##### 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, 2005
 Commission file number: 001-31311
 LIN TV Corp.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of incorporation or organization)05-0501252(I.R.S. Employer Identification No.)
 Commission file number: 000-25206
 LIN Television Corporation
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of incorporation or organization)13-3581627(I.R.S. Employer Identification No.)
 Four Richmond Square, Suite 200, Providence, Rhode Island 02906  (Address of principal executive offices)
 (401) 454-2880  (Registrants telephone number, including area code)
 þ o
 þ o
 o þ




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Table of Contents
 Part I. Financial InformationItem 1. Financial StatementsLIN TV Corp.Condensed Consolidated Balance Sheets
    
    
    2Condensed Consolidated Statements of Operations
    
    
    3Condensed Consolidated Statements of Cash Flows
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5(See separate index for financial statements of LIN Television Corporation)
    
    
    31Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    
    16Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    27Item 4. Controls and Procedures
    
    
    27Part II. Other InformationItem 1. Legal Proceedings
    
    
    28Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    28Item 4. Submission of Matters to a Vote of Security Holders
    
    
    28Item 6. Exhibits
    
    
    28Signature Page
    
    
    30Supplemental IndentureSupplemental IndentureCertification Pursuant to Section 302 of CEO of LIN TV CorpCertification Pursuant to Section 302 of CFO of LIN TV CorpCertification Pursuant to Section 302 of CEO of LIN Television CorpCertification Pursuant to Section 302 of CFO of LIN Television CorpCertification Pursuant to Section 906 of the CEO and CFO of LIN TV CorpCertification Pursuant to Section 906 of the CEO and CFO of LIN Television Corp
  1




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##### Table of Contents



PART I: FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 LIN TV CORP.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 September 30,
    
    
    December 31,2005
    
    
    2004(Unaudited)(In thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    13,145
    
    
    $
    14,797Accounts receivable, less allowance for doubtful accounts (2005 - $1,484; 2004 - $1,450)
    
    
    68,446
    
    
    
    70,639Program rights
    
    
    23,238
    
    
    
    17,312Other current assets
    
    
    7,306
    
    
    
    3,790Total current assets
    
    
    112,135
    
    
    
    106,538Property and equipment, net
    
    
    197,682
    
    
    
    197,565Deferred financing costs
    
    
    15,743
    
    
    
    11,060Equity investments
    
    
    64,467
    
    
    
    65,813Program rights
    
    
    13,189
    
    
    
    12,165Other assets
    
    
    37,832
    
    
    
    16,043Goodwill
    
    
    612,906
    
    
    
    583,105Broadcast licenses and other intangible assets, net
    
    
    1,123,360
    
    
    
    1,066,135Total assets
    
    $
    2,177,314
    
    
    $
    2,058,424LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    
    
    
    $
    6,573Accounts payable
    
    
    2,599
    
    
    
    7,774Accrued interest expense
    
    
    10,866
    
    
    
    8,118Accrued sales volume discount
    
    
    3,924
    
    
    
    6,462Other accrued expenses
    
    
    18,200
    
    
    
    13,483Program obligations
    
    
    29,781
    
    
    
    23,278Total current liabilities
    
    
    65,370
    
    
    
    65,688Long-term debt, excluding current portion
    
    
    739,196
    
    
    
    626,268Deferred income taxes, net
    
    
    439,306
    
    
    
    445,695Program obligations
    
    
    8,787
    
    
    
    12,008Other liabilities
    
    
    48,343
    
    
    
    38,344Total liabilities
    
    
    1,301,002
    
    
    
    1,188,003Preferred stock of Banks Broadcasting, Inc., $0.01 par value, 179,322 and
173,822 issued and outstanding at September 30, 2005 and December 31, 2004, respectively
    
    
    14,627
    
    
    
    14,458Stockholders equity:Class A common stock, $0.01 par value, 100,000,000 shares authorized,
27,496,926 shares at September 30, 2005 and 26,946,183 shares at December 31, 2004,
issued and outstanding
    
    
    275
    
    
    
    269Class B common stock, $0.01 par value, 50,000,000 shares authorized, 23,502,059
shares at September 30, 2005 and 23,508,119 shares at December 31, 2004,
issued and outstanding; convertible into an equal number of shares of Class A or Class C
common stock
    
    
    235
    
    
    
    235Class C common stock, $0.01 par value, 50,000,000 shares authorized, 2 shares at
September 30, 2005 and December 31, 2004, issued and outstanding; convertible
into an equal number of shares of Class A common stock
    
    
    
    
    
    
    Additional paid-in capital
    
    
    1,077,933
    
    
    
    1,071,816Deferred compensation
    
    
    (3,962
    )
    
    
    Accumulated deficit
    
    
    (198,206
    )
    
    
    (201,767
    )Accumulated other comprehensive loss
    
    
    (14,590
    )
    
    
    (14,590
    )Total stockholders equity
    
    
    861,685
    
    
    
    855,963Total liabilities, preferred stock and stockholders equity
    
    $
    2,177,314
    
    
    $
    2,058,424
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##### Table of Contents



LIN TV CORP.
 
  (In thousands, except per share information)
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net revenues
    
    $
    90,827
    
    
    $
    91,005
    
    
    $
    267,708
    
    
    $
    267,187Operating costs and expenses:Direct operating (excluding depreciation of $6.6 million and $7.5
million for the three months ended September 30, 2005 and 2004,
respectively, and $22.8 million and $22.7 million for the nine
months
ended September 30, 2005 and 2004, respectively)
    
    
    27,788
    
    
    
    25,638
    
    
    
    80,859
    
    
    
    75,658Selling, general and administrative
    
    
    26,192
    
    
    
    22,737
    
    
    
    77,838
    
    
    
    69,725Amortization of program rights
    
    
    6,833
    
    
    
    6,481
    
    
    
    19,222
    
    
    
    18,116Corporate
    
    
    4,362
    
    
    
    5,542
    
    
    
    14,716
    
    
    
    13,570Depreciation and amortization of intangible assets
    
    
    7,151
    
    
    
    7,728
    
    
    
    24,063
    
    
    
    23,545Total operating costs
    
    
    72,326
    
    
    
    68,126
    
    
    
    216,698
    
    
    
    200,614Operating income
    
    
    18,501
    
    
    
    22,879
    
    
    
    51,010
    
    
    
    66,573Other (income) expenseInterest expense, net
    
    
    11,115
    
    
    
    10,888
    
    
    
    32,860
    
    
    
    34,414Share of income in equity investments
    
    
    (410
    )
    
    
    (2,250
    )
    
    
    (2,119
    )
    
    
    (5,014
    )Minority interest in loss of Banks Broadcasting, Inc.
    
