<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [fee required]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [no fee required]
For the transition period ___________ to _________
Commission File No. 1-6383
MEDIA GENERAL, INC.
__________________________________________________________
(Exact name of registrant as specified in its charter)
Commonwealth of Virginia 54-0850433
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 East Grace Street, Richmond, Virginia 23219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 649-6000
Securities registered pursuant to Section 12(b) of the Act:
Class A Common Stock American Stock Exchange
(Title of class) (Name of exchange on
which registered)
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
__________ ________
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of voting stock held by nonaffiliates of the
registrant was $846,075,788 as of March 3, 1996.
The number of shares of Class A Common Stock outstanding on March 3, 1996,
was 25,891,885. The number of shares of Class B Common Stock outstanding on
March 3, 1996, was 556,574.
<PAGE> 2
Part I, Part II and Part IV incorporate information by reference from the
Annual Report to Stockholders for the year ended December 31, 1995. Part III
incorporates information by reference from the proxy statement for the Annual
Meeting of Stockholders to be held on May 17, 1996.
Part I
Item 1. Business
General
Media General, Inc., is an independent, publicly owned communications
company with interests in metropolitan newspapers, broadcast television, cable
television, newsprint production and diversified information services located
primarily in the Southeast United States. The Company employs approximately
7,500 people on a full or part-time basis. The Company's businesses are
somewhat seasonal; the second and fourth quarters are typically stronger than
the first and third quarters.
On October 26, 1995, the Company acquired for approximately $232 million
the assets of several Virginia newspapers (Virginia Newspapers, Inc., "VNI")
from Worrell Enterprises, Inc., and its affiliates. Daily and Sunday newspaper
properties acquired included The News & Advance in Lynchburg (circulation -
39,000 daily, 43,500 Sunday), The Daily Progress in Charlottesville (circulation
- - 32,000 daily, 33,700 Sunday), the Culpeper Star-Exponent in Culpeper
(circulation - 7,000 daily and Sunday) and the Suffolk News-Herald in Suffolk
(circulation - 4,200 daily and Sunday). In addition, the acquisition included a
number of weekly and other publications, located in Culpeper, Greene, Madison,
Orange and Tazewell Counties, Virginia. VNI's results of operations have been
included in the Company's consolidated results of operations since the date of
acquisition.
Industry Segments
The Company is engaged in four significant industry segments. For
financial information related to these segments see pages 33 and 34 of the 1995
Annual Report to Stockholders, which are incorporated herein by reference.
Additional information related to each of the Company's significant industry
segments is included below.
Newspaper Publishing Business
Wholly owned newspaper operations include daily and Sunday newspapers in
Tampa, Florida; Winston-Salem, North Carolina; and Richmond, Lynchburg,
Charlottesville, Culpeper and Suffolk, Virginia. Daily and Sunday newspapers
include the Richmond Times-Dispatch, The Tampa Tribune, the Winston-Salem
Journal, The News & Advance (Lynchburg), The Daily Progress (Charlottesville),
the Culpeper Star-Exponent, and the Suffolk News-Herald. In addition, beginning
April 1, 1996, Hernando Today in Brooksville, Florida, will be published every
day except Sunday, when subscribers will be offered the Sunday edition of The
Tampa Tribune. The Company also owns weekly newspapers and other publications
in Virginia and in West Central Florida.
All of the Company's newspapers compete for circulation and advertising
with other newspapers published nationally and in nearby cities and towns and
for advertising with magazines, radio, television and other promotional media.
All of the newspapers compete for circulation principally on the basis of
performance, service and price.
<PAGE> 3
In 1994, the Company launched its entry into electronic publishing with The
Tampa Tribune's introduction of Tampa Bay Online (TBO). In conjunction with
Prodigy Services, and with Doppler radar weather pictures and news support from
the Company's WFLA-TV station, TBO, now available on the Internet's World Wide
Web, is the first interactive, local news and entertainment service in the Tampa
Bay area. In 1995, the Company's Richmond Times-Dispatch, again in partnership
with Prodigy Services, using the news and weather resources of independently
owned WWBT-TV, Channel 12, in Richmond, introduced a
1
similar service named Gateway Virginia which provides Virginia news coverage to
users of the World Wide Web.
The primary raw material used by the Company in its newspaper operations is
newsprint, which is purchased from various Canadian and United States sources,
including Garden State Paper Company, Inc., a wholly owned subsidiary of the
Company, and Southeast Paper Manufacturing Co., in which the Company owns a one-
third equity interest. The newspaper operations of the Company consumed
approximately 121,000 tons of newsprint in 1995. Management of the Company
believes that newsprint inventory and sources of supply under existing
arrangements will be adequate in 1996.
On September 28, 1994, the Company acquired 40% of the common stock of
Denver Newspapers, Inc., (DNI), the parent company of The Denver Post, a Denver,
Colorado, daily newspaper company, through the exercise for $40,000 of a warrant
held since 1987. Beginning with the fourth quarter of 1994, the Company began
recognizing in its earnings 40% of DNI's net income applicable to common
stockholders.
On May 20, 1994, the Company sold its 40% common equity interest (held
since 1985) in Garden State Newspapers, Inc. (GSN), a domestic daily and weekly
newspaper company, along with its GSN Series A and Series C Preferred Stock, for
$63 million in cash. Additionally, in exchange for the GSN Series B Preferred
Stock previously owned by the Company, the Company received 1,200 shares of
$25,000 par, 9% Cumulative Preferred Stock of DNI (previously owned by GSN),
which included accumulated and unpaid dividends of approximately $17.4 million.
The preferred stock was valued at $34 million, net of an unamortized discount of
$27.3 million, based on an imputed discount rate of 12% and a redemption date of
June 30, 1999. The sale of GSN resulted in a gain of $91.5 million ($83.3
million after-tax; $3.17 per share).
<PAGE> 4
The following table presents certain circulation and advertising data for
the Company's three largest, wholly owned daily newspaper companies:
(Dollar amounts in thousands)
Richmond 1995 1994 1993
---------------------- ---- ---- ----
Average Circulation
Daily 211,725 212,189 212,805
Sunday 256,147 254,971 253,537
Inches
ROP full run 1,506,981 1,550,668 1,525,377
ROP part run 190,127 197,362 202,610
Revenue
Retail Advertising $ 42,976 $ 41,832 $ 41,566
Classified Advertising 35,471 32,221 29,967
Circulation 29,140 27,230 26,038
Tampa 1995 1994 1993
---------------------- ---- ---- ----
Average Circulation
Daily 261,706 265,616 269,496
Sunday 359,780 361,147 364,864
Inches
ROP full run 1,669,168 1,755,501 1,578,238
ROP part run 2,736,471 3,813,876 4,500,283
Revenue
Retail Advertising $ 61,923 $ 61,281 $ 60,632
Classified Advertising 58,718 52,401 45,205
Circulation 25,513 24,184 23,436
2
Winston-Salem 1995 1994 1993
---------------------- ---- ---- ----
Average Circulation
Daily 91,002 90,275 91,513
Sunday 103,301 102,975 105,380
Inches
ROP full run 1,531,333 1,538,568 1,508,854
ROP part run 70,596 88,159 131,099
Revenue
Retail Advertising $ 18,172 $ 17,775 $ 17,446
Classified Advertising 13,522 12,266 10,527
Circulation 7,787 7,495 7,562
Broadcast Television Business
The Broadcast Television Division operates three network-affiliated
television stations in the Southeastern Sun Belt: Tampa and Jacksonville,
Florida, and Charleston, South Carolina.
<PAGE> 5
The television broadcasting and cable television operations of the Company
are subject to the jurisdiction of the Federal Communications Commission (FCC)
pursuant to the Communications Act of 1934, as amended (the Act). The Act
provides, among other things, that television broadcasts may be made only by
persons licensed by the FCC. The Company's television stations operate under
such licenses. The Act authorizes the FCC to grant or modify licenses on a
determination that the "public convenience, interest, or necessity" will be
served thereby, and to revoke licenses for violations of the Act, the terms of
the license, or for certain other reasons. Licenses may also be revoked by
court order or by the FCC if a licensee is found guilty of violations of certain
provisions of the antitrust laws.
The maximum term for which the FCC may grant a broadcasting license for a
television station was increased from five to eight years by the
Telecommunications Act of 1996 (the "1996 Act"), and renewals for periods of not
more than eight years may be made by the FCC upon considerations similar to
those that govern the granting of original licenses. The license of WCBD-TV in
Charleston was most recently renewed in November 1991, and will expire on
December 1, 1996. The licenses of WFLA-TV in Tampa and WJKS-TV in Jacksonville
were most recently renewed in January 1992, and will expire on February 1, 1997.
The primary source of revenues for WFLA-TV (NBC), WJKS-TV (ABC) and WCBD-TV
(ABC) is the sale of time to national and local advertisers. Since each of the
stations is network affiliated, additional revenue is derived from the network
programming carried by each. The WFLA-TV network contract expires in January
2005. In mid-February 1996, the Company was advised that ABC would transfer its
network affiliation in Jacksonville and Charleston to another broadcast
television operator during the second half of the year. The Charleston station
will pursue affiliation with another network. The Company is exploring several
options for its Jacksonville station. The Company's future results of
operations are not expected to be materially affected by these events.
The Company's television stations are in competition for audience and
advertising revenues with other television and radio stations and cable
television systems as well as magazines, newspapers and other promotional media.
A number of cable television systems which operate generally on a subscriber
payment basis are in business in the Company's broadcasting markets and compete
for audience by importing out-of-market television signals and by presenting
cable network and other program services. The television stations compete for
audience on the basis of program content and quality of reception, and for
advertising revenues on the basis of price, share of market and performance.
3
FCC rules prohibit further acquisitions which would result in the common
ownership of a daily newspaper and a television station in the same market. The
rules do not apply retroactively to require divestiture of station WFLA-TV which
is under common ownership with the Company's Tampa newspaper.
<PAGE> 6
The following table sets forth certain information with respect to each of
the Company's television stations:
1995 1994 1993
---- ---- ----
WFLA (NBC) - Tampa, FL (a)
--------------------------
Market Rank 15 15 15
Audience % Share* 17 17 18
Station Rank* 1 2 2
WJKS (ABC) - Jacksonville, FL (a)
---------------------------------
Market Rank 55 55 54
Audience % Share* 11 12 12
Station Rank* 3 3 3
WCBD (ABC) - Charleston, SC (a)
-------------------------------
Market Rank 108 105 105
Audience % Share* 17 18 22
Station Rank* 3 3 2
(a) Source: November Nielson Rating Books
* Sign-On To Sign-Off.
Cable Television Business
The Cable Television Division includes two cable networks in Northern
Virginia, Media General Cable of Fairfax County, Inc., and Media General Cable
of Fredericksburg, Inc., and a cable advertising agency, Mega Advertising, Inc.
The Fairfax County system has a 120 channel capacity, with two-way dual cable
passing approximately 320,000 homes. The Fredericksburg system has a 60 channel
capacity and passes approximately 20,000 homes.
The Company has cable television franchises to operate its existing systems
in portions of Fairfax County, Virginia, and adjoining cities and towns and in
Fredericksburg, Virginia, and portions of Spotsylvania and Stafford Counties,
Virginia. These jurisdictions have enacted extensive regulations governing
cable television systems within their borders. In anticipation of a series of
expiration dates commencing in September 1997, the Company has given notices to
commence renewal proceedings for its Fairfax County and adjoining franchises.
Renewal proceedings have also commenced in the Company's Spotsylvania and
Stafford County franchises. At December 31, 1995, the Company's cable
television systems served approximately 237,000 subscribers.
The Company's cable television systems have substantially the same
competition as its television stations. The cable television systems compete
for audience on the basis of program content and quality of reception and for
advertising revenues on the basis of price, share of market and performance.
<PAGE> 7
The FCC has jurisdiction over and has adopted a regulatory program
concerning the cable television industry. The FCC's regulations govern cable
television engineering standards, registration and reporting obligations and
other matters. In 1992, Congress passed, effective December 4, 1992, the Cable
Television Consumer Protection and Competition Act of 1992 (1992 Cable Act). It
contains a number of provisions affecting and potentially affecting the Company,
including service, programming and equipment mandates and other limitations
which impact the Company's costs and business. Additionally, the 1992 Cable Act
established rate regulation for the cable services (other
4
than premium and pay-per-view services) which the Company offers to subscribers.
Ratemaking authority is divided between local franchisors and the FCC, and some
of the Company's rates are under review by franchisors and under review by or on
appeal to the FCC. While the Company believes that its rates have been
established in compliance with the applicable FCC regulations and the 1992 Cable
Act, it is possible that rate refunds and/or rate adjustments may be ordered.
The 1996 Act eliminates rate regulation of the cable programming services tier
for the Company's cable operations after March 31, 1999.
The 1996 Act removes previously applicable restrictions that prevented most
local telephone companies from providing cable services within the areas in
which they provided telephone services. This will almost certainly lead to
increased competition by competitive providers of video services within the area
served by the Company's cable systems. Increases in competition from so-called
"wireless cable" and direct broadcast satellite providers of video programming
to the home is also highly likely. Reference is made to page 43 of the 1995
Annual Report to Stockholders, which is incorporated herein by reference, for
information regarding cable competition and strategic planning alternatives
being considered by the Company.
The information contained in the preceding discussion is not intended to be
a complete summary of all the provisions of the Act, the 1992 Cable Act, the
1996 Act or of the rules and regulations of the FCC thereunder or of other
pending regulatory proposals. It is impossible to predict with certainty the
extent of any future impact on the Company's cable systems of some or all of
these requirements and regulatory and competitive developments.
The following table sets forth certain information with respect to the
Company's largest cable operation:
Media General Cable of Fairfax
- ------------------------------
1995 1994 1993
---- ---- ----
Subscribers 221,784 214,259 206,228
Penetration 69.2% 68.8% 67.6%
Monthly revenue per home passed $31.82 $28.65 $30.39
Monthly average revenue
per subscriber $46.25 $42.50 $45.15
<PAGE> 8
Newsprint Paper Manufacturing Business
Media General's newsprint operations consist of the Garden State Paper
Company, a wholly owned newsprint mill in Garfield, New Jersey, with an annual
capacity of 235,000 short tons, and a one-third interest in Southeast Paper
Manufacturing Co. (SEPCO) in Dublin, Georgia, with an annual capacity of 485,000
short tons. Both facilities use Media General's proprietary de-inking
technology to produce 100 percent recycled, high quality newsprint from
recovered old newspapers (ONP). Media General's share of their combined total
capacity is approximately 400,000 short tons, making Media General the nation's
leading producer of 100 percent recycled newsprint. The Company also earns
licensing fees pursuant to a contract with SEPCO, in addition to its share of
operating results.
Garden State owns certain United States patent rights and also has obtained
patents in various foreign countries. Although these have been of value, their
loss would not materially affect the conduct of its business as the Company has
developed substantial proprietary knowledge related to its manufacturing process
which enhances its competitive position.
Garden State competes with approximately twenty Canadian and American
companies in selling newsprint, its sole product, to newspaper publishers.
Distribution from the
5
Garden State mill is primarily by truck transportation. Competition is based
principally on price, quality of product and service, although the percentage of
recovered fiber contained in manufactured newsprint is becoming increasingly
important to newspaper publishers to meet various existing and proposed state
and federal standards.
In recent years, environmentally driven legislation has encouraged the use
of recycled paper. With demand pushing against the practical limits of
recovery, ONP costs accelerated during much of 1995, but began to decline to
more favorable levels by year-end. Media General's strategically located and
cost-effective newsprint facilities have helped assure the Company of adequate
supplies of ONP.
Historically a cyclical industry, the newsprint business peaked in 1988,
declining over the next four years as U.S. newsprint consumption slipped and
demand fell. In late 1992, a threatened Canadian newsprint strike resulted in a
short period of somewhat improved newsprint prices which lasted until mid-1993,
when supply again exceeded demand. Demand picked up again in 1994 producing
higher selling prices as most mills reached 96-97 percent of operating capacity.
The trend upward continued through 1995, enabling Media General's newsprint
operations to implement four price increases during the year.
The Company owned a 49% interest in a Mexican newsprint mill near San Luis
Potosi, Mexico, from which the Company received option fees based on production
through October 15, 1994. In February 1995, the Company sold its interest which
resulted in a gain of $3.6 million.
<PAGE> 9
Item 2. Properties
The headquarters of Media General, Inc., and its Richmond Newspapers, Inc.,
subsidiary are located in downtown Richmond, Virginia, in five adjacent
buildings. The Richmond newspapers are printed at a production and distribution
facility located on an 86 acre site in Hanover County, Virginia, near Richmond.
The Tampa, Florida, newspapers are located in a single unit production plant and
office building located on a six acre tract in that city. The Winston-Salem
newspapers are headquartered in one building in downtown Winston-Salem. Its
newspapers are printed at a production and distribution facility, located on a
nearby 12 acre site, which was completed and placed in service in the latter
half of 1994. The Lynchburg newspapers are printed at a production and
distribution facility, which also contains VNI's headquarters, on a six acre
tract in that city. The Charlottesville newspapers are printed at a production
and distribution facility, located on a four acre site in that city. All of the
foregoing properties are Company-owned.
Television facilities for WFLA-TV Tampa, Florida, WJKS-TV Jacksonville,
Florida, and WCBD-TV Charleston, South Carolina, are located on land owned by
the Company in and around these respective cities.
Media General Cable of Fairfax County, Inc., a subsidiary of the Company,
has its headquarters located in one building owned by the Company in Chantilly,
Virginia, and two signal retransmission centers located in Fairfax County,
Virginia, one on property owned by the Company and adjacent to its production
studio and one on leased property. In addition, Fairfax Cable leases an
operations center for its service maintenance fleet in Springfield, Virginia.
The cable system includes a home subscriber network and a separate institutional
network.
Newsprint production facilities of Garden State consist of a Company-owned
mill in Garfield, New Jersey, housing two paper-making machines adjacent to a
Company-owned power plant which supplies it with steam and electric power.
Garden State leases adequate storage facilities for waste paper in the general
vicinity of the newsprint mill.
6
The Company considers all of its properties, together with the related
machinery and equipment contained therein, to be well-maintained, in good
operating condition, and adequate for its present and foreseeable future needs.
Item 3. Legal Proceedings
Certain of the Company's subsidiaries have been identified as potentially
responsible parties (PRPs), along with many other businesses unrelated to the
Company, in connection with alleged soil and/or groundwater contamination at a
former commercial waste disposal site, a former industrial drum recycling
location and a former solvent reclamation location. With respect to these
matters, the involved subsidiaries have contributed, or may in the future be
asked to contribute, to the costs of site assessment and cleanup. In addition,
one of the Company's subsidiaries is currently involved in an environmental
remediation project at a facility currently owned. While the ultimate costs of
the foregoing matters are not presently determinable, based on information
currently available, management believes such costs will not be material to the
Company's financial position or results of operations.
<PAGE> 10
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of 1995.
<TABLE>
Executive Officers of the Registrant
<CAPTION>
Name Age Position and Office Year First Took Office*
<S> <C> <C> <C>
D. Tennant Bryan 89 Chairman of the Executive Committee 1930
J. Stewart Bryan III 57 Chairman, President,
Chief Executive Officer 1990
Marshall N. Morton 50 Senior Vice President,
Chief Financial Officer 1989
H. Graham Woodlief, Jr. 51 Vice President 1989
Stephen Y. Dickinson 50 Controller 1989
George L. Mahoney 43 General Counsel, Secretary 1993
Stephen R. Zacharias 46 Treasurer 1989
- -----------------
</TABLE>
* The year indicated is the year in which the officer first assumed an
office with the Company or with Richmond Newspapers, Inc., the predecessor of
the Company, involving essentially the same duties and responsibilities as the
office presently held, regardless of its formal titles at that time. Mr.
Dickinson assumed executive officer responsibilities as of May 1994. Mr.
Mahoney previously served as Assistant General Counsel of Dow Jones & Company,
Inc., for more than five years. Mr. Zacharias assumed executive officer
responsibilities as of December 1993.
Officers of the Company are elected at the Annual Meeting of the Board of
Directors to serve, unless sooner removed, until the next Annual Meeting of the
Board of Directors and/or until their successors are duly elected and qualified.
7
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Reference is made to page 51 of the 1995 Annual Report to Stockholders,
which is incorporated herein by reference, for information required by this
item.
<PAGE> 11
Item 6. Selected Financial Data
Reference is made to Note 5 on pages 33 and 34, and to pages 52 and 53 of
the 1995 Annual Report to Stockholders, which are incorporated herein by
reference, for information required by this item.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Reference is made to pages 42 through 50 of the 1995 Annual Report to
Stockholders, which are incorporated herein by reference, for information
required by this item.
Item 8. Financial Statements and Supplementary Data
Consolidated financial statements of the Company as of December 31, 1995,
and December 25, 1994, and for the fiscal years ended December 31, 1995,
December 25, 1994, and December 26, 1993, and the report of independent auditors
thereon, as well as the Company's unaudited quarterly financial data for the
fiscal years ended December 31, 1995, and December 25, 1994, are incorporated
herein by reference from the 1995 Annual Report to Stockholders pages 25 through
41 and page 51.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders on May 17, 1996, except as to
certain information regarding executive officers included in Part I.
Item 11. Executive Compensation
Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders on May 17, 1996.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders on May 17, 1996.
Item 13. Certain Relationships and Related Transactions
Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders on May 17, 1996.
8
<PAGE> 12
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. and 2. The financial statements and schedule listed in the
accompanying index to financial statements and financial statement
schedules are filed as part of this annual report.
3. Exhibits
The exhibits listed in the accompanying index to exhibits are filed as part
of this annual report.
(b) Reports on Form 8-K
On November 7, 1995, the Company filed a Form 8-K to report the October 26,
1995, acquisition by Virginia Newspapers, Inc., a newly formed, wholly
owned subsidiary of Media General, Inc., of several Virginia newspapers
from Worrell Enterprises, Inc., and its affiliates. On January 4, 1996,
the Company filed a Form 8-K/A which contained financial statements and pro
forma information omitted (in reliance upon Item 7(a)(4) and 7(b)(2) of
Form 8-K) from the Form 8-K filed on November 7, 1995.
Index to Financial Statements and Financial Statement Schedules - Item 14(a)
Annual
Report
Form to
10-K Stockholders
---- ------------
Media General, Inc.
(Registrant)
Report of independent auditors 10 41
Consolidated statements of operations for the
fiscal years ended December 31, 1995,
December 25, 1994, and December 26, 1993 25
Consolidated balance sheets at December 31, 1995,
and December 25, 1994 26-27
Consolidated statements of stockholders' equity
for the fiscal years ended December 31, 1995,
December 25, 1994, and December 26, 1993 28
Consolidated statements of cash flows for the
fiscal years ended December 31, 1995,
December 25, 1994, and December 26, 1993 29
Notes to consolidated financial statements 30-40
Schedule:
II - Valuation and qualifying accounts and reserves 11
Schedules other than Schedule II, listed above, are omitted since they are not
required or are not applicable, or the required information is shown in the
financial statements or notes thereto.
<PAGE> 13
The consolidated financial statements of Media General, Inc., listed in the
above index which are included in the Annual Report to Stockholders of Media
General, Inc., for the fiscal year ended December 31, 1995, are incorporated
herein by reference. With the exception of the pages listed in the above index
and the information incorporated by reference included in Parts I, II and IV,
the 1995 Annual Report to Stockholders is not deemed filed as part of this
report.
9
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Media General, Inc.
We consent to the incorporation by reference in this Annual Report (Form
10-K) of Media General, Inc., of our report dated January 26, 1996, included in
the 1995 Annual Report to Stockholders of Media General, Inc.
Our audits also included the financial statement schedule of Media General,
Inc., listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in (a) the Registration
Statement (Form S-8 No. 2-56905) pertaining to the 1971 Unqualified Stock Option
Plan and the 1976 Qualified and Non-Qualified Stock Option Plans of Media
General, Inc.; (b) the Registration Statement (Form S-8 No. 33-29478) pertaining
to the Media General, Inc., Employees Thrift Plan; (c) the Registration
Statement (Form S-8 No. 33-23698) pertaining to the 1987 Non-Qualified Stock
Option Plan of Media General, Inc.; (d) the Registration Statement (Form S-3 No.
