GRAY TELEVISION, INC.
 

 
 
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).

2

 

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.

3

 

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.

4

 

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  
 
                    

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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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