##### 



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 December 31, 2006 or
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to  .
 Commission file number 000-51636
 Triple Crown Media, Inc.
  Delaware
    
    20-3012824(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)546 East Main Street, Lexington, Kentucky
    
    40508(Address of principal executive offices)
    
    (Zip code)
 (859) 226-4678  (Registrants telephone number, including area code)
 Not Applicable  (Former name, former address and former fiscal year, if changed since last report)
 þ o
  o o þ
 o þ
  5,271,015 shares outstanding as of January 31, 2007




---



##### 



PAGEPART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsCondensed consolidated balance sheets    June 30, 2006 (Audited) and December 31, 2006 (Unaudited)
    
    
    3Condensed combined and consolidated statements of operations (Unaudited)  Three and six months ended December 31, 2005 and 2006
    
    
    4Combined and consolidated statements of cash flows (Unaudited)  Three and six months ended December 31, 2005 and 2006
    
    
    5Notes to condensed combined and consolidated financial statements (Unaudited)
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3.
    
    Quantitative and Qualitative Disclosure About Market Risk
    
    
    31Item 4.
    
    Controls and Procedures
    
    
    31PART II.
    
    OTHER INFORMATION
    
    
    31Item 1A.
    
    Risk Factors
    
    
    31Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    31Item 6.
    
    Exhibits
    
    
    32
 2




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##### 



PART I. FINANCIAL INFORMATION
 Item 1. Financial Statements
 TRIPLE CROWN MEDIA, INC.
CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2006
    
    
    2006(Audited)
    
    
    (Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    173
    
    
    $
    866Accounts receivable, less allowance for
doubtful accounts of $434 and $641, respectively
    
    
    11,412
    
    
    
    31,800Inventories
    
    
    1,498
    
    
    
    1,381Other current assets
    
    
    1,949
    
    
    
    1,708Total current assets
    
    
    15,032
    
    
    
    35,755Property and equipment:Land
    
    
    1,993
    
    
    
    1,993Buildings and improvements
    
    
    7,737
    
    
    
    7,747Equipment
    
    
    19,777
    
    
    
    21,21329,507
    
    
    
    30,953Accumulated depreciation
    
    
    (16,457
    )
    
    
    (18,301
    )13,050
    
    
    
    12,652Goodwill
    
    
    87,475
    
    
    
    88,395Other intangible assets, net
    
    
    24,917
    
    
    
    28,157Deferred income taxes
    
    
    16,193
    
    
    
    15,492Other assets
    
    
    6,908
    
    
    
    5,682Total assets
    
    $
    163,575
    
    
    $
    186,133LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS DEFICITCurrent liabilities:Current portion of long-term debt
    
    $
    900
    
    
    $
    12,100Accounts payable
    
    
    3,849
    
    
    
    5,746Accrued expenses
    
    
    11,526
    
    
    
    19,999Accrued fees payable to Gray Television, Inc.
    
    
    3,420
    
    
    
    1,710Deferred revenue
    
    
    4,576
    
    
    
    8,427Total current liabilities
    
    
    24,271
    
    
    
    47,982Long-term debt
    
    
    118,376
    
    
    
    117,437Other liabilities
    
    
    2,332
    
    
    
    2,122Series B redeemable preferred stock, $.001 par value (authorized 20,000
shares; issued and outstanding 6,050 shares; $6,050 liquidation value)
    
    
    4,425
    
    
    
    4,470Total liabilities
    
    
    149,404
    
    
    
    172,011Series A redeemable, convertible preferred stock, $.001 par value (authorized 50,000
shares; issued and outstanding 20,890 shares; $20,890 liquidation value)
    
    
    16,885
    
    
    
    17,009Commitments and contingenciesStockholders deficit:Common stock, par value $0.001 (authorized 25,000 shares, issued and
outstanding (5,187 and 5,257 shares, respectively)
    
    
    5
    
    
    
    5Additional paid-in capital
    
    
    3,453
    
    
    
    4,274Accumulated deficit
    
    
    (6,572
    )
    
    
    (7,169
    )Accumulated other comprehensive income (loss), net of tax
    
    
    400
    
    
    
    3Total stockholders deficit
    
    
    (2,714
    )
    
    
    (2,887
    )Total liabilities, preferred stock and stockholders deficit
    
    $
    163,575
    
    
    $
    186,133
  3




---



##### 



TRIPLE CROWN MEDIA, INC.
COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2005
    
    
    2006
    
    
    2005
    
    
    2006(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Operating revenues:Publishing
    
    $
    10,673
    
    
    $
    13,015
    
    
    $
    20,459
    
    
    $
    25,000Collegiate marketing and production services
    
    
    97
    
    
    
    30,739
    
    
    
    97
    
    
    
    43,548Association management services
    
    
    16
    
    
    
    2,875
    
    
    
    16
    
    
    
    5,600Wireless
    
    
    1,517
    
    
    
    1,470
    
    
    
    3,377
    
    
    
    3,06012,303
    
    
    
    48,099
    
    
    
    23,949
    
    
    
    77,208Expenses:Operating expenses before depreciation, amortization
and loss (gain) on disposal of assets, net:Publishing
    
    
    7,827
    
    
    
    8,843
    
    
    
    15,325
    
    
    
    17,370Collegiate marketing and production services
    
    
    101
    
    
    
    26,970
    
    
    
    101
    
    
    
    39,761Association management services
    
    
    12
    
    
    
    1,914
    
    
    
    12
    
    
    
    3,622Wireless
    
    
    1,650
    
    
    
    1,465
    
    
    
    3,374
    
    
    
    2,821Corporate and administrative
    
    
    369
    
    
    
    1,280
    
    
    
    730
    
    
    
    2,394Depreciation
    
    
    460
    
    
    
    522
    
    
    
    801
    
    
    
    1,065Amortization
    
    
    3,216
    
    
    
    1,045
    
    
    
    3,216
    
    
    
    1,830Loss (gain) on disposal of assets, net
    
    
    41
    
    
    
    
    
    
    
    (558
    )
    
    
    (17
    )13,676
    
    
    
    42,039
    
    
    
    23,001
    
    
    
    68,846Operating income
    
    
    (1,373
    )
    
    
    6,060
    
    
    
    948
    
    
    
    8,362Other income (expense):Interest expense related to Series B preferred stock
    
    
    (1
    )
    
    
    (113
    )
    
    
    (1
    )
    
    
    (226
    )Interest expense, other
    
    
    (236
    )
    
    
    (3,309
    )
    
    
    (236
    )
    
    
    (6,463
    )Debt issue cost amortization
    
    
    (3
    )
    
    
    (285
    )
    
    
    (3
    )
    
    
    (551
    )Income (loss) from continuing operations before income taxes
    
    
    (1,613
    )
    
    
    2,353
    
    
    
    708
    
    
    
    1,122Income tax expense (benefit)
    
    
    (611
    )
    
    
    1,664
    
    
    
    273
    
    
    
    1,178Earnings (loss) from continuing operations
    
    
    (1,002
    )
    
    
    689
    
    
    
    435
    
    
    
    (56
    )Income from discontinued operations, net of tax
    
    
    203
    
    
    
    
    
    
    
    445Net income (loss)
    
    
    (799
    )
    
    
    689
    
    
    
    880
    
    
    
    (56
    )Series A preferred stock dividends accrued
    
    
    (3
    )
    
    
    (271
    )
    
    
    (3
    )
    
    
    (542
    )Net income (loss) available to common stockholders
    
    $
    (802
    )
    
    $
    418
    
    
    $
    877
    
    
    $
    (598
    )Basic per share information:Earnings (loss) from continuing operations
    
    $
    (0.20
    )
    
    $
    0.13
    
    
    $
    0.09
    
    
    $
    (0.01
    )Income from discontinued operations
    
    $
    0.04
    
    
    $
    
    
    
    $
    0.09
    
    
    $
    Net income (loss)
    
    $
    (0.16
    )
    
    $
    0.13
    
    
    $
    0.18
    
    
    $
    (0.01
    )Net income (loss) available to common stockholders
    
    $
    (0.16
    )
    
    $
    0.08
    
    
    $
    0.18
    
    
    $
    (0.12
    )Weighted average shares outstanding
    
    
    4,873
    
    
    
    5,230
    
    
    
    4,871
    
    
    
    5,200Diluted per share information:Earnings (loss) from continuing operations
    
    $
    (0.20
    )
    
    $
    0.13
    
    
    $
    0.09
    
    
    $
    (0.01
    )Income from discontinued operations
    
    $
    0.04
    
    
    $
    
    
    
    $
    0.09
    
    
    $
    Net income (loss)
    
    $
    (0.16
    )
    
    $
    0.13
    
    
    $
    0.18
    
    
    $
    (0.01
    )Net income (loss) available to common stockholders
    
    $
    (0.16
    )
    
    $
    0.08
    
    
    $
    0.18
    
    
    $
    (0.12
    )Diluted weighted average shares outstanding
    
    
    4,873
    
    
    
    5,319
    
    
    
    4,871
    
    
    
    5,200
  4




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##### 



TRIPLE CROWN MEDIA, INC.
COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedDecember 31,2005
    
    
    2006(Unaudited)
    
    
    (Unaudited)Operating activities:Net income (loss)
    
    $
    880
    
    
    $
    (56
    )Income on discontinued operations
    
    
    (445
    )Income (loss) from continuing operations
    
    $
    435
    
    
    $
    (56
    )Adjustments to reconcile net income (loss) to net
cash provided by operating activities:Depreciation
    
    
    801
    
    
    
    1,065Amortization
    
    
    3,219
    
    
    
    2,381Interest accrued on redeemable preferred stock
    
    
    
    
    
    
    226Gain on disposal of assets, net
    
    
    (558
    )
    
    
    (15
    )Stock compensation expense
    
    
    
    
    
    
    213Issuance of common stock to 401K plan
    
    
    
    
    
    
    203Deferred income taxes
    
    
    (461
    )
    
    
    966Changes in operating assets and liabilities:Accounts receivable
    
    
    74
    
    
    
    (19,398
    )Inventories
    
    
    (13
    )
    
    
    117Other current assets
    
    
    17
    
    
    
    1,118Accounts payable and accrued expenses
    
    
    474
    
    
    
    7,651Accrued income taxes
    
    
    706
    
    
    
    212Deferred revenue
    
    
    (394
    )
    
    
    2,738Other assets and liabilities
    
    
    158
    
    
    
    415Net cash provided by (used in) continuing operations
    
    
    4,458
    
    
    
    (2,164
    )Net provided by discontinued operations
    
    
    1,141Net cash provided by (used in) operating activities
    
    
    5,599
    
    
    
    (2,164
    )Investing activities:Purchases of property and equipment
    
    
    (775
    )
    
    
    (512
    )Proceeds from asset sales
    
    
    1,459
    
    
    
    15Acquisition of business, net of cash acquired
    
    
    (73,928
    )
    
    
    (6,294
    )Net cash used in investing activities
    
    
    (73,244
    )
    
    
    (6,791
    )Financing activities:Proceeds from borrowings on revolving line of credit
    
    
    1,939
    
    
    
    18,150Proceeds from borrowings on long-term debt
    
    
    120,000Distributions paid to Gray Television, Inc.
    
    
    (43,953
    )Other transfers to Gray Television, Inc., net
    
    
    (5,281
    )Repayments of borrowings on debt
    
    
    
    
    
    
    (7,889
    )Debt issue costs
    
    
    (3,888
    )
    
    
    (613
    )Net cash provided by financing activities
    
    
    68,817
    
    
    
    9,648Increase in cash and cash equivalents
    
    
    1,172
    
    
    
    693Cash and cash equivalents, beginning of period
    
    
    301
    
    
    
    173Cash and cash equivalents, end of period
    
    $
    1,473
    
    
    $
    866Supplemental cash flow information:Interest Paid
    
    
    
    
    
    $
    6,451
  5




---



##### 



TRIPLE CROWN MEDIA, INC.
NOTES TO CONDENSED COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 NOTE 1  BASIS OF PRESENTATION
  Organization and Business Description 
     Change in Fiscal Year 
 Stock-Based Compensation 
 6




---



##### 



Three Months
    
    
    Six MonthsEnded
    
    
    EndedDecember 31,
    
    
    December 31,2005
    
    
    2005Net (loss) income available to common
stockholders, as reported
    
    $
    (802
    )
    
    $
    877Add: Stock-based employee
compensation expense included in
reported net income, net of related
tax effects
    
    
    
    
    
    
    Deduct: Total stock-based employee
compensation expense determined
under fair value based method for all
awards, net of related tax effects
    
    
    (7
    )
    
    
    (14
    )Net (loss) income available to common
stockholders, pro forma
    
    $
    (809
    )
    
    $
    863Net (loss) income available to common
stockholders per share:Basic and diluted, as reported
    
    $
    (0.16
    )
    
    $
    0.18Basic and diluted, pro forma
    
    $
    (0.17
    )
    
    $
    0.18
  Valuation and Impairment Testing of Intangible Assets 
  7




---



##### 



Accounting for Derivatives 
   Earnings Per Share 
   Seasonality 
 Reclassifications
 NOTE 2  ACQUISITIONS
 Acquisition of Bull Run Corporation
 8




