<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
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-8598
A. H. BELO CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 75-0135890
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. BOX 655237
DALLAS, TEXAS 75265-5237
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (214) 977-6606
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -----------------------
<S> <C>
SERIES A COMMON STOCK, $1.67 PAR VALUE NEW YORK STOCK EXCHANGE
PREFERRED SHARE PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: SERIES B COMMON
STOCK, $1.67 PAR VALUE
(Title of class)
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 the registrant's voting stock held by
nonaffiliates on February 28, 1995, based on the closing price for the
registrant's Series A Common Stock on such date as reported on the New York
Stock Exchange, was approximately $869,437,405.*
Shares of Common Stock outstanding at February 28, 1995: 19,907,543 shares.
(Consisting of 15,162,735 shares of Series A Common Stock and 4,744,808 shares
of Series B Common Stock.)
* For purposes of this calculation the market value of a share of Series B
Common Stock was assumed to be the same as the share of Series A Common Stock
into which it is convertible.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant's Proxy Statement relating to the Annual
Meeting of Shareholders to be held May 3, 1995 are incorporated by reference
into Part III (Items 10, 11, 12 and 13).
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A. H. BELO CORPORATION
FORM 10-K
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . 6
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . . . . . 7
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . 9
Item 8. Financial Statements and Supplementary Data (see Index to Financial Statements
below) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . 14
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . 14
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . 14
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . 14
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . . . . 14
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
INDEX TO FINANCIAL STATEMENTS
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Consolidated Statements of Earnings for the years ended December 31, 1994, 1993 and 1992 . . . . . . . 24
Consolidated Balance Sheets as of December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . 25
Consolidated Statements of Shareholders' Equity for the years ended December 31, 1994, 1993
and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1993 and 1992 . . . . . . 28
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Management's Responsibility for Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
<PAGE> 3
PART I
ITEM 1. BUSINESS
A. H. Belo Corporation (the "Company" or "Belo") owns and operates
newspapers and network-affiliated television stations in seven U.S. cities.
The Company traces its roots to The Galveston Daily News, which began
publishing in 1842. Incorporated in Texas in 1926, the Company was reorganized
as a Delaware corporation in 1987. (References herein to "Company" or "Belo"
mean A. H. Belo Corporation and its wholly-owned subsidiaries unless the
context otherwise specifies.)
The Company's principal newspaper is The Dallas Morning News. In addition,
the Company publishes eight community newspapers for certain suburbs in the
Dallas-Fort Worth metropolitan area. The Company also owns and operates
network- affiliated VHF television broadcast stations in Dallas-Fort Worth and
Houston, Texas; Seattle-Tacoma, Washington; Sacramento-Stockton-Modesto,
California; Norfolk-Portsmouth-Newport News-Hampton, Virginia; New Orleans,
Louisiana; and Tulsa, Oklahoma. The assets of television station WWL-TV in New
Orleans, Louisiana, were purchased by the Company on June 1, 1994 for
$110,000,000. Further, on February 1, 1995, the Company completed the
acquisition of the assets of television station KIRO-TV in Seattle, Washington,
for $162,500,000, excluding final adjustments.
Note 12 to the Consolidated Financial Statements, included on page 38 of
this document, contains information about the Company's industry segments for
the years ended December 31, 1994, 1993 and 1992.
NEWSPAPER PUBLISHING
The Company's wholly-owned subsidiary, The Dallas Morning News, Inc.,
publishes the Company's principal newspaper, The Dallas Morning News, seven
days a week. Published continuously since 1885, The Dallas Morning News
provides coverage of local, state, national and international news. The
Morning News is distributed throughout the Southwest, though its circulation is
concentrated primarily in the twelve counties surrounding Dallas: Collin,
Dallas, Denton, Ellis, Henderson, Hood, Hunt, Johnson, Kaufman, Parker,
Rockwall and Tarrant counties.
The Dallas Morning News strives to serve the public interest by maintaining
a strong and independent voice in matters of public concern. It is the policy
of the Company to allocate such resources as may be necessary to maintain
excellence in news reporting and editorial comment in The Dallas Morning News.
The Dallas Morning News serves a large readership in its primary market.
Average paid circulation for the six months ended September 30, 1994, according
to the unaudited Publisher's Statement of the Audit Bureau of Circulations, an
independent agency, was 524,567 daily, down slightly from the 1993 average
daily circulation of 527,387. Sunday's average paid circulation was 797,206,
down 2.1 percent from the six months ended September 30, 1993 average of
814,404.
The Dallas Morning News competes for advertising with television and radio
stations (including a television station owned and operated by the Company),
magazines, direct mail, cable television, billboards and other newspapers
(including the other newspapers owned and operated by the Company). Also
competing with The Dallas Morning News is the Fort Worth Star-Telegram, owned
by Capital Cities/ABC, Inc..
The basic material used in publishing The Dallas Morning News is newsprint.
The average unit price of newsprint consumed during 1994 was slightly less than
that of the prior year. However, recent market-wide increases in newsprint
prices are expected to result in substantially higher newsprint prices during
1995. At present, newsprint is purchased from nine suppliers. During 1994,
the Company's three largest providers of newsprint supplied approximately 57
percent of the annual requirements, but the Company is not dependent on any one
of them. Management believes its sources of newsprint, along with alternate
sources that are available, are adequate for its current needs.
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DFW Suburban Newspapers, Inc. publishes six paid and two free circulation
newspapers for suburban communities in the Dallas-Fort Worth metropolitan area.
These publications are delivered either one or two days a week. Each of the
Company's community publications has its own sales, circulation, news and
editorial personnel, and several of the publications maintain separate offices.
All administrative functions are centralized and all of the newspapers are
printed at a plant in Arlington, Texas. This plant is owned and operated by
DFW Printing Company, Inc., a wholly-owned subsidiary of the Company, which, in
addition to printing the suburban newspapers, is the site of the Company's
commercial printing operations.
TELEVISION BROADCASTING
The following table lists relevant information about the Company's
television broadcasting stations:
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TOTAL
STATION, NUMBER OF NUMBER OF
CHANNEL, DMA TELEVISION COMMERCIAL
MARKET AND NATIONAL EXPIRATION BROADCAST BROADCAST
NETWORK TV HOMES MARKET DATE OF STATIONS IN STATIONS IN
AFFILIATION IN DMA (1) RANK (1) FCC LICENSE MARKET (1) MARKET (1)
- -------------- ------------ ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
WFAA-TV, Ch. 8 1,820,710 8th August 1, 1993 (2) 6 VHF 4 VHF
Dallas-Fort Worth, TX 9 UHF 9 UHF
(ABC)
KHOU-TV, Ch. 11 1,561,530 11th August 1, 1998 4 VHF 3 VHF
Houston, TX 10 UHF 10 UHF
(CBS)
KIRO-TV, Ch. 7 1,468,730 12th February 1, 1999 7 VHF 6 VHF
Seattle-Tacoma, WA 4 UHF 2 UHF
(UPN)(3)
KXTV, Ch. 10 1,109,140 21st December 1, 1998 4 VHF 3 VHF
Sacramento- 6 UHF 6 UHF
Stockton-Modesto, CA
(ABC) (4)
WVEC-TV, Ch. 13 620,390 40th October 1, 1996 3 VHF 3 VHF
Norfolk-Portsmouth- 3 UHF 2 UHF
Newport News-Hampton, VA
(ABC)
WWL-TV, Ch. 4 615,180 41st June 1, 1997 4 VHF 3 VHF
New Orleans, LA 3 UHF 2 UHF
(CBS)
KOTV, Ch. 6 462,800 59th June 1, 1998 4 VHF 3 VHF
Tulsa, OK 4 UHF 3 UHF
(CBS)
</TABLE>
________________________
(1) Designated Market Area ("DMA") is an exclusive geographic area
consisting of all counties in which the local stations receive a preponderance
of total viewing hours. DMA data, which is published by the A. C. Nielsen
Company ("Nielsen"), is a significant factor in determining television
advertising rates. All the information shown in the table is as of the
November 1994 Nielsen ratings book.
(2) An application for renewal of the license for WFAA-TV is pending
before the Federal Communications Commission, and the station's license is by
statute continued in effect pending action thereon.
(3) On February 1, 1995, the Company purchased television station KIRO-TV
for $162,500,000, excluding final adjustments. At that time, KIRO-TV was being
operated as a CBS affiliate. As of March 13, 1995, the station began operating
as a United Paramount Network affiliate.
(4) Effective March 6, 1995, KXTV became an ABC television affiliate. Prior to
March 6, 1995, KXTV was being operated as a CBS affiliate.
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Commercial television stations generally fall into one of three categories.
The first category of stations consists of stations affiliated with one of the
three major national networks (ABC, CBS and NBC). The second category is
comprised of stations affiliated with newer national networks, such as Fox and
the recently formed United Paramount Network ("UPN") and the WB (Warner
Brothers) Television Network. The third category includes independent stations
that are not affiliated with any network and that rely principally on local and
syndicated programming.
Affiliation with a television network can have a significant influence on
the revenues of a television station because the audience share drawn by a
network's programming can affect the rates at which a station can sell
advertising time. The Federal Communications Commission ("FCC") regulates
certain provisions of television stations' network affiliation contracts. The
television networks compete for affiliations with licensed television stations
through program commitments and local marketing support. From time to time,
local television stations also solicit network affiliations on the basis of
their ability to provide a network better access to a particular market.
Generally, rates for national and local spot advertising sold by the
Company are determined by each station, which receives all of the revenues, net
of agency commissions, for that advertising. Rates are influenced both by the
demand for advertising time and the popularity of the station's programming.
Most advertising during network programs is sold by the networks, which pay
their affiliated stations negotiated fees for broadcasting such programs and
advertising.
The Company's television broadcast properties compete for advertising
revenues directly with other media such as newspapers (including those owned
and operated by the Company), billboard advertising, magazines, direct mail
advertising, radio stations, other television stations, cable television
systems, and indirectly, with motion picture theaters and other news and
entertainment media. The success of broadcast operations depends on a number
of factors, including the general strength of the national and local economy,
the ability to provide attractive programming, audience ratings, relative cost
efficiency in reaching audiences as compared to other advertising media,
technical capabilities and governmental regulations and policies.
The three major national television networks are represented in each
television market in which the Company has a television broadcast station.
Fox-affiliated stations also compete in each of Belo's markets for advertising
sales and local viewers. Competition for advertising sales and local viewers
within each market is intense, particularly among the network-affiliated
commercial VHF television stations. See the table on page two of this document
for information regarding the number of competing stations in each of the
Company's television broadcast markets.
REGULATION OF TELEVISION BROADCASTING
The Company's television broadcasting operations are subject to the
jurisdiction of the FCC under the Communications Act of 1934, as amended (the
"Act"). Among other things, the Act empowers the FCC to assign frequency
bands; determine stations' frequencies, location and power; issue, renew,
revoke and modify station licenses; regulate equipment used by stations; impose
penalties for violation of the Act or of FCC regulations; impose fees for
processing applications and other administrative functions; and adopt
regulations to carry out the Act's provisions. The Act also prohibits the
assignment of a broadcast license or the transfer of control of a broadcast
licensee without prior FCC approval. Under the Act, the FCC also regulates
certain aspects of the operation of cable television systems and other
electronic media that compete with broadcast stations.
The Act would prohibit the Company's subsidiaries from continuing as
broadcast licensees if record ownership or power to vote more than one-fourth
of the Company's stock were to be held by aliens or foreign governments or
their representatives, or if an officer or more than one-fourth of the
Company's directors were aliens.
Under the Act, television broadcast licenses may be granted for maximum
periods of five years and are renewable upon proper application for additional
five-year terms. Renewal applications are granted without hearing if there are
no competing applications or issues raised by petitioners to deny such
applications that would cause the FCC to order a hearing. A full comparative
hearing is required if competing applications are filed. A federal court of
appeals has affirmed an FCC decision that recognizes an incumbent licensee's
"renewal expectancy" based on
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substantial service to its community. The precise parameters of licensees'
renewal expectancies in comparative proceedings are ambiguous at the present
time. This ambiguity may lead to new FCC rules or policies as the result of
pending FCC rulemaking proceedings, or Congressional legislation reforming the
comparative renewal process.
An application for renewal of the broadcast license for WFAA-TV is pending
before the FCC. The station's license is by statute continued pending action
thereon. The current license expiration dates for each of the Company's
television broadcast stations are set forth in the table under
"Business-Television Broadcasting."
FCC rules limit the total number of television broadcast stations that may
be under common ownership, operation and control, or in which a single person
or entity may hold office or have more than a specified interest or percentage
of voting power. FCC rules also place certain limits on common ownership,
operation and control of, or cognizable interests or voting power in, (a)
broadcast stations serving the same area, (b) broadcast stations and daily
newspapers serving the same area and (c) television broadcast stations and
cable systems serving the same area. The Company's ownership of The Dallas
Morning News and WFAA-TV, which are both located in the Dallas-Fort Worth area
and serve the same market area, predates the adoption of the FCC's rules
regarding cross-ownership, and the Company's ownership of The Dallas Morning
News and WFAA-TV has been "grandfathered" by the FCC.
These FCC rules affect the number, type and location of newspaper,
broadcast and cable television properties that the Company might acquire in the
future. For example, under current rules, the Company could not acquire any
daily newspaper, broadcast or cable television properties in a market in which
it now owns or has an interest deemed attributable under FCC rules in a
television station, except that the FCC's rules and policies provide that
waivers of their restrictions could be available to permit the Company's
acquisition of radio stations in the Dallas, Houston, Seattle and Sacramento
markets. Under current FCC regulations, and in light of the Company's current
investments, the Company could not acquire outright any more television
stations in other markets (but not including "satellite" television stations
located within a parent station's grade B service contour which rebroadcast all
or most of the parent station's programming) without disposing of another
television station. The FCC has instituted proceedings looking toward possible
relaxation of certain of these rules regulating television station ownership
and changes in the standards used to determine what type of interests are
considered to be attributable under it's rules.
The FCC has significantly reduced its past regulation of broadcast
stations, including elimination of formal ascertainment requirements and
guidelines concerning amounts of certain types of programming and commercial
matter that may be broadcast. There are, however, FCC rules and policies, and
rules and policies of other federal agencies, that regulate matters such as
network-affiliate relations, cable systems' carriage of syndicated and network
television programming on distant stations, political advertising practices,
obscene and indecent programming, equal employment opportunity, application
procedures and other areas affecting the business or operations of broadcast
stations. The FCC has modified its rules which restrict network participation
in program production and syndication. The U.S. Supreme Court has refused to
review a lower court decision that upheld FCC action invalidating most aspects
of the Fairness Doctrine, which had required broadcasters to present
contrasting views on controversial issues of public importance. The FCC may,
however, continue to regulate other aspects of fairness obligations in
connection with certain types of broadcasts. The FCC has adopted rules to
implement the Children's Television Act of 1990, which, among other provisions,
limits the permissible amount of commercial matter in children's television
programs and requires each television station to present educational and
informational children's programming.
The FCC has adopted various regulations to implement certain provisions of
the Cable Television Consumer Protection and Competition Act of 1992 ("1992
Cable Act") which, among other matters, includes provisions respecting the
carriage of television stations' signals by cable television systems and
requiring mid-license term review of television stations' equal employment
opportunity practices. Certain provisions of the 1992 Cable Act, including the
provisions respecting cable systems' carriage of local television stations, are
the subject of pending judicial review proceedings. The FCC has also modified
its rules to enable local telephone companies to provide a "video dialtone"
service that would be similar to the ordinary telephone dialtone and would
provide access for consumers to a wide variety of services, including video
programming. This decision is the subject of pending judicial review
proceedings.
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Proposals for additional or revised regulations and requirements are
pending before and are being considered by Congress and federal regulatory
agencies from time to time. The FCC is at present considering revision or
elimination of rules which now limit the permissible amount of primetime
network programming which television stations in the top 50 markets may carry;
rules relating to telephone company ownership of cable television systems; and
policies with respect to high definition television. The Company cannot
predict the effect of existing and proposed federal regulations and policies on
its broadcast business.
The foregoing does not purport to be a complete summary of all the
provisions of the Act or the regulations and policies of the FCC thereunder.
Also, various of the foregoing matters are now, or may become, the subject of
court litigation, and the Company cannot predict the outcome of any such
litigation or the impact on its broadcast business.
EMPLOYEES
As of December 31, 1994, the Company had 3,082 full-time employees. At
such date, there were 28 full-time and 1 part-time television broadcasting
employees of WFAA-TV represented by a union under a contract that expires on
September 11, 1996. Furthermore, WWL-TV had 90 full-time and 1 part-time
television broadcasting employees represented by unions under two separate
contracts that expire on September 24, 1996 and January 8, 1997. As of
February 1, 1995, KIRO-TV employed 228 employees, including 117 full-time and
13 part-time employees represented by three unions under five different
agreements. Two of these agreements expired on December 31, 1994 and are
currently under negotiation, two of the agreements expire on April 30, 1995 and
the fifth agreement expires on May 31, 1997.
ITEM 2. PROPERTIES
The Company's corporate operations, several departments of The Dallas
Morning News and certain broadcast administrative functions have offices that
are located in downtown Dallas in a portion of a 17-story office building owned
by the Company.
The Company owns and operates a newspaper printing facility in Plano, Texas
(the "North Plant"), in which eight high-speed offset presses are housed to
print The Dallas Morning News. The remainder of The Morning News' operations
are housed in a Company-owned five-story building in downtown Dallas. This
facility is equipped with computerized input and photocomposition facilities
and other equipment that is used in the production of both news and advertising
copy.
DFW Suburban Newspapers, Inc. and DFW Printing Company, Inc. operations are
located at a Company-owned plant in Arlington, Texas. This facility is pledged
as security for certain industrial revenue bonds issued in 1985.
The studios and offices of WFAA-TV occupy Company-owned facilities in
downtown Dallas. The Company also owns 50 percent of the outstanding capital
stock of Hill Tower, Inc. ("Hill Tower"), owner of a 1,500-foot transmitting
tower and antennas located in Cedar Hill, Texas. The remaining 50 percent of
Hill Tower is owned by the CBS television affiliate in Dallas, a subsidiary of
Argyle Television Holding, Inc.. This property is used by both WFAA and the
CBS television affiliate.
KHOU-TV operates from Company-owned facilities located in Houston. The
station's transmitter is located near DeWalt, Texas and includes a 2,000-foot
tower.
KIRO-TV operates from Company-owned facilities located in Seattle,
Washington. The station's transmitting facility, which includes a 535-foot
tower, is also located in Seattle.
KXTV operates from Company-owned facilities located in Sacramento,
California. The station's 2,000-foot tower and transmitter system are located
in Sacramento County, California. The tower and transmitter building are
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owned by a joint venture between the Company and a subsidiary of River City
Broadcasting, Inc., which owns and operates the ABC television affiliate in
Stockton. KXTV leases the transmitter site from the joint venture.
WVEC-TV operates from Company-owned facilities in Hampton and Norfolk,
Virginia. The transmitting facility includes a 980-foot tower and antenna in
Driver, Virginia. WVEC also leases additional building space adjacent to the
Company- owned facilities that is used by the marketing and business
departments.
WWL-TV operates from Company-owned facilities in New Orleans, Louisiana.
The transmitting facility includes a 960- foot tower in Gretna, Louisiana.
WWL-TV also leases space in New Orleans, which is used as an additional
broadcast studio.
KOTV operates from Company-owned facilities located in Tulsa, Oklahoma.
The station's transmitting system is located near Tulsa. The transmitter site
and 1,839-foot tower are owned by a joint venture between the Company and
Scripps Howard Inc., owner and operator of the NBC television affiliate in
Tulsa. The balance of KOTV's transmitting equipment is owned by the station.
All of the foregoing subsidiaries have additional leasehold interests that
are used in their respective operations.
The Company believes its properties are in good condition and well
maintained, and that such properties are adequate for present operations.
ITEM 3. LEGAL PROCEEDINGS
There are legal proceedings pending against the Company, including a number
of actions for alleged libel. In the opinion of management, liabilities, if
any, arising from these actions are either covered by insurance or would not
have a material adverse effect on the consolidated operations or financial
position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year covered by this Form 10-K.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's authorized common equity consists of 150,000,000 shares of
Common Stock, par value $1.67 per share. The Company currently has two series
of Common Stock outstanding, Series A and Series B. Shares of the two series
are identical in all respects except that Series B shares are entitled to ten
votes per share on all matters submitted to a vote of shareholders, while the
Series A shares are entitled to one vote per share; transferability of the
Series B shares is limited to family members and affiliated entities of the
holder; and Series B shares are convertible at any time on a one-for-one basis
into Series A shares. Shares of the Company's Series A Common Stock are traded
on the New York Stock Exchange (NYSE symbol: BLC). There is no established
public trading market for shares of Series B Common Stock. The Company has
also issued certain Preferred Stock Purchase Rights that accompany the
outstanding shares of the Company's Common Stock. See Note 9 of Notes to
Consolidated Financial Statements.
The following table lists the high and low trading prices and the closing
prices for Series A Common Stock as reported by the New York Stock Exchange for
the last two years.
<TABLE>
<CAPTION>
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DIVIDEND
HIGH LOW CLOSE PAID
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994
Fourth Quarter 57 1/4 47 1/2 56 1/2 .15
Third Quarter 52 1/4 43 3/8 50 3/4 .15
Second Quarter 50 3/8 43 1/8 43 1/8 .15
First Quarter 55 47 3/4 48 .15
1993
Fourth Quarter 53 44 53 .14
Third Quarter 49 5/8 45 1/4 46 3/8 .14
Second Quarter 49 39 3/4 46 3/4 .14
First Quarter 43 3/8 38 3/4 40 1/4 .14
- -------------------------------------------------------------------------------------------
</TABLE>
On February 28, 1995, the closing price for the Company's Series A Common
Stock, as reported on the New York Stock Exchange, was $56 3/8 and the
approximate number of shareholders of record of the Series A Common Stock at
the close of business on such date was 723. On February 28, 1995, there were
approximately 559 holders of record of shares of Series B Common Stock.
On February 22, 1995, the Company announced a two-for-one stock split in
the form of a stock dividend whereby one additional share of Series A and
Series B Common Stock will be issued for each share of Series A and Series B
Common Stock outstanding on May 19, 1995, the record date for the split. The
stock split will be effected on June 9, 1995. On February 22, 1995, the Board
of Directors also declared a quarterly dividend increase from $.075 to $.08 per
share to be paid on a post-split basis on June 9, 1995 to shareholders of
record on May 19, 1995. The effect of the stock split will be to double the
number of shares outstanding and reduce earnings per share and other per share
amounts by one- half. Total shareholders' equity and the proportionate
ownership in the Company of individual shareholders will not be affected by the
stock split. All information in this report is set forth on a pre-split basis.
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ITEM 6. SELECTED FINANCIAL DATA
The following table presents selected financial data of the Company for
each of the five years in the period ending December 31, 1994. It is intended
to highlight significant trends in Belo's financial condition and results of
operations. For a more complete understanding of this selected financial data,
please see Management's Discussion and Analysis of Financial Condition and
Results of Operations and the Consolidated Financial Statements, including the
Notes thereto.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
In thousands, except per share amounts 1994 1993 1992 1991 1990
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Newspaper publishing revenues $ 369,366 $ 335,642 $ 314,701 $ 249,737 $ 246,493
Broadcasting revenues (A) 258,759 209,193 201,241 181,848 192,567
Net operating revenues $ 628,125 $ 544,835 $ 515,942 $ 431,585 $ 439,060
-------------------------------------------------------------
Net earnings (B) $ 68,867 $ 51,077 $ 37,170 $ 12,392 $ 29,591
-------------------------------------------------------------
Per share amounts:
Net earnings per common and
common equivalent share $ 3.41 $ 2.53 $ 1.90 $ .65 $ 1.55
Cash dividends declared $ .60 $ .56 $ .54 $ .52 $ .48
- --------------------------------------------------------------------------------------------------------------
Total assets (C) $ 913,791 $ 796,156 $ 758,527 $ 746,384 $ 694,255
Long-term debt (D) $ 330,400 $ 277,400 $ 302,151 $ 337,100 $ 280,054
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Broadcasting revenues for 1994 include seven months' revenue of WWL-TV,
which was purchased by Belo on June 1, 1994.
(B) Net earnings for 1993 include an increase of $6,599,000 (33 cents per
share) representing the cumulative effect of adopting Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," effective January
1, 1993.
(C) Belo purchased substantially all of the operating assets of the Dallas
Times Herald newspaper for $55,673,000 in December 1991 and in June 1994, Belo
purchased substantially all of the operating assets of television station
WWL-TV for approximately $110,000,000.
(D) The purchase of WWL-TV in June 1994 was financed with proceeds from
Belo's revolving credit agreement.
8
<PAGE> 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
Cash provided by operations is Belo's primary source of liquidity. During
1994, net cash provided by operations was $138,785,000, compared to $84,818,000
in 1993, a 63.6 percent increase. The increase resulted primarily from
increased earnings from operations and changes in the components of working
capital, primarily accounts receivable, accounts payable, accrued compensation
and benefits and income taxes payable. The increase in accounts receivable is
the result of higher revenues. Accounts payable were higher due primarily to
larger payables for capital expenditures and timing of payments for newsprint.
Accrued compensation and benefits were higher due to more employees and higher
performance bonus accruals at the end of 1994. Higher income taxes payable are
attributable to the earnings increase and timing of payments. Cash provided by
operations was sufficient to fund capital expenditures, common stock dividends
and the repurchase of 644,000 shares of treasury stock for $32,073,000. These
shares were subsequently retired.
On June 1, 1994, Belo acquired the assets of television station WWL-TV, the
CBS affiliate in New Orleans, Louisiana, from Rampart Operating Partnership for
approximately $110,000,000 in cash. The acquisition has been accounted for as
a purchase. See Other Matters on page 13 for a discussion of additional
borrowings of revolving debt to finance an acquisition subsequent to December
31, 1994.
At December 31, 1994, Belo had access to a $600,000,000 variable rate
revolving credit agreement, on which borrowings at that time were
$305,000,000. The agreement expires on August 5, 1999 with an extension to
August 5, 2000 at the request of the Company and consent of the participating
banks. Revolving debt increased $55,000,000 from December 31, 1993 due to the
net effect of the $110,000,000 in borrowings in June 1994 to finance the WWL-TV
acquisition and debt repayments. From time to time, short-term unsecured notes
are also used as a source of financing. Based on the Company's intent and
ability to renew short-term notes through the revolving credit facility,
short-term borrowings are classified as long-term. At December 31, 1994, there
was $19,000,000 in short-term notes outstanding.
Because substantially all of Belo's outstanding debt is currently financed
under the revolving credit agreement, the Company is subject to interest rate
volatility. While average revolving debt rates for 1994 were 4.8 percent, the
weighted average revolving debt rate at December 31, 1994 was 6.3 percent. If
this condition continues in 1995, interest expense will be higher than in 1994.
During 1994, Belo had four interest rate cap agreements that were designed to
limit the interest rate on $75,000,000 of its revolving debt to 6 percent.
During the first quarter of 1995, Belo sold these financial instruments for
$1,395,000.
The Company has in place a stock repurchase program authorizing the
purchase of up to $2,500,000 of Company stock annually. In addition, the
Company has the authority to purchase approximately 765,000 shares of Series A
Common Stock from time to time under a previous authorization from the Board of
Directors.
Although the Company believes its current financial condition and credit
relationships will enable it to adequately fund its current obligations and
near-term growth, Belo's Board of Directors has authorized the Company to file
a shelf registration statement that would allow it, from time to time, to offer
up to $200,000,000 of debt securities. The Company's current intentions would
be to use the proceeds from any such offering to refinance existing
indebtedness, to repurchase common stock under the Company's stock repurchase
program and for general corporate purposes, including acquisitions.
On December 31, 1994, Belo's ratio of long-term debt to total
capitalization was 46.3 percent, compared to 44.5 percent at the end of 1993.
The change during 1994 is due to additional borrowings to finance the
acquisition of WWL-TV and the effect on shareholders' equity of the repurchase
and subsequent retirement of treasury shares.
Capital expenditures in 1994 were $47,371,000. Capital projects for the
year included additional production equipment for The Dallas Morning News and
significant building projects at two of Belo's broadcast stations. Belo
expects to finance future capital expenditures using net cash generated from
operations and, when necessary,
9
<PAGE> 12
borrowings of revolving debt. Required future payments for capital
expenditures in 1995 are $13,677,000 and relate primarily to additional
newspaper publishing equipment and the renovation of certain newspaper
publishing operating facilities. Total capital expenditures in 1995 are
expected to be somewhat less than $40,000,000.
Belo paid dividends of $11,984,000 or 60 cents per share on Series A and
Series B Common Stock outstanding during 1994 compared to $11,128,000 or 56
cents per share in 1993.
CONSOLIDATED RESULTS OF OPERATIONS
Belo recorded 1994 net earnings of $68,867,000 or $3.41 per share, compared
to $51,077,000 ($2.53 per share) in 1993 and $37,170,000 ($1.90 per share) in
1992. Results for 1994 include a one-time charge to net earnings of $1,567,000
(8 cents per share) from the donation of shares of Stauffer Communications,
Inc. stock to The Dallas Morning News--WFAA Foundation. The transaction
included a $9,271,000 gain on the write-up of the shares to fair market value,
less a charge of $16,675,000 for the subsequent donation of those shares to the
Foundation, and the related income tax benefit of $5,837,000. Upon
consummation of an outstanding tender offer for the remaining Stauffer shares,
Belo expects this transaction to increase earnings per share by approximately 8
cents in 1995, assuming the transaction occurs before June 9, 1995, the
effective date of the stock split. See Market for Registrant's Common Equity
and Related Stockholder Matters on page 7. Belo also reversed $631,000 of
music license fee accruals (2 cents per share) during 1994 in response to a
final agreement between the All Industry Television Music License Committee and
Broadcast Music, Inc., which established final television music performance
rights fee levels through 1994. Excluding these nonrecurring items, net
earnings for 1994 were $3.47 per share. These earnings include seven months of
WWL-TV results, which contributed approximately 5 cents per share to current
year earnings after consideration of incremental interest and amortization.
Several one-time items are included in 1993 net earnings, including a
$6,599,000 increase (33 cents per share) representing the cumulative effect of
adopting Statement of Financial Accounting Standards ("SFAS") No. 109 in
January 1993. This increase was partially offset in the third quarter, when
Belo recorded a $2,249,000 (11 cents per share) adjustment to deferred taxes
following an increase in the federal income tax rate from 34 percent to 35
percent. Also included in 1993 earnings was a $5,822,000 (19 cents per share)
restructuring charge related primarily to the write-off of goodwill and a
reduction in the carrying value of production assets associated with the
newspaper operations of Dallas-Fort Worth Suburban Newspapers, Inc., a
wholly-owned subsidiary of Belo. In addition, Belo reversed certain music
license fee accruals totaling $3,349,000 (10 cents per share) in 1993 in
response to an agreement between the All Industry Television Music License
Committee and the American Society of Composers, Authors and Publishers,
defining the formula used to compute licensing fees for the use of certain
music in television broadcasts from 1984 to 1994. Net earnings for 1993,
excluding these special one-time items, were $2.40 per share.
In 1992, net earnings included a $4,019,000 (16 cents per share) increase
from a property damage settlement with the United States Navy. Excluding this
one-time gain, comparable 1992 earnings were $1.74 per share.
Interest expense in 1994 was $16,112,000 compared to $15,015,000 in 1993
and $24,159,000 in 1992. The decrease in interest expense from 1992 to 1993
was primarily due to lower interest rates. During 1992, Belo had $200,000,000
of fixed-rate notes outstanding, with an average rate of 9 percent while
revolving rates were approximately 4 percent. In January 1993, $100,000,000 of
the fixed-rate debt was converted to revolving debt, and in December of 1993,
the remaining $100,000,000 was replaced with revolving debt. These transactions
lowered the average rate on total debt to approximately 5.4 percent for 1993.
The 1994 average rate on revolving debt was 4.8 percent. However, rate savings
were offset by higher average borrowings due to the acquisition of WWL-TV in
June 1994. Capitalization of interest also affected interest expense in each
period, mostly in 1993 during The Dallas Morning News' North Plant expansion
project. Capitalized interest for 1994, 1993 and 1992 was $138,000, $1,961,000
and $395,000, respectively.
Other income and expense for 1994 includes the charge associated with the
donation of Stauffer Communications, Inc. stock. Other income and expense in
1993 included a gain of $986,000 on the sale of two
10
<PAGE> 13
parcels of non-operating real estate and in 1992, included the $4,019,000 gain
on the property damage settlement with the United States Navy.
The effective tax rate for 1994 of 36.2 percent includes the tax benefit
associated with the Stauffer Communications, Inc. stock donation. The 1993
effective tax rate of 41.1 percent was affected by an increase in the federal
income tax rate, which resulted in a $2,249,000 increase in deferred tax
expense to adjust deferred taxes to the 35 percent rate. In addition, the 1993
rate was favorably impacted by the reversal of certain tax accruals as a result
of new tax legislation regarding amortization of intangibles. Excluding these
items, the effective tax rates for 1994 and 1993 were 38.9 percent and 39.5
percent, while the effective rate in 1992 was 39.6 percent.
NEWSPAPER PUBLISHING
In 1994, newspaper publishing revenues represented 58.8 percent of total
revenues, compared to 61.6 percent in 1993 and 61 percent in 1992. Although
publishing revenues increased 10 percent in 1994 from 1993, they have decreased
as a percent of total revenues due to a disproportionate increase in broadcast
revenues during 1994, partially due to the WWL-TV acquisition. The composition
of publishing revenues has remained fairly consistent year to year, with
advertising revenues accounting for 86 percent of revenues in 1994 and 87
percent in 1993 and 1992. Circulation revenues represent 10 percent of 1994
publishing revenue and 11 percent in 1993 and 1992. Other publishing revenues,
primarily commercial printing, contributed the remainder.
Newspaper advertising volume for The Dallas Morning News, Belo's principal
newspaper, is measured in column inches. Volume for the last three years was
as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
In thousands 1994 1993 1992
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Full-run ROP inches:
Classified 2,188.9 2,068.8 1,997.6
Retail 1,524.0 1,661.5 1,640.6
General 270.8 262.1 279.9
- -------------------------------------------------------------------------------------
Total 3,983.7 3,992.4 3,918.1
- -------------------------------------------------------------------------------------
</TABLE>
Revenues from newspaper publishing for 1994 were $369,366,000, an increase
of $33,724,000 or 10 percent over 1993 revenues. Classified and general
advertising revenues contributed the majority of the increase in year-to-year
revenue gains. As noted above, linage in these two categories increased 5.8
percent and 3.3 percent, respectively, which combined with significant rate
increases, resulted in an increase in classified and general advertising
revenues of $27,580,000. Strong demand for employment advertising and a good
automotive market drove the improvement in classified linage. The
telecommunications industry was a significant component of the general
advertising year-to-year increase. Retail ROP revenues for 1994 were down
slightly when compared to 1993 due to volume declines of 8.3 percent, partially
offset by an increase in the average rate of 8.7 percent. The retail volume
declines were primarily attributable to a shift by certain department stores to
preprints, which increased 15.6 percent over 1993 preprint revenue.
Circulation revenues in 1994 were up 2.1 percent from 1993 despite a slight
decrease in the Sunday average circulation, due to price increases in April and
July.
Total publishing revenues in 1993 were $335,642,000, up 6.7 percent from
revenues of $314,701,000 earned in 1992. Classified advertising revenues were
nearly 11 percent better than 1992 due to both linage and rate increases. The
increase in linage was primarily attributable to automotive and employment
advertising. Retail and general advertising revenues also improved in 1993
relative to 1992, primarily due to increased rates. Circulation revenues
increased 5.9 percent in 1993, mostly because of a January 1, 1993 increase in
the price of a Sunday single-copy and the weekend subscription rate.
The Company believes that its advertising rates continue to compare
favorably with competing media. Future demand for advertising in the
Dallas-Fort Worth area will continue to depend on general economic conditions
of the Southwest region and the United States as a whole. Thus, the ability of
the Company to generate continued growth in circulation and advertising
revenues will likely depend on its ability to compete successfully in the
highly
11
<PAGE> 14
competitive Dallas-Fort Worth media market, where numerous news and advertising
alternatives are available. In addition, various market and demographic
factors, such as circulation and readership trends, retail sales activity,
inflation and population growth will affect future revenues.
Newspaper publishing earnings from operations in 1994 were $66,568,000
compared to $44,293,000 in 1993. Operating results in 1993 included a
$5,822,000 restructuring charge related to Belo's suburban newspaper
operations. Excluding this one-time charge, comparable 1993 operating earnings
were $50,115,000. The 32.8 percent increase in 1994 from adjusted 1993
operating earnings is due to the 10 percent increase in 1994 revenues,
partially offset by a 6 percent increase in operating expenses, resulting in an
operating margin of 18 percent compared to an adjusted margin of 14.9 percent
in 1993. Salaries, wages and employee benefits increased in 1994 due to a
larger employment base, merit increases, higher performance-based bonuses and
an increase in related benefit costs. Other production, distribution and
operating costs were also higher due to increased distribution and outside
solicitation expenses associated with circulation efforts and higher
advertising and promotion expense. Rack conversion costs to accommodate single
copy price increases also contributed to higher 1994 expense. Depreciation
expense was up as well, due to a full year's depreciation of The Dallas Morning
News' North Plant expansion project that was completed in late 1993. Newsprint
expense, which currently represents approximately 29 percent of total newspaper
publishing operating costs, was only slightly higher in 1994 than in 1993. The
increase was primarily due to slightly higher consumption offset by lower
average prices. However, recent and proposed newsprint price increases could
cause newsprint expense at The Dallas Morning News to increase by as much as 40
percent over 1994. The Company plans to offset this increase by limiting 1995
spending increases in all other operating expense categories, maintaining 1994
employee-count levels and raising advertising rates.
Newspaper publishing earnings from operations in 1993 (excluding the
$5,822,000 restructuring charge) increased 16.6 percent from 1992. Although
total publishing revenues increased 6.7 percent, operating expenses (excluding
the charge) increased only 5.1 percent, resulting in an operating margin of
14.9 percent versus 13.7 percent in 1992. Salaries, wages and employee
benefits rose primarily as a result of merit increases and more full-time
employees. Newsprint expense was up due to both increased consumption
associated with the linage increase and a higher average cost per ton.
Contributing to the increase in linage was the publishing of special sports
sections in connection with the Dallas Cowboys' appearance in the Super Bowl.
The higher consumption accounted for approximately 60 percent of the overall
increase in newsprint expense. In addition, expansion of delivery routes
resulted in increased distribution expenses. Depreciation expense was higher
in 1993 than in 1992 following the completion of The Dallas Morning News' North
Plant expansion project. Partially offsetting these increases were savings in
outside services, bad debt expense and property taxes.
BROADCASTING
Belo's television broadcast subsidiaries contributed 41.2 percent of total
1994 revenues compared to 38.4 percent in 1993 and 39 percent in 1992.
Broadcast revenues for 1994, which include seven months' revenue for WWL-TV,
were $258,759,000. These results represent an increase of 23.7 percent over
1993 revenues of $209,193,000. In 1993, revenues improved 4 percent from the
$201,241,000 of the previous year.
Each station contributed to the increase in 1994 revenues with improvement
in every revenue category. The greatest improvements were in local and
political advertising. Local advertising revenues, which improved 25 percent
overall, were up most significantly in Dallas, Houston and Tulsa while the New
Orleans station contributed more than 10 percent of total 1994 local revenues.
Advertising for automobiles was a significant factor in each of Belo's local
market gains. National revenues benefited from the broadcast of the 1994 Winter
Olympics on Belo's CBS-affiliated stations, but were offset somewhat by losses
associated with the baseball strike and the move of NFL Football from CBS to
the Fox network. Political revenues were up considerably in 1994 due to active
gubernatorial and senate races in several states. The recent and dramatic
changes in the structure of the network television industry in 1994 led to the
renegotiation of several of Belo's network affiliation agreements, resulting in
a significant increase in 1994 network compensation, beginning in the third
quarter. Belo anticipates 1995 network compensation will exceed 1994 network
compensation levels as well. This increase, however, is expected to be offset
by the anticipated decline in political advertising.