    
    (96
    )
    
    
    (226
    )
    
    
    (382
    )
    
    
    (472
    )Gain on derivative instruments
    
    
    (1,860
    )
    
    
    (9,026
    )
    
    
    (3,455
    )
    
    
    (13,646
    )Loss on extinguishment of debt
    
    
    1,082
    
    
    
    
    
    
    
    13,412
    
    
    
    4,447Other, net
    
    
    95
    
    
    
    917
    
    
    
    261
    
    
    
    1,138Total other expense, net
    
    
    9,926
    
    
    
    303
    
    
    
    40,577
    
    
    
    20,867Income from continuing operations before provision for
income taxes and cumulative effect of change in accounting principle
    
    
    8,575
    
    
    
    22,576
    
    
    
    10,433
    
    
    
    45,706Provision for income taxes
    
    
    4,789
    
    
    
    7,760
    
    
    
    6,872
    
    
    
    16,960Income from continuing operations before cumulative effect of
change in accounting principle
    
    
    3,786
    
    
    
    14,816
    
    
    
    3,561
    
    
    
    28,746Discontinued operations:Income from discontinued operations, net of tax provision of $311
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (44
    )Loss from sale of discontinued operations, net of tax benefit of $1,094
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,284Cumulative effect of change in accounting principle,
net of tax effect of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,290
    )Net income
    
    $
    3,786
    
    
    $
    14,816
    
    
    $
    3,561
    
    
    $
    30,796Basic income per common share:Income from continuing operations before cumulative effect of
change in accounting principle
    
    $
    0.07
    
    
    $
    0.29
    
    
    $
    0.07
    
    
    $
    0.57Income from discontinued operations, net of tax provision
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss from sale of discontinued operations, net of tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.03Cumulative effect of change in accounting principle, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.07
    )Net income
    
    
    0.07
    
    
    
    0.29
    
    
    
    0.07
    
    
    
    0.61Weighted  average number of common shares outstanding used
in calculating basic income per common share
    
    
    50,702
    
    
    
    50,350
    
    
    
    50,632
    
    
    
    50,272Diluted income per common share:Income from continuing operations before cumulative effect of
change in accounting principle
    
    $
    0.07
    
    
    $
    0.19
    
    
    $
    0.07
    
    
    $
    0.44Income from discontinued operations, net of tax provision
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss from sale of discontinued operations, net of tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.02Cumulative effect of change in accounting principle, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.06
    )Net income
    
    
    0.07
    
    
    
    0.19
    
    
    
    0.07
    
    
    
    0.48Weighted  average number of common shares outstanding used
in calculating diluted income per common share
    
    
    50,801
    
    
    
    54,314
    
    
    
    50,731
    
    
    
    54,358
  3




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LIN TV CORP.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)
 Nine months ended September 30,2005
    
    
    2004( in thousands )OPERATING ACTIVITIES:Net income
    
    $
    3,561
    
    
    $
    30,796Adjustment to reconcile net income to net cash provided by operating activities:Depreciation and amortization of intangible assets
    
    
    24,063
    
    
    
    23,545Amortization of financing costs and note discounts
    
    
    4,654
    
    
    
    6,036Amortization of program rights
    
    
    19,222
    
    
    
    18,116Program payments
    
    
    (21,545
    )
    
    
    (18,336
    )Program buyout payments related to acquisitions
    
    
    (21,420
    )
    
    
    Loss on extinguishment of debt
    
    
    13,412
    
    
    
    4,447Cumulative effect of change in accounting principle, net of tax impact
    
    
    
    
    
    
    (3,290
    )Gain on derivative instruments
    
    
    (3,455
    )
    
    
    (13,646
    )Share of income in equity investments
    
    
    (2,119
    )
    
    
    (5,014
    )Deferred income taxes, net
    
    
    5,351
    
    
    
    13,000Stock-based compensation
    
    
    1,844
    
    
    
    346Other, net
    
    
    816
    
    
    
    890Changes in operating assets and liabilities, net of acquisitions and disposals:Accounts receivable
    
    
    1,951
    
    
    
    5,092Program rights, net of program obligations
    
    
    
    
    
    
    233Other assets
    
    
    (2,664
    )
    
    
    (4,146
    )Accounts payable
    
    
    (1,398
    )
    
    
    (1,122
    )Accrued interest expense
    
    
    2,748
    
    
    
    (756
    )Accrued sales volume discount
    
    
    (2,538
    )
    
    
    (1,766
    )Other liabilities
    
    
    2,668
    
    
    
    6,957Net cash provided by operating activities
    
    
    25,151
    
    
    
    61,382INVESTING ACTIVITIES:Capital expenditures
    
    
    (8,581
    )
    
    
    (17,500
    )Investment in equity investments
    
    
    
    
    
    
    (650
    )Capital contribution from minority interest in Banks Broadcasting, Inc.
    
    
    550
    
    
    
    Distributions from equity investments
    
    
    3,464
    
    
    
    5,503Acquisition of broadcast licenses
    
    
    (232
    )
    
    
    (9,152
    )Deposit on acquisition of business
    
    
    (19,500
    )Payments for business combinations
    
    
    (85,000
    )
    
    
    Proceeds from sale of broadcast licenses and related operating assets
    
    
    
    
    
    
    24,000Other, net
    
    
    (3,044
    )
    
    
    29Net cash (used in) provided by investing activities
    
    
    (112,343
    )
    
    
    2,230FINANCING ACTIVITIES:Net proceeds on exercises of employee stock options and phantom stock
units and employee stock purchase plan issuances
    
    
    1,935
    
    
    
    1,563Proceeds from issuance of long-term debt
    
    
    520,252
    
    
    
    Long-term debt financing costs
    
    
    (9,599
    )
    
    
    (147
    )Net proceeds from revolver debt
    
    
    75,000
    
    
    
    (18,000
    )Principal payments on long-term debt
    
    
    (494,940
    )
    
    
    (43,810
    )Cash expenses associated with early extinguishment of debt
    
    
    (7,108
    )
    
    
    (3,016
    )Net cash provided by (used) in financing activities
    
    
    85,540
    
    
    
    (63,410
    )Net (decrease) increase in cash and cash equivalents
    
    
    (1,652
    )
    
    
    202Cash and cash equivalents at the beginning of the period
    
    
    14,797
    
    
    
    9,475Cash and cash equivalents at the end of the period
    
    $
    13,145
    
    
    $
    9,677
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##### Table of Contents



LIN
TV CORP.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Basis of Presentation
       st
  AssetsCash
    
    $
    97Accounts receivable
    
    
    899Program rights, short-term
    
    
    757Other current assets
    
    
    46Property and equipment
    
    
    5,048Program rights, long-term
    
    
    662Broadcast licenses
    
    
    29,238Total assets
    
    $
    36,747Liabilities and EquityAccounts payable
    
    $
    396Program obligations, short-term
    
    
    793Other accrued expenses
    
    
    404Program obligations, long-term
    
    
    525Deferred income taxes, net
    
    
    4,805Preferred stock
    
    
    34,764Total liabilities and equity
    
    
    41,687Deficit
    
    $
    (4,940
    )
  5




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LIN TV CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Note 2
 Stock-Based Compensation
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income, as reported
    
    $
    3,786
    
    
    $
    14,816
    
    
    $
    3,561
    
    
    $
    30,796Add: Stock-based employee compensation expense,
included in reported net income, net of related tax effect
    
    
    55
    
    
    
    70
    
    
    
    1,106
    
    
    
    208Deduct: Total stock-based employee compensation
expense determined under the fair value based
method for all awards, net of related tax effect
    
    
    (465
    )
    
    
    (1,016
    )
    
    
    (1,287
    )
    
    
    (2,516
    )Pro forma net income
    
    $
    3,376
    
    
    $
    13,870
    
    
    $
    3,380
    
    
    $
    28,488Basic net income per common share, as reported
    
    $
    0.07
    
    
    $
    0.29
    
    
    $
    0.07
    
    
    $
    0.61Basic net income per common share, pro forma
    
    $
    0.07
    
    
    $
    0.28
    
    
    $
    0.07
    
    
    $
    0.57Diluted net income per common share, as reported
    
    $
    0.07
    
    
    $
    0.19
    
    
    $
    0.07
    
    
    $
    0.48Diluted net income per common share, pro forma
    
    $
    0.07
    
    
    $
    0.18
    
    
    $
    0.07
    
    
    $
    0.44
  Three Months Ended September 30,
    
    Nine Months Ended September 30,2005
    
    2004
    
    2005
    
    2004Volatility
    
    
    24
    %
    
    
    24
    %
    
    
    24
    %
    
    
    24
    %Risk-free interest rates
    
    
    3.7 - 3.8
    %
    
    
    2.0 - 3.2
    %
    
    
    3.7 - 3.8
    %
    
    
    2.0 - 4.4
    %Weighted average expected life
    
    4.5 years
    
    4.5 years
    
    4.5 years
    
    5 yearsDividend yields
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
  6




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LIN TV CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 3  Acquisitions and Dispositions
     WNDY-TV
    
