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, 2009
 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
    
    33-0074499(State or other Jurisdiction
    
    (IRS Employer Identification Number)of incorporation or organization)
 43445 Business Park Drive, Suite 103
Temecula, California 92590
 (951) 699-6991
  þ o
 o 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 8, 2009Common Stock, $0.001 par value
    
    25,692,894




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##### 



OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Quarterly Report on Form 10-Q
For the Period Ended March 31, 2009
 Table of Contents
 Part I. Financial Information

3Item 1.Financial Statements

3Condensed Consolidated Balance Sheets as of March 31, 2009 (Unaudited) and December 31, 2008

3Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March
31, 2009 and 2008

4Unaudited Condensed Consolidated Statement of Stockholders Equity for the Three Months
Ended March 31, 2009

5Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March
31, 2009 and 2008

6Notes to Unaudited Condensed Consolidated Financial Statements

7Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations

21Item 3.Quantitative and Qualitative Disclosures About Market Risk

30Item 4.Controls and Procedures

30Part II. Other Information

32Item 1.Legal Proceedings

32Item 1A.Risk Factors

32Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

42Item 3.Defaults Upon Senior Securities

42Item 4.Submission of Matters to a Vote of Security Holders

42Item 5.Other Information

42Item 6.Exhibits

43Signatures

44
   2




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##### 



PART IFINANCIAL INFORMATION
 
 ITEM 1. Financial Statements.
 OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Balance Sheets
  March 31,
    
    
    December 31,2009
    
    
    2008(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    41,614
    
    
    $
    60,257Investments in available-for-sale securities
    
    
    9,994
    
    
    
    Accounts receivable, net of allowance for doubtful accounts of $869 and $891
    
    
    12,370
    
    
    
    9,448Income tax refund receivable
    
    
    252
    
    
    
    Deferred tax assets, net
    
    
    1,524
    
    
    
    1,524Prepaid programming and production costs
    
    
    6,323
    
    
    
    3,997Other current assets
    
    
    1,580
    
    
    
    1,333Total current assets
    
    
    73,657
    
    
    
    76,559Property, plant and equipment, net
    
    
    16,168
    
    
    
    10,042Amortizable intangible assets, net
    
    
    938
    
    
    
    142Goodwill
    
    
    43,160
    
    
    
    43,160Investments in auction-rate securities
    
    
    6,471
    
    
    
    6,456Deferred tax assets, net
    
    
    5,946
    
    
    
    4,949Deposits and other assets
    
    
    2,802
    
    
    
    1,646Totals
    
    $
    149,142
    
    
    $
    142,954Liabilities and Stockholders EquityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    9,679
    
    
    $
    5,923Accrued severance payments
    
    
    17
    
    
    
    25Deferred revenue
    
    
    1,747
    
    
    
    205Current portion of deferred obligations
    
    
    255
    
    
    
    126Unfavorable lease
    
    
    402
    
    
    
    Income taxes payable
    
    
    
    
    
    
    30Total current liabilities
    
    
    12,100
    
    
    
    6,309Deferred obligations
    
    
    245
    
    
    
    236Unfavorable lease, net of current portion
    
    
    1,106
    
    
    
    Total liabilities
    
    
    13,451
    
    
    
    6,545Commitments 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; 25,200 and
25,246 shares issued and outstanding
    
    
    25
    
    
    
    25Additional paid-in capital
    
    
    163,829
    
    
    
    163,300Accumulated other comprehensive loss
    
    
    (312
    )
    
    
    (327
    )Accumulated deficit
    
    
    (27,851
    )
    
    
    (26,589
    )Total stockholders equity
    
    
    135,691
    
    
    
    136,409Totals
    
    $
    149,142
    
    
    $
    142,954
  3




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##### 



OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
 
 Unaudited Condensed Consolidated Statements of Operations
  Three Months EndedMarch 31,2009
    
    
    2008Revenues:Advertising
    
    $
    7,794
    
    
    $
    7,631Subscriber fees
    
    
    4,663
    
    
    
    4,049Production services
    
    
    4,519
    
    
    
    Total revenues
    
    
    16,976
    
    
    
    11,680Cost of services:Programming
    
    
    1,748
    
    
    
    1,923Satellite transmission fees
    
    
    395
    
    
    
    626Production and operations
    
    
    6,472
    
    
    
    1,861Other direct costs
    
    
    97
    
    
    
    97Total costs of services
    
    
    8,712
    
    
    
    4,507Other expenses:Advertising
    
    
    459
    
    
    
    538Selling, general and administrative
    
    
    9,214
    
    
    
    7,617Depreciation and amortization
    
    
    898
    
    
    
    615Total other expenses
    
    
    10,571
    
    
    
    8,770Loss from operations
    
    
    (2,307
    )
    
    
    (1,597
    )Interest and other income, net
    
    
    48
    
    
    
    538Loss from operations before income taxes
    
    
    (2,259
    )
    
    
    (1,059
    )Income tax benefit
    
    
    (997
    )
    
    
    (278
    )Net loss
    
    $
    (1,262
    )
    
    $
    (781
    )Loss per common share data:Basic
    
    $
    (0.05
    )
    
    $
    (0.03
    )Diluted
    
    $
    (0.05
    )
    
    $
    (0.03
    )Weighted average common shares outstanding:Basic
    
    
    24,417
    
    
    
    26,133Diluted
    
    
    24,417
    
    
    
    26,133
  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, 2009
  AccumulatedAdditional
    
    
    OtherCommon Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Capital
    
    
    Income (Loss)
    
    
    Deficit
    
    
    TotalBalance, December 31, 2008
    
    
    25,246
    
    
    $
    25
    
    
    $
    163,300
    
    
    $
    (327
    )
    
    $
    (26,589
    )
    
    $
    136,409Comprehensive income (loss):Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,262
    )
    
    
    (1,262
    )Change in fair value of
auction-rate securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    15Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,247
    )Issuance of restricted stock
and performance shares to
employees and service
providers for services to be
rendered, net of forfeited
shares
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based employee and
service provider
compensation expense
    
    
    
    
    
    
    
    
    
    
    1,014
    
    
    
    
    
    
    
    
    
    
    
    1,014Purchase and retirement of
treasury stock related to
employee and service
provider share-based
compensation activity
    
    
    (28
    )
    
    
    
    
    
    
    (179
    )
    
    
    
    
    
    
    
    
    
    
    (179
    )Purchase and retirement of
treasury stock related to
the stock repurchase program
    
    
    (57
    )
    
    
    
    
    
    
    (306
    )
    
    
    
    
    
    
    
    
    
    
    (306
    )Balance, March 31, 2009
    
    
    25,200
    
    
    $
    25
    
    
    $
    163,829
    
    
    $
    (312
    )
    
    $
    (27,851
    )
    
    $
    135,691
  5




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##### 



OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
 
 Unaudited Condensed Consolidated Statements of Cash Flows
  Three Months EndedMarch 31,2009
    
    
    2008Operating activities:Net loss
    
    $
    (1,262
    )
    
    $
    (781
    )Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:Depreciation and amortization
    
    
    898
    
    
    
    615Amortization of subscriber acquisition fees
    
    
    122
    
    
    
    122Gain on sale of equipment
    
    
    
    
    
    
    (5
    )Loss on sale of available-for-sale securities
    
    
    
    
    
    
    44Other-than-temporary impairment on auction-rate securities
    
    
    
    
    
    
    260Provision for doubtful accounts
    
    
    76
    
    
    
    277Share-based employee and service provider compensation
    
    
    1,014
    
    
    
    912Deferred tax benefit, net
    
    
    (1,027
    )
    
    
    (279
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    2,196
    
    
    
    (54
    )Income tax refund receivable
    
    
    (252
    )
    
    
    (5
    )Prepaid programming costs
    
    
    (64
    )
    
    
    346Other current assets
    
    
    435
    
    
    
