##### Table of Contents



UNITED STATES
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, 2008
 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.
  Delaware
(State or other Jurisdiction 
of incorporation or organization)
    
    33-0074499
(IRS Employer Identification Number)
 43445 Business Park Drive, Suite 103
Temecula, California 92590
  (951) 699-6991
  þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  Class
    
    
    Number of Shares Outstanding at May 7, 2008Common Stock, $0.001 par value
    
    
    
    27,174,157




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##### 



OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Quarterly Report on Form 10-Q
For The Period Ended March 31, 2008
 Table of Contents
 Part I. Financial InformationItem 1.
    
    Financial Statements
    
    
    
    3Condensed Consolidated Balance Sheets as of March 31, 2008 (Unaudited) and December 31, 2007
    
    
    
    3Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2008 and 2007
    
    
    
    4Unaudited Condensed Consolidated Statement of Stockholders' Equity for the Three Months Ended March 31, 2008
    
    
    
    5Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2008 and 2007
    
    
    
    6Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    
    17Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    
    25Item 4.
    
    Controls and Procedures
    
    
    
    25Part II. Other InformationItem 1.
    
    Legal Proceedings
    
    
    
    27Item 1A.
    
    Risk Factors
    
    
    
    27Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    
    36Item 3.
    
    Defaults Upon Senior Securities
    
    
    
    36Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    
    36Item 5.
    
    Other Information
    
    
    
    36Item 6.
    
    Exhibits
    
    
    
    36Signatures
    
    
    
    
    
    37EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
   2




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##### Table of Contents



PART IFINANCIAL INFORMATION
 
 ITEM 1. Financial Statements.
 OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Balance Sheets
 March 31,
    
    
    December 31,2008
    
    
    2007(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    39,397
    
    
    $
    25,260Investments in available-for-sale securities
    
    
    27,449
    
    
    
    46,155Accounts receivable, net of allowance for doubtful accounts of $679 and $240
    
    
    8,076
    
    
    
    8,299Income tax refund receivable
    
    
    229
    
    
    
    224Deferred tax assets, net
    
    
    705
    
    
    
    705Prepaid programming costs
    
    
    3,176
    
    
    
    3,522Other current assets
    
    
    2,108
    
    
    
    1,175Total current assets
    
    
    81,140
    
    
    
    85,340Property, plant and equipment, net
    
    
    11,263
    
    
    
    11,632Amortizable intangible assets, net
    
    
    225
    
    
    
    313Goodwill
    
    
    43,160
    
    
    
    43,160Investments in auction-rate securities
    
    
    5,115
    
    
    
    Deferred tax assets, net
    
    
    9,605
    
    
    
    9,326Deposits and other assets
    
    
    1,870
    
    
    
    1,930Totals
    
    $
    152,378
    
    
    $
    151,701Liabilities and Stockholders EquityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    4,951
    
    
    $
    4,158Accrued severance payments
    
    
    75
    
    
    
    257Deferred revenue
    
    
    192
    
    
    
    261Current portion of deferred obligations
    
    
    179
    
    
    
    143Customer deposits
    
    
    12
    
    
    
    14Total current liabilities
    
    
    5,409
    
    
    
    4,833Accrued severance payments, net of current portion
    
    
    17
    
    
    
    22Deferred obligations
    
    
    248
    
    
    
    269Total liabilities
    
    
    5,674
    
    
    
    5,124Commitments and contingenciesStockholders equity:Preferred stock, $0.001 par value; 25,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock, $0.001 par value; 75,000 shares authorized; 27,170 and
26,870 shares issued and outstanding
    
    
    27
    
    
    
    27Additional paid-in capital
    
    
    176,418
    
    
    
    175,570Accumulated other comprehensive income (loss)
    
    
    1
    
    
    
    (59
    )Accumulated deficit
    
    
    (29,742
    )
    
    
    (28,961
    )Total stockholders equity
    
    
    146,704
    
    
    
