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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2
FORM 10/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
PULITZER INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
DELAWARE 43-1819711
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
900 North Tucker Boulevard, St. Louis, 63101
Missouri
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (314) 340-8000
Securities to be registered pursuant to Section 12(b) of the Act:
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<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
------------------- ------------------------------
<S> <C>
Common Stock, $0.01 par value per share New York Stock Exchange, Inc.
</TABLE>
Securities to be registered pursuant to Section 12(g) of the Act:
Not applicable
(Title of Class)
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ITEM 1. BUSINESS.
INTRODUCTION
Pulitzer Inc. ("New Pulitzer") was organized as a corporation in 1998 and
is a wholly-owned subsidiary of Pulitzer Publishing Company ("Pulitzer").
Pulitzer is engaged in newspaper publishing and television and radio
broadcasting.
As of May 25, 1998, Pulitzer, New Pulitzer and Hearst-Argyle Television,
Inc. ("Hearst-Argyle") entered into an Amended and Restated Agreement and Plan
of Merger (the "Merger Agreement") pursuant to which Hearst-Argyle will acquire
Pulitzer's television and radio broadcasting operations (collectively, the
"Broadcasting Business") in exchange for the issuance to Pulitzer's stockholders
of 37,096,774 shares of Hearst-Argyle's Series A common stock. The Broadcasting
Business consists of nine network-affiliated television stations and five radio
stations owned and operated by Pulitzer Broadcasting Company, a wholly-owned
subsidiary of Pulitzer, and its wholly-owned subsidiaries. The Broadcasting
Business will be acquired by Hearst-Argyle through the merger (the "Merger") of
Pulitzer into Hearst-Argyle. Pulitzer's newspaper publishing and related new
media businesses will continue as "New Pulitzer," which will be distributed in a
tax-free "spin-off" to Pulitzer stockholders (the "Spin-off") prior to the
Merger. The Merger and Spin-off are collectively referred to as the
"Transactions."
In connection with the Transactions, New Pulitzer will amend and restate
its Certificate of Incorporation to: (i) recapitalize its capital structure to
provide for common stock, par value $0.01 per share (the "Common Stock"), Class
B common stock, par value $0.01 per share (the "Class B Common Stock"), and
preferred stock, par value $0.01 per share (the "Preferred Stock" and together
with the Common Stock and Class B Common Stock, the "New Pulitzer Stock"); and
(ii) provide for substantially the same stockholder voting rights and other
terms and provisions as currently provided for in the Restated Pulitzer
Certificate of Incorporation, as amended. Prior to the Spin-off, New Pulitzer
will issue to Pulitzer: (i) that number of shares of Common Stock equal to the
number of shares of Pulitzer common stock then outstanding; and (ii) that number
of shares of Class B Common Stock equal to the number of shares of Pulitzer
Class B common stock then outstanding. Pulitzer will then distribute these
shares of New Pulitzer Common Stock and Class B Common Stock to its stockholders
in the Spin-off.
The closing of the Transactions is expected to occur in the first quarter
of 1999, subject to certain conditions and rights, including termination rights
described in the Joint Proxy Statement/Prospectus included in Hearst-Argyle's
registration statement on Form S-4 which is expected to be filed with the
Securities and Exchange Commission in February, 1999. All information herein
assumes consummation of the Transactions.
Pulitzer's historical basis in its newspaper publishing and related new
media assets and liabilities will be carried over to New Pulitzer. The
Transactions will be recorded as a reverse-spin transaction and, accordingly,
New Pulitzer's results of operations for periods prior to the consummation of
the Transactions will be identical to the historical results previously reported
by Pulitzer.
The Board of Directors of New Pulitzer intends to continue to pay the same
quarterly dividend per share as Pulitzer. Future dividends will depend upon,
among other things, New Pulitzer's earnings, financial condition, cash flows,
capital requirements and other relevant considerations, including the
limitations under any credit agreement or other agreement to which New Pulitzer
may become a party in the future.
Following the consummation of the Transactions, New Pulitzer will continue
the newspaper publishing and related new media operations of Pulitzer. Set forth
below is a general description of the newspaper publishing and related new media
businesses of Pulitzer that will continue to operate through New Pulitzer.
GENERAL
Pulitzer is engaged in newspaper publishing and related "new media"
business. Its newspaper operations consist of two major metropolitan dailies:
the St. Louis Post-Dispatch (the "Post-Dispatch"), the only major daily
newspaper serving the St. Louis metropolitan area; and The Arizona Daily Star
(the "Star"), serving the
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Tucson metropolitan area. Each of these publications also operates electronic
news, information and communication web sites on the Internet. In addition,
Pulitzer's Pulitzer Community Newspaper group (the "PCN Group") includes 12
dailies which serve smaller markets, primarily in the West and Midwest, as well
as a number of weekly and bi-weekly publications.
The Pulitzer Publishing Company was founded by the first Joseph Pulitzer in
1878 to publish the original St. Louis Post-Dispatch and has operated
continuously since that time under the direction of the Pulitzer family. Michael
E. Pulitzer, a grandson of the founder, currently serves as Chairman of the
Board, President and Chief Executive Officer of Pulitzer and Chairman of the
Board of New Pulitzer.
The following table sets forth certain historical financial information
regarding Pulitzer's operations for the periods and at the dates indicated.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------
1997 1996(4) 1995 1994(5) 1993(5)
---- ------- ---- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Publishing(1):
Operating revenues -- net............ $357,969 $309,096 $269,388 $304,779 $290,146
======== ======== ======== ======== ========
Operating income (loss):
Publishing operations.............. $ 66,994 $ 46,549 $ 37,895 $ 45,192 $ 34,362
St. Louis Agency adjustment........ (19,450) (13,972) (12,502) (14,706) (10,660)
General corporate expense.......... (6,007) (5,532) (4,666) (3,871) (3,692)
-------- -------- -------- -------- --------
Total...................... $ 41,537 $ 27,045 $ 20,727 $ 26,615 $ 20,010
======== ======== ======== ======== ========
Depreciation and amortization........ $ 13,007 $ 8,660 $ 4,307 $ 6,128 $ 6,938
======== ======== ======== ======== ========
Operating margins(2)................. 18.7% 15.1% 14.1% 14.8% 11.8%
Assets............................... $427,109 $424,737 $241,821 $213,902 $191,368
======== ======== ======== ======== ========
Broadcasting(3):
Operating revenues -- net............ $227,016 $224,992 $202,939 $180,800 $136,839
======== ======== ======== ======== ========
Operating income..................... $ 82,180 $ 83,246 $ 65,939 $ 47,963 $ 27,947
======== ======== ======== ======== ========
Depreciation and amortization........ $ 23,447 $ 22,442 $ 22,843 $ 24,358 $ 16,854
======== ======== ======== ======== ========
Operating margins.................... 36.2% 37.0% 32.5% 26.5% 20.4%
Assets............................... $255,847 $259,114 $253,252 $254,410 $270,250
======== ======== ======== ======== ========
Consolidated Pulitzer:
Operating revenues -- net............ $584,985 $534,088 $472,327 $485,579 $426,985
======== ======== ======== ======== ========
Operating income..................... $123,717 $110,291 $ 86,666 $ 74,578 $ 47,957
======== ======== ======== ======== ========
Depreciation and amortization........ $ 36,454 $ 31,102 $ 27,150 $ 30,486 $ 23,792
======== ======== ======== ======== ========
Assets............................... $682,956 $683,851 $495,073 $468,312 $461,618
======== ======== ======== ======== ========
</TABLE>
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(1) Publishing includes related new media businesses and general corporate
expense and represents the historical operations of Pulitzer that will
continue as New Pulitzer.
(2) Operating margins represent publishing operating income compared to
operating revenues. Publishing operating income used in margin calculations
excludes the St. Louis Agency adjustment (see "-- Publishing -- Agency
Agreements.") and general corporate expense (which are recorded as operating
expenses for financial reporting purposes).
(3) Broadcasting includes the historical operations of Pulitzer that will be
acquired by Hearst-Argyle through the Merger.
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(4) In 1996, publishing and consolidated amounts included a partial year of
operations for Scripps League Newspapers, Inc. (subsequently renamed
Pulitzer Community Newspapers, Inc.) following its acquisition on July 1,
1996.
(5) On December 22, 1994, Pulitzer sold its Chicago publishing subsidiary; the
subsidiary's operating results are included in the publishing and
consolidated amounts for 1994 and 1993. In 1993, broadcasting and
consolidated amounts included a partial year of operations for WESH-TV and
KCCI-TV, acquired on June 30, 1993 and September 30, 1993, respectively.
OPERATING STRATEGY
Pulitzer's long-term operating strategy for its media assets has been, and
New Pulitzer's long-term operating strategy will be, to maximize each property's
growth and profitability through maintenance of editorial excellence, leadership
in locally-responsive news, and prudent control of costs. Management believes
that editorial excellence and leadership in locally-responsive news will, over
the long-term, allow New Pulitzer to maximize its market share in each of its
respective markets. Experienced local managers implement Pulitzer's strategy in
each media market, with centralized Pulitzer management providing oversight and
guidance in all areas of planning and operations.
Pulitzer complements its internal growth strategies with a disciplined and
opportunistic acquisition strategy that is focused on acquiring media properties
that Pulitzer believes are a good fit with its operating strategy, possess
attractive growth potential and meet Pulitzer's objectives for after-tax cash
flow. Management believes that Pulitzer's reputation, financial position, cash
flow and conservative capital structure, among other factors, will assist New
Pulitzer in pursuing acquisitions. New Pulitzer intends to seek out acquisition
opportunities, with particular emphasis on small-to medium-sized markets.
New Pulitzer believes that cost controls are an important tool in the
management of media properties which are subject to significant fluctuations in
advertising volume. New Pulitzer believes that prudent control of costs will
permit it to respond quickly when positive operating conditions offer
opportunities to expand market share and profitability and, alternatively, when
deteriorating operating conditions require cost reductions to protect
profitability. Pulitzer's disciplined budgeting process is one of the key
elements in controlling costs. Pulitzer employs, and New Pulitzer will continue
to employ, production technology in all of its media operations in order to
minimize production costs and produce an attractive and timely news product for
its readers.
Pulitzer's newspaper operations are geographically diverse, placing
Pulitzer in the Midwest, Southwest and Western regions of the United States. Due
to the close relationship between economic activity and advertising volume, New
Pulitzer believes that geographic diversity will provide New Pulitzer with
valuable protection from regional economic variances.
PUBLISHING
New Pulitzer intends to continue the tradition of reporting and editorial
excellence that has resulted in Pulitzer's receiving 17 Pulitzer Prizes* over
the years.
Pulitzer publishes two major metropolitan daily newspapers, the St. Louis
Post-Dispatch and The Arizona Daily Star. Both daily newspapers have weekly
total market coverage sections that provide advertisers with market saturation,
and both offer alternative delivery systems that provide advertisers with either
targeted or total market coverage.
The PCN Group's 12 daily community newspapers have a combined average daily
circulation of approximately 162,000. The smaller markets served by these
newspapers and their locations will provide New Pulitzer with further
diversification and participation in several higher growth areas of the western
United
- -------------------------
* Pulitzer Prizes are awarded annually at Columbia University by the Pulitzer
Prize Board, an independent entity affiliated with the Columbia University
School of Journalism, founded by the first Joseph Pulitzer.
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States. A strong focus on local reporting and editorial excellence is also
considered the key to long-term success in these markets.
Pulitzer's publishing revenues are derived primarily from advertising and
circulation, which averaged approximately 87 percent of Pulitzer's total
publishing revenue over the last five years. Advertising rates and rate
structures and resulting revenues vary among publications based, among other
things, on circulation, type of advertising, local market conditions and
competition. The following table provides a breakdown of Pulitzer's publishing
revenues for the past five years.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------
1997 1996(1) 1995 1994(2) 1993(2)
---- ------- ---- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Advertising:
Retail............................. $107,916 $ 91,373 $ 78,362 $ 88,450 $ 85,860
General............................ 10,466 10,123 7,645 7,830 7,154
Classified......................... 109,435 90,443 75,925 84,738 75,670
-------- -------- -------- -------- --------
Total......................... 227,817 191,939 161,932 181,018 168,684
Circulation.......................... 87,611 81,434 76,349 77,941 78,661
Other................................ 42,541 35,723 31,107 45,820 42,801
-------- -------- -------- -------- --------
Total......................... $357,969 $309,096 $269,388 $304,779 $290,146
======== ======== ======== ======== ========
</TABLE>
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(1) Revenue amounts for 1996 included a partial year of operations of Scripps
League Newspapers, Inc. (subsequently renamed Pulitzer Community
Newspapers, Inc.) following its acquisition on July 1, 1996.
(2) On December 22, 1994, Pulitzer sold its Chicago publishing subsidiary; the
subsidiary's operating revenues are included in the above amounts for 1994
and 1993.
ST. LOUIS POST-DISPATCH
Founded in 1878 by the first Joseph Pulitzer, the Post-Dispatch has a long
history of reporting and editorial excellence and innovation in newspaper
publishing under the direction of the Pulitzer family. The Post-Dispatch is a
morning daily and Sunday newspaper serving primarily the greater St. Louis
metropolitan area. St. Louis is currently the 17th largest metropolitan
statistical area in the United States with a population of approximately 2.6
million.
Over the past several years, Pulitzer has taken a number of steps designed
to strengthen the market position of the Post-Dispatch. In 1997, the
Post-Dispatch completed an extensive redesign intended to make the newspaper
more accessible and relevant to readers, and Pulitzer is continuing to make
investments to enhance its news coverage capabilities and strengthen its
circulation and advertising operations.
The Post-Dispatch operates under an Agency Agreement, dated March 1, 1961,
as amended (the "St. Louis Agency Agreement"), between Pulitzer and The Herald
Company, Inc. (the "Herald Company") pursuant to which Pulitzer performs all
activities relating to the day-to-day operations of the newspaper, but pursuant
to which it must share one-half of the agency's operating income or one-half of
the agency's operating loss with the Herald Company (the "St. Louis Agency").
The following table sets forth for the past five years certain circulation and
advertising information for the Post-Dispatch and operating revenues for the
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St. Louis Agency, all of which are included in Pulitzer's consolidated financial
statements. See "Agency Agreements."
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<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Post-Dispatch:
Circulation(1):
Daily (including Saturday)...... 319,887 319,203 323,137 335,819 341,797
Sunday.......................... 530,442 540,434 545,882 555,488 564,761
Advertising linage (in thousands of
inches):
Retail............................. 841 819 880 912 913
General............................ 91 101 75 75 62
Classified......................... 1,003 1,007 1,057 1,039 977
-------- -------- -------- -------- --------
Total...................... 1,935 1,927 2,012 2,026 1,952
Part run(2)........................ 607 792 594 591 481
-------- -------- -------- -------- --------
Total inches............... 2,542 2,719 2,606 2,617 2,433
======== ======== ======== ======== ========
Operating revenues (in thousands):
Advertising........................ $147,770 $137,054 $130,600 $125,704 $116,951
Circulation........................ 63,216 63,858 64,862 61,207 62,345
Other(3)........................... 24,276 23,231 24,404 23,490 22,387
-------- -------- -------- -------- --------
Total...................... $235,262 $224,143 $219,866 $210,401 $201,683
======== ======== ======== ======== ========
</TABLE>
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(1) Amounts based on ABC Publisher's Statements for the twelve-month periods
ended September 30.
(2) Part run inches represent advertisements that are published in selected
copies (i.e., less than the full press run) of a daily edition of the
newspaper to specifically target certain geographic locations. The
advertisements typically appear in a special news and advertising section
designed specifically for the targeted geographic locations.
(3) Primarily revenues from preprinted inserts.
The Post-Dispatch has consistently been a leader in technological
innovation in the newspaper industry. Pulitzer's commitment to the ongoing
enhancement of its operating systems has enabled the Post-Dispatch to offer a
continually improving product to both readers and advertisers while also
realizing substantial savings in labor cost. New Pulitzer believes the
Post-Dispatch has adequate facilities to sustain up to at least a 35 percent
increase in daily circulation without incurring significant capital
expenditures. The Post-Dispatch is in the process of upgrading and modifying its
systems to make them "Year-2000" compatible, and expects to achieve full
compliance during 1999.
The Post-Dispatch is distributed primarily through independent home
delivery carriers and single copy dealers. Home delivery accounted for
approximately 76 percent of circulation for the daily Post-Dispatch and
approximately 55 percent of circulation for the Sunday edition during 1997.
THE ARIZONA DAILY STAR
Founded in 1877, the Star is published in Tucson, Arizona, by Pulitzer's
wholly-owned subsidiary, Star Publishing Company. Following the consummation of
the Transactions, Star Publishing Company will be a wholly-owned subsidiary of
New Pulitzer. The Star, a morning and Sunday newspaper, and the Tucson Citizen
(the "Citizen"), an afternoon newspaper owned by Gannett Co., Inc. ("Gannett"),
are southern Arizona's leading dailies. The Star and the Citizen are published
through an agency operation (the "Tucson Agency") pursuant to an Agency
Agreement, dated March 28, 1940, as amended and restated (the "Tucson Agency
Agreement"), and have a combined weekday circulation of approximately 140,000.
Tucson is currently the 69th largest metropolitan statistical area in the United
States with a population of approximately 781,000.
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The Tucson Agency operates through TNI Partners, an agency partnership
which is owned half by Pulitzer and half by Gannett. TNI Partners is responsible
for all aspects of the business of the two newspapers other than editorial
opinion and gathering and reporting news. Revenues and expenses are generally
shared equally by the Star and the Citizen. Unlike the St. Louis Agency,
Pulitzer's consolidated financial statements include only its share of the
combined operating revenues and operating expenses of the two newspapers. See
"Agency Agreements."
As a result of the Tucson Agency, the financial performance of Pulitzer's
Star Publishing Company subsidiary is directly affected by the operations and
performance of both the Star and the Citizen.
The following table sets forth certain information concerning circulation
and combined advertising linage of the Star and the Citizen and Pulitzer's share
of the operating revenues of the Star and the Citizen for the past five years.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Circulation(1):
Star daily.............................. 96,101 96,198 97,134 98,050 96,926
Citizen daily........................... 44,009 46,062 47,240 48,272 49,560
Star Sunday............................. 175,659 178,820 180,170 179,652 175,321
Combined advertising linage (in thousands
of inches):
Full run (all zones)
Retail............................... 1,587 1,499 1,565 1,565 1,675
General.............................. 51 45 49 50 45
Classified........................... 1,713 1,684 1,682 1,608 1,462
------- ------- ------- ------- -------
Total........................... 3,351 3,228 3,296 3,223 3,182
Part run(2).......................... 264 201 171 116 98
------- ------- ------- ------- -------
Total inches.................... 3,615 3,429 3,467 3,339 3,280
======= ======= ======= ======= =======
Operating revenues (in thousands):
Advertising............................. $34,302 $31,765 $31,332 $28,459 $25,562
Circulation............................. 11,023 11,194 11,487 11,434 11,065
Other(3)................................ 7,712 7,139 6,703 5,833 5,298
------- ------- ------- ------- -------
Total........................... $53,037 $50,098 $49,522 $45,726 $41,925
======= ======= ======= ======= =======
</TABLE>
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(1) Amounts for 1995 based on ABC Publisher's Statement for the 53 week period
ended December 31. All other years based on ABC Publisher's Statements for
the 52 week periods ended December 31.
(2) Part run inches represent advertisements that are published in selected
copies (i.e., less than the full press run) of a daily edition of the
newspaper to specifically target certain geographic locations. The
advertisements typically appear in a special news and advertising section
designed specifically for the targeted geographic locations.
(3) Primarily revenues from preprinted inserts.
In 1997, the Star's daily edition accounted for approximately 69 percent of
the combined daily circulation of the Tucson Agency publications. The Star's
daily and Sunday editions accounted for approximately 60 percent of the agency's
total advertising linage.
The Star and the Citizen are printed at TNI Partners' modern, computerized
facility equipped with two, eight-unit Metro offset presses. The writing,
editing and composing functions have been computerized, increasing efficiency
and reducing workforce requirements.
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PULITZER COMMUNITY NEWSPAPERS, INC.
On July 1, 1996, Pulitzer acquired for approximately $216 million all the
stock of Scripps League Newspapers, Inc. (subsequently renamed Pulitzer
Community Newspapers, Inc.), a privately owned publisher of community newspapers
which serve smaller markets, primarily in the West and Midwest. The PCN Group
now includes 12 daily newspapers which publish morning or afternoon editions
during the week and, generally, morning editions on the weekend. Home delivery
through independent contract carriers accounts for the significant portion of
each newspaper's circulation. With circulations ranging from approximately
31,000 to 5,000, the 12 daily newspapers in the PCN Group, ranked in order of
daily circulation, are:
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The Daily Herald....................................... Provo, Utah
Santa Maria Times...................................... Santa Maria, California
The Napa Valley Register............................... Napa, California
The World.............................................. Coos Bay, Oregon
The Hanford Sentinel................................... Hanford, California
The Arizona Daily Sun.................................. Flagstaff, Arizona
Troy Daily News........................................ Troy, Ohio
The Daily Chronicle.................................... De Kalb, Illinois
The Daily Journal...................................... Park Hills, Missouri
The Garden Island...................................... Lihue, Hawaii
The Ravalli Republic................................... Hamilton, Montana
The Daily News......................................... Rhinelander, Wisconsin
</TABLE>
In addition, the PCN Group operates weekly newspapers in Petaluma,
California and Farmington and Fredericktown, Missouri and two weekly newspaper
groups in conjunction with the properties in Hanford and Santa Maria,
California.
The smaller markets served by the PCN Group are attractive because they
generally have desirable demographic characteristics and above-average growth
rates. Collectively, the PCN Group markets exceed U.S. averages in such key
measures as annual household growth rate, average household income and average
household wealth; in addition, the average median home value in these markets is
nearly double the U.S. median average.
Further, these markets, which are often not served by major metropolitan
media, tend to be characterized by less media competition, which gives New
Pulitzer an opportunity to sustain and expand market shares.
For the year ended December 31, 1997, the PCN Group had consolidated
operating revenues of approximately $69.7 million, of which advertising,
preprints and circulation accounted for approximately 66 percent, 12 percent and
19 percent, respectively. For the six-month period ended December 31, 1996, the
PCN Group had consolidated operating revenues of approximately $34.9 million, of
which advertising, preprints and circulation accounted for approximately 67
percent, 11 percent and 18 percent, respectively.
Pulitzer has recently made a significant investment in new computer systems
which handle typesetting, editing and web publishing, as well as financial and
statistical reporting, for its PCN Group properties. The standardized systems,
which are "Year-2000" compatible, permit centralized maintenance and support.
RELATED "NEW MEDIA" OPERATIONS
Pulitzer has developed "new media" operations that are designed to enhance,
complement and add value to its traditional newspaper publishing businesses by
providing subscriber and advertiser services through various forms of electronic
distribution, including electronic publishing, voice services delivered by
phone, and electronic dissemination of information via the world wide
web/Internet. Pulitzer's objective in these operations is to develop and expand
its ability to provide advertisers access to a large and attractive online
audience.
Pulitzer is an Internet service provider as a central element of its
strategy in both St. Louis and Tucson. Full access to each newspaper's
"electronic publication" web site, as well as full Internet access, is provided
on
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a subscription basis. The Star's service, StarNet (www.azstarnet.com), began
operations in May, 1995 and had approximately 12,500 subscribers as of December
31, 1998. The service provided by the Post-Dispatch, POSTnet (www.stlnet.com),
started in January 1996 and had approximately 16,400 subscribers as of December
31, 1998. The web sites provide access to current and archive material,
including news, editorials and classified advertising, from each newspaper, as
well as interactive Internet-specific enhancements such as message boards and
chat rooms. Pulitzer is currently developing enhanced online services featuring
the three major classified advertising categories -- automotive, real estate and
help wanted.
In addition, Pulitzer is a founding member of PAFET, a consortium of six
newspaper companies that is pursuing a program of research and investment
designed to help its members understand and participate in the opportunities and
challenges that the new media provide for newspaper properties.
ACQUISITION STRATEGY
One of Pulitzer's primary growth strategies has been a disciplined and
opportunistic acquisition program. In evaluating acquisition opportunities,
Pulitzer requires that candidates must: (i) be in businesses related to
Pulitzer's core publishing competencies; (ii) have strong cash flows; (iii)
reflect its preference for small-to medium-sized markets that possess good
growth or economic characteristics and, where possible, offer a clustering
opportunity with respect to present or future properties; (iv) provide an
opportunity for its disciplined management approach to add value; and (v) offer
an attractive return on investment. Management of New Pulitzer intends to pursue
a similar growth strategy.
AGENCY AGREEMENTS
Newspapers in approximately 15 cities operate under joint operating or
agency agreements. Agency agreements generally provide for newspapers servicing
the same market to share certain printing and other facilities and to pool
certain revenues and expenses in order to decrease aggregate expenses and
thereby allow the continuing operation of multiple newspapers serving the same
market. The Newspaper Preservation Act of 1970 permits joint operating
agreements between newspapers under certain circumstances without violation of
the Federal antitrust laws.
St. Louis Agency. An agency operation between Pulitzer and the Herald
Company is conducted under the provisions of the St. Louis Agency Agreement. For
many years, the Post-Dispatch was the afternoon and Sunday newspaper serving St.
Louis, and the Globe-Democrat was the morning paper and also published a weekend
edition. Although separately owned, from 1961 through February 1984, the
publication of both the Post-Dispatch and the Globe-Democrat was governed by the
St. Louis Agency Agreement. From 1961 to 1979, the two newspapers controlled
their own news, editorial, advertising, circulation, accounting and promotion
departments and Pulitzer managed the production and printing of both newspapers.
In 1979, Pulitzer assumed full responsibility for advertising, circulation,
accounting and promotion for both newspapers. In February 1984, after a number
of years of unfavorable financial results at the St. Louis Agency, the Globe-
Democrat was sold by the Herald Company and the St. Louis Agency Agreement was
revised to eliminate any continuing relationship between the two newspapers and
to permit the repositioning of the daily Post-Dispatch as a morning newspaper.
Following the renegotiation of the St. Louis Agency Agreement at the time
of the sale of the Globe-Democrat, the Herald Company retained the contractual
right to half the profits or losses (as defined) of the operations of the St.
Louis Agency, which from February 1984 forward consisted solely of the
publication of the Post-Dispatch. The St. Louis Agency Agreement generally
provides for the Herald Company to share half the cost of, and to share in a
portion of the proceeds from the sale of, capital assets used in the production
of the Post-Dispatch. Under the St. Louis Agency Agreement, Pulitzer supervises,
manages and performs all activities relating to the day-to-day publication of
the Post-Dispatch and is solely responsible for the news and editorial policies
of the newspaper.
The consolidated financial statements of Pulitzer include all the operating
revenues and expenses of the St. Louis Agency. An agency adjustment is provided
as an operating expense which reflects that portion of the operating income of
the St. Louis Agency allocated to the Herald Company. Under the St. Louis Agency
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Agreement, for fiscal 1997, 1996, 1995, 1994, and 1993, Pulitzer paid the Herald
Company $19,450,000, $13,972,000, $12,502,000, $14,706,000, and $10,660,000,
respectively, for the Herald Company's share of the operating income of the St.
Louis Agency. As a result of such agency adjustment, Pulitzer is, and during the
term of the St. Louis Agency New Pulitzer will continue to be, entitled to half
the profits (as defined) from the operations of the St. Louis Agency, the amount
of which cannot be determined until the end of each fiscal year.
The current term of the St. Louis Agency Agreement runs through December
31, 2034, following which either party may elect to renew the agreement for
successive periods of 30 years each.
Tucson Agency. The Tucson Agency Agreement has, since 1940, governed the
joint operations of the Star and Citizen. For financial reporting purposes, the
operations of the Tucson Agency are reflected in Pulitzer's consolidated
financial statements differently from the operations of the St. Louis Agency.
The consolidated financial statements of Pulitzer include only Pulitzer's share
of the combined revenues, operating expenses and income of the Star and Citizen.
TNI Partners, Inc. ("TNI Partners"), as agent for Pulitzer and Gannett, is
responsible for advertising and circulation, printing and delivery and
collection of all revenues of the Star and the Citizen. The Board of Directors
of TNI Partners presently consists of three directors chosen by Pulitzer and
three chosen by Gannett. Budgetary, personnel and other non-news and editorial
policy matters, such as advertising and circulation policies and rates or
prices, are determined by the Board of Directors of TNI Partners. Each newspaper
is responsible for its own news and editorial content. Revenues and expenses are
recorded by TNI Partners, and the resulting profit is generally split 50-50
between Pulitzer and Gannett. Both partners have certain administrative costs
which are borne separately. As a result of the Tucson Agency, the Star and the
Citizen benefit from increases and can be adversely affected by decreases in
each other's circulation.
The Tucson Agency Agreement runs through June 1, 2015, and contains renewal
provisions for successive periods of 25 years each.
COMPETITION
Pulitzer's publications compete for readership and advertising revenues in
varying degrees with other metropolitan, suburban, neighborhood and national
newspapers and other publications as well as with television, radio, cable,
Internet, online services and other new media technologies, direct mail, yellow
page directories, billboards and other news and advertising media. Competition
for advertising is based upon circulation levels, readership demographics, price
and advertiser results, while competition for circulation is generally based
upon the content, journalistic quality and price of the publication. In St.
Louis and its surrounding suburban communities, the Post-Dispatch's closest
print competition for circulation and advertising revenues includes paid
suburban daily newspapers as well as a chain of community newspapers and
shoppers. These community newspapers and shoppers target selected geographic
markets throughout the St. Louis metropolitan area.
Due to the agency relationship existing in Tucson, the Star and the Citizen
cannot be viewed as competitors for advertising or circulation revenues. The
Star and the Citizen compete primarily against other media and against
Phoenix-area and suburban, neighborhood and national newspapers and other
publications.
EMPLOYEE RELATIONS
The Post-Dispatch has contracts with substantially all of its production
unions, with expiration dates ranging from February 1999 through February 2010.
In addition, the Post-Dispatch has a multi-year contract with the St. Louis
Newspaper Guild which expires in January 2003. All of the Post-Dispatch labor
contracts contain no strike provisions.
TNI Partners' contract with Tucson Graphic Communications Union Local No.
212, covering certain pressroom employees, expired on December 31, 1998. While
negotiating a new contract, the union is operating under the provisions of the
old agreement. In each of the last several years, this contract has been
renegotiated for a one-year term.
9
<PAGE> 11
RAW MATERIALS
Pulitzer's newspaper operations are significantly impacted by the cost of
newsprint which accounted for approximately 20 percent of the total 1997
operating expenses. During 1997, Pulitzer used approximately 100,900 metric tons
of newsprint in its production process at a total cost of approximately $56.8
million. Consumption at the Post-Dispatch represented approximately 72,600
metric tons of Pulitzer's total newsprint usage in 1997. In the last five years,
Pulitzer's average cost per ton of newsprint has varied from a low of $452 per
metric ton in 1994 to a high of $675 per metric ton in 1995. For the first nine
months of 1998, Pulitzer's average cost for newsprint was approximately $590 per
metric ton, compared to approximately $555 per metric ton in 1997. A price
increase to $615 per metric ton on September 1, 1998 was subsequently rescinded
by all of Pulitzer's newsprint suppliers. As a result, Pulitzer expects its cost
of newsprint for the fourth quarter of 1998 to be in the range of $580 to $590
per metric ton. In the fourth quarter of 1997, Pulitzer's average cost of
newsprint was approximately $585 per metric ton.
The Post-Dispatch obtains the newsprint necessary for its operations from
five separate mills, three of which are located in Canada and two in the United
States. The Post-Dispatch has guaranteed the future supply of certain volume
levels through long-term agreements with two of its newsprint suppliers.
Pulitzer believes that the absence of long-term agreements with the remaining
three newsprint suppliers will not affect Pulitzer's ability to obtain newsprint
at competitive prices.
Pulitzer acquired five newsprint contracts with the purchase of the PCN
Group in 1996. Combined with the tonnage purchased for the Post-Dispatch,
Pulitzer has been able to leverage its pricing power to obtain the best price
available for the PCN Group, and to assure adequate supplies for all locations.
TNI Partners obtains the newsprint necessary for the Tucson Agency's
operations pursuant to an arrangement with Gannett, the owner of the Citizen.
Gannett purchases newsprint on behalf of TNI Partners under various contractual
arrangements and agreements. Newsprint is also purchased on the spot market.
EMPLOYEES
At December 31, 1998, Pulitzer's publishing operations had approximately
2,300 full-time employees. In St. Louis, a majority of the approximately 1,200
full-time employees engaged in publishing are represented by unions. Pulitzer
considers its relationship with its employees to be good.
10
<PAGE> 12
ITEM 2. FINANCIAL INFORMATION.
SELECTED FINANCIAL DATA
Selected Historical Financial Data of Pulitzer. The following table sets
forth selected consolidated historical financial data for each of the five years
in the period ended December 31, 1997 and for the nine-month periods ended
September 30, 1998 and 1997 for Pulitzer. Such data have been derived from, and
should be read in conjunction with, Pulitzer's consolidated financial statements
and notes thereto included in Item 13 of this Registration Statement on Form
10/A. The historical amounts below include the operations of both the publishing
and related new media businesses that will continue as New Pulitzer after the
Spin-off and the Broadcasting Business that will be acquired by Hearst-Argyle
through the Merger.
<TABLE>
<CAPTION>
FOR THE
NINE MONTHS ENDED
OR
AS OF SEPTEMBER 30, FOR THE YEARS ENDED OR AS OF DECEMBER 31,
-------------------- ----------------------------------------------------------
1998 1997 1997 1996(e) 1995(g) 1994(a) 1993(a)(h)
---- ---- ---- ------- ------- ------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT
DATA:
Operating revenues -- net... $448,888 $428,648 $584,985 $534,088 $472,327 $485,579 $426,985
-------- -------- -------- -------- -------- -------- --------
OPERATING EXPENSES:
Operations.................. 165,980 157,939 214,935 205,885 190,013 191,570 180,998
Selling, general and
administrative............ 144,720 140,447 190,429 172,838 155,996 174,239 163,578
St. Louis Agency
adjustment................ 15,926 14,749 19,450 13,972 12,502 14,706 10,660
Depreciation and
amortization.............. 26,750 27,435 36,454 31,102 27,150 30,486 23,792
-------- -------- -------- -------- -------- -------- --------
Total operating
expenses................ 353,376 340,570 461,268 423,797 385,661 411,001 379,028
-------- -------- -------- -------- -------- -------- --------
Operating income............ 95,512 88,078 123,717 110,291 86,666 74,578 47,957
Interest income............. 3,541 3,476 4,652 4,522 5,203 1,971 1,090
Interest expense............ (10,255) (12,553) (16,081) (13,592) (10,171) (12,009) (9,823)
Gain on sale of
properties(a)............. 2,791
Net other expense(b)........ (1,303) (867) (1,203) (5,449) (2,330) (1,461) (1,011)
-------- -------- -------- -------- -------- -------- --------
Income before provision for
income taxes and
cumulative effects of
changes in accounting
principles................ 87,495 78,134 111,085 95,772 79,368 65,870 38,213
Provision for income
taxes..................... 35,422 31,735 45,057 38,272 30,046 25,960 15,260
-------- -------- -------- -------- -------- -------- --------
Income before cumulative
effects of changes in
accounting principles..... 52,073 46,399 66,028 57,500 49,322 39,910 22,953
Cumulative effects of
changes in accounting
principles, net of
tax(c).................... (719) 360
-------- -------- -------- -------- -------- -------- --------
Net income................ $ 52,073 $ 46,399 $ 66,028 $ 57,500 $ 49,322 $ 39,191 $ 23,313
======== ======== ======== ======== ======== ======== ========
PER SHARE DATA(D)(F):
BASIC EARNINGS PER SHARE OF
STOCK:
Earnings per share before
cumulative effects of
changes in accounting
principles................ $ 2.33 $ 2.10 $ 2.99 $ 2.62 $ 2.26 $ 1.84 $ 1.13
Cumulative effects of
changes in accounting
principles(c)............. (0.03) 0.02
-------- -------- -------- -------- -------- -------- --------
Earnings per share.......... $ 2.33 $ 2.10 $ 2.99 $ 2.62 $ 2.26 $ 1.81 $ 1.15
======== ======== ======== ======== ======== ======== ========
Weighted average number of
shares outstanding........ 22,343 22,088 22,110 21,926 21,800 21,655 20,371
======== ======== ======== ======== ======== ======== ========
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
FOR THE
NINE MONTHS ENDED
OR
AS OF SEPTEMBER 30, FOR THE YEARS ENDED OR AS OF DECEMBER 31,
-------------------- ----------------------------------------------------------
1998 1997 1997 1996(e) 1995(g) 1994(a) 1993(a)(h)
---- ---- ---- ------- ------- ------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
DILUTED EARNINGS PER SHARE OF
STOCK:
Earnings per share before
cumulative effects of
changes in accounting
principles................ $ 2.29 $ 2.07 $ 2.94 $ 2.58 $ 2.23 $ 1.83 $ 1.11
Cumulative effects of
changes in accounting
principles(c)............. (0.03) 0.02
-------- -------- -------- -------- -------- -------- --------
Earnings per share.......... $ 2.29 $ 2.07 $ 2.94 $ 2.58 $ 2.23 $ 1.80 $ 1.13
======== ======== ======== ======== ======== ======== ========
Weighted average number of
shares outstanding........ 22,726 22,427 22,452 22,273 22,097 21,822 20,609
======== ======== ======== ======== ======== ======== ========
Dividends per share of common
stock and Class B common
stock....................... $ 0.45 $ 0.39 $ 0.52 $ 0.46 $ 0.41 $ 0.35 $ 0.32
======== ======== ======== ======== ======== ======== ========
CONSOLIDATED BALANCE SHEET
DATA:
Working capital............. $134,881 $ 86,900 $ 99,322 $ 95,330 $128,853 $ 96,729 $ 60,688
Total assets................ 714,886 673,061 682,956 683,851 495,073 468,312 461,618
Long-term debt, less current
maturities................ 160,000 186,705 172,705 235,410 114,500 128,750 161,920
Stockholders' equity........ 355,938 287,929 310,777 249,937 198,771 155,019 122,143
</TABLE>
- -------------------------
(a) In 1994, the gain on the sale of Pulitzer's Chicago publishing subsidiary
added $1,051 (after tax) to net income ($0.05 per share); the subsidiary's
operating results are included in 1993 and 1994 through the sale on
December 22, 1994.
(b) In 1996, a joint venture investment of $2,700 was written off resulting in
an after-tax charge of $1,600 or $0.07 per share.
(c) Effective January 1, 1994, Pulitzer adopted the provisions of Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits." Effective January 1, 1993, Pulitzer adopted the
provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," which recalculated deferred income taxes at
the lower 34% federal statutory rate as opposed to the higher tax rates
which were in effect when the deferred income taxes originated.
(d) In 1996, shares outstanding, dividends per share and earnings per share
were adjusted for 1996 and restated for 1995, 1994 and 1993 to reflect the
impact of a four-for-three stock split (payable in the form of a 33 1/3%
Pulitzer common stock and Pulitzer Class B common stock dividend) declared
by Pulitzer on September 12, 1996.
(e) The year 1996 included a partial year of operation of Scripps League
Newspapers, Inc. (subsequently renamed Pulitzer Community Newspapers, Inc.)
following its acquisition on July 1, 1996.
(f) In 1994, shares outstanding, dividends per share and earnings per share
were adjusted for 1994 and restated for 1993 to reflect the impact of a
five-for-four stock split (payable in the form of a 25% Pulitzer common
stock and Pulitzer Class B common stock dividend) declared by Pulitzer on
January 4, 1995.
(g) Pulitzer's fiscal year ends on the last Sunday of the calendar year, which
in 1995 resulted in a 53-week year.
(h) The year 1993 included a partial year of operations for WESH-TV and
KCCI-TV, acquired on June 30, 1993 and September 9, 1993, respectively.
Unaudited Pro Forma Condensed Consolidated Financial Statements. The
following unaudited pro forma condensed statement of consolidated financial
position as of September 30, 1998 and the unaudited pro forma condensed
statements of consolidated income for the nine months ended September 30, 1998
and for the year ended December 31, 1997 give effect to the Spin-off, the Merger
and related transactions described in this Registration Statement on Form 10/A.
See "Item 1 -- Business -- Introduction". The pro forma
12
<PAGE> 14
condensed statement of consolidated financial position is presented as if the
Spin-off, the Merger and related transactions had occurred on September 30,
1998, and the pro forma condensed statements of consolidated income are
presented as if the Spin-off, the Merger and related transactions had occurred
as of the beginning of the periods presented. The "Pulitzer As Adjusted" amounts
show the effects on reported results of operations and financial position of
Pulitzer assuming the proposed Spin-off and Merger were consummated, and, as a
result, the Broadcasting Business was presented as discontinued operations.
These financial statements are presented on a pro forma basis pending the
occurrence of the event that would establish the measurement date for treatment
of the Broadcasting Business as discontinued operations, namely the approval of
the Spin-off, Merger and related stockholder proposals by Pulitzer's
stockholders. The pro forma information is presented for illustrative purposes
only and may not be indicative of the results that would have been obtained had
the Spin-off, the Merger and related transactions actually occurred on the dates
assumed nor is it necessarily indicative of the future consolidated results of
operations.
Several of the pro forma adjustments included herein are computed based
upon the closing share prices for Pulitzer's common stock and, in one
adjustment, Hearst-Argyle's Series A common stock. Depending on the share prices
of Pulitzer's common stock and Hearst-Argyle's Series A common stock near and/or
on the dates of the Spin-off and Merger, the actual amounts may differ
significantly from the pro forma adjustments. Disclosures are included in each
of the notes to these pro forma adjustments to provide a range of possible
results for changes in the share prices of Pulitzer's common stock and
Hearst-Argyle's Series A common stock.
The unaudited pro forma condensed consolidated financial statements should
be read in conjunction with the historical consolidated financial statements and
the related notes thereto of Pulitzer, included in Item 13 of this Registration
Statement on Form 10/A.
13
<PAGE> 15
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED STATEMENT OF
CONSOLIDATED FINANCIAL POSITION
AS OF SEPTEMBER 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
---------------------------------------------------
DIVESTITURE OF
PULITZER ADDITIONS PULITZER
HISTORICAL (DEDUCTIONS) BROADCASTING(j) NEW PULITZER
---------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................... $ 107,291 $ 700,000(a) $ (7,625)(k) $525,993
(174,793)(b)
(21,800)(b)
(33,600)(c)
5,000(d)
0(e)
(40,369)(f)
(8,111)(g)
Accounts receivable -- net................... 78,663 -- (41,770)(k) 36,893
Other........................................ 21,474 -- (11,688)(k) 9,786
--------- --------- --------- --------
Total Current Assets....................... 207,428 426,327 (61,083) 572,672
--------- --------- --------- --------
Properties -- net.............................. 163,663 -- (82,806) 80,857
Intangibles -- net............................. 277,148 -- (96,744) 180,404
Receivable from The Herald Company............. 37,339 -- -- 37,339
Other assets................................... 29,308 (3,400)(c) (2,756) 49,316
(5,000)(d)
31,164(h)
--------- --------- --------- --------
Total Assets............................... $ 714,886 $ 449,091 $(243,389) $920,588
========= ========= ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt.............. $ 12,705 $ (12,705)(b) $ -- $ --
Interest payable............................... 2,088 (2,088)(b) -- --
Other.......................................... 57,754 -- (20,083)(k) 37,671
--------- --------- --------- --------
Total Current Liabilities.................. 72,547 (14,793) (20,083) 37,671
--------- --------- --------- --------
Long-term Debt................................. 160,000 700,000(a) (700,000) --
(160,000)(b)
Postretirement and Postemployment
Benefit Obligations.......................... 91,495 -- (2,711) 88,784
Other Long-term Liabilities.................... 34,906 4,838(f) (9,134) 35,399
4,789(g)
Commitments and contingencies(l)............... --
Stockholders' Equity:
Common stock................................. 71 -- -- 71
Class B common stock......................... 271 (117)(i) -- 154
Additional paid-in capital................... 142,077 (37,000)(c) 488,539 405,760
0(e)
(187,856)(i)
Retained earnings.............................. 401,492 (21,800)(b) -- 352,749
(45,207)(f)
(12,900)(g)
31,164(h)
Treasury stock................................. (187,973) 187,973(i) -- --
--------- --------- --------- --------
Total Stockholders' Equity................. 355,938 (85,743) 488,539 758,734
--------- --------- --------- --------
Total Liabilities and Equity............... $ 714,886 $ 449,091 $(243,389) $920,588
========= ========= ========= ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Statement of
Consolidated Financial Position on the following pages.
14
<PAGE> 16
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL
POSITION
(a) To record the borrowing of $700 million of new debt by Pulitzer. This new
debt will be assumed by Hearst-Argyle in the Merger.
(b) To record the prepayment of Pulitzer's existing debt ($172.7 million) and
related interest payable ($2.1 million). In connection with the debt
prepayment, a prepayment penalty based on current interest rates and
remaining years to maturity will be payable to the lender. For purposes of
this pro forma, a prepayment penalty of $21.8 million was computed assuming
a prepayment date of December 31, 1998. This will be reflected as an
extraordinary charge in Pulitzer's financial statements in the period
incurred. The actual prepayment penalty may be higher or lower depending
primarily on interest rate levels on the date of the debt prepayment.
(c) To record the payment of estimated professional fees of $37 million related
to the Spin-off and Merger. These fees will be recorded as a reduction in
the contribution to New Pulitzer at the time of the Spin-off and Merger. As
of September 30, 1998, approximately $3.4 million of fees had been paid and
recorded as a deferred charge in "Other Assets."
(d) To record Hearst-Argyle's acquisition, separate from the Merger, of
Pulitzer's investment in the Arizona Diamondbacks Major League Baseball
franchise for $5 million.
(e) To the extent a gain is generated by the Spin-off and Merger, a
corporate-level income tax ("Spin-off Tax") will be due. The gain is
measured by the excess, if any, of the fair market value of the New Pulitzer
Stock distributed by Pulitzer to its stockholders in the Spin-off over
Pulitzer's adjusted tax basis in such New Pulitzer Stock immediately prior
to the distribution. For purposes of this pro forma, the fair market value
of the New Pulitzer Stock was estimated as the difference between the
closing price of Pulitzer's common stock on December 31, 1998 ($86.63) and
an estimate of the fair market value for the Broadcasting Business of $54.32
per share. The fair market value for the Broadcasting Business was estimated
based upon the fixed number of shares of Hearst-Argyle's Series A common
stock (37,096,774 shares) that will be exchanged for Pulitzer's common stock
and Class B common stock (22,536,412 shares at December 31, 1998) and the
closing price of Hearst-Argyle's Series A common stock on December 31, 1998
($33.00) (i.e., 37,096,774 shares multiplied by $33.00 per share divided by
22,536,412 shares equals $54.32). Using a fair market value of $32.31 (the
excess of $86.63 over $54.32) per common share for the New Pulitzer Stock,
no gain (or tax) would result from the Spin-off and the Merger because the
adjusted tax basis of the New Pulitzer Stock would be approximately $34.20
per share.
15
<PAGE> 17
The following table illustrates the calculation of several Spin-off Tax
estimates under various common stock closing prices for Pulitzer and
Hearst-Argyle:
<TABLE>
<CAPTION>
FOR THE MONTH ENDED DECEMBER 31,
1998
AS OF --------------------------------
JANUARY 19, 1999 HIGH LOW
---------------- ---- ---
<S> <C> <C> <C>
Closing price of Pulitzer's common stock.... $ 85.19 $ 86.63 $ 76.63
-------------- -------------- ------------
Estimated fair market value for Broadcasting
Business:
Hearst-Argyle shares to be exchanged for
Pulitzer shares........................ 37,096,774 37,096,774 37,096,774
Closing price of Hearst-Argyle common
stock.................................. $ 30.94 $ 33.00 $ 24.38
-------------- -------------- ------------
Estimated fair market value............... $1,147,774,188 $1,224,193,542 $904,419,350
Divide by the number of shares of Pulitzer
common stock outstanding on December
31, 1998............................... 22,536,412 22,536,412 22,536,412
-------------- -------------- ------------
Estimated fair market value per share for
Broadcasting Business.................. $ 50.93 $ 54.32 $ 40.13
-------------- -------------- ------------
Estimated fair market value per share for
New Pulitzer Stock........................ $ 34.26 $ 32.31 $ 36.50
Estimated tax basis per share for New
Pulitzer Stock............................ $ 34.25 $ 34.20 $ 34.52
-------------- -------------- ------------
Estimated gain (loss) per share from
Spin-off.................................. $ 0.01 $ (1.89) $ 1.98
Estimated number of shares of New Pulitzer
Stock at the time of the Spin-off (based
upon the number of shares of Pulitzer's
common stock outstanding on December 31,
1998)..................................... 22,536,412 22,536,412 22,536,412
-------------- -------------- ------------
Estimated gain (loss) from Spin-off......... $ 225,364 $ (42,593,819) $ 44,622,096
Estimated U.S. federal and state income tax
rate...................................... 39% 39% 39%
-------------- -------------- ------------
Estimated Spin-off Tax...................... $ 87,892 N/A $ 17,402,617
============== ============== ============
</TABLE>
The above amounts are estimates provided to show the range of possible
results based upon historical price per share data for Pulitzer and
Hearst-Argyle. The actual gain and related income tax will depend on the
fair market value of, and Pulitzer's adjusted tax basis in, the New
Pulitzer Stock at the time of the Spin-off.
(f) To record the redemption of all outstanding stock options, whether or not
vested, at the time of the Merger. The cash-out value ("Cash-out Value")
will be equal to the difference between the option exercise price and the
average daily closing price of Pulitzer's common stock for the 10 trading
days immediately prior to the date of the Merger (the "Cash-Out Measurement
Period"). The pro forma adjustment was computed using data as of December
31, 1998 including 876,873 options outstanding, a weighted average exercise
price of $35.07 and a closing price of $86.63 for Pulitzer's common stock.
Payment of approximately $4.8 million of the approximate total $45.2 million
cash-out value will be deferred and has been recorded in "Other Long-term
Liabilities." Based upon the number of options
16
<PAGE> 18
outstanding on December 31, 1998, for every $1.00 change in the Cash-out
Value, the total cash-out value of all outstanding stock options will change
by approximately $877,000. The actual cash-out value may be higher or lower
depending on the closing price of Pulitzer's common stock over the Cash-Out
Measurement Period and the number of shares of Pulitzer's common stock
underlying stock options then outstanding.
(g) To record management bonuses related to the Merger. The pro forma adjustment
includes both fixed payments (approximately $10.2 million) that are
contractually due upon the closing of the Merger and discretionary payments
(approximately $2.7 million) that may be awarded by the Compensation
Committee of Pulitzer's Board of Directors. Payment of approximately $4.8
million of the total $12.9 million pro forma adjustment will be deferred and
has been recorded in "Other Long-term Liabilities."
(h) To record changes in deferred tax assets, assuming a U.S. federal and state
income tax rate of 39%, due to the impact of the following adjustments:
Prepayment penalty (note
(b)) $21,800
Stock option cash-out (note
(f)) 45,207
Management bonuses (note
(g)) 12,900
(i) To record the elimination of Pulitzer's common stock and Class B common
stock held in treasury, as such shares will be cancelled without the payment
of consideration therefor in connection with the Spin-off.
(j) To record the divestiture of the net liabilities of the Broadcasting
Business, including the new debt of $700 million which will be assumed by
Hearst-Argyle and the working capital adjustment related to the Merger (see
note (k) below).
(k) To record the estimated working capital adjustment related to the Merger.
Pursuant to the Merger Agreement, a cash payment is required by either
Hearst-Argyle or Pulitzer for the difference between $41 million and the
working capital balance of the Broadcasting Business on the date of the
Merger. Based upon the Broadcasting Business' working capital balance of
approximately $33.4 million as of September 30, 1998, a payment of
approximately $7.6 million would be due Hearst-Argyle from Pulitzer. The
actual working capital adjustment may be higher or lower depending on the
Broadcasting Business' working capital balance on the date of the Merger.
For tax purposes, a payment by either Pulitzer or Hearst-Argyle to the other
will be treated as having been made immediately prior to the Spin-off and
thus may reduce or increase Pulitzer's taxable gain upon the Spin-off (see
note (e) above).
(l) In connection with the September 1986 purchase of Pulitzer's Class B common
stock from certain selling stockholders (the "1986 Selling Stockholders"),
Pulitzer agreed, under certain circumstances, to make an additional payment
to the 1986 Selling Stockholders in the event of a Gross-Up Transaction (as
defined herein). A "Gross-Up Transaction" was defined to mean, among other
transactions, (i) any merger, in any transaction or series of related
transactions, of more than 85% of the voting securities or equity of
Pulitzer pursuant to which holders of Pulitzer's common stock receive
securities other than Pulitzer common stock and (ii) any recapitalization,
dividend or distribution, or series of related recapitalizations, dividends
or distributions, in which holders of Pulitzer's common stock receive
securities (other than Pulitzer common stock) having a Fair Market Value (as
defined herein) of not less than 33 1/3% of the Fair Market Value of the
shares of Pulitzer common stock immediately prior to such transaction. The
amount of the additional payment, if any, would equal (x) the product of (i)
the amount by which the Transaction Proceeds (as defined herein) exceeds the
Imputed Value (as defined herein) multiplied by (ii) the applicable
percentage (i.e., 50% for the period from May 13, 1996 through May 12, 2001)
multiplied by (iii) the number of shares of Pulitzer common stock issuable
upon conversion of the shares of Pulitzer Class B common stock owned by the
1986 Selling Stockholders, adjusted for, among other things, stock dividends
and stock splits; less (y) the sum of any additional payments previously
received by the 1986 Selling Stockholders; provided, however, that in the
event of any recapitalization, dividend or distribution, the amount by which
the Transaction Proceeds exceeds the Imputed Value shall not exceed the
amount paid or distributed pursuant to such recapitalization, dividend or
distribution in respect of one share of Pulitzer common stock. The term
"Transaction Proceeds" was defined to mean, in the case of a merger, the
aggregate Fair Market Value (as defined herein) of the consideration
received
17
<PAGE> 19
pursuant thereto by the holder of one share of Pulitzer common stock, and,
in the case of a recapitalization, dividend or distribution, the aggregate
Fair Market Value of the amounts paid or distributed in respect of one share
of Pulitzer common stock plus the aggregate Fair Market Value of one share
of Pulitzer common stock following such transaction. The "Imputed Value" for
one share of Pulitzer common stock on a given date was defined to mean an
amount equal to $28.82 compounded annually from May 12, 1986 to such given
date at the rate of 15% per annum, the result of which is $154.19 at May 12,
1998. There was no specific provision for adjustment of the $28.82 amount,
but if it were adjusted to reflect all stock dividends and stock splits of
Pulitzer since September 30, 1986, it would now equal $15.72, which if
compounded annually from May 12, 1986 at the rate of 15% per annum would now
equal $84.11. "Fair Market Value," in the case of any consideration other
than cash received in a Gross-Up Transaction, was defined to mean the fair
market value thereof as agreed to by a valuation firm selected by Pulitzer
and a valuation firm selected by the 1986 Selling Stockholders, or, if the
two valuation firms do not agree on the fair market value, the fair market
value of such consideration as determined by a third valuation firm chosen
by the two previously selected valuation firms. Any such agreement or
determination shall be final and binding on the parties. As a result of the
foregoing, the amount of additional payments, if any, that may be payable by
New Pulitzer with respect to the Merger and the distribution of New Pulitzer
Stock in the Spin-off (the "Distribution") cannot be determined at this
time. However, if the Distribution were determined to be a Gross-Up
Transaction and if the Fair Market Value of the Transaction Proceeds with
respect to the Merger and the Distribution were determined to exceed the
Imputed Value, then the additional payments to the 1986 Selling Stockholders
would equal approximately $5.9 million for each $1.00 by which the
Transaction Proceeds exceed the Imputed Value. Accordingly, depending on the
ultimate resolution of the meaning and application of various provisions of
the Gross-Up Transaction agreements, including the determination of Imputed
Value and Fair Market Value of the Transaction Proceeds, in the opinion of
Pulitzer's management, the amount of an additional payment, if any, could be
material to the consolidated financial statements of Pulitzer. The
additional payment, if any, to the 1986 Selling Stockholders will be
recorded directly to additional paid-in capital as the payment of this
contingent amount is a direct cost of the disposal of the Broadcasting
Business.
The following table illustrates the calculation of potential additional
payments under the Gross-up Transaction agreements, assuming, among other
things, a determination of a Gross-up Transaction, an Imputed Value of
$84.11 and a Fair Market Value of Transaction Proceeds of various amounts
above and below $84.11.
18
<PAGE> 20
<TABLE>
<CAPTION>
FOR THE PERIOD MAY 25, 1998
FOR THE MONTH ENDED (DATE OF MERGER PRESS RELEASE)
DECEMBER 31, 1998 THROUGH DECEMBER 31, 1998
---------------------------- ------------------------------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
Fair Market Value of Transaction
Proceeds (using high and low
closing prices of Pulitzer's common
stock)............................. $ 86.63 $ 76.63 $ 89.25 $ 64.94
Less Imputed Value (assumes
adjustment to reflect stock
dividends and stock splits since
1986).............................. $ 84.11 $ 84.11 $ 84.11 $ 84.11
----------- ----------- ----------- -----------
Transaction Proceeds in excess of
Imputed Value...................... $ 2.52 n/a $ 5.14 n/a
Multiply by applicable percentage.... 50% 50% 50% 50%
Multiply by the number of shares of
Pulitzer's common stock issuable
upon conversion of the shares of
Pulitzer's Class B common stock
owned by the 1986 Selling
Stockholders, adjusted for stock
dividends and stock splits since
1986............................... 11,700,850 11,700,850 11,700,850 11,700,850
----------- ----------- ----------- -----------
Additional payment to the 1986
Selling Stockholders............... $14,743,071 $ 0 $30,071,185 $ 0
=========== =========== =========== ===========
</TABLE>
If the Imputed Value is determined to be $154.19 instead of $84.11, no
additional payment to the 1986 Selling Stockholders would be required under
any of the above calculations.