    
    WWHO-TVAccounts receivable
    
    $
    437
    
    
    $
    87Program rights, short-term
    
    
    2,239
    
    
    
    2,134Other current assets
    
    
    491
    
    
    
    2,054Property and equipment
    
    
    7,373
    
    
    
    7,433Program rights, long-term
    
    
    2,968
    
    
    
    3,826Broadcast licenses and other intangibles
    
    
    32,687
    
    
    
    25,527Goodwill
    
    
    19,496
    
    
    
    10,300Deferred tax assets
    
    
    7,868
    
    
    
    3,872Total assets
    
    $
    73,559
    
    
    $
    55,233Program obligations, short-term
    
    
    4,803
    
    
    
    2,980Program obligations, long-term
    
    
    7,395
    
    
    
    7,277Other long-term liabilities
    
    
    13,861
    
    
    
    7,476Total liabilities
    
    $
    26,059
    
    
    $
    17,733Purchase Price
    
    $
    47,500
    
    
    $
    37,500
 7




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##### Table of Contents



LIN TV CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2005
    
    2004
    
    2005
    
    2004Net revenues
    
    $
    90,827
    
    
    $
    96,464
    
    
    $
    272,364
    
    
    $
    283,571Operating income
    
    
    18,501
    
    
    
    23,186
    
    
    
    50,306
    
    
    
    67,460Net income
    
    
    3,786
    
    
    
    14,819
    
    
    
    2,978
    
    
    
    30,784Basic net income per common share
    
    $
    0.07
    
    
    $
    0.29
    
    
    $
    0.06
    
    
    $
    0.61Diluted net income per common share
    
    $
    0.07
    
    
    $
    0.19
    
    
    $
    0.06
    
    
    $
    0.48
    Three Months Ended
    
    Nine Months EndedSeptember 30, 2004
    
    September 30, 2004Net revenues
    
    $
    
    
    
    $
    3,257Operating income
    
    
    
    
    
    
    960Net income
    
    
    
    
    
    
    884
 Note 4  Investments
  September 30,
    
    
    December 31,2005
    
    
    2004NBC Universal joint venture
    
    $
    54,439
    
    
    $
    55,604WAND (TV) Partnership
    
    
    10,028
    
    
    
    10,209$
    64,467
    
    
    $
    65,813
 Joint Venture with NBC Universal:
 8




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##### Table of Contents



LIN TV CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2005
    
    2004
    
    2005
    
    2004Revenue
    
    $
    19,216
    
    
    $
    27,923
    
    
    $
    60,916
    
    
    $
    75,682Other expense
    
    
    (16,401
    )
    
    
    (16,487
    )
    
    
    (49,634
    )
    
    
    (48,921
    )Net income
    
    
    2,815
    
    
    
    11,436
    
    
    
    11,282
    
    
    
    26,761
 September 30,
    
    December 31,2005
    
    2004Current assets
    
    $
    10,270
    
    
    $
    12,675Non-current assets
    
    
    231,033
    
    
    
    233,957Current liabilities
    
    
    1,087
    
    
    
    724Non-current liabilities
    
    
    815,500
    
    
    
    815,500
 WAND (TV) Partnership:
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2005
    
    2004
    
    2005
    
    2004Net revenues
    
    $
    1,612
    
    
    $
    1,440
    
    
    $
    4,757
    
    
    $
    4,737Operating loss
    
    
    (506
    )
    
    
    (165
    )
    
    
    (580
    )
    
    
    (269
    )Net loss
    
    
    (491
    )
    
    
    (243
    )
    
    
    (542
    )
    
    
    (346
    )
 September 30,
    
    
    December 31,2005
    
    
    2004Current assets
    
    $
    3,428
    
    
    $
    3,317Non-current assets
    
    
    23,750
    
    
    
    24,283Current liabilities
    
    
    1,066
    
    
    
    917Non-current liabilities
    
    
    2
    
    
    
    32
 9




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LIN TV CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 5  Intangible Assets
  September 30,
    
    
    December 31,2005
    
    
    2004Amortized Intangible Assets:LMA purchase options
    
    $
    3,300
    
    
    $
    3,300Network affiliations
    
    
    564
    
    
    
    173Other intangibles
    
    
    3,116
    
    
    
    2,173Accumulated amortization
    
    
    (3,989
    )
    
    
    (2,776
    )2,991
    
    
    
    2,870Unamortized Intangible Assets:Broadcast licenses
    
    
    1,120,311
    
    
    
    1,063,265Other intangibles
    
    
    58
    
    
    
    Total broadcast licenses and other intangible assets, net
    
    $
    1,123,360
    
    
    $
    1,066,135Goodwill
    
    
    612,906
    
    
    
    583,105Total intangible assets, net
    
    $
    1,736,266
    
    
    $
    1,649,240
   Three Months Ended
    
    
    
    Nine Months Ended
    
    
    
    
    
    
    Estimated amortization expenseSeptember 30,
    
    
    
    September 30,
    
    
    
    
    
    
    For the Year Ended December 31,2005
    
    
    2004
    
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009Amortization expense
    
    $
    547
    
    
    $
    270
    
    
    
    $
    1,213
    
    
    $
    825
    
    
    $
    1,611
    
    
    $
    374
    
    
    $
    53
    
    
    $
    43
    
    
    $
    43
  10




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##### Table of Contents



LIN TV CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 6 Debt
  September 30,
    
    
    December 31,2005
    
    
    2004Credit Facility
    
    $
    75,000
    
    
    $
    158,500$166,440, 8% Senior Notes due 2008 (net of discount of $2,884)
    
    
    
    
    
    
    163,5566 1/2% Senior Subordinated Notes due 2013
    
    
    375,000
    
    
    
    200,000$190,000, 6 1/2% Senior Subordinated Notes due 2013  Class B
(net of discount of $14,748)
    
    
    175,252
    
    
    
    $125,000, 2.50% Exchangeable Senior Subordinated Debentures due
2033 (net of discount of $11,056 and $14,215 at September 30, 2005
and December 31, 2004, respectively)
    
    
    113,944
    
    
    
    110,785Total debt
    
    
    739,196
    
    
    
    632,841Less current portion
    
    
    
    
    
    
    6,573Total long-term debt
    
    $
    739,196
    
    
    $
    626,268
 1 2 1 2
 1 2 1 2
 1 2
  11




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##### Table of Contents





LIN TV CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




1 2 1 2






Note 7  Related Party Transactions


Financial Advisory Agreement: .


Centennial Cable of Puerto Rico:


Banks Broadcasting Inc.: st


Note 8  Contingencies


GECC Note. 12




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##### Table of Contents





LIN TV CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





    
    GECC could force LIN TV Corp. to sell the stock of LIN Television held by LIN TV Corp. to
satisfy outstanding amounts under the GECC note;
    
    if more than 50% of the ownership of LIN Television had to be sold to satisfy the GECC
Note, it could cause an acceleration of the Companys credit facility and notes; and
    
    if the GECC note is prepaid because of an acceleration on default or otherwise, or if
the note is repaid at maturity, the Company may incur a substantial tax liability.