    146,577Totals
    
    $
    152,378
    
    
    $
    151,701
  3




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##### Table of Contents



OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
 
 Unaudited Condensed Consolidated Statements of Operations
 Three Months EndedMarch 31,2008
    
    
    2007Revenues:Advertising
    
    $
    7,631
    
    
    $
    6,357Subscriber fees
    
    
    4,049
    
    
    
    4,749Total revenues
    
    
    11,680
    
    
    
    11,106Cost of services:Programming
    
    
    1,923
    
    
    
    1,471Satellite transmission fees
    
    
    626
    
    
    
    596Production and operations
    
    
    1,861
    
    
    
    1,370Other direct costs
    
    
    97
    
    
    
    38Total costs of services
    
    
    4,507
    
    
    
    3,475Other expenses:Advertising
    
    
    538
    
    
    
    714Selling, general and administrative
    
    
    7,617
    
    
    
    8,200Depreciation and amortization
    
    
    615
    
    
    
    649Total other expenses
    
    
    8,770
    
    
    
    9,563Loss from operations
    
    
    (1,597
    )
    
    
    (1,932
    )Interest and
other income, net
    
    
    538
    
    
    
    703Loss from continuing operations before income taxes
    
    
    (1,059
    )
    
    
    (1,229
    )Income tax benefit
    
    
    (278
    )
    
    
    (466
    )Loss from continuing operations
    
    
    (781
    )
    
    
    (763
    )Income from discontinued operations, net of tax
    
    
    
    
    
    
    36Net loss
    
    $
    (781
    )
    
    $
    (727
    )Basic earnings (loss) per common share data:From continuing operations
    
    $
    (0.03
    )
    
    $
    (0.03
    )From discontinued operations
    
    $
    
    
    
    $
    Basic earnings per common share
    
    $
    (0.03
    )
    
    $
    (0.03
    )Diluted earnings (loss) per common share data:From continuing operations
    
    $
    (0.03
    )
    
    $
    (0.03
    )From discontinued operations
    
    $
    
    
    
    $
    Diluted earnings per common share
    
    $
    (0.03
    )
    
    $
    (0.03
    )Weighted average number of common shares outstanding:Basic
    
    
    26,133
    
    
    
    25,272Diluted
    
    
    26,133
    
    
    
    25,272
  4




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OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
 
 Unaudited Condensed Consolidated Statement of Stockholders Equity
For the Three Months Ended March 31, 2008
 Additional
    
    
    Accumulated OtherCommon Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Capital
    
    
    Income (Loss)
    
    
    Deficit
    
    
    TotalBalance, December 31, 2007
    
    
    26,870
    
    
    $
    27
    
    
    $
    175,570
    
    
    $
    (59
    )
    
    $
    (28,961
    )
    
    $
    146,577Comprehensive income:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (781
    )
    
    
    (781
    )Change in fair value of
available-for-sale
securities, net of taxes
of $31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    60Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (721
    )Issuance of restricted stock
and performance shares to
employees and service
providers for services to be
rendered, net of forfeited
shares
    
    
    309
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based employee and
service provider
compensation expense
    
    
    
    
    
    
    
    
    
    
    912
    
    
    
    
    
    
    
    
    
    
    
    912Purchase and retirement of
treasury stock related to
employee and service
provider share-based
compensation activity
    
    
    (9
    )
    
    
    
    
    
    
    (64
    )
    
    
    
    
    
    
    
    
    
    
    (64
    )Balance, March 31, 2008
    
    
    27,170
    
    
    $
    27
    
    
    $
    176,418
    
    
    $
    1
    
    
    $
    (29,742
    )
    
    $
    146,704
  5




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##### Table of Contents



OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
 
 Unaudited Condensed Consolidated Statements of Cash Flows
 Three Months EndedMarch 31,2008
    
    
    2007Operating activities:Net loss
    
    $
    (781
    )
    
