Gray Television (GTN) 8-K Gray Television, Inc. and Triple Crown Media, Inc. Announce Completion of the Spin-Off of Gray’s Newspaper Publishing and Graylink Wireless Businesses

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):December 30, 2005

Gray Television, Inc.

(Exact name of registrant as specified in its charter)

Georgia	1-13796	58-0285030
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
4370 Peachtree Road, NE, Atlanta, Georgia		30319
(Address of principal executive offices)		(Zip Code)

(Registrant’s telephone number, including area code) (404) 504-9828

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01 Other Events

     On January 3, 2006, Gray Television, Inc., a Georgia corporation (“Gray”) issued a press release announcing the completion of the previously announced spinoff by Gray of Triple Crown Media, Inc., effective December 30, 2005. Gray also announced that immediately prior to the spinoff, Gray contributed its newspaper publishing and Graylink wireless businesses to Triple Crown Media, Inc. in return for a $45.0 million cash distribution to Gray, which Gray used to reduce its outstanding indebtedness. The full text of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(a)	None.
(b)	Pro Forma Financial Information.

UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION

     The following unaudited pro forma condensed balance sheet of Gray as of September 30, 2005 and the unaudited pro forma condensed statements of operations for the nine months ended September 30, 2005 and 2004 and years ended December 31, 2004, December 31, 2003 and December 31, 2002 are based on the unaudited condensed historical consolidated balance sheet and consolidated statement of operations of Gray as of and for the nine months ended September 30, 2005, the unaudited condensed historical statement of operations of Gray as of and for the nine months ended September 30, 2004 and the consolidated statements of operations for the years ended December 31, 2004, December 31, 2003 and December 31, 2002. The unaudited pro forma condensed balance sheet and unaudited pro forma condensed statements of operations give effect to the spinoff of the publishing and Graylink wireless businesses of Gray on December 30, 2005.

     The pro forma adjustments are based upon currently available information and upon certain assumptions that management believes are reasonable under the circumstances. This unaudited pro forma condensed balance sheet and statements of operations should be read in conjunction with Gray’s Consolidated Financial Statements and the Notes thereto for the year ended December 31, 2004 (as filed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004) and for the nine months ended September 30, 2005 (as filed in the Company’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2005).

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GRAY TELEVISION, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
As of September 30, 2005
(in thousands)

				Spinoff of
				Publishing
				and Graylink
				Wireless			Pro Forma
	Historical			Businesses(a)			Adjustments			Pro Forma
Assets:
Current assets:
Cash and cash equivalents	$	4,056		$	—		$	45,000	(b)
								(45,330	)(c)	$	3,726
Trade accounts receivable, net		53,455			(5,532	)		—			47,923
Inventories		904			(904	)		—			—
Current portion of program broadcast rights, net		10,291			—			—			10,291
Related party receivable		1,169			—			—			1,169
Other current assets		3,448			(210	)		—			3,238
Total current assets		73,323			(6,646	)		(330	)		66,347
Property and equipment:
Land		19,648			(560	)		—			19,088
Buildings and improvements		40,472			(6,549	)		—			33,923
Equipment		225,619			(20,336	)		—			205,283
		285,739			(27,445	)		—			258,294
Accumulated depreciation		(129,091	)		17,535			—			(111,556	)
		156,648			(9,910	)		—			146,738
Deferred loan costs, net		10,273			—			—			10,273
Broadcast licenses		934,742			(4,006	)		—			930,736
Goodwill		158,378			(16,779	)		—			141,599
Other intangible assets, net		2,255			—			—			2,255
Investment in broadcasting company		13,599			—			—			13,599
Other		2,965			(60	)		—			2,905
Total assets	$	1,352,183		$	(37,401	)	$	(330	)	$	1,314,452

See pro forma adjustment footnotes.

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GRAY TELEVISION, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (Continued) (Unaudited)
As of September 30, 2005
(in thousands)

				Spinoff of
				Publishing
				and Graylink
				Wireless			Pro Forma
	Historical			Businesses(a)			Adjustments			Pro Forma
Liabilities and stockholders’ equity:
Current liabilities:
Trade accounts payable	$	3,178		$	(364	)	$	—		$	2,814
Employee compensation and benefits		7,977			(912	)		—			7,065
Current portion of accrued pension costs		2,766			—			—			2,766
Accrued interest		6,968			—			—			6,968
Other accrued expenses		11,286			(464	)		—			10,822
Dividends payable		—			—			—			—
Federal and state income taxes		1,699			(314	)		—			1,385
Current portion of program broadcast obligations		11,988			—			—			11,988
Acquisition related liabilities		641			—			—			641
Deferred revenue		2,155			(2,003	)		—			152
Current portion of long-term debt		2,076			—			—			2,076
Total current liabilities		50,734			(4,057	)		—			46,677
Long-term debt, less current portion		630,930			—			(45,330	)(c)		585,600
Program broadcast obligations, less current portion		986			—			—			986
Deferred income taxes		246,563			(2,336	)		—			244,227
Other		6,567			(118	)		—			6,449
Total liabilities		935,780			(6,511	)		(45,330	)		883,939
Redeemable Serial Preferred Stock, no par value; cumulative; convertible; designated 5 shares, respectively, issued and outstanding 4 shares $(39,640 aggregate liquidation value)		39,068			—			—			39,068
Stockholders’ equity:
Common Stock, no par value; authorized 100,000 shares, issued 45,139 shares		406,358			—			39,695	(b)		446,053
Class A Common Stock, no par value; authorized 15,000 shares; issued 7,332 shares		11,037			—			5,305	(b)		16,342
Retained earnings		12,048			(30,890	)					(18,842	)
Accumulated other comprehensive loss, net of tax		(1,414	)		—			—			(1,414	)
Unearned compensation		(834	)		—			—			(834	)
		427,195			(30,890	)		45,000			441,305
Treasury Stock at cost, Common Stock, 2,092 shares		(27,461	)		—			—			(27,461	)
Treasury Stock at cost, Class A Common Stock, 1,579 shares		(22,399	)		—			—			(22,399	)
Total stockholders’ equity		377,335			(30,890	)		45,000			391,445
Total liabilities and stockholders’ equity	$	1,352,183		$	(37,401	)	$	(330	)	$	1,314,452

See pro forma adjustment footnotes.

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GRAY TELEVISION, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
For the Nine Months Ended September 30, 2005
(in thousands except for per share data)

				Spinoff of
				Publishing
				and Graylink
				Wireless			Pro Forma
	Historical			Businesses(a)			Adjustments			Pro Forma
Operating revenues:
Broadcasting (less agency commissions)	$	188,578		$	—		$	—		$	188,578
Publishing and other		39,314			(39,314	)		—			—
		227,892			(39,314	)		—			188,578
Expenses:
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:
Broadcasting		118,298			—			—			118,298
Publishing and other		29,339			(28,880	)		—			459
Corporate and administrative		11,400			—			—			11,400
Depreciation		18,557			(1,233	)		—			17,324
Amortization of intangible assets		576			—			—			576
Amortization of restricted stock awards		294			—			—			294
(Gain) loss on disposal of assets, net		(107	)		199			—			92
		178,357			(29,914	)		—			148,443
Operating income		49,535			(9,400	)		—			40,135
Miscellaneous income, net		709			—			—			709
Interest expense		(33,547	)		—			1,521	(d)		(32,026	)
Loss on early extinguishment of debt		(4,770	)		—			—			(4,770	)
Income before income taxes		11,927			(9,400	)		1,521			4,048
Income tax expense		4,716			(3,666	)		593	(e)		1,643
Income from continuing operations		7,211			(5,734	)		928			2,405
Preferred dividends including accretion of issuance cost of $65		2,444			—			—			2,444
Income from continuing operations available to common stockholders	$	4,767		$	(5,734	)	$	928		$	(39	)
Basic per share information:
Income from continuing operations available to common stockholders	$	0.10								$	0.00
Weighted average shares outstanding		48,655									48,655
Diluted per share information:
Income from continuing operations available to common stockholders	$	0.10								$	0.00
Weighted average shares outstanding		48,939									48,939
Dividends declared per share	$	0.09								$	0.09

See pro forma adjustment footnotes.