Note 9  Retirement Plans






Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Service cost
    
    $
    549
    
    
    $
    494
    
    
    $
    1,647
    
    
    $
    1,494Interest cost
    
    
    1,350
    
    
    
    1,352
    
    
    
    4,050
    
    
    
    4,154Expected return on plan assets
    
    
    (1,435
    )
    
    
    (1,364
    )
    
    
    (4,305
    )
    
    
    (4,264
    )Amortization of prior service cost
    
    
    30
    
    
    
    47
    
    
    
    90
    
    
    
    125Amortization of net loss
    
    
    241
    
    
    
    103
    
    
    
    723
    
    
    
    263Net periodic benefit cost
    
    $
    735
    
    
    $
    632
    
    
    $
    2,205
    
    
    $
    1,772




Note 10  Earnings per Share




13



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##### Table of Contents



LIN TV CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Numerator for income per common share calculation:Net income available to common shareholders, basic
    
    $
    3,786
    
    
    $
    14,816
    
    
    $
    3,561
    
    
    $
    30,796Interest expense on contingently convertible
debt, net of tax
    
    
    
    
    
    
    1,122
    
    
    
    
    
    
    
    3,391Derivative income, net of tax
    
    
    
    
    
    
    (5,415
    )
    
    
    
    
    
    
    (8,187
    )Net income available to common shareholders, diluted
    
    $
    3,786
    
    
    $
    10,523
    
    
    $
    3,561
    
    
    $
    26,000Denominator for income per common share calculation:Weighted average common shares, basic
    
    
    50,702
    
    
    
    50,350
    
    
    
    50,632
    
    
    
    50,272Effect of dilutive securities:Restricted stock and stock options
    
    
    99
    
    
    
    611
    
    
    
    99
    
    
    
    733Contingently convertible debt
    
    
    
    
    
    
    3,353
    
    
    
    
    
    
    
    3,353Weighted average common shares, diluted
    
    
    50,801
    
    
    
    54,314
    
    
    
    50,731
    
    
    
    54,358Basic income per common share
    
    $
    0.07
    
    
    $
    0.29
    
    
    $
    0.07
    
    
    $
    0.61Diluted income per common share
    
    $
    0.07
    
    
    $
    0.19
    
    
    $
    0.07
    
    
    $
    0.48
  Note
11  Share Repurchase Program
  Note
12  Subsequent Events
     14




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LIN TV CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note
13  Recent Accounting Pronouncements
 Share-Based Payment,
     15




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Special Note About Forward-Looking Statements
  
    
    volatility and changes in our advertising revenues;
    
    the outbreak and duration of hostilities or the occurrence of terrorist attacks and the duration and
extent of network preemption of regularly scheduled programming and decisions by advertisers to withdraw
or delay planned advertising expenditures as a result of military action or terrorist attacks;
    
    restrictions on our operations due to, and the effect of, our significant leverage;
    
    effects of complying with new accounting standards, including with respect to the treatment of our
intangible assets;
    
    inability to consummate acquisitions on attractive terms;
    
    increases in our cost of borrowings or inability or unavailability of additional debt or equity
capital;
    
    increased competition, including from newer forms of entertainment and entertainment media or changes
in the popularity or availability of programming;
    
    increased costs, including increased capital expenditures as a result of necessary technological
enhancements such as expenditures related to the transition to digital broadcasting, or acquisitions or
increased programming costs;
    
    effects of our control relationships, including the control that Hicks Muse and its affiliates have
with respect to corporate transactions and activities we undertake;
    
    adverse state or federal legislation or regulation or adverse determinations by regulators including
adverse changes in, or interpretations of, the exceptions to the FCC duopoly rule; and
    
    changes in general economic conditions in the markets in which we compete.
 16




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##### Table of Contents



Executive Summary
   
    
    We entered into an agreement to purchase five network-affiliated television stations
from Emmis Television for $260.0 million in cash, subject to approval of the
transaction by the FCC and other customary closing conditions.
    
    We issued $190.0 million in aggregate principal amount of 6 1/2% Senior Subordinated
Notes due 2013  Class B and an additional $175.0 million in aggregate principal amount of our 6
1/2% Senior Subordinated Notes.
    
    We repurchased or redeemed all $166.4 million of our 8% Senior Notes.
    
    We acquired WNDY-TV, the UPN affiliate serving Indianapolis, Indiana, and WWHO-TV,
the UPN affiliate serving Columbus, Ohio, from Viacom, Inc. for $85.0 million in cash,
which was funded by a combination of cash on hand and proceeds from our revolving
credit facility (see Note 3 of the unaudited condensed consolidated financial
statements  Acquisitions and Dispositions).
 Industry Trends
  
    
    Political revenues from elections and revenues from Olympic games, which generally
occur in even years, create fluctuations in our operating results when comparing third
quarter and the first nine months of 2005 with the same periods of 2004. According to
the Television Bureau of Advertising, U.S. television station advertising decreased
8.5% in the third quarter and 5.2% in the first nine months of 2005 compared to
increases of 9.9% and 9.1% in the third quarter and first nine months of 2004,
respectively. (source: Television Bureau of Advertising).
    
    We depend on automotive-related advertising that represented approximately 24% and
25% of our total net revenues for the nine months ended September 30, 2005 and 2004,
respectively. A significant change in these advertising revenues could materially
affect our future results of operations.
    
    Approximately $1.7 billion, or 80%, of our total assets as of September 30, 2005
consisted of unamortized intangible assets. Intangible assets principally include
broadcast licenses and goodwill. SFAS No. 142, Goodwill and Other Intangible Assets,
requires, among other things, the impairment testing of goodwill. We will perform our annual impairment
testing during the fourth quarter of 2005. If the fair value of
these intangible assets decreased, we could be required to incur an impairment charge
that could significantly adversely impact our reported results of operations and
stockholders equity. Our common stock currently trades at a
price, which results in a market capitalization less than total stockholders equity as of
September 30, 2005, and has done so since April 2005, which
may indicate a valuation for our intangible assets different from the
amount reflected in our condensed consolidated financial statements. If we are required to write down intangible assets
in future periods, it would reduce net income, which in turn could have a
 17




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Critical Accounting Policies and Estimates
   Off-Balance Sheet Arrangements
  18




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Results of Operations
  Three Months Ended
    
    
    
    
    
    
    Nine Months EndedSeptember 30,
    
    
    %
    
    
    September 30,
    
    
    %2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeNational time sales (before agency commissions)
    
    $
    31,965
    
    
    $
    31,236
    
    
    
    2
    %
    
    $
    95,581
    
    
    $
    93,473
    
    
    
    2
    %Local time sales (before agency commissions)
    
    
    66,634
    
    
    
    62,298
    
    
    
    7
    %
    
    
    196,357
    
    
    
    188,837
    
    
    
    4
    %Political time sales (before agency commissions)
    
    
    728
    
    
    
    7,102
    
    
    
    -90
    %
    
    
    2,157
    
    
    
    12,724
    
    
    
    -83
    %Agency commissions (related to time sales)
    
    
    (16,073
    )
    
    
    (16,921
    )
    
    
    -5
    %
    
    
    (47,322
    )
    
    
    (48,658
    )
    
    
    -3
    %Network compensation
    
    
    2,386
    
    
    
    2,710
    
    
    
    -12
    %
    
    
    7,014
    
    
    
    7,841
    
    
    
    -11
    %Barter revenue
    
    
    2,925
    
    
    
    2,530
    
    
    
    16
    %
    
    
    7,249
    
    
    
    7,467
    
    
    
    -3
    %Other revenue
    
    
    2,262
    
    
    
    2,050
    
    
    
    10
    %
    
    
    6,672
    
    
    
    5,503
    
    
    
    21
    %Net revenue
    
    
    90,827
    
    
    
    91,005
    
    
    
    0
    %
    
    
    267,708
    
    
    
    267,187
    
    
    
    0
    %Operating costs and expenses:Direct operating 1
    
    
    27,788
    
    
    
    25,638
    
    
    
    8
    %
    
    
    80,859
    
    
    
    75,658
    
    
    