In the opinion of Pulitzer's management, the amount of additional payment,
if any, is not likely to have a material adverse effect on the existing
day-to-day newspaper publishing and related new media properties now operated by
Pulitzer and, following the Spin-off, to be operated by New Pulitzer. The amount
of additional payment, if any, will reduce, however, the amount of cash
available to New Pulitzer to finance potential acquisition opportunities in the
future.
19
<PAGE> 21
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED INCOME
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
------------------------------------------------------------------- ------------------------
DISCONTINUED OPERATIONS(A)
----------------------------------------
PULITZER ADDITIONS PULITZER ADDITIONS NEW
PULITZER BROADCASTING (DEDUCTIONS) SUBTOTAL AS ADJUSTED (DEDUCTIONS) PULITZER
-------- ------------ ------------ -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenues -- net..... $584,985 $227,016 $227,016 $357,969 $357,969
Operating expenses:
Operations.................. 214,935 69,205 69,205 145,730 145,730
Selling, general and
administrative............ 190,429 55,885 (3,701)(b) 52,184 138,245 45,207(c) 196,352
12,900(d)
St. Louis Agency
adjustment................ 19,450 -- -- 19,450 19,450
Depreciation and
amortization.............. 36,454 23,447 23,447 13,007 13,007
-------- -------- ------ -------- -------- -------- --------
Total operating
expenses.............. 461,268 148,537 (3,701) 144,836 316,432 58,107 374,539
-------- -------- ------ -------- -------- -------- --------
Operating income.............. 123,717 78,479 3,701 82,180 41,537 (58,107) (16,570)
Interest income............... 4,652 10 10 4,642 4,642
Interest expense.............. (16,081) (16,081) (16,081) -- --
Net other expense............. (1,203) -- (1,203) (1,203)
-------- -------- ------ -------- -------- -------- --------
Income from continuing
operations before provision
for income taxes............ 111,085 62,408 3,701 66,109 44,976 (58,107) (13,131)
Provision for income taxes
(benefits).................. 45,057 24,387 1,444(e) 25,831 19,226 (22,662)(e) (3,436)
-------- -------- ------ -------- -------- -------- --------
Income from continuing
operations.................. 66,028 38,021 2,257 40,278 25,750 (35,445) (9,695)
Income from discontinued
operations.................. -- 40,278 (40,278)
-------- -------- -------- --------
Net income (loss)............. $ 66,028 $ 66,028 $(75,723) $ (9,695)
======== ======== ======== ========
Basic earnings per share of
stock:
Income from continuing
operations................ $ 2.99 $ 1.17 $ (0.44)
Income from discontinued
operations................ -- 1.82 --
-------- -------- --------
Earnings (loss) per share... $ 2.99 $ 2.99 $ (0.44)
======== ======== ========
Weighted average number of
shares outstanding........ 22,110 22,110 22,110
======== ======== ========
Diluted earnings per share of
stock:
Income from continuing
operations................ $ 2.94 $ 1.15 $ (0.43)
Income from discontinued
operations................ -- 1.79 --
-------- -------- --------
Earnings (loss) per share... $ 2.94 $ 2.94 $ (0.43)
======== ======== ========
Weighted average number of
shares outstanding........ 22,452 22,452 22,452
======== ======== ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Statements of
Consolidated Income on the following pages.
20
<PAGE> 22
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
--------------------------------------------------------------------- --------------------------
DISCONTINUED OPERATIONS(A)
------------------------------------------
PULITZER ADDITIONS PULITZER ADDITIONS NEW
PULITZER BROADCASTING (DEDUCTIONS) SUBTOTAL AS ADJUSTED (DEDUCTIONS) PULITZER
-------- ------------ ------------ -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating
revenues -- net......... $448,888 $173,681 $173,681 $275,207 $275,207
Operating expenses:
Operations.............. 165,980 54,313 54,313 111,667 111,667
Selling, general and
administrative........ 144,720 41,633 (2,863)(b) 38,770 105,950 45,207(c) 164,057
12,900(d)
St. Louis Agency
adjustment............ 15,926 -- -- 15,926 15,926
Depreciation and
amortization.......... 26,750 16,512 16,512 10,238 10,238
-------- -------- ------ -------- -------- -------- --------
Total operating
expenses............ 353,376 112,458 (2,863) 109,595 243,781 58,107 301,888
-------- -------- ------ -------- -------- -------- --------
Operating income.......... 95,512 61,223 2,863 64,086 31,426 (58,107) (26,681)
Interest income........... 3,541 11 11 3,530 3,530
Interest expense.......... (10,255) (10,255) (10,255) -- --
Net other expense......... (1,303) -- -- (1,303) (1,303)
-------- -------- ------ -------- -------- -------- --------
Income from continuing
operations before
provision for income
taxes................... 87,495 50,979 2,863 53,842 33,653 (58,107) (24,454)
Provision for income taxes
(benefits).............. 35,422 19,918 1,117(e) 21,035 14,387 (22,662)(e) (8,275)
-------- -------- ------ -------- -------- -------- --------
Income from continuing
operations.............. 52,073 31,061 1,746 32,807 19,266 (35,445) (16,179)
Income from discontinued
operations.............. -- 32,807 (32,807) --
-------- -------- -------- --------
Net income (loss)......... $ 52,073 $ 52,073 $(68,252) $(16,179)
======== ======== ======== ========
Basic earnings per share
of stock:
Income from continuing
operations............ $ 2.33 $ 0.86 $ (0.72)
Income from discontinued
operations............ -- 1.47 --
-------- -------- --------
Earnings (loss) per
share................. $ 2.33 $ 2.33 $ (0.72)
======== ======== ========
Weighted average number
of shares
outstanding........... 22,343 22,343 22,343
======== ======== ========
Diluted earnings per share
of stock:
Income from continuing
operations............ $ 2.29 $ 0.85 $ (0.71)
Income from discontinued
operations............ -- 1.44 --
-------- -------- --------
Earnings (loss) per
share................. $ 2.29 $ 2.29 $ (0.71)
======== ======== ========
Weighted average number
of shares
outstanding........... 22,726 22,726 22,726
======== ======== ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Statements of
Consolidated Income on the following pages.
21
<PAGE> 23
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF CONSOLIDATED INCOME:
- -------------------------
(a) The "Discontinued Operations" columns in the unaudited pro forma condensed
statements of consolidated income represent the historical results of
operations of the Broadcasting Business and the effects of certain
adjustments, which are reasonable in the opinion of Pulitzer's management,
to properly present such results as discontinued operations.
(b) To reverse the historical allocation of Pulitzer general corporate expense
because such amounts will no longer be allocated after the Spin-off and
Merger. For purposes of the historical Broadcasting Business financial
statements, the allocation was computed using a formula that considered
revenues, payroll expense and operating profits of the Broadcasting
Business.
(c) To record the redemption of all outstanding stock options, whether or not
vested, at the time of the Merger. The Cash-out Value will be equal to the
difference between the option exercise price and the average daily closing
price of Pulitzer's common stock during the Cash-Out Measurement Period. The
pro forma adjustment was computed using data as of December 31, 1998
including 876,873 options outstanding, a weighted average exercise price of
$35.07 and a closing price of $86.63 for Pulitzer's common stock. Based upon
the number of options outstanding on December 31, 1998, for every $1.00
change in the Cash-out Value, the total cash-out value of all outstanding
stock options will change by approximately $877,000. The actual cash-out
value may be higher or lower depending on the closing price of Pulitzer's
common stock over the Cash-Out Measurement Period and the number of shares
of Pulitzer's common stock underlying stock options then outstanding.
(d) To record management bonuses related to the Merger. The pro forma adjustment
includes both fixed payments (approximately $10.2 million) that are
contractually due upon the closing of the Merger and discretionary payments
(approximately $2.7 million) that may be awarded by the Compensation
Committee of Pulitzer's Board of Directors.
(e) To record the income tax provision (benefit), assuming a U.S. federal and
state income tax rate of 39%, due to the impact of the adjustments included
herein.
22
<PAGE> 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Statements in this Registration Statement on Form 10/A concerning New
Pulitzer's business outlook or future economic performance; anticipated
profitability, revenues, expenses or other financial items, together with other
statements that are not historical facts, are forward-looking statements.
Forward-looking statements are subject to risks, uncertainties and other factors
which could cause actual results to differ materially from those stated in such
statements. Such risks, uncertainties and factors include, but are not limited
to, industry cyclicality, the seasonal nature of the business, changes in
pricing or other actions by competitors or suppliers, and general economic
conditions, as well as other risks detailed in either Pulitzer's or New
Pulitzer's filings with the Securities and Exchange Commission including this
Registration Statement on Form 10/A.
GENERAL
Pulitzer's operating revenues are significantly influenced by a number of
factors, including overall advertising expenditures, the appeal of newspapers in
comparison to other forms of advertising, the performance of Pulitzer in
comparison to its competitors in specific markets, the strength of the national
economy and general economic conditions and population growth in the markets
served by Pulitzer.
Pulitzer's business tends to be seasonal, with peak revenues and profits
generally occurring in the fourth and, to a lesser extent, second quarters of
each year as a result of increased advertising activity during the Christmas and
spring holiday periods. The first quarter is historically the weakest quarter
for revenues and profits.
RECENT EVENTS
As of May 25, 1998, Pulitzer, New Pulitzer, and Hearst-Argyle entered into
the Merger Agreement pursuant to which Hearst-Argyle will acquire the
Broadcasting Business in exchange for the issuance to Pulitzer's stockholders of
37,096,774 shares of Hearst-Argyle's Series A common stock. The Merger is
subject to the satisfaction or waiver of certain closing conditions enumerated
in the Merger Agreement. Pulitzer's newspaper publishing and related new media
businesses will continue as New Pulitzer, which will be distributed in the
Spin-off prior to the Merger.
Pulitzer's historical basis in its non-broadcasting assets and liabilities
will be carried over to New Pulitzer. The Merger, the Spin-off and the related
transactions will be recorded as a reverse-spin transaction, and, accordingly,
New Pulitzer's results of operations for periods reported prior to the
consummation of the Merger, the Spin-off and related transactions will represent
the historical results of operations previously reported by Pulitzer. (See Note
2 to the Consolidated Financial Statements included in Item 13 of this
Registration Statement on Form 10/A.)
As discussed in the notes to the consolidated financial statements included
in Item 13 of this Registration Statement on Form 10/A, Pulitzer's consolidated
financial statements have been restated to reflect the Broadcasting Business,
which had previously been reported as discontinued operations, as a part of
Pulitzer's continuing operations. Such restatement results in the
reclassification of amounts related to the Broadcasting Business previously
reflected as discontinued operations in the consolidated financial statements
but does not change Pulitzer's previously reported amounts for consolidated net
income, total earnings per share and stockholders' equity.
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH 1997
Consolidated
Operating revenues for the first nine months of 1998 increased 4.7 percent
compared to the corresponding period in the prior year. The increase included
gains in both publishing and broadcasting revenues.
23
<PAGE> 25
Operating expenses, excluding the St. Louis Agency adjustment, for the
first nine months of 1998 increased 3.6 percent compared to the corresponding
period in the prior year. The higher expenses in 1998 reflected increases in
overall personnel costs of $7.4 million and newsprint costs of $2.6 million.
Operating income for the first nine months of 1998 increased 8.4 percent to
$95.5 million. The increase reflected the current year revenue gains in both the
publishing and broadcasting segments.
Interest expense declined $2.3 million in the first nine months due to a
lower average debt level. Pulitzer's average debt level for first nine months of
1998 decreased to $182.6 million from $229.6 million in the prior year.
Pulitzer's average interest rate for first nine months of 1998 increased to 7.5
percent from 7.3 percent in the prior year period. The lower average debt level
and higher average interest rate in 1998 reflected the payment of variable rate
credit agreement borrowings during the last three quarters of 1997.
Interest income for the first nine months of 1998 increased $65,000 (1.9
percent), due to a higher average balance of invested funds in the current year.
Net other expense for the first nine months of 1998 increased $436,000 due
to a one-time charge of $869,000 related to the sale of the Haverhill Gazette on
June 1, 1998. The sale charge was partially offset by current year capital gains
related to limited partnership investments.
The effective income tax rate for the first nine months of 1998 was 40.5
percent compared to 40.6 percent in the prior year. Pulitzer expects that its
effective tax rate will be in the 40 to 41 percent range for the full year of
1998 (exclusive of any non-recurring items related to the Spin-off and Merger).
Net income for the first nine months of 1998 increased 12.2 percent to
$52.1 million, or $2.29 per diluted share, compared with $46.4 million, or $2.07
per diluted share, a year ago. The gain reflected increased operating profits
for both publishing and broadcasting, higher interest income and lower interest
expense in the current year period.
Publishing
Operating revenues for the first nine months of 1998 increased 4.4 percent
compared to the prior year. The gain primarily reflected higher advertising
revenues.
Newspaper advertising revenues increased $10 million (5.9 percent) in the
first nine months of 1998 compared to the corresponding period in the prior
year. The current year increase resulted from advertising gains at the
Post-Dispatch, the Star and the PCN Group. In general, the current year
advertising gains reflected higher advertising rates at all newspaper properties
and increases in advertising volume at the Star. For the first nine months of
1998, full run advertising volume (linage in inches) increased 0.3 percent at
the Post-Dispatch and 4 percent at the Star. In the fourth quarter of 1997 and
the first quarter of 1998, varying rate increases were implemented at the
Post-Dispatch, the Star and most of the PCN Group properties.
Circulation revenues increased $432,000 (0.7 percent) in the first nine
months of 1998. The year-to-date increase resulted primarily from gains at the
PCN Group properties during the first half of 1998.
Other publishing revenues increased $1.1 million (3.8 percent) in the first
nine months of 1998. The increase for the nine-month period resulted primarily
from higher preprint revenues and Internet subscriber fees.
Operating expenses (including selling, general and administrative expenses,
and depreciation and amortization), excluding the St. Louis Agency adjustment,
for the first nine months of 1998 increased 4.8 percent compared to the
corresponding period in the prior year. The year-to-date increase reflected
higher overall personnel costs ($4.4 million) and higher newsprint costs ($2.6
million).
Operating income in the first nine months of 1998 increased 0.6 percent to
$35.4 million. The increase reflected the current year revenue gains.
Fluctuations in the price of newsprint significantly impact the results of
Pulitzer's newspaper operations, where newsprint expense accounts for
approximately 20 percent of total operating costs. For the first
24
<PAGE> 26
nine months of 1998, Pulitzer's average cost for newsprint was approximately
$590 per metric ton, compared to approximately $555 per metric ton in 1997. A
price increase to $615 per metric ton on September 1, 1998 was subsequently
rescinded by all of the Company's newsprint suppliers. As a result, the Company
expects its cost of newsprint for the fourth quarter of 1998 to be in the range
of $580 to $590 per metric ton. In the fourth quarter of 1997, Pulitzer's
average cost of newsprint was approximately $585 per metric ton.
Broadcasting
Broadcasting operating revenues for the first nine months of 1998 increased
5.3 percent over the comparable 1997 period. Local and national spot advertising
increased 5.6 percent and 5.8 percent, respectively, for the first nine months
of 1998. The current year comparison reflected the impact of increased political
advertising of approximately $6.6 million in the first nine months of 1998.
Broadcasting operating expenses (including selling, general and
administrative expenses and depreciation and amortization) for the first nine
months of 1998 increased to $109.6 million (1.6 percent) compared to the prior
year period. The increase for the 1998 nine-month period was primarily
attributable to higher overall personnel costs of $2.9 million which were
partially offset by declines in depreciation and amortization expense of $1.1
million and promotion costs of $436,000.
Broadcasting operating income in the first nine months of 1998 increased
12.2 percent to $64.1 million. The increase reflected the higher advertising
revenues in the current year.
1997 COMPARED WITH 1996
Consolidated
Operating revenues for the year ended December 31, 1997 increased 9.5
percent to $585 million from $534.1 million in 1996. The revenue comparison was
affected by the acquisition of Scripps League Newspapers, Inc. ("Scripps League"
which was subsequently renamed Pulitzer Community Newspapers, Inc.) on July 1,
1996. On a comparable basis, excluding the PCN Group from the first six months
of 1997, consolidated revenues increased 3.2 percent. The increase reflected
gains in both publishing and broadcasting revenues.
Operating expenses, excluding the St. Louis Agency adjustment, were $441.8
million compared to $409.8 million in 1996, an increase of 7.8 percent. Prior
year operating expenses included approximately $1.8 million of non-recurring
costs related to the acquisition of Scripps League. On a comparable basis,
excluding the PCN Group from the first six months of 1997 and the non-recurring
costs from 1996, operating expenses increased 1.4 percent. Major increases in
comparable expenses were overall personnel costs of $10.9 million, circulation
distribution expenses of $1.5 million and promotion expenses of $1.3 million.
Partially offsetting these increases were declines in newsprint expense of $6
million and purchased supplements of $3.1 million.
Operating income for fiscal 1997 increased 12.2 percent to $123.7 million
from $110.3 million in 1996. On a comparable basis, excluding the PCN Group from
the first six months of 1997 and the non-recurring costs from 1996, operating
income increased 5.6 percent. The 1997 increase reflected improvements in
publishing segment profits.
Interest expense increased $2.5 million in 1997 compared to 1996 due to
higher average debt levels in 1997. Pulitzer's average debt level for 1997
increased to $220 million from $186.9 million in the prior year due to new
long-term borrowings related to the July 1, 1996 acquisition of Scripps League.
Pulitzer's average interest rate for 1997 was unchanged from the prior year's
rate of 7.3 percent.
Net other expense (non-operating) decreased $4.2 million in 1997 compared
to 1996. The decrease resulted from a 1996 non-recurring charge of approximately
$2.7 million for the write-down in value of a joint venture investment and lower
joint venture losses in 1997.
The effective income tax rate for 1997 increased to 40.6 percent from 40
percent in the prior year, due to an additional $2.1 million of nondeductible
goodwill amortization related to the Scripps League acquisition.
25
<PAGE> 27
Pulitzer expects its effective tax rate for 1998 to be similar to its 1997 rate
(exclusive of any non-recurring items related to the Spin-off and Merger).
For the year ended December 31, 1997, Pulitzer reported net income of $66
million, or $2.94 per diluted share, compared with net income of $57.5 million,
or $2.58 per diluted share, in the prior year. Comparability of the earnings
results was affected by the joint venture write-off in 1996 ($1.6 million
after-tax) and non-recurring costs related to the Scripps League acquisition
($1.1 million after-tax) in 1996. Excluding the non-recurring items from 1996,
1997 net income would have increased 9.5 percent to $66 million, or $2.94 per
diluted share, from $60.3 million, or $2.71 per diluted share, for the prior
year. The gain in net income reflected increased publishing profits, resulting
primarily from higher advertising revenue and lower newsprint costs.
Publishing
Operating revenues from Pulitzer's publishing segment for 1997 increased
15.8 percent to $358 million from $309.1 million in 1996. On a comparable basis,
excluding the PCN Group from the first six months of 1997, publishing revenues
increased 4.9 percent. The comparable increase reflected higher advertising
revenues in 1997.
Newspaper advertising revenues, on a comparable basis, increased $13.8
million, or 7.2 percent, in 1997. A significant portion of the current year
increase resulted from higher classified and retail advertising revenue at both
the Post-Dispatch and the Star. Full run advertising volume (linage in inches)
increased 0.4 percent at the Post-Dispatch and 3.8 percent at the Star for 1997.
Varying rate increases were implemented at the Post-Dispatch and most of the PCN
Group properties in the first quarter of 1997 while the Star increased
advertising rates in the fourth quarters of 1996 and 1997.
Circulation revenues, on a comparable basis, decreased approximately
$390,000, or 0.5 percent, in 1997. The decline reflected slight fluctuations in
paid circulation and average rates at the Post-Dispatch and the Star in 1997
compared to the prior year.
Other publishing revenues, on a comparable basis, increased $1.8 million,
or 5.1 percent, in 1997, resulting primarily from higher preprint revenue at the
Post-Dispatch.
Operating expenses (including selling, general and administrative expenses
and depreciation and amortization) for the publishing segment, excluding the St.
Louis Agency adjustment, increased to $291 million in 1997 from $262.5 million
in 1996, an increase of 10.8 percent. On a comparable basis, excluding the PCN
Group from the first six months of 1997 and the non-recurring costs from 1996,
operating expenses increased 0.8 percent. Major increases in comparable expenses
were overall personnel costs of $7.4 million, promotion expense of $1.6 million,
and circulation distribution expenses of $1.5 million. Partially offsetting
these increases were declines in newsprint expense of $6 million and purchased
supplement costs of $3.1 million.
Operating income from Pulitzer's publishing activities increased 45.9
percent to $47.5 million in 1997 from $32.6 million in 1996. On a comparable
basis, excluding the PCN Group from the first six months of 1997 and the
non-recurring costs from 1996, operating income from the publishing segment
increased 22.7 percent. The increase resulted primarily from higher advertising
revenues and lower newsprint costs.
Fluctuations in the price of newsprint significantly impact the results of
Pulitzer's publishing segment, where newsprint expense accounts for
approximately 20 percent of the segment's total operating costs. During the
first three quarters of 1997, the publishing segment benefited from newsprint
prices below prior year levels. However, as a result of 1997 price increases and
declining prices in late 1996, Pulitzer's 1997 fourth quarter newsprint expense
increased over the comparable prior year period. For the full year of 1997,
Pulitzer's newsprint cost and metric tons consumed, after giving effect to the
St. Louis Agency adjustment, were approximately $36.5 million and 64,600 tons
respectively.
26
<PAGE> 28
Broadcasting
Broadcasting operating revenues for 1997 increased 0.9 percent to $227
million from $225 million in 1996. For the year, a 1.6 percent increase in
national spot advertising and a 6.1 percent increase in network compensation
were partially offset by a 0.5 percent decline in local spot advertising. The
modest increases in current year advertising revenues reflect the impact of
decreased political advertising of approximately $12 million in 1997. In
addition, Pulitzer's five NBC affiliated television stations benefited from
significant Olympic related advertising in the prior year third quarter.
Broadcasting operating expenses (including selling, general and
administrative expenses and depreciation and amortization) increased 2.2 percent
to $144.8 million in 1997 from $141.7 million in 1996. The increase was
attributable to higher overall personnel costs of $3.2 million and higher
depreciation and amortization of $1 million. These increases were partially
offset by decreases in program rights costs of $493,000, promotion costs of
$333,000 and license fees of $246,000.
Operating income from the broadcasting segment in 1997 decreased 1.3
percent to $82.2 million from $83.2 million in the prior year. The 1997 decrease
reflected the modest overall revenue gain, resulting primarily from the effect
of significant political and Olympic related advertising revenue in the prior
year.
1996 COMPARED WITH 1995
Consolidated
Operating revenues for the year ended December 31, 1996 increased 13.1
percent to $534.1 million from $472.3 million in 1995. The revenue comparison
was affected by the acquisition of the PCN Group on July 1, 1996. In addition,
the revenue comparison was affected by an extra week of operations in 1995;
fiscal 1995 contained 53 weeks, versus 52 weeks in fiscal 1996. On a comparable
basis (i.e., excluding the PCN Group from 1996 and the extra week from 1995),
consolidated revenues increased 7.6 percent. The increase reflected gains in
both broadcasting and publishing revenues.
Operating expenses, excluding the St. Louis Agency adjustment, were $409.8
million compared to $373.2 million in 1995, an increase of 9.8 percent. On a
comparable basis, excluding the PCN Group from 1996 and the extra week from
1995, operating expenses increased 3.2 percent. Major increases in comparable
expenses were overall personnel costs of $5.2 million, promotion expenses of
$1.2 million, national advertising commissions of $951,000 and circulation
distribution expenses of $611,000. Partially offsetting these increases were
declines in newsprint expense of $1.1 million and inducement costs of $798,000.
Operating income for fiscal 1996 increased 27.3 percent to $110.3 million
from $86.7 million in 1995. On a comparable basis, excluding the PCN Group from
1996 and the extra week from 1995, operating income increased 25.9 percent. The
1996 increase reflected improvements in both the broadcasting and publishing
segments, resulting from increased revenues.
Interest expense increased $3.4 million in 1996 compared to 1995 due to
higher debt levels in the second half of 1996. New long-term borrowings related
to the acquisition of Scripps League added approximately $4.8 million to 1996
interest expense. Pulitzer's average debt level for 1996 increased to $186.9
million from $133.2 million in the prior year. Pulitzer's average interest rate
for 1996 decreased slightly to 7.3 percent from 7.5 percent in the prior year.
Interest income for the year decreased $681,000, due to both lower average
balances of invested funds and lower interest rates in 1996.
Pulitzer's 1996 non-operating expenses included a non-recurring charge of
approximately $2.7 million ($1.6 million after-tax) for the write-down in value
of a joint venture investment.
The effective income tax rate for 1996 increased to 40 percent from 37.9
percent in the prior year, due to approximately $2.1 million of nondeductible
goodwill amortization related to the Scripps League acquisition. The prior year
rate was affected by the settlement of a state tax examination which reduced
income tax expense by $911,000 in 1995. Excluding the non-recurring tax
settlement from the prior year, the effective income tax rate for 1995 would
have been 39 percent.
27
<PAGE> 29
For the year ended December 31, 1996, Pulitzer reported net income of $57.5
million, or $2.58 per diluted share, compared with net income of $49.3 million,
or $2.23 per diluted share, in the prior year. Comparability of the earnings
results was affected by the joint venture write-off in 1996, non-recurring costs
related to the Scripps League acquisition ($1.1 million after tax) in 1996, and
the positive income tax adjustment in 1995. Excluding the non-recurring items
from both years, 1996 net income would have increased to $60.3 million, or $2.71
per diluted share, from $48.4 million, or $2.19 per diluted share, for the prior
year. The gain in net income reflected a significant increase in the
broadcasting segment's operating profits.
Publishing
Operating revenues from Pulitzer's publishing segment for 1996 increased
14.7 percent to $309.1 million from $269.4 million in 1995. On a comparable
basis, excluding the PCN Group from 1996 and the extra week from 1995,
publishing revenues increased 3.5 percent. The comparable increase reflected
higher advertising revenues in 1996.
Newspaper advertising revenues, on a comparable basis, excluding the PCN
Group from 1996 and the extra week from 1995, increased $9.5 million, or 6
percent, in 1996. The significant portion of the current year increase resulted
from higher classified advertising revenue at the Post-Dispatch. Increases in
advertising rates for most categories and higher volume for zoned advertising
were the primary factors in the 1996 revenue increase. In the fourth quarter of
1996 and the first quarter of 1997, varying rate increases were implemented at
the Post-Dispatch, the Star and most of the PCN Group properties.
Circulation revenues, on a comparable basis, excluding the PCN Group from
1996 and the extra week from 1995, increased approximately $100,000, or 0.2
percent, in 1996. The Post-Dispatch and the Star experienced only slight
fluctuations in paid circulation and average rates in 1996 compared to the prior
year.
Operating expenses (including selling, general and administrative expenses
and depreciation and amortization) for the publishing segment, excluding the St.
Louis Agency adjustment, increased to $262.5 million in 1996 from $231.5 million
in 1995, an increase of 13.4 percent. On a comparable basis, excluding the PCN
Group from 1996 and the extra week from 1995, operating expenses increased 2.1
percent. Major increases in comparable expenses were promotion expense of $1.5
million, circulation distribution expenses of $611,000 and overall personnel
costs of $574,000. Partially offsetting these increases were declines in
newsprint expense of $1.1 million and inducement costs of $798,000.
Operating income from Pulitzer's publishing activities increased 28.3
percent to $32.6 million in 1996 from $25.4 million in 1995. On a comparable
basis, excluding the PCN Group from 1996 and the extra week from 1995, operating
income from the publishing segment increased 12 percent. The increase resulted
from higher advertising revenues on a comparable basis.
Broadcasting
Broadcasting operating revenues for 1996 increased 10.9 percent to $225
million from $202.9 million in 1995. On a comparable basis, excluding the extra
week from 1995, operating revenues increased 12.9 percent. Local spot
advertising increased 14.2 percent and national spot advertising increased 14.7
percent. The current year increases reflected strong Olympic-related advertising
at Pulitzer's five NBC affiliated stations and significant political advertising
of $13.2 million, an increase of $10.3 million.
Broadcasting operating expenses (including selling, general and
administrative expenses and depreciation and amortization) increased 3.5 percent
to $141.7 million in 1996 from $137 million in 1995. On a comparable basis,
excluding the extra week from 1995, operating expenses increased 4.5 percent.
This increase was primarily attributable to higher overall personnel costs of
$4.2 million and higher national advertising commissions of $951,000.
Operating income from the broadcasting segment in 1996 increased 26.2
percent to $83.2 million from $65.9 million in the prior year. On a comparable
basis, excluding the extra week from 1995, operating income
28
<PAGE> 30
from the broadcasting segment increased 30.9 percent. The 1996 gain resulted
from the significant increases in both local and national advertising revenues.
LIQUIDITY AND CAPITAL RESOURCES
Outstanding debt, inclusive of the short-term portion of long-term debt, as
of September 30, 1998, was $172.7 million compared to $185.4 million at December
31, 1997. The decrease since the prior year end reflects a scheduled repayment
of $12.5 million in the third quarter of 1998. Pulitzer's borrowings consist
primarily of fixed-rate senior notes with The Prudential Insurance Company of
America (the "Prudential Senior Note Agreements"). Under a variable rate credit
agreement with The First National Bank of Chicago, as Agent, for a group of
lenders, Pulitzer has a $50 million line of credit available through June, 2001
(the "FNBC Credit Agreement"). No amount is currently borrowed under the FNBC
Credit Agreement.
The Prudential Senior Note Agreements and the FNBC Credit Agreement require
Pulitzer to maintain certain financial ratios, place restrictions on the payment
of dividends and prohibit new borrowings, except as permitted thereunder.
Borrowings pursuant to the Prudential Senior Note Agreements will be repaid with
new borrowings prior to the Merger, and the Prudential Senior Note Agreements
and FNBC Credit Agreement will be terminated. Pulitzer's new borrowings will be
assumed by Hearst-Argyle at the time of the Merger. Accordingly, New Pulitzer
will have no long-term borrowings immediately after the Spin-off and Merger.
As of September 30, 1998, commitments for capital expenditures were
approximately $12.3 million, relating to normal capital equipment replacements
at both publishing and broadcasting locations (including Year 2000 projects
in-process). Commitments for capital expenditures at Pulitzer's publishing
locations represented approximately $10.3 million of Pulitzer's total commitment
at September 30. At the time of the Spin-off and Merger, capital commitments
related to publishing locations will be assumed by New Pulitzer and capital
commitments of the Broadcasting Business will be assumed by Hearst-Argyle.
Capital expenditures to be made in fiscal 1998 are estimated to be in the range
of $25 to $30 million. Commitments for film contracts and license fees at
broadcasting locations as of September 30, 1998 were approximately $17.9
million. In addition, as of September 30, 1998, Pulitzer had capital
contribution commitments of approximately $9.1 million related to investments in
two limited partnerships.
At September 30, 1998, Pulitzer had working capital of $134.9 million and a
current ratio of 2.86 to 1. This compares to working capital of $99.3 million
and a current ratio of 2.32 to 1 at December 31, 1997.
On October 30, 1998, Pulitzer acquired, in a purchase transaction, Troy
Daily News, Inc., the publisher of a daily afternoon and Sunday morning
newspaper located in Troy, Ohio, for approximately $20 million. Pulitzer expects
to consider further acquisitions of newspaper properties when favorable
investment opportunities are identified. In the event an investment opportunity
is identified, management expects that it would be able to arrange financing, if
necessary, on terms and conditions satisfactory to Pulitzer.
Pulitzer generally expects to generate sufficient cash from operations to
cover ordinary capital expenditures, film contract and license fees, working
capital requirements, debt installments and dividend payments.
Spin-off and Merger
Prior to the Spin-off and Merger (collectively referred to as the
"Transactions"), Pulitzer intends to borrow $700 million which will provide
sufficient funds to pay the existing Company debt and the costs of the
Transactions discussed below. Pursuant to the Merger Agreement, Hearst-Argyle
will assume the new debt following the consummation of the Transactions. (See
Note 2 to the consolidated financial statements included in Item 13 of this
Registration Statement on Form 10/A.)
In connection with the Transactions, Pulitzer will incur new borrowings,
prepay existing Company debt and make several one-time payments near the dates
of the Transactions. Pulitzer will incur a prepayment penalty related to the
prepayment of the existing borrowings under the Prudential Senior Note
Agreements. Based upon December 31, 1998 interest rates, the prepayment penalty
would be approximately $21.8 million. Professional fees to be incurred related
to the Transactions are estimated in the range of $37 million. Management
bonuses to be paid at the date of the Merger are estimated at approximately
$12.9 million.
29
<PAGE> 31
Pursuant to the Merger Agreement, Pulitzer will cash-out all outstanding stock
options at the date of the Merger. Based upon outstanding options (876,873) and
Pulitzer's common stock market price ($86.63) as of December 31, 1998, payments
to employee option holders of approximately $45.2 million would have been
required. It is anticipated that a portion of the option cash-out and bonus
payments will be deferred at the time of the Merger and paid at a future date.
Pulitzer expects to realize tax benefits related to the long-term debt
prepayment penalty, stock option cash-out payments and bonus payments. The
preceding amounts represent estimates based upon current information available
to management of Pulitzer. The final actual amounts will likely differ from the
estimates.
To the extent a gain is generated by the Transactions, a corporate-level
income tax ("Spin-off Tax") will be due. The gain is measured by the excess, if
any, of the fair market value of New Pulitzer Stock distributed by Pulitzer to
its stockholders in the Spin-off over Pulitzer's adjusted tax basis in such New
Pulitzer Stock immediately prior to the distribution of New Pulitzer Stock in
the spin-off (the "Distribution"). On December 31, 1998, the fair market value
of New Pulitzer Stock would be estimated as the difference between the closing
price of Pulitzer's common stock on December 31, 1998 ($86.63) and the fair
market value for the Broadcasting Business of $54.32 per share. The fair market
value for the Broadcasting Business was estimated based upon the fixed number of
shares of Hearst-Argyle's Series A common stock (37,096,774 shares) that will be
exchanged for Pulitzer's common stock and Class B common stock (22,536,412
shares at December 31, 1998) and the closing price of Hearst-Argyle's Series A
common stock on December 31, 1998 ($33.00) (i.e., 37,096,774 shares multiplied
by $33.00 per share divided by 22,536,412 shares equals $54.32). Using a fair
market value of $32.31 (the excess of $86.63 over $54.32) per common share for
the New Pulitzer Stock, no gain (or tax) would result from the Transactions
because the adjusted tax basis of the New Pulitzer Stock would be approximately
$34.20 per share.
30
<PAGE> 32
The following table illustrates the calculation of several Spin-off Tax
estimates under various common stock closing prices for Pulitzer and
Hearst-Argyle:
<TABLE>
<CAPTION>
FOR THE MONTH ENDED DECEMBER 31,
1998
AS OF --------------------------------
JANUARY 19, 1999 HIGH LOW
---------------- ---- ---
<S> <C> <C> <C>
Closing price of Pulitzer's common stock.... $ 85.19 $ 86.63 $ 76.63
-------------- -------------- ------------
Estimated fair market value for Broadcasting
Business:
Hearst-Argyle shares to be exchanged for
Pulitzer shares........................ 37,096,774 37,096,774 37,096,774
Closing price of Hearst-Argyle common
stock.................................. $ 30.94 $ 33.00 $ 24.38
-------------- -------------- ------------
Estimated fair market value............... $1,147,774,188 $1,224,193,542 $904,419,350
Divide by the number of shares of Pulitzer
common stock outstanding on December
31, 1998............................... 22,536,412 22,536,412 22,536,412
-------------- -------------- ------------
Estimated fair market value per share for
Broadcasting Business.................. $ 50.93 $ 54.32 $ 40.13
-------------- -------------- ------------
Estimated fair market value per share for
New Pulitzer Stock........................ $ 34.26 $ 32.31 $ 36.50
Estimated tax basis per share for New
Pulitzer Stock............................ $ 34.25 $ 34.20 $ 34.52
-------------- -------------- ------------
Estimated gain (loss) per share from
Spin-off.................................. $ 0.01 $ (1.89) $ 1.98
Estimated number of shares of New Pulitzer
Stock at the time of the Spin-off (based
upon the number of shares of Pulitzer's
common stock outstanding on December 31,
1998)..................................... 22,536,412 22,536,412 22,536,412
-------------- -------------- ------------
Estimated gain (loss) from Spin-off......... $ 225,364 $ (42,593,819) $ 44,622,096
Estimated U.S. federal and state income tax
rate...................................... 39% 39% 39%
-------------- -------------- ------------
Estimated Spin-off Tax...................... $ 87,892 N/A $ 17,402,617
============== ============== ============
</TABLE>
The above amounts are estimates provided to show the range of possible
results based upon historical price per share data for Pulitzer and
Hearst-Argyle. The actual gain and related income tax will depend on the
fair market value of, and Pulitzer's adjusted tax basis in, the New
Pulitzer Stock at the time of the Spin-off.
In connection with the September 1986 purchase of Pulitzer Class B common
stock from certain selling stockholders (the "1986 Selling Stockholders"),
Pulitzer agreed, under certain circumstances, to make an additional payment to
the 1986 Selling Stockholders in the event of a Gross-Up Transaction (as defined
herein). A "Gross-Up Transaction" was defined to mean, among other transactions,
(i) any merger, in any transaction or series of related transactions, of more
than 85 percent of the voting securities or equity of Pulitzer pursuant to which
holders of Pulitzer common stock receive securities other than Pulitzer common
stock and (ii) any recapitalization, dividend or distribution, or series of
related recapitalizations, dividends or distributions, in which holders of
Pulitzer common stock receive securities (other than Pulitzer common stock)
having a Fair Market Value (as defined herein) of not less than 33 1/3 percent
of the Fair Market Value of the shares of Pulitzer common stock immediately
prior to such transaction. The amount of the additional payment, if any, would
equal (x) the product of (i) the amount by which the Transaction Proceeds (as
defined herein) exceeds the Imputed Value (as defined herein) multiplied by (ii)
the applicable percentage
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<PAGE> 33
(i.e., 50 percent for the period from May 13, 1996 through May 12, 2001)
multiplied by (iii) the number of shares of Pulitzer common stock issuable upon
conversion of the shares of Pulitzer Class B common stock owned by the 1986
Selling Stockholders, adjusted for, among other things, stock dividends and
stock splits; less (y) the sum of any additional payments previously received by
the 1986 Selling Stockholders; provided, however, that in the event of any
recapitalization, dividend or distribution, the amount by which the Transaction
Proceeds exceeds the Imputed Value shall not exceed the amount paid or
distributed pursuant to such recapitalization, dividend or distribution in
respect of one share of Pulitzer common stock.
The term "Transaction Proceeds" was defined to mean, in the case of a
merger, the aggregate Fair Market Value (as defined herein) of the consideration
received pursuant thereto by the holder of one share of Pulitzer common stock,
and, in the case of a recapitalization, dividend or distribution, the aggregate
Fair Market Value of the amounts paid or distributed in respect of one share of
Pulitzer common stock plus the aggregate Fair Market Value of one share of
Pulitzer common stock following such transaction. The "Imputed Value" for one
share of Pulitzer common stock on a given date was defined to mean an amount
equal to $28.82 compounded annually from May 12, 1986 to such given date at the
rate of 15 percent per annum, the result of which is $154.19 at May 12, 1998.
There was no specific provision for adjustment of the $28.82 amount, but if it
were adjusted to reflect all stock dividends and stock splits of Pulitzer since
September 30, 1986, it would now equal $15.72, which if compounded annually from
May 12, 1986 at the rate of 15 percent per annum would now equal $84.11.
"Fair Market Value," in the case of any consideration other than cash
received in a Gross-Up Transaction, was defined to mean the fair market value
thereof as agreed to by a valuation firm selected by Pulitzer and a valuation
firm selected by the 1986 Selling Stockholders, or, if the two valuation firms
do not agree on the fair market value, the fair market value of such
consideration as determined by a third valuation firm chosen by the two
previously selected valuation firms. Any such agreement or determination shall
be final and binding on the parties.
As a result of the foregoing, the amount of additional payments, if any,
that may be payable by New Pulitzer with respect to the Merger and the
Distribution cannot be determined at this time. However, if the Distribution
were determined to be a Gross-Up Transaction and if the Fair Market Value of the
Transaction Proceeds with respect to the Merger and the Distribution were
determined to exceed the Imputed Value, then the additional payments to the 1986
Selling Stockholders would equal approximately $5.9 million for each $1.00 by
which the Transaction Proceeds exceed the Imputed Value. Accordingly, depending
on the ultimate resolution of the meaning and application of various provisions
of the Gross-Up Transaction agreements, including the determination of Imputed
Value and Fair Market Value of the Transaction Proceeds, in the opinion of
Pulitzer's management, the amount of an additional payment, if any, could be
material to the consolidated financial statements of Pulitzer. The additional
payment, if any, to the 1986 Selling Stockholders will be recorded directly to
additional paid-in capital as the payment of this contingent amount is a direct
cost of the disposal of the Broadcasting Business.
32
<PAGE> 34
The following table illustrates the calculation of potential additional
payments under the Gross-up Transaction agreements, assuming, among other
things, a determination of a Gross-up Transaction, an Imputed Value of $84.11
and a Fair Market Value of Transaction Proceeds of various amounts above and
below $84.11.
<TABLE>
<CAPTION>
FOR THE PERIOD MAY 25, 1998
FOR THE MONTH ENDED (DATE OF MERGER PRESS RELEASE)
DECEMBER 31, 1998 THROUGH DECEMBER 31, 1998
---------------------------- ------------------------------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
Fair Market Value of Transaction
Proceeds (using high and low closing
prices of Pulitzer's common
stock).............................. $ 86.63 $ 76.63 $ 89.25 $ 64.94
Less Imputed Value (assumes adjustment
to reflect stock dividends and stock
splits since 1986).................. $ 84.11 $ 84.11 $ 84.11 $ 84.11
----------- ----------- ----------- -----------
Transaction Proceeds in excess of
Imputed Value....................... $ 2.52 n/a $ 5.14 n/a
Multiply by applicable percentage..... 50% 50% 50% 50%
Multiply by the number of shares of
Pulitzer's common stock issuable
upon conversion of the shares of
Pulitzer's Class B common stock
owned by the 1986 Selling
Stockholders, adjusted for stock
dividends and stock splits since
1986................................ 11,700,850 11,700,850 11,700,850 11,700,850
----------- ----------- ----------- -----------
Additional payment to the 1986 Selling
Stockholders........................ $14,743,071 $ 0 $30,071,185 $ 0
=========== =========== =========== ===========
</TABLE>
If the Imputed Value is determined to be $154.19 instead of $84.11, no
additional payment to the 1986 Selling Stockholders would be required under any
of the above calculations.
In the opinion of Pulitzer's management, the amount of additional payment,
if any, is not likely to have a material adverse effect on the existing
day-to-day newspaper publishing and related new media properties now operated by
Pulitzer and, following the Spin-off, to be operated by New Pulitzer. The amount
of additional payment, if any, will reduce, however, the amount of cash
available to New Pulitzer to finance potential acquisition opportunities in the
future.
Pursuant to the Merger Agreement, New Pulitzer will indemnify Hearst-Argyle
against losses related to: (i) on an after tax basis, certain tax liabilities,
including (A) any transfer tax liability attributable to the Spin-off, (B) with
certain exceptions, any tax liability of Pulitzer or any subsidiary of Pulitzer
attributable to any tax period (or portion thereof) ending on or before the
closing date of the Merger, including tax liabilities resulting from the
Spin-off, and (C) any tax liability of New Pulitzer or any subsidiary of New
Pulitzer; (ii) liabilities and obligations under any employee benefit plans not
assumed by Hearst-Argyle; (iii) any liabilities for payments made pursuant to a
Gross-Up Transaction; and (iv) certain other matters as set forth in the Merger
Agreement.
Information Systems and the Year 2000
The Year 2000 Issue is the result of information systems being designed
using two digits rather than four digits to define the applicable year. As the
year 2000 approaches, such information systems may be unable to accurately
process certain date-based information.
In 1995, Pulitzer began reviewing and preparing its computer systems for
the Year 2000. Generally, at Pulitzer's newspaper publishing locations, the
following categories of computer systems were identified for
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<PAGE> 35
assessment of Year 2000 compliance: pre-press systems, press systems, post-press
systems, business systems, network systems, desktop PC systems,
telecommunication systems and building systems. Significant sub-systems within
these categories which were identified as non-compliant during the assessment
phase represented aging hardware and software which would have required
replacement in the near term irrespective of the Year 2000 Issue. Consequently,
Pulitzer adopted a Year 2000 strategy which will replace its significant
non-compliant systems with new compliant systems prior to December 31, 1999.
Pulitzer's strategy for achieving Year 2000 compliance was developed using
a five phase plan as follows: (1) educate and plan; (2) assess; (3) replace and
renovate; (4) validate/test; and (5) implement. As of September 30, 1998,
Pulitzer has completed the planning and assessment phases and is in the process
of replacing, testing and implementing new compliant systems (with some systems
already implemented). Pulitzer and New Pulitzer expect to have substantially all
of the Year 2000 system changes implemented by January 31, 1999 at the Star,
March 31, 1999 at the Post-Dispatch and September 30, 1999 at the PCN Group
properties.
Pulitzer's current estimate of capital expenditures for new hardware and
software to address Year 2000 issues, as well as to replace aging systems, is
approximately $11.6 million for its newspaper publishing locations. At September
30, 1998, approximately $4.6 million of the total capital expenditure estimate
remains to be spent through the projected implementation dates. These amounts do
not include either the internal staff costs of Pulitzer's information technology
department or the cost of minor Year 2000 system modifications, both of which
are recorded as expense in the period incurred. Year 2000 modification costs for
minor system issues are not expected to be significant. The Year 2000 related
capital expenditures have been considered in Pulitzer's normal capital budgeting
process and will be funded through operating cash flows.
In addition to addressing internal system issues, Pulitzer is communicating
with its major suppliers (including but not limited to newsprint, ink,
telecommunication services and utilities) and selected customers to obtain
assurance of their preparedness for the Year 2000. In general, questionnaires
are being used to identify potential Year 2000 issues at these third parties
which may impact Pulitzer's business operations and require a remedy. In a
significant portion of the responses received to date, material third parties
have indicated that they are aware of the Year 2000 Issue and have developed and
are currently implementing their respective plans to address Year 2000 issues.
Throughout 1999, Pulitzer and New Pulitzer, where appropriate, will follow-up
and make more detailed inquiries of these material third parties as to the
status of their respective Year 2000 plans.
As of December 31, 1998, Pulitzer believes that its plan for achieving Year
2000 compliance will be fully implemented by September 30, 1999. However, as it
is not possible to anticipate all future outcomes, especially where third
parties are involved, Pulitzer is in the process of developing Year 2000
contingency plans for mission critical business and production systems.
In the event that either Pulitzer or Pulitzer's suppliers and customers do
not successfully implement their Year 2000 plans on a timely basis, Pulitzer
could experience business losses. In the most extreme case, publication of
Pulitzer's newspapers and on-line products, as well as the sale of advertising,
could be interrupted and/or delayed. The extent of losses under such a scenario
have not been estimated by Pulitzer.
The preceding discussion relates to Pulitzer's publishing operations only.
Pulitzer does not expect to incur significant costs to address Year 2000 issues
at its broadcasting locations prior to the Merger.
Digital Television
Pulitzer's Orlando television station, WESH, is required to construct
digital television facilities in order to broadcast digitally by November 1,
1999 and comply with Federal Communications Commission ("FCC") rules. The
deadline for constructing digital facilities at Pulitzer's other television
stations is May 1, 2002. Pulitzer is currently considering available options to
comply with the FCC's timetable but does not expect to incur significant capital
expenditures to construct digital facilities prior to the Merger.
34
<PAGE> 36
ITEM 3. PROPERTIES.
The corporate headquarters of New Pulitzer is located at 900 North Tucker
Boulevard, St. Louis, Missouri. The general character, location and approximate
size of the principal physical properties used by Pulitzer for its publishing
business segment at December 31, 1998, are set forth below. Leases on the
properties indicated as leased by Pulitzer expire at various dates through April
2007.
New Pulitzer believes that all of Pulitzer's owned and leased properties
used in connection with its publishing business segment are in good condition,
well maintained and adequate for New Pulitzer's current and immediately
foreseeable operating needs.
<TABLE>
<CAPTION>
APPROXIMATE AREA IN
SQUARE FEET
--------------------
GENERAL CHARACTER OF PROPERTY OWNED LEASED
----------------------------- ----- ------
<S> <C> <C>
Printing plants, business and editorial offices, and
warehouse space located in:
St. Louis, Missouri(1).................................... 585,600 138,700
St. Louis, Missouri....................................... 5,600
Tucson, Arizona(2)........................................ 265,000 41,800
Washington, D.C........................................... 2,250
Provo, Utah............................................... 22,900 9,600
Santa Maria, California................................... 20,800 2,200
Napa, California.......................................... 21,000
Coos Bay, Oregon.......................................... 15,200
Hanford, California....................................... 16,500 3,600
Flagstaff, Arizona........................................ 23,200
Troy, Ohio................................................ 43,000 772
DeKalb, Illinois.......................................... 15,900
Park Hills, Missouri...................................... 9,100
Lihue, Hawaii............................................. 8,500 20,900
Hamilton, Montana......................................... 2,900
Rhinelander, Wisconsin.................................... 6,400
Petaluma, California...................................... 9,000
Farmington, Missouri...................................... 11,800
Fredericktown, Missouri................................... 1,800 650
</TABLE>
- -------------------------
(1) Property is subject to the provisions of the St. Louis Agency Agreement.
(2) The 265,000 square foot facility in Tucson, Arizona is used in the
production of the Star and the Citizen and is jointly owned with Gannett
pursuant to the Tucson Agency.
35
<PAGE> 37
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Pulitzer's common stock and Class B common stock as of December 31,
1998, (i) by each director of Pulitzer, (ii) by each person known by New
Pulitzer to own beneficially more than 5% of Pulitzer's common stock, (iii) by
the executive officers named in the Summary Compensation Table set forth in
"Item 6 -- Executive Compensation," and (iv) by all directors and officers of
Pulitzer as a group. Assuming that the Spin-off had occurred as of December 31,
1998, the information in the table below would also reflect the number of shares
of Common Stock and Class B Common Stock of New Pulitzer, and the respective
percentages thereof, beneficially owned by the persons named in such table.
<TABLE>
<CAPTION>
PERCENT OF
CLASS B AGGREGATE
COMMON STOCK COMMON STOCK VOTING POWER OF
-------------------- --------------------- COMMON STOCK
DIRECTORS, OFFICERS AND NUMBER NUMBER AND CLASS B
5% STOCKHOLDERS OF SHARES PERCENT OF SHARES PERCENT COMMON STOCK
----------------------- --------- ------- --------- ------- ---------------
<S> <C> <C> <C> <C> <C>
Trustees of Pulitzer Voting Trust(1)....... -- --% 15,274,749 99.7% 94.9%
Emily Rauh Pulitzer(2)(3).................. -- -- 6,780,667 44.3 42.1
Michael E. Pulitzer(2)(4).................. -- -- 3,800,146 24.8 23.6
David E. Moore(2)(5)....................... 182 * 3,927,035 25.6 24.4
James M. Snowden, Jr.(6)................... 10,333 * -- -- **
William Bush(7)............................ 1,667 * -- -- **
Alice B. Hayes(8).......................... 6,667 * -- -- **
Ronald H. Ridgway(2)(9).................... 186,434 2.4 -- -- **
Ken J. Elkins(2)(10)....................... 174,360 2.3 -- -- **
Nicholas G. Penniman IV(2)(11)............. 117,501 1.5 -- -- **
Terrance C.Z. Egger(12).................... 4,765 * -- -- **
C. Wayne Godsey(13)........................ 30,695 * -- -- **
John C. Kueneke............................ 501 * -- -- **
Gabelli Funds, Inc.(14).................... 595,009 7.7 -- -- **
One Corporate Center
Rye, New York 10580-1434
Nicholas Company, Inc.(15)................. 470,866 6.6
701 North Water Street
Milwaukee, Wisconsin 53202
Oak Value Capital Management, Inc.(16)..... 682,123 8.9
3100 Tower Boulevard
Durham, North Carolina 27707
Morgan Stanley Dean Witter & Co.(17)....... 711,899 9.3
1585 Broadway
New York, New York 10036
All directors and officers as a group
(14 persons)(2)(18)...................... 557,222 7.2% 14,507,848 94.7% 90.2%
</TABLE>
- -------------------------
* Represents less than 1% of the outstanding Pulitzer common stock.
** Represents less than 1% of the aggregate voting power of Pulitzer common
stock and Class B common stock.
(1) The Trustees of the Pulitzer Voting Trust are Michael E. Pulitzer, David E.
Moore, Emily Rauh Pulitzer, Ken J. Elkins, Nicholas G. Penniman IV, Ronald
H. Ridgway and Cole C. Campbell. The
36
<PAGE> 38
Pulitzer Voting Trust and each of the individual Trustees may be reached at 900
North Tucker Boulevard, St. Louis, Missouri 63101.
(2) Excludes shares which may be deemed to be beneficially owned solely as a
trustee of the Pulitzer Voting Trust.
(3) Includes 6,716,693 shares held in trusts, and 22,860 shares held in a
private operating foundation. These shares are beneficially owned by Mrs.
Pulitzer.
(4) Includes 3,684,760 shares held in trusts, and 51,113 shares held in a
private foundation. These shares are beneficially owned by Mr. Pulitzer.
Also includes 64,273 shares held in a trust for the benefit of the wife of
Michael E. Pulitzer. Mr. Pulitzer disclaims beneficial ownership of these
shares.
(5) Includes 366 shares of Class B common stock and 182 shares of common stock
beneficially owned by the wife of David E. Moore. Mr. Moore disclaims
beneficial ownership of these shares. Also includes 651,231 shares held in
trust. These shares are beneficially owned by Mr. Moore.
(6) Includes 6,667 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1994 Stock Option Plan which are exercisable
within 60 days of the date hereof.
(7) Consists of 1,667 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1994 Stock Option Plan which are exercisable
within 60 days of the date hereof.
(8) Consists of 6,667 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1994 Stock Option Plan which are exercisable
within 60 day as of the date hereof.
(9) Includes 157,449 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1986 Employee Stock Option Plan and the Pulitzer
1994 Stock Option Plan which are exercisable within 60 days of the date
hereof.
(10) Includes 156,332 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1986 Employee Stock Option Plan and the Pulitzer
1994 Stock Option Plan which are exercisable within 60 days of the date
hereof.
(11) Includes 92,501 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1986 Employee Stock Option Plan and the Pulitzer
1994 Stock Option Plan which are exercisable within 60 days of the date
hereof.
(12) Includes 3,778 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1994 Stock Option Plan which are exercisable
within 60 days of the date hereof. Also includes 185 shares subject to the
terms of the Pulitzer Publishing Company 1994 Key Employees' Restricted
Stock Purchase Plan (76 shares will vest on January 24, 1999; 55 shares on
February 13, 1999; and 54 shares on February 13, 2000).
(13) Includes 29,467 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1986 Employee Stock Option Plan and the Pulitzer
1994 Stock Option Plan which are exercisable within 60 days of the date
hereof.
(14) This figure is based on information set forth in Amendment No. 8 to
Schedule 13D dated September 24, 1997, filed by Gabelli Funds, Inc., and
its investment adviser, GAMCO, with the Securities and Exchange Commission.
The Schedule 13D, as amended, states that (i) Gabelli Funds, Inc. has the
sole power to vote, or direct the vote of, and the sole power to dispose or
direct the disposition of 92,000 of such shares, and (ii) GAMCO has the
sole power to vote, or direct the vote of, 463,011 of such shares, and the
sole power to dispose or direct the disposition of, 501,676 of such shares,
and (iii) Gabelli Asset Management Company International Advisory Services
Ltd. has the sole power to vote, or direct the vote of, and the sole power
to dispose or direct the disposition of, 1,333 of such shares.
(15) This figure is based on information set forth in Amendment No. 3 to the
joint Schedule 13G dated February 10, 1999, filed by Nicholas Company,
Inc., Nicholas Fund, Inc., and Albert O. Nicholas with the Securities and
Exchange Commission. Nicholas Company, Inc. acts as the investment advisor
to Nicholas Fund, Inc. and Albert O. Nicholas is the Chief Executive
Officer, Chairman, a director and majority shareholder of Nicholas Company,
Inc. The joint Schedule 13G states that (i) Nicholas Fund,
37
<PAGE> 39
Inc., has the sole power to vote, or direct the vote of such shares, and
(ii) that Nicholas Company, Inc. has the sole power to dispose or direct
the disposition of such shares.
(16) This figure is based on information set forth in Amendment 2 to Schedule
13G dated January 31, 1998, filed by Oak Value Capital Management, Inc.
with the Securities and Exchange Commission. The Schedule 13G states that
Oak Value Capital Management, Inc. has the sole power to vote, or direct
the vote of 598,629 shares, and the sole power to dispose or direct the
disposition of 682,123 shares.
(17) This figure includes 662,400 shares which Morgan Stanley Asset Management
Inc. has the shared power to dispose or direct the disposition of and is
based on information set forth in the joint Schedule 13G, dated September
10, 1998, filed by Morgan Stanley Dean Witter & Co. and Morgan Stanley
Asset Management Inc., a wholly-owned subsidiary of Morgan Stanley Dean
Witter & Co., with the Securities and Exchange Commission. The joint
Schedule 13G states that (i) Morgan Stanley Dean Witter & Co. has the
shared power to vote or direct the vote of 511,499 shares, and the shared
power to dispose or direct the disposition of 711,899 shares and (ii)
Morgan Stanley Asset Management Inc. has the shared power to vote or direct
the vote of 462,000 shares, and the shared power to dispose or direct the
disposition of 662,400 shares.