    $
    (727
    )Adjustments to reconcile net loss to net cash provided by operating activities:Income from discontinued operations
    
    
    
    
    
    
    (36
    )Depreciation and amortization
    
    
    615
    
    
    
    649Amortization of subscriber acquisition fees
    
    
    122
    
    
    
    116Gain on sale of equipment
    
    
    (5
    )
    
    
    Loss on sale of available-for-sale securities
    
    
    44
    
    
    
    Other-than-temporary impairment on auction-rate securities
    
    
    260
    
    
    
    Provision for doubtful accounts
    
    
    277
    
    
    
    55Share-based employee and service provider compensation
    
    
    912
    
    
    
    3,780Deferred tax provision (benefit), net
    
    
    (279
    )
    
    
    (446
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (54
    )
    
    
    (33
    )Income tax refund receivable
    
    
    (5
    )
    
    
    2,077Prepaid programming costs
    
    
    346
    
    
    
    247Other current assets
    
    
    (933
    )
    
    
    40Deposits and other assets
    
    
    (62
    )
    
    
    (185
    )Accounts payable and accrued expenses
    
    
    933
    
    
    
    530Deferred revenue
    
    
    (69
    )
    
    
    (79
    )Customer deposits
    
    
    (2
    )
    
    
    (41
    )Accrued severance payments
    
    
    (187
    )
    
    
    (60
    )Deferred obligations
    
    
    15
    
    
    
    (9
    )Net cash provided by operating activities
    
    
    1,147
    
    
    
    5,878Investing activities:Purchases of property, plant and equipment
    
    
    (308
    )
    
    
    (217
    )Proceeds from sale of equipment
    
    
    15
    
    
    
    Purchases of available-for-sale securities
    
    
    (27,176
    )
    
    
    (16,726
    )Proceeds from sale of available-for-sale securities
    
    
    40,523
    
    
    
    27,280Net cash provided by investing activities
    
    
    13,054
    
    
    
    10,337Financing activities:Proceeds from exercise of stock options
    
    
    
    
    
    
    446Purchase of treasury stock
    
    
    (64
    )
    
    
    (167
    )Net cash (used in) provided by financing activities
    
    
    (64
    )
    
    
    279Cash flows from discontinued operations:Net cash used in operating activities of discontinued operations
    
    
    
    
    
    
    (247
    )Net cash used in investing activities of discontinued operations
    
    
    
    
    
    
    Net cash used in financing activities of discontinued operations
    
    
    
    
    
    
    Net cash used in discontinued operations
    
    
    
    
    
    
    (247
    )Net increase in cash and cash equivalents
    
    
    14,137
    
    
    
    16,247Cash and cash equivalents, beginning of period
    
    
    25,260
    
    
    
    14,226Cash and cash equivalents, end of period
    
    $
    39,397
    
    
    $
    30,473Supplemental disclosure of cash flow information:Income taxes paid
    
    $
    5
    
    
    $
    1Supplemental disclosures of non-cash investing and financing activities:Effect of net increase (decrease) in fair value of available-for-sale
securities, net of deferred taxes
    
    $
    60
    
    
    $
    (1
    )Property, plant and equipment costs incurred but not paid
    
    $
    30
    
    
    $
    96Retirement of treasury stock
    
    $
    (64
    )
    
    $
    167
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OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 NOTE 1ORGANIZATION AND BUSINESS
 Description of Operations
     NOTE 2STOCK INCENTIVE PLANS
   7




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1995 Stock Option Plan (1995 Plan).
 2004 Long-Term Incentive Plan (LTIP Plan).
 Non-Employee Director Stock Option Plan (NEDSOP).
     Three Months EndedMarch 31,2008
    
    
    2007Nature of Award:Restricted stock
    
    $
    809
    
    
    $
    235Options
    
    
    103
    
    
    
    695Performance units
    
    
    
    
    