33-26853) pertaining to the Media General, Inc., Automatic Dividend
Reinvestment and Stock Purchase Plan and (e) the Registration Statement (Form S-
8 No. 33-52472) pertaining to the 1987 Non-Qualified Stock Option Plan of Media
General, Inc., amended and restated May 17, 1991, and in the Prospectus related
to each, of our report dated January 26, 1996, with respect to the consolidated
financial statements of Media General, Inc., incorporated herein by reference,
and our report included in the preceding paragraph with respect to the financial
statement schedule of Media General, Inc., included in this Annual Report (Form
10-K) of Media General, Inc., for the fiscal year ended December 31, 1995.
ERNST & YOUNG LLP
Richmond, Virginia
March 25, 1996
10
<PAGE> 14
<TABLE>
Media General, Inc., and Subsidiaries
Schedule II - Valuation and Qualifying Accounts and Reserves
Fiscal Years Ended December 31, 1995, December 25, 1994, and December 26, 1993
<CAPTION>
Additions
(reductions)
Balance at charged Balance
beginning (credited) to Deductions- at end
of period expense-net net Transfers of period
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1995
Allowance for doubtful
accounts....................... $ 3,360,172 $ 4,224,695 $ 3,343,663 $ 288,756(a) $ 4,529,960
Reserve for warranties............ 3,441,835 --- 401,002 --- 3,040,833
------------ ------------ ------------ ------------ ------------
Totals....................... $ 6,802,007 $ 4,224,695 $ 3,744,665 $ 288,756 $ 7,570,793
============ ============ ============ ============ ============
1994
Allowance for doubtful
accounts....................... $ 3,697,761 $ 3,109,329 $ 3,446,918 $ --- $ 3,360,172
Reserve for warranties............ 3,968,006 --- 526,171 --- 3,441,835
Reserve for discontinuance
of Broadcast Services.......... 784,783 --- 259,347 (525,436)(b) ---
------------ ------------ ------------ ------------ ------------
Totals....................... $ 8,450,550 $ 3,109,329 $ 4,232,436 $ (525,436) $ 6,802,007
============ ============ ============ ============ ============
1993
Allowance for doubtful
accounts....................... $ 3,414,941 $ 3,488,482 $ 3,205,662 $ --- $ 3,697,761
Allowance for discounts........... 316,746 437,720 754,466 --- ---
Allowance for note
receivable..................... 5,140,000 --- --- (5,140,000)(b) ---
------------ ------------ ------------ ------------ ------------
8,871,687 3,926,202 3,960,128 (5,140,000) 3,697,761
------------ ------------ ------------ ------------ ------------
Reserve for warranties............ 4,345,163 --- 544,248 167,091 3,968,006
Reserve for disposition of
certain operations............. 1,730,948 (921,782) 809,166 --- ---
Reserve for discontinuance
of Broadcast Services.......... 1,166,999 --- 382,216 --- 784,783
------------ ------------ ------------ ------------ ------------
Totals....................... $ 16,114,797 $ 3,004,420 $ 5,695,758 $ (4,972,909) $ 8,450,550
============ ============ ============ ============ ============
(a) Amount associated with the acquisition of newspaper properties.
(b) Amount transferred to other liabilities and deferred credits.
</TABLE>
11
<PAGE> 15
Index to Exhibits
Exhibit
Number Description
2 Asset Purchase Agreement dated September 14, 1995, by and among Media
General, Inc., and Worrell Enterprises, Inc., et al., incorporated by
reference to Exhibit 2 of Form 8-K dated October 24, 1995.
3(i) The Amended and Restated Articles of Incorporation of Media General,
Inc., incorporated by reference to Exhibit 3.1 of Form 10-K for the
fiscal year ended December 31, 1989.
3(ii) Bylaws of Media General, Inc., amended as of May 31, 1993, incorporated
by reference to Exhibit 3(ii) of Form 10-K for the fiscal year ended
December 26, 1993.
10.1 The 1976 Non-Qualified Stock Option Plan, incorporated by reference to
Exhibit 1.2 to Registration Statement 2-56905.
10.2 Amendment to the 1976 Non-Qualified Stock Option Plan adopted July 29,
1983, incorporated by reference to Exhibit 10.9 of Form 10-K for the
fiscal year ended December 31, 1983.
10.3 Amendment to the 1976 Non-Qualified Stock Option Plan adopted June 19,
1992, incorporated by reference to Exhibit 10.10 of Form 10-K for the
fiscal year ended December 27, 1992.
10.4 Form of Option granted under the 1976 Non-Qualified Stock Option Plan,
incorporated by reference to Exhibit 2.2 of Registration Statement 2-
56905.
10.5 Amendment to the 1976 Non-Qualified Stock Option Plan, dated December
9, 1978, incorporated by reference to Exhibit 1 to Post-Effective
Amendment No. 3 of Registration Statement 2-56905.
10.6 Additional Form of Option to be granted under the 1976 Non-Qualified
Stock Option Plan, incorporated by reference to Exhibit 2 to Post-
Effective Amendment No. 3 Registration Statement 2-56905.
10.7 Addendum dated January 1984, to Form of Option granted under the 1976
Non-Qualified Stock Option Plan, incorporated by reference to Exhibit
10.13 of Form 10-K for the fiscal year ended December 31, 1983.
10.8 Addendum dated June 19, 1992, to Form of Option granted under the 1976
Non-Qualified Stock Option Plan, incorporated by reference to Exhibit
10.15 of Form 10-K for the fiscal year ended December 27, 1992.
10.9 The 1987 Non-Qualified Stock Option Plan adopted May 15, 1987, and as
amended on August 21, 1987, incorporated by reference to Exhibit 10.14
of Form 10-K for the fiscal year ended December 31, 1987.
10.10 The Media General, Inc., Amended and Restated Restricted Stock Plan,
dated January 31, 1996.
<PAGE> 16
10.11 Amendment to the 1987 Non-Qualified Stock Option Plan, adopted May 17,
1991, incorporated by reference to Exhibit 10.2 of Form 10-Q for the
quarter ended June 30, 1991.
10.12 Amendment to the 1987 Non-Qualified Stock Option Plan adopted June 19,
1992, incorporated by reference to Exhibit 10.19 of Form 10-K for the
fiscal year ended December 27, 1992.
12
10.13 Addendum dated June 19, 1992, to Form of Option granted under the 1987
Non-Qualified Stock Option Plan, incorporated by reference to Exhibit
10.20 of Form 10-K for the fiscal year ended December 27, 1992.
10.14 Media General, Inc., Executive Death Benefit Plan effective January 1,
1991, incorporated by reference to Exhibit 10.17 of Form 10-K for the
fiscal year ended December 29, 1991.
10.15 Amendment to the Media General, Inc., Executive Death Benefit Plan
dated July 24, 1991, incorporated by reference to Exhibit 10.18 of Form
10-K for the fiscal year ended December 29, 1991.
10.16 1984 Outside Directors Retirement Agreement, incorporated by reference
to Exhibit 10.16 of Form 10-K for the fiscal year ended December 31,
1984.
10.17 Employment Agreement between Media General, Inc., and D. Tennant Bryan,
dated January 1, 1973, incorporated by reference to Exhibit 10.9 of
Form 8 dated August 3, 1981.
10.18 Amendment dated September 24, 1981, to Employment Agreement between
Media General, Inc., and D. Tennant Bryan dated January 1, 1973,
incorporated by reference to Exhibit 10 of Form 10-Q for the quarter
ended September 30, 1981.
10.19 Shareholders Agreement, dated May 28, 1987, between Mary Tennant Bryan,
Florence Bryan Wisner, J. Stewart Bryan III, and D. Tennant Bryan and
J. Stewart Bryan III as Trustees under D. Tennant Bryan Media Trust,
and Media General, Inc., incorporated by reference to Exhibit 10.50 of
Form 10-K for the fiscal year ended December 31, 1987.
10.20 Amended and Restated Redemption Agreement between Media General, Inc.,
and D. Tennant Bryan, dated April 7, 1994, incorporated by reference to
Exhibit 10.21 of Form 10-Q for the period ending March 27, 1994.
10.21 Employment Contract between Media General, Inc., and Alan S. Donnahoe,
dated January 1, 1977, incorporated by reference to Exhibit 10.15 of
Form 8 dated August 3, 1981.
10.22 Amendment, dated March 22, 1979, to Employment Contract between Media
General, Inc., and Alan S. Donnahoe, dated January 1, 1977,
incorporated by reference to Exhibit 10.16 of Form 8 dated August 3,
1981.
<PAGE> 17
10.23 Amendment, dated January 1, 1982, to Employment Contract between Media
General, Inc., and Alan S. Donnahoe, dated January 1, 1977,
incorporated by reference to Exhibit 10.23 of Form 10-K for the fiscal
year ended December 31, 1981.
10.24 Amendment, dated December 1, 1984, to Employment Contract between Media
General, Inc., and Alan S. Donnahoe, dated January 1, 1977,
incorporated by reference to Exhibit 10.22 of Form 10-K for the fiscal
year ended December 31, 1984.
10.25 Amendment, dated December 1, 1989, to Employment Contract between Media
General, Inc., and Alan S. Donnahoe, dated January 1, 1977,
incorporated by reference to Exhibit 10.25 of Form 10-K for the fiscal
year ended December 31, 1989.
10.26 Media General, Inc., Supplemental Thrift Plan, amended and restated as
of November 17, 1994, incorporated by reference to Exhibit 10.27 of
Form 10-K for the fiscal year ended December 25, 1994.
10.27 Media General, Inc., Executive Supplemental Retirement Plan, amended
and restated as of November 17, 1994, incorporated by reference to
Exhibit 10.28 of Form 10-K for the fiscal year ended December 25, 1994.
13
10.28 Deferred Income Plan for Selected Key Executives of Media General,
Inc., and form of Deferred Compensation Agreement thereunder dated as
of December 1, 1984, incorporated by reference to Exhibit 10.29 of Form
10-K for the fiscal year ended December 31, 1989.
10.29 Media General, Inc., Management Performance Award Program, adopted
November 16, 1990, and effective January 1, 1991, incorporated by
reference to Exhibit 10.35 of Form 10-K for the fiscal year ended
December 29, 1991.
10.30 Media General, Inc., Deferred Compensation Plan, amended and restated
as of November 17, 1994, incorporated by reference to Exhibit 10.32 of
Form 10-K for the fiscal year ended December 25, 1994.
10.31 Media General, Inc., ERISA Excess Benefits Plan, amended and restated
as of November 17, 1994, incorporated by reference to Exhibit 10.33 of
Form 10-K for the fiscal year ended December 25, 1994.
10.32 Media General, Inc., Restricted Stock Plan for Non-Employee Directors,
adopted as of May 19, 1995.
10.33 Media General, Inc., 1995 Long-Term Incentive Plan, adopted as of May
19, 1995.
10.34 Amended and Restated Partnership Agreement, dated November 1, 1987, by
and among Virginia Paper Manufacturing Corp., KR Newsprint Company,
Inc., and CEI Newsprint, Inc., incorporated by reference to Exhibit
10.31 of Form 10-K for the fiscal year ended December 31, 1987.
<PAGE> 18
10.35 Amended and Restated License Agreement, dated November 1, 1987, by and
among Media General, Inc., Garden State Paper Company, Inc., and
Southeast Paper Manufacturing Co., incorporated by reference to Exhibit
10.32 of Form 10-K for the fiscal year ended December 31, 1987.
10.36 Amended and Restated Umbrella Agreement, dated November 1, 1987, by and
among Media General, Inc., Knight-Ridder, Inc., and Cox Enterprises,
Inc., incorporated by reference to Exhibit 10.34 of Form 10-K for the
fiscal year ended December 31, 1987.
10.37 Amended Newsprint Purchase Contract, dated November 1, 1987, by and
among Southeast Paper Manufacturing Co., Media General, Inc., Knight-
Ridder, Inc., and Cox Enterprises, Inc., incorporated by reference to
Exhibit 10.35 of Form 10-K for the fiscal year ended December 31, 1987.
10.38 Television affiliation agreement, dated February 10, 1995, between
WFLA-TV and the NBC Television Network incorporated by reference to
Exhibit 10.38 of Form 10-K for the fiscal year ended December 25,
1994.
10.39 Amendments, dated May 17, 1993, to television affiliations agreement,
between WFLA-TV and National Broadcasting Company, Inc., dated March
22, 1989, incorporated by reference to Exhibit 10.47 of Form 10-K for
the fiscal year ended December 26, 1993.
10.40 Franchise Agreements, dated September 30, 1982, between Media General,
Inc., Media General Cable of Fairfax County, Inc., and Fairfax County,
Virginia, as amended January 30, 1984, incorporated by reference to
Exhibit 10.32 of Form 10-K for the fiscal year ended December 31, 1983.
10.41 Agreement dated March 14, 1988, between Media General Cable of Fairfax
County, Inc., and Warner Cable Communications of Reston, Inc.,
partially assigning Franchise Agreements dated September 30, 1982,
incorporated by reference to Exhibit 10.34 of Form 10-K for the fiscal
year ended December 31, 1988.
14
10.42 Cable Television Franchise Ordinance of the Town of Herndon, Virginia,
accepted January 24, 1984, by Media General, Inc., and Media General
Cable of Fairfax County, Inc., incorporated by reference to Exhibit
10.33 of Form 10-K for the fiscal year ended December 31, 1983.
10.43 Franchise Agreement, dated June 14, 1983, between Media General, Inc.,
Media General Cable of Fairfax County, Inc., and the City of Fairfax,
Virginia, incorporated by reference to Exhibit 10.34 of Form 10-K for
the fiscal year ended December 31, 1983.
10.44 Franchise Agreement, dated April 9, 1983, between Media General Cable
of Fairfax County, Inc., and the Town of Vienna, Virginia, incorporated
by reference to Exhibit 10.35 of Form 10-K for the fiscal year ended
December 31, 1983.
10.45 Franchise Agreement, dated July 12, 1983, between Media General Cable
of Fairfax County, Inc., Media General, Inc., and the City of Falls
Church, Virginia, incorporated by reference to Exhibit 10.36 of Form
10-K for the fiscal year ended December 31, 1983.
<PAGE> 19
10.46 Second Amended and Restated Stock and Warrant Purchase and
Shareholders' Agreement dated May 20, 1994, by and among Media General,
Inc., Affiliated Newspapers Investments, Inc., and Denver Newspapers,
Inc., incorporated by reference to Exhibit 2 of Form 8-K dated
September 28, 1994.
13 Media General, Inc., Annual Report to Stockholders for the fiscal year
ended December 31, 1995.
21 List of subsidiaries of the registrant.
23 Consent of Ernst & Young LLP, independent auditors.
27 Financial Data Schedule
Note: Exhibits 10.1-10.33 are management contracts or compensatory
plans, contracts or arrangements.
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MEDIA GENERAL, INC.
Date: March 28, 1996
/s/ J. Stewart Bryan III
----------------------------------------------
J. Stewart Bryan III, Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ D. Tennant Bryan
- ----------------------------- Chairman of the Executive March 28, 1996
D. Tennant Bryan Committee and Director
/s/ James S. Evans
- ----------------------------- Vice Chairman and Director March 28, 1996
James S. Evans
<PAGE> 20
/s/ Marshall N. Morton
- ----------------------------- Senior Vice President and March 28, 1996
Marshall N. Morton Chief Financial Officer
/s/ Stephen Y. Dickinson
- ----------------------------- Controller March 28, 1996
Stephen Y. Dickinson
/s/ Robert P. Black
- ----------------------------- Director March 28, 1996
Robert P. Black
- ----------------------------- Director March 28, 1996
Charles A. Davis
/s/ A. S. Donnahoe
- ----------------------------- Director March 28, 1996
A. S. Donnahoe
/s/ Robert V. Hatcher, Jr.
- ----------------------------- Director March 28, 1996
Robert V. Hatcher, Jr.
/s/ John G. Medlin, Jr.
- ----------------------------- Director March 28, 1996
John G. Medlin, Jr.
/s/ Henry L. Valentine, II
- ----------------------------- Director March 28, 1996
Henry L. Valentine, II
16
<PAGE> 1
Exhibit 10.10
MEDIA GENERAL, INC.
RESTRICTED STOCK PLAN
Amended and Restated as of January 31, 1996
1. Purpose. The purpose of this plan is to keep personnel
of experience and ability in the employ of the Company and its
subsidiaries and to compensate them for their contributions to
the growth and profits of the Company and its subsidiaries and
thereby induce them to continue to make such contributions in the
future.
2. Definitions.
(a) "Company" shall mean Media General, Inc.
(b) "Subsidiary" or "Subsidiaries" shall mean a
corporation or corporations of which the Company owns, directly
or indirectly, shares having a majority of the voting power for
the election of directors.
(c) "Board" shall mean the Board of Directors of the
Company.
(d) "Committee" shall mean the Compensation Committee
as appointed from time to time by the Board.
(e) "Plan" shall mean this Media General, Inc.,
Restricted Stock Plan.
(f) "Restricted Share" shall mean the shares of
Class A Common Stock of the Company reserved pursuant to Section
3 hereof and any such shares issued to a Recipient pursuant to
this Plan.
(g) "Recipient" shall mean an employee of the Company
or a Subsidiary to whom shares are allocated pursuant to this
Plan, or his designated beneficiary, surviving spouse, estate, or
legal representative, but for the purposes hereof, any
beneficiary, spouse, estate or legal representative shall be
considered as one person with the employee.
(h) "Disability" shall mean the Recipient's inability
to perform the services required by his position with the Company
by reason of any medically determinable, physical or mental
impairment which can be expected to result in death or to be of
long-continued and indefinite duration.
3. Restricted Share Reserve. There shall be established a
Restricted Share Reserve to which shall be credited 400,000
shares of the Class A Common Stock of the Company. In the event
that the shares of Class A Common Stock of the Company should, as
a result of a stock split or stock dividend or combination of
shares or any other change, or exchange for other securities, by
reclassification, reorganization, merger, consolidation,
recapitalization or otherwise, be increased or decreased or
changed into or exchanged for a different number or kind of
shares of stock or other securities of the Company or of another
corporation, the number of shares then remaining in the
Restricted Share Reserve shall be appropriately adjusted to
reflect such action. If any such adjustment shall result in a
fractional share, such fraction shall be disregarded. Upon the
allocation of shares hereunder, the Restricted Share Reserve
shall be reduced by the number of Restricted Shares so allocated,
and upon the forfeiture of Restricted Shares pursuant to Section
7 hereof, the Restricted Share Reserve shall be increased by such
number of Restricted Shares, and such Restricted Shares may again
be the subject of allocations hereunder. All authorized and
unissued shares issued as Restricted Shares in accordance with
the Plan shall be fully paid and non-assessable shares and free
from pre-emptive rights.
4. Eligibility and Making of Allocations. Any salaried
executive employee of the Company or any Subsidiary, having
substantial responsibility for the direction and management of
the Company or any Subsidiary, shall be eligible to receive an
allocation of Restricted Shares pursuant to the Plan.
From the employees eligible to receive allocations pursuant
to the Plan, the Committee may from time to time select those
employees to whom Restricted Shares shall be allocated. In
selecting those employees to whom an allocation shall be made and
in determining the number of Restricted Shares subject thereto,
the Committee shall consider the position and responsibilities of
the eligible employees, the value of their services to the
Company and its Subsidiaries, and such other factors as the
Committee deems pertinent. If the Committee elects to award
Restricted Shares to any employee, the date of such action shall
be the "date of allocation" for purposes of this Plan.
The aggregate number of Restricted Shares which may be
allocated pursuant to this Plan shall not exceed the amount
available therefor in the Restricted Share Reserve.
5. Form of Allocations. Each allocation shall specify the
number of Restricted Shares subject thereto, subject to the
provisions of Section 4 hereof.
At the time of making any allocation, the Board shall advise
the Recipient and the Company thereof by delivery of written
notice.
The Company shall take such action as shall be necessary to
cause any Restricted Shares issued pursuant to this Plan and not
previously listed to be listed on the American Stock Exchange
and/or such other exchanges on which shares of the same class as
the Restricted Shares are then listed.
The Recipient, by accepting an allocation of Restricted
Shares hereunder, agrees that he will not elect to treat the
receipt of such Restricted Shares as a taxable event pursuant to
Section 83(b) of the Internal Revenue Code of 1986, as amended.
In addition, the Recipient agrees that at such time that the
value of the Restricted Shares is included in his income, the
Company shall withhold from issuance that number of Restricted
Shares necessary to satisfy the Recipient's applicable federal
and state income tax withholding. Thereafter, the Company shall
release to the Recipient a certificate evidencing ownership of
the balance of Restricted Shares to which the Recipient is
entitled, without any restrictions on transfer whatsoever.
6. Restrictions.
(a) Restricted Shares shall forthwith after the
allocation, pursuant to Section 5 hereof, be duly issued or
transferred and a certificate or certificates for such shares
shall be issued in the Recipient's name. The Recipient shall
thereupon be a shareholder with respect to all the Restricted
Shares represented by such certificate or certificates and shall
have all the rights of a shareholder with respect to all such
shares, including the right to vote such shares and to receive
all dividends and other distributions (subject to the provisions
of Section 6(b) hereof) paid with respect to such shares,
provided, however, that such shares shall be subject to the
restrictions hereinafter described in Section 6(d). Certificates
of stock representing Restricted Shares shall be imprinted with a
legend to the effect that the shares represented thereby may not
be sold, exchanged, transferred, pledged, hypothecated or
otherwise disposed of except in accordance with the terms of this
Plan, and the transfer agent for the Common Stock shall be
instructed to like effect in respect of such shares. In aid of
such restrictions, the Company shall retain the certificate(s)
therefor, and the Recipient shall deposit a stock power or other
instrument of transfer, appropriately endorsed in blank, with an
officer designated by the Committee, which officer shall retain
possession of such certificates until the Restricted Period
(described in (c) below) expires.
(b) In the event that as the result of a stock split
or stock dividend or combination of shares or any other change,
or exchange for other securities, by reclassification,
reorganization, merger, consolidation, recapitalization or
otherwise, the Recipient shall, as the owner of Restricted Shares
subject to restrictions hereunder, be entitled to new or
additional or different shares of stock or securities, the
certificate or certificates for, or other evidences of, such new
or additional or different shares or securities, together with an
instrument of transfer appropriately endorsed, shall also be
imprinted with a legend as provided in Section 6(a) and all
provisions of the Plan relating to restrictions and lapse of
restrictions herein set forth shall thereupon be applicable to
such new or additional or different shares or securities to the
extent applicable to the shares with respect to which they were
distributed; provided, however, that if the Recipient shall
receive rights, warrants or fractional interests in respect of
any of such Restricted Shares, such rights or warrants may be
held, exercised, sold or otherwise disposed of, and such
fractional interests may be settled, by the Recipient free and
clear of the restrictions hereafter set forth.
(c) The term "Restricted Period" with respect to
Restricted Shares (after which restrictions shall lapse) shall
mean a period specified by the Board commencing on the date of
allocation of such Restricted Shares to the Recipient and ending
on the date that is no more than ten (10) years after the date of
allocation of such shares (subject to earlier termination
pursuant to Section 7.(a) below). Notwithstanding the foregoing,
at the time Restricted Shares are allocated, the Committee may
establish performance targets which, if met, will accelerate the
termination of the Restricted Period for all or a portion of the
Restricted Shares that are allocated. The performance targets,
if any, and the number of Restricted Shares affected will be set
forth in the notice that will be given to the Recipient advising
him of the allocation of Restricted Shares.
(d) The restrictions to which Restricted Shares shall
be subject shall be as follows:
During the Restricted Period applicable
to such shares and except as otherwise
specifically provided in the Plan, none of
such shares shall be sold, exchanged,
transferred, pledged, hypothecated or
otherwise disposed of.
7. Forfeiture of Restricted Shares.
(a) If the employment of a Recipient should be
terminated during the Restricted Period on account of his death,
or on account of his retirement after attaining age sixty-three
(63), he shall forfeit and return to the Company the unvested
portion of the Restricted Shares that have been issued to him.
For this purpose, it will be assumed that Restricted Shares are
vested ratably over the one hundred and twenty (120) month period
after the Restricted Shares are allocated. The Restricted Period
shall automatically terminate for such vested Restricted Shares,
and the Company shall release to the Recipient, or the duly
qualified personal representative of a deceased Recipient, a
certificate for such vested Restricted Shares, without
restrictions.
(b) If the employment of a Recipient should be
terminated during the Restricted Period other than on account of
his death or retirement after attaining age sixty-three (63), he
shall forfeit and return to the Company all of the Restricted
Shares that have been allocated to him.
(c) Nothing contained in this Section 7 or elsewhere
in this Plan shall preclude the transfer of vested Restricted
Shares, on the death of the Recipient, to his legal
representatives or his estate or preclude such representatives
from transferring such shares, or any of them, to the person or
persons entitled thereto by will or by the laws of descent and
distribution.
(d) All notices in writing required pursuant to this
Section 7 shall be sufficient only if actually delivered or if
sent via registered or certified mail, postage prepaid, to the
Company at its principal office within the City of Richmond,
Virginia, and shall be conclusively deemed given on the date of
delivery, if delivered or on the first business day following the
date of such mailing, if mailed.
8. Finality of Determinations. The Committee shall
administer this Plan and construe its provisions; any
determination by the Committee in carrying out, administering or
construing this Plan shall be final and binding for all purposes
and upon all interested persons and their heirs, successors,
assigns and personal representatives.
9. Limitations. No person shall at any time have any
right to receive an allocation of Restricted Shares hereunder,
and no person shall have authority to enter into an agreement for
the making of an allocation or to make any representation or
warranty with respect thereto.
Recipients of allocations shall have no rights in respect
thereof except as set forth in the Plan. Such rights may not be
assigned or transferred except by will or by the laws of descent
and distribution, and in the event that any attempt shall be made
to sell, exchange, transfer, pledge, hypothecate or otherwise
dispose of any Restricted Shares held by the Recipient during the
Restricted Period then the shares which are the subject of such
attempted disposition shall be deemed to be forfeited. Before
the actual issuance of Restricted Shares, no such shares shall be
earmarked for the Recipients' accounts, nor shall the Recipients
have any rights as stockholders with respect to such shares.
Neither the action of the Company in establishing the Plan,
nor any action taken by it or by the Board or the Committee under
the Plan, nor any provision of the Plan, shall be construed as
giving to any person the right to be retained in the employ of
the Company of any Subsidiary.
10. Amendment, Suspension or Termination of the Plan in
Whole or in Part. The Board may amend, suspend or terminate the
Plan in whole or in part at any time, provided that any amendment
shall not adversely affect rights or obligations with respect to
allocations theretofore made; and provided further, that no
modification of the Plan by the Board without approval of the
stockholders shall (a) increase the maximum number of Restricted
Shares reserved pursuant to Section 3; (b) change the provisions
of Section 3 with respect to the aggregate number of Restricted
Shares which may be allocated under the Plan; or (c) render any
member of the Committee eligible to receive an allocation at any
time while he is serving on the Committee.
11. Waiver of Vesting and Benefit Accrual Limitations. The
Board may, in its sole discretion, waive, modify or amend all or
any portion of the provisions of the Plan that have the effect of
limiting the amount or the timing of payments that are to be made
under the plan, provided that such waiver, modification or
amendment shall not adversely affect rights or obligations with
respect to allocations theretofore made. Such action by the
Board may be made on a case by case basis or may be made with
respect to all Recipients.
12. Governing Law. The Plan shall be governed by the laws
of the Commonwealth of Virginia.
13. Expenses of Administration. All costs and expenses
incurred in the operation and administration of this Plan shall
be borne by the Company.
14. Registration of Restricted Shares. The Company shall
proceed promptly to register under the Securities Act of 1933 (or
similar statute then in effect) all Restricted Shares to the
extent that such registration is required under the regulations
of the Securities and Exchange Commission.
The Company at its expense will furnish to each Recipient
such number of prospectuses incident to any such registration and
indemnify each such Recipient against all claims, losses, damages
and liabilities caused by any untrue statement of a material fact
contained therein (or in any related registration statement or by
any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except insofar as the same may have been caused by an
untrue statement or omission based upon information furnished in
writing to the Company by such Recipient expressly for use
therein; and, as a condition precedent to the obligations of the
Company pursuant to this Section 14, each Recipient will agree in
writing to indemnify the Company against all claims, losses,
damages and liabilities caused by an untrue statement or omission
based upon information furnished to the Company by such Recipient
expressly for use therein.
The Recipient shall furnish the Company such information
that may be required and shall fully cooperate with the Company
in connection with any registration or filing that may be
required at any time with respect to the Restricted Shares.
IN WITNESS WHEREOF, the Company has caused this Plan to be
executed by its duly authorized representative as of the 31st day
of January, 1996.
MEDIA GENERAL, INC.
By /s/ J.Stewart Bryan
------------------------------
J. Stewart Bryan III
Chairman
<PAGE> 1
Exhibit 10.32
MEDIA GENERAL, INC.
RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
Effective May 19, 1995
1. Purpose. The purpose of this Plan is to attract and
retain qualified persons of experience and ability, who are not
employees or former employees of the Company, for service as
members of the Board of Directors by granting them shares of the
Company's Class A Common Stock, subject to certain restrictions
set forth below, to compensate them for their contributions to
the growth and profits of the Company and thereby to align their
compensation with the long-term growth and profitability of the
Company.
2. Definitions.
(a) "Act" shall mean The Securities Exchange Act of
1934, as amended.
(b) "Annual Director's Fee" shall mean the annual fee
paid by the Company to each Eligible Director of the Company,
which fee may be modified from year to year.
(c) "Board" shall mean the Board of Directors of the
Company.
(d) "Committee" shall mean the Compensation and Stock
Option Committee, as appointed from time to time by the Board.
(e) "Common Stock" shall mean Class A Common Stock of
Media General, Inc.
(f) "Company" shall mean Media General, Inc.
(g) "Director" shall mean any member of the Board.
(h) "Disability" shall mean the Recipient's inability
to perform the services required by his position on the Board by
reason of any medically determinable physical or mental
impairment which can be expected to result in death or to be of
long-continued and indefinite duration.
(i) "Effective Date" shall mean the date specified in
Section 14 hereof.
(j) "Eligible Director" or "Non-Employee Director"
shall mean any Director who is not an employee or former employee
of the Company or any of its subsidiaries or affiliates.
(k) "Plan" shall mean this Media General, Inc.,
Restricted Stock Plan for Non-Employee Directors.
(l) "Recipient" shall mean an Eligible Director of the
Company to whom Restricted Shares are allocated pursuant to this
Plan, or his designated beneficiary, surviving spouse, estate or
legal representative; but for the purposes hereof, any
beneficiary, spouse, estate or legal representative shall be
considered as one person with the Eligible Director.
(m) "Restricted Period" shall mean the period of time
from the date of grant of the Restricted Stock until the earliest
to occur of the events described in Section 6(c) hereof.
(n) "Restricted Shares" shall mean the shares of
Class A Common Stock of the Company reserved pursuant to Section
3 hereof and any such shares allocated or issued to a Recipient
pursuant to this Plan.
(o) "Subsidiary" or "Subsidiaries" shall mean a
corporation or corporations of which the Company owns, directly
or indirectly, shares having a majority of the voting power for
the election of directors.
(p) "Year of Board Membership" shall mean 365
consecutive days of Board Membership.
3. Restricted Share Reserve. There shall be
established a Restricted Share Reserve to which shall be credited
20,000 Restricted Shares. In the event that the shares of Class
A Common Stock of the Company should, as a result of a stock
split or stock dividend or combination of shares or any other
change, or exchange for other securities, by reclassification,
reorganization, merger, consolidation, recapitalization or
otherwise, be increased or decreased or changed into or exchanged
for a different number or kind of shares of stock or other
securities of the Company or of another corporation, the number
of shares then remaining in the Restricted Share Reserve shall be
appropriately adjusted to reflect such action. If any such
adjustment shall result in a fractional share, such fraction
shall be disregarded. Upon the allocation of shares hereunder,
the Restricted Share Reserve shall be reduced by the number of
Restricted Shares so allocated, and upon the forfeiture of
Restricted Shares pursuant to Section 7 hereof, the Restricted
Share Reserve shall be increased by such number of Restricted
Shares, and such Restricted Shares again may be the subject of
allocations hereunder. All authorized and unissued shares issued
as Restricted Shares in accordance with the Plan shall be fully
paid and non-assessable shares and free from preemptive rights.
4. Eligibility and Making of Allocations. Only Eligible
Directors of the Company shall receive an allocation of
Restricted Shares pursuant to the Plan. Each Eligible Director
shall receive the equivalent of $10,000 every other year in the
form of Restricted Shares as part of such Eligible Director's
Annual Director's Fee. The number of Restricted Shares so
allocated shall be based upon the closing price on the principal
exchange upon which the Company's Class A Common Stock is listed
on the trading day immediately preceding the date of grant. The
date of grant for purposes of the initial award made pursuant to
this Plan shall be the day of the Board of Directors' meeting
immediately following the 1995 Annual Meeting of Stockholders;
all subsequent dates of grants shall be the date of the
Committee's regular January meeting in a year in which an award
is to be made.
The aggregate number of Restricted Shares which may be
allocated pursuant to this Plan shall not exceed the amount
available therefor in the Restricted Share Reserve.
5. Form of Allocations. Each allocation pursuant to
Section 4 hereof shall specify the number of Restricted Shares
subject thereto.
At the time of making any allocation, the Committee shall
advise the Recipient and the Company thereof by delivery of
written notice.
The Company shall take such action as shall be necessary to
cause any Restricted Shares issued pursuant to this Plan and not
previously listed to be listed on the American Stock Exchange
and/or such other exchanges on which shares of the same class as
the Restricted Shares then are listed.
The Recipient agrees that at such time that the value of the
Restricted Shares are included in his taxable income, the Company
may withhold the applicable federal and state income taxes from
any payments that then are due to the Recipient from the Company
as required by law or requested by the Recipient and that, if the
amount that then is due to the Recipient from the Company is not
sufficient to cover the applicable federal and state tax with-
holding that is required, the Recipient shall pay the amount of
the shortfall to the Company. The Company shall not be required
to release the certificates evidencing the Recipient's ownership
of Restricted Shares until all of the applicable federal and
state tax withholding requirements relating to the Recipient have
been satisfied.
6. Restrictions.
(a) After an allocation pursuant to Section 4 hereof,
the applicable Restricted Shares shall be duly issued or
transferred forthwith, and a certificate or certificates for such
shares shall be issued in the Recipient's name. The Recipient
thereupon shall be a stockholder with respect to all the
Restricted Shares represented by such certificate or
certificates, including the right to vote such shares and to
receive all dividends and other distributions (subject to the
provisions of Section 6(b) hereof) paid with respect to such
shares; provided, however, that such shares shall be subject to
and imprinted with the terms of the legend specified in Section
6(d) hereof, and the transfer agent for the Common Stock shall
be instructed to like effect in respect of such shares. In aid
of such restrictions, the Company shall retain the certificate(s)
therefor, and the Recipient shall deposit a stock power or other
instrument of transfer, appropriately endorsed in blank, with an
officer designated by the Committee, which officer shall retain
possession of such certificates until the Restricted Period
(described in (c) below) expires.
(b) In the event that as the result of a stock split
or stock dividend or combination of shares or any other change or
exchange for other securities by reclassification,
reorganization, merger, consolidation, recapitalization or
otherwise, the Recipient, as the owner of Restricted Shares
subject to restrictions hereunder, shall be entitled to new or
additional or different shares of stock or securities, and the
certificate or certificates for, or other evidences of, such new
or additional or different shares or securities, together with an
instrument of transfer appropriately endorsed, also shall be
imprinted with the legend specified in Section 6(d), and all
provisions of the Plan relating to restrictions and lapse of
restrictions herein set forth thereupon shall be applicable to
such new or additional or different shares or securities to the
extent applicable to the shares with respect to which they were
distributed; provided, however, that if the Recipient shall
receive rights, warrants or fractional interests in respect of
any of such Restricted Shares, such rights or warrants may be
held, exercised, sold or otherwise disposed of, and such
fractional interests may be settled, by the Recipient free and
clear of the restrictions hereafter set forth.
(c) The term "Restricted Period" with respect to
Restricted Shares (after which restrictions shall lapse) shall
mean a period specified by the Board commencing on the date of
allocation of such Restricted Shares to the Recipient and ending
on the date that is no more than ten (10) years after the date of
allocation of such shares. Notwithstanding the foregoing, at the
time Restricted Shares are allocated, the Committee may establish
performance targets which, if met, will accelerate the
termination of the Restricted Period for all or a portion of the
Restricted Shares so allocated. The performance targets, if any,
and the number of Restricted Shares affected shall be set forth
in the notice given to the Recipient pursuant to Section 5
hereof.
(d) The restrictions to which Restricted Shares shall
be subject and the legend to be imprinted on certificates
representing the Restricted Shares shall be as follows:
During the Restricted Period applicable to
such shares, and except as otherwise
specifically provided in the Plan, none of such
shares shall be sold, exchanged, transferred,
pledged, hypothecated or otherwise disposed of.
7. Forfeiture of Restricted Shares.
(a) If a Recipient's status as an Eligible Director
should be terminated during the Restricted Period on account of
his death, Disability or retirement, the unvested portion of the
Restricted Shares issued to him shall be forfeited and returned
to the Company. For this purpose, if the Restricted Period has
not been terminated previously through the attainment of the
applicable performance targets, it shall be assumed that
Restricted Shares vest ratably over the one hundred and twenty
(120) month period after the Restricted Shares are allocated.
(b) Notwithstanding Section 7(a) hereof, if a
Recipient's status as an Eligible Director is terminated upon the
completion of five (5) or more Years of Board Membership after a
date of grant of Restricted Stock, and such termination occurs by
reason of death, Disability or retirement, then all shares so
allocated as to which the Restricted Period has not been
terminated previously through the attainment of applicable
performance targets shall vest upon such death, Disability or
retirement.
(c) Nothing contained in this Section 7 or elsewhere in
this Plan shall preclude the transfer of vested Restricted Shares
on the death or Disability of the Recipient to his legal
representatives or his estate or preclude such representatives
from transferring such shares, or any of them, to the person or
persons entitled thereto by will or by the laws of descent and
distribution; provided, however, that any shares so transferred
as to which such restrictions shall not have lapsed shall
continue to be subject to all restrictions and obligations with
respect thereto imposed by the Plan.
(d) All notices in writing required pursuant to this
Section 7 shall be sufficient only if actually delivered or if
sent via registered or certified mail, postage prepaid, to the
Company at its principal office and conclusively shall be deemed
given on the date of delivery, if delivered, or on the first
business day following the date of such mailing, if mailed.
8. Finality of Determinations. The Committee shall
administer this Plan and construe its provisions. Any
determination by the Committee in carrying out, administering or
construing this Plan shall be final and binding for all purposes
and upon all interested persons and their heirs, successors,
assigns and personal representatives.
9. Limitations.
(a) Nothing in the Plan shall be deemed to create any
obligation on the part of the Board to nominate any Director for
re-election by the Company's stockholders nor confer upon any
Director the right to remain a member of the Board.
(b) Recipients of allocations shall have no rights in
respect thereof except as set forth in the Plan. Such rights may
not be assigned or transferred except by will or by the laws of
descent and distribution, and in the event that any attempt shall
be made to sell, exchange, transfer, pledge, hypothecate or
otherwise dispose of any Restricted Shares held by the Recipient
during the Restricted Period (except those as to which the
Restricted Period previously has been terminated through the
attainment of the applicable performance targets), then the
shares which are the subject of such attempted disposition shall
be deemed forfeited. Before the actual issuance of Restricted
Shares, no such shares shall be earmarked for the Recipients'
accounts, nor shall the Recipients have any rights as
stockholders with respect to such shares.
10. Amendment, Suspension or Termination of the Plan in
Whole or in Part. The Board may amend, suspend or terminate the
Plan in whole or in part at any time; provided that any amendment
shall not adversely affect rights or obligations with respect to
allocations theretofore made; and provided further that no
modification of the Plan by the Board without approval of the
stockholders shall (a) increase the maximum number of Restricted
Shares reserved pursuant to Section 3; (b) change the provisions
of Section 3 with respect to the aggregate number of Restricted
Shares which may be allocated under the Plan; or (c) change the
classification of Eligible Director for the purpose of receiving
Restricted Shares under the Plan. Notwithstanding the foregoing,
the Plan shall not be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code,
the Employee Retirement Income Security Act or the rules
thereunder. The Company intends that the Plan and the grants of
Restricted Stock hereunder shall comply with the conditions of
Rule 16b-3 of the Act and qualify for the exemption from Section
16(b) of the Act as a "formula plan." Should any additional
provisions be necessary in order to so comply, the Board may
amend the Plan accordingly, without the necessity of obtaining
the approval of the Company's stockholders.
11. Governing Law. The Plan shall be governed by the laws
of the Commonwealth of Virginia.
12. Expenses of Administration. All costs and expenses
incurred in the operation and administration of this Plan shall
be borne by the Company.
13. Regulatory Compliance and Listing. The issuance or
delivery of any Restricted Shares may be postponed by the Company
for such period as may be required to comply with any applicable
requirements under the federal securities laws, any applicable
listing requirements of any national securities exchange or any
requirements under any other law or regulation applicable to the
issuance or delivery of such shares, and the Company shall not be
obligated to issue or deliver any such shares if the issuance or
delivery thereof shall constitute a violation of any provision of
any law or any regulation of any governmental authority or any
national securities exchange.
14. Effective Date. The Plan shall be adopted by the Board
and submitted to the stockholders of the Company for approval at
the Annual Meeting of Stockholders to be held on May 19, 1995.
The Plan shall become effective upon the affirmative vote of a
majority of the Class A and Class B stockholders voting together
and not as separate classes.
<PAGE> 1
Exhibit 10.33
MEDIA GENERAL, INC.
LONG-TERM INCENTIVE PLAN
Effective May 19, 1995
1. Purpose. The purpose of this 1995 Long-Term Incentive
Plan (the "Plan") of Media General, Inc. (together with any
successor thereto, the "Company") is (a) to promote the identity
of interests between shareholders and employees of the Company by
encouraging and creating significant ownership of Class A Common
Stock of the Company by officers and other salaried employees of
the Company and its subsidiaries; (b) to enable the Company to
attract and retain qualified officers and employees who
contribute to the Company's success by their ability, ingenuity
and industry; and (c) to provide meaningful long-term incentive
opportunities for officers and other employees who are
responsible for the success of the Company and who are in a
position to make significant contributions toward its objectives.
2. Definitions. In addition to the terms defined elsewhere
in the Plan, the following shall be defined terms under the Plan:
2.01. "Award" means any Performance Accelerated Restricted
Stock, Performance Award, Option, Stock Appreciation Right,
Restricted Stock, Deferred Stock, Dividend Equivalent or Other
Stock-Based Award or any other right or interest relating to
Shares or cash granted to a Participant under the Plan.
2.02. "Award Agreement" means any written agreement,
contract or other instrument or document evidencing an Award.
2.03. "Board" means the Board of Directors of the Company.
2.04. "Change of Control" and related terms are defined in
Section 9.
2.05. "Code" means the Internal Revenue Code of 1986, as
amended from time to time. References to any provision of the
Code shall be deemed to include successor provisions thereto and
regulations thereunder.
2.06. "Committee" means the Compensation and Stock Option
Committee of the Board, or such other Board committee as may be
designated by the Board to administer the Plan, or any
subcommittee of either; provided, however, that the Committee,
and any subcommittee thereof, shall consist of two or more
directors, each of whom is a "disinterested person" within the
meaning of Rule 16b-3 under the Exchange Act.
2.07. "Company" is defined in Section 1.
2.08. "Covered Employee" has the same meaning as set forth
in Section 162(m) of the Code, and successor provisions.
2.09. "Deferred Stock" means a right, granted to a
Participant under Section 6.06, to receive Shares at the end of a
specified deferral period.
2.10. "Dividend Equivalent" means a right, granted to a
Participant under Section 6.04, to receive cash, Shares, other
Awards or other property equal in value to dividends paid with
respect to a specified number of Shares.
2.11. "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time. References to any provision
of the Exchange Act shall be deemed to include successor
provisions thereto and regulations thereunder.
2.12. "Fair Market Value" means, with respect to Shares,
Awards or other property, the fair market value of such Shares,
Awards or other property determined by such methods or procedures
as shall be established from time to time by the Committee.
Unless otherwise determined by the Committee, the Fair Market
Value of Shares as of any date shall be the publicly reported
closing sales price on that date of a Share; provided that if
there were no sales on the valuation date but there were sales on
dates within a reasonable period both before and after the
valuation date, the Fair Market Value is the weighted average of
the closing prices on the nearest date before and the nearest
date after the valuation date. The average is to be weighted
inversely by the respective numbers of trading days between the
selling dates and the valuation date.
2.13. "Incentive Stock Option" means an Option that is
intended to meet the requirements of Section 422 of the Code.
2.14. "Non-Qualified Stock Option" means an Option that is
not intended to be an Incentive Stock Option.
2.15. "Option" means a right, granted to a Participant
under Section 6.07, to purchase Shares, other Awards or other
property at a specified price during specified time periods. An
Option may be either an Incentive Stock Option or a Non-Qualified
Stock Option.
2.16. "Other Stock-Based Award" means a right, granted to a
Participant under Section 6.09, that relates to or is valued by
reference to Shares.
2.17. "Participant" means a person who, as an officer or
salaried employee of the Company or any Subsidiary, has been
granted an Award under the Plan.
2.18. "Performance Accelerated Restricted Stock" means
Restricted Stock granted to a Participant under Section 6.02
containing certain performance criteria established by the
Committee which, if met, shall accelerate the vesting thereof.
2.19. "Performance Award" means a right granted to a
Participant under Section 6.03 to receive cash, Shares, other
Awards or other property the payment of which is contingent upon
achievement of performance goals specified by the Committee.
2.20. "Performance-Based Restricted Stock" means Restricted
Stock that is subject to a risk of forfeiture if specified
performance criteria are not met within the restriction period.
2.21. "Plan" is defined in Section 1.
2.22. "Restricted Stock" means Shares granted to a
Participant under Section 6.05 that are subject to certain
restrictions and to a risk of forfeiture.
2.23. "Rule 16b-3" means Rule 16b-3, as from time to time
amended and applicable to Participants, promulgated by the
Securities and Exchange Commission under Section 16 of the
Exchange Act.
2.24. "Shareholders" means the holders of all issued and
outstanding Shares.
2.25. "Shares" means the Class A Common Stock, $5.00 par
value, of the Company and such other securities of the Company as
may be substituted for Shares or such other securities pursuant
to Section 10.
2.26. "Stock Appreciation Right" means a right granted to a
Participant under Section 6.08 to be paid an amount measured by
the appreciation in the Fair Market Value of Shares from the date
of grant to the date of exercise of the right, with payment to be
made in cash, Shares, other Awards or other property as specified
in the Award or determined by the Committee.
2.27. "Subsidiary" means any corporation (other than the
Company) with respect to which the Company owns, directly or
indirectly, 50 percent or more of the total combined voting power
of all classes of stock. In addition, any other related entity
may be designated by the Board as a Subsidiary, provided such
entity could be considered as a subsidiary according to generally
accepted accounting principles.
2.28. "Year" means a calendar year.
3. Administration.
3.01. Authority of the Committee. The Plan shall be
administered by the Committee. The Committee shall have full and
final authority to take the following actions, in each case
subject to and consistent with the provisions of the Plan:
(i) to select and designate Participants;
(ii) to designate Subsidiaries;
(iii) to determine the type or types of Awards to be
granted to each Participant;
(iv) to determine the number of Awards to be granted,
the number of Shares to which an Award will relate, the terms and
conditions of any Award granted under the Plan (including, but
not limited to, any exercise price, grant price or purchase
price, any restriction or condition, any schedule for lapse of
restrictions or conditions relating to transferability or
forfeiture, exercisability or settlement of an Award, and waivers
or accelerations thereof, and waiver of performance conditions
relating to an Award, based in each case on such considerations
as the Committee shall determine) and all other matters to be
determined in connection with an Award;
(v) to determine whether, to what extent and under
what circumstances an Award may be settled, or the exercise price
of an Award may be paid, in cash, Shares, other Awards or other
property, or an Award may be cancelled, forfeited or surrendered;
(vi) to determine whether, to what extent, and under
what circumstances, cash, Shares, other Awards or other property
payable with respect to an Award will be deferred either
automatically, at the election of the Committee or at the
election of the Participant;
(vii) to prescribe the form of each Award Agreement,
which need not be identical for each Participant;
(viii) to adopt, amend, suspend, waive and rescind
such rules and regulations and appoint such agents as the
Committee may deem necessary or advisable to administer the Plan;
(ix) to correct any defect or supply any omission or
reconcile any inconsistency in the Plan and to construe and
interpret the Plan and any Award, rules and regulations, Award
Agreement or other instrument hereunder; and
(x) to make all other decisions and determinations as
may be required under the terms of the Plan or as the Committee
may deem necessary or advisable for the administration of the
Plan.
3.02. Manner of Exercise of Committee Authority. Unless
authority is specifically reserved to the Board under the terms
of the Plan or applicable law, the Committee shall have sole
discretion in exercising such authority under the Plan. Any
action of the Committee with respect to the Plan shall be final,
conclusive and binding on all persons, including the Company,
Subsidiaries, Shareholders, Participants and any person claiming
any rights under the Plan from or through any Participant. The
express grant of any specific power to the Committee and/or the
taking of any action by the Committee shall not be construed as
limiting any power or authority of the Committee. A memorandum
signed by all members of the Committee shall constitute the act
of the Committee without the necessity, in such event, to hold a
meeting. The Committee may delegate to officers or managers of
the Company or any Subsidiary the authority, subject to such
terms as the Committee shall determine, to perform administrative
functions under the Plan.
3.03. Limitation of Liability. Each member of the
Committee shall in good faith be entitled to rely or act upon any
report or other information furnished to such member by any
officer or other employee of the Company or any Subsidiary, the
Company's independent certified public accountants or any
executive compensation consultant or other professional retained
by the Company to assist in the administration of the Plan. No
member of the Committee, nor any officer or employee of the
Company acting on behalf of the Committee, shall be personally
liable for any action, determination or interpretation taken or
made in good faith with respect to the Plan, and all members of
the Committee and any officer or employee of the Company acting
on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such
action, determination or interpretation.
3.04. Termination of Current Plans. As soon as practicable
following the Effective Date, the Committee shall proceed to
terminate the 1987 Stock Option Plan and the 1991 Restricted
Stock Plan and, in connection therewith, take all necessary
action to delete and/or de-list any remaining shares subject to
issuance or reissuance under such plans from any effective
registration statements filed with the Securities and Exchange
Commission and/or additional listing applications filed with the
American Stock Exchange covering such plans. Under no
circumstances, shall any additional options or restricted shares
be granted under such plans after the Effective Date.
Notwithstanding the provision of this Section 3.04, all options
and restricted shares granted prior to the Effective Date shall
remain in full force and effect, subject to the terms thereof and
of the respective plan under which such grants were made.
4. Shares Subject to the Plan. Subject to adjustment as
provided in Section 10, the total number of Shares reserved and
available for Awards under the Plan shall be 1,300,000, of which
up to 400,000 shares may be reserved for grants as Performance
Awards, Performance-Based Restricted Stock, Performance
Accelerated Restricted Stock and Other Stock-Based Awards. For
purposes of this Section 4, the number of and time at which
Shares shall be deemed to be subject to Awards and therefore
counted against the number of Shares reserved and available under
the Plan shall be the earliest date at which the Committee
reasonably can estimate the number of Shares to be distributed in
settlement of an Award or with respect to which payments will be
made; provided, however, that subject to the requirements of Rule
16b-3, the Committee may adopt procedures for the counting of
Shares relating to any Award for which the number of Shares to be
distributed or with respect to which payment will be made cannot
be fixed at the date of grant to ensure appropriate counting,
avoid double counting (in the case of tandem or substitute
awards) and provide for adjustments in any case in which the
number of Shares actually distributed or with respect to which
payments are actually made differs from the number of Shares
previously counted in connection with such Award.
If any Shares to which an Award relates are forfeited or the
Award is settled or terminates without a distribution of Shares
(whether or not cash, other Awards or other property is
distributed with respect to such Award), any Shares counted
against the number of Shares reserved and available under the
Plan with respect to such Award shall, to the extent of any such
forfeiture, settlement or termination, again be available for
Awards under the Plan; provided, however, that such Shares shall
be available for issuance only to the extent permitted under Rule
16b-3.
5. Eligibility. Awards may be granted only to individuals
who are officers or other salaried employees (including employees
who also are directors) of the Company or a Subsidiary; provided,
however, that no Award pursuant to this Plan shall be granted to
any member of the Committee.
6. Specific Terms of Awards.
6.01. General. Awards may be granted on the terms and
conditions set forth in this Section 6. In addition, the
Committee may impose on any Award or the exercise thereof, at the
date of grant or thereafter (subject to Section 11.02), such
additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine,
including without limitation the acceleration of vesting of any
Awards or terms requiring forfeiture of Awards in the event of
termination of employment by the Participant. Except as provided
in Sections 7.03 and/or 7.04, only services may be required as
consideration for the grant of any Award.
6.02. Performance Accelerated Restricted Stock. Subject to
the provisions of Sections 7.01 and 7.02, the Committee is
authorized to grant Performance Accelerated Restricted Stock to
Participants on the following terms and conditions:
(i) Awards and Dividends. Performance Accelerated
Restricted Stock Awards shall be denominated in Shares. The
Participant thereupon shall be a Shareholder with respect to the
Shares awarded, including the right to vote such Shares and to
receive all dividends and distributions paid with respect
thereto.
(ii) Certificates of Shares. Performance Accelerated
Restricted Stock granted under the Plan may be evidenced in such
manner as the Committee shall determine. If certificates
representing Performance Accelerated Restricted Stock are
registered in the name of a Participant, such certificates shall
bear an appropriate legend referring to the terms, conditions and
restrictions applicable to such performance Accelerated
Restricted Stock, the Company shall retain physical possession of
the certificates, and the Participant shall deliver a stock power
to the Company, endorsed in blank, relating to that Performance
Accelerated Restricted Stock.
(iii) Restrictions and Acceleration. At the time of
the Award of Performance Accelerated Restricted Stock, the
Committee shall specify a period commencing on the date of the
Award and ending on a date that is no more than 10 years
thereafter. At the time of each such Award, the Committee also
shall specify and advise the Participant of such performance
targets as the Committee shall determine to be appropriate which,
if met, shall accelerate the termination of the foregoing
restricted period for all or such other portion of the
Performance Accelerated Restricted Stock as the Committee shall
deem appropriate.
(iv) Forfeiture. Except as otherwise determined by
the Committee, upon termination of employment (as determined
under criteria established by the Committee) during an applicable
restriction period, all Performance Accelerated Restricted Stock
that remains subject to such applicable restriction period shall
be forfeited; provided, however, that the Committee may provide,
by rule or regulation or in any Award Agreement, or may determine
in any individual case, that restrictions or forfeiture
conditions relating to Performance Accelerated Restricted Stock
will be waived in whole or in part in the event of termination
resulting from specified causes, and the Committee in other cases
may waive in whole or in part the forfeiture of Performance
Accelerated Restricted Stock.
6.03. Performance Awards. Subject to the provisions of
Sections 7.01 and 7.02, the Committee is authorized to grant
Performance Awards to Participants on the following terms and
conditions:
(i) Awards and Conditions. A Performance Award shall
confer upon the Participant rights, valued as determined by the
Committee, and payable to, or exercisable by, the Participant to
whom the Performance Award is granted, in whole or in part, as
determined by the Committee, conditioned upon the achievement of
performance criteria determined by the Committee.
(ii) Other Terms. A Performance Award shall be
denominated in Shares and may be payable in cash, Shares, other
Awards or other property, and the same may have such other terms
as shall be determined by the Committee.
6.04. Dividend Equivalents. The Committee is authorized to
grant Dividend Equivalents to Participants. The Committee may
provide that Dividend Equivalents shall be paid or distributed
when accrued or shall be deemed to have been reinvested in
additional Shares or Awards or otherwise reinvested.
6.05. Restricted Stock. The Committee is authorized to
grant Restricted Stock to Participants on the following terms and
conditions:
(i) Issuance and Restrictions. Restricted Stock shall
be subject to such restrictions on transferability and other
restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or
the right to receive dividends thereon), which restrictions may
lapse separately or in combination at such times, under such
circumstances, in such installments or otherwise as the Committee
shall determine.
(ii) Forfeiture. Performance-Based Restricted Stock
shall be forfeited unless the pre-established performance
criteria established by the Committee are satisfied during the
applicable restriction period. Except as otherwise determined by
the Committee, including any vesting of Restricted Stock and
accelerated vesting of Performance Accelerated Restricted Stock,
upon termination of employment (as determined under criteria
established by the Committee) during the applicable restriction
period, Performance Accelerated Restricted Stock or other
Restricted Stock that is at that time subject to restrictions
shall be forfeited and reacquired by the Company; provided,
however, that the Committee may provide, by rule or regulation or
in any Award Agreement, or may determine in any individual case,
that restrictions or forfeiture conditions relating to
Performance Accelerated Restricted Stock or other Restricted
Stock will be waived in whole or in part in the event of
terminations resulting from specified events.
(iii) Certificates of Shares. Restricted Stock
granted under the Plan may be evidenced in such manner as the
Committee shall determine. If certificates representing
Restricted Stock are registered in the name of the Participant,
such certificates shall bear an appropriate legend referring to
the terms, conditions and restrictions applicable to such
Restricted Stock, the Company shall retain physical possession of
the certificates, and the Participant shall deliver a stock power
to the Company, endorsed in blank, relating to the Restricted
Stock.
(iv) Dividends. Unless otherwise determined by the
Committee, cash dividends paid on Performance-Based Restricted
Stock shall be automatically reinvested in additional shares of
Performance-Based Restricted Stock, and cash dividends paid on
other Restricted Stock shall be paid to the Participant.
Dividends reinvested in Performance-Based Restricted Stock and
Shares distributed in connection with a stock split or stock
dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same
extent as the Restricted Stock with respect to which such stock
or other property has been distributed.
6.06. Deferred Stock. The Committee is authorized to grant
Deferred Stock to Participants, on the following terms and
conditions:
(i) Award and Restrictions. Delivery of Shares will
occur upon expiration of the deferral period specified for
Deferred Stock by the Committee (or, if permitted by the
Committee, as elected by the Participant). In addition, Deferred
Stock shall be subject to such restrictions as the Committee may
impose, which restrictions may lapse at the expiration of the
deferral period or at earlier specified times, separately or in
combination, in installments or otherwise as the Committee shall
determine.
(ii) Forfeiture. Except as otherwise determined by
the Committee, upon termination of employment (as determined
under criteria established by the Committee) during the
applicable deferral period or portion thereof (as provided in the
Award Agreement evidencing the Deferred Stock), all Deferred
Stock that is at that time subject to deferral (other than a
deferral at the election of the Participant) shall be forfeited;
provided, however, that the Committee may provide, by rule or
regulation or in any Award Agreement, or may determine in any
individual case, that restrictions or forfeiture conditions
relating to Deferred Stock will be waived in whole or in part in
the event of terminations resulting from specified causes, and
the Committee may in other cases waive in whole or in part the
forfeiture of Deferred Stock.
6.07. Options. The Committee is authorized to grant
Options to Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per Share
purchasable under an Option shall be determined by the Committee;
provided, however, that, except as provided in Section 7.03, such
exercise price shall be not less than the Fair Market Value of a
Share on the date of grant of such Option.
(ii) Time and Method of Exercise. The Committee shall
determine the time or times at which an Option may be exercised
in whole or in part, the methods by which such exercise price may
be paid or deemed to be paid, the form of such payment,
including, without limitation, cash, Shares, other Awards or
awards issued under other Company plans, or other property
(including notes or other contractual obligations of Participants
to make payment on a deferred basis, such as through "cashless
exercise" arrangements), and the methods by which Shares will be
delivered or deemed to be delivered to Participants. Options
shall expire not later than 10 years after the date of grant.
(iii) Incentive Stock Options. The terms of any
Incentive Stock Option granted under the Plan shall comply in all
respects with the provisions of Section 422 of the Code,
including but not limited to the requirement that no Incentive
Stock Option shall be granted more than 10 years after the
effective date of the Plan. Anything in the Plan to the contrary
notwithstanding, no term of the Plan relating to Incentive Stock
Options shall be interpreted, amended or altered, nor shall any
discretion or authority granted under the Plan be exercised, so
as to disqualify either the Plan or any Incentive Stock Option
under Section 422 of the Code. In the event a Participant
voluntarily disqualifies an Option as an Incentive Stock Option,
the Committee may, but shall not be obligated to, make such
additional Awards or pay bonuses as the Committee shall deem
appropriate to reflect the tax savings to the Company which
result from such disqualification.
6.08. Stock Appreciation Rights. The Committee is
authorized to grant Stock Appreciation Rights to Participants on
the following terms and conditions:
(i) Right to Payment. A Stock Appreciation Right
shall confer on the Participant to whom it is granted a right to
receive, upon exercise thereof, the excess of (A) the Fair Market
Value of one Share on the date of exercise (or, if the Committee
shall so determine in the case of any such right, other than one
related to an Incentive Stock Option, the Fair Market Value of
one Share at any time during a specified period before or after
the date of exercise or the Change of Control Price as defined in
Section 9.03) over (B) the grant price of the Stock Appreciation
Right as determined by the Committee as of the date of grant of
the Stock Appreciation Right, which, except as provided in
Section 7.03, shall be not less than the Fair Market Value of one
Share on the date of grant.
(ii) Other Terms. The Committee shall determine the
time or times at which a Stock Appreciation Right may be
exercised in whole or in part, the method of exercise, the method
of settlement, the form of consideration payable in settlement,
the method by which Shares will be delivered or deemed to be
delivered to Participants and any other terms and conditions of
any Stock Appreciation Right. Limited Stock Appreciation Rights
that may be exercised only upon the occurrence of a Change of
Control (as such term is defined in Section 9.02) or as otherwise
defined by the Committee) may be granted under this Section 6.08.
Stock Appreciation Rights shall expire not later than 10 years
after the date of grant.
6.09. Other Stock-Based Awards. The Committee is
authorized to grant to Participants such other Awards that are
denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares, as
deemed by the Committee to be consistent with the purposes of the
Plan, including without limitation, Shares awarded purely as a
"bonus" and not subject to any restrictions or conditions,
convertible or exchangeable debt securities, other rights
convertible or exchangeable into Shares, purchase rights and
Awards valued by reference to book value of Shares or the value
of securities of or the performance of specified Subsidiaries.
The Committee shall determine the terms and conditions of such
Awards, which may include performance criteria. Shares delivered
pursuant to an Award in the nature of a purchase right granted
under this Section 6.09 shall be purchased for such
consideration, paid for at such times, by such methods and in
such forms, including, without limitation, cash, Shares, other
Awards or other property, as the Committee shall determine.
7. Certain Provisions Applicable to Awards.
7.01. Performance-Based Awards. Performance Awards,
Performance-Based Restricted Stock, and certain Other Stock-Based
Awards subject to performance criteria are intended to be
"qualified performance-based compensation" within the meaning of
Section 162(m) of the Code and shall be paid solely on account of
the attainment of one or more pre-established, objective
performance goals within the meaning of Section 162(m) and the
regulations thereunder. Until otherwise determined by the
Committee, the performance goal shall be the attainment of pre-
established amounts of annual net income of the Company.
The payout of any such Award to a Covered Employee may be
reduced, but not increased, based on the degree of attainment of
other performance criteria or otherwise at the direction of the
Committee.
7.02. Maximum Yearly Awards. No participant may receive a
grant of Option or Stock Appreciation Option Rights exceeding
50,000 in any Year. In addition to this maximum, the maximum
annual individual payout of Performance Awards is $300,000, and
the Maximum individual limit of shares earned under Performance-
Based Restricted Stock, Performance Accelerated Restricted Stock
and Other Stock-Based Awards may not exceed 50,000 shares in any
two-year period.
7.03. Stand-Alone, Additional, Tandem and Substitute
Awards. Awards granted under the Plan may, in the discretion of
the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award granted under
the Plan or any award granted under any other plan of the
Company, any Subsidiary or any business entity to be acquired by
the Company or a Subsidiary, or any other right of a Participant
to receive payment from the Company or any Subsidiary. If an
Award is granted in substitution for another Award or award, the
Committee shall require the surrender of such other Award or
award in consideration for the grant of the new Award. Awards
granted in addition to or in tandem with other Awards or awards
may be granted either as of the same time as or a different time
from the grant of such other Awards or awards. The per Share
exercise price of any Option, grant price of any Stock
Appreciation Right or purchase price of any other Award
conferring a right to purchase Shares:
(i) Granted in substitution for an outstanding Award
or award shall be not less than the lesser of the Fair Market
Value of a Share at the date such substitute award is granted or
such Fair Market Value at that date reduced to reflect the Fair
Market Value at that date of the Award or award required to be
surrendered by the Participant as a condition to receipt of the
substitute Award; or
(ii) Retroactively granted in tandem with an
outstanding Award or award shall be not less than the lesser of
the Fair Market Value of a Share at the date of grant of the
later Award or at the date of grant of the earlier Award or
award.
7.04. Exchange Provisions. The Committee may at any time
offer to exchange or buy out any previously granted Award for a
payment in cash, Shares, other Awards (subject to Section 7.03)
or other property based on such terms and conditions as the
Committee shall determine and communicate to the Participant at
the time that such offer is made.
7.05. Term of Awards. The term of each Award shall be for
such period as may be determined by the Committee; provided,
however, that in no event shall the term of any Option or a Stock
Appreciation Right granted in tandem therewith exceed a period of
10 years from the date of its grant (or such shorter period as
may be applicable under Section 422 of the Code).
7.06. Form of Payment Under Awards. Subject to the terms
of the Plan and any applicable Award Agreement, payments to be
made by the Company or a Subsidiary upon the grant or exercise of
an Award may be made in such forms as the Committee shall
determine, including without limitation, cash, Shares, other
Awards or other property, and may be made in a single payment or
transfer, in installments or on a deferred basis. Such payments
may include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred
payments or the grant or crediting of Dividend Equivalents in
respect of installment or deferred payments denominated in
Shares.
8. General Restrictions Applicable to Awards.
8.01. Restrictions Under Rule 16b-3.
8.01.1. Six-Month Holding Period. Unless a
Participant could otherwise transfer an equity security,
derivative security or Shares issued upon exercise of a
derivative security granted under the Plan without incurring
liability under Section 16(b) of the Exchange Act (i) an equity
security issued under the Plan, other than an equity security
issued upon exercise or conversion of a derivative security
granted under the Plan, shall be held for at least six months
from the date of acquisition; (ii) with respect to a derivative
security issued under the Plan, at least six months shall elapse
from the date of acquisition of the derivative security to the
date of disposition of the derivative security (other than upon
exercise or conversion) or its underlying equity security; and
(iii) any Award in the nature of a Stock Appreciation Right must
be held for six months from the date of grant to the date of cash
settlement.
8.01.2. Nontransferability. Awards which constitute
derivative securities (including any option, stock appreciation
right or similar right) shall not be transferable by a
Participant except by will or the laws of descent and
distribution (except pursuant to a beneficiary designation
authorized under Section 8.02) or, if then permitted under Rule
16b-3, pursuant to a qualified domestic relations order as
defined under the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder,
and, in the case of an Incentive Stock Option or, if then
required by Rule 16b-3, any other derivative security granted
under the Plan, shall be exercisable during the lifetime of a
Participant only by such Participant or his guardian or legal
representative.
8.01.3. Compliance with Rule 16b-3. It is the intent
of the Company that this Plan comply in all respects with Rule
16b-3 in connection with any Award granted to a person who is
subject to Section 16 of the Exchange Act. Accordingly, if any
provision of this Plan or any Award Agreement does not comply
with the requirements of Rule 16b-3 as then applicable to any
such person, such provision shall be construed or deemed amended
to the extent necessary to conform to such requirements with
respect to such person.
8.02. Limits on Transfer of Awards; Beneficiaries. No
right or interest of a Participant in any Award shall be pledged,
encumbered or hypothecated to or in favor of any party (other
than the Company or a Subsidiary) or shall be subject to any
lien, obligation or liability of such Participant to any party
(other than the Company or a Subsidiary). Unless otherwise
determined by the Committee (subject to the requirements of
Section 8.01.2), no Award subject to any restriction shall be
assignable or transferable by a Participant otherwise than by
will or the laws of descent and distribution (except to the
Company under the terms of the Plan); provided, however, that a
Participant may, in the manner established by the Committee,
designate a beneficiary or beneficiaries to exercise the rights
of the Participant and to receive any distribution with respect
to any Award upon the death of the Participant. A beneficiary,
guardian, legal representative or other person claiming any
rights under the Plan from or through any Participant shall be
subject to all terms and conditions of the Plan and any Award
Agreement applicable to such Participant or agreement applicable
to such, except to the extent the Plan and such Award Agreement
or agreement otherwise provide with respect to such persons and
to any additional restrictions deemed necessary or appropriate by
the Committee.
8.03. Registration and Listing Compliance. The Company
shall not be obligated to deliver any Award or distribute any
Shares with respect to any Award in a transaction subject to
regulatory approval, registration or any other applicable
requirement of federal or state law, or subject to a listing
requirement under any listing or similar agreement between the
Company and any national securities exchange, until such laws,
regulations and contractual obligations of the Company have been
complied with in full, although the Company shall be obligated to
use reasonable efforts to obtain any such approval and comply
with such requirements as promptly as practicable.
8.04. Share Certificates. All certificates for Shares
delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop-transfer order and other
restrictions as the Committee may deem advisable under applicable
federal or state laws, rules and regulations thereunder, and the
rules of any national securities exchange on which Shares are
listed. The Committee may cause a legend or legends to be placed
on any such certificates to make appropriate reference to such
restrictions or any other restrictions that may be applicable to
Shares, including under the terms of the Plan or any Award
Agreement. In addition, during any period in which Awards or
Shares are subject to restrictions under the terms of the Plan or
any Award Agreement, or during any period during which delivery
or receipt of an Award or Shares has been deferred by the
Committee or a Participant, the Committee may require the
Participant to enter into an agreement providing that
certificates representing Shares issuable or issued pursuant to
an Award shall remain in the physical custody of the Company or
such other person as the Committee may designate.
9. Adjustment Provisions. In the event that the Committee
shall determine that any dividend or other distribution (whether
in the form of cash, Shares or other property), recapitalization,
stock split, reverse stock split, reorganization, merger,
consolidation, spin-off, combination, repurchase or share
exchange or other similar corporate transaction or event affects
the Shares such that an adjustment is determined by the Committee
to be appropriate in order to prevent dilution or enlargement of
the rights of Participants under the Plan, then the Committee
shall, in such manner as it may deem equitable, adjust any or all
of (i) the number and kind of Shares which may thereafter be
issued in connection with Awards (ii) the number and kind of
Shares issued or issuable in respect of outstanding Awards and
(iii) the exercise price, grant price or purchase price relating
to any Award or, if deemed appropriate, make provision for a cash
payment with respect to any outstanding Award; provided, however,
in each case, that, with respect to Incentive Stock Options, no
such adjustment shall be authorized to the extent that such
authority would cause the Plan to violate Section 422(b)(1) of
the Code. In addition, the Committee is authorized to make
adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring
events (including, without limitation, events described in the
preceding sentence) affecting the Company or any Subsidiary or
the financial statements of the Company or any Subsidiary, or in
response to changes in applicable laws, regulations or accounting
principles.
