GRAY TELEVISION, INC.
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 11-K

    [X]    ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

    For the fiscal year ended December 31, 2002.

    OR

    [  ]   TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

    For the transition period from __________ to  __________

    Commission file numbers 33-84656 and 333-17773.

A.   Full title of the plan and the address of the plan, if different from that of the issuer named below:

    Gray Television, Inc.
Capital Accumulation Plan

B.   Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

    Gray Television, Inc.
126 N. Washington Street
Albany, Georgia 31701

1


TABLE OF CONTENTS

REQUIRED INFORMATION
SIGNATURES
EXHIBIT INDEX
EX-23.1 CONSENT OF PRICEWATERHOUSECOOPERS LLP
EX-23.2 CONSENT OF MCGLADREY & PULLEN LLP
EX-99.1 906 CERTIFICATION


Table of Contents

GRAY TELEVISION, INC.

FORM 11-K

REQUIRED INFORMATION

(a)   Financial Statements. Filed as part of this Report on Form 11-K are the financial statements and the schedules thereto of the Gray Television, Inc. Capital Accumulation Plan as required by Form 11-K, together with the report thereon of PriceWaterhouseCoopers, LLP, independent auditors, dated June 26, 2003 AND McGladrey & Pullen, LLP, independent auditors, dated June 19, 2002.

(b)   Exhibits. Consents of PriceWaterhouseCoopers, LLP dated June 26, 2003 and McGladrey & Pullen, LLP dated June 26, 2003 are being filed as an exhibit to this report.

SIGNATURES

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

  GRAY TELEVISION, INC.
CAPITAL ACCUMULATION PLAN
           
Date: June 27, 2003   By: /S/   James C. Ryan
   
        James C. Ryan
Gray Television, Inc.
Chief Financial Officer

2


Table of Contents

GRAY TELEVISION, INC.

FORM 11-K

EXHIBIT INDEX

             
Exhibit       Page
Number   Exhibit   Number

 
 
23.1   Consent of PriceWaterhouseCoopers, LLP to incorporation of its report by reference in Gray Television, Inc. Registration Statement on Form S-8, No. 33-84656 and No. 333-17773.  
17

             
23.2   Consent of McGladrey & Pullen, LLP to incorporation of its Report by Reference in Gray Television, Inc. Registration Statement on Form S-8, No.33-84656 and No.333-17773.  
18

             
99.1   Section 906 Certification of the Plan Chief Administrative Officer and Plan Chief Financial Officer.  
19

3


Table of Contents

GRAY TELEVISION, INC.
CAPITAL ACCUMULATION PLAN
Financial Statements and
Supplemental Schedules
December 2002 and 2001


Table of Contents

Gray Television, Inc. Capital Accumulation Plan
Contents
December 31, 2002 and 2001

           
      Pages
     
Report of Independent Auditors
    1  
Independent Auditor’s Report
    2  
Financial Statements
       
 
Statements of Net Assets Available for Benefits
    3  
 
Statement of Changes in Net Assets Available for Benefits
    4  
 
Notes to Financial Statements
    5-8  
Supplemental Schedules
       
 
Schedule H, Line 4i — Schedule of Assets (Held at End of Year)
    9  
 
Schedule H, Line 4j — Schedule of Reportable Transactions
    10  

 


Table of Contents

Report of Independent Auditors

The Retirement Committee
Gray Television, Inc. Capital Accumulation Plan

In our opinion, the accompanying statement of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Gray Television, Inc. Capital Accumulation Plan (the “Plan”) at December 31, 2002, and the changes in net assets available for benefits for the year ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan’s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes at end of year as of December 31, 2002, and reportable transactions for the year then ended, are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan’s management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ PricewaterhouseCoopers, LLP

Atlanta, Georgia
June 26, 2003

 


Table of Contents

INDEPENDENT AUDITOR’S REPORT

Benefit Committee
Gray Television, Inc.
   Capital Accumulation Plan
Albany, Georgia

We have audited the accompanying statement of net assets available for benefits of the Gray Television, Inc. Capital Accumulation Plan (the “Plan”) as of December 31, 2001. This financial statement is the responsibility of the Plan’s management. Our responsibility is to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statement referred to above presents fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2001, in conformity with accounting principles generally accepted in the United States of America.