(18) Includes 477,801 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1986 Employee Stock Option Plan and the Pulitzer
1994 Stock Option Plan which are exercisable within 60 days of the date
hereof.
VOTING TRUST
It is contemplated that the beneficial owners of more than 90% of
Pulitzer's Class B common stock currently outstanding, representing more than
88% of the combined voting power of Pulitzer's outstanding common stock and
Class B common stock will enter into an agreement to be effective immediately
following the consummation of the Spin-off (the "New Pulitzer Voting Trust
Agreement") providing for the creation of a new voting trust (the "New Pulitzer
Voting Trust") and will deposit their shares of New Pulitzer Class B Common
Stock into that trust. A description of the terms and provisions of the New
Pulitzer Voting Trust Agreement is set forth in "Item 11. -- Description of
Registrant's Securities to be Registered -- New Pulitzer Voting Trust
Agreement." The Pulitzer Voting Trust will be terminated in connection with the
Transactions.
38
<PAGE> 40
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
MANAGEMENT
The following table sets forth certain information concerning New
Pulitzer's executive officers and directors.
<TABLE>
<CAPTION>
NAME, AGE AND CLASS POSITIONS WITH NEW PULITZER
- ------------------- ---------------------------
<S> <C>
CLASS A DIRECTORS
Emily Rauh Pulitzer; 65(1)........................... Director
James M. Snowden, Jr.; 55............................ Director
Nicholas G. Penniman IV; 60(2)....................... Director, Senior Vice President --
Newspaper Operations
CLASS B DIRECTORS
Michael E. Pulitzer; 68(1)........................... Director, Chairman of the Board
Ronald H. Ridgway; 60................................ Director, Senior Vice
President -- Finance
William Bush; 52..................................... Director
CLASS C DIRECTORS
David E. Moore; 75(1)................................ Director
Ken J. Elkins; 61.................................... Director
Alice B. Hayes; 61................................... Director
OTHER EXECUTIVE OFFICERS
Robert C. Woodworth; 51(3)........................... President and Chief Executive Officer
Terrance C.Z. Egger; 41.............................. Vice President
James V. Maloney; 49................................. Secretary
</TABLE>
- -------------------------
(1) Michael E. Pulitzer is a cousin of David E. Moore and a brother-in-law of
Emily Rauh Pulitzer.
(2) Following consummation of the Transactions, Mr. Penniman will cease to serve
as a director and executive officer of New Pulitzer but will continue with
New Pulitzer as a consultant.
(3) Robert C. Woodworth will be named to the Board of Directors of New Pulitzer
as a Class A Director following consummation of the Transactions.
EMILY RAUH PULITZER is the widow of Joseph Pulitzer, Jr. Mrs. Pulitzer was
a curator of the St. Louis Art Museum from 1964 through 1973. She currently
serves certain St. Louis and national charitable, civic and arts organizations
and as a director of Pulitzer. It is contemplated that following the
consummation of the Transactions, Mrs. Pulitzer will enter into a consulting
agreement with New Pulitzer. The terms of this consulting agreement will be
substantially similar to Mrs. Pulitzer's existing consulting agreement with
Pulitzer and will include an agreement by New Pulitzer to use its best efforts
to cause Mrs. Pulitzer to be a member of its Board of Directors.
JAMES M. SNOWDEN, JR. has been an Executive Vice President of Huntleigh
Securities Corporation ("Huntleigh") since November 6, 1995. Mr. Snowden was a
Vice President of A.G. Edwards & Sons, Inc. from June 1984 through November 3,
1995 and was a director of A.G. Edwards & Sons, Inc. from March 1988 through
February 1994. Mr. Snowden serves as a director of Pulitzer. Pulitzer has
retained, and New Pulitzer intends to retain in the future, Huntleigh as a
financial advisor in connection with such financial matters as it deems
appropriate.
NICHOLAS G. PENNIMAN IV, has served as New Pulitzer's Senior Vice
President -- Newspaper Operations since May 1998 and has served as Pulitzer's
Senior Vice President -- Newspaper Operations since April 1986. Prior to that
time, Mr. Penniman served as Pulitzer's Vice President -- Newspaper Operations
and General Manager of the Post Dispatch from April 1984 through March 1986 and
as Assistant General Manager of the Post-Dispatch from January 1978 through
March 1984. Mr. Penniman is a director of Pulitzer and also serves as Publisher
of the Post-Dispatch. Following consummation of the Transactions,
39
<PAGE> 41
Mr. Penniman will cease to serve as a director and executive officer of New
Pulitzer but will continue with New Pulitzer as a consultant.
MICHAEL E. PULITZER was elected Chairman of the Board of New Pulitzer in
May 1998, and served as its President and Chief Executive Officer from May 1998
through December 1998. Mr. Pulitzer was elected Chairman of the Board of
Pulitzer on June 11, 1993, and has served as its President and Chief Executive
Officer since April 1986. Mr. Pulitzer served as Vice Chairman of the Board of
Pulitzer from April 1984 through March 1986 and as President and Chief Operating
Officer of Pulitzer from April 1979 through March 1984. It is contemplated that
following the consummation of the Transactions, Mr. Pulitzer will enter into an
employment agreement with New Pulitzer. Mr. Pulitzer is expected to become a
director of Hearst-Argyle following the closing of the Transactions.
RONALD H. RIDGWAY, has served as Senior Vice President -- Finance of New
Pulitzer since May 1998 and as Pulitzer's Senior Vice President -- Finance since
March 1986. Prior thereto, Mr. Ridgway served as Pulitzer's Vice
President -- Finance from April 1984 through March 1986, as Treasurer from April
1979 through March 1986, and as Secretary and Assistant Treasurer from January
1978 through March 1979. Mr. Ridgway serves as a director of Pulitzer.
WILLIAM BUSH has been a partner in the law firm of Fulbright & Jaworski
L.L.P. (and its predecessor firm, Reavis & McGrath) since 1977. He is the
partner in charge of the New York office and a member of the Executive Committee
of the firm. Pulitzer has retained, and New Pulitzer intends to retain in the
future, Fulbright & Jaworski L.L.P. as attorneys in connection with such legal
matters as it deems appropriate. Mr. Bush serves as a director of Pulitzer.
DAVID E. MOORE, lifelong journalist, founded Harrison Independent
(Westchester County, NY), Connecticut Business Journal in association with
Westchester Business Journal, and International Business magazine. Mr. Moore
serves as a director of Pulitzer. It is contemplated that following the
consummation of the Transactions, Mr. Moore will enter into a consulting
agreement with New Pulitzer. The terms of this consulting agreement will be
substantially similar to Mr. Moore's existing consulting agreement with Pulitzer
and will include an agreement by New Pulitzer to use its best efforts to cause
Mr. Moore to be a member of its Board of Directors.
KEN J. ELKINS, has served as Pulitzer's Senior Vice
President -- Broadcasting Operations since April 1986 and prior thereto, from
April 1984 through March 1986, served as Pulitzer's Vice President --
Broadcasting Operations. Mr. Elkins is a director of Pulitzer and Commerce Bank
of St. Louis and is expected to become a director of Hearst-Argyle following the
closing of the Transactions.
ALICE B. HAYES has been President of the University of San Diego since July
1995. From July 1989 through May 1995, Dr. Hayes was Executive Vice President
and Provost of St. Louis University, St. Louis, Missouri, and for over five
years prior thereto held various academic positions at Loyola University of
Chicago. Dr. Hayes serves as a director of Pulitzer.
ROBERT C. WOODWORTH has served as New Pulitzer's President and Chief
Executive Officer since January 1, 1999. Mr. Woodworth was a Vice President --
Newspapers of Knight Ridder, Inc. from May 1997 until December 1998. Prior to
that, Mr. Woodworth worked for Capital Cities/ABC, most recently as Publisher of
The Kansas City Star and Senior Vice President -- Metro Newspapers. Mr.
Woodworth, who joined Capital Cities in 1973, previously served in various
capacities at a number of Capital Cities properties, including Executive Vice
President and General Manager of The Fort-Worth Star-Telegram and Vice
President -- Operations of The Belleville News-Democrat. Mr. Woodworth will be
named to the Board of Directors of New Pulitzer as a Class A Director following
the consummation of the Transactions.
TERRANCE C.Z. EGGER has served as a Vice President of New Pulitzer since
May 1998 and as a Vice President of Pulitzer and General Manager of the
Post-Dispatch since March 1996. Prior to joining Pulitzer, Mr. Egger served as
Vice President and Advertising Director for TNI Partners.
40
<PAGE> 42
JAMES V. MALONEY has served as Secretary of New Pulitzer since May 1998 and
has served as Secretary of Pulitzer since January 1984 and was appointed
Pulitzer's Director of Shareholder Relations in June 1987.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of Pulitzer has, and after the Spin-off the New
Pulitzer Board of Directors will have, an Audit Committee, Compensation
Committee, Executive Committee, Finance Committee, Nominating Committee and
Planning Committee. The functions of each of these committees are described and
the members of each are listed below. The functions of these committees will not
change as a result of the Spin-off, and it is expected that the members of the
New Pulitzer committees following the Spin-off will be the same, with certain
exceptions, as those currently serving on the Pulitzer committees.
The Audit Committee of Pulitzer consists of the two directors who are
determined to be independent directors under the corporate responsibility
requirements for companies listed on the New York Stock Exchange. The Audit
Committee is responsible to the Board of Directors for overseeing and reviewing
audit results and monitoring the effectiveness of internal audit functions.
James M. Snowden, Jr. and Alice B. Hayes currently serve as members of this
Committee of Pulitzer.
The Compensation Committee of Pulitzer consists of Michael E. Pulitzer, who
is Chairman, President and Chief Executive Officer of Pulitzer, and three
directors who are not officers of Pulitzer. The Board of Directors may at its
discretion appoint a fourth person, who, if he is not a director, shall be an
advisory member of the Compensation Committee. The Compensation Committee
renders advice with respect to compensation matters and administers, among other
things, Pulitzer's equity and incentive compensation plans. In addition to
Michael E. Pulitzer, David E. Moore, William Bush and James M. Snowden, Jr.
currently serve as members of this Committee of Pulitzer.
The Executive Committee of Pulitzer consists of the four directors who hold
the positions of President, Senior Vice President -- Finance, Senior Vice
President -- Newspaper Operations and Senior Vice President -- Broadcasting
Operations and one or more directors who are not officers of Pulitzer. The
Executive Committee exercises the power and authority of the Board of Directors
during the period between Board meetings, subject to certain limitations.
Michael E. Pulitzer, Ronald H. Ridgway, Nicholas G. Penniman IV, Ken J. Elkins
and David E. Moore currently serve as members of this Committee of Pulitzer.
The Finance Committee of Pulitzer consists of the three directors who hold
the positions of President, Senior Vice President -- Finance and Senior Vice
President -- Newspaper Operations and, in the discretion of the Board of
Directors, a fourth person, designated by resolution adopted by a majority of
the whole Board of Directors, who, if he is not a director, shall be an advisory
member. The Finance Committee may exercise, in general, the authority of the
Board with respect to approval or disapproval of contracts obligating Pulitzer
for more than $50,000 but not more than $500,000 ($1,000,000 with respect to the
Post-Dispatch). Michael E. Pulitzer, Ronald H. Ridgway and Nicholas G. Penniman
IV currently serve as members of this Committee of Pulitzer.
The Nominating Committee of Pulitzer consists of two or more directors who
are designated by resolution adopted by a majority of the whole Board. The
Nominating Committee recommends qualified candidates to the Board of Directors
and/or the stockholders for election as directors of Pulitzer. Michael E.
Pulitzer, David E. Moore and James M. Snowden, Jr. currently serve as members of
this Committee of Pulitzer.
The Planning Committee of Pulitzer consists of the four directors who hold
the positions of President, Senior Vice President -- Finance, Senior Vice
President -- Newspaper Operations and Senior Vice President -- Broadcasting
Operations and, in the discretion of the Board of Directors, up to six
additional persons, designated by resolution adopted by a majority of the whole
Board of Directors, each of whom, if he or she is not a director, shall be an
advisory member. The Planning Committee may consider and develop short and
long-term plans and strategies for Pulitzer for presentation to the Board of
Directors for consideration and appropriate action. Michael E. Pulitzer, Ronald
H. Ridgway, Nicholas G. Penniman IV, Ken J. Elkins,
41
<PAGE> 43
William Bush, David E. Moore, Alice B. Hayes, Emily Rauh Pulitzer and James M.
Snowden, Jr. currently serve as members of this Committee of Pulitzer.
DIRECTOR COMPENSATION
Compensation for non-employee directors of Pulitzer is set at $5,000 per
year. In addition, each non-employee director receives $750 for each meeting of
the Pulitzer Board of Directors or any of its committees he or she attends in
person or by telephone, a $1,000 travel allowance if he or she attends in
person, and a per diem payment of $150 for each day he or she stays overnight in
St. Louis or elsewhere in connection with any meeting of the Board of Directors
or any of its Committees. It is expected that New Pulitzer will compensate
directors following the Spin-off substantially in accordance with the foregoing
practices.
New Pulitzer has adopted, subject to stockholder approval, the Pulitzer
Inc. 1999 Stock Option Plan which is substantially similar to the Pulitzer
Publishing Company 1994 Stock Option Plan. Under this stock option plan, New
Pulitzer will grant options to purchase 1,250 shares of Common Stock to each
non-employee director (other than directors who beneficially own 1% or more of
any class of capital stock of New Pulitzer) following each Annual Meeting of
Stockholders. The exercise price per share would be equal to the fair market
value per share of the Common Stock on the date of grant, and unless sooner
terminated, each option would expire ten years after the date of grant. At
present, Dr. Hayes and Messrs. Bush and Snowden are the only non-employee
directors who would be eligible to receive these annual option grants. The
Pulitzer Inc. 1999 Stock Option Plan will be presented for approval by the
stockholders of New Pulitzer at their first annual meeting following the
consummation of the Transactions.
David E. Moore, a director of Pulitzer and member of the Compensation
Committee, is party to a consulting agreement with Pulitzer, dated October 21,
1986, pursuant to which Mr. Moore provides, at the request of the President,
managerial advice regarding the business operations of Pulitzer and its
subsidiaries and general business advice regarding long-term strategic planning.
For his services under the agreement, Mr. Moore was paid $131,200 in 1997,
$140,000 in 1998, and Mr. Moore will be paid $140,000 in 1999. The consulting
agreement provides for automatic renewals unless terminated by either party not
later than December 1 of any calendar year.
Emily Rauh Pulitzer, a director of Pulitzer, is party to a consulting
agreement with Pulitzer, dated January 26, 1998, pursuant to which Mrs. Pulitzer
provides, at the request of the Chairman, advice regarding the business
operations of Pulitzer and its subsidiaries, particularly their newspaper
operations, and general advice regarding long-term strategic planning. For her
services under the agreement, Pulitzer paid Mrs. Pulitzer $43,733.33 on March
11, 1998 for September through December of 1997, $140,000 for the 1998 fiscal
year, and Mrs. Pulitzer will be paid $140,000 for the 1999 fiscal year. The
consulting agreement provides for automatic renewals unless terminated by either
party not later than December 1 of any calendar year.
It is contemplated that in connection with the Spin-off and Merger, Mr.
Moore and Mrs. Pulitzer's consulting agreements with Pulitzer will be terminated
and that following the consummation of the Transactions, New Pulitzer will enter
into a substantially similar consulting agreement with each of Mr. Moore and
Mrs. Pulitzer.
42
<PAGE> 44
ITEM 6. EXECUTIVE COMPENSATION.
Prior to the Spin-off, Pulitzer's executive officers will not have received
any compensation from New Pulitzer for serving as executive officers thereof. On
December 18, 1998, New Pulitzer entered into an employment agreement with Robert
C. Woodworth pursuant to which Mr. Woodworth will serve as President and Chief
Executive Officer of New Pulitzer for an initial term of three years, beginning
January 1, 1999. At the end of each year, the agreement automatically renews for
an additional year. Mr. Woodworth will be entitled to receive an annual base
salary of $575,000 and an annual incentive bonus target of 100% of salary. Mr.
Woodworth received an initial cash bonus of $200,000 in December 1998 and will
receive initial stock option and restricted stock awards in New Pulitzer valued
at approximately $2,500,000, subject to vesting conditions. If Mr. Woodworth
terminates his employment for "good reason" or New Pulitzer terminates his
employment without "cause," then Mr. Woodworth will be entitled to severance
equal to three years' salary plus accelerated vesting of the initial option and
restricted stock awards. In the event the Transactions do not occur, the Company
will assume all provisions of the employment agreement with Mr. Woodworth,
including the provisions relating to his position, rights and entitlements. New
Pulitzer has also agreed to make an additional cash payment to Mr. Woodworth of
$200,000 in 1999 to compensate him for lost bonus opportunities with his
previous employer. New Pulitzer also has entered into employment agreements with
Messrs. Cole C. Campbell, Terrance C.Z. Egger and James V. Maloney that become
effective upon consummation of the Merger. Messrs. Campbell and Egger are
currently employed as the Editor of the Post-Dispatch and General Manager of the
Post-Dispatch, respectively, and Mr. Maloney is currently employed as a
corporate officer of Pulitzer. Each of these agreements is for a term of three
years, and each agreement includes salary and bonus opportunities that are
substantially similar to what is currently provided by Pulitzer, except that the
agreement with Mr. Egger includes a provision for a restricted stock grant that
would vest if his employment with New Pulitzer continues until the end of the
three-year term.
Following the consummation of the Transactions, it is anticipated that the
Board of Directors of New Pulitzer, acting upon the recommendation of outside
compensation consultants, will approve the terms and conditions of new
employment agreements to be made by New Pulitzer with Messrs. Michael E.
Pulitzer and Ronald H. Ridgway. It is anticipated that Mr. Pulitzer's agreement
will be for a term of seven years and that Mr. Pulitzer will serve as Chairman
of the Board of Directors of New Pulitzer. Initially, Mr. Pulitzer's salary and
bonus opportunities would be substantially the same as is currently provided to
him by Pulitzer. It is also expected that Mr. Pulitzer would become a
participant in the Pulitzer Inc. 1999 Stock Option Plan, and that the annual
retirement pension payable to him under the qualified and nonqualified pension
and retirement plans of New Pulitzer will be increased to approximately 50%
(from 40%) of his final average compensation.
It is anticipated that the term of Mr. Ridgway's agreement will be between
two and three years. Mr. Ridgway would serve as Senior Vice President - Finance
- -- the same position he currently holds with Pulitzer. His salary and bonus
opportunities would be substantially the same as is currently provided to him by
Pulitzer. It is anticipated that, upon completion of the terms of his agreement,
New Pulitzer will waive any early retirement reduction factor that would
otherwise apply to Mr. Ridgway in determining the annual retirement pension to
which he would then be entitled under the nonqualified pension plan of New
Pulitzer (which is expected to be similar to the Supplemental Executive Benefit
Pension Plan presently maintained by Pulitzer).
Following the consummation of the Transactions, Nicholas G. Penniman IV
will cease to serve as a director and executive officer of New Pulitzer. It is
anticipated that Mr. Penniman will then provide advisory and consulting services
to New Pulitzer until March 31, 2000, that Mr. Penniman will receive
compensation from New Pulitzer at substantially the same level as is currently
provided to him by Pulitzer and that, upon completion of his advisory and
consulting services, New Pulitzer will waive any early retirement reduction
factor that would otherwise apply to Mr. Penniman in determining the annual
retirement pension to which he would then be entitled under the non-qualified
pension plan of New Pulitzer (which is expected to be similar to the
Supplemental Executive Benefit Pension Plan presently maintained by Pulitzer).
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<PAGE> 45
The following Summary Compensation Table shows the compensation paid each
of the last three fiscal years of Pulitzer to the seven most highly compensated
executive officers of Pulitzer for 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------ ------------------------ -------
(A) (B) (C) (D) (F)
(E) RESTRICTED (G) (H) (I)
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND COMPENSATION AWARDS SARS(3) PAYOUTS COMPENSATION(4)
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) ($) (#) ($) ($)
------------------ ---- --------- -------- ------------ ---------- -------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael E. Pulitzer........... 1997 $918,115 $554,972 $0 $ 0 0 $0 $37,951
Chairman of the Board, 1996 850,000 597,676 0 0 0 0 6,135
President and 1995 800,000 441,072 0 0 0 0 8,775
Chief Executive Officer
Ken J. Elkins................. 1997 420,000 206,273 0 0 35,000 0 26,716
Senior Vice President -- 1996 390,000 220,326 0 0 32,000 0 15,077
Broadcasting Operations 1995 364,000 204,589 0 51,081(1) 30,000 0 15,986
Nicholas G. Penniman IV....... 1997 324,435 167,779 0 0 17,500 0 14,617
Senior Vice President -- 1996 304,000 139,880 0 0 15,000 0 5,500
Newspaper Operations 1995 292,000 130,624 0 51,081(1) 16,667 0 6,452
Ronald H. Ridgway............. 1997 318,950 154,856 0 0 27,500 0 13,259
Senior Vice President -- 1996 281,000 158,505 0 0 20,000 0 5,464
Finance 1995 255,000 137,658 0 51,081(1) 20,000 0 6,413
John C. Kueneke............... 1997 233,000 87,496 0 0 8,000 0 3,945
Executive Vice President 1996 212,827 91,593 0 0 4,000 0 0
Pulitzer Broadcasting
Company 1995 0 0 0 0 0 0 0
C. Wayne Godsey............... 1997 233,000 84,349 0 0 8,000 0 5,260
Executive Vice President 1996 217,000 91,843 0 0 4,000 0 4,818
Pulitzer Broadcasting
Company 1995 201,552 95,551 0 0 12,000 0 5,100
Terrance C.Z. Egger........... 1997 174,327 68,250 0 13,134(2) 5,000 0 3,074
Vice President 1996 121,731 61,750 0 3,465(2) 3,000 0 61,379
1995 0 0 0 3,333 0 0
</TABLE>
- -------------------------
(1) The grant was for 2,083 shares representing a value of $51,081 based on the
closing price of the Pulitzer common stock of $24.525 on the date of grant.
At December 31, 1997, the value of each of the grants was $131,880. All of
the stock vested upon grant, and dividends have been paid thereon. None of
the named executive officers holds restricted stock which did not fully vest
upon grant.
(2) Income related to the vesting of stock grants issued while employed by TNI
Partners.
(3) Stock options have been adjusted for 1995 to reflect the impact of a common
stock and Class B common stock split, effected in the form of a 25% stock
dividend, declared by Pulitzer's Board of Directors on January 4, 1995 and a
common stock and Class B common stock split, effected in the form of a 33.3%
stock dividend, declared by Pulitzer's Board of Directors on September 12,
1996.
(4) Includes (i) Pulitzer's contributions to the Pulitzer Retirement Savings
Plan, in the amount of $5,350, $5,350, $5,350, $5,350, $3,945, $5,260 and
$3,074, respectively, in the cases of Messrs. Pulitzer, Elkins, Penniman,
Ridgway, Kueneke, Godsey and Egger, (ii) income assessed which was related
to split dollar life insurance of $32,601, $11,866, $9,267, and $7,909,
respectively, in the cases of Messrs. Pulitzer, Elkins, Penniman, and
Ridgway (iii) Pulitzer's payment of an annual auto allowance to Ken J.
Elkins of $9,500 in 1997, 1996 and 1995 and (iv) payment of moving expenses
for Terrance C.Z. Egger of $61,379 in 1996.
44
<PAGE> 46
Stock Compensation. Pulitzer has maintained three different equity
incentive compensation plans: (i) a stock option plan, (ii) a restricted stock
plan and (iii) a broad-based employee stock purchase plan (participation in
which was suspended as of September 30, 1998). All three plans are administered
by the Compensation Committee of the Board of Directors of Pulitzer. New
Pulitzer's Board of Directors has adopted similar equity incentive compensation
plans.
New Pulitzer's stock option plan, which is subject to stockholder approval,
provides for the granting of options to purchase shares of New Pulitzer Common
Stock to key personnel at an exercise price equal to the fair market value of
the Common Stock on the option grant date. Unlike Pulitzer's present plan,
Michael E. Pulitzer is eligible to receive stock option grants under the New
Pulitzer plan. At the time the Merger is consummated, all options previously
granted under Pulitzer's stock option plans will have been exercised, cancelled
or cashed-out.
New Pulitzer's restricted stock plan, which is subject to stockholder
approval, provides for the issuance of "restricted" shares of New Pulitzer
Common Stock to key personnel. The shares are restricted in the sense that New
Pulitzer is entitled to recover the shares issued to individuals whose
employment or service with New Pulitzer terminates before the specified vesting
date(s). At the time of the consummation of the Merger, all restricted shares
issued under the corresponding Pulitzer restricted stock plan will have become
unrestricted or will have been re-acquired by Pulitzer.
New Pulitzer's employee stock purchase plan provides for the purchase of
shares of New Pulitzer Common Stock by participating employees at the end of
each of four quarterly plan cycles for a purchase price equal to 85% of the then
fair market value of the Common Stock. In general, all employees of New Pulitzer
and its subsidiary corporations are eligible to become participants in this
plan. Stock purchases will be made with money withheld from pay at the election
of the participating employees. In contemplation of the Merger, participation in
Pulitzer's employee stock purchase plan was suspended at the end of the third
cycle for 1998 (i.e., as of September 30, 1998).
The following table provides information on option grants in fiscal 1997 by
Pulitzer to the named executive officers:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
(A) (B) (D) (E) (G)
(C) (F)
% OF TOTAL POTENTIAL REALIZABLE VALUE
OPTIONS AT END OF OPTION TERM
OPTIONS GRANTED TO EXERCISE ASSUMING ANNUAL STOCK
GRANTED EMPLOYEES PRICE PRICE APPRECIATION RATES OF:
(SHARES) IN FISCAL (PER EXPIRATION ----------------------------
NAME (1) 1997(2) SHARE) DATE 5%($) 10%($)
---- -------- ---------- -------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Michael E. Pulitzer.......... 0 0% $ .00 -- $ 0 $ 0
Ken J. Elkins................ 35,000 16.6 58.81 12/18/07 1,294,563 3,280,463
Nicholas G. Penniman IV...... 17,500 8.3 58.81 12/18/07 647,281 1,640,231
Ronald H. Ridgway............ 27,500 13.0 58.81 12/18/07 1,017,156 2,577,506
John C. Kueneke.............. 8,000 3.8 58.81 12/18/07 295,900 749,820
C. Wayne Godsey.............. 8,000 3.8 58.81 12/18/07 295,900 749,820
Terrence C.Z. Egger.......... 5,000 2.4 58.81 12/18/07 184,938 468,638
</TABLE>
- -------------------------
(1) Each option becomes exercisable in one-third increments over a three-year
period on the anniversary date of the grants.
(2) Based on an aggregate of 211,231 stock options granted to all employees in
fiscal 1997.
45
<PAGE> 47
The following table provides information on option/SAR exercises in
Pulitzer's fiscal 1997 by the named executive officers and the value of such
officers' unexercised options/SARs at December 31, 1997:
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND DECEMBER 31, 1997 OPTION VALUES
<TABLE>
<CAPTION>
EXERCISES DURING YEAR FISCAL YEAR-END
- --------------------------------------------------------- ------------------------------------------------------------------
(A) (C)
(D) (E)
(B) NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS IN-THE-MONEY
ACQUIRED (SHARES) OPTIONS/SARS($)(1)
ON VALUE ------------------------------ ------------------------------
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael E. Pulitzer...... 0 $ 0 0 0 $ 0 $ 0
Ken J. Elkins............ 0 0 153,998 66,334 6,469,845 810,574
Nicholas G. Penniman IV.. 8,500 284,969 94,444 33,056 3,906,579 409,978
Ronald H. Ridgway........ 7,225 269,165 134,998 47,501 5,860,661 543,390
John C. Kueneke.......... 0 0 4,888 12,445 129,061 134,679
C. Wayne Godsey.......... 0 0 35,556 16,446 1,483,165 249,680
Terrence C.Z. Egger...... 0 0 3,222 8,111 81,292 88,740
</TABLE>
- -------------------------
(1) Computed based upon the difference between the closing price of Pulitzer's
common stock on December 31, 1997, and the exercise price. Stock options and
stock prices have been adjusted to reflect the impact of a common stock and
a Class B common stock split, effected in the form of a 25% stock dividend,
declared by Pulitzer's Board of Directors on January 4, 1995 and a common
stock and Class B common stock split, effected in the form of a 33.3% stock
dividend, declared by Pulitzer's Board of Directors on September 12, 1996.
Pulitzer Retirement Savings Plan. Pulitzer maintains the Pulitzer
Retirement Savings Plan (the "Retirement Savings Plan") for the benefit of
eligible employees of Pulitzer and certain subsidiaries. The Retirement Savings
Plan is intended to be a qualified plan under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code") and contains a qualified cash or
deferred arrangement as described in Section 401(k) of the Code. The Retirement
Savings Plan is funded through Pulitzer's contributions and participating
employees' elective 401(k) deferrals. Each participant's elective deferrals are
made through payroll deductions and are subject to the annual 401(k) limit
which, for 1999, is $10,000 and other legal limitations. Pulitzer makes annual
matching contributions (limited to 2% of pay) at the rate of 50% of an executive
officer's elective contributions. In addition, Pulitzer makes a $50 monthly
profit sharing contribution to each participating executive's Retirement Savings
Plan account.
New Pulitzer will assume sponsorship of Pulitzer's Retirement Savings Plan
in connection with the consummation of the Transactions. It is anticipated that
New Pulitzer will continue to maintain the Retirement Savings Plan on
substantially the same basis for the benefit of its eligible employees.
Following the Merger, the Retirement Savings Plan account balances of the
continuing Broadcasting Business employees and the liabilities for payment
thereof will be transferred to and assumed by a similar plan that is or will be
maintained by Hearst-Argyle and/or its affiliates.
Pulitzer's contributions under the Retirement Saving Plan for the accounts
of the seven most highly compensated executive officers of Pulitzer are included
in the amount of cash compensation set forth opposite their names on the Summary
Compensation Table set forth on page 44.
Pulitzer Publishing Company Pension Plan. The Pulitzer Publishing Company
Pension Plan (the "Pension Plan") is a defined benefit plan that is intended to
be a qualified plan under Section 401(a) of the Code. Generally, the Pension
Plan provides retirement benefits to non-union employees of Pulitzer and all
employees of the Broadcasting Business. Pulitzer's executive officers are also
covered under the Pension Plan.
The Pension Plan provides for the payment of monthly retirement income to
participating employees. The amount of the monthly benefit, expressed as a
single life annuity beginning at normal retirement age (later of age 65 or the
completion of five years of participation), is approximately equal to the sum of
(i) 1.5%
46
<PAGE> 48
of "monthly earnings" for each year of service up to 25 years, (ii) 1% of
"monthly earnings" for each year of service beyond 25 years, (iii) .5% of
"monthly earnings" in excess of "covered compensation" for each year of service
up to a total of 35 years (subject to certain limitations), and (iv) the
benefit, if any, earned under a predecessor plan as of December 31, 1988.
Generally, monthly earnings means the monthly average of an employee's base
earnings in the specified years, and covered compensation means base
compensation with respect to which social security benefits are earned. Pension
Plan benefits become vested upon completion of five years of service. A covered
employee may retire with reduced benefits after attaining age 55 and completing
five years of service.
New Pulitzer will assume sponsorship of the Pension Plan in connection with
the consummation of the Transactions. It is anticipated that New Pulitzer will
continue to maintain the Pension Plan after the Merger for the benefit of its
eligible employees. Following the Merger, the Pension Plan liabilities
attributable to continuing Broadcasting Business employees, together with
Pension Plan assets associated with those liabilities, will be transferred to
and assumed by a similar plan maintained or to be maintained by Hearst-Argyle
and/or its affiliates for the benefit of those employees.
As of December 31, 1997, total estimated annual retirement benefits for
Michael E. Pulitzer, Ken J. Elkins, Nicholas G. Penniman IV, Ronald H. Ridgway,
John C. Kueneke, C. Wayne Godsey and Terrance C.Z. Egger under the Pension Plan,
assuming they continue in their current positions at their current levels of
compensation and retire at age 65 (or at the present date if older than 65), are
$63,963, $71,786, $70,322, $65,624, $46,644, $64,124 and $74,810, respectively.
The following table shows the estimated annual pension payable under the Pension
Plan to persons retiring at age 65. The table reflects the fact that the
benefits provided by the Pension Plan's formula are subject to certain
limitations under the Code.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION BENEFITS FOR YEARS OF SERVICE INDICATED
ANNUAL COMPENSATION --------------------------------------------------------------------
AT RETIREMENT 15 YRS. 20 YRS. 25 YRS. 30 YRS. 35 YRS.
------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$150,000..... $30,361 $36,143 $40,506 $41,736 $42,447
200,000..... 41,260 49,228 55,304 57,205 58,412
250,000..... 45,685 60,887 70,102 72,673 74,377
300,000..... 45,665 60,887 76,109 87,331 90,342
350,000..... 45,665 60,887 76,109 87,331 98,553
400,000..... 45,665 60,887 76,109 87,331 98,553
450,000..... 45,665 60,887 76,109 87,331 98,553
500,000..... 45,665 60,887 76,109 87,331 98,553
</TABLE>
- -------------------------
This table reflects the fact that the benefit provided by the Pension Plan's
formula is subject to certain constraints under the Code. For 1988, the maximum
annual benefit is $130,000 under Code Section 415. Furthermore, under Code
Section 401(a)(17), the maximum annual compensation that may be reflected in
1998 is $160,000. These dollar limits are subject to cost of living increases in
future years.
Supplemental Executive Benefit Pension Plan. The Pulitzer Publishing
Company Supplemental Executive Benefit Pension Plan ("SERP") is an unfunded
defined benefit plan. The SERP provides for the payment of a minimum annual
retirement benefit to executive officers and other designated highly compensated
employees of Pulitzer, taking into account the employer provided benefits earned
by the participant under Pulitzer's Retirement Savings Plan and Pension Plan.
The retirement pension payable to a SERP participant, expressed as an annual
single life annuity beginning at the participant's normal retirement date (age
65 and 10 years of service), is equal to 40% of the participant's final
three-year average compensation multiplied by a fraction, the numerator of which
is the number of the participant's years of credited service, and the
denominator of which is 25. The amount of the benefit, as so determined, is
payable by Pulitzer to the extent it is not covered by the employer-provided
benefits payable to the participant under Pulitzer's Retirement Savings Plan and
Pension Plan. Participants become vested in their SERP benefits after the
completion of ten years of service with Pulitzer and its affiliates. Vested
participants who retire between age 55 and 65 may elect to begin receiving
reduced annual payments before they reach age 65 (their normal retirement age).
Subject to certain conditions, the SERP also provides for the payment of a 50%
survivor annuity to the
47
<PAGE> 49
surviving spouse of a deceased participant. The estimated years of credited
service for Michael E. Pulitzer, Ken J. Elkins, Nicholas G. Penniman IV, Ronald
H. Ridgway, John C. Kueneke, C. Wayne Godsey and Terrance C. Z. Egger under the
SERP are 37 years, 36 years, 22 years, 26 years, 2 years, 10 years and 2 years,
respectively.
In connection with the Transactions, New Pulitzer will assume Pulitzer's
obligations under the SERP other than obligations accrued with respect to
employees of the Broadcasting Business who continue to be employed by
Hearst-Argyle and/or its affiliates after the consummation of the Transactions.
In connection with the assumption of the SERP obligations to Mr. Ken J. Elkins,
New Pulitzer will be required to waive the application of any early retirement
reduction factor if Mr. Elkins elects to begin receiving his SERP payments
before reaching age 65 but after reaching age 63. It is anticipated that New
Pulitzer will adopt a similar plan for the benefit of its executive officers and
other designated highly compensated employees. Benefits payable under the SERP
formula after the Merger to a New Pulitzer employee who was also a participant
in Pulitzer's SERP before the Merger will not be lower than the SERP benefits
earned by the employee under Pulitzer's SERP immediately prior to the Merger.
The following table shows the estimated annual pension benefits that would
be payable under the existing SERP formula, without regard to offsets for
employer-provided benefits payable under the Retirement Savings Plan and the
Pension Plan to persons retiring at age 65 in the specified compensation and
years-of-service classifications. The SERP benefit is the difference between the
total benefit shown in the following table and the employer-provided benefit
earned under the Pension Plan and the Retirement Savings Plan. As of December
31, 1997, total estimated annual retirement benefits for Michael E. Pulitzer,
Ken J. Elkins, Nicholas G. Penniman IV, Ronald H. Ridgway, John C. Kueneke, C.
Wayne Godsey and Terrance C. Z. Egger under the SERP, assuming they continue in
their current positions at their current levels of compensation and retire at 65
(or at the present date if older than 65), are $483,247, $156,723, $100,379,
$91,008, $20,316, $43,354 and $0, respectively.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION BENEFITS
FOR YEARS OF SERVICE INDICATED
FINAL THREE-YEAR --------------------------------------------------------------------
AVERAGE COMPENSATION 15 YRS. 20 YRS. 25 YRS. 30 YRS. 35 YRS.
- -------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$150,000... $ 36,000 $ 48,000 $ 60,000 $ 60,000 $ 60,000
200,000... 48,000 64,000 80,000 80,000 80,000
250,000... 60,000 80,000 100,000 100,000 100,000
300,000... 72,000 96,000 120,000 120,000 120,000
350,000... 84,000 112,000 140,000 140,000 140,000
400,000... 96,000 128,000 160,000 160,000 160,000
450,000... 108,000 144,000 180,000 180,000 180,000
500,000... 120,000 160,000 200,000 200,000 200,000
</TABLE>
Deferred Compensation Plan. Pulitzer presently maintains a deferred
compensation plan (the "Deferred Compensation Plan") pursuant to which its
senior executive officers are required to defer annual incentive compensation
the payment of which would not be currently deductible by Pulitzer because of
the $1 million executive compensation deduction limitation of Section 162(m) of
the Code. The Deferred Compensation Plan also permits eligible executives to
make elective deferrals of annual bonus awards. Amounts deferred under the
Deferred Compensation Plan are credited with interest based on the one-year
treasury bill rate in effect at the beginning of each year. The Deferred
Compensation Plan is not a qualified plan under Section 401(a) of the Code and
the obligations of Pulitzer under the Deferred Compensation Plan are unfunded.
To date, the only deferrals that have been made under the Deferred Compensation
Plan are mandatory deferrals of annual incentive compensation earned by Michael
E. Pulitzer.
New Pulitzer will assume the obligations to Michael E. Pulitzer under the
Deferred Compensation Plan. It is anticipated that the Board of Directors of New
Pulitzer will adopt a new deferred compensation plan and that New Pulitzer will
make contributions to a grantor trust equal to the amounts deferred under the
plan. It is anticipated that the amounts deferred under the new plan (including
the amount credited to Michael E. Pulitzer under Pulitzer's Deferred
Compensation Plan) would be credited with earnings based upon several
48
<PAGE> 50
hypothetical investment alternatives that may be designated by the plan
participants. A substantial portion of Pulitzer's payment obligations to the
executive officers (including Mr. Ken J. Elkins) arising at the closing of the
Transactions, including, for example, transaction and retention incentive awards
and amounts payable for the cancellation of certain stock options, will be
assumed by New Pulitzer and deferred under New Pulitzer's deferred compensation
plan. It is expected that the trust will be funded by New Pulitzer soon after
the closing of the Merger. All obligations of New Pulitzer under the deferred
compensation plan will be unsecured. Assets of the trust to be maintained as
part of the plan will be subject to the claims of creditors of New Pulitzer in
the event of its insolvency.
Split Dollar Life Insurance Agreements. In December 1996, Pulitzer entered
into so-called split dollar life insurance agreements in connection with life
insurance policies issued on the lives of Michael E. Pulitzer, Ken J. Elkins,
Nicholas G. Penniman IV and Ronald H. Ridgway. These agreements require Pulitzer
to make annual premium deposits under the policies and give Pulitzer an economic
interest in the policies. Pulitzer is entitled to receive the value of its
interest in each policy upon the death of the insured executive or, if earlier,
upon termination of the split dollar agreement associated with that policy.
Pulitzer has received a collateral assignment of each of the policies covered by
the split dollar agreements in order to secure the payment of its interest
therein. New Pulitzer will assume the obligations of Pulitzer under and is
anticipated to continue to maintain in force all four split dollar agreements.
The agreements would be amended accordingly.
Other Insurance Benefits. In 1986, the Board of Directors of Pulitzer
adopted an insurance benefit program for certain of its executive officers and
key employees to provide group life, accidental death and dismemberment and
long-term disability insurance coverage in addition to the group life and
accidental death and dismemberment insurance coverage maintained by Pulitzer for
its employees generally. The group life insurance benefit was increased to a
multiple of the executive's total annual compensation, but in no event may it
exceed $250,000. Upon retirement, the group life insurance coverage is reduced
to $50,000. The accidental death and dismemberment coverage equals the amount of
the group life insurance benefit and terminates upon retirement.
Long-term disability insurance coverage was instituted to provide a salary
replacement equal to 60% of total compensation, subject to a maximum monthly
benefit payment of $10,000. Benefits are payable after the ninetieth day of
total disability and continue for the duration of the disability or until age
65. Executives who become disabled after age 60 are entitled to reduced
benefits. Benefits are integrated with other sources of disability income, such
as Social Security Disability Income.
It is contemplated that New Pulitzer will provide certain of its executive
officers and key employees with similar benefits programs.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Retention and Participation Agreements. In connection with the
Transactions, Pulitzer entered into agreements with Messrs. Michael E. Pulitzer,
Ken J. Elkins, Nicholas G. Penniman IV, Ronald H. Ridgway, C. Wayne Godsey and
John Kueneke (collectively, the "Pulitzer Executives") pursuant to which
Pulitzer agreed to pay each Pulitzer Executive a retention award on the earlier
of (a) January 1, 2000, or (b) the date of the closing of the Transactions,
provided the Pulitzer Executive remains in the continuous employ of Pulitzer
until such earlier date. The amounts of the retention awards are $900,000,
$600,000, $150,000, $450,000, $250,000 and $250,000, respectively. These
agreements also provide for transaction completion bonuses payable on or after
the closing of the Transactions. The amounts of the transaction completion
bonuses are $1,000,000, $1,000,000, $150,000, $450,000, $375,000, and $375,000,
respectively. It is anticipated that Pulitzer's Compensation Committee will
award additional, discretionary transaction completion bonuses to each Pulitzer
Executive (except Messrs. Elkins, Godsey and Kueneke) and certain other
management personnel. The agreements for Messrs. Elkins, Godsey and Kueneke
provide for cash separation payments of approximately $1,350,000, $850,000 and
$650,000, respectively. The exact amount payable to each of these individuals
will depend in large part upon the value assigned for federal income tax
purposes to the accelerated vesting of their unvested stock options and other
non-cash benefits. Each of the agreements provides for full payment to the
Pulitzer Executive's estate if the Pulitzer Executive dies before the closing of
49
<PAGE> 51
the Transactions. Pulitzer has entered into similar agreements with certain of
its other corporate, newspaper and new media officers and executives who will be
entitled to receive transaction completion bonuses aggregating approximately
$984,000. Certain of these individuals will also be entitled to receive, among
other things, retention awards aggregating approximately $289,000. In addition,
pursuant to the Merger Agreement, Hearst-Argyle has agreed to assume the
obligation to make payments of certain retirement or other benefits that have
been earned as of the effective time of the Merger (which will become fully
vested at that time) to certain broadcasting executives of Pulitzer under
Pulitzer's supplemental executive retirement plan. New Pulitzer has agreed to
pay to Hearst-Argyle an amount equal to the aggregate amount of such payments
net of a deferred tax benefit. The net amount has been estimated to be $100,000,
although the actual amount may be higher or lower depending on the final
actuarial calculations at the effective time of the Merger.
James M. Snowden, Jr., a member of the Compensation Committee, is an
executive vice president of Huntleigh Securities Corporation ("Huntleigh").
Since November 6, 1995, Huntleigh has had a retainer relationship with Pulitzer
with respect to general financial advisory services. In addition, in December
1997, Pulitzer entered into an engagement letter with Huntleigh pursuant to
which Huntleigh has acted as a financial adviser to Pulitzer with respect to
various alternatives regarding Pulitzer's broadcasting operations. Pursuant to
this engagement letter, Pulitzer has paid Huntleigh $200,000 in financial
advisory fees. In addition, Pulitzer will be obligated to pay Huntleigh a fee of
$1.5 million upon consummation of the Spin-off and additional fees aggregating
approximately $9.1 million (based on the closing price of Hearst-Argyle's Series
A common stock on January 21, 1999) upon consummation of the Merger. New
Pulitzer intends to retain Huntleigh in the future as a financial advisor in
connection with such financial matters as it deems appropriate. Pulitzer has
agreed to reimburse Huntleigh, and its affiliates, partners, directors, agents,
employees and control persons for certain legal and other expenses and to
indemnify Huntleigh against certain liabilities, including certain liabilities
under the federal securities laws.
For a discussion of David E. Moore and Emily Rauh Pulitzer's consulting
agreements with Pulitzer, see "Item 5. Directors and Executive
Officers -- Director Compensation."
For a discussion of Messrs. Pulitzer, Woodworth, Ridgway and Egger's
employment agreements with New Pulitzer, see "Item 6. Executive Compensation."
Pursuant to the terms of the late Joseph Pulitzer Jr.'s employment
agreement, Pulitzer pays Emily Rauh Pulitzer, as the beneficiary of Joseph
Pulitzer Jr.'s deferred compensation balance, a monthly annuity of $15,000
(including interest). Pulitzer will assign this employment agreement to New
Pulitzer in the Spin-off and the annuity payments to Mrs. Pulitzer are expected
to terminate in 2003.
William Bush, a director of Pulitzer and New Pulitzer, is a partner in
Fulbright & Jaworski L.L.P. Pulitzer has retained, and New Pulitzer intends to
retain in the future, Fulbright & Jaworski L.L.P. as attorneys in connection
with such legal matters as it deems appropriate.
ITEM 8. LEGAL PROCEEDINGS.
Subsequent to the Scripps League acquisition, Barry H. Scripps commenced an
action against Edward W. Scripps, Betty Knight Scripps and Pulitzer Community
Newspapers, Inc. Barry H. Scripps is the child of Edward W. Scripps and Betty
Knight Scripps. Barry Scripps, a former minority shareholder and executive
employee of Scripps League, alleges that the defendant Betty Knight Scripps
formed and implemented a wrongful scheme to transfer the ownership of Scripps
League outside the Scripps family in violation of the Scripps League corporate
mission by (i) inducing the defendant Edward W. Scripps to breach their
life-long promises to Barry Scripps to retain the ownership of Scripps League
Newspapers in the family and ultimately turn over its management and control to
Barry Scripps; (ii) engineering an unlawful freeze-out of Barry Scripps as a
minority shareholder from Scripps League and its subsidiaries; and (iii)
tortiously causing Scripps League to breach its promise to Barry Scripps of
permanent employment. The claims asserted are for breach of promise against
Edward W. Scripps and Betty Knight Scripps, breach of employment contract
against Pulitzer Community Newspapers, Inc. as successor to Scripps League,
interference with contract against Betty Knight Scripps, breach of fiduciary
duty against Betty Knight Scripps, and promissory estoppel against Edward W. and
Betty Knight Scripps. Barry Scripps seeks (i) money damages, together with
50
<PAGE> 52
interest and counsel fees in the amount to be proven at trial against Edward and
Betty Scripps; (ii) judgment rescinding each of the actions that Betty Knight
Scripps caused to be taken that allegedly froze out Barry Scripps as a
stockholder in Scripps League; and (iii) damages against Pulitzer Community
Newspapers, Inc. for loss of income plus interest and counsel fees in an amount
to be proven at trial for breach of the purported employment agreement. Edward
W. Scripps and Betty Knight Scripps, jointly and severally, agreed to indemnify
Pulitzer and its affiliates, officers, directors, stockholders, employees,
agents, successors and assigns at all times after the closing for any and all
losses arising from Barry Scripps' claims. On March 26, 1998, the Court issued
an order granting defendants' motion for summary judgment and dismissed all of
Barry Scripps' charges and claims against all defendants, and on April 29, 1998,
a final judgment was entered with respect to that order. Barry Scripps filed a
notice of appeal on May 21, 1998, and Barry Scripps' brief in connection with
that appeal is due March 18, 1999.
Pulitzer has been involved, from time to time, in various claims and
lawsuits incidental to the ordinary course of its business, including such
matters as libel, slander and defamation actions and complaints alleging
discrimination. While the results of litigation cannot be predicted, management
of Pulitzer and New Pulitzer believe the ultimate outcome of such existing
litigation will not have a material adverse effect on the consolidated financial
statements of New Pulitzer and its subsidiaries.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
Prior to the Spin-off, New Pulitzer Common Stock and New Pulitzer Class B
Common Stock will not have traded in a public market. Pulitzer's common stock is
listed and traded on the New York Stock Exchange, Inc. (the "NYSE") under the
symbol "PTZ."
At December 31, 1998, there were approximately 373 record holders of
Pulitzer's common stock and 2 record holders of its class B common stock.
The following table sets forth, for the periods indicated, the range of
high and low sales prices and dividends paid by Pulitzer for each quarterly
fiscal period through January 14, 1999:
<TABLE>
<CAPTION>
1999 HIGH LOW DIVIDEND(1)
---- ---- --- -----------
<S> <C> <C> <C>
First Quarter (as of January 14)................... $88.88 $84.00 $ --
</TABLE>
<TABLE>
<CAPTION>
1998 HIGH LOW DIVIDEND(1)
---- ---- --- -----------
<S> <C> <C> <C>
First Quarter...................................... $87.44 $57.44 $0.1500
Second Quarter..................................... 92.13 77.75 0.1500
Third Quarter...................................... 89.63 74.38 0.1500
Fourth Quarter..................................... 85.69 64.38 0.3000
</TABLE>
<TABLE>
<CAPTION>
1997 HIGH LOW DIVIDEND(1)
---- ---- --- -----------
<S> <C> <C> <C>
First Quarter...................................... $50.63 $43.38 $0.1300
Second Quarter..................................... 54.25 40.88 0.1300
Third Quarter...................................... 57.50 49.75 0.1300
Fourth Quarter..................................... 63.31 51.81 0.1300
</TABLE>
- -------------------------
(1) In 1998, Pulitzer declared cash dividends of $0.75 per share of common stock
and Class B common stock including a cash dividend of $0.15 per share of
common stock and Class B common stock which was declared in December 1998
and paid to stockholders in January 1999. The dividend declared in December
1998 represents the acceleration of Pulitzer's dividend historically
declared in the first quarter of each fiscal year. As a result, Pulitzer
will not declare a quarterly dividend in the first quarter of 1999. In 1997,
Pulitzer declared and paid cash dividends of $0.5200 per share of common
stock and Class B common stock. (For restrictions on dividends see Note 6 to
Audited Annual Consolidated Financial Statements included in Item 13 of this
Registration Statement on Form 10/A.)
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<PAGE> 53
Upon completion of the Transactions, the separate existence of Pulitzer
will cease. The shares of New Pulitzer's Common Stock issued in the Spin-off
will be listed on the NYSE and will trade under the symbol "PTZ." The Board of
Directors of New Pulitzer intends to maintain the same quarterly dividend per
share as Pulitzer. Future dividends will depend upon, among other things, New
Pulitzer's earnings, financial condition, cash flows, capital requirements and
other relevant considerations, including limitations under any credit agreement
or other agreement to which New Pulitzer may become a party in the future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
The following paragraph sets forth certain information with respect to all
securities sold by New Pulitzer within the past three years without registration
under the Securities Act of 1933, as amended (the "Securities Act"). The
information includes the names of the purchasers, the dates of issuance, the
title and number of securities sold and the consideration received by New
Pulitzer for the issuance of these securities.
The following shares of Common Stock were issued by New Pulitzer without
registration under the Securities Act by reason of the exemption from
registration afforded by the provisions of Section 4(2) thereof, as transactions
by an issuer not involving a public offering:
1. In May 1998, New Pulitzer issued 100 shares of Common Stock to Pulitzer
for $10,000.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
Pulitzer now owns all 100 issued and outstanding shares of Common Stock of
New Pulitzer. Pulitzer has caused the Certificate of Incorporation of New
Pulitzer to be amended and restated (the "New Pulitzer Charter") and to contain
provisions substantially similar to Pulitzer's Restated Certificate of
Incorporation as proposed to be amended. The New Pulitzer Charter will provide
New Pulitzer with the authority to issue 100,000,000 shares of Common Stock,
100,000,000 shares of Class B Common Stock and 100,000,000 shares of Preferred
Stock.
COMMON STOCK AND CLASS B COMMON STOCK
Dividends. Each share of Common Stock and Class B Common Stock of New
Pulitzer is entitled to dividends if, as and when dividends may be declared by
the Board of Directors of New Pulitzer and paid. Under Delaware General
Corporation Law, New Pulitzer may declare and pay dividends only out of its
surplus, or in case there shall be no such surplus, out of its net profits for
the fiscal year in which the dividend is declared and/or the preceding year. No
dividends may be declared, however, if the capital of New Pulitzer has been
diminished by depreciation, losses or otherwise to an amount less than the
aggregate amount of capital represented by any issued and outstanding stock
having a preference on distribution. Dividends must be paid on both the Common
Stock and the Class B Common Stock at any time that dividends are paid on
either. Any dividend so declared and payable in cash, capital stock of New
Pulitzer (other than Common Stock or Class B Common Stock) or other property
will be paid equally, share for share, on the Class B Common Stock and Common
Stock, except under certain circumstances. Dividends and distributions payable
in shares of Class B Common Stock may be paid only on or to shares of Class B
Common Stock, and dividends and distributions payable in shares of Common Stock
may be paid only on or to shares of Common Stock. If a dividend or distribution
payable in Common Stock is made on the Common Stock, New Pulitzer must also make
a simultaneous dividend or distribution payable in Class B Common Stock on the
Class B Common Stock. If a dividend or distribution payable in Class B Common
Stock is made on the Class B Common Stock, New Pulitzer must also make a
simultaneous dividend or distribution payable in Common Stock on the Common
Stock. Pursuant to any such dividend or distribution, each share of Class B
Common Stock will receive a number of shares of Class B Common Stock equal to
the number of shares of Common Stock payable on each share of Common Stock.
Notwithstanding the foregoing, in the case of any dividend or other distribution
payable in stock of any corporation which immediately prior to the time of such
dividend or other distribution is a wholly-owned subsidiary of New Pulitzer and
which possesses authority to issue shares of capital stock with voting
characteristics substantially similar to those of the shares of New Pulitzer's
Common Stock and Class B Common Stock, respectively, including a distribution
pursuant to a stock
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<PAGE> 54
dividend or division or split-up of the shares of New Pulitzer, (i) only shares
of capital stock of such a subsidiary with voting characteristics substantially
similar to those of the Class B Common Stock shall be distributed with respect
to shares of New Pulitzer's Class B Common Stock and only shares of capital
stock of such a subsidiary with voting characteristics substantially similar to
those of the Common Stock shall be distributed with respect to shares of New
Pulitzer's Common Stock; (ii) the number of shares of such subsidiary's Class B
common stock payable on each share of New Pulitzer Class B Common Stock pursuant
to such dividend or other distribution shall be equal to the number of shares of
such subsidiary's common stock payable on each share of New Pulitzer Common
Stock pursuant to such dividend or other distribution; and (iii) such dividends
or other distributions of shares of such subsidiary's common stock and Class B
common stock shall be made simultaneously.
Voting Rights. Each share of Common Stock is entitled to one vote, and each
share of Class B Common Stock is entitled to ten votes, on all matters. Except
as described below, the Common Stock and the Class B Common Stock will vote
together as a single class on all matters presented for a vote of the
stockholders, including the election of directors. The holders of a majority of
the outstanding shares of Common Stock or Class B Common Stock, voting as
separate classes, must approve certain amendments affecting shares of such
class. Specifically, if there is any proposal to amend the New Pulitzer Charter
in a manner that would increase or decrease the number of authorized shares of
Common Stock or Class B Common Stock, increase or decrease the par value of the
shares of Common Stock or Class B Common Stock or alter or change the powers,
preferences or special rights of the shares of Common Stock or Class B Common
Stock so as to affect them adversely, such an amendment must be approved by a
majority of the outstanding shares of the affected class, voting separately as a
class. In addition, any merger or consolidation in which each share of Common
Stock receives consideration that is not of the same type or is less than the
amount of the consideration to be received by each share of Class B Common Stock
must be approved by a majority of the outstanding shares of Common Stock, voting
separately as a class. Shares of Common Stock and Class B Common Stock do not
have cumulative voting rights.
Terms of Conversion. Each share of Class B Common Stock is convertible at
any time, at the option of and without cost to the stockholder, into one share
of Common Stock. If at any time (i) the aggregate voting power of all
outstanding shares of Class B Common Stock represents less than 20% of the
aggregate voting power of all issued and outstanding shares of Common Stock and
Class B Common Stock, or (ii) the Board of Directors and the holders of a
majority of the outstanding shares of Class B Common Stock approve the
conversion of all of the Class B Common Stock into Common Stock, then each
outstanding share of Class B Common Stock shall be converted automatically into
one share of Common Stock without any action by the holder. In the event of such
a conversion, certificates formerly representing outstanding shares of Class B
Common Stock will thereafter be deemed to represent an equal number of shares of
Common Stock.
Restrictions on Transfers of Class B Common Stock. The transfer of the
Class B Common Stock, except upon its conversion into Common Stock as described
above, is restricted by the New Pulitzer Charter to Permitted Transferees (as
defined therein), which, in general, includes only (A) as to holders of Class B
Common Stock who are natural persons, the original holders of such stock, their
spouses or former spouses, their lineal descendants and any spouse or former
spouse of such lineal descendants, and entities (such as trusts, corporations,
partnerships, limited liability companies and charitable organizations)
controlled by the holders of such Class B Common Stock or their Permitted
Transferees, or by New Pulitzer's executive officers or directors and (B) as to
holders of Class B Common Stock that are (i) corporations, partnerships, limited
liability companies or charitable organizations, any person who transferred such
shares of Class B Common Stock to such entity and such person's Permitted
Transferees or (ii) trusts, any person who established the trust and any person
who would be a Permitted Transferee thereof, any original holder or Permitted
Transferee thereof, and any person to whom or for whose benefit any portion of
the principal of the trust may be distributed either during or at the end of the
term of such trust. Stockholders who desire to sell their shares of Class B
Common Stock to other than Permitted Transferees may convert their shares of
Class B Common Stock into shares of Common Stock and sell the shares of Common
Stock, subject, however, to the limitations imposed by the proposed New Pulitzer
Voting Trust with respect to the shares of Class B Common Stock that will be
deposited thereunder.
