##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 30, 2010
 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 
of incorporation or organization)
    
    (IRS Employer Identification Number)
 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 November 2, 2010Common Stock, $0.001 par value
    
    25,373,791




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##### 



OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Quarterly Report on Form 10-Q
For the Period Ended September 30, 2010
  
 Table of Contents
 PagePart I. Financial InformationItem 1.Financial Statements
    
    
    3Condensed Consolidated Balance Sheets as of September 30, 2010 (Unaudited) and December 31, 2009
    
    
    3Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended
September 30, 2010 and 2009
    
    
    4Unaudited Condensed Consolidated Statement of Stockholders Equity for the Nine Months Ended
September 30, 2010
    
    
    5Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September
30, 2010 and 2009
    
    
    6Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    7Item 2.Managements Discussion and Analysis of Results of Operations and Financial Condition
    
    
    17Item 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 4.Controls and Procedures
    
    
    29Part II. Other InformationItem 1.Legal Proceedings
    
    
    30Item 1A.Risk Factors
    
    
    30Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3.Defaults Upon Senior Securities
    
    
    30Item 4.Removed and Reserved
    
    
    30Item 5.Other Information
    
    
    30Item 6.Exhibits
    
    
    31Signatures
    
    
    31EX-10.45EX-10.46EX-31.1EX-31.2EX-32.1EX-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
  September 30,
    
    
    December 31,2010
    
    
    2009(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    33,322
    
    
    $
    20,848Investments in available-for-sale securities
    
    
    27,992
    
    
    
    38,090Accounts receivable, net of allowance for doubtful accounts of $935 and $620
    
    
    14,060
    
    
    
    15,827Income tax refund receivable
    
    
    11
    
    
    
    Deferred tax assets, net
    
    
    2,434
    
    
    
    2,434Prepaid programming and production costs
    
    
    4,871
    
    
    
    6,111Other current assets
    
    
    2,732
    
    
    
    1,871Total current assets
    
    
    85,422
    
    
    
    85,181Property, plant and equipment, net
    
    
    12,764
    
    
    
    14,286Amortizable intangible assets, net
    
    
    571
    
    
    
    828Goodwill
    
    
    43,160
    
    
    
    43,160Investments in auction-rate securities
    
    
    5,061
    
    
    
    5,775Deferred tax assets, net
    
    
    2,645
    
    
    
    2,489Subscriber acquisition fees
    
    
    3,193
    
    
    
    4,371Deposits and other assets
    
    
    546
    
    
    
    688Totals
    
    $
    153,362
    
    
    $
    156,778Liabilities and Stockholders EquityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    10,039
    
    
    $
    14,824Accrued severance payments
    
    
    168
    
    
    
    255Deferred revenue
    
    
    2,014
    
    
    
    1,469Current portion of deferred obligations
    
    
    46
    
    
    
    165Current portion of unfavorable lease
    
    
    146
    
    
    
    136Income taxes payable
    
    
    303
    
    
    
    459Total current liabilities
    
    
    12,716
    
    
    
    17,308Deferred obligations
    
    
    147
    
    
    
    178Unfavorable lease
    
    
    883
    
    
    
    994Total liabilities
    
    
    13,746
    
    
    
    18,480Commitments 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; 25,380 and
25,444 shares issued and outstanding
    
    
    25
    
    
    
    25Additional paid-in capital
    
    
    166,846
    
    
    
    165,374Accumulated other comprehensive loss
    
    
    (369
    )
    
    
    (444
    )Accumulated deficit
    
    
    (26,886
    )
    
    
    (26,657
    )Total stockholders equity
    
    
    139,616
    
    
    
    138,298Totals
    
    $
    153,362
    
    
    $
    156,778
  3




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##### Table of Contents



OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
 
 Unaudited Condensed Consolidated Statements of Operations
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues:Advertising
    
    $
    11,225
    
    
    $
    9,881
    
    
    $
    25,770
    
    
    $
    24,780Subscriber fees
    
    
    4,194
    
    
    
    4,427
    
    
    
    13,529
    
    
    
    14,428Production services
    
    
    7,480
    
    
    
    9,322
    
    
    
    18,250
    
    
    
    20,611Total revenues
    
    
    22,899
    
    
    
    23,630
    
    
    
    57,549
    
    
    
    59,819Cost of services:Programming
    
    
    938
    
    
    
    902
    
    
    
    3,771
    
    
    
    3,983Satellite transmission fees
    
    
    397
    
    
    
    400
    
    
    
    1,181
    
    
    
    1,195Production and operations
    
    
    8,145
    
    
    
    9,157
    
    
    
    21,255
    
    
    
    23,960Other direct costs
    
    
    132
    
    
    
    175
    
    
    
    353
    
    
    
    382Total cost of services
    
    
    9,612
    
    
    
    10,634
    
    
    
    26,560
    
    
    
    29,520Other expenses:Advertising
    
    
    752
    
    
    
    649
    
    
    
    2,017
    
    
    
    2,032Selling, general and administrative
    
    
    7,241
    
    
    
    9,326
    
    
    
    26,174
    
    
    
    26,998Depreciation and amortization
    
    
    748
    
    
    
    993
    
    
    
    2,587
    
    
    
    2,848Total other expenses
    
    
    8,741
    
    
    
    10,968
    
    
    
    30,778
    
    
    
    31,878Income (loss) from operations
    
    
    4,546
    
    
    
    2,028
    
    
    
    211
    
    
    
    (1,579
    )Interest and other income, net
    
    
    (5
    )
    
    
    14
    
    
    
    22
    
    
    
    66Income (loss) from operations before income taxes
    
    
    4,541
    
    
    
    2,042
    
    
    
    233
    
    
    
    (1,513
    )Income tax provision (benefit)
    
    
    2,101
    
    
    
    641
    
    
    
    462
    
    
    
    (663
    )Net income (loss)
    
    $
    2,440
    
    
    $
    1,401
    
    
    $
    (229
    )
    
    $
    (850
    )Earnings (loss) per common share data:Basic
    
    $
    0.10
    
    
    $
    0.06
    
    
    $
    (0.01
    )
    
    $
    (0.03
    )Diluted
    
    $
    0.10
    
    
    $
    0.05
    
    
    $
    (0.01
    )
    
    $
    (0.03
    )Weighted average common shares outstanding:Basic
    
    
    24,460
    
    
    
    24,426
    
    
    
    24,482
    
    
    
    24,434Diluted
    
    
    25,399
    
    
    
    25,819
    
    
    
    24,482
    
    
    
    24,434
  4




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##### Table of Contents



OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
 
 Unaudited Condensed Consolidated Statement of Stockholders Equity
 For the Nine Months Ended September 30, 2010
  Additional
    
    
    Accumulated OtherCommon Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Capital
    
    
    Income (Loss)
    
    
    Deficit
    
    
    TotalBalance, December 31, 2009
    
    
    25,444
    
    
    $
    25
    
    
    $
    165,374
    
    
    $
    (444
    )
    
    $
    (26,657
    )
    
    $
    138,298Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (229
    )
    
    
    (229
    )Change in fair value of
auction-rate securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    75Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (154
    )Issuance of restricted stock
and performance shares to
employees for services to be
rendered, net of forfeited
shares
    
    
    114
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based employee and
service provider compensation
expense
    
    
    
    
    
    
    
    
    
    
    2,486
    
    
    
    
    
    
    
    
    
    
    
    2,486Purchase and retirement of
treasury stock related to
employee and service provider
share-based compensation
activity
    
    
    (116
    )
    
    
    
    
    
    
    (673
    )
    
    
    
    
    
    
    
    
    
    
    (673
    )Purchase and retirement of
treasury stock related to the
stock repurchase program
    
    
    (62
    )
    
    
    
    
    
    
    (341
    )
    
    
    
    
    
    
    
    
    
    
    (341
    )Balance, September 30, 2010
    
    
    25,380
    
    
    $
    25
    
    
    $
    166,846
    
    
    $
    (369
    )
    
    $
    (26,886
    )
    
    $
    139,616
  5




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##### Table of Contents



OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
 
 Unaudited Condensed Consolidated Statements of Cash Flows
  Nine Months EndedSeptember 30,2010
    
    
    2009Operating activities:Net loss
    
    $
    (229
    )
    
    $
    (850
    )Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:Depreciation and amortization
    
    
    2,587
    
    
    
    2,848Amortization of subscriber acquisition fees
    
    
    1,189
    
    
    
    553Loss on sale of equipment
    
    
    109
    
    
    
    21Gain on sale of available-for-sale and auction-rate securities
    
    
    (11
    )
    
    
    (7
    )Provision for doubtful accounts
    
    
    457
    
    
    
    335Share-based employee and service provider compensation
    
    
    2,486
    
    
    
    3,322Deferred tax provision (benefit), net
    
    
    462
    
    
    
    (663
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    1,312
    
    
    
    1,122Income tax (payable) refund receivable
    
    
    (785
    )
    
    
    (281
    )Prepaid programming costs
    
    
    1,240
    
    
    
    (1,683
    )Other current assets
    
    
    (861
    )
    
    
    400Deposits and other assets
    
    
    108
    
    
    
    21Subscriber acquisition fees
    
    
    (2,116
    )
    
    
    (4,224
    )Accounts payable and accrued expenses
    
    
    (2,758
    )
    
    
    (16
    )Deferred revenue
    
    
    545
    
    
    
    2,101Accrued severance payments
    
    
    (87
    )
    
    
    18Deferred obligations
    
    
    (150
    )
    
    
    (33
    )Unfavorable lease obligations
    
    
    (101
    )
    
    
    (89
    )Net cash provided by operating activities
    
    
    3,397
    
    
    
    2,895Investing activities:Purchases of property, plant and equipment
    
    
    (943
    )
    
    
    (2,075
    )Proceeds from sale of equipment
    
    
    107
    
    
    
    111Cash paid to purchase assets of Winnercomm, net of cash acquired
    
    
    
    
    
    
    (5,746
    )Purchases of available-for-sale securities
    
    
    (76,973
    )
    
    
    (31,990
    )Proceeds from sale of available-for-sale and auction-rate securities
    
    
    87,900
    
    
    
    600Net cash provided by (used in) investing activities
    
    
    10,091
    
    
    
    (39,100
    )Financing activities:Purchase of treasury stock
    
    
    (673
    )
    
    
    (482
    )Purchase and retirement of treasury stock related to stock repurchase program
    
    
    (341
    )
    
    
    (347
    )Net cash used in financing activities
    
    
    (1,014
    )
    
    
    (829
    )Net increase in cash and cash equivalents
    
    
    12,474
    
    
    
    (37,034
    )Cash and cash equivalents, beginning of period
    
    
    20,848
    
    
    
    60,257Cash and cash equivalents, end of period
    
    $
    33,322
    
    
    $
    23,223Supplemental disclosure of cash flow information:Income taxes paid
    
    $
    785
    
    
    $
    381Supplemental disclosures of non-cash investing and financing activities:Effect of net increase in fair value of auction-rate securities
    
    $
    75
    
    
    $
    82Property, plant and equipment costs incurred but not paid
    
    $
    47
    
    
    $
    168Subscriber acquisition fees incurred but not paid
    
    $
    
    
    
    $
    3,188Retirement of treasury stock
    
    $
    673
    
    
    $
    482
  6




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##### Table of Contents



OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
 
 Notes to Unaudited Condensed Consolidated Financial Statements
  NOTE 1ORGANIZATION AND BUSINESS
 Description of Operations
       NOTE 2ACQUISITION
  Unaudited Pro Forma Financial Information
  7




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Nine Months EndedSeptember 30,2009Total revenues
    
    $
    60,767Net income loss
    
    $
    (1,617
    )Basic loss per share
    
    $
    (0.07
    )Diluted loss per share
    
    $
    (0.07
    )
 NOTE 3STOCK INCENTIVE PLANS
    2004 Long-Term Incentive Plan (LTIP Plan).
 Non-Employee Director Stock Option Plan (NEDSOP).
 8




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Nature of Award:Restricted stock
    
    $
    526
    
    
    $
    1,094
    
    
    $
    2,241
    
    
    $
    2,945RSUs
    
    
    151
    
    
    
    
    
    
    
    210
    
    
    
    Options
    
    
    
    
    
    
    105
    
    
    
    35
    
    
    
    377Total share-based compensation expense
    
    $
    677
    
    
    $
    1,199
    
    
    $
    2,486
    
    
    $
    3,322
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Classification of Compensation Expense:Cost of services:Production and operations
    
    $
    36
    
    
    $
    22
    
    
    $
    194
    
    
    $
    236Other expenses:Selling, general and administrative
    
    
    641
    
    
    
    1,177
    
    
    
    2,292
    
    
    
    3,086Total share-based compensation expense
    
    $
    677
    
    
    $
    1,199
    
    
    $
    2,486
    
    
    $
    3,322
 Stock Options
  Weighted
    
    
    Weighted AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregateOptions
    
    Shares
    
    
    Price
    
    
    Term (Yrs.)
    
    
    Intrinsic Value(in thousands)
    
    
    
    
    
    
    
    
    
    
    (in thousands)Outstanding at beginning of period
    
    
    650
    
    
    $
    12.58Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Expired
    
    
    (15
    )
    
    
    14.95Outstanding at end of period
    
    
    635
    
    
    $
    12.52
    
    
    
    1.83
    
    
    $
    Vested or expected to vest at end of period
    
    
    635
    
    
    $
    12.52
    
    
    
    1.83
    
    
    $
    Exercisable at end of period
    
    
    635
    
    
    $
    12.52
    
    
    
    1.83
    
    
    $
    ~~~~~~      ~~~~~
 9




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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)$10.19  $10.19
    
    
    10
    
    
    
    .51
    
    
    $
    10.19
    
    
    
    10
    
    
    $
    10.19$12.10  $12.10
    
    
    300
    
    
    
    1.04
    
    
    
    12.10
    
    
    
    300
    
    
    
    12.10$12.50  $12.50
    
    
    125
    
    
    
    3.22
    
    
    
    12.50
    
    
    
    125
    
    
    
    12.50$12.58  $12.58
    
    
    25
    
    
    
    .67
    
    
    
    12.58
    
    
    
    25
    
    
    
    12.58$12.80  $12.80
    
    
    125
    
    
    
    3.30
    
    
    
    12.80
    
    
    