    7
    %Selling, general and administrative
    
    
    26,192
    
    
    
    22,737
    
    
    
    15
    %
    
    
    77,838
    
    
    
    69,725
    
    
    
    12
    %Amortization of program rights
    
    
    6,833
    
    
    
    6,481
    
    
    
    5
    %
    
    
    19,222
    
    
    
    18,116
    
    
    
    6
    %Corporate
    
    
    4,362
    
    
    
    5,542
    
    
    
    -21
    %
    
    
    14,716
    
    
    
    13,570
    
    
    
    8
    %Depreciation and amortization of
intangible assets
    
    
    7,151
    
    
    
    7,728
    
    
    
    -7
    %
    
    
    24,063
    
    
    
    23,545
    
    
    
    2
    %Total operating costs and expenses
    
    
    72,326
    
    
    
    68,126
    
    
    
    6
    %
    
    
    216,698
    
    
    
    200,614
    
    
    
    8
    %Operating income
    
    $
    18,501
    
    
    $
    22,879
    
    
    
    -19
    %
    
    $
    51,010
    
    
    $
    66,573
    
    
    
    -23
    %~~~~~~~~~~~~~ ~~~~~~~~~
 
 1
    
    Excluding depreciation of $6.6 million and $7.5 million for the three months ended September 30, 2005 and 2004, respectively, and $22.8
and $22.7 million for the nine months ended September 30, 2005 and 2004, respectively. Net revenues
  Operating Costs and Expenses
 Direct operating expenses (excluding depreciation and amortization of intangible assets),
 19




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Selling, general and administrative expenses,
 Amortization of program rights
 Corporate expenses
 Depreciation and amortization of intangible assets
 20




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Other (Income) Expense
 Interest expense
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Components of interest expense, including discount and financing fee amortizationCredit Facility
    
    $
    2,785
    
    
    $
    2,465
    
    
    $
    7,549
    
    
    $
    7,1306 1/2% Senior Subordinated Notes
    
    
    6,334
    
    
    
    3,376
    
    
    
    18,206
    
    
    
    10,1666 1/2% Senior Subordinated Notes  Class B
    
    
    69
    
    
    
    
    
    
    
    69
    
    
    
    2.50% Exchangeable Senior Subordinated Debentures
    
    
    1,888
    
    
    
    1,870
    
    
    
    5,654
    
    
    
    5,6518% Senior Notes
    
    
    
    
    
    
    3,295
    
    
    
    1,501
    
    
    
    11,751Other interest (income) expense, net
    
    
    39
    
    
    
    (118
    )
    
    
    (119
    )
    
    
    (284
    )Total interest expense, net
    
    $
    11,115
    
    
    $
    10,888
    
    
    $
    32,860
    
    
    $
    34,414
 Interest expense, net
 Gain on derivative instruments
 Other Items
  Provision for Income Taxes
  21




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##### Table of Contents



Liquidity and Capital Resources
  Description of Indebtedness
 1 2 1 2
 1 2 1 2
   September 30,
    
    
    December 31,2005
    
    
    2004Credit Facility
    
    $
    75,000
    
    
    $
    158,500$166,440, 8% Senior Notes due 2008 (net of discount of $2,884)
    
    
    
    
    
    
    163,5566 1/2% Senior Subordinated Notes due 2013
    
    
    375,000
    
    
    
    200,0006 1/2% Senior Subordinated Notes due 2013 - Class B (net of discount of $14,748)
    
    
    175,252
    
    
    
    $125,000, 2.50% Exchangeable Senior Subordinated Debentures due
2033 (net of discount of $11,056 and $14,215 at September 30, 2005
and December 31, 2004, respectively)
    
    
    113,944
    
    
    
    110,785Total debt
    
    
    739,196
    
    
    
    632,841Less current portion
    
    
    
    
    
    
    6,573Total long-term debt
    
    $
    739,196
    
    
    $
    626,268
 22




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1/2 % 1 2
 1/2 1 2
 1/2 1/2 1/2 1/2
 23




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Contractual Obligation s
  October -December2005
    
    
    2006-2008
    
    
    2009-2010
    
    
    Thereafter
    
    
    TotalPrincipal payments and mandatory
redemptions on debt (1)
    
    $
    75,000
    
    
    $
    
    
    
    $
    
    
    
    $
    765,000
    
    
    $
    840,000Cash interest on debt (2)
    
    
    14,598
    
    
    
    158,610
    
    
    
    86,837
    
    
    
    123,439
    
    
    
    383,484Program payments (3)
    
    
    6,587
    
    
    
    55,976
    
    
    
    14,092
    
    
    
    7,325
    
    
    
    83,980Operating leases (4)
    
    
    508
    
    
    
    2,591
    
    
    
    1,736
    
    
    
    3,398
    
    
    
    8,233Local marketing agreement payments (5)
    
    
    912
    
    
    
    1,069
    
    
    
    
    
    
    
    
    
    
    
    1,981Total
    
    $
    97,605
    
    
    $
    218,246
    
    
    $
    102,665
    
    
    $
    899,162
    
    
    $
    1,317,678
 
 (1)
    
    We repaid the revolving portion of our credit facility on November 4, 2005 as the
result of entering into our new credit facility (See Description of Indebtedness above). We
are obligated to pay our 6 1/2% Senior Subordinated Notes and our 6 1/2% Senior Subordinated
Notes due 2013  Class B in May 2013 and our 2.50% Exchangeable Senior Subordinated Debentures in
May 2033. The holders of our 2.50% Exchangeable Senior Subordinated Debentures can require
us to purchase all or a portion of the debentures on each of May 15, 2008, 2013, 2018, 2023
and 2028.(2)
    
    We have contractual obligations to pay cash interest on our credit facility through
2011, our 6 1/2% Senior Subordinated Notes and our 6 1/2% Senior Subordinated Notes due 2013  Class B
through 2013, and our 2.50% Exchangeable Senior Subordinated Debentures through 2033. We
may pay contingent interest to holders of the debentures during any six-month period
commencing May 15, 2008, if the average trading price of the debentures for a five trading
day measurement period immediately preceding the first day of the applicable six-month
period equals 120% or more of the principal amount of the debentures. The contingent
interest equals 0.25% per annum per $1,000 principal amount of debentures. In addition, we
are obligated to pay commitment fees of approximately 0.30% on the unused portion of the
revolving credit facility.(3)
    
    We have entered into commitments to purchase future syndicated news, entertainment, and
sports programming. We have recorded $38.6 million of program obligations as of September
30, 2005 and have unrecorded commitments of $45.4 million for programming that is not
available to air as of September 30, 2005.(4)
    
    We lease land, buildings, vehicles and equipment under non-cancelable operating lease
agreements.(5)
    
    We have entered into option agreements that would enable us to purchase KNVA-TV and
WNAC-TV for a fixed amount under certain conditions. In connection with these agreements,
we are committed to pay minimum future periodic fees totaling $2.0 million as of September
30, 2005. Net cash provided by operating activities
 Net cash used in investing activities
 24




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Net cash provided by financing activities 1 2 1 2
   Recent Accounting Pronouncements
 Share-Based Payment,
   25




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26




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
     
 Item 4. Controls and Procedures
   27




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Part II: Other Information
 
 Item 1. Legal Proceedings
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 4. Submission of Matters to a Vote of Security Holders
 1 2
 
 Item 6. Exhibits
 Exhibits:
 3.1.
    
    Second Amended and Restated Certificate of Incorporation of LIN TV Corp. as amended (filed as
Exhibit 3.1 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 of LIN TV
Corp. and LIN Television Corporation (file nos. 001-31311 and 000-25206) and incorporated by
reference herein).3.2.
    