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<PAGE> 55
Liquidation Rights. In the event of the liquidation, dissolution or winding
up of New Pulitzer, holders of the shares of Common Stock and Class B Common
Stock are entitled to share equally, share for share, in the net assets
available for distribution.
Other. Following the Spin-off, additional shares of Class B Common Stock
may only be issued upon stock splits of, or stock dividends on, the existing
Class B Common Stock. No stockholder of New Pulitzer will have preemptive or
other rights to subscribe for additional shares of New Pulitzer.
PREFERRED STOCK
The Board of Directors of New Pulitzer is authorized to issue, by
resolution, without any action by the stockholders, up to 100,000,000 shares of
Preferred Stock and has the authority to establish the designations, dividend
rights, dividend rate, conversion rights, voting rights, terms of redemption,
liquidation preference, sinking fund terms and all other preferences and rights
of any series of Preferred Stock.
ADDITIONAL PROVISIONS OF NEW PULITZER'S CHARTER
Following the Distribution, New Pulitzer will have a substantial number of
unissued and unreserved shares of Common Stock and unissued and undesignated
shares of Preferred Stock. These additional shares may be utilized for a variety
of corporate purposes, including future public offerings to raise additional
capital or to facilitate corporate acquisitions and could be utilized, under
certain circumstances, as a method of preventing or making more difficult a
takeover or change in control of New Pulitzer.
In addition, certain other charter provisions, which are described below,
may have the effect, alone or in combination with each other or with the
existence of authorized but unissued stock, of rendering more difficult or
discouraging an acquisition of New Pulitzer deemed undesirable by the Board of
Directors.
Classification of the Board of Directors. The Board of Directors of New
Pulitzer consists of nine directors. The New Pulitzer Charter provides for a
classified Board divided into three equal classes serving staggered three-year
terms. If at any time the size of the Board is changed, the increase or decrease
in the number of directors would be apportioned among the three classes to make
all classes as nearly equal as possible.
Business Combination Provision. The New Pulitzer Charter requires the
affirmative vote of the holders of at least 66 2/3% of the aggregate voting
power of all outstanding shares of New Pulitzer voting stock, voting together as
a single class, (with each share of Class B Common Stock entitled to ten votes)
as a condition for any merger (other than certain mergers with subsidiaries),
consolidation or sale of all or substantially all the property and assets of New
Pulitzer and for certain Business Combinations (as defined herein) with, or
proposed by or on behalf of, any Interested Stockholder (as defined herein)
unless such transaction shall have been approved by a majority of the entire
Board of Directors. This voting requirement applies even though the Delaware
General Corporation Law requires a simple majority or no stockholder vote to
approve the transaction. An Interested Stockholder is defined as any person or
group (other than New Pulitzer or any of its subsidiaries or employee benefit
plans) (i) that is, or was at any time within the two-year period immediately
prior to the date in question, the beneficial owner of 10% or more of the voting
stock of New Pulitzer, but excludes any person (including any Permitted
Transferee of such person) who or which, immediately prior to the effective time
of the Merger, is the beneficial owner of 10% or more of the outstanding Class B
Common Stock, or (ii) is an assignee of, or has otherwise succeeded to, any
shares of New Pulitzer voting stock of which an Interested Stockholder was the
beneficial owner at any time within the two year period immediately prior to the
date in question, provided such assignment or succession shall not have occurred
in the course of a transaction or series of transactions involving a public
offering. The term "beneficial owner" includes persons directly and indirectly
owning or having the right to acquire or vote shares. Under certain
circumstances, an Interested Stockholder could include persons or entities
affiliated or associated with the Interested Stockholder. A Business Combination
includes: (i) a merger or consolidation of New Pulitzer or any subsidiary with
an Interested Stockholder or an affiliate or associate of an Interested
Stockholder; (ii) the sale, lease, exchange, mortgage, pledge, transfer or other
disposition by New Pulitzer or a subsidiary to or with, or proposed by or on
behalf of, an Interested Stockholder or an affiliate or associate of an
Interested Stockholder
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<PAGE> 56
of assets having an aggregate fair market value equal to or greater than 1% of
the total assets of New Pulitzer; (iii) the issuance or transfer of stock or
other securities of New Pulitzer or of a subsidiary to, or proposed by or on
behalf of, an Interested Stockholder or an affiliate or associate of an
Interested Stockholder in exchange for cash or property (including stock or
other securities) having an aggregate fair market value equal to or greater than
1% of the total assets of New Pulitzer; (iv) the adoption of any plan or
proposal for the liquidation or dissolution of New Pulitzer, or any spin-off or
split-up of any kind of New Pulitzer or any subsidiary, proposed by or on behalf
of an Interested Stockholder or an affiliate or associate of an Interested
Stockholder; (v) any reclassification of securities, recapitalization of New
Pulitzer, or merger or consolidation with a subsidiary or other transaction that
has the effect, directly or indirectly, of increasing the percentage of the
outstanding stock of any class of New Pulitzer or a subsidiary owned, directly
or indirectly, by an Interested Stockholder or an affiliate or an associate of
an Interested Stockholder; (vi) any other transaction with an Interested
Stockholder or an affiliate or an associate of an Interested Stockholder that
requires the approval of the stockholders under Delaware law; or (vii) any
agreement, contract or other arrangement providing for any one or more of the
foregoing actions.
The New Pulitzer Charter provides that the Board of Directors, when
evaluating any offer of another party to make a tender or exchange offer for any
equity security of New Pulitzer, to merge or consolidate New Pulitzer with
another company or to purchase or otherwise acquire all or substantially all the
properties and assets of New Pulitzer, shall, in connection with the exercise of
its judgment in determining what is in the best interest of New Pulitzer and its
stockholders, give due consideration to the effect of such a transaction on the
editorial and publishing integrity and the character and quality of New
Pulitzer's newspaper and other operations, all other relevant factors,
including, without limitation, the social, legal and economic effects on the
employees, customers, suppliers and other affected persons, firms and companies
and on the communities and geographical areas in which New Pulitzer and its
subsidiaries operate or are located and on any of the businesses and properties
of New Pulitzer or any of its subsidiaries, as well as such other factors as the
directors deem relevant.
Supermajority Voting Provision. The affirmative vote of the holders of
record of at least 66 2/3% of the aggregate voting power of all outstanding
voting stock, voting together as a single class, is required for the amendment
or repeal of, or the adoption of any provision inconsistent with the provisions
of the New Pulitzer Charter relating to: (i) Business Combinations, (ii) the
specific voting rights of the Common Stock and Preferred Stock and the required
stockholder approval necessary to effect (A) the consolidation or merger of New
Pulitzer with or into another corporation or of a corporation with or into New
Pulitzer (other than with a corporation of which at least 90% of the outstanding
capital stock is owned by New Pulitzer) and (B) the sale, lease or exchange of
all or substantially all of New Pulitzer's property and assets, (iii) the power,
number, qualification, classification, nomination and removal of directors, (iv)
the terms of the Common Stock and the Class B Common Stock, (v) the terms of the
Preferred Stock, (vi) meetings of stockholders, (vii) the indemnification of
directors, officers, employees and agents for liability incurred as a result of
their activities on behalf of New Pulitzer, (viii) the amendment of the New
Pulitzer Charter or By-laws or (ix) issuance of the Common Stock and the
Preferred Stock. This supermajority provision, however, is inapplicable where
the proposed amendment is approved by a majority of the entire Board of
Directors. The By-laws may only be amended by a majority of the entire Board of
Directors or by the affirmative vote of the holders of record of at least
66 2/3% of the aggregate voting power of all outstanding voting stock, voting
together as a single class.
Liability of Directors. The New Pulitzer Charter limits a director's
liability for monetary damages for breach of fiduciary duty to the fullest
extent permitted by Delaware law as now in effect or hereafter amended,
including breach of fiduciary duty of care and a breach resulting from gross
negligence, except in circumstances involving certain wrongful acts, such as the
breach of a director's duty of loyalty or acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law. The Delaware
statute does not eliminate a director's duty of care and has no effect on the
availability of equitable remedies such as injunction or rescission based upon a
director's breach of the duty of care.
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NEW PULITZER VOTING TRUST AGREEMENT
Following the consummation of the Spin-off and pursuant to the New Pulitzer
Voting Trust Agreement, certain holders of the Class B Common Stock, including
David E. Moore, Emily Rauh Pulitzer and Michael E. Pulitzer, individually or as
trustees of certain holders of the Class B Common Stock, will deposit their
shares of the Class B Common Stock into the New Pulitzer Voting Trust and will
receive from the New Pulitzer Voting Trust certificates (each, a "New Pulitzer
Voting Trust Certificate") evidencing their interests in the shares so
deposited.
It is contemplated that the trustees of the New Pulitzer Voting Trust will
be Cole C. Campbell, David E. Moore, Emily Rauh Pulitzer, Michael E. Pulitzer,
Ronald H. Ridgway and Robert C. Woodworth (collectively, the "New Pulitzer
Trustees"). It is contemplated that pursuant to the New Pulitzer Voting Trust
Agreement, the New Pulitzer Trustees will generally have all voting rights with
respect to the shares of New Pulitzer Stock subject to the New Pulitzer Voting
Trust; however, in connection with certain matters, including any proposal for a
merger, consolidation, recapitalization or dissolution of New Pulitzer or
disposition of all or substantially all New Pulitzer's assets, the calling of a
special meeting of stockholders and the removal of directors, the New Pulitzer
Trustees will not vote the shares of New Pulitzer Stock deposited in the New
Pulitzer Voting Trust except in accordance with written instructions from the
holders of the New Pulitzer Voting Trust Certificates. It is contemplated that
the New Pulitzer Voting Trust Agreement will also permit the conversion of the
Class B Common Stock deposited in the New Pulitzer Voting Trust into the Common
Stock in connection with certain permitted events, including, without
limitation, sales exempt from the registration requirements of the Securities
Act, which meet the volume and manner of sale requirements of Rule 144
promulgated thereunder, and sales pursuant to registered public offerings. It is
contemplated that the New Pulitzer Voting Trust will terminate with the written
consent of holders of two-thirds in interest of all outstanding New Pulitzer
Voting Trust Certificates. Unless extended or terminated by the parties thereto,
the New Pulitzer Voting Trust Agreement will expire on or about the tenth
anniversary of the Spin-off.
NEW PULITZER REGISTRATION RIGHTS AGREEMENT
It is contemplated that upon consummation of the Transactions, New Pulitzer
will enter into a registration rights agreement (the "New Pulitzer Registration
Rights Agreement") with certain holders of the Class B Common Stock, including
David E. Moore, Emily Rauh Pulitzer and Michael E. Pulitzer, individually or as
trustees or controlling persons of certain holders of New Pulitzer Stock.
Subject to certain terms and conditions, the New Pulitzer Registration Rights
Agreement will grant the parties thereto the right to cause New Pulitzer to
register under the Securities Act for sale to the public all or part of the
shares of New Pulitzer Common Stock issuable upon conversion of their shares of
the Class B Common Stock. The New Pulitzer Registration Rights Agreement will
also grant the parties thereto the right, subject to certain terms and
conditions, to include such shares of New Pulitzer Common Stock in other
registrations made by New Pulitzer. New Pulitzer will bear the Registration
Expenses (as defined therein) related to any such registrations.
TRANSFER AGENT
The transfer agent for the Common Stock of New Pulitzer is First Chicago
Trust Company of New York.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware grants
corporations the power to indemnify their directors, officers, employees and
agents in accordance with the provisions set forth therein.
Article XI of the New Pulitzer Charter provides for indemnification of
directors, officers, employees and agents of New Pulitzer to the fullest extent
provided by law and is set forth in its entirety as Exhibit 3.1.2 to
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this Form 10/A. New Pulitzer does not currently maintain any directors' and
officers' liability insurance. Sections 1, 2 and 11 of Article XI include the
basic indemnification provisions and provide as follows:
(1) Action Not By or on Behalf of Corporation. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an
action by or in the right of the Corporation) by reason of the fact that
the person is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by the person in connection with such action, suit
or proceeding if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the person's conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed
to be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that the person's conduct was unlawful.
(2) Action By or on Behalf of the Corporation. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of
the fact that the person is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by the person
in connection with the defense or settlement of such action or suit if the
person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the Corporation, except
that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Delaware Court of
Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but
in view of all of the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court
of Chancery or such other court shall deem proper.
(11) A director's liability to the Corporation for breach of duty to
the Corporation or its stockholders shall be limited to the fullest extent
permitted by Delaware law as now in effect or hereafter amended. In
particular, no director of the Corporation shall be personally liable to
the Corporation or any of its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (A) for any breach of
the director's duty of loyalty to the Corporation or its stockholders; (B)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (C) under Section 174 of the
Delaware General Corporation Law, as the same exists or hereafter may be
amended; or (D) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law
hereafter is amended to authorize the further elimination or limitation of
the liability of directors, then the liability of a director of the
Corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended
Delaware General Corporation Law. Any repeal or modification of this
Article by the stockholders of the Corporation shall be prospective only,
and shall not adversely affect any limitation on the personal liability of
a director of the Corporation existing at the time of such repeal or
modification.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Financial Statements and Supplementary Data required by this Item are
filed as part of this Form 10/A. See Index to Financial Statement Information at
page F-1 of this Form 10/A.
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ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements and Supplemental Schedule
(i) The consolidated financial statements of Pulitzer are filed as
part of this Registration Statement on Form 10/A. See Index to
Financial Statement Information at page F-1.
The report of Deloitte & Touche LLP, Independent Auditors, dated
February 6, 1998 (July 17, 1998 as to paragraphs 1, 2, 3 and 5 of
Note 2 and paragraphs 3 through 7 of Note 13; November 25, 1998 as
to paragraph 4 of Note 2; and December 11, 1998 as to Note 17), is
filed as part of this Registration Statement on Form 10/A. See
Index to Financial Statement Information at page F-1.
(ii) The consolidated supplemental schedule of Pulitzer is filed as
part of this Registration Statement on Form 10/A. See Index to
Financial Statement Information at page F-1.
The report of Deloitte & Touche LLP, Independent Auditors, dated
February 6, 1998 (July 17, 1998 as to paragraphs 1, 2, 3 and 5 of
Note 2 and paragraphs 3 through 7 of Note 13; November 25, 1998
as to paragraph 4 of Note 2; and December 11, 1998 as to Note
17), is filed as part of this Registration Statement on Form
10/A. See Index to Financial Statement Information at page F-1.
(b) The following exhibits are filed as part of this Registration Statement
on Form 10/A:
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <S> <C>
3.1.1** -- Certificate of Incorporation of Pulitzer Inc.
3.1.2 -- Restated Certificate of Incorporation of Pulitzer Inc.
3.2.1** -- By-laws of Pulitzer Inc.
3.2.2 -- Amended and Restated By-laws of Pulitzer Inc.
4.1** -- Form of Pulitzer Inc. Common Stock Certificate.
9.1 -- Form of Pulitzer Inc. Voting Trust Agreement between the
holders of voting trust certificates and Michael E.
Pulitzer, Emily Rauh Pulitzer, Ronald H. Ridgway, Cole C.
Campbell, David E. Moore and Robert C. Woodworth.
10.1** -- Agreement, dated March 1, 1961, effective January 1, 1961,
between The Pulitzer Publishing Company, a Missouri
corporation, and the Globe-Democrat Publishing Company, as
amended on September 4, 1975, April 12, 1979 and December
22, 1983.
10.2.1** -- Amended and Restated Joint Operating Agreement, dated
December 22, 1988, between Star Publishing Company and
Citizen Publishing Company.
10.2.2** -- Partnership Agreement, dated December 22, 1988, between Star
Publishing Company and Citizen Publishing Company.
10.3** -- Agreement, dated as of May 12, 1986, among The Pulitzer
Publishing Company, Clement C. Moore, II, Gordon C. Weir,
William E. Weir, James R. Weir, Kenward G. Elmslie, Stephen
E. Nash and Manufacturers Hanover Trust Company, as
Trustees, and Christopher Mayer.
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C>
10.4** -- Letter Agreement, dated September 29, 1986, among The
Pulitzer Publishing Company, Trust Under Agreement Made by
David E. Moore, Frederick D. Pulitzer, Michael E. Pulitzer,
Jr., Robert S. Pulitzer, Joseph Pulitzer, IV, Joseph
Pulitzer, Jr., Michael E. Pulitzer, Stephen E. Nash and
Manufacturers Hanover Trust Company, as Trustees, Kenward G.
Elmslie, Gordon C. Weir, William E. Weir, James R. Weir,
Peter W. Quesada, T. Ricardo Quesada, Elinor P. Hempelmann,
The Moore Foundation, Inc., Mariemont Corporation, Z Press
Inc. and Clement C. Moore, II.
10.5** -- Letter Agreement, dated May 12, 1986, among The Pulitzer
Publishing Company, Peter W. Quesada, T. Ricardo Quesada,
Kate Davis Pulitzer Quesada and Elinor P. Hempelmann.
10.6** -- Agreement, dated as of September 29, 1986, among The
Pulitzer Publishing Company, Peter W. Quesada, T. Ricardo
Quesada, Kate Davis Pulitzer Quesada and Elinor Hempelmann.
10.7.1** -- Amendment, dated March 9, 1992, to the Pulitzer Publishing
Company Annual Incentive Compensation Plan.
10.7.2** -- The Pulitzer Publishing Company Annual Incentive
Compensation Plan.
10.7.3** -- Pulitzer Publishing Company Newspaper Operations Annual
Incentive Plan.
10.8.1 -- Amendment, dated September 16, 1997, to Pulitzer Retirement
Savings Plan.(v)
10.8.2 -- Amendment, dated January 28, 1997, to Pulitzer Retirement
Savings Plan.(iv)
10.8.3 -- Amendment, dated October 30, 1996, to Pulitzer Retirement
Savings Plan.(iv)
10.8.4 -- Amendment, dated July 31, 1996, to Pulitzer Retirement
Savings Plan.(iv)
10.8.5 -- Amendment, dated October 25, 1995, to Pulitzer Retirement
Savings Plan.(iv)
10.8.6 -- Amendment, dated October 25, 1995, to Pulitzer Retirement
Savings Plan.(ii)
10.8.7 -- Amendment, dated January 24, 1995, to Pulitzer Retirement
Savings Plan.(i)
10.8.8 -- Amended and Restated Pulitzer Retirement Savings Plan.(i)
10.9.1 -- Amendment, dated October 25, 1995, to Pulitzer Publishing
Company Pension Plan.(iv)
10.9.2 -- Amended and Restated Pulitzer Publishing Company Pension
Plan.(i)
10.10.1** -- Amendment, dated October 29, 1997, to Pulitzer Publishing
Company Supplemental Executive Benefit Pension Plan.
10.10.2** -- Amendment, dated June 23, 1992, to Pulitzer Publishing
Company Supplemental Executive Benefit Pension Plan.
10.10.3** -- Amendment, dated January 1, 1992, to Pulitzer Publishing
Company Supplemental Executive Benefit Pension Plan.
10.10.4** -- Amendment, dated January 18, 1990, to Pulitzer Publishing
Company Supplemental Executive Benefit Pension Plan.
10.10.5** -- Amendment, dated October 26, 1989, to Pulitzer Publishing
Company Supplemental Executive Benefit Pension Plan.
10.10.6** -- Amendment, dated November 6, 1987, to Pulitzer Publishing
Company Supplemental Executive Benefit Pension Plan.
10.10.7** -- Pulitzer Publishing Company Supplemental Executive Benefit
Pension Plan dated March 18, 1986.
10.11** -- Employment Agreement, dated October 1, 1986, between the
Pulitzer Publishing Company and Joseph Pulitzer, Jr.
10.12** -- Employment Agreement, dated January 1, 1986, between the
Pulitzer Publishing Company and Michael E. Pulitzer.
10.13 -- Pulitzer Publishing Company Senior Executive Deferred
Compensation Plan.(ii)
10.14** -- Letter Agreement, dated October 21, 1986, between Pulitzer
Publishing Company and David E. Moore.
</TABLE>
59
<PAGE> 61
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C>
10.15 -- Stock Purchase Agreement by and among Pulitzer Publishing
Company and Mr. Edward W. Scripps, Mrs. Betty Knight
Scripps, and the Edward W. Scripps and Betty Knight Scripps
Charitable Remainder Unitrust dated as of May 4, 1996.(iii)
10.16 -- Split Dollar Life Insurance Agreement, dated December 27,
1996, between Pulitzer Publishing Company and Richard A.
Palmer, Trustee of the Michael E. Pulitzer 1996 Life
Insurance Trust.(iv)
10.17 -- Split Dollar Life Insurance Agreement, dated December 31,
1996, between Pulitzer Publishing Company and Rose M.
Elkins, Trustee of the Kennie J. Elkins Insurance Trust.(iv)
10.18 -- Split Dollar Life Insurance Agreement, dated December 30,
1996, between Pulitzer Publishing Company and Rebecca H.
Penniman and Nicholas G. Penniman V, Trustees of the
Nicholas G. Penniman IV Irrevocable 1996 Trust.(iv)
10.19 -- Split Dollar Life Insurance Agreement, dated December 30,
1996, between Pulitzer Publishing Company and Doris D.
Ridgway and Boatmen's Trust Company, Trustees of The Ronald
H. Ridgway Insurance Trust.(iv)
10.20 -- Letter Agreement, dated January 26, 1998, between Pulitzer
Publishing Company and Emily Rauh Pulitzer.(v)
10.21 -- Amended and Restated Agreement and Plan of Merger by and
among Pulitzer Publishing Company, Pulitzer Inc. and
Hearst-Argyle Television, Inc., dated as of May 25,
1998.(vi)
10.22** -- Form of Contribution and Assumption Agreement by and between
Pulitzer Publishing Company and Pulitzer Inc.
10.23** -- Letter Agreement, dated May 25, 1998, by and among Pulitzer
Publishing Company, Pulitzer Inc. and Hearst-Argyle
Television, Inc.
10.24 -- Form of Letter Agreement between Pulitzer Inc. and Emily
Rauh Pulitzer.
10.25 -- Form of Letter Agreement between Pulitzer Inc. and David E.
Moore.
10.26 -- Form of Pulitzer Inc. Registration Rights Agreement.
10.27** -- Pulitzer Inc. 1999 Key Employees' Restricted Stock Purchase
Plan.
10.28** -- Pulitzer Inc. 1999 Stock Option Plan.
10.29** -- Pulitzer Inc. 1999 Employee Stock Purchase Plan.
10.33 -- Employment Agreement, dated December 18, 1998, between
Pulitzer Inc. and Robert C. Woodworth (vii).
10.34** -- Employment Agreement, dated August 26, 1998 between Pulitzer
Inc. and Terrance C.Z. Egger.
10.35** -- Participation Agreement, dated May 25, 1998, by and between
Pulitzer Publishing Company and Michael E. Pulitzer.
10.36** -- Participation and Severance Agreement, dated May 25, 1998,
by and between Pulitzer Publishing Company and Ken J.
Elkins.
10.37** -- Participation Agreement, dated May 25, 1998, by and between
Pulitzer Publishing Company and Nicholas G. Penniman IV.
10.38** -- Participation Agreement, dated May 25, 1998, by and between
Pulitzer Publishing Company and Ronald H. Ridgway.
10.39** -- Participation and Severance Agreement, dated May 25, 1998,
by and between Pulitzer Publishing Company and C. Wayne
Godsey.
10.40** -- Participation and Severance Agreement, dated May 25, 1998,
by and between Pulitzer Publishing Company and John Kueneke.
21** -- Subsidiaries of Pulitzer Inc.
</TABLE>
- -------------------------
** Previously filed.
(i) Incorporated by reference to Pulitzer Publishing Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994.
60
<PAGE> 62
(ii) Incorporated by reference to Pulitzer Publishing Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995.
(iii) Incorporated by reference to Pulitzer Publishing Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 1996.
(iv) Incorporated by reference to Pulitzer Publishing Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996.
(v) Incorporated by reference to Pulitzer Publishing Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997.
(vi) Incorporated by reference to Pulitzer Publishing Company's Current Report
on Form 8-K filed on January 22, 1999.
(vii) Incorporated by reference to Pulitzer Publishing Company's Registration
Statement (File No. 333-69701) on Form S-3.
61
<PAGE> 63
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Amendment No. 2 to its Registration
Statement on Form 10/A to be signed on its behalf by the undersigned, thereunto
duly authorized.
PULITZER INC.
By: /s/ RONALD H. RIDGWAY
------------------------------------
Ronald H. Ridgway
Senior Vice President -- Finance
Dated: February 10, 1999
62
<PAGE> 64
INDEX TO FINANCIAL STATEMENT INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
Audited Annual Consolidated Financial Statements
Independent Auditors' Report................................ F-2
Statements of Consolidated Income for each of the Three
Years in the Period Ended December 31, 1997............... F-3
Statements of Consolidated Financial Position at December
31, 1997 and 1996......................................... F-4
Statements of Consolidated Stockholders' Equity for each of
the Three Years in the Period Ended December 31, 1997..... F-5
Statements of Consolidated Cash Flows for each of the Three
Years in the Period Ended December 31, 1997............... F-7
Notes to Consolidated Financial Statements for the Three
Years in the Period Ended December 31, 1997............... F-8
Consolidated Supplemental Financial Schedule
Independent Auditors' Report................................ F-27
Financial Schedule II for Each of the Three Years in the
Period Ended December 31, 1997............................ F-28
Unaudited Interim Consolidated Financial Statements
Statements of Consolidated Income for the Nine-Month Periods
Ended September 30, 1998 and 1997......................... F-29
Statements of Consolidated Financial Position at September
30, 1998 and December 31, 1997............................ F-30
Statements of Consolidated Cash Flows for the Nine-Month
Periods Ended September 30, 1998 and 1997................. F-31
Notes to Consolidated Financial Statements.................. F-32
</TABLE>
F-1
<PAGE> 65
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Pulitzer Publishing Company:
We have audited the accompanying statements of consolidated financial
position of Pulitzer Publishing Company and subsidiaries as of December 31, 1997
and 1996, and the related consolidated statements of income, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. 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 audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the companies at December 31,
1997 and 1996, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1997 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Saint Louis, Missouri
February 6, 1998
(July 17, 1998 as to paragraphs
1, 2, 3 and 5 of Note 2 and
paragraphs 3 through 7 of
Note 13; November 25, 1998
as to paragraph 4 of Note 2; and
December 11, 1998 as to
Note 17)
F-2
<PAGE> 66
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Operating Revenues -- Net:
Publishing:
Advertising............................................ $227,817 $191,939 $161,932
Circulation............................................ 87,611 81,434 76,349
Other.................................................. 42,541 35,723 31,107
Broadcasting.............................................. 227,016 224,992 202,939
-------- -------- --------
Total operating revenues.......................... 584,985 534,088 472,327
-------- -------- --------
Operating Expenses:
Publishing operations..................................... 145,730 139,259 125,811
Broadcasting operations................................... 69,205 66,626 64,202
Selling, general and administrative....................... 190,429 172,838 155,996
St. Louis Agency adjustment (Note 3)...................... 19,450 13,972 12,502
Depreciation and amortization............................. 36,454 31,102 27,150
-------- -------- --------
Total operating expenses.......................... 461,268 423,797 385,661
-------- -------- --------
Operating income............................................ 123,717 110,291 86,666
Interest income............................................. 4,652 4,522 5,203
Interest expense............................................ (16,081) (13,592) (10,171)
Net other expense........................................... (1,203) (5,449) (2,330)
-------- -------- --------
Income before provision for income taxes.................... 111,085 95,772 79,368
Provision for income taxes (Note 9)......................... 45,057 38,272 30,046
-------- -------- --------
Net Income.................................................. $ 66,028 $ 57,500 $ 49,322
======== ======== ========
Basic earnings per share of stock (Note 12):
Earnings per share........................................ $ 2.99 $ 2.62 $ 2.26
======== ======== ========
Weighted average number of shares outstanding............. 22,110 21,926 21,800
======== ======== ========
Diluted earnings per share of stock (Note 12):
Earnings per share........................................ $ 2.94 $ 2.58 $ 2.23
======== ======== ========
Weighted average number of shares outstanding............. 22,452 22,273 22,097
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 67
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 62,749 $ 73,052
Trade accounts receivable (less allowance for doubtful
accounts of $2,411 and $2,576).......................... 85,882 80,010
Inventory................................................. 5,265 4,976
Prepaid expenses and other................................ 12,847 5,650
Program rights............................................ 7,866 8,452
-------- --------
Total current assets.................................. 174,609 172,140
-------- --------
Properties:
Land...................................................... 16,154 14,692
Buildings................................................. 84,215 78,733
Machinery and equipment................................... 225,113 209,854
Construction in progress.................................. 7,324 2,071
-------- --------
Total................................................. 332,806 305,350
Less accumulated depreciation............................. 170,992 149,418
-------- --------
Properties -- net..................................... 161,814 155,932
-------- --------
Intangible and Other Assets:
Intangible assets -- net of applicable amortization (Notes
4 and 5)................................................ 287,617 298,305
Receivable from The Herald Company (Notes 3 and 8)........ 39,733 39,955
Other..................................................... 19,183 17,519
-------- --------
Total intangible and other assets..................... 346,533 355,779
-------- --------
Total................................................. $682,956 $683,851
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable.................................... $ 16,158 $ 13,355
Current portion of long-term debt (Note 6)................ 12,705 14,705
Salaries, wages and commissions........................... 15,232 14,897
Income taxes payable...................................... 3,070 1,267
Program contracts payable................................. 7,907 8,916
Interest payable.......................................... 5,677 7,177
Pension obligations (Note 7).............................. 348 2,123
Acquisition payable....................................... 9,804 9,804
Other..................................................... 4,386 4,566
-------- --------
Total current liabilities............................. 75,287 76,810
-------- --------
Long-Term Debt (Note 6)..................................... 172,705 235,410
-------- --------
Pension Obligations (Note 7)................................ 26,709 23,415
-------- --------
Postretirement and Postemployment Benefit Obligations (Note
8)........................................................ 91,906 92,252
-------- --------
Other Long-Term Liabilities................................. 5,572 6,027
-------- --------
Commitments and Contingencies (Note 13).....................
Stockholders' Equity (Note 10):
Preferred stock, $.01 par value; 25,000,000 shares
authorized; issued and outstanding -- none Common stock,
$.01 par value; 100,000,000 shares authorized;
issued -- 6,797,895 in 1997 and 6,498,215 in 1996....... 68 65
Class B common stock, convertible, $.01 par value;
50,000,000 shares authorized; issued -- 27,125,247 in
1997 and 27,214,842 in 1996............................. 271 272
Additional paid-in capital................................ 135,542 129,173
Retained earnings......................................... 362,828 308,283
-------- --------
Total................................................. 498,709 437,793
Treasury stock -- at cost; 24,660 and 22,811 shares of
common stock in 1997 and 1996, respectively, and
11,700,850 shares of Class B common stock in 1997 and
1996.................................................... (187,932) (187,856)
-------- --------
Total stockholders' equity............................ 310,777 249,937
-------- --------
Total................................................. $682,956 $683,851
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 68
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CLASS B ADDITIONAL TOTAL
COMMON COMMON PAID-IN RETAINED TREASURY STOCKHOLDERS'
STOCK STOCK CAPITAL EARNINGS STOCK EQUITY
------ ------- ---------- -------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 1995........ $44 $206 $ 122,070 $220,322 $(187,623) $155,019
Issuance of common stock grants.... 218 218
Common stock options exercised..... 2 2,327 2,329
Conversion of Class B common stock
to common stock.................. 1 (1)
Tax benefit from stock options
exercised........................ 924 924
Net income......................... 49,322 49,322
Cash dividends declared and paid
$.41 per share of common and
Class B common................... (8,828) (8,828)
Purchase of treasury stock......... (213) (213)
--- ---- ---------- -------- --------- --------
BALANCES AT DECEMBER 31, 1995...... 47 205 125,539 260,816 (187,836) 198,771
Issuance of common stock grants.... 76 76
Common stock options exercised..... 1 2,166 2,167
Conversion of Class B common stock
to common stock.................. 1 (1)
Tax benefit from stock options
exercised........................ 1,476 1,476
Net income......................... 57,500 57,500
Cash dividends declared and paid
$.46 per share of common and
Class B common................... (10,033) (10,033)
Purchase of treasury stock......... (20) (20)
Four for three stock split in the
form of a 33.3 percent stock
dividend (Note 10)............... 16 68 (84)
--- ---- ---------- -------- --------- --------
BALANCES AT DECEMBER 31, 1996...... 65 272 129,173 308,283 (187,856) 249,937
Issuance of common stock grants.... 70 70
Common stock options exercised..... 2 3,297 3,299
Conversion of Class B common stock
to common stock.................. 1 (1)
Common stock issued under Employee
Stock Purchase Plan.............. 322 322
Tax benefit from stock options
exercised........................ 2,680 2,680
Net income......................... 66,028 66,028
Cash dividends declared and paid
$.52 per share of common and
Class B common................... (11,483) (11,483)
Purchase of treasury stock......... (76) (76)
--- ---- ---------- -------- --------- --------
BALANCES AT DECEMBER 31, 1997...... $68 $271 $ 135,542 $362,828 $(187,932) $310,777
=== ==== ========== ======== ========= ========
</TABLE>
(Continued)
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 69
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CLASS B
COMMON STOCK COMMON STOCK
------------------ ------------------
HELD IN HELD IN
ISSUED TREASURY ISSUED TREASURY
------ -------- ------ --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
SHARE ACTIVITY:
BALANCES AT JANUARY 1, 1995................................ 4,444 (11) 20,609 (8,776)
Issuance of common stock grants............................ 6
Common stock options exercised............................. 119
Conversion of Class B common stock to common stock......... 135 (135)
Purchase of treasury stock................................. (6)
----- --- ------ -------
BALANCES AT DECEMBER 31, 1995.............................. 4,704 (17) 20,474 (8,776)
Issuance of common stock grants............................ 2
Common stock options exercised............................. 140
Conversion of Class B common stock to common stock......... 84 (84)
Four for three split in the form of a 33.3 percent stock
dividend (Note 10)....................................... 1,568 (6) 6,825 (2,925)
----- --- ------ -------
BALANCES AT DECEMBER 31, 1996.............................. 6,498 (23) 27,215 (11,701)
Issuance of common stock grants............................ 1
Common stock options exercised............................. 202
Conversion of Class B common stock to common stock......... 90 (90)
Common stock issued under Employee Stock Purchase Plan..... 7
Purchase of treasury stock................................. (2)
----- --- ------ -------
BALANCES AT DECEMBER 31, 1997.............................. 6,798 (25) 27,125 (11,701)
===== === ====== =======
</TABLE>
(Concluded)
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 70
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 66,028 $ 57,500 $ 49,322
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation............................................ 22,884 20,434 19,281
Amortization of intangibles............................. 13,570 10,668 7,869
Deferred income taxes................................... (3,367) (1,943) (1,847)
Gain on sale of assets.................................. (421)
Changes in assets and liabilities (net of the effects of
the purchase and sale of properties) which provided
(used) cash:
Trade accounts receivable............................. (5,872) (9,737) (1,581)
Inventory............................................. (289) 3,017 (3,121)
Other assets.......................................... (3,766) 7,842 1,150
Trade accounts payable and other liabilities.......... 2,494 3,659 1,594
Income taxes payable.................................. 1,803 (239) (3,713)
-------- --------- --------
Net cash provided by operating activities................... 93,485 90,780 68,954
-------- --------- --------
Cash flows from investing activities:
Capital expenditures...................................... (28,191) (17,787) (22,934)
Purchase of publishing properties, net of cash acquired... (203,306)
Purchase of broadcast assets.............................. (3,141) (5,187)
Investment in joint ventures and limited partnerships..... (4,792) (2,983) (3,637)
Sale of assets, net of cash sold.......................... 4,150
(Increase) decrease in notes receivable................... 4,979 (4,904) 1,875
-------- --------- --------
Net cash used in investing activities....................... (31,145) (230,017) (24,696)
-------- --------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt.................. 135,000
Repayments on long-term debt.............................. (64,705) (15,205) (14,250)
Dividends paid............................................ (11,483) (10,033) (8,828)
Proceeds from exercise of stock options................... 3,299 2,167 2,329
Proceeds from employee stock purchase plan................ 322
Purchase of treasury stock................................ (76) (20) (213)
-------- --------- --------
Net cash provided by (used in) financing activities......... (72,643) 111,909 (20,962)
-------- --------- --------
Net (decrease) increase in cash and cash equivalents........ (10,303) (27,328) 23,296
Cash and cash equivalents at beginning of year.............. 73,052 100,380 77,084
-------- --------- --------
Cash and cash equivalents at end of year.................... $ 62,749 $ 73,052 $100,380
======== ========= ========
Supplemental disclosure of cash flow information:
Cash paid (received) during the year for:
Interest paid........................................... $ 17,469 $ 9,716 $ 10,147
Interest received....................................... (4,574) (4,872) (4,805)
Income taxes............................................ 45,110 38,530 35,862
Income tax refunds...................................... (1,108) (195) (1,280)
Supplemental disclosure of noncash investing and financing
activity:
Increase (decrease) in minimum pension liability and
related intangible asset................................ $ 402 $ (1,059) $ (227)
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE> 71
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation -- The consolidated financial statements include the
accounts of Pulitzer Publishing Company (the "Company" or "Pulitzer") and its
subsidiary companies, all of which are wholly-owned. All significant
intercompany transactions have been eliminated from the consolidated financial
statements.
Fiscal Year -- The Company's fiscal year ends on the last Sunday of the
calendar year, which in 1995 resulted in a 14-week fourth quarter and a 53-week
year. In 1997 and 1996, the fourth quarter was 13 weeks and the year was 52
weeks. For ease of presentation, the Company has used December 31 as the
year-end.
Cash Equivalents -- For purposes of reporting cash flows, the Company
considers all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents.
Inventory Valuation -- Inventory, which consists primarily of newsprint, is
stated at the lower of cost (determined primarily using the last-in, first-out
method) or market. If the first-in, first-out cost method had been used,
inventory would have been $805,000 and $874,000 higher than reported at December
31, 1997 and 1996, respectively. Ink and other miscellaneous supplies are
expensed as purchased.
Program Rights -- Program rights represent license agreements for the right
to broadcast feature programs, program series and other syndicated programs over
limited license periods and are presented in the consolidated balance sheet at
the lower of unamortized cost or estimated net realizable value. The total gross
cost of each agreement is recorded as an asset and liability when the license
period begins and all of the following conditions have been met: (a) the cost of
the agreement is known or reasonably determinable, (b) the program material has
been accepted in accordance with the conditions of the license agreement and (c)
the program is available for broadcast. Payments are made in installments as
provided for in the license agreements. Program rights expected to be amortized
in the succeeding year and payments due within one year are classified as
current assets and current liabilities, respectively.
Program rights covering periods of less than one year are amortized on a
straight-line basis as the programs are broadcast. Program rights covering
periods greater than one year are generally amortized as a package or series
over the license period using an accelerated method. When a determination is
made that either the unamortized cost of a program exceeds its estimated net
realizable value or a program will not be used prior to the expiration of the
license agreement, appropriate adjustments are made to charge unamortized
amounts to operations.
Property and Depreciation -- Property is recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the
individual assets. Buildings are depreciated over 20 to 50 years and all other
property over lives ranging from 3 to 15 years.
Intangible Assets -- Intangibles consisting of goodwill, FCC licenses and
network affiliations acquired subsequent to the effective date of Accounting
Principles Board Opinion No. 17 ("Opinion No. 17") are being amortized over
lives of either 15 or 40 years while all other intangible assets are being
amortized over lives ranging from 4 to 23 years. Intangibles in the amount of
$1,520,000, related to acquisitions prior to the effective date of Opinion No.
17, are not being amortized because, in the opinion of management, their value
is of undeterminable duration. In addition, the intangible asset relating to the
Company's additional minimum pension liability under Statement of Financial
Accounting Standards No. 87 is adjusted annually, as necessary, when a new
determination of the amount of the additional minimum pension liability is made.
Long-Lived Assets -- The Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, in
March 1995. This statement became effective for the Company's 1996 fiscal year.
The general requirements of this statement are applicable to the properties and
intangible assets of the Company
F-8
<PAGE> 72
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and require impairment to be considered whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Management periodically evaluates the recoverability of long-lived
assets by reviewing the current and projected cash flows of each of its
properties. If a permanent impairment is deemed to exist, any write-down would
be charged to operations. For the periods presented, there has been no
impairment.
Employee Benefit Plans -- The Company and its subsidiaries have several
noncontributory defined benefit pension plans covering a significant portion of
their employees. Benefits under the plans are generally based on salary and
years of service. The Company's liability and related expense for benefits under
the plans are recorded over the service period of active employees based upon
annual actuarial calculations. Plan funding strategies are influenced by tax
regulations. Plan assets consist primarily of government bonds and corporate
equity securities.
The Company provides retiree medical and life insurance benefits under
varying postretirement plans at several of its operating locations. In addition,
the Company provides postemployment disability benefits to certain former
employee groups prior to retirement. The significant portion of these benefits
results from plans at the St. Louis Post-Dispatch. The Company's liability and
related expense for benefits under the postretirement plans are recorded over
the service period of active employees based upon annual actuarial calculations.
The Company accrues postemployment disability benefits when it becomes probable
that such benefits will be paid and when sufficient information exists to make
reasonable estimates of the amounts to be paid. All of the Company's
postretirement and postemployment benefits are funded on a pay-as-you-go basis.
Income Taxes -- Deferred tax assets and liabilities are recorded for the
expected future tax consequences of events that have been included in either the
financial statements or tax returns of the Company. Under this asset and
liability approach, deferred tax assets and liabilities are determined based on
temporary differences between the financial statement and tax bases of assets
and liabilities by applying enacted statutory tax rates applicable to future
years in which the differences are expected to reverse.
Stock-Based Compensation Plans -- Effective January 1, 1996, the Company
adopted the disclosure requirements of Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), Accounting for Stock-Based Compensation. The new
standard defines a fair value method of accounting for stock options and similar
equity instruments. Under the fair value method, compensation cost is measured
at the grant date based on the fair value of the award and is recognized over
the service period, which is usually the vesting period. Pursuant to the new
standard, companies are encouraged, but not required, to adopt the fair value
method of accounting for employee stock-based transactions. Companies are also
permitted to continue to account for such transactions under Accounting
Principles Board Opinion No. 25 ("APB 25"), Accounting for Stock Issued to
Employees, but are required to disclose pro forma net income and, if presented,
earnings per share as if the Company had applied the new method of accounting.
The accounting requirements of the new method are effective for all employee
awards granted after the beginning of the fiscal year of adoption, whereas the
disclosure requirements apply to all awards granted subsequent to December 31,
1994. The Company continues to recognize and measure compensation for its
restricted stock and stock option plans in accordance with the existing
provisions of APB 25.
Earnings Per Share of Stock -- Effective December 15, 1997, the Company
adopted Statement of Financial Accounting Standards No. 128, Earnings per Share
("SFAS 128"). This statement simplifies the standards for computing earnings per
share ("EPS"), making them comparable to international standards, and supersedes
Accounting Principles Board Opinion No. 15, Earnings Per Share ("APB 15"). SFAS
128 replaces the presentation of primary EPS with a presentation of basic EPS.
The statement also requires dual presentation of basic and diluted EPS on the
face of the income statement for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation. As
required by SFAS 128, diluted EPS has been computed for all prior periods
presented to conform to the provisions of the new statement.
F-9
<PAGE> 73
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Basic earnings per share of stock is computed using the weighted average
number of common and Class B common shares outstanding during the applicable
period, adjusted for the stock splits described in Note 10. Diluted earnings per
share of stock is computed using the weighted average number of common and Class
B common shares outstanding and potential common shares. (see Note 12)
Use of Management Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires that
management make certain 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. The reported amounts of
revenues and expenses during the reporting period may also be affected by the
estimates and assumptions management is required to make. Actual results may
differ from those estimates.
Reclassifications -- Certain reclassifications have been made to the 1996
and 1995 consolidated financial statements to conform with the 1997
presentation.
2. SPIN-OFF AND MERGER
On May 25, 1998, the Company, Pulitzer Inc., (a wholly-owned subsidiary of
the Company ("New Pulitzer")), and Hearst-Argyle Television, Inc.
("Hearst-Argyle") entered into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which Hearst-Argyle will acquire the Company's
television and radio broadcasting operations (collectively, the "Broadcasting
Business"). The Broadcasting Business consists of nine network-affiliated
television stations and five radio stations owned and operated by Pulitzer
Broadcasting Company ("PBC"), a wholly-owned subsidiary of the Company, and its
wholly-owned subsidiaries. The Broadcasting Business will be acquired by
Hearst-Argyle through the merger ("Merger") of the Company into Hearst-Argyle.
Prior to the Spin-off (as defined below), the Company intends to borrow
$700 million, which may be secured by the assets and/or stock of PBC and its
subsidiaries. Out of the proceeds of this new debt, the Company will pay the
existing Company debt and any costs arising as a result of the Merger and
related transactions. Prior to the Merger, the balance of the proceeds of this
new debt, together with the Company's publishing assets and liabilities, will be
contributed by the Company to New Pulitzer pursuant to a Contribution and
Assumption Agreement (the "Contribution"). Pursuant to the Merger Agreement,
Hearst-Argyle will assume the new debt following the consummation of the
Spin-off and Merger.
Immediately following the Contribution, the Company will distribute to each
holder of Company Common Stock one fully-paid and nonassessable share of New
Pulitzer Common Stock for each share of Company Common Stock held and to each
holder of Company Class B Common Stock one fully-paid and nonassessable share of
New Pulitzer Class B Common Stock for each share of Company Class B Common Stock
held (the "Distribution"). The Contribution and Distribution are collectively
referred to as the "Spin-off." The Spin-off and the Merger are collectively
referred to as the "Transactions."
Consummation of the Transactions is subject, among other things, to the
receipt of various regulatory approvals, Pulitzer stockholder approval of the
Charter Amendment (as defined in Note 17) and approval of the Merger by the
stockholders of both the Company and Hearst-Argyle. The Company has received a
favorable letter ruling from the Internal Revenue Service confirming that the
Spin-off will be tax-free to Pulitzer stockholders. Early termination of the
initial waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of
1976 has also been granted. In addition, the Federal Communications Commission
(the "FCC") has published notice of its grant of the application for the
transfer of FCC licenses, including related waiver requests, from the Company to
Hearst-Argyle. The Company anticipates that its special stockholders meeting to
consider the Charter Amendment and the Merger will be held in the first quarter
of 1999 and that the Transactions will be completed shortly after the meeting.
F-10
<PAGE> 74
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Following the consummation of the Transactions, New Pulitzer will be
engaged primarily in the business of newspaper publishing and related new media
businesses. For financial reporting purposes, New Pulitzer is the continuing
stockholder interest and will retain the Pulitzer name.
3. AGENCY AGREEMENTS
An agency operation between the Company and The Herald Company is conducted
under the provisions of an Agency Agreement, dated March 1, 1961, as amended.
For many years, the St. Louis Post-Dispatch (published by the Company) was the
afternoon and Sunday newspaper serving St. Louis, and the Globe-Democrat
(formerly published by The Herald Company) was the morning paper and also
published a weekend edition. Although separately owned, from 1961 through
February 1984, the publication of both the Post-Dispatch and the Globe-Democrat
was governed by the St. Louis Agency Agreement. From 1961 to 1979, the two
newspapers controlled their own news, editorial, advertising, circulation,
accounting and promotion departments and Pulitzer managed the production and
printing of both newspapers. In 1979, Pulitzer assumed full responsibility for
advertising, circulation, accounting and promotion for both newspapers. In
February 1984, after a number of years of unfavorable financial results at the
St. Louis Agency, the Globe-Democrat was sold by The Herald Company and the St.
Louis Agency Agreement was revised to eliminate any continuing relationship
between the two newspapers and to permit the repositioning of the daily Post-
Dispatch as a morning newspaper. Following the renegotiation of the St. Louis
Agency Agreement at the time of the sale of the Globe-Democrat, The Herald
Company retained the contractual right to receive one-half the profits (as
defined), and the obligation to share one-half the losses (as defined), of the
operations of the St. Louis Agency, which from February 1984 forward consisted
solely of the publication of the Post-Dispatch. The St. Louis Agency Agreement
also provides for The Herald Company to share one-half the cost of, and to share
in a portion of the proceeds from the sale of, capital assets used in the
production of the Post-Dispatch. Under the St. Louis Agency Agreement, Pulitzer
supervises, manages and performs all activities relating to the day-to-day
publication of the Post-Dispatch and is solely responsible for the news and
editorial policies of the newspaper. The consolidated financial statements of
the Company include all the operating revenues and expenses of the St. Louis
Agency relating to the Post-Dispatch.
In Tucson, Arizona, a separate partnership, TNI Partners, ("TNI"), acting
as agent for the Star (a newspaper owned by the Company) and the Citizen (a
newspaper owned by Gannett Co., Inc.), is responsible for printing, delivery,
advertising, and circulation of the Star and the Citizen. TNI collects all of
the receipts and income relating to the Star and the Citizen and pays all
operating expenses incident to the partnership's operations and publication of
the newspapers. Each newspaper is solely responsible for its own news and
editorial content. Net income or net loss of TNI is generally allocated equally
to the Star and the Citizen. The Company's consolidated financial statements
include its share of TNI's revenues and expenses.
4. ACQUISITION AND DISPOSITION OF PROPERTIES
During 1996, the Company acquired in a purchase transaction all of the
stock of Scripps League Newspapers, Inc. ("Scripps League"), a privately owned
publisher of community newspapers serving smaller markets, primarily in the West
and Midwest. The purchase price of approximately $216 million (including
acquisition costs) includes all of the operating assets of the newspapers,
working capital of approximately $6 million and intangibles. The acquisition was
financed by long-term borrowings of $135 million (see Note 6) and cash of
approximately $81 million (approximately $69 million net of cash acquired). The
results of the operations of Scripps League for the period subsequent to June
30, 1996 are included in the Company's Statements of Consolidated Income.
F-11
<PAGE> 75
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following supplemental unaudited pro forma information shows the
results of operations of the Company for the years ended December 31, 1996 and
1995 adjusted for the acquisition of Scripps League, assuming such transaction
and the related debt financing had been consummated at the beginning of each
year presented. The unaudited pro forma financial information is not necessarily
indicative either of results of operations that would have occurred had the
transaction occurred at the beginning of each year presented or of future
results of operations.
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
---- ----
(UNAUDITED)
<S> <C> <C>
In thousands, except per share data:
Operating revenues -- net.............................. $566,915 $536,803
Operating income....................................... $113,660 $ 93,896
Net income............................................. $ 54,519 $ 44,203
Earnings per share of stock:
Basic earnings per share............................... $ 2.49 $ 2.03
Diluted earnings per share............................. $ 2.45 $ 2.00
</TABLE>
In December 1996, the Company acquired in a purchase transaction the assets
of an AM radio station in Phoenix, Arizona for approximately $5,187,000.
5. INTANGIBLE ASSETS
Intangible assets consist of:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
FCC licenses and network affiliations.................... $114,376 $112,161
Goodwill................................................. 178,355 178,327
Intangible pension asset (Note 7)........................ 2,320 1,918
Other.................................................... 63,924 63,914
-------- --------
Total............................................... 358,975 356,320
Less accumulated amortization............................ 71,358 58,015
-------- --------
Total intangible assets -- net...................... $287,617 $298,305
======== ========
</TABLE>
F-12
<PAGE> 76
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. FINANCING ARRANGEMENTS
Long-term debt consists of:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Credit Agreement......................................... $ -- $ 50,000
Senior notes maturing in substantially equal annual
installments:
8.8% due through 1997.................................. 14,500
6.76% due 1998-2001.................................... 50,000 50,000
7.22% due 2002-2005.................................... 50,000 50,000
7.86% due 2001-2008.................................... 85,000 85,000
Other.................................................. 410 615
-------- --------
Total............................................. 185,410 250,115
Less current portion..................................... 12,705 14,705
-------- --------
Total long-term debt.............................. $172,705 $235,410
======== ========
</TABLE>
The Company's fixed-rate senior note borrowings are with The Prudential
Insurance Company of America ("Prudential"). The Senior Note Agreements with
Prudential provide for the payment of certain fees, depending on current
interest rates and remaining years to maturity, in the event of repayment prior
to the notes' scheduled maturity dates (as anticipated by the Spin-off and
Merger discussed in Note 2).
The credit agreement with The First National Bank of Chicago, as Agent, for
a group of lenders ("FNBC"), provides for a $50,000,000 variable rate revolving
credit facility ("Credit Agreement"). Loans may be borrowed, repaid and
reborrowed by the Company until the Credit Agreement terminates on July 2, 2001.
The Company has the option to repay any borrowings and terminate the Credit
Agreement, without penalty, prior to its scheduled maturity. As of December 31,
1997, the Company had no borrowings under the Credit Agreement.
The Credit Agreement allows the Company to elect an interest rate with
respect to each borrowing under the facility equal to a daily floating rate or
the Eurodollar rate plus 0.225 percent. As of December 31, 1996, the interest
rate on the Credit Agreement borrowings with FNBC was 5.875 percent.
The terms of the various senior note agreements contain certain covenants
and conditions including the maintenance of cash flow and various other
financial ratios, limitations on the incurrence of other debt and limitations on
the amount of restricted payments (which generally includes dividends, stock
purchases and redemptions).
Under the terms of the most restrictive borrowing covenants, in general,
the Company may pay annual dividends not to exceed the sum of $10,000,000, plus
75% of consolidated net earnings commencing January 1, 1993, less the sum of all
dividends paid or declared and redemptions in excess of sales of Company stock
after December 31, 1992. Pursuant to this calculation, approximately
$138,938,000 is available for distribution as dividends at December 31, 1997.
F-13
<PAGE> 77
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Approximate annual maturities of long-term debt for the five years
subsequent to December 31, 1997 are as follows:
<TABLE>
<S> <C>
Fiscal Year (In thousands):
1998...................................................... $ 12,705
1999...................................................... 12,705
2000...................................................... 12,500
2001...................................................... 23,125
2002...................................................... 23,125
Thereafter................................................ 101,250
--------
Total................................................ $185,410
========
</TABLE>
7. PENSION PLANS
The pension cost components were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost for benefits earned during the
year.......................................... $ 3,966 $ 4,154 $ 3,834
Interest cost on projected benefit obligation... 8,470 8,185 8,057
Actual return on plan assets.................... (18,785) (12,507) (17,541)
Net amortization and deferrals.................. 10,001 4,833 11,365
-------- -------- --------
Net periodic pension cost....................... $ 3,652 $ 4,665 $ 5,715
======== ======== ========
</TABLE>
The funded status of the Company's pension plans was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation.............................. $117,854 $107,637
======== ========
Accumulated benefit obligation......................... $118,735 $108,380
======== ========
Projected benefit obligation............................. $128,690 $118,414
Plan assets at fair value................................ 119,353 104,046
-------- --------
Plan assets less than projected benefit obligation....... 9,337 14,368
Unrecognized transition obligation, net.................. (1,318) (1,539)
Unrecognized net gain.................................... 16,507 10,557
Unrecognized prior service cost.......................... 211 234
Additional minimum liability............................. 2,320 1,918
-------- --------
Pension obligations...................................... $ 27,057 $ 25,538
======== ========
</TABLE>
The projected benefit obligation was determined using assumed discount
rates of 7%, 7.5% and 7.25% at December 31, 1997, 1996 and 1995, respectively.
The expected long-term rate of return on plan assets was 8.5% for 1997, 1996 and
1995. For those plans that pay benefits based on final compensation levels, the
actuarial assumptions for overall annual rate of increase in future salary
levels was 4.5% for 1997 and 5% for both 1996 and 1995.
F-14
<PAGE> 78
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Certain of the Company's employees participate in multi-employer retirement
plans sponsored by their respective unions. Amounts charged to operations,
representing the Company's required contributions to these plans in 1997, 1996
and 1995, were approximately $844,000, $781,000, and $731,000, respectively.
The Company also sponsors an employee savings plan under Section 401(k) of
the Internal Revenue Code. This plan covers substantially all employees.
Contributions by the Company amounted to approximately $1,899,000, $1,668,000
and $1,494,000 for 1997, 1996 and 1995, respectively.
8. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
The net periodic postretirement benefit cost components were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost (for benefits earned during the year).......... $ 970 $ 926 $ 933
Interest cost on accumulated postretirement benefit
obligation................................................ 4,632 4,683 5,799
Net amortization, deferrals and other components............ (2,538) (2,308) (1,787)
------- ------- -------
Net periodic postretirement benefit cost.................... $ 3,064 $ 3,301 $ 4,945
======= ======= =======
</TABLE>
The Company funds its postretirement benefit obligation on a pay-as-you-go
basis, and, for 1997, 1996 and 1995 made payments of $4,118,000, $4,207,000 and
$4,071,000, respectively.
The status of the Company's postretirement benefit plans was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Retirees and surviving beneficiaries........................ $39,549 $37,734
Actives eligible to retire.................................. 14,418 13,516
Other actives............................................... 12,756 11,142
------- -------
Accumulated postretirement benefit obligation............... 66,723 62,392
Unrecognized prior service gain............................. 6,658 7,990
Unrecognized net gain....................................... 15,351 19,404
------- -------
Accrued postretirement benefit cost......................... $88,732 $89,786
======= =======
</TABLE>
The preceding amounts for the December 31, 1997 and 1996 accrued
postretirement benefit cost and the 1997, 1996 and 1995 net periodic
postretirement benefit expense have not been reduced for The Herald Company's
share of the respective amounts. However, pursuant to the St. Louis Agency
Agreement (see Note 3), the Company has recorded a receivable for The Herald
Company's share of the accrued postretirement benefit cost as of December 31,
1997 and 1996.