10. Changes to the Plan and Awards.
10.01. Changes to the Plan. The Board may amend, alter,
suspend, discontinue or terminate the Plan without the consent of
shareholders or Participants, except that any such amendment,
alteration, suspension, discontinuation or termination shall be
subject to the approval of the Company's shareholders within one
year after such Board action if such shareholder approval is
required by any federal or state law or regulation or the rules
of any stock exchange on which the Shares may be listed, or if
the Board in its discretion determines that obtaining such
shareholder approval is for any reason advisable; provided,
however, that, without the consent of an affected Participant, no
amendment, alteration, suspension, discontinuation or termination
of the Plan may impair the rights of such Participant under any
Award theretofore granted to him.
10.02. Changes to Awards. The Committee may waive any
conditions or rights under, or amend, alter, suspend, discontinue
or terminate, any Award theretofore granted and any Award
Agreement relating thereto; provided, however, that, without the
consent of an affected Participant, no such amendment,
alteration, suspension, discontinuation, or termination of any
Award may impair the rights of such Participant under such Award.
11. General Provisions.
11.01. No Rights to Awards. No Participant or employee
shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of
Participants and employees.
11.02. No Shareholder Rights. No Award shall confer on any
Participant any of the rights of a shareholder of the Company
unless and until Shares are duly issued or transferred to the
Participant in accordance with the terms of the Award.
11.03. Tax Withholding. The Company or any Subsidiary is
authorized to withhold from any Award granted, any payment
relating to an Award under the Plan, including from a
distribution of Shares, or any payroll or other payment to a
Participant, amounts or withholding and other taxes due with
respect thereto, its exercise or any payment thereunder and to
take such other action as the Committee may deem necessary or
advisable to enable the Company and Participants to satisfy
obligations for the payment of withholding taxes and other tax
liabilities relating to any Award. This authority shall include
authority to withhold or receive Shares or other property and to
make cash payments in respect thereof in satisfaction of
Participant's tax obligations.
11.04. No Right to Employment. Nothing contained in the
Plan or any Award Agreement shall confer, and no grant of an
Award shall be construed as conferring, upon any employee any
right to continue in the employ of the Company or any Subsidiary
or to interfere in any way with the right of the Company or any
Subsidiary to terminate his employment at any time or increase or
decrease his compensation from the rate in existence at the time
of granting of an Award.
11.05. Unfunded Status of Awards. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are
greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation
of trusts or make other arrangements to meet the Company's
obligations under the Plan to deliver cash, Shares, other Awards
or other property pursuant to any award, which trusts or other
arrangements shall be consistent with the "unfunded" status of
the Plan unless the Committee otherwise determines with the
consent of each affected Participant.
11.06. Other Compensatory Arrangements. The Company or any
Subsidiary shall be permitted to adopt other or additional
compensation arrangements (which may include arrangements which
relate to Awards), and such arrangements may be either generally
applicable or applicable only in specific cases.
11.07. Fractional Shares. No fractional Shares shall be
issued or delivered pursuant to the Plan or any Award. The
Committee shall determine whether cash, other Awards or other
property shall be issued or paid in lieu of fractional Shares or
whether such fractional Shares or any rights thereto shall be
forfeited or otherwise eliminated.
11.08. Governing Law. The validity, construction and
effect of the Plan, any rules and regulations relating to the
Plan and any Award Agreement shall be determined in accordance
with the laws of the Commonwealth of Virginia, without giving
effect to principles of conflicts of laws and applicable federal
law.
12. Effective Date. The Plan shall become effective upon
approval the affirmative vote of the holders of a majority of the
votes cast by the holders of Class A and Class B Common Stock of
the Company, voting together and not as separate classes, at a
meeting of the Company's shareholders to be held on May 19, 1995,
or any adjournment thereof.
<PAGE> 1
<TABLE>
Media General, Inc., CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<CAPTION>
Fiscal Years Ended
December 31, December 25, December 26,
1995 1994 1993
(53 Weeks)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $707,766 $626,247 $600,824
Operating costs:
Production costs 391,940 332,557 321,422
Selling, distribution and
administrative 182,243 171,989 162,252
Depreciation and amortization 60,590 55,450 56,847
- ------------------------------------------------------------------------------------------
Total operating costs 634,773 559,996 540,521
- ------------------------------------------------------------------------------------------
Operating income 72,993 66,251 60,303
- ------------------------------------------------------------------------------------------
Other income (expense):
Gain on sale of Garden State Newspapers
investment --- 91,520 ---
Interest expense (15,522) (16,948) (21,274)
Investment income (loss) -
unconsolidated affiliates:
Southeast Paper Manufacturing Co. 12,780 (1,647) (990)
Denver Newspapers, Inc.:
Equity in net income 1,817 2,037 ---
Preferred stock income 4,437 2,545 ---
Other, net 5,204 (789) 835
- ------------------------------------------------------------------------------------------
Total other income (expense) 8,716 76,718 (21,429)
- ------------------------------------------------------------------------------------------
Income before income taxes 81,709 142,969 38,874
- ------------------------------------------------------------------------------------------
Income taxes 28,477 25,960 13,166
- ------------------------------------------------------------------------------------------
Net income $ 53,232 $117,009 $ 25,708
==========================================================================================
Earnings per common share and equivalent $ 2.01 $ 4.45 $ 0.98
==========================================================================================
Notes to Consolidated Financial Statements begin on page 30. Weighted average common shares and equivalents were 26,482, 26,283 and
26,152 for 1995, 1994 and 1993, respectively.
</TABLE>
25
<PAGE> 2
<TABLE>
Media General, Inc., CONSOLIDATED BALANCE SHEETS
(In thousands, except shares)
ASSETS
<CAPTION>
December 31, December 25,
1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,367 $ 11,663
Accounts receivable (less allowance for doubtful
accounts 1995 -- $4,530; 1994 -- $3,360) 76,532 68,901
Inventories 20,380 11,360
Other 25,812 22,738
----------- -----------
Total current assets 126,091 114,662
- ------------------------------------------------------------------------------------------
Investments in unconsolidated affiliates 102,284 83,249
- ------------------------------------------------------------------------------------------
Other assets 42,718 28,105
- ------------------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land 22,789 21,516
Buildings 153,182 148,760
Machinery and equipment 796,451 771,965
Construction in progress 10,121 7,041
Accumulated depreciation (484,411) (432,238)
----------- -----------
Net property, plant and equipment 498,132 517,044
- ------------------------------------------------------------------------------------------
Excess of cost of businesses acquired over equity
in net assets (less accumulated amortization
1995 -- $9,429; 1994 -- $8,009) 247,518 44,105
- ------------------------------------------------------------------------------------------
Total assets $1,016,743 $ 787,165
==========================================================================================
Notes to Consolidated Financial Statements begin on page 30.
</TABLE>
26
<PAGE> 3
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
December 31, December 25,
1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 25,324 $ 26,981
Accrued expenses and other liabilities 72,764 61,973
Income taxes payable 5,065 1,875
Current portion of long-term debt --- 9,000
----------- -----------
Total current liabilities 103,153 99,829
- ------------------------------------------------------------------------------------------
Long-term debt 326,750 163,500
- ------------------------------------------------------------------------------------------
Deferred income taxes 102,884 97,012
- ------------------------------------------------------------------------------------------
Other liabilities and deferred credits 106,845 93,461
- ------------------------------------------------------------------------------------------
Commitments and contingencies (Note 10)
- ------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock ($5 cumulative convertible),
par value $5 per share:
Authorized 5,000,000 shares; none outstanding
Common stock, par value $5 per share:
Class A, authorized 75,000,000 shares; issued
25,905,237 and 25,739,732 shares 129,526 128,699
Class B, authorized 600,000 shares; issued
556,574 shares 2,783 2,783
Additional paid-in capital 10,068 6,787
Unearned compensation (2,573) (1,676)
Retained earnings 237,307 196,770
----------- -----------
Total stockholders' equity 377,111 333,363
- ------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $1,016,743 $ 787,165
==========================================================================================
Notes to Consolidated Financial Statements begin on page 30.
</TABLE>
27
<PAGE> 4
<TABLE>
Media General, Inc., CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except shares and per share amounts)
<CAPTION>
Additional Unearned
Common Stock Paid-in Compen- Retained
Class A Class B Capital sation Earnings
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 27, 1992 $127,707 $ 2,786 $ 4,052 $ (1,744) $ 77,140
Net income ($0.98 per share) --- --- --- --- 25,708
Cash dividends ($0.44 per share) --- --- --- --- (11,534)
Exercise of options on 57,632
Class A shares 288 --- 169 --- ---
Issuance of 107,600 Class A shares
under restricted stock plan 538 --- 1,520 (2,058) ---
Income tax benefits relating to
restricted share dividends and
exercised options --- --- 392 --- ---
Issuance of 4,995 Class A shares
under dividend reinvestment plan 25 --- 87 --- ---
Amortization and forfeitures
of unearned compensation (83) --- (253) 694 ---
--------- --------- --------- --------- ---------
Balance at December 26, 1993 128,475 2,786 5,967 (3,108) 91,314
Net income ($4.45 per share) --- --- --- --- 117,009
Cash dividends ($0.44 per share) --- --- --- --- (11,553)
Exercise of options on 55,554
Class A shares 278 --- 684 --- ---
Income tax benefits relating to
restricted share dividends and
exercised options --- --- 270 --- ---
Issuance of 4,629 Class A shares
under dividend reinvestment plan 23 --- 100 --- ---
Exchange of 580 Class B shares for
Class A shares 3 (3) --- --- ---
Amortization and forfeitures
of unearned compensation (80) --- (234) 1,432 ---
--------- --------- --------- --------- ---------
Balance at December 25, 1994 128,699 2,783 6,787 (1,676) 196,770
Net income ($2.01 per share) --- --- --- --- 53,232
Cash dividends ($0.48 per share) --- --- --- --- (12,695)
Exercise of options on 81,436
Class A shares 407 --- 699 --- ---
Issuance of 88,305 Class A shares
under restricted stock plan 442 --- 2,050 (2,492) ---
Income tax benefits relating to
restricted share dividends and
exercised options --- --- 557 --- ---
Issuance of 5,646 Class A shares
under dividend reinvestment plan 28 --- 149 --- ---
Amortization and forfeitures
of unearned compensation (50) --- (174) 1,595 ---
--------- --------- --------- --------- ---------
Balance at December 31, 1995 $129,526 $ 2,783 $ 10,068 $( 2,573) $237,307
==========================================================================================
Notes to Consolidated Financial Statements begin on page 30.
</TABLE>
28
<PAGE> 5
<TABLE>
Media General, Inc., CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
Fiscal Years Ended
December 31, December 25, December 26,
1995 1994 1993
(53 Weeks)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 53,232 $117,009 $ 25,708
Adjustments to reconcile net income:
Gain on sale of Garden State Newspapers
investment --- (91,520) ---
Depreciation and amortization 60,590 55,450 56,847
Deferred income taxes 4,271 4,704 473
Provision for doubtful accounts 4,188 2,690 3,488
Investment (income) loss -
unconsolidated affiliates (19,034) (2,935) 990
Change in assets and liabilities:
Accounts receivable and inventories (16,730) (10,539) (7,946)
Other current assets (3,814) 8,010 2,015
Accounts payable, accrued expenses
and other liabilities 11,959 10,042 1,320
Other, net 8,641 9,923 2,270
--------- --------- ---------
Net cash provided by operating activities 103,303 102,834 85,165
- ------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of newspaper properties (231,900) --- ---
Net proceeds from sale of Garden State
Newspapers investment --- 57,520 ---
Capital expenditures (29,076) (56,919) (32,837)
Change in restricted bond proceeds held
in trust 2,668 3,365 4,115
Collection of note receivable --- --- 8,918
Other, net 3,871 1,645 3,905
--------- --------- ---------
Net cash provided (used) by investing activities (254,437) 5,611 (15,899)
- ------------------------------------------------------------------------------------------
Cash flows from financing activities:
Increase in long-term debt 207,000 --- ---
Payment of long-term debt (52,750) (89,256) (58,750)
Cash dividends paid (12,695) (11,553) (11,534)
Other, net 1,283 1,085 1,169
--------- --------- ---------
Net cash provided (used) by financing activities 142,838 (99,724) (69,115)
- ------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents (8,296) 8,721 151
Cash and cash equivalents at beginning of year 11,663 2,942 2,791
--------- --------- ---------
Cash and cash equivalents at end of year $ 3,367 $ 11,663 $ 2,942
==========================================================================================
Notes to Consolidated Financial Statements begin on page 30.
</TABLE>
29
<PAGE> 6
Media General, Inc., NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Principles of Consolidation
- --------------------------------------------------------------------------------
The accompanying financial statements include the accounts of Media General,
Inc., and subsidiaries more than 50% owned (the Company). All significant
intercompany balances and transactions have been eliminated. See Note 10 for a
summary of the Company's accounting policies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
The Company's fiscal year ends on the last Sunday in December. Results for 1995
are for the 53 week period ended December 31, 1995, and results for 1994 and
1993 are for the 52 week periods ended December 25, 1994, and December 26, 1993,
respectively.
Note 2: Acquisition of Newspaper Properties
- --------------------------------------------------------------------------------
On October 26, 1995, the Company acquired for approximately $232 million the
assets of several Virginia newspapers (Virginia Newspapers) from Worrell
Enterprises, Inc., and its affiliates. Daily and Sunday newspaper properties
acquired included The News & Advance in Lynchburg, The Daily Progress in
Charlottesville, the Culpeper Star-Exponent in Culpeper and the Suffolk News-
Herald in Suffolk. In addition, the acquisition included a number of weekly and
other publications.
The acquisition was accounted for as a purchase and accordingly, the purchase
price was allocated to assets acquired based on their estimated fair values.
The amount allocated to cost in excess of net assets acquired was $205 million,
to other intangibles (principally subscription lists) was $14 million, and to
other assets, net (principally property, plant and equipment) was $13 million.
Cost in excess of net assets acquired and other intangibles are being amortized
on a straight-line basis over lives ranging from 10-35 years. The Virginia
Newspapers' results of operations have been included in the Company's
consolidated results of operations since the date of acquisition.
The unaudited consolidated results of operations on a pro forma basis, as though
the Virginia Newspapers had been acquired as of the beginning of each of fiscal
years 1995 and 1994, are as follows:
<TABLE>
<CAPTION>
(In thousands, except per share amounts) 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C>
(Unaudited)
Revenues $740,659 $666,027
Net income $ 52,052 $116,465
Earnings per common share and equivalent $ 1.97 $ 4.43
<PAGE> 7
The pro forma information is presented for comparative purposes only and is not
necessarily indicative of the operating results that would have occurred had the
Virginia Newspapers acquisition been consummated at the beginning of the periods
presented, nor is it necessarily indicative of future operating results.
Note 3: Investments in Unconsolidated Affiliates
- --------------------------------------------------------------------------------
The Company has a one-third partnership interest in Southeast Paper
Manufacturing Company (SEPCO), a domestic newsprint manufacturer which pays
licensing fees to the Company. The Company acquired on September 28, 1994, a
40% interest in Denver Newspapers, Inc. (DNI), the parent company of The Denver
Post, a Denver, Colorado, daily newspaper company, by exercising a warrant, held
since 1987, for $40,000.
On May 20, 1994, the Company sold its 40% common equity interest in Garden State
Newspapers, Inc. (GSN), a domestic daily and weekly newspaper company, along
with its GSN Series A and Series C Preferred Stock, for $63 million in cash.
Additionally, in exchange for the GSN Series B Preferred Stock previously owned
by the Company, the Company received 1,200 shares of $25,000 par, 9% Cumulative
Preferred Stock of DNI (previously owned by GSN), which included accumulated and
unpaid dividends of approximately $17.4 million. The preferred stock was valued
at $34 million, net of an unamortized discount of $27.3 million, based on an
imputed discount rate of 12% and a redemption date of June 30, 1999. The sale
of GSN resulted in a gain of $91.5 million ($83.3 million after-tax; $3.17 per
share).
30
Summarized financial information for these investments accounted for by the
equity method follows:
</TABLE>
<TABLE>
Southeast Paper Manufacturing Company:
<CAPTION>
(In thousands) 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current assets $ 87,498 $ 61,847
Noncurrent assets 325,135 350,700
Current liabilities 63,564 60,528
Noncurrent liabilities 176,938 218,229
- ------------------------------------------------------------------------------------------
<CAPTION>
(In thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------
Net sales $290,980 $195,599 $185,784
Gross profit 75,274 29,497 33,403
Net income (loss) 38,341 (5,331) (6,436)
Company's equity in net income (loss) 12,780 (1,647) (990)
- ------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 8
<TABLE>
Denver Newspapers, Inc.:
<CAPTION>
(In thousands) 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current assets $ 38,631 $ 34,898
Noncurrent assets 86,370 80,914
Current liabilities 35,209 27,438
Noncurrent liabilities 28,459 34,300
Mandatorily redeemable preferred stock 51,600 48,900
- ------------------------------------------------------------------------------------------
<CAPTION>
(In thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------
Net sales $168,836 $140,625 $132,611
Gross profit 67,800 70,377 60,477
Income before cumulative effect of a change in
accounting principle 7,242 12,560 6,251
Net income applicable to common stock 4,542 7,117 3,234
Company's equity in net income 1,817 2,037 ---
- ------------------------------------------------------------------------------------------
</TABLE>
The above summarized information for DNI includes its operating results for the
12 month period ended November 30, 1995, the 11 month period ended November 30,
1994, and the 12 month period ended December 31, 1993. Effective with the
fourth quarter of 1994, the Company began recognizing, on a one month lag, 40%
of DNI's net income applicable to common stockholders. The carrying value of
the Company's investment in the DNI mandatorily redeemable preferred stock,
which is included in investments in unconsolidated affiliates, was $41 million
and $36.5 million, net of unamortized discounts of $20.3 million and $24.8
million, at December 31, 1995, and December 25, 1994, respectively. The fair
value of the preferred stock, which the Company intends to hold until maturity,
approximated its carrying value.
Other:
GSN operating results for the 12 month period ended September 30, 1993, were (in
thousands): net sales- $181,490; gross profit- $63,037; and net loss- $10,649.
The Company's investment in GSN was reduced to zero in 1991, and the Company did
not recognize any equity in the operations of GSN subsequent to that date.
Retained earnings of the Company at December 31, 1995, includes $21.6 million
related to undistributed earnings of unconsolidated affiliates.
In February 1995, the Company sold its interest in its Mexican newsprint
affiliate for $3.6 million, which is included in other income, net. Income from
this affiliate was $2.9 million in 1994 and $3.5 million in 1993.
31
<PAGE> 9
Note 4: Long-term Debt
- --------------------------------------------------------------------------------
<TABLE>
Long-term debt at December 31, 1995, and December 25, 1994, was as follows:
<CAPTION>
(In thousands) 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Revolving credit facility $190,000 $ ---
Bank lines 8,000 ---
9.27% notes due annually through 1996 43,750 87,500
8.62% senior notes due annually from 1998 to 2002 65,000 65,000
7.125% revenue bonds due 2022 20,000 20,000
--------- ---------
326,750 172,500
Less current portion of long-term debt --- 9,000
--------- ---------
Long-term debt $326,750 $163,500
==========================================================================================
</TABLE>
In October 1995, the Company replaced its $180 million five-year revolving
credit facility with a five-year revolving credit facility committing eight
banks to lend the Company up to $320 million at competitive interest rates based
typically on the London Interbank Offered Rate. Under the facility, the Company
is obligated to pay commitment fees equal to 1/8 of 1% per annum on $320
million.
At December 31, 1995, the Company had borrowings of $8 million from available
uncommitted bank demand lines which were classified as long-term debt in
accordance with the Company's intention and ability to refinance this obligation
on a long-term basis.
In early 1995, the Company entered into a three-year agreement with an insurance
company which permits the Company to borrow up to an additional $150 million
under senior notes on an uncommitted basis. The notes can have a maximum
maturity of 15 years with interest rates determined by market conditions at the
time of issuance. No borrowings were outstanding under this agreement at
December 31, 1995.
In 1992, the Company issued $20 million of New Jersey Economic Development
Authority tax-exempt revenue bonds. The bonds are secured by a letter of
credit, under which the Company pays an annual fee equal to 3/4 of 1% per annum
on outstanding bond principal and interest payable. The bonds contain certain
optional and mandatory redemption provisions, and the bond proceeds are
restricted for capital expenditures related to the Company's Garden State Paper
newsprint operations in New Jersey.
The Company's debt covenants contain a minimum net worth requirement ($331
million at December 31, 1995), and require the maintenance of certain debt to
total capital ratios and debt to cash flow ratios, as defined. At December 31,
1995, the amount outstanding under the 9.27% notes due in 1996 was classified as
long-term debt in accordance with the Company's intention and ability to
refinance the obligation on a long-term basis. At December 25, 1994, $34.8
million of the 9.27% notes due in 1995 was classified as long-term debt in
<PAGE> 10
accordance with the Company's intention and ability to refinance the obligation
on a long-term basis. Excluding the $43.8 million of 9.27% notes, and the $8
million of borrowings under bank demand lines referred to above, long-term debt
maturities during the five years subsequent to December 31, 1995, aggregating
$229,000,000, are as follows: 1996 - none; 1997 - none; 1998 - $13,000,000;
1999 - $13,000,000; 2000 - $203,000,000.
In October 1995, the Company entered into three interest rate swap agreements
totaling $200 million with maturities of three to five years which effectively
converted the Company's variable rate debt to fixed rate debt with a weighted
average interest rate of 6.25%. The Company enters into interest rate swap
agreements to manage interest cost and risk associated with increasing variable
interest rates. Amounts which are due to or from interest rate swap
counterparties are recorded in interest expense in the period in which they
accrue. The Company's exposure to credit loss on its interest rate swap
agreements in the event of nonperformance by the counterparties is believed to
be remote due to the Company's requirement that counterparties have a strong
credit rating.
The Company had an interest rate swap agreement of $50 million which, combined
with the favorable effect of the 1991 termination of a counter swap agreement,
effectively converted the variable interest rate on $50 million of revolving
debt to a fixed interest rate which approximated 8% through the second quarter
of 1994. To the extent that variable interest rates were below 9%, the Company
was unable to take advantage of such lower rates on the above-mentioned $50
million. In 1994, the Company recorded this swap, which expired in June 1995,
at its fair value, since the associated debt was retired in 1994. In 1992, the
Company entered into interest rate swap agreements in amounts which matched the
maturities of the Company's 9.27% notes. These swaps were terminated in 1992,
at a gain, which is being amortized over the remaining life of the 9.27% notes,
lowering their interest rate to 8.4%.
32
<PAGE> 11
<TABLE>
Estimated fair values of the Company's financial instruments are as follows:
<CAPTION>
(In thousands) 1995 1994
- ------------------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents (Note 10) $ 3,367 $ 3,367 $ 11,663 $ 11,663
Restricted bond proceeds held in trust 550 550 3,219 3,219
Investment in DNI
Preferred Stock (Note 3) 40,982 40,982 36,545 36,545
Liabilities:
Interest rate swap agreements --- 3,315 550 550
Long-term debt:
Revolving credit facility 190,000 190,000 --- ---
Bank lines 8,000 8,000 --- ---
9.27% notes 43,750 45,269 87,500 90,803
8.62% senior notes 65,000 71,401 65,000 65,461
7.125% revenue bonds 20,000 22,677 20,000 20,190
- ------------------------------------------------------------------------------------------
</TABLE>
Fair values of restricted bond proceeds held in trust are based on market
quotations or valuations reported by the trustee. The fair value of the
Company's investment in DNI Preferred Stock, which is not publicly traded, was
estimated by discounting expected future cash flows using a current market rate
applicable to the yield, credit quality and maturity of the investment. The
fair values of the interest rate swaps are based on the estimated cost to the
Company to terminate the swaps. Fair values of the Company's long-term debt are
estimated using discounted cash flow analyses based on the Company's incremental
borrowing rates for similar types of borrowings. The borrowings under the
Company's revolving credit facility and bank demand lines approximate their fair
value.
Note 5: Business Segments
- --------------------------------------------------------------------------------
The Company is a diversified communications company with four principal business
segments located primarily in the Southeast United States. The Newspaper
segment, the Company's largest segment based on assets, currently includes seven
daily (four of which were purchased in 1995) and a number of weekly newspapers
and other publications. The Broadcast Television segment consists of three
television stations. The Cable Television segment includes two cable television
operations and a cable advertising unit. The Newsprint segment includes the
Company's recycled newsprint operations. Intersegment sales (principally
newsprint) comprise less than 1% of consolidated totals and are not shown
separately. Corporate assets are principally property, plant and equipment and
investments in unconsolidated affiliates.
<PAGE> 12
Operations for 1994 include recognition of a gain of $91.5 million ($83.3
million after-tax; $3.17 per share) related to the sale of the Company's
investment in Garden State Newspapers, Inc. (GSN), for $63 million in cash and
Denver Newspapers, Inc., Preferred Stock valued at $34 million. See Note 3 for
a further discussion of the GSN sale.
Other income, net, for 1992 includes $2.9 million of insurance proceeds related
to a 1991 fire at the Company's Garden State Paper newsprint mill in Garfield,
New Jersey, and $2.1 million resulting from the termination of obligations
previously established upon the disposition of certain operations.
Operations for 1991 include special charges of $11.3 million ($7.1 million
after-tax), $10.6 million of which relates to the Newspaper segment, for costs
associated with the Company's 1991 early retirement program ($8.8 million) and
the merger, consummated in June 1992, of the Company's two Richmond newspapers
($2.5 million). Equity in net income (loss) of unconsolidated affiliates for
1991 includes a $78.7 million loss from GSN as a result of GSN management's
decision to write down the carrying value of certain assets, mostly intangibles,
in light of depressed market conditions.
In 1995, the Company began reporting Broadcast Television and Cable Television
segment information separately to provide shareholders with a clearer
understanding of the importance of each segment to the Company's overall
operations. Certain prior year financial information has been reclassified to
conform with the current year's presentation.
33
<TABLE>
Information as to revenues, profitability and assets is as follows:
<CAPTION>
(In thousands) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Newspaper $ 350,904 $ 324,366 $ 307,058 $ 299,038 $ 299,173
Broadcast Television 69,274 62,443 54,121 52,579 52,296
Cable Television 134,183 123,305 125,356 117,367 107,300
Newsprint 140,105 102,411 100,371 96,540 116,717
Auxiliary 13,300 13,722 13,918 12,135 10,414
- ------------------------------------------------------------------------------------------
Total $ 707,766 $ 626,247 $ 600,824 $ 577,659 $ 585,900
==========================================================================================
<PAGE> 13
<CAPTION>
(In thousands) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------
Operating profit
Newspaper $ 25,812 $ 31,543 $ 19,610 $ 16,382 $ 681
Broadcast Television 25,195 20,647 14,281 11,259 10,908
Cable Television 10,654 13,691 20,897 14,653 7,498
Newsprint 11,841 470 5,725 1,277 18,527
Auxiliary (509) (100) (210) (958) (1,273)
- ------------------------------------------------------------------------------------------
72,993 66,251 60,303 42,613 36,341
Gain on sale of Garden State
Newspapers investment --- 91,520 --- --- ---
Interest expense (15,522) (16,948) (21,274) (17,559) (16,056)
Equity in net income (loss) of
unconsolidated affiliates 14,597 390 (990) (4,926) (75,640)
Preferred stock income 4,437 2,545 --- --- ---
Other, net 5,204 (789) 835 6,131 2,659
- ------------------------------------------------------------------------------------------
Income (loss) before
income taxes $ 81,709 $ 142,969 $ 38,874 $ 26,259 $ (52,696)
==========================================================================================
Identifiable assets
Newspaper $ 565,919 $ 343,804 $ 330,613 $ 344,255 $ 306,754
Broadcast Television 52,483 40,697 42,208 47,347 54,441
Cable Television 165,933 181,221 186,744 196,035 207,908
Newsprint 86,173 84,042 84,329 86,315 81,495
Auxiliary 23,407 23,538 24,592 24,606 23,954
Corporate 123,128 114,163 77,090 89,587 88,059
Segment eliminations (300) (300) (334) (720) (300)
- ------------------------------------------------------------------------------------------
Total $1,016,743 $ 787,165 $ 745,242 $ 787,425 $ 762,311
==========================================================================================
Capital expenditures
Newspaper $ 5,570 $ 34,413 $ 12,259 $ 63,631 $ 90,165
Broadcast Television 1,805 1,852 2,227 1,291 1,011
Cable Television 17,895 16,371 13,110 12,023 13,341
Newsprint 3,392 3,797 4,413 14,899 10,558
Auxiliary 83 297 226 59 95
Corporate 331 189 602 416 213
- ------------------------------------------------------------------------------------------
Total $ 29,076 $ 56,919 $ 32,837 $ 92,319 $ 115,383
==========================================================================================
Depreciation and amortization
Newspaper $ 22,748 $ 21,263 $ 21,623 $ 19,337 $ 14,528
Broadcast Television 2,676 2,936 3,267 3,524 3,739
Cable Television 26,519 22,402 22,702 23,177 23,726
Newsprint 6,305 6,472 6,837 6,161 5,638
Auxiliary 867 857 859 864 880
Corporate 1,475 1,520 1,559 1,487 1,432
- ------------------------------------------------------------------------------------------
Total $ 60,590 $ 55,450 $ 56,847 $ 54,550 $ 49,943
==========================================================================================
</TABLE>
34
<PAGE> 14
Note 6: Taxes on Income
- --------------------------------------------------------------------------------
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109), which
requires recognition of deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this "liability" method, deferred tax
liabilities and assets are determined based on the 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.
In accordance with SFAS 109, the Company recognized an increase in the deferred
tax liability in 1993 to reflect the increase in the federal statutory tax rate,
from 34% to 35%. At the date of enactment, the cumulative effect of the
increase, which was made retroactively to January 1, 1993, was to decrease 1993
net income by $2.3 million ($0.09 per share). This decrease in net income was
substantially offset by the effects of resolving various tax examinations
covering fiscal years prior to 1992.
Net of refunds, in 1995, 1994 and 1993, the Company paid income taxes of $18.4
million, $9.2 million and $11.6 million, respectively. Taxes paid in 1994 are
net of $10.8 million of refunds resulting from settlements with the Internal
Revenue Service concerning examinations of fiscal years prior to 1992.
The Company's federal income tax returns for fiscal years 1993 and 1992 have
been examined by the Internal Revenue Service. The result of this IRS
examination was not material to the Company's results of operations, financial
position or cash flows. The Company also has various state tax returns under
examination, the results of which are not expected to be material to the
Company's results of operations, financial position or cash flows.
<TABLE>
Significant components of income taxes are as follows:
(In thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 20,300 $ 18,996 $ 10,956
State 3,906 2,260 1,737
--------- --------- ---------
24,206 21,256 12,693
--------- --------- ---------
Deferred:
Federal 4,073 3,645 (14)
State 198 1,059 487
--------- --------- ---------
4,271 4,704 473
--------- --------- ---------
$ 28,477 $ 25,960 $ 13,166
==========================================================================================
<PAGE> 15
Temporary differences which give rise to significant components of the Company's deferred tax liabilities and assets at December 31,
1995, and December 25, 1994, are as follows:
<CAPTION>
(In thousands) 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Tax over book depreciation $126,231 $128,715
Other 13,895 11,854
--------- ---------
Total deferred tax liabilities 140,126 140,569
--------- ---------
Deferred tax assets:
Employee benefits (34,019) (31,921)
Alternative minimum tax credit --- (9,511)
Other (13,579) (12,206)
--------- ---------
Total deferred tax assets (47,598) (53,638)
--------- ---------
Deferred tax liabilities, net 92,528 86,931
Deferred tax assets included in other current assets 10,356 10,081
--------- ---------
Deferred tax liabilities $102,884 $ 97,012
==========================================================================================
35
Reconciliation of income taxes computed at the federal statutory tax rate to actual income tax expense is as follows:
<CAPTION>
(In thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income taxes computed at federal statutory
tax rate $ 28,598 $ 50,039 $ 13,606
Increase (reduction) in taxes resulting from:
State income taxes, net of federal income
tax benefit 2,664 2,261 1,446
Investment income - unconsolidated affiliates (1,751) (1,283) ---
Life insurance plans (1,674) (1,525) (1,756)
Gain on sale of investment in Garden State
Newspapers --- (24,422) ---
Change in enacted tax rates --- --- 2,068
Tax examination adjustments and settlements --- --- (2,085)
Other 640 890 (113)
--------- --------- ---------
$ 28,477 $ 25,960 $ 13,166
==========================================================================================
</TABLE>
<PAGE> 16
Note 7: Common Stock and Stock Options
- --------------------------------------------------------------------------------
Holders of the Class A common stock are entitled to elect 30% of the Board of
Directors and, with the holders of Class B common stock, also are entitled to
vote on the reservation of shares for stock awards and on certain specified
types of major corporate reorganizations or acquisitions. Class B common stock
can be converted into Class A common stock on a share-for-share basis at the
option of the holder. Both classes of common stock receive the same dividends
per share.
The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", in accounting for the Company's
stock-based awards.
The Company has two nonqualified stock option plans under which options to
purchase Class A common stock may be granted to key employees. The plans are
administered by the Compensation & Stock Option Committee of the Board of
Directors. The Committee sets option prices and determines when options become
exercisable. The option price for the 1976 plan is presently not less than
$2.50 per share, while the 1987 plan stipulates option prices equal to the fair
market value on the date of grant. Every option must become exercisable on or
before the fifth anniversary of its grant. In general, portions of the options
vest and become exercisable in each of the first three to five years after their
grant. Options under the plans are then exercisable during the continued
employment of the optionee, but not for a period greater than ten years after
the date of grant for options granted subsequent to the 1991 amendment to the
1987 plan and for a period of not greater than three years after termination of
employment. The Company will not make any future awards under these plans.
<PAGE> 17
<TABLE>
<CAPTION>
Price
Nonqualified Option Shares Outstanding Exercisable Per Share
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at December 27, 1992 893,570 583,010 $ 2-46
Became exercisable --- 152,134 19-32
Exercised (57,632) (57,632) 2-20
Issued 200,000 --- 19
Canceled/forfeited (87,355) (74,144) 2-46
---------- ----------
Balance at December 26, 1993 948,583 603,368 2-46
Became exercisable --- 183,407 19-32
Exercised (55,554) (55,554) 2-20
Issued 149,400 --- 28
Forfeited (19,780) (19,780) 32-46
---------- ----------
Balance at December 25, 1994 1,022,649 711,441 2-46
Became exercisable --- 179,808 19-28
Exercised (81,436) (81,436) 2-32
Issued 130,400 --- 28
Forfeited (33,102) (33,102) 19-46
---------- ----------
Balance at December 31, 1995 1,038,511 776,711 2-46
=========================================================================================
</TABLE>
36
The number of shares reserved for future grants at December 31, 1995, December
25, 1994, and December 26, 1993, was 310,187, 434,985 and 584,385, respectively.
Under the terms of the Company's restricted stock plan, adopted in 1991, certain
key employees were granted 86,400, 107,600 and 158,400 restricted shares of the
Company's Class A common stock in 1995, 1993 and 1991, respectively. Shares
were awarded in the name of each of the participants; these shares have all the
rights of other Class A shares, subject to certain restrictions and forfeiture
provisions. Restrictions on the shares expire no more than ten years after the
date of award, or earlier if certain performance targets are met. The Company
will not make any future awards under the plan.
Unearned compensation was recorded at the date of award based on the market
value of shares. Unearned compensation, which is shown as a separate component
of stockholders' equity, is being amortized to expense over a vesting period not
exceeding ten years, based upon meeting certain performance targets. The amount
amortized to expense in 1995, 1994 and 1993 was $1,361,000, $1,118,000 and
$358,000, respectively. Shares reserved for future grants at the end of 1995,
1994 and 1993 were 85,000, 171,000 and 155,000, respectively.
In May 1995, shareholders approved the 1995 Long-Term Incentive Plan (LTP) which
reserved and made available 1,300,000 shares of Class A common stock for any
future stock-based awards. The LTP provides that no more than 400,000 shares
can be issued which are subject to performance criteria. The plan is
administered by the Compensation & Stock Option Committee of the Board of
Directors. The plan will continue until terminated by the Company. The
approval of the 1995 LTP required the 1987 Stock Option Plan and the 1991
Restricted Stock Plan to be terminated. Past awards under these plans are not
affected.
<PAGE> 18
Also in May 1995, shareholders approved the Restricted Stock Plan For Non-
Employee Directors. Each non-employee director will automatically receive
shares every two years of Class A common stock with a market value equal to
$10,000. Under the plan, restrictions on shares expire no more than ten years
from date of award, or earlier if certain performance targets are met. During
1995, 1,905 shares were awarded.
Note 8: Retirement Plans
- --------------------------------------------------------------------------------
The Company has a non-contributory defined benefit retirement plan which covers
substantially all employees. Benefits are based on salary and years of service.
The Company's funding policy is to contribute annually the tax-deductible
amounts required by statute. Plan assets include marketable securities, U.S.
government obligations and cash equivalents. The Company also has a non-
contributory unfunded executive supplemental retirement plan which supplements
the coverage available to certain executives under the defined benefit
retirement plan.
Certain employees of the Company's newsprint operations participate in multi-
employer defined benefit and contribution pension plans. The plans provide
benefits to substantially all union employees.
Net pension cost for 1995, 1994 and 1993 is summarized below.
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Benefits earned during the year $ 4,067 $ 4,632 $ 3,786
Interest cost on projected benefit
obligation 10,973 10,462 10,507
Actual return on plan assets (38,363) (1,179) (18,103)
Net amortization and deferral 22,490 (13,647) 2,857
--------- --------- ---------
Defined benefit plan expense (credit) (833) 268 (953)
Supplemental retirement plan expense 2,371 2,040 1,814
Multi-employer plans expense 576 593 623
--------- --------- ---------
Total expense $ 2,114 $ 2,901 $ 1,484
==========================================================================================
37
<PAGE> 19
The non-contributory defined benefit retirement plan's status was as follows:
<CAPTION>
December 31, December 25,
(In thousands) 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested $123,250 $109,642
Non-vested 4,431 4,092
--------- ---------
Total accumulated benefit obligation $127,681 $113,734
- ------------------------------------------------------------------------------------------
Plan assets at fair value $172,710 $144,012
Projected benefit obligation 153,711 137,504
--------- ---------
Plan assets in excess of projected
benefit obligation 18,999 6,508
Unrecognized net gain (30,157) (18,203)
Unrecognized prior service costs 5,704 6,420
Unrecognized net asset from transition (5,061) (6,073)
--------- ---------
Net pension liability $(10,515) $(11,348)
==========================================================================================
Assumptions used in determining the funded status of the non-contributory defined benefit retirement plan are as follows:
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.50% 8.00% 7.25%
Average rate of increase in compensation levels 4.50% 5.00% 4.75%
Expected long-term rate of return on plan assets 10.00% 10.00% 10.00%
</TABLE>
At December 31, 1995, and December 25, 1994, the projected benefit obligation of
the supplemental retirement plan totaled $12.8 million and $11.4 million,
respectively, and was included as a liability in the accompanying balance sheet.
The Company also sponsors a thrift plan covering substantially all employees.
Company contributions represent a partial matching of employee contributions up
to a maximum of 3.3% of the employee's salary. Contributions charged to expense
under the plan were $4 million, $3.7 million and $3.5 million in 1995, 1994 and
1993, respectively.
Note 9: Postretirement Benefits
- --------------------------------------------------------------------------------
The Company provides certain health and life insurance benefits for retired
employees. Substantially all of the Company's full-time employees hired before
1992 may become eligible for all or a portion of those benefits if they retire
after age 55 with at least ten years of service. Employees hired after 1991 are
not eligible for Company paid health care and life insurance benefits at
retirement. The postretirement health care plan for participants hired before
1992 and retiring after December 31, 1991, is contributory and contains cost-
sharing features. The annual health care benefit paid by the Company is fixed
and determined by years of service and retirement age and is limited to $4,500
<PAGE> 20
per employee. Company paid life insurance benefits are based on age and
compensation, with a maximum insurance coverage limitation of $50,000 for post-
1991 retirees. The Company's policy is to fund postretirement benefits as
claims and premiums are paid.
The following table sets forth components of the accumulated postretirement
benefit obligation included in the accompanying balance sheet at December 31,
1995, and December 25, 1994:
<TABLE>
<CAPTION>
Medical Life Insurance
(In thousands) Plans Plans
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 1994 1995 1994
---- ---- ---- ----
Retirees $11,978 $13,425 $ 5,561 $ 5,780
Fully eligible plan participants 163 179 163 179
Other active plan participants 6,213 4,828 2,006 1,496
-------- -------- ------- --------
Accumulated postretirement benefit
obligation 18,354 18,432 7,730 7,455
Unrecognized accumulated net gain (loss) (1,407) (1,757) 677 340
-------- -------- ------- --------
Accrued postretirement benefit cost $16,947 $16,675 $ 8,407 $ 7,795
==========================================================================================
38
Net periodic postretirement benefit cost for 1995, 1994 and 1993 includes the following components:
<CAPTION>
Medical Life Insurance
(In thousands) Plans Plans
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ----
Service cost $ 324 $ 388 $ 333 $ 114 $ 133 $ 133
Interest cost 1,383 1,410 1,359 570 573 573
------ ------ ------ ------ ------ ------
Net periodic postretirement
benefit cost $1,707 $1,798 $1,692 $ 684 $ 706 $ 706
==========================================================================================
</TABLE>
The annual assumed rate of increase in the health care cost trend rate is 10.75%
for 1996 (11.25% for 1995), and is assumed to decrease gradually to 6.75% in
2004 and thereafter for pre-65 benefits, and to 5.75% in 2006 and thereafter for
post-65 benefits. Increasing the health care cost trend rate assumption by one
percentage point in each year would increase the accumulated postretirement
benefit obligation at December 31, 1995, and December 25, 1994, by approximately
$1 million, and the aggregate of the service and interest cost components of net
<PAGE> 21
periodic postretirement benefit cost for 1995 and 1994 by approximately $.1
million.
The discount rate used to determine the accumulated postretirement benefit
obligation was 7.5% and 8% for 1995 and 1994, respectively. The average rate of
increase in compensation levels used to determine life insurance benefits was
4.50% and 5% for 1995 and 1994, respectively.
Note 10: Other
- --------------------------------------------------------------------------------
Revenue recognition
- -------------------
Advertising revenue is recognized when ads are published or aired, or when
related advertising services are rendered. Subscription revenue is recognized
on a pro-rata basis over the term of the subscription. Newsprint revenue is
recognized upon shipment of newsprint.
Depreciation and amortization
- -----------------------------
Plant and equipment are depreciated, primarily on a straight-line basis, over
their estimated useful lives which are generally 40 years for buildings and
range from 3 to 20 years for machinery and equipment. Depreciation deductions
are computed by accelerated methods for income tax purposes.
Cost in excess of net assets acquired through 1970 (approximately $33 million)
is not amortized unless there is evidence of diminution in value; such excess
cost incurred after 1970 is being amortized by the straight-line method over
periods not exceeding 40 years. Management periodically evaluates the
recoverability of cost in excess of net assets acquired by reviewing the current
and projected profitability of each of the Company's operations. Amortization
of the excess of cost of businesses acquired over equity in net assets and other
intangibles was $3,071,000, $1,764,000 and $1,883,000 in 1995, 1994 and 1993,
respectively.
Interest
- --------
In 1995, 1994 and 1993, the Company's interest expense was $15.5 million, $16.9
million and $21.3 million, respectively, which is net of $.4 million, $.8
million and $.3 million of interest costs capitalized for those years. Interest
payments, net of amounts capitalized, made during 1995, 1994 and 1993 were $14.4
million, $19.5 million and $23.5 million, respectively.
Cash and cash equivalents
- -------------------------
Cash and cash equivalents include highly liquid investments with original
maturities of three months or less whose carrying amount approximates fair
value.
Inventories
- -----------
Inventories, principally raw materials, are valued at the lower of cost or
market. The cost of raw material used in the production of newsprint is
determined on the basis of average cost. The cost of newsprint inventories is
determined on the first-in, first-out method.
<PAGE> 22
Other current assets
- --------------------
Other current assets include program rights of $8,246,000 and $2,752,000 for
1995 and 1994, respectively.
Accrued expenses and other liabilities
- --------------------------------------
<TABLE>
Accrued expenses and other liabilities consist of the following:
<CAPTION>
(In thousands) 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Payroll $ 16,477 $ 15,520
Program rights 8,067 2,522
Advances from unconsolidated newsprint affiliate 6,667 6,667
Unearned revenue 6,636 5,555
Other 34,917 31,709
--------- ---------
Total $ 72,764 $ 61,973
==========================================================================================
</TABLE>
39
Lease obligations
- -----------------
The Company and its subsidiaries rent certain facilities and equipment under
operating leases. These leases extend for varying periods of time up to ten
years and in most cases contain renewal options. Total rental expense amounted
to $7 million in 1995, $7.2 million in 1994 and $7 million in 1993. Minimum
rental commitments under operating leases with noncancelable terms in excess of
one year are as follows: 1996 - $6,378,000; 1997 - $5,894,000; 1998 -
$4,693,000; 1999 - $3,332,000; 2000 - $1,957,000; subsequent years - $7,347,000.
Concentration of credit risk
- ----------------------------
Media General is a diversified communications company which sells products and
services to a wide variety of customers located principally in the eastern
United States. The Company's trade receivables result primarily from its
newspaper, broadcast television, cable television and newsprint operations. The
Company routinely assesses the financial strength of significant customers, and
this assessment, combined with the large number and geographic diversity of its
customer base, limits its concentration of risk with respect to trade
receivables.
Commitments and contingencies
- -----------------------------
The Company is committed to purchase approximately $18 million of program rights
over the next five years which currently are not available for broadcast,
including programs not yet produced. If such programs are not produced the
Company's commitment would expire without obligation.
The Company entered into a stock redemption agreement in November 1985, which
was amended in January 1988, and April 1994, with Mr. D. Tennant Bryan, Chairman
of the Executive Committee of the Board of Directors. The amended agreement
provides that upon Mr. Bryan's death, his estate has the option to sell and the
Company has a separate option to buy the lesser of (a) 15% of the Company's
<PAGE> 23
Class A stock owned by Mr. Bryan at his death and (b) a sufficient number of
shares of Class A stock to fund estate taxes and certain funeral and
administrative expenses. The purchase price for each share redeemed under the
amended agreement will equal 90% of the average daily closing price for a share
of Class A stock during the 91 days preceding the date that is 30 days after the
date of death. If the Company or the estate had exercised an option,
respectively, to buy or sell, the maximum cost to the Company of the redemption
would have approximated $9 million at December 31, 1995.
Pursuant to the provisions of the Cable Television Consumer and Competition Act
of 1992 (the "1992 Cable Act"), the rates charged to subscribers by the
Company's Fairfax Cable subsidiary are subject to regulation and review by local
franchising authorities and the Federal Communications Commission (FCC). The
FCC is currently reviewing certain of the rates charged to subscribers. The
Company believes that it has complied with all provisions of the 1992 Cable Act,
including its rate setting provisions. However, since the Company's rates for
regulated services are subject to review, the Company may be subject to a refund
liability if its rates are successfully challenged.
40
Media General, Inc.
Management Statement
Primary responsibility for the integrity and objectivity of the Company's
financial statements rests with Management. The financial statements report on
Management's stewardship of Company assets. They are prepared in conformity
with generally accepted accounting principles and accordingly include amounts
that are based on Management's best estimates and judgments. Nonfinancial
information included in the annual report has also been prepared by Management
and is consistent with the financial statements.
Media General, Inc., maintains an accounting system and related controls
designed to provide reasonable assurance that there is proper authorization and
accounting for all transactions, that financial records are reliable for
preparing financial statements, and that assets are safeguarded against loss or
unauthorized use. The system is supported by written policies and guidelines, a
program of internal audit and the selection and training of qualified personnel.
The Audit Committee of the Board of Directors is composed of outside directors.
The Committee meets periodically with Management, internal auditors and the
independent auditors.
January 26, 1996
J. Stewart Bryan III Marshall N. Morton
Chairman, President and Senior Vice President and
Chief Executive Officer Chief Financial Officer
- --------------------------------------------------------------------------------
<PAGE> 24
Report of Independent Auditors
The Board of Directors and Stockholders,
Media General, Inc.
We have audited the accompanying consolidated balance sheets of Media General,
Inc., as of December 31, 1995, and December 25, 1994, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three fiscal years in the period ended December 31, 1995. 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, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Media
General, Inc., at December 31, 1995, and December 25, 1994, and the consolidated
results of its operations and its cash flows for each of the three fiscal years
in the period ended December 31, 1995, in conformity with generally accepted
accounting principles.
January 26, 1996 Ernst & Young LLP
Richmond, Virginia
41
<PAGE> 25
Media General, Inc., Financial Review and Management Analysis
This discussion, which addresses the principal factors affecting the Company's
operations during the past three years, should be read in conjunction with the
Company's financial statements and the Ten-Year Financial Summary which appear
elsewhere in this report.
Several noteworthy transactions and other matters which occurred in 1995 and
1994 are briefly summarized in the following paragraphs.
In late October 1995, for approximately $232 million, the Company acquired the
Virginia newspaper properties in Lynchburg, Charlottesville, Culpeper and
Suffolk (Virginia Newspapers, Inc., "VNI") of Worrell Enterprises, Inc., and its
affiliates. The acquisition included four daily and Sunday newspapers and a
number of weekly and other publications. The transaction was accounted for as a
purchase and accordingly, the operations of the acquired properties have been
included in the Company's consolidated results of operations since the date of
purchase. Consequently, the following comparisons of operating results focus
much of their attention on the comparative performance of the Company, excluding
the results of the recently acquired VNI operations.
In February 1995, the Company sold its interest in a Mexican newsprint affiliate
for $3.6 million. This concluded the Company's 20-year relationship with that
venture.
In 1995, the Company began reporting Broadcast Television Segment and Cable
Television Segment information separately to provide stockholders with a clearer
understanding of the importance of each segment to the Company's overall
operations. Previously, the two divisions had been combined and reported in the
Television Segment. As a result of the change, certain prior year segment
information and discussions contained in this review and analysis have been
reclassified and modified to conform with the current year's presentation.
Finally, 1995 operating results include 53 weeks, while those for 1994 and 1993
include 52 weeks.
During 1994, the Company completed two significant transactions related to
unconsolidated affiliates. On May 20, 1994, the Company sold its investment in
Garden State Newspapers, Inc. (GSN), for cash of $63 million and preferred stock
of Denver Newspapers, Inc., which had a fair value of $34 million. This
disposition ended the Company's nine-year ownership position in GSN and resulted
in a gain of $91.5 million ($83.3 million after-tax; $3.17 per share). On
September 28, 1994, the Company acquired 40% of the common stock of Denver
Newspapers, Inc. (DNI), through the exercise, for $40,000, of a warrant held
since 1987. Beginning with the fourth quarter of 1994, the Company began
recognizing in its earnings 40% of DNI's net income applicable to common
stockholders.
Additional information regarding each of these 1995 and 1994 events is included
in the appropriate areas of this review and analysis, as well as elsewhere in
this report.
<PAGE> 26
RESULTS OF OPERATIONS
REVENUES
- --------
1995 Compared to 1994
Consolidated revenues for 1995 rose 13% (11.7% excluding VNI) to $707.8 million
from $626.2 million in 1994. All of the Company's significant business segments
contributed to the revenue growth; the strongest contributions came from the
Newsprint and Newspaper Segments.
Total Newspaper Segment revenues for 1995 of $350.9 million were up 8.2% from
$324.4 million in 1994. Excluding VNI, segment revenues increased 5.7%. At the
Company's metropolitan newspaper group, which includes its three largest daily
newspapers, advertising revenues increased 4.7%, reflecting the effect of a 6.4%
average rate increase offset by a 1.6% decline in advertising inches.
Classified advertising led the way in the overall revenue improvement, with
growth in the employment, automotive and real estate categories. A small
revenue increase in retail advertising was offset by a commensurate decline in
general advertising. Circulation revenues rose 6% in 1995, the result of a 4.5%
average rate increase together with a 1.4% rise in circulation volume. Other
revenues rose 23% due principally to increased waste newsprint sales (up due to
prices) and commercial printing revenue gains.
In August 1994, the Company launched its entry into electronic publishing with
The Tampa Tribune's introduction of Tampa Bay Online (TBO). In conjunction with
Prodigy Services, and with
42
Doppler radar weather pictures and news support from the Company's WFLA-TV
station, TBO, now available on the Internet's World Wide Web, is the first
interactive, local news and entertainment service in the Tampa Bay area, and
currently serves nearly 6,500 subscribers. In mid-1995, the Company's Richmond
Times-Dispatch, again in partnership with Prodigy Services, using the news and
weather resources of independently owned WWBT-TV, Channel 12, in Richmond,
introduced a similar service named Gateway Virginia which provides Virginia news
coverage to users of the World Wide Web. These types of ventures, although
initially small in terms of revenue contribution, represent a logical extension
of the Company's in-place news gathering and disseminating capabilities, and the
Company will continue to explore additional projects to expand its revenue base.
Broadcast Television Segment revenues increased to $69.3 million in 1995, up
10.9% from $62.4 million in 1994. The increase came from strength in local and
national advertising primarily at the Company's flagship station WFLA-TV in
Tampa; WJKS-TV in Jacksonville also contributed to the overall growth.
Increases in national (due to robust automotive spending) and local advertising
categories, together with advertising increases in the food and entertainment
categories, more than offset declines in political revenues (resulting from the
absence of last year's political races) and the slight decline in revenues at
WCBD-TV, which continued to feel the effects of the Navy Base and Shipyard
closings. In December 1994, three of the Tampa market's four major broadcast
television stations changed their network affiliations. In that market only the
Company's WFLA-TV station retained its historical network affiliation. This
undisrupted network affiliation has contributed to WFLA-TV's ability to achieve
the number one station ranking in that market (sign-on to sign-off), resulting
in strong demand for advertising time and increased advertising rates.
<PAGE> 27
In mid-February 1996, the Company was advised that ABC would transfer its
network affiliation in Jacksonville and Charleston to another broadcast
television operator during the second half of the year. Our Charleston station
will pursue affiliation with another network, and we are exploring several
options for our Jacksonville station. The Company's future results of
operations are not expected to be materially affected by these events.
Revenues of the Company's Cable Television Segment rose to $134.2 million in
1995, up 8.8% from $123.3 million in 1994. The improvement came from the
Company's Fairfax County, Virginia, cable system as a result of a January 1,
1995, 2.1% subscriber rate increase on basic service and an average increase of
6.5% on expanded service. These rate increases, together with the 3.5% growth
in subscribers (to 221,800 at December 31, 1995), produced a 3.6% improvement in
average revenue per subscriber (excluding pay-per-view). While the
Telecommunications Act of 1996 (1996 Act) eliminates rate regulation of cable
services other than the basic service tier after March 31, 1999, certain of the
rates charged for regulated services after September 1, 1993, remain subject to
regulation and review by local franchising authorities and the Federal
Communications Commission (FCC) under the Cable Television Consumer Protection
Act of 1992 (1992 Cable Act). The FCC is currently reviewing certain of the
Company's rates charged to subscribers. The Company believes it has complied
with all applicable provisions of the 1992 Act, including its rate setting
provisions. However, since the Company's rates for regulated services are
subject to review, the Company may be subject to a refund liability and/or rate
adjustments if its rates are successfully challenged. The 1996 Act also removes
previously applicable restrictions that had prevented most local telephone
companies from offering cable services in the areas where they provide telephone
services. This development and the advent of wireless and direct broadcast
satellite services likely will increase competition in the areas served by the
Company's cable systems. In light of these events, the Company is developing
several strategic planning alternatives, including entry into the data
transmission and commercial and residential telephone markets, for the future
operation of its cable systems. The Company estimates that the capital
investment required for it to compete effectively in the telephony market could
exceed $200 million over a ten-year period.
Newsprint Segment revenues increased 36.8% in 1995, to $140.1 million from
$102.4 million in 1994. The increase was attributable to the Company's Garden
State Paper newsprint mill, located in Garfield, New Jersey, where the average
realized selling price per ton rose 39%. The rise in the average realized
selling price was attributable to the cumulative effects of four selling price
changes (due to discount reductions or list price increases) imple-
43
mented since the beginning of 1995, the most recent being a 10% list price
increase announced September 1, 1995, which was not fully implemented until
October 1, 1995. Newsprint selling prices began the year at $455 per ton, and
reached $652 per ton by year-end as a result of the discount reductions and list
price increases discussed above. The Garden State mill is operating at full
capacity, and is sold-out through the end of 1996. Despite the impact of rising
newsprint prices on the Company's own newspaper operations, such price increases
result in an overall benefit to the Company on a consolidated basis because it
sells more newsprint in the marketplace than it consumes internally. The
increase in newsprint revenues provided by the Company's Garden State mill more
than offset the absence of $2.9 million in option fees from the Company's
Mexican newsprint affiliate which were discontinued, as planned, in October
1994.
<PAGE> 28
1994 Compared to 1993
Consolidated revenues for 1994 rose 4.2% to $626.2 million from $600.8 million
in 1993. The growth was led by the Company's Newspaper and Broadcast Television
operations.
Newspaper Segment revenues for 1994 of $324.4 million were up 5.6% from $307.1
million in 1993. At the Company's metropolitan newspaper group, which included
its three daily newspapers, advertising revenues increased 6%, reflecting the
combined effects of a 3.2% average rate increase and a 2.7% increase in
advertising inches. Classified advertising was the primary contributor to the
overall revenue growth paced, as in the previous year, by the automotive and
employment categories. Retail advertising revenues reflected a small increase
in 1994, reversing three consecutive years of declines. The turnaround was
primarily the result of some stabilization in the department store category and
increased rates. Circulation revenues rose 3.3% in 1994, the result of a 4.3%
average rate increase which more than offset a slight combined decrease in
circulation volume.
Broadcast Television Segment revenues increased to $62.4 million in 1994, up
15.4% from $54.1 million in 1993. All three of the Company's broadcast
television stations generated revenue growth in 1994, led by WFLA-TV, the
Company's flagship station in Tampa, Florida. The improvement came from
strength in the local, national and political advertising categories. Local and
national benefited from strong automotive and electronics advertising during the
year, while state-related elections fueled the growth in political advertising
revenues.
Revenues of the Company's Cable Television Segment declined to $123.3 million in
1994, down 1.6% from $125.4 million in 1993 due, in large measure, to the impact
of the 1992 Cable Act on the Company's Fairfax County, Virginia, cable system
(Fairfax Cable). Despite a 3.9% increase in the number of subscribers during
the year, to 214,300 at December 25, 1994, average revenue per subscriber
(excluding pay-per-view) declined 7% in 1994. The decrease in average revenue
per subscriber reflects a decline in the percentage of subscribers taking
expanded cable service. To a significant degree, this is attributable to 1992
Cable Act provisions which now enable subscribers who take basic cable service
to subscribe directly to premium channels. Also, Fairfax Cable's overall rates
for its regulated services were essentially frozen during the 23-month period
from February 1, 1993, through December 31, 1994, again largely the result of
the 1992 Cable Act. These factors, together with a small 1994 decline in pay-
per-view revenues (the result of fewer popular special event and movie offerings
during the year), more than offset increased installation revenues from
subscriber growth.
Newsprint Segment revenues increased 2% in 1994, to $102.4 million from $100.4
million in 1993. The increase was attributable to the Company's Garden State
Paper newsprint mill, located in Garfield, New Jersey, where a 1.5% (3,400 ton)
rise in finished newsprint sold, together with increased outside sales of waste
paper (principally corrugated), more than offset the effect of a 1.5% decline in
the 1994 average realized selling price per ton of finished newsprint. In
general, average newsprint selling prices rose during the course of 1994,
beginning the year at $385 per ton as customers worked-off excess inventories
built-up in 1993, and rising to $407 per ton in June and $455 per ton in
December when discount reductions of 7% and 6% announced in March and September
became fully implemented in June and December. Although newsprint selling
prices rose during the course of the year, the average realized price for all of
1994 declined to $410 per ton from $416 per ton in 1993. Newsprint Segment
<PAGE> 29
revenues for 1994 include $2.9 million ($3.5 million in 1993) of option fees
from a Mexican newsprint affiliate. During the fourth quarter of 1994 the
Company revised its
44
agreement with the majority owner of the Mexican newsprint affiliate regarding
the sale of the Company's interest in the affiliate. Originally scheduled to
occur on October 15, 1994 (the date on which the affiliate's obligation to pay
option fees to the Company ceased), the sale instead became effective in
February 1995, for $3.6 million plus interest from the originally scheduled sale
date.
OPERATING COSTS
---------------
1995 Compared to 1994
Total operating costs in 1995 of $634.8 million rose $74.8 million (13.4%) from
$560 million in 1994 (an increase of 12.4% excluding VNI). The following
discussion focuses on the direct operating costs of each of the Company's
significant business segments and consolidated depreciation and amortization
expense which is addressed separately.
Operating costs for the Newspaper Segment rose $30 million (11.6%) in 1995 from
the comparable 1994 amount (a $26.1 million rise excluding VNI). Of the $26.1
million increase in operating costs, approximately $16.3 million (63%) was
attributable to increased newsprint expense, the result of a 39.3% increase in
price per ton which was only partially offset by a 4.7% decline in tons consumed
(due largely to aggressive newsprint conservation measures undertaken by the
newspaper properties). Operating costs in 1995 included $2.9 million related to
a re-engineering and downsizing program implemented at the Company's Winston-
Salem, North Carolina, daily newspaper during the year. Approximately one-third
of the program's cost was recouped in 1995 from lower payroll and benefits
expense; the remainder will be recovered within the next year. Other expense
increases included a $3.6 million (2.8%) rise in employee compensation and
benefit costs (moderated somewhat by the reduction in costs which resulted from
the above-mentioned re-engineering and downsizing program), a $1.7 million (16%)
increase in newspaper circulation-related expenses and a $1.2 million rise in
bad debt expense (primarily the result of both increased sales volume and slower
collection experience). The average cost per ton of newsprint that will be
consumed in 1996 by the Company's newspapers is expected to rise by at least 20%
as a result of the newsprint price increases in 1995.
Broadcast Television Segment operating costs increased $2.5 million (7%) in 1995
over 1994. The majority of the increase was attributable to the September 1995
acquisition of new afternoon programs at WFLA-TV that resulted in a rise of $1.5
million (32.3%) in programming costs, and to an increase in employee
compensation and benefit costs which rose $.9 million (4.9%) over 1994.
Programming expense for the full year 1996 is expected to rise by an additional
$3 million as a result of the previously mentioned afternoon programs.
Cable Television Segment operating costs rose $9.5 million (11.9%) in 1995 to
$89.9 million. The rise included increases in programming costs, up $3.8
million (15.3%) as a result of higher programming rates and the increased
subscriber base and a $1.7 million (6.5%) increase in employee compensation and
benefit costs.
<PAGE> 30
Newsprint Segment operating costs rose $26 million (27.9%) in 1995 from the
comparable 1994 amount. A $20.7 million (131%) increase in the cost of this
Segment's principal raw material, recovered newspapers (ONP), accounted for
approximately 80% of the operating cost increase. The average cost of ONP in
1995 was $121 per ton, up 133% from last year's $52 per ton. The dramatic price
increase in ONP occurring over the past two years has been the result of
increased domestic and foreign market demand. Although the 1995 average annual
cost per ton consumed was up significantly from 1994, ONP costs were decreasing
at the end of the year. By December 1995, the ONP purchase price per ton had
declined to $54 from a mid-year high of $151 as demand began to moderate. Other
expense increases over 1994 expense levels included a $1.6 million increase in
additives and bleaching chemicals, a $1.2 million (5.3%) increase in energy
costs due both to higher volume and to price increases, a $.7 million (2.8%)
increase in employee compensation and benefit costs and a $.5 million (6.1%)
rise in maintenance and repair expense.
Total consolidated depreciation and amortization expense increased $5.1 million
(9.3%), to $60.6 million in 1995. Excluding VNI, depreciation and amortization
increased $3.7 million (6.7%). The majority of the $3.7 million increase was
due to increased depreciation expense at the Company's cable operations.
Depreciation and amortization will increase in 1996 as a result of the
recognition of a full year's amortization (approximately $7 million) of cost in
excess of net assets acquired and other intangibles related
45
to the VNI acquisition. See Note 2 to the accompanying consolidated financial
statements for additional information regarding the VNI acquisition.
1994 Compared to 1993
Total operating costs in 1994 of $560 million rose $19.5 million (3.6%) from
$540.5 million in 1993. The following discussion focuses on the direct
operating costs of each of the Company's significant business segments,
excluding consolidated depreciation and amortization expense which is addressed
separately.
Operating costs for the Newspaper Segment rose $4 million (1.6%) in 1994 from
the comparable 1993 amount. Virtually all of the increase was attributable to
employee compensation and benefit costs which rose $4 million (3.2%) in the
year. Other increases of $.5 million (3.6%) in circulation promotion incentives
and $.4 million (10.7%) in repair and maintenance costs, together with lesser
increases in production supplies, advertising, utilities and other cost
categories, were offset by reductions in insurance costs, down $1.8 million
principally as a result of reduced workers' compensation costs, bad debt
expense, down $.7 million as a result of improved collection experience and
receivables aging, and newsprint expense, down $.3 million as a result of a 3%
average price decline partially offset by a 2.4% increase in tons consumed.
Broadcast Television Segment operating costs increased $2 million (5.7%) in 1994
over 1993. The rise was due to a $.9 million (5%) increase in employee
compensation and benefit costs, a $.4 million (22.4%) rise in national
representation sales expense (largely a function of the increase in revenues),
and a $.3 million (24%) increase in advertising and promotion, much of which
related to the network affiliation switches in the Tampa market.
<PAGE> 31
Cable Television Segment operating costs rose $4.7 million (6.2%) in 1994 over
1993. Programming costs rose $1.1 million (4.6%), the result of the addition of
new programming together with a rise in programming rates and increases in the
number of subscribers. Maintenance and repair costs increased $1 million (31%),
during the year, principally the result of increased line maintenance and
converter repair costs. Employee compensation and benefit costs were up $1
million (3.9%) in 1994 over 1993. Together with other increases in operating
costs, including increased legal expenses associated primarily with cable
reregulation and related compliance matters, these increases more than offset
reduced insurance expense, reflecting decreased workers' compensation costs.
Newsprint Segment operating costs rose $7.2 million (8.4%) in 1994 from the
comparable 1993 amount. Approximately $3.3 million of the increase was directly
attributable to the rise in the cost of this Segment's principal raw material,
recovered newspapers (ONP). During 1994, increased domestic and foreign market
demand for ONP resulted in dramatic price rises which, for the Company's
newsprint operations, had the effect of increasing the average monthly cost per
ton of ONP from $44 in January 1994 to $70 in December 1994. For the full year
the average annual cost per ton of ONP rose by nearly 22%, to $52 in 1994. In
addition, employee compensation and benefit costs rose $.7 million (3%), and
energy costs increased a similar $.7 million (3%) on both fuel price and
consumption increases. Together, these and other operating cost increases more
than offset the effect of declines in insurance expense (principally workers'
compensation).
Consolidated depreciation and amortization expense declined $1.4 million (2.5%),
to $55.5 million in 1994. Declines occurred in each of the Company's principal
business segments and were attributable to certain newspaper press, broadcast
and other equipment becoming fully depreciated. The broad-based declines in
depreciation expense more than offset $1 million of depreciation related to the
new Winston-Salem Journal production facility which was completed and placed in
service in July and became fully operational in September 1994.
OTHER INCOME (EXPENSE)
----------------------
The principal components of other income (expense) are interest on Company
indebtedness, investment income or (loss) from the Company's unconsolidated
affiliates, and in 1994, the gain on sale of the Company's investment in Garden
State Newspapers, Inc. (GSN).
1995 Compared to 1994
Interest expense decreased 8.4% in 1995, to $15.5 million from $16.9 million in
1994. The decrease was primarily attributable to the significant decline in
debt during the first nine months of 1995,
46
from $172.5 million at the beginning of the year to $128.75 million by the end
of September. In late October 1995, additional debt of approximately $207
million was incurred in connection with the acquisition of VNI (discussed
elsewhere in this report). Despite this late-year increase in debt, average debt
outstanding for the full year declined approximately $16 million (from a 1994
average of $204 million). The Company's effective borrowing rate throughout the
year remained relatively stable. The net decrease in average debt outstanding
<PAGE> 32
was directly attributable to increased cash flow, partially offset by the
increase in funds borrowed late in the year to finance the VNI acquisition. In
1996, interest costs are expected to increase by approximately 20% due to a
higher average level of debt outstanding anticipated for the year.
The Company's investment income from unconsolidated affiliates rose in 1995 to
$19 million from $2.9 million in 1994. The most significant portion of the
increase resulted from the Company's share of the operating results of its
Southeast Paper Manufacturing Company (SEPCO) newsprint affiliate, which
increased to a profit of $12.8 million from a loss of $1.6 million in 1994. In
1995, SEPCO established new annual records for income, production and shipments.
Record income in 1995 was a reversal from three prior years of losses. SEPCO,
like the Company's wholly owned newsprint operations, benefited from the
significant improvement in newsprint selling prices during 1995. For the year,
SEPCO's average realized selling price approximated $578 per ton compared to
$406 per ton in 1994. Sales volume remained steady, increasing .8%. The growth
in revenues more than offset a significant increase in production costs,
principally the result of rising ONP costs. As noted at the Company's wholly
owned newsprint operations, some moderation in ONP prices began during the
latter portion of 1995.
Income earned from the Company's Denver Newspapers, Inc. (DNI), affiliate
increased to $6.3 million in 1995, $4.4 million of which was derived from the
Company's DNI preferred stock investment, and the remainder from the Company's
share of DNI's net income applicable to common stockholders. This compares to
$4.6 million of income earned in 1994, $2.5 million of which was derived from
the preferred stock investment, and the remainder from the common stock
investment. As discussed more fully in Note 3 to the accompanying consolidated
financial statements, the Company held no ownership position in DNI until its
acquisition of 40% of DNI's common stock in the fourth quarter of 1994, at which
time the Company began recognizing 40% of DNI's net income applicable to common
stockholders. Prior to that time, the Company had only recognized income from
its preferred stock investment, acquired in May 1994. Consequently, the
Company's 1994 pretax income includes only one quarter's worth of its share of
DNI's earnings and the recognition of seven months' income from its DNI
preferred stock investment. The share of DNI's net income applicable to common
stockholders recognized by the Company in 1995 reflects a decline in DNI's
operating margins, principally the result of the significant and continuing
increases in the price of newsprint, which more than exceeded DNI's strong
revenue growth (paced by retail and classified advertising). However, on a
market share basis, DNI continues to do well against its principal competitor,
The Rocky Mountain News, and expects to benefit from that competitor's decision
to pull back from statewide circulation.