    Second Amended and Restated Bylaws of LIN TV Corp. as amended (filed as Exhibit 3.2 to the
Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 of LIN TV Corp. and LIN
Television Corporation (file nos. 001-31311 and 000-25206) and incorporated by reference
herein).3.3.
    
    Restated Certificate of Incorporation of LIN Television Corporation (filed as Exhibit 3.1 to
the Quarterly Report on Form 10-Q of LIN TV Corp. and LIN Television Corporation for the
fiscal quarter ended June 30, 2004 (File Nos. 001-31311 and 000-25206) and incorporated by
reference herein).3.4.
    
    Restated By-laws of LIN Television Corporation (filed as Exhibit 3.2 to the Quarterly Report
on Form 10-Q for the quarter ended June 30, 2004 of LIN TV Corp. and LIN Television
Corporation (file nos. 001-31311 and 000-25206) and incorporated by reference herein).4.1.
    
    Specimen of stock certificate representing LIN TV Corp. Class A Common stock, par value $.01
per share (filed as Exhibit 4.1 to LIN TV Corp.s Registration Statement on Form S-1
(Registration No. 333-83068) and incorporated by reference herein).4.2.
    
    Indenture, dated as of May 12, 2003, among LIN Television Corporation, the guarantors named
therein and the Bank of New York, as Trustee, relating to the 6 1/2% Senior Subordinated Notes
(filed as Exhibit 4.1 to the Current Report on Form 8-K of LIN TV Corp. and LIN Television
Corporation (File Nos. 001-31311 and 000-25206) filed with the SEC on May 14, 2003 and
incorporated by reference herein).4.3.
    
    Indenture, dated as of May 12, 2003, among LIN Television Corporation, the guarantors named
therein and the Bank of New York, as Trustee, relating to the 2.50% Senior Subordinated
Debentures (filed as Exhibit 4.2 to the Current Report on Form 8-K of LIN TV Corp. and LIN
Television Corporation (File Nos. 001-31311 and 000-25206) filed with the SEC on May 14, 2003
and incorporated by reference herein).4.4.
    
    Indenture, dated as of September 29, 2005, among LIN Television Corporation, as Issuer, the
Guarantors named therein and The Bank of New York Trust Company, N.A., as Trustee, for the 6
1/2% Senior Subordinated Notes due 2013  Class B (filed as Exhibit 4.1 to the Current Report on
Form 8-K of LIN TV Corp. and LIN Television Corporation filed with the SEC on October 5, 2005 (File No. 000-25206) and
incorporated by reference herein)4.5.
    
    Supplemental Indenture, dated as of March 10, 2005, among WAPA America, Inc., WWHO
Broadcasting, LLC, LIN Television Corporation and The Bank of New York, as Trustee, for the
2.50% Exchangeable Senior Subordinated Debentures due 2033.4.6.
    
    Supplemental Indenture, dated as of March 10, 2005, among WAPA America, Inc., WWHO
Broadcasting, LLC, LIN Television Corporation and The Bank of New York, as Trustee, for the 6
1/2% Senior Subordinated Notes due 2013.
 28




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##### Table of Contents



31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief
Executive Officer of LIN TV Corp.31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief
Financial Officer of LIN TV Corp.31.3
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief
Executive Officer of LIN Television Corporation.31.4
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief
Financial Officer of LIN Television Corporation.32.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief
Executive Officer and Chief Financial Officer of LIN TV Corp.32.2
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief
Executive Officer and Chief Financial Officer of LIN Television Corporation
 29




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##### Table of Contents



SIGNATURES
  LIN TV CORP.LIN TELEVISION CORPORATIONDated:November 9, 2005
    
    By:
    
    /s/ Vincent L. SaduskyVincent L. SaduskyVice President  Chief Financial Officer and TreasurerBy:
    
    /s/ William A. CunninghamWilliam A. CunninghamVice President and Controller(Principal Accounting Officer)
 30




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##### Table of Contents



Item 1. Financial Statements
 LIN Television CorporationCondensed Consolidated Balance Sheets
    
    
    32Condensed Consolidated Statements of Operations
    
    
    33Condensed Consolidated Statements of Cash Flows
    
    
    34Notes to Condensed Consolidated Financial Statements
    
    
    35
 31




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##### Table of Contents



LIN TELEVISION CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 September 30,
    
    
    December 31,2005
    
    
    2004(Unaudited)(In thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    13,145
    
    
    $
    14,797Accounts receivable, less allowance for doubtful accounts (2005 - $1,484; 2004 - $1,450)
    
    
    68,446
    
    
    
    70,639Program rights
    
    
    23,238
    
    
    
    17,312Other current assets
    
    
    7,306
    
    
    
    3,790Total current assets
    
    
    112,135
    
    
    
    106,538Property and equipment, net
    
    
    197,682
    
    
    
    197,565Deferred financing costs
    
    
    15,743
    
    
    
    11,060Equity investments
    
    
    64,467
    
    
    
    65,813Program rights
    
    
    13,189
    
    
    
    12,165Other assets
    
    
    37,832
    
    
    
    16,043Goodwill
    
    
    612,906
    
    
    
    583,105Broadcast licenses and other intangible assets, net
    
    
    1,123,360
    
    
    
    1,066,135Total assets
    
    $
    2,177,314
    
    
    $
    2,058,424LIABILITIES, PREFERRED STOCK
AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    
    
    
    $
    6,573Accounts payable
    
    
    2,599
    
    
    
    7,774Accrued interest expense
    
    
    10,866
    
    
    
    8,118Accrued sales volume discount
    
    
    3,924
    
    
    
    6,462Other accrued expenses
    
    
    18,200
    
    
    
    13,483Program obligations
    
    
    29,781
    
    
    
    23,278Total current liabilities
    
    
    65,370
    
    
    
    65,688Long-term debt, excluding current portion
    
    
    739,196
    
    
    
    626,268Deferred income taxes, net
    
    
    439,306
    
    
    
    445,695Program obligations
    
    
    8,787
    
    
    
    12,008Other liabilities
    
    
    48,343
    
    
    
    38,344Total liabilities
    
    
    1,301,002
    
    
    
    1,188,003Preferred stock of Banks Broadcasting, Inc., $0.01 par value, 179,322 and
173,822 issued and outstanding at September 30, 2005 and December 31, 2004, respectively
    
    
    14,627
    
    
    
    14,458Stockholders equity:Common stock, $0.01 par value; 1,000 authorized,
issued and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    1,078,443
    
    
    
    1,072,320Deferred compensation
    
    
    (3,962
    )
    
    
    Accumulated deficit
    
    
    (198,206
    )
    
    
    (201,767
    )Accumulated other comprehensive loss
    
    
    (14,590
    )
    
    
    (14,590
    )Total stockholders equity
    
    
    861,685
    
    
    
    855,963Total liabilities, preferred
stock and stockholders equity
    
    $
    2,177,314
    
    
    $
    2,058,424
  32




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##### Table of Contents



LIN TELEVISION CORPORATION
 
 (In thousands)
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net revenues
    
    $
    90,827
    
    
    $
    91,005
    
    
    $
    267,708
    
    
    $
    267,187Operating costs and expenses:Direct
operating (excluding depreciation of $6.6
million and $7.5 million for the three months ended
September 30, 2005 and 2004, respectively, and $22.8
million and $22.7 million for the nine months ended
September 30, 2005 and 2004, respectively)
    
    
    27,788
    
    
    
    25,638
    
    
    
    80,859
    
    
    
    75,658Selling, general and administrative
    
    
    26,192
    
    
    
    22,737
    
    
    
    77,838
    
    
    
    69,725Amortization of program rights
    
    
    6,833
    
    
    
    6,481
    
    
    
    19,222
    
    
    
    18,116Corporate
    
    
    4,362
    
    
    
    5,542
    
    
    
    14,716
    
    
    
    13,570Depreciation and amortization of intangible assets
    
    
    7,151
    
    
    
    7,728
    
    
    
    24,063
    
    
    
    23,545Total operating costs
    
    
    72,326
    
    
    
    68,126
    
    
    
    216,698
    
    
    
    200,614Operating income
    
    
    18,501
    
    
    
    22,879
    
    
    
    51,010
    
    
    
    66,573Other (income) expenseInterest expense, net
    
    
    11,115
    
    
    
    10,888
    
    
    
    32,860
    
    
    
    34,414Share of income in equity investments
    
    
    (410
    )
    
    
    (2,250
    )
    
    
    (2,119
    )
    
    
    (5,014
    )Minority interest in loss of Banks Broadcasting, Inc.
    