For 1997 and 1996 measurement purposes, health care cost trend rates of 9%,
7% and 5% were assumed for indemnity plans, PPO plans and HMO plans,
respectively. For 1997, these rates were assumed to decrease gradually to 5%
through the year 2010 and remain at that level thereafter. For 1996, the
indemnity and PPO rates were assumed to decrease gradually to 5.5% through the
year 2010 and remain at that level thereafter. A 1% increase in the annual
health care cost trend rate assumptions would have increased the accrued
postretirement benefit cost at December 31, 1997 by approximately $1,162,000 and
the 1997 annual net periodic postretirement benefit cost by approximately
$1,164,000.
F-15
<PAGE> 79
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Administrative costs related to indemnity plans were assumed to increase at
a constant annual rate of 6% for 1997, 1996 and 1995. The assumed discount rate
used in estimating the accumulated postretirement benefit obligation was 7%,
7.5% and 8% for 1997, 1996 and 1995, respectively.
The Company's postemployment benefit obligation, representing certain
disability benefits at the St. Louis Post-Dispatch, was $3,174,000 and
$2,466,000 at December 31, 1997 and 1996, respectively.
9. INCOME TAXES
Provisions for income taxes (benefits) consist of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal................................................... $41,389 $33,465 $28,352
State and local........................................... 7,035 5,750 $ 3,541
Deferred:
Federal................................................... (2,878) (805) (1,641)
State and local........................................... (489) (138) (206)
------- ------- -------
Total................................................ $45,057 $38,272 $30,046
======= ======= =======
</TABLE>
Factors causing the effective tax rate to differ from the statutory Federal
income tax rate were:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Statutory rate.............................................. 35% 35% 35%
Favorable resolution of prior year federal and state tax
issues.................................................... (1)
Amortization of intangibles................................. 2 1
State and local income taxes, net of U.S. Federal income tax
benefit................................................... 4 4 3
Other-net................................................... 1
-- -- --
Effective rate....................................... 41% 40% 38%
== == ==
</TABLE>
The Company's deferred tax assets and liabilities, net, which have been
included in other assets in the statements of consolidated financial position
consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Pensions and employee benefits............................ $11,403 $ 9,575
Postretirement benefit costs.............................. 19,248 19,284
Other..................................................... 1,561 2,110
------- -------
Total................................................ 32,212 30,969
------- -------
Deferred tax liabilities:
Depreciation.............................................. 19,583 19,590
Amortization.............................................. 7,765 9,882
------- -------
Total................................................ 27,348 29,472
------- -------
Net deferred tax asset...................................... $ 4,864 $ 1,497
======= =======
</TABLE>
F-16
<PAGE> 80
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company had no valuation allowance for deferred tax assets as of
December 31, 1997, 1996 and 1995.
10. STOCKHOLDERS' EQUITY
Each share of the Company's common stock is entitled to one vote and each
share of Class B common stock is entitled to ten votes on all matters. As of
December 31, 1997, holders of outstanding shares of Class B common stock
representing 95.5% of the combined voting power of the Company have deposited
their shares in a voting trust (the "Voting Trust"). Each share of the Company's
Class B common stock is convertible into one share of the Company's common stock
at the holder's option subject to the limitations imposed by the Voting Trust on
the shares of Class B common stock deposited thereunder. The Voting Trust
permits the conversion of the Class B common stock deposited in the Voting Trust
into common stock in connection with certain permitted transfers, including,
without limitation, sales which are exempt from the registration requirements of
the Securities Act of 1933, as amended, sales which meet the volume and manner
of sale requirements of Rule 144 promulgated thereunder and sales which are made
pursuant to registered public offerings.
The trustees generally hold all voting rights with respect to the shares of
Class B common stock subject to the Voting Trust; however, in connection with
certain matters, including any proposal for a merger, consolidation,
recapitalization or dissolution of the Company or disposition of all or
substantially all its assets, the calling of a special meeting of stockholders
and the removal of directors, the Trustees may not vote the shares deposited in
the Voting Trust except in accordance with written instructions from the holders
of the Voting Trust Certificates. The Voting Trust may be terminated with the
written consent of holders of two-thirds in interest of all outstanding Voting
Trust Certificates. Unless extended or terminated by the parties thereto, the
Voting Trust expires on January 16, 2001.
On September 12, 1996, the Board of Directors declared a four-for-three
stock split of the Company's common and Class B common stock payable in the form
of a 33.3% stock dividend. The dividend was distributed on November 1, 1996 to
stockholders of record on October 10, 1996. The Company's capital balances and
share amounts were adjusted in 1996 to reflect the split.
On January 4, 1995, the Board of Directors declared a five-for-four stock
split of the Company's common and Class B common stock payable in the form of a
25% stock dividend. The dividend was distributed on January 24, 1995 to
stockholders of record on January 13, 1995. Even though this stock split was
declared subsequent to December 31, 1994, the Company's capital balances and
share amounts were adjusted in 1994 to reflect the split.
11. COMMON STOCK PLANS
On May 11, 1994, the Company's stockholders adopted the Pulitzer Publishing
Company 1994 Stock Option Plan (the "1994 Plan"), replacing the Pulitzer
Publishing Company 1986 Employee Stock Option Plan (the "1986 Plan"). The 1994
Plan provides for the issuance to key employees and outside directors of
incentive stock options to purchase up to a maximum of 2,500,000 shares of
common stock. Under the 1994 Plan, options to purchase 1,667 shares of common
stock will be automatically granted to outside directors on the date following
each annual meeting of the Company's stockholders and will vest on the date of
the next annual meeting of the Company's stockholders. Total shares available
for issue to outside directors under this automatic grant feature are limited to
a maximum of 166,667. The issuance of all other options will be administered by
the Compensation Committee of the Board of Directors, subject to the 1994 Plan's
terms and conditions. Specifically, the exercise price per share may not be less
than the fair market value of a share of common stock at the date of grant. In
addition, exercise periods may not exceed ten years and the minimum vesting
period is established at six months from the date of grant. Option awards to an
individual employee may not exceed 250,000 shares in a calendar year.
F-17
<PAGE> 81
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Prior to 1994, the Company issued incentive stock options to key employees
under the 1986 Plan. As provided by the 1986 Plan, certain option awards were
granted with tandem stock appreciation rights which allow the employee to elect
an alternative payment equal to the appreciation of the stock value instead of
exercising the option. Outstanding options issued under the 1986 Plan have an
exercise term of ten years from the date of grant and vest in equal installments
over a three-year period.
Stock option transactions are summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES PRICE RANGE PRICE
------ ----------- --------
<S> <C> <C> <C>
Common Stock Options:
Outstanding, January 1, 1995............................. 1,198,371 $ 9.27 - $21.98 $16.69
Granted (weighted average value at grant date of
$13.99)............................................. 192,853 $30.47 - $34.41 $34.31
Canceled............................................... (39,632) $11.73 - $21.98 $16.69
Exercised.............................................. (158,304) $ 9.27 - $21.98 $14.71
---------
Outstanding, December 31, 1995........................... 1,193,288 $ 9.27 - $34.41 $19.80
Granted (weighted average value at grant date of
$16.01)............................................. 179,809 $41.91 - $46.25 $46.03
Canceled............................................... (2,146) $21.53 - $34.41 $28.77
Exercised.............................................. (140,096) $ 9.27 - $21.98 $15.47
---------
Outstanding, December 31, 1996........................... 1,230,855 $ 9.27 - $46.25 $24.11
Granted (weighted average value at grant date of
$20.23)............................................. 211,231 $45.63 - $58.81 $58.41
Canceled............................................... (14,235) $21.53 - $47.38 $38.91
Exercised.............................................. (201,920) $ 9.27 - $46.25 $16.34
---------
Outstanding, December 31, 1997........................... 1,225,931 $ 9.27 - $58.81 $31.13
=========
Exercisable at:
December 31, 1996...................................... 855,445 $ 9.27 - $34.41 $18.19
=========
December 31, 1997...................................... 849,565 $ 9.27 - $46.25 $22.21
=========
Shares Available for Grant at December 31, 1997.......... 1,712,004
=========
</TABLE>
Stock appreciation right transactions are summarized as follows:
<TABLE>
<CAPTION>
SHARES PRICE
------ -----
<S> <C> <C>
Common Stock Appreciation Rights:
Outstanding, January 1, 1995.............................. 37,584 $14.87
Canceled.................................................. (10,183) $14.87
Exercised................................................. (27,401) $14.87
-------
Outstanding, December 31, 1995, 1996 and 1997............. --
=======
</TABLE>
On May 11, 1994, the Company's stockholders also adopted the Pulitzer
Publishing Company 1994 Key Employees' Restricted Stock Purchase Plan (the "1994
Stock Plan") which replaced the Pulitzer Publishing Company 1986 Key Employees'
Restricted Stock Purchase Plan ("1986 Stock Plan"). The 1994 Stock Plan provides
that an employee may receive, at the discretion of the Compensation Committee, a
grant or right to purchase at a particular price, shares of common stock subject
to restrictions on transferability. A maximum of 416,667 shares of common stock
may be granted or purchased by employees. In addition, no more than 83,333
shares of common stock may be issued to an employee in any calendar year.
F-18
<PAGE> 82
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Prior to 1994, the Company granted stock awards under the 1986 Stock Plan.
For grants awarded under both the 1994 and 1986 Stock Plans, compensation
expense is recognized over the vesting period of the grants. Stock Purchase Plan
transactions are summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED
SHARES PRICE RANGE AVERAGE PRICE
------ ----------- -------------
<S> <C> <C> <C>
Common Stock Grants:
Outstanding, January 1, 1995........... 4,236 $20.25 - $21.38 $20.89
Granted................................ 8,880 $24.53 $24.53
Vested................................. (7,460) $20.25 - $24.53 $23.93
-------
Outstanding, December 31, 1995......... 5,656 $20.25 - $24.53 $22.60
Granted................................ 2,093 $36.70 $36.70
Vested................................. (1,864) $20.25 - $24.53 $22.12
-------
Outstanding, December 31, 1996......... 5,885 $20.25 - $36.70 $27.78
Granted................................ 1,468 $47.44 $47.44
Canceled............................... (1,393) $20.25 - $47.44 $33.13
Vested................................. (2,272) $20.25 - $36.70 $25.56
-------
Outstanding, December 31, 1997......... 3,688 $21.38 - $47.44 $34.95
=======
Shares Available for Grant at December
31, 1997............................... 400,776
=======
</TABLE>
As required by SFAS 123, the Company has estimated the fair value of its
option grants since December 31, 1994 by using the binomial options pricing
model with the following assumptions:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Expected Life (years).................................... 7 7 7
Risk-free interest rate.................................. 5.8% 6.4% 5.7%
Volatility............................................... 23.6% 22.5% 19.6%
Dividend yield........................................... 1.1% 1.2% 1.3%
</TABLE>
As discussed in Note 1, the Company accounts for its stock option grants in
accordance with APB 25, resulting in the recognition of no compensation expense
in the consolidated statements income. Had compensation expense been computed on
the fair value of the option awards at their grant date, consistent
F-19
<PAGE> 83
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
with the provisions of SFAS 123, the Company's income from continuing operations
and earnings per share would have been reduced to the pro forma amounts below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Net income:
As reported............................................... $66,028 $57,500 $49,322
Pro forma................................................. $64,487 $56,820 $49,288
Basic earnings per share:
As reported............................................... $ 2.99 $ 2.62 $ 2.26
Pro forma................................................. $ 2.92 $ 2.59 $ 2.26
Diluted earnings per share:
As reported............................................... $ 2.94 $ 2.58 $ 2.23
Pro forma................................................. $ 2.87 $ 2.55 $ 2.23
</TABLE>
Because the provisions of SFAS 123 have not been applied to options granted
prior to January 1, 1995, the pro forma compensation cost may not be
representative of compensation cost to be incurred on a pro forma basis in
future years.
On April 24, 1997, the Company's stockholders approved the adoption of the
Pulitzer Publishing Company 1997 Employee Stock Purchase Plan (the "Plan"). The
Plan allows eligible employees to authorize payroll deductions for the quarterly
purchase of the Company's Common Stock ("Common Stock") at a price generally
equal to 85 percent of the Common Stock's fair market value at the end of each
quarter. The Plan began operations as of July 1, 1997. In general, other than
Michael E. Pulitzer, all employees of the Company and its subsidiaries are
eligible to participate in the Plan after completing at least one year of
service. Subject to appropriate adjustment for stock splits and other capital
changes, the Company may sell a total of 500,000 shares of its Common Stock
under the Plan. Shares sold under the Plan may be authorized and unissued or
held by the Company in its treasury. The Company may purchase shares for resale
under the Plan.
12. EARNINGS PER SHARE
Weighted average shares of common and Class B common stock and potential
common shares used in the calculation of basic and diluted earnings per share
are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Weighted average shares outstanding (Basic EPS)............. 22,110 21,926 21,800
Stock options............................................... 342 347 297
------ ------ ------
Weighted average shares outstanding and stock options
(Diluted EPS)............................................. 22,452 22,273 22,097
====== ====== ======
</TABLE>
Stock options included in the Diluted EPS calculation were determined using
the treasury stock method. Under the treasury stock method and SFAS 128,
outstanding stock options are dilutive when the average market price of the
Company's common stock exceeds the option price during a period. In addition,
proceeds from the assumed exercise of dilutive options along with the related
tax benefit are assumed to be used to repurchase common shares at the average
market price of such stock during the period.
F-20
<PAGE> 84
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. COMMITMENTS AND CONTINGENCIES
At December 31, 1997, the Company and its subsidiaries had construction and
equipment commitments of approximately $13,779,000 and commitments for program
contracts payable and license fees of approximately $30,025,000.
The Company is an investor in three limited partnerships requiring future
capital contributions. As of December 31, 1997, the Company's unfunded capital
contribution commitment related to these investments was approximately
$13,863,000.
The Company and its subsidiaries are involved, from time to time, in
various claims and lawsuits incidental to the ordinary course of its business,
including such maters as libel, slander and defamation actions and complaints
alleging discrimination. While the results of litigation cannot be predicted,
management believes the ultimate outcome of such existing litigation will not
have a material adverse effect on the consolidated financial statements of the
Company and its subsidiaries.
In connection with the September 1986 purchase of Pulitzer Class B common
stock from certain selling stockholders (the "1986 Selling Stockholders"),
Pulitzer agreed, under certain circumstances, to make an additional payment to
the 1986 Selling Stockholders in the event of a Gross-Up Transaction (as defined
herein). A "Gross-Up Transaction" was defined to mean, among other transactions,
(i) any merger, in any transaction or series of related transactions, of more
than 85 percent of the voting securities or equity of Pulitzer pursuant to which
holders of Pulitzer common stock receive securities other than Pulitzer common
stock and (ii) any recapitalization, dividend or distribution, or series of
related recapitalizations, dividends or distributions, in which holders of
Pulitzer common stock receive securities (other than Pulitzer common stock)
having a Fair Market Value (as defined herein) of not less than 33 1/3 percent
of the Fair Market Value of the shares of Pulitzer common stock immediately
prior to such transaction. The amount of the additional payment, if any, would
equal (x) the product of (i) the amount by which the Transaction Proceeds (as
defined herein) exceeds the Imputed Value (as defined herein) multiplied by (ii)
the applicable percentage (i.e., 50 percent for the period from May 13, 1996
through May 12, 2001) multiplied by (iii) the number of shares of Pulitzer
common stock issuable upon conversion of the shares of Pulitzer Class B common
stock owned by the 1986 Selling Stockholders, adjusted for, among other things,
stock dividends and stock splits; less (y) the sum of any additional payments
previously received by the 1986 Selling Stockholders; provided, however, that in
the event of any recapitalization, dividend or distribution, the amount by which
the Transaction Proceeds exceeds the Imputed Value shall not exceed the amount
paid or distributed pursuant to such recapitalization, dividend or distribution
in respect of one share of Pulitzer common stock.
The term "Transaction Proceeds" was defined to mean, in the case of a
merger, the aggregate Fair Market Value (as defined herein) of the consideration
received pursuant thereto by the holder of one share of Pulitzer common stock,
and, in the case of a recapitalization, dividend or distribution, the aggregate
Fair Market Value of the amounts paid or distributed in respect of one share of
Pulitzer common stock plus the aggregate Fair Market Value of one share of
Pulitzer common stock following such transaction. The "Imputed Value" for one
share of Pulitzer common stock on a given date was defined to mean an amount
equal to $28.82 compounded annually from May 12, 1986 to such given date at the
rate of 15 percent per annum, the result of which is $154.19 at May 12, 1998.
There was no specific provision for adjustment of the $28.82 amount, but if it
were adjusted to reflect all stock dividends and stock splits of Pulitzer since
September 30, 1986, it would now equal $15.72, which if compounded annually from
May 12, 1986 at the rate of 15 percent per annum would now equal $84.11.
"Fair Market Value," in the case of any consideration other than cash
received in a Gross-Up Transaction, was defined to mean the fair market value
thereof as agreed to by a valuation firm selected by Pulitzer and a valuation
firm selected by the 1986 Selling Stockholders, or, if the two valuation firms
do not agree on the fair market value, the fair market value of such
consideration as determined by a third valuation
F-21
<PAGE> 85
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
firm chosen by the two previously selected valuation firms. Any such agreement
or determination shall be final and binding on the parties.
As a result of the foregoing, the amount of additional payments, if any,
that may be payable by New Pulitzer with respect to the Merger and the
Distribution cannot be determined at this time. However, if the Distribution
were determined to be a Gross-Up Transaction and if the Fair Market Value of the
Transaction Proceeds with respect to the Merger and the Distribution were
determined to exceed the Imputed Value, then the additional payments to the 1986
Selling Stockholders would equal approximately $5.9 million for each $1.00 by
which the Transaction Proceeds exceed the Imputed Value. Accordingly, depending
on the ultimate resolution of the meaning and application of various provisions
of the Gross-Up Transaction agreements, including the determination of Imputed
Value and Fair Market Value of the Transaction Proceeds, in the opinion of
Pulitzer's management, the amount of an additional payment, if any, could be
material to the consolidated financial statements of Pulitzer.
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has estimated the following fair value amounts for its
financial instruments using available market information and appropriate
valuation methodologies. However, considerable judgment is required in
interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts.
Cash and Cash Equivalents, Accounts Receivable, Accounts Payable and
Program Contracts Payable -- The carrying amounts of these items are a
reasonable estimate of their fair value.
Long-Term Debt -- Interest rates that are currently available to the
Company for issuance of debt with similar terms and remaining maturities are
used to estimate fair value. The fair value estimates of the Company's long-term
debt as of December 31, 1997 and 1996 were $195,969,000 and $259,958,000,
respectively.
The fair value estimates presented herein are based on pertinent
information available to management as of December 31, 1997 and 1996. Although
management is not aware of any facts that would significantly affect the
estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date, and current
estimates of fair value may differ from the amounts presented herein.
F-22
<PAGE> 86
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
15. BUSINESS SEGMENTS
The Company's operations are divided into two business segments, publishing
and broadcasting. The following is a summary of operations, assets and other
data.
<TABLE>
<CAPTION>
AS OF AND FOR THE YEARS
ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Operating Revenues:
Publishing(a)............................................. $357,969 $309,096 $269,388
Broadcasting.............................................. 227,016 224,992 202,939
-------- -------- --------
Total............................................. $584,985 $534,088 $472,327
======== ======== ========
Operating Income (Loss):
Publishing(a)............................................. $ 47,544 $ 32,577 $ 25,393
Broadcasting.............................................. 82,180 83,246 65,939
Corporate................................................. (6,007) (5,532) (4,666)
-------- -------- --------
Total............................................. $123,717 $110,291 $ 86,666
======== ======== ========
Total Assets:
Publishing(a)............................................. $364,360 $351,685 $141,441
Broadcasting.............................................. 255,847 259,114 253,252
Corporate................................................. 62,749 73,052 100,380
-------- -------- --------
Total............................................. $682,956 $683,851 $495,073
======== ======== ========
Capital Expenditures:
Publishing(a)............................................. $ 15,215 $ 6,433 $ 6,627
Broadcasting.............................................. 12,976 11,354 16,307
-------- -------- --------
Total............................................. $ 28,191 $ 17,787 $ 22,934
======== ======== ========
Depreciation & Amortization:
Publishing(a)............................................. $ 13,007 $ 8,660 $ 4,307
Broadcasting.............................................. 23,447 22,442 22,843
-------- -------- --------
Total............................................. $ 36,454 $ 31,102 $ 27,150
======== ======== ========
Operating Margins
(Operating income to revenues):
Publishing(a)(b).......................................... 18.7% 15.1% 14.1%
Broadcasting.............................................. 36.2% 37.0% 32.5%
</TABLE>
- -------------------------
(a) Publishing information for 1997 and 1996 includes Scripps League Newspapers,
Inc. (subsequently renamed Pulitzer Community Newspapers, Inc.), which was
acquired on July 1, 1996. (see Note 4)
(b) Operating margins for publishing are stated with St. Louis Agency adjustment
(which is recorded as an operating expense in the accompanying consolidated
financial statements) added back to publishing operating income.
F-23
<PAGE> 87
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
16. QUARTERLY FINANCIAL DATA (UNAUDITED)
Operating results for the years ended December 31, 1997 and 1996 by
quarters are as follows:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- ------- ------- ------- -----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
1997
Operating Revenues -- Net:................. $136,006 $151,398 $141,244 $156,337 $584,985
======== ======== ======== ======== ========
Net income................................. $ 12,495 $ 19,681 $ 14,223 $ 19,629 $ 66,028
======== ======== ======== ======== ========
Basic earnings per share of stock (Note
12):
Earnings per share....................... $ 0.57 $ 0.89 $ 0.64 $ 0.88 $ 2.99
======== ======== ======== ======== ========
Weighted average shares outstanding...... 22,029 22,081 22,151 22,185 22,110
======== ======== ======== ======== ========
Diluted earnings per share of stock (Note
12):
Earnings per share....................... $ 0.56 $ 0.88 $ 0.63 $ 0.87 $ 2.94
======== ======== ======== ======== ========
Weighted average shares outstanding...... 22,378 22,413 22,489 22,526 22,452
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- ------- ------- ------- -----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
1996
Operating revenues -- net:................. $115,706 $127,574 $138,865 $151,943 $534,088
======== ======== ======== ======== ========
Net income................................. $ 10,241 $ 16,185 $ 12,964 $ 18,110 $ 57,500
======== ======== ======== ======== ========
Basic earnings per share of stock (Note
12):
Earnings per share....................... $ 0.47 $ 0.74 $ 0.59 $ 0.82 $ 2.62
======== ======== ======== ======== ========
Weighted average shares outstanding...... 21,864 21,912 21,949 21,978 21,926
======== ======== ======== ======== ========
Diluted earnings per share of stock (Note
12):
Earnings per share....................... $ 0.46 $ 0.73 $ 0.58 $ 0.81 $ 2.58
======== ======== ======== ======== ========
Weighted average shares outstanding...... 22,191 22,271 22,291 22,291 22,273
======== ======== ======== ======== ========
</TABLE>
In the fourth quarter of 1996, the Company determined that the carrying
value of one of its joint venture investments had been impaired. Accordingly,
the investment was reduced by a $2.7 million adjustment resulting in an
after-tax charge of $1.6 million or $0.07 per share.
Subsequent to the second quarter of 1996, the results of operations of
Scripps League, acquired on July 1, 1996, are included in the Company's
Statements of Consolidated Income (see Note 4).
In the fourth quarter of 1995, a state tax examination was settled
favorably resulting in a reduction of income tax expense of approximately
$900,000, or $0.04 per share for the quarter.
Earnings per share are computed independently for each of the quarters
presented. Therefore, the sum of the quarterly earnings per share may not equal
the total for the year.
17. RESTATEMENT
On October 22, 1998, the Company determined that a change in facts had
occurred concerning a stockholder vote that is required to consummate the
Spin-off and Merger (see Note 2). When the Company entered into the Merger
Agreement on May 25, 1998, the principal stockholders of the Company controlled,
and continue to control, that number of shares of Class B Common Stock
sufficient to approve the Merger
F-24
<PAGE> 88
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
regardless of the vote of any other holders of the Company's Common Stock and
Class B Common Stock. In addition, on May 25, 1998 the principal stockholders of
the Company entered into a voting agreement with Hearst-Argyle (the "Pulitzer
Voting Agreement"), in which they agreed to direct the vote of all their shares
in favor of the Merger and the transactions contemplated by it (including the
Charter Amendment defined below). Consummation of the Merger is also conditioned
upon the passage of an amendment to the Company's restated certificate of
incorporation (the "Charter Amendment"), the approval of which requires the
affirmative vote of the holders of a majority of the outstanding shares of the
Company's Common Stock and the Class B Common Stock voting together as a single
class and the vote of the holders of a majority of the outstanding shares of the
Company's Common Stock voting as a separate class. On May 25, 1998, at the time
of the execution and delivery of the Merger Agreement and the Pulitzer Voting
Agreement, the principal stockholders of the Company had stated to the Company
that they were committed to take such actions as they deemed necessary to
effectuate the Transactions, including (i), on or before the record date for the
Special Meeting of Stockholders of the Company (the "Special Stockholders
Meeting") to be called for the purpose of voting upon the Merger and the Charter
Amendment, the conversion of that number of their shares of Class B Common Stock
into shares of Common Stock as would constitute a majority of the Company's then
issued and outstanding shares of Common Stock and (ii) to vote those shares of
Common Stock at the Special Stockholders Meeting in accordance with the
provisions of the Pulitzer Voting Agreement. Based upon the facts that existed
on May 25, 1998, and continued to exist through October 21, 1998, the Company
determined that it was appropriate to report the Broadcasting Business as
discontinued operations under Accounting Principles Board Opinion 30, "Reporting
the Results of Operations -- Reporting the Effects of Disposal of a Segment of a
Business and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions" ("APB 30"). On October 22, 1998, the principal stockholders
advised the Company that they had not converted, and did not deem it necessary
to convert on or before the record date for the Special Stockholders Meeting,
that number of shares of the Company's Class B Common Stock as would constitute
a majority of the then issued and outstanding shares of the Company's Common
Stock. Accordingly, based upon this change in facts (i.e., even though the
principal stockholders of the Company intend to vote all their shares in favor
of the Charter Amendment upon which the Spin-off and Merger are conditioned,
they alone will not be in a position at the Special Stockholders Meeting to
approve the Charter Amendment), the Company determined that it would no longer
be appropriate under APB 30 to report the Broadcasting Business as discontinued
operations in the Company's consolidated financial statements. As a result, the
Company's financial statements as of December 31, 1997 and 1996 and for the
years ended December 31, 1997, 1996 and 1995 have been restated from the amounts
previously reported (in Exhibit 99-1 to the Company's Current Report on Form 8-K
dated September 4, 1998) to now reflect the Broadcasting Business as a part of
continuing operations of the Company. Such restatement results in the
reclassification of amounts related to the Broadcasting Business previously
reflected as discontinued operations in the consolidated financial statements
but does not change the Company's previously reported amounts for consolidated
net income, total earnings per share and stockholders' equity.
F-25
<PAGE> 89
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the significant effects of the restatement if as follows:
<TABLE>
<CAPTION>
AT DECEMBER 31, 1997 AT DECEMBER 31, 1996
--------------------- ---------------------
AS AS
PREVIOUSLY AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Total current assets............................... $114,603 $174,609 $114,711 $172,140
Properties -- net.................................. 74,797 161,814 67,038 155,932
Total intangibles and other assets................. 274,911 346,533 245,433 355,779
Total assets....................................... 464,311 682,956 427,182 683,851
Total current liabilities.......................... 38,733 75,287 35,783 76,810
Long-term debt..................................... -- 172,705 -- 235,410
Pension obligations................................ 21,165 26,709 19,266 23,415
Postretirement and postemployment benefit
obligations...................................... 89,350 91,906 89,634 92,252
Other long-term obligations........................ 4,246 5,572 3,795 6,027
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
1997 1996 1995
--------------------- --------------------- ---------------------
AS AS AS
PREVIOUSLY AS PREVIOUSLY AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
---------- -------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Total operating revenues............. $357,969 $584,985 $309,096 $534,088 $269,388 $472,327
Total operating expenses............. 316,432 461,268 282,051 423,797 248,661 385,661
Operating income..................... 41,537 123,717 27,045 110,291 20,727 86,666
Income from continuing operations.... 25,750 66,028 14,792 57,500 14,455 49,322
Income from discontinued
operations......................... 40,278 -- 42,708 -- 34,867 --
BASIC EARNINGS PER SHARE OF STOCK:
Continuing operations............ $1.17 $2.99 $0.67 $2.62 $0.66 $2.26
Discontinued operations.......... 1.82 -- 1.95 -- 1.60 --
DILUTED EARNINGS PER SHARE OF STOCK:
Continuing operations............ $1.15 $2.94 $0.66 $2.58 $.65 $2.23
Discontinued operations.......... 1.79 -- 1.92 -- 1.58 --
</TABLE>
* * * * * *
F-26
<PAGE> 90
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Pulitzer Publishing Company:
We have audited the consolidated financial statements of Pulitzer
Publishing Company and its subsidiaries as of December 31, 1997 and 1996, and
for each of the three years in the period ended December 31, 1997, and have
issued our report thereon dated February 6, 1998 (July 17, 1998 as to paragraphs
1, 2, 3 and 5 of Note 2 and paragraphs 3 through 7 of Note 13; November 25, 1998
as to paragraph 4 of Note 2; and December 11, 1998 as to Note 17); such report
is included elsewhere in this Registration Statement on Form 10/A. Our audits
also included the consolidated financial statement schedule II of Pulitzer
Publishing Company and its subsidiaries. This financial statement schedule is
the responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such consolidated financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
DELOITTE & TOUCHE LLP
Saint Louis, Missouri
February 6, 1998
(July 17, 1998 as to
paragraphs 1, 2, 3 and 5 of
Note 2 and paragraphs 3 through
7 of Note 13; November 25,
1998 as to paragraph 4 of Note 2;
and December 11, 1998 as to Note 17)
F-27
<PAGE> 91
SCHEDULE II
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
SCHEDULE II -- VALUATION & QUALIFYING ACCOUNTS & RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 & 1995
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS & OTHER AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
----------- ---------- ---------- ---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1997
Valuation Accounts:
Allowance for Doubtful Accounts........ $2,576 $1,468 $178(a) $1,811(b) $2,411
Reserves:
Accrued Medical Plan................... 389 4,714 0 4,060(c) 1,043
Workers Compensation................... 2,126 1,199 0 1,368 1,957
YEAR ENDED DECEMBER 31, 1996
Valuation Accounts:
Allowance for Doubtful Accounts........ $2,009 $2,131 $321(a) $1,885(b) $2,576
Reserves:
Accrued Medical Plan................... 561 4,198 0 4,370(c) 389
Workers Compensation................... 2,005 1,478 0 1,357 2,126
YEAR ENDED DECEMBER 31, 1995
Valuation Accounts:
Allowance for Doubtful Accounts........ $2,135 $1,538 $247(a) $1,911(b) $2,009
Reserves:
Accrued Medical Plan................... 789 4,907 0 5,135(c) 561
Workers Compensation................... 2,327 1,192 0 1,514 2,005
</TABLE>
- -------------------------
(a) -- Accounts reinstated, cash recoveries, etc.
(b) -- Accounts written off
(c) -- Amount represents:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Claims paid................................. $3,596 $3,830 $4,660
Service fees................................ 473 579 548
Cash refunds................................ (9) (39) (73)
------ ------ ------
$4,060 $4,370 $5,135
====== ====== ======
</TABLE>
* * * * *
F-28
<PAGE> 92
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1998 1997
---- ----
(UNAUDITED)
(IN THOUSANDS, EXCEPT
EARNINGS PER SHARE DATA)
<S> <C> <C>
Operating Revenues -- Net:
Publishing:
Advertising............................................... $178,245 $168,245
Circulation............................................... 66,194 65,762
Other..................................................... 30,768 29,639
Broadcasting.............................................. 173,681 165,002
-------- --------
Total operating revenues.......................... 448,888 428,648
-------- --------
Operating expenses:
Publishing operations..................................... 111,667 106,437
Broadcasting operations................................... 54,313 51,502
Selling, general and administrative....................... 144,720 140,447
St. Louis Agency adjustment............................... 15,926 14,749
Depreciation and amortization............................. 26,750 27,435
-------- --------
Total operating expenses............................... 353,376 340,570
-------- --------
Operating income.......................................... 95,512 88,078
Interest income........................................... 3,541 3,476
Interest expense.......................................... (10,255) (12,553)
Net other expense......................................... (1,303) (867)
-------- --------
Income before provision for income taxes.................... 87,495 78,134
Provision for income taxes.................................. 35,422 31,735
-------- --------
Net income.................................................. $ 52,073 $ 46,399
======== ========
Basic earnings per share of stock:
Earnings per share........................................ $ 2.33 $ 2.10
======== ========
Weighted average number of shares outstanding............. 22,343 22,088
======== ========
Diluted earnings per share of stock:
Earnings per share........................................ $ 2.29 $ 2.07
======== ========
Weighted average number of shares outstanding............. 22,726 22,427
======== ========
</TABLE>
See notes to consolidated financial statements.
F-29
<PAGE> 93
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 107,291 $ 62,749
Trade accounts receivable (less allowance for doubtful
accounts of $2,751 and $2,411).......................... 78,663 85,882
Inventory................................................. 2,427 5,265
Prepaid expenses and other................................ 8,764 12,847
Program rights............................................ 10,283 7,866
--------- ---------
Total current assets.................................... 207,428 174,609
--------- ---------
Properties:
Land...................................................... 15,904 16,154
Buildings................................................. 87,112 84,215
Machinery and equipment................................... 232,832 225,113
Construction in progress.................................. 14,420 7,324
--------- ---------
Total................................................... 350,268 332,806
Less accumulated depreciation............................. 186,605 170,992
--------- ---------
Properties -- net....................................... 163,663 161,814
--------- ---------
Intangible and other assets:
Intangible assets -- net of applicable amortization....... 277,148 287,617
Receivable from The Herald Company........................ 37,339 39,733
Other..................................................... 29,308 19,183
--------- ---------
Total intangible and other assets....................... 343,795 346,533
--------- ---------
Total.............................................. $ 714,886 $ 682,956
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable.................................... $ 15,947 $ 16,158
Current portion of long-term debt......................... 12,705 12,705
Salaries, wages and commissions........................... 13,198 15,232
Income taxes payable...................................... 881 3,070
Program contracts payable................................. 9,846 7,907
Interest payable.......................................... 2,088 5,677
Acquisition payable....................................... 9,804 9,804
Other..................................................... 8,078 4,734
--------- ---------
Total current liabilities............................... 72,547 75,287
--------- ---------
Long-term debt.............................................. 160,000 172,705
--------- ---------
Pension obligations......................................... 28,682 26,709
--------- ---------
Postretirement and postemployment
Benefit obligations....................................... 91,495 91,906
--------- ---------
Other long-term liabilities................................. 6,224 5,572
--------- ---------
Commitments and contingencies...............................
Stockholders' equity:
Preferred stock, $.01 par value; 25,000,000 shares
authorized; issued and outstanding -- none
Common stock, $.01 par value; 100,000,000 shares
authorized; issued -- 7,116,359 in 1998 and 6,797,895 in
1997.................................................... 71 68
Class B common stock, convertible, $.01 par value;
50,000,000 shares authorized; issued -- 27,083,630 in
1998 and 27,125,247 in 1997............................. 271 271
Additional paid-in capital................................ 142,077 135,542
Retained earnings......................................... 401,492 362,828
--------- ---------
Total................................................... 543,911 498,709
Treasury stock -- at cost; 25,519 and 24,660 shares of
common stock in 1998 and 1997, respectively, and
11,700,850 shares of Class B common stock in 1998 and
1997.................................................... (187,973) (187,932)
--------- ---------
Total stockholders' equity.............................. 355,938 310,777
--------- ---------
Total.............................................. $ 714,886 $ 682,956
========= =========
</TABLE>
See notes to consolidated financial statements.
F-30
<PAGE> 94
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
1998 1997
---- ----
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 52,073 $ 46,399
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation........................................... 16,508 17,273
Amortization of intangibles............................ 10,242 10,162
Changes in assets and liabilities (net of the effects
of the purchase and sale of properties) which provided
(used) cash:
Trade accounts receivable............................ 7,219 3,005
Inventory............................................ 2,838 (659)
Other assets......................................... 2,464 (7,605)
Trade accounts payable and other liabilities......... (4,874) (2,057)
Income taxes payable................................. (2,189) (184)
-------- --------
Net cash provided by operating activities................... 84,281 66,334
-------- --------
Cash flows from investing activities:
Capital expenditures...................................... (19,364) (19,097)
Purchase of publishing properties......................... (2,051)
Purchase of broadcast assets.............................. (2,936)
Investment in limited partnerships........................ (4,788) (4,175)
Sale of publishing property............................... 2,590
Decrease in notes receivable.............................. 111 4,976
-------- --------
Net cash used in investing activities....................... (23,502) (21,232)
-------- --------
Cash flows from financing activities:
Repayments on long-term debt.............................. (12,705) (50,705)
Dividends paid............................................ (10,029) (8,599)
Proceeds from exercise of stock options................... 5,521 3,108
Proceeds from employee stock purchase plan................ 1,017
Purchase of treasury stock................................ (41) (28)
-------- --------
Net cash used in financing activities....................... (16,237) (56,224)
-------- --------
Net increase (decrease) in cash and cash equivalents........ 44,542 (11,122)
Cash and cash equivalents at beginning of year.............. 62,749 73,052
-------- --------
Cash and cash equivalents at end of period.................. $107,291 $ 61,930
======== ========
</TABLE>
See notes to consolidated financial statements.
F-31
<PAGE> 95
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ACCOUNTING POLICIES
Basis of Consolidation -- The consolidated financial statements include the
accounts of Pulitzer Publishing Company (the "Company" or "Pulitzer") and its
subsidiary companies, all of which are wholly-owned. All significant
intercompany transactions have been eliminated from the consolidated financial
statements.
Interim Adjustments -- In the opinion of management, the accompanying
unaudited consolidated financial statements contain all adjustments, consisting
only of normal recurring adjustments, necessary to present fairly the Company's
financial position as of September 30, 1998, and results of operations and cash
flows for the nine-month periods ended September 30, 1998 and 1997. These
financial statements should be read in conjunction with the audited consolidated
financial statements and related notes thereto included elsewhere in this
Registration Statement on Form 10/A. Results of operations for interim periods
are not necessarily indicative of the results to be expected for the full year.
Fiscal Year and Fiscal Quarters -- The Company's fiscal year and third
fiscal quarter end on the Sunday coincident with or prior to December 31 and
September 30, respectively. For ease of presentation, the Company has used
December 31 as the year end and September 30 as the third quarter end.
Earnings Per Share of Stock -- Basic earnings per share of stock is
computed using the weighted average number of common and Class B common shares
outstanding during the applicable period. Diluted earnings per share of stock is
computed using the weighted average number of common and Class B common shares
outstanding and potential common shares (outstanding stock options). Weighted
average shares of common and Class B common stock and potential common shares
used in the calculation of basic and diluted earnings per share are summarized
as follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30,
----------------
1998 1997
---- ----
(IN THOUSANDS)
<S> <C> <C>
Weighted average shares outstanding (Basic EPS)............. 22,343 22,088
Stock options............................................... 383 339
------ ------
Weighted average shares outstanding and stock options
(Diluted EPS)............................................. 22,726 22,427
====== ======
</TABLE>
Stock options included in the diluted earnings per share calculation were
determined using the treasury stock method. Under the treasury stock method,
outstanding stock options are dilutive when the average market price of the
Company's common stock exceeds the option price during a period. In addition,
proceeds from the assumed exercise of dilutive options along with the related
tax benefit are assumed to be used to repurchase common shares at the average
market price of such stock during the period.
Comprehensive Income -- In June 1997, the Financial Accounting Standards
Board issued statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income. This statement established standards for the reporting and
display of Comprehensive Income and its components. This statement is required
to be implemented in financial statements issued for periods ending after
December 15, 1997. For the nine-month periods ended September 30, 1998 and 1997,
the Company did not incur items to be reported in "Comprehensive Income" that
were not already included in reported "net income". As a result, comprehensive
income and net income were the same for these periods.
Reclassifications -- Certain reclassifications have been made to the 1997
consolidated financial statements to conform with the 1998 presentation.
F-32
<PAGE> 96
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. SPIN-OFF AND MERGER
On May 25, 1998, the Company, Pulitzer Inc., (a wholly-owned subsidiary of
the Company ("New Pulitzer")), and Hearst-Argyle Television, Inc.
("Hearst-Argyle") entered into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which Hearst-Argyle will acquire the Company's
television and radio broadcasting operations (collectively, the "Broadcasting
Business"). The Broadcasting Business consists of nine network-affiliated
television stations and five radio stations owned and operated by Pulitzer
Broadcasting Company ("PBC"), a wholly-owned subsidiary of the Company, and its
wholly-owned subsidiaries. The Broadcasting Business will be acquired by
Hearst-Argyle through the merger ("Merger") of the Company into Hearst-Argyle.
Prior to the Spin-off (as defined below), the Company intends to borrow
$700 million, which may be secured by the assets and/or stock of PBC and its
subsidiaries. Out of the proceeds of this new debt, the Company will pay the
existing Company debt and any costs arising as a result of the Merger and
related transactions. Prior to the Merger, the balance of the proceeds of this
new debt, together with the Company's publishing assets and liabilities, will be
contributed by the Company to New Pulitzer pursuant to a Contribution and
Assumption Agreement (the "Contribution"). Pursuant to the Merger Agreement,
Hearst-Argyle will assume the new debt following the consummation of the
Spin-off and Merger.
Immediately following the Contribution, the Company will distribute to each
holder of Company Common Stock one fully-paid and nonassessable share of New
Pulitzer Common Stock for each share of Company Common Stock held and to each
holder of Company Class B Common Stock one fully-paid and nonassessable share of
New Pulitzer Class B Common Stock for each share of Company Class B Common Stock
held (the "Distribution"). The Contribution and Distribution are collectively
referred to as the "Spin-off." The Spin-off and the Merger are collectively
referred to as the "Transactions."
Consummation of the Transactions is subject, among other things, to the
receipt of various regulatory approvals, Pulitzer stockholder approval of the
Charter Amendment (as defined in Note 7), and approval of the Merger by the
stockholders of both the Company and Hearst-Argyle. The Company has received a
favorable letter ruling from the Internal Revenue Service confirming that the
Spin-off will be tax-free to Pulitzer stockholders. Early termination of the
initial waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of
1976 has also been granted. In addition, the Federal Communications Commission
(the "FCC") has published notice of its grant of the application for the
transfer of FCC licenses, including related waiver requests, from the Company to
Hearst-Argyle. The Company anticipates that its special stockholders meeting to
consider the Charter Amendment and the Merger will be held in the first quarter
of 1999 and that the Transactions will be completed shortly after the meeting.
Following the consummation of the Transactions, New Pulitzer will be
engaged primarily in the business of newspaper publishing and related new media
businesses. For financial reporting purposes, New Pulitzer is the continuing
stockholder interest and will retain the Pulitzer name.
3. DIVIDENDS
In the first quarter of 1998, two dividends of $0.15 per share were
declared, payable on February 2, 1998 and May 1, 1998. In the second quarter of
1998, a dividend of $0.15 per share was declared, payable on August 3, 1998. In
the third quarter of 1998, a dividend of $0.15 per share was declared, payable
on November 2, 1998.
In the first quarter of 1997, two dividends of $0.13 per share were
declared, payable on February 3, 1997 and May 1, 1997. In the second quarter of
1997, a dividend of $0.13 per share was declared, payable on August 1, 1997. In
the third quarter of 1997, a dividend of $0.13 per share was declared, payable
on November 1, 1997.
F-33
<PAGE> 97
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. BUSINESS SEGMENTS
The Company's operations are divided into two business segments, publishing
and broadcasting. The following is a summary of operating data by segment (in
thousands):
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
1998 1997
-------- ----
<S> <C> <C>
Operating revenues:
Publishing............................................. $275,207 $263,646
Broadcasting........................................... 173,681 165,002
-------- --------
Total............................................... $448,888 $428,648
======== ========
Operating income (loss):
Publishing............................................. $ 35,385 $ 35,157
Broadcasting........................................... 64,086 57,131
Corporate.............................................. (3,959) (4,210)
-------- --------
Total............................................... $ 95,512 $ 88,078
======== ========
Depreciation and amortization:
Publishing............................................. $ 10,238 $ 9,813
Broadcasting........................................... 16,512 17,622
-------- --------
Total............................................... $ 26,750 $ 27,435
======== ========
Operating margins
(Operating income to revenues):
Publishing(a).......................................... 18.6% 18.9%
Broadcasting........................................... 36.9% 34.6%
</TABLE>
- -------------------------
(a) Operating margins for publishing stated with St. Louis Agency adjustment
added back to publishing operating income.
5. COMMITMENTS AND CONTINGENCIES
At September 30, 1998, the Company and its subsidiaries had construction
and equipment commitments of approximately $12,342,000. The Company's commitment
for broadcasting program contracts payable and license fees at September 30,
1998 was approximately $17,908,000.
The Company is an investor in two limited partnerships requiring future
capital contributions. As of September 30, 1998, the Company's unfunded capital
contribution commitment related to these investments was approximately
$9,075,000.
The Company and its subsidiaries are involved, from time to time, in
various claims and lawsuits incidental to the ordinary course of its business,
including such maters as libel, slander and defamation actions and complaints
alleging discrimination. While the results of litigation cannot be predicted,
management believes the ultimate outcome of such existing litigation will not
have a material adverse effect on the consolidated financial statements of the
Company and its subsidiaries.
In connection with the September 1986 purchase of Pulitzer Class B common
stock from certain selling stockholders (the "1986 Selling Stockholders"),
Pulitzer agreed, under certain circumstances, to make an additional payment to
the 1986 Selling Stockholders in the event of a Gross-Up Transaction (as defined
herein). A "Gross-Up Transaction" was defined to mean, among other transactions,
(i) any merger, in any transaction or series of related transactions, of more
than 85 percent of the voting securities or equity of
F-34
<PAGE> 98
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Pulitzer pursuant to which holders of Pulitzer common stock receive securities
other than Pulitzer common stock and (ii) any recapitalization, dividend or
distribution, or series of related recapitalizations, dividends or
distributions, in which holders of Pulitzer common stock receive securities
(other than Pulitzer common stock) having a Fair Market Value (as defined
herein) of not less than 33 1/3 percent of the Fair Market Value of the shares
of Pulitzer common stock immediately prior to such transaction. The amount of
the additional payment, if any, would equal (x) the product of (i) the amount by
which the Transaction Proceeds (as defined herein) exceeds the Imputed Value (as
defined herein) multiplied by (ii) the applicable percentage (i.e., 50 percent
for the period from May 13, 1996 through May 12, 2001) multiplied by (iii) the
number of shares of Pulitzer common stock issuable upon conversion of the shares
of Pulitzer Class B common stock owned by the 1986 Selling Stockholders,
adjusted for, among other things, stock dividends and stock splits; less (y) the
sum of any additional payments previously received by the 1986 Selling
Stockholders; provided, however, that in the event of any recapitalization,
dividend or distribution, the amount by which the Transaction Proceeds exceeds
the Imputed Value shall not exceed the amount paid or distributed pursuant to
such recapitalization, dividend or distribution in respect of one share of
Pulitzer common stock.
The term "Transaction Proceeds" was defined to mean, in the case of a
merger, the aggregate Fair Market Value (as defined herein) of the consideration
received pursuant thereto by the holder of one share of Pulitzer common stock,
and, in the case of a recapitalization, dividend or distribution, the aggregate
Fair Market Value of the amounts paid or distributed in respect of one share of
Pulitzer common stock plus the aggregate Fair Market Value of one share of
Pulitzer common stock following such transaction. The "Imputed Value" for one
share of Pulitzer common stock on a given date was defined to mean an amount
equal to $28.82 compounded annually from May 12, 1986 to such given date at the
rate of 15 percent per annum, the result of which is $154.19 at May 12, 1998.
There was no specific provision for adjustment of the $28.82 amount, but if it
were adjusted to reflect all stock dividends and stock splits of Pulitzer since
September 30, 1986, it would now equal $15.72, which if compounded annually from
May 12, 1986 at the rate of 15 percent per annum would now equal $84.11.
"Fair Market Value," in the case of any consideration other than cash
received in a Gross-Up Transaction, was defined to mean the fair market value
thereof as agreed to by a valuation firm selected by Pulitzer and a valuation
firm selected by the 1986 Selling Stockholders, or, if the two valuation firms
do not agree on the fair market value, the fair market value of such
consideration as determined by a third valuation firm chosen by the two
previously selected valuation firms. Any such agreement or determination shall
be final and binding on the parties.
As a result of the foregoing, the amount of additional payments, if any,
that may be payable by New Pulitzer with respect to the Merger and the
Distribution cannot be determined at this time. However, if the Distribution
were determined to be a Gross-Up Transaction and if the Fair Market Value of the
Transaction Proceeds with respect to the Merger and the Distribution were
determined to exceed the Imputed Value, then the additional payments to the 1986
Selling Stockholders would equal approximately $5.9 million for each $1.00 by
which the Transaction Proceeds exceed the Imputed Value. Accordingly, depending
on the ultimate resolution of the meaning and application of various provisions
of the Gross-Up Transaction agreements, including the determination of Imputed
Value and Fair Market Value of the Transaction Proceeds, in the opinion of
Pulitzer's management, the amount of an additional payment, if any, could be
material to the consolidated financial statements of Pulitzer.
6. SUBSEQUENT EVENT
On October 30, 1998, the Company acquired, in a purchase transaction, Troy
Daily News, Inc., the publisher of a daily afternoon and Sunday morning
newspaper located in Troy, Ohio, for approximately $20 million.
F-35
<PAGE> 99
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. RESTATEMENT
On October 22, 1998, the Company determined that a change in facts had
occurred concerning a stockholder vote that is required to consummate the
Spin-off and Merger (see Note 2). When the Company entered into the Merger
Agreement on May 25, 1998, the principal stockholders of the Company controlled,
and continue to control, that number of shares of Class B Common Stock
sufficient to approve the Merger regardless of the vote of any other holders of
the Company's Common Stock and Class B Common Stock. In addition, on May 25,
1998 the principal stockholders of the Company entered into a voting agreement
with Hearst-Argyle (the "Pulitzer Voting Agreement"), in which they agreed to
direct the vote of all their shares in favor of the Merger and the transactions
contemplated by it (including the Charter Amendment defined below). Consummation
of the Merger is also conditioned upon the passage of an amendment to the
Company's restated certificate of incorporation (the "Charter Amendment"), the
approval of which requires the affirmative vote of the holders of a majority of
the outstanding shares of the Company's Common Stock and the Class B Common
Stock voting together as a single class and the vote of the holders of a
majority of the outstanding shares of the Company's Common Stock voting as a
separate class. On May 25, 1998, at the time of the execution and delivery of
the Merger Agreement and the Pulitzer Voting Agreement, the principal
stockholders of the Company had stated to the Company that they were committed
to take such actions as they deemed necessary to effectuate the Transactions,
including (i), on or before the record date for the Special Meeting of
Stockholders of the Company (the "Special Stockholders Meeting") to be called
for the purpose of voting upon the Merger and the Charter Amendment, the
conversion of that number of their shares of Class B Common Stock into shares of
Common Stock as would constitute a majority of the Company's then issued and
outstanding shares of Common Stock and (ii) to vote those shares of Common Stock
at the Special Stockholders Meeting in accordance with the provisions of the
Pulitzer Voting Agreement. Based upon the facts that existed on May 25, 1998,
and continued to exist through October 21, 1998, the Company determined that it
was appropriate to report the Broadcasting Business as discontinued operations
under Accounting Principles Board Opinion 30, "Reporting the Results of
Operations -- Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions" ("APB
30"). On October 22, 1998, the principal stockholders advised the Company that
they had not converted, and did not deem it necessary to convert on or before
the record date for the Special Stockholders Meeting, that number of shares of
the Company's Class B Common Stock as would constitute a majority of the then
issued and outstanding shares of the Company's Common Stock. Accordingly, based
upon this change in facts (i.e., even though the principal stockholders of the
Company intend to vote all their shares in favor of the Charter Amendment upon
which the Spin-off and Merger are conditioned, they alone will not be in a
position at the Special Stockholders Meeting to approve the Charter Amendment),
the Company determined that it would no longer be appropriate under APB 30 to
report the Broadcasting Business as discontinued operations in the Company's
consolidated financial statements. As a result, the Company's financial
statements as of September 30, 1998 and for the three-month and nine-month
periods ended September 30, 1998 and 1997 (included in Item 1 of the Company's
Report on Form 10-Q, as filed with the Securities and Exchange Commission on
November 12, 1998) have been restated from the amounts previously reported to
now reflect the Broadcasting Business as a part of continuing operations of the
Company. Such restatement results in the reclassification of amounts related to
the Broadcasting Business previously reflected as discontinued operations in the
consolidated financial statements but does not change the Company's previously
reported amounts for consolidated net income, total earnings per share and
stockholders' equity.
F-36
<PAGE> 100
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the significant effects of the restatement is as follows:
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1998
----------------------
AS
PREVIOUSLY AS
REPORTED RESTATED
---------- --------
<S> <C> <C>
Total current assets..................................... $153,970 $207,428
Properties -- net........................................ 80,857 163,663
Total intangibles and other assets....................... 273,338 343,795
Total assets............................................. 508,165 714,886
Total current liabilities................................ $ 37,671 $ 72,547
Long-term debt........................................... -- 160,000
Pension obligations...................................... 22,092 28,682
Postretirement and postemployment benefit obligations.... 88,784 91,495
Other long-term obligations.............................. 3,680 6,224
</TABLE>
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------
1998 1997
---------------------- ----------------------
AS AS
PREVIOUSLY AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Total operating revenues.............. $275,207 $448,888 $263,646 $428,648
Total operating expenses.............. 243,781 353,376 232,699 340,570
Operating income...................... 31,426 95,512 30,947 88,078
Income from continuing operations..... 19,276 52,073 19,242 46,399
Income from discontinued operations... 32,797 -- 27,157 --
BASIC EARNINGS PER SHARE OF STOCK:
Continuing operations................. $ 0.86 $ 2.33 $ 0.87 $ 2.10
Discontinued operations............... 1.47 -- 1.23 --
DILUTED EARNINGS PER SHARE OF STOCK:
Continuing operations................. $ 0.85 $ 2.29 $ 0.86 $ 2.07
Discontinued operations............... 1.44 -- 1.21 --
</TABLE>
* * * * * *
F-37
<PAGE> 1
EXHIBIT 3.1.2
RESTATED CERTIFICATE OF INCORPORATION
OF
PULITZER INC.
* * * *
PULITZER INC., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware (the "GCL")
DOES HEREBY CERTIFY THAT:
FIRST: The name of the Corporation is Pulitzer Inc. and the date of filing
of its original Certificate of Incorporation with the Secretary of State of the
State of Delaware (the "Secretary of State") was May 22, 1998.
SECOND: The Board of Directors of the Corporation, by unanimous written
consent pursuant to Section 141(f) of the GCL, adopted resolutions proposing and
declaring advisable that the Certificate of Incorporation of the Corporation be
restated and amended and directing submission of the following resolution to the
sole stockholder of the Corporation for its consideration thereof.
RESOLVED, that the text of the Certificate of Incorporation be restated and
amended as follows:
<PAGE> 2
"ARTICLE I
NAME
The name of the corporation is Pulitzer Inc. (hereinafter referred to as
the "Corporation").
ARTICLE II
AGENT FOR SERVICE
The name and address of the Corporation's agent for service of process in
Delaware is:
The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware
County of New Castle
ARTICLE III
CAPITAL
(1) Classes and Number of Shares.
The total number of shares of all classes of stock which the Corporation
shall have authority to issue is 300,000,000 shares. The classes and the
aggregate number of shares of stock of each class which the Corporation shall
have authority to issue are as follows:
A. 100,000,000 shares of Common Stock, $0.01 par value ("Common Stock").
B. 100,000,000 shares of Class B Common Stock, $0.01 par value ("Class B
Common Stock").
C. 100,000,000 shares of Preferred Stock, $0.01 par value ("Preferred
Stock").
(2) Powers and Rights of the Common Stock and the Class B Common Stock.
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A. Voting Rights and Powers. Except as otherwise provided in this Restated
Certificate of Incorporation or required by law, with respect to all matters
upon which stockholders are entitled to vote, the holders of the outstanding
shares of Common Stock and the holders of any outstanding shares of Class B
Common Stock shall vote together with the holders of any other outstanding
shares of voting capital stock of the Corporation, without regard to class, and
every holder of outstanding shares of Common Stock shall be entitled to cast
thereon one vote in person or by proxy for each share of Common Stock standing
in his name, and every holder of the outstanding shares of Class B Common Stock
shall be entitled to cast thereon ten votes in person or by proxy for each share
of Class B Common Stock standing in his name. The holders of shares of Common
Stock shall have the relevant class voting rights set forth in Article XIV.
B. Dividends and Distributions.
(i) Except as otherwise expressly provided in clause (ii) of this Section
(2)B, at any time shares of Class B Common Stock are outstanding, as and when
dividends or other distributions payable in either cash, capital stock of the
Corporation (other than Common Stock or Class B Common Stock) or other property
of the Corporation may be declared by the Board of Directors, the amount of any
such dividend payable on each share of Common Stock shall in all cases be equal
to the amount of such dividend payable on each share of Class B Common Stock,
and the amount of any such dividend payable on each share of Class B Common
Stock shall in all cases be equal to the amount of the dividend payable on each
share of Common Stock. Dividends and distributions payable in shares of Class B
Common Stock may not be made on or to shares of any class of the Corporation's
capital stock other than the Class B Common Stock, and dividends payable in
shares of Common Stock may not be made on or to shares of any class of the
Corporation's capital stock other than the Common Stock. If a dividend or
distribution payable in shares of Common Stock shall be made on the shares of
Common Stock, a dividend or distribution payable in shares of Class B Common
Stock shall be made simultaneously on the shares of Class B Common Stock, and
the number of shares of Class B Common Stock payable on each share of Class B
Common Stock pursuant to such dividend or distribution shall be equal to the
number of shares of Common Stock payable on each share of Common Stock pursuant
to such dividend or distribution.