    125
    
    
    
    12.80$14.86  $14.86
    
    
    50
    
    
    
    0.30
    
    
    
    14.86
    
    
    
    50
    
    
    
    14.86Total
    
    
    635
    
    
    
    1.83
    
    
    $
    12.52
    
    
    
    635
    
    
    $
    12.52
  Restricted Stock
  Nine Months EndedSeptember 30, 2010WeightedAverageGrant-DateShares
    
    
    Fair Value(in thousands)Nonvested at beginning of period
    
    
    1,049
    
    
    $
    7.46Granted
    
    
    262
    
    
    
    5.20Vested
    
    
    (372
    )
    
    
    7.75Forfeited
    
    
    (148
    )
    
    
    6.87Nonvested at end of period
    
    
    791
    
    
    $
    6.68
  Restricted Stock Units
  Nine Months EndedSeptember 30, 2010WeightedAverageNumber of Restricted
    
    
    Grant-DateStock Units
    
    
    Fair Value(in thousands)RSUs outstanding at beginning of period
    
    
    
    
    
    $
    Granted
    
    
    101
    
    
    
    5.97Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Nonvested at end of period
    
    
    101
    
    
    $
    5.97
 10




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Expense to be Recognized
  September 30, 2010Weighted AverageExpense Yet to be
    
    
    Remaining RequisiteRecognized
    
    
    Service PeriodsRestricted stock
    
    $
    3,684
    
    
    2.2 yearsRSUs
    
    
    390
    
    
    0.7 yearsTotal
    
    $
    4,074
    
    
    2.0 years
 NOTE 4EARNINGS (LOSS) PER COMMON SHARE
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Weighted average shares used to calculate basic earnings
(loss) per share
    
    
    24,460
    
    
    
    24,426
    
    
    
    24,482
    
    
    
    24,434Dilutive effect of unvested restricted stock and stock units
    
    
    939
    
    
    
    1,393
    
    
    
    
    
    
    
    Weighted average shares used to calculate diluted earnings
(loss) per share
    
    
    25,399
    
    
    
    25,819
    
    
    
    24,482
    
    
    
    24,434
  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.
 11




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##### Table of Contents



Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Cash and cash equivalents (1)
    
    $
    33,322
    
    
    $
    33,322
    
    
    $
    
    
    
    $
    Investments in available-for-sale securities (2)
    
    
    27,992
    
    
    
    27,992
    
    
    
    
    
    
    
    Non-current investments in auction-rate securities (3)
    
    
    5,061
    
    
    
    
    
    
    
    
    
    
    
    5,061Total
    
    $
    66,375
    
    
    $
    61,314
    
    
    $
    
    
    
    $
    5,061
 
 (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 auction-rate securities consist of one
auction-rate municipal security and one closed-end
perpetual preferred auction-rate security (PPS). PPS use
a discounted cash flow analysis to more accurately measure
possible liquidity discounts.   12




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2010
    
    
    September 30, 2010Auction-Rate Securities:Balance at beginning of period
    
    $
    5,050
    
    
    $
    5,775Redeemed
    
    
    
    
    
    
    (800
    )Realized gain on redemption
    
    
    
    
    
    
    11Unrealized gain included in
accumulated other comprehensive
loss
    
    
    11
    
    
    
    75Balance as of September 30, 2010
    
    $
    5,061
    
    
    $
    5,061
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Interest income
    
    $
    19
    
    
    $
    42
    
    
    $
    83
    
    
    $
    139Interest expense
    
    
    (24
    )
    
    
    (28
    )
    
    
    (72
    )
    
    
    (80
    )Gain on redemption of auction-rate
securities
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    7Total interest and other income, net
    
    $
    (5
    )
    
    $
    14
    
    
    $
    22
    
    
    $
    66
 NOTE 6COMPREHENSIVE INCOME (LOSS)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income (loss), as reported
    
    $
    2,440
    
    
    $
    1,401
    
    
    $
    (229
    )
    
    $
    (850
    )Unrealized gain on auction-rate securities
    
    
    11
    
    
    
    12
    
    
    
    75
    
    
    
    82Comprehensive income (loss)
    
    $
    2,451
    
    
    $
    1,413
    
    
    $
    (154
    )
    
    $
    (768
    )
 NOTE 7GOODWILL AND INTANGIBLE ASSETS
    13




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##### Table of Contents



September 30, 2010AccumulatedGross
    
    
    Amortization
    
    
    NetTrademark
    
    $
    219
    
    
    $
    200
    
    
    $
    19Internet domain names
    
    
    97
    
    
    
    85
    
    
    
    12Customer relationships
    
    
    980
    
    
    
    493
    
    
    
    487Patents
    
    
    80
    
    
    
    27
    
    
    
    53Programming library
    
    
    50
    
    
    
    50
    
    
    