    
    (96
    )
    
    
    (226
    )
    
    
    (382
    )
    
    
    (472
    )Gain on derivative instruments
    
    
    (1,860
    )
    
    
    (9,026
    )
    
    
    (3,455
    )
    
    
    (13,646
    )Loss on extinguishment of debt
    
    
    1,082
    
    
    
    
    
    
    
    13,412
    
    
    
    4,447Other, net
    
    
    95
    
    
    
    917
    
    
    
    261
    
    
    
    1,138Total other expense, net
    
    
    9,926
    
    
    
    303
    
    
    
    40,577
    
    
    
    20,867Income from continuing operations before provision for
income taxes and cumulative effect of change in accounting principle
    
    
    8,575
    
    
    
    22,576
    
    
    
    10,433
    
    
    
    45,706Provision for income taxes
    
    
    4,789
    
    
    
    7,760
    
    
    
    6,872
    
    
    
    16,960Income from continuing operations before cumulative effect of
change in accounting principle
    
    
    3,786
    
    
    
    14,816
    
    
    
    3,561
    
    
    
    28,746Discontinued operations:Income from discontinued operations, net of tax provision of $311
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (44
    )Loss from sale of discontinued operations, net of tax benefit of $1,094
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,284Cumulative effect of change in accounting principle,
net of tax effect of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,290
    )Net income
    
    $
    3,786
    
    
    $
    14,816
    
    
    $
    3,561
    
    
    $
    30,796
  33




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LIN TELEVISION CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (unaudited)
 Nine months ended September 30,2005
    
    
    2004(in thousands)OPERATING ACTIVITIES:Net income
    
    $
    3,561
    
    
    $
    30,796Adjustment to reconcile net income to net cash provided by operating activities:Depreciation and amortization of intangible assets
    
    
    24,063
    
    
    
    23,545Amortization of financing costs and note discounts
    
    
    4,654
    
    
    
    6,036Amortization of program rights
    
    
    19,222
    
    
    
    18,116Program payments
    
    
    (21,545
    )
    
    
    (18,336
    )Program buyout payments related to acquisitions
    
    
    (21,420
    )
    
    
    Loss on extinguishment of debt
    
    
    13,412
    
    
    
    4,447Cumulative effect of change in accounting principle, net of tax impact
    
    
    
    
    
    
    (3,290
    )Gain on derivative instruments
    
    
    (3,455
    )
    
    
    (13,646
    )Share of income in equity investments
    
    
    (2,119
    )
    
    
    (5,014
    )Deferred income taxes, net
    
    
    5,351
    
    
    
    13,000Stock-based compensation
    
    
    1,844
    
    
    
    346Other, net
    
    
    816
    
    
    
    890Changes in operating assets and liabilities, net of acquisitions and disposals:Accounts receivable
    
    
    1,951
    
    
    
    5,092Program rights, net of program obligations
    
    
    
    
    
    
    233Other assets
    
    
    (2,664
    )
    
    
    (4,146
    )Accounts payable
    
    
    (1,398
    )
    
    
    (1,122
    )Accrued interest expense
    
    
    2,748
    
    
    
    (756
    )Accrued sales volume discount
    
    
    (2,538
    )
    
    
    (1,766
    )Other liabilities
    
    
    2,668
    
    
    
    6,957Net cash provided by operating activities
    
    
    25,151
    
    
    
    61,382INVESTING ACTIVITIES:Capital expenditures
    
    
    (8,581
    )
    
    
    (17,500
    )Investment in equity investments
    
    
    
    
    
    
    (650
    )Capital contribution from minority interest in Banks Broadcasting, Inc.
    
    
    550
    
    
    
    Distributions from equity investments
    
    
    3,464
    
    
    
    5,503Acquisition of broadcast licenses
    
    
    (232
    )
    
    
    (9,152
    )Deposit on acquisition of business
    
    
    (19,500
    )Payments for business combinations
    
    
    (85,000
    )
    
    
    Proceeds from sale of broadcast licenses and related operating assets
    
    
    
    
    
    
    24,000Other, net
    
    
    (3,044
    )
    
    
    29Net cash (used in) provided by investing activities
    
    
    (112,343
    )
    
    
    2,230FINANCING ACTIVITIES:Net proceeds on exercises of employee stock options and phantom stock
units and employee stock purchase plan issuances
    
    
    1,935
    
    
    
    1,563Proceeds from issuance of long-term debt
    
    
    520,252
    
    
    
    Long-term debt financing costs
    
    
    (9,599
    )
    
    
    (147
    )Net proceeds from revolver debt
    
    
    75,000
    
    
    
    (18,000
    )Principal payments on long-term debt
    
    
    (494,940
    )
    
    
    (43,810
    )Cash expenses associated with early extinguishment of debt
    
    
    (7,108
    )
    
    
    (3,016
    )Net cash provided by (used) in financing activities
    
    
    85,540
    
    
    
    (63,410
    )Net (decrease) increase in cash and cash equivalents
    
    
    (1,652
    )
    
    
    202Cash and cash equivalents at the beginning of the period
    
    
    14,797
    
    
    
    9,475Cash and cash equivalents at the end of the period
    
    $
    13,145
    
    
    $
    9,677
  34




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LIN TELEVISION CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Note 1  Basis of Presentation
       st
  AssetsCash
    
    $
    97Accounts receivable
    
    
    899Program rights, short-term
    
    
    757Other current assets
    
    
    46Property and equipment
    
    
    5,048Program rights, long-term
    
    
    662Broadcast licenses
    
    
    29,238Total assets
    
    $
    36,747Liabilities and EquityAccounts payable
    
    $
    396Program obligations, short-term
    
    
    793Other accrued expenses
    
    
    404Program obligations, long-term
    
    
    525Deferred income taxes, net
    
    
    4,805Preferred stock
    
    
    34,764Total liabilities and equity
    
    
    41,687Deficit
    
    $
    (4,940
    )
 35




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##### Table of Contents



Note 2
 Stock-Based Compensation
   Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2005
    
    2004
    
    2005
    
    2004Net income, as reported
    
    $
    3,786
    
    
    $
    14,816
    
    
    $
    3,561
    
    
    $
    30,796Add: Stock-based employee compensation expense,
included in reported net income, net of related tax effect
    
    
    55
    
    
    
    70
    
    
    
    1,106
    
    
    
    208Deduct: Total stock-based employee compensation
expense determined under the fair value based
method for all awards, net of related tax effect
    
    
    (465
    )
    
    
    (1,016
    )
    
    
    (1,287
    )
    
    
    (2,516
    )Pro forma net income
    
    $
    3,376
    
    
    $
    13,870
    
    
    $
    3,380
    
    
    $
    28,488
  Three Months Ended September 30,
    
    Nine Months Ended September 30,2005
    
    2004
    
    2005
    
    2004Volatility
    
    
    24
    %
    
    
    24
    %
    
    
    24
    %
    
    
    24
    %Risk-free interest rates
    
    
    3.7 - 3.8
    %
    
    
    2.0 - 3.2
    %
    
    
    3.7 - 3.8
    %
    
    
    2.0 - 4.4
    %Weighted average expected life
    
    4.5 years
    
    4.5 years
    
    4.5 years
    
    5 yearsDividend yields
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
  36