(ii) In the case of any dividend or other distribution payable in stock of
any corporation which immediately prior to the time of such dividend or other
distribution is a wholly-owned subsidiary of the Corporation and which possesses
authority to issue shares of capital stock with voting characteristics
substantially similar to those of the shares of Common Stock and Class B Common
Stock, respectively, provided in this Restated Certificate of Incorporation (an
"Article III(2)B Subsidiary"), including a distribution pursuant to a stock
dividend or division or split-up of the shares of the Corporation, (X) only
shares of capital stock of an Article III(2)B Subsidiary with voting
characteristics substantially similar to those of the Class B Common Stock
("Article III(2)B Subsidiary Class B Common Stock") shall be distributed with
respect to shares of Class B Common Stock and only shares of capital stock of an
Article III(2)B Subsidiary with voting characteristics substantially similar to
those of the Common Stock ("Article III(2)B Subsidiary
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Common Stock") shall be distributed with respect to shares of Common Stock; (Y)
the number of shares of Article III(2)B Subsidiary Class B Common Stock payable
on each share of Class B Common Stock pursuant to such dividend or other
distribution shall be equal to the number of shares of Article III(2)B
Subsidiary Common Stock payable on each share of Common Stock pursuant to such
dividend or other distribution; and (Z) such dividends or other distributions of
shares of Article III(2)B Subsidiary Common Stock and Article III(2)B Subsidiary
Class B Common Stock shall be made simultaneously.
C. Distribution of Assets Upon Liquidation. In the event the Corporation
shall be liquidated, dissolved or wound up, whether voluntarily or
involuntarily, after there shall have been paid or set aside for the holders of
all shares of the Preferred Stock then outstanding the full preferential amounts
to which they are entitled under the resolutions authorizing the issuance of
such Preferred Stock, the net assets of the Corporation remaining thereafter
shall be divided among the holders of the Common Stock and Class B Common Stock
in such a manner that the amount of such net assets distributed to each share of
Common Stock shall be equal to the amount of such net assets distributed to each
share of Class B Common Stock.
D. Issuance of the Class B Common Stock. Class B Common Stock may only be
issued (i) in accordance with and pursuant to the terms of that certain
Agreement and Plan of Merger among Pulitzer Publishing Company, a Delaware
corporation which immediately prior to the filing of this Restated Certificate
of Incorporation owned all of the issued and outstanding shares of capital stock
of the Corporation ("Pulitzer Publishing"), the Corporation and Hearst-Argyle
Television, Inc. (as amended, the "Merger Agreement") or (ii) in the form of a
distribution or distributions pursuant to a stock dividend or division or
split-up of the shares of Class B Common Stock and only then in respect of the
issued shares of Class B Common Stock.
E. Restrictions on Transfer of Class B Common Stock.
(i) No record holder of shares of Class B Common Stock (each a "Class B
Holder") may transfer, and the Corporation shall not register the transfer of,
any shares of Class B Common Stock, whether by sale, assignment, gift, bequest,
appointment or otherwise, except (X) in accordance with and pursuant to the
terms of the Merger Agreement or (Y) to a Permitted Transferee (each a
"Permitted Transfer"). The term Permitted Transferee has the following meanings
with respect to each Class B Holder:
(a) The following persons shall be "Permitted Transferees" of each Class B
Holder who is a natural person:
1. The spouse or former spouse of such Class B Holder; any Original
Holder (as defined in clause (iii) of this Section (2)E) or the spouse or
former spouse of any Original Holder; any lineal descendant of any Original
Holder or of the spouse or former spouse of any Original
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Holder; and any spouse or former spouse of such lineal descendant
(hereinafter such Class B Holder's "Family Members");
2. The trustee or trustees of a voting trust of which a Controlling
Number (as defined in clause (iii) of this Section (2)E) of such trustees
are any of the following (each a "Qualified Person"): (i) such Class B
Holder, (ii) one of such Class B Holder's Family Members, (iii) an
executive officer (as defined in Rule 3b-7 of the General Rules and
Regulations under the Exchange Act, as in effect on December 31, 1998) of
the Corporation or any wholly-owned subsidiary of the Corporation, (iv) a
director of the Corporation, or (v) any person who is the duly designated
initial or subsequent successor of an Original Holder in accordance with
the terms of such voting trust;
3. The trustee or trustees of a trust (other than a voting trust)
solely for the benefit of such Class B Holder or one or more of such Class
B Holder's Permitted Transferees described in each subclause of this clause
(a) other than subclause (2) or this subclause (3);
4. Any organization contributions to which are deductible for federal
income, estate or gift tax purposes or any split interest trust described
in Section 4947 of the Internal Revenue Code as it may from time to time be
amended, and of which a Controlling Number of the members of the Board of
Directors or other governing body or group having the ultimate authority,
inter alia, to vote, dispose or direct the voting or disposition of the
shares of Class B Common Stock held by such organization ("Governing Body")
are Qualified Persons (a "Charitable Organization");
5. A corporation of which a majority of the outstanding shares of
capital stock entitled to vote generally for the election of directors is
beneficially owned by, or a partnership of which a majority of the
partnership interests entitled to participate in the management of the
partnership are beneficially owned by, or a limited liability company of
which a majority of the membership interests entitled to participate in the
management of the limited liability company are beneficially owned by, such
Class B Holder or his or her Permitted Transferees described in each
subclause of this clause (a) other than this subclause (5); and
6. If the Class B Holder is deceased, bankrupt or insolvent, the
estate of such Class B Holder.
(b) In the case of one or more Class B Holders holding shares of Class
B Common Stock as trustees pursuant to a voting trust or any other trust
(other than
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a Charitable Organization or a trust described in clause (d) below) as a result
of a Permitted Transfer, "Permitted Transferee" means, with respect to each
share of Class B Common Stock so transferred to such trustees, (X) any person
who transferred such share of Class B Common Stock to such trustees and (Y) any
Permitted Transferee of any such transferor, and, with respect to each
Subsequent Class B Share (as defined in clause (iii) of this Section (2)E) held
by such trustees, any person who is a Permitted Transferee with respect to the
share of Class B Common Stock in respect of which such Subsequent Class B Share
was issued.
(c) In the case of one or more Class B Holders holding shares of Class B
Common Stock as trustees pursuant to a trust (other than a voting trust or a
Charitable Organization) in effect immediately prior to the issuance of shares
of Class B Common Stock in accordance with this Section (2)D, "Permitted
Transferee" means (X) with respect to each share of Class B Common Stock so
held, (i) any person who originally established the trust and any person who
would be a Permitted Transferee thereof, (ii) any Original Holder or a Permitted
Transferee thereof and (iii) any person to whom or for whose benefit any portion
of the principal of the trust may be distributed either during or at the end of
the term of such trust whether by power of appointment or otherwise and (Y) with
respect to each Subsequent Class B Share so held, any person who is a Permitted
Transferee with respect to the share of Class B Common Stock in respect of which
such Subsequent Class B Share was issued.
(d) In the case of any Charitable Organization that is a Class B Holder,
"Permitted Transferee" means, (X) with respect to any share of Class B Common
Stock transferred to such Charitable Organization in a Permitted Transfer, the
transferor in such Permitted Transfer and any Permitted Transferee of such
transferor and (Y) with respect to each Subsequent Class B Share held by such
Charitable Organization, any person who is a Permitted Transferee with respect
to the share of Class B Common Stock in respect of which such Subsequent Class B
Share was issued.
(e) In the case of a Class B Holder that is a corporation, partnership or
limited liability company (other than a Charitable Organization) holding shares
of Class B Common Stock as a result of a Permitted Transfer, "Permitted
Transferee" means with respect to each share of Class B Common Stock so
transferred to such corporation, partnership or limited liability company (X)
any person who transferred such share of Class B Common Stock to such
corporation, partnership or limited liability company and (Y) any Permitted
Transferee of any such transferor, and, with respect to each Subsequent Class B
Share held by such corporation, partnership or limited liability company, any
person who is a Permitted Transferee with respect to the share of Class B Common
Stock in respect of which such Subsequent Class B Share was issued.
(f) In the case of a Class B Holder that is the estate of a deceased,
bankrupt or insolvent Class B Holder, "Permitted Transferee" means a Permitted
Transferee of such deceased, bankrupt or insolvent Class B Holder.
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(ii) Notwithstanding anything to the contrary set forth herein, any Class B
Holder may (X) transfer shares of Class B Common Stock to any person who or
which would have been a "Permitted Transferee" of shares of Class B Common Stock
of Pulitzer Publishing in accordance with and pursuant to the terms of that
certain Restated Certificate of Incorporation of Pulitzer Publishing, dated
December 4, 1986, filed with the Secretary of State of Delaware on December 8,
1986 and in effect on December 31, 1998 and (Y) pledge shares of Class B Common
Stock to a pledgee pursuant to a bona fide pledge of such shares as collateral
security for indebtedness due to the pledgee, provided that such shares shall
not be transferred to or registered in the name of the pledgee and shall remain
subject to the provisions of this Section (2)E. In the event of foreclosure or
other similar action with respect to such shares by the pledgee, such pledged
shares of Class B Common Stock may only be transferred to a Permitted Transferee
of the pledgor or converted into shares of Common Stock, as the pledgee may
elect.
(iii) For purposes of this Section (2)E:
(a) The term "Controlling Number" means the minimum number of trustees, in
the case of a trust, or members of a Governing Body, in the case of any other
form of entity, whose affirmative vote is necessary to take any action on, or
whose negative vote, abstention or failure to attend is sufficient to prevent
any action with respect to the voting or disposition of shares of capital stock
held by such entity;
(b) The term "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(c) The term "Original Holder" means any person to whom or to which
Pulitzer Publishing distributed and transferred shares of Class B Common Stock
of the Corporation in accordance with and pursuant to the terms of the Merger
Agreement.
(d) The term "Subsequent Class B Share" means any share of Class B Common
Stock issued by the Corporation to a Class B Holder in respect of an existing
share of Class B Common Stock held by such Class B Holder.
(e) The relationship of any person that is derived by or through legal
adoption shall be considered a natural one.
(f) A minor for whom shares of Class B Common Stock are held pursuant to
the Uniform Gifts to Minors Act, as in effect in any state, or any similar law,
shall be considered a Class B Holder.
(g) Unless otherwise specified, the term "person" means both natural
persons and legal entities.
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(h) Without derogating from the election conferred upon the Corporation
pursuant to paragraph (iv) below, each reference to a corporation shall include
any successor corporation resulting from merger or consolidation; each reference
to a partnership shall include any successor partnership resulting from the
death or withdrawal of a partner; and each reference to a limited liability
company shall include any successor legal entity resulting from merger or
consolidation.
(i) The term "beneficial owner" has the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act, as in
effect on December 31, 1998.
(j) All references to "spouse or former spouse" shall include a deceased
spouse.
(iv) If at any time after the effective date of this Restated Certificate
of Incorporation, any of the following events shall occur:
(a) A Controlling Number of the trustees of any voting trust that is a
Class B Holder shall cease to be Qualified Persons;
(b) A Controlling Number of the Governing Body of any Charitable
Organization that is a Class B Holder shall cease to be Qualified Persons; or
(c) A corporation, partnership or limited liability company that first
became a Class B Holder as a result of a Permitted Transfer shall thereafter by
reason of any transfer of the beneficial ownership of the capital stock,
partnership interests or membership interests thereof cease to be a Permitted
Transferee of the transferor in such Permitted Transfer;
then, at any time after the occurrence of any such event, upon the election
of the Corporation given by written notice to the trustees of such voting trust,
Charitable Organization, corporation, partnership or limited liability company,
as the case may be, without further action on anyone's part, each share of Class
B Common Stock held by such entity shall be converted into one share of Common
Stock, effective upon the giving of such notice, and the stock certificates
formerly representing the shares of Class B Common Stock held by such entity
shall thereupon and thereafter be deemed to represent such shares of Common
Stock.
(v) Anything contained in this Section (2)E to the contrary
notwithstanding:
(a) Shares of Class B Common Stock may be registered in the names of more
than one person only if each person in whose name the shares of Class B Common
Stock are to be registered is a Permitted Transferee of each such other person.
If shares of Class B Common Stock are registered in the names of more than one
person in accordance with this
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subclause (a), then any subsequent transfer of such shares of Class B Common
Stock to any Permitted Transferee of any person in whose name such shares are
registered shall be a Permitted Transfer.
(b) Any transfer of shares of Class B Common Stock to the Corporation or
any wholly-owned subsidiary of the Corporation, to an employee benefit plan
established and maintained by the Corporation or any wholly-owned subsidiary of
the Corporation or to any trustee or fiduciary with respect to any such plan in
such capacity shall be a Permitted Transfer, and the Corporation or any
wholly-owned subsidiary of the Corporation and any such plan, trustee or
fiduciary shall be a Permitted Transferee of any Class B Holder.
(vi) Any purported transfer of record or beneficial ownership of shares of
Class B Common Stock other than in accordance with the terms of this Section
(2)E shall, without any action on anyone's part, result in the conversion of
each share of the purportedly transferred share of Class B Common Stock into one
share of Common Stock effective on the date of such purported transfer, and the
stock certificates formerly representing such shares of Class B Common Stock
shall thereupon and thereafter be deemed to represent such number of shares of
Common Stock.
(vii) Shares of Class B Common Stock shall be issued to or registered in
the names of the beneficial owners thereof and not in "street" or "nominee"
name. The Corporation may, in connection with preparing a list of stockholders
entitled to vote at any meeting of stockholders, or as a condition to the
transfer or the registration of shares of Class B Common Stock on the
Corporation's books, require the furnishing of such affidavits or other proof as
it deems necessary to establish that the registered owner of such shares is in
fact the beneficial owner of such shares. Notwithstanding the foregoing, shares
of Class B Common Stock may be issued to or registered in the name(s) of the
trustee(s) of any trust who or which is a Permitted Transferee.
(viii) The Corporation shall note on the certificates for shares of Class B
Common Stock that the shares represented by such certificates are subject to the
restrictions on transfer and registration of transfer imposed by this Section
(2)E.
F. Conversion of the Class B Common Stock. Each share of the Class B Common
Stock may at any time be converted at the election of the holder thereof into
one share of the Common Stock. Any holder of shares of Class B Common Stock may
elect to convert any or all of such shares at one time or at various times in
such holder's discretion. Such right shall be exercised by the surrender of the
certificate representing each share of Class B Common Stock to be converted to
the Corporation at its principal executive offices, accompanied by a written
notice of the election by the holder thereof to convert and (if so required by
the Corporation) by instruments of transfer, in form satisfactory to the
Corporation, duly executed by such holder or his duly authorized attorney. The
issuance of a certificate or certificates for shares of the Common Stock upon
conversion of shares of Class B Common Stock shall be made without charge for
any stamp or other similar tax in respect of such issuance. However, if any such
certificate or certificates for
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shares of Common Stock is or are to be issued in a name other than that of the
holder of the shares of Class B Common Stock to be converted, the person or
persons requesting the issuance thereof shall pay to the Corporation the amount
of any tax which may be payable in respect of any such transfer, or shall
establish to the satisfaction of the Corporation that such tax has been paid. As
promptly as practicable after the surrender for conversion of a certificate or
certificates representing shares of Class B Common Stock and the payment of any
tax as hereinabove provided, the Corporation will deliver to, or upon the
written order of, the holder of such certificate or certificates, a certificate
or certificates representing the number of shares of Common Stock issuable upon
such conversion, issued in such name or names as such holder may direct. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of the surrender of the certificate or certificates
representing shares of Class B Common Stock (or, if on such date the transfer
books of the Corporation shall be closed, then immediately prior to the close of
business on the first date thereafter that said books shall be open), and all
rights of such holder arising from ownership of shares of Class B Common Stock
shall cease at such time, and the person or persons in whose name or names the
certificate or certificates representing shares of Common Stock are to be issued
shall be treated for all purposes as having become the record holder or holders
of such shares of Common Stock at such time and shall have and may exercise all
the rights and powers appertaining thereto. No adjustments in respect of past
cash dividends shall be made upon the conversion of any share of Class B Common
Stock; provided, that, if any shares of Class B Common Stock shall be converted
into shares of Common Stock subsequent to the record date for the payment of a
dividend or other distribution on shares of Class B Common Stock but prior to
such payment, the registered holder of such shares of Class B Common Stock at
the close of business on such record date shall be entitled to receive on the
payment date, with respect to the shares of Common Stock received upon such
conversion, the dividend or other distribution which would have been payable had
such shares of Common Stock been outstanding and held of record on such dividend
record date by the registered holder on such dividend record date of the shares
of Class B Common Stock so converted in lieu of the dividend otherwise payable
on the shares of Class B Common Stock so converted. The Corporation shall at all
times reserve and keep available, solely for the purpose of issuance upon
conversion of outstanding shares of Class B Common Stock, such number of shares
of Common Stock as may be issuable upon the conversion of all such outstanding
shares of Class B Common Stock; provided, that, the Corporation may deliver
shares of Common Stock which are held in the treasury of the Corporation for
shares of Class B Common Stock to be converted. If any share of Common Stock
requires registration with or approval of any governmental authority under any
federal or state law before such share of Common Stock may be issued upon
conversion, the Corporation will endeavor to cause such share to be duly
registered or approved, as the case may be. The Corporation will endeavor to
list shares of Common Stock required to be delivered upon conversion prior to
such delivery upon any national securities exchange or national market system on
which the outstanding shares of Common Stock may be listed at the time of such
delivery. All shares of Common Stock which may be issued upon conversion of
shares of Class B Common Stock will, upon issuance, be fully paid and
nonassessable. The aggregate amount of stated capital represented by shares of
Common Stock issued upon conversion of shares of Class B Common Stock shall be
the same as the aggregate amount of stated capital represented by the shares of
Class B Common Stock so converted.
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G. Mandatory Conversion of Class B Common Stock. At any time when the
aggregate voting power of all outstanding shares of Class B Common Stock as
reflected on the stock transfer books of the Corporation falls below 20% of the
aggregate voting power of all outstanding shares of Common Stock and Class B
Common Stock of the Corporation, or when the Board of Directors and the holders
of a majority of the outstanding shares of Class B Common Stock approve the
conversion of all of the shares of Class B Common Stock into Common Stock, then,
immediately upon the occurrence of either such event, without any action on
anyone's part, the outstanding shares of Class B Common Stock shall be converted
into shares of Common Stock in accordance with Section (2)F above. In the event
of such a conversion, certificates formerly representing outstanding shares of
Class B Common Stock shall thereupon and thereafter be deemed to represent the
number of shares of Common Stock into which such shares of Class B Common Stock
are convertible.
H. Other Rights. Except as otherwise required by the General Corporation
Law of the State of Delaware or as otherwise provided in this Restated
Certificate of Incorporation, each share of Common Stock and each share of Class
B Common Stock shall have identical powers, preferences and rights.
(3) Powers and Rights of the Preferred Stock.
The Preferred Stock may be issued from time to time in one or more series,
with such distinctive serial designations as may be stated or expressed in the
resolution or resolutions providing for the issue of such stock adopted from
time to time by the Board of Directors; and in such resolution or resolutions
providing for the issuance of shares of each particular series, the Board of
Directors is also expressly authorized to fix: the right to vote, if any; the
consideration for which the shares of such series are to be issued; the number
of shares constituting such series, which number may be increased (except as
otherwise fixed by the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time by action of the
Board of Directors; the rate of dividends upon which and the times at which
dividends on shares of such series shall be payable and the preference, if any,
which such dividends shall have relative to dividends on shares of any other
class or classes or any other series of stock of the Corporation; whether such
dividends shall be cumulative or noncumulative, and if cumulative, the date or
dates from which dividends on shares of such series shall be cumulative; the
rights, if any, which the holders of shares of such series shall have in the
event of any voluntary or involuntary liquidation, merger, consolidation,
distribution or sale of assets, dissolution or winding up of the affairs of the
Corporation; the rights, if any, which the holders of shares of such series
shall have to convert such shares into or exchange such shares for shares of any
other class or classes or any other series of stock of the Corporation (other
than shares of Class B Common Stock) and the terms and conditions, including
price and rate of exchange, of such conversion or exchange; whether shares of
such series shall be subject to redemption, and the redemption price or prices
and other terms of redemption, if any, for shares of such series including,
without limitation, a redemption price or prices payable in shares of Common
Stock; the terms and amounts of any sinking fund for the purchase or redemption
of shares of such series; and any and all other powers, preferences and
relative, participating, optional or other special
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rights and qualifications, limitations or restrictions thereof pertaining to
shares of such series permitted by law. The holders of shares of Preferred Stock
shall have the relevant class voting rights set forth in Article XIV.
(4) Issuance of the Common Stock and the Preferred Stock.
The Board of Directors of the Corporation may from time to time authorize
by resolution the issuance of any or all shares of the Common Stock and the
Preferred Stock herein authorized in accordance with the terms and conditions
set forth in this Restated Certificate of Incorporation for such purposes, in
such amounts, to such persons, corporations, or entities, for such
consideration, and in the case of the Preferred Stock, in one or more series,
all as the Board of Directors in its discretion may determine and without any
vote or other action by the stockholders, except as otherwise required by law.
ARTICLE IV
NAME AND ADDRESS OF INCORPORATOR
The name and mailing address of the sole incorporator is as follows:
Richard A. Palmer, Esq.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
ARTICLE V
DIRECTORS
(l) Power of the Board of Directors. The property and business of the
Corporation shall be controlled and managed by or under the direction of its
Board of Directors. In furtherance, and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized:
(a) To make, alter, amend or repeal the By-Laws of the Corporation, but
only in accordance with the provisions of Article XIII; provided, that no
By-Laws hereafter adopted shall invalidate any prior act of the directors that
would have been valid if such By-Laws had not been adopted;
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(b) To determine the rights, powers, duties, rules and procedures that
affect the power of the Board of Directors to manage and direct the property,
business and affairs of the Corporation, including the power to designate and
empower committees of the Board of Directors, to elect, appoint and empower the
officers and other agents of the Corporation, and to determine the time and
place of, and the notice requirements for Board meetings, as well as the manner
of taking Board action; and
(c) To exercise all such powers and do all such acts as may be exercised by
the Corporation, subject to the provisions of the laws of the State of Delaware,
this Restated Certificate of Incorporation, and the By-Laws of the Corporation.
(2) Number and Qualifications of Directors; Classified Board of Directors.
The number of directors constituting the entire Board of Directors shall be
fixed at a number not less than six by, or in the manner provided in, the
By-Laws. The Board of Directors shall be divided into three classes, as nearly
equal in number as possible, with the mode of such classification to be set
forth in the By-Laws. Except as otherwise provided in the By-Laws with respect
to the implementation of this Article V, directors shall be elected to hold
office for a term of three years, with the term of office of one class of
directors expiring each year. As used in this Restated Certificate of
Incorporation, the term "entire Board of Directors" means the total number of
directors fixed by, or in the manner provided in, the By-Laws.
(3) Nominations. Subject to the rights of holders of any series of
Preferred Stock or any other class of capital stock of the Corporation (other
than the Common Stock and the Class B Common Stock) then outstanding,
nominations for the election of directors may be made by the affirmative vote of
a majority of the entire Board of Directors or by any stockholder of record
entitled to vote generally in the election of directors. However, any
stockholder of record entitled to vote generally in the election of directors
desiring to nominate one or more persons for election as directors at any
meeting of stockholders may do so only if written notice of such stockholder's
intent to make such nomination or nominations has been given, either by personal
delivery or by United States mail, postage prepaid, to the Secretary of the
Corporation not less than 50 days nor more than 75 days prior to the meeting;
provided, however, that in the event that less than 60 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the tenth day following the day on which such notice of the
date of meeting was mailed or such public disclosure was made, whichever first
occurs. Each such notice to the Secretary shall set forth: (i) the name and
address of record of the stockholder who intends to make the nomination; (ii) a
representation that the stockholder is a holder of record of shares of capital
stock of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified
in the notice; (iii) the name, age, business and residence addresses, and
principal occupation or employment of each nominee; (iv) a description of all
arrangements or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (v) such other
information regarding each nominee proposed by such
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stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission; and (vi)
the consent of each nominee to serve as a director of the Corporation if so
elected. The Corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as a director of the Corporation.
The presiding officer of the meeting may, if the facts warrant, determine that a
nomination was not made in accordance with the foregoing procedure, and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(4) Vacancies. Subject to the rights of the holders of any series of
Preferred Stock or any other class of capital stock of the Corporation (other
than the Common Stock and the Class B Common Stock) then outstanding, any
vacancies in the Board of Directors for any reason, including by reason of any
increase in the number of directors, shall, if occurring prior to the expiration
of the term of office of the class in which such vacancy occurs, be filled only
by the Board of Directors, acting by the affirmative vote of a majority of the
remaining directors then in office, although less than a quorum, and any
directors so elected shall hold office until the next election of directors.
(5) Removal of Directors. Subject to the rights of the holders of any
series of Preferred Stock or any other class of capital stock of the Corporation
(other than the Common Stock and the Class B Common Stock) then outstanding, (i)
any director, or the entire Board of Directors, may be removed from office at
any time prior to the expiration of his term of office, with or without cause,
only by the affirmative vote of the holders of record of at least 66 2/3% of the
aggregate voting power of all outstanding shares of capital stock of the
Corporation then entitled to vote generally in the election of directors, voting
together as a single class, at a special meeting of stockholders called
expressly for that purpose; and (ii) any director may be removed from office by
the affirmative vote of a majority of the entire Board of Directors, at any time
prior to the expiration of his term of office, as provided by law, in the event
a director fails to meet the qualifications stated in the By-Laws for election
as a director or in the event such director is in breach of any agreement
between such director and the Corporation relating to such director's service as
a director or employee of the Corporation.
ARTICLE VI
DURATION
The Corporation shall have perpetual existence.
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ARTICLE VII
PURPOSES
The nature of the business or purposes to be conducted or promoted by the
Corporation shall be to engage in any lawful act or activity for which a
corporation may be organized under the General Corporation Law of Delaware.
ARTICLE VIII
STOCKHOLDERS' MEETINGS
Special meetings of stockholders of the Corporation may be called only by
(i) the Board of Directors pursuant to a resolution adopted by the affirmative
vote of a majority of the entire Board of Directors, (ii) the Chairman of the
Board, (iii) the Vice Chairman of the Board, (iv) the President, or (v) by the
holders of record of at least 50.1% of the aggregate voting power of all
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, acting together as a single class.
ARTICLE IX
BUSINESS COMBINATIONS
(1) Certain Definitions. For the purposes of this Article:
A. "Affiliate" or "Associate" have the meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on December 31, 1998.
B. "Beneficial Owner" has the meaning ascribed to such term in Rule 13d-3
of the General Rules and Regulations under the Exchange Act, as in effect on
December 31, 1998.
C. "Business Combination" means:
(i) any merger or consolidation of the Corporation or any Subsidiary with
(a) an Interested Stockholder or (b) any other Person (whether or not itself an
Interested Stockholder) which is, or after such merger or consolidation would
be, an Affiliate or Associate of an Interested Stockholder; or
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(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with, or
proposed by or on behalf of, an Interested Stockholder or an Affiliate or
Associate of an Interested Stockholder of any assets of the Corporation or any
Subsidiary including, without limitation, any voting securities of a Subsidiary
having an aggregate Fair Market Value of not less than 1% of the total assets of
the Corporation as reported in the consolidated balance sheet of the Corporation
as of the end of the most recent quarter with respect to which such balance
sheet has been prepared; or
(iii) the issuance or transfer by the Corporation or any Subsidiary (in one
transaction or a series of transactions) of any securities of the Corporation or
any Subsidiary to or with, or proposed by or on behalf of, an Interested
Stockholder or an Affiliate or Associate of an Interested Stockholder in
exchange for cash, securities or other property (or a combination thereof)
having an aggregate Fair Market Value of not less than 1% of the total assets of
the Corporation as reported in the consolidated balance sheet of the Corporation
as of the end of the most recent quarter with respect to which such balance
sheet has been prepared; or
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or any spin-off or split-up of any kind of the
Corporation or any Subsidiary, proposed by or on behalf of an Interested
Stockholder or an Affiliate or Associate of an Interested Stockholder; or
(v) any reclassification of securities (including any reverse stock split),
or recapitalization of the Corporation, or any merger or consolidation of the
Corporation with any Subsidiary or any other transaction (whether or not with or
into or otherwise involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the percentage of the outstanding shares
of (a) any class of equity securities of the Corporation or any Subsidiary or
(b) any class of securities of the Corporation or any Subsidiary convertible
into equity securities of the Corporation or any Subsidiary, represented by
securities of such class which are directly or indirectly owned by an Interested
Stockholder and all of its Affiliates and Associates; or
(vi) any other transaction with an Interested Stockholder or its Affiliates
or Associates which requires the approval of the stockholders under the General
Corporation Law of Delaware; or
(vii) any agreement, contract or other arrangement providing for any one or
more of the actions specified in clauses (i) through (vi) of this Section (1)C.
D. "Fair Market Value" means: (i) in the case of stock, the highest closing
sale price during the 30-day period immediately preceding the date in question
of a share of such stock on the Composite Tape for New York Stock
Exchange-Listed Stocks, or, if such stock is not listed on such Exchange, on the
principal United States securities exchange registered under the Exchange Act on
which such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing sale price, or if closing sale prices are not
reported, the closing bid quotation with
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respect to a share of such stock during the 30-day period preceding the date in
question on the Nasdaq Stock Market, Inc. or any similar interdealer quotation
system then in use, or, if no such quotation is available, the fair market value
on the date in question of a share of such stock as determined by a majority of
the Board of Directors in good faith; and (ii) in the case of property other
than cash or stock, the fair market value of such property on the date in
question as is determined by a majority of the Board of Directors in good faith.
E. "Interested Stockholder" means any Person (other than the Corporation or
any Subsidiary, any employee benefit plan maintained by the Corporation or any
Subsidiary or any trustee or fiduciary with respect to any such plan when acting
in such capacity) who or which:
(i) is, or was at any time within the two-year period immediately prior to
the date in question, the Beneficial Owner of 10% or more of the then
outstanding Voting Stock of the Corporation, provided, however, that any Person
who or which, immediately prior to the effective time of the impending merger
between Pulitzer Publishing and Hearst-Argyle Television, Inc., a Delaware
corporation, is the Beneficial Owner of 10% or more of the outstanding Class B
Common Stock of the Corporation, or the Permitted Transferee of any such Person,
shall not be an Interested Stockholder; or
(ii) is an assignee of, or has otherwise succeeded to, any shares of Voting
Stock of the Corporation of which an Interested Stockholder was the Beneficial
Owner at any time within the two-year period immediately prior to the date in
question, if such assignment or succession shall have occurred in the course of
a transaction, or series of transactions, not involving a public offering within
the meaning of the Securities Act of 1933, as amended.
For the purpose of determining whether a Person is an Interested
Stockholder, the outstanding Voting Stock of the Corporation shall include
unissued shares of Voting Stock of the Corporation of which the Interested
Stockholder is the Beneficial Owner but shall not include any other shares of
Voting Stock of the Corporation which may be issuable pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
warrants or options, or otherwise, to any Person who is not the Interested
Stockholder.
F. A "Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange
Act.
G. "Subsidiary" means any corporation of which the Corporation owns,
directly or indirectly, (i) a majority of the outstanding shares of equity
securities of such corporation, or (ii) shares having a majority of the
aggregate voting power of all outstanding shares of Voting Stock of such
corporation. For the purpose of determining whether a corporation is a
Subsidiary, the outstanding Voting Stock and shares of equity securities thereof
shall include unissued shares of which the Corporation is the Beneficial Owner
but shall not include any other shares of Voting Stock of such corporation which
may be issuable pursuant to any agreement, arrangement or
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understanding, or upon the exercise of conversion rights, warrants, or options,
or otherwise, to any Person other than the Corporation.
H. "Voting Stock" means outstanding shares of capital stock of the relevant
corporation entitled to vote generally in the election of directors.
(2) Vote for Business Combinations. In addition to any affirmative vote
required by law or by this Restated Certificate of Incorporation, unless a
Business Combination shall have been approved by the affirmative vote of not
less than a majority of the entire Board of Directors, any Business Combination
shall require the affirmative vote of the holders of record of at least 66 2/3%
of the aggregate voting power of all outstanding shares of the Voting Stock of
the Corporation, voting together as a single class. Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that a
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(3) Powers of Board of Directors. A majority of the Board of Directors
shall have the power and duty to determine, on the basis of information known to
them after reasonable inquiry, all facts necessary to determine compliance with
this Article, including, without limitation, (A) whether a Person is an
Interested Stockholder, (B) the number of shares of Voting Stock of the
Corporation beneficially owned by any Person, (C) whether a Person is an
Affiliate or Associate of another, and (D) whether the assets which are the
subject of any Business Combination have, or the consideration to be received
for the issuance or transfer of securities by the Corporation or any Subsidiary
in any Business Combination has, an aggregate Fair Market Value of not less than
1% of the total assets of the Corporation as reported in the consolidated
balance sheet of the Corporation as of the end of the most recent quarter with
respect to which such balance sheet has been prepared; and the good faith
determination of a majority of the Board of Directors on such matters shall be
conclusive and binding for all the purposes of this Article.
(4) Amendment, Repeal. Notwithstanding any other provisions of this
Restated Certificate of Incorporation or By-Laws of the Corporation (and
notwithstanding the fact that a lesser percentage may be specified by law, the
other provisions of this Restated Certificate of Incorporation or the By-Laws of
the Corporation), and in addition to any requirement of the General Corporation
Law of Delaware, the affirmative vote of the holders of record of at least 66
2/3% of the aggregate voting power of all outstanding shares of Voting Stock of
the Corporation held by stockholders other than an Interested Stockholder or its
Affiliates or Associates, voting together as a single class, shall be required
to amend or repeal, or to adopt any provisions inconsistent with, this Article
IX; provided, however, that the preceding provision shall not be applicable to
any amendment or repeal or adoption of any provision inconsistent with this
Article IX, and such amendment or repeal or adoption of any provision
inconsistent with this Article IX shall require only such affirmative vote as is
required by law and any other provisions of this Restated Certificate of
Incorporation, if such amendment or repeal or adoption shall have been approved
by a majority vote of the members of the Board of Directors who are not
Interested Stockholders or Affiliates or Associates of Interested Stockholders.
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(5) No Effect on Fiduciary Obligations. Nothing contained in this Article
shall be construed to relieve the members of the Board of Directors or an
Interested Stockholder from any fiduciary obligation imposed by law.
ARTICLE X
DELIBERATIONS OF DIRECTORS
The Board of Directors of the Corporation, when evaluating any offer of
another party to make a tender or exchange offer for any equity security of the
Corporation, to merge or consolidate the Corporation with another corporation or
to purchase or otherwise acquire all or substantially all of the properties and
assets of the Corporation, shall, in connection with the exercise of its
judgment in determining what is in the best interests of the Corporation and its
stockholders, give due consideration to the effect of such a transaction on the
editorial and publishing integrity and the character and quality of the
Corporation's newspaper and other operations, all other relevant factors,
including, without limitation, the social, legal and economic effects on the
employees, customers, suppliers and other affected persons, firms and
corporations and on the communities and geographical areas in which the
Corporation and its subsidiaries operate or are located and on any of the
businesses and properties of the Corporation or any of its subsidiaries, as well
as such other factors as the directors deem relevant.
ARTICLE XI
INDEMNIFICATION
(1) Action Not By or on Behalf of Corporation. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that the person's
conduct was unlawful.
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(2) Action By or on Behalf of Corporation. The Corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that the
person is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by the person in connection with the defense or settlement
of such action or suit if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Delaware Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all of the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper.
(3) Successful Defense. To the extent that a present or former director or
officer of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section (1) or (2) of
this Article XI, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith.
(4) Determination of Right to Indemnification in Certain Circumstances. Any
indemnification under Section (1) or (2) of this Article XI (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the present or former director,
officer, employee or agent is proper in the circumstances because the person has
met the applicable standard of conduct set forth in this Article. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (A) by a majority vote of the
directors who are not parties to such action, suit or proceeding , even though
less than a quorum, or (B) by a committee of such directors designated by
majority vote of such directors, even though less than a quorum, or (C) if there
are no such directors, or if such directors so direct, by independent legal
counsel in a written opinion, or (D) by the stockholders.
(5) Advance Payment of Expenses. Expenses (including attorneys' fees)
incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the Corporation as authorized in
this Article. Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so paid upon such
terms and conditions, if any, as the Corporation deems appropriate.
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(6) Not Exclusive. The indemnification and advancement of expenses provided
by, or granted pursuant to, the other sections of this Article XI shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office. Without limiting the foregoing, the Corporation is authorized to
enter into an agreement with any director, officer, employee or agent of the
Corporation providing indemnification for such person against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement that
result from any threatened, pending or completed action, suit, or proceeding,
whether civil, criminal, administrative or investigative, including any action
by or in the right of the Corporation, that arises by reason of the fact that
such person is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, to the full extent allowed by law, except that no such
agreement shall provide for indemnification for any actions that constitute
fraud, actual dishonesty or willful misconduct.
(7) Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power to
indemnify such person against such liability under the provisions of this
Article XI.
(8) Certain Definitions. For the purposes of this Article XI, (A) any
director, officer, employee or agent of the Corporation who shall serve as a
director, officer, employee or agent of any other corporation, joint venture,
trust or other enterprise of which the Corporation, directly or indirectly, is
or was a stockholder or creditor, or in which the Corporation is or was in any
way interested, or (B) any director, officer, employee or agent of any
subsidiary corporation, joint venture, trust or other enterprise wholly-owned by
the Corporation, shall be deemed to be serving as such director, officer,
employee or agent at the request of the Corporation, unless the Board of
Directors of the Corporation shall determine otherwise. In all other instances
where any person shall serve as a director, officer, employee or agent of
another corporation, joint venture, trust or other enterprise of which the
Corporation is or was a stockholder or creditor, or in which it is or was
otherwise interested, if it is not otherwise established that such person is or
was serving as such director, officer, employee or agent at the request of the
Corporation, the Board of Directors of the Corporation may determine whether
such service is or was at the request of the Corporation, and it shall not be
necessary to show any actual or prior request for such service. For purposes of
this Article XI, references to "the Corporation" shall include, in addition to
the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the
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request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this Article XI with respect
to the resulting or surviving corporation as such person would have with respect
to such constituent corporation if its separate existence had continued. For
purposes of this Article XI, references to "other enterprises" shall include
employee benefit plans; references to "fines" shall include any excise taxes
assessed on a person with respect to any employee benefit plan; and references
to "serving at the request of the Corporation" shall include any service as a
director, officer, employee or agent of the Corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent with respect
to an employee benefit plan, its participants, or beneficiaries; and a person
who acted in good faith and in a manner such person reasonably believed to be in
the interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the Corporation" as referred to in this Article XI.
(9) The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article XI shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(10) The Delaware Court of Chancery shall have exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this Article XI or under any By-Law, agreement, vote of
stockholders or disinterested directors, or otherwise. The Delaware Court of
Chancery may summarily determine the Corporation's obligation to advance
expenses (including attorneys' fees).
(11) A director's liability to the Corporation for breach of duty to the
Corporation or its stockholders shall be limited to the fullest extent permitted
by Delaware law as now in effect or hereafter amended. In particular, no
director of the Corporation shall be personally liable to the Corporation or any
of its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (A) for any breach of the director's duty of
loyalty to the Corporation or its stockholders; (B) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (C) under Section 174 of the Delaware General Corporation Law, as the same
exists or hereafter may be amended; or (D) for any transaction from which the
director derived an improper personal benefit. If the Delaware General
Corporation Law hereafter is amended to authorize the further elimination or
limitation of the liability of directors, then the liability of a director of
the Corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended Delaware
General Corporation Law. Any repeal or modification of this Article by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation existing at the time of such repeal or modification.
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ARTICLE XII
AMENDMENT OF CERTIFICATE
OF INCORPORATION
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate of Incorporation in the manner
now or hereafter prescribed by law, and all rights and powers conferred herein
on stockholders, directors and officers are subject to this reserved power;
provided, that, notwithstanding the fact that a lesser percentage may be
specified by the General Corporation Law of Delaware, the affirmative vote of
the holders of record of at least 66 2/3% of the aggregate voting power of all
outstanding shares of capital stock of the Corporation then entitled to vote
generally in the election of directors, voting together as a single class, shall
be required to amend, alter, change, repeal, or adopt any provision or
provisions inconsistent with, Section (2), (3) or (4) of Article III, Articles
V, VIII, IX, XI, XIII, XIV or this Article XII of this Restated Certificate of
Incorporation unless such amendment, alteration, repeal or adoption of any
inconsistent provision or provisions is declared advisable by the Board of
Directors by the affirmative vote of a majority of the entire Board of
Directors, in which case the percentage required shall be as specified by the
General Corporation Law of Delaware.
ARTICLE XIII
AMENDMENT OF BY-LAWS
The By-Laws of the Corporation may be amended, altered, changed or
repealed, and a provision or provisions inconsistent with the provisions of the
By-Laws as they exist from time to time may be adopted, only by the majority of
the entire Board of Directors or by the affirmative vote of the holders of
record of at least 66 2/3% of the aggregate voting power of all outstanding
shares of capital stock of the Corporation then entitled to vote generally in
the election of directors, voting together as a single class, notwithstanding
the fact that a lesser percentage may be specified by the General Corporation
Law of Delaware.
ARTICLE XIV
VOTING RIGHTS
(1) Common Stock. In addition to any other approval required by law or by
this Restated Certificate of Incorporation, the affirmative vote of a majority
of the then outstanding shares of Common Stock, voting separately as a class,
shall be necessary to approve any consolidation of the Corporation with another
corporation, any merger of the Corporation into another corporation or any
merger of any other corporation into the Corporation pursuant to which shares of
Common Stock or Class B Common Stock are converted into or exchanged for any
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securities or any other consideration, unless, pursuant to such consolidation or
merger, each share of Common Stock will receive consideration of a type
identical to the type to be received by each share of Class B Common Stock and
each share of Common Stock will receive consideration in an amount equal to the
amount to be received by each share of Class B Common Stock.
(2) Preferred Stock. In addition to any other approval required by law or
by this Restated Certificate of Incorporation, each particular series of any
class of Preferred Stock shall have such right to vote, if any, as shall be
fixed in the resolution or resolutions, adopted by the Board of Directors,
providing for the issuance of shares of such particular series.
(3) Agreement of Merger or Consolidation. In addition to any other approval
required by law or by this Restated Certificate of Incorporation, the
affirmative vote of the holders of record of at least 66 2/3% of the aggregate
voting power of all outstanding shares of capital stock of the Corporation then
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to approve any consolidation of the Corporation
with another corporation, any merger of the Corporation into another corporation
or any merger of any other corporation into the Corporation other than any
merger between the Corporation and any corporation in which at least 90 percent
of the outstanding shares of each class of stock is owned by the Corporation,
unless any such transaction is approved by the Board of Directors by the
affirmative vote of a majority of the entire Board of Directors, in which case
the percentage required shall be as specified by the General Corporation Law of
Delaware.
(4) Sale of Assets. In addition to any other approval required by law or by
this Restated Certificate of Incorporation, the affirmative vote of the holders
of record of at least 66 2/3% of the aggregate voting power of all outstanding
shares of capital stock of the Corporation then entitled to vote generally in
the election of directors, voting together as a single class, shall be required
to authorize any sale, lease, or exchange of all or substantially all of the
Corporation's property and assets, including its goodwill and its corporate
franchises, unless any such transaction is deemed expedient and for the best
interests of the Corporation by the Board of Directors by the affirmative vote
of a majority of the entire Board of Directors, in which case the percentage
required shall be as specified by the General Corporation Law of Delaware.
ARTICLE XV
Whenever a compromise or arrangement is proposed between the Corporation
and its creditors or any class of them and/or between the Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for the Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
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stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing three
fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation."
THIRD: Effective upon filing with the Secretary of State, this Restated
Certificate of Incorporation restates and amends the Certificate of
Incorporation of the Corporation.
FOURTH: In lieu of a special meeting, the sole stockholder of the
Corporation has given its written consent to said restatement and amendment in
accordance with the provisions of Section 228 of the GCL.
FIFTH: This Restated Certificate of Incorporation was duly adopted in
accordance with the provisions of Sections 228, 242 and 245 of the GCL.
SIXTH: The capital of the Corporation will not be reduced under or by
reason of any amendment in this Restated Certificate of Incorporation.
IN WITNESS WHEREOF, PULITZER INC. has caused this Restated Certificate of
Incorporation to be signed by its Senior Vice President - Finance and attested
to by its Secretary this 5th day of February, 1999.
PULITZER INC.
By: /s/ Ronald H. Ridgway
-------------------------
Ronald H. Ridgway
Senior Vice President - Finance
Attest:
/s/ James V. Maloney
--------------------
James V. Maloney
Secretary
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EXHIBIT 3.2.2
PULITZER INC.
BY-LAWS
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The Corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Meetings of stockholders may be held at such time and place,
within or without the State of Delaware, as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof. The annual meeting of
stockholders may be held at such place, within or without the State of Delaware,
as shall be designated by the board of directors and stated in the notice of the
meeting or in a duly executed waiver of notice
thereof.
Section 2. The annual meeting of stockholders shall be held on the
third Wednesday of April in each year if not a legal holiday, and if a legal
holiday, then on the next secular day following, at 2:00 P.M., or at such other
date and time as shall be designated from time to time by the board of directors
and stated in the notice of the
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meeting, at which they shall elect by a plurality vote by written ballot a board
of directors, and transact such other business as may properly be brought before
the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept open at the time and place of the
meeting during the whole time thereof and may be inspected by any stockholder
who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the affirmative vote of the entire board of
directors, the Chairman of the Board or the President and shall be called by the
President or Secretary at the request in writing of the holders of record of at
least 50.1% of the aggregate voting power of all outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
Directors,
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acting together as a single class. Such request shall state the purpose or
purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called shall be given not less than ten nor more than sixty days before the date
of the meeting to each stockholder of record entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the aggregate voting power of
the shares of the capital stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall constitute a quorum at
all meetings of the stockholders for the transaction of business except as
otherwise provided by statute or by the certificate of incorporation. If,
however, such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally scheduled. If the adjournment is
for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
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Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the aggregate voting power of the shares of the capital
stock having voting power present in person or represented by proxy shall decide
any question brought before such meeting, unless the question is one upon which,
by express provision of the statutes or of the certificate of incorporation, a
different vote is required in which case such express provision shall govern and
control the decision of such question.
Section 10. At every meeting of the stockholders, each stockholder
shall be entitled to vote, in person or by proxy executed in writing by the
stockholder or his duly authorized attorney-in-fact, each share of the capital
stock having voting power held by such stockholder in accordance with the
provisions of the certificate of incorporation and, if applicable, the
certificate of designations relating thereto, but no proxy shall be voted or
acted upon after three years from its date, unless the proxy provides for a
longer period.
Section 11. Any action required to be taken at any annual or special
meeting of stockholders of the Corporation, or any action which may be taken at
any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such actions at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
such action without a meeting by less than unanimous written consent shall be
given to those stockholders who have not consented in writing and who, if the
action had been taken at a meeting, would have been entitled to notice of the
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meeting if the record date for such meeting had been the date that written
consents signed by a sufficient number of holders to take the action were
delivered to the Corporation. The Secretary shall file such consents with the
minutes of the meetings of the stockholders.
Section 12. At all meetings of stockholders, the chairman of the
meeting shall have absolute authority over matters of procedure, and there shall
be no appeal from the ruling of the chairman.
Section 13. If the object of a stockholders meeting is to elect
directors or to take a vote of the stockholders on any proposition, then, the
chairman of the meeting shall appoint not less than two persons, who are not
directors, as inspectors to receive and canvass the votes given at such meeting
and certify the result to him.
Section 14. Attendance of a stockholder, in person or by proxy, at any
meeting shall constitute a waiver of notice of such meeting, except where the
stockholder, in person or by proxy, attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting is not lawfully
called or convened.
ARTICLE III
DIRECTORS
Section 1. (a) The whole board of directors of the Corporation shall
consist of nine (9) directors and the number which shall constitute the whole
board may be increased or decreased by resolution of the board of directors, but
in no case shall be less than six (6) directors. Directors shall be nominated
only as provided in the certificate of
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incorporation, and shall have such qualifications as may be prescribed by these
by-laws. Directors need not be stockholders.
(b) The board of directors shall be divided into three classes, as
nearly equal in number as possible. In the event of any increase or decrease in
the number of directors, the additional director(s) shall be added to or
subtracted from such class(es) as the board of directors may determine, provided
that all classes remain as nearly equal in number as possible.
(c) The first classified Board of Directors of the Corporation shall be
elected by the sole stockholder, as follows: Class A directors shall be elected
for a term expiring at the 1999 annual meeting of stockholders, Class B
directors for a term expiring at the 2000 annual meeting of stockholders, and
Class C directors for a term expiring at the 2001 annual meeting of
stockholders.
(d) Commencing with the 1999 annual meeting of stockholders, the
directors shall be elected at annual meetings of stockholders, except as
provided in Section 2 of this Article, and each director elected shall hold
office until such director's successor is elected and qualified or until such
director's earlier resignation or removal. At each annual meeting of
stockholders, the successors to the Class of directors whose term shall then
expire shall be elected for a term expiring at the third succeeding annual
meeting of stockholders after such election.
Section 2. Subject to the rights of the holders of any series of
Preferred Stock or any other class of capital stock of the Corporation then
outstanding (other than the Common Stock and the Class B Common Stock),
vacancies in the board of directors for any reason, including by reason of an
increase in the authorized number of directors,
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shall, if occurring prior to the expiration of the term of office of the Class
in which the vacancy occurs, be filled by a majority of the directors then in
office, though less than a quorum, or by a sole remaining director, and the
directors so chosen shall hold office until the next annual meeting of
stockholders of the Corporation or until their successors are duly elected and
shall qualify, unless sooner displaced. If there are no directors in office,
then an election of directors may be held in the manner provided by statute.
Section 3. The property and business of the Corporation shall be
managed by its board of directors which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
Section 4. Directors must be nominated in accordance with the procedure
set out in Section 3 of Article V of the certificate of incorporation. No person
shall be qualified to be elected and to hold office as a director if such person
is determined by the affirmative vote of a majority of the entire board of
directors to have violated either Federal or state law, in a manner contrary to
the best interests of the Corporation, to have interests not properly authorized
in conflict with the interests of the Corporation, or to have breached any
agreement between such director and the Corporation relating to such director's
services as a director or employee of the Corporation.
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MEETINGS OF THE BOARD OF DIRECTORS
Section 5. The board of directors of the Corporation, or any committees
thereof, may hold meetings, both regular and special, either within or without
the State of Delaware.
Section 6. A regular annual meeting of the board of directors,
including newly elected directors, shall be held at such time and place as the
board of directors shall determine, and no notice of such meeting to the
directors shall be necessary in order legally to constitute the meeting,
provided a quorum shall be present.
Section 7. Additional regular meetings of the board of directors shall
be held quarterly in the months of January, July and October upon such notice,
or without notice, and on such date and time and at such place as shall from
time to time be determined by the board of directors.
Section 8. The Chairman of the Board or the President of the
Corporation and the Secretary may call a special meeting of the board of
directors at any time by giving notice, specifying the business to be transacted
at and the purpose or purposes of the meeting, to each member of the board at
least twenty-four (24) hours before the time designated.
Section 9. At all meetings of the board, a majority of the full board
of directors shall constitute a quorum for the transaction of business, and the
vote of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the board of directors, except as may be otherwise
specifically provided by statute, the certificate of incorporation or these
by-laws. If a quorum shall not be present at any meeting of the board of
directors, the directors present thereat may adjourn the meeting from time to
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time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 10. The act of at least a majority of the full board of
directors shall be the act of the board of directors with respect to any matter
if the Executive Committee had considered that matter previously and had not
acted unanimously (or as otherwise specified by the board of directors, as
provided in Section 14 of this Article) with respect thereto.
Section 11. Any action required or permitted to be taken at any meeting
of the board of directors or of any committee thereof may be taken without a
meeting if all members of the board or committee, as the case may be, consent
thereto in writing, setting forth the action so taken, and the writing or
writings are filed with the minutes of proceedings of the board or committee.
Section 12. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee thereof, may participate in a meeting of the board of directors, or
any committee, by means of conference telephone or similar communications
equipment whereby all persons participating in the meeting can hear each other,
and such participation in a meeting shall constitute presence in person at the
meeting.
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COMMITTEES OF DIRECTORS
Section 13. There shall be the following six committees of the board
which shall have and may exercise the authority specified in these by-laws: an
Executive Committee, a Finance Committee, a Compensation Committee, a Planning
Committee, an Audit Committee and a Nominating Committee. The board of directors
may from time to time appoint one or more other committees which shall have such
authority and consist of such members as the board may from time to time
determine by resolution adopted by a majority of the whole board.
Section 14. The Executive Committee shall consist of the three
directors who hold the positions, respectively, of Chairman of the Board,
President and Vice President-Finance and, in the discretion of the board, a
fourth person, designated by resolution adopted by a majority of the whole
board, who, if such person is not a director, shall be an advisory member.
Unless otherwise restricted by statute, the certificate of incorporation or
these by-laws, the Executive Committee shall have and may exercise all the
powers and authority of the board of directors in the management of the business
and affairs of the Corporation.
The Executive Committee shall not have authority to (i) approve or
adopt, or recommend to the stockholders of the Corporation, any action or matter
expressly required by the Delaware General Corporation Law, as it may be amended
from time to time, to be submitted to stockholders for approval, (ii) adopt,
amend or repeal any by-law of the Corporation, (iii) declare a dividend, (iv)
authorize the issuance of shares of capital stock of the Corporation, or (v)
approve expenditures of any nature exceeding the greater of $10,000,000 or 10%
of the consolidated book value of the Corporation and its
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subsidiaries as of the last day of the preceding fiscal year as determined by
the Corporation's certified public accountants.
At all meetings of the Executive Committee the presence of a majority
of the full committee shall constitute a quorum for the transaction of business
and (unless otherwise specified by the board of directors in referring or
delegating any matter to the Executive Committee) the unanimous act of all of
the members present at any meeting at which there is a quorum shall be the act
of the Executive Committee. In the event the Executive Committee does not act
unanimously (or as otherwise specified by the board of directors) with respect
to any matter, it shall refer that matter to the board of directors.
Section 15. The Finance Committee shall consist of the three directors
who hold the positions, respectively, of Chairman of the Board, President and
Vice President-Finance and, in the discretion of the board of directors, a
fourth person, designated by resolution adopted by a majority of the whole board
of directors, who, if such person is not a director, shall be an advisory
member. The Finance Committee shall have and may exercise all of the authority
of the board of directors with respect to (i) approval or disapproval of
contracts obligating the Corporation for more than $100,000 but not more than
$750,000 or not more than $1,500,000 if the contract relates to any Agency
expense to be shared equally with The Herald Company, Inc., (ii) designation of
depositories for monies and other valuable effects of the Corporation and (iii)
designation of signatures on all checks, demands for money and bank or other
similar accounts of the Corporation.
Section 16. The Compensation Committee shall consist of the directors
who hold the positions of Chairman of the Board and President, two directors who
do not hold any officer positions with the Corporation and who are designated by
resolution adopted by a
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majority of the whole board of directors, and, in the discretion of the board of
directors, a fifth person, also designated by resolution adopted by a majority
of the whole board of directors, who, if such person is not a director, shall be
an advisory member. The Compensation Committee shall render advice with respect
to compensation matters for officers, directors and key employees of the
Corporation and with respect to other personnel matters.
Section 17. The Planning Committee shall consist of the three directors
who hold the positions, respectively, of Chairman of the Board, President and
Vice President-Finance and, in the discretion of the board of directors, up to
seven additional persons, designated by resolution adopted by a majority of the
whole board of directors, each of whom, if such person is not a director, shall
be an advisory member. The Planning Committee shall consider and develop short
and long term plans and strategies for the Corporation and present them to the
board of directors for consideration and appropriate action.
Section 18. The Audit Committee shall consist of at least two
directors, all of whom (i) are determined to be independent of management and
free from any relationship that would interfere with the exercise of independent
judgment as members of the Audit Committee and (ii) are designated by a
resolution adopted by a majority of the whole board of directors. The Audit
Committee shall be responsible to the board of directors for overseeing and
reviewing audit results and monitoring the effectiveness of internal audit
functions. The Audit Committee may retain and consult with legal counsel and
such experts as it deems necessary or appropriate.
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Section 19. The Nominating Committee shall consist of two or more
directors who are designated by resolution adopted by a majority of the whole
board. The Nominating Committee shall be responsible to the board of directors
and/or stockholders, as the case may be, for recommending qualified candidates
for election as directors of the Corporation and for recommending candidates for
designation as members of the committee to fill vacancies therein. At all
meetings of the Nominating Committee, the presence of a majority of the members
thereof shall constitute a quorum for the transaction of business, and the act
of a majority of the members of the whole committee at which there is a quorum
present shall be the act of the Nominating Committee.
Section 20. Each committee of the board of directors shall keep regular
minutes of its meetings and report the same to the board of directors when
required.
COMPENSATION OF DIRECTORS
Section 21. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. All directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors, and directors
who are not full-time employees of the Corporation may be paid a fixed sum for
attendance at each meeting of the board of directors and/or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation and expenses
for attending committee meetings.