---



##### 



Bull Run debt repaid at closing
    
    $
    72,124Common and preferred stock issued
    
    
    24,313Redemption of Bull Run preferred stock
    
    
    2,825Assumption of Bull Run operating liabilities
    
    
    2,484Cash acquired at closing
    
    
    (1,022
    )$
    100,724
   Receivables
    
    $
    16,877Other current assets
    
    
    1,791Property and equipment
    
    
    4,044Goodwill
    
    
    69,075Customer relationships, trademarks and tradenames
    
    
    17,700Other noncurrent assets
    
    
    2,757Deferred income taxes
    
    
    16,018Accounts payable and accrued expenses
    
    
    (20,218
    )Deferred revenue
    
    
    (5,196
    )Other noncurrent liabilities
    
    
    (2,124
    )$
    100,724
  9




---



##### 



(Unaudited)
    
    (Unaudited)Three Months
    
    Six MonthsEnded December
    
    Ended December31, 2005
    
    31, 2005Operating revenues
    
    $
    38,887
    
    
    $
    64,436Operating income
    
    
    2,083
    
    
    $
    4,592Net (loss) income
    
    
    (263
    )
    
    $
    274Net (loss)
income available to common stockholders
    
    
    (266
    )
    
    $
    271Per share, basic and diluted:Net (loss)
income available to common stockholders
    
    $
    (0.05
    )
    
    $
    0.05Pro forma weighted average shares outstanding
    
    
    5,129
    
    
    
    5,129
  Acquisition of the Jonesboro Group
    Receivables
    
    $
    716Other current assets
    
    
    115Property and equipment
    
    
    1,410Goodwill
    
    
    13,646Customer base and trademarks
    
    
    7,830Deferred income taxes
    
    
    (1,873
    )Accounts payable and accrued expenses
    
    
    (193
    )Deferred Revenue
    
    
    (151
    )$
    21,500
  10




---



##### 



(Unaudited)
    
    (Unaudited)Three Months
    
    Six MonthsEnded December
    
    Ended December31, 2005
    
    31, 2005Operating revenues
    
    $
    39,145
    
    
    $
    64,986Operating income
    
    $
    2,323
    
    
    $
    5,054Net (loss) income
    
    $
    (114
    )
    
    $
    561Net (loss) income available to common stockholders
    
    $
    (117
    )
    
    $
    558Per share, basic and diluted:Net (loss)
income available to common stockholders
    
    $
    (0.02
    )
    
    $
    0.11Pro forma weighted average shares outstanding
    
    
    5,129
    
    
    
    5,129
  Acquisition of Pinnacle Sports Productions, LLC
   Cash paid
    
    $
    3,155Pinnacle debt repaid at closing
    
    
    2,984Common stock issued
    
    
    406Assumption of Pinnacle operating liabilities
    
    
    176Cash acquired at closing
    
    
    (10
    )$
    6,711
  11




---



##### 



Receivables
    
    $
    990Other current assets
    
    
    877Property and equipment
    
    
    226Goodwill
    
    
    842Customer relationships
    
    
    5,070Accounts payable and accrued expenses
    
    
    (181
    )Deferred revenue
    
    
    (1,113
    )$
    6,711
 NOTE 3  CORPORATE AND ADMINISTRATIVE EXPENSE
  NOTE 4  TRANSACTIONS WITH AFFILIATED COMPANIES
 Insurance Contract with Georgia Casualty & Surety Co. 
 Rights-Sharing Agreement with Gray 
 12




---



##### 



13




---



##### 



NOTE 5  LONG-TERM DEBT
  June 30,
    
    
    December 31,2006
    
    
    2006First lien senior term loan
    
    $
    89,276
    
    
    $
    88,337Second lien senior term loan
    
    
    30,000
    
    
    
    30,000First lien revolving credit facility
    
    
    
    
    
    
    11,200$
    119,276
    
    
    $
    129,537
     14




---



##### 



NOTE 6  INCOME TAXES
  NOTE 7  DISCONTINUED OPERATIONS
   Three Months Ended
    
    Six Months EndedDecember 31, 2005
    
    December 31, 2005Operating revenue
    
    $
    1,463
    
    
    $
    2,941Income before taxes
    
    
    328
    
    
    
    719Income tax expense
    
    
    125
    
    
    
    274Income, net of taxes
    
    
    203
    
    
    
    445
  NOTE 8  PREFERRED STOCK
  15




---



##### 



NOTE 9  OTHER COMPREHENSIVE INCOME (LOSS)
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2005
    
    
    2006
    
    
    2005
    
    
    2006Net income (loss)
    
    $
    (799
    )
    
    $
    689
    
    
    $
    880
    
    
    $
    (56
    )Other comprehensive income (loss), change
in the valuation of an interest rate swap
agreement, net of tax of $38 and ($265)
    
    
    
    
    
    
    57
    
    
    
    
    
    
    
    (397
    )Comprehensive income (loss)
    
    $
    (799
    )
    
    $
    746
    
    
    $
    880
    
    
    $
    (453
    )
  NOTE 10  EMPLOYEE BENEFIT PLANS
 16




---



##### 



Stock Options and Other Equity Compensation Plans 
      WeightedAverage
    
    Expected
    
    Expected
    
    Risk-FreeGrant
    
    Expected
    
    Life
    
    Dividend
    
    InterestDate
    
    Volatility
    
    (Years)
    
    Yield
    
    Rate4/27/2006
    
    
    33.6
    %
    
    
    5.75
    
    
    
    0
    %
    
    
    4.79
    %11/29/2006
    
    
    33.6
    %
    
    
    5.75
    
    
    
    0
    %
    
    
    4.51
    %
 17




---



##### 



Employee Benefit Plans 
    18




---



##### 



NOTE 11  INFORMATION ON BUSINESS SEGMENTS
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2005
    
    
    2006
    
    
    2005
    
    
    2006Operating revenues:Publishing
    
    $
    10,673
    
    
    $
    13,015
    
    
    $
    20,459
    
    
    $
    25,000Collegiate marketing and production services
    
    
    97
    
    
    
    30,739
    
    
    
    97
    
    
    
    43,548Association management
    
    
    16
    
    
    
    2,875
    
    
    
    16
    
    
    
    5,600Wireless
    
    
    1,517
    
    
    
    1,470
    
    
    
    3,377
    
    
    
    3,060Total operating revenue
    
    $
    12,303
    
    
    $
    48,099
    
    
    $
    23,949
    
    
    $
    77,208Operating income:Publishing
    
    $
    2,525
    
    
    $
    3,748
    
    
    $
    4,598
    
    
    $
    6,765Collegiate marketing and production services
    
    
    (6
    )
    
    
    3,012
    
    
    
    (6
    )
    
    
    2,539Association management
    
    
    4
    
    
    
    646
    
    
    
    4
    
    
    
    1,349Wireless
    
    
    (3,486
    )
    
    
    (66
    )
    
    
    (3,476
    )
    
    
    86Corporate and other miscellaneous income (expense)
    
    
    (369
    )
    
    
    (1,280
    )
    
    
    (730
    )
    
    
    (2,394
    )Gain (loss) on disposal of assets, net
    
    
    (41
    )
    
    
    
    
    
    
    558
    
    
    
    17Total operating income
    
    
    (1,373
    )
    
    
    6,060
    
    
    
    948
    
    
    
    8,362Interest expense related to Series B preferred stock
    
    
    (1
    )
    
    
    (113
    )
    
    
    (1
    )
    
    
    (226
    )Interest expense
    
    
    (236
    )
    
    
    (3,309
    )
    
    
    (236
    )
    
    
    (6,463
    )Debt issue cost amortization
    
    
    (3
    )
    
    
    (285
    )
    
    
    (3
    )
    
    
    (551
    )Income from continuing operations before taxes
    
    $
    (1,613
    )
    
    $
    2,353
    
    
    $
    708
    
    
    $
    1,122
 As of
    
    
    As ofJune 30,
    
    
    December 31,2006
    
    
    2006Identifiable assets:Publishing
    
    $
    36,272
    
    
    $
    33,795Collegiate marketing and production services
    
    
    79,813
    
    
    
    101,344Association management
    
    
    21,332
    
    
    
    21,463Wireless
    
    
    4,507
    
    
    
    4,100141,924
    
    
    
    160,702Corporate
    
    
    21,651
    
    
    
    25,431Total identifiable assets
    
    $
    163,575
    
    
    $
    186,133
  19




---



##### 



NOTE 12  COMMITMENTS AND CONTINGENCIES
 Legal Matters
 Indemnification
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
       20