5

GRAY TELEVISION, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
For the Nine Months Ended September 30, 2004
(in thousands except for per share data)

				Spinoff of
				Publishing
				and Graylink
				Wireless			Pro Forma
	Historical			Businesses(a)			Adjustments			Pro Forma
Operating revenues:
Broadcasting (less agency commissions)	$	206,802		$	—		$	—		$	206,802
Publishing and other		38,148			(38,148	)		—			—
		244,950			(38,148	)		—			206,802
Expenses:
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:
Broadcasting		112,762			—			—			112,762
Publishing and other		27,262			(27,014	)		—			248
Corporate and administrative		7,420			—			—			7,420
Depreciation		17,760			(1,303	)		—			16,457
Amortization of intangible assets		751			(55	)		—			696
Amortization of restricted stock awards		323			—			—			323
(Gain) loss on disposal of assets, net		(605	)		41			—			(564	)
		165,673			(28,331	)		—			137,342
Operating income		79,277			(9,817	)		—			69,460
Miscellaneous income, net		600			(37	)		—			563
Interest expense		(31,353	)		2			1,368	(d)		(29,983	)
Income before income taxes		48,524			(9,852	)		1,368			40,040
Income tax expense		19,042			(3,842	)		533	(e)		15,733
Income from continuing operations		29,482			(6,010	)		835			24,307
Preferred dividends, including accretion of issuance cost of $87		2,458			—			—			2,458
Income from continuing operations available to common stockholders	$	27,024		$	(6,010	)	$	835		$	21,849
Basic per share information:
Income from continuing operations available to common stockholders	$	0.54								$	0.44
Weighted average shares outstanding		49,922									49,922
Diluted per share information:
Income from continuing operations available to common stockholders	$	0.54								$	0.43
Weighted average shares outstanding		50,471									50,471
Dividends declared per share	$	0.09								$	0.09

See pro forma adjustment footnotes.

6

GRAY TELEVISION, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
For the Year Ended December 31, 2004
(in thousands except for per share data)

				Spinoff of
				Publishing
				and Graylink
				Wireless			Pro Forma
	Historical			Businesses(a)			Adjustments			Pro Forma
Operating revenues:
Broadcasting (less agency commissions)	$	293,273		$	—		$	—		$	293,273
Publishing and other		53,294			(53,294	)		—			—
		346,567			(53,294	)		—			293,273
Expenses:
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:
Broadcasting		158,305			—			—			158,305
Publishing and other		38,701			(38,353	)		—			348
Corporate and administrative		11,662						—			11,662
Depreciation		23,656			(1,701	)		—			21,955
Amortization of intangible assets		975			(55	)		—			920
Amortization of restricted stock awards		512			—			—			512
(Gain) loss on disposal of assets, net		(451	)		(45	)		—			(496	)
		233,360			(40,154	)		—			193,206
Operating income		113,207			(13,140	)		—			100,067
Miscellaneous income, net		1,016			(37	)		—			979
Interest expense		(41,974	)		2			1,436	(d)		(40,536	)
Income before income taxes		72,249			(13,175	)		1,436			60,510
Income tax expense		27,964			(5,138	)		560	(e)		23,386
Income from continuing operations		44,285			(8,037	)		876			37,124
Preferred dividends, including accretion of issuance cost of $87		3,272			—			—			3,272
Income from continuing operations available to common stockholders	$	41,013		$	(8,037	)	$	876		$	33,852
Basic per share information:
Income from continuing operations available to common stockholders	$	0.83								$	0.68
Weighted average shares outstanding		49,643									49,643
Diluted per share information:
Income from continuing operations available to common stockholders	$	0.82								$	0.67
Weighted average shares outstanding		50,170									50,170
Dividends declared per share	$	0.24								$	0.24

See pro forma adjustment footnotes.

7

GRAY TELEVISION, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
For the Year Ended December 31, 2003
(in thousands except for per share data)