    
    2,850Total share-based compensation expense
    
    $
    912
    
    
    $
    3,780
 8




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Three Months EndedMarch 31,2008
    
    
    2007Classification of Compensation Expense:Cost of services:Production and operations
    
    $
    98
    
    
    $
    (9
    )Other expenses:Selling, general and administrative
    
    
    814
    
    
    
    3,789Total share-based compensation expense
    
    $
    912
    
    
    $
    3,780
  Three Months EndedMarch 31,2008
    
    2007Risk-free interest rate
    
    1.4  2.3%
    
    4.9  5.0%Dividend yield
    
    0.0%
    
    0.0%Expected life of the option
    
    0.2  0.3 years
    
    0.8 yearsVolatility factor
    
    50.0  52.6%
    
    39.2  39.5%Weighted average volatility factor
    
    51.3%
    
    39.4%
  Issuances of Common Stock by the Company
  Three Months EndedMarch 31,2008
    
    2007Number of options exercised
    
    
    
    
    
    
    332Cash proceeds
    
    $
    
    
    
    $
    446Tax benefit from options exercised
    
    $
    
    
    
    $
    692
  Stock Options
  9




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WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregateOptions
    
    Shares
    
    
    Price
    
    
    Term (Yrs.)
    
    
    Intrinsic Value(in thousands)
    
    
    
    
    
    
    
    
    
    
    (in thousands)Outstanding at beginning of period
    
    
    1,442
    
    
    $
    12.48Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Expired
    
    
    (60
    )
    
    
    14.50Outstanding at end of period
    
    
    1,382
    
    
    $
    12.39
    
    
    
    2.59
    
    
    $
    2Vested or expected to vest at end of period
    
    
    1,364
    
    
    $
    12.39
    
    
    
    2.59
    
    
    $
    2Exercisable at end of period
    
    
    1,254
    
    
    $
    12.31
    
    
    
    2.50
    
    
    $
    2
  Options Outstanding
    
    
    Options ExercisableWeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    
    AverageNumber
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    ExerciseRange of Exercise Prices
    
    Outstanding
    
    
    Term (Yrs.)
    
    
    Price
    
    
    Exercisable
    
    
    Price(In thousands)
    
    
    
    
    
    
    
    
    
    
    (In thousands)$6.14  $10.19
    
    
    12
    
    
    
    2.55
    
    
    $
    9.55
    
    
    
    4
    
    
    $
    8.45$11.60  $11.60
    
    
    500
    
    
    
    0.62
    
    
    
    11.60
    
    
    
    500
    
    
    
    11.60$12.10  $12.10
    
    
    300
    
    
    
    3.55
    
    
    
    12.10
    
    
    
    300
    
    
    
    12.10$12.11  $12.80
    
    
    345
    
    
    
    5.04
    
    
    
    12.56
    
    
    
    285
    
    
    
    12.61$13.90  $14.95
    
    
    200
    
    
    
    2.04
    
    
    
    14.27
    
    
    
    142
    
    
    
    14.19$15.75  $15.75
    
    
    25
    
    
    
    1.19
    
    
    
    15.75
    
    
    
    23
    
    
    
    15.75Total
    
    
    1,382
    
    
    
    2.59
    
    
    $
    12.39
    
    
    
    1,254
    
    
    $
    12.31
   Restricted Stock
  As of March 31, 2008WeightedAverageGrant-DateShares
    
    
    Fair Value(in thousands)Nonvested at beginning of period
    
    
    697
    
    
    $
    10.25Granted
    
    
    316
    
    
    
    7.23Vested
    
    
    (29
    )
    
    
    11.99Forfeited
    
    
    (7
    )
    
    
    9.61Nonvested at end of period
    
    
    977
    
    
    $
    9.23
  10




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Expense to be Recognized
  March 31, 2008Weighted AverageExpense Yet
    
    
    Remainingto be
    
    
    Requisite ServiceRecognized
    
    
    PeriodsStock options
    
    $
    853
    
    
    1.6 yearsRestricted stock
    
    
    7,362
    
    
    3.2 yearsPerformance units
    
    
    
    
    
    
    Total
    
    $
    8,215
    
    
    3.1 years
 NOTE 3EARNINGS (LOSS) PER COMMON SHARE
   2008
    
    2007Weighted average shares used to calculate basic
earnings (loss) per share
    
    
    26,133
    
    
    
    25,272Dilutive effect of potentially issuable common
shares upon exercise of dilutive stock options
and performance units
    
    
    
    
    
    
    Weighted average shares used to calculate
diluted earnings (loss) per share
    
    
    26,133
    
    
    
    25,272
  NOTE 4INVESTMENTS IN AVAILABLE-FOR-SALE SECURITIES
  Level 1:
    
    Quoted prices (unadjusted) in active markets that are accessible at the measurement date
for assets or liabilities.
 Level 2:
    
    Observable prices that are based on inputs not quoted on active markets, but corroborated
by market data.
 Level 3:
    
    Unobservable inputs developed using estimates and assumptions developed by management,
which reflect those that a market participant would use.
 11




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Fair Value Measurements at March 31, 2008 usingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Investment securities:Auction-rate securities
    
    $
    20,751
    
    
    $
    
    
    
    $
    20,751
    
    
    $
    Corporate debt securities
    
    
    6,698
    
    
    
    
    
    
    
    6,698
    
    
    
    Auction-rate securities, non-current
    
    
    5,115
    
    
    
    
    
    
    
    
    
    
    
    5,115Total investment securities
    
    $
    32,564
    
    
    $
    
    
    
    $
    27,449
    
    
    $
    5,115
     Balance as of December 31, 2007
    
    $
    Transfers into Level 3
    
    
    5,375Other-than-temporary impairment
    
    
    (260
    )Balance as of March 31, 2008
    
    $
    5,115
  12




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Three Months EndedMarch 31,2008
    
    
    2007Interest income
    
    $
    810
    
    
    $
    684Dividend income
    
    
    32
    
    
    
    19Loss on sale of equity securities
    
    
    (44
    )
    
    
    Other-than-temporary impairment on
auction-rate securities
    
    
    (260
    )
    
    
    Total
interest and other income, net
    
    $
    538
    
    
    $
    703
 NOTE 5GOODWILL AND INTANGIBLE ASSETS
   March 31, 2008AccumulatedGross
    
    
    Amortization
    
    
    NetAdvertising customer relationships
    
    $
    1,972
    
    
    $
    1,803
    
    
    $
    169Trademark
    
    
    219
    
    
    
    163
    
    
    
    56Total intangible assets
    
    $
    2,191
    
    
    $
    1,966
    
    
    $
    225
    Years Ending December 31,
    
    Amount2008 (remaining 9 months)
    
    $
    1802009
    
    
    152010
    
    
    152011
    
    
    112012
    
    
    4Total
    
    $
    225
 NOTE 6LINES OF CREDIT
  13




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NOTE 7INCOME TAX PROVISION (BENEFIT)
   NOTE 8RELATED PARTY TRANSACTIONS
    NOTE 9COMMITMENTS AND CONTINGENCIES
    14




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Operating Leases
    NOTE 10DISCONTINUED OPERATIONS
    Three Months EndedMarch 31,2008
    
    2007Membership Division revenue
    
    $
    
    
    
    $
    1,269Income from continuing operations
    
    
    
    
    
    
    58Income from discontinued operations, net of tax
    
    $
    
    
    
    $
    36
 NOTE 11RECENT ACCOUNTING PRONOUNCEMENTS
   15




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NOTE 12SUBSEQUENT EVENT
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
 Safe Harbor Statement
   General
  Gold Prospector & Treasure Hunters in the Great Outdoors
  Critical Accounting Policies and Estimates
  17




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Subscriber Acquisition Fees
   Prepaid Programming Costs
  Revenue Recognition
     18




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Valuation of Goodwill
  Income Taxes
    Stock Incentive Plans
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Comparison of Operating Results for the Three Months Ended March 31, 2008 and March 31, 2007
  Change
    
    
    % of Total Revenue2008
    
    
    2007
    
    
    $
    
    
    %
    
    
    2008
    
    
    2007Revenues:Advertising
    
    $
    7,631
    
    
    $
    6,357
    
    
    $
    1,274
    
    
    
    20.0
    %
    
    
    65.3
    %
    
    
    57.2
    %Subscriber fees
    
    
    4,049
    
    
    
    4,749
    
    
    
    (700
    )
    
    
    (14.7
    )
    
    
    34.7
    
    
    
    42.8Total revenues
    
    
    11,680
    
    
    
    11,106
    
    
    
    574
    
    
    
    5.2
    
    
    
    100.0
    
    
    
    100.0Cost of services:Programming
    
    
    1,923
    
    
    
    1,471
    
    
    
    452
    
    
    
    30.7
    
    
    
    16.5
    
    
    
    13.2Satellite transmission fees
    
    
    626
    
    
    
    596
    
    
    
    30
    
    
    
    5.0
    
    
    
    5.4
    
    
    
    5.4Production and operations
    
    
    1,861
    
    
    
    1,370
    
    
    
    491
    
    
    
    35.8
    
    
    
    15.9
    
    
    
    12.3Other direct costs
    
    
    97
    
    
    
    38
    
    
    
    59
    
    
    
    155.3
    
    
    
    0.8
    
    
    
    0.3Total cost of services
    
    
    4,507
    
    
    
    3,475
    
    
    
    1,032
    
    
    
    29.7
    
    
    
    38.6
    
    
    
    31.3Other expenses:Advertising
    
    
    538
    
    
    
    714
    
    
    
    (176
    )
    
    
    (24.6
    )
    
    
    4.6
    
    
    
    6.4Selling, general and
administrative
    
    
    7,617
    
    
    
    8,200
    
    
    
    (583
    )
    
    
    (7.1
    )
    
    
    65.2
    
    
    
    73.8Depreciation and amortization
    
    
    615
    
    
    
    649
    
    
    
    (34
    )
    
    
    (5.2
    )
    
    
    5.3
    
    
    
    5.8Total other expenses
    
    
    8,770
    
    
    
    9,563
    
    
    
    (793
    )
    
    
    (8.3
    )
    
    
    75.1
    
    
    
    86.1Loss from operations
    
    
    (1,597
    )
    
    
    (1,932
    )
    
    
    335
    
    
    
    (17.3
    )
    
    
    (13.7
    )
    
    
    (17.4
    )Interest and other income, net
    
    
    538
    
    
    
    703
    
    
    
    (165
    )
    
    
    (23.5
    )
    
    
    4.6
    
    
    
    6.3Loss from continuing operations
before income taxes
    
    
    (1,059
    )
    
    
    (1,229
    )
    
    
    170
    
    
    
    (13.8
    )
    
    
    (9.1
    )
    
    
    (11.1
    )Income tax benefit
    
    
    (278
    )
    
    
    (466
    )
    
    
    188
    
    
    
    (40.3
    )
    
    
    (2.4
    )
    
    
    (4.2
    )Loss from continuing operations
    
    
    (781
    )
    
    
    (763
    )
    
    
    (18
    )
    
    
    2.4
    
    
    
    (6.7
    )
    
    
    (6.9
    )Income from discontinued
operations, net of tax
    
    
    
    
    
    
    36
    
    
    
    (36
    )
    
    
    (100.0
    )
    
    
    
    
    
    
    0.3Net loss
    
    $
    (781
    )
    
    $
    (727
    )
    
    $
    (54
    )
    