    (933
    )Deposits and other assets
    
    
    (1,055
    )
    
    
    (62
    )Accounts payable and accrued expenses
    
    
    (3,881
    )
    
    
    933Deferred revenue
    
    
    944
    
    
    
    (69
    )Customer deposits
    
    
    
    
    
    
    (2
    )Accrued severance payments
    
    
    (8
    )
    
    
    (187
    )Deferred obligations
    
    
    138
    
    
    
    15Unfavorable lease obligations
    
    
    (89
    )
    
    
    Net cash provided by (used in) operating activities
    
    
    (1,815
    )
    
    
    1,147Investing activities:Purchases of property, plant and equipment
    
    
    (603
    )
    
    
    (308
    )Proceeds from sale of equipment
    
    
    
    
    
    
    15Cash paid to purchase assets of Winnercomm, net of cash acquired
    
    
    (5,746
    )
    
    
    Purchases of available-for-sale and auction-rate securities
    
    
    (9,994
    )
    
    
    (27,176
    )Proceeds from sale of available-for-sale and auction-rate securities
    
    
    
    
    
    
    40,523Net cash provided by (used in) investing activities
    
    
    (16,343
    )
    
    
    13,054Financing activities:Purchase of treasury stock
    
    
    (179
    )
    
    
    (64
    )Purchase and retirement of stock related to stock repurchase program
    
    
    (306
    )
    
    
    Net cash used in financing activities
    
    
    (485
    )
    
    
    (64
    )Net increase (decrease) in cash and cash equivalents
    
    
    (18,643
    )
    
    
    14,137Cash and cash equivalents, beginning of period
    
    
    60,257
    
    
    
    25,260Cash and cash equivalents, end of period
    
    $
    41,614
    
    
    $
    39,397Supplemental disclosure of cash flow information:Income taxes paid
    
    $
    282
    
    
    $
    5Supplemental disclosures of non-cash investing and financing activities:Effect of net increase (decrease) in fair value of auction-rate securities
    
    $
    15
    
    
    $
    60Property, plant and equipment costs incurred but not paid
    
    $
    239
    
    
    $
    30Retirement of treasury stock
    
    $
    (179
    )
    
    $
    (64
    )
  6




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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ACQUISITION
  7




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##### 



January 12, 2009Fair value of the net tangible assets acquired and liabilities assumed:Cash and cash equivalents
    
    $
    198Receivables
    
    
    5,194Inventories
    
    
    81Other current assets
    
    
    2,863Property, plant and equipment
    
    
    6,121Other assets
    
    
    223Accounts payable and accrued liabilities
    
    
    (7,415
    )Deferred revenues
    
    
    (598
    )Unfavorable leases
    
    
    (1,597
    )Total net tangible assets acquired and liabilities assumed
    
    
    
    
    
    $
    5,070Fair value of identifiable intangible assets acquired:Customer relationships
    
    
    730Patents
    
    
    90Programming library
    
    
    54Total identifiable intangible assets acquired
    
    
    
    
    
    
    874Total purchase price
    
    
    
    
    
    
    5,944Less cash acquired
    
    
    
    
    
    
    (198
    )Net purchase price
    
    
    
    
    
    $
    5,746
   Intangible Assets
  WeightedPreliminary
    
    
    AverageFair Value
    
    
    Useful LifeCustomer relationships
    
    $
    730
    
    
    3.5 yearsPatents
    
    
    90
    
    
    5 yearsProgramming library
    
    
    54
    
    
    1 yearTotal intangible assets
    
    $
    874
 Unaudited Pro Forma Financial Information
  8




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##### 



Three Months EndedMarch 31,2009
    
    2008Total revenues
    
    $
    17,924
    
    
    $
    22,699Net income (loss)
    
    $
    (1,980
    )
    
    $
    (4,221
    )Basic earnings (loss) per share
    
    $
    (0.08
    )
    
    $
    (0.16
    )Diluted earnings (loss) per share
    
    $
    (0.08
    )
    