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REMOVAL OF DIRECTORS
Section 22. Subject to the rights of the holders of any series of
Preferred Stock or any other class of capital stock of the Corporation (other
than the Common Stock and the Class B Common Stock) then outstanding, (a) any
director, or the entire board of directors, may be removed from office at any
time prior to the expiration of such director's term of office, with or without
cause, only by the affirmative vote of the holders of record of at least 66 2/3%
of the aggregate voting power of all outstanding shares of capital stock of the
Corporation then entitled to vote generally in the election of directors, voting
together as a single class, at a special meeting of stockholders called
expressly for that purpose; provided that, any director may be removed from
office by the affirmative vote of a majority of the entire board of directors,
at any time prior to the expiration of such director's term of office, as
provided by law, in the event a director fails to meet the qualifications stated
in these by-laws for election as a director or in the event such director is in
breach of any agreement between such director and the Corporation relating to
such director's service as a director or employee of the Corporation.
INDEMNIFICATION OF DIRECTORS
Section 23. The Corporation shall have the right to indemnify
directors, officers and agents of the Corporation to the fullest extent
permitted by the General Corporation Law of Delaware and by the certificate of
incorporation, as both may be amended from time to time.
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ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these By-laws, notice is required to be given
to any director or stockholder, it shall be construed to mean written or printed
notice given either personally or by mail or facsimile addressed to such
director or stockholder, at such person's address as it appears on the records
of the Corporation, with postage or other charges thereon prepaid, and such
notice shall be deemed to be given at the time when the same shall be deposited
in the United States mail or upon confirmation of transmission if sent by
facsimile. Notice to directors may also be given by telephone.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
Section 3. Attendance at a meeting shall constitute a waiver of notice
except where a director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened.
Section 4. Neither the business to be transacted at, nor the purpose
of, any regular meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
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ARTICLE V
OFFICERS
Section 1. The officers of the Corporation shall be chosen by the board
of directors at its first meeting after each annual meeting of the stockholders
and shall be a Chairman of the Board, a President, a Vice President-Finance, a
Vice President-Newspaper Operations, a Treasurer and a Secretary. The board of
directors may also choose one or more additional Vice Presidents and one or more
Assistant Treasurers and Assistant Secretaries. Any number of offices may be
held by the same person, except that the offices of President and Secretary
shall not be held by the same person. Vice Presidents may be given distinctive
designations such as Executive Vice President or Senior Vice President.
Section 2. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
Section 3. The officers of the Corporation shall hold office until
their successors are chosen and qualify or until their earlier resignation or
removal. Any officer elected or appointed by the board of directors may be
removed at any time with or without cause by the affirmative vote of a majority
of the whole board of directors. Any vacancy occurring in any office of the
Corporation shall be filled by the board of directors.
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CHAIRMAN OF THE BOARD
Section 4. The Chairman of the Board shall preside at all meetings of
the board of directors and the stockholders. The Chairman of the Board shall
advise and counsel with the President and shall have such other powers and
perform such other duties as may from time to time be assigned to him by the
board of directors.
THE PRESIDENT
Section 5. The President shall be the chief executive officer of the
Corporation, shall be subject to the direction of the board of directors, shall
have general and active management of the business of the Corporation and shall
see that all orders and resolutions of the board of directors are carried into
effect.
THE VICE PRESIDENTS
Section 6. The Vice Presidents shall have such powers and perform such
duties as may from time to time be assigned to them by the board of directors or
the President.
THE SECRETARY AND ASSISTANT SECRETARY
Section 7. The Secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the Corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
of the board of directors when required. The Secretary shall give, or cause to
be given, notice of all meetings of the stockholders and special meetings of the
board of directors, and shall perform such other duties as may be prescribed by
the board of directors or the President, under whose supervision the Secretary
shall be. The Secretary shall have custody of the corporate seal of the
Corporation, and the Secretary, or an Assistant Secretary, shall have authority
to affix the
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same to any instrument requiring it and when so affixed, it may be attested by
the signature of the Secretary or such Assistant Secretary. The board of
directors may give general authority to any other officer to affix the seal of
the Corporation and to attest the affixing by such officer's signature.
Section 8. The Assistant Secretary, or if there be more than one, the
Assistant Secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the Secretary or in the event of the Secretary's inability or
refusal to act, perform the duties and exercise the powers of the Secretary and
shall have such other powers and perform such other duties as may from time to
time be assigned to them by the board of directors.
THE TREASURER AND ASSISTANT TREASURERS
Section 9. The Treasurer, under the supervision of the Vice
President-Finance, shall have charge of all the corporate funds and securities
and shall keep or cause to be kept full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all monies
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by or at the direction of the board of
directors or the Finance Committee.
Section 10. The Treasurer shall disburse or cause to be disbursed the
funds of the Corporation as may be ordered by or at the direction of the Vice
President-Finance or the board of directors, taking proper vouchers for such
disbursements, and subject to the supervision of the Vice President-Finance,
shall render to the President and the board of directors, when they or either of
them so require, an account of such officer's transactions as Treasurer and of
the financial condition of the Corporation.
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Section 11. If required by the board of directors, the Treasurer shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the board of directors for the faithful performance of
the duties of the office of Treasurer and for the restoration to the
Corporation, in case of the Treasurer's death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind belonging to the Corporation and in the possession or under the
control of the Treasurer.
Section 12. The Assistant Treasurer, or if there shall be more than
one, the Assistant Treasurers in the order determined by the board of directors
(of if there be no such determination, then in the order of their election),
shall, in the absence of the Treasurer or in the event of the Treasurer's
inability or refusal to act, perform the duties and exercise the powers of the
Treasurer and shall have such other powers and perform such other duties as may
from time to time be assigned to them by the board of directors.
Section 13. In addition to the corporate officers elected by the board
of directors pursuant to this Article V, the President may, from time to time,
appoint one or more other persons as appointed officers who shall not be deemed
to be corporate officers, but may, respectively, be designated with such titles
as the President may deem appropriate. The President may prescribe the powers to
be exercised and the duties to be performed by each such appointed officer, may
designate the term for which each such appointment is made, and may, from time
to time, terminate any or all of such appointments. Such appointments and
termination of appointments shall be reported to the board of directors.
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ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of shares of capital stock in the Corporation
shall be entitled to have a certificate sealed with the seal of the Corporation
and signed by, or in the name of the Corporation by, the Chairman of the Board
or the President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the Corporation, certifying the number of shares
owned by such holder in the Corporation. If the Corporation shall be authorized
to issue more than one class of stock or more than one series of any class, the
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate which the
Corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in section 202 of the General Corporation Law
of Delaware, in lieu of the foregoing requirements, there may be set forth on
the face or back of the certificate which the Corporation shall issue to
represent such class or series of stock, a statement that the Corporation will
furnish without charge to each stockholder who so requests the designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
Section 2. Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or
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registrar before such certificate is issued, it may be issued by the Corporation
with the same effect as if such officer, transfer agent or registrar held such
position at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of capital stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or the legal representative of the owner, to advertise the same in
such manner as it shall require and/or to give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the Corporation or the transfer agent of
the Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
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FIXING RECORD DATE
Section 5. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
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ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the Corporation, subject
to the provisions of the certificate of incorporation, if any, may be declared
by the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to provisions of any statute, the certificate of incorporation and these
by-laws.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
Corporation.
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CHECKS
Section 4. All checks or demands for money of the Corporation shall be
signed by such officer or officers or such person or persons as the board of
directors or the Finance Committee may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the Corporation shall be a 52 to 53 week
period which ends on the last Sunday in December.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of
the Corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
CONTRACTS
Section 7. Except as otherwise provided in these by-laws, contracts
with labor unions shall be made or executed by any officer of the Corporation or
the Director/Personnel.
Section 8. An officer of the Corporation may sign any note, bond, or
mortgage of the Corporation in furtherance of the Corporation's ordinary
business and in order to implement any action authorized by these by-laws.
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ARTICLE VIII
AMENDMENTS
Section 1. The by-laws of the Corporation may be amended, altered,
changed or repealed, and a provision or provisions inconsistent with the
provisions of the by-laws as they exist from time to time may be adopted, only
by the majority of the entire Board of Directors or by the affirmative vote of
the holders of record of at least 66 2/3% of the aggregate voting power of all
outstanding shares of capital stock of the Corporation then entitled to vote
generally in the election of Directors, voting together as a single class,
notwithstanding the fact that a lesser percentage may be specified by the
General Corporation Law of Delaware.
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EXHIBIT 9.1
VOTING TRUST AGREEMENT
AGREEMENT dated as of the ___ day of March, 1999, between such
holders of the Class B Common Stock, par value $.01 per share ("Class B Common
Stock"), of PULITZER INC., a Delaware corporation (hereinafter called the
"Company"), as may become parties to this agreement in the manner hereinafter
provided, (all hereinafter referred to as the "Depositing Stockholders"), and
COLE C. CAMPBELL (Editor - St. Louis Post-Dispatch), DAVID E. MOORE, EMILY RAUH
PULITZER, MICHAEL E. PULITZER (Chairman of the Board of the Company), RONALD H.
RIDGWAY (Senior Vice President-Finance of the Company) and ROBERT C. WOODWORTH
(President and Chief Executive Officer of the Company), or their successors
(hereinafter referred to as the "Trustees").
W I T N E S S E T H :
WHEREAS, the Depositing Stockholders deem it for the best
interests of the Company and its stockholders that the Depositing Stockholders
act together to secure continuity of policy and stability of management in the
affairs of the Company and to these ends they propose to place their shares of
Class B Common Stock in the hands of the persons who are now and will be
responsible for the success of the Company to be voted and held by them as
trustees for the
<PAGE> 2
Depositing Stockholders. The Trustees, in connection with the exercise of
their judgment in determining what is in the best interest of the Company and
its stockholders, shall give due consideration to the effect of their actions on
the editorial and publishing integrity and the character and quality of the
Company's newspaper and other operations, and all other relevant factors,
including, without limitation, the social, legal and economic effects on the
employees, customers, suppliers and other affected persons, firms and
corporations and on the communities and geographical areas in which the Company
and its subsidiaries operate or are located and on any of the businesses and
properties of the Company or any of its subsidiaries, as well as such other
factors as the Trustees deem relevant. In addition, the platform of the St.
Louis Post-Dispatch printed daily on the editorial page as the principles of its
founder, Joseph Pulitzer, should be considered by the Trustees in assessing the
public service aspects of journalism. The two preceding sentences are referred
to herein as the "Statement of Policy," which shall guide the Trustees in the
exercise of their judgment as provided in Paragraph 16 below. The shares of
Class B Common Stock deposited hereunder shall be subject to the terms and
conditions of this agreement, and the Trustees are directed to exercise the
powers delegated hereunder guided by the Statement of Policy.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and other good and valuable consideration, receipt of which is
hereby acknowledged, it is agreed between the parties as follows:
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<PAGE> 3
DEPOSIT OF STOCK
1. Each stockholder of the Company who becomes a party hereto by signing
these presents agrees to deposit, or cause to be deposited, with the Trustees,
to be held by them pursuant to the provisions of this agreement, the certificate
or certificates representing the shares of Class B Common Stock of the Company
now or at any time hereafter owned by him or for his benefit, duly endorsed in
blank or to the Trustees, or accompanied by proper instruments of assignment and
transfer duly executed in blank or to the Trustees, and accompanied by any
revenue stamps required for the transfer, which deposit shall continue for a
period from the date of this agreement first above written until the ___ day of
March, 2009 unless sooner terminated as hereinafter provided, and to accept in
lieu thereof a Voting Trust Certificate or Certificates issued hereunder in the
form hereinafter provided.
Each Depositing Stockholder whose shares of Class B Common Stock of the
Company have been deposited under a Voting Trust Agreement dated as of June 19,
1995 (the "1995 Voting Trust Agreement") hereby individually authorizes,
instructs and directs (i) the voting trustees under the 1995 Voting Trust
Agreement and Mercantile Bank of St. Louis N.A., as depositary under the 1995
Voting Trust Agreement, to deliver, on his behalf, the stock certificates
representing those shares to the Trustees, and (ii) the Trustees to re-register
those stock certificates in the name of the Trustees, to be held by the Trustees
under this agreement. Notwithstanding the foregoing, (i) in the case of each
such Depositing Stockholder who is a party to a line of credit agreement with
Mercantile Bank of St. Louis N.A. which is secured by a pledge of one or more
voting trust certificates issued under the 1995 Voting Trust Agreement (the
"1995 Voting Trust Certificates"),
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<PAGE> 4
delivery to the Trustees, as authorized and directed under the foregoing, shall
be effected by delivery to Mercantile Bank of St. Louis N.A., which is the
Depositary hereunder and (ii) all issued and outstanding 1995 Voting Trust
Certificates issued to Depositing Stockholders shall constitute temporary Voting
Trust Certificates for those shares of Class B Common Stock which the Depositing
Stockholders had deposited under the 1995 Voting Trust Agreement and have now
deposited hereunder until replaced by Voting Trust Certificates to be issued
hereunder in substantially the form set forth in Exhibit E; provided, however,
that all references to the 1995 Voting Trust Agreement in the 1995 Voting Trust
Certificates shall be deemed to refer to this agreement and that the last
paragraph of the 1995 Voting Trust Certificates shall be deemed to read like the
last paragraph of the Voting Trust Certificates to be issued hereunder.
Any other owner of Class B Common Stock in the Company may at any time
become a party hereto by depositing the certificate or certificates representing
his shares of Class B Common Stock in the Company with the Trustees in like
manner to be held by said Trustees under the terms hereof and by accepting in
lieu thereof a Voting Trust Certificate or Certificates issued hereunder in the
form hereinafter provided, and in consideration of the original deposit of Class
B Common Stock by the present Depositing Stockholders the Trustees bind
themselves and their successors to accept for deposit and to receive in trust
hereunder any additional certificate or certificates of Class B Common Stock
owned by any stockholder whomsoever and to hold any certificate so deposited in
trust under the terms and conditions of this agreement. Such deposit of any
additional certificate or certificates of Class B Common Stock of the Company
and such acceptance of any Voting Trust
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<PAGE> 5
Certificate or Certificates by the owner thereof shall have the same force and
effect as though such owner of Class B Common Stock had in fact subscribed his
name to this agreement.
WITHDRAWAL OF STOCK
2. The Trustees shall not convert into Common Stock, par value $.01 per
share ("Common Stock"), of the Company any of the shares of Class B Common Stock
deposited hereunder, except in conjunction with a withdrawal of shares permitted
by subparagraphs (a) or (b) of this Paragraph 2.
(a) A Depositing Stockholder shall be permitted to withdraw, from time to
time, part or all of the Common Stock of the Company into which Class B Common
Stock represented by his Voting Trust Certificate or Certificates is convertible
(but not any Class B Common Stock of the Company) free of the terms of this
agreement, including the Voting Trust Certificate or Certificates issued
hereunder, subject to satisfaction of the following conditions and compliance
with the following procedures:
(1) Any Common Stock so withdrawn shall be withdrawn solely to the extent
that:
A. Such Common Stock is being sold (i) in a public offering pursuant to a
registration statement filed by the Company and effective under the Securities
Act of 1933, as amended (the "Securities Act"), (ii) pursuant to any other
transaction that complies with the provisions of Rule 144 promulgated under the
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<PAGE> 6
Securities Act and is exempt from registration under the Securities Act,
(iii) to an employee benefit plan established and maintained by the Company or
any wholly-owned subsidiary of the Company or any trustee or fiduciary with
respect to any such plan ("Employee Benefit Plan") or (iv) to the Company or any
wholly-owned subsidiary of the Company; or
B. Such Common Stock is being transferred (i) to a charitable organization
contributions to which are allowed as deductions for federal income, estate or
gift tax purposes ("Charitable Organization") or (ii) to any charitable trust or
split-interest trust ("Charitable Trust") as described in Section 4947 of the
Internal Revenue Code of 1986, as amended, and as it may from time to time be
further amended (the "Code").
(2) Such Depositing Stockholder shall be deemed to have instructed,
directed and authorized the Trustees to convert a sufficient number of the
Company's Class B Common Stock represented by the Voting Trust Certificate or
Certificates of such Depositing Stockholder into Common Stock of the Company to
the extent necessary to effect such withdrawal, it being understood that under
the Company's Restated Certificate of Incorporation dated February 5, 1999 and
filed on February 5, 1999 in the office of the Secretary of State of the State
of Delaware ("Certificate of Incorporation"), the Common Stock so withdrawn may
not thereafter be reconverted into Class B Common Stock of the Company.
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<PAGE> 7
(3) A. Any Depositing Stockholder who shall request the withdrawal of
shares of Common Stock for purposes of making a sale pursuant to Paragraph
2(a)(1)A. hereof shall, not less than three (3) New York Stock Exchange business
days prior to the date on which the closing for the sale of the shares of Common
Stock so to be withdrawn and sold is scheduled, deliver to the Trustees (c/o the
Company at the address of the Company's principal executive offices), with
duplicate copies to the Company, to the Depositary under this agreement and any
transfer agent for the Common Stock appointed by the Company (the "Transfer
Agent"), a Withdrawal Request substantially in the form prescribed on Exhibit A
attached hereto, and, simultaneously with the delivery of such Withdrawal
Request or as soon thereafter as practicable (but not less than 48 hours prior
to the date of such closing), such Depositing Stockholder (together with the
underwriters for such sale, or their representatives, if any) shall furnish to
the Trustees (c/o the Company at the address of the Company's principal
executive offices), with duplicate copies to the Company, the Depositary and the
Transfer Agent, an Instruction Request, substantially in the form prescribed on
Exhibit B attached hereto, setting forth the denominations in which certificates
for the shares of Common Stock so sold are to be delivered at such closing and
the names in which such certificates are to be registered.
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<PAGE> 8
B. Any Depositing Stockholder who shall request the withdrawal of shares of
Common Stock for the purpose of making a transfer to a Charitable Organization
or a Charitable Trust pursuant to Paragraph 2(a)(1)B. hereof shall, not less
than three (3) New York Stock Exchange business days prior to the date on which
the transfer of the shares of Common Stock is to be made, deliver to the
Trustees (c/o the Company at the address of the Company's principal executive
offices), with duplicate copies to the Company, to the Depositary under this
agreement and to the Transfer Agent, a Withdrawal Request, substantially in the
form prescribed on Exhibit A-I attached hereto, setting forth the name of the
transferee Charitable Organization or Charitable Trust, and, simultaneously with
the delivery of such Withdrawal Request or as soon thereafter as practicable
(but not less than 48 hours prior to the date of such transfer), such Depositing
Stockholder (together with the transferee) shall furnish to the Trustees (c/o
the Company at the address of the Company's principal executive offices), with
duplicate copies to the Company, the Depositary and the Transfer Agent, an
Instruction Request, substantially in the form prescribed on Exhibit B-I
attached hereto, setting forth the denominations in which certificates for the
shares of Common Stock to be so transferred are to be delivered and the name(s)
in which such certificates are to be registered, and, in the case of a transfer
to a Charitable Organization, appropriate
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<PAGE> 9
documentation, addressed to the Trustees, confirming to the satisfaction of the
Trustees that contributions thereto are allowed as deductions for federal
income, estate or gift tax purposes, or, in the case of a transfer to a
Charitable Trust, an opinion from counsel for the Charitable Trust, addressed to
the Trustees, confirming that the Charitable Trust is a charitable trust or
split-interest trust as described in Section 4947 of the Code.
(b) In addition to any withdrawal of shares permitted by subparagraph (a)
above, a Depositing Stockholder shall be permitted to withdraw, from time to
time during the term hereof for any reason, up to an aggregate number of shares
of Common Stock of the Company into which Class B Common Stock represented by
his Voting Trust Certificate or Certificates is convertible (but not any Class B
Common Stock of the Company) free of the terms of this agreement, including the
Voting Trust Certificate or Certificates issued hereunder, which equals the
greater of (i) 150,000 shares of Common Stock or (ii) ten percent (10%) of the
number of shares of Class B Common Stock originally deposited by such Depositing
Stockholder hereunder. Appropriate adjustment shall be made for stock dividends,
stock splits or reverse splits of the Class B Common Stock. Any Depositing
Stockholder who shall request the withdrawal of shares of Common Stock pursuant
to this Paragraph 2(b) shall deliver to the Trustees (c/o the Company at the
Company's principal executive offices), with duplicate copies to the Company, to
the Depositary under this agreement and the Transfer Agent, a Withdrawal Request
substantially in the form prescribed on Exhibit C attached hereto, and,
simultaneously with the Withdrawal Request or as soon thereafter as practicable
(but not less than 48 hours prior to the date of such withdrawal), an
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<PAGE> 10
Instruction Request, substantially in the form prescribed on Exhibit B-II
attached hereto, setting forth the denominations in which certificates for the
shares of Common Stock to be so withdrawn are to be delivered and the names in
which such certificates are to be registered.
(c) The Trustees and the Depositing Stockholders agree that in the event of
a pledge permitted by Paragraph 5 of this agreement by a Depositing Stockholder
of a Voting Trust Certificate to secure indebtedness due the pledgee, each of
Ronald H. Ridgway and James V. Maloney, individually, is hereby authorized for
and on behalf of the Trustees, and is hereby made, constituted and appointed as
their true and lawful agent and attorney-in-fact, acting separately, for and in
the name, place and stead of the Trustees (1) to examine any pledge agreement or
power of attorney executed in connection therewith and (2) if such documents are
substantially in the form of the General Pledge Agreement ("Pledge Agreement")
and Irrevocable Power of Attorney ("Power of Attorney") attached hereto as
Exhibit D or in such other form as the Trustees may approve, to execute on
behalf of the Trustees an Acknowledgement substantially in the form attached
hereto as Exhibit E (the "Acknowledgement"). The Trustees shall have the power
to designate a replacement or replacements for either or both of the foregoing
attorneys-in-fact in their sole discretion. Each of the Secretary for the Voting
Trust and the Voting Trustees, or any of them, is hereby authorized to certify
to any such pledgee the individual or individuals who then act as
attorneys-in-fact under this Paragraph 2(c) and any such pledgee shall be
entitled to rely on such certification without further inquiry. The Trustees and
the Depositing Stockholders further agree that any written notice duly delivered
by any such pledgee to any individual or individuals who then act as
attorneys-in-fact
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<PAGE> 11
under this Paragraph 2(c) shall be deemed to constitute notice to the Trustees
for purposes of this agreement.
(d) Each Depositing Stockholder represents, warrants and agrees that, in
the event of the execution of an Acknowledgment with respect to him pursuant to
Paragraph 2(c) above, (i) the obligations of the Trustees, and the rights of the
Depositing Stockholder, under this agreement, including, without limitation,
Paragraphs 3, 7, 8, 9 and 10 hereof, are expressly subject to the terms of such
Acknowledgement and (ii) he shall hold the Trustees and the person or persons
executing the Acknowledgement harmless in connection with any actions pursuant
thereto.
(e) Each Depositing Stockholder agrees that, in the event of a pledge
permitted by Paragraph 5 of this agreement by him or by any other Depositing
Stockholder of a Voting Trust Certificate to secure indebtedness due the pledgee
and until such time as any loan agreement relating to the pledge is terminated
and any related promissory note of the pledgor is repaid, he shall not, whether
by affirmative vote, consent, acquiescence, waiver or otherwise, and without one
hundred twenty (120) days' prior written notice to the lender, or the prior
written consent of the lender, amend this agreement to affect adversely the
right of the pledgor (i) to pledge his Voting Trust Certificate or (ii) to
convert, or have converted pursuant to the pledgor's Power of Attorney, the
shares of Class B Common Stock represented by the pledgor's Voting Trust
Certificate into Common Stock of the Company and withdraw such Common Stock.
Each Depositing Stockholder further acknowledges and agrees that any such lender
may rely upon the above representation, warranty and agreement in making any
loan or extending any credit to a Depositing
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<PAGE> 12
Stockholder that is secured by a pledge permitted by Paragraph 5 of this
agreement by the Depositing Stockholder of a Voting Trust Certificate to secure
indebtedness due the pledgee.
VOTING TRUST CERTIFICATES
3. All certificates for shares of Class B Common Stock in the Company at
any time delivered to the Trustees hereunder or thereafter acquired as a result
of a distribution of shares of Class B Common Stock as a stock dividend or
otherwise shall be held and disposed of by the Trustees under and pursuant to
the terms and conditions of this agreement. The Trustees, in exchange for the
certificate or certificates so deposited hereunder, will cause to be issued and
delivered to the Depositing Stockholder a Voting Trust Certificate or
Certificates for the appropriate number of shares of Class B Common Stock
substantially in the form prescribed on Exhibit F attached hereto.
4. Subject to the provisions of Paragraph 1 of this agreement, the Trustees
may issue temporary typewritten or printed Voting Trust Certificates conforming
generally to the form prescribed on Exhibit F and may cause the same to be
exchanged for definitive Voting Trust Certificates in substantially said form
when the same are prepared. The Voting Trust Certificates may be executed by any
one or more of the Trustees on behalf of all said Trustees. The Trustees, under
such rules as they in their discretion may prescribe with respect to indemnity
or otherwise, may provide for the issuance and delivery of new Voting Trust
Certificates in lieu of lost, stolen or destroyed Voting Trust Certificates or
in exchange for mutilated Voting Trust Certificates.
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<PAGE> 13
5. The Voting Trust Certificates shall not be transferred,
whether by sale, assignment, gift, bequest, appointment or otherwise except to a
Permitted Transferee (as that term is defined in the Company's Certificate of
Incorporation) of the Company's Class B Common Stock, and the Voting Trustees
shall not register any transfer except in compliance therewith.
Subject to the foregoing, the Voting Trust Certificates shall
be transferable on the books of the Trustees by the holders of record thereof in
person or by duly authorized attorney, subject to such regulations as may be
established by the Trustees for that purpose, upon surrender thereof at the
office of the Trustees, properly endorsed for transfer, and the Trustees may
treat the holders of record thereof, or when duly endorsed in blank the bearers
thereof, as the owners of Voting Trust Certificates for all purposes whatsoever.
As a condition of making or permitting any transfer or
delivery of stock certificates or Voting Trust Certificates, the trustees may
require the payment of a sum sufficient to pay or reimburse them for any stamp
tax or other governmental charge in connection therewith or any other charge
applicable to such transfer or delivery.
Every transferee of a Voting Trust Certificate or Certificates
shall, by the acceptance thereof, become a party hereto with like force and
effect as though an original party hereto and shall be embraced within the
meaning of the term "Depositing Stockholders" wherever used herein.
Notwithstanding anything to the contrary set forth herein, any
Depositing Stockholder may pledge his Voting Trust Certificate and, in
connection therewith, the shares of Class B Common Stock represented thereby to
a pledgee pursuant to a bona fide pledge thereof as collateral security for
indebtedness due to the pledgee, provided that the Voting Trust Certificate and
such underlying
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<PAGE> 14
shares shall not be transferred to or registered in the name of the pledgee and
shall remain subject to the provisions of this Paragraph 5 and of Article
III(2)(E) of the Company's Certificate of Incorporation. In the event of
foreclosure or other similar action with respect to such collateral by the
pledgee, (i) the pledged Voting Trust Certificate may be transferred only to a
Permitted Transferee of the pledgor or (ii) the Class B Common Stock represented
by such pledged Voting Trust Certificate may be converted into the Common Stock
of the Company, and such Common Stock may be withdrawn, free of the terms of
this agreement, only pursuant to, and in compliance with, Paragraph 2 of this
agreement.
THE DEPOSITARY
6. The Trustees agree to deposit with BNY Trust Company of
Missouri ("BNY") of St. Louis, Missouri, as Depositary hereunder, the Class B
Common Stock of the Company transferred in their name; provided, however, that
BNY shall first agree in writing that it will, if requested to do so by any
Trustee or any Depositing Stockholder, enter its appearance in any suit which
may hereafter be brought in the State of Delaware, in which suit the
construction, interpretation or validity of this Voting Trust Agreement or any
portion thereof shall be an issue. The Trustees may, in their absolute
discretion, name a new or other Depositary to hold said shares and deliver such
shares to any such new or other Depositary. No Depositary hereunder shall incur
any liability to any of the parties hereto or to any assignee of the Voting
Trust Certificates except for failure to exercise ordinary care in the
performance of the duties of Depositary.
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<PAGE> 15
Any Depositary acting hereunder shall be entitled to
compensation in such amount as may be fixed from time to time by the Trustees,
and shall be reimbursed for all expenses, including counsel fees and liabilities
incurred in connection with its duties hereunder.
DIVIDENDS
7. The holder of each Voting Trust Certificate shall be
entitled during the life of this Voting Trust, except as hereinafter provided,
to receive from time to time payments equal to the dividends payable in money,
if any, received by the Trustees on a number of shares of Class B Common Stock
of the Company equal to that called for by such Voting Trust Certificate, less
such charges and expenses as are herein authorized to be deducted therefrom and
less any income or other taxes required by law to be deducted therefrom.
The Trustees, instead of themselves receiving and disbursing
dividends, may instruct the Company to pay the amount of any dividends upon the
shares of Class B Common Stock held by such Trustees hereunder to which such
Trustees from time to time become entitled directly to the holders of the
outstanding Voting Trust Certificates after deducting any charges and expenses
authorized herein and any income or other taxes required by law to be deducted
therefrom. Payments in respect of each such dividend shall be made according to
their respective interests to the holders of outstanding Voting Trust
Certificates registered as such at the close of business on the date fixed by
the Trustees as a record date for the determination of the Voting Trust
Certificate holders entitled to receive payments in respect of such dividends,
or, if the Trustees have not fixed such date, to the holders of outstanding
Voting Trust Certificates registered as such at the close of
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<PAGE> 16
business on the date fixed by the Company for the taking of a record to
determine those holders of its Class B Common Stock entitled to receive such
dividend; provided, however, that the Trustees may at any time or from time to
time thereafter instruct the Company to make payment in respect of such
dividends to such Trustees.
At the termination of this Voting Trust, the Trustees shall
continue to hold the Class B Common Stock of the Company represented by any
Voting Trust Certificate or Certificates issued and outstanding under this
agreement and any dividend received on such Class B Common Stock until the
surrender of such Voting Trust Certificate or Certificates by the holder or
holders thereof.
8. In case the Trustees shall receive any fully-paid shares of
Class B Common Stock of the Company, as a dividend upon the shares of Class B
Common Stock held by them hereunder, the Trustees shall hold such shares subject
to this agreement and shall issue Voting Trust Certificates, in proportion to
their respective interests, to the holders of outstanding Voting Trust
Certificates of record at the close of business on the date fixed by the Company
as a record date for the determination of the stockholders entitled to receive
distribution in respect of such dividend.
9. If any dividend in respect of the deposited Class B Common
Stock shall be paid otherwise than in money or in fully-paid Class B Common
Stock, the Trustees shall distribute the same in kind ratably among the holders
of the outstanding Voting Trust Certificates entitled to receive distribution in
respect of such dividend upon payment by each holder of a sum sufficient to
reimburse the Voting Trustees for any stamp tax, other governmental charge or
other expense to
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which the Voting Trustees shall have been put, or for which they shall have or
will become liable in such connection.
10. In case any stock of the Company shall be offered for
subscription to the holders of the Class B Common Stock, the Trustees, promptly
upon receipt of notice of such offer, shall mail a copy of such notice to each
holder of record of Voting Trust Certificates with a notice of the number of
shares subscribable with respect to the shares of Class B Common Stock
represented by his Voting Trust Certificates. Upon receipt by the Trustees,
within such time as shall be fixed by the Trustees prior to the last date fixed
by the Company for subscription and payment, of a request from any holder of
record of a Voting Trust Certificate to subscribe in his behalf and of the
amount of money required to pay for a stated number of shares of such stock (not
in excess of the number of shares subscribable in respect of the shares
represented by such Voting Trust Certificate), the Trustees shall make such
subscription and payment. Upon receiving from the Company the certificate for
the shares so subscribed for, the Trustees, if such stock be Class B Common
Stock, shall hold the same under this agreement and shall issue to such holder
Voting Trust Certificates in respect thereof; or if such stock be stock of
another class, the Trustees shall deliver the certificate or certificates
therefor to such holder. In case the stock offered for subscription by the
Company be stock other than Class B Common Stock, the Trustees, in their
discretion, may assign such subscription rights, pro rata, to the holders of
Voting Trust Certificates in proportion to their respective interests.
The right of any holder of record of a Voting Trust
Certificate to subscribe to additional shares of Class B Common Stock as
provided in this Paragraph 10 may be assigned and
17
<PAGE> 18
transferred to any Permitted Transferee and to no other person or entity, and
the Trustees shall not be required to exercise such subscription right on behalf
of any person who is not a Voting Trust Certificate holder or a Permitted
Transferee. Any shares of Class B Common Stock acquired pursuant to a
subscription right assigned by a Voting Trust Certificate holder to a Permitted
Transferee shall be held by the Trustees subject to all the terms and conditions
of this agreement.
VOTING RIGHTS
11. Until the actual delivery to the holder of Voting Trust
Certificates by or on behalf of the Trustees of the stock certificate deposited
hereunder in exchange for said Voting Trust Certificates, pursuant to the
provisions hereof, the Trustees shall possess and shall be entitled to exercise
all the rights and powers of owners of the shares of Class B Common Stock of the
Company deposited hereunder, to vote for every purpose and to consent to any and
all corporate acts of the Company guided by the Statement of Policy, it being
expressly stipulated that no right to vote or to consent or to be consulted in
respect to all such deposited Class B Common Stock is created in or passes to
the holder of any Voting Trust Certificate by or under any such Voting Trust
Certificate, or by or under this agreement, or by or under any other agreement,
express or implied; provided, however, that upon any proposal for (i) the
dissolution of the Company, (ii) the sale, lease, exchange or other disposition,
other than by mortgage, deed of trust or pledge, of all, or substantially all,
the property and assets of the Company, (iii) the merger, consolidation, or
recapitalization of the Company, or (iv) any other proposal which, under
Articles III (2) G, V (5), VIII, IX (2) and (4), XII, XIII, XIV (3) and (4) or
XVI of the Certificate of Incorporation of the Company, requires the
18
<PAGE> 19
affirmative vote of the holders of record of at least a majority of the
aggregate voting power of the Class B Common Stock separately or together with
the Common Stock, the Trustees shall promptly notify all holders of Voting Trust
Certificates hereunder, and the Trustees shall not vote any share or shares of
such Class B Common Stock upon any such proposal except in accordance with the
written direction of the holder or holders of the Voting Trust Certificates
issued in respect of such share or shares of Class B Common Stock.
THE TRUSTEES
12. Except as provided in Paragraph 11, the Trustees shall
vote the shares of Class B Common Stock held by them or take any other action
with respect to such shares of Class B Common Stock as a unit in accordance with
the determination of a majority of the then acting Trustees; provided that such
majority shall include two out of three of EMILY RAUH PULITZER, MICHAEL E.
PULITZER and DAVID E. MOORE or their successors as Trustees, as designated as
provided in the first paragraph of Paragraph 13; and further provided, however,
that in the event of a tie vote among the then acting Trustees or in the event
that a majority of the Trustees does not include two out of three of EMILY RAUH
PULITZER, MICHAEL E. PULITZER and DAVID E. MOORE or their successors as
Trustees, as designated as provided in the first paragraph of Paragraph 13, as
to any matter, the Trustees shall promptly notify all holders of Voting Trust
Certificates hereunder, and the Trustees shall not vote any share or shares of
Class B Common Stock of the Company deposited hereunder with respect to that
matter except in accordance with the
19
<PAGE> 20
written direction of the holder or holders of the Voting Trust Certificates
issued in respect of such share or shares of Class B Common Stock.
The Trustees may meet at such time as they may determine, with
such notice as their rules may provide, and may act without a meeting by a
writing embodying their action. The Trustees may adopt their own rules of
procedure. At any meeting of the Trustees, any Trustee may vote in person or by
proxy given to any other Trustee, and any Trustee may give powers of attorney to
any other Trustee to sign for him any instrument expressing the actions of the
Trustees. The Trustees may vote by proxy at any meeting of the stockholders of
the Company, if the Trustees so elect, provided that such proxy be signed by at
least a majority of the then acting Trustees.
13. Subject to the provisions of subparagraph (a) hereof,
EMILY RAUH PULITZER, MICHAEL E. PULITZER and DAVID E. MOORE shall serve as
Trustees, whether or not they serve or continue to serve as Company officers,
and each shall be permitted to appoint a successor as Trustee to act in the
event of his or her resignation or inability for any reason to act as Trustee
hereunder. Any successor Trustee appointed as provided hereunder shall have the
same rights and powers as if originally named herein, and any such successor or
successors shall similarly be authorized to appoint a successor as Trustee in
the event of the resignation or inability of such successor or successors to act
as Trustee hereunder. Any appointment of a successor Trustee hereunder shall be
made by written instrument signed and acknowledged by the Trustee making such
appointment and filed with the Trustees acting hereunder and may be revoked by
such Trustee at any time before the appointment becomes operative.
20
<PAGE> 21
ROBERT C. WOODWORTH, President and Chief Executive Officer,
RONALD H. RIDGWAY, Senior Vice President-Finance, and COLE C. CAMPBELL, Editor -
St. Louis Post- Dispatch, shall serve as such Trustees so long and only so long
as they occupy the above-described positions with the Company (or, in the case
of Cole C. Campbell, the St. Louis Post-Dispatch) now held by them,
respectively. Should any of them resign, retire, become deceased or otherwise
cease to act in the position with the Company (or, in the case of Cole C.
Campbell, the St. Louis Post- Dispatch), now held by him as above described, the
person appointed to the position in the Company (or the St. Louis Post-Dispatch)
held by such Trustee shall become Trustee in his place and stead by signifying
his acceptance of such trusteeship, it being the intention of this agreement
that the persons holding the Company positions of Chairman of the Board, Chief
Executive Officer and Senior Vice President-Finance and the position of Editor -
St. Louis Post-Dispatch shall always be Trustees and that in the event of a
vacancy occurring in any of these positions, the corresponding trusteeship shall
remain vacant until the position is filled.
In the event MICHAEL E. PULITZER resigns, retires or otherwise
ceases to act in the position of Chairman of the Board, the person appointed to
the position of Chairman of the Board shall become an additional Trustee
(provided he is not already a Trustee) by signifying his acceptance of such
trusteeship and shall serve as such Trustee so long as he occupies the position
of Chairman of the Board and should he resign, retire, become deceased or cease
to act in such position with the Company the next person appointed to the
position of Chairman of the Board shall become Trustee in his place and stead by
signifying his acceptance of such trusteeship.
21
<PAGE> 22
Pending the appointment of a successor Trustee to fill any
vacancy, the Trustees then remaining in office shall possess and may exercise
all the powers of the Trustees hereunder.
Notwithstanding any vacancy or change in the Trustees, the
certificate or certificates for shares of Class B Common Stock of the Company
standing in the name of the Trustees may be endorsed and transferred by any
Trustees or successor Trustees then acting.
(a) Each of EMILY RAUH PULITZER, MICHAEL E. PULITZER and DAVID
E. MOORE (individually, "Initial Depositing Stockholder"), or his or her
respective successor Trustee designated by him or her or his or her successors
as Trustee, shall continue to serve as Trustee hereunder only so long as the
Initial Depositing Stockholder and his or her Family (as defined below) hold
Voting Trust Certificates representing 20% or more of the Class B Common Stock
originally deposited by the Initial Depositing Stockholder and his or her Family
hereunder. Appropriate adjustment shall be made for stock dividends, stock
splits, or reverse splits of the Class B Common Stock. For purposes of this
subparagraph (a), the term "Family" shall mean the persons and entities which
shall have any of the following relationships to an Initial Depositing
Stockholder: (i) spouse or former spouse, (ii) lineal descendant of such Initial
Depositing Stockholder or of the spouse or former spouse of such Initial
Depositing Stockholder, (iii) spouse or former spouse of any such lineal
descendant, (iv) trust established either before or after the date of this
agreement by such Initial Depositing Stockholder or any of the foregoing, (v)
trust established either before or after the date of this agreement of which any
of the foregoing is a grantor and which is a Permitted Transferee or (vi) the
estate of any of the foregoing persons. All references in the foregoing sentence
to "spouse or former spouse" shall include a deceased spouse.
22
<PAGE> 23
14. The Trustees may employ counsel and incur other
indebtedness or expenses deemed necessary by them for the proper discharge of
their duties and shall be reimbursed for any such expenses by the Voting Trust
Certificate holders, and to that end shall be entitled to deduct on a pro rata
basis any such indebtedness or expenses incurred by them from the dividends
received by them or to which they may become entitled on Class B Common Stock of
the Company deposited hereunder before paying or causing such dividends to be
paid to the Voting Trust Certificate holders.
15. The Depositing Stockholders expressly agree that any
Trustee may at the same time be an officer, director, consultant, agent, or
employee of the Company or of any affiliated or subsidiary company, and may be
or become pecuniarily interested in his personal capacity, either directly or
indirectly, in any matter or transaction to which the Company or any affiliated
or subsidiary company may be a party or in which it may be concerned to the same
extent as though he were not a Trustee.
The Depositing Stockholders likewise expressly agree that any
Trustee may, for his personal account or otherwise, either acquire from or sell
to the Company, any affiliated or subsidiary company or any stockholder shares
of stock or other securities of the Company or Voting Trust Certificates to the
same extent as though he were not a Trustee.
The Depositing Stockholders likewise expressly agree that the
Company or any affiliated or subsidiary company may either acquire from or sell
to any Trustee, for his personal account or otherwise, shares of stock or other
securities of the Company or Voting Trust Certificates to the same extent as
though he were not a Trustee.
23
<PAGE> 24
The Depositing Stockholders likewise expressly agree that any
Trustee may, in his personal capacity or otherwise, become a Voting Trust
Certificate holder either by depositing hereunder any certificate or
certificates for shares of Class B Common Stock now or at any time hereafter
owned by him or by acquiring any Voting Trust Certificate and, as such Voting
Trust Certificate holder, shall be entitled to exercise all rights and options
conferred upon Voting Trust Certificate holders under this agreement to the same
extent as though he were not a Trustee.
The Depositing Stockholders recognize that the Trustees who
are respectively the Chairman of the Board, Chief Executive Officer, Senior Vice
President-Finance and Editor - St. Louis Post-Dispatch do at this time receive,
and such Trustees and their successors will hereafter be entitled to receive,
substantial compensation for their services as officers or employees of the
Company or its subsidiaries, that David E. Moore acts as a Director of, and
consultant to, the Company and is compensated for his services and that Emily
Rauh Pulitzer acts as a Director of, and consultant to, the Company and is
compensated for her services (the "Compensated Trustees").
The Depositing Stockholders accordingly do expressly agree
that the Compensated Trustees may continue to receive such compensation, of
whatever character, as is provided by their existing contracts, if any, with the
Company or its subsidiaries, with complete propriety and without disqualifying
themselves to act as Trustees hereunder; and they do further expressly agree
that upon the expiration of the existing contracts, if any, with the Compensated
Trustees, or sooner by mutual agreement, the Company, or its subsidiaries and
such Compensated Trustees, may enter into new contracts which may change or
increase their compensation, because of changing circumstances and
responsibilities. The Depositing Stockholders recognize that it would be unfair
to limit in any way
24
<PAGE> 25
the right of the Compensated Trustees to adequate compensation for their
services to the Company or its subsidiaries. The Depositing Shareholders further
recognize that, in order to carry out the purposes of this agreement, it is, or
may be, necessary that the Compensated Trustees act at the same time as Trustees
hereunder, as Directors of the Company, and as officers, consultants or
employees of the Company or its subsidiaries; and they do agree that the
qualifications or eligibility of the Compensated Trustees so to act in any of
these capacities shall not be impaired by reason of the fact that they act in
the other capacities also. All and singular the provisions of this paragraph
shall apply with equal force to any and all successor Trustees under the
provisions of Paragraph 13 hereof.
The Compensated Trustees shall not be entitled to compensation
for their services as Trustees hereunder, but the successor or successors to
Emily Rauh Pulitzer, Michael E. Pulitzer and David E. Moore designated as
provided in the first paragraph of Paragraph 13 hereof shall be entitled to
compensation for their services hereunder equal to the compensation paid by the
Company to its outside directors for their services to the Company as directors.
16. In voting or giving directions for voting the shares of
Class B Common Stock deposited hereunder or in exercising any consent with
respect thereto, the Trustees will exercise their best judgment, guided by the
Statement of Policy, as set forth in the preamble hereto, from time to time, to
select suitable Directors of the Company to the end that the affairs of the
Company shall be properly managed in the interest of its stockholders, and in
voting or giving directions for voting and acting on other matters for
stockholders' action the Trustees will exercise like judgment, guided by the
Statement of Policy; provided, however, that the Trustees assume no
responsibility in respect of such management or in respect to any action taken
by them or taken in pursuance of their consent
25
<PAGE> 26
thereto, or in pursuance of their votes, and no Trustee shall incur or be under
any liability as the holder of securities of the Company as Trustee, fiduciary
or otherwise, by reason of any error of law or any error in the construction of
this agreement or of any matter or thing done or suggested or omitted to be done
in this agreement, except for his own individual malfeasance or wilful neglect.
No bond shall be required of any Trustee for the performance
of his services as such.
GENERAL PROVISIONS
17. This agreement and all covenants herein contained shall
inure to the benefit of and be binding upon the parties hereto, their heirs,
executors, administrators, successors and assigns.
18. Any written notice required to be given under this
agreement shall be deemed to have been given and received if deposited in the
United States mail in a postpaid wrapper addressed as follows:
In case of a notice to the Trustees or to the Company,
addressed to the Trustees or to the Company, as the case may be, at the office
of the Company.
In case of a notice to a Voting Trust Certificate holder,
addressed to such Certificate holder at his or her last address appearing on the
records of the Trustees.
19. This agreement and the Voting Trust Certificates issued
hereunder may be amended upon the consent in writing of the holders of sixty-six
and two-thirds percent (66-2/3%) in interest of the Voting Trust Certificates
then issued and outstanding under this agreement; provided, however, that no
amendment which shall have the effect of extending the time for
26
<PAGE> 27
termination of this Voting Trust Agreement shall be made without the consent in
writing of the holders of all the then issued and outstanding Voting Trust
Certificates.
20. This agreement shall be binding upon each of the parties
executing the same from the date of its execution by such party. The trust
created hereunder shall be effective as of the date hereof, and this agreement
and the trust created hereunder shall remain in full force and effect until the
___ day of March, 2009, but shall terminate prior to that date upon the
dissolution of the Company. This agreement and the trust created hereunder may
be terminated at any time with the consent in writing of the holders of
sixty-six and two-thirds percent (66-2/3%) in interest of the Voting Trust
Certificates then issued and outstanding under this agreement.
21. The invalidity or unenforceability of any term or
provision of this agreement shall not affect the validity of the remainder
hereof.
22. The term "Trustee" or "Trustees" wherever used herein
means the trustee or trustees for the time acting, and shall include the
successor trustee or trustees.
23. The Trustees hereby accept the trusts in this agreement
declared and provided and agree faithfully to perform the same upon the terms
and conditions hereinabove set forth.
24. All questions concerning the validity and administration
of this agreement, and the trust created hereunder, shall be determined under
the law of the State of Delaware.
25. This agreement may be executed by the parties herein, or
any of them, in any number of counterparts, with the same force and effect as if
they had all executed the same instrument.
27
<PAGE> 28
26. The definitions herein shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.
POWER OF ATTORNEY
27. In order to facilitate the execution and filing with the
Securities and Exchange Commission of a Schedule 13-D, including any and all
amendments thereto, with respect to this Voting Trust, each of the Depositing
Stockholders hereby grants to each of the Trustees and James V. Maloney the
following power of attorney for the limited purposes set forth herein.
Each of the Depositing Stockholders hereby irrevocably
constitutes and appoints each of the Trustees and James V. Maloney
(individually, the "Attorney"), acting singly, the true and lawful agent and
attorney-in-fact of the Depositing Stockholder, with full power and authority,
in the Depositing Stockholder's name, place and stead, to execute and deliver,
on behalf of the Depositing Stockholder at any time a Schedule 13-D, or any and
all amendments thereto, with all exhibits thereto and other documents in
connection therewith, as required by the securities laws, the execution and
delivery by the Attorney of such Schedule 13-D or amendments thereto being
conclusive evidence that such execution and delivery were authorized hereby.
It is expressly understood and intended by each of the
Depositing Stockholders that the power of attorney granted in this Paragraph 27
(the "13-D Power of Attorney") is coupled with an interest, is irrevocable and
shall in all respects constitute a durable power of attorney. This 13-D Power of
Attorney shall survive the death or incapacity of the Depositing Stockholder, or
if the
28
<PAGE> 29
Depositing Stockholder is a partnership, corporation, trust or other entity, the
dissolution, liquidation or termination thereof, or the assignment of any or all
of the Depositing Stockholder's Voting Trust Certificates. This 13-D Power of
Attorney shall terminate upon the later to occur of (i) the last Schedule 13-D
filing, including any and all amendments thereto, as required by the securities
laws, with respect to this Voting Trust or (ii) thirty (30) days immediately
following the termination of this agreement or the date the Depositing
Stockholder shall cease to be a Depositing Stockholder, as the case may be.
29
<PAGE> 30
IN WITNESS WHEREOF, the Trustees and the Depositing
Stockholders have hereunto set their hands and seals as of the day and year
first above written.
TRUSTEES
_________________________
Cole C. Campbell
_________________________
David E. Moore
_________________________
Emily Rauh Pulitzer
_________________________
Michael E. Pulitzer
_________________________
Ronald H. Ridgway
_________________________
Robert C. Woodworth
30
<PAGE> 31
No. of Deposited
Depositing Date of Shares of Class
Stockholders Execution B Common Stock
- ------------ --------- ----------------
Emily Rauh Pulitzer,
James V. Maloney and William
Bush, Successor Trustees of
Marital Trust A U/T Joseph
Pulitzer, Jr. dtd 6/12/74,
as amended 10/20/92
By:___________________________
Emily Rauh Pulitzer, Trustee
By:___________________________
James V. Maloney, Trustee
By:___________________________ ____________ ________________
William Bush, Trustee
Emily Rauh Pulitzer,
James V. Maloney and William
Bush, Successor Trustees of
Marital Trust B U/T Joseph
Pulitzer, Jr. dtd 6/12/74,
as amended 10/20/92
By:___________________________
Emily Rauh Pulitzer, Trustee
By:___________________________
James V. Maloney, Trustee
By:___________________________ ____________ _________________
William Bush, Trustee
31
<PAGE> 32
No. of Deposited
Depositing Date of Shares of Class
Stockholders Execution B Common Stock
- ------------ --------- ----------------
______________________________ ____________ ___________________
David E. Moore
Michael E. Pulitzer, as Trustee
U/A dtd 3/22/82
F/B/O Michael E. Pulitzer
By: __________________________ _____________ ___________________
Michael E. Pulitzer,
Trustee
The Ceil and Michael E.
Pulitzer Foundation, Inc.
By:___________________________ ____________ ___________________
Michael E. Pulitzer,
President
______________________________ ____________ ___________________
Emily Rauh Pulitzer
______________________________ ____________ ___________________
Katherine C. Moore
______________________________ ____________ ___________________
Barbara F. Moore
______________________________ ____________ ___________________
David E. Moore, Jr.
______________________________ ____________ ___________________
Deborah Moore
32
<PAGE> 33
No. of Deposited
Depositing Date of Shares of Class
Stockholders Execution B Common Stock
- ------------ --------- ----------------
James V. Maloney and William Bush,
Trustees of the Bianca Pulitzer 1998
Family Trust U/I dtd 2/9/98
By: ___________________________
William Bush, Trustee
By: ___________________________ ____________ ______________
James V. Maloney, Trustee
______________________________ ____________ _______________
Kate C. Moore
______________________________ ____________ _______________
Richard W. Moore
______________________________ ____________ _______________
Timothy P. Moore
______________________________ ____________ _______________
Joseph Pulitzer IV
______________________________ ____________ _______________
Michael E. Pulitzer, Jr.
______________________________ ____________ _______________
Ramelle C. Pulitzer
33
<PAGE> 34
No. of Deposited
Depositing Date of Shares of Class
Stockholders Execution B Common Stock
- ------------ --------- ----------------
______________________________ ____________ ______________
Robert Stair Pulitzer
______________________________ ____________ ______________
Elizabeth E. Pulitzer Voges
______________________________ ____________ ______________
Christina H. Eisenbeis
______________________________ ____________ ______________
Alexander F. Moore
______________________________ ____________ ______________
Meredith C. Moore
Mark C. Eisenbeis, Trustee of the
Mark Eisenbeis Trust dtd 7/19/91
By: __________________________ ____________ ______________
Mark C. Eisenbeis, Trustee
______________________________ ____________ ______________
Catherine Dory Culver
34
<PAGE> 35
No. of Deposited
Depositing Date of Shares of Class
Stockholders Execution B Common Stock
- ------------ --------- ----------------
Richard A. Palmer, as Trustee
U/A dtd 8/16/83 F/B/O
Michael E. Pulitzer
By:___________________________ ____________ ______________
Richard A. Palmer, Trustee
William Bush and Richard A.
Palmer, Trustees U/I
dtd 11/3/87 F/B/O Bianca
Pulitzer
By:___________________________
William Bush, Trustee
By:___________________________ ______________ ______________
Richard A. Palmer, Trustee
William Bush and Richard A.
Palmer, Trustees U/I
dtd 11/3/87 F/B/O Elinor
Pulitzer
By:___________________________
William Bush, Trustee
By:___________________________ ____________ ______________
Richard A. Palmer, Trustee
35
<PAGE> 36
No. of Deposited
Depositing Date of Shares of Class
Stockholders Execution B Common Stock
- ------------ --------- ----------------
William Bush and Richard A.
Palmer, Trustees U/I
dtd 11/3/87 F/B/O Elkhanah
Pulitzer
By:___________________________
William Bush, Trustee
By:___________________________ ____________ ______________
Richard A. Palmer, Trustee
William Bush and Richard A.
Palmer, Trustees U/I
dtd 11/3/87 F/B/O Joseph
Pulitzer V
By:___________________________
William Bush, Trustee
By:___________________________ ____________ ______________
Richard A. Palmer, Trustee
36
<PAGE> 37
No. of Deposited
Depositing Date of Shares of Class
Stockholders Execution B Common Stock
- ------------ --------- ----------------
James V. Maloney and William Bush,
Trustees of the Elkhanah Pulitzer 1998
Family Trust U/I dtd 2/9/98
By:___________________________
James V. Maloney, Trustee
By:___________________________ ____________ ______________
William Bush, Trustee
William Bush and Richard A.
Palmer, Trustees U/I
dtd 1/14/88 F/B/O
Theodosia Cochrane Pulitzer
By:___________________________
William Bush, Trustee
By:___________________________ ____________ ______________
Richard A. Palmer, Trustee
37
<PAGE> 38
No. of Deposited
Depositing Date of Shares of Class
Stockholders Execution B Common Stock
- ------------ --------- ----------------
William Bush and Richard A.
Palmer, Trustees U/I
dtd 1/14/88 F/B/O Michael
E. Pulitzer III
By:___________________________
William Bush, Trustee
By:___________________________ ____________ _____________
Richard A. Palmer, Trustee
38
<PAGE> 39
No. of Deposited
Depositing Date of Shares of Class
Stockholders Execution B Common Stock
- ------------ --------- ----------------
William Bush and Richard A.
Palmer, Trustees U/I
dtd 1/14/88 F/B/O Philip
Sherwood Pulitzer
By:___________________________
William Bush, Trustee
By:___________________________ ____________ ______________
Richard A. Palmer, Trustee
William Bush and Richard A.
Palmer, Trustees U/I
dtd 1/14/88 F/B/O Samuel
Pulitzer
By:___________________________
William Bush, Trustee
By:___________________________ ____________ ______________
Richard A. Palmer, Trustee
39
<PAGE> 40
No. of Deposited
Depositing Date of Shares of Class
Stockholders Execution B Common Stock
- ------------ --------- ----------------
William Bush and Richard A.
Palmer, Trustees U/I
dtd 3/12/96 F/B/O Harrison
Stell Golding
By:___________________________
William Bush, Trustee
By:___________________________ ____________ _____________
Richard A. Palmer, Trustee
William Bush and Richard A.
Palmer, Trustees U/I
dtd 1/14/88 F/B/O Sarah
G. Pulitzer
By:___________________________
William Bush, Trustee
By:___________________________ ____________ _____________
Richard A. Palmer, Trustee
40
<PAGE> 41
No. of Deposited
Depositing Date of Shares of Class
Stockholders Execution B Common Stock
- ------------ --------- ----------------
William Bush and Richard A.
Palmer, Trustees U/I
dtd 5/4/90 F/B/O Shelton
Campbell Voges III
By:___________________________
William Bush, Trustee
By:___________________________ ____________ __________
Richard A. Palmer, Trustee
William Bush and Richard A.
Palmer, Trustees U/I
dtd 10/19/90 F/B/O
Clarissa Reed Dore Golding
By:___________________________
William Bush, Trustee
By:___________________________ ____________ __________
Richard A. Palmer, Trustee
41
<PAGE> 42
No. of Deposited
Depositing Date of Shares of Class
Stockholders Execution B Common Stock
- ------------ --------- ----------------
William Bush and Richard A.