    
    7.4
    %
    
    
    (6.7
    )%
    
    
    (6.5
    )%
  Revenues
  Results of Operations
  20




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Cost of Services
     21




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Other Expenses
       Loss from Operations
  22




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##### Table of Contents



Interest and Other Income, Net
  Loss from Continuing Operations Before Income Taxes
  Income Tax Benefit
   Loss from Continuing Operations
  Income from Discontinued Operations, Net of Tax
  Net Loss
  Liquidity and Capital Resources
  23




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
      
 ITEM 4. CONTROLS AND PROCEDURES.
 Evaluation of disclosure controls and procedures.
  Managements report on internal control over financial reporting.
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Remediation plan for material weaknesses in internal control over financial reporting.
   Changes in internal control over financial reporting.
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PART IIOTHER INFORMATION
 
 ITEM 1. Legal Proceedings.
  
 ITEM 1A. Risk Factors.
  Cable and satellite service providers could discontinue or refrain from carrying Outdoor Channel,
or decide to not renew our distribution agreements, which could substantially reduce the number of
viewers and harm our operating results.
  If our channel is placed in unpopular program packages by cable or satellite service providers, or
if service fees are increased for our subscribers, the number of viewers of our channel may decline
which could harm our business and operating results.
  We may not be able to grow our subscriber base at a sufficient rate to offset planned increased
costs, decreased revenue or at all, and as a result our revenues and profitability may not increase
and could decrease.
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We do not control the methodology used by Nielsen to estimate our subscriber base or television
ratings, and changes, or inaccuracies, in such estimates could cause our advertising revenue to
decrease.
  If we offer favorable terms or incentives to service providers in order to grow our subscriber
base, our operating results may be harmed or your percentage of the Company may be diluted.
  If, in our attempt to increase our number of subscribers, we structure favorable terms or
incentives with one service provider in a way that would require us to offer the same terms or
incentives to all other service providers, our operating results may be harmed.
  Consolidation among cable and satellite operators may harm our business.
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The cable and satellite television industry is subject to substantial governmental regulation for
which compliance may increase our costs, hinder our growth and possibly expose us to penalties for
failure to comply.
    Our investments in adjustable rate securities are subject to risks which may affect the liquidity
of these investments and could cause additional impairment charges.
  We may not be able to effectively manage our future growth or the integration of acquisitions, and
our growth may not continue, which may substantially harm our business and prospects.
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We may not be able to secure additional national advertising accounts, and as a result, our
revenues and profitability may be negatively impacted.
  We have found material weaknesses in our internal controls over financial reporting, and we cannot
be certain in the future that we will be able to report that our controls are without material
weakness or to complete our evaluation of those controls in a timely fashion.
    Expenses relating to programming costs are generally increasing and a number of factors can cause
cost overruns and delays, and our operating results may be adversely impacted if we are not able to
successfully recover the costs of developing and acquiring new programming.
  Our operating results may vary significantly, and historical comparisons of our operating results
are not necessarily meaningful and should not be relied upon as an indicator of future performance.
  
    
    carriage decisions of cable and satellite service providers;
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
    
    demand for advertising, advertising rates and offerings of competing media;
    
    changes in the growth rate of cable and satellite subscribers;
    
    cable and satellite service providers capital and marketing expenditures and
their impact on programming offerings and penetration;
    
    seasonal trends in viewer interests and activities;
    
    pricing, service, marketing and acquisition decisions that could reduce
revenues and impair quarterly financial results;
    
    the mix of cable television and satellite-delivered programming products and
services sold and the distribution channels for those products and services;
    
    our ability to react quickly to changing consumer trends;
    
    increased compensation expenses resulting from the hiring of highly qualified
employees;
    