12
<PAGE> 15
Local and national advertising revenues in 1993 increased 6.2 percent and
6.6 percent, respectively, compared to 1992 revenues. Stations in Houston,
Virginia and Tulsa combined for an overall revenue gain of $9,266,000 while
Dallas station revenues were relatively flat and the California station
experienced a slight revenue decline. In 1993, all but one of Belo's broadcast
stations experienced an increase in local advertising revenues. National
advertising revenues increased at all but another of Belo's stations.
Contributing factors to the 1993 improvements include strong ratings
performances and healthier local economies. The industry categories
contributing the most to advertising revenues were restaurants, automobiles,
department stores and health care. Partially offsetting these revenue gains,
however, were a significant decrease in political advertising compared to 1992,
a weaker California economy and other competitive forces.
Broadcast earnings from operations were $80,445,000 in 1994 compared to
$63,240,000 in 1993. Included in 1994 earnings are WWL-TV operations since
June 1, 1994. Also included in broadcast earnings in 1994 and 1993 are
increases to earnings of $631,000 and $3,349,000, respectively, for the
reversal of certain music license fee accruals from previous years. Excluding
the music license fee adjustments, operating earnings for 1994 and 1993 were
$79,814,000 and $59,891,000, respectively. Revenue improvements were partially
offset by higher operating costs. Salaries, wages and employee benefits were
higher in 1994 due to increases in sales commissions, more employees, merit
increases, higher profit performance bonuses and an increase in benefit costs.
Other production, distribution and operating costs were higher in 1994 than in
1993 (excluding the music license fee adjustments) due primarily to an increase
in programming expenses from increased contract rates for several syndicated
program packages and costs to produce a new local morning show and weekly news
show in Dallas. Advertising and promotion costs, as well as repair and
maintenance expenses, were also higher in 1994. These increases were slightly
offset by lower bad debt and outside services expense. Depreciation and
amortization expense increased as a result of the purchase of WWL-TV assets.
Broadcast earnings from operations for 1993, excluding the music license
fee adjustment, were $59,891,000 compared to $56,461,000 in 1992, an increase
of 6.1 percent. Although revenues increased 4 percent, operating costs
increased only 3.3 percent, excluding the music license fee adjustment.
Contributing to the increase in 1993 expenses were higher salaries, wages and
employee benefits, due to merit increases, higher benefit costs and an increase
in the number of broadcast employees. Communications and travel expenses were
higher in 1993 than in 1992 due to coverage of significant news stories,
including the Dallas Cowboys' appearance in the 1993 Super Bowl, the
Presidential Inauguration, and the Branch Davidian story in Waco, Texas. These
increases were partially offset by savings in 1993 programming expense.
In recent years, the television broadcasting industry has been affected by
increased competition for viewing audiences. Belo continues to compete
aggressively for advertisers and viewing audiences in markets that offer many
alternative media outlets. Future earnings growth will likely depend on the
ability to offer competitive audience delivery to advertisers and on general
economic conditions.
OTHER MATTERS
On February 1, 1995, Belo completed the acquisition of certain assets of
television station KIRO-TV in Seattle, Washington for a purchase price of
$162,500,000, excluding final adjustments. Belo borrowed funds from its
revolving credit agreement to complete the transaction, which will be accounted
for as a purchase. Although a complete purchase price allocation will not be
finalized until later in 1995, it is estimated that the majority of the
purchase price will be allocated to property, plant and equipment and
intangible assets. The Company intends to operate the television station as a
United Paramount affiliate, with an emphasis on local news programming.
Management expects the acquisition to be dilutive in 1995.
The net effect of inflation on Belo's revenues and net earnings from
operations has not been material in the last few years because of a relatively
low rate of inflation during this period, combined with efforts to lessen the
effect of rising costs through improved productivity, cost control and, when
warranted, increased prices.
13
<PAGE> 16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements, together with the report of
independent auditors, are included on pages 23 through 40 of this document.
Financial statement schedules have been omitted because the required
information is contained in the Consolidated Financial Statements or related
notes, or because such information is not applicable.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the headings "Outstanding Capital Stock and
Stock Ownership of Directors, Certain Executive Officers and Principal
Shareholders," "Executive Officers of the Company" and "Election of Directors"
contained in the definitive Proxy Statement for the Company's Annual Meeting of
Shareholders to be held on May 3, 1995, is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the heading "Executive Compensation and
Other Matters" and "Election of Directors" contained in the definitive Proxy
Statement for the Company's Annual Meeting of Shareholders to be held on May 3,
1995, is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the heading "Outstanding Capital Stock and
Stock Ownership of Directors, Certain Executive Officers and Principal
Shareholders" contained in the definitive Proxy Statement for the Company's
Annual Meeting of Shareholders to be held on May 3, 1995, is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the headings "Executive Compensation and
Other Matters" and "Election of Directors" contained in the definitive Proxy
Statement for the Company's Annual Meeting of Shareholders to be held on May 3,
1995, is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) The financial statements listed in the Index to Financial
Statements included in the Table of Contents are filed as part
of this report.
(2) The financial schedules required by Regulation S-X are either
not applicable or are included in the information provided in
the Notes to Consolidated Financial Statements, which are
filed as part of this report.
(3) Exhibits
The exhibits to this report are hereby incorporated by
reference, as specified:
14
<PAGE> 17
EXHIBIT
NUMBER DESCRIPTION
3.1 Certificate of Incorporation of the Company (incorporated by reference
to Exhibit 3.1 to the Company's Annual Report on Form 10-K dated March
19, 1992 (the "1991 Form 10-K"))
3.2 Certificate of Correction to Certificate of Incorporation dated May
13, 1987 (incorporated by reference to Exhibit 3.2 to the Company's
Annual Report on Form 10-K dated March 18, 1993 (the "1992 Form
10-K"))
3.3 Certificate of Designation of Series A Junior Participating Preferred
Stock of the Company dated April 16, 1987 (incorporated by reference
to Exhibit 3.3 to the 1991 Form 10-K)
3.4 Certificate of Amendment of Certificate of Incorporation of the
Company dated May 4, 1988 (incorporated by reference to Exhibit 3.4 to
the 1992 Form 10-K)
3.5 Amended Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company dated May 4, 1988 (incorporated by
reference to Exhibit 3.5 to the 1992 Form 10-K)
3.6 Certificate of Designation of Series B Common Stock of the Company
dated May 4, 1988 (incorporated by reference to Exhibit 3.6 to the
1992 Form 10-K)
3.7 Bylaws of the Company, effective February 22, 1995
4.1 Certain rights of the holders of the Company's Common Stock are set
forth in Exhibits 3.1-3.6 above
4.2 Specimen Form of Certificate representing shares of the Company's
Series A Common Stock (incorporated by reference to Exhibit 4.2 to the
1992 Form 10-K)
4.3 Specimen Form of Certificate representing shares of the Company's
Series B Common Stock (incorporated by reference to Exhibit 4.3 to the
Company's Annual Report on Form 10-K dated March 20, 1989)
4.4 Form of Rights Agreement, dated March 10, 1986 between the Company and
RepublicBank Dallas, National Association as Rights Agent, which
includes as Exhibit B thereto the Form of Right Certificate
(incorporated by reference to Exhibit 4.8 to the 1991 Form 10-K)
4.5 Supplement No. 1 to Rights Agreement (incorporated by reference to
Exhibit 4.9 to the 1991 Form 10-K)
4.6 Supplement No. 2 to Rights Agreement (incorporated by reference to
Exhibit 4.9 to the 1992 Form 10-K)
4.7 Supplement No. 3 to Rights Agreement (incorporated by reference to
Exhibit 4.10 to the 1992 Form 10-K)
4.8 Supplement No. 4 to Rights Agreement dated December 12, 1988
substituting Manufacturers Hanover Trust Company as Rights Agent
(incorporated by reference to Exhibit 4.8 to the Company's Annual
Report on Form 10-K dated March 18, 1994 (the "1993 Form 10-K"))
4.9 Supplement No. 5 to Rights Agreement (incorporated by reference to
Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1993)
4.10 Supplement No. 6 to Rights Agreement
15
<PAGE> 18
EXHIBIT
NUMBER DESCRIPTION
10.1 Contracts relating to television broadcasting:
(1) Contract for Affiliation between KOTV in Tulsa, Oklahoma and
CBS, with Network Affiliation Consent (incorporated by reference
to Exhibit 10.1(1) to the 1991 Form 10-K)
(2) Contract for Affiliation between KHOU-TV in Houston, Texas and
CBS, with Network Affiliation Consent (incorporated by reference
to Exhibit 10.1(2) to the 1991 Form 10-K)
(3) Letter Amendment to Contract for Affiliation between KHOU-TV in
Houston, Texas and CBS (incorporated by reference to Exhibit
10.1(3) to the 1993 Form 10-K)
(4) Contract for Affiliation between KXTV in Sacramento, California
and CBS (incorporated by reference to Exhibit 10.3 to the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1993 (the "First Quarter 1993 Form 10-Q"))
(5) Contract for Affiliation between WFAA-TV in Dallas, Texas and
ABC, with Network Affiliation Consent (incorporated by reference
to Exhibit 10.1(4) to the Company's Annual Report on Form 10-K
dated March 28, 1991 (the "1990 Form 10-K"))
(6) Rider One to Contract for Affiliation between WFAA-TV in Dallas,
Texas and ABC (incorporated by reference to Exhibit 10.1 to the
First Quarter 1993 Form 10-Q)
(7) Contract for Affiliation between WVEC-TV in Hampton-Norfolk,
Virginia and ABC, with Network Affiliation Consent
(incorporated by reference to Exhibit 10.1(5) to the 1991 Form
10-K)
(8) Contract for Affiliation between WWL-TV in New Orleans,
Louisiana, and CBS
10.2 Contracts relating to newspaper publication:
(1) Founding Agreement between the Company and Newsprint South, Inc.
for newsprint supply (incorporated by reference to Exhibit
10.2(2) to the 1990 Form 10-K)
(2) Amendment to the Founding Agreement between the Company and
Newsprint South, Inc. for newsprint supply (incorporated by
reference to Exhibit 10.2(3) to the 1990 Form 10-K)
10.3 (1) Management Security Plan (incorporated by reference to Exhibit
10.4(1) to the 1991 Form 10-K)
(2) Stock Option Plan (incorporated by reference to Exhibit 10.4(2)
to the 1991 Form 10-K)
(3) Amendment to Stock Option Plan by the Compensation Committee of
the Board of Directors (incorporated by reference to Exhibit
10.4(3) to the 1991 Form 10-K)
(4) Amendments to Stock Option Plan (incorporated by reference to
Exhibit 10.4(4) to the 1991 Form 10-K)
(5) Amendment to Stock Option Plan dated December 19, 1986
(incorporated by reference to Exhibit 10.4(5) to the 1991 Form
10-K)
(6) Amendment to Stock Option Plan dated February 22, 1989
(incorporated by reference to Exhibit 10.3(6) to the 1993 Form
10-K)
16
<PAGE> 19
EXHIBIT
NUMBER DESCRIPTION
(7) 1986 Long-Term Incentive Plan (incorporated by reference to
Exhibit 10.4(7) to the 1991 Form 10-K)
(8) Amendment No. 1 to 1986 Long-Term Incentive Plan (incorporated
by reference to Exhibit 10.4(8) to the 1991 Form 10-K)
(9) Amendment No. 2 to 1986 Long-Term Incentive Plan (incorporated
by reference to Exhibit 10.3(9) to the 1992 Form 10-K)
(10) Amendment No. 3 to 1986 Long-Term Incentive Plan (incorporated
by reference to Exhibit 10.3(10) to the 1993 Form 10-K)
(11) Amendment No. 4 to 1986 Long-Term Incentive Plan (incorporated
by reference to Exhibit 10.3(11) to the 1993 Form 10-K)
(12) Amendment No. 5 to 1986 Long-Term Incentive Plan (incorporated
by reference to Exhibit 10.3(12) to the 1993 Form 10-K)
(13) Amendment No. 6 to 1986 Long-Term Incentive Plan (incorporated
by reference to Exhibit 10.3(13) to the 1992 Form 10-K)
(14) The A. H. Belo Corporation Employee Savings and Investment Plan
(15) First Amendment to the A. H. Belo Corporation Employee Savings
and Investment Plan (incorporated by reference to Exhibit
10.3(15) to the 1992 Form 10-K)
(16) Second Amendment to the A. H. Belo Corporation Employee Savings
and Investment Plan (incorporated by reference to Exhibit
10.3(16) to the 1992 Form 10-K)
(17) Third Amendment to the A. H. Belo Corporation Employee Savings
and Investment Plan (incorporated by reference to Exhibit 10.2
to the First Quarter 1993 Form 10-Q)
(18) Fourth Amendment to the A. H. Belo Corporation Employee Savings
and Investment Plan (incorporated by reference to Exhibit 4.14
to Post-Effective Amendment No. 1 to Form S-8 dated January 18,
1994 (Registration No. 33-30994))
(19) Fifth Amendment to the A. H. Belo Corporation Employee Savings
and Investment Plan (incorporated by reference to Exhibit
10.3(19) to the 1993 Form 10-K)
(20) Sixth Amendment to the A. H. Belo Corporation Employee Savings
and Investment Plan (incorporated by reference to Exhibit
10.3(1) to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1994 ("Second Quarter 1994 Form
10-Q"))
(21) Seventh Amendment to the A. H. Belo Corporation Employee Savings
and Investment Plan
(22) Eighth Amendment to the A. H. Belo Corporation Employee Savings
and Investment Plan
(23) The G. B. Dealey Retirement Pension Plan (as amended and
restated effective January 1, 1988) (incorporated by reference
to Exhibit 10.3(20) to the 1993 Form 10-K)
(24) First Amendment to the G. B. Dealey Retirement Pension Plan
(incorporated by reference to Exhibit 10.3(21) to the 1993 Form
10-K)
17
<PAGE> 20
EXHIBIT
NUMBER DESCRIPTION
(25) Second Amendment to the G. B. Dealey Retirement Pension Plan
(incorporated by reference to Exhibit 10.3(22) to the 1993 Form
10-K)
(26) Third Amendment to the G. B. Dealey Retirement Pension Plan
(incorporated by reference to Exhibit 10.3(23) to the 1993 Form
10-K)
(27) Fourth Amendment to the G. B. Dealey Retirement Pension Plan
(incorporated by reference to Exhibit 10.3(24) to the 1993 Form
10-K)
(28) Fifth Amendment to the G. B. Dealey Retirement Pension Plan
(incorporated by reference to Exhibit 10.3(25) to the 1993 Form
10-K)
(29) Sixth Amendment to the G. B. Dealey Retirement Pension Plan
(incorporated by reference to Exhibit 10.3(2) to the Second
Quarter 1994 Form 10-Q)
(30) Seventh Amendment to the G. B. Dealey Retirement Pension Plan
(31) Eighth Amendment to the G. B. Dealey Retirement Pension Plan
(32) Master Trust Agreement, effective as of July 1, 1992, between A.
H. Belo Corporation and Mellon Bank, N. A. (incorporated by
reference to Exhibit 10.3(26) to the 1993 Form 10-K)
(33) A. H. Belo Corporation Supplemental Executive Retirement Plan
(incorporated by reference to Exhibit 10.3(27) to the 1993 Form
10-K)
(34) Trust Agreement dated February 28, 1994, between the Company and
Mellon Bank, N. A. (incorporated by reference to Exhibit
10.3(28) to the 1993 Form 10-K)
(35) Summary of A. H. Belo Corporation Executive Compensation Program
(incorporated by reference to Exhibit 10.3(18) to the 1992 Form
10-K)
(36) Employment and Consultation Agreement between A. H. Belo
Corporation and James P. Sheehan (incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1993)
10.4 (1) Loan Agreement dated October 1, 1985, between City of Arlington
Industrial Development Corporation and Dallas-Fort Worth
Suburban Newspapers, Inc. (incorporated by reference to Exhibit
10.5(2) to the 1991 Form 10-K)
(2) Letter of Credit and Reimbursement Agreement dated as of June 2,
1987, between Dallas-Fort Worth Suburban Newspapers, Inc. and
The Sanwa Bank, Limited, Dallas Agency covering $6,400,000 City
of Arlington Industrial Development Corporation Industrial
Development Revenue Bonds (incorporated by reference to Exhibit
10.5(3) to the 1991 Form 10-K)
(3) Credit Agreement dated as of August 5, 1994 among the Company
and Citicorp Securities, Inc., as Syndication Agent, The First
National Bank of Chicago, as Administrative Agent, Texas
Commerce Bank National Association, as Documentation Agent and
The Banks Listed Therein, as Lenders (incorporated by reference
to Exhibit 10.4(1) to the Second Quarter 1994 Form 10-Q)
(4) Amendment and Waiver Agreement dated as of August 5, 1994, by
and between the Company and The Sanwa Bank, Limited, Dallas
Agency
18
<PAGE> 21
21 Subsidiaries of the Company
23 Consent of Ernst & Young LLP
27 Financial Data Schedule (filed electronically with the
Securities and Exchange Commission)
Executive Compensation Plans and Arrangements
Management Security Plan--1991 Form 10-K, Exhibit 10.4(1)
Stock Option Plan--1991 Form 10-K, Exhibit 10.4(2)
Amendment to Stock Option Plan by the Compensation Committee of the
Board of Directors--1991 Form 10-K, Exhibit 10.4(3)
Amendments to Stock Option Plan--1991 Form 10-K, Exhibit 10.4(4)
Amendment to Stock Option Plan dated December 19, 1986--1991 Form
10-K, Exhibit 10.4(5)
Amendment to Stock Option Plan dated February 22, 1989--1993 Form
10-K, Exhibit 10.3(6)
1986 Long-Term Incentive Plan--1991 Form 10-K, Exhibit 10.4(7)
Amendment No. 1 to 1986 Long-Term Incentive Plan --1991 Form 10-K,
Exhibit 10.4(8)
Amendment No. 2 to 1986 Long-Term Incentive Plan --1992 Form 10-K,
Exhibit 10.3(9)
Amendment No. 3 to 1986 Long-Term Incentive Plan--1993 Form 10-K,
Exhibit 10.3(10)
Amendment No. 4 to 1986 Long-Term Incentive Plan--1993 Form 10-K,
Exhibit 10.3(11)
Amendment No. 5 to 1986 Long-Term Incentive Plan--1993 Form 10-K,
Exhibit 10.3(12)
Amendment No. 6 to 1986 Long-Term Incentive Plan--1992 Form 10-K,
Exhibit 10.3(13)
The A. H. Belo Corporation Employee Savings and Investment Plan--filed
herewith as Exhibit 10.3(14)
First Amendment to the A. H. Belo Corporation Employee Savings and
Investment Plan--1992 Form 10-K, Exhibit 10.3(15)
Second Amendment to the A. H. Belo Corporation Employee Savings and
Investment Plan--1992 Form 10-K, Exhibit 10.3(16)
Third Amendment to the A. H. Belo Corporation Employee Savings and
Investment Plan--First Quarter 1993 Form 10- Q, Exhibit 10.2
Fourth Amendment to the A. H. Belo Corporation Employee Savings and
Investment Plan--Post-Effective Amendment No. 1 to Form S-8 dated
January 18, 1994, Exhibit 4.14
Fifth Amendment to the A. H. Belo Corporation Employee Savings and
Investment Plan--1993 Form 10-K, Exhibit 10.3(19)
Sixth Amendment to the A. H. Belo Corporation Employee Savings and
Investment Plan--Second Quarter 1994 Form 10-Q, Exhibit 10.3(1)
19
<PAGE> 22
Seventh Amendment to the A. H. Belo Corporation Employee Savings and
Investment Plan--filed herewith as Exhibit 10.3(21)
Eighth Amendment to the A. H. Belo Corporation Employee Savings and
Investment Plan--filed herewith as Exhibit 10.3(22)
The G. B. Dealey Retirement Pension Plan (as amended and restated
effective January 1, 1988)--1993 Form 10-K, Exhibit 10.3(20)
First Amendment to the G. B. Dealey Retirement Pension Plan--1993 Form
10-K, Exhibit 10.3(21)
Second Amendment to the G. B. Dealey Retirement Pension Plan--1993
Form 10-K, Exhibit 10.3(22)
Third Amendment to the G. B. Dealey Retirement Pension Plan--1993 Form
10-K, Exhibit 10.3(23)
Fourth Amendment to the G. B. Dealey Retirement Pension Plan--1993
Form 10-K, Exhibit 10.3(24)
Fifth Amendment to the G. B. Dealey Retirement Pension Plan--1993 Form
10-K, Exhibit 10.3(25)
Sixth Amendment to the G. B. Dealey Retirement Pension Plan--Second
Quarter 1994 Form 10-Q, Exhibit 10.3(2)
Seventh Amendment to the G. B. Dealey Retirement Pension Plan--filed
herewith as Exhibit 10.3(30)
Eighth Amendment to the G. B. Dealey Retirement Pension Plan--filed
herewith as Exhibit 10.3(31)
A. H. Belo Corporation Supplemental Executive Retirement Plan--1993
Form 10-K, Exhibit 10.3(27)
Summary of A. H. Belo Corporation Executive Compensation Program--1992
Form 10-K, Exhibit 10.3(18)
Employment and Consultation Agreement between A. H. Belo Corporation
and James P. Sheehan--Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1993, Exhibit 10.1
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
20
<PAGE> 23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
A. H. BELO CORPORATION
By: /S/Robert W. Decherd
Robert W. Decherd
Chairman of the Board, President
& Chief Executive Officer
Dated: March 8, 1995
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 Company
and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/Robert W. Decherd Chairman of the Board, President March 8, 1995
- -------------------- & Chief Executive Officer
Robert W. Decherd
/S/Ward L. Huey, Jr. Vice Chairman of the March 8, 1995
- --------------------
Ward L. Huey, Jr. Board and President,
Broadcast Division
/S/Burl Osborne Director, Publisher and March 8, 1995
- --------------- Editor, The Dallas
Burl Osborne Morning News
/S/John W. Bassett, Jr. Director March 8, 1995
- -----------------------
John W. Bassett, Jr.
/S/Judith L. Craven, M.D., M.P.H. Director March 8, 1995
- ---------------------------------
Judith L. Craven, M.D., M.P.H.
/S/Joe M. Dealey Director and Former March 8, 1995
- ---------------- Chairman of the Board
Joe M. Dealey
/S/Dealey D. Herndon Director March 8, 1995
- --------------------
Dealey D. Herndon
/S/Lester A. Levy Director March 8, 1995
- -----------------
Lester A. Levy
/S/Arturo Madrid, Ph.D. Director March 8, 1995
- -----------------------
Arturo Madrid, Ph.D.
</TABLE>
21
<PAGE> 24
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/James M. Moroney, Jr. Director and Former March 8, 1995
- ------------------------ Chairman of the Board
James M. Moroney, Jr.
/S/Hugh G. Robinson Director March 8, 1995
- -------------------
Hugh G. Robinson
/S/William H. Seay Director March 8, 1995
- ------------------
William H. Seay
/S/William T. Solomon Director March 8, 1995
- ---------------------
William T. Solomon
/S/Thomas B. Walker, Jr. Director March 8, 1995
- ------------------------
Thomas B. Walker, Jr.
/S/J. McDonald Williams Director March 8, 1995
- -----------------------
J. McDonald Williams
/S/Michael D. Perry Senior Vice President and March 8, 1995
- ------------------- Chief Financial Officer
Michael D. Perry
/S/Dunia A. Shive Vice President/Controller March 8, 1995
- -----------------
Dunia A. Shive
</TABLE>
22
<PAGE> 25
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
A. H. Belo Corporation
We have audited the accompanying consolidated balance sheets of A. H. Belo
Corporation and subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of earnings, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 1994. 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of A. H. Belo
Corporation and subsidiaries at December 31, 1994 and 1993, and the
consolidated results of their operations and cash flows for each of the three
years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.
As discussed in Note 5 to the consolidated financial statements, effective
January 1, 1993, the Company changed its method of accounting for income taxes.
/S/ERNST & YOUNG LLP
Dallas, Texas
January 26, 1995
except for Note 13, as to which the date is February 1, 1995.
23
<PAGE> 26
CONSOLIDATED STATEMENTS OF EARNINGS
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years ended December 31,
- -------------------------------------------------------------------------------------------------------------
In thousands, except per share amounts 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET OPERATING REVENUES
Newspaper publishing $369,366 $335,642 $314,701
Broadcasting (Note 2) 258,759 209,193 201,241
- -------------------------------------------------------------------------------------------------------------
Total net operating revenues 628,125 544,835 515,942
- -------------------------------------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Salaries, wages and employee benefits (Note 6) 178,264 161,170 149,139
Newsprint, ink and other supplies 106,270 105,395 97,498
Other production, distribution and operating costs (Note 8) 166,187 145,310 151,640
Depreciation 32,854 25,281 23,547
Amortization 13,551 12,383 12,492
Restructuring charge (Note 3) - 5,822 -
- -------------------------------------------------------------------------------------------------------------
Total operating costs and expenses 497,126 455,361 434,316
- -------------------------------------------------------------------------------------------------------------
Earnings from operations 130,999 89,474 81,626
- -------------------------------------------------------------------------------------------------------------
OTHER INCOME AND EXPENSE
Interest expense (Note 4) (16,112) (15,015) (24,159)
Other, net (Note 10) (6,990) 1,119 4,106
- -------------------------------------------------------------------------------------------------------------
Total other income and expense (23,102) (13,896) (20,053)
- -------------------------------------------------------------------------------------------------------------
EARNINGS
Earnings before income taxes and cumulative
effect of change in accounting 107,897 75,578 61,573
Income taxes (Note 5) 39,030 31,100 24,403
- -------------------------------------------------------------------------------------------------------------
Earnings before cumulative effect of change in accounting 68,867 44,478 37,170
Cumulative effect of change in accounting for
income taxes (Note 5) - 6,599 -
- -------------------------------------------------------------------------------------------------------------
Net earnings $ 68,867 $ 51,077 $ 37,170
- -------------------------------------------------------------------------------------------------------------
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
Earnings before cumulative effect of change in accounting $ 3.41 $ 2.20 $ 1.90
Cumulative effect of change in accounting $ - $ .33 $ -
Net earnings $ 3.41 $ 2.53 $ 1.90
- -------------------------------------------------------------------------------------------------------------
Weighted average common and common equivalent
shares outstanding 20,223 20,204 19,567
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
24
<PAGE> 27
CONSOLIDATED BALANCE SHEETS
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
>ASSETS December 31,
- -------------------------------------------------------------------------------------------------------------
In thousands 1994 1993
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and temporary cash investments $ 9,294 $ 8,943
Accounts receivable (net of allowance of
$3,959 and $3,684 in 1994 and 1993, respectively) 99,825 80,023
Inventories 9,439 11,734
Deferred income taxes (Note 5) 7,641 6,053
Other current assets 4,138 10,632
- -------------------------------------------------------------------------------------------------------------
Total current assets 130,337 117,385
- -------------------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land 19,803 15,065
Buildings 126,632 116,466
Newspaper publishing equipment 188,006 183,211
Broadcast equipment 118,816 93,276
Other 40,369 35,610
Advance payments on plant and equipment
expenditures (Note 8) 28,352 8,679
Total property, plant and equipment 521,978 452,307
Less accumulated depreciation 209,824 182,295
- -------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net 312,154 270,012
- -------------------------------------------------------------------------------------------------------------
Intangible assets, net:
Excess cost over values assigned to tangible
assets of purchased subsidiaries (Note 2) 403,268 333,880
Other intangibles 18,949 20,221
- -------------------------------------------------------------------------------------------------------------
Total intangible assets, net 422,217 354,101
- -------------------------------------------------------------------------------------------------------------
Other assets, at cost (Note 6) 49,083 54,658
- -------------------------------------------------------------------------------------------------------------
Total assets $913,791 $796,156
- -------------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 28
CONSOLIDATED BALANCE SHEETS (CONTINUED)
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY December 31,
- --------------------------------------------------------------------------------------------------------------
In thousands, except share data 1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 27,308 $ 16,555
Accrued compensation and benefits 26,170 20,092
Other accrued expenses 9,112 12,895
Accrued interest payable 3,138 2,219
Advance subscription payments 7,935 6,913
Income taxes payable (Note 5) 10,074 1,057
- --------------------------------------------------------------------------------------------------------------
Total current liabilities 83,737 59,731
- --------------------------------------------------------------------------------------------------------------
Long-term debt (Note 4) 330,400 277,400
Deferred income taxes (Note 5) 110,324 107,308
Other liabilities (Note 6) 6,795 5,618
Commitments and contingent liabilities (Note 8)
Shareholders' equity (Notes 7 and 9):
Preferred stock, $1.00 par value. Authorized
5,000,000 shares; none issued.
Common stock, $1.67 par value. Authorized
150,000,000 shares;
Series A: Issued 14,238,888 and 14,467,182 shares
at December 31, 1994 and 1993, respectively; 23,779 24,161
Series B: Issued 5,621,988 and 5,743,099 shares
at December 31, 1994 and 1993, respectively. 9,389 9,591
Additional paid-in capital 124,431 116,451
Retained earnings 230,959 201,246
- --------------------------------------------------------------------------------------------------------------
Total 388,558 351,449
Less deferred compensation - restricted shares 6,023 5,350
- --------------------------------------------------------------------------------------------------------------
Total shareholders' equity 382,535 346,099
- --------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $913,791 $796,156
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
26
<PAGE> 29
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
In thousands, except share and per share amounts Three years ended December 31, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK TREASURY STOCK Deferred
Additional Compensation-
Shares Shares Paid-in Retained Shares Restricted
Series A Series B Amount Capital Earnings Series A Amount Shares Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JAN. 1, 1992 12,175,609 6,667,625 $31,468 $70,626 $134,508 - $ - $(6,545) $230,057
Exercise of stock options 513,696 183,698 1,165 16,100 17,265
Restricted shares awarded 50,830 85 2,871 (2,956) -
Amortization of restricted
shares 2,723 2,723
Tax benefit from long-term
incentive plan 4,408 4,408
Net earnings 37,170 37,170
Cash dividends declared
($.54 per share) (10,381) (10,381)
Conversion of Series B
to Series A 693,834 (693,834) -
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DEC. 31, 1992 13,433,969 6,157,489 $32,718 $ 94,005 $161,297 - $ - $(6,778) $281,242
Exercise of stock options 505,295 87,326 990 16,252 17,242
Restricted shares awarded 37,192 62 2,576 (2,638) -
Amortization of restricted
shares 3,781 3,781
Forfeiture of restricted shares(10,990) (18) (450) 285 (183)
Tax benefit from long-term
incentive plan 4,068 4,068
Net earnings 51,077 51,077
Cash dividends declared
($.56 per share) (11,128) (11,128)
Conversion of Series B
to Series A 501,716 (501,716) -
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DEC. 31, 1993 14,467,182 5,743,099 $33,752 $116,451 $201,246 - $ - $(5,350) $346,099
Exercise of stock options 234,545 12,500 412 7,240 7,652
Restricted shares awarded 48,360 81 2,764 (2,845) -
Amortization of restricted
shares 2,166 2,166
Forfeiture of restricted shares (810) (1) (25) 6 (20)
Tax benefit from long-term
incentive plan 1,828 1,828
Purchase of treasury stock (644,000) (32,073) (32,073)
Retirement of treasury stock (644,000) (1,076) (3,827) (27,170) 644,000 32,073 -
Net earnings 68,867 68,867
Cash dividends declared
($.60 per share) (11,984) (11,984)
Conversion of Series B
to Series A 133,611 (133,611) -
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DEC. 31, 1994 14,238,888 5,621,988 $33,168 $124,431 $230,959 - $ - $(6,023) $382,535
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
27
<PAGE> 30
CONSOLIDATED STATEMENTS OF CASH FLOWS
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
CASH PROVIDED (USED) Years ended December 31,
- --------------------------------------------------------------------------------------------------------------
In thousands 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS
Net earnings $ 68,867 $ 51,077 $ 37,170
Adjustments to reconcile net earnings to net cash
provided by operations:
Depreciation and amortization 46,405 37,664 36,039
Deferred income taxes 1,428 10,969 6,511
Non-cash adjustments and allowances 1,842 209 1,617
Cumulative effect of change in accounting (Note 5) - (6,599) -
Restructuring charge (Note 3) - 5,822 -
Other, net 1,549 1,262 2,492
Net change in current assets and liabilities:
Accounts receivable (20,067) (5,211) (3,021)
Inventories and other current assets 8,234 (6,685) (1,335)
Accounts payable 10,187 (1,338) 2,318
Accrued compensation and benefits 14,666 2,466 4,424
Other accrued liabilities (11,927) (5,518) 279
Accrued interest payable 919 (3,662) (2,938)
Income taxes payable 16,682 4,362 (5,220)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operations 138,785 84,818 78,336
- --------------------------------------------------------------------------------------------------------------
INVESTMENTS
Capital expenditures (47,371) (62,130) (27,145)
Acquisition of WWL-TV assets (Note 2) (110,058) - -
Acquisition of other assets - - (22,624)
Asset dispositions 2,400 2,458 848
- --------------------------------------------------------------------------------------------------------------
Net cash used for investments (155,029) (59,672) (48,921)
- --------------------------------------------------------------------------------------------------------------
FINANCING
Borrowings for acquisition 110,000 - -
Net proceeds from (payments on) debt (57,000) 175,000 (35,000)
Repayment of long-term notes - (200,000) -
Payments of dividends on stock (11,984) (11,128) (10,381)
Net proceeds from exercise of stock options 7,652 17,242 17,265
Payments to repurchase stock (32,073) - -
- --------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing 16,595 (18,886) (28,116)
- --------------------------------------------------------------------------------------------------------------
Net increase in cash and
temporary cash investments 351 6,260 1,299
- --------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at beginning of year 8,943 2,683 1,384
Cash and temporary cash investments at end of year $ 9,294 $ 8,943 $ 2,683
- --------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES (Note 11)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
28
<PAGE> 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. Belo Corporation and Subsidiaries
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) Principles of Consolidation The consolidated financial statements
include the accounts of A. H. Belo Corporation (the "Company" or
"Belo") and its wholly-owned subsidiaries after the elimination of all
significant intercompany accounts and transactions.
Certain amounts for the prior years have been reclassified to conform
to the current year presentation.
B) Statements of Cash Flows For the purpose of the Consolidated
Statements of Cash Flows, the Company considers all highly liquid debt
instruments purchased with a remaining maturity of three months or
less to be temporary cash investments. Such temporary cash
investments are classified as available for sale and carried at fair
value.
C) Accounts Receivable Accounts receivable are net of a valuation
reserve that represents an estimation of amounts considered
uncollectible. Expense for such uncollectible amounts, which is
included in other production, distribution and operating costs, was
$4,506,000, $4,617,000 and $3,758,000 in 1994, 1993 and 1992,
respectively. Accounts written off during these years were
$4,231,000, $4,408,000 and $7,235,000, respectively.
D) Inventories Inventories, consisting primarily of newsprint, ink and
other supplies used in printing newspapers, are stated at the lower of
average cost or market value.
E) Property, Plant and Equipment Depreciation of property, plant and
equipment is provided principally on a straight-line basis over the
estimated useful lives of the assets as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
ESTIMATED
USEFUL LIVES
----------------------------------------------------------------------------
<S> <C>
Buildings and improvements 5-20 years
Newspaper publishing equipment 5-20 years
Broadcast equipment 7-15 years
Other 3-10 years
----------------------------------------------------------------------------
</TABLE>
F) Intangible Assets, Net Amortization of excess cost over values
assigned to tangible assets of purchased subsidiaries is recorded on a
straight-line basis over 40 years. The carrying value of intangible
assets is periodically reviewed to determine whether impairment
exists. In 1993, the Company determined that excess cost associated
with its suburban newspaper operations was not recoverable (see Note
3). Also included in intangible assets, net is an intangible asset
acquired in 1991 that is being amortized on a straight-line basis over
its estimated useful life of 18 years.
Accumulated amortization of intangible assets was $126,326,000 and
$112,775,000 at December 31, 1994 and 1993, respectively.
G) Earnings Per Common and Common Equivalent Share Earnings per common
and common equivalent share are based on the weighted average number
of shares outstanding during the period, including common equivalent
shares representing dilutive stock options.
29
<PAGE> 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. Belo Corporation and Subsidiaries
NOTE 2: ACQUISITION
On June 1, 1994, Belo acquired the assets of television station
WWL-TV, the CBS affiliate in New Orleans, Louisiana, from Rampart Operating
Partnership for approximately $110,000,000 in cash. The acquisition has been
accounted for as a purchase.
The cost of the acquisition has been allocated on the basis of the
estimated fair market value of the assets acquired. This allocation resulted
in excess cost over values assigned to tangible assets of purchased
subsidiaries of $81,673,000, which is being amortized on a straight-line basis
over 40 years.
The pro forma financial results of operations below assumes the
transaction was financed with the revolving credit facility, and include
certain other purchase price adjustments regarding depreciation, amortization
and taxes. The pro forma financial results further assume the transaction was
completed at the beginning of each of the years ended December 31, 1994 and
1993:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
In thousands, except per share amounts 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net operating revenues $ 641,407 $ 573,882
Net earnings before cumulative effect
of change in accounting $ 69,208 $ 44,204
Net earnings $ 69,208 $ 50,803
Net earnings per common and common
equivalent share before cumulative effect
of change in accounting $ 3.42 $ 2.19
Net earnings per common and
common equivalent share $ 3.42 $ 2.52
- -----------------------------------------------------------------------------------------------
</TABLE>
The pro forma financial information is provided for informational
purposes only and is not necessarily representative of the operating results
that would have occurred had the acquisition been completed as of the indicated
dates, nor are they indicative of future operating results.
NOTE 3: RESTRUCTURING CHARGE
The Consolidated Statement of Earnings for 1993 includes a $5,822,000
charge related to Dallas-Fort Worth Suburban Newspapers, Inc. ("DFWSN"), that
consists primarily of the write-off of goodwill and a reduction in the carrying
value of production assets to their fair value. The production assets adjusted
include building and improvements and publishing equipment. The charge was
recognized in conjunction with the decision to restructure DFWSN upon the
determination that the carrying value of these assets was not recoverable. Fair
value of production assets was determined principally by market value. The
restructuring was substantially completed in January 1994.
NOTE 4: LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
In thousands 1994 1993
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Revolving credit agreement $305,000 $250,000
Short-term unsecured notes classified
as long-term debt 19,000 21,000
Industrial Revenue Bonds 6,400 6,400
- --------------------------------------------------------------------------------------------------
Total $330,400 $277,400
- --------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
At the end of 1994, the Company had a revolving credit facility for
$600,000,000. Borrowings of revolving debt were $305,000,000 and $250,000,000
at December 31, 1994 and 1993, respectively. Loans under the revolving credit
agreement bear interest at a rate based, at the option of the Company, on the
bank's alternate base rate, LIBOR or competitive bid. The rate obtained
through competitive bid is either a Eurodollar rate or a rate agreed to by the
Company and the bank. Average interest rates were 4.8 percent and 3.7 percent
during 1994 and 1993, respectively. At December 31, 1994, the weighted average
borrowing rate was 6.3 percent. The agreement also provides for a facility fee
of 1/8 of one percent on the total commitment. The agreement expires on August
5, 1999, with an extension to August 5, 2000, at the request of the Company and
consent of the participating banks.
The revolving credit agreement contains certain covenants, including
the maintenance of cash flow in relation to both the Company's leverage and its
fixed charges and a limitation on repurchases of the Company's stock. The
Company is in compliance with these covenants at December 31, 1994.
During 1994, the Company used various short-term unsecured notes as an
additional source of financing. For the years ended December 31, 1994 and
1993, the average interest rate on this debt was 4.8 percent and 3.7 percent,
respectively. Due to the Company's intent to renew the short-term notes and
its continued ability to refinance this debt on a long-term basis through its
revolving credit agreement, $19,000,000 and $21,000,000 of short-term notes
outstanding at December 31, 1994 and 1993, respectively, have been classified
as long-term.
During 1993, Belo entered into interest-rate cap agreements to reduce
the effect of increases in interest rates on its revolving debt. At December
31, 1994, the Company had four interest-rate cap agreements outstanding. These
agreements entitled the Company to receive the amount, if any, by which
three-month LIBOR on $75,000,000 of borrowings exceeded 6 percent. No such
payments were received during 1994 or 1993. The fair value of these cap
agreements was approximately $1,400,000 at December 31, 1994, based on the
subsequent selling price of the caps.
In 1994, 1993 and 1992, the Company incurred interest costs of
$16,250,000, $16,976,000 and $24,554,000, respectively, of which $138,000,
$1,961,000 and $395,000, respectively, were capitalized as components of
construction cost.
At December 31, 1994, the Company had outstanding letters of credit of
$8,032,000 issued in the ordinary course of business.
Because substantially all of the Company's debt is due under the
variable rate revolving credit agreement, no significant differences exist
between the carrying value and fair value.
NOTE 5: INCOME TAXES
- --------------------------------------------------------------------------------
Effective January 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes" changing to the liability method of accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and
liabilities, and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. As permitted by SFAS
No. 109, prior years' financial statements were not restated to reflect the
change. The cumulative effect of adopting SFAS No. 109 as of January 1, 1993
increased 1993 net earnings by $6,599,000 or 33 cents per share.
In August 1993, subsequent to the adoption of SFAS No. 109, the
federal income tax rate was increased from 34 percent to 35 percent,
retroactive to January 1, 1993. The Company's deferred taxes were adjusted to
reflect the new tax rate, resulting in an increase in deferred tax expense of
$2,249,000. Deferred tax expense in 1993 also reflects a decrease of
$1,000,000 for the reversal of certain tax accruals as a result of new tax
legislation regarding the amortization of intangibles.
31
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
Income tax expense for the years ended December 31, 1994, 1993 and 1992
consists of the following:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
In thousands 1994 1993 1992
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $32,548 $17,385 $15,585
State 5,054 2,746 2,307
---------------------------------------------------------------------------------------------
Total current 37,602 20,131 17,892
Deferred 1,428 10,969 6,511
---------------------------------------------------------------------------------------------
Total $39,030 $31,100 $24,403
---------------------------------------------------------------------------------------------
Effective tax rate 36.2% 41.1% 39.6%
---------------------------------------------------------------------------------------------
</TABLE>
Income tax provisions for the years ended December 31, 1994, 1993 and 1992
differ from amounts computed by applying the applicable U.S. federal income tax
rate as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
In thousands 1994 1993 1992
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed expected income tax expense $37,764 $26,452 $20,935
Amortization of excess cost 2,235 2,235 2,235
State income taxes 3,494 2,601 2,001
Stock donation (Note 10) (3,245) - -
Effect of 1% rate increase on deferred taxes - 2,249 -
Reduction for change in law regarding
amortization of acquired intangible asset - (1,000) -
Other (1,218) (1,437) (768)
---------------------------------------------------------------------------------------------
$39,030 $31,100 $24,403
---------------------------------------------------------------------------------------------
</TABLE>
Significant components of the Company's deferred tax liabilities and assets
as of December 31, 1994 and 1993, are as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
In thousands 1994 1993
-----------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Excess tax depreciation and amortization $103,621 $102,392
Deferred gain on sale of assets 4,751 5,425
Loss on investment 7,730 4,080
Expenses deductible for tax purposes in a year
different from the year accrued 5,053 4,610
Other 464 654
-----------------------------------------------------------------------------------------
Total deferred tax liabilities $121,619 $117,161
-----------------------------------------------------------------------------------------
Deferred tax assets:
State taxes $ 4,541 $ 4,448
Deferred compensation 4,490 3,048
Expenses deductible for tax purposes in a year
different from the year accrued 5,887 4,950
Other 4,018 3,460
-----------------------------------------------------------------------------------------
Total deferred tax assets $ 18,936 $ 15,906
-----------------------------------------------------------------------------------------
Net deferred tax liability $102,683 $101,255
-----------------------------------------------------------------------------------------
</TABLE>
32
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
The sources of deferred income taxes and the tax effect of each prior to
the adoption of SFAS No. 109 are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
In thousands 1992
- ------------------------------------------------------------------------------------------------------
<S> <C>
Excess tax depreciation and amortization $3,220
Interest expense 337
Alternative Minimum Tax 3,965
Other expenses deductible for tax purposes
in a year different from the year accrued (3,034)
Other, net 2,023
- ------------------------------------------------------------------------------------------------------
$6,511
- ------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 6: EMPLOYEE RETIREMENT PLANS
- --------------------------------------------------------------------------------
The Company sponsors a noncontributory defined benefit pension plan
covering substantially all employees. The benefits are based on years of
service and the average of the employee's five years of highest annual
compensation earned during the most recently completed ten years of employment.
The funding policy is to contribute annually to the plan an amount at
least equal to the minimum required contribution for a qualified retirement
plan, but not in excess of the maximum tax deductible contribution.
The following table sets forth the plan's funded status and prepaid
pension costs (included in other assets on the Consolidated Balance Sheets) at
December 31, 1994 and 1993:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
In thousands 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation $(64,476) $(65,824)
Accumulated benefit obligation $(66,378) $(66,225)
Projected benefit obligation for service
rendered to date $(86,462) $(83,236)
Plan assets at fair value, invested primarily
in equity securities 75,709 74,754
- -------------------------------------------------------------------------------------------------------
Plan assets less than projected benefit obligation (10,753) (8,482)
Unrecognized net loss 30,285 25,031
Unrecognized net transition asset being recognized
over 12.3 years (4,069) (5,302)
Unrecognized prior service cost (2,241) 915
- ------------------------------------------------------------------------------------------------------
Prepaid pension cost $ 13,222 $ 12,162
- ------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
The net periodic pension cost (benefit) for the years ended December
31, 1994, 1993 and 1992 includes the following components:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
In thousands 1994 1993 1992
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during the period $3,666 $ 2,284 $ 1,858
Interest cost on projected benefit obligation 6,461 5,782 5,109
Actual return on plan assets (604) (9,294) (3,447)
Net amortization and deferral (6,563) 1,784 (4,563)
- -----------------------------------------------------------------------------------------------------
Net periodic pension cost (benefit) $2,960 $ 556 $(1,043)
- -----------------------------------------------------------------------------------------------------
</TABLE>
Assumptions used in the accounting for the defined benefit plan are as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
1994 1993 1992
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate in determining benefit obligation 8.50% 7.50% 9.00%
Discount rate in determining net periodic pension
cost (benefit) 7.50% 9.00% 9.00%
Expected long-term rate of return on assets 10.25% 10.25% 11.00%
Rate of increase in future compensation 6.00% 5.00% 5.00%
- -----------------------------------------------------------------------------------------------------
</TABLE>
The Company sponsors a defined contribution plan that covers
substantially all of its employees. Subject to certain dollar limits,
employees may contribute a percentage of their salaries to this plan, and the
Company will match a portion of the employee's contributions. The Company's
contributions totaled $2,568,000, $1,825,000 and $1,074,000 in 1994, 1993 and
1992, respectively. Contributions have increased in recent years due to a
mid-1993 change in the Company's matching percentage from 35 to 50 percent.
The Company also sponsors non-qualified retirement and death benefit
plans for key employees. Expense for the plans recognized in 1994, 1993 and
1992 was $1,232,000, $1,412,000 and $908,000, respectively.
NOTE 7: LONG-TERM INCENTIVE PLAN
The Company's current long-term incentive plan has been in place since
1986. There are, however, stock options awarded under a prior plan, which will
remain outstanding until they are exercised, canceled or expire. The following
table presents the status of the stock options awarded under the prior plan.
At December 31, 1994, all of these options were exercisable.
<TABLE>
<CAPTION>
PRIOR STOCK OPTION PLAN
- --------------------------------------------------------------------------------------------------------
SHARES SHARES OPTION PRICE
SERIES A SERIES B PER SHARE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding at January 1, 1992 204,689 170,959 $ 9-26
Exercised (181,899) (117,819) 9-26
- --------------------------------------------------------------------------------------------------------
Options outstanding at December 31, 1992 22,790 53,140 $20-26
Exercised (20,925) (50,195) 20-26
- --------------------------------------------------------------------------------------------------------
Options outstanding at December 31, 1993 1,865 2,945 $22-26
Exercised (1,265) (1,895) 22-26
- --------------------------------------------------------------------------------------------------------
Options outstanding at December 31, 1994 600 1,050 $ 26
- --------------------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
Awards under the 1986 long-term incentive plan may be granted to
employees in the form of incentive stock options, non- qualified stock options,
restricted shares or performance units, the values of which are based on the
long-term performance of the Company. In addition, options may be accompanied
by stock appreciation rights and limited stock appreciation rights. Rights and
limited rights may also be issued without accompanying options. The plan was
amended in 1988 to provide for a one-time grant of non-qualified options to
purchase 2,500 shares of Series A Common Stock to non-employee directors and to
eliminate the previous limit on the number of restricted shares that may be
issued. The plan was also amended in 1992 to provide for automatic annual
grants through 1997 of non-qualified options to non-employee directors serving
after the 1992 Annual Meeting of Shareholders and an additional one-time grant
of options to purchase 10,000 shares of Series A Common Stock to those
directors subsequently elected. The amendment also increased the number of
shares for which awards could be made under the plan.
The maximum aggregate number of shares of common stock that may be
granted in relation to options, restricted shares and rights, and limited
rights issued without accompanying options is 3,600,000, less the number of
performance units granted under the plan. The maximum number of performance
units that may be granted under the plan is 3,600,000, less the number of
options, restricted shares and rights, and limited rights issued without
accompanying options granted.
Grants made under the 1986 long-term incentive plan during 1994, 1993
and 1992 are summarized below:
<TABLE>
<CAPTION>
1986 LONG-TERM INCENTIVE PLAN
- --------------------------------------------------------------------------------------------------------------
NON-QUALIFIED STOCK OPTIONS RESTRICTED SHARES
OPTION
SHARES SHARES PRICE SHARES SHARES PRICE
SERIES A SERIES B PER SHARE SERIES A SERIES B PER SHARE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at Jan. 1, 1992 1,628,084 158,415 $24-37 312,473 20,250 $24-38
Granted 314,580 - 40 50,830 - 40-42
Exercised (331,797) (65,879) 24-37 - - -
Vested - - - (71,488) (20,250) 24-42
Canceled (15,140) (240) 25-37 - - -
- --------------------------------------------------------------------------------------------------------------
Outstanding at Dec. 31, 1992 1,595,727 92,296 $24-40 291,815 - $29-42
Granted 317,955 - 40-49 37,192 - 49-53
Exercised (484,370) (37,131) 24-40 - - -
Vested - - - (106,225) - 29-53
Canceled (61,285) - 29-40 (10,990) - 29-49
- --------------------------------------------------------------------------------------------------------------
Outstanding at Dec. 31, 1993 1,368,027 55,165 $24-49 211,792 - $29-53
Granted 322,795 - 50-53 48,360 - 53-57
Exercised (233,280) (10,605) 24-49 - - -
Vested - - - (46,971) - 30-57
Canceled (7,002) - 29-49 (810) - 29-43
- --------------------------------------------------------------------------------------------------------------
Outstanding at Dec. 31, 1994 1,450,540 44,560 $24-53 212,371 - $29-57
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The non-qualified options granted under the Company's long-term
incentive plan become exercisable in cumulative installments over a period of
three years. On December 31, 1994, of the 1,495,100 options outstanding,
906,867 were exercisable. Shares of Series A Common Stock reserved for grants
under the plan were 250,531 and 613,874 at December 31, 1994 and 1993,
respectively.
A provision for the restricted shares is made ratably over the
restriction period. Expense recognized under the plan for restricted shares
was $2,146,000, $3,598,000 and $2,723,000 in 1994, 1993 and 1992, respectively.
35
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
NOTE 8: COMMITMENTS AND CONTINGENT LIABILITIES
The Company is involved in certain claims and litigation related to
its operations. In the opinion of Management, liabilities, if any, arising
from these claims and litigation are either covered by insurance or would not
have a material adverse effect on the consolidated financial statements of the
Company.
Commitments for the purchase of broadcast film contract rights totaled
approximately $141,098,000 at December 31, 1994 for broadcasts scheduled
through August 2000.
Advance payments on plant and equipment expenditures at December 31,
1994 primarily relate to newspaper production equipment, broadcast equipment
and building renovations and improvements. Required future payments for
capital expenditures for 1995, 1996, 1997 and 1998 are $13,677,000, $8,998,000,
$5,489,000 and $3,350,000, respectively.
Total lease expense for property and equipment was $3,131,000,
$5,447,000 and $6,130,000 in 1994, 1993 and 1992, respectively. Lease expense
was lower in 1994 following the Company's 1993 purchase of the building in
which it had been leasing office space.
Future minimum rental payments for operating lease agreements are as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
In thousands
- ------------------------------------------------------------------------------------
<S> <C>
1995 $1,631
1996 811
1997 343
1998 140
1999 129
2000 and beyond 31
- ------------------------------------------------------------------------------------
$3,085
- ------------------------------------------------------------------------------------
</TABLE>
NOTE 9: COMMON AND PREFERRED STOCK
- --------------------------------------------------------------------------------
The Company has two series of common stock authorized, issued and
outstanding, Series A and Series B. The shares are identical except that
Series B shares are entitled to ten votes per share on all matters submitted to
a vote of shareholders, while the Series A shares are entitled to one vote per
share. Transferability of the Series B shares is limited to family members and
affiliated entities of the holder. Series B shares are convertible at any time
on a one-for-one basis into Series A shares.
Each outstanding share of common stock is accompanied by one preferred
share purchase right, which entitles shareholders to purchase 1/200 of a share
of Series A Junior Participating Preferred Stock. The rights will not be
exercisable until a party either acquires beneficial ownership of 30 percent of
the Company's common stock or makes a tender offer for at least 30 percent of
its common stock. The rights expire in 1996. If the Company is acquired in a
merger or business combination, each right has an initial exercise price of
$87.50 (subject to adjustment) and can be used to purchase the common stock of
the surviving company having a market value of twice the exercise price of each
right. The number of shares of Series A Junior Participating Preferred Stock
reserved for possible conversion of these rights is equivalent to 1/200 of the
number of shares of common stock issued and outstanding plus the number of
shares reserved for grant under the 1986 Long-Term Incentive Plan and Stock
Option Plan.
36
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
NOTE 10: OTHER INCOME AND EXPENSE
- --------------------------------------------------------------------------------
In 1994, Belo donated 58,835 shares of Stauffer Communications, Inc.
stock to The Dallas Morning News--WFAA Foundation. The fair market value of
the shares at the time of the transfer, as determined by an outstanding tender
offer from a third party, exceeded the carrying value of the stock, resulting
in a gain of $9,271,000, which was offset by a charge for the charitable
contribution of $16,675,000. The transaction, net of a $5,837,000 income tax
benefit, resulted in a decrease in 1994 net earnings of $1,567,000 (8 cents per
share).
NOTE 11: SUPPLEMENTAL CASH FLOW INFORMATION
- --------------------------------------------------------------------------------
Net cash provided by operations reflects cash payments for interest
and income taxes during the years ended December 31, 1994, 1993 and 1992 as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
In thousands 1994 1993 1992
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest paid, net of amounts capitalized $14,564 $18,677 $27,097
Income taxes paid, net of refunds $26,618 $15,679 $23,112
- -----------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE> 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
NOTE 12: INDUSTRY SEGMENT INFORMATION
The Company operates in two industries: newspaper publishing and
television broadcasting. Operations in the newspaper publishing industry
involve the sale of advertising space in published issues, the sale of
newspapers to distributors and individual subscribers and commercial printing.
Operations in the broadcast industry involve the sale of air time for
advertising and the broadcast of entertainment, news and other programming for
both local markets and syndication. Net operating revenues by industry segment
include sales to unaffiliated customers and intersegment revenues, which before
their elimination, are accounted for on the same basis as revenues from
unaffiliated customers.
Selected segment data for the years ended December 31, 1994, 1993 and
1992 is as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
In thousands 1994 1993 1992
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net operating revenues
Newspaper publishing $369,366 $335,651 $314,718
Broadcasting (A) 258,759 209,457 201,241
Intersegment revenues - (273) (17)
- ----------------------------------------------------------------------------------------------------
$628,125 $544,835 $515,942
- ----------------------------------------------------------------------------------------------------
Earnings from operations
Newspaper publishing $ 66,568 $ 44,293(B) $ 42,974
Broadcasting (A) 80,445(C) 63,204(C) 56,461
Corporate expenses (16,014) (18,059) (17,809)
- ----------------------------------------------------------------------------------------------------
$130,999 $ 89,474 $ 81,626
- ----------------------------------------------------------------------------------------------------
Identifiable assets
Newspaper publishing $271,179 $263,855 $245,589
Broadcasting (A) 568,147 446,175 444,237
Other 74,465 86,126 68,701
- ----------------------------------------------------------------------------------------------------
$913,791 $796,156 $758,527
- ----------------------------------------------------------------------------------------------------
Depreciation and amortization
Newspaper publishing $ 20,716 $ 17,374 $ 16,247
Broadcasting (A) 25,079 20,039 19,460
Other 610 251 332
- ----------------------------------------------------------------------------------------------------
$ 46,405 $ 37,664 $ 36,039
- ----------------------------------------------------------------------------------------------------
Capital expenditures
Newspaper publishing $ 22,227 $ 36,765 $ 17,381
Broadcasting (A) 24,623 16,996 9,666
Other 521 8,369 98
- ----------------------------------------------------------------------------------------------------
$ 47,371 $ 62,130 $ 27,145
- ----------------------------------------------------------------------------------------------------
</TABLE>
(A) In 1994, the Broadcasting segment data includes the effect of WWL-TV,
which Belo purchased on June 1, 1994 (see Note 2).
(B) Included in Newspaper publishing earnings from operations in 1993 is a
$5,822,000 restructuring charge consisting primarily of the write-off
of goodwill and a reduction in the carrying value of production assets
related to the restructuring of DFWSN (see Note 3).
(C) Broadcasting earnings from operations include the reversal of certain
music license fee accruals of $631,000 in 1994 and $3,349,000 in 1993.
NOTE 13: SUBSEQUENT EVENT
On February 1, 1995, the Company completed the acquisition of
television station KIRO-TV in Seattle, Washington for $162,500,000, excluding
final adjustments. The acquisition was financed with borrowings from the
revolving credit agreement. The transaction will be accounted for as a
purchase. Although a complete purchase price allocation will not be finalized
until later in 1995, the purchase price will be allocated to property, plant
and equipment and intangible assets.
38
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
NOTE 14: QUARTERLY RESULTS OF OPERATIONS (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Following is a summary of the unaudited quarterly results of operations for 1994 and 1993:
- ------------------------------------------------------------------------------------------------------------------------------------
In thousands, except per share amounts 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
Net operating revenues
Newspaper publishing $ 82,921 $ 91,107 $ 93,262 $ 102,076
Broadcasting 49,126 63,831(C) 66,319(C) 79,483(C)
Intersegment revenues - (1) 1 -
- ------------------------------------------------------------------------------------------------------------------------------------
$ 132,047 $ 154,937 $ 159,582 $ 181,559
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings from operations
Newspaper publishing $ 10,908 $ 17,716 $ 18,220 $ 19,724
Broadcasting 11,498(A) 21,049(C) 19,083(C) 28,815(C)
Corporate expenses (3,222) (3,361) (4,618) (4,813)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 19,184 $ 35,404 $ 32,685 $ 43,726
- ------------------------------------------------------------------------------------------------------------------------------------
Net earnings $ 10,038 $ 19,511 $ 15,748(D) $ 23,570
- ------------------------------------------------------------------------------------------------------------------------------------
Net earnings per common and
common equivalent share $ .49 $ .96 $ .79 $ 1.18
- ------------------------------------------------------------------------------------------------------------------------------------
1993
Net operating revenues
Newspaper publishing $ 78,780 $ 84,747 $ 83,309 $ 88,815
Broadcasting 44,122 59,154 49,314 56,867
Intersegment revenues (62) (97) (84) (30)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 122,840 $ 143,804 $ 132,539 $ 145,652
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings from operations
Newspaper publishing $ 11,010 $ 13,160 $ 10,887 $ 9,236(F)
Broadcasting 8,283 22,042 12,187 20,728(A)
Corporate expenses (3,737) (4,985) (3,686) (5,651)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 15,556 $ 30,217 $ 19,388 $ 24,313
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings before cumulative effect of
change in accounting $ 7,271 $ 16,143 $ 7,934 $ 13,130
Cumulative effect of change in accounting 6,599(B) - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Net earnings $ 13,870 $ 16,143 $ 7,934(E) $ 13,130
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings per common and common equivalent share:
Before cumulative effect
of change in accounting $ .37 $ .80 $ .39 $ .64
Cumulative effect of change in accounting $ .33(B) $ - $ - $ -
Net earnings $ .70 $ .80 $ .39 $ .64
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Included in Broadcasting earnings from operations for the first
quarter of 1994 and the fourth quarter of 1993 is the reversal of certain music
license fee accruals of $631,000 and $3,349,000, respectively.
(B) Amount represents the cumulative effect of adopting SFAS No. 109,
"Accounting for Income Taxes" (see Note 5).
(C) Broadcasting results include the effect of WWL-TV, which Belo
purchased on June 1, 1994 (see Note 2).
(D) Net earnings for the third quarter of 1994 include the net charge of
$1,567,000 related to the Stauffer Communications, Inc. stock donation (see
Note 10).
(E) Belo's income tax provision in the third quarter of 1993 reflects a
$2,249,000 charge representing an adjustment to deferred taxes following an
increase in the federal income tax rate from 34 percent to 35 percent (see Note
5).
(F) Included in Newspaper publishing earnings from operations for the
fourth quarter of 1993 is a $5,822,000 restructuring charge consisting
primarily of the write-off of goodwill and a reduction in the carrying value of
production assets related to the restructuring of DFWSN (see Note 3).
39
<PAGE> 42
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
The Management of A. H. Belo Corporation is responsible for the preparation of
the Company's consolidated financial statements, as well as for their integrity
and objectivity. Those statements are prepared using generally accepted
accounting principles, they include amounts that are based on our best
estimates and judgments, and we believe they are not misstated due to material
fraud or error. Management has also prepared the other information in the
Annual Report and is responsible for its accuracy and its consistency with the
financial statements.
Management maintains a system of internal control that is designed to provide
reasonable assurance of the integrity and reliability of the financial
statements, the protection of assets from unauthorized use or disposition, and
the prevention and detection of fraudulent financial reporting. This system of
internal control provides for appropriate division of responsibility, and is
documented in written policies and procedures. These policies and procedures
are updated as necessary and communicated to those employees having a
significant role in the financial reporting process. Management continually
monitors the system of internal control for compliance.
Management believes that as of December 31, 1994, the Company's system of
internal control is adequate to accomplish the objectives described above.
Management recognizes, however, that no system of internal control can ensure
the elimination of all errors and irregularities, and it recognizes that the
cost of the internal controls should not exceed the value of the benefits
derived.
Finally, Management recognizes its responsibility for fostering a strong
ethical climate within the Company according to the highest standards of
personal and professional conduct, and this responsibility is delineated in the
Company's written statement of business conduct. This statement of business
conduct addresses, among other things, the necessity for due diligence and
integrity, avoidance of potential conflicts of interest, compliance with all
applicable laws and regulations, and the confidentiality of proprietary
information.
/S/Robert W. Decherd
Robert W. Decherd
Chairman of the Board, President and Chief Executive Officer
/S/Michael D. Perry
Michael D. Perry
Senior Vice President and Chief Financial Officer
40
<PAGE> 43
<TABLE>
<CAPTION>
EXHIBIT SEQ.
NUMBER DESCRIPTION PAGE NO.
- ------ ----------- --------
<S> <C> <C>
3.1 Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the
Company's Annual Report on Form 10-K dated March 19, 1992 (the "1991 Form 10-K")) N/A
3.2 Certificate of Correction to Certificate of Incorporation dated May 13, 1987 (incorporated by reference
to Exhibit 3.2 to the Company's Annual Report on Form 10-K dated March 18, 1993 (the "1992 Form 10-K")) N/A
3.3 Certificate of Designation of Series A Junior Participating Preferred Stock of the Company dated
April 16, 1987 (incorporated by reference to Exhibit 3.3 to the 1991 Form 10-K) N/A
3.4 Certificate of Amendment of Certificate of Incorporation of the Company dated May 4, 1988 (incorporated
by reference to Exhibit 3.4 to the 1992 Form 10-K) N/A
3.5 Amended Certificate of Designation of Series A Junior Participating Preferred Stock of the Company
dated May 4, 1988 (incorporated by reference to Exhibit 3.5 to the 1992 Form 10-K) N/A
3.6 Certificate of Designation of Series B Common Stock of the Company dated May 4, 1988 (incorporated
by reference to Exhibit 3.6 to the 1992 Form 10-K) N/A
3.7 Bylaws of the Company, effective February 22, 1995
----
4.1 Certain rights of the holders of the Company's Common Stock are set forth in Exhibits 3.1-3.6 above N/A
4.2 Specimen Form of Certificate representing shares of the Company's Series A Common Stock (incorporated
by reference to Exhibit 4.2 to the 1992 Form 10-K) N/A
4.3 Specimen Form of Certificate representing shares of the Company's Series B Common Stock (incorporated by
reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K dated March 20, 1989) N/A
4.4 Form of Rights Agreement, dated March 10, 1986 between the Company and RepublicBank Dallas, National
Association as Rights Agent, which includes as Exhibit B thereto the Form of Right Certificate
(incorporated by reference to Exhibit 4.8 to the 1991 Form 10-K) N/A
4.5 Supplement No. 1 to Rights Agreement (incorporated by reference to Exhibit 4.9 to the 1991 Form 10-K) N/A
4.6 Supplement No. 2 to Rights Agreement (incorporated by reference to Exhibit 4.9 to the 1992 Form 10-K) N/A
4.7 Supplement No. 3 to Rights Agreement (incorporated by reference to Exhibit 4.10 to the 1992 Form 10-K) N/A
</TABLE>
E-1
<PAGE> 44
<TABLE>
<CAPTION>
EXHIBIT SEQ.
NUMBER DESCRIPTION PAGE NO.
- ------ ----------- --------
<S> <C> <C>
4.8 Supplement No. 4 to Rights Agreement dated December 12, 1988 substituting Manufacturers Hanover Trust
Company as Rights Agent (incorporated by reference to Exhibit 4.8 to the Company's Annual Report on
Form 10-K dated March 18, 1994 (the "1993 Form 10-K")) N/A
4.9 Supplement No. 5 to Rights Agreement (incorporated by reference to Exhibit 4.1 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1993) N/A
4.10 Supplement No. 6 to Rights Agreement
----
10.1 Contracts relating to television broadcasting:
(1) Contract for Affiliation between KOTV in Tulsa, Oklahoma and CBS, with Network Affiliation Consent
(incorporated by reference to Exhibit 10.1(1) to the 1991 Form 10-K) N/A
(2) Contract for Affiliation between KHOU-TV in Houston, Texas and CBS, with Network Affiliation
Consent (incorporated by reference to Exhibit 10.1(2) to the 1991 Form 10-K) N/A
(3) Letter Amendment to Contract for Affiliation between KHOU-TV in Houston, Texas and CBS
(incorporated by reference to Exhibit 10.1(3) to the 1993 Form 10-K) N/A
(4) Contract for Affiliation between KXTV in Sacramento, California and CBS (incorporated by
reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1993 (the "First Quarter 1993 Form 10-Q")) N/A
(5) Contract for Affiliation between WFAA-TV in Dallas, Texas and ABC, with Network Affiliation
Consent (incorporated by reference to Exhibit 10.1(4) to the Company's Annual Report on Form
10-K dated March 28, 1991 (the "1990 Form 10-K")) N/A
(6) Rider One to Contract for Affiliation between WFAA-TV in Dallas, Texas and ABC (incorporated by
reference to Exhibit 10.1 to the First Quarter 1993 Form 10-Q) N/A
(7) Contract for Affiliation between WVEC-TV in Hampton-Norfolk, Virginia and ABC, with Network
Affiliation Consent (incorporated by reference to Exhibit 10.1(5) to the 1991 Form 10-K) N/A
(8) Contract for Affiliation between WWL-TV in New Orleans, Louisiana, and CBS
----
10.2 Contracts relating to newspaper publication:
(1) Founding Agreement between the Company and Newsprint South, Inc. for newsprint supply
(incorporated by reference to Exhibit 10.2(2) to the 1990 Form 10-K) N/A
</TABLE>
E-2
<PAGE> 45
<TABLE>
<CAPTION>
EXHIBIT SEQ.
NUMBER DESCRIPTION PAGE NO.
- ------ ----------- --------
<S> <C> <C> <C>
(2) Amendment to the Founding Agreement between the Company and Newsprint South, Inc. for newsprint
supply (incorporated by reference to Exhibit 10.2(3) to the 1990 Form 10-K) N/A
10.3 (1) Management Security Plan (incorporated by reference to Exhibit 10.4(1) to the 1991 Form 10-K) N/A
(2) Stock Option Plan (incorporated by reference to Exhibit 10.4(2) to the 1991 Form 10-K) N/A
(3) Amendment to Stock Option Plan by the Compensation Committee of the Board of Directors
(incorporated by reference to Exhibit 10.4(3) to the 1991 Form 10-K) N/A
(4) Amendments to Stock Option Plan (incorporated by reference to Exhibit 10.4(4) to the 1991
Form 10-K) N/A
(5) Amendment to Stock Option Plan dated December 19, 1986 (incorporated by reference to Exhibit
10.4(5) to the 1991 Form 10-K) N/A
(6) Amendment to Stock Option Plan dated February 22, 1989 (incorporated by reference to Exhibit
10.3(6) to the 1993 Form 10-K) N/A
(7) 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4(7) to the 1991 Form 10-K) N/A
(8) Amendment No. 1 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4(8)
to the 1991 Form 10-K) N/A
(9) Amendment No. 2 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3(9)
to the 1992 Form 10-K) N/A
(10) Amendment No. 3 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3(10)
to the 1993 Form 10-K) N/A
(11) Amendment No. 4 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3(11)
to the 1993 Form 10-K) N/A
(12) Amendment No. 5 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3(12)
to the 1993 Form 10-K) N/A
(13) Amendment No. 6 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3(13)
to the 1992 Form 10-K) N/A
(14) The A. H. Belo Corporation Employee Savings and Investment Plan ----
(15) First Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated
by reference to Exhibit 10.3(15) to the 1992 Form 10-K) N/A
</TABLE>
E-3
<PAGE> 46
<TABLE>
<CAPTION>
EXHIBIT SEQ.
NUMBER DESCRIPTION PAGE NO.
- ------ ----------- --------
<S> <C> <C>
(16) Second Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated
by reference to Exhibit 10.3(16) to the 1992 Form 10-K) N/A
(17) Third Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated
by reference to Exhibit 10.2 to the First Quarter 1993 Form 10-Q) N/A
(18) Fourth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated
by reference to Exhibit 4.14 to Post-Effective Amendment No. 1 to Form S-8 dated January 18, 1994
(Registration No. 33-30994)) N/A
(19) Fifth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated
by reference to Exhibit 10.3(19) to the 1993 Form 10-K) N/A
(20) Sixth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated
by reference to Exhibit 10.3(1) to the Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1994 ("Second Quarter 1994 Form 10-Q")) N/A
(21) Seventh Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan ----
(22) Eighth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan ----
(23) The G. B. Dealey Retirement Pension Plan (as amended and restated effective January 1, 1988)
(incorporated by reference to Exhibit 10.3(20) to the 1993 Form 10-K) N/A
(24) First Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit
10.3(21) to the 1993 Form 10-K) N/A
(25) Second Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit
10.3(22) to the 1993 Form 10-K) N/A
(26) Third Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit
10.3(23) to the 1993 Form 10-K) N/A
(27) Fourth Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit
10.3(24) to the 1993 Form 10-K) N/A
(28) Fifth Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit
10.3(25) to the 1993 Form 10-K) N/A
(29) Sixth Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit
10.3(2) to the Second Quarter 1994 Form 10-Q) N/A
</TABLE>
E-4
<PAGE> 47
<TABLE>
<CAPTION>
EXHIBIT SEQ.
NUMBER DESCRIPTION PAGE NO.
- ------ ----------- --------
<S> <C>
(30) Seventh Amendment to the G. B. Dealey Retirement Pension Plan ----
(31) Eighth Amendment to the G. B. Dealey Retirement Pension Plan ----
(32) Master Trust Agreement, effective as of July 1, 1992, between A. H. Belo Corporation and Mellon
Bank, N. A. (incorporated by reference to Exhibit 10.3(26) to the 1993 Form 10-K) N/A
(33) A. H. Belo Corporation Supplemental Executive Retirement Plan (incorporated by reference to
Exhibit 10.3(27) to the 1993 Form 10-K) N/A
(34) Trust Agreement dated February 28, 1994, between the Company and Mellon Bank, N. A.
(incorporated by reference to Exhibit 10.3(28) to the 1993 Form 10-K) N/A
(35) Summary of A. H. Belo Corporation Executive Compensation Program (incorporated by reference
to Exhibit 10.3(18) to the 1992 Form 10-K) N/A
(36) Employment and Consultation Agreement between A. H. Belo Corporation and James P. Sheehan
(incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1993) N/A
10.4 (1) Loan Agreement dated October 1, 1985, between City of Arlington Industrial Development Corporation
and Dallas-Fort Worth Suburban Newspapers, Inc. (incorporated by reference to Exhibit 10.5(2) to
the 1991 Form 10-K) N/A
(2) Letter of Credit and Reimbursement Agreement dated as of June 2, 1987, between Dallas-Fort Worth
Suburban Newspapers, Inc. and The Sanwa Bank, Limited, Dallas Agency covering $6,400,000 City of
Arlington Industrial Development Corporation Industrial Development Revenue Bonds (incorporated by
reference to Exhibit 10.5(3) to the 1991 Form 10-K) N/A
(3) Credit Agreement dated as of August 5, 1994 among the Company and Citicorp Securities, Inc., as
Syndication Agent, The First National Bank of Chicago, as Administrative Agent, Texas Commerce Bank
National Association, as Documentation Agent and The Banks Listed Therein, as Lenders (incorporated
by reference to Exhibit 10.4(1) to the Second Quarter 1994 Form 10-Q) N/A
(4) Amendment and Waiver Agreement dated as of August 5, 1994, by and between the Company and The Sanwa
Bank, Limited, Dallas Agency ----
21 Subsidiaries of the Company ----
23 Consent of Ernst & Young LLP ----
27 Financial Data Schedule (filed electronically with the Securities and Exchange Commission) N/A
</TABLE>
E-5
<PAGE> 1
Exhibit 3.7
AMENDED AND RESTATED
BYLAWS
OF
A. H. BELO CORPORATION
(A Delaware Corporation)
Effective February 22, 1995
<PAGE> 2
INDEX
TO
BYLAWS OF
A. H. BELO CORPORATION
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - OFFICES
Section 1. Registered Office . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - MEETINGS OF THE STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3. Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 4. Notice of Annual or Special
Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5. Business at Special Meeting . . . . . . . . . . . . . . . . . . . 2
Section 6. Quorum of Stockholders . . . . . . . . . . . . . . . . . . . . . 2
Section 7. Act of Stockholders' Meeting . . . . . . . . . . . . . . . . . . 3
Section 8. Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 9. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 10. Voting List . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 11. Order of Business . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 12. Notice of Stockholder Business . . . . . . . . . . . . . . . . . 5
Section 13. Notice of Stockholder Nominees . . . . . . . . . . . . . . . . . 6
ARTICLE III - BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 1. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2. Number of Directors . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3. Election and Term . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5. Resignation and Removal . . . . . . . . . . . . . . . . . . . . . 10
Section 6. Compensation of Directors . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV - MEETINGS OF THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 1. First Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4. Business at Regular or Special
Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5. Quorum of Directors . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6. Act of Directors' Meeting . . . . . . . . . . . . . . . . . . . . 12
Section 7. Action by Written Consent Without
a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V - COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VI - NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 1. Methods of Giving Notice . . . . . . . . . . . . . . . . . . . . 14
Section 2. Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3. Attendance as Waiver . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VII - ACTION WITHOUT A MEETING BY USE OF A
CONFERENCE TELEPHONE OR SIMILAR COMMUNICATIONS
EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VIII - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 1. Executive Officers . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2. Election and Qualification . . . . . . . . . . . . . . . . . . . 16
Section 3. Division Officers . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4. Other Officers and Agents . . . . . . . . . . . . . . . . . . . . 17
Section 5. Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6. Term, Removal and Vacancies . . . . . . . . . . . . . . . . . . . 18
Section 7. Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . 18
Section 8. Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . 18
Section 9. President . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 10. Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 11. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 12. Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . . 20
Section 13. Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 14. Assistant Treasurers . . . . . . . . . . . . . . . . . . . . . . 21
Section 15. Officers' Bond . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IX - CERTIFICATES FOR SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 1. Certificates Representing Shares . . . . . . . . . . . . . . . . 21
Section 2. Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3. Lost, Stolen or Destroyed Certificate . . . . . . . . . . . . . . 23
Section 4. Closing of Stock Ledger and Fixing
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5. Foreign Share Ownership . . . . . . . . . . . . . . . . . . . . . 24
Section 6. Registered Stockholders . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE X - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 1. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2. Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3. Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5. Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE XI - INDEMNIFICATION OF OFFICERS AND DIRECTORS . . . . . . . . . . . . . . . . . . . 28
Section 1. Actions, Suits, or Proceedings
Other Than by or in the Right of
the Corporation . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2. Actions or Suits by or in the
Right of the Corporation . . . . . . . . . . . . . . . . . . . 29
Section 3. Indemnification for Costs, Charges,
and Expenses of Successful Party . . . . . . . . . . . . . . . 30
Section 4. Determination of Right to
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5. Advance of Costs, Charges and
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6. Procedure for Indemnification . . . . . . . . . . . . . . . . . . 31
Section 7. Other Rights; Continuation of
Right to Indemnification . . . . . . . . . . . . . . . . . . . 32
Section 8. Extent of Indemnification . . . . . . . . . . . . . . . . . . . . 33
Section 9. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 10. Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XII - AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
(iii)
<PAGE> 5
BYLAWS
OF
A. H. BELO CORPORATION
(A Delaware Corporation)
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office shall be
located in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The corporation also may have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine or as the business of the
corporation may require.
ARTICLE II
MEETINGS OF THE STOCKHOLDERS
Section 1. Place of Meetings. All meetings of the stockholders
for the election of directors or for any other proper purpose shall be held at
such time and place, within or without the State of Delaware, as the Board of
Directors may from time to time designate, as stated in the notice of such
meeting or a duly executed waiver of notice thereof.
Section 2. Annual Meeting. An annual meeting of the stockholders
shall be held at 10:00 a.m. on the first Wednesday in May in each year, unless
such day in a legal holiday, in which case such meeting shall be held at the
specified time on the first full business day thereafter which is not a legal
holiday. At such meeting the stockholders entitled to vote thereat shall
elect, by a plurality vote of the voting power of all of the shares entitled to
vote thereon, the successors to the directors whose terms shall expire that
year, and may transact such other business as properly may be brought before
the meeting.
<PAGE> 6
Section 3. Special Meeting. Special meetings of the stockholders
may be called by the Chief Executive Officer, the Board of Directors or the
holders of not less than one-fifth of the voting power of all shares entitled
to vote at the meeting.
Section 4. Notice of Annual or Special Meeting. Written or
printed notice stating the place, day and hour of the meeting and, in case of a
special meeting, the purpose or purposes for which the meeting is called, shall
be delivered not less than ten (10) nor more than sixty (60) days before the
date of the meeting, either personally or by mail, by or at the direction of
the Chairman of the Board, the Secretary, or the officer or person calling the
meeting, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the stockholder at his address as it appears
on the records of the corporation, with postage thereon prepaid.
Section 5. Business at Special Meeting. The business transacted
at any special meeting of the stockholders shall be limited to the purposes
stated in the notice thereof.
Section 6. Quorum of Stockholders. Unless otherwise provided in
the Certificate of Incorporation, the holders of a majority of the voting power
of all of the shares entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of the stockholders, but in no event shall a
quorum consist of the holders of less than one-third (1/3) of the shares
entitled to vote and thus represented at such meeting. If, however, a quorum
shall not be present or represented at any meeting of the stockholders, the
stockholders present in person or represented by proxy shall have power to
adjourn the meeting from time to time,
-2-
<PAGE> 7
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 7. Act of Stockholders' Meeting. The vote of the holders
of a majority of the voting power of all of the shares entitled to vote and
thus represented at a meeting at which a quorum is present shall be the act of
the stockholders' meeting, unless the vote of a greater number is required by
law or the Certificate of Incorporation.
Section 8. Voting of Shares. Each outstanding share shall be
entitled to the number of votes per share as provided in the Certificate of
Incorporation and the Certificate of Designation, if any, which relates to such
share, on each matter submitted to a vote at a meeting of the stockholders. At
each election of directors, every stockholder entitled to vote at such election
shall have the right to vote, in person or by proxy, the number of votes
alloted to the shares owned by him for as many persons as there are directors
to be elected and for whose election he has the right to vote. Cumulative
voting in the election of directors or otherwise is expressly prohibited by the
Certificate of Incorporation.
Section 9. Proxies. At any meeting of the stockholders, each
stockholder having the right to vote shall be entitled to vote either in person
or by proxy executed in writing by the stockholder or by his duly authorized
attorney-in-fact. Any such proxy shall be delivered to the secretary of such
meeting at or prior to the time designated by the chairman of the meeting or in
the order of
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business for so delivering such proxies. No proxy shall be voted or acted upon
after three (3) years from its date, unless the proxy provides for a longer
period. Each proxy shall be revocable unless expressly provided therein to be
irrevocable and unless otherwise made irrevocable by law. Unless required by
statute or determined by the chairman of the meeting to be advisable, the vote
on any question need not be by ballot. On a vote by ballot, each ballot shall
be signed by the stockholder voting or by such stockholder's proxy, if there be
such proxy.
Section 10. Voting List. The officer or agent having charge of
the stock ledger for shares of the corporation shall make, at least ten (10)
days before each meeting of the stockholders, a complete list of the
stockholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and number of shares of
each class or series of the corporation's stock registered in the name of each
stockholder, which list, for a period of ten (10) days prior to such meeting,
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, at any time during the usual business hours, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. Such list shall also be produced and kept open at the
time and place of the meeting and shall be subject to the inspection of any
stockholder during the whole time of the meeting. The corporation shall be
entitled to rely upon the stock ledger as the only evidence as to who are the
stockholders entitled to examine the stock ledger, the aforementioned list of
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stockholders or the books of the corporation, or to vote in person or by proxy
at any such meeting of stockholders.
Section 11. Order of Business. The order of business of each
meeting of the stockholders of the corporation shall be determined by the
chairman of the meeting. The chairman of the meeting shall have the right and
authority to prescribe such rules, regulations, and procedures and to do all
such acts and things as are necessary or desirable for the conduct of the
meeting, including, without limitation, the establishment of procedures for the
dismissal of business not properly presented, the maintenance of order and
safety, limitations on the time allotted to questions or comments on the
affairs of the corporation, restrictions on entry to such meetings after the
time prescribed for commencement thereof, and opening and closing of the voting
polls.
Section 12. Notice of Stockholder Business. At an annual or
special meeting of the stockholders, only such business shall be conducted as
shall have been brought before the meeting (a) by or at the direction of the
Board of Directors or (b) by any stockholder of the corporation entitled to
vote at such annual or special meeting who complies with the notice procedures
set forth in this Section 12. For business to be properly brought before an
annual or special meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to the Secretary of the corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation, not less than thirty (30)
days nor more than sixty (60) days prior to the meeting; provided, however,
that in the event that less than forty (40) days' notice or prior public
disclosure of the date of the meeting is given or made to the
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stockholders, notice by the stockholder to be timely must be received not later
than the close of business on the 10th day following the day on which such
notice of the date of the annual or special meeting was mailed or such public
disclosure was made. Such stockholder's notice to the Secretary shall set forth
as to each matter the stockholder proposes to bring before the annual or
special meeting (a) a brief description of the business desired to be brought
before the annual or special meeting and the reasons for conducting such
business at the annual or special meeting; (b) the name and address, as they
appear on the corporation's books, of such stockholder; (c) the class and
number of each class or series of the shares of the corporation which are
beneficially owned by such stockholder; and (d) any material interest of such
stockholder in such business. Notwithstanding anything in these Bylaws to the
contrary, no business shall be conducted at an annual or special meeting except
in accordance with the procedures set forth in this Section 12. The chairman
of an annual or special meeting shall, if the facts warrant, determine that
business was not properly brought before the meeting and in accordance with the
provisions of this Section 12, and if he should so determine, he shall so
declare to the meeting and any such business not properly brought before the
meeting shall not be transacted. Notwithstanding the foregoing provisions of
this Section 12, a stockholder seeking to have a proposal included in the
corporation's proxy statement shall comply with the requirements of Regulation
14A under the Securities Exchange Act of 1934, as amended (including, but not
limited to, Rule 14a-8 or its successor provision).
Section 13. Notice of Stockholder Nominees. Only persons who are
nominated in accordance with the procedures set forth in
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these Bylaws shall be eligible for election as directors. Nominations of
persons for election to the Board of Directors of the corporation may be made
at a meeting of stockholders (a) by or at the direction of the Board of
Directors or (b) by any stockholder of the corporation entitled to vote for the
election of directors at the meeting who complies with the notice procedures
set forth in this Section 13. Nominations by stockholders shall be made
pursuant to timely notice in writing to the Secretary of the corporation. To
be timely, a stockholder's notice shall be delivered to or mailed and received
at the principal executive offices of the corporation not less than thirty (30)
days nor more than sixty (60) days prior to the meeting; provided, however,
that in the event that less than forty (40) days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a director, all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (including
such person's written consent to being named in the proxy statement as a
nominee and to serving as a director if elected); and (b) as to the stockholder
giving the notice (i) the name and address, as they appear on the corporation's
books, of such stockholder and (ii) the class, series and number of shares of
the corporation
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which are beneficially owned by such stockholder. At the request of the Board
of Directors, any person nominated by the Board of Directors for election as a
director shall furnish to the Secretary of the corporation that information
required to be set forth in a stockholder's notice of nomination which pertains
to the nominee. No person shall be eligible for election as a director of the
corporation unless nominated in accordance with the procedures set forth in
these Bylaws. The chairman of the meeting shall, if the facts warrant,
determine that a nomination was not made in accordance with the procedures
prescribed by these Bylaws, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Powers. The business and affairs of the corporation
shall be managed by its Board of Directors which may exercise all such powers
of the corporation and do all such lawful acts and things as are not by
statute, the Certificate of Incorporation or by these Bylaws directed or
required to be exercised and done by the stockholders.
Section 2. Number of Directors. The number of directors of the
corporation constituting the Board of Directors shall be not less than nine (9)
nor more than eighteen (18), determined from time to time in accordance with
these Bylaws by resolution of the Board of Directors or of the stockholders.
Section 3. Election and Term. The directors shall be classified
with respect to the time for which they shall severally hold office by dividing
them into three (3) classes, each
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consisting of approximately one-third (1/3) of the whole number of the Board of
Directors, and each director of the corporation shall hold office until his
successor is elected and qualified or until his death, resignation, or removal.
Each class of directors shall be as nearly equal in number of directors as
possible and shall be denominated in such manner as the Board of Directors may
determine. The term of office of those of the first class will expire at the
first annual meeting of stockholders after adoption of this Bylaw provision; of
the second class one year thereafter; of the third class two years thereafter;
and at each annual election held after such classification and election, the
successors to the class of directors whose terms shall expire that year shall
be elected to hold office for a term of three (3) years, so that the term of
office for one class of directors shall expire in each year. Directors need not
be residents of the State of Delaware or stockholders of the corporation.
Notwithstanding the foregoing, no person shall be eligible to stand
for election as director if he or she has attained the age of 75 years.
Furthermore, for directors elected to the Board at or after the 1995 Annual
Meeting of Stockholders, a director shall be qualified to continue to serve as
a director only until the first annual meeting of stockholders following the
date on which such director attains the age of 75 years. The term of any
director who has attained the age of 75 years shall automatically terminate
upon the commencement of such next ensuing annual meeting of stockholders
without further action by such director, the board of directors or the
stockholders of the corporation.
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Section 4. Vacancies. Any vacancies occurring in the Board of
Directors and any newly created directorships resulting from any increase in
the authorized number of directors may be filled by the affirmative vote of a
majority of the remaining directors although less than a quorum of the Board of
Directors. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office. Any directorship to be filled by
reason of an increase in the number of directors may be filled by the
affirmative vote of a majority of the directors, subject to the applicable
provisions then in effect of the Delaware General Corporation Law pertaining
thereto. A director elected to fill a newly created directorship shall hold
office until his successor is elected and qualified or until his death,
resignation, or removal.
Section 5. Resignation and Removal. Any director may resign at
any time upon giving written notice to the corporation. At any meeting of
stockholders called expressly for the purpose of removing a director or
directors, any director or the entire Board of Directors may be removed, but
for cause only (removal of directors without cause being expressly prohibited),
by a vote of the holders of a majority of the voting power of all of the shares
then entitled to vote at an election of directors.
Section 6. Compensation of Directors. As specifically prescribed
from time to time by resolution of the Board of Directors, the directors of the
corporation may be paid their expenses of attendance at each meeting of the
Board and may be paid reasonable compensation for their services as directors.
This provision shall not preclude any director from serving the corporation in
any other capacity and receiving compensation
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therefor. Members of special or standing committees may be allowed like
compensation for their services in such capacities.
ARTICLE IV
MEETINGS OF THE BOARD
Section 1. First Meeting. The first meeting of each newly elected
Board of Directors shall be held immediately following the annual meeting of
the stockholders and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present.
Section 2. Regular Meetings. Regular meetings of the Board of
Directors may be held with or without notice at such time and at such place
either within or without the State of Delaware as from time to time shall be
prescribed by resolution of the Board of Directors.
Section 3. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the Chief Executive
Officer or the Secretary on the written request of two directors. Written
notice of special meetings of the Board of Directors shall be given to each
director at least three (3) days before the date of the meeting.
Section 4. Business at Regular or Special Meeting. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the notice or waiver of
notice of such meeting.
Section 5. Quorum of Directors. A majority of the Board of
Directors shall constitute a quorum for the transaction of business, unless a
greater number is required by law or the Certificate of Incorporation. If a
quorum shall not be present at
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any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement
of the meeting, until a quorum shall be present.
Section 6. Act of Directors' Meeting. The vote of a majority of
the directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors, unless the vote of a greater number is required
by law or the Certificate of Incorporation.
Section 7. Action by Written Consent Without a Meeting. Any action
required or permitted to be taken at a meeting of the Board of Directors or of
any committee thereof under the applicable provisions of any statute, the
Certificate of Incorporation or these Bylaws may be taken without a meeting if
a consent in writing setting forth the action so taken is signed by all members
of the Board of Directors or of the committee, as the case may be. Such
consent shall have the same force and effect as a unanimous vote of the Board
of Directors or of the committee, as the case may be.
ARTICLE V
COMMITTEES
The Board of Directors, by resolution adopted by a majority of the
full Board of Directors, may designate from among its members an executive
committee and one or more other committees, each of which, to the extent
provided in such resolution, the Certificate of Incorporation or these Bylaws,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all
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papers which may require it, except that no such committee shall have the power
or authority of the Board of Directors in reference to amending the Certificate
of Incorporation (except as permitted by the Delaware General Corporation Law),
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease, or exchange of all or substantially all of the
property and assets of the corporation otherwise than in the usual and regular
course of its business, recommending to the stockholders a voluntary
dissolution of the corporation or a revocation thereof, amending, altering, or
repealing the Bylaws of the corporation or adopting new Bylaws for the
corporation, filling vacancies in or removing members of the Board of Directors
or any such committee, fixing the compensation of any member of such committee,
or altering or repealing any resolution of the Board of Directors which by its
terms provides that it shall not be so amendable or repealable. Unless such
resolution, the Certificate of Incorporation or these Bylaws so provides, no
such committee shall have the power or authority to declare a dividend, to
authorize the issuance of shares of the corporation, or to adopt a certificate
of ownership and merger pursuant to Section 253 of the Delaware General
Corporation Law. Vacancies in the membership of any such committee shall be
filled by resolution adopted by the majority of the full Board of Directors at
a regular or special meeting of the Board. The designation of any such
committee and the delegation thereto of authority shall not operate to relieve
the Board of Directors, or any member thereof, of any responsibility imposed
upon it or him by law.
Any executive committee designated by the Board of Directors shall
consist of the Chief Executive Officer and such number (not
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less than two (2)) of other directors as the Board may from time to time
determine by resolution adopted by the majority of the full Board of Directors,
one of the members of which committee shall be designated the chairman thereof
by the Board of Directors. The executive committee may make rules for the
conduct of its business, not inconsistent with this Article V, as it shall from
time to time deem necessary and shall keep regular minutes of its proceedings
and report the same to the Board when required. A majority of the members of
the executive committee shall constitute a quorum for the transaction of
business. If a quorum is not present at a meeting, the members present may
adjourn the meeting until a quorum is present. The act of a majority of the
members present at any meeting at which a quorum is present shall be the act of
the executive committee, except as otherwise specifically provided by statute,
the Certificate of Incorporation or the Bylaws of the corporation. Any member
of the executive committee may be removed by the Board of Directors by the
affirmative vote of a majority of the full Board, whenever in its judgment the
best interests of the corporation will be served thereby.
ARTICLE VI
NOTICES
Section 1. Methods of Giving Notice. Whenever any notice is
required to be given to any stockholder or director under the provisions of any
statute, the Certificate of Incorporation or these Bylaws, it shall be given in
writing and delivered personally or mailed to such stockholder or director at
such address as appears on the books of the corporation, and such notice shall
be deemed to be given at the time the same shall be deposited in the
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United States mail with sufficient postage thereon prepaid. Notice to
directors may also be given by telegram, telex, telecopy or similar means of
visual data transmission, and notice given by any of such means shall be deemed
to be delivered when transmitted for delivery to the recipient.
Section 2. Waiver of Notice. Whenever any notice is required to
be given to any stockholder or director under the provisions of any statute,
the Certificate of Incorporation or these Bylaws, a waiver thereof in writing
signed by the person or persons entitled to said notice shall be deemed
equivalent to the giving of such notice.
Section 3. Attendance as Waiver. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business on the ground that
the meeting is not lawfully called or convened.
ARTICLE VII
ACTION WITHOUT A MEETING BY USE OF A
CONFERENCE TELEPHONE OR SIMILAR COMMUNICATIONS EQUIPMENT
Subject to the provisions required or permitted for notice of
meetings, unless otherwise restricted by the Certificate of Incorporation or
these Bylaws, stockholders, members of the Board of Directors or members of any
committee designated by such Board may participate in and hold a meeting of
such stockholders, Board or committee by conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in such a meeting shall
constitute presence in person at such meeting, except where
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a person participates in the meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE VIII
OFFICERS
Section 1. Executive Officers. The officers of the corporation
shall consist of a Chairman of the Board, a Chief Executive Officer, a
President, one or more Vice Presidents (with such supplemental designation to
indicate seniority or scope of duties as the Board of Directors may determine
from time to time), a Secretary, and a Treasurer, each of whom shall be elected
by the Board of Directors as provided in Section 2 of this Article; provided
that any of such offices except President, Secretary and Treasurer may be
allowed to become vacant by failure of the Board of Directors to fill the
office. Any two or more offices may be held by the same person, except that
the Chairman of the Board or the President and the Secretary shall not be the
same person.
Section 2. Election and Qualification. The Board of Directors
shall annually choose (subject to the provisions of Section 1 of this Article)
a Chairman of the Board, a Chief Executive Officer, a President, one or more
Vice Presidents, a Secretary, and a Treasurer, none of whom, except the
Chairman of the Board, the Chief Executive Officer and the President need to be
a member of the Board.
Section 3. Division Officers. The Board of Directors may from
time to time establish one or more divisions of the corporation and assign to
such divisions responsibilities for such of the corporation's business,
operations and affairs as the Board
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may designate. The Board of Directors may appoint or authorize an officer of
the corporation to appoint in writing officers of a division. Unless elected
or appointed an officer of the corporation by the Board of Directors or
pursuant to authority granted by the Board, an officer of a division shall not
as such be an officer of the corporation, except that he shall be an officer of
the corporation for the purposes of executing and delivering documents on
behalf of the corporation or for other specific purposes, if and to the extent
that he may be authorized to do so by the Board of Directors. Unless otherwise
provided in the writing appointing an officer of a division, such officer shall
hold office until his successor is appointed and qualified. Any officer of a
division may be removed with or without cause by the Board of Directors or by
the officer, if any, of the corporation then authorized by the Board of
Directors to appoint such officer of a division. The Board of Directors may
prescribe or authorize an officer of the corporation or an officer of a
division to prescribe in writing the duties and powers and authority of
officers of divisions and may authorize an officer of the corporation or an
officer of a division to determine the compensation for officers of divisions.
Section 4. Other Officers and Agents. The Board of Directors may
elect or appoint such other officers, assistant officers and agents as the
Board may deem necessary, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time
to time by the Board.
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Section 5. Salaries. Subject to the provisions of Section 3 of
this Article, the compensation of all officers and agents of the corporation
shall be determined by the Board of Directors.
Section 6. Term, Removal and Vacancies. Each officer of the
corporation shall hold office until his successor is elected and qualified, or
until his earlier death, resignation or removal. Any officer may resign at any
time upon giving written notice to the corporation. Any officer or agent or
member of the executive committee elected or appointed by the Board of
Directors may be removed by the Board of Directors whenever in its judgment the
best interests of the corporation will be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. Election or appointment of an officer or agent shall not of itself
create contract rights. Any vacancy occurring in any office of the corporation
by death, resignation, removal or otherwise shall be filled (subject to the
provisions of Sections 1 and 3 of this Article) by the Board of Directors.
Section 7. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors and
shall have such other powers and duties as usually pertain to such office or as
may be prescribed by the Board of Directors.
Section 8. Chief Executive Officer. The Board of Directors may
designate whether the Chairman of the Board or the President shall be the Chief
Executive Officer of the corporation. The officer so designated as the Chief
Executive Officer shall have general powers of oversight, supervision and
management of the business and affairs of the corporation, and shall see that
all orders and resolutions of the Board of Directors are carried into
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effect. He shall execute bonds, mortgages and other contracts requiring a seal
under the seal of the corporation, except where required or permitted by law to
be otherwise signed and executed, and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to some other
officer or agent of the corporation. The Chief Executive Officer shall have
such other powers and duties as usually pertain to such office or as may be
prescribed by the Board of Directors. If a Chief Executive Officer is not
otherwise designated by the Board of Directors, the Chairman of the Board shall
be the Chief Executive Officer of the corporation.
Section 9. President. The President, in the absence or disability
of the Chairman of the Board, shall perform the duties and exercise the powers
of the Chairman of the Board. The President shall perform such other duties
and exercise such other powers as usually pertain to such office or as may be
delegated from time to time by the Board of Directors.
Section 10. Vice Presidents. Unless otherwise determined by the
Board of Directors, the Vice Presidents, in the order of their seniority as
such seniority may from time to time be designated by the Board of Directors,
shall perform the duties and exercise the powers of the President in the
absence or disability of the President. They shall perform such other duties
and have such other powers as the Board of Directors may from time to time
prescribe.
Section 11. Secretary. The Secretary shall attend all meetings of
the Board of Directors and all meetings of the stockholders, and shall record
all the proceedings of the meetings of the corporation and of the Board of
Directors in a book to be
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kept for that purpose, and shall perform like duties for the standing
committees when required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the Board of
Directors. He shall keep in safe custody the seal of the corporation, and,
when authorized by the Board of Directors, affix the same to any instrument
requiring it. When so affixed, such seal shall be attested by his signature or
by the signature of the Treasurer or an Assistant Secretary.
Section 12. Assistant Secretaries. Unless otherwise determined by
the Board of Directors, the Assistant Secretaries, in the order of their
seniority as such seniority may from time to time be designated by the Board of
Directors, shall perform the duties and exercise the powers of the Secretary in
the absence or disability of the Secretary. They shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
Section 13. Treasurer. The Treasurer shall have the custody of
the corporate funds and securities, and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation, and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
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Section 14. Assistant Treasurers. Unless otherwise determined by
the Board of Directors, the Assistant Treasurers, in the order of their
seniority as such seniority may from time to time be designated by the Board of
Directors, shall perform the duties and exercise the powers of the Treasurer in
the absence or disability of the Treasurer. They shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
Section 15. Officers' Bond. If required by the Board of
Directors, any officer so required shall give the corporation a bond (which
shall be renewed as the Board may require) in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of any and all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
ARTICLE IX
CERTIFICATES FOR SHARES
Section 1. Certificates Representing Shares. The corporation
shall deliver certificates representing all shares to which stockholders are
entitled. Such certificates shall be numbered and shall be entered in the
books of the corporation as they are issued, and shall be signed by the
Chairman of the Board, the President or a Vice President, and the Secretary or
an Assistant Secretary of the corporation, and may be sealed with the seal of
the corporation or a facsimile thereof. The signatures of
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the Chairman of the Board, the President or Vice President, Secretary or
Assistant Secretary, upon a certificate may be facsimiles, if the certificate
is countersigned by a transfer agent or registered by a registrar, either of
which is other than the corporation itself or an employee of the corporation.
In case any officer who has signed or whose facsimile signature has been placed
upon such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer at the date of its issuance. If the corporation is
authorized to issue shares of more than one class of stock or more than one
series of any class, there shall be set forth upon the face or back of the
certificate, or the certificate shall have a statement that the corporation
will furnish to any stockholder upon request and without charge, a full
statement of all of the powers, designations, preferences, and rights of the
shares of each class authorized to be issued and the qualifications,
limitations or restrictions thereof, and, if the corporation is authorized to
issue any preferred or special class in series, the variations in the relative
rights and preferences between the shares of each such series so far as the
same have been fixed and determined, and the authority of the Board of
Directors to fix and determine the relative rights and preferences of
subsequent series. Each certificate representing shares shall state upon the
face thereof that the corporation is organized under the laws of the State of
Delaware, the name of the person to whom issued, the number and the class and
the designation of the series, if any, which such certificate represents and
the par value of each share represented by such certificate or a statement that
the
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shares are without par value. No certificate shall be issued for any share
until the consideration therefor has been fully paid.
Section 2. Transfer of Shares. Subject to the provisions of
Section 5 of this Article IX and the provisions of Section 2 of Article Four of
the Certificate of Incorporation, upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate, and record the
transaction upon its books.
Section 3. Lost, Stolen or Destroyed Certificate. The Board of
Directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the corporation alleged
to have been lost, stolen or destroyed upon the making of an affidavit of that
fact by the person claiming the certificate to be lost, stolen or destroyed.
When authorizing such issue of a new certificate or certificates, the Board of
Directors, in its discretion and as a condition precedent to the issuance
thereof, may require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 4. Closing of Stock Ledger and Fixing Record Date. For the
purpose of determining stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment
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thereof, or entitled to receive payment of any dividend, or in order to make a
determination of stockholders for any other proper purpose, the Board of
Directors may provide that the stock ledger shall be closed for a stated period
but not to exceed, in any case, sixty (60) days. If the stock ledger shall be
closed for the purpose of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, such ledger shall be closed for at least ten
(10) days immediately preceding such meeting. In lieu of closing the stock
ledger, the Board of Directors may fix in advance a date as the record date for
any such determination of stockholders, such date in any case to be not more
than sixty (60) days, and, in case of a meeting of stockholders, not less than
ten (10) days, prior to the date on which the particular action requiring such
determination of stockholders is to be taken. If the stock ledger is not
closed and no record date is fixed for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders, or stockholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record
date for such determination of stockholders. When a determination of
stockholders entitled to vote at any meeting of stockholders has been made as
provided in this Section 4, such determination shall apply to any adjournment
thereof, except where the determination has been made through the closing of
the stock ledger and the stated period of closing has expired.
Section 5. Foreign Share Ownership. As used in these Bylaws, the
word "Alien" shall include any individual not a citizen of the United States of
America and any representative of any such
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<PAGE> 29
individual; any corporation or other entity organized under the laws of any
foreign government; any foreign government, its agencies or representatives;
any partnership of which any partner is an alien, except for limited partners
insulated in accordance with the rules and regulations of the Federal
Communications Commission; any corporation or other entity controlled directly
or indirectly by other than United States citizens; and any other entity or
individual determined to be an alien under Section 310 of the Communications
Act of 1934, as amended, or the rules and regulations of the Federal
Communications Commission.
At no time shall Aliens (i) own, directly or indirectly, more than
one-fourth of the equity in the corporation, or in any other corporation
directly or indirectly controlling the corporation, that is represented by the
issued and outstanding capital stock of such corporation; or (ii) vote,
directly or indirectly, more than one-fourth of the total voting rights in the
corporation, or in any other corporation directly or indirectly controlling the
corporation, that are represented by the issued and outstanding capital stock
of such corporation. The percentage of voting rights and equity ownership of
Aliens in the corporation's issued and outstanding capital stock shall be
determined in accordance with the Communications Act of 1934, as amended, and
the rules and regulations of the Federal Communications Commission, taking into
account direct and indirect equity interests and direct and indirect voting
rights in the corporation as may be required. As used in these Bylaws, a
"Noncompliance Status" means the existence of circumstances in which, but for
the following provisions of this Section 5, Aliens would own or hold voting
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<PAGE> 30
rights or interests in the corporation in excess of the thresholds set forth in
this paragraph.
In the event a Noncompliance Status shall arise, then, so long as
the Noncompliance Status continues to exist, those stockholders causing or
contributing to the Noncompliance Status shall have no voting, dividend, or
other rights with respect to the shares of the corporation that they may hold,
except the right to transfer such shares in such a manner that the
Noncompliance Status will cease to exist. No transfers of shares of domestic
record to Aliens shall be made if a Noncompliance Status exists or if such
transfer would result in a Noncompliance Status. If the corporation shall
determine that stock of domestic record in fact is held or voted, in whole or
in part, by or for the account of an Alien, and that such interest, but for
this Section 5, would give rise to a Noncompliance Status, the holder of such
stock shall not be entitled to vote, to receive dividends, or to exercise any
other normal stockholder rights, except the right to transfer such stock to a
citizen of the United States of America.
Alien voting and equity interests and rights in stock of the
corporation and the citizenship of transferees of the corporation's stock shall
be determined in conformity with regulations prescribed by or upon the approval
of the Board of Directors, which shall not be less restrictive than the
requirements imposed by the Communications Act of 1934, as amended, and the
rules and regulations of the Federal Communications Commission. The Board of
Directors shall be authorized, at any time and from time to time, to adopt such
other provisions as the directors may deem necessary or desirable to avoid
violation of the provisions of Section 310 of the Communications Act of 1934 as
now in effect or as it may
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<PAGE> 31
hereafter from time to time be amended, and to carry out the provisions of this
Section 5.
Section 6. Registered Stockholders. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of the State of Delaware.
ARTICLE X
GENERAL PROVISIONS
Section 1. Dividends. The Board of Directors from time to time
may declare, and the corporation may pay, dividends on its outstanding shares
in cash, property, or its own shares pursuant to law and subject to the
provisions of the Certificate of Incorporation and these Bylaws.
Section 2. Reserves. The Board of Directors may by resolution
create a reserve or reserves out of earned surplus for any proper purpose or
purposes, and may abolish any such reserve in the same manner.
Section 3. Checks. All checks or demands for money and notes of
the corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors from time to time may designate.
Section 4. Fiscal Year. The fiscal year of the corporation shall
be the calendar year.
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<PAGE> 32
Section 5. Seal. The corporate seal shall have inscribed thereon
the name of the corporation and may be used by causing it or a facsimile
thereof to be impressed or affixed or in any other manner reproduced.
ARTICLE XI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 1. Actions, Suits, or Proceedings Other Than by or in the
Right of the Corporation. The corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was or has agreed to become a director,
officer, employee or agent of the corporation, or is or was serving or has
agreed to serve at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, against costs, charges, expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such action,
suit or proceeding and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo
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<PAGE> 33
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
Section 2. Actions or Suits by or in the Right of the Corporation.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was or has agreed to become a director,
officer, employee or agent of the corporation, or is or was serving or has
agreed to serve at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, against costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by him or on his behalf in
connection with the defense or settlement of such action or suit and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of such liability but in view of all the
circumstances of the case,
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<PAGE> 34
such person is fairly and reasonably entitled to indemnity for such costs,
charges and expenses which the Court of Chancery or such other court shall deem
proper.
Section 3. Indemnification for Costs, Charges, and Expenses of
Successful Party. Notwithstanding the other provisions of this Article, to the
extent that a director, officer, employee or agent of the corporation has been
successful on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, in defense of any action, suit or
proceeding referred to in Sections 1 and 2 of this Article, or in defense of
any claim, issue or matter therein, he shall be indemnified against all costs,
charges and expenses (including attorneys' fees) actually and reasonably
incurred by him or on his behalf in connection therewith.
Section 4. Determination of Right to Indemnification. Any
indemnification under Sections 1 and 2 of this Article (unless ordered by a
court) shall be paid by the corporation unless a determination is made (1) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (2) if such a
quorum is not obtainable, or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or (3)
by the vote of the holders of a majority of the voting power of all of the
shares entitled to vote thereon, that indemnification of the director, officer,
employee or agent is not proper in the circumstances because he has not met the
applicable standard of conduct set forth in Sections 1 and 2 of this Article.
Section 5. Advance of Costs, Charges and Expenses. Costs, charges
and expenses (including attorneys' fees) incurred by a
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<PAGE> 35
person referred to in Sections 1 and 2 of this Article in defending a civil or
criminal action, suit or proceeding shall be paid by the corporation in advance
of the final disposition of such action, suit or proceeding; provided, however,
that the payment of such costs, charges and expenses incurred by a director or
officer in his capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such person while a director or officer)
in advance of the final disposition of such action, suit or proceeding shall be
made only upon receipt of an undertaking by or on behalf of the director or
officer to repay all amounts so advanced in the event that it shall ultimately
be determined that such director or officer is not entitled to be indemnified
by the corporation as authorized in this Article. Such costs, charges and
expenses incurred by other employees and agents may be so paid upon such terms
and conditions, if any, as the Board of Directors deems appropriate. The Board
of Directors may, in the manner set forth above, and upon approval of such
director, officer, employee or agent of the corporation, authorize the
corporation's counsel to represent such person, in any action, suit or
proceeding, whether or not the corporation is a party to such action, suit or
proceeding.
Section 6. Procedure for Indemnification. Any indemnification
under Sections 1, 2 and 3, or advance of costs, charges and expenses under
Section 5 of this Article, shall be made promptly, and in any event within 60
days, upon the written request of the director, officer, employee or agent.
The right to indemnification or advances as granted by this Article shall be
enforceable by the director, officer, employee or agent in any court of
competent jurisdiction, if the corporation denies such
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<PAGE> 36
request, in whole or in part, or if no disposition thereof is made within 60
days. Such person's costs and expenses incurred in connection with
successfully establishing his right to indemnification, in whole or in part, in
any such action shall also be indemnified by the corporation. It shall be a
defense to any such action (other than an action brought to enforce a claim for
the advance of costs, charges and expenses under Section 5 of this Article
where the required undertaking, if any, has been received by the corporation)
that the claimant has not met the standard of conduct set forth in Sections 1
or 2 of this Article, but the burden of proving such defense shall be on the
corporation. Neither the failure of the corporation (including its Board of
Directors, its independent legal counsel, and its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in Sections 1 or 2 of this Article, nor the fact
that there has been an actual determination by the corporation (including its
Board of Directors, its independent legal counsel, and its stockholders) that
the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
Section 7. Other Rights; Continuation of Right to Indemnification.
The indemnification and advancement of costs, charges and expenses provided by
this Article shall not be deemed exclusive of any other rights to which a
person seeking indemnification or advancement of costs, charges and expenses
may be entitled under any law (common or statutory), other Bylaw provision,
agreement, vote of stockholders or disinterested
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<PAGE> 37
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office or while employed by or acting
as agent for the corporation, and shall continue as to a person who has ceased
to be a director, officer, employee or agent as to actions taken while he was
such a director, officer, employee or agent, and shall inure to the benefit of
the estate, heirs, executors and administrators of such person. All rights to
indemnification under this Article shall be deemed to be a contract between the
corporation and each director, officer, employee or agent of the corporation
who serves or served in such capacity at any time while this Article is in
effect. Any repeal or modification of this Article or any repeal or
modification of relevant provisions of the Delaware General Corporation Law or
any other applicable laws shall not in any way diminish any rights to
indemnification of such director, officer, employee or agent or the obligations
of the corporation arising hereunder.
Section 8. Extent of Indemnification. In addition to the specific
indemnification provided for herein, the corporation shall indemnify each
person who is or was or has agreed to become a director, officer, employee or
agent of the corporation, or is or was serving or has agreed to serve at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, to the
fullest extent authorized or permitted (i) by the General Corporation Law of
Delaware, or any other applicable law, or by any amendment thereof or other
statutory provisions in effect on the date hereof, or (ii) by the corporation's
Certificate of Incorporation as in effect on the date hereof. The corporation
shall also advance expenses to any of the foregoing individuals to
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<PAGE> 38
the fullest extent authorized or permitted (i) by the General Corporation Law
of Delaware, or any other applicable law, or by any amendment thereof or other
statutory provision in effect on the date hereof, or (ii) by the corporation's
Certificate of Incorporation as in effect on the date hereof.
Section 9. Insurance. Notwithstanding the foregoing, the
corporation shall have the power to purchase and maintain insurance on behalf
of any person who is or was or has agreed to become a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him or on his behalf in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of this Article.
Section 10. Savings Clause. If this Article or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the corporation shall nevertheless indemnify each director, officer, employee
and agent of the corporation as to costs, charges and expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the corporation, to
the full extent permitted by any applicable portion of this Article that shall
not have been invalidated and to the full extent permitted by applicable law.
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<PAGE> 39
ARTICLE XII
AMENDMENTS
The initial Bylaws of the corporation shall be adopted by the Board
of Directors. The power to alter, amend, or repeal the Bylaws or adopt new
Bylaws, subject to repeal or change by action of the stockholders, is vested in
the Board of Directors. Thus, these Bylaws may be altered, amended, or
repealed or new Bylaws may be adopted by the affirmative vote of a majority of
the Board of Directors at any regular or special meeting of the Board, subject
to repeal or change at any regular or special meeting of stockholders at which
a quorum is present or represented by the affirmative vote of not less than
two-thirds of the voting power of all of the shares entitled to vote at such
meeting, voting together as a single class, and present or represented thereat,
provided notice of the proposed repeal or change is contained in the notice of
such meeting of stockholders.
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<PAGE> 1
Exhibit 4.10
SUPPLEMENT NO. 6 TO RIGHTS AGREEMENT
This Supplement No. 6 to the Rights Agreement between the parties
hereto supplements that certain Rights Agreement dated as of March 10, 1986,
between A. H. Belo Corporation ("Belo") and RepublicBank Dallas, N.A., a
national banking association ("Republic"), as amended prior to the date hereof
(the "Rights Agreement").
RECITALS
WHEREAS, Belo and Republic entered into the Rights Agreement as of
March 10, 1986;
WHEREAS, Belo and Republic amended the Rights Agreement by Supplement
No. 1 dated April 9, 1987;
WHEREAS, Belo and Republic amended the Rights Agreement by Supplement
No. 2 dated May 6, 1987;
WHEREAS, Belo and First RepublicBank Dallas, National Association
("First Republic"), as successor to Republic as the Rights Agent pursuant to
the provisions of Section 19 of the Rights Agreement, amended the Rights
Agreement by Supplement No. 3 dated May 19, 1988;
WHEREAS, Belo, NCNB Texas National Bank ("NCNB-Texas"), as successor
to First Republic as the Rights Agent pursuant to the provisions of Section 19
of the Rights Agreement, and Manufacturers Hanover Trust Company
("Manufacturers Hanover") amended the Rights Agreement by Supplement No. 4
dated December 12, 1988, in part to appoint Manufacturers Hanover as the Rights
Agent under the Rights Agreement;
WHEREAS, Belo and Chemical Bank ("Chemical"), as successor to
Manufacturers Hanover as the Rights Agent pursuant to the provisions of Section
19 of the Rights Agreement, amended the Rights Agreement by Supplement No. 5
dated May 6, 1993; and
WHEREAS, the Board of Directors of Belo has declared a two-for-one
stock split in the form of a stock dividend on all outstanding shares of its
Common Stock, pursuant to which, on or about June 9, 1995 it will distribute
one share of its Series A Common Stock for each share of Series A Common Stock
held as of May 19, 1995 and one share of its Series B Common Stock for each
share of Series B Common Stock held as of May 19, 1995 (the "Distribution");
and
WHEREAS, in connection with the Distribution, Belo and Chemical desire
to amend the Rights Agreement pursuant to Section 26 of the Rights Agreement;
<PAGE> 2
NOW, THEREFORE, the parties hereto agree to amend the Rights Agreement as
follows:
Pursuant to the provisions of Section 11(n), as a
result of the Distribution (i) each Right shall entitle the
holder thereof to purchase one four-hundredth of a Preferred
Share, rather than one-two hundredth, at an exercise price of
$43.75 per one-four hundredth of a Preferred Share, and (ii)
the redemption price of $.05 per Right set forth in Section 23
is hereby adjusted to $.025 per Right.
IN WITNESS WHEREOF, the parties hereto have caused this Supplement No.
6 to be duly executed and attested as of the 22nd day of February, 1995.
A. H. BELO CORPORATION
ATTEST: By: /s/ Robert W. Decherd
By: /s/ Michael J. McCarthy ______________________________
______________________________ Robert W. Decherd
Michael J. McCarthy Chairman of the Board, President
Senior Vice President, Secretary and Chief Executive Officer
and General Counsel
CHEMICAL BANK
ATTEST: By: /s/ [illegible]
By: /s/ [illegible] ________________________________
____________________________________ Name:______________________________
Name:__________________________________ Title:_____________________________
Title:_________________________________
2
<PAGE> 1
EXHIBIT 10.1(8)
CBS TELEVISION NETWORK
CBS Affiliate Relations
A Division of CBS Inc.
AFFILIATION AGREEMENT
---------------
CBS AFFILIATE RELATIONS, A Division of CBS Inc., 51 West 52 Street, New York,
New York 10019 ("CBS"), and WWL-TV INC., 1024 North Rampart Street, New
Orleans, Louisiana 70116 ("Broadcaster"), licensed to operate television
station WWL-TV at New Orleans, Louisiana on channel number 4 ("Affiliated
Station"), hereby mutually covenant and agree, as of the 10th day of May, 1994,
as follows:
1. Offer, Acceptance and Delivery of Network Programs.
Broadcaster shall have a "first call" on CBS network television programs
("Network Programs") as follows:
(a) Offer of Network Programs.
CBS shall offer to Broadcaster for broadcasting by Affiliated Station
those Network Programs which are to be broadcast on a network basis by any
television broadcast station licensed to operate in Affiliated Station's
community of license.
(b) Acceptance of Network Programs.
As to any offer described in Paragraph 1(a) of this Agreement,
Broadcaster may accept such offer only by notifying CBS, by means of CBS's
computer-based communications system, of such acceptance within 72 hours
(exclusive of Saturdays, Sundays and holidays), or such longer period as CBS
may specify therein, after such offer; provided, however, that, if the first
broadcast referred to in such offer is scheduled to occur less than 72 hours
after the making of the offer, Broadcaster shall notify CBS of the acceptance
or rejection of such offer as promptly as possible and in any event prior to
the first broadcast time specified in such offer. Such acceptance shall
constitute Broadcaster's agreement that Affiliated Station will broadcast such
Network Program or Programs in accordance with the terms of this Agreement and
of such offer, and so long as Affiliated Station so broadcasts such Network
Program or Programs, CBS will not, subject to its rights in the program
material, authorize the broadcast thereof on a network basis by any other
television broadcast station licensed to operate in Affiliated Station's
community of license; provided, however, that CBS shall have the right to
authorize any television broadcast station, wherever licensed to operate, to
broadcast any Network Program consisting of an address by the President of the
United States of America on a subject of public importance or consisting of
coverage of a matter of immediate national concern. If as to any Network
Program offered hereunder, Broadcaster does not notify CBS as provided for in
this Paragraph 1(b), Broadcaster shall have no rights with respect to such
Network Program, and CBS may offer such Network Program on the same or
different terms to any other television broadcast station or stations licensed
to operate in Affiliated Station's community of license;
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<PAGE> 2
provided, however, that, if any Network Program offered hereunder is accepted,
by Affiliated Station, upon any other terms or conditions to which CBS agrees
in writing, then the provisions of this Agreement shall apply to the broadcast
of such Network Program except to the extent such provisions are expressly
varied by the terms and conditions of such acceptance as so agreed to by CBS.
(c) Delivery of Network Programs.
Any obligation of CBS to furnish Network Programs for broadcasting by
Affiliated Station is subject to CBS's making of arrangements satisfactory to
it for the delivery of Network Programs to Affiliated Station.
2. Payment to Broadcasters.
(a) Definitions.
(i) "Live Time Period," means the time period or periods
specified by CBS in its initial offer of a Network
Program to Broadcaster for the broadcast of such
Network Program over Affiliated Station; (ii)
"Affiliated Station's Network Rate" shall be $4,622
and is used herein solely for purposes of computing
payments by CBS to Broadcaster; (iii) "Commercial
Availability" means a period of time made available
by CBS during a Network Commercial Program for one or
more Network Commercial Announcements or local
cooperative commercial announcements; and (iv)
"Network Commercial Announcements" means a commercial
announcement broadcast over Affiliated Station during
a Commercial Availability and paid for by or on
behalf of one or more CBS advertisers, but does not
include announcements consisting of billboards,
credits, public service announcements, promotional
announcements and announcements required by law.
(b) Payment for Broadcast of Programs.
For each Network Commercial Program or portion thereof, except those
specified in Paragraph 2(c) hereof, which is broadcast over Affiliated Station
during the Live Time Period therefor and the Live Time Period for which is set
forth in the table below, CBS shall pay Broadcaster the amount resulting from
multiplying the following:
(i) Affiliated Station's Network Rate; by
(ii) the percentage set forth below opposite such time period
(which, unless otherwise specified, is expressed in Affiliated
Station's then-current local time); by
(iii) the fraction of an hour substantially occupied by such program
or portion thereof; by
(iv) the fraction of the aggregate length of all Commercial
Availabilities during such program or portion thereof occupied
by Network Commercial Announcements.
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<PAGE> 3
Table
<TABLE>
<S> <C>
Monday through Friday
6:00 a.m.- 9:00 a.m ............................. 7%
9:00 a.m.- 11:OO a.m ............................. 15%
11:00 a.m.- 3:00 p.m ............................. 6%
3:00 p.m.- 5:00 p.m ............................. 12%
5:00 p.m.- 7:00 p.m ............................. 15%
7:00 p.m.- 10:00 p.m ............................. 28%
10:00 p.m.- 11:00 p.m ............................. 15%
Saturday
7:00 a.m.- 8:00 a.m ............................. 7%
8:00 a.m.- 5:00 p.m ............................. 12%
5:00 p.m.- 7:00 p.m ............................. 15%
7:00 p.m.- 10:00 p.m ............................. 28%
10:00 p.m.- 11:00 p.m ............................. 15%
Sunday
10:30 a.m.- 5:00 p.m ............................. 12%
5:00 p.m.- 6:00 p.m ............................. 15%
6:00 p.m.- 10:00 p.m. ............................ 28%
10:00 p.m.- 11:00 p.m ............................. 15%
</TABLE>
For each Network Program or portion thereof, except those specified in
Paragraph 2(c) hereof, which is broadcast by Affiliated Station during a time
period other than the Live Time Period therefor and the Live Time Period for
which is set forth in the table above, CBS shall pay Broadcaster as if
Affiliated Station had broadcast such program or portion thereof during such
Live Time Period, except that:
(i) if the percentage set forth above opposite the time
period during which Affiliated Station broadcast such
program or portion thereof is less than that set
forth opposite such Live Time Period, then CBS shall
pay Broadcaster on the basis of the time period during
which Affiliated Station broadcast such program or
portion thereof; and
(ii) if the time period or any portion thereof during
which Affiliated Station broadcast such program is
not set forth in the table above, then CBS shall pay
Broadcaster in accordance with Paragraph 2(c) hereof.
(c) Payment for Broadcast of Other Programs.
For the following programs, the percentages listed below (rather than
those daypart percentages set forth in the table in Paragraph 2(b) hereinabove)
shall be used in computing payment to Affiliated Station:
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<PAGE> 4
<TABLE>
<S> <C>
Monday-Friday Daytime Game shows .................................... 15%
Monday-Friday Continuing Dramas ..................................... 6%
Monday-Friday Late Night Daypart ....................10% per telecast for
live clearance or 5%
per telecast for
delayed clearance
Monday - Friday CBS EVENING NEWS .................................... 15%
CBS Sports programs ................................................. 0%
CBS SUNDAY MORNING and FACE THE NATION .............................. 8%
</TABLE>
Notwithstanding the payment obligations set forth in Paragraph 2(b)
above, CBS shall pay Broadcaster such amounts as specified in CBS's program
offer for Network Programs broadcast by Affiliated Station consisting of (i)
special event programs (including, but not limited to, such programs as awards
programs, mini-series, movie specials, entertainment specials,
special-time-period broadcasts of regularly-scheduled series, and news specials
such as political conventions, election coverage, presidential inaugurations
and related events), (ii) paid political programming, and (iii) programs for
which CBS specified a Live Time Period, or which Affiliated Station broadcast
during a time period, any portion of which is not set forth in the table above.
(d) Deduction.
From the amounts otherwise payable to Broadcaster hereunder, there
shall be deducted, for each week of the term of this Agreement, a sum equal to
168% of Affiliated Station's Network Rate.
(e) Changes in Rate.
CBS may reduce Affiliated Station's Network Rate in connection with a
re-evaluation and reduction of the Affiliated Station Network Rate of CBS's
affiliated stations in general, by giving Affiliated Station at least
thirty-days' prior notice of such reduction in Affiliated Station's Network
Rate in which event Broadcaster may terminate this Agreement, effective as of
the effective date of any such reduction, on not less than fifteen-days' prior
notice to CBS. In order to reflect differences in the importance of
compensation payments to stations in markets of varying size, the size of any
general reduction of the Network Rate of CBS's affiliated stations pursuant to
this Paragraph 2(e) may vary to a reasonable degree according to each station's
market-size category (i.e., 1-50, 51-100, 101-150 or 151+).
(f) Time of Payment.
CBS shall make the payments hereunder reasonably promptly after the
end of each four-week or five-week accounting period of CBS for Network
Commercial Programs broadcast during such accounting period.
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<PAGE> 5
(g) Reports.
Broadcaster shall submit to CBS in the manner requested by CBS such
reports as CBS may reasonably request concerning the broadcasting of Network
Programs by Affiliated Station.
3. Term and Termination.
(a) Term.
The term of this Agreement shall be the period commencing on the date
Affiliated Station's license is transferred to Broadcaster and expiring on May
31, 1998; provided, however, that, unless Broadcaster or CBS shall notify the
other at least six months prior to the expiration of the original period or any
subsequent two-year period that the party giving such notice does not wish to
have the term extended beyond such period, the term of this Agreement shall be
automatically extended upon the expiration of the original period and each
subsequent extension thereof for an additional period of two years.
Notwithstanding any provision of any offer or acceptance under Paragraph 1
hereof, upon the expiration or any termination of the term of this Agreement,
Broadcaster shall have no right whatsoever to broadcast over Affiliated Station
any Network Program.
(b) Termination on Transfer of License or Interest in Broadcaster.
Broadcaster shall notify CBS forthwith if any application is made to
the Federal Communications Commission relating to a transfer either of any
interest in Broadcaster or of Broadcaster's license for Affiliated Station. CBS
shall have the right to terminate this Agreement effective as of the effective
date of any such transfer (except a transfer within the provisions of Section
73.3540(f) of the Federal Communications Commission's present Rules and
Regulations) by giving Broadcaster notice thereof within thirty days after the
date on which Broadcaster gives CBS notice of the making of such application.
If CBS does not so terminate this Agreement, Broadcaster shall, prior to the
effective date of any such transfer of Broadcaster's license for Affiliated
Station, procure and deliver to CBS, in form satisfactory to CBS, the agreement
of the proposed transferee that, upon consummation of the transfer, the
transferee will unconditionally assume and perform all obligations of
Broadcaster under this Agreement. Upon delivery of said agreement to CBS, in
form satisfactory to it, the provisions of this Agreement applicable to
Broadcaster shall, effective upon the date of such transfer, be applicable to
such transferee. If Broadcaster does not so notify CBS or does not so procure
such agreement of the proposed transferee, then CBS shall have the right to
terminate the term of this Agreement effective upon giving Broadcaster and the
transferee notice thereof within thirty days after the later of the effective
date of such transfer and the date on which CBS first learns of such
application.
(c) Termination on Change of Transmitter Location, Power, Frequency
or Hours of Operation of Affiliated Station.
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<PAGE> 6
Broadcaster shall notify CBS forthwith if application is made to the
Federal Communications Commission to modify the transmitter location, power or
frequency of Affiliated Station or Broadcaster plans to modify the hours of
operation of Affiliated Station. CBS shall have the right to terminate this
Agreement, effective upon the effective date of such modification, by giving
Broadcaster notice thereof within thirty (30) days after the date on which
Broadcaster gives CBS notice of the application or plan for such modification.
If Broadcaster fails to notify CBS as required herein, then CBS shall have the
right to terminate this Agreement by giving Broadcaster thirty (30) days'
notice thereof within thirty (30) days of the date on which CBS first learns of
such application.
(d) Termination in the Event of Bankruptcy.
Upon one (1) month's notice, CBS may terminate this Agreement if a
petition in bankruptcy is filed by or on behalf of Broadcaster, or Broadcaster
otherwise takes advantage of any insolvency law, or an involuntary petition in
bankruptcy is filed against Broadcaster and not dismissed within thirty (30)
days thereafter, or if a receiver or trustee of any of Broadcaster's property
is appointed at any time and such appointment is not vacated within thirty (30)
days thereafter (it being understood that Broadcaster will have a similar right
of termination upon the occurrence of any such event with respect to CBS).
(e) Termination in the Event of Breach.
Each party, effective upon notice to the other, may, in addition to
its other rights, terminate this Agreement if any material representation,
warranty or agreement of the other party contained in this Agreement has been
breached.
4. Use of Network Programs.
(a) General.
Broadcaster shall not broadcast any Network Program over Affiliated
Station unless such Network Program has first been offered by CBS to
Broadcaster for broadcasting over Affiliated Station and has been accepted by
Broadcaster in accordance with this Agreement. Except with the prior written
consent of CBS, Broadcaster shall neither sell any Network Program, in whole or
in part, or any time therein, for sponsorship, nor otherwise use Network
Programs except as specifically authorized in this Agreement. Affiliated
Station shall not broadcast any commercial announcement or announcements during
any interval, within a Network Program, which is designated by CBS to
Affiliated Station as being for the sole purpose of making a station
identification announcement. Broadcaster shall, with respect to each Network
Program broadcast over Affiliated Station, broadcast such Network Program in
its entirety (including but not limited to commercial announcements,
billboards, credits, public service announcements, promotional announcements
and network identification), without interruption, alteration, compression,
deletion or addition of any kind, from the beginning of the Network Program to
the final system cue at the conclusion of the Network Program. Nothing herein
shall be construed as preventing Broadcaster's deletion of (i) part of a Network
Program in order to broadcast an emergency announcement or
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<PAGE> 7
news bulletin; (ii) a promotional announcement for a Network Program not to be
broadcast over Affiliated Station (provided that Affiliated Station shall
broadcast an alternative promotional announcement for CBS network programming
in place of the deleted promotional announcement); (iii) such words, phrases or
scenes as Broadcaster, in the reasonable exercise of its judgment, determines
it would not be in the public interest to broadcast over Affiliated Station;
provided, however, that Broadcaster shall not substitute for any material
deleted pursuant to this clause (iii) any commercial or promotional
announcement of any kind whatsoever; and provided further that Broadcaster
shall notify CBS of every such deletion within 72 hours thereof. Broadcaster
shall not, without CBS's prior written consent, authorize or permit any Network
Program, recording, or other material furnished by CBS to Broadcaster or
Affiliated Station hereunder to be recorded, duplicated, rebroadcast,
retransmitted or otherwise used for any purpose whatsoever other than
broadcasting by Affiliated Station as provided herein; except that Broadcaster
may assert a right to carriage of Affiliated Station's signal by a cable system
pursuant to the provisions of Section 4 of the Cable Consumer Protection and
Competition Act of 1992 ("the 1992 Cable Act") and may, to the extent permitted
by paragraph 4(b) hereof, grant consent to the retransmission of such signal by
a cable system or other multichannel video programming distributor, as defined
by said Act, pursuant to the provisions of Section 6 thereof.
(b) Retransmission Consent.
Broadcaster may grant consent to the retransmission of Affiliated
Station's signal by a cable system or other multichannel video programming
distributor pursuant to the provisions of Section 6 of the 1992 Cable Act
(hereafter "retransmission consent"), provided that one of the following
conditions applies at the time retransmission consent is granted:
(i) the cable system or other multichannel program
service on which Affiliated Station's signal is to be
retransmitted serves television homes within
Affiliated Station's television market;
(ii) the majority of television homes served by the cable
system or other multichannel program service on which
Affiliated Station's signal is to be retransmitted
are within a county or community in which Affiliated
Station's signal is, and has been since October 5,
1992, "significantly viewed" as defined in Section
76.54 of the FCC's rules; or
(iii) the cable system or other multichannel program
service on which Affiliated Station's signal is to be
retransmitted carried such signal on October 5, 1992,
and does not receive such signal by satellite
delivery.
Notwithstanding anything to the contrary in the foregoing, in no case
shall retransmission consent be granted to a television receive-only satellite
service, or a direct broadcast satellite service, if Affiliated Station's
signal is to be retransmitted by such service to television homes outside of
Affiliated Station's television market other than "unserved household(s)," as
that term is defined in
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<PAGE> 8
Section 119(d) of Title 17, United States Code, as in effect on October 5,
1992. For purposes of this paragraph, a station's "television market" shall be
defined in the same manner as set forth in Sections 76.55(e) and 76.59 of the
FCC's rules.
(c) Taped Recordings of Network Programs.
When authorized to make a taped delayed broadcast of a Network
Program, Broadcaster shall use Broadcaster-owned tape to record the Network
Program when transmitted by CBS only for a single broadcast by Affiliated
Station and shall erase the Program recorded on the tape within 24 hours of
broadcasting the Network Program and observe any limitations which CBS may
place on the exploitation of the Network Program so recorded and erased.
5. Rejection, Refusal, Substitution and Cancellation of Network Programs.
(a) Rights of Broadcaster and CBS.
With respect to Network Programs offered to or already accepted
hereunder by Broadcaster, nothing in this Agreement shall be construed to
prevent or hinder:
(i) Broadcaster from rejecting or refusing any such
Network Program which Broadcaster reasonably believes
to be unsatisfactory or unsuitable or contrary to the
public interest, or from substituting a program
which, in Broadcaster's opinion, is of greater local
or national importance; or
(ii) CBS from substituting one or more other Network
Programs, in which event CBS shall offer such
substituted program or programs to Broadcaster
pursuant to the provisions of Paragraph 1 hereof; or
(iii) CBS from canceling one or more Network Programs.
(b) Notice.
In the event of any such rejection, refusal, substitution or
cancellation by either party hereto, such party shall notify the other thereof
as soon as practicable by telex or by such computer-based communications system
as CBS may develop for notifications of this kind. Notice given to CBS shall be
addressed to CBS Affiliate Relations.
6. Disclosure of Information.
CBS shall endeavor in good faith, before furnishing any Network Program, to
disclose to Broadcaster information of which CBS has knowledge concerning the
inclusion of any matter in such Network Program for which any money, service or
other valuable consideration is directly or indirectly paid or promised to, or
charged or accepted by, CBS or any employee of CBS or any other person with
whom CBS deals in connection with the production or preparation of such Network
Program. As used in this Paragraph 6, the term "service or other valuable
consideration" shall not include any service or property furnished without
charge or at a nominal charge for use in, or in connection
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<PAGE> 9
with, any Network Program "unless it is so furnished in consideration for an
identification in a broadcast of any person, product, service, trademark, or
brand name beyond an identification which is reasonably related to the use of
such service or property on the broadcast," as such words are used in Section
317 of the Communications Act of 1934 as amended. The provisions of this
Paragraph 6 requiring the disclosure of information shall not apply in any case
where, because of a waiver granted by the Federal Communications Commission, an
announcement is not required to be made under said Section 317. The inclusion
in any such Network Program of an announcement required by said Section 317
shall constitute the disclosure to Broadcaster required by this Paragraph 6.
7. Indemnification.
CBS will indemnify Broadcaster from and against any and all claims, damages,
liabilities, costs and expenses arising out of the broadcasting, pursuant to
this Agreement, of Network Programs furnished by CBS to the extent that such
claims, damages, liabilities, costs and expenses are (i) based upon alleged
libel, slander, defamation, invasion of the right of privacy, or violation or
infringement of copyright or literary or dramatic rights; (ii) based upon the
broadcasting of Network Programs as furnished by CBS, without any deletions by
Broadcaster; and (iii) not based upon any material added by Broadcaster to such
Network Programs (as to which deletions and added material Broadcaster shall,
to the like extent, indemnify CBS, all network advertisers, if any, on Such
Network Program, and the advertising agencies of such advertisers).
Furthermore, each party will so indemnify the other only if such other party
gives the indemnifying party prompt notice of any claim or litigation to which
its indemnity applies; it being agreed that the indemnifying party shall have
the right to assume the defense of any or all claims or litigation to which its
indemnity applies and that the indemnified party will cooperate fully with the
indemnifying party in such defense and in the settlement of such claim or
litigation. Except as herein provided to the contrary, neither Broadcaster nor
CBS shall have any rights against the other party hereto for claims by third
persons or for the non-operation of facilities or the non-furnishing of Network
Programs for broadcasting if such non-operation or non-furnishing is due to
failure of equipment, action or claims by any third person, labor dispute or
any cause beyond such party's reasonable control.
8. News Reports Included in Affiliated Station's Local News Broadcasts.
As provided in the agreements pertaining to CBS Newsnet and CBS
regional news cooperatives (but as a separate obligation of this Affiliation
Agreement as well), Broadcaster shall make available, on request by CBS News,
coverage produced by Affiliated Station of news stories and breaking news
events of national and/or regional interest, to CBS News and to regional news
cooperatives operated by CBS News. Affiliated Station shall be compensated at
CBS News' then-prevailing rates for material broadcast by CBS News or included
in the national Newsnet service.
9. Non-Duplication of Network Programs.
(a) For purposes of this paragraph, a television station's "Network
Exclusivity Zone" shall mean the zone within thirty-five (35) miles of the
station's reference points, or, in the case of a
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"small market television station," as defined in Section 76.92 of the FCC
rules, the zone within 55 miles of said reference points; provided, however,
that in no case shall the "Network Exclusivity Zone" include an area within the
Area of Dominant Influence (ADI), as determined by Arbitron and published in
the then-current edition of its Television ADI Market Guide, of another CBS
Television Network Affiliate. A station's "reference points" for purposes of
this paragraph shall be as defined in Section 73.658(m) of the FCC rules, and
shall be deemed to include, with respect to a station in a hyphenated market,
the reference points of each named community in that market.
(b) Broadcaster shall be entitled to exercise, within Affiliated
Station's Network Exclusivity Zone, the protection against duplication of
network programming, as provided by Sections 76.92 through 76.97 of the FCC
rules, with respect to a Network Program during the period beginning one (1)
day before and ending seven (7) days after the delivery of such Network Program
by CBS to Broadcaster; provided, however, that such right shall apply only to
Network Programs broadcast in the live time period as offered or on no more
than a one day delay as accepted by CBS; and provided further that nothing
herein shall be deemed to preclude CBS from granting to any other broadcast
television station licensed to any other community similar network
non-duplication rights within that station's Network Exclusivity Zone, and
Broadcaster's aforesaid right of network non-duplication shall not apply with
respect to the transmission of the programs of another CBS affiliate (current
or future) by a "community unit," as that term is defined by the rules of the
FCC, located (wholly or partially) within the area in which Broadcaster's
Network Exclusivity Zone overlaps the Network Exclusivity Zone of that other
CBS affiliate.
(c) Broadcaster's network non-duplication rights under this
paragraph shall be subject to cancellation by CBS on six (6) months written
notice to Broadcaster. Any such cancellation by CBS shall not affect any of the
other rights and obligations of the parties under this Agreement.
10. Assignment, Conveyance and Conditions for Use of Descramblers.
(a) For value received, CBS hereby conveys, transfers, and assigns
to Broadcaster, all of its rights, title and interest in and to the tangible
personal property consisting of two (2) Videocipher 1B Descramblers (the
"Descramblers") subject to the following conditions:
(i) Broadcaster may not assign its rights in the
Descramblers to any party without CBS's written
approval.
(ii) At the termination or expiration of this Agreement,
Broadcaster's rights in the Descramblers shall cease
and Broadcaster shall take appropriate steps to
assign the Descramblers to CBS.
(b) Broadcaster shall use the Descramblers solely in connection with
the broadcast rights granted and specified in the Agreement.
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<PAGE> 11
(c) CBS makes no warranties whatsoever, either express or implied,
in respect of the equipment including, but not limited to, any warranties of
merchantability or fitness for a particular purpose.
(d) Broadcaster shall be solely responsible for any and all
installation and other related costs or charges in connection with the use and
installation of the Descramblers. Broadcaster shall at all times use and
maintain the Descramblers as instructed by CBS and the manufacturer and shall
use its best efforts to assure that the Descramblers are kept in good condition
and that no tampering with the Descramblers or other breach of security, as
defined in subparagraph (g) below, occurs. Broadcaster shall promptly notify
the CBS Satellite Management Center by telephone of any defect or failure in
the operation of the Descramblers and shall follow such procedures as are
established by CBS for the replacement or repair of the Descramblers. CBS shall
be responsible for the cost of correcting any defect or of rectifying any
failure of the Descramblers to operate during the Term of the Agreement,
provided that Broadcaster shall be responsible for any costs associated with
its failure to follow the prescribed procedures.
(e) In addition to its rights under paragraph 7 of the Agreement,
CBS will not be liable for any damages resulting from the operation of the
Descramblers or from the failure of the Descramblers to function properly or,
any loss, cost or damage to Broadcaster or others arising from defects or
non-performance of the Descramblers.
(f) If Broadcaster makes any use of the Descramblers in violation of
the terms and conditions of this Agreement, said use shall be a material breach
of this Agreement.
(g) Should Broadcaster's willful acts or negligence result in any
breach in the security of the two Descramblers covered by this Agreement, such
breach of security shall be a material breach of this Agreement. Breach of
security shall include but not be limited to any theft of all or part of the
Descramblers, any unauthorized reproduction of all or part of the Descramblers,
any unauthorized reproduction of the code involved in descrambling the network
feed from CBS to Broadcaster, or any related misappropriation of the physical
property or intellectual property contained in the Descramblers.
11. General.
(a) As of the beginning of the term hereof, this Agreement takes the
place of, and is substituted for, any and all television affiliation agreements
heretofore existing between Broadcaster and CBS concerning Affiliated Station,
subject only to the fulfillment of any obligations thereunder relating to
events occurring prior to the beginning of the term hereof. This Agreement
cannot be changed or terminated orally and no waiver by either Broadcaster or
CBS of any breach of any provision hereof shall be or be deemed to be a waiver
of any preceding or subsequent breach of the same or any other provision of
this Agreement.
(b) The obligations of Broadcaster and CBS under this Agreement are
subject to all applicable federal, state and local law, rules and regulations
(including but not limited to the Communications Act of 1934 as amended and the
Rules and Regulations of the Federal Communications Commission) and this
Agreement and all matters or issues collateral thereto shall
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<PAGE> 12
be governed by the law of the State of New York applicable to contracts
performed entirely therein.
(c) Neither Broadcaster nor CBS shall be or be deemed to be or hold
itself out as the agent of the other under this Agreement.
(d) Unless specified otherwise, all notices given hereunder shall be
given in writing, by personal delivery, mail, telegram, telex system or private
wire at the respective addresses of Broadcaster and CBS set forth above, unless
either party at any time or times designates another address for itself by
notifying the other party thereof by certified mail, in which case all notices
to such party shall thereafter be given at its most recently so designated
address. Notice given by mail shall be deemed given on the date of mailing
thereof with postage prepaid. Notice given by telegram shall be deemed given on
delivery of such telegram to a telegraph office with charges therefor prepaid
or to be billed to the sender thereof. Notice given by private wire shall be
deemed given on the sending thereof.
(e) The titles of the paragraphs in this Agreement are for
convenience only and shall not in any way affect the interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
WWL-TV INC. CBS AFFILIATE RELATIONS
A Division of CBS Inc.
By /s/ WARD L. HUEY, JR. By /s/ [illegible]
---------------------- -------------------
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[CBS LETTERHEAD]
May 10, 1994
WWL-TV INC.
New Orleans, Louisiana
Gentlemen:
Reference is made to the CBS Television Network Affiliation Agreement between
you and us dated May 10, 1994 relating to television station WWL-TV at New
Orleans, Louisiana.
You and we agree that at such time as WWL-TV commences clearance of the two
hour weekday morning CBS News program CBS THIS MORNING, effective on the
premiere date of the program a revenue-neutral reallocation of payment will be
made by increasing payment for the Monday - Friday 6:00AM - 9:00AM time period
from 7% to 11.2% per hour as specified in paragraph 2(b), and reducing payment
for the Monday - Friday CBS EVENING NEWS from 15% to 5% per hour as specified
in paragraph 2(c).
This letter shall not be construed as amending in any way any of the other terms
or conditions of the Agreement.
WWL-TV INC. CBS AFFILIATE RELATIONS
A Division of CBS Inc.
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
______________________________ _____________________________
<PAGE> 1
EXHIBIT 10.3(14)
A. H. BELO CORPORATION
EMPLOYEE SAVINGS AND INVESTMENT PLAN
<PAGE> 2
A. H. BELO CORPORATION
EMPLOYEE SAVINGS AND INVESTMENT PLAN
A. H. Belo Corporation, a Delaware corporation, adopts this
employee savings and investment plan effective October 1, 1989. The Plan is a
profit sharing plan with a cash or deferred arrangement intended to qualify
under Code section 401(a) and to meet the requirements of Code section 401(k).
The Company and Fidelity Management Trust Company have entered into a trust
agreement that provides for the investment and reinvestment of the assets of
the Plan.
Words and phrases with initial capital letters used throughout
the Plan are defined in Article 1.
(i)
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Article 1 Definitions 1
Article 2 Participation 8
Article 3 Contributions 10
Article 4 Allocations to Participants' Accounts 13
Article 5 Vesting 15
Article 6 Distributions to Participants 16
Article 7 Distributions to Beneficiaries 21
Article 8 Provisions Regarding Company Stock 23
Article 9 Administration of the Plan and Trust Agreement 26
Article 10 Limitations on Contributions and Allocations to Participants'
Accounts 31
Article 11 Restrictions on Distributions to Participants and Beneficiaries 43
Article 12 Top-Heavy Provisions 46
Article 13 Adoption of Plan by Controlled Group Members 52
Article 14 Amendment of the Plan 53
Article 15 Termination, Partial Termination and Complete Discontinuance of
Contributions 54
Article 16 Miscellaneous 56
Appendix A Participating Employers 59
</TABLE>
(ii)
<PAGE> 4
ARTICLE 1
DEFINITIONS
1.1 "Account" means the records, including subaccounts,
maintained by the Committee in the manner provided in Article 4 to determine
the interest of each Participant in the assets of the Plan and may refer to
either or both of the Participant's Deferral Contribution Account and his
Matching Contribution Account.
1.2 "Beneficiary" means the one or more persons or entities
entitled to receive distribution of a Participant's interest in the Plan in the
event of his death as provided in Article 7.
1.3 "Board of Directors" or "Board" means the Board of
Directors of the Company.
1.4 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
1.5 "Committee" or "Administrative Committee" means the
Committee appointed under Article 9.
1.6 "Company" means A. H. Belo Corporation, a Delaware
corporation.
1.7 "Company Stock" means the Series A Common Stock, par
value $1.67 per share, of the Company.
1.8 "Compensation" means the earnings paid to an Employee
by the Participating Employers which are subject to reporting on Internal
Revenue Service Form W-2, excluding, however, any earnings paid to the Employee
in a form other than cash. In addition, Compensation includes any
contributions made by the Participating Employers on behalf of an Employee
pursuant to a deferral election under the Plan or under any other employee
benefit plan containing a cash or deferred arrangement under Code section
401(k) and any amounts that would have been received as cash but for an
election to receive benefits under a cafeteria plan meeting the requirements of
Code section 125. The annual Compensation of an Employee taken into account
for any purpose for any Plan Year will not exceed $200,000, as adjusted in
regulations prescribed by the Secretary of the Treasury. For purposes of
applying the $200,000 limit set forth in the preceding sentence, an Employee's
Compensation includes the Compensation of his spouse
<PAGE> 5
and any lineal descendants who are under age 19 at the end of the Plan Year if
the Employee is a Highly Compensated Employee (as defined in Section 10.2(m))
who is either (i) a 5-percent owner, determined in accordance with Code section
414(q) and the Treasury Regulations promulgated thereunder or (ii) one of the
10 most highly compensated Employees ranked on the basis of Compensation paid
by the Controlled Group during the year, determined in accordance with Code
section 414(q) and the Treasury Regulations promulgated thereunder.
1.9 "Controlled Group" means the Company and all other
corporations, trades and businesses, the employees of which, together with
employees of the Company, are required by the first sentence of subsection (b),
by subsection (c), by subsection (m) or by subsection (o) of Code section 414
to be treated as if they were employed by a single employer.
1.10 "Controlled Group Member" means each corporation or
unincorporated trade or business that is or was a member of the Controlled
Group, but only during such period as it is or was such a member.
1.11 "Deferral Contribution" means the amount of a
Participant's Compensation that he elects to have contributed to the Plan by
the Participating Employers rather than paid to him directly in cash.
1.12 "Deferral Contribution Account" means the Account
established for each Participant, the balance of which is attributable to the
Participant's Deferral Contributions and earnings and losses of the Trust Fund
with respect to such contributions.
1.13 "Effective Date" means the first day of October, 1989.
1.14 "Employee" means any person who is: (i) employed by
any Controlled Group Member if their relationship is, for federal income tax
purposes, that of employer and employee, or (ii) "a leased employee" of a
Controlled Group Member within the meaning of Code section 414(n)(2) but only
for purposes of the requirements of Code section 414(n)(3).
1.15 "Entry Date" means January 1, April 1, July 1 and
October 1 of each Plan Year.
1.16 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
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<PAGE> 6
1.17 "Hour of Service" means each hour credited in
accordance with the following rules:
(a) Credit for Services Performed. An Employee
will be credited with one Hour of Service for each hour for which he is paid,
or entitled to payment, by one or more Controlled Group Members for the
performance of duties.
(b) Credit for Periods in Which No Services Are
Performed. An Employee will be credited with one Hour of Service for each hour
for which he is paid, or entitled to payment, by one or more Controlled Group
Members on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated); except
that (i) no more than 501 Hours of Service will be credited under this
subsection (b) to an Employee on account of any single continuous period during
which he performs no duties (whether or not such period occurs in a single Plan
Year), (ii) an hour for which an Employee is directly or indirectly paid, or
entitled to payment, on account of a period during which no duties are
performed will not be credited to the Employee if the payment is made or due
under a plan maintained solely for the purpose of complying with applicable
workers' compensation or unemployment compensation or disability insurance
laws, and (iii) Hours of Service will not be credited for a payment which
solely reimburses an Employee for medical or medically related expenses
incurred by the Employee. For purposes of this subsection (b), an Employee
will be credited with Hours of Service on the basis of his regularly scheduled
working hours per week (or per day if he is paid on a daily basis) or, in the
case of an Employee without a regular work schedule, on the basis of 40 Hours
of Service per week (or 8 Hours of Service per day if he is paid on a daily
basis) for each week (or day) during the period of time during which no duties
are performed; except that an Employee will not be credited with a greater
number of Hours of Service for a period during which no duties are performed
than the number of hours for which he is regularly scheduled for the
performance of duties during the period or, in the case of an Employee without
a regular work schedule, on the basis of 40 Hours of Service per week (or 8
Hours of Service per day if he is paid on a daily basis).
(c) Credit for Back Pay. An Employee will be
credited with one Hour of Service for each hour for which back pay,
irrespective of mitigation of damages, has been either awarded or agreed to by
one or more Controlled Group Members; except that an hour will not be credited
under both subsection (a) or (b), as the case may be, and this subsection (c),
and
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<PAGE> 7
Hours of Service credited under this subsection (c) with respect to periods
described in subsection (b) will be subject to the limitations and provisions
under subsection (b).
(d) Credit for Certain Absences. If an Employee is
absent from work on or after the Effective Date for any period by reason of the
pregnancy of the Employee, by reason of the birth of a child of the Employee,
by reason of the placement of a child with the Employee, or for purposes of
caring for a child for a period beginning immediately following the birth or
placement of that child, the Employee will be credited with Hours of Service
(solely for the purpose of determining whether he has a One Year Break in
Service under the Plan) equal to (i) the number of Hours of Service which
otherwise would normally have been credited to him but for his absence, or (ii)
if the number of Hours of Service under clause (i) is not determinable, 8 Hours
of Service per normal workday of the absence, provided, however, that the total
number of Hours of Service credited to an Employee under this subsection (d) by
reason of any pregnancy, birth or placement will not exceed 501 Hours of
Service. Hours of Service will not be credited to an Employee under this
subsection (d) unless the Employee furnishes to the Committee such timely
information as the Committee may reasonably require to establish that the
Employee's absence from work is for a reason specified in this subsection (d)
and the number of days for which there was such an absence.
(e) Manner of Counting Hours. No hour will be
counted more than once or be counted as more than one Hour of Service even
though the Employee may receive more than straight-time pay for it. With
respect to Employees whose compensation is not determined on the basis of
certain amounts for each hour worked during a given period and for whom hours
are not required to be counted and recorded by any federal law (other than
ERISA), Hours of Service will be credited on the basis of 10 Hours of Service
daily, 45 Hours of Service weekly, 95 Hours of Service semi-monthly, or 190
Hours of Service monthly, if the Employee's compensation is determined on a
daily, weekly, semi-monthly or monthly basis, respectively, for each period in
which the Employee would be credited with at least one Hour of Service under
this section. Except as otherwise provided in subsection (d), Hours of Service
will be credited to eligibility and vesting computation periods in accordance
with the provisions of 29 C.F.R. Section 2530.200b-2, which provisions are
incorporated in this Plan by reference.
1.18 "Matching Contribution Account" means the Account
established for each Participant, the balance of which is
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attributable to Participating Employer matching contributions made pursuant to
Article 3, forfeitures and earnings and losses of the Trust Fund with respect
to such contributions and forfeitures.
1.19 "Net Profits" means the amount of a Participating
Employer's current and accumulated earnings as determined under accounting
principles adopted by the Participating Employer and consistently applied,
without regard to whether the Participating Employer has current or accumulated
earnings and profits for federal income tax purposes, and determined before the
deduction of federal or state income taxes and contributions to the Plan.
1.20 "One Year Break in Service" means a period of at least
12 consecutive months in which an Employee is absent from service. A One Year
Break in Service Year will begin on the Employee's termination date (as defined
in Section 1.30) and will end on the day on which the Employee again performs
an Hour of Service for a Controlled Group Member.
If an Employee who is absent from work with a
Controlled Group Member because of (i) the Employee's pregnancy, (ii) the birth
of the Employee's child, (iii) the placement of a child with the Employee in
connection with the Employee's adoption of the child, or (iv) caring for such
child immediately following such birth or placement, will be absent for such
reason beyond the first anniversary of the first date of his absence, his
period of absence, solely for purposes of preventing a One Year Break in
Service, will commence on the second anniversary of the first day of his
absence from work. The period of absence from work between the first and
second anniversaries of the first date of his absence from work will not be
taken into account in determining whether the Employee has completed a Year of
Service. The provisions of this paragraph will not apply to an Employee unless
the Employee furnishes to the Committee such timely information that the
Committee may reasonably require to establish (i) that the absence from work is
for one of the reasons specified in this paragraph and (ii) the number of days
for which there was such an absence.
1.21 "Participant" means an Employee or former Employee who
has met the applicable eligibility requirements of Article 2 and who has not
yet received a distribution of the entire amount of his vested interest in the
Plan.
1.22 "Participating Employer" means each Controlled Group
Member set forth on Appendix A and any other Controlled
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Group Member or organizational unit of the Company or a Controlled Group Member
which is designated as a Participating Employer under the Plan by the Board of
Directors.
1.23 "Plan" means the employee savings and investment plan
set forth herein, as amended from time to time.
1.24 "Plan Year" means the period with respect to which the
records of the Plan are maintained, which will be the 12-month period beginning
on December 31 and ending on December 30.
1.25 "Qualified Plan" means an employee benefit plan that is
qualified under Code section 401(a).
1.26 "Trust Agreement" means the agreement or agreements
executed by the Company and the Trustee which establishes a trust fund to
provide for the investment, reinvestment, administration and distribution of
contributions made under the Plan and the earnings thereon, as amended from
time to time.
1.27 "Trust Fund" means the assets of the Plan held by the
Trustee pursuant to the Trust Agreement.
1.28 "Trustee" means the one or more individuals or
organizations who have entered into the Trust Agreement as Trustee, and any
duly appointed successor.
1.29 "Valuation Date" means the date with respect to which
the Trustee determines the fair market value of the assets comprising the Trust
Fund or any portion thereof. The regular Valuation Date will be the last day
of each Plan Year. However, if the Committee determines that the fair market
value of any asset comprising the Trust Fund has changed substantially since
the previous Valuation Date, or if the Committee determines it to be in the
best interests of the Plan and the Participants to value any asset of the Trust
Fund at a time other than the regular Valuation Date, the Committee may fix, in
a uniform and nondiscriminatory manner, one or more interim Valuation Dates.
1.30 "Year of Service" means each period of 365 days
(determined by aggregating periods of service that are not consecutive)
beginning on the date an Employee is first credited with an Hour of Service (or
is again credited with an Hour of Service following his reemployment) and
ending on the earlier of (i) the date on which the Employee quits, retires, is
discharged or dies or (ii) the first anniversary of the date
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on which the Employee is absent from service with a Controlled Group Member for
any other reason, such as vacation, holiday, sickness, disability, leave of
absence or layoff (the earlier of such dates is hereafter referred to as the
Employee's "termination date"). An Employee's period of service for purposes
of determining a Year of Service will include each period in which the Employee
is absent from service for less than 12 months (measured from the Employee's
termination date) and any periods during which he is in the service of the
armed forces of the United States and his reemployment rights are guaranteed by
law, provided he returns to employment with a Controlled Group Member within
the time such rights are guaranteed.
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ARTICLE 2
PARTICIPATION
2.1 Eligibility to Participate. Each Employee who had both
attained age 21 and completed a Year of Service before the Effective Date, or
who participated in the Company's Employee Stock Purchase Plan immediately
before the Effective Date, will be a Participant as of the first payroll period
beginning on or after the Effective Date, if he is then employed by a
Participating Employer. Each Employee who is not a Participant as of the
Effective Date will become a Participant as of the first payroll period
beginning on or after the first Entry Date following the date he has both
attained age 21 and completed a Year of Service, if he is then employed by a
Participating Employer.
2.2 Exclusions from Participation.
(a) Ineligible Employees. An Employee who is
otherwise eligible to participate in the Plan will not become or continue as an
active Participant if (i) he is covered by a collective bargaining agreement
that does not expressly provide for participation in the Plan, provided that
the representative of the Employees with whom the collective bargaining
agreement is executed has had an opportunity to bargain concerning retirement
benefits for those Employees; (ii) he is represented by a bargaining
representative but is not covered by a collective bargaining agreement, unless
the Company and the bargaining representative agree in writing that the
Employee will be eligible to participate in the Plan; (iii) he is classified as
a part-time Employee in accordance with standard personnel practices of his
Participating Employer and did not participate in the Company's Employee Stock
Purchase Plan immediately before the Effective Date; (iv) he is a nonresident
alien who receives no earned income (within the meaning of Code section
911(d)(2)) from a Participating Employer which constitutes income from sources
within the United States (within the meaning of Code section 861(a)(3)); (v) he
is a leased employee required to be treated as an Employee under Code section
414(n); (vi) he is employed by a Controlled Group Member or an organizational
unit thereof that has not been designated as a Participating Employer by the
Board; or (vii) he is then on an approved leave of absence without pay or in
the service of the armed forces of the United States.
(b) Exclusion after Participation. A Participant
who becomes ineligible under subsection (a) may not elect to have Deferral
Contributions made or continued to the Plan.
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(c) Participation after Exclusion. An Employee or
Participant who is excluded from active participation will be eligible to
participate in the Plan on the first day he is no longer described in
subsection (a) and is credited with one or more Hours of Service by a
Participating Employer, provided that he has otherwise met the requirements of
Section 2.1. This subsection will apply to an Employee who returns from an
approved leave of absence or from military leave and who would otherwise be
treated as a new Employee under Section 2.3 only if he returns to employment
with a Controlled Group Member immediately following the expiration of the
leave of absence or, in the case of an Employee on military leave, during the
period in which reemployment rights are guaranteed by law.
2.3 Reemployment Provisions. All Hours of Service are
counted in determining eligibility to participate, except as otherwise provided
in this Section.
(a) Termination of Employment before Participation.
If an Employee terminates employment before becoming a Participant and is
reemployed by a Controlled Group Member before incurring five consecutive One
Year Breaks in Service, he will become a Participant on the later of the Entry
Date initially determined under Section 2.1 or the date he is credited with one
or more Hours of Service by a Participating Employer after reemployment; but if
he is reemployed by a Controlled Group Member after incurring five consecutive
One Year Breaks in Service he will be treated as a new Employee for purposes of
the Plan and his Hours of Service completed before his reemployment will be
disregarded in determining when he will become a Participant.
(b) Termination of Employment after Participation.
A Participant who terminates employment will again become an active Participant
immediately upon his reemployment by a Participating Employer.
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ARTICLE 3
CONTRIBUTIONS
3.1 Participant Deferral Contributions.
(a) Amount of Deferral Contributions. A
Participant may elect, in accordance with procedures established by the
Committee from time to time, to have Deferral Contributions made to the Plan by
the Participating Employers, provided the amount of a Participant's Deferral
Contributions for any Plan Year will not be less than 2% nor more than 10% of
his Compensation for the Plan Year.
(b) Modification and Suspension of Deferral
Contributions. A Participant may increase or decrease the amount of his
Deferral Contributions during the Plan Year, provided that only one such
modification may be made during any six-month period. A Participant may
suspend his Deferral Contributions at any time during the Plan Year, and a
suspension of his Deferral Contributions will not be considered a modification
for purposes of this subsection (b). A Participant who suspends his Deferral
Contributions may not again authorize Deferral Contributions to the Plan for a
period of six months. The Committee will adopt from time to time procedures
for administering the rules contained in this subsection.
(c) Limitations on Deferral Contributions. The sum
of a Participant's Deferral Contributions and his elective deferrals (within
the meaning of Code section 402(g)(3)) under any other plans, contracts or
arrangements of any Controlled Group Member will not exceed $7,000 (as adjusted
for cost of living increases in the manner described in Code section 415(d))
for any taxable year of the Participant. A Participant's Deferral
Contributions will also be subject to the deferral percentage limitation set
forth in Section 10.6. In the event a Participant's Deferral Contributions and
other elective deferrals (whether or not under a plan, contract or arrangement
of a Controlled Group Member) for any taxable year exceed the foregoing $7,000
limitation, the excess allocated by the Participant to Deferral Contributions
(adjusted for Trust Fund earnings and losses in the manner described in Section
10.6(d)) may, in the discretion of the Committee, be distributed to the
Participant no later than April 15 following the close of such taxable year.
The amount of Deferral Contributions distributed to a Participant for a Plan
Year pursuant to this Section will be reduced by any excess Deferral
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Contributions previously distributed to him pursuant to Section 10.6(c) for the
same Plan Year.
3.2 Participating Employer Matching Contributions.
(a) Amount of Matching Contributions. The
Participating Employers will pay to the Trustee as a matching contribution for
each Plan Year an amount equal to 30% of each Participant's Deferral
Contributions, but only to the extent that the Participant's Deferral
Contributions do not exceed 5% of the Participant's Compensation for the
portion of the Plan Year with respect to which he has authorized Deferral
Contributions. In addition, each Participating Employer may make an additional
matching contribution for any Plan Year if authorized by its board of
directors, but no Participating Employer will be required to make an additional
matching contribution for any Plan Year. Participating Employer matching
contributions may be made in cash or in shares of Company Stock or both.
(b) Limitation on Matching Contributions.
Participating Employer matching contributions will be subject to the
contribution percentage limitation set forth in Section 10.7.
3.3 Net Profits Restriction. Deferral Contributions and
Participating Employer matching contributions will be made by the Participating
Employers from their Net Profits. If a Participating Employer which is a
member of an affiliated group within the meaning of Code section 1504 is
prevented from making its accrued contribution to the Plan by reason of having
no Net Profits or because the Net Profits of the Participating Employer are
less than the contribution which it has accrued, then so much of the
contribution which the Participating Employer was prevented from making may be
made, for the benefit of Participants who are employed by the Participating
Employer, by any other Participating Employer, subject to the limitations of
Code section 404(a)(3)(B) and the Treasury Regulations thereunder. If a
Participating Employer does not have sufficient Net Profits to contribute the
total amount of Deferral Contributions elected by its Employees for a Plan
Year, and if the other Participating Employers do not make up the full balance
of such contribution pursuant to the preceding sentence, then the Deferral
Contributions elected for such Plan Year by the Participants employed by that
Participating Employer will be reduced ratably, and no further Participating
Employer matching contributions will be made to the Plan.
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3.4 Time of Payment. Deferral Contributions and
Participating Employer matching contributions will be paid to the Trustee as
soon as practicable following the close of each calendar month during the Plan
Year.
3.5 Investment of Contributions. Participating Employer
matching contributions will be invested by the Trustee pursuant to the Trust
Agreement solely in shares of Company Stock. The Deferral Contributions
allocated to a Participant's Deferral Contribution Account will be invested by
the Trustee in accordance with the Participant's directions in the investment
funds established for such purpose pursuant to the Trust Agreement. The
Committee from time to time will establish rules and procedures regarding
Participant investment directions, including, without limitation, rules and
procedures with respect to the manner in which such directions may be
furnished, the frequency with which such directions may be changed during the
Plan Year and the minimum portion of a Participant's Deferral Contribution
Account that may be invested in any one investment fund.
3.6 Rollover and Transfer Contributions. Unless directed
to do so by the Committee, the Trustee is not authorized to accept (i) any part
of the cash or other assets distributed to a Participant from a Qualified Plan
or from an individual retirement account or annuity described in Code section
408, or (ii) a direct transfer of assets to the Plan on behalf of a Participant
from the trustee or other funding agent of a Qualified Plan.
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ARTICLE 4
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
4.1 Establishment of Accounts. The Committee will
establish a Deferral Contribution Account and a Matching Contribution Account
for each Participant and may establish one or more subaccounts of a
Participant's Accounts, if the Committee determines that subaccounts are
necessary or desirable in administering the Plan.
4.2 Allocation of Contributions and Forfeitures. Each
Deferral Contribution made by a Participating Employer on behalf of a
Participant will be allocated by the Committee to the Participant's Deferral
Contribution Account. Each Participating Employer matching contribution made
with respect to a Plan Year and all forfeitures arising during that Plan Year
will be allocated by the Committee to the Matching Contribution Accounts of
Participants employed by that Participating Employer in the ratio that the
Deferral Contributions made on behalf of each such Participant for the Plan
Year bear to the total Deferral Contributions made on behalf of all such
Participants for the Plan Year, taking into account for purposes of this ratio
only Deferral Contributions that do not exceed 5% of each Participant's
Compensation.
4.3 Limitation on Allocations. Article 10 sets forth
certain rules under Code sections 401(k), 401(m) and 415 that limit the amount
of contributions and forfeitures that may be allocated to a Participant's
Accounts for a Plan Year.
4.4 Allocation of Trust Fund Income and Loss.
(a) Accounting Records. The Committee, through its
accounting records, will clearly segregate each Account and subaccount and will
maintain a separate and distinct record of all income and losses of the Trust
Fund attributable to each Account or subaccount. Income or loss of the Trust
Fund will include any unrealized increase or decrease in the fair market value
of the assets of the Trust Fund.
(b) Method of Allocation. The share of net income
or net loss of the Trust Fund to be credited to, or deducted from, each Account
will be the allocable portion of the net income or net loss of the Trust Fund
attributable to each Account determined by the Committee as of each Valuation
Date in a uniform and nondiscriminatory manner, based upon the ratio that each
Account balance as of the previous Valuation
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Date bears to all Account balances after adjustment for withdrawals,
distributions and other additions or subtractions that may be appropriate. The
share of net income or net loss to be credited to, or deducted from, any
subaccount will be an allocable portion of the net income or net loss credited
to or deducted from the Account under which the subaccount is established.
4.5 Valuation of Trust Fund. The fair market value of the
total net assets comprising the Trust Fund will be determined by the Trustee as
of each Valuation Date.
4.6 No Guarantee. The Participating Employers, the
Committee and the Trustee do not guarantee the Participants or their
Beneficiaries against loss or depreciation or fluctuation of the value of the
assets of the Trust Fund.
4.7 Annual Statement of Accounts. The Committee will
furnish each Participant and each Beneficiary of a deceased Participant, at
least annually, a statement showing (i) the value of his Accounts at the end of
the Plan Year, (ii) the allocations to and distributions from his Accounts
during the Plan Year, and (iii) his vested and nonforfeitable interest in his
Accounts at the end of the Plan Year. No statement will be provided to a
Participant or Beneficiary after the Participant's entire vested and
nonforfeitable interest in his Accounts has been distributed.
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ARTICLE 5
VESTING
5.1 Determination of Vested Interest. Except as provided
in Section 5.2, the interest of each Participant in his Deferral Contribution
Account and his Matching Contribution Account will be 100% vested and
nonforfeitable at all times.
5.2 Unclaimed Distribution. If the Committee cannot locate
a person entitled to receive a benefit under the Plan within a reasonable
period (as determined by the Committee in its discretion), the amount of the
benefit will be treated as a forfeiture during the Plan Year in which the
period ends. If, before final distributions are made from the Trust Fund
following termination of the Plan, a person who was entitled to a benefit which
has been forfeited under this Section makes a claim to the Committee or the
Trustee for his benefit, he will be entitled to receive, as soon as
administratively feasible, a benefit in an amount equal to the value of the
forfeited benefit on the date of forfeiture. This benefit will be reinstated
from Participating Employer contributions made to the Plan for this purpose.
5.3 Application of Forfeited Amounts. The amount of a
Participant's Accounts which is forfeited pursuant to Section 5.2 will be
applied to reduce Participating Employer contributions pursuant to Article 3.
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ARTICLE 6
DISTRIBUTIONS TO PARTICIPANTS
6.1 Basic Rules Governing Distributions.
(a) Timing of Distributions. Except as set forth
in Sections 6.2 and 6.3, distribution of a Participant's vested Account
balances will be made as soon as practicable after the Valuation Date
coinciding with or immediately following the Participant's termination of
employment. If a loan is outstanding from the Trust Fund to the Participant on
the date his vested Account balances become distributable, the amount
distributed to the Participant will be reduced by any security interest in his
Accounts held by the Plan by reason of the loan.
(b) Form of Distributions. Distributions will be
made in a single lump sum payment. Shares of Company Stock allocated to a
Participant's Accounts will be distributed in the form of whole shares plus
cash for any fractional share, unless the Participant elects to receive the
cash value of such shares.
(c) Participant's Consent to Certain Payments. If
the amount of a Participant's vested Account balances exceeds $3,500, the
Committee will not distribute the Participant's vested Account balances to him
prior to his attainment of age 62 unless he consents to the distribution. The
foregoing provision will not apply to any distributions required under Sections
10.6 and 10.7.
6.2 Withdrawals after Age 59-1/2. A Participant who has
not terminated employment may request a distribution from his Accounts if he
has reached age 59-1/2. A Participant who is a director, officer or principal
stockholder of the Company within the meaning of Section 16 of the Securities
Exchange Act of 1934 may exercise the foregoing withdrawal right only in
accordance with rules and procedures established from time to time by the
Committee. All other Participants may exercise their withdrawal rights at any
time or times during the Plan Year.
6.3 Hardship Distributions.
(a) General Rule. A Participant who has not
terminated employment may request a distribution from the vested portion of his
Accounts in the event of his hardship. A
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distribution will be on account of hardship only if the distribution is
necessary to satisfy an immediate and heavy financial need of the Participant,
as defined below, and satisfies all other requirements of this Section.
(b) Deemed Financial Need. For purposes of this
Section, a distribution is made on account of an immediate and heavy financial
need of the Participant only if the distribution is for (i) the payment of
medical expenses described in Code section 213(d) incurred by the Participant,
the Participant's spouse or any dependents of the Participant (as defined in
Code section 152); (ii) the purchase (excluding mortgage payments) of a
principal residence for the Participant; (iii) the payment of tuition for the
next semester or quarter of post-secondary education for the Participant, his
spouse, children, or dependents; (iv) the need to prevent the eviction of the
Participant from his principal residence or foreclosure on the mortgage of the
Participant's principal residence; or (v) the payment of funeral expenses of a
family member.
(c) Reasonable Reliance Test. A distribution will
be considered necessary to satisfy an immediate and heavy financial need of the
Participant only if all three of the following requirements are satisfied: (i)
the distribution is not in excess of the amount required to relieve the
immediate and heavy financial need of the Participant (taking into account the
taxable nature of the distribution); (ii) the Participant represents in
writing, on forms provided by the Committee, that the need cannot be relieved
through reimbursement or compensation by insurance or otherwise, by reasonable
liquidation of the Participant's assets, to the extent such liquidation would
not itself cause an immediate and heavy financial need, by cessation of
Deferral Contributions under the Plan, or by distributions other than hardship
distributions or nontaxable (at the time of the loan) loans from the Plan and
any other plans maintained by any Controlled Group Member or any other entity
by which the Participant is employed, or by borrowing from commercial sources
on reasonable commercial terms; and (iii) the Committee determines that it can
reasonably rely on the Participant's written representation.
(d) Limitation for Loans. No distribution under
this Section will be made in an amount that is greater than the excess of the
Participant's vested interest in his Accounts over the aggregate amount of
outstanding loans, plus accrued interest, secured by the Participant's
Accounts.
(e) Source of Hardship Distributions. The
cumulative amount distributed to a Participant on account of
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hardship will not exceed the amount of his Deferral Contributions that have not
been previously withdrawn (but not the income allocable to his Deferral
Contributions).
6.4 Distribution Procedures. Distributions pursuant to
Sections 6.2 and 6.3 will be made as soon as practicable following the
Committee's approval of the Participant's written request for withdrawal and
will be made in the form described in Section 6.1(b). Distributions pursuant
to Section 6.2 will be made first from the vested portion of the Participant's
Matching Contribution Account and next from his Deferral Contribution Account.
6.5 Loans to Participants.
(a) Effective Date. The provisions of this Section
will be effective as of a date determined by the Committee in its discretion
and communicated to Participants.
(b) General Provisions. A Participant may, subject
to the provisions of this Section, borrow from the vested interest in his
Accounts. All such loans will be subject to the requirements of this Section
and such other rules as the Committee may from time to time prescribe,
including without limitation any rules restricting the purposes for which loans
will be approved. The Committee will have complete discretion as to approval
of a loan hereunder and as to the terms thereof, provided that its decisions
will be made on a uniform and nondiscriminatory basis and in accordance with
this Section. If the Committee approves a loan, the Committee will direct the
Trustee to make the loan and will advise the Participant and the Trustee of the
terms and conditions of the loan. Nothing in this Section will require the
Committee to make loans available to Participants.
(c) Terms and Conditions. Loans to Participants
will be made according to the following terms and conditions and such
additional terms and conditions as the Committee may from time to time
establish: (i) no loan will be for a term of longer than five years unless
the loan proceeds are used to acquire a dwelling unit which, within a
reasonable time, is to be used (determined at the time the loan is made) as the
principal residence of the Participant; (ii) all loans will become due and
payable in full upon termination (by death or otherwise) of the Participant's
employment with the Controlled Group and upon the occurrence of such other
events as the Committee may from time to time specify; (iii) all loans will
bear a reasonable rate of interest as determined by the Committee from time to
time; (iv) all loans will be made only
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upon receipt of adequate security (the minimum security for a loan will be the
Participant's vested interest in the Trust Fund in an amount that equals the
principal amount of the loan); (v) payments of principal and interest will be
made through payroll deductions sufficient to provide for substantially level
amortization of principal and interest with payments not less frequently than
quarterly, which will be irrevocably authorized by the Participant in writing
on a form provided by the Committee at the time the loan is made; (vi) the
amount of any indebtedness (including accrued and unpaid interest) under any
loan will be deducted from a Participant's interest in the Trust Fund if and
only if such indebtedness or any installment thereof is not paid when due
(including amounts due by acceleration) unless the Committee determines that
there is adequate security for such loan other than the Participant's interest
in the Trust Fund; (vii) no more than one outstanding loan will be permitted
with respect to a Participant at any time, except that a Participant may have a
home loan and a loan which is not a home loan outstanding at the same time; and
(viii) all loans will be evidenced by a note containing such additional terms
and conditions as the Committee will determine.
(d) Maximum Amount of Loans. The amount of any
loan made pursuant to this Section, when added to the outstanding balance of
all other loans to the Participant from all qualified employer plans (as
defined in Code section 72(p)(4)) of the Controlled Group, will not exceed the
lesser of (i) one-half of the nonforfeitable interest in his Accounts, or (ii)
$50,000 reduced by the excess, if any, of (A) the highest outstanding balance
of all other loans from qualified employer plans of the Controlled Group to the
Participant during the 1-year period ending on the date on which such loan was
made, over (B) the outstanding balance of all loans from qualified employer
plans of the Controlled Group to the Participant on the date on which such loan
was made.
(e) Minimum Loan. The minimum loan permitted under
this Section is $1,000. If such minimum amount exceeds the limitations of
subsection (d), no loan will be made.
(f) Source of Loans. All loans will be made first
from a Participant's Matching Contribution Account and next from his Deferral
Contribution Account.
(g) Investment of Loan Payments. All loans will be
treated as a separate investment fund of the borrowing Participant. All
payments with respect to a loan will be credited to the borrowing Participant's
Accounts and will be
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invested in the fixed income fund established pursuant to the Trust Agreement,
or if none, as directed by the Committee.
6.6 Reemployment of Participant. If a Participant who
terminated employment again becomes an Employee before receiving a distribution
of his Account balances, no distribution from the Trust Fund will be made while
he is an Employee, and amounts distributable to him on account of his prior
termination will be held in the Trust Fund until he is again entitled to a
distribution under the Plan.
6.7 Valuation of Accounts. A Participant's distributable
Account balances will be valued as of the Valuation Date immediately preceding
the date the Accounts are to be distributed, except that there will be added to
the value of his Accounts the fair market value of any amounts allocated to his
Accounts under Article 4 after that Valuation Date.
6.8 Restrictions on Distributions. Article 11 sets forth
certain rules under various provisions of the Code relating to restrictions on
distributions to Participants.
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ARTICLE 7
DISTRIBUTIONS TO BENEFICIARIES
7.1 Designation of Beneficiary. Each Participant will have
the right to designate a Beneficiary or Beneficiaries to receive his vested
Account balances upon his death. The designation will be made on forms
prescribed by the Committee and will be effective upon receipt by the
Committee. A Participant will have the right to change or revoke any
designation by filing a new designation or notice of revocation with the
Committee, but the revised designation or revocation will be effective only
upon receipt by the Committee.
7.2 Consent of Spouse Required. A Participant who is
married may not designate a Beneficiary other than, or in addition to, his
spouse unless his spouse consents to the designation by means of a written
instrument that is signed by the spouse, contains an acknowledgment by the
spouse of the effect of the consent, and is witnessed by a member of the
Committee (other than the Participant) or by a notary public. The designation
will be effective only with respect to the consenting spouse, whose consent
will be irrevocable. A Beneficiary designation to which a spouse has consented
may not be changed by the Participant without spousal consent (other than to
designate the spouse as Beneficiary), unless the spouse's consent expressly
permits Beneficiary designations by the Participant without any further consent
of the spouse.
7.3 Failure to Designate Beneficiary. In the event a
Participant has not designated a Beneficiary, or in the event no Beneficiary
survives a Participant, the distribution of the Participant's vested Account
balances upon his death will be made (i) to the Participant's spouse, if
living, (ii) if his spouse is not then living, to his then living issue by
right of representation, (iii) if neither his spouse nor his issue are then
living, to his then living parents, and (iv) if none of the above are then
living, to his estate.
7.4 Distributions to Beneficiaries. Distribution of a
Participant's vested Account balances to the Participant's Beneficiary will be
made as soon as practicable after Participant's death. The Participant's
vested Account balances will be distributed to the Beneficiary in a single lump
sum payment and will be in the same form as provided for Participants in
Section 6.1(b). The Participant's Account balances will be valued as of the
Valuation Date coinciding
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with or immediately preceding the date the Accounts are to be distributed to
his Beneficiary, except that there will be added to the value of the
Participant's Accounts the fair market value of any amounts allocated to his
Accounts under Article 4 after that Valuation Date. If a loan is outstanding
from the Trust Fund to the Participant on the date of his death, the amount
distributed to his Beneficiary will be reduced by any security interest in the
Participant's Accounts held by the Plan by reason of the loan.
7.5 Restrictions on Distributions. Article 11 sets forth
certain rules under various provisions of the Code relating to restrictions on
distributions to Beneficiaries.
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ARTICLE 8
PROVISIONS REGARDING COMPANY STOCK
8.1 Powers and Duties of the Committee.
(a) Committee as Named Fiduciary. Except as
otherwise provided in this Section, the Committee will be the named fiduciary
within the meaning of ERISA section 402(a)(2) for purposes of all shareholder
action authorized or permitted to be taken with respect to Company Stock held
in the Trust Fund. The powers and duties of the Committee as named fiduciary
for this purpose will include, without limitation, the powers and duties to
direct the Trustee with respect to the voting of all shares of Company Stock;
to direct the Trustee to accept or reject a tender offer for shares of Company
Stock; to direct the Trustee to sell shares of Company Stock under any other
circumstances to any person, including the Company, provided that any sale to
the Company or other "disqualified person" within the meaning of Code section
4975 or "party in interest" within the meaning of ERISA section 3(14) is made
at a price which is not less than adequate consideration as defined in ERISA
section 3(18) and no commission is charged with respect to the sale; and to
exercise any options, warrants or other rights in connection with shares of
Company Stock held in the Trust Fund. The Committee will also have the power,
in its discretion, to permit each Participant and Beneficiary to direct the
Trustee to take or to refrain from taking any action with respect to the shares
of Company Stock allocated to his Accounts that the Committee could have
directed the Trustee to take or refrain from taking. If the Committee permits
Participants and Beneficiaries to direct the Trustee in connection with any
matter relating to Company Stock held in the Trust Fund, each Participant and
Beneficiary who furnishes instructions to the Trustee will be a named fiduciary
within the meaning of ERISA section 402(a)(2) with respect to such matter, but
the Committee will retain the power and duty to direct the Trustee with respect
to shares of Company Stock allocated to the Accounts of Participants and
Beneficiaries who fail to furnish timely instructions to the Trustee and with
respect to any shares of Company Stock that have not been allocated to
Participants' Accounts. The Committee will adopt from time to time whatever
procedures it determines to be appropriate in order to exercise its powers and
duties under this subsection (a) and may retain advisors and consultants
(including, without limitation, legal counsel and financial advisors) who are
independent of the Company, the Board and the
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Trustee to the extent the Committee determines such independent advice to be
necessary or appropriate.
(b) Delegation of Powers and Duties. The Committee
may, in its discretion, delegate any power or duty allocated to it pursuant to
subsection (a) above to another person or entity, who will act as an
independent fiduciary and will exercise such power or duty to the same extent
as it could have been exercised by the Committee. The persons or entities to
which such powers and duties may be delegated will include, without limitation,
the Board or any committee of the Board, the Trustee, any other person or
entity that meets the requirements of an investment manager under ERISA section
3(38), or any other person or entity that the Committee determines in good
faith has the requisite knowledge and experience concerning the matter with
respect to which the delegation is made. The Committee may also remove any
fiduciary to whom it has delegated any power or duty and exercise such power or
duty itself or appoint a successor fiduciary. For purposes of Sections 8.2 and
8.3, the term "Committee" will also mean any fiduciary to which the Committee
has delegated any power or duty pursuant to this subsection (b).
8.2 Voting Company Stock. Unless the Committee determines
otherwise pursuant to Section 8.1, voting rights with respect to shares of
Company Stock held in the Trust Fund will be exercised by Participants and
Beneficiaries and the procedures of this Section will apply. Before each
annual or special meeting of its shareholders, the Committee will cause to be
sent to each Participant and Beneficiary who has Company Stock allocated to his
Accounts on the record date of such meeting a copy of the proxy solicitation
material for the meeting, together with a form requesting confidential
instructions to the Trustee on how to vote the shares of Company Stock
allocated to his Accounts. Upon receipt of such instructions, the Trustee will
vote the shares allocated to such Participant's or Beneficiary's Accounts as
instructed. The Trustee will vote allocated shares of Company Stock for which
it does not receive timely instructions from Participants or Beneficiaries in
accordance with the Committee's instructions. A Participant's or Beneficiary's
right to instruct the Trustee with respect to voting shares of Company Stock
will not include rights concerning the exercise of any appraisal rights,
dissenters' rights or similar rights granted by applicable law to the
registered or beneficial holders of Company Stock. These matters will be
exercised by the Trustee in accordance with the Committee's instructions.
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8.3 Tender Offer for Company Stock. Unless the Committee
determines otherwise pursuant to Section 8.1, the right to accept or reject a
tender offer for shares of Company Stock held in the Trust Fund will be
exercised by Participants and Beneficiaries and the procedures of this Section
will apply. In the event of a tender offer for shares of Company Stock subject
to Section 14(d)(1) of the Securities Exchange Act of 1934 or subject to Rule
13e-4 promulgated under that Act (as those provisions may from time to time be
amended or replaced by successor provisions of federal securities laws), the
Committee will advise each Participant and Beneficiary who has shares of
Company Stock allocated to his Accounts in writing of the terms of the tender
offer as soon as practicable after its commencement and will furnish each
Participant and Beneficiary with a form by which he may instruct the Trustee
confidentially to tender shares allocated to his Accounts. The Trustee will
tender those shares it has been properly instructed to tender, and will not
tender those shares which it has been properly instructed not to tender. The
Committee will also advise Participants and Beneficiaries that the Committee
will furnish instructions to the Trustee with respect to allocated shares for
which no instructions are received from Participants and Beneficiaries and will
furnish such related documents as are prepared by any person and provided to
the shareholders of the Company pursuant to the Securities Exchange Act of
1934. The Committee may also provide Participants with such other material
concerning the tender offer as the Committee in its discretion determines to be
appropriate. The number of shares to which a Participant's instructions apply
will be the total number of shares allocated to his Accounts as of the latest
date for which Participant statements were prepared. The Committee will advise
the Trustee of the commencement date of any tender offer and, until receipt of
that advice, the Trustee will not be obligated to take any action under this
Section. Funds received in exchange for tendered stock will be credited to the
Accounts of the Participant or Beneficiary whose stock was tendered and will be
used by the Trustee to purchase Company Stock, if available on a national
securities exchange, commencing on the earlier of the following dates: (a) the
trading day following the first date on which the closing price of the Company
Stock on a national securities exchange on which the Company Stock is then
traded is within 20% of the closing price on the tenth trading day preceding
the commencement date of the tender offer or (b) the thirtieth trading day
after the expiration date of the tender offer, of which date the Committee will
advise the Trustee. In the interim, or if Company Stock is not available for
purchase, the Trustee will invest such funds in short term investments
permitted under the Trust Agreement.
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ARTICLE 9
ADMINISTRATION OF THE PLAN AND TRUST AGREEMENT
9.1 Appointment of Committee Members. The Board will
appoint an Administrative Committee consisting of at least three or more
members, to hold office at the pleasure of the Board. Members of the Committee
are not required to be Employees or Participants. Any member may resign by
giving notice, in writing, filed with the Board.
9.2 Officers and Employees of the Committee. The Committee
will choose from its members a Chairman and a Secretary. The Secretary will
keep a record of the Committee's proceedings and all dates, records and
documents pertaining to the Committee's administration of the Plan. The
Committee may employ and suitably compensate such persons or organizations to
render advice with respect to the duties of the Committee under the Plan as the
Committee determines to be necessary or desirable.
9.3 Action of the Committee. Action of the Committee may
be taken with or without a meeting of Committee members, provided that action
will be taken only upon the vote or other affirmative expression of a majority
of the Committee's members qualified to vote with respect to such action. The
Chairman or the Secretary of the Committee may execute any certificate or other
written direction on behalf of the Committee. In the event the Committee
members qualified to vote on any question are unable to determine such question
by a majority vote or other affirmative expression of a majority of the
Committee members qualified to vote on such question, such question will be
determined by the Board. A member of the Committee who is a Participant may
not vote on any question relating specifically to himself unless he is the sole
member of the Committee.
9.4 Expenses and Compensation. The expenses of
administering the Plan, including without limitation the expenses of the
Committee properly incurred in the performance of its duties under the Plan,
will be paid from the Trust Fund, and all such expenses paid by the
Participating Employers on behalf of the Plan will be reimbursed from the Trust
Fund unless the Participating Employers in their discretion elect not to submit
such expenses for reimbursement. Notwithstanding the foregoing, the members of
the Committee will not be compensated by the Plan for their services as
Committee members.
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9.5 General Powers and Duties of the Committee. The
Committee will have the full power and responsibility to administer the Plan
and the Trust Agreement and to construe and apply their provisions. For
purposes of ERISA, the Committee will be the named fiduciary with respect to
the operation and administration of the Plan and the Trust Agreement. In
addition, the Committee will have the powers and duties granted by the terms of
the Trust Agreement. The Committee, and all other persons with discretionary
control respecting the operation, administration, control, and/or management of
the Plan, the Trust Agreement, and/or the Trust Fund, will perform their duties
under the Plan and the Trust Agreement solely in the interests of Participants
and their Beneficiaries.
9.6 Specific Powers and Duties of the Committee. The
Committee will administer the Plan and have all powers necessary to accomplish
that purpose, including the following: (i) resolving all questions relating to
the eligibility of Employees to become Participants, (ii) determining the
amount of benefits payable to Participants or their Beneficiaries, and
determining the time and manner in which such benefits are to be paid, (iii)
authorizing and directing all disbursements by the Trustee from the Trust Fund,
(iv) engaging any administrative, legal, medical, accounting, clerical, or
other services it deems appropriate in administering the Plan or the Trust
Agreement, (v) construing and interpreting the Plan and the Trust Agreement and
adopting rules for administration of the Plan and the Trust Agreement which are
not inconsistent with the terms of such documents, (vi) compiling and
maintaining all records it determines to be necessary, appropriate or
convenient in connection with the administration of the Plan and the Trust
Agreement, (vii) determining the disposition of assets in the Trust Fund in the
event the Plan is terminated, (viii) reviewing the performance of the Trustee
with respect to the Trustee's administrative duties, responsibilities and
obligations under the Plan and the Trust Agreement, reporting to the Board
regarding such administrative performance of the Trustee, and recommending to
the Board, if necessary, the removal of the Trustee and the appointment of a
successor Trustee, and (ix) resolving all questions of fact relating to any of
the foregoing.
9.7 Allocation of Fiduciary Responsibility. The Committee
from time to time may allocate to one or more of its members and may delegate
to any other persons or organizations any of its rights, powers, duties and
responsibilities with respect to the operation and administration of the Plan
and the Trust Agreement that are permitted to be delegated under ERISA. Any
such allocation or delegation will be made in
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writing, will be reviewed periodically by the Committee, and will be terminable
upon such notice as the Committee in its discretion deems reasonable and proper
under the circumstances. Whenever a person or organization has the power and
authority under the Plan or the Trust Agreement to delegate discretionary
authority respecting the administration of the Plan or the Trust Fund to
another person or organization, the delegating party's responsibility with
respect to such delegation is limited to the selection of the person to whom
authority is delegated and the periodic review of such person's performance and
compliance with applicable law and regulations. Any breach of fiduciary
responsibility by the person to whom authority has been delegated which is not
proximately caused by the delegating party's failure to properly select or
supervise, and in which breach the delegating party does not otherwise
participate, will not be considered a breach by the delegating party.
9.8 Information to be Submitted to the Committee. To
enable the Committee to perform its functions, the Participating Employers will
supply full and timely information to the Committee on all matters relating to
Employees and Participants as the Committee may require and will maintain such
other records required by the Committee to determine the benefits due to
Participants or their Beneficiaries under the Plan.
9.9 Notices, Statements and Reports. The Company will be
the "administrator" of the Plan as defined in ERISA section 3(16)(A) for
purposes of the reporting and disclosure requirements imposed by ERISA and the
Code. The Committee will assist the Company, as requested, in complying with
such reporting and disclosure requirements.
9.10 Claims Procedure.
(a) Filing Claim for Benefits. If a Participant or
Beneficiary does not receive the benefits which he believes he is entitled to
receive under the Plan, he may file a claim for benefits with the Committee.
All claims will be made in writing and will be signed by the claimant. If the
claimant does not furnish sufficient information to determine the validity of
the claim, the Committee will indicate to the claimant any additional
information which is required.
(b) Notification by the Committee. Each claim will
be approved or disapproved by the Committee within 90 days following the
receipt of the information necessary to process the claim. In the event the
Committee denies a claim for benefits in whole or in part, the Committee will
notify the
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claimant in writing of the denial of the claim. Such notice by the Committee
will also set forth, in a manner calculated to be understood by the claimant,
the specific reason for such denial, the specific Plan provisions on which the
denial is based, a description of any additional material or information
necessary to perfect the claim with an explanation of why such material or
information is necessary, and an explanation of the Plan's claim review
procedure as set forth in subsection (c). If no action is taken by the
Committee on a claim within 90 days, the claim will be deemed to be denied for
purposes of the review procedure.
(c) Review Procedure. A claimant may appeal a
denial of his claim by requesting a review of the decision by the Committee or
a person designated by the Committee, which person will be a named fiduciary
under ERISA section 402(a)(2) for purposes of this Section. An appeal must be
submitted in writing within six months after the denial and must (i) request a
review of the claim for benefits under the Plan, (ii) set forth all of the
grounds upon which the claimant's request for review is based and any facts in
support thereof, and (iii) set forth any issues or comments which the claimant
deems pertinent to the appeal. The Committee or the named fiduciary designated
by the Committee will make a full and fair review of each appeal and any
written materials submitted in connection with the appeal. The Committee or
the named fiduciary designated by the Committee will act upon each appeal
within 60 days after receipt thereof unless special circumstances require an
extension of the time for processing, in which case a decision will be rendered
as soon as possible but not later than 120 days after the appeal is received.
The claimant will be given the opportunity to review pertinent documents or
materials upon submission of a written request to the Committee or named
fiduciary, provided the Committee or named fiduciary finds the requested
documents or materials are pertinent to the appeal. On the basis of its
review, the Committee or named fiduciary will make an independent determination
of the claimant's eligibility for benefits under the Plan. The decision of the
Committee or named fiduciary on any claim for benefits will be final and
conclusive upon all parties thereto. In the event the Committee or named
fiduciary denies an appeal in whole or in part, it will give written notice of
the decision to the claimant, which notice will set forth in a manner
calculated to be understood by the claimant the specific reasons for such
denial and which will make specific reference to the pertinent Plan provisions
on which the decision was based.
9.11 Service of Process. The Committee may from time to
time designate an agent of the Plan for the service of legal
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process. The Committee will cause such agent to be identified in materials it
distributes or causes to be distributed when such identification is required
under applicable law. In the absence of such a designation, the Company will
be the agent of the Plan for the service of legal process.
9.12 Correction of Participants' Accounts. If an error or
omission is discovered in the Accounts of a Participant, or in the amount
distributed to a Participant, the Committee will make such equitable
adjustments in the records of the Plan as may be necessary or appropriate to
correct such error or omission as of the Plan Year in which such error or
omission is discovered. Further, a Participating Employer may, in its
discretion, make a special contribution to the Plan which will be allocated by
the Committee only to the Account of one or more Participants to correct such
error or omission.
9.13 Payment to Minors or Other Persons Under Legal
Disability. If any benefit becomes payable to a minor or to a person under a
legal disability, payment of such benefit will be made only to the conservator
or the guardian of the estate of such person appointed by a court of competent
jurisdiction or such other person as the Committee determines is necessary to
ensure that the payment will legally discharge the Plan's obligation to such
person.
9.14 Uniform Application of Rules and Policies. The
Committee in exercising its discretion granted under any of the provisions of
the Plan or the Trust Agreement will do so only in accordance with rules and
policies established by it which will be uniformly applicable to all
Participants and Beneficiaries.
9.15 Funding Policy. The Plan is to be funded through
Participating Employer contributions and earnings on such contributions; and
benefits will be paid to Participants and Beneficiaries as provided in the
Plan.
9.16 The Trust Fund. The Trust Fund will be held by the
Trustee for the exclusive benefit of Participants and Beneficiaries. The
assets held in the Trust Fund will be invested and reinvested in accordance
with the terms of the Trust Agreement, which is hereby incorporated into and
made a part of the Plan. All benefits will be paid solely out of the Trust
Fund, and no Participating Employer will be otherwise liable for benefits
payable under the Plan.
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ARTICLE 10
LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS TO
PARTICIPANTS' ACCOUNTS
10.1 Priority over Other Contribution and Allocation
Provisions. The provisions set forth in this Article will supersede any
conflicting provisions of Articles 3 and 4.
10.2 Definitions Used in this Article. The following words
and phrases, when used with initial capital letters, will have the meanings set
forth below.
(a) "Annual Addition" means the sum of the
following amounts with respect to all Qualified Plans and Welfare Benefit Funds
maintained by the Controlled Group Members:
(i) the amount of Controlled Group Member
contributions with respect to the Limitation Year allocated to the
Participant's account;
(ii) the amount of any forfeitures for the
Limitation Year allocated to the Participant's account;
(iii) the amount, if any, carried forward
pursuant to Section 10.4 or a similar provision in another Qualified Plan and
allocated to the Participant's account;
(iv) the amount of a Participant's voluntary
nondeductible contributions for the Limitation Year, provided, however, that
the Annual Addition for any Limitation Year beginning before January 1, 1987
will not be recomputed to treat all of the Participant's nondeductible
voluntary contributions as part of the Annual Addition;
(v) the amount allocated after March 31, 1984
to an individual medical benefit account (as defined in Code section 415(1)(2))
which is part of a Defined Benefit Plan or an annuity plan; and
(vi) the amount derived from contributions paid
or accrued after December 31, 1985 in taxable years ending after such date that
are attributable to post-retirement medical benefits allocated to the separate
account of a key employee (as defined in Code section 419A(d)(3)) under a
Welfare Benefit Fund. A Participant's Annual Addition will not include any
nonvested amounts restored to his account following
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<PAGE> 35
his reemployment before incurring five consecutive One Year Breaks in Service,
and a corrective allocation pursuant to Section 9.12 will be considered an
Annual Addition for the Limitation Year to which it relates.
(b) "Average Contribution Percentage" means the
average of the Contribution Percentages of each Participant in a group of
Participants.
(c) "Average Deferral Percentage" means the average
of the Deferral Percentages of each Participant in a group of Participants.
(d) "Contribution Percentage" means the ratio
(expressed as a percentage) determined by dividing the Matching Contributions
made to the Plan on behalf of a Participant who is eligible to receive an
allocation of Matching Contributions for a Plan Year (but only to the extent
such Matching Contributions are not taken into account in determining the
Participant's Deferral Percentage for the Plan Year) by the Participant's
Compensation for the Plan Year. A Participant is eligible to receive an
allocation of Matching Contributions for purposes of determining his
Contribution Percentage even though no Matching Contributions are made to the
Plan on his behalf because of the suspension of his Deferral Contributions
under the terms of the Plan, because of an election not to participate, or
because of the limitations contained in Sections 10.3 through 10.5 of the Plan.
(e) "Deferral Percentage" means the ratio
(expressed as a percentage) determined by dividing the Deferral Contributions
made to the Plan on behalf of a Participant who is eligible to make Deferral
Contributions for all or any portion of a Plan Year by the Participant's
Compensation for the Plan Year. In addition, if the Matching Contributions to
the Plan for any Plan Year satisfy the requirements of Code section
401(k)(2)(B) and (C), a Participant's Deferral Percentage will be determined by
aggregating the Deferral Contributions and the Matching Contributions made to
the Plan on his behalf for such Plan Year, unless such aggregation is
prohibited in regulations prescribed by the Secretary of the Treasury. A
Participant is eligible to make Deferral Contributions for purposes of
determining his Deferral Percentage even though he does not make Deferral
Contributions because of the suspension of his Deferral Contributions under the
terms of the Plan, because of an election not to participate, or because of the
limitations contained in Sections 10.3 through 10.5 of the Plan.
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(f) "Defined Benefit Dollar Limitation" means for
any Limitation Year, $90,000 or such amount as determined by the Commissioner
of Internal Revenue under Code section 415(d)(1) as of the January 1 falling
within such Limitation Year.
(g) "Defined Benefit Fraction" means a fraction,
the numerator of which is the Projected Annual Benefit of a Participant under
all Defined Benefit Plans maintained by a Controlled Group Member determined as
of the close of the Limitation Year and the denominator of which is the lesser
of (i) 140% of the Participant's average Includable Compensation that may be
taken into account for the Limitation Year under Code section 415(b)(1)(B), or
(ii) 125% of the Defined Benefit Dollar Limitation, determined as of the close
of the Limitation Year. If the Participant was a participant in a Defined
Benefit Plan maintained by a Controlled Group Member in existence on July 1,
1982, or on May 6, 1986, the denominator of the Defined Benefit Fraction will
not be less than 125% of the greater of the Participant's accrued Projected
Annual Benefit under such plan as of the end of the last Limitation Year
beginning before January 1, 1983, or his accrued Projected Annual Benefit of
the end of the last Limitation Year beginning January 1, 1987. The preceding
sentence applies only if the Defined Benefit Plan satisfied the requirements of
Code section 415 as in effect at the end of such Limitation Year.
(h) "Defined Benefit Plan" means a Qualified Plan
other than a Defined Contribution Plan.
(i) "Defined Contribution Dollar Limitation" means
for any Limitation Year, $30,000 or, if greater, 25% of the Defined Benefit
Dollar Limitation for the same Limitation Year. If a short Limitation Year is
created because of a Plan amendment changing the Limitation Year to a different
12-consecutive month period, the Defined Contribution Dollar Limitation for the
short Limitation Year will not exceed the amount determined in the preceding
sentences multiplied by a fraction, the numerator of which is the number of
months in the short Limitation Year and the denominator of which is 12.
(j) "Defined Contribution Fraction" means a
fraction, the numerator of which is the sum of the Annual Additions allocated
to the Participant's accounts for the applicable Limitation Year and each prior
Limitation Year, and the denominator of which is the sum of the lesser of the
following products for each Limitation Year in which the Participant was an
Employee (regardless of whether a Defined Contribution Plan was in existence
for such Limitation Year) (i) the Defined Contribution Dollar Limitation
(determined for
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this purpose without regard to the provisions of Code section 415(c)(6))
effective for the Limitation Year multiplied by 125%, or (ii) 35% of the
Participant's Includable Compensation for such Limitation Year.
(k) "Defined Contribution Plan" means a Qualified
Plan described in Code section 414(i).
(l) "Family Member" means, with respect to an
Employee, the Employee's spouse and lineal ascendants or descendants and the
spouses of such lineal ascendants or descendants.
(m) "Highly Compensated Employee" means any
Employee who performs services for a Controlled Group Member during the
determination year (as hereinafter defined) and who during the look-back year
(as hereinafter defined): (i) received Compensation from a Controlled Group
Member in excess of $75,000 (as adjusted pursuant to Code section 415(d)); (ii)
received Compensation from a Controlled Group Member in excess of $50,000 (as
adjusted pursuant to Code section 415(d)) and was a member of the top-paid
group for such year; or (iii) was an officer of a Controlled Group Member and
received Compensation during such year that is greater than 50% of the dollar
limitation in effect under Code section 415(b)(1)(A). The term Highly
Compensated Employee also includes: (i) an Employee who is both described in
the preceding sentence if the term "determination year" is substituted for the
term "look-back year" and the Employee is one of the 100 Employees who received
the most Compensation from the Controlled Group during the determination year;
and (ii) an Employee who is a 5-percent owner at any time during the look-back
year or determination year. If no officer has satisfied the Compensation
requirement of (ii) above during either a determination year or look-back year,
the officer with the highest Compensation for such year will be treated as a
Highly Compensated Employee. For purposes of this subsection, the
determination year is the Plan Year, and the look-back year is the twelve-month
period immediately preceding the determination year. A Highly Compensated
Employee also includes any Employee who separated from service (or was deemed
to have separated) prior to the determination year, performs no services for a
Controlled Group Member during the determination year, and was a Highly
Compensated Employee for either the separation year or any determination year
ending on or after the Employee's 55th birthday. All determinations under this
definition will be made in accordance with Code section 414(q) and the Treasury
Regulations thereunder.
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(n) "Includable Compensation" means an Employee's
total wages from the Controlled Group as determined for purposes of Internal
Revenue Service Form W-2, excluding, however: (i) moving expense
reimbursements that are deductible by the Employee under Code section 217, (ii)
contributions of Controlled Group Members to a simplified employee pension plan
to the extent such contributions are deductible by the Employee and
contributions of Controlled Group Members to any other plan of deferred
compensation that are not includable in the Employee's gross income, (iii)
distributions to the Employee from any plan of deferred compensation other than
an unfunded, nonqualified plan of deferred compensation, (iv) amounts realized
from the exercise of a nonqualified stock option, (v) amounts realized under
Code section 83 with respect to restricted property that becomes freely
transferable or is no longer subject to a substantial risk of forfeiture, (vi)
amounts realized from the disposition of stock acquired under a qualified stock
option within the meaning of Code section 422, and (vii) any other amounts that
receive special tax benefits within the meaning of section 1.415-2(d)(2) of the
Treasury Regulations. The annual Includable Compensation of an Employee taken
into account for any purpose for any Plan Year will not exceed $200,000, as
that amount may be adjusted by the Secretary of the Treasury.
(o) "Limitation Year" means the
12-consecutive-month period used by a Qualified Plan for purposes of computing
the limitations on benefits and annual additions under Code section 415. The
Limitation Year for this Plan is the Plan Year.
(p) "Maximum Annual Addition" means with respect to
a Participant for any Limitation Year an amount equal to the lesser of (i) the
Defined Contribution Dollar Limitation or (ii) 25% of the Participant's
Includable Compensation.
(q) "Nonhighly Compensated Employee" means an
Employee who is neither a Highly Compensated Employee nor a Family Member of a
Highly Compensated Employee.
(r) "Projected Annual Benefit" means the annual
benefit (as defined in Code section 415(b)(2)) to which a Participant would be
entitled under the terms of a Defined Benefit Plan maintained by a Controlled
Group Member, assuming that the Participant will continue employment until his
normal retirement age under the Defined Benefit Plan (or current age, if later)
and that the Participant's Includable Compensation for the current Limitation
Year and all other relevant factors
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used to determine benefits under the Defined Benefit Plan will remain constant
for all future Limitation Years.
(s) "Matching Contribution" means the Participating
Employer matching contribution made to the Plan on behalf of a Participant
pursuant to Article 3.
(t) "Welfare Benefit Fund" means an organization
described in paragraph (7), (9), (17) or (20) of Code section 501(c), a trust,
corporation or other organization not exempt from federal income tax, or to the
extent provided in Treasury Regulations, any account held for an employer by
any person, which is part of a plan of an employer through which the employer
provides benefits to employees or their beneficiaries, other than a benefit to
which Code sections 83(h), 404 (determined without regard to section 404(b)(2))
or 404A applies, or to which an election under Code section 463 applies.
10.3 General Allocation Limitation. The Annual Addition of
a Participant for any Limitation Year will not exceed the Maximum Annual
Addition. If, except for the application of this section, the Annual Addition
of a Participant for any Limitation Year would exceed the Maximum Annual
Addition, the excess Annual Addition attributable to this Plan will not be
allocated to the Participant's Account for the Plan Year included in such
Limitation Year, but will be subject to the provisions of Section 10.4. The
limitations contained in this Article will apply on an aggregate basis to all
Defined Contribution Plans and all Defined Benefit Plans (whether or not any of
such plans have terminated) established by the Controlled Group Members.
10.4 Excess Allocations.
(a) Participants Covered by One Defined
Contribution Plan. If the Participant is not covered under another Defined
Contribution Plan or a Welfare Benefit Fund maintained by a Controlled Group
Member during the Limitation Year and the amount otherwise allocable to his
Account would exceed the Maximum Annual Addition, the Participating Employer
contributions and forfeitures which would cause the Participant's Annual
Addition to exceed the Maximum Annual Addition will be successively allocated
in the manner described in Section 4.2 among the Accounts of eligible
Participants whose Annual Additions do not exceed the Maximum Annual Addition.
If, after such allocations have been made, there remain Participating Employer
contributions or forfeitures which cannot be allocated without causing the
Annual Addition of a Participant to exceed the Maximum Annual Addition, the
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forfeitures which cause the Annual Addition to exceed the Maximum Annual
Addition and the Participating Employer contributions which result from a
reasonable error in estimating the Participant's Includable Compensation or
from any other limited facts and circumstances which the Commissioner of
Internal Revenue finds justifiable under section 1.415-6(b)(6) of the Treasury
Regulations and which cause the Participant's Annual Addition to exceed the
Maximum Annual Addition will be held in a suspense account in the Trust Fund to
be carried forward and allocated in subsequent Limitation Years as provided in
Section 4.2. Such suspense account will not participate in the allocation of
the net income or net loss of the Trust Fund.
(b) Participants Covered by Two or More Defined
Contribution Plans. If, in addition to this Plan, the Participant is covered
under another Defined Contribution Plan or a Welfare Benefit Fund maintained by
a Controlled Group Member during the Limitation Year, the following provisions
will apply. The Annual Addition which may be credited to a Participant's
Account under this Plan for any such Limitation Year will not exceed the
Maximum Annual Addition reduced by the Annual Addition credited to a
Participant's accounts under the other Defined Contribution Plans and Welfare
Benefit Funds for the same Limitation Year. If the Annual Addition with
respect to the Participant under the other Defined Contribution Plans and
Welfare Benefit Funds maintained by a Controlled Group Member is less than the
Maximum Annual Addition and the Participating Employer contribution that would
otherwise be contributed or allocated to the Participant's Account under this
Plan would cause the Annual Addition for the Limitation Year to exceed the
Maximum Annual Addition, the amount to be contributed or allocated to the
Participant's Account under this Plan will be reduced so that the Annual
Addition under all such Defined Contribution Plans and Welfare Benefit Funds
for the Limitation Year will equal the Maximum Annual Addition. If the
aggregate Annual Addition with respect to the Participant under such other
Defined Contribution Plans and Welfare Benefit Funds is equal to or greater
than the Maximum Annual Addition, no amount will be contributed or allocated to
the Participant's Account under this Plan for the Limitation Year. An excess
Annual Addition will be reduced in the manner described in subsection (c).
(c) Reduction of Excess Allocations. As soon as is
administratively feasible after the end of the Limitation Year, the Maximum
Annual Addition for the Limitation Year will be determined on the basis of the
Participant's Includable Compensation for the Limitation Year. If a
Participant's
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Annual Addition under this Plan and the other Defined Contribution Plans and
Welfare Benefit Funds maintained by Controlled Group Members would result in
the Annual Addition exceeding the Maximum Annual Addition for the Limitation
Year, the excess amount will be deemed to consist of the Annual Addition last
allocated. In making this determination, the Annual Addition attributable to a
Welfare Benefit Fund will be deemed to have been allocated first regardless of
the actual date of allocation. If an excess amount was allocated to a
Participant on an allocation date of this Plan that coincides with an
allocation date of another plan, the excess amount attributed to this Plan will
be the product of (i) the total excess amount allocated as of such date and
(ii) the ratio of the Annual Addition allocated to the Participant for the
Limitation Year as of such date under this Plan to the total Annual Addition
allocated to the Participant for the Limitation Year as of such date under this
and all the other Defined Contribution Plans. Any excess amount attributed to
this Plan will be disposed of in the manner described in subsection (a).
10.5 Aggregate Benefit Limitation. If a Controlled Group
Member maintains, or at any time maintained, one or more Defined Benefit Plans
covering any Participant in this Plan, the sum of the Defined Benefit Fraction
and the Defined Contribution Fraction for any Limitation Year will equal no
more than one (1.0). The provisions of the Defined Benefit Plans will govern
the order of reduction of Annual Additions or benefit accruals necessary to
meet this limitation. If the provisions of the Defined Benefit Plans are
silent, the current Annual Addition under this Plan will be reduced first, and
then the rate of accrual under the Defined Benefit Plans will be reduced, if
necessary to meet this limitation. If the Defined Contribution Plans taken
into account in determining the Participant's Annual Addition under this
Article satisfied the requirements of Code section 415 as in effect for all
Limitation Years beginning before January 1, 1987, an amount will be subtracted
from the numerator of the Defined Contribution Fraction (not exceeding such
numerator) as prescribed by the Secretary of the Treasury so that the sum of
the Defined Contribution Fraction and the Defined Benefit Fraction does not
exceed 1.0. For purposes of this Section, a Participant's voluntary
nondeductible contributions to a Defined Benefit Plan will be treated as being
part of a separate Defined Contribution Plan.
10.6 Limitation on Deferral Contributions.
(a) Average Deferral Percentage Test.
Notwithstanding any other provision of the Plan, the Average
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Deferral Percentage for a Plan Year for Participants who are Highly Compensated
Employees will not exceed the greater of: (i) the Average Deferral Percentage
for Participants who are Nonhighly Compensated Employees multiplied by 1.25; or
(ii) the lesser of (A) the Average Deferral Percentage for Participants who are
Nonhighly Compensated Employees plus two percentage points or (B) the Average
Deferral Percentage for Participants who are Nonhighly Compensated Employees
multiplied by 2.0. The multiple use of the alternative test in clause (ii) of
this subsection will be restricted as provided in regulations prescribed by the
Secretary of the Treasury.
(b) Suspension of Deferral Contributions. If at
any time during a Plan Year the Committee determines, on the basis of estimates
made from information then available, that the limitation described in
subsection (a) above will not be met for the Plan Year, the Committee in its
discretion may reduce or suspend the Deferral Contributions of one or more
Participants who are Highly Compensated Employees to the extent necessary (i)
to enable the Plan to meet such limitation or (ii) to reduce the amount of
excess Deferral Contributions that would otherwise be distributed pursuant to
subsection (c) below.
(c) Reduction of Excess Deferral Contributions.
If, for any Plan Year, the Average Deferral Percentage for Participants who are
Highly Compensated Employees exceeds the limitation described in subsection (a)
above, the Deferral Percentage for each such Participant will be reduced (in
the order of Deferral Percentages, beginning with the highest of such
percentages) until the limitation in subsection (a) is satisfied. In order to
reduce a Participant's Deferral Percentage, the Participant's excess Deferral
Contributions will be distributed to him. If Matching Contributions are taken
into account in determining Deferral Percentages, a Participant's Deferral
Percentage will be reduced by distributing first Deferral Contributions in
excess of 5% of Compensation and by distributing next the remaining Deferral
Contributions and Matching Contributions, in proportion to the amount of such
contributions for the Plan Year. All distributions under this subsection will
be increased by Trust Fund earnings and decreased by Trust Fund losses for the
Plan Year and for the period between the end of the Plan Year and the date of
distribution and will be made within two and one-half months following the
close of the Plan Year, if practicable, but in no event later than the last day
of the immediately following Plan Year. The amount of excess Deferral
Contributions distributed pursuant to this Section with respect to a
Participant for the Plan Year will be reduced by any
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Deferral Contributions previously distributed to the Participant for the same
Plan Year pursuant to Section 3.1(c).
(d) Determination of Earnings and Losses. The
earnings and losses of the Trust Fund for the Plan Year allocable to the
portion of a Participant's Deferral Contributions that are distributed pursuant
to subsection (c) above will be determined by multiplying the Trust Fund
earnings or losses for the Plan Year allocable to the Participant's Deferral
Contribution Account by a fraction, the numerator of which is the amount of
Deferral Contributions to be distributed to the Participant and the denominator
of which is the balance of the Participant's Deferral Contribution Account on
the last day of the Plan Year, reduced by the earnings and increased by the
losses allocable to such Account for the Plan Year. The earnings and losses of
the Trust Fund allocable to the Participant's Deferral Contributions that are
distributed pursuant to subsection (c) for the period between the end of the
Plan Year and the date of such distribution will be determined in accordance
with regulations prescribed by the Secretary of the Treasury interpreting Code
section 401(k). The earnings and losses of the Trust Fund allocable to the
portion of a Participant's Matching Contributions that are distributed pursuant
to subsection (c) above will be determined in the manner described in Section
10.7(c).
10.7 Limitation on Matching Contributions.
(a) Average Contribution Percentage Test.
Notwithstanding any other provision of the Plan, the Average Contribution
Percentage for a Plan Year for Participants who are Highly Compensated
Employees will not exceed the greater of: (i) the Average Contribution
Percentage for Participants who are Nonhighly Compensated Employees multiplied
by 1.25; or (ii) the lesser of (A) the Average Contribution Percentage Test for
Participants who are Nonhighly Compensated Employees plus two percentage points
or (B) the Average Contribution Percentage for Participants who are Nonhighly
Compensated Employees multiplied by 2.0. The multiple use of the alternative
test contained in clause (ii) of this subsection will be restricted as provided
in regulations prescribed by the Secretary of the Treasury.
(b) Reduction of Excess Matching Contributions.
If, for any Plan Year, the Average Contribution Percentage for Participants who
are Highly Compensated Employees exceeds the limitation described in subsection
(a) above, the Contribution Percentage for each such Participant will be
reduced (in the order of Contribution Percentages, beginning with the highest
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of such percentages) until the limitation in subsection (a) is satisfied. In
order to reduce a Participant's Contribution Percentage, the Participant's
excess Matching Contributions (increased by Trust Fund earnings and decreased
by Trust Fund losses for the Plan Year and for the period between the end of
the Plan Year and the date of distribution) will be distributed to the
Participant within two and one-half months following the close of the Plan
Year, if practicable, but in no event later than the last day of the
immediately following Plan Year.
(c) Determination of Earnings and Losses. The
earnings and losses of the Trust Fund for the Plan Year allocable to the
portion of a Participant's Matching Contributions that are distributed pursuant
to Section 10.6 or subsection (b) above will be determined by multiplying the
Trust Fund earnings or losses for the Plan Year allocable to the Participant's
Matching Contribution Account by a fraction, the numerator of which is the
amount of Matching Contributions to be distributed and the denominator of which
is the balance of the Participant's Matching Contribution Account on the last
day of the Plan Year, reduced by the earnings and increased by the losses
allocable to such Account for the Plan Year. The earnings and losses of the
Trust Fund allocable to a Participant's Matching Contributions that are
distributed pursuant to Section 10.6 or subsection (b) above for the period
between the end of the Plan Year and the date of such distribution will be
determined in accordance with regulations prescribed by the Secretary of the
Treasury interpreting Code sections 401(k) and 401(m).
10.8 Aggregation Rules.
(a) Code Section 415. For purposes of the
allocation limitations under Code section 415 set forth in this Article, all
Defined Benefit Plans ever maintained by a Controlled Group Member will be
treated as one Defined Benefit Plan, and all Defined Contribution Plans ever
maintained by a Controlled Group Member will be treated as one Defined
Contribution Plan.
(b) Code Section 401(k). For purposes of the
limitation on Deferral Contributions set forth in this Article, the Average
Deferral Percentage for any Participant who is a Highly Compensated Employee
for the Plan Year and who is eligible to have deferral contributions allocated
to his account under two or more plans or arrangements described in Code
section 401(k) that are maintained by the Company or any Controlled Group
Member will be determined as if all such deferral contributions were made under
a single arrangement.
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(c) Code Section 401(m). If this Plan satisfies
the requirements of Code section 410(b) only if aggregated with one or more
other plans, the Contribution Percentages of all Participants will be
determined as if all such plans were a single plan. In addition, the
Contribution Percentage of a Participant who is a Highly Compensated Employee
for a Plan Year and who is eligible to make voluntary Employee contributions or
receive deferral contributions or matching employer contributions allocated to
his account under two or more Defined Contribution Plans maintained by the
Company or a Controlled Group Member will be determined as if all such
contributions were made to a single plan.
(d) Family Members. For purposes of determining
the Contribution Percentage or the Deferral Percentage of a Participant who is
both a Highly Compensated Employee and either (i) a 5-percent owner, determined
in accordance with Code section 414(q) and the Treasury Regulations promulgated
thereunder or (ii) one of the 10 most highly compensated Employees ranked on
the basis of Compensation paid by the Controlled Group during the year,
determined in accordance with Code section 414(q) and the Treasury Regulations
promulgated thereunder, the Matching Contributions, Deferral Contributions, and
Compensation of such Participant will include the Matching Contributions,
Deferral Contributions and Compensation of Family Members, and Family Members
will be disregarded in determining the Contribution Percentage or the Deferral
Percentage of Participants who are not such Highly Compensated Employees.
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ARTICLE 11
RESTRICTIONS ON DISTRIBUTIONS TO
PARTICIPANTS AND BENEFICIARIES
11.1 Priority over Other Distribution Provisions. The
provisions set forth in this Article will supersede any conflicting provisions
of Article 6 or Article 7.
11.2 General Restrictions.
(a) Distributions Prior to a Separation from
Service. Except for distributions permitted under Article 6 with respect to
Participants who attain age 59-1/2 or suffer a hardship, a Participant's
interest in the Plan will not be distributed before the Participant's
separation from service, disability or death unless: (i) the Plan is
terminated without the establishment or maintenance by the Participating
Employers of another defined contribution plan (other than an employee stock
ownership plan as defined in Code section 4975(e)(7)); (ii) a Participating
Employer that is a corporation sells all or substantially all of the assets
used by the Participating Employer in a trade or business to a person other
than a Controlled Group Member and the Participant becomes an employee of the
acquiring employer; or (iii) a Participating Employer that is a corporation
disposes of its interest in a subsidiary to a person other than an Controlled
Group Member but only if the Participant continues employment with the
subsidiary. An event will not be treated as described in clause (ii) or (iii)
above unless the Participating Employer continues to maintain the Plan after
the disposition.
(b) Lump Sum Distribution Required. An event
described in subparagraph (a) that would otherwise permit distribution of a
Participant's interest in the Plan will not be treated as described in
subparagraph (a) unless the Participant receives a lump sum distribution by
reason of the event. A lump sum distribution for this purpose will be a
distribution described in Code section 402(e)(4), without regard to clauses
(i), (ii), (iii), and (iv) of subparagraph (A), subparagraph (B), or
subparagraph (H) thereof.
11.3 Restrictions on Commencement of Distributions. The
provisions of this Section will apply to restrict the Committee's ability to
delay the commencement of distributions. Unless a Participant elects otherwise
in writing, distribution of the Participant's vested interest in his Account
will begin no later than the 60th day after the
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close of the Plan Year in which occurs the latest of (i) the date on which the
Participant attains age 65, (ii) the tenth anniversary of the Plan Year in
which the Participant began participation in the Plan, or (iii) the
Participant's termination of employment.
11.4 Restrictions on Delay of Distributions. The following
provisions will apply to limit a Participant's ability to delay the
distribution of benefits.
(a) General Rule. Distribution of a Participant's
entire vested and nonforfeitable interest will be made or commence not later
than April 1 following the calendar year in which he attains age 70-1/2.
(b) Rule for Certain Participants Who Attained Age
70-1/2 Before 1988. Notwithstanding subsection (a), if a Participant attained
age 70-1/2 before January 1, 1988 and was not a 5-percent owner (as such term
is defined in Code Section 416(i)) at any time during the five-plan-year period
ending in the calendar year in which he attained age 70-1/2, then distribution
of his entire vested and nonforfeitable interest will be made or commence not
later than April 1 following the earlier of (i) the calendar year in which his
employment with the Controlled Group terminates or (ii) the calendar year in
which he becomes a 5-percent owner.
(c) Rule for Participants Who Attained Age 70-1/2
in 1988. If a Participant attained age 70-1/2 during 1988 and had not
terminated employment with the Controlled Group as of January 1, 1989,
distribution of his entire vested and nonforfeitable interest will be made or
commence not later than April 1, 1990.
11.5 Limitation to Assure Benefits Payable to Beneficiaries
are Incidental. In the event that any payments under the Plan are to be made
to someone other than the Participant or jointly to the Participant and his
spouse or other payee, such payments must conform to the "incidental benefit"
rules of Code section 401(a)(9)(G) and Treasury Regulation section
1.401(a)(9)-2.
11.6 Restrictions in the Event of Death. Upon the death of
a Participant, the following distribution provisions will apply to limit the
Beneficiary's ability to delay distributions. If the Participant dies after
distribution of his benefit has begun, the remaining portion of his benefit
will continue to be distributed at least as rapidly as under the method of
distribution being used prior to the
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Participant's death; but if he dies before distribution of his benefit
commences, his entire benefit will be distributed no later than five years
after his death, unless an individual who is a designated Beneficiary elects to
receive distributions in substantially equal installments over the
Beneficiary's life or life expectancy beginning no later than one year after
the Participant's death. If the designated Beneficiary is the Participant's
surviving spouse, the date distributions are required to begin will not be
earlier than the date on which the Participant would have attained age 70-1/2,
and, if the spouse dies before payments begin, subsequent distributions will be
made as if the spouse had been the Participant. Any amount paid to a child of
the Participant will be treated as if it had been paid to the surviving spouse
if the amount becomes payable to the surviving spouse when the child reaches
the age of majority.
11.7 Compliance with Regulations. Distributions under the
Plan to Participants or Beneficiaries will be made in accordance with Treasury
Regulations issued under Code section 401(a)(9), including Treasury Regulations
thereunder.
11.8 Delayed Payments. If the amount of a distribution
required to begin on a date determined under the applicable provisions of the
Plan cannot be ascertained by such date, or if it is not possible to make such
payment on such date because the Committee has been unable to locate a
Participant or Beneficiary after making reasonable efforts to do so, a payment
retroactive to such date may be made no later than 60 days after the earliest
date on which the amount of such payment can be ascertained or the date on
which the Participant or Beneficiary is located (whichever is applicable).
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ARTICLE 12
TOP-HEAVY PROVISIONS
12.1 Priority over Other Plan Provisions. If the Plan is or
becomes a Top-Heavy Plan in any Plan Year, the provisions of this Article will
supersede any conflicting provisions of the Plan. However, the provisions of
this Article will not operate to increase the rights or benefits of
Participants under the Plan except to the extent required by Code section 416
and other provisions of law applicable to Top-Heavy Plans.
12.2 Definitions Used in this Article. The following words
and phrases, when used with initial capital letters, will have the meanings set
forth below.
(a) "Defined Benefit Dollar Limitation" means the
limitation described in Section 10.2(f).
(b) "Defined Benefit Plan" means the Qualified Plan
described in Section 10.2(h).
(c) "Defined Contribution Dollar Limitation" means
the limitation described in Section 10.2(i).
(d) "Defined Contribution Plan" means the Qualified
Plan described in Section 10.2(k).
(e) "Determination Date" means for the first Plan
Year of the Plan the last day of the Plan Year and for any subsequent Plan Year
the last day of the preceding Plan Year.
(f) "Determination Period" means the Plan Year
containing the Determination Date and the four preceding Plan Years.
(g) "Includable Compensation" means the
compensation described in Section 10.2(n).
(h) "Key Employee" means any Employee or former
Employee (and the Beneficiary of a deceased Employee) who at any time during
the Determination Period was (i) an officer of a Controlled Group Member, if
such individual's Includable Compensation (modified as described below) exceeds
50% of the Defined Benefit Dollar Limitation, (ii) an owner (or considered an
owner under Code section 318) of one of the ten largest interests in a
Controlled Group Member, if such individual's Includable Compensation exceeds
the Defined Contribution Dollar
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Limitation, (iii) a 5% owner of a Controlled Group Member, or (iv) a 1% owner
of a Controlled Group Member who has annual Includable Compensation of more
than $150,000. The determination of who is a Key Employee will be made in
accordance with Code section 416(i). For purposes of this subsection,
Includable Compensation will include the amount of any salary reduction
contributions pursuant to a cash or deferred arrangement meeting the
requirements of Code section 401(k) or a cafeteria plan meeting the
requirements of Code section 125.
(i) "Minimum Allocation" means the allocation
described in the first sentence of Section 12.4(a).
(j) "Permissive Aggregation Group" means the
Required Aggregation Group of Qualified Plans plus any other Qualified Plan or
Qualified Plans of a Controlled Group Member which, when considered as a group
with the Required Aggregation Group, would continue to satisfy the requirements
of Code sections 401(a)(4) and 410 (including simplified employee pension
plans).
(k) "Present Value" means present value based only
on the interest and mortality rates specified in a Defined Benefit Plan.
(l) "Required Aggregation Group" means the group of
plans consisting of (i) each Qualified Plan (including simplified employee
pension plans) of a Controlled Group Member in which at least one Key Employee
participates, and (ii) any other Qualified Plan (including simplified employee
pension plans) of a Controlled Group Member which enables a Qualified Plan to
meet the requirements of Code sections 401(a)(4) or 410.
(m) "Top-Heavy Plan" means the Plan for any Plan
Year in which any of the following conditions exists: (i) if the Top-Heavy
Ratio for the Plan exceeds 60% and the Plan is not a part of any Required
Aggregation Group or Permissive Aggregation Group of Qualified Plans; (ii) if
the Plan is a part of a Required Aggregation Group but not part of a Permissive
Aggregation Group of Qualified Plans and the Top-Heavy Ratio for the Required
Aggregation Group exceeds 60%; or (iii) if the Plan is a part of a Required
Aggregation Group and part of a Permissive Aggregation Group of Qualified Plans
and the Top-Heavy Ratio for the Permissive Aggregation Group exceeds 60%.
(n) "Top-Heavy Ratio" means a fraction, the
numerator of which is the sum of the Present Value of accrued
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benefits and the account balances (as required by Code section 416)) of all Key
Employees with respect to such Qualified Plans as of the Determination Date
(including any part of any accrued benefit or account balance distributed
during the five-year period ending on the Determination Date), and the
denominator of which is the sum of the Present Value of the accrued benefits
and the account balances (including any part of any accrued benefit or account
balance distributed in the five-year period ending on the Determination Date)
of all Employees with respect to such Qualified Plans as of the Determination
Date. The value of account balances and the Present Value of accrued benefits
will be determined as of the most recent Top-Heavy Valuation Date that falls
within or ends with the 12-month period ending on the Determination Date,
except as provided in Code section 416 for the first and second Plan Years of a
Defined Benefit Plan. The account balances and accrued benefits of a
participant who is not a Key Employee but who was a Key Employee in a prior
year will be disregarded. The calculation of the Top-Heavy Ratio, and the
extent to which distributions, rollovers, transfers and contributions unpaid as
of the Determination Date are taken into account will be made in accordance
with Code section 416. Employee contributions described in Code section
219(e)(2) will not be taken into account for purposes of computing the
Top-Heavy Ratio. When aggregating plans, the value of account balances and
accrued benefits will be calculated with reference to the Determination Dates
that fall within the same calendar year. The accrued benefit of any Employee
other than a Key Employee will be determined under the method, if any, that
uniformly applies for accrual purposes under all Qualified Plans maintained by
all Controlled Group Members and included in a Required Aggregation Group or a
Permissive Aggregation Group or, if there is no such method, as if the benefit
accrued not more rapidly than the slowest accrual rate permitted under the
fractional accrual rate of Code section 411(b)(1)(C). Notwithstanding the
foregoing, the account balances and accrued benefits of any Employee who has
not performed services for an employer maintaining any of the aggregated plans
during the five-year period ending on the Determination Date will not be taken
into account for purposes of this subsection.
(o) "Top-Heavy Valuation Date" means the last day
of each Plan Year.
12.3 Minimum Allocation.
(a) Calculation of Minimum Allocation. For any
Plan Year in which the Plan is a Top-Heavy Plan, each Participant who is not a
Key Employee will receive an
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allocation of Participating Employer contributions and forfeitures of not less
than the lesser of 3% of his Includable Compensation for such Plan Year or the
percentage of Includable Compensation that equals the largest percentage of
Participating Employer contributions and forfeitures allocated to a Key
Employee. The Minimum Allocation is determined without regard to any Social
Security contribution. Deferral Contributions made on behalf of Participants
who are not Key Employees will not be treated as Participating Employer
contributions for purposes of the Minimum Allocation. Matching Contributions
that are allocated to Participants who are not Key Employees and that are taken
into account in determining a Participant's Deferral Percentage or Contribution
Percentage will not be treated as Participating Employer contributions for such
Plan Year for purposes of the Minimum Allocation. The Minimum Allocation
applies even though under other Plan provisions the Participant would not
otherwise be entitled to receive an allocation, or would have received a lesser
allocation for the Plan Year because (i) the non-Key Employee fails to make
mandatory contributions to the Plan, (ii) the non-Key Employee's Includable
Compensation is less than a stated amount, or (iii) the non-Key Employee fails
to complete 1,000 Hours of Service in the Plan Year.
(b) Limitation on Minimum Allocation. No Minimum
Allocation will be provided pursuant to subsection (a) to a Participant who is
not employed by a Controlled Group Member on the last day of the Plan Year.
(c) Minimum Allocation When Participant is Covered
by Another Qualified Plan. If a Controlled Group Member maintains one or more
other Defined Contribution Plans covering Employees who are Participants in
this Plan, the Minimum Allocation will be provided under this Plan, unless such
other Defined Contribution Plans make explicit reference to this Plan and
provide that the Minimum Allocation will not be provided under this Plan, in
which case the provisions of subsection (a) will not apply to any Participant
covered under such other Defined Contribution Plans. If a Controlled Group
Member maintains one or more Defined Benefit Plans covering Employees who are
Participants in this Plan, and such Defined Benefit Plans provide that
Employees who are participants therein will accrue the minimum benefit
applicable to top-heavy Defined Benefit Plans notwithstanding their
participation in this Plan, then the provisions of subsection (a) will not
apply to any Participant covered under such Defined Benefit Plans. If a
Controlled Group Member maintains one or more Defined Benefit Plans covering
Employees who are Participants in this Plan, and the provisions of the
preceding sentence do not
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apply, then each Participant who is not a Key Employee and who is covered by
such Defined Benefit Plans will receive a Minimum Allocation determined by
applying the provisions of subsection (a) with the substitution of "5%" in each
place that "3%" occurs therein.
(d) Nonforfeitability. The Participant's Minimum
Allocation, to the extent required to be nonforfeitable under Code section
416(b) and the special vesting schedule provided in this Article, may not be
forfeited under Code section 411(a)(3)(B) (relating to suspension of benefits
on reemployment) or 411(a)(3)(D) (relating to withdrawal of mandatory
contributions).
12.4 Modification of Aggregate Benefit Limit.
(a) Modification. Subject to the provisions of
subsection (b), in any Plan Year in which the Top-Heavy Ratio exceeds 60%, the
aggregate benefit limit described in Article 10 will be modified by
substituting "100%" for "125%" in Sections 10.1(b) and (c).
(b) Exception. The modification of the aggregate
benefit limit described in subsection (a) will not be required if the Top-Heavy
Ratio does not exceed 90% and one of the following conditions is met: (i)
Employees who are not Key Employees do not participate in both a Defined
Benefit Plan and a Defined Contribution Plan which are in the Required
Aggregation Group, and the Minimum Allocation requirements of Section 12.4(a)
are met when such requirements are applied with the substitution of "4%" for
"3%"; (ii) the Minimum Allocation requirements of Section 12.4(c) are met when
such requirements are applied with the substitution of "7 1/2%" for "5%"; or
(iii) Employees who are not Key Employees have an accrued benefit of not less
than 3% of their average Includable Compensation for the five consecutive Plan
Years in which they had the highest Includable Compensation multiplied by their
Years of Service in which the Plan is a Top-Heavy Plan (not to exceed a total
such benefit of 30%), expressed as a life annuity commencing at the
Participant's normal retirement age in a Defined Benefit Plan which is in the
Required Aggregation Group.
12.5 Minimum Vesting.
(a) Required Vesting. For any Plan Year in which
this Plan is a Top-Heavy Plan, the minimum vesting schedule set forth in
subsection (b) will automatically apply to the Plan to the extent it provides a
higher vested
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<PAGE> 54
percentage than the regular vesting schedule set forth in Article 5. The
minimum vesting schedule applies to all Account balances including amounts
attributable to Plan Years before the effective date of Code section 416 and
amounts attributable to Plan Years before the Plan became a Top-Heavy Plan.
Further, no reduction in vested Account balances may occur in the event the
Plan's status as a Top-Heavy Plan changes for any Plan Year, and any change in
the effective vesting schedule from the schedule set forth in subsection (b) to
the regular schedule set forth in Article 5 will be treated as an amendment
subject to Section 14.1(iii). However, this subsection does not apply to the
Account balances of any Employee who does not have an Hour of Service after the
Plan has initially become a Top-Heavy Plan, and such Employee's Account
balances will be determined without regard to this Section.
(b) Minimum Vesting Schedule.
<TABLE>
<CAPTION>
Percentage Vested
Years of Service and Nonforfeitable
---------------- ------------------
<S> <C>
Less than 2 0
2 but less than 3 20
3 but less than 4 40
4 but less than 5 60
5 but less than 6 80
6 or more 100
</TABLE>
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<PAGE> 55
ARTICLE 13
ADOPTION OF PLAN BY CONTROLLED GROUP MEMBERS
13.1 Adoption Procedure. Any Controlled Group Member may
become a Participating Employer under the Plan provided that (i) the Board
approves the adoption of the Plan by the Controlled Group Member and designates
the Controlled Group Member as a Participating Employer; (ii) the Controlled
Group Member adopts the Plan and Trust Agreement together with all amendments
then in effect by appropriate resolutions of the board of directors of the
Controlled Group Member; and (iii) the Controlled Group Member by appropriate
resolutions of its board of directors agrees to be bound by any other terms and
conditions which may be required by the Board, provided that such terms and
conditions are not inconsistent with the purposes of the Plan.