    $
    (0.16
    )
 NOTE 3STOCK INCENTIVE PLANS
    2004 Long-Term Incentive Plan (LTIP Plan).
 Non-Employee Director Stock Option Plan (NEDSOP).
 9




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##### 



Three Months EndedMarch 31,2009
    
    
    2008Nature of Award:Restricted stock
    
    $
    863
    
    
    $
    809Options
    
    
    151
    
    
    
    103Total share-based compensation expense
    
    $
    1,014
    
    
    $
    912
 Three Months EndedMarch 31,2009
    
    
    2008Classification of Compensation Expense:Cost of services:Production and operations
    
    $
    105
    
    
    $
    98Other expenses:Selling, general and administrative
    
    
    909
    
    
    
    814Total share-based compensation expense
    
    $
    1,014
    
    
    $
    912
  Three Months EndedMarch 31,2009
    
    2008Risk-free interest rate
    
    
    
    
    
    
    1.4  2.3%Dividend yield
    
    
    
    
    
    
    0.0%Expected life of the option
    
    
    
    
    
    
    0.2  0.3 yearsVolatility factor
    
    
    
    
    
    
    50.0  52.6%Weighted average volatility factor
    
    
    
    
    
    
    51.3%
  Issuances of Common Stock by the Company
   10




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##### 



Stock Options
  WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregateOptions
    
    Shares
    
    
    Price
    
    
    Term (Yrs.)
    
    
    Intrinsic Value(in thousands)
    
    
    
    
    
    
    
    
    (in thousands)Outstanding at beginning of period
    
    
    830
    
    
    $
    12.90Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Expired
    
    
    (10
    )
    
    
    12.58Outstanding at end of period
    
    
    820
    
    
    $
    12.91
    
    
    
    2.76
    
    
    $
    Vested or expected to vest at end of period
    
    
    817
    
    
    $
    12.91
    
    
    
    2.76
    
    
    $
    Exercisable at end of period
    
    
    781
    
    
    $
    12.89
    
    
    
    2.82
    
    
    $
    
  Options OutstandingWeighted
    
    
    
    
    
    
    Options ExercisableAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    AverageNumber
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    ExerciseRange of Exercise Prices
    
    Outstanding
    
    
    Term (Yrs.)
    
    
    Price
    
    
    Exercisable
    
    
    Price(in thousands)
    
    
    
    
    
    
    
    
    (in thousands)$10.19  $10.19
    
    
    10
    
    
    
    2.01
    
    
    $
    10.19
    
    
    
    5
    
    
    $
    10.19$12.10  $12.10
    
    
    300
    
    
    
    2.55
    
    
    
    12.10
    
    
    
    300
    
    
    
    12.10$12.50  $12.58
    
    
    160
    
    
    
    4.16
    
    
    
    12.52
    
    
    
    142
    
    
    
    12.51$12.80  $13.90
    
    
    250
    
    
    
    2.75
    
    
    
    13.35
    
    
    
    250
    
    
    
    13.35$14.86  $14.95
    
    
    75
    
    
    
    1.59
    
    
    
    14.89
    
    
    
    59
    
    
    
    14.89$15.75  $15.75
    
    
    25
    
    
    
    0.19
    
    
    
    15.75
    
    
    
    25
    
    
    
    15.75Total
    
    
    820
    
    
    
    2.76
    
    
    $
    12.91
    
    
    
    781
    
    
    $
    12.89
  Restricted Stock
  As of March 31, 2009WeightedAverageGrant-DateShares
    
    
    Fair Value(in thousands)Nonvested at beginning of period
    
    
    849
    
    
    $
    8.46Granted
    
    
    91
    
    
    
    5.74Vested
    
    
    (81
    )
    
    
    8.06Forfeited
    
    
    (1
    )
    