    specific economic conditions in the cable television and related industries;
and
    
    changing regulatory requirements.
  Changes to financial accounting standards or our accounting estimates may affect our reported
operating results.
  If we fail to develop and distribute popular programs, our viewership would likely decline, which
could cause advertising and subscriber fee revenues to decrease.
  The market in which we operate is highly competitive, and we may not be able to compete
effectively, particularly against competitors with greater financial resources, brand recognition,
marketplace presence and relationships with service providers.
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Changes in corporate governance and securities disclosure and compliance practices have increased
and may continue to increase our legal compliance and financial reporting costs.
  The satellite infrastructure that we use may fail or be preempted by another signal, which could
impair our ability to deliver programming to our cable and satellite service providers.
  Natural disasters and other events beyond our control could interrupt our signal.
  Seasonal increases or decreases in advertising revenue may negatively affect our business.
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We may be unable to access capital, or offer equity as an incentive for increased subscribers, on
acceptable terms to fund our future growth and operations.
  We may not be able to attract and retain key personnel.
  New video recording technologies may reduce our advertising revenue.
 ®
 Cable and satellite television programming signals have been stolen or could be stolen in the
future, which reduces our potential revenue from subscriber fees and advertising.
  Because we expect to become increasingly dependent upon our intellectual property rights, our
inability to protect those rights could negatively impact our ability to compete.
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We may face intellectual property infringement claims that could be time-consuming, costly to
defend and result in our loss of significant rights.
  Some of our existing stockholders can exert control over us and may not make decisions that are in
the best interests of all stockholders.
  The market price of our common stock has been and may continue to be subject to wide fluctuations.
  Anti-takeover provisions in our certificate of incorporation, our bylaws and under Delaware law may
enable our incumbent management to retain control of us and discourage or prevent a change of
control that may be beneficial to our stockholders.
  
    
    allow the authorized number of directors to be changed only by resolution of
our board of directors;
 
    
    establish a classified board of directors, providing that not all members of
the board be elected at one time;
 
    
    require a 66 2/3% stockholder vote to remove a director, and only for cause;
 
    
    authorize our board of directors to issue without stockholder approval blank
check preferred stock that, if issued, could operate as a poison pill to dilute the stock
ownership of a potential hostile acquirer to prevent an acquisition that is not approved by
our board of directors;
 
    
    require that stockholder actions must be effected at a duly called
stockholder meeting and prohibit stockholder action by written consent;
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
    
    establish advance notice requirements for stockholder nominations to our
board of directors or for stockholder proposals that can be acted on at stockholder meetings;
 
    
    except as provided by law, allow only our board of directors to call a
special meeting of the stockholders; and
 
    
    require a 66 2/3% stockholder vote to amend our certificate of incorporation
or bylaws.
  Technologies in the cable and satellite television industry are constantly changing, and our
failure to acquire or maintain state-of-the-art technology may harm our business and competitive
advantage.
  If our goodwill becomes impaired, we will be required to recognize a noncash charge which could
have a significant effect on our reported net earnings.
  Future issuance by us of preferred shares could adversely affect the holders of existing shares,
and therefore reduce the value of existing shares.
  We do not expect to pay dividends in the foreseeable future.
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ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 ITEM 3. Defaults Upon Senior Securities.
  
 ITEM 4. Submission of Matters to a Vote of Security Holders.
  
 ITEM 5. Other Information.
     
 ITEM 6. Exhibits.
 ExhibitNumber
    
    Description3.1
    
    Certificate of Incorporation of Outdoor Channel Holdings,
Inc, a Delaware corporation (filed as Exhibit 3.1 to the
Companys 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 Companys 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 Companys Form 10-Q for the period ended
June 30, 2005)31.1
    
    Certification by Chief Executive Officer31.2
    
    Certification by Chief Financial Officer32.1*
    
    Section 1350 Certification by Chief Executive Officer32.2*
    
    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. 36




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SIGNATURES
  OUTDOOR CHANNEL HOLDINGS, INC./s/ Shad L. BurkeShad L. BurkeAuthorized Officer, Chief Financial Officer and
Principal Accounting Officer
Date: May 9, 2008 37