Other income, net, increased to $5.2 million in 1995 from a loss of $.8 million
in 1994. The improvement was primarily due to the previously mentioned $3.6
million gain on the sale of the Company's interest in a Mexican newsprint
affiliate and to a $1 million rise in interest income earned on short-term cash
equivalent securities due to higher investable balances.
1994 Compared to 1993
Interest expense decreased 20.3% in 1994, to $16.9 million from $21.3 million in
1993. The decrease was primarily attributable to the significant decline in
outstanding debt, which averaged $204 million in 1994 compared to $292 million
in 1993. The effect of this 30% decrease in average outstanding debt, together
with a comparative increase of $.5 million in the amount of interest capitalized
<PAGE> 33
(primarily related to the new Winston-Salem production facility), more than
offset the effect of a two percentage point increase in the Company's effective
borrowing rate which rose to 9.2% in 1994 from 7.2% in 1993. The decrease in
average debt outstanding was directly attributable to increased cash flow and
net income, both of which benefited significantly from the sale of the Company's
GSN investment (see following discussion).
The Company's investment income from unconsolidated affiliates rose to $2.9
million in 1994 from a loss of $1 million in 1993. Two significant events
related to the Company's unconsolidated
47
affiliates occurred in 1994. First, on May 20, 1994, the Company sold its
investment in GSN for cash of $63 million and the 9% Cumulative Preferred Stock
($30 million par value) of Denver Newspapers, Inc. (DNI), which had a fair value
on that date of $34 million. Second, on September 28, 1994, the Company
exercised an option, for $40,000, to purchase 40% of the common stock of DNI,
the parent company of The Denver Post. Consequently, during the second quarter
of 1994 the Company began to recognize investment income from its DNI preferred
stock and, effective with the fourth quarter of 1994, the Company began
recognizing in its earnings 40% of DNI's net income applicable to common
stockholders.
The increase in investment income from unconsolidated affiliates was wholly
attributable to the recognition, beginning in 1994, of income from the Company's
investment in the common and preferred stock of DNI, which more than offset the
increased year-over-year loss from Southeast Paper Manufacturing Company
(SEPCO). Investment income earned on the DNI preferred stock investment, which
has an effective yield of 12%, amounted to $2.55 million. Combined with an
additional $2.04 million recognized in the fourth quarter of 1994, representing
the Company's 40% equity in DNI's earnings applicable to common stockholders,
total pretax income from its DNI investment in 1994 approximated $4.6 million.
DNI's revenues and net income for the one-quarter period ended December 25,
1994, rose 16.1% and 68.6%, respectively, from the prior comparable period (a
period during which the Company had no DNI ownership position), aided by strong
retail and classified advertising revenues. Circulation revenue declined 7%
from the comparable year-ago period, largely the result of selective,
competitive rate reductions which more than offset the effect of daily and
Sunday average volume increases of 3.7% and .3%, respectively.
In 1994, the Company's SEPCO newsprint affiliate reported a net loss, although a
reduction in its fourth quarter loss, to $.8 million from a $2.8 million loss in
the comparable 1993 period, reflected significant improvement. As was the case
with the Company's wholly owned newsprint operations, the beginning of 1994 at
SEPCO was characterized by weak demand and steeply discounted newsprint selling
prices. However, demand firmed-up during the year enabling SEPCO to decrease
its selling price discounts, with the last 1994 discount reduction becoming
effective in December. For the year, SEPCO's average realized selling price
approximated $406 per ton, compared to $407 per ton in 1993, and sales volume
increased by 12,900 tons, up 2.8%. The resulting volume-generated revenue
increase was insufficient to return SEPCO to profitability in 1994 as increased
costs for ONP and other raw materials, together with increased energy and repair
and maintenance costs, had an essentially offsetting effect. See Note 3 to the
accompanying consolidated financial statements for additional information
regarding the Company's investments in unconsolidated affiliates.
<PAGE> 34
NET INCOME
----------
1995 Compared to 1994
Excluding the 1995 gain on the sale of the Company's interest in a Mexican
newsprint affiliate ($2.5 million or $.09 per share) and the 1994 second quarter
gain ($83.3 million or $3.17 per share) on the sale of the Company's investment
in GSN (see Note 3 to the accompanying consolidated financial statements for a
further discussion of the GSN and Mexican newsprint affiliate sales), net income
was $50.7 million ($1.92 per share) in 1995 compared to $33.7 million ($1.28 per
share) in 1994, an increase of 50.3%. Net income as reported was $53.2 million
($2.01 per share) in 1995 compared to $117 million ($4.45 per share) in 1994.
The earnings impact of VNI was not significant to the Company's 1995 net income.
The following discussion focuses on the pretax operating income of each of the
Company's significant business segments (excluding VNI) and on income taxes.
Total operating income for the Newspaper Segment declined 18.2% in 1995, to
$25.8 million from $31.5 million in 1994. Excluding VNI, Newspaper Segment
operating income declined 27%. Revenue growth, up 5.7% on the strength of
classified advertising, was more than offset by a 9.4% increase in operating
costs, largely due to a 32.7% rise in newsprint cost (due to price), together
with other operating cost increases.
Broadcast Television Segment operating income rose 22% in 1995, to $25.2 million
from $20.6 million in 1994. Solid improvement in advertising revenues at WFLA-
TV in Tampa, and at WJKS-TV in Jacksonville, led by automotive spending, more
than offset a 5.8%
48
increase in operating costs, up mainly due to increased programming expenses.
Cable Television Segment operating income decreased 22.2% in 1995, to $10.7
million from $13.7 million in 1994. An 8.8% rise in revenues, the result of
both rate and subscriber count increases, was more than offset by a 13.3%
increase in operating costs, largely the result of increases in depreciation
expense and programming costs.
Newsprint Segment operating income rose to $11.8 million in 1995 from $.5
million in 1994. The rise was due to improved newsprint selling prices which
produced a 1995 revenue increase of 36.8%. The solid revenue growth more than
offset a 25.9% increase in operating costs, due chiefly to the 131% rise in the
cost of ONP.
Excluding gains and related income taxes applicable to the Company's 1995 sale
of its interest in a Mexican newsprint affiliate and the 1994 sale of its
investment in GSN, income tax expense for 1995 rose $9.7 million (54.6%) on a
pretax earnings increase of $26.7 million (51.8%). The Company's effective tax
rate, excluding the previously mentioned gain items, rose slightly to 35% in
1995 from 34.4% in 1994. Reported income tax expense for 1995 increased $2.5
million (9.7%), to $28.5 million in the current year compared to $26 million in
1994 on a 42.8% decrease in reported pretax earnings. See Note 6 to the
accompanying consolidated financial statements for additional information
regarding income taxes.
<PAGE> 35
1994 Compared to 1993
Net income for 1994 was $117 million ($4.45 per share) compared to $25.7 million
($0.98 per share) in 1993. Net income for 1994 included a gain of $83.3 million
($3.17 per share) from the sale, in the second quarter of 1994, of the Company's
investment in GSN (see Note 3 to the accompanying consolidated financial
statements for a further discussion of the GSN sale). Excluding the GSN gain,
1994 net income was $33.7 million ($1.28 per share), up 31.3% from net income of
$25.7 million in 1993.
The following discussion focuses on the pretax operating income of each of the
Company's significant business segments, and on income taxes.
Operating income for the Newspaper Segment rose 60.9% in 1994, to $31.5 million
from $19.6 million in 1993. All three of the Company's metropolitan newspapers
contributed to the improvement, led by The Tampa Tribune where operating income
rose 84% from the prior year. On a combined basis, newspaper advertising and
circulation revenues increased 6% and 3.3%, respectively, the effect of which
more than offset a 1.4% increase in operating costs, which included
approximately $1 million of increased 1994 depreciation expense related to the
new Winston-Salem production facility.
Broadcast Television Segment operating income rose 44.6% in 1994, to $20.6
million from $14.3 million in 1993. Paced by WFLA-TV, the improvement resulted
primarily from a combined revenue increase of 15.4% on strong local, national
and political advertising growth, which more than offset increased operating
expenses, up 4.4% for the year.
Cable Television Segment operating income declined 34.5% in 1994, to $13.7
million from $20.9 million in 1993. The combined effects of the 1992 Cable Act,
including a 23-month rate freeze (from February 1, 1993 to December 31, 1994) at
the Company's Fairfax Cable system, together with increases in programming and
other direct costs which could not be recouped through regulated rates, led to
the decline.
Newsprint Segment operating income declined to $.5 million in 1994 from $5.7
million in 1993. The decrease was primarily attributable to the results of the
Company's Garden State Paper newsprint mill and, to a lesser extent, to the 1994
reduction in option fee income from the Company's Mexican newsprint affiliate.
At Garden State, the decline was principally attributable to a 7.4% increase in
operating expenses, largely the result of the increased cost of its primary raw
material, ONP, the effect of which more than offset a 2% increase in revenues.
Additionally, the scheduled termination, in October 1994, of option fees from a
Mexican newsprint affiliate, which resulted in a $.6 million decrease in 1994
option fee income (to $2.9 million from $3.5 million in 1993), was also a
contributing factor to the decline in operating income.
Income tax expense for 1994 increased $12.8 million (97.2%), to $26 million in
the current year compared to $13.2 million in 1993. The increase was
attributable to two factors: the $91.5 million pretax gain on the sale of the
Company's investment in GSN which resulted
49
in $8.2 million of income tax expense and the improved operating income for the
year. Excluding the effect of the GSN sale, 1994 pretax income approximated
$51.4 million and associated income tax expense was $17.7 million, resulting in
a 1994 effective income tax rate of 34.4%. This compares with 1993 pretax income
<PAGE> 36
of $38.9 million, associated income tax expense of $13.2 million, and a 1993
effective tax rate of 33.9%. The slight rise in the 1994 effective tax rate
resulted principally from a decrease in the favorable tax effect of certain
insurance programs.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Funds generated by operating activities during 1995 rose $.5 million (.5%), to
$103.3 million. The slight rise was attributable to increased net income
(excluding the effect of the 1994 GSN sale), largely offset by the increased
level of funds invested in current assets (particularly ONP and newsprint
inventories, due to price increases) and to the comparative increase in the
level of funds applied to reduce accounts payable and other current liabilities.
The $103.3 million of funds generated by operating activities in 1995, combined
with proceeds from short-term investments and $207 million of additional long-
term borrowings, were used to fund the $232 million acquisition of VNI
(discussed more fully in Note 2 to the accompanying consolidated financial
statements and elsewhere in this report), to curtail $52.75 million of long-term
debt (including $43.75 million due under the 9.27% notes), and to fund capital
expenditures and dividends to stockholders of $29.1 million and $12.7 million,
respectively. The $29.1 million of capital expenditures made during the year
included $13 million for the continued growth and expansion of the Fairfax Cable
system.
The Company's total debt outstanding rose $154.25 million to $326.75 million at
December 31, 1995, from $172.5 million at the end of 1994, principally as a
result of the late 1995 acquisition of VNI. Although capital expenditures are
expected to increase during 1996 to approximately $66 million, barring
unexpected funds requirements, the Company anticipates that it will be able to
reduce its debt level in 1996.
At December 31, 1995, the Company had unused credit lines of $130 million
available under a committed five-year revolving credit facility with eight
banks. Additionally, the Company has an agreement with an insurance company
which makes available to the Company, on an uncommitted basis, the opportunity
to borrow up to $150 million under senior notes at prevailing interest rates.
Together, these available funds will ensure continued flexibility should
unexpected needs arise.
OUTLOOK FOR 1996
----------------
While some economic indicators appear to be mixed, we believe the economy is
fundamentally sound and, as 1996 also brings with it both a Presidential
election and the Olympics, this year should be another good one for Media
General.
50
<PAGE> 37
<TABLE>
Media General, Inc., Quarterly Review
(In thousands, except per share amounts)
First Second Third Fourth
Quarter Quarter Quarter Quarter
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
<CAPTION>
- ------------------------------------------------------------------------------------------
1995
Revenues $ 165,154 $ 173,479 $ 168,458 $ 200,675
Operating income 15,902 20,310 11,475 25,306
Net income 12,675 13,189 8,848 18,520
Net income per share 0.48 0.50 0.33 0.70
- ------------------------------------------------------------------------------------------
Shares traded 1,732 945 1,482 1,848
Stock price range $27.50-32.63 $30.50-33.50 $31.25-37.38 $27.75-35.75
Quarterly dividend paid $ 0.12 $ 0.12 $ 0.12 $ 0.12
- ------------------------------------------------------------------------------------------
1994
Revenues $ 149,390 $ 154,608 $ 155,192 $ 167,057
Operating income 12,439 18,452 15,632 19,728
Net income 3,949 92,889 8,022 12,149
Net income per share 0.15 3.54 0.30 0.46
- ------------------------------------------------------------------------------------------
Shares traded 1,481 1,073 1,051 1,554
Stock price range $24.88-29.38 $21.75-28.50 $25.63-29.88 $27.50-29.88
Quarterly dividend paid $ 0.11 $ 0.11 $ 0.11 $ 0.11
- ------------------------------------------------------------------------------------------
* Media General, Inc., Class A common stock is listed on the American Stock Exchange under the symbol MEG.A. The approximate
number of equity security holders of record at February 29, 1996, was: Class A common - 2,523, Class B common - 17.
* Fourth quarter 1995 was a 14 week period and includes the results of operations of Virginia Newspapers, Inc., acquired October
26, 1995.
* First quarter 1995 results include $3.6 million ($2.5 million after-tax; $0.09 per share) from the sale of the Company's
interest in a Mexican newsprint operation.
* Second quarter 1994 includes a gain of $91.5 million ($83.3 million after-tax; $3.17 per share) related to the sale of the
Company's investment in Garden State Newspapers, Inc., in May 1994, for $63 million in cash and Denver Newspapers, Inc.,
preferred stock valued at $34 million.
</TABLE>
51
<PAGE> 38
<TABLE>
Media General, Inc., Ten-Year Financial Summary
(In thousands, except per share amounts)
Certain of the following data were compiled from the consolidated financial statements of Media General, Inc., and should be read in
conjunction with those statements and the financial review and management analysis which appear elsewhere in this report.
<CAPTION>
1995 1994 1993 1992
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Summary of Operations
Operating revenues (d) $ 707,766 $626,247 $600,824 $577,659
- ------------------------------------------------------------------------------------------
Operating income (a)(d) $ 72,993 $ 66,251 $ 60,303 $ 42,613
Gain on sale of Garden State
Newspapers investment --- 91,520 --- ---
Interest expense (15,522) (16,948) (21,274) (17,559)
Investment income (loss) -
unconsolidated affiliates 19,034 2,935 (990) (4,926)
Other, net 5,204 (789) 835 6,131
----------- --------- --------- ---------
Income (loss) before income taxes
and cumulative effect of changes
in accounting principles 81,709 142,969 38,874 26,259
Income taxes (28,477) (25,960) (13,166) (7,946)
Cumulative effect of changes in
accounting principles (b) --- --- --- 687
----------- --------- --------- ---------
Net income (loss) $ 53,232 $117,009 $ 25,708 $ 19,000
==========================================================================================
Per Share Data: (b)(c)
Income (loss) before cumulative effect
of changes in accounting principles $ 2.01 $ 4.45 $ 0.98 $ 0.70
Cumulative effect of changes in
accounting principles --- --- --- 0.03
- ------------------------------------------------------------------------------------------
Net income (loss) $ 2.01 $ 4.45 $ 0.98 $ 0.73
Cash dividends 0.48 0.44 0.44 0.44
Common stock price
High 37.38 29.88 30.63 22.63
Low 27.50 21.75 16.88 14.50
Stockholders' equity 14.25 12.68 8.59 8.04
==========================================================================================
Other Financial Data:
Total assets $1,016,743 $787,165 $745,242 $787,425
Working capital 22,938 14,833 9,551 9,657
Capital expenditures 29,076 56,919 32,837 92,319
Total debt 326,750 172,500 261,756 320,506
Stockholders' equity 377,111 333,363 225,434 209,941
Total debt/total capital ratio 46.4% 34.1% 53.7% 60.4%
Shares outstanding at fiscal
year-end 26,462 26,296 26,252 26,099
==========================================================================================
<PAGE> 39
(a)Operating income includes the following pretax special charges: 1991-$11.3 million for an early retirement program and newspaper
merger costs; 1989-$10.3 million for the write-off of unrecovered costs related to a lawsuit against William B. Tanner and
others; 1988-$66.3 million primarily related to the Company's discontinuance of Broadcast Services operations; 1986-$30.8 million
related to the write-off of certain newspaper, broadcast television and other assets.
(b)Includes the recognition, at the beginning of fiscal 1992, of the accumulated postretirement benefit obligation related to prior
service costs of $22.8 million ($14.4 million after-tax; $0.55 per share) as the cumulative effect of a change in accounting
principle for the adoption of Statement of Financial Accounting Standards No. 106 "Employers' Accounting for Postretirement
Benefits Other Than Pensions" and the adoption of Financial Accounting Standards No. 109, "Accounting for Income Taxes" which
increased 1992 net income by $15.1 million ($0.58 per share), which represented the net decrease in the Company's deferred tax
liability at that date.
(c)Per share data is restated for the 1987 stock split.
(d)In December 1988, the Company discontinued its Broadcast Services operations and sold its media placement division, and agreed to
dispose of its West Coast newsprint mill and related operations. Revenues for 1988 include disposed broadcast operation revenues
of $62.4 million and disposed newsprint operation revenues of $74.3 million. Operating income for 1988 includes disposed
broadcast operation operating losses of $59.3 million and disposed newsprint operation operating profits of $14.8 million
</TABLE>
52
<PAGE> 40
<TABLE>
Media General, Inc., Ten-Year Financial Summary - Continued
(In thousands, except per share amounts)
<CAPTION>
1991 1990 1989 1988 1987 1986
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
Operating revenues (d) $585,900 $613,667 $595,132 $738,871 $703,148 $625,873
- ------------------------------------------------------------------------------------------------------------------
Operating income (a)(d) $ 36,341 $ 63,825 $ 44,139 $ 15,412 $ 77,638 $ 28,959
Gain on sale of Garden State
Newspapers investment --- --- --- --- --- ---
Interest expense (16,056) (19,831) (25,385) (18,089) (15,780) (13,026)
Investment income (loss) -
unconsolidated affiliates (75,640) (1,303) 10,562 16,507 11,898 8,339
Other, net 2,659 814 684 369 265 415
---------- --------- --------- --------- --------- ---------
Income (loss) before income taxes
and cumulative effect of changes
in accounting principles (52,696) 43,505 30,000 14,199 74,021 24,687
Income taxes (9,395) (18,025) (9,280) (5,380) (31,100) (7,580)
Cumulative effect of changes in
accounting principles (b) --- --- --- --- --- ---
--------- --------- --------- --------- --------- ---------
Net income (loss) $(62,091) $ 25,480 $ 20,720 $ 8,819 $ 42,921 $ 17,107
==================================================================================================================
Per Share Data: (b)(c)
Income (loss) before cumulative effect
of changes in accounting principles $ (2.39) $ 0.98 $ 0.80 $ 0.31 $ 1.50 $ 0.60
Cumulative effect of changes in
accounting principles --- --- --- --- --- ---
- ------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (2.39) $ 0.98 $ 0.80 $ 0.31 $ 1.50 $ 0.60
Cash dividends 0.44 0.44 0.42 0.39 0.34 0.30
Common stock price
High 22.88 31.63 40.00 49.00 48.25 24.69
Low 16.63 15.38 30.38 33.75 21.31 18.00
Stockholders' equity 7.74 10.58 10.02 9.80 12.34 11.15
==================================================================================================================
Other Financial Data:
Total assets $762,311 $775,944 $782,657 $852,764 $823,094 $740,485
Working capital 3,668 21,333 62,210 55,488 60,439 52,459
Capital expenditures 115,383 73,686 69,117 77,717 80,593 100,314
Total debt 277,202 234,565 275,928 274,985 234,348 203,711
Stockholders' equity 201,868 273,818 258,637 252,419 348,431 314,459
Total debt/total capital ratio 57.9% 46.1% 51.6% 52.1% 40.2% 39.3%
Shares outstanding at fiscal
year-end 26,071 25,874 25,806 25,751 28,233 14,101
==================================================================================================================
</TABLE>
53
<PAGE> 1
Exhibit 21
Subsidiaries of the Registrant
Listed below are the major subsidiaries of the Company, including equity
investees, each of which is in the consolidated financial statements of the
Company and its Subsidiaries, and the percentage of ownership by the Company (or
if indented, by the subsidiary under which it is listed). Subsidiaries omitted
from the list would not, if aggregated, constitute a significant subsidiary:
Jurisdiction of Securities
Name of Subsidiary Incorporation Ownership
Charleston Television, Inc. South Carolina 100%
Denver Newspapers, Inc. Delaware 40%
Garden State Paper Company, Inc. Virginia 100%
Jacksonville Television, Inc. Florida 100%
Media General Cable of Fairfax
County, Inc. Virginia 100%
Piedmont Publishing Company, Inc. North Carolina 100%
Richmond Newspapers, Inc. Virginia 100%
Tampa Television, Inc. Florida 100%
The Tribune Company Florida 100%
Virginia Newspapers, Inc. Virginia 100%
Virginia Paper Manufacturing Corp. Virginia 100%
Southeast Paper Manufacturing Co.
(Partnership) Georgia 33.33%
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Media General, Inc.
We consent to the incorporation by reference in this Annual
Report (Form 10-K) of Media General, Inc., of our report dated January
26, 1996, included in the 1995 Annual Report to Stockholders of Media
General, Inc.
Our audits also included the financial statement schedule of
Media General, Inc., listed in Item 14(a). This schedule is the
responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, the financial
statement schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
We also consent to the incorporation by reference in (a) the
Registration Statement (Form S-8 No. 2-56905) pertaining to the 1971
Unqualified Stock Option Plan and the 1976 Qualified and Non-Qualified
Stock Option Plans of Media General, Inc.; (b) the Registration
Statement (Form S-8 No. 33-29478) pertaining to the Media General,
Inc., Employees Thrift Plan; (c) the Registration Statement (Form S-8
No. 33-23698) pertaining to the 1987 Non-Qualified Stock Option Plan
of Media General, Inc.; (d) the Registration Statement (Form S-3 No.
33-26853) pertaining to the Media General, Inc., Automatic Dividend
Reinvestment and Stock Purchase Plan and (e) the Registration
Statement (Form S-8 No. 33-52472) pertaining to the 1987 Non-Qualified
Stock Option Plan of Media General, Inc., amended and restated May 17,
1991, and in the Prospectus related to each, of our report dated
January 26, 1996, with respect to the consolidated financial
statements of Media General, Inc., incorporated herein by reference,
and our report included in the preceding paragraph with respect to the
financial statement schedule of Media General, Inc., included in this
Annual Report (Form 10-K) of Media General, Inc., for the fiscal year
ended December 31, 1995.
ERNST & YOUNG LLP
Richmond, Virginia
March 25, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDIA
GENERAL, INC.'S CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF
OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 3,367
<SECURITIES> 0
<RECEIVABLES> 81,062
<ALLOWANCES> 4,530
<INVENTORY> 20,380
<CURRENT-ASSETS> 126,091
<PP&E> 982,543
<DEPRECIATION> 484,411
<TOTAL-ASSETS> 1,016,743
<CURRENT-LIABILITIES> 103,153
<BONDS> 326,750
0
0
<COMMON> 132,309
<OTHER-SE> 244,802
<TOTAL-LIABILITY-AND-EQUITY> 1,016,743
<SALES> 707,766
<TOTAL-REVENUES> 707,766
<CGS> 391,940
<TOTAL-COSTS> 391,940
<OTHER-EXPENSES> 60,590
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,522
<INCOME-PRETAX> 81,709
<INCOME-TAX> 28,477
<INCOME-CONTINUING> 53,232
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,232
<EPS-PRIMARY> 2.01
<EPS-DILUTED> 0
</TABLE>