    Total amortizable intangible assets
    
    $
    1,426
    
    
    $
    855
    
    
    $
    571
   Years Ending December 31,
    
    Amount2010 (remaining 3 months)
    
    $
    582011
    
    
    1792012
    
    
    1672013
    
    
    1622014 and thereafter
    
    
    5Total
    
    $
    571
 NOTE 8LINES OF CREDIT
  NOTE 9ACCOUNTS PAYABLE AND ACCRUED EXPENSES
  September 30, 2010
    
    
    December 31, 2009Trade accounts payable
    
    $
    1,412
    
    
    $
    4,849Accrued payroll and related expenses
    
    
    2,925
    
    
    
    4,488Estimated make-good accrual
    
    
    1,147
    
    
    
    281Estimated most-favored nation accrual
    
    
    1,248
    
    
    
    260Accrued launch support commitment
    
    
    
    
    
    
    3,046Accrued expenses
    
    
    3,307
    
    
    
    1,900Total
    
    $
    10,039
    
    
    $
    14,824
 NOTE 10INCOME TAX PROVISION (BENEFIT)
   14




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NOTE 11RELATED PARTY TRANSACTIONS
    NOTE 12COMMITMENTS AND CONTINGENCIES
     NOTE 13SEGMENT INFORMATION
  15




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,Revenues
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009TOC
    
    $
    15,419
    
    
    $
    14,308
    
    
    $
    39,299
    
    
    $
    39,208Production Services
    
    
    8,684
    
    
    
    10,196
    
    
    
    20,182
    
    
    
    22,325Eliminations
    
    
    (1,204
    )
    
    
    (874
    )
    
    
    (1,932
    )
    
    
    (1,714
    )Total revenues
    
    $
    22,899
    
    
    $
    23,630
    
    
    $
    57,549
    
    
    $
    59,819
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,Income (Loss) Before Income Taxes
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009TOC*
    
    $
    4,911
    
    
    $
    2,338
    
    
    $
    4,342
    
    
    $
    3,696Production Services*
    
    
    (118
    )
    
    
    (82
    )
    
    
    (3,963
    )
    
    
    (4,927
    )Eliminations
    
    
    (252
    )
    
    
    (214
    )
    
    
    (146
    )
    
    
    (282
    )Total income (loss) before income taxes
    
    $
    4,541
    
    
    $
    2,042
    
    
    $
    233
    
    
    $
    (1,513
    )
 September 30,
    
    
    December 31,Total Assets
    
    2010
    
    
    2009TOC
    
    $
    87,326
    
    
    $
    88,015Production Services
    
    
    6,765
    
    
    
    11,379Corporate assets*
    
    
    59,659
    
    
    
    57,627Eliminations
    
    
    (388
    )
    
    
    (243
    )Total assets
    
    $
    153,362
    
    
    $
    156,778
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,Depreciation and Amortization
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009TOC
    
    $
    394
    
    
    $
    515
    
    
    $
    1,212
    
    
    $
    1,524Production Services
    
    
    354
    
    
    
    478
    
    
    
    1,375
    
    
    
    1,324Total
    
    $
    748
    
    
    $
    993
    
    
    $
    2,587
    
    
    $
    2,848
 
 *
    
    Corporate overhead expenses consist primarily of executive, legal and administrative functions
not associated directly with either TOC or Production Services. We allocate a portion of these
expenses to our Production Services segment, but the majority is captured in our TOC segment.
Corporate assets consist primarily of cash not held in our operating accounts and
available-for-sale securities. NOTE 14RECENT ACCOUNTING PRONOUNCEMENTS
  NOTE 15SUBSEQUENT EVENTS
   16




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
 Safe Harbor Statement
     
    
    Overview.The overview section provides a summary of our business.
    
    Consolidated Results of Operations. The consolidated results of operations section
provides an analysis of our results on a consolidated basis for the quarter and nine months
ended September 30, 2010 compared to the quarter and nine months ended September 30, 2009.
    
    Segment Results of Operations. The segment results of operations section provides an
analysis of our results on a reportable operating segment basis for the quarter and nine
months ended September 30, 2010 compared to the quarter and nine months ended September 30,
2009.
    
    Liquidity and Capital Resources. The liquidity and capital resources section provides a
discussion of our cash flows for the nine months ended September 30, 2010 compared to the
nine months ended September 30, 2009.
 OVERVIEW
  The Outdoor Channel
   17




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##### Table of Contents



Production Services
    Critical Accounting Policies and Estimates
  18




---



##### Table of Contents



19




---



##### Table of Contents



CONSOLIDATED RESULTS OF OPERATIONS
   Comparison of Consolidated Operating Results for the Three Months Ended September 30, 2010 and
September 30, 2009
  Change
    
    
    % of Total Revenue2010
    
    
    2009
    
    
    $
    
    
    %
    
    
    2010
    
    
    2009Revenues:Advertising
    
    $
    11,225
    
    
    $
    9,881
    
    
    $
    1,344
    
    
    
    14
    %
    
    
    49
    %
    
    
    42
    %Subscriber fees
    
    
    4,194
    
    
    
    4,427
    
    
    
    (233
    )
    
    
    (5
    )
    
    
    18
    
    
    
    19Production services
    
    
    7,480
    
    
    
    9,322
    
    
    
    (1,842
    )
    
    
    (20
    )
    
    
    33
    
    
    
    39Total revenues
    
    
    22,899
    
    
    
    23,630
    
    
    
    (731
    )
    
    
    (3
    )
    
    
    100
    
    
    
    100Cost of services:Programming
    
    
    938
    
    
    
    902
    
    
    
    36
    
    
    
    4
    
    
    
    4
    
    
    
    4Satellite transmission fees
    
    
    397
    
    
    
    400
    
    
    
    (3
    )
    
    
    (1
    )
    
    
    2
    
    
    
    2Production and operations
    
    
    8,145
    
    
    
    9,157
    
    
    
    (1,012
    )
    
    
    (11
    )
    
    
    36
    
    
    
    39Other direct costs
    
    
    132
    
    
    
    175
    
    
    
    (43
    )
    
    
    (25
    )
    
    
    1
    
    
    
    1Total cost of services
    
    
    9,612
    
    
    
    10,634
    
    
    
    (1,022
    )
    
    
    (10
    )
    
    
    42
    
    
    
    45Other expenses:Advertising
    
    
    752
    
    
    
    649
    
    
    
    103
    
    
    
    16
    
    
    
    3
    
    
    
    3Selling, general and administrative
    
    
    7,241
    
    
    
    9,326
    
    
    
    (2,085
    )
    
    
    (22
    )
    
    
    32
    
    
    
    40Depreciation and amortization
    
    
    748
    
    
    
    993
    
    
    
    (245
    )
    
    
    (25
    )
    
    
    3
    
    
    
    4Total other expenses
    
    
    8,741
    
    
    
    10,968
    
    
    
    (2,227
    )
    
    
    (20
    )
    
    
    38
    
    
    
    46Income from operations
    
    
    4,546
    
    
    
    2,028
    
    
    
    2,518
    
    
    
    124
    
    
    
    20
    
    
    
    9Interest and other income, net
    
    
    (5
    )
    
    
    14
    
    
    
    (19
    )
    
    
    (136
    )
    
    
    
    
    
    
    Income from operations before income
taxes
    
    
    4,541
    
    
    
    2,042
    
    
    
    2,499
    
    
    
    122
    
    
    
    20
    
    
    
    9Income tax provision
    
    
    2,101
    
    
    
    641
    
    
    
    1,460
    
    
    
    228
    
    
    
    9
    
    
    
    3Net income
    
    $
    2,440
    
    
    $
    1,401
    
    
    $
    1,039
    
    
    
    74
    %
    
    
    11
    %
    
    
    6
    %
  20




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##### Table of Contents



Comparison of Consolidated Operating Results for the Nine Months Ended September 30, 2010 and
September 30, 2009
  Change
    
    
    % of Total Revenue2010
    
    
    2009
    
    
    $
    
    
    %
    
    
    2010
    
    
    2009Revenues:Advertising
    
    $
    25,770
    
    
    $
    24,780
    
    
    $
    990
    
    
    
    4
    %
    
    
    45
    %
    
    
    41
    %Subscriber fees
    
    
    13,529
    
    
    
    14,428
    
    
    
    (899
    )
    
    
    (6
    )
    
    
    24
    
    
    
    24Production services
    
    
    18,250
    
    
    
    20,611
    
    
    
    (2,361
    )
    
    
    (12
    )
    
    
    32
    
    
    
    35Total revenues
    
    
    57,549
    
    
    
    59,819
    
    
    
    (2,270
    )
    
    
    (4
    )
    
    
    100
    
    
    
    100Cost of services:Programming
    
    
    3,771
    
    
    
    3,983
    
    
    
    (212
    )
    
    
    (5
    )
    
    
    7
    
    
    
    7Satellite transmission fees
    
    
    1,181
    
    
    
    1,195
    
    
    
    (14
    )
    
    
    (1
    )
    
    
    2
    
    
    
    2Production and operations
    
    
    21,255
    
    
    
    23,960
    
    
    
    (2,705
    )
    
    
    (11
    )
    
    
    37
    
    
    
    40Other direct costs
    
    
    353
    
    
    
    382
    
    
    
    (29
    )
    
    
    (8
    )
    
    
    1
    
    
    
    1Total cost of services
    
    
    26,560
    
    
    
    29,520
    
    
    
    (2,960
    )
    
    
    (10
    )
    
    
    46
    
    
    
    49Other expenses:Advertising
    
    
    2,017
    
    
    
    2,032
    
    
    
    (15
    )
    
    
    (1
    )
    
    
    4
    
    
    
