Second Quarter Financial Highlights
                        Gray Communications Systems, Inc.
                               Financial Highlights
                      (in thousands, except per share data)

                                        Three Months Ended June 30,
                               Historical                  Pro Forma*
                        1999       1998  % Change   1999      1998  % Change
    OPERATING REVENUES
     Broadcasting    $23,138    $22,690     2 %  $23,138   $24,944    (7)%
     Publishing        9,536      7,380    29 %    9,536     8,617    11 %
     Paging            2,355      1,991    18 %    2,355     1,991    18 %
      TOTAL OPERATING
       REVENUES       35,029     32,061     9 %   35,029    35,552    (1)%

    EXPENSES
     Broadcasting     13,684     12,662     8 %   13,684    13,518     1 %
     Publishing        7,355      5,983    23 %    7,355     6,880     7 %
     Paging            1,724      1,327    30 %    1,724     1,327    30 %
     Corporate and
      administrative     941        657    43 %      941       657    43 %
     Depreciation and
      amortization     5,664      4,221    34 %    5,664     5,520     3 %
      TOTAL EXPENSES  29,368     24,850    18 %   29,368    27,902     5 %
                       5,661      7,211   (21)%    5,661     7,650   (26)%
    Miscellaneous
     income (expense)     34        (73)     NA       34       (53)     NA
                       5,695      7,138   (20)%    5,695     7,597   (25)%
    Interest expense   7,005      6,040    16 %    7,005     7,833   (11)%
     INCOME (LOSS)
      BEFORE INCOME
      TAXES           (1,310)     1,098  (219)%   (1,310)     (236)  455 %
    Income tax expense
     (benefit)          (229)       260  (188)%     (229)     (193)   19 %
      NET INCOME
      (LOSS)          (1,081)       838  (229)%   (1,081)      (43) 2414 %
    Preferred dividends  252        359   (30)%      252       359   (30)%
     NET INCOME (LOSS)
      AVAILABLE TO
      COMMON
      STOCKHOLDERS   $(1,333)     $ 479  (378)%  $(1,333)    $(402)  232 %

    Media Cash Flow**:
     Broadcasting     $9,584    $10,118    (5)%   $9,584   $11,510   (17)%
     Publishing        2,211      1,416    56 %    2,211     1,756    26 %
     Paging              637        670    (5)%      637       670    (5)%
     Consolidated    $12,432    $12,204     2 %  $12,432   $13,936   (11)%

    Media Cash Flow** margins:
     Broadcasting       41 %       45 %             41 %      46 %
     Publishing         23 %       19 %             23 %      20 %
     Paging             27 %       34 %             27 %      34 %
     Consolidated       35 %       38 %             35 %      39 %

    Income (loss) per share
     available to common
     stockholders:
      Basic           $(0.11)     $0.04           $(0.11)   $(0.03)
      Diluted         $(0.11)     $0.04           $(0.11)   $(0.03)

    Weighted average
     shares outstanding:
      Basic           11,966     11,917     0 %   11,966    11,917     0 %
      Diluted         11,966      12,516   (4)%   11,966    11,917     0 %

                        Gray Communications Systems, Inc.
                               Financial Highlights
                      (in thousands, except per share data)

                                       Six Months Ended June 30,
                                Historical                 Pro Forma*
                        1999       1998  % Change   1999      1998  % Change
    OPERATING REVENUES
     Broadcasting    $44,306    $42,201     5 %  $44,306   $46,759    (5)%
     Publishing       17,558     13,917    26 %   18,240    16,218    12 %
     Paging            4,557      3,925    16 %    4,557     3,925    16 %
      TOTAL OPERATING
       REVENUES       66,421     60,043    11 %   67,103    66,902     0 %

    EXPENSES
     Broadcasting     26,673     24,780     8 %   26,673    26,840    (1)%
     Publishing       13,710     11,441    20 %   14,296    13,202     8 %
     Paging            3,238      2,583    25 %    3,238     2,583    25 %
     Corporate and
      administrative   1,687      1,317    28 %    1,687     1,317    28 %
     Depreciation and
      amortization    11,119      7,843    42 %   11,284    10,519     7 %
      TOTAL EXPENSES  56,427     47,964    18 %   57,178    54,461     5 %
                       9,994     12,079   (17)%    9,925    12,441   (20)%
    Miscellaneous
     income (expense)    456       (314)     NA      470      (276)     NA
                      10,450     11,765   (11)%   10,395    12,165   (15)%
    Interest expense  13,775     11,967    15 %   13,996    15,666   (11)%
      LOSS BEFORE
       INCOME TAXES   (3,325)      (202) 1546 %   (3,601)   (3,501)    3 %
    Income tax
     expense (benefit)  (684)       443  (254)%     (778)     (678)   15 %
      NET LOSS        (2,641)      (645)  309 %   (2,823)   (2,823)    0 %
    Preferred dividends  505        718   (30)%      505       718   (30)%
      NET LOSS AVAILABLE
       TO COMMON
       STOCKHOLDERS  $(3,146)   $(1,363)  131 %  $(3,328)  $(3,541)    (6)%

    Media Cash Flow**:
     Broadcasting    $17,881    $17,546     2 %  $17,881   $20,037   (11)%
     Publishing        3,901      2,513    55 %    3,997     3,053    31 %
     Paging            1,336       1,357   (2)%    1,336     1,357    (2)%
     Consolidated    $23,118    $21,416     8 %  $23,214   $24,447    (5)%