Palmer, Trustees U/I
dtd 10/21/93 F/B/O
Grayson Carroll Voges
By:___________________________
William Bush, Trustee
By:___________________________ ____________ __________
Richard A. Palmer, Trustee
______________________________ ____________ __________
Timothy P. Moore, as Custodian
for Elisabeth W. Moore
______________________________ ____________ __________
Timothy P. Moore, as Custodian
for Zachary P. Moore
Emily Rauh Pulitzer, as Trustee
of the Pulitzer Family Trust
By: __________________________ ____________ __________
Emily Rauh Pulitzer, Trustee
42
<PAGE> 43
No. of Deposited
Depositing Date of Shares of Class
Stockholders Execution B Common Stock
- ------------ --------- ----------------
Spring Foundation
By: __________________________ ____________
Emily Rauh Pulitzer, Trustee
By:___________________________
James V. Maloney, Trustee
By:__________________________ _____________ __________
William Bush, Trustee
_____________________________ ____________ __________
Deborah W. Moore, as Custodian
for Zachary P. Moore
_____________________________ ____________ __________
Deborah W. Moore, as Custodian
for Elisabeth W. Moore
_____________________________ ____________ __________
Ramelle C. Pulitzer, as Custodian
for Theodosia C. Pulitzer
_____________________________ ____________ __________
Ramelle C. Pulitzer, as Custodian
for Philip S. Pulitzer
43
<PAGE> 44
No. of Deposited
Depositing Date of Shares of Class
Stockholders Execution B Common Stock
- ------------ --------- ----------------
_____________________________ ____________ __________
Ramelle C. Pulitzer, as Custodian
for Michael E. Pulitzer III
______________________________ ____________ __________
Barbara F. Moore, as Custodian
for Anne L. Moore
______________________________ ____________ __________
David E. Moore, Jr., as Custodian
for Alida Livingston Moore
______________________________ ____________ __________
Richard W. Moore, Jr., as Custodian
for Anne L. Moore
_____________________________ ____________ __________
David E. Moore, Jr., as Custodian
for Clement Clarke Moore
David E. Moore, as Trustee
David E. Moore 1998 Grantor
Annuity Trust dtd 2/5/98
By: _______________________ ____________ __________
David F. Moore, Trustee
44
<PAGE> 45
No. of Deposited
Depositing Date of Shares of Class
Stockholders Execution B Common Stock
- ------------ --------- ----------------
Cecille Stell Pulitzer, Trustee
U/I Cecille Stell Pulitzer
dtd 7/19/91
By: ________________________ ____________ __________
Cecille Stell Pulitzer, Trustee
45
<PAGE> 46
EXHIBIT A
A "Withdrawal Request" as referred to in subparagraph (a)(3)A.
of Paragraph 2 of the Voting Trust Agreement, shall be in the following form:
WITHDRAWAL REQUEST
Dated ________________, ____
To Trustees
Under Voting
Trust Agreement
Dated as of March __, 1999
("Voting Trust Agreement")
c/o Pulitzer Inc.
900 North Tucker Boulevard
St. Louis, Missouri 63101
The undersigned hereby requests the withdrawal of ___________
shares of Common Stock of Pulitzer Inc. (the "Company"), into which is
convertible all or part of the shares of Class B Common Stock of the Company
represented by the enclosed Voting Trust Certificate(s) No(s).
____________________ registered in the undersigned's name, which shares of
Common Stock the undersigned has sold in accordance with the provisions of
subparagraph (a)(1)A. of Paragraph 2 of the Voting Trust Agreement.
You are authorized and directed by the undersigned to convert
into the above number of shares of Common Stock the requisite number of shares
of Class B Common Stock represented by the enclosed Voting Trust Certificate(s),
it being understood by the undersigned that, under the Company's Restated
Certificate of Incorporation, Common Stock may not thereafter be reconverted
into Class B Common Stock of the Company.
<PAGE> 47
The undersigned hereby represents and warrants to, and agrees
with, you, the Company and First Chicago Trust Company of New York, as the
Transfer Agent for the Common Stock, that: (i) the sale of the shares of Common
Stock referred to in the first paragraph hereof is being made in compliance with
subparagraph (a)(1)A. of Paragraph 2 of the Voting Trust Agreement; (ii) the
closing of such sale will be held on ________ ___, _____ and further information
concerning the time and place of such closing, as well as the denominations and
registrations of certificates to be delivered thereat in accordance with
subparagraph (a)(3)A. of Paragraph 2 of the Voting Trust Agreement, will be
delivered to the Company, BNY Trust Company of Missouri ("the Depositary") and
the Transfer Agent not less than 48 hours prior to such closing date; (iii) all
conditions in Paragraph 2 of the Voting Trust Agreement as to the withdrawal of
the shares of Common Stock requested hereby, to be satisfied by the undersigned,
have been, or will, prior to such closing, be, satisfied, and all procedures set
forth therein, to be complied with by the undersigned, have been, or prior to
such closing will be, complied with; and (iv) any additional documents, opinions
of legal counsel, or other materials reasonably required of the undersigned by
you, the Company, the Depositary or the Transfer Agent in connection with the
matters that are the subject of this Withdrawal Request will be furnished by the
undersigned at or in advance of the closing.
-------------------------------
[Name]
cc: (1) Pulitzer Inc.
(2) Depositary
(3) Transfer Agent
-2-
<PAGE> 48
EXHIBIT A-1
A "Withdrawal Request" as referred to in subparagraph (b) of
Paragraph 2 of the Voting Trust Agreement, shall be in the following form:
WITHDRAWAL REQUEST
Dated ________________, ____
To Trustees
Under Voting
Trust Agreement
Dated as of March __, 1999
("Voting Trust Agreement")
c/o Pulitzer Inc.
900 North Tucker Boulevard
St. Louis, Missouri 63101
The undersigned hereby requests the withdrawal of ___________
shares of Common Stock of Pulitzer Inc. (the "Company"), into which is
convertible all or part of the shares of Class B Common Stock of the Company
represented by the enclosed Voting Trust Certificate(s) No(s).
____________________ registered in the undersigned's name, which shares of
Common Stock the undersigned has withdrawn in accordance with the provisions of
subparagraph (b) of Paragraph 2 of the Voting Trust Agreement.
You are authorized and directed by the undersigned to convert
into the above number of shares of Common Stock the requisite number of shares
of Class B Common Stock represented by the enclosed Voting Trust Certificate(s),
it being understood by the undersigned that, under the Company's Restated
Certificate of Incorporation, Common Stock may not thereafter be reconverted
into Class B Common Stock of the Company.
<PAGE> 49
The undersigned hereby represents and warrants to, and agrees
with, you, the Company and First Chicago Trust Company of New York, as the
Transfer Agent for the Common Stock, that: (i) the number of shares to be
withdrawn in accordance with subparagraph (b) of Paragraph 2 of the Voting Trust
Agreement (a "Paragraph 2(b) Withdrawal"), when aggregated with all other
previous Paragraph 2(b) Withdrawals by the undersigned, does not exceed the
limitation on the number of shares of Common Stock which may be withdrawn
pursuant thereto; (ii) all conditions in Paragraph 2 of the Voting Trust
Agreement as to the withdrawal of the shares of Common Stock requested hereby,
to be satisfied by the undersigned, have been, or will, prior to such
withdrawal, be, satisfied, and all procedures set forth therein, to be complied
with by the undersigned, have been, or prior to such withdrawal will be,
complied with; and (iii) any additional documents, opinions of legal counsel, or
other materials reasonably required of the undersigned by you, the Company, BNY
Trust Company of Missouri, as Depositary, or the Transfer Agent in connection
with the matters that are the subject of this Withdrawal Request will be
furnished by the undersigned at or in advance of the withdrawal.
-------------------------------
[Name]
cc: (1) Pulitzer Inc.
(2) Depositary
(3) Transfer Agent
-2-
<PAGE> 50
EXHIBIT B
INSTRUCTION REQUEST
Dated ______________, _____
To Trustees
Under Voting
Trust Agreement
Dated as of March __, 1999
("Voting Trust Agreement")
c/o Pulitzer Inc.
900 North Tucker Boulevard
St. Louis, Missouri 63101
The undersigned hereby requests that the stock certificates
representing the __________ shares of Common Stock, $.01 par value, of Pulitzer
Inc., being withdrawn from the provisions of the Voting Trust Agreement pursuant
to subparagraph (a)(1)(A). of Paragraph 2 thereof, under a Withdrawal Request
dated __________________ and duly executed and delivered to the Trustees by the
undersigned, be issued and registered in the following names and denominations.
Names Denominations
----- -------------
-------------------------------------
Name
cc: (1) Pulitzer Inc.
(2) Depositary
(3) Transfer Agent
<PAGE> 51
EXHIBIT B-I
INSTRUCTION REQUEST
Dated ______________, _____
To Trustees
Under Voting
Trust Agreement
Dated as of March __, 1999
("Voting Trust Agreement")
c/o Pulitzer Inc.
900 North Tucker Boulevard
St. Louis, Missouri 63101
The undersigned hereby requests that the stock certificates
representing the __________ shares of Common Stock, $.01 par value, of Pulitzer
Inc., being withdrawn from the provisions of the Voting Trust Agreement pursuant
to subparagraph (a)(1)B. of Paragraph 2 thereof, under a Withdrawal Request
dated __________________ and duly executed and delivered to the Trustees by the
undersigned, be issued and registered in the following names and denominations.
Names Denominations
----- -------------
-------------------------------------
Name
cc: (1) Pulitzer Inc.
(2) Depositary
(3) Transfer Agent
<PAGE> 52
EXHIBIT B-II
INSTRUCTION REQUEST
Dated ______________, _____
To Trustees
Under Voting
Trust Agreement
Dated as of March __, 1999
("Voting Trust Agreement")
c/o Pulitzer Inc.
900 North Tucker Boulevard
St. Louis, Missouri 63101
The undersigned hereby requests that the stock certificates
representing the __________ shares of Common Stock, $.01 par value, of Pulitzer
Inc., being withdrawn from the provisions of the Voting Trust Agreement pursuant
to subparagraph (b) of Paragraph 2 thereof, under a Withdrawal Request dated
__________________ and duly executed and delivered to the Trustees by the
undersigned, be issued and registered in the following names and denominations.
Names Denominations
----- -------------
-------------------------------------
Name
cc: (1) Pulitzer Inc.
(2) Depositary
(3) Transfer Agent
<PAGE> 53
EXHIBIT C
A "Withdrawal Request" as referred to in subparagraph (b) of
Paragraph 2 of the Voting Trust Agreement, shall be in the following form:
WITHDRAWAL REQUEST
Dated ________________, ____
To Trustees
Under Voting
Trust Agreement
Dated as of March __, 1999
("Voting Trust Agreement")
c/o Pulitzer Inc.
900 North Tucker Boulevard
St. Louis, Missouri 63101
The undersigned hereby requests the withdrawal of ___________
shares of Common Stock of Pulitzer Inc. (the "Company"), into which is
convertible all or part of the shares of Class B Common Stock of the Company
represented by the enclosed Voting Trust Certificate(s) No(s).
____________________ registered in the undersigned's name, which shares of
Common Stock the undersigned has withdrawn in accordance with the provisions of
subparagraph (b) of Paragraph 2 of the Voting Trust Agreement.
You are authorized and directed by the undersigned to convert
into the above number of shares of Common Stock the requisite number of shares
of Class B Common Stock represented by the enclosed Voting Trust Certificate(s),
it being understood by the undersigned that, under the Company's Restated
Certificate of Incorporation, Common Stock may not thereafter be reconverted
into Class B Common Stock of the Company.
<PAGE> 54
The undersigned hereby represents and warrants to, and agrees
with, you, the Company and First Chicago Trust Company of New York, as the
Transfer Agent for the Common Stock, that: (i) the number of shares to be
withdrawn in accordance with subparagraph (b) of Paragraph 2 of the Voting Trust
Agreement (a "Paragraph 2(b) Withdrawal"), when aggregated with all other
previous Paragraph 2(b) Withdrawals by the undersigned, does not exceed the
limitation on the number of shares of Common Stock which may be withdrawn
pursuant thereto; (ii) all conditions in Paragraph 2 of the Voting Trust
Agreement as to the withdrawal of the shares of Common Stock requested hereby,
to be satisfied by the undersigned, have been, or will, prior to such
withdrawal, be, satisfied, and all procedures set forth therein, to be complied
with by the undersigned, have been, or prior to such withdrawal will be,
complied with; and (iii) any additional documents, opinions of legal counsel, or
other materials reasonably required of the undersigned by you, the Company, BNY
Trust Company of Missouri, as Depositary, or the Transfer Agent in connection
with the matters that are the subject of this Withdrawal Request will be
furnished by the undersigned at or in advance of the withdrawal.
-------------------------------
[Name]
cc: (1) Pulitzer Inc.
(2) Depositary
(3) Transfer Agent
-2-
<PAGE> 55
EXHIBIT D
GENERAL PLEDGE AGREEMENT
As collateral security for the payment of all indebtedness,
obligations or liabilities of the undersigned to ______________________________
__________________ ("Bank"), under the ___________________ dated the date hereof
(the "Loan Agreement") between the undersigned and Bank and for the payment of
the Promissory Note ("Note") executed by the undersigned pursuant thereto
(collectively called "liabilities"), the undersigned hereby pledges and delivers
and/or gives to Bank a general lien upon and/or right of set-off as to the
following: all the securities, hereinafter set forth and described in the
Collateral Schedule (as defined herein), together with all stock splits, stock
dividends or other distributions of stock or other securities thereon
(collectively the "collateral security"). Any reference herein to the Collateral
Schedule shall mean and be deemed to include the Collateral Schedule executed by
the undersigned and delivered to Bank concurrently herewith and any additional
or superseding Collateral Schedule executed and delivered by the undersigned in
favor of and to Bank, provided Bank shall have delivered a copy thereof to the
Voting Trustees under the Voting Trust Agreement referred to below by delivery
to the individual(s) designated to receive notice on behalf of the Voting
Trustees pursuant to Paragraph 2(e) of the Voting Trust Agreement.
If at any time any collateral security shall become
unsatisfactory to Bank by reason of decline in value thereof in the opinion of
Bank, or for any other reason, the Bank may demand at any time or from time to
time the pledge and deposit with Bank of such additional collateral security, or
such payment on account, as will be satisfactory to Bank in accordance with the
Loan Agreement.
Subject to the provisions of the Power of Attorney granted by
the undersigned to Bank on the date thereof (the "Power of Attorney") and the
provisions of Paragraphs 2 and 5 of the Voting Trust Agreement referred to
therein (the "Voting Trust Agreement"), upon the occurrence of an Event of
Default under the Loan Agreement, Bank may (1) appropriate and apply toward the
payment and discharge of any such liability, moneys on deposit or otherwise held
by Bank for the account of, to the credit of, or belonging to the undersigned,
(2) sell or cause to be sold any collateral security, and (3) exercise any or
all the rights and remedies of a secured party under the Uniform Commercial Code
of the State of ___________ (the "Code"). Any sale of collateral may be made
without demand of performance and any requirement of the Code for reasonable
notice to the undersigned shall be met if such notice is mailed, postage
prepaid, to the undersigned at his address as it appears herein or as last shown
on the records of Bank at least five business days before the time of sale,
disposition or other event giving rise to the notice. The undersigned agrees it
shall be reasonable for the Bank to sell the collateral security on credit for
present or future delivery without any assumption of any credit risk. In case of
a public sale, notice published by Bank for ten days in a newspaper of general
circulation in the city of _____________ shall be sufficient. The proceeds of
any sale, or sales, of collateral security shall be applied by Bank in the
following order: (1) to expenses, including expense for any legal services,
arising from the enforcement of any of the
<PAGE> 56
provisions hereof, or of any of the liabilities, or of any actual or attempted
sale; (2) to the payment of or the reduction of any liability of any of the
undersigned to Bank with the right of Bank to distribute or allocate such
proceeds as Bank shall elect, and its determination with respect to such
allocation shall be conclusive, however making proper rebate of interest or
discount in case of allocation to any item not due; (3) to the payment of any
surplus remaining after payment of the amounts mentioned, to the undersigned or
to whomsoever may be lawfully entitled thereto. If any deficiency arises upon
any such sale or sales, the undersigned agrees to pay the amount of such
deficiency promptly upon demand with legal interest. Notwithstanding that Bank
may continue to hold the collateral security and regardless of the value
thereof, the undersigned shall be and remain liable for the payment in full of
principal and interest of any balance of the liabilities and expenses any time
unpaid.
Subject to compliance with the provisions of the Loan
Agreement, the Power of Attorney and Paragraphs 2 and 5 of the Voting Trust
Agreement (including, without limitation, restrictions on the ability to sell or
transfer the Voting Trust Certificate described in the Collateral Schedule, the
shares of Class B Common Stock represented thereby, or the shares of Common
Stock into which the Class B Common Stock may be converted), at any time,
whether prior to or after default in the payment of any liability of the
undersigned to Bank, Bank may at its option, but shall not be obligated to, (1)
have transferred to or registered in the name of Bank or its nominee or
nominees, any collateral security and thereafter exercise all rights with
respect thereto as the absolute owner thereof, without notice or liability to
the undersigned, except to account for money or property actually received by
Bank; provided, however, that Bank may treat all cash proceeds as additional
collateral and such proceeds need not be applied to the reduction of the
liability of the undersigned unless Bank so elects; (2) in Bank's name, or in
the name of the undersigned, demand, sue for, collect, and receive money,
securities or other property which may at any time be payable or receivable on
account of or in exchange for any collateral security, or make any compromise or
settlement that Bank considers desirable with respect thereto or renew or extend
the time of payment or otherwise modify the terms of any obligation included in
the collateral security; provided, however, it is expressly agreed that the Bank
shall not be obligated to take any step to preserve rights against prior parties
on any of the collateral, and that reasonable care of the collateral shall not
include the taking of any such step; (3) foreclose the lien of any security
interest included in the collateral security and become the purchaser of any
property constituting the security without thereby affecting any liability of
the undersigned to Bank; (4) transfer any liability and any security therefor of
the undersigned, Bank being thereafter fully discharged from every claim and
responsibility with respect to any such collateral security so transferred; and
(5) surrender or deliver, without further liability on the part of the Bank to
account therefor, all or any part of the collateral security to or upon the
written order of the undersigned, permit substitutions therefor or additions
thereto, and accept the receipt of the undersigned for any collateral security,
or proceeds thereof, which receipt shall be a full and complete discharge of
Bank as to the undersigned with respect to the collateral so delivered and
proceeds so paid.
As additional security, the undersigned agrees that: (i) he
will execute and deliver to Bank a Power of Attorney, substantially in the form
of Schedule 1 hereto which empowers Bank, upon the occurrence of the
circumstances set forth therein, to execute in undersigned's name the
-2-
<PAGE> 57
Withdrawal Request (the "Withdrawal Request") and the Instruction Request (the
"Instruction Request"), substantially in the form of Exhibits A and B,
respectively, to the Voting Trust Agreement; (ii) he will execute such other
documents and deliver such additional instructions as may be reasonably
requested by Bank in order to implement the foregoing; (iii) he will not tender
any other Withdrawal Request without the prior written consent of Bank until all
obligations and liabilities to the Bank shall have been repaid and this
Agreement terminated; and (iv) he will not request from the Voting Trustees
under the Voting Trust Agreement that they issue to him a duplicate Voting Trust
Certificate in respect of any Voting Trust Certificate held by Bank hereunder
until the obligations and liabilities under the Note shall have been repaid and
satisfied and this Agreement terminated.
Subject to the provisions of the Loan Agreement, the Power of
Attorney and Paragraphs 2 and 5 of the Voting Trust Agreement, the rights and
powers of Bank under this Agreement (1) are cumulative and do not exclude any
other right which Bank may have independent of this Agreement; and (2) may be
exercised or not exercised at the discretion of Bank (i) without regard to any
rights of the undersigned, (ii) without forfeiture or waiver because of any
delay in the exercising thereof, (iii) without imposing any liability on Bank
for so exercising or failing to exercise, and (iv) in the event of a single or
partial exercise thereof, without precluding further exercise thereof.
No delay or omission on the part or the Bank in exercising any
right hereunder shall operate as a waiver of such right or of any other right
hereunder and no waiver shall be construed as a bar to or waiver of any right or
remedy in the future.
Rights and powers of Bank under this Agreement shall inure to
the benefit of its successors and assigns and any assignee of any liability
secured hereby. Any liability of any of the undersigned hereunder shall be
binding upon the heirs, legal representatives, successors and assigns of such
undersigned.
Revocation or termination of this Agreement, whether by
operation of law or otherwise, shall be effective only when written notice
thereof shall have been received by Bank, but no such revocation or termination
shall affect or impair the pledge of collateral security or the lien thereby
created as to any liability secured hereby at the time of receipt by Bank of
such notice.
Address _____________________ __________________________________
Pledgor
_____________________________
Date: ______________ __, ______
-3-
<PAGE> 58
SCHEDULE 1 TO
GENERAL PLEDGE AGREEMENT
IRREVOCABLE POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned,
_____________________________, does hereby make, constitute and appoint
_______________________________________________ ("Bank") or its designee as his
true and lawful agent and attorney-in-fact, for and in the name, place and stead
of the undersigned upon the occurrence of an Event of Default under the
____________ Agreement entered into as of the date hereof between Bank and the
undersigned (the "Loan Agreement"):
1. To sell all, or part of, the undersigned's interest in the
shares of Class B Common Stock of Pulitzer Inc. (the "Company") represented by
Voting Trust Certificate No. VT ___ to a Permitted Transferee (as that term is
defined in the Company's Restated Certificate of Incorporation).
2. To complete and execute the Withdrawal Request and
Instruction Request, attached as Exhibits A and B, respectively, to the Voting
Trust Agreement dated as of March __, 1999 by and among certain stockholders of
the Company and the Trustees named therein (the "Voting Trust Agreement"), with
such date and sale closing date, in the case of the Withdrawal Request, and such
number of shares, in the case of the Instruction Request, as Bank deems
appropriate; to execute and deliver said Withdrawal Request and Instruction
Request in accordance with the provisions of Paragraph 2 of the Voting Trust
Agreement; and to withdraw pursuant to such Withdrawal Request, from the Voting
Trust created by the Voting Trust Agreement, such number of shares of Common
Stock of the Company into which the shares of Class B Common Stock then
represented by Voting Trust Certificate No. VT ___ may be converted, subsequent
to such conversion as provided in the Voting Trust Agreement and said Withdrawal
Request and Instruction Request, as shall be necessary, as determined by Bank in
its sole discretion, to satisfy the obligations of the undersigned to Bank under
the Loan Agreement and the General Pledge Agreement entered into on the date
hereof between Bank and the undersigned;
3. To sell such shares of Common Stock of the Company in
accordance with the provisions of Paragraphs 2 and 5 of the Voting Trust
Agreement; and
4. To comply otherwise with the provisions of the Voting Trust
Agreement, Withdrawal Request and Instruction Request in order to effect the
transactions contemplated hereby on behalf of the undersigned for the benefit of
Bank.
In consideration for and in reliance upon the powers granted
by the undersigned, Bank has entered into the Loan Agreement with the
undersigned. The powers hereby conferred are coupled with an interest and shall
continue in full force and effect and be binding upon the
A-1
<PAGE> 59
undersigned and his heirs, assigns and legal representatives, and shall not be
revoked by the undersigned until the undersigned has fulfilled all his
obligations under the Loan Agreement, or any renewal, extension, amendment,
restatement or modification thereof, and the Loan Agreement, or any renewal,
extension, amendment, restatement or modification thereof, is cancelled.
This irrevocable power of attorney shall not be affected by
the subsequent disability or incapacity of the undersigned and shall in all
respects constitute a durable power of attorney.
Executed this ______ day of ______________, ____.
-----------------------------------
ACKNOWLEDGEMENT
STATE OF )
) SS.
COUNTY OF )
On this _____ day of ___________, , before me personally
appeared ________________________ known to me to be the person who executed the
foregoing Irrevocable Power of Attorney and said ___________________
acknowledged to me that he executed the same as his free act and deed.
----------------------------------
Notary Public
A-2
<PAGE> 60
EXHIBIT E
ACKNOWLEDGEMENT
The undersigned, on behalf of all the Voting Trustees
("Trustees"), under that certain Voting Trust Agreement dated as of March __,
1999 ("Voting Trust Agreement"), hereby acknowledges the pledge of Voting Trust
Certificate No. VT ___ by ________________________ ("Borrower") to
_______________________ __________________________ ("Bank") pursuant to the
General Pledge Agreement dated _____________ __, ____ ("Pledge Agreement") in
connection with the ____________________________ dated ___________ __, ____,
between Borrower and Bank (the "Loan Agreement").
The undersigned, on behalf of all the Trustees, further
acknowledges Bank's rights under the Power of Attorney dated ____________ __,
____ granted by Borrower to Bank (the "Power of Attorney"), attached as Schedule
1 to the Pledge Agreement.
Notwithstanding any provision contained in the Voting Trust
Agreement to the contrary, until such time as the Loan Agreement is terminated,
the Note referred to therein is paid, and the Trustees have confirmed such facts
with the Bank, the undersigned, on behalf of all the Trustees, agrees that:
(i) the Trustees and the Trust established under the
Voting Trust Agreement (the "Trust") shall not honor
any Withdrawal Request with respect to the shares of
Class B Common Stock evidenced by Voting Trust
Certificate No. VT ___ issued under the Trust or any
shares of Common Stock issuable upon conversion
thereof, other than those Withdrawal Requests and
Instruction Requests executed by Bank pursuant to the
Power of Attorney;
(ii) the Trustees and the Trust shall not issue a new
Voting Trust Certificate or replacement Voting Trust
Certificate with respect to the shares evidenced by
Voting Trust Certificate No. VT ___ except at the
request and direction of Bank as pledgee of Voting
Trust Certificate No. VT ___;
(iii) in the event any provision (including any amendment),
or the termination, of the Voting Trust Agreement,
whether by expiration of time, affirmative vote of
the beneficiaries of the Trust or otherwise,
necessitates a distribution of shares, warrants,
options or other securities of the Company, or any
successor
<PAGE> 61
or affiliated entity of the Company, all those
securities which are to be distributed with respect
to Voting Trust Certificate No. VT ___ shall be
delivered to Bank as pledgee of Voting Trust
Certificate No. VT ___; and
(iv) the Trustees and the Trust shall otherwise honor
Bank's rights and powers under and in accordance with
the Power of Attorney and the Pledge Agreement.
--------------------------------------------
As Attorney-In-Fact for the Voting Trustees
-2-
<PAGE> 62
EXHIBIT F
VOTING TRUST CERTIFICATE
No. _____ ______ Shares of Class B
Common Stock
PULITZER INC.
Incorporated under the Laws of the State of Delaware
THIS IS TO CERTIFY THAT, subject to the provisions hereof and of the
Voting Trust Agreement hereinafter mentioned, on the surrender hereof, properly
endorsed, ________________, will be entitled to receive on the _____ day of
March, 2009, or on the earlier termination of the Voting Trust Agreement, as
therein provided, a certificate or certificates, expressed to be fully-paid and
non-assessable, for ________ shares of Class B Common Stock, represented by this
Certificate, of Pulitzer Inc. (hereinafter called the "Company"), a corporation
organized and existing under the laws of the State of Delaware, or its
successor, and in the event of a withdrawal of Common Stock pursuant to a
Withdrawal Request as contemplated by Paragraph 2 of the Voting Trust Agreement,
will be entitled to receive a certificate or certificates for the Common Stock
so withdrawn under the terms and conditions set forth in such Paragraph 2, and
in the meantime, subject to the provisions of the Voting Trust Agreement, is
entitled to receive payments equal and of like character to the dividends, if
any, received by the Trustees upon the number of shares of Class B Common Stock
held by the Trustees for the Depositing Stockholder, less such charges and
expenses as are authorized by the Voting Trust Agreement to be deducted
therefrom and less any income or other taxes required by law to be deducted
therefrom; provided, however, such
<PAGE> 63
dividends, if received by the Trustees in Class B Common Stock, shall be payable
in Voting Trust Certificates for such stock. If the Trustees shall exercise on
behalf of any holder of Voting Trust Certificates any right to subscribe to
Class B Common Stock, in accordance with the provisions of the Voting Trust
Agreement, the Trustees shall issue Voting Trust Certificates in respect
thereof.
Until actual delivery of the stock certificates called for
hereby following the termination of the Voting Trust Agreement (or in the case
of Common Stock properly withdrawn pursuant to a Withdrawal Request until actual
delivery of the stock certificates for such withdrawn Common Stock), the
Trustees, upon the terms and subject to the provisions stated in the Voting
Trust Agreement, shall possess and shall be entitled to exercise all rights and
powers of the owners of such Class B Common Stock to vote for every purpose and
to consent to any and all corporate acts of the Company, except as such right is
expressly limited by the terms of the Voting Trust Agreement; it being expressly
stipulated that except as expressly provided in the Voting Trust Agreement, no
right to vote such Class B Common Stock and no right to consent or be consulted
in respect of such Class B Common Stock is created or passes to any holder
hereof by or under this Certificate or by or under any agreement express or
implied.
This Certificate is issued under and pursuant to, and the
rights of each successive holder hereof are subject to and limited by, the terms
and provisions of a certain Voting Trust Agreement, dated as of the ____ day of
March, 1999, between certain owners of Class B Common Stock of the Company and
Cole C. Campbell, David E. Moore, Emily Rauh Pulitzer, Michael E. Pulitzer,
Ronald H. Ridgway, and Robert C. Woodworth, as Trustees (herein referred to, and
as it may be amended from time to time, the "Voting Trust Agreement"), one copy
of which is on file at
-2-
<PAGE> 64
the principal office of the Company at St. Louis, Missouri and one copy of which
is on file in the registered office of the Company in the State of Delaware.
Each holder of this Certificate by the acceptance hereof assents and agrees to
be bound by all the provisions of the Voting Trust Agreement.
This Certificate is not transferable whether by sale,
assignment, gift, bequest, appointment or otherwise by the holder of record
hereof except to a Permitted Transferee (as that term is defined in the
Company's Restated Certificate of Incorporation) of the Company's Class B Common
Stock, subject to such regulations as may be established by the Trustees for
that purpose, upon surrender hereof at the office of the Trustees, properly
endorsed for transfer, and the Trustees may treat the holder of record hereof as
the owner of this Certificate for all purposes. Every transferee of this
Certificate shall by the acceptance hereof become a party to the Voting Trust
Agreement with like force and effect as though an original party thereto and
shall be embraced within the meaning of the term "Depositing Stockholders"
wherever used therein.
Notwithstanding anything to the contrary set forth herein,
this Certificate may be pledged in accordance with, and subject to the
limitations of, the terms of the Voting Trust Agreement.
As a condition of making or permitting any transfer or
delivery of stock certificates or Voting Trust Certificates, the Trustees may
require the payment of a sum sufficient to pay or reimburse them for any stamp
tax or other governmental charge in connection therewith, or any other charges
applicable to such transfer or delivery.
-3-
<PAGE> 65
The Voting Trust Agreement and this Certificate may be amended
at any time and from time to time in the manner therein provided by the Trustees
with the consent in writing of the holders of sixty-six and two-thirds percent
(66-2/3%) in interest of the then issued and outstanding Voting Trust
Certificates; provided, however, that no amendment which shall have the effect
of extending the time for termination of the Voting Trust Agreement shall be
made without the consent in writing of the holders of all the then issued and
outstanding Voting Trust Certificates. The Voting Trust Agreement and the trust
created thereunder shall terminate upon the dissolution of the Company and may
be terminated at any time with the consent in writing of the holders of
sixty-six and two-thirds percent (66-2/3%) in interest of the then issued and
outstanding Voting Trust Certificates.
IN WITNESS WHEREOF, the Trustees have caused this Certificate
to be signed on their behalf by one of their number and countersigned by their
duly authorized Agent.
Dated: __________________________
COLE C. CAMPBELL
DAVID E. MOORE
COUNTERSIGNED: EMILY RAUH PULITZER
BNY TRUST COMPANY OF MISSOURI MICHAEL E. PULITZER
Agent RONALD H. RIDGWAY
ROBERT C. WOODWORTH
By: _____________________________
Authorized Officer
VOTING TRUSTEES
By: ___________________________
A Voting Trustee
-4-
<PAGE> 66
(FORM OF ASSIGNMENT FOR REVERSE SIDE
OF VOTING TRUST CERTIFICATE)
FOR VALUE RECEIVED, _________________________ hereby sells,
assigns and transfers unto ____________________ the within Certificate and all
rights and interests thereby and does hereby irrevocably constitute and appoint
__________________ attorney to transfer such certificate on the books of the
Trustees under the Voting Trust Agreement within referred to, with full power of
substitution in the premises.
Date: _______________________
___________________________
Name
In the presence of:
_____________________
Name
<PAGE> 1
EXHIBIT 10.24
Pulitzer Inc.
900 North Tucker Boulevard
St. Louis, Missouri 63101
March __, 1999
Ms. Emily Rauh Pulitzer
c/o Pulitzer Inc.
900 North Tucker Boulevard
St. Louis, Missouri 63101
Dear Emily:
This letter will confirm the mutual agreement between you and
Pulitzer Inc. (the "Company") regarding your provision of consulting services to
the Company:
1. From the date hereof through December 31, 1999 (the
"Consulting Period"), you agree to provide consulting and advisory services to
the Company and its subsidiaries as requested by the Chairman of the Board of
Directors; provided, however, that any such request will not interfere with your
normal civic and other commitments. Such services generally will consist of
providing advice regarding the business operations of the Company and its
subsidiaries and general advice regarding long-term strategic planning, and may
be rendered at the Company's office in St. Louis, Missouri, or at any other
mutually agreeable location. The Consulting Period will be extended
automatically on a year-to-year basis unless a party furnishes written notice to
the other party of its intent to terminate this agreement not later than
December 1 of any calendar year.
<PAGE> 2
2. During the Consulting Period, the Company's management will
use its best efforts to cause you to be a member of the Board of Directors and
the Long-Range Planning Committee and will include you on the management slate
for election as a director at every stockholder's meeting at which your term as
a director would otherwise expire. For such service, you will receive the fees,
including reimbursement for expenses, payable to an outside director of the
Company or to members of any such committee, as applicable.
3. In consideration of your services as a consultant as
described under paragraph 1, the Company will pay compensation to you as
described below:
(a) The Company will pay you, on a monthly basis, $147,000 per
calendar year. Payments will be made within ten days after the last business day
of the month during which such consulting services are performed.
(b) Upon the presentation of receipts and other proper
documentation, the Company will reimburse you, as soon as practicable, for all
ordinary and necessary business expenses incurred by you while providing
consulting services to the Company.
(c) The Company will make available suitable office space and
secretarial services at its St. Louis office as you may reasonably require from
time to time in order to provide consulting services.
4. Notwithstanding paragraph 1, the Consulting Period and the
mutual obligations between you and the Company as described herein will
terminate upon your death or disability. For this purpose, "disability" means a
mental or physical condition as determined by the
-2-
<PAGE> 3
Board of Directors of the Company which prevents you from providing the
consulting services described under paragraph 1 for six consecutive calendar
months.
5. During the Consulting Period, you will not be precluded
from accepting employment with an employer unrelated to the Company and its
subsidiaries or from engaging in any business or other consulting arrangements;
provided, however, such other employment, business or arrangement must not be
competitive with any business of the Company and its subsidiaries.
6. During the Consulting Period, you will be entitled to
medical benefits in accordance with the prior arrangements between you and
Pulitzer Publishing Company.
7. Any notice described herein will be sent to the Company, if
applicable, at its office in St. Louis, Missouri, and to you, if applicable,
c/o the Company at its office in St. Louis, Missouri.
8. The mutual obligations described herein will be binding on
and inure to the benefit of the Company and any successor-in-interest to the
Company and be binding on and inure to the benefit of, and be enforceable by,
you and your personal or legal representative and heirs.
9. The mutual obligations described herein may not be
modified, except by a written instrument signed by you and the Company, and will
be construed in accordance with the laws of the State of Missouri.
-3-
<PAGE> 4
If the foregoing provisions correctly describe the agreement
between you and the Company regarding your performance of consulting services
for the Company, please sign and return the enclosed copy of this letter.
Sincerely,
Robert C. Woodworth
President and Chief Executive Officer
- ----------------------------
Emily Rauh Pulitzer
-4-
<PAGE> 1
EXHIBIT 10.25
Pulitzer Inc.
900 North Tucker Boulevard
St. Louis, Missouri 63101
March __, 1999
Mr. David E. Moore
Dear David:
This letter will confirm the mutual agreement between you and
Pulitzer Inc. (the "Company") regarding your provision of consulting services to
the Company:
1. From the date hereof through December 31, 1999 (the
"Consulting Period"), you agree to provide consulting and advisory services to
the Company and its subsidiaries as requested by the Chairman of the Board of
Directors; provided, however, that any such request will not interfere with your
normal business activities. Such services generally will consist of providing
managerial advice regarding the business operations of the Company and its
subsidiaries and general business advice regarding long-term strategic planning,
and may be rendered at the Company's office in St. Louis, Missouri, or at any
other mutually agreeable location. The Consulting Period will be extended
automatically on a year-to-year basis unless a party furnishes written notice to
the other party of its intent to terminate this agreement not later than
December 1 of any calendar year.
<PAGE> 2
2. During the Consulting Period, the Company's management will
use its best efforts to cause you to be a member of the Board of Directors, the
Long-Range Planning Committee, the Executive Committee and the Compensation
Committee, and will include you on the management slate for election as a
director at every stockholder's meeting at which you term as a director would
otherwise expire. For such service, you will receive the fees, including
reimbursement for expenses, payable to an outside director of the Company or to
members of any such committee, as applicable.
3. In consideration of your services as a consultant as
described under paragraph 1, the Company will pay compensation to you as
described below:
(a) The Company will pay you, on a monthly basis, $147,000 per
calendar year. Payments will be made within ten days after the last business day
of the month during which such consulting services are performed.
(b) Upon the presentation of receipts and other proper
documentation, the Company will reimburse you, as soon as practicable, for all
ordinary and necessary business expenses incurred by you while providing
consulting services to the Company.
(c) The Company will make available suitable office space and
secretarial services at its St. Louis office as you may reasonably require from
time to time in order to provide consulting services.
4. Notwithstanding paragraph 1, the Consulting Period and the
mutual obligations between you and the Company as described herein will
terminate upon your death or disability. For this purpose, "disability" means a
mental or physical condition as determined by the
-2-
<PAGE> 3
Board of Directors of the Company which prevents you from providing the
consulting services described under paragraph 1 for six consecutive calendar
months.
5. During the Consulting Period, you will not be precluded
from accepting employment with an employer unrelated to the Company and its
subsidiaries or from engaging in any business or other consulting arrangements;
provided, however, such other employment, business or arrangement must not be
competitive with any business of the Company and its subsidiaries. For this
purpose, employment with American City Business Journals shall not violate this
agreement.
6. During the Consulting Period, you will be entitled to
medical benefits in accordance with the prior arrangements between you and
Pulitzer Publishing Company.
7. Any notice described herein will be sent to the Company, if
applicable, at its office in St. Louis, Missouri, and to you, if applicable, at
8. The mutual obligations described herein will be binding on
and inure to the benefit of the Company and any successor-in-interest to the
Company and be binding on and inure to the benefit of, and be enforceable by,
you and your personal or legal representative and heirs.
9. The mutual obligations described herein may not be
modified, except by a written instrument signed by you and the Company, and will
be construed in accordance with the laws of the State of Missouri.
-3-
<PAGE> 4
If the foregoing provisions correctly describe the agreement
between you and the Company regarding your performance of consulting services
for the Company, please sign and return the enclosed copy of this letter.
Sincerely,
Robert C. Woodworth
President and Chief Executive Officer
- ----------------------
David E. Moore
-4-
<PAGE> 1
EXHIBIT 10.26
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of March __, 1999, by and
among PULITZER INC., a Delaware corporation (the "Company"), and Emily Rauh
Pulitzer, Michael E. Pulitzer and David E. Moore (collectively, the
"Stockholders" and individually referred to herein as a "Stockholder").
W I T N E S S E T H:
WHEREAS, the Stockholders own, directly or directly, outstanding
shares (the "Shares") of Class B Common Stock, $.01 par value per share (the
"Class B Common Stock"), of the Company exchangeable for a like number of shares
of the Common Stock, $.01 par value per share (the "Common Stock"), of the
Company;
WHEREAS, the Shares have been deposited in a Voting Trust (the "Voting
Trust") pursuant to a voting trust agreement, dated as of March __, 1999,
which, among other things, restricts the transfer of such Shares;
WHEREAS, the Voting Trust permits the withdrawal from the Voting Trust
of all or a portion of the Shares upon their exchange for shares of the Common
Stock under certain circumstances, including the sale of the Common Stock
pursuant to a registered public offering;
<PAGE> 2
WHEREAS, the Company desires to grant to each Stockholder, including
each Stockholder's heirs, legal representatives, successors and assigns whose
names are registered on the books maintained by the Company, and any parent,
sibling, spouse, child, grandchild or other relative of each Stockholder (each,
a "Family Relative"), or any custodian or trustee for the benefit of any of the
Stockholders or Family Relatives, or any partnership, corporation or other
entity for which he or she acts as a trustee or which is owned by a Stockholder
or a Family Relative (collectively, the "Holders" and individually referred to
herein as a "Holder"), certain registration rights with respect to shares of the
Common Stock issuable upon exchange of the Shares.
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the parties hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES.
(a) Status, Power and Authority. The Company represents and
warrants that it is duly organized and validly existing under the laws of the
State of Delaware, that it has the legal power and authority to enter into this
Agreement and carry out its obligations hereunder and that this Agreement
constitutes a legal, valid and binding obligation of the Company.
(b) Covenant Against Material False Statement or Omission. The
Company covenants to the Holders that any registration statement, prospectus,
and any amendments or supplements thereto filed by the Company pursuant to
Section 3 or 4 of this Agreement will comply in all material respects with the
Securities Act of 1933, as amended and the rules and regulations promulgated
thereunder (the "Securities Act"), and that none of such registration
statements, prospectuses, or amendments or supplements thereto
2
<PAGE> 3
shall contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading (provided, however, that the covenants contained in this section
do not apply to any statements or omissions in such registration statement,
prospectus, or amendment or supplement thereto made in reliance upon information
furnished in writing to the Company by the Holders expressly for use therein).
2. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
(b) "Initiating Holders" shall, except as provided in Section
3(c) hereof, mean the Holders of not less than five percent of the outstanding
shares of Class B Common Stock.
(c) "Market Value" shall mean as of the date specified for its
computation the closing sale price for the security as reported on the principal
securities exchange on which such security is traded or if not traded on an
exchange, the closing sale price as reported on the NASDAQ national market
system, or if not so listed or traded, the closing bid price reported in the
over-the-counter market.
3
<PAGE> 4
(d) The term "register", "registered" and "registration" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and the applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.
(e) "Registration Expenses" shall mean all expenses incurred
by the Company in compliance with Sections 3 and 4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses, and the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company; which shall
be paid in any event by the Company).
(f) "Selling Expenses" shall mean all underwriting discounts
and selling commissions applicable to the sale of the Common Stock and all fees
and disbursements of counsel for the selling Holdings.
3. Requested Registration.
(a) Request for Registration. If the Company shall
receive from Initiating Holders, at any time or times not earlier than three
months and not later than nine months after the end of a fiscal year of the
Company, a written request that the Company effect any registration with
4
<PAGE> 5
respect to all or a part of the shares of the Common Stock issuable upon
exchange of the Shares of any one or more of the Initiating Holders having a
Market Value of not less than $2,000,000 on the business day preceding the date
of such written request, the Company will:
(i) promptly give written notice of the proposed
registration to all other Holders; and
(ii) as soon as practicable, use its diligent
best efforts to effect such registration (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act) as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such shares of the Common Stock as are
specified in such request, together with all or such portion of the shares of
common stock of any Holder or Holders joining in such request as are specified
in a written request given within twenty (20) days after mailing of such written
notice by the Company; provided that the Company shall not be obligated to
effect, or to take any action to effect, any such registration pursuant to this
Section 3:
(A) In any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting
such registration, qualification or
5
<PAGE> 6
compliance, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act or
applicable rules or regulations thereunder; or
(B) More than two times pursuant to requests hereunder in any
consecutive 12 month period; or
(C) Within 120 days of the effectiveness of a registration
statement filed by the Company pursuant to which the Holders were entitled
to register all or part of the shares of the Common Stock issuable upon
exchange of their Shares; or
(D) If the Company informs the Initiating Holders that the
Company intends to file a registration statement within 30 days of the
written request from the Initiating Holders pursuant to which the Holders
will have the right to register all or part of the shares of the Common
Stock issuable upon exchange of their shares.
Subject to the foregoing clauses (A), (B), (C) and (D), the Company
shall file a registration statement covering shares of the Common Stock so
requested to be registered as soon as practicable after receipt of the request
or requests of the Initiating Holders.
The registration statement filed pursuant to the request of the
Initiating Holder may, subject to the provisions of Section 3(b) below, include
other securities of the Company which are being sold by the Company or which are
held by officers or directors of the Company (other than
6
<PAGE> 7
the Holders) or which are held by persons who, by virtue of agreements with the
Company, are entitled to include their securities in any such registration.
(b) Underwriting. If the Initiating Holders intend to
distribute the shares of the Common Stock covered by their request by means of
an underwriting, they shall so advise the Company as a part of their request
made pursuant to Section 3 and the Company shall include such information in the
written notice referred to in Section 3 (a)(i) above. The right of any Holder to
registration pursuant to this Section 3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's shares of
the Common Stock in the underwriting (unless otherwise mutually agreed by a
majority in interest of the Initiating Holders and such Holder with respect to
such participation and inclusion) to the extent provided herein. A Holder may
elect to include in such underwriting all or a part of the shares of the Common
Stock issuable upon the exchange of that Holder's Shares.
If officers or directors of the Company (other than the Holders)
holding shares of the Common Stock of the Company shall request inclusion in any
registration pursuant to this Section 3, or if holders of securities of the
Company who are entitled, by contract with the Company, to have securities
included in such a registration (the "Other Stockholders") request such
inclusion, the Initiating Holders shall, on behalf of all Holders, offer to
include the securities of the Company held by such officers, directors and Other
Stockholders in the underwriting and may condition such offer to such officers,
directors and Other Stockholders on their acceptance of the further applicable
7
<PAGE> 8
provisions of this Agreement. The Company shall (together with all Holders,
officers, directors and Other Stockholders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected for such underwriting by a majority in interest of the Initiating
Holders and reasonably acceptable to the Company. Notwithstanding any other
provision of this Section 3, if the representative advises the Initiating
Holders in writing that marketing factors require a limitation on the number of
shares to be underwritten, the Initiating Holders shall so advise all Holders of
shares of the Common Stock, officers and directors of the Company and Other
Stockholders whose securities would otherwise be underwritten pursuant hereto,
and the number of shares of the Common Stock and other securities that may be
included in the registration and underwriting shall be allocated among all such
Holders, officers and directors of the Company and Other Stockholders in
proportion, as nearly as practicable, to the respective amounts of shares of the
Common Stock or other securities which they had requested to be included in such
registration at the time of filing the registration statement. No shares of the
Common Stock or other securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such registration.
If any Holder of shares of the Common Stock, officer, director or Other
Shareholder who has requested inclusion in such registration as provided above
disapproves of the terms of the underwriting, such person may elect to withdraw
therefrom by written notice to the Company, the underwriter and the Initiating
Holders. The securities so withdrawn shall also be withdrawn from registration.
If the underwriter has not limited the number of shares of the Common Stock to
be underwritten, the Company may include its securities for its own account in
such
8
<PAGE> 9
registration if the underwriter so agrees and if the number of shares of the
Common Stock which would otherwise have been included in such registration and
underwriting will not thereby be limited.
(c) Registration at Request of the Estate of a Holder. Within
nine months of the death of any Holder, the estate of that Holder may on a
single occasion act as an Initiating Holder notwithstanding the failure to meet
the five percent ownership requirement set forth in Section 2(b) and may request
registration of all or part of the shares of the Common Stock issuable upon
exchange of the Shares held by such estate notwithstanding a failure to meet the
$2,000,000 minimum Market Value set forth in Section 3(a), provided that such
estate could not within three months following the request for registration then
sell pursuant to Rule 144 under the Securities Act all the shares of the Common
Stock issuable upon exchange of the Shares held by such estate. If an estate
acting as an Initiating Holder pursuant to this Section 3(c) intends to
distribute shares of the Common Stock by means of an underwriting pursuant to
Section 3(b), the provisions of Section 3(b) requiring a reduction in the shares
of the Common Stock included in the registration and underwriting shall not
apply to the shares of the Common Stock being registered for the estate and the
shares of the Common Stock included by all other participants in the
registration and underwriting shall be reduced accordingly. The provisions of
this Section 3(c) may only be used one time by each estate.
4. Company Registration.
9
<PAGE> 10
(a) If the Company shall determine to register any of its
securities either for its own account or the account of a security holder or
holders, other than the first registration of the Company's securities on Form
S-1, or a registration relating solely to employee benefit plans,
or a registration relating solely to a Commission Rule 145 transaction, or a
registration on any registration form which does not permit secondary sales or
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of shares of the Common
Stock, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification
under applicable blue sky or other state securities laws), and in any
underwriting involved therein, all the shares of the Common Stock
specified in a written request or requests, delivered by any Holder
within twenty (20) days after mailing of the written notice from the
Company described in clause (i) above, except as set forth in Section
4(b) below. Such written request may specify all or a part of the
shares of the Common Stock issuable upon exchange of a Holder's
Shares.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 4(a)(i). In such event the right of
10
<PAGE> 11
any Holder to registration pursuant to this Section 4 shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's shares of the Common Stock in the underwriting to the extent provided
herein and shall be further conditioned upon the Company receiving requests to
include in the underwriting shares of the Common Stock having a Market Value as
of the fifteenth day following mailing of the Company's notice of not less than
$500,000. All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and the officers and directors of
the Company and Other Stockholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for underwriting by the Company.
Notwithstanding any other provision of this Section 4, if the underwriter
determines that marketing factors require a limitation on the number of shares
to be underwritten, the underwriter may (subject to the allocation priority set
forth below) limit the number of shares of the Common Stock to be included in
the registration and underwriting by all Holders, officers and directors of the
Company and Other Stockholders requesting registration. The Company shall
advise all holders of shares of the Common Stock requesting registration of the
limitation on the number of shares to be underwritten, and the number of shares
of the Common Stock that are entitled to be included in the registration and
underwriting shall be allocated in the following manner: the number of shares
to be included in the registration and underwriting by the Company shall not be
reduced and any remaining shares shall be allocated among all such Holders,
officers and directors of the Company and Other Stockholders in proportion, as
nearly as practicable, to the respective amounts of shares of the Common Stock
or other securities which they had requested to be included in such
registration at the time of filing the
11
<PAGE> 12
registration statement. If any Holder of shares of the Common Stock or any
officer, director of Other Stockholder disapproves of the terms of any such
underwriting, that holder may elect to withdraw therefrom by written notice to
the Company and the underwriter. Any shares of the Common Stock excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
5. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Agreement shall be borne by the Company, and all Selling Expenses shall be borne
by the holders of the securities so registered pro rata on the basis of the
number of their shares so registered; provided, however, that the Company shall
not be required to pay any Registration Expenses if, as a result of the
withdrawal of a request for registration by Initiating Holders, the registration
statement does not become effective, in which case the Holders, officers and
directors of the Company and Other Stockholders requesting registration shall
bear such Registration Expenses pro rata on the basis of the number of their
shares so included in the registration request, and provided, further, that such
registration shall not be counted as a registration pursuant to Section
3(a)(ii)(B).
6. Registration on Form S-3. The Company shall use its best efforts
to qualify for registration on Form S-3 or any comparable or successor form or
forms; and to that end the Company shall register (whether or not required by
law to do so) the Common Stock under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), in accordance with the provisions of the Exchange
Act following the effective date of the first registration of any securities
12
<PAGE> 13
of the Company on Form S-1 or any comparable or successor form or forms. After
the Company has qualified for the use of Form S-3 or any comparable or successor
form or forms, in addition to the rights contained in the foregoing provisions
of this Agreement, the Holders shall have the right to request registrations on
Form S-3 in accordance with the procedures set forth in Section 3(a) provided
the restrictions in Section 3(a)(ii)(B) shall not apply.
7. Registration Procedures, In the case of each registration
effected by the Company pursuant to this Agreement, the Company will keep each
Holder advised in writing as to the initiation of each registration and as to
completion thereof. As its expense, the Company shall:
(a) Keep such registration effective for a period of one
hundred twenty (120) days or until the Holder or Holders have completed the
distribution described in the registration statement relating thereto, whichever
first occurs; provided, however, that (i) such 120-day period shall be extended
for a period of time equal to the period the Holder refrains from selling any
securities included in such registration in accordance with the provisions of
Section 11 hereof; and (ii) in the case of any registration of shares of the
Common Stock on Form S-3, or any successor form or forms, which are intended to
be offered on a continuous or delayed basis, such 120-day period shall be
extended, if necessary, to keep the registration statement effective until all
such shares of the Common Stock are sold, provided that Rule 415, or any
successor rule under the Securities Act, permits an offering on a continuous or
delayed basis, and provided further that applicable rules under the Securities
Act governing the obligation to file a post-effective amendment which (y)
13
<PAGE> 14
includes any prospectus required by Section 10(a)(3) of the Securities Act or
(z) reflects facts or events representing a material change in the information
set forth in the registration statement, the incorporation by reference in the
registration statement of information required to be included in (y) and (z)
above to be contained in periodic reports filed pursuant to Section 13 or 15(d)
of the Exchange Act;
(b) Furnish such number of prospectuses and other documents
incident thereto as a Holder from time to time may reasonably request; and
(c) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 3 hereof, the Company will
enter into any underwriting agreement reasonably necessary to effect the offer
and sale of the Common Stock, provided such underwriting agreement contains
customary underwriting provisions, and provided further that if the underwriter
so requests, the underwriting agreement will contain customary indemnification
any contribution provisions.
8. Indemnification.
(a) The Company will indemnify each Holder, each of its
officers, directors and partners, if any, and each person controlling such
Holder, with respect to which registration, qualification or compliance has been
effected pursuant to this Agreement, against all claims, losses,
14
<PAGE> 15
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any rule or regulation thereunder applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse each such Holder, each of its officers, directors and partners, if
any, and each person controlling such Holder, for any legal and any other
expenses reasonably incurred in connection with investigating and defending any
such claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Company by such Holder and stated to be specifically for use therein.
(b) Each Holder will, if shares of the Common Stock issuable
upon exchange of the Shares held by that Holder are included in the securities
as to which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors and officers, each person who
controls the Company within the meaning of the Securities Act and the rules and
regulations thereunder, each other such Holder and each Other Stockholder and
each of their officers, directors and partners, and each person controlling such
Holder or Other Stockholder, against all claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any untrue
15
<PAGE> 16
statement (or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company and such Holders, Other Stockholders, directors,
officers, partners, persons or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein; provided, however, that the
obligations of such Holders hereunder shall be limited to an amount equal to the
proceeds to each such Holder of securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 8
(the "Indemnified Party") shall give notice to the party required to provided
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense or any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that
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the failure or any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Agreement. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgement or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with defense of
such claim and litigation resulting therefrom.
9. Information by Holder. Each Holder shall furnish to the Company
such information regarding such Holder and the distribution proposed by such
Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement.
10. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may permit the sale of
the Common Stock to the public without registration, the Company agrees to:
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(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
from and after ninety (90) days following the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act at any time after it has become subject to
such reporting requirements; and
(c) Furnish to a Holder forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144 (at any time from and after ninety (90) days following the effective
date of the first registration statement filed by the Company for an offering of
its securities to the general public), and of the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of the
company, and such other reports and documents so filed as a Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a Holder to see any such securities without registration.
11. "Market Stand-off" Agreement. If requested by the Company and an
underwriter of the Common Stock (or other securities) of the Company,
Stockholders will not sell or otherwise transfer
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or dispose of any of the Common Stock (or other securities) of the Company
issuable upon exchange of the Shares held by them during the one hundred twenty
(120) day period following the effective date of a registration statement of the
Company filed under the Securities Act, other than a registration statement
relating solely to employee benefit plans, a registration statement relating
solely to a Commission Rule 145 transaction, or a registration statement
covering a delayed or continuous offering pursuant to Rule 415 under the
Securities Act.
The Company may impose stop-transfer instructions with respect to the
shares (or securities) subject to the foregoing restriction until the end of
said one hundred twenty (120) day period.
12. Limitations on Grant of Subsequent Registration Rights. The
Company shall not enter into any agreement with any holder or prospective holder
of the securities of the Company giving such holder or prospective holder the
right to require the Company to initiate any registration of any securities of
the Company or to require the Company to include in any registration securities
owned by such holder unless such agreement is consistent with the provisions of
this Agreement and with the rights of the Holders hereunder.
13. Term. The obligations of the Company to effect any registration
pursuant to this Agreement shall terminate at such time as the Holders may sell
all shares of the Common Stock issuable upon exchange of their Shares within a
three month period in reliance on Rule 144 under the
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Securities Act, or any comparable or successor rule, assuming that the Holders
at such time are not required to aggregate their sales with sales by any other
Holder other than a predecessor Holder and assuming the average weekly volume of
trading in the Common Stock during any period is less than one percent of the
shares of the Common Stock outstanding.
14. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Holders of
more than 80% of the Shares and, in the case of any amendment, action or
omission to act which adversely affects any Holder of Shares differently from
any of the other Holders of Shares, the written consent of such Holder. Each
Holder of any Shares at the time or thereafter outstanding shall be bound by any
consent authorized by this Section 14.
15. Notices. All communications provided for hereunder shall be sent
by first-class mail and (a) if addressed to a Holder, at the address that such
Holder shall have furnished to the Company in writing, or, until any such other
Holder so furnished to the Company an address, then to and at the address of the
last Holder of such Shares who has furnished an address to the Company, or (b)
if addressed to the Company, at 900 North Tucker Boulevard, St. Louis, Missouri
63101 to the attention of its President, or at such other address, or to the
attention of such other officer, as the Company shall have furnished to each
Holder at the time outstanding, with a copy of all such notices
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to: Fulbright & Jaworski LLP., 666 Fifth Avenue, New York, New York 10103 to the
attention of Richard A. Palmer.
16. Assignment. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
heirs, legal representatives, successors and assigns. In addition, and whether
or not any express assignment shall have been made, the provisions of this
Agreement which are for the benefit of the parties hereto other than the Company
shall also be for the benefit of and enforceable by any subsequent Holder,
subject to the provisos respecting the minimum numbers or percentages of Shares
required in order to be entitled to certain rights, or take certain actions,
contained herein.
17. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
18. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement or caused this Agreement to be executed and delivered by their
respective officers thereunto duly authorized as of the date first above
written.
PULITZER INC.
By:
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Title:
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Emily Rauh Pulitzer
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Michael E. Pulitzer
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David E. Moore
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