/s/ McGladrey & Pullen, LLP

Fort Lauderdale, Florida
June 19, 2002

2


Table of Contents

Gray Television, Inc. Capital Accumulation Plan
Statements of Net Assets Available for Benefits
December 31, 2002 and 2001

                     
        December 31,
        2002   2001
Assets
               
Investments
               
 
Participant-directed:
               
   
Mutual funds
  $ 8,538,247     $ 8,185,872  
   
Participant loans
    286,603       227,036  
   
 
   
     
 
 
    8,824,850       8,412,908  
   
 
   
     
 
 
Nonparticipant-directed:
               
   
Gray Television, Inc. common stock — class A
    416,907       528,541  
   
Gray Television, Inc. common stock
    2,413,164       2,171,297  
   
Common stock liquidity cash
    53,554       85,411  
   
 
   
     
 
 
    2,883,625       2,785,249  
   
 
   
     
 
Receivables
               
 
Employer contributions
    624,568       49,281  
 
Participant contributions
    138,822       124,618  
   
 
   
     
 
 
    763,390       173,899  
   
 
   
     
 
Net assets available for benefits
  $ 12,471,865     $ 11,372,056  
   
 
   
     
 

The accompanying notes are an integral part of these consolidated financial statements.

3


Table of Contents

Gray Television, Inc. Capital Accumulation Plan
Statement of Changes in Net Assets Available for
Benefits Year Ended December 31, 2002

               
Additions in net assets attributed to
       
 
Investment income
       
   
Interest and dividends
  $ 183,837  
   
Other
    2,545  
   
 
   
 
 
    186,382  
 
Contributions
       
   
Employee contributions
    1,783,263  
   
Employer contributions — matching
    753,181  
   
Employer contributions — voluntary
    568,035  
   
Rollover contributions
    142,005  
   
 
   
 
     
Total additions
    3,432,866  
   
 
   
 
Deductions from net assets attributed to
       
 
Net depreciation in fair value of investments
    1,504,297  
 
Benefit payments
    798,497  
 
Administrative expenses
    30,263  
   
 
   
 
     
Total deductions
    2,333,057  
   
 
   
 
Net increase in net assets available for benefits
    1,099,809  
Net assets available for benefits, beginning of year
    11,372,056  
   
 
   
 
Net assets available for benefits, end of year
  $ 12,471,865  
   
 
   
 

The accompanying notes are an integral part of these consolidated financial statements.

4


Table of Contents

Gray Television, Inc. Capital Accumulation Plan
Notes to Financial Statements
December 31, 2002 and 2001

1.   Description of the Plan

    The following description of the Plan provides only general information. Reference should be made to the Plan document for a more complete description of the Plan’s provisions.

    General

    The Plan was established and made effective October 1, 1994, for the administration and allocation of contributions by Gray Television, Inc., (the “Employer”) and to encourage eligible employees to defer a part of their current income to provide for their retirement, death, or disability under the provisions of Section 401(k) of the Internal Revenue Code. The Plan covers all employees of Gray Television, Inc. and its subsidiaries that subsequently adopt the Plan, except Excluded Employees as defined in the Plan document. Employees who have completed one eligibility year of service as defined in the plan document may become a participant. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).

    Contributions

    The Plan allows participants to make contributions up to a maximum of 16% of their compensation on a before-tax basis and up to a maximum of 16% on an after-tax basis, as long as the sum of the before-tax and after-tax percentages does not exceed 16%. Participants may change their deferral options quarterly.

    Participants’ contributions on a before-tax basis are limited by the Internal Revenue Code Section 402(c) (5) to $11,000, in 2002. In addition, annual additions to all pension plans shall not exceed the lesser of $40,000 or 100% of a participant’s annual compensation. Contributions to highly compensated employees are subject to additional restrictions.

    The Employer shall contribute to the Plan a matching percentage, as determined by a declaration of its Board of Directors before the beginning of any Plan year, of the eligible contributions of plan participants not to exceed 6% of eligible compensation as defined in the Plan document. The matching percentage was 50% for the year ended December 31, 2002. The Employer’s matching contributions are made in shares of Gray Television, Inc. common stock. Any forfeitures of Employer contributions are used to reduce future Sponsor contributions. Forfeitures of nonvested amounts were approximately $203,497 for the year ended December 31, 2002.

    Investment Funds

    Participants may direct their contributions, vested employer contributions, and any related earnings into various mutual funds held by Circle Trust. Participants may change their investment elections daily. Matching contributions made in shares of Gray Television, Inc. common stock may not be redirected until the accounts are fully vested.

    Vesting

    Participants are immediately vested in their voluntary contributions plus the actual earnings thereon. Employer contributions and earnings thereon become 100% vested after completing three years of service as defined in the Plan document.

5


Table of Contents

Gray Television, Inc. Capital Accumulation Plan
Notes to Financial Statements
December 31, 2002 and 2001

    Payment of Benefits

    Upon retirement, death, disability, or termination of employment, a participant, or their designated beneficiary, may elect to receive the vested balance in the participant’s account in the form of a single lump-sum cash payment or a direct rollover to another retirement plan.

    Participant Loans

    Participants may receive a loan from their account subject to the adoption of a written loan agreement and approval of a participant’s application. The maximum loan amount is the lesser of $50,000 or one-half of a participant’s vested account balance, with a minimum loan amount of $1,000. Loans are payable through payroll deductions over periods ranging up to five years, unless the loan qualifies as a home loan in which case the repayment period may be longer. The interest rate is determined by the plan administrator based on prevailing market conditions and is fixed over the life of the note. The loan interest rate is equal to the prime rate for major banks, as published in The Wall Street Journal on the date the loan is approved, plus 1%.

    Plan Termination

    The Plan may be terminated or amended by the Board at any time, provided, however, that no such amendment shall make it possible for any part of the corpus or income of the Plan to be used for or directed to purposes other than for the exclusive benefit of participants or their beneficiaries. If the Plan is terminated by the Employer, each participant’s account will become fully vested and nonforfeitable.

2.   Accounting Policies

    Basis of Accounting

    The Gray Television, Inc. Capital Accumulation Plan (the “Plan”) financial statements are presented on the accrual basis of accounting. Gray Television, Inc., (the “Company”) is the Plan’s sponsor and Plan administrator. Circle Trust Company (“Circle Trust”) is the Plan’s trustee.

    Contributions

    Employer contributions are accrued in the period in which they become obligations of the Company. The amount is determined in accordance with the provisions of the Plan as approved by the Company’s Board of Directors. Contributions from participants are made on a voluntary basis.

    Payment of Benefits

    Benefits are recorded when paid.

    Investments

    The Plan’s investments are stated at fair value. Quoted market prices are used to value investments in common stock. Shares of mutual funds are valued at the net asset value of shares held by the Plan at year end.

    Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date.

6


Table of Contents

Gray Television, Inc. Capital Accumulation Plan
Notes to Financial Statements
December 31, 2002 and 2001

    Use of Estimates

    The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

    Net Depreciation in Fair Value of Investments

    The Plan presents in the statement of changes in net assets available for benefits the net depreciation in the fair value of its investments, which consists of realized gains or losses and the unrealized appreciation (depreciation) on those investments.

    Administrative Expenses

    The Employer pays all administrative expenses of the Plan except for certain contract administrator and trustee fees. Such charges not paid by the employer were applied directly to the accounts of the participants and are classified as administrative expenses in the statement of changes in net assets available for benefits. Administrative expenses paid by the employer are not included in the accompanying financial information.

3.   Investments

    The fair market values of investments that represent 5% or more of the Plan’s net assets available for benefits as of December 31, 2002 and 2001 are as follows:
         
    December 31,
    2002
 
Growth Fund of America, 120,456 shares
  $ 2,224,819  
Intermediate Bond Fund, 151,390 shares
    2,104,320  
Investment Company of America, 77,279 shares
    1,814,513  
Cash Management Trust, 1,109,296 shares
    1,109,296  
Gray Television, Inc. — Common Stock
    2,413,164 *
         
    December 31,
    2001
 
Growth Fund of America, 105,659 shares
  $ 2,505,166  
Intermediate Bond Fund, 116,754 shares
    1,582,016  
Investment Company of America, 64,771 shares
    1,847,918  
Cash Management Trust, 851,853 shares
    851,853  
Gray Television, Inc. — Common Stock
    2,171,297 *