    Media Cash Flow** margins:
     Broadcasting       40 %       42 %             40 %      43 %
     Publishing         22 %       18 %             22 %      19 %
     Paging             29 %       35 %             29 %      35 %
     Consolidated       35 %       36 %             35 %      37 %

    Loss per share available
     to common stockholders:
      Basic           $(0.26)    $(0.11)          $(0.28)   $(0.30)
      Diluted         $(0.26)    $(0.11)          $(0.28)   $(0.30)

    Weighted average shares outstanding:
      Basic           11,961     11,899     1 %   11,961    11,899     1 %
      Diluted         11,961     11,899     1 %   11,961    11,899     1 %


The following tables exclude political revenue from Gray's historical and pro forma financial information. These tables present certain financial results of Gray without the impact of cyclical political revenue. Excluding the impact of the political revenue, Gray's revenue and Media Cash Flow** increased over the prior year on a historical and pro forma basis.
                        Gray Communications Systems, Inc.
                 Financial Highlights Excluding Political Revenue
                                  (in thousands)

                                       Three Months Ended June 30,
                                 Historical                Pro Forma*
                            (Excluding Political       (Excluding Political
                                  Revenues)                Revenues)
                        1999       1998  % Change   1999      1998  % Change
    OPERATING REVENUES -
     excluding political
     revenue
      Broadcasting -
       excluding
       political
       revenue       $22,998    $20,694    11 %  $22,998   $22,911     0 %
      Publishing       9,536      7,380    29 %    9,536     8,617    11 %
      Paging           2,355      1,991    18 %    2,355     1,991    18 %
       TOTAL OPERATING
        REVENUES -
        excluding
        political
        revenue      $34,889    $30,065    16 %  $34,889   $33,519     4 %

    Media Cash Flow** -
     excluding political
     revenue
      Broadcasting -
       excluding
       political
       revenue        $9,444     $8,122    16 %   $9,444    $9,477    (0)%
      Publishing       2,211      1,416    56 %    2,211     1,756    26 %
      Paging             637        670    (5)%      637       670    (5)%
      Consolidated -
       excluding
       political
       revenue       $12,292    $10,208    20 %  $12,292   $11,903     3 %

    Media Cash Flow**
     margins: - excluding
     political revenue
      Broadcasting -
       excluding
       political
       revenue          41 %       39 %             41 %      41 %
      Publishing        23 %       19 %             23 %      20 %
      Paging            27 %       34 %             27 %      34 %
      Consolidated -
       excluding
       political
       revenue          35 %       34 %             35 %      36 %


                                       Six Months Ended June 30,
                                 Historical                Pro Forma*
                            (Excluding Political       (Excluding Political
                                  Revenues)                Revenues)
                        1999       1998  % Change   1999      1998  % Change
    OPERATING REVENUES -
     excluding political
     revenue
      Broadcasting -
       excluding
       political
       revenue       $44,117    $40,016    10 %  $44,117   $44,375    (1)%
      Publishing      17,558     13,917    26 %   18,240    16,218    12 %
      Paging           4,557      3,925    16 %    4,557     3,925    16 %
       TOTAL OPERATING
        REVENUES -
        excluding
        political
        revenue      $66,232    $57,858    14 %  $66,914   $64,518     4 %


    Media Cash Flow** -
     excluding
     political
     revenue
      Broadcasting -
       excluding
       political
       revenue       $17,692    $15,361    15 %  $17,692   $17,653     0 %
     Publishing        3,901      2,513    55 %    3,997     3,053    31 %
     Paging            1,336      1,357    (2)%    1,336     1,357    (2)%
     Consolidated -
      excluding
      political
      revenue        $22,929    $19,231    19 %  $23,025   $22,063     4 %

    Media Cash Flow**
     margins: -
     excluding
     political
     revenue
      Broadcasting -
       excluding
       political
       revenue          40 %       38 %             40 %      40 %
     Publishing         22 %       18 %             22 %      19 %
     Paging             29 %       35 %             29 %      35 %
     Consolidated -
      excluding
      political
      revenue           35 %       33 %             34 %      34 %

* Gray Communications Systems, Inc. (the “Company”) acquired the assets of The Goshen
News on March 1, 1999.  The Company also acquired Busse Broadcasting Corporation and disposed
of WALB-TV, the NBC affiliate serving Albany, Georgia on July 31, 1998.  The results of
operations of these acquired businesses have been included in the Company’s historical
financial statements since their respective acquisition dates.  The pro forma results of
operations of these acquired businesses have been included in the Company’s pro forma financial
 statements since the first day of the respective reporting period.  The results of operations
of WALB -TV have been excluded from the Company’s pro forma financial statements since the
first day of the respective reporting period.


** Media Cash Flow is defined as operating income, plus depreciation, non-cash compensation,
amortization (including amortization of program license rights), and corporate overhead,
less payments for program license liabilities.  The Company has included Media Cash Flow
data because such data is commonly used as a measure of performance for media companies and
is also used by investors to measure a company’s ability to service debt.  Media Cash Flow is
not, and should not, be used as an indicator or alternative to operating income, net income
or cash flow as reflected in the Company’s consolidated financial statements.  It is not a
measure of financial performance under generally accepted accounting principles and should
not be considered in isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles.