UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 27, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number: 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 E. Franklin St., Richmond, VA 23219
(Address of principal executive offices) (Zip Code)
(804) 649-6000
(Registrant's telephone number, including area code)
N/A
---
(Former name, former address and former fiscal year,
if changed since last report.)
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 the number of shares outstanding of each of the issuer's classes of
common stock as of August 1, 1999.
Class A Common shares: 26,033,485
Class B Common shares: 556,574
<PAGE>
<TABLE>
MEDIA GENERAL, INC.
TABLE OF CONTENTS
FORM 10-Q REPORT
JUNE 27, 1999
Page
----
Part I. Financial Information
<S> <C>
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - June 27, 1999,
and December 27, 1998 1
Consolidated Condensed Statements of Operations - Second quarter and
six months ended June 27, 1999, and June 28, 1998 3
Consolidated Condensed Statements of Cash Flows - Six
months ended June 27, 1999, and June 28, 1998 4
Notes to Consolidated Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 6. Exhibits and Reports on Form 8-K 16
(a) Exhibits
(b) Reports on Form 8-K
Signatures 17
</TABLE>
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MEDIA GENERAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(000's except shares)
<CAPTION>
(Unaudited)
June 27, December 27,
1999 1998
----------------- ------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,079 $ 7,637
Accounts receivable - net 103,605 110,067
Inventories 20,328 20,341
Other 26,820 38,181
----------------- ------------------
Total current assets 156,832 176,226
----------------- ------------------
Investments in unconsolidated affiliates 147,183 146,702
Other assets 46,414 45,818
Property, plant and equipment - net 491,166 496,797
Excess of cost over fair value of net identifiable assets
of acquired businesses - net 642,700 651,391
FCC licenses and other intangibles - net 392,079 400,412
----------------- ------------------
$ 1,876,374 $ 1,917,346
================= ==================
</TABLE>
See accompanying notes.
1
<PAGE>
<TABLE>
MEDIA GENERAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(000's except shares)
<CAPTION>
(Unaudited)
June 27, December 27,
1999 1998
----------------- ------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable $ 23,316 $ 41,050
Accrued expenses and other liabilities 95,246 106,047
----------------- ------------------
Total current liabilities 118,562 147,097
----------------- ------------------
Long-term debt 909,941 928,101
Deferred income taxes 242,308 244,968
Other liabilities and deferred credits 118,964 119,831
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
26,027,926 and 26,214,721 shares 130,140 131,074
Class B, authorized 600,000 shares; issued
556,574 shares 2,783 2,783
Additional paid-in capital 11,868 18,694
Unearned compensation (3,737) (1,050)
Retained earnings 345,545 325,848
----------------- ------------------
Total stockholders' equity 486,599 477,349
----------------- ------------------
$ 1,876,374 $ 1,917,346
================= ==================
</TABLE>
See accompanying notes.
2
<PAGE>
<TABLE>
MEDIA GENERAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(000's except for per share data)
<CAPTION>
Second Quarter Ended Six Months Ended
------------------------------- ------------------------------
June 27, June 28, June 27, June 28,
1999 1998 1999 1998
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Revenues $ 199,554 $ 211,519 $ 391,365 $ 407,553
------------- ------------- ------------ -------------
Operating costs:
Production 96,316 101,447 192,732 199,686
Selling, distribution and
administrative 52,835 54,651 106,254 107,440
Depreciation and amortization 20,209 18,975 40,299 38,535
------------- ------------- ------------ -------------
Total operating costs 169,360 175,073 339,285 345,661
------------- ------------- ------------ -------------
Operating income 30,194 36,446 52,080 61,892
------------- ------------- ------------ -------------
Other income (expense):
Interest expense (14,813) (15,703) (30,168) (31,935)
Investment income -
unconsolidated affiliates 4,118 6,092 9,140 12,010
Other, net 763 (433) 1,068 (950)
------------- ------------- ------------ -------------
Total other expense (9,932) (10,044) (19,960) (20,875)
------------- ------------- ------------ -------------
Income from continuing operations
before income taxes 20,262 26,402 32,120 41,017
Income taxes 8,298 9,137 13,248 14,829
------------- ------------- ------------ -------------
Income from continuing operations 11,964 17,265 18,872 26,188
Income from discontinued Cable opera-
tions, net of income taxes - Note 2 4,492 4,276 8,890 8,098
------------- ------------- ------------ -------------
Net income $ 16,456 $ 21,541 $ 27,762 $ 34,286
============= ============= ============ =============
Earnings per common share:
Income from continuing operations $ 0.45 $ 0.65 $ 0.71 $ 0.99
Income from discontinued Cable
operations 0.17 0.16 0.33 0.30
------------- ------------- ------------ -------------
Net income $ 0.62 $ 0.81 $ 1.04 $ 1.29
============= ============= ============ =============
Earnings per common share
- assuming dilution:
Income from continuing operations $ 0.44 $ 0.64 $ 0.70 $ 0.97
Income from discontinued Cable
operations 0.17 0.16 0.33 0.30
------------- ------------- ------------ -------------
Net income $ 0.61 $ 0.80 $ 1.03 $ 1.27
============= ============= ============ =============
Dividends paid per common share $ 0.15 $ 0.14 $ 0.30 $ 0.28
============= ============= ============ =============
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
MEDIA GENERAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(000's)
<CAPTION>
Six Months Ended
--------------------------------------------
June 27, June 28,
1999 1998
--------------------------------------------
Operating activities:
<S> <C> <C>
Net income $ 27,762 $ 34,286
Adjustments to reconcile net income:
Depreciation and amortization 52,633 51,475
Deferred income taxes (1,529) (4,956)
Investment income -- unconsolidated affiliates,
net of distributions 490 (4,310)
Change in assets and liabilities:
Accounts receivable and inventories 5,277 9,219
Accounts payable (17,802) (292)
Other (5,521) (582)
----------------- ------------------
Net cash provided by operating activities 61,310 84,840
----------------- ------------------
Investing activities:
Capital expenditures (30,203) (22,885)
Purchase of businesses --- (92,656)
Sale of businesses 8,058 23,645
Other, net (2,307) 1,863
----------------- ------------------
Net cash used by investing activities (24,452) (90,033)
----------------- ------------------
Financing activities:
Increase in debt 170,000 248,000
Payment of debt (188,359) (236,152)
Stock redemption (13,609) ---
Dividends paid (8,066) (7,478)
Other, net 1,618 2,097
----------------- ------------------
Net cash (used) provided by financing activities (38,416) 6,467
----------------- ------------------
Net (decrease) increase in cash and cash equivalents (1,558) 1,274
Cash and cash equivalents at beginning of year 7,637 3,504
----------------- ------------------
Cash and cash equivalents at end of period $ 6,079 $ 4,778
================= ==================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 30,929 $ 33,970
Income taxes $ 15,437 $ 21,493
</TABLE>
See accompanying notes.
4
<PAGE>
MEDIA GENERAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial reporting, and with applicable quarterly
reporting regulations of the Securities and Exchange Commission. They do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements and, accordingly, should
be read in conjunction with the consolidated financial statements and related
footnotes included in the Company's Annual Report on Form 10-K for the year
ended December 27, 1998.