    
    8.60Nonvested at end of period
    
    
    858
    
    
    $
    8.21
 11




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##### 



Expense to be Recognized
  March 31, 2009Weighted AverageExpense Yet
    
    
    Remainingto be
    
    
    Requisite ServiceRecognized
    
    
    PeriodsStock options
    
    $
    262
    
    
    0.7 yearsRestricted stock
    
    
    5,567
    
    
    2.6 yearsTotal
    
    $
    5,829
    
    
    2.5 years
 NOTE 4EARNINGS (LOSS) PER COMMON SHARE
   2009
    
    
    2008Weighted average shares used to calculate basic
earnings (loss) per share
    
    
    24,417
    
    
    
    26,133Dilutive 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
    
    
    24,417
    
    
    
    26,133
  NOTE 5INVESTMENTS IN AVAILABLE-FOR-SALE SECURITIES
  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; andLevel 3 
    
    Unobservable inputs developed using estimates and assumptions developed by management,
which reflect those that a market participant would use.
  12




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##### 



Quoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Cash and cash equivalents (1)
    
    $
    41,614
    
    
    $
    41,614
    
    
    $
    
    
    
    $
    Investments in available-for-sale securities (2)
    
    
    9,994
    
    
    
    9,994
    
    
    
    
    
    
    
    Non-current investments in available-for-sale securities
(3)
    
    
    6,471
    
    
    
    
    
    
    
    
    
    
    
    6,471Total
    
    $
    58,079
    
    
    $
    51,608
    
    
    $
    
    
    
    $
    6,471
 
 (1)
    
    Cash and cash equivalents consist primarily of treasury
bills 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 with original maturity dates in excess of
three months, for which we determine fair value through
quoted market prices.(3)
    
    Investments in available-for-sale securities consist of
one auction-rate municipal security and three closed end
perpetual preferred auction-rate securities (PPS). PPS
are using a discounted cash flow analysis to more
accurately measure possible liquidity discounts.   13




---



##### 



Three Months EndedMarch 31, 2009Auction-Rate Securities:Balance at beginning of period
    
    $
    6,456Unrealized gain included in accumulated other
comprehensive loss
    
    
    15Balance as of March 31, 2009
    
    $
    6,471
  Three Months EndedMarch 31,2009
    
    
    2008Interest income
    
    $
    48
    
    
    $
    810Dividend income
    
    
    
    
    
    
    32Loss on sale of equity securities
    
    
    
    
    
    
    (44
    )Other-than-temporary impairment on
auction-rate securities
    
    
    
    
    
    
    (260
    )Total interest and other income, net
    
    $
    48
    
    
    $
    538
 NOTE 6COMPREHENSIVE LOSS
  Three Months EndedMarch 31,2009
    
    
    2008Net loss, as reported
    
    $
    (1,262
    )
    
    $
    (781
    )Unrealized gain on available-for-sale securities
    
    
    15
    
    
    
    60Comprehensive loss
    
    $
    (1,247
    )
    
    $
    (721
    )
 NOTE 7GOODWILL AND INTANGIBLE ASSETSUnder the provisions of SFAS No. 142, goodwill and intangible assets with indefinite lives are not
amortized, but instead are tested for impairment annually or more frequently if impairment
indicators arise. All of our other intangible assets are considered to have finite lives and are
being amortized on a straight-line basis over their estimated useful lives.Intangible assets that are subject to amortization under SFAS No. 142 consist of the following as
of March 31, 2009:
 March 31, 2009AccumulatedGross
    
    
    Amortization
    
    
    NetAdvertising customer relationships
    
    $
    1,972
    
    
    $
    1,972
    
    
    $
    Trademark
    
    
    219
    
    
    
    178
    
    
    
    41Internet domain names
    
    
    97
    
    
    
    12
    
    
    
    85Customer relationships
    
    
    730
    
    
    
    46
    
    
    
    684Patents
    
    
    90
    
    
    
    4
    
    
    
    86Programming library
    
    
    54
    
    
    
    12
    
    
    
    42Total intangible assets
    
    $
    3,162
    
    
    $
    2,224
    
    
    $
    938
  14




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##### 



Years Ending December 31,
    
    Amount2009 (remaining 9 months)
    