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##### 



Revenues
  Three Months Ended December 31,
    
    
    Six Months Ended December 31,2005
    
    
    2006
    
    
    2005
    
    
    2006Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %Publishing:Retail
    
    $
    6,675
    
    
    
    54.3
    %
    
    $
    7,696
    
    
    
    16.0
    %
    
    $
    12,165
    
    
    
    50.8
    %
    
    $
    13,942
    
    
    
    18.1
    %Classifieds
    
    
    2,919
    
    
    
    23.7
    %
    
    
    3,831
    
    
    
    8.0
    %
    
    
    6,126
    
    
    
    25.6
    %
    
    
    8,108
    
    
    
    10.5
    %Circulation
    
    
    1,023
    
    
    
    8.3
    %
    
    
    1,087
    
    
    
    2.3
    %
    
    
    2,054
    
    
    
    8.6
    %
    
    
    2,185
    
    
    
    2.8
    %Other
    
    
    56
    
    
    
    0.5
    %
    
    
    401
    
    
    
    0.8
    %
    
    
    114
    
    
    
    0.5
    %
    
    
    765
    
    
    
    1.0
    %$
    10,673
    
    
    
    86.8
    %
    
    $
    13,015
    
    
    
    27.1
    %
    
    $
    20,459
    
    
    
    85.4
    %
    
    $
    25,000
    
    
    
    32.4
    %Collegiate Marketing &
Production Services:Advertising and sponsorship
    
    $
    94
    
    
    
    0.8
    %
    
    $
    26,569
    
    
    
    55.2
    %
    
    $
    94
    
    
    
    0.4
    %
    
    $
    35,670
    
    
    
    46.2
    %Product sales and production services
    
    
    1
    
    
    
    0.0
    %
    
    
    1,923
    
    
    
    4.0
    %
    
    
    1
    
    
    
    0.0
    %
    
    
    4,077
    
    
    
    5.3
    %Station rights fees and other
    
    
    2
    
    
    
    0.0
    %
    
    
    2,247
    
    
    
    4.7
    %
    
    
    2
    
    
    
    0.0
    %
    
    
    3,801
    
    
    
    4.9
    %$
    97
    
    
    
    0.8
    %
    
    $
    30,739
    
    
    
    63.9
    %
    
    $
    97
    
    
    
    0.4
    %
    
    $
    43,548
    
    
    
    56.4
    %Association Management
Services:Management services
    
    $
    16
    
    
    
    0.1
    %
    
    $
    1,900
    
    
    
    4.0
    %
    
    $
    16
    
    
    
    0.1
    %
    
    $
    3,773
    
    
    
    4.9
    %Advertising and other
    
    
    
    
    
    
    0.0
    %
    
    
    975
    
    
    
    2.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    1,827
    
    
    
    2.4
    %$
    16
    
    
    
    0.1
    %
    
    $
    2,875
    
    
    
    6.0
    %
    
    $
    16
    
    
    
    0.1
    %
    
    $
    5,600
    
    
    
    7.3
    %Wireless:Lease, sales and service
    
    $
    1,517
    
    
    
    12.3
    %
    
    $
    1,470
    
    
    
    3.1
    %
    
    $
    3,377
    
    
    
    14.1
    %
    
    $
    3,060
    
    
    
    4.0
    %Total Revenues
    
    $
    12,303
    
    
    
    100.0
    %
    
    $
    48,099
    
    
    
    100.0
    %
    
    $
    23,949
    
    
    
    100.0
    %
    
    $
    77,208
    
    
    
    100.0
    %
 Results of Operations
 Three and Six Months Ended December 31, 2006 compared to Three and Six Months Ended    December 31, 2005
  21




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##### 



Revenues.
 
    
    Newspaper Publishing revenues of approximately $13.0 million for the three months ended
December 31, 2006, increased approximately 22% compared to the three months ended
December 31, 2005. Total retail advertising revenue increased 15%, whereas classified
advertising revenue increased 31%. For the six months ended December 31, 2006, total
revenue of $25.0 million increased 22% compared to the same period last year with retail
advertising up 15% and classified advertising up 32% over the six months ended December 31,
2005. In both the three and six months ended December 31, 2006, the increase in retail
advertising revenue was due largely to growth at The Gwinnett Daily Post and the
acquisition of the Jonesboro Group further discussed in Note 2 to the condensed combined
and consolidated financial statements, partly offset by declines at The Albany Herald,
which has been affected by the loss of certain advertisers. Classified advertising revenues
increased at all of our newspaper properties primarily due to real estate and foreclosures.
    
    Collegiate Marketing and Production Services revenue was approximately $30.7 million
and $43.5 million for the three and six months ended December 31, 2006, respectively. This
business segment was acquired in the Merger and, as such, revenue recognized related to
this business segment for the three and six months ended December 31, 2005 was immaterial.
Revenue for this segment was approximately $24.4 million and $34.3 million for the three
and six months ended December 31, 2005, respectively, virtually all of which was derived
prior to the Merger. The increase was primarily attributable to the expansion of marketing
rights available under contract extensions with certain universities and an increase in
revenues derived from rights available under existing contracts.
    
    Association Management revenue was approximately $2.9 million and $5.6 million for the
three and six months ended December 31, 2006, respectively. This business segment was
acquired in the Merger and, as such, revenue recognized by us related to this business
segment for the three and six months ended December 31, 2005 was immaterial. Revenue for
this segment was approximately $2.3 million and $4.8 million for the three and six months
ended December 31, 2005, respectively, virtually all of which was derived prior to the
Merger. The increase was primarily attributable to an association management contract added
in June 2006.
    
    Wireless revenue decreased 3% to approximately $1.5 million for the three months ended
December 31, 2006 compared to the same period in the prior year. Revenue decreased 9% to
approximately $3.1 million for the six months ended December 31, 2006 compared to the six
months ended December 31, 2005. Our Wireless business had approximately 33,000, 27,800 and
25,100 pagers in service as of December 31, 2005, September 30, 2006 and December 31, 2006,
respectively. The number of pagers in service decreased as a result of increased
competition from other communication services and products such as cellular telephones. The
number of pagers in service has declined over the past several years. The decrease in
revenue from the sale and leasing of pagers has been partially offset by reselling cellular
telephone services. Paging revenue, excluding revenue from reselling cellular telephone
services, accounted for approximately $0.9 million and $1.9 of total Wireless revenue for
the three and six months ended December 31, 2005 compared to approximately $0.7 million and
$1.5 million for the three and six months ended December 31, 2006. The trend of declining
paging revenue is expected to continue in the future.
 Operating expenses.
  22




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##### 




    
    Newsprint expenses increased 13% to approximately $1.6 million for the three months
ended December 31, 2006 and 17% to approximately $3.2 million for the six months then
ended. The increase in newsprint expense was primarily due to the acquisition of the
Jonesboro Group. Total usage was approximately 2,700 and 2,500 metric tons for the three
months ended December 31, 2005 and 2006, respectively, and 5,300 and 5,000 metric tons for
the three months ended December 31, 2005 and 2006, respectively. Our average cost of
newsprint has risen from an average of $599 per metric ton used during the three months
ended December 31, 2005 to an average of $646 per metric ton used during the three months
ended December 31, 2006.
    
    Newspaper Publishing payroll expenses increased 17% and 13% to approximately $4.0
million and $7.8 million for the three and six months ended December 31, 2006 compared to
the same periods in the prior year, respectively, primarily due to the acquisition of the
Jonesboro Group, partially offset by cost saving strategies at the Albany Herald.
    
    Newspaper Publishing transportation service costs, which are primarily outsourced,
increased 9% and 11% to approximately $1.2 million and $2.3 in the three and six months
ended December 31, 2006 compared to approximately $1.1 million and $2.1 million for the
three and six months ended December 31, 2005, respectively. The increase between the
periods reflects general increases in fuel costs, which resulted in higher rates paid to
independent contractors and the acquisition of the Jonesboro Group.
      Interest expense.
 Debt issue cost amortization.
 23




---



##### 



Income tax expense.
 Net loss available to common shareholders.
 Liquidity and Capital Resources
 General
  Six Months EndedDecember 31,2005
    
    
    2006Net cash provided by (used in) operating activities
    
    $
    5,599
    
    
    $
    (2,164
    )Net cash (used in) investing activities
    
    
    (73,244
    )
    
    
    (6,791
    )Net cash provided by financing activities
    
    
    68,817
    
    
    
    9,648Net increase in cash and cash equivalents
    
    $
    1,172
    
    
    $
    693
 June 30,
    
    December 31,2006
    
    2006Cash and cash equivalents
    
    $
    173
    
    
    $
    866Long-term debt, including current portion
    
    $
    119,276
    
    
    $
    129,537
 Six Months Ended December 31, 2006 compared to Six Months Ended December 31, 2005
  24




---



##### 



Off-Balance Sheet Arrangements
   Contractual Obligations as of December 31, 2006
 (Dollars in thousands)
    
    Payment Due by PeriodYear
    
    
    Years
    
    
    Years
    
    
    More ThanContractual Obligations
    
    Total
    
    
    1
    
    
    2-3
    
    
    4-5
    
    
    5 YearsLong-term debt obligations
    
    $
    118,337
    
    
    $
    900
    
    
    $
    1,800
    
    
    $
    115,637
    
    
    $
    Interest obligations (1)
    
    
    45,214
    
    
    
    12,092
    
    
    
    24,004
    
    
    
    9,118
    
    
    
    Operating lease obligations (2)
    
    
    5,912
    
    
    
    1,809
    
    
    
    2,187
    
    
    
    1,395
    
    
    
    521Purchase obligations (3)
    
    
    227,473
    
    
    
    27,780
    
    
    
    50,745
    
    
    
    44,071
    
    
    
    104,877$
    396,936
    
    
    $
    42,581
    
    
    $
    78,736
    
    
    $
    170,221
    
    
    $
    105,398
 
 (1)
    
    Interest obligations assume the LIBOR rate in effect as of December 31, 2006, as
adjusted for the fixed interest rate under the interest rate swap agreement for the
period during which the interest rate swap agreement will be effective. Interest
obligations are presented through the maturity dates of each component of the credit
facilities. 25




---



##### 



(2)
    
    Operating lease obligations represent payment obligations under non-cancelable
lease agreements classified as operating leases and disclosed pursuant to Statements of
Financial Accounting Standards No. 13, Accounting for Leases, as may be modified or
supplemented. These amounts are not recorded as liabilities as of the current balance
sheet date. Operating lease obligations are presented net of future receipts on
contracted sublease arrangements totaling approximately $0.7 million as of December 31,
2006.(3)
    
    Purchase obligations primarily consist of future guaranteed rights fee commitments
to associations or institutions under contractual arrangements of typically three to ten
years, which expire at varying times through 2019.    26




---



##### 



Working Capital
   Certain Relationships
   27




---



##### 



Critical Accounting Policies
  Revenue Recognition and Rights Fee Expenses
      28




---



##### 



Valuation and Impairment Testing of Intangible Assets
       Deferred Income Taxes
 29




---



##### 



Transactions with Related Parties
  Recent Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes 
 Interest Rate and Market Rate Risk
   30




---



##### 



Forward-Looking Statements
  Item 3. Quantitative and Qualitative Disclosure About Market Risk
  Item 4. Controls and Procedures
 Disclosure Controls and Procedures
   Changes in Internal Control over Financial Reporting
  PART II. OTHER INFORMATION
 Item 1A. Risk Factors
  Item 4.  Submission of Matters to a Vote of Security Holders
  31




---



##### 



(i)
    
    The first item considered was the election of six directors of
the Company to serve until the 2007 annual meeting of shareholders, and the
results of such voting were as follows:
 Nominees
    
    Votes For
    
    WithheldRobert S. Prather
    
    
    4,961,775
    
    
    
    6,661Thomas J. Stultz
    
    
    4,961,775
    
    
    
    6,661Gerald N. Agranoff
    
    
    4,963,524
    
    
    
    4,912James W. Busby
    
    
    4,963,522
    
    
    
    4,914Hilton H. Howell, Jr.
    
    
    4,961,775
    
    
    
    6,661Monte C. Johnson
    
    
    4,963,424
    
    
    
    5,012George E. Nick Nicholson
    
    
    4,963,524
    
    
    
    4,912
 (ii)
    
    The second item considered was a proposal to ratify BDO Seidman, LLP as the Companys
independent auditor for 2007, which was approved with 4,961,363 shares voted in favor of
such proposal, 162 shares voted against such proposal, and holders of 6,911 shares
abstaining.
 Item 6. Exhibits
 Exhibit 31.1
    
    Rule 13 (a)  14(a) Certificate of Chief Executive OfficerExhibit 31.2
    
    Rule 13 (a)  14(a) Certificate of Chief Financial OfficerExhibit 32.1
    
    Section 1350 Certificate of Chief Executive OfficerExhibit 32.2
    
    Section 1350 Certificate of Chief Financial Officer
 32




---



##### 



SIGNATURES
  TRIPLE CROWN MEDIA, INC.Date: February 8, 2007
    
    by:
    
    /s/ MARK G. MEIKLEMark G. MeikleExecutive Vice President and ChiefFinancial Officer
 33