* Nonparticipant-directed

7


Table of Contents

Gray Television, Inc. Capital Accumulation Plan
Notes to Financial Statements
December 31, 2002 and 2001

4.   Nonparticipant-Directed Investments

    Information about the significant components of the changes in nonparticipant-directed investments is as follows:
             
        December 31,
        2002
 
Increase (decrease) attributed to:
       
 
Contributions
  $ 883,620  
 
Interest and dividends
    4,586  
 
Net depreciation
    (255,229 )
 
Benefit payments and other expenses
    (294,453 )
 
Net transfers to participant — directed investments
    (240,148 )
 
   
 
   
Net increase
  $ 98,376  
 
 
   
 

5.   Income Tax Status

    The Plan has received a favorable determination letter from the Internal Revenue Service, dated October 25, 1995, regarding the Plan’s exemption from federal income tax under Section 501(a) of the Internal Revenue Code. The Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, the Plan administrator believes that the Plan is qualified as of December 31, 2002, and as such, no provision for income tax has been included in the Plan’s financial statements. As of February 7, 2002, the Company certified its intention to amend and restate the Plan by adopting a volume submitter program.

6.   Transactions with Parties-In-Interest

    Certain Plan investments are managed by Circle Trust. Circle Trust is the trustee of the Plan and therefore these transactions qualify as party-in-interest transactions. In addition, transactions involving the Common Stock Fund, which invests in the common stock of the Plan Sponsor, also qualify as party-in-interest transactions. The Plan considers only “prohibited transactions” as reportable party-in-interest transactions. The Plan had no such reportable party-in-interest transactions during the year ended December 31, 2002.

8


Table of Contents

Gray Television, Inc. Capital Accumulation Plan
Schedule H, Line 4i — Schedule of Assets (Held at End of Year)
December 31,2002

Supplemental Schedules

                               
          Description of            
          Investment           Fair
          (Shares)/Units   Cost   Value
Circle Trust Company*
                       
 
Growth Fund of America
    120,455.814       #     $ 2,224,819  
 
Intermediate Bond Fund
    151,389.888       #       2,104,320  
 
Investment Company of America
    77,279.090       #       1,814,513  
 
Cash Management Trust
    1,109,296.380       #       1,109,296  
 
Europacific Growth Fund
    18,046.030       #       414,517  
 
New Economy Fund
    27,073.080       #       366,570  
 
Small Cap World Fund
    15,160.038       #       270,152  
 
Van Kampen Emerging Growth Fund
    4,639.172       #       131,103  
 
Fidelity Advisors Equity Growth Fund
    1,104.088       #       37,009  
 
Fundamental Investors Fund
    1,079.748       #       24,003  
 
New Perspective
    1,297.970       #       23,415  
 
Fidelity Advisors Overseas Fund Class A
    1,704.731       #       18,530  
 
                   
 
     
Total
                    8,538,247  
Common Stock Fund —
                       
 
Gray Television, Inc.*
                       
   
Common Stock — Class A
    35,182.000     $ 434,609       416,907  
   
Common Stock
    247,504.000       3,489,486       2,413,164  
   
Common Stock liquidity cash
            53,554       53,554  
Participant Loans (rates of interest, lowest — 5.25%,highest—10.50%)
            #       286,603  
 
                   
 
 
                  $ 11,708,475  
 
                   
 

*Indicates a party-in-interest.

#Not applicable for participant directed investments.

9


Table of Contents

Gray Television, Inc. Capital Accumulation Plan
Schedule H, Line 4j — Schedule of Reportable Transactions
Year Ended December 31, 2002

                                                   
                                      (h)    
                                      Current Value    
              (c)   (d)   (g)   of Assets on   (i)
(a)   (b)   Purchase   Selling   Cost of   Transaction   Net Gain
Identity of Party Involved   Description of Asset   Price   Price   Asset   Date   or Loss

 
 
 
 
 
 
Gray Television, Inc.   Gray Television, Inc.                                        
         
Common Stock
                                       
         
Purchases of 61,461 units
  $ 1,040,322     $     $ 1,040,322     $ 1,040,322     $  
         
Sales of 39,670 units
          650,584       484,900       650,584       165,684  

Note: The information required by columns (e) and (f) is not applicable.

10