    3Selling, general and administrative
    
    
    26,174
    
    
    
    26,998
    
    
    
    (824
    )
    
    
    (3
    )
    
    
    46
    
    
    
    45Depreciation and amortization
    
    
    2,587
    
    
    
    2,848
    
    
    
    (261
    )
    
    
    (9
    )
    
    
    5
    
    
    
    5Total other expenses
    
    
    30,778
    
    
    
    31,878
    
    
    
    (1,100
    )
    
    
    (4
    )
    
    
    54
    
    
    
    53Income (loss) from operations
    
    
    211
    
    
    
    (1,579
    )
    
    
    1,790
    
    
    
    (113
    )
    
    
    
    
    
    
    (3
    )Interest and other income, net
    
    
    22
    
    
    
    66
    
    
    
    (44
    )
    
    
    (67
    )
    
    
    
    
    
    
    Income (loss) from operations before
income taxes
    
    
    233
    
    
    
    (1,513
    )
    
    
    1,746
    
    
    
    (115
    )
    
    
    
    
    
    
    (3
    )Income tax provision (benefit)
    
    
    462
    
    
    
    (663
    )
    
    
    1,125
    
    
    
    (170
    )
    
    
    1
    
    
    
    (1
    )Net loss
    
    $
    (229
    )
    
    $
    (850
    )
    
    $
    621
    
    
    
    (73
    )%
    
    
    
    %
    
    
    (1
    )%
  Revenues
  Cost of Services
  21




---



##### Table of Contents



Other Expenses
    Income (Loss) from Operations
   Interest and Other Income, Net
  Income (Loss) from Operations Before Income Taxes
  Income Tax Provision (Benefit)
  22




---



##### Table of Contents



Net Income (Loss)
  23




---



##### Table of Contents



SEGMENT RESULTS OF OPERATIONS
  TOC
 Comparison of Operating Results for the Three and Nine Months Ended September 30, 2010 and
September 30, 2009
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,Change
    
    
    
    
    
    
    
    
    
    
    Change2010
    
    
    2009
    
    
    $
    
    
    %
    
    
    2010
    
    
    2009
    
    
    $
    
    
    %Revenues:Advertising
    
    $
    11,225
    
    
    $
    9,881
    
    
    $
    1,344
    
    
    
    14
    %
    
    $
    25,770
    
    
    $
    24,780
    
    
    $
    990
    
    
    
    4
    %Subscriber fees
    
    
    4,194
    
    
    
    4,427
    
    
    
    (233
    )
    
    
    (5
    )
    
    
    13,529
    
    
    
    14,428
    
    
    
    (899
    )
    
    
    (6
    )Total revenues
    
    
    15,419
    
    
    
    14,308
    
    
    
    1,111
    
    
    
    8
    
    
    
    39,299
    
    
    
    39,208
    
    
    
    91
    
    
    
    Cost of services:Programming
    
    
    1,769
    
    
    
    1,357
    
    
    
    412
    
    
    
    30
    
    
    
    5,243
    
    
    
    4,928
    
    
    
    315
    
    
    
    6Satellite transmission
fees
    
    
    397
    
    
    
    400
    
    
    
    (3
    )
    
    
    (1
    )
    
    
    1,181
    
    
    
    1,195
    
    
    
    (14
    )
    
    
    (1
    )Production and operations
    
    
    1,576
    
    
    
    1,384
    
    
    
    192
    
    
    
    14
    
    
    
    5,181
    
    
    
    4,588
    
    
    
    593
    
    
    
    13Other direct costs
    
    
    132
    
    
    
    175
    
    
    
    (43
    )
    
    
    (25
    )
    
    
    353
    
    
    
    382
    
    
    
    (29
    )
    
    
    (8
    )Total cost of services
    
    
    3,874
    
    
    
    3,316
    
    
    
    558
    
    
    
    17
    
    
    
    11,958
    
    
    
    11,093
    
    
    
    865
    
    
    
    8Other expenses:Advertising
    
    
    752
    
    
    
    705
    
    
    
    47
    
    
    
    7
    
    
    
    2,016
    
    
    
    2,044
    
    
    
    (28
    )
    
    
    (1
    )Selling, general and
administrative
    
    
    5,513
    
    
    
    7,470
    
    
    
    (1,957
    )
    
    
    (26
    )
    
    
    19,859
    
    
    
    20,985
    
    
    
    (1,126
    )
    
    
    (5
    )Depreciation and
amortization
    
    
    394
    
    
    
    515
    
    
    
    (121
    )
    
    
    (24
    )
    
    
    1,212
    
    
    
    1,524
    
    
    
    (312
    )
    
    
    (21
    )Total other expenses
    
    
    6,659
    
    
    
    8,690
    
    
    
    (2,031
    )
    
    
    (23
    )
    
    
    23,087
    
    
    
    24,553
    
    
    
    (1,466
    )
    