In the opinion of management, all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair presentation of
interim financial information have been included. Certain items in 1998 have
been reclassified to conform with the current year's presentation. The
reclassifications have no effect on net income as previously reported. The
results of operations for interim periods are not necessarily indicative of the
results that may be expected for the full fiscal year.
2. On April 22, 1999, the Company agreed to sell all of its cable
operations to Cox Communications, Inc., for approximately $1.4 billion in cash.
The transaction, which is subject to various municipal and regulatory approvals,
is expected to close in the fourth quarter of 1999 and will result in a
substantial gain for the Company. The results of the Cable Segment have been
presented as discontinued operations in the accompanying consolidated condensed
statements of operations as follows:
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
-------------------------- ---------------------------
June 27, June 28, June 27, June 28,
(in thousands) 1999 1998 1999 1998
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 40,029 $ 39,643 $ 80,417 $ 78,290
Costs and Expenses 32,748 32,801 66,073 65,339
-------- --------- --------- ---------
Income before income taxes 7,281 6,842 14,344 12,951
Income taxes 2,789 2,566 5,454 4,853
-------- --------- --------- ---------
Income from discontinued Cable operations $ 4,492 $ 4,276 $ 8,890 $ 8,098
======== ========= ========= =========
</TABLE>
At June 27, 1999, the accompanying consolidated condensed
balance sheet included the following approximate amounts related to the Cable
operations: current assets of $15 million, noncurrent assets of $105 million,
current liabilities of $25 million, and noncurrent liabilities of $25 million.
The Company is considering its options for the use of the
proceeds from the sale. However, income from continuing operations reflected in
the accompanying consolidated condensed statements of operations does not
include any proforma adjustments or other allocations to reflect the potential
use of the proceeds for acquisitions, to repay debt, or repurchase shares and,
as such, are not fully indicative of the ongoing operations of the Company.
3. On June 30, 1999, subsequent to the end of the second quarter, the
Company completed the previously announced sale of 20% of the outstanding common
stock of Denver Newspapers, Inc. (DNI) to MediaNews Group, Inc., for $39
million. Additionally, DNI redeemed, at maturity, the Company's preferred stock
totaling $53.2 million. The Company also consummated the sale of WHOA-TV in
Montgomery, Alabama, for approximately $8 million during the quarter. The
proceeds from these transactions, approximately $100 million, have been used to
reduce debt outstanding under the Company's revolving credit agreement.
5
<PAGE>
On July 1, 1998, the Company acquired, for approximately $40
million, the assets of the Hickory Daily Record, a daily newspaper in
northwestern North Carolina. The transaction was accounted for as a purchase and
the Company's results of operations include the results of Hickory since the
date of acquisition. Purchase price was allocated to the assets acquired based
on an appraisal of fair values. On June 2, 1998, the Company completed the sale
of its Kentucky newspaper properties for approximately $24 million.
Additionally, the Company sold certain commercial printing assets in October
1998.
4. Inventories are principally raw materials.
5. On June 1, 1999, the estate of D. Tennant Bryan, the former Chairman
Emeritus of the Company, exercised its option under the 1994 stock redemption
agreement to sell to the Company 15% of the Company's Class A stock owned by Mr.
Bryan at his death. This exercise resulted in the Company purchasing 326,897
shares from the estate for $13.6 million.
6. The following tables set forth the Company's financial performance
by segment. Cable Segment results have not been presented as they are reflected
as income from discontinued operations in the consolidated condensed statements
of operations.
<TABLE>
<CAPTION>
Broadcast
(In thousands) Publishing Television Newsprint Total
- ---------------------------------------------------------------------------------------------------------
Three Months Ended June 27, 1999
<S> <C> <C> <C> <C>
Consolidated revenues * $ 130,801 $ 44,110 $ 24,643 $ 199,554
==========================================================
Segment operating cash flow $ 44,009 $ 13,930 $ (2,469) $ 55,470
Allocated amounts:
Equity in net income of
unconsolidated affiliates 128 2,403 2,531
License fees from unconsolidated affiliate 164 164
Depreciation and amortization (6,385) (2,719) (1,876) (10,980)
----------------------------------------------------------
Segment profit $ 37,752 $ 11,211 $ (1,778) 47,185
==========================================
Unallocated amounts:
Interest expense (14,813)
Acquisition intangible amortization (8,483)
Corporate expenses (7,034)
Other 3,407
------------
Consolidated income from continuing operations before income taxes $ 20,262
============
- ---------------------------------------------------------------------------------------------------------
* Intercompany revenues are less than 1% of consolidated revenues and have been eliminated.
6
<PAGE>
<CAPTION>
Broadcast
(In thousands) Publishing Television Newsprint Total
- ---------------------------------------------------------------------------------------------------------
Three Months Ended June 28, 1998
Consolidated revenues * $ 132,424 $ 47,233 $ 31,862 $ 211,519
==========================================================
Segment operating cash flow $ 40,670 $ 15,495 $ 5,702 $ 61,867
Allocated amounts:
Equity in net income of
unconsolidated affiliates 867 3,691 4,558
License fees from unconsolidated affiliate 268 268
Depreciation and amortization (6,019) (2,468) (1,703) (10,190)
----------------------------------------------------------
Segment profit $ 35,518 $ 13,027 $ 7,958 56,503
==========================================
Unallocated amounts:
Interest expense (15,703)
Acquisition intangible amortization (8,344)
Corporate expenses (5,437)
Other (617)
------------
Consolidated income from continuing operations before income taxes $ 26,402
============
- ---------------------------------------------------------------------------------------------------------
Six Months Ended June 27, 1999
Consolidated revenues * $ 258,704 $ 81,171 $ 51,490 $ 391,365
==========================================================
Segment operating cash flow $ 83,456 $ 22,645 $ (1,700) $ 104,401
Allocated amounts:
Equity in net income (loss) of
unconsolidated affiliates (386) 6,353 5,967
License fees from unconsolidated affiliate 418 418
Depreciation and amortization (12,714) (5,423) (3,752) (21,889)
----------------------------------------------------------
Segment profit $ 70,356 $ 17,222 $ 1,319 88,897
==========================================
Unallocated amounts:
Interest expense (30,168)
Acquisition intangible amortization (16,967)
Corporate expenses (13,834)
Other 4,192
------------
Consolidated income from continuing operations before income taxes $ 32,120
============
- ---------------------------------------------------------------------------------------------------------
Six Months Ended June 28, 1998
Consolidated revenues * $ 258,216 $ 84,760 $ 64,577 $ 407,553
==========================================================
Segment operating cash flow $ 76,742 $ 25,059 $ 11,162 $ 112,963
Allocated amounts:
Equity in net income of
unconsolidated affiliates 1,483 7,459 8,942
License fees from unconsolidated affiliate 536 536
Depreciation and amortization (12,175) (5,087) (3,407) (20,669)
----------------------------------------------------------
Segment profit $ 66,050 $ 19,972 $ 15,750 101,772
==========================================
Unallocated amounts:
Interest expense (31,935)
Acquisition intangible amortization (17,101)
Corporate expenses (10,817)
Other (902)
------------
Consolidated income from continuing operations before income taxes $ 41,017
=========================================================================================================
* Intercompany revenues are less than 1% of consolidated revenues and have been eliminated.