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##### Table of Contents



Note 3  Acquisitions and Dispositions
     WNDY-TV
    
    
    WWHO-TVAccounts receivable
    
    $
    437
    
    
    $
    87Program rights, short-term
    
    
    2,239
    
    
    
    2,134Other current assets
    
    
    491
    
    
    
    2,054Property and equipment
    
    
    7,373
    
    
    
    7,433Program rights, long-term
    
    
    2,968
    
    
    
    3,826Broadcast licenses and other intangibles
    
    
    32,687
    
    
    
    25,527Goodwill
    
    
    19,496
    
    
    
    10,300Deferred tax assets
    
    
    7,868
    
    
    
    3,872Total assets
    
    $
    73,559
    
    
    $
    55,233Program obligations, short-term
    
    
    4,803
    
    
    
    2,980Program obligations, long-term
    
    
    7,395
    
    
    
    7,277Other long-term liabilities
    
    
    13,861
    
    
    
    7,476Total liabilities
    
    $
    26,059
    
    
    $
    17,733Purchase Price
    
    $
    47,500
    
    
    $
    37,500
 37




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net revenues
    
    $
    90,827
    
    
    $
    96,464
    
    
    $
    272,364
    
    
    $
    283,571Operating income
    
    
    18,501
    
    
    
    23,186
    
    
    
    50,306
    
    
    
    67,460Net income
    
    
    3,786
    
    
    
    14,819
    
    
    
    2,978
    
    
    
    30,784
    Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2004
    
    
    September 30, 2004Net revenues
    
    $
    
    
    
    $
    3,257Operating income
    
    
    
    
    
    
    960Net income
    
    
    
    
    
    
    884
 Note 4  Investments
  September 30,
    
    
    December 31,2005
    
    
    2004NBC Universal joint venture
    
    $
    54,439
    
    
    $
    55,604WAND (TV) Partnership
    
    
    10,028
    
    
    
    10,209$
    64,467
    
    
    $
    65,813
 Joint Venture with NBC Universal:
  38




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenue
    
    $
    19,216
    
    
    $
    27,923
    
    
    $
    60,916
    
    
    $
    75,682Other expense
    
    
    (16,401
    )
    
    
    (16,487
    )
    
    
    (49,634
    )
    
    
    (48,921
    )Net income
    
    
    2,815
    
    
    
    11,436
    
    
    
    11,282
    
    
    
    26,761
 September 30,
    
    
    December 31,2005
    
    
    2004Current assets
    
    $
    10,270
    
    
    $
    12,675Non-current assets
    
    
    231,033
    
    
    
    233,957Current liabilities
    
    
    1,087
    
    
    
    724Non-current liabilities
    
    
    815,500
    
    
    
    815,500
 WAND (TV) Partnership:
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net revenues
    
    $
    1,612
    
    
    $
    1,440
    
    
    $
    4,757
    
    
    $
    4,737Operating loss
    
    
    (506
    )
    
    
    (165
    )
    
    
    (580
    )
    
    
    (269
    )Net loss
    
    
    (491
    )
    
    
    (243
    )
    
    
    (542
    )
    
    
    (346
    )
 September 30,
    
    
    December 31,2005
    
    
    2004Current assets
    
    $
    3,428
    
    
    $
    3,317Non-current assets
    
    
    23,750
    
    
    
    24,283Current liabilities
    
    
    1,066
    
    
    
    917Non-current liabilities
    
    
    2
    
    
    
    32
 39




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##### Table of Contents



Note 5  Intangible Assets
  September 30,
    
    
    December 31,2005
    
    
    2004Amortized Intangible Assets:LMA purchase options
    
    $
    3,300
    
    
    $
    3,300Network affiliations
    
    
    564
    
    
    
    173Other intangibles
    
    
    3,116
    
    
    
    2,173Accumulated amortization
    
    
    (3,989
    )
    
    
    (2,776
    )2,991
    
    
    
    2,870Unamortized Intangible Assets:Broadcast licenses
    
    
    1,120,311
    
    
    
    1,063,265Other intangibles
    
    
    58
    
    
    
    Total broadcast licenses and other intangible assets, net
    
    $
    1,123,360
    
    
    $
    1,066,135Goodwill
    
    
    612,906
    
    
    
    583,105Total intangible assets, net
    
    $
    1,736,266
    
    
    $
    1,649,240
   Three Months Ended
    
    
    Nine Months Ended
    
    
    Estimated amortization expenseSeptember 30,
    
    
    September 30,
    
    
    For the Year Ended December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009Amortization expense
    
    $
    547
    
    
    $
    270
    
    
    $
    1,213
    
    
    $
    825
    
    
    $
    1,611
    
    
    $
    374
    
    
    $
    53
    
    
    $
    43
    
    
    $
    43
  40




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##### Table of Contents



Note 6 Debt
  September 30,
    
    
    December 31,2005
    
    
    2004Credit Facility
    
    $
    75,000
    
    
    $
    158,500$166,440, 8% Senior Notes due 2008 (net of discount of $2,884)
    
    
    
    
    
    
    163,5566 1/2% Senior Subordinated Notes due 2013
    
    
    375,000
    
    
    
    200,000$190,000, 6 1/2% Senior Subordinated Notes due 2013  Class B net of discount of $14,748)
    
    
    175,252
    
    
    
    $125,000, 2.50% Exchangeable Senior Subordinated Debentures due
2033 (net of discount of $11,056 and $14,215 at September 30, 2005
and December 31, 2004, respectively)
    
    
    113,944
    
    
    
    110,785Total debt
    
    
    739,196
    
    
    
    632,841Less current portion
    
    
    
    
    
    
    6,573Total long-term debt
    
    $
    739,196
    
    
    $
    626,268
 1 2 1 2
 1 2 1 2
 1 2
    41




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##### Table of Contents



1 2 1 2
   Note 7  Related Party Transactions
 Financial Advisory Agreement: .
 Centennial Cable of Puerto Rico:
 Banks Broadcasting Inc.: st
 Note 8  Contingencies
 GECC Note.
 42




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##### Table of Contents




    
    GECC could force LIN TV Corp. to sell the stock of LIN Television held by LIN TV Corp. to
satisfy outstanding amounts under the GECC note;
    
    if more than 50% of the ownership of LIN Television had to be sold to satisfy the GECC
Note, it could cause an acceleration of the Companys credit facility and notes; and
    
    if the GECC note is prepaid because of an acceleration on default or otherwise, or if
the note is repaid at maturity, the Company may incur a substantial tax liability.
  Note 9  Retirement Plans
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Service cost
    
    $
    549
    
    
    $
    494
    
    
    $
    1,647
    
    
    $
    1,494Interest cost
    
    
    1,350
    
    
    
    1,352
    
    
    
    4,050
    
    
    
    4,154Expected return on plan assets
    
    
    (1,435
    )
    
    
    (1,364
    )
    
    
    (4,305
    )
    
    
    (4,264
    )Amortization of prior service cost
    
    
    30
    
    
    
    47
    
    
    
    90
    
    
    
    125Amortization of net loss
    
    
    241
    
    
    
    103
    
    
    
    723
    
    
    
    263Net periodic benefit cost
    
    $
    735
    
    
    $
    632
    
    
    $
    2,205
    
    
    $
    1,772
  Note
10  Share Repurchase Program
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##### Table of Contents



Note
11  Subsequent Events
     Note
12  Recent Accounting Pronouncements
 Share-Based Payment,
   44




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##### Table of Contents



45