				Spinoff of
				Publishing
				and Graylink
				Wireless
	Historical			Businesses(a)			Pro Forma
Operating revenues:
Broadcasting (less agency commissions)	$	243,061		$	—		$	243,061
Publishing and other		52,310			(52,310	)		—
		295,371			(52,310	)		243,061
Expenses:
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:
Broadcasting		145,721			—			145,721
Publishing and other		37,566			(37,093	)		473
Corporate and administrative		8,460			—			8,460
Depreciation		21,715			(2,018	)		19,697
Amortization of intangible assets		5,622			(427	)		5,195
Amortization of restricted stock awards		454			—			454
(Gain) loss on disposal of assets, net		1,155			(164	)		991
		220,693			(39,702	)		180,991
Operating income		74,678			(12,608	)		62,070
Miscellaneous income, net		20			(53	)		(33	)
Interest expense		(43,337	)		30			(43,307	)
Income before income taxes		31,361			(12,631	)		18,730
Income tax expense		17,337			(4,926	)		12,411
Income from continuing operations		14,024			(7,705	)		6,319
Preferred dividends, including accretion of issuance cost of $87		3,287			—			3,287
Income from continuing operations available to common stockholders	$	10,737		$	(7,705	)	$	3,032
Basic per share information:
Income from continuing operations available to common stockholders	$	0.21					$	0.06
Weighted average shares outstanding		50,111						50,111
Diluted per share information:
Income from continuing operations available to common stockholders	$	0.21					$	0.06
Weighted average shares outstanding		50,535						50,535
Dividends declared per share	$	0.08					$	0.08

See pro forma adjustment footnotes.

8

GRAY TELEVISION, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
For the Year Ended December 31, 2002
(in thousands except for per share data)

				Spinoff of
				Publishing
				and Graylink
				Wireless
	Historical			Businesses(a)			Pro Forma
Operating revenues:
Broadcasting (less agency commissions)	$	146,714		$	—		$	146,714
Publishing and other		51,926			(51,926	)		—
		198,640			(51,926	)		146,714
Expenses:
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:
Broadcasting		81,996			—			81,996
Publishing and other		37,381			(36,971	)		410
Corporate and administrative		5,607			—			5,607
Depreciation		15,564			(2,226	)		13,338
Amortization of intangible assets		2,164			(429	)		1,735
(Gain) loss on disposal of assets, net		699			(15	)		684
		143,411			(39,641	)		103,770
Operating income		55,229			(12,285	)		42,944
Appreciation in value of derivatives, net		1,581			—			1,581
Miscellaneous income, net		303			(114	)		189
Interest expense		(35,674	)		40			(35,634	)
Loss on early extinguishment of debt		(16,838	)		—			(16,838	)
Income before income taxes		4,601			(12,359	)		(7,758	)
Income tax expense		1,896			(4,697	)		(2,801	)
Income (loss) from continuing operations		2,705			(7,662	)		(4,957	)
Preferred dividends, including accretion of issuance cost of $58		2,461			—			2,461
Preferred dividends associated with redemption of preferred stock		3,969			—			3,969
Loss from continuing operations available to common stockholders	$	(3,725	)	$	(7,662	)	$	(11,387	)
Basic per share information:
Loss from continuing operations available to common stockholders	$	(0.17	)				$	(0.51	)
Weighted average shares outstanding		22,127						22,127
Diluted per share information:
Loss from continuing operations available to common stockholders	$	(0.17	)				$	(0.51	)
Weighted average shares outstanding		22,127						22,127
Dividends declared per share	$	0.08					$	0.08

9

See pro forma adjustment footnotes.

Pro Forma Adjustment Footnotes

Spinoff of Publishing and Graylink Wireless Businesses:

(a) To reflect the spinoff of our publishing and Graylink wireless businesses as a discontinued operation in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. All items represented under discontinued operations were specific to our publishing and Graylink wireless businesses and will be reported as discontinued operations in our historical financial statements beginning with our Annual Report on Form 10-K for the year ended December 31, 2005. Spinoff costs of $2.5 million were included in Gray’s financial statements for the nine months ended September 30, 2005.

Pro Forma Adjustments:

(b)	To reflect the transfer of $45.0 million distribution from TCM to Gray, including an estimated $5.0 million of fees and expenses relating to the transaction.
(c)	To reflect the pay down of a portion of Gray’s senior credit facility with the $45.3 million in cash transferred and the cash retained from TCM.
(d)	To reflect the net reduction in interest expense from the pay down of Gray’s senior credit facility with the proceeds from TCM using the average interest rates of the senior credit facility in effect, net of increased costs for unused commitment on that credit facility.
(e)	To reflect the income tax impact of the pro forma income statement adjustments at the blended federal and state statutory rate of 39.0%.

(c) Exhibits.

Exhibit No.	Description
Exhibit 99.1	Press release, dated January 3, 2006

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Gray Television, Inc.
Date: January 6, 2006	By:	/s/ James C. Ryan
		Name:	James C. Ryan
		Title:	Chief Financial Officer and Sr. Vice President

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