</TABLE>
7
<PAGE>
7. The following tables set forth the computation of basic and diluted
earnings per share from continuing operations:
<TABLE>
Quarter Ended June 27, 1999 Quarter Ended June 28, 1998
---------------------------------------- ----------------------------------------
Income Shares Per Share Income Shares Per Share
(In thousands, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Income from continuing operations
available to common stockholders $11,964 26,586 $ 0.45 $17,265 26,578 $ 0.65
========= =========
Effect of dilutive securities
Stock options 262 268
Restricted stock and other (9) 119 (5) 87
---------------------- ----------------------
Diluted EPS
Income from continuing operations
available to common stockholders
+ assumed conversions $11,955 26,967 $ 0.44 $17,260 26,933 $ 0.64
==================================== =====================================
Six Months Ended June 27, 1999 Six Months Ended June 28, 1998
---------------------------------------- ----------------------------------------
Income Shares Per Share Income Shares Per Share
(In thousands, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
Basic EPS
Income from continuing operations
available to common stockholders $18,872 26,616 $ 0.71 $26,188 26,541 $ 0.99
========= =========
Effect of dilutive securities
Stock options 263 262
Restricted stock and other (19) 116 (9) 83
---------------------- ----------------------
Diluted EPS
Income from continuing operations
available to common stockholders
+ assumed conversions $18,853 26,995 $ 0.70 $26,179 26,886 $ 0.97
==================================== =====================================
</TABLE>
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
OVERVIEW
- --------
Media General is an independent, publicly owned communications company situated
primarily in the Southeast with interests in newspapers, broadcast and cable
television, recycled newsprint production, and diversified information services.
The Company's fiscal year ends on the last Sunday in December.
ACQUISITIONS AND DISPOSITIONS
- -----------------------------
In April 1999, the Company announced an agreement to sell its Cable operations,
located primarily in Fairfax County and Fredericksburg, Virginia, to Cox
Communications, Inc., for approximately $1.4 billion in cash; the transaction is
expected to close in the fourth quarter of 1999. See Note 2 of this Form 10-Q
for further details about the Cable disposition. See Note 3 of this Form 10-Q
for information about 1999 and 1998 acquisitions and dispositions which affect
Segment comparability.
<TABLE>
CONSOLIDATED OPERATING RESULTS
- ------------------------------
(In thousands, except per share data)
<CAPTION>
Second Quarter Ended Six Months Ended
----------------------------------------- ----------------------------------------
June 27, June 28, June 27, June 28,
1999 1998 Change 1999 1998 Change
----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 199,554 $ 211,519 (6) % $ 391,365 $ 407,553 (4) %
Operating Income 30,194 36,446 (17) 52,080 61,892 (16)
Income from Continuing
Operations 11,964 17,265 (31) 18,872 26,188 (28)
Income from Discontinued
Cable Operations 4,492 4,276 5 8,890 8,098 10
Net income 16,456 21,541 (24) 27,762 34,286 (19)
Earnings Per Share 0.62 0.81 (23) 1.04 1.29 (19)
Earnings Per Share -
Assuming Dilution 0.61 0.80 (24) 1.03 1.27 (19)
</TABLE>
The results of the Cable Segment have been presented as discontinued operations
in the accompanying consolidated condensed statements of operations. However,
these statements do not include any proforma adjustments or other allocations to
reflect the potential use of the proceeds for acquisitions, to repay debt, or
repurchase shares and, as such, are not fully indicative of the ongoing
operations of the Company.
SEGMENT OPERATING RESULTS
- -------------------------
Each segment's operating results include segment operating cash flow information
in addition to revenues, operating expense and operating income. The segment
operating cash flow amounts represent operating income plus depreciation and
amortization. The Company believes the presentation of operating cash flow
amounts is important for several reasons. First, fluctuations in depreciation
and amortization from year to year are not necessarily indicative of the
underlying performance of a company. Second, the year-over-year change in
operating cash flow can be a useful measure of performance and presents a
meaningful indicator of results that may occur in future periods. Finally,
acquisition values of communications and media businesses are often based on
multiples of operating cash flow.
9
<PAGE>
Operating income, in the tables that follow, differs from segment profit, as
presented in Note 5 of this Form 10-Q, because segment profit includes
investment income from unconsolidated affiliates.
<TABLE>
PUBLISHING
- ----------
(In thousands)
<CAPTION>
Second Quarter Ended Six Months Ended
----------------------------------------- ----------------------------------------
June 27, June 28, June 27, June 28,
1999 1998 Change 1999 1998 Change
----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 130,801 $ 132,424 (1) % $ 258,704 $ 258,216 --- %
Operating Expenses 93,177 97,773 (5) 187,962 193,649 (3)
Operating Income 37,624 34,651 9 70,742 64,567 10
Depreciation &
Amortization 6,385 6,019 6 12,714 12,175 4
Operating Cash Flow 44,009 40,670 8 83,456 76,742 9
</TABLE>
The preceding chart contains the operating results of the Publishing Segment,
including acquisitions and dispositions. As a direct result of net acquisitions
and dispositions, Publishing Segment revenues decreased $1.5 million and $3.3
million, while operating income increased $.7 million and $1.3 million in the
second quarter and first half of 1999 over the comparable prior-year periods.
Excluding acquisitions and dispositions, Publishing revenues were relatively
flat in the quarter, but increased $3.8 million in the first half of 1999 from
the comparable 1998 period. At the Company's three largest metropolitan
newspapers, second quarter 1999 revenues virtually mirrored those of the
prior-year equivalent period; however, revenues rose $2.5 million in the year to
date due to increased average advertising rates (up 3.5%) which were partially
offset by a decline in linage (down 2.1%). The year to date revenue increase was
the result of a $2.9 million rise in general advertising (led by the
telecommunications and automotive categories) combined with a solid contribution
from classified advertising, partially offset by a $1.5 million decline in
retail advertising (due to weak performances in the financial and electronics
categories). Additionally, the Company's daily and weekly community newspaper
revenues increased $1.1 million over last year's first half, primarily on the
strength of classified revenues (driven by the automotive and employment
categories).
Publishing operating expense, excluding acquisitions and dispositions, dropped
$2.4 million and $1.1 million in the second quarter and first half of 1999.
These decreases were more than fully accounted for by a $2.7 million and $3.6
million decrease in newsprint expense in the current quarter and year to date as
a result of lower cost per ton (down 12.9% and 8.9%), partially offset by a $.6
million and $2.1 million rise in employee compensation and benefit expense.
Excluding acquisitions and dispositions, operating income for the Publishing
Segment rose $2.3 million and $4.9 million in the second quarter and first half
of 1999 from the prior-year periods. The improved operating results were due to
strong general advertising revenues in the year to date, coupled with a
substantial drop in newsprint expense from both the second quarter and first six
months of last year. Together, these were more than sufficient to offset
increased employee compensation and benefit expense.