13.2 Effect of Adoption by Controlled Group Member. A
Controlled Group Member that adopts the Plan pursuant to this Article will be
deemed to be a Participating Employer for all purposes hereunder, unless
otherwise specified in the resolutions of the Board designating the Controlled
Group Member as a Participating Employer. In addition, the Board may provide,
in its discretion and by appropriate resolutions, that the Employees of the
Controlled Group Member will receive credit for their employment with the
Controlled Group Member prior to the date it became a Controlled Group Member
for purposes of determining either or both the eligibility of such Employees to
participate in the Plan and the vested and nonforfeitable interest of such
Employees in their Account balances provided that such credit will be applied
in a uniform and nondiscriminatory manner with respect to all such Employees.
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<PAGE> 56
ARTICLE 14
AMENDMENT OF THE PLAN
14.1 Right to Amend the Plan. The Company reserves to the
Compensation Committee of the Board of Directors the right to amend the Plan at
any time and from time to time to the extent it may deem advisable or
appropriate, provided that (i) no amendment will increase the duties or
liabilities of the Trustee without its written consent; (ii) no amendment will
cause a reversion of Plan assets to the Participating Employers not otherwise
permitted under the Plan; (iii) no amendment will have the effect of reducing
the percentage of the vested and nonforfeitable interest of any Participant in
his Account nor will the vesting provisions of the Plan be amended unless each
Participant with at least three Years of Service (including Years of Service
disregarded pursuant to the reemployment provisions (if any) of Article 5) is
permitted to elect to continue to have the prior vesting provisions apply to
him, within 60 days after the latest of the date on which the amendment is
adopted, the date on which the amendment is effective, or the date on which the
Participant is issued written notice of the amendment; and (iv) no amendment
will be effective to the extent that it has the effect of decreasing a
Participant's Account balance or eliminating an optional form of distribution
as it applies to an existing Account balance.
14.2 Amendment Procedure. Any amendment to the Plan will
be made only pursuant to action of the Compensation Committee of the Board. A
certified copy of the resolutions adopting any amendment and a copy of the
executed amendment will be delivered to the Trustee, the Committee and the
Company. Upon such action by the Compensation Committee of the Board, the Plan
will be deemed amended as of the date specified as the effective date by such
action or in the instrument of amendment. The effective date of any amendment
may be before, on or after the date of such action, except as otherwise set
forth in Section 14.1.
14.3 Effect on Participating Employers. Unless an
amendment expressly provides otherwise, all Participating Employers will be
bound by any amendment to the Plan.
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<PAGE> 57
ARTICLE 15
TERMINATION, PARTIAL TERMINATION AND
COMPLETE DISCONTINUANCE OF CONTRIBUTIONS
15.1 Continuance of Plan. The Participating Employers
expect to continue the Plan indefinitely, but they do not assume an individual
or collective contractual obligation to do so, and the right is reserved to the
Company, by action of the Board, to terminate the Plan or to completely
discontinue contributions thereto at any time. In addition, subject to
remaining provisions of this Article, any Participating Employer at any time
may discontinue its participation in the Plan with respect to its Employees.
15.2 Complete Vesting. If the Plan is terminated, or if
there is a complete discontinuance of contributions to the Plan by the
Participating Employers, the amounts allocated or to be allocated to the
Accounts of all affected Participants will become 100% vested and
nonforfeitable without regard to their Years of Service. For purposes of this
Section, a Participant who has terminated employment and is not again an
Employee at the time the Plan is terminated or there is a complete
discontinuance of Participating Employer contributions will not be an affected
Participant entitled to full vesting if the Participant had no vested interest
in his Account balance attributable to Participating Employer contributions at
his termination of employment. In the event of a partial termination of the
Plan, the amounts allocable to the Accounts of those Participants who cease to
participate on account of the facts and circumstances which result in the
partial termination will become 100% vested and nonforfeitable without regard
to their Years of Service.
15.3 Disposition of the Trust Fund. If the Plan is
terminated, or if there is a complete discontinuance of contributions to the
Plan, the Committee will instruct the Trustee either (i) to continue to
administer the Plan and pay benefits in accordance with the Plan until the
Trust Fund has been depleted, or (ii) to distribute the assets remaining in the
Trust Fund. If the Trust Fund is to be distributed, the Committee will make,
after deducting estimated expenses for termination of the Trust Fund and
distribution of its assets, the allocations required under the Plan as though
the date of completion of the Trust Fund termination were a Valuation Date.
The Trustee will distribute to each Participant the amount credited to his
Account as of the date of completion of the Trust Fund termination.
-54-
<PAGE> 58
15.4 Withdrawal by A Participating Employer. A
Participating Employer may withdraw from participation in the Plan or
completely discontinue contributions to the Plan only with the approval of the
Board. If any Participating Employer withdraws from the Plan or completely
discontinues contributions to the Plan, a copy of the resolutions of the board
of directors of the Participating Employer adopting such action, certified by
the secretary of such board of directors and reflecting approval by the Board,
will be delivered to the Committee as soon as it is administratively feasible
to do so, and the Committee will communicate such action to the Trustee and to
the Employees of the Participating Employer.
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<PAGE> 59
ARTICLE 16
MISCELLANEOUS
16.1 Reversion Prohibited.
(a) General Rule. Except as provided in
subsections (b), (c) and (d), it will be impossible for any part of the Trust
Fund either (i) to be used for or diverted to purposes other than those which
are for the exclusive benefit of Participants and their Beneficiaries (except
for the payment of taxes and administrative expenses), or (ii) to revert to a
Controlled Group Member.
(b) Disallowed Contributions. Each contribution
of the Participating Employers under the Plan is expressly conditioned upon the
deductibility of the contribution under Code section 404. If all or part of a
Participating Employer's contribution is disallowed as a deduction under Code
section 404, such disallowed amount (reduced by any Trust Fund losses
attributable thereto) may be returned by the Trustee to the Participating
Employer with respect to which the deduction was disallowed (upon the direction
of the Committee) within one year after the disallowance.
(c) Mistaken Contributions. If a contribution is
made by a Participating Employer by reason of a mistake of fact, then so much
of the contribution as was made as a result of the mistake (reduced by any
Trust Fund losses attributable thereto) may be returned by the Trustee to the
Participating Employer (upon direction of the Committee) within one year after
the mistaken contribution was made.
(d) Failure to Qualify. In the event the
Internal Revenue Service determines that the Plan and the Trust Agreement, as
amended by amendments acceptable to the Company, initially fail to constitute a
qualified plan and establish a tax-exempt trust under the Code, then
notwithstanding any other provisions of the Plan or the Trust Agreement, the
contributions made by the Participating Employers prior to the date of such
determination will be returned to the Participating Employers and the Plan and
Trust Agreement will terminate.
16.2 Bonding, Insurance and Indemnity.
(a) Bonding. To the extent required under ERISA,
the Participating Employers will obtain, pay for and keep current a bond or
bonds with respect to each Committee
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<PAGE> 60
member and each Employee who receives, handles, disburses, or otherwise
exercises custody or control of, any of the assets of the Plan.
(b) Insurance. The Participating Employers, in
their discretion, may obtain, pay for and keep current a policy or policies of
insurance, insuring the Committee members, the members of the board of
directors of each Participating Employer and other Employees to whom any
fiduciary responsibility with respect to the administration of the Plan has
been delegated against any and all costs, expenses and liabilities (including
attorneys' fees) incurred by such persons as a result of any act, or omission
to act, in connection with the performance of their duties, responsibilities
and obligations under the Plan and any applicable law.
(c) Indemnity. If the Participating Employers do
not obtain, pay for and keep current the type of insurance policy or policies
referred to in subsection (b), or if such insurance is provided but any of the
parties referred to in subsection (b) incur any costs or expenses which are not
covered under such policies, then the Participating Employers will indemnify
and hold harmless, to the extent permitted by law, such parties against any and
all costs, expenses and liabilities (including attorneys' fees) incurred by
such parties in performing their duties and responsibilities under this Plan,
provided that such party or parties were acting in good faith within what was
reasonably believed to have been the best interests of the Plan and its
Participants.
16.3 Merger, Consolidation or Transfer of Assets. There
will be no merger or consolidation of all or any part of the Plan with, or
transfer of the assets or liabilities of all or any part of the Plan to, any
other Qualified Plan unless each Participant who remains a Participant
hereunder and each Participant who becomes a participant in the other Qualified
Plan would receive a benefit immediately after the merger, consolidation or
transfer (determined as if the other Qualified Plan and the Plan were then
terminated) which is equal to or greater than the benefit they would have been
entitled to receive under the Plan immediately before the merger, consolidation
or transfer if the Plan had then terminated.
16.4 Spendthrift Clause. The rights of any Participant or
Beneficiary to and in any benefits under the Plan will not be subject to
assignment or alienation, and no Participant or Beneficiary will have the power
to assign, transfer or dispose of such rights, nor will any such rights to
benefits be subject to attachment, execution, garnishment,
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<PAGE> 61
sequestration, the laws of bankruptcy or any other legal or equitable process.
This Section will not apply to a "qualified domestic relations order". A
"qualified domestic relations order" means a judgment, decree or order made
pursuant to a state domestic relations law which satisfies the requirements of
Code section 414(p).
16.5 Rights of Participants. Participation in the Plan
will not give any Participant the right to be retained in the employ of a
Controlled Group Member or any right or interest in the Plan or the Trust Fund
except as expressly provided herein.
16.6 Gender, Tense and Headings. Whenever any words are
used herein in the masculine gender, they will be construed as though they were
also used in the feminine gender in all cases where they would so apply.
Whenever any words used herein are in the singular form, they will be construed
as though they were also used in the plural form in all cases where they would
so apply. Headings of Articles, Sections and subsections as used herein are
inserted solely for convenience and reference and constitute no part of the
Plan.
16.7 GOVERNING LAW. THE PLAN WILL BE CONSTRUED AND
GOVERNED IN ALL RESPECTS IN ACCORDANCE WITH APPLICABLE FEDERAL LAW AND, TO THE
EXTENT NOT PREEMPTED BY SUCH FEDERAL LAW, IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE.
Executed: this 15th day of September, 1989.
A. H. BELO CORPORATION
BY /S/ ROBERT W. DECHERD
BY
---------------------
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<PAGE> 62
APPENDIX A
PARTICIPATING EMPLOYERS
A. H. Belo Corporation
Dallas-Ft. Worth Suburban Newspapers, Inc.
Great Western Broadcasting Corporation
Gulf Television Corporation
KOTV, Inc.
The Dallas Morning News Company
WFAA Television, Inc.
WVEC Television, Inc.
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<PAGE> 1
EXHIBIT 10.3 (21)
SEVENTH AMENDMENT
TO
A. H. BELO CORPORATION
EMPLOYEE SAVINGS AND INVESTMENT PLAN
A. H. Belo Corporation, a Delaware corporation, pursuant to
authorization of its Board of Directors, adopts the following amendments to the
A. H. Belo Corporation Employee Savings and Investment Plan (the "Plan").
1. The first sentence of Section 1.8 of the Plan ("Compensation")
is amended in its entirety to read as follows:
"Compensation" means the earnings paid to an Employee by the
Participating Employers which are subject to reporting on Internal
Revenue Service Form W-2, excluding, however, reimbursements for
moving expenses, automobile allowances and any earnings paid to the
Employee in a form other than cash.
2. Clause (iv) of Section 2.2(a) of the Plan (relating to
employees ineligible to participate) is amended in its entirety to read as
follows:
(iv) he is a leased employee required to be treated as an
Employee under Code section 414(n) or he is classified by a
Participating Employer as an independent contractor whose
compensation for services is reported on a form other than
Form W-2 or any successor form for reporting wages paid to
employees;
<PAGE> 2
3. Section 3.1(a) of the Plan ("Amount of Deferral
Contributions") is amended by the addition of the following sentence:
Effective with the first payroll period beginning on or after
January 1, 1995, the amount of a Participant's Deferral
Contributions will not be less than 2% nor more than 15% of
his Compensation for each payroll period.
4. Sections 3.2(a) and 3.2(b) of the Plan are amended in their
entirety to read as follows:
(a) Amount of Matching Contributions. Prior to January
1, 1995, the Participating Employers will pay to the Trustee as a
matching contribution for each Plan Year an amount equal to 50% of
each Participant's Deferral Contributions, but only to the extent that
the Participant's Deferral Contributions do not exceed 6% of the
Participant's Compensation for the Plan Year (excluding Compensation
earned before the Participant was eligible to participate under
Section 2.1). Effective with the first payroll period beginning on or
after January 1, 1995, the Participating Employers will pay to the
Trustee as a matching contribution for each payroll period an amount
equal to 50% of each Participant's Deferral Contributions, but only to
the extent that the Participant's Deferral Contributions do not exceed
6% of the Participant's Compensation for the payroll period. In
addition, each Participating Employer may make an additional matching
contribution for any Plan Year if authorized by its board of
directors, but no Participating Employer will be required to make an
additional matching contribution for any Plan Year. Participating
Employer matching contributions may be made in cash or in shares of
Company Stock or both.
-2-
<PAGE> 3
(b) Calculation of Matching Contributions. For Plan
Years beginning before January 1, 1995, Participating Employer
matching contributions initially will be calculated on the basis of
Deferral Contributions and Compensation for each payroll period within
the Plan Year. Except as otherwise set forth in Section 3.2(c), as of
one or more dates within each Plan Year beginning before January 1,
1995, the Participating Employers will make an additional matching
contribution for a Participant to the extent necessary to cause the
matching contributions for such Participant for the Plan Year to be
equal to the amount required by Section 3.2(a) calculated on the basis
of the Participant's Deferral Contributions and Compensation for the
entire Plan Year (excluding Compensation earned before the Participant
was eligible to participate under Section 2.1). For Plan Years
beginning on and after January 1, 1995, Participating Employer
matching contributions will be calculated solely on the basis of
Deferral Contributions and Compensation for each payroll period within
the Plan Year.
5. Section 3.2(d) of the Plan is amended in its entirety to read
as follows:
(d) Participants Ineligible for Matching Contributions.
Notwithstanding the foregoing provisions of this Section, (i) no
matching contributions will be made for any payroll period beginning
on or after April 1, 1994, with respect to any Employee who is
employed by DFW Suburban Newspapers, Inc. and (ii) no matching
contributions will be made for any payroll period beginning before
January 1, 1995, with respect to any Employee who is employed by
WWL-TV, Inc.
-3-
<PAGE> 4
6. Section 4.2 of the Plan is amended in its entirety to read as
follows:
4.2 Allocation of Contributions and Forfeitures. Each
Deferral Contribution made by a Participating Employer on behalf of a
Participant will be allocated by the Committee to the Participant's
Deferral Contribution Account. Prior to 1995, each Participating
Employer matching contribution made with respect to a Plan Year and
all forfeitures arising during that Plan Year will be allocated by the
Committee to the Matching Contribution Accounts of Participants
employed by that Participating Employer in the ratio that the Deferral
Contributions made on behalf of each such Participant for the Plan
Year bear to the total Deferral Contributions made on behalf of all
such Participants for the Plan Year, taking into account for purposes
of this ratio only Deferral Contributions that do not exceed 6% of
each Participant's Compensation. Effective with the first payroll
period beginning on and after January 1, 1995, each Participating
Employer matching contribution made with respect to a payroll period
and all forfeitures will be allocated by the Committee to the Matching
Contribution Accounts of Participants employed by that Participating
Employer in the ratio that the Deferral Contributions made on behalf
of each such Participant for each payroll period in the Plan Year bear
to the total Deferral Contributions made on behalf of all such
Participants for each such payroll period, taking into account for
purposes of this ratio only Deferral Contributions that do not exceed
6% of each Participant's Compensation for the payroll period.
7. Clause (i) of Section 6.5(c) of the Plan (relating to the term
of participant loans) is amended in its entirety to read as follows:
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<PAGE> 5
(i) no loan will be for a term of longer than five years;
8. The second sentence of Section 6.5(g) of the Plan (relating to
the investment of loan repayments) is amended in its entirety to read as
follows:
All payments with respect to a loan will be credited to the
borrowing Participant's Accounts and will be invested in the
investment funds under the Trust Agreement in accordance with
the Participant's latest investment directions pursuant to
Section 3.5.
9. Article 6 of the Plan ("Distributions to Participants") is
amended by renumbering Section 6.8 as Section 6.9 and inserting the following
new section immediately after Section 6.7:
6.8 Direct Rollovers: (a) Notwithstanding any other
provision of the Plan, for distributions made on or after January 1,
1993, a Distributee (as hereinafter defined) may elect, at any time
and in the manner prescribed by the Committee, to have any portion of
an Eligible Rollover Distribution (as hereinafter defined) paid
directly to an Eligible Retirement Plan (as hereinafter defined)
specified by the Distributee.
(b) An Eligible Rollover Distribution is any
distribution of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution does not
include (i) any distribution that is one of a series of substantially
equal periodic payments
-5-
<PAGE> 6
(not less frequently than annually) made for the life or life
expectancy of the Distributee or the joint lives or life expectancies
of the Distributee and the Distributee's designated beneficiary, or
for a specified period of ten years or more, (ii) any distribution to
the extent such distribution is required by Section 401(a)(9) of the
Code, and (iii) the portion of any distribution that is not includible
in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(c) An Eligible Retirement Plan is an individual
retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code,
an annuity plan described in Section 403(a) of the Code, or a
qualified trust described in Section 401(a) of the Code that is a
defined contribution plan within the meaning of Section 414(i) of the
Code, that accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to a
Participant's surviving Spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement annuity.
(d) A Distributee includes a Participant, the
Participant's Spouse, or a Participant's former spouse who is an
alternate payee under a qualified domestic relations order, as defined
in Section 414(p) of the Code.
10. The last sentence of Section 10.2(n) of the Plan (relating to
the definition of Includable Compensation for purposes of the annual addition
limitations under Code section 415) is deleted and replaced by the following
sentences:
The annual Includable Compensation of an Employee taken into account
for any purpose for any Plan Year will not exceed
-6-
<PAGE> 7
$200,000 for any Plan Year ending before January 1, 1994, as adjusted
in regulations prescribed by the Secretary of the Treasury, and will
not exceed $150,000 for any Plan Year beginning after December 31,
1993, as adjusted in regulations prescribed by the Secretary of the
Treasury. For purposes of applying the $200,000 and $150,000 limits
set forth in the preceding sentence, if an Employee is a Highly
Compensated Employee who is either (i) a 5-percent owner, determined
in accordance with Code section 414(q) and the Treasury Regulations
promulgated thereunder or (ii) one of the 10 most highly compensated
Employees ranked on the basis of Compensation paid by the Controlled
Group during the year, such Highly Compensated Employee and the
members of his family (as hereafter defined) will be treated as a
single employee and the Compensation of each member of the family will
be aggregated with the Compensation of the Highly Compensated
Employee. The limitation on Compensation will be allocated among such
Highly Compensated Employee and his family members in proportion to
each individual's Compensation. For purposes of this Section 10.2(n),
the term "family" means an Employee's spouse and any lineal
descendants who are under age 19 at the end of the Plan Year in
question.
11. Section 10.2(u) of the Plan (relating to the definition of
"Compensation" for discrimination testing purposes) is amended in its entirety
to read as follows:
(u) "Compensation" means the wages as defined in Code
section 3401(a) for purposes of income tax withholding at the source
(but determined without regard to any rules that limit the
remuneration included in wages based on the nature or location of the
employment or services performed) that are paid to a Participant by
the Participating Employers. In addition, Compensation includes any
contributions made by the Participating Employers on behalf of an
Employee pursuant to a deferral election under the Plan or under any
other employee benefit plan containing a cash or deferred
-7-
<PAGE> 8
arrangement under Code section 401(k) and any amounts that would have
been received as cash but for an election to receive benefits under a
cafeteria plan meeting the requirements of Code section 125. The
annual Compensation of an Employee taken into account for any purpose
will not exceed $200,000 for any Plan Year ending before January 1,
1994, as adjusted in regulations prescribed by the Secretary of the
Treasury, and will not exceed $150,000 for any Plan Year beginning
after December 31, 1993, as adjusted in regulations prescribed by the
Secretary of the Treasury. For purposes of applying the $200,000 and
$150,000 limits set forth in the preceding sentence, if an Employee is
a Highly Compensated Employee who is either (i) a 5-percent owner,
determined in accordance with Code section 414(q) and the Treasury
Regulations promulgated thereunder or (ii) one of the 10 most highly
compensated Employees ranked on the basis of Compensation paid by the
Controlled Group during the year, such Highly Compensated Employee and
the members of his family (as hereafter defined) will be treated as a
single employee and the Compensation of each member of the family will
be aggregated with the Compensation of the Highly Compensated
Employee. The limitation on Compensation will be allocated among such
Highly Compensated Employee and his family members in proportion to
each individual's Compensation. For purposes of this Section 10.2(u),
the term "family" means an Employee's spouse and any lineal
descendants who are under age 19 at the end of the Plan Year in
question.
12. Section 16.7 of the Plan is amended in its entirety to read as
follows:
16.7 Governing Law. The Plan will be construed and
governed in all respects in accordance with applicable federal law
and, to the extent not preempted by such federal law, in accordance
with the laws of the State of Texas, including without limitation, the
Texas statute of
-8-
<PAGE> 9
limitations, but without giving effect to the principles of conflicts
of laws of such State.
13. Appendix A to the Plan ("Participating Employers") is amended
to delete Dallas - Ft. Worth Suburban Newspapers, Inc. as a Participating
Employer as of April 1, 1994, and to add as Participating Employers the
following Controlled Group Members: Belo Production, Inc. (as of April 1,
1994); DFW Printing Company, Inc. (as of April 1, 1994); DFW Suburban
Newspapers, Inc. (for the period beginning on April 1, 1994, and ending on
December 31, 1994); and WWL-TV, Inc. (as of June 1, 1994).
14. The amendments set forth in paragraphs 1, 2, 3, 4, 5, 6 and 12
will be effective as of January 1, 1995. The amendments set forth in paragraph
7, 8 and 9 will be effective as of January 1, 1993. The amendment set forth in
paragraphs 10 and 11 will be effective as of January 1, 1994. The amendment
set forth in paragraph 13 will be effective as of April 1, 1994.
Executed this 14th day of December, 1994.
A. H. BELO CORPORATION
By /s/ Michael J. McCarthy
_______________________
-9-
<PAGE> 1
EXHIBIT 10.3 (22)
EIGHTH AMENDMENT
TO
A. H. BELO CORPORATION
EMPLOYEE SAVINGS AND INVESTMENT PLAN
A. H. Belo Corporation, a Delaware corporation, pursuant to
authorization of its Board of Directors, adopts the following amendments to the
A. H. Belo Corporation Employee Savings and Investment Plan (the "Plan").
1. Section 1.30 of the Plan ("Year of Service") is amended by the
addition of the following paragraph:
Notwithstanding the foregoing, in determining whether an
Employee of Third Avenue Television, Inc., a Delaware corporation
("Third Avenue"), has completed a Year of Service for purposes of
eligibility to participate under Section 2.1, each such Employee who
became an employee of Third Avenue on February 1, 1995, and who
immediately prior to that date was an employee of KIRO, Inc., a
Washington corporation ("KIRO"), will receive credit for an Hour of
Service for each hour for which the Employee was paid or entitled to
payment by KIRO or any affiliate of KIRO determined in accordance with
Section 1.17 and will receive credit for his period of employment with
KIRO or any affiliate of KIRO calculated in the same manner as if it
had been employment with a Controlled Group Member.
2. Section 2.1 of the Plan ("Eligibility to Participate") is
amended by the addition of the following sentence:
In addition, each Employee of Third Avenue Television, Inc. who
completed a Year of Service and attained age 21 on or
<PAGE> 2
before January 31, 1995, will become a Participant on February 1, 1995.
3. Appendix A to the Plan ("Participating Employers") is amended
by the addition of the following corporation:
Third Avenue Television, Inc.
(as of February 1, 1995)
4. The foregoing amendments will be effective from and after
February 1, 1995.
Executed at Dallas, Texas, this 22nd day of February, 1995.
A. H. BELO CORPORATION
By /s/ Michael J. McCarthy
_______________________
<PAGE> 1
EXHIBIT 10.3 (30)
SEVENTH AMENDMENT
TO
THE G. B. DEALEY RETIREMENT PENSION PLAN
(As Amended and Restated Effective January 1, 1988)
A. H. Belo Corporation, a Delaware corporation, pursuant to
authorization of its Board of Directors, adopts the following amendments to the
G. B. Dealey Retirement Pension Plan (the "Plan").
1. Section 1.3 of the Plan is amended in its entirety to read as
follows:
1.3 "Applicable Interest Rate" means the interest rate or
rates that would be used by the Pension Benefit Guaranty Corporation,
as of the first day of the Plan Year in which a distribution is made,
for purposes of determining the lump sum present value of the
Participant's benefit under the Plan if the Plan had terminated on the
first day of such Plan Year with insufficient assets to provide
benefits guaranteed by the Pension Benefit Guaranty Corporation on
that date.
2. The second sentence of Section 1.11 of the Plan (relating to
the definition of Compensation) is amended in its entirety to read as follows:
In addition, the Compensation paid to an Employee who is a "highly
compensated employee" as defined in Code section 414(q) and the
Treasury Regulations thereunder will be further reduced by the
following items: amounts
<PAGE> 2
includible in the Employee's income by reason of the grant or exercise
of a stock option, amounts includible in the Employee's income under
Code section 83 with respect to restricted stock and any other amounts
includible in the Employee's income by reason of an award (other than
an annual bonus award) under the Company's 1986 Long Term Incentive
Plan, the 1995 Executive Compensation Plan or any successor executive
compensation plan, as such plans may be amended and in effect from
time to time.
3. The first sentence of the second paragraph of Section 1.11
(relating to the definition of Compensation), as previously amended by the
Fourth Amendment to the Plan, is further amended in its entirety to read as
follows:
For purposes of determining benefit accruals for any Plan Year
beginning after December 31, 1988, and ending before January 1, 1994,
the Compensation of an Employee will not exceed $200,000, and for
purposes of determining benefit accruals for any Plan Year beginning
after December 31, 1993, the Compensation of any Employee will not
exceed $150,000, as both such dollar limits are adjusted by the
Secretary of the Treasury.
4. The fourth paragraph of Section 1.11 (relating to the
definition of Compensation), as added by the Second Amendment to the Plan, is
amended in its entirety to read as follows:
If Compensation for any prior Plan Year is taken into account in
determining an Employee's benefits for the current Plan Year, the
Compensation for such prior Plan Year is subject to the applicable
annual compensation limit in effect for that prior Plan Year. For
this purpose, for years beginning before January 1, 1990, the
applicable
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<PAGE> 3
annual compensation limit is $200,000. In addition, if Compensation
for any Plan Year beginning prior to January 1, 1994, is used to
determine benefit accruals in a Plan Year beginning on or after
January 1, 1994, the annual compensation limit for that prior Plan
Year will be $150,000, as adjusted for that prior Plan Year by the
Secretary of the Treasury.
5. The fifth sentence of Section 1.14 of the Plan (relating to
the definition of Credited Service) is amended in its entirety to read as
follows:
Notwithstanding the foregoing, for purposes of determining the amount
of an Employee's Accrued Benefit under Article 5, Credited Service
earned by an Employee while employed by a Controlled Group Member that
is not a Participating Employer will not be taken into account, and
Credited Service during any period prior to January 1, 1982, during
which the Employee was eligible to participate in the Plan but elected
not to participate will be disregarded.
6. Section 1.33 of the Plan is amended in its entirety to read as
follows:
(a) with respect to a married Participant who
dies before January 1, 1995, a monthly annuity for the life of the
deceased Participant's surviving spouse that is equal to the Actuarial
Equivalent of the Participant's Accrued Benefit determined as of the
date of his death and (b) with respect to a married Participant who
dies on or after January 1, 1995, a monthly annuity for the life of
the deceased Participant's surviving spouse in the amount described in
Section 8.1.
-3-
<PAGE> 4
7. Article 1 of the Plan is amended by the addition of the
following new definition and all references in the Plan to a Participant's
current or surviving spouse are amended to conform to the new definition:
1.38 "Spouse" means the individual to whom a Participant
was legally married on the earlier of his Benefit Commencement Date or
the date of his death.
8. Clause (iv) of Section 2.2(a) of the Plan (relating to
employees ineligible to participate) is amended in its entirety to read as
follows:
(iv) he is a leased employee required to be treated as an
Employee under Code section 414(n) or he is classified by a
Participating Employer as an independent contractor whose
compensation for services is reported on a form other than
Form W-2 or any successor form for reporting wages paid to
employees;
9. Clause (ii) of Section 4.1(b) of the Plan (relating to
accelerated vesting) is amended in its entirety to read as follows:
(ii) on his death prior to January 1, 1995, while he is an
Employee, or
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<PAGE> 5
10. Section 5.5 of the Plan is amended in its entirety to read as
follows:
5.5 Disability Benefit. A Participant who has a
Disability prior to attaining age 65 and prior to his termination of
employment will continue to accrue a benefit during the period of his
Disability only if (i) he returns to regular employment with a
Participating Employer immediately following the termination of his
Disability or (ii) he has attained Early Retirement Age at the time
his Disability terminates and he elects to retire and immediately
begin receiving retirement benefits under the Plan. For purposes of
determining the amount of the benefit accrued during Disability, the
Participant's Compensation will be deemed to be his annualized rate of
Compensation as of the date of his Disability, and the Participant
will earn Credited Service during the period in which he receives
Disability benefits.
A Participant who becomes totally and permanently
disabled (as hereafter defined) before attaining age 65 and before his
termination of employment and who is not eligible for benefits under
the Company's long-term disability plan will be fully vested in his
Accrued Benefit without regard to his years of Credited Service and
will be entitled to receive a monthly benefit beginning on the first
day of the month immediately following the date of his disability in
an amount equal to his Accrued Benefit determined as of such date.
The amount of such disability benefit will not be actuarially reduced
to reflect the fact that it is being paid prior to the Participant's
Normal Retirement Date. A Participant will be totally and permanently
disabled for purposes of this paragraph only if he is eligible to
receive disability benefits under the Social Security Act. A
Participant who is eligible to receive a monthly benefit under this
paragraph will continue to receive such benefit only if he submits
evidence to the Committee, in such form and at such times as the
Committee may reasonably request, that he continues to qualify for
disability benefits under the Social Security Act.
-5-
<PAGE> 6
11. The definition of Change in Control that appears in Section
5.7(b) is amended in its entirety to read as follows:
(b) Change in Control Defined. For purposes of this
Section, the term "Change in Control" means the first to occur of the
events described in (i) through (iv) below, unless the Board has
adopted a resolution prior to or promptly following the occurrence of
any such event stipulating, conditionally, temporarily or otherwise,
that any such event will not result in a change in control of the
Company:
(i) the commencement of, or first public
announcement of the intention of any person or group (within
the meaning of Section 3(b) of and Rule 13d-5(b) promulgated
under the Securities Exchange Act of 1934, as amended,
respectively) to commence, a tender offer or exchange offer
(other than an offer by the Company or any Subsidiary) for
all, or any part of, the common stock of the Company
(including, if issued and outstanding, Series A Common Stock
and Series B Common Stock, hereinafter referred to as "Common
Stock");
(ii) the public announcement by the Company or by
any group (as defined in clause (i) above), entity or person
(other than the Company, any Subsidiary (as hereinafter
defined), or any savings, pension or other benefit plan for
the benefit of employees of the Company or any Subsidiary)
which, through a transaction or series of transactions has
acquired, directly or indirectly, beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended) of more than 30% of the
total number of shares of Common Stock that such group, entity
or person has become such a beneficial owner;
(iii) the approval by the Company's shareholders
(or, if such approval is not required, the consummation) of a
merger in which the Company does not
-6-
<PAGE> 7
survive as an independent publicly owned corporation, a
consolidation, or a sale, exchange, or other disposition of
all or substantially all the Company's assets; or
(iv) a change in the composition of the Board during
any period of two consecutive years such that individuals who
at the beginning of such period were members of the Board
cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election
by the Company's shareholders, of each new director was
approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of
such period.
For purposes of the foregoing definition, the term "Subsidiary" means
any corporation, partnership, joint venture or other entity in which
at the time the Company owns or controls, directly or indirectly, not
less than 50% of the total combined voting power or equity interests
represented by all classes of stock issued by such corporation,
partnership, joint venture or other entity.
12. Article 5 of the Plan is amended by the addition of the
following new Section 5.12:
5.12 Direct Rollovers.
(a) Distributions after 1992. Notwithstanding
any other provision of the Plan, for distributions made on or after
January 1, 1993 a Distributee (as hereinafter defined) may elect, at
any time and in the manner prescribed by the Committee, to have any
portion of an Eligible Rollover Distribution (as hereinafter defined)
paid directly to an Eligible Retirement Plan (as hereinafter defined)
specified by the Distributee.
(b) Eligible Rollover Distribution. An Eligible
Rollover Distribution is any distribution of all or any
-7-
<PAGE> 8
portion of the balance to the credit of the Distributee, except that
an Eligible Rollover Distribution does not include (i) any
distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life or life
expectancy of the Distributee or the joint lives or life expectancies
of the Distributee and the Distributee's designated beneficiary, or
for a specified period of ten years or more, (ii) any distribution to
the extent such distribution is required by Code section 401(a)(9),
and (iii) the portion of any distribution that is not includible in
gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(c) Eligible Retirement Plan. An Eligible
Retirement Plan is an individual retirement account described in Code
section 408(a), an individual retirement annuity described in Code
section 408(b), an annuity plan described in Code section 403(a), or a
Qualified Plan that is a Defined Contribution Plan, that accepts the
Distributee's Eligible Rollover Distribution. However, in the case of
an Eligible Rollover Distribution to a Participant's surviving Spouse,
an Eligible Retirement Plan is an individual retirement account or
individual retirement annuity.
(d) Distributee. A Distributee includes a
Participant, the Participant's Spouse, or a Participant's former
spouse who is an alternate payee under a qualified domestic relations
order, as defined in Code section 414(p).
13. The last sentence of Section 6.9, Section 6.10 and Section
6.11 (relating to benefits payable to Participants employed by sold businesses)
is deleted.
-8-
<PAGE> 9
14. The last sentence of Section 8.4 of the Plan ("Designation of
a Beneficiary") is amended in its entirety to read as follows:
If a Participant has not designated a Beneficiary or is not survived
by a designated Beneficiary, the death benefit under the Plan will be
payable, to his surviving Spouse, if any, otherwise equally among his
surviving children, if any, and if the Participant is not survived by
a Spouse or children, to his then living parents, and if none of the
above are then living, to his estate.
15. Article 8 of the Plan is amended in its entirety to read as
follows:
ARTICLE 8
DEATH BENEFITS FOR SPOUSES
8.1 Death Benefit. The Spouse of a Participant
(including without limitation a Participant who terminated employment
before January 1, 1995) who has a vested interest in his Accrued
Benefit and dies after December 31, 1994, and prior to his Benefit
Commencement Date will receive a Qualified Preretirement Survivor
Annuity in an amount determined under this Section. Payments to the
Spouse that begin before the Participant's Normal Retirement Date will
be actuarially adjusted in the manner set forth in Section 8.2. The
death benefit, if any, payable to the Spouse of a Participant who dies
after his Benefit Commencement Date will be determined under the form
of benefit elected by the Participant with the consent of the Spouse,
if required under Section 7.2.
-9-
<PAGE> 10
(ii) the payments the Spouse would have received under the Qualified Joint
and Survivor Annuity if the Participant had terminated employment with
an immediate Qualified Joint and Survivor Annuity on the day before
his death or (ii) if the Participant either (A) had attained age 55
while an Employee on or before December 31, 1994, or (B) had
terminated employment before January 1, 1995, but had attained age 55
at the time of his termination of employment, payments that are the
Actuarial Equivalent of the Participant's Accrued Benefit determined
as of December 31, 1994, or the date of his termination of employment,
whichever is earlier.
(b) Death On or Before Age 55. If a Participant
dies on or before attaining age 55, the payments to his Spouse under
the Qualified Preretirement Survivor Annuity will be equal to the
payments the Spouse would have received if the Participant (i) had
terminated employment on the date of his death (if he was an Employee
on the date of his death); (ii) had survived to age 55; (iii) had
received at age 55 an immediate Qualified Joint and Survivor Annuity
in the amount elected by the Participant prior to his death; and (iv)
had died on the day after attaining age 55.
(c) Death after Divorce. If a married
Participant becomes divorced, he will be treated as having waived the
Qualified Preretirement Survivor Annuity with respect to his former
spouse, and his former spouse will not be entitled to any death
benefit under the Plan except to the extent provided in a qualified
domestic relations order described in Code section 414(p).
8.2 Commencement of Benefit. The surviving Spouse may
elect to begin receiving payments on the first day of any month
following the later of (i) the month in which the Participant would
have attained age 55 or (ii) the month in which the Participant died.
The early retirement factors set forth in Section 5.2 will be applied
to determine the monthly amount of the Qualified Preretirement
Survivor Annuity payable to the surviving Spouse as of any date that
precedes the Participant's Normal Retirement Date.
8.3 Form of Benefit. The normal form of death benefit
under this Article will be a monthly annuity for the life of
-10-
<PAGE> 11
the Spouse. If, however, the Actuarially Equivalent present value of
the monthly death benefit does not exceed $3,500, then the Committee
will distribute the death benefit to the Spouse in the form of an
immediate lump sum payment that is the Actuarial Equivalent of the
death benefit.
8.4 Certain Spouses. A former spouse will be treated as
the current spouse or the surviving spouse of a Participant to the
extent provided under a qualified domestic relations order as
described in Code section 414(p). If, however, the qualified domestic
relations order provides for a portion of the Participant's retirement
benefit (either through separate accounts or a percentage of the
benefit) to be distributed to the former spouse, the Participant will
not be deemed to be a married Participant for purposes of this Article
with respect to the portion of the benefit awarded to his former
spouse.
8.5 Cost of Coverage. The Participant's benefit under
the Plan will not be reduced by the cost of providing the death
benefits for his Spouse described in this Article.
16. Section 10.2(j), relating to the definition of Compensation
for purposes of the maximum benefit limitations of the Internal Revenue Code,
is amended by the addition of the following sentences:
The Includable Compensation of an Employee for any Plan Year beginning
after December 31, 1988, and ending before January 1, 1994, the
Compensation of an Employee will not exceed $200,000, and for any Plan
Year beginning after December 31, 1993, the Includable Compensation of
any Employee will not exceed $150,000, as both such dollar limits are
adjusted by the Secretary of the Treasury. If an Employee's
Compensation is determined with respect to a period of time that
contains fewer than 12 calendar months, then the annual compensation
limit is an amount equal to the annual compensation limit for the
calendar year in which the
-11-
<PAGE> 12
compensation period begins multiplied by the ratio obtained by
dividing the number of full months in the period by 12. In
determining the Includable Compensation of an Employee for purposes of
the adjusted $200,000 limitation or $150,000 limitation, as
applicable, the rules of Code section 414(q)(6) will apply, except in
applying such rules, the term "family" will include only the spouse of
an Employee and any lineal descendants of the Employee who have not
attained age 19 before the close of the year. If, as a result of the
application of such rules, the adjusted $200,000 limitation or
$150,000 limitation, as applicable, is exceeded, then (except for
purposes of determining the portion of Includable Compensation up to
the integration level), the limitation will be prorated among the
affected individuals in proportion to each such individual's
Compensation as determined under this Section prior to the application
of this limitation.
17. Sections 14.1 and 14.2 of the Plan are amended in their
entirety to read as follows:
14.1 Right to Amend the Plan.
(a) In General. The Company reserves to the
Compensation Committee of the Board of Directors the right to amend
the Plan at any time and from time to time to the extent it may deem
advisable or appropriate, provided that (i) no amendment will increase
the duties or liabilities of the Trustee without its written consent;
(ii) no amendment will cause a reversion of Plan assets to the
Participating Employers not otherwise permitted under the Plan; (iii)
no amendment will have the effect of reducing the percentage of the
vested and nonforfeitable interest of any Participant in his Account
nor will the vesting provisions of the Plan be amended unless each
Participant with at least three years of Credited Service (including
years of Credited Service disregarded pursuant to the reemployment
provisions (if any) of Article 4) is permitted to elect to continue to
have the prior vesting provisions apply to him, within 60 days after
the latest of the date on which the amendment is adopted,
-12-
<PAGE> 13
the date on which the amendment is effective, or the