    
    (6
    )Income from operations
    
    
    4,886
    
    
    
    2,302
    
    
    
    2,584
    
    
    
    112
    
    
    
    4,254
    
    
    
    3,562
    
    
    
    692
    
    
    
    19Interest and other
income, net
    
    
    25
    
    
    
    36
    
    
    
    (11
    )
    
    
    (31
    )
    
    
    88
    
    
    
    134
    
    
    
    (46
    )
    
    
    (34
    )Income from operations
before income taxes
    
    $
    4,911
    
    
    $
    2,338
    
    
    $
    2,573
    
    
    
    110
    %
    
    $
    4,342
    
    
    $
    3,696
    
    
    $
    646
    
    
    
    18
    %
  Revenues
  24




---



##### Table of Contents



Cost of Services
     Other Expenses
    25




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##### Table of Contents



Income from Operations
  Interest and Other Income, Net
  Production Services
 Comparison of Operating Results for the Three and Nine Months Ended September 30, 2010 and
September 30, 2009
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,Change
    
    
    
    
    
    
    
    
    
    
    Change2010
    
    
    2009
    
    
    $
    
    
    %
    
    
    2010
    
    
    2009
    
    
    $
    
    
    %Revenues:Production services
    
    $
    8,684
    
    
    $
    10,196
    
    
    $
    (1,512
    )
    
    
    (15
    )%
    
    $
    20,182
    
    
    $
    22,325
    
    
    $
    (2,143
    )
    
    
    (10
    )%Total revenues
    
    
    8,684
    
    
    
    10,196
    
    
    
    (1,512
    )
    
    
    (15
    )
    
    
    20,182
    
    
    
    22,325
    
    
    
    (2,143
    )
    
    
    (10
    )Cost of services:Production and operations
    
    
    6,690
    
    
    
    7,918
    
    
    
    (1,228
    )
    
    
    (16
    )
    
    
    16,388
    
    
    
    19,799
    
    
    
    (3,411
    )
    
    
    (17
    )Total cost of services
    
    
    6,690
    
    
    
    7,918
    
    
    
    (1,228
    )
    
    
    (16
    )
    
    
    16,388
    
    
    
    19,799
    
    
    
    (3,411
    )
    
    
    (17
    )Other expenses:Advertising
    
    
    
    
    
    
    4
    
    
    
    (4
    )
    
    
    (100
    )
    
    
    1
    
    
    
    48
    
    
    
    (47
    )
    
    
    (98
    )Selling, general and
administrative
    
    
    1,728
    
    
    
    1,856
    
    
    
    (128
    )
    
    
    (7
    )
    
    
    6,315
    
    
    
    6,013
    
    
    
    302
    
    
    
    5Depreciation and
amortization
    
    
    354
    
    
    
    478
    
    
    
    (124
    )
    
    
    (26
    )
    
    
    1,375
    
    
    
    1,324
    
    
    
    51
    
    
    
    4Total other expenses
    
    
    2,082
    
    
    
    2,338
    
    
    
    (256
    )
    
    
    (11
    )
    
    
    7,691
    
    
    
    7,385
    
    
    
    306
    
    
    
    4Loss from operations
    
    
    (88
    )
    
    
    (60
    )
    
    
    (28
    )
    
    
    47
    
    
    
    (3,897
    )
    
    
    (4,859
    )
    
    
    962
    
    
    
    (20
    )Interest and other
income, net
    
    
    (30
    )
    
    
    (22
    )
    
    
    (8
    )
    
    
    36
    
    
    
    (66
    )
    
    
    (68
    )
    
    
    2
    
    
    
    (3
    )Loss from operations
before income taxes
    
    $
    (118
    )
    
    $
    (82
    )
    
    $
    (36
    )
    
    
    44
    %
    
    $
    (3,963
    )
    
    $
    (4,927
    )
    
    $
    964
    
    
    
    (20
    )%
  26




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##### Table of Contents



Revenues
  Cost of Services
  Other Expenses
   Loss from Operations
  27




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
        28




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##### Table of Contents



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.
 29




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##### Table of Contents



PART IIOTHER INFORMATION
 
 ITEM 1. Legal Proceedings.
   
 ITEM 1A. Risk Factors.
  
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 ITEM 3. Defaults Upon Senior Securities.
  
 ITEM 4. Removed and Reserved.
 
 ITEM 5. Other Information.
  30




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##### Table of Contents



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)10.45
    
    Form of Restricted Stock Unit Award Agreement10.46
    
    Amendment to Loan Agreement and Note dated September
1, 2010 by and between U.S. Bank N.A. and Outdoor
Channel Holdings, Inc.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. 
 SIGNATURES
  OUTDOOR CHANNEL HOLDINGS, INC./s/ Thomas D. AllenThomas D. AllenAuthorized Officer, Chief Financial Officer and
Principal Accounting Officer
Date: November 4, 2010 31