10
<PAGE>
Investment income earned from the Company's Denver Newspapers, Inc. (DNI),
affiliate decreased $.7 million in the second quarter and $1.9 million (from
income of $1.5 million in 1998 to a loss of $.4 million in 1999) in the year to
date from the prior-year equivalent periods. This reduced income was primarily
attributable to increased circulation, production and newsprint expenses, which
were only partially mitigated by a rise in both circulation and advertising
revenues, all the result of circulation gains in the intensely competitive
Colorado market. Subsequent to the close the second quarter, the Company
completed the sale of 20% of the outstanding common stock of DNI to MediaNews
Group, Inc. (see Note 3 of this Form 10-Q).
<TABLE>
BROADCAST TELEVISION
- --------------------
(In thousands)
<CAPTION>
Second Quarter Ended Six Months Ended
----------------------------------------- ----------------------------------------
June 27, June 28, June 27, June 28,
1999 1998 Change 1999 1998 Change
----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 44,110 $ 47,233 (7) % $ 81,171 $ 84,760 (4) %
Operating Expenses 32,899 34,206 (4) 63,949 64,788 (1)
Operating Income 11,211 13,027 (14) 17,222 19,972 (14)
Depreciation &
Amortization 2,719 2,468 10 5,423 5,087 7
Operating Cash Flow 13,930 15,495 (10) 22,645 25,059 (10)
</TABLE>
Broadcast revenues declined $3.1 million and $3.6 million in the second quarter
and first half of 1999. These decreases were attributable to a combination of
factors: a decline in political advertising revenues due to the absence of
congressional and presidential elections this year; a generally weak performance
at the Company's largest station, WFLA-TV (NBC) in Tampa, Florida, primarily due
to a soft national ad market; and a decline in revenues at PCS, the Company's
provider of equipment and studio design services, as customers displayed
uncertainty regarding which digital equipment to purchase as the
industry-mandated timetable to switch from analog to digital approaches.
Together, these weak revenues were partially offset by a solid contribution from
local advertising, led by the telecommunications and department store
categories. The Segment's lower national and political advertising revenues
reflect the decreased time sales which have resonated throughout the broadcast
industry.
Operating expense in the Broadcast Segment decreased $1.3 million and $.8
million in the current quarter and six months of 1999. These favorable expense
levels were attributable to decreased cost of sales at PCS associated with lower
equipment sales, combined with the absence of certain 1998 expenses related to
the repositioning and relaunching efforts at several stations. Programming costs
rose 10% and 13%, while employee compensation and benefit expense increased a
more modest 2% and 3.5 % in the second quarter and first half of 1999. These
increases reflected improved program offerings and enhanced employee benefits
provided by the Company.
Broadcast operating income decreased $1.8 million and $2.8 million in the second
quarter and first half of 1999. The drop was attributable to a decline in
political advertising revenues and a weak performance at WFLA-TV, combined with
higher programming expense as the Company enhanced its program offerings.
11
<PAGE>
<TABLE>
NEWSPRINT
- ---------
(In thousands)
<CAPTION>
Second Quarter Ended Six Months Ended
----------------------------------------- ----------------------------------------
June 27, June 28, June 27, June 28,
1999 1998 Change 1999 1998 Change
----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 24,643 $ 31,862 (23) % $ 51,490 $ 64,577 (20) %
Operating Expenses 28,988 27,863 4 56,942 56,822 ---
Operating Income (Loss) (4,345) 3,999 (209) (5,452) 7,755 (170)
Depreciation &
Amortization 1,876 1,703 10 3,752 3,407 10
Operating Cash Flow (2,469) 5,702 (143) (1,700) 11,162 (115)
</TABLE>
Newsprint Segment revenues decreased $7.2 million and $13.1 million in the
current quarter and first six months of 1999, reflecting the results of the
Company's Garden State Paper (Garden State) newsprint mill, located in Garfield,
New Jersey. This decline resulted from a 17% and 11% decrease in the average
realized selling price per ton for the quarterly and year-to-date periods ended
June 27, 1999, combined with an 8% and 11% decline in tons sold. Newsprint
selling prices decreased steadily over the first half of 1999, with average
realized newsprint selling prices falling from $528 per ton in December of 1998
to $422 per ton in June of 1999, due primarily to an excess supply from
overseas.
Despite the large decline in tons sold, Newsprint Segment operating expense
increased $1.1 million in the second quarter of 1999 and remained virtually even
with the first six months of 1998. The quarterly increase resulted from $.6
million in costs associated with the efficiency-motivated closing of a New
Jersey recycling center, combined with $.7 million in market related inventory
writedowns. A decrease in tons produced, coupled with a 3% and 8% rise in the
cost of Garden State's principal raw material, recovered newspapers, resulted in
a $30 and $36 cost per ton increase in the second quarter and first half of this
year over the comparable prior-year periods.
Newsprint operating income declined $8.3 million and $13.2 million in the second
quarter and year to date period of 1999, from profits of $4 million and $7.8
million, to losses of $4.3 million and $5.4 million in the comparable 1999
periods. The decrease resulted primarily from an $88 and $59 erosion in average
realized selling price per ton for the current quarter and year-to-date period.
The Company's investment income from its Southeast Paper Manufacturing Company
(SEPCO) newsprint affiliate decreased $1.3 million and $1.1 million in the
current quarter and first half of 1999 from the comparable year-ago periods.
SEPCO's revenues fell 7.3% and 3.7% in the second quarter and first half of 1999
despite a 9.7% and 7.5% rise in tons sold. Average realized selling price
declined 14.4% and 9.5% in the second quarter and year-to-date period of 1999,
reflecting the adverse pricing environment which continues to reverberate
throughout the newsprint industry.
INTEREST EXPENSE
- ----------------
Interest expense of $14.8 million and $30.2 million represented a $.9 million
and $1.8 million decrease in the second quarter and first half of 1999 from the
comparable year-earlier periods. The decrease was due to a $34 million and $43
million decline in average debt outstanding, as the Company used funds generated
from operations and the proceeds from the sale of WHOA-TV in Montgomery (see
Note 3 of this Form 10-Q) to reduce its outstanding debt. The Company's average
effective borrowing rate remained just under 7% in the second quarter and first
half of both 1999 and 1998.
12
<PAGE>
The Company has interest rate swaps totaling $725 million with maturities
ranging from less than one year to five years. These swap agreements effectively
convert most of the Company's variable rate debt to fixed rate debt at interest
rates approximating 6.8%.
INCOME TAXES
- ------------
The Company's effective tax rate on income from continuing operations was
approximately 41% in the second quarter and first six months of 1999, up from
34.6% and 36.2% in the previous year's comparable periods due to a reduction in
tax benefits related to the Company's investment in unconsolidated affiliates
and an adverse change in tax law limiting the deductibility of company-owned
life insurance. Despite this increase in effective tax rate, income tax expense
dropped $.8 million and $1.6 million from the second quarter and first half of
1999 due to pretax earnings decreases of $6.1 million and $8.9 million.
INCOME FROM CONTINUING OPERATIONS
- ---------------------------------
Income from continuing operations for 1999's second quarter was $12 million
($0.45 per share, or $0.44 per share - assuming dilution) compared to $17.3
million ($0.65 per share, or $0.64 per share - assuming dilution) in the
equivalent prior-year quarter. This $5.3 million decrease was more than fully
accounted for by the Company's Newsprint Segment which produced a $9.7 million
negative quarter-over-quarter swing from a $7.9 million profit in 1998 to a $1.8
million loss in 1999, as newsprint prices continued to be subject to
disadvantageous supply and demand factors. Partially offsetting the poor results
posted by the Newsprint Segment was a 6% rise in Publishing Segment profits, a
decrease in interest expense resulting from lower average debt levels, and
proceeds from company-owned life insurance.