    $
    2582010
    
    
    2622011
    
    
    1772012
    
    
    1222013 and thereafter
    
    
    119Total
    
    $
    938
 NOTE 8LINES OF CREDIT
  NOTE 9INCOME TAX BENEFIT
   NOTE 10RELATED PARTY TRANSACTIONS
    NOTE 11COMMITMENTS AND CONTINGENCIES
   15




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##### 



Operating Leases
  16




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##### 



NOTE 12SEGMENT INFORMATION
  17




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##### 



Income (Loss)
    
    
    
    
    
    
    DepreciationBefore Income
    
    
    Total
    
    
    andRevenues
    
    
    Taxes
    
    
    Assets
    
    
    AmortizationTOC
    
    $
    12,457
    
    
    $
    3,788
    
    
    $
    82,399
    
    
    $
    500Production Services
    
    
    4,519
    
    
    
    (2,349
    )
    
    
    11,422
    
    
    
    398Subtotals of Segments
    
    
    16,976
    
    
    
    1,439
    
    
    
    93,821
    
    
    
    898Corporate*
    
    
    
    
    
    
    (3,698
    )
    
    
    55,321
    
    
    
    Totals
    
    $
    16,976
    
    
    $
    (2,259
    )
    
    $
    149,142
    
    
    $
    898
 
 *
    
    We capture corporate overhead that is applicable to both segments, but not directly related to
operations in a separate business unit, as Corporate. The expenses allocated to Corporate
consisted primarily of executive, legal and administrative functions not associated directly with
either TOC or Production Services. Corporate assets consist primarily of cash not held in our
operating accounts and available-for-sale securities. NOTE 13RECENT ACCOUNTING PRONOUNCEMENTS
      18




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##### 



NOTE 14SUBSEQUENT EVENT
        19




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##### 




    
    If the Company terminates Mr. Werners employment without cause, or Mr. Werner resigns
for good reason, Mr. Werner will receive (i) severance payments (less taxes) which shall
result in an aggregate severance payment of $1,250,000 (payable over a period of twelve
(12) months if such event occurs prior to October 17, 2009, or eighteen (18) months if
such event occurs after October 16, 2009), and (ii) accelerated vesting with respect to
50% of the then unvested portion of his outstanding equity awards, except for the
performance units awards previously issued to Mr. Werner;
    
    If the Company terminates Mr. Hornishs employment without cause, or Mr. Hornish
resigns for good reason, Mr. Hornish will receive (i) monthly severance payments of
$31,250 for 12 months (resulting in an aggregate severance payment of $375,000) if such
termination or resignation is not in connection with a change in control of the Company;
and (ii) monthly severance payments of $41,667 for 18 months (resulting in an aggregate
severance payment of $750,000) if such termination or resignation is in connection with a
change in control of the Company;
    
    If the Company terminates Mr. Burkes employment without cause, or Mr. Burke resigns
for good reason, Mr. Burke will receive (i) monthly severance payments of $20,833 for 12
months (resulting in an aggregate severance payment of $250,000) if such termination or
resignation is not in connection with a change in control of the Company; and (ii) monthly
severance payments of $27,778 for 18 months (resulting in an aggregate severance payment
of $500,000) if such termination or resignation is in connection with a change in control
of the Company; and
    
    If the Company terminates Mr. Wilburns employment without cause, or Mr. Wilburn
resigns for good reason, Mr. Wilburn will receive monthly severance payments of $25,000
for 16 months (resulting in an aggregate severance payment of $400,000).
   20




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##### 



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
 Safe Harbor Statement
   General
    Critical Accounting Policies and Estimates
   Subscriber
Acquisition Fees
  21




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##### 



Prepaid Programming Costs
  Revenue Recognition
         22




---



##### 



Valuation of Goodwill
  Income Taxes
    Stock Incentive Plans
   23




---



##### 



24




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##### 



Comparison of Operating Results for the Three Months Ended March 31, 2009 and March 31, 2008
  Change
    
    
    % of Total Revenue2009
    
    
    2008
    
    
    $
    
    
    %
    
    
    2009
    
    
    2008Revenues:Advertising
    
    $
    7,794
    
    
    $
    7,631
    
    
    $
    163
    
    
    
    2.1
    %
    
    
    45.9
    %
    
    
    65.3
    %Subscriber fees
    
    
    4,663
    
    
    
    4,049
    
    
    
    614
    
    
    
    15.2
    
    
    
    27.5
    
    
    
    34.7Production services
    
    
    4,519
    
    
    
    
    
    
    
    4,519
    
    
    
    100.0
    
    
    
    26.6
    
    
    
    Total revenues
    
    
    16,976
    
    
    
    11,680
    
    
    
    5,296
    
    
    
    45.3
    
    
    
    100.0
    
    
    
    100.0Cost of services:Programming
    
    
    1,748
    
    
    
    1,923
    
    
    
    (175
    )
    
    
    (9.1
    )
    
    
    10.3
    
    
    
    16.5Satellite transmission fees
    
    
    395
    
    
    
    626
    
    
    
    (231
    )
    
    
    (36.9
    )
    
    
    2.3
    
    
    
    5.4Production and operations
    
    
    6,472
    
    
    
    1,861
    
    
    
    4,611
    
    
    
    247.8
    
    
    
    38.1
    
    
    
    15.9Other direct costs
    
    
    97
    
    
    
    97
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    0.8Total cost of services
    
    
    8,712
    
    
    
    4,507
    
    
    
    4,205
    
    
    
    93.3
    
    
    
    51.3
    
    
    
    38.6Other expenses:Advertising
    
    
    459
    
    
    
    538
    
    
    
    (79
    )
    
    
    (14.7
    )
    
    
    2.7
    
    
    
    4.6Selling, general and
administrative
    
    
    9,214
    
    
    
    7,617
    
    
    
    1,597
    
    
    
    21.0
    
    
    
    54.3
    
    
    
    65.2Depreciation and amortization
    
    
    898
    
    
    
    615
    
    
    
    283
    
    
    
    46.0
    
    
    
    5.3
    
    
    
    5.3Total other expenses
    
    
    10,571
    
    
    
    8,770
    
    
    
    1,801
    
    
    
    20.5
    
    
    
    62.3
    
    
    
    75.1Loss from operations
    
    
    (2,307
    )
    
    
    (1,597
    )
    
    
    (710
    )
    
    
    44.5
    
    
    
    (13.6
    )
    
    
    (13.7
    )Interest and other income, net
    
    
    48
    
    
    
    538
    
    
    
    (490
    )
    
    
    (91.1
    )
    
    
    0.3
    
    
    
    4.6Loss from operations before
income taxes
    
    
    (2,259
    )
    
    
    (1,059
    )
    
    
    (1,200
    )
    
    
    113.3
    
    
    
    (13.3
    )
    
    
    (9.1
    )Income tax benefit
    
    
    (997
    )
    
    
    (278
    )
    
    
    (719
    )
    
    
    (258.6
    )
    
    
    (5.9
    )
    
    
    (2.4
    )Net loss
    
    $
    (1,262
    )
    
    $
    (781
    )
    
    $
    (481
    )
    
    
    61.6
    %
    
    
    (7.4
    )%
    
    
    (6.7
    )%
      25




---



##### 



Revenues
        26




---



##### 



Cost of Services
       Other Expenses
     27




---



##### 



Loss from Operations
  Interest and Other Income, Net
  Loss from Operations Before Income Taxes
  Income Tax Benefit
  28




---



##### 



Net Loss
  Liquidity and Capital Resources
       29




---



##### 



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
     
 ITEM 4. CONTROLS AND PROCEDURES.
 Evaluation of disclosure controls and procedures.
  Changes in internal control over financial reporting.
 30




---



##### 



Managements report on internal control over financial reporting.
  31




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##### 



PART IIOTHER INFORMATION
 
 ITEM 1. Legal Proceedings.
     
 ITEM 1A. Risk Factors.
  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.
  32




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##### 



If our channel is placed in unpopular program packages by our 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 could have an aerial camera fall, harming our reputation and possibly causing damage exceeding
our liability insurance limits.
  A deterioration in general economic conditions may cause a decrease in, or hinder our ability to
grow, our advertising revenues.
  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.
  We may not be able to maintain sufficient revenue relating to our production business to offset its
fixed costs, and as a result our profitability may decrease.
  33




---



##### 



We may not be able to grow our subscriber base of Outdoor Channel 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.
  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.
  34




---



##### 



Consolidation among service providers may harm our business.
  The cable, satellite and telco 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 option 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 secure sufficient or additional advertising revenue, and as a result, our
profitability may be negatively impacted.
  35




---



##### 



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 and production 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, acquiring and producing 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 service providers;
    
    demand for advertising, advertising rates and offerings of competing media;
    
    changes in the growth rate of cable, satellite and telco subscribers;
    
    service providers capital and marketing expenditures and their impact on programming
offerings and penetration;
    
    seasonal trends in viewer interests and activities;
    
    our advertising sales, for both Outdoor Channel and our Production Services, tend to be
more robust during the second half of each year, while expenses remain relatively constant
throughout the year;
 36




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##### 




    
    pricing, service, marketing and acquisition decisions that could reduce revenues and
impair quarterly financial results;
    
    the mix of cable television, satellite-delivered and telco 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 or promotion of highly
qualified employees;
    
    our need to retain some employees on a full-time basis throughout the year so that we
have the minimally necessary personnel available during the busiest seasons;
    
    the necessity to do some projects that may be minimally profitable, if at all, in order
to establish a business relationship with a strategic customer;
    
    specific economic conditions in the pay television and related industries; and
    
    changing regulatory requirements.
  Changes to financial accounting standards or our accounting estimates may affect our reported
operating results.
  Our expansion into international operations has inherent risks, including currency exchange rate
fluctuations, possible governmental seizure of property, and our inability or increased costs
associated with enforcing our rights, including intellectual property rights.
  If we fail to develop and distribute popular programs, our viewership would likely decline, which
could cause advertising and subscriber fee revenues to decrease.
  37




---



##### 



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.
    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 service providers.
  Natural disasters and other events beyond our control could interrupt our signal.
  38




---



##### 



Seasonal increases or decreases in advertising revenue may negatively affect our business.
  We may be unable to access capital, or offer equity as an incentive for increased subscribers or
for acquisitions, 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, satellite and telco television programming signals have been stolen or could be stolen in
the future, which reduces our potential revenue from subscriber fees and advertising.
  39




---



##### 



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.
  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;
 40




---



##### 




    
    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;
    
    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 pay 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.
  41




---



##### 



ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
   Total Number
    
    Maximumof Shares
    
    Approximate DollarPurchased as
    
    Value that May YetTotal Number
    
    
    
    
    
    Part of Publicly
    
    Be Used to Purchaseof Shares
    
    Average Price
    
    Announced
    
    Shares Under thePeriod
    
    Purchased
    
    Paid per Share
    
    Program
    
    ProgramMarch 3, 2009
through March 31,
2009
    
    
    57,000
    
    
    
    $5.33
    
    
    
    57,000
    
    
    
    $9,694,412Total
    
    
    57,000
    
    
    
    $5.33
    
    
    
    57,000
  
 ITEM 3. Defaults Upon Senior Securities.
  
 ITEM 4. Submission of Matters to a Vote of Security Holders.
  
 ITEM 5. Other Information.
  42




---



##### 



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. 43




---



##### 



SIGNATURES
  OUTDOOR CHANNEL HOLDINGS, INC./s/ Shad L. BurkeShad L. BurkeAuthorized Officer, Chief Financial Officer and
Principal Accounting Officer
Date: May 15, 2009 44