Income from continuing operations in the first half of 1999 was $18.9 million
($0.71 per share, or $0.70 per share - assuming dilution) compared to $26.2
million ($0.99 per share, or $0.97 per share - assuming dilution) in the
comparable year-ago period. This $7.3 million decline was more than fully
attributable to a 92% drop in the Newsprint Segment's profitability from the
first half of 1998, partially offset by a 7% increase in the Publishing
Segment's performance. As in the quarter, life insurance proceeds and lower
interest expense contributed positively to income from continuing operations.
INCOME FROM DISCONTINUED CABLE OPERATIONS
- -----------------------------------------
As previously mentioned, in April 1999, the Company announced an agreement to
sell its Cable operations to Cox Communications, Inc.; the sale is expected to
close in the fourth quarter of this year. Income from discontinued Cable
Television systems remained flat in both the second quarter and first half of
1999. Although revenues at the Company's Fairfax County, Virginia, cable system,
increased as a result of a .7% growth in the number of subscribers, the increase
was essentially offset by a rise in franchise fees precipitated by increased
revenues and a higher fee structure in the new franchise agreements signed in
mid-1998 and early 1999.
Cable Segment results in 1999 also included income from the Company's Greater
Washington Interconnect (GWI) affiliate. GWI is a cable advertising interconnect
formed with several other cable providers in the metro Washington, D.C., area
for the sole purpose of collectively selling national and regional spot
advertising throughout the region. GWI provided $.5 million and $.9 million of
income in the second quarter and first half of this year.
13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Funds generated by operating activities during the first six months of 1999
totaled $61.3 million, down $23.5 million from the comparable period of 1998.
The decrease was due to a combination of factors, including: a $17.5 million
increase in funds used in the current year to reduce accounts payable, a $6.5
million decrease in net income, and a $3.9 million reduction of funds generated
in the current year from accounts receivable and inventory changes, partially
offset by higher cash distributions from unconsolidated affiliates. Funds
generated from operating and financing activities, coupled with the proceeds
from the sale of WHOA-TV, supplied $30.2 million for capital expenditures, $18
million to reduce long-term debt, $13.6 million for redemption of stock (see
Note 5 of this Form 10-Q), and $8.1 million for the payment of dividends to
stockholders. Total debt outstanding at June 27, 1999, was $910 million, down
$18 million from the year-end level of $928 million. The Company's unused credit
lines available from its committed revolving credit facility were $355 million
at June 27, 1999.
Subsequent to the end of the quarter, the Company received approximately $92
million in cash related to the redemption of its DNI preferred stock and the
sale of half of its DNI common stock (see Note 3 of this Form 10-Q). These funds
were used to reduce debt. Additionally, the Company anticipates a large influx
of cash late in the fourth quarter from the sale of its Cable Segment. See Note
2 of this Form 10-Q for details. These funds, together with internally generated
funds provided by operations and existing credit facilities, will be more than
adequate to finance possible acquisitions, projected capital expenditures,
dividends to stockholders, potential debt termination costs (including
outstanding derivatives), and other cash needs of the Company.
YEAR 2000
- ---------
The Company continues to address issues regarding the transition to the Year
2000 through a specially created task force comprised of corporate, divisional
and operating unit personnel. The project has been divided into five phases: 1)
identification/analysis, 2) plan development/scheduling, 3) remediation, 4)
testing/integration, and 5) monitoring/continuous improvement. The Company
continues to make progress in all phases for both information systems and
operating systems with embedded technology. The Company believes its significant
systems are ready for the Year 2000 and that the project will be complete well
before the end of the fourth quarter.
Inherent in all phases of the above is the assessment of the Year 2000
compliance by key suppliers and customers. The Company has initiated formal
communications with these parties and most have indicated that there should be
no disruption in their relationships with us. However, the Company cannot assure
timely compliance of third parties and therefore could be adversely affected by
failure of a significant third party to become Year 2000 compliant.
Amounts expended exclusively to ensure Year 2000 compliance continue to be
funded by cash flow from operations and have not had, nor are they expected to
have, a material impact on the Company's financial position, results of
operations or cash flows. While the Company believes its significant systems are
ready for the Year 2000, its financial condition still could be adversely
impacted by disruptions related to the Year 2000. The Company does not consider
the possibility of such an occurrence to be reasonably likely.
If Year 2000 disruptions occur, the Company believes its existing business
recovery plans are adequate to address reasonably likely Year 2000 issues.
However, the Company has a separate initiative underway to revise its business
recovery plans; the initiative is much broader than the Year 2000 project but
will certainly consider Year 2000 issues.
14
<PAGE>
OUTLOOK
- -------
The sale of the Company's Cable operations will facilitate growth opportunities
while simultaneously providing significant financial flexibility. The Company
continues to review and evaluate its options as to the most advantageous use of
the proceeds to further enhance shareholder value. The Company is likely to
reduce outstanding debt initially. In any event, the sale of our Cable
operations will allow for increased directional focus toward newspapers and
broadcast television in our chosen southeastern markets.
15
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Media General, Inc., was held on May 21, 1999,
for the purpose of electing a board of directors.
Each nominee for director was elected by the following vote:
Class A Class A
Shares Voted Shares Voted
Class A Directors "FOR" "WITHHELD"
- ----------------- ----- ----------
Charles A. Davis 17,592,212 6,108,222
Robert V. Hatcher, Jr. 17,581,730 6,118,704
John G. Medlin, Jr. 17,588,036 6,112,398
Class B Class B
Shares Voted Shares Voted
Class B Directors "FOR" "WITHHELD"
- ----------------- ----- ----------
Robert P. Black 554,054 ---
J. Stewart Bryan III 554,054 ---
Marshall N. Morton 554,054 ---
Roger H. Mudd 554,054 ---
Wyndham Robertson 554,054 ---
Henry L. Valentine, II 554,054 ---
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10 Media General, Inc., Executive Supplemental Retirement Plan,
amended, and restated as of April 23,1999.
27.1 Financial Data Schedule for the period ended June 27, 1999.
27.2 Restated Financial Data Schedule for the period ended June 28,
1998.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended June 27, 1999.
16
<PAGE>
SIGNATURES
Pursuant to the requirements 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: August 10, 1999 /s/ J. Stewart Bryan III
-----------------------------------------
J. Stewart Bryan III, Chairman, President
and Chief Executive Officer
DATE: August 10, 1999 /s/ Marshall N. Morton
-----------------------------------------
Marshall N. Morton
Senior Vice President and Chief Financial
Officer
17
MEDIA GENERAL, INC.
-------------------
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
--------------------------------------
Amended and Restated
Effective April 23, 1999
Media General, Inc., hereby amends and restates the Media General, Inc.
Executive Supplemental Retirement Plan (the "Plan") for the benefit of the
eligible officers and executive employees of Media General, Inc., and its wholly
owned subsidiaries (collectively the "Company") that was originally adopted on
May 24, 1979 and amended and restated from time to time.
1. Purpose. The Plan is intended to advance the interests of the
Company by providing certain of its officers and other key executive employees
with supplemental retirement benefits and thus an additional incentive to
promote the success of the Company and to encourage the employees to remain
employed by the Company. The Plan is intended to be (and shall be construed and
administered as) an "employee pension benefit plan" under the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"), which is unfunded and
maintained by the Company solely to provide retirement income to a select group
of management or highly compensated employees, as such group is described under
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.
2. Administration of Plan. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company (the
"Committee").
1
<PAGE>
3. Eligibility and Participation. Any salaried executive employee of
the Company shall be eligible to participate in the Plan.
From the employees eligible to participate in the Plan, the Committee
may from time to time select those employees whom the Committee shall recommend
to the Board for participation in the Plan. In selecting those employees who
shall be recommended at any time, the Committee shall consider the position and
responsibilities of the eligible employees, the value of their services to the
Company and such other factors as the Committee deems pertinent.
As promptly as practicable after the Committee shall have made
recommendations to the Board, the Board shall review the recommendations of the
Committee and in the Board's discretion designate all or any number of those
employees as shall have been recommended by the Committee as participants in the
Plan. Set forth in Exhibit A and in Exhibits B and C attached hereto are the
Participants and Special Participants, respectively, who have been designated
from time to time.
4. Supplemental Retirement Benefit.
(a) The Company shall pay a supplemental retirement benefit to
each Participant upon his retirement after attaining age fifty-five (55). Upon
the death of a Participant, a death benefit will be paid to his spouse or
designated beneficiary in accordance with the provisions of paragraph 6 hereof.
2
<PAGE>
(b) Subject to the provisions of (c), (d), (e) and (f) of this
paragraph 4, the amount of the supplemental retirement benefit payable to a
Participant shall be equal to the difference between the amounts determined
under (1) and (2), as follows:
(1) An amount equal to 55% of the Participant's
average annual compensation for the five calendar years of his
employment by the Company prior to his death or retirement
during which his compensation was the highest. If the
Participant has been employed by the Company for less than
five years, the average compensation for such number of years
shall be used in this computation.
(2) An amount equal to the total of the annual
retirement benefits the Participant is entitled to receive
under the Employees Retirement Plan of the Participating
Companies of Media General, Inc. (the "Retirement Plan") and
all other retirement plans or benefit arrangements providing
for a pension payable with respect to the Participant's
employment by the Company or any other employer (collectively,
the "Pension Plans"). For purposes of this Plan, the joint and
survivor annuity provided under such Employees' Retirement
Plan and the comparable form of benefit under any other
retirement plan or benefit arrangement taken into account in
this computation shall be deemed to be the applicable form of
benefit. Distributions under the Thrift Plan Plus for
Employees of Media General, Inc. or Media General, Inc.
Deferred Compensation Plan shall not be taken into account in
this computation, and in the case of Participants who are
admitted to the Plan on or after January 1, 1991, benefits
provided under a plan or arrangement that is sponsored by an
employer other than the Company shall not be included in the
determination of the amount under this paragraph 4(b)(2).
No benefit shall be payable if the amount computed under (2) equals or exceeds
the amount computed under (1).
For purposes of the Plan, a Participant's compensation for a calendar
year shall mean the sum of (i) a Participant's highest base rate salary that is
payable during the calendar year and (ii) the Incentive Bonus that is payable to
3
<PAGE>
such Participant with respect to the prior calendar year. The determination of
compensation shall be made for each calendar year during which a Participant is
employed by the Company irrespective of the number of days during each such
calendar year that the Participant is actually employed by the Company. In the
case of a Participant who is entitled to receive supplemental disability
payments under paragraph 5, the benefit payable under paragraph 5 shall be
treated as compensation for purposes of paragraph 4.
(c) The benefit payments provided in paragraph 4(b) shall be
reduced if such payments commence upon the Participant's retirement prior to
attaining age sixty-three (63). If a Participant retires prior to attaining age
sixty-three (63), the benefit payment shall be an amount equal to the amount of
the benefit payment computed as provided in paragraph 4(b) multiplied by the
applicable factor in the table set forth below:
Age at Retirement Reduced Benefit Factor
----------------- ----------------------
62 92.3%
61 84.6%
60 76.9%
59 70.7%
58 64.6%
57 58.4%
56 53.8%
55 49.2%
The reduction of any benefit payment required by this paragraph 4(c) can be
waived by the Committee in its sole discretion.
(d) If a Participant who enters the Plan on or after January
1, 1991, terminates his employment with the Company, other than on account of
4
<PAGE>
his death or disability, prior to completing 15 full years of service to the
Company after his admission to the Plan, the percentage of average annual
compensation used to determine the amount in paragraph 4(b)(1) shall be reduced
to the following percentage:
Years of Service (in Plan) Benefit Percentage
-------------------------- ------------------
14 54%
13 53%
12 52%
11 51%
10 50%
9 45%
8 40%
7 35%
6 30%
5 25%
4 20%
3 15%
2 10%
1 5%
0 0%
(e) If a Participant who entered the Plan prior to January 1,
1991 terminates his employment with the Company prior to January 1, 1996, other
than on account of his death or disability, the percentage of average annual
compensation provided in paragraph 4(b)(1) shall be reduced to the following
percentage:
Year Employment Terminates Benefit Percentage
-------------------------- ------------------
1995 54%
1994 53%
1993 52%
1992 51%
1991 50%
5
<PAGE>
(f) The benefit payment computed under paragraph 4(b), as
reduced by paragraphs 4(c) and 4(d), shall be an annual amount which shall be
payable in monthly installments commencing on the first day of the first month
following the termination of the Participant's employment by the Company and
terminating with the last installment paid prior to the Participant's death.
(g) At the Participant's option, he may elect, at least ninety
(90) days prior to the time benefit payments are first payable hereunder, to
receive reduced benefit payments in exchange for the Company's agreement to make
one hundred and twenty (120) monthly payments under the Plan irrespective of the
death of the Participant and/or his spouse. The amount of the reduction of the
benefit to be paid to the Participant and to his spouse upon his death will be
determined by an actuarial consulting firm selected by the Company. The
Participant shall designate who shall be the recipient of the guaranteed
payments upon the death of the survivor of the Participant and his spouse. In
the absence of such designation, payments shall be made to the Participant's
estate.
(h) Notwithstanding the foregoing provisions, Special
Participants shall be entitled to receive only those supplemental retirement
benefits specified in Exhibits B and C respectively.
5. Supplemental Disability Benefit.
(a) In the event a Participant terminates his employment by
the Company on account of his disability, which for purposes of the Plan is
defined as the inability to perform the services required by his position with
6
<PAGE>
the Company by reason of any medically determinable, physical or mental
impairment which can be expected to be of long-continued and indefinite
duration, he will not be treated as having retired from the Company during the
period of his disability for purposes of paragraph 4, and he will be paid a
supplemental disability benefit until the earlier of (i) the date he resumes his
employment with the Company in his former position, or (ii) the date he attains
the age of sixty three (63).
(b) The supplemental disability benefit shall be an amount
equal to the difference between the amounts determined under (1) and (2) below
as follows:
(1) An amount equal to the Participant's base
compensation for the year in which he becomes disabled plus an
amount equal to the incentive bonus, if any, that is payable
to such Participant with respect to the calendar year next
preceding the year in which he becomes disabled. Such amount
will be increased or decreased for each subsequent calendar
year by a factor that is equal to the increase or decrease in
the average covered compensation of all participants in the
Employees Retirement Plan of Media General, Inc., from year to
year.
(2) An amount equal to the aggregate amount of
compensation received by the Participant with respect to
services performed by the Participant for the Company and any
other employer (including the Participant himself in the case
of self-employment income) during the period he is receiving
supplemental disability payments hereunder plus an amount
equal to the Social Security benefits, if any, that such
Participant is entitled to receive during the period.
(c) The supplemental disability benefit payment provided in
paragraph 5(b) shall be an annual amount which shall be payable in monthly
installments commencing on the first day of the first month following the
7
<PAGE>
suspension of the Participant's employment by the Company on account of his
disability and continuing until he resumes his employment with the Company in
his former position or until he attains the age of sixty-three (63).
(d) If a Participant attains the age of sixty-three (63) while
he is entitled to receive supplemental disability benefit payments under the
Plan, he will be deemed to have retired from the Company for purposes of
paragraph 4 as of such date, and such supplemental disability benefit payments
will cease and he will be entitled to receive the benefit payment computed under
paragraph 4 commencing on the first day of the first month following such date.
(e) Notwithstanding the foregoing provisions, Special
Participants shall not be entitled to any disability benefits.
6. Death Benefit.
(a) Upon the death of a Participant receiving or entitled to
receive benefit payments under the Plan, the Company shall pay a death benefit
as hereinafter provided.
(b) A spouse's benefit shall be payable only in the event the
Participant was married to the spouse at the time of the termination of the
Participant's employment by the Company.
(c) The benefit payable to a Participant's spouse shall be an
amount equal to the difference between the amounts computed under (1) and (2) as
follows:
8
<PAGE>
(1) An amount equal to 80% of the amount determined
under paragraph 4(b)(1).
(2) An amount equal to the total of the benefits the
Participant's spouse is entitled to receive under the Pension
Plans taken in account in computing the amount under paragraph
4(b)(2).
No benefit shall be payable hereunder if the amount computed under (2) equals or
exceeds the amount computed under (1). If the Participant has made an election
to receive a reduced benefit pursuant to paragraph 4(g), the amount of the
spouse's benefit will be determined by an actuarial consulting firm selected by
the Company at the time such election is made.
(d) The spouse's benefit shall be paid to the surviving spouse
in monthly installments commencing on the first day of the first month following
the Participant's death and continuing until the death or remarriage of the
surviving spouse.
(e) In the event of the death of a Participant prior to the
termination of his employment by the Company, the spouse's benefit shall
nevertheless be payable as provided herein.
(f) Upon the death of a Participant who has not retired and
who is not married at the time of his death, the Company shall pay to the estate
of such Participant a lump sum payment equal to the present value of the benefit
payments that would have been made to such Participant pursuant to paragraph 4
during the 10 year period following his death determined as if such Participant
9
<PAGE>
had retired at age sixty-three (63) and lived for ten (10) years. In determining
such present value, the discount rate shall be a rate equal to the yield on 10
year government obligations determined on the last day of the month next
preceding the lump sum payment hereunder, which payment shall be made within
ninety (90) days of the date of the Participant's death.
(g) Notwithstanding the foregoing provisions, a surviving
spouse of a Special Participant shall be entitled to a spousal benefit only in
accordance with the schedule on Exhibit B. No other benefit shall be payable to
any other person.
7. Election of Alternative Benefit.
(a) Notwithstanding anything contained in any Section of this
Plan to the contrary, a Participant who has at least fifteen (15) full years of
service to the Company after his admission to the Plan may elect, either prior
to the beginning of any Plan Year, so long as such date is at least ninety (90)
days prior to the earliest date on which he otherwise would be eligible to
receive benefits under the Plan, or within forty-five (45) days after the
effective date of this amended and restated Plan, to exchange all or part of his
Accrued Benefit (the "Election Amount") for rights in and to a life insurance
contract, on the life of the Participant or the lives of the Participant and his
spouse, as approved by the Company. Such alternative benefit election
("Election") shall be irrevocable. "Accrued Benefit" shall mean the benefit
accrued under the Plan, determined as though the Participant had terminated
employment as of the effective date of Participant's election, as set forth in
Section 4.
10
<PAGE>
(b) A Participant's Election shall be made on such forms
provided by the Company and according to the procedures established by the
Company. The Election of the Participant shall set forth the part of the
Participant's Accrued Benefit to which it shall be applicable, the number and
amount of annual payments to be invested by the Company in such life insurance
contract, and the terms of the recoupment by the Company of its investment in
such life insurance contract, plus a return at least equal to the Company's
current net after-tax long-term borrowing rate, and shall be effective upon
approval by the Company. Any life insurance contract in which the Company
invests as a result of the Participant's Election may be owned by the Company,
the Participant, or a third party, including a separate trust established by the
Participant. The rights and obligations of the Company and the policy owner with
respect to premium payments, policy cash values, policy death benefits, and
other rights and obligations of ownership shall be set forth in an agreement
entered into between the Company and the policy owner. If the insurance contract
is owned by the Participant or a third party, then the insurance contract shall
be collaterally assigned to the Company, and the Company's interest in the
insurance policy shall be subject to the claims of its general creditors.
(c) Subject to the approval by the Company of a Participant's
Election, the Company agrees to invest the Election Amount during the
lifetime(s) of the insured(s) in the life insurance contract.
11
<PAGE>
(d) The Participant's Election under this Section 7 shall
supersede any form or timing of payment of benefits under the Plan with regard
to the Election Amount. The Participant shall not be entitled to receive any
other form of benefit under the Plan with respect to the Election Amount. In
addition, the Participant shall accrue no further benefit under the Plan after
the effective date of the Election for a period of two years (the calendar year
in which the Election occurs and the year following). In determining any benefit
payable under the Plan, service and compensation for such years shall be
disregarded.
8. Non-Compete Provision. A Participant shall not, without the written
consent of the Company, directly or indirectly enter into or in any manner take
part in any business, profession or other endeavor which shall be in competition
with the business of the Company, either as an employee, agent, independent
contractor, owner or otherwise in any state in which the Company is conducting
business.
9. Miscellaneous Provisions.
(a) No Participant or spouse shall have any right to receive
benefits under the Plan prior to the termination of the Participant's employment
by the Company.
(b) In the event of the termination of a Participant's
employment by the Company prior to his death, disability or retirement, or in
the event a Participant breaches the noncompete provision in paragraph 7, all
12
<PAGE>
rights of the Participant and his spouse and all obligations of the Company
under the Plan shall cease.
(c) The Plan shall be unfunded for federal income tax purposes
and for purposes of Title I of ERISA. The Plan constitutes a mere promise by the
Company to make future benefit payments. Nevertheless, for the convenience of
the Company, a trust fund may be established to segregate certain assets for the
purpose of paying benefits under the Plan. The Company shall be the beneficial
owner of such assets, and no Participants or Beneficiary shall have any right,
title, or interest in or to any such assets.
(d) Benefits payable to or for the benefit of a Participant or
Beneficiary shall not be assignable and shall not be subject to the claims of
creditors of such Participant or Beneficiary.
(e) The Company reserves the right at any time to amend,
modify or terminate the Plan, in whole or in part. Any such amendment,
modification or termination of the Plan shall be made by a resolution adopted by
the Board of Directors and distributed to Participants within sixty (60) days
from the later of the date of adoption or the effective of such action;
provided, however, that the Company shall not amend the Plan retroactively in
such a manner as to deprive any Participant or Beneficiary of any benefit to the
extent that such benefit was accrued and vested prior to the amendment,
modification or termination.
13
<PAGE>
(f) A Participant shall not have the power to pledge,
transfer, assign, anticipate, mortgage or otherwise encumber or dispose of in
advance any interest in amounts payable hereunder or any of the payments
provided for herein, nor shall any interest in amounts payable hereunder or in
any payments be subject to seizure for payment of any debts or judgments, or be
reached or transferred by operation of law in the event of bankruptcy,
insolvency or otherwise.
10. 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. Such action by the Board
may be made on a case by case basis or may be made with respect to all
Participants.
11. Claims Procedure. Any claim by a Participant or his Beneficiary
(hereafter "Claimant") for benefits shall be submitted to the Committee. The
Committee shall be responsible for deciding whether such claim is within the
scope provided by the Plan (a "Covered Claim") and for providing full and fair
review of the decision with respect to such claim. In addition, the Committee
shall provide a full and fair review in accordance with ERISA, including without
limitation Section 503 thereof.
Each Claimant or other interested person sh
all file with the Committee
such pertinent information as the Committee may specify, and in such manner and
form as the Committee may specify and provide, and such person shall not have
any rights or be entitled to any benefits or further benefits hereunder, as the
14
<PAGE>
case may be, unless such information is filed by the Claimant or on behalf of
the Claimant. Each Claimant shall supply at such times and in such manner as may
be required, written proof that the benefit is covered under the Plan. If it is
determined that a Claimant has not incurred a Covered Claim or if the Claimant
shall fail to furnish such proof as is requested, no benefits or no further
benefits hereunder, as the case may be, shall be payable to such Claimant.
Notice of a decision by the Committee with respect to a claim shall be
furnished to the Claimant within ninety (90) days following the receipt of the
claim by the Committee (or within ninety (90) days following the expiration of
the initial ninety (90) day period, in a case where there are special
circumstances requiring extension of time for processing the claim). If special
circumstances require and extension of time for processing the claim, written
notice of the extension shall be furnished by the Committee to the Claimant
prior to the expiration of the initial ninety (90) day period. The notice of
extension shall indicate the special circumstances requiring the extension and
the date by which the notice of decisions with respect to the claim shall be
furnished. Commencement of benefit payments shall constitute notice of approval
of a claim to the extent of the amount of the approved benefit. If such claim is
15
<PAGE>
wholly or partially denied, such notice shall be in writing and worded in a
manner calculated to be understood by the Claimant, and shall set forth (i) the
specific reason or reasons for the denial; (ii) specific reference to pertinent
provisions of the Plan on which the denial is based; (iii) a description of any
additional material or information necessary for the Claimant to perfect the
claim and an explanation of why such material or information is necessary; and
(iv) an explanation of the Plan's claims review procedure. If the Committee
fails to notify the Claimant of the decision regarding his or her claim in
accordance with these "Claims Procedure" provisions, the claim shall be deemed
denied and the Claimant shall then be permitted to proceed with the claims
review procedure provided herein.
Within sixty (60) days following receipt by the Claimant of notice of
the claim denial, or within sixty (60) days following the close of the ninety
(90) day period referred to herein, or if the Committee fails to notify the
Claimant of the decision within such ninety (90) day period, the Claimant may
appeal denial of the claim by filing a written application for review with the
Committee. Following such request for review, the Committee shall fully and
fairly review the decision denying the claim. Prior to the decision of the
Committee, the Claimant shall be given an opportunity to review pertinent
documents and to submit issues and comments to the Committee in writing. The
decision of the Committee shall be made within sixty (60) days following receipt
16
<PAGE>
by the Committee of the request for review (or within one hundred and twenty
(120) days after such receipt, in a case where there are special circumstances
requiring extension of time for reviewing such denied claim). The Committee
shall deliver its decision to the Claimant in writing. If the decision on review
is not furnished within the prescribed time, the claim shall be deemed denied on
review.
For all purposes under the Plan, the decision with respect to a claim
if no review is requested and the decision with respect to a claim if review is
requested shall be final, binding and conclusive on all interested parties as to
matters relating to the Plan.
IN WITNESS WHEREOF, the Plan has been duly amended, restated as of the
23rd day of April, 1999.
MEDIA GENERAL, INC.
By /s/ Marshall N. Morton
---------------------------
0509985.01
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDIA
GENERAL, INC.'S CONSOLIDATED CONDENSED BALANCE SHEETS AND CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> DEC-26-1999
<PERIOD-END> JUN-27-1999
<CASH> 6,079
<SECURITIES> 0
<RECEIVABLES> 111,207
<ALLOWANCES> 7,602
<INVENTORY> 20,328
<CURRENT-ASSETS> 156,832
<PP&E> 1,129,035
<DEPRECIATION> 637,869
<TOTAL-ASSETS> 1,876,374
<CURRENT-LIABILITIES> 118,562
<BONDS> 909,941
0
0
<COMMON> 132,923
<OTHER-SE> 353,676
<TOTAL-LIABILITY-AND-EQUITY> 1,876,374
<SALES> 391,365
<TOTAL-REVENUES> 391,365
<CGS> 192,732
<TOTAL-COSTS> 192,732
<OTHER-EXPENSES> 40,299
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,168
<INCOME-PRETAX> 32,120
<INCOME-TAX> 13,248
<INCOME-CONTINUING> 18,872
<DISCONTINUED> 8,890
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,762
<EPS-BASIC> 1.04
<EPS-DILUTED> 1.03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDIA
GENERAL, INC.'S CONSOLIDATED CONDENSED BALANCE SHEETS AND CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-END> JUN-28-1998
<CASH> 4,778
<SECURITIES> 0
<RECEIVABLES> 108,805
<ALLOWANCES> 7,300
<INVENTORY> 21,300
<CURRENT-ASSETS> 154,634
<PP&E> 1,097,836
<DEPRECIATION> 606,338
<TOTAL-ASSETS> 1,863,079
<CURRENT-LIABILITIES> 138,358
<BONDS> 912,434
0
0
<COMMON> 133,644
<OTHER-SE> 312,508
<TOTAL-LIABILITY-AND-EQUITY> 1,863,079
<SALES> 407,553
<TOTAL-REVENUES> 407,553
<CGS> 199,686
<TOTAL-COSTS> 199,686
<OTHER-EXPENSES> 38,535
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,935
<INCOME-PRETAX> 41,017
<INCOME-TAX> 14,829
<INCOME-CONTINUING> 26,188
<DISCONTINUED> 8,098
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,286
<EPS-BASIC> 1.29
<EPS-DILUTED> 1.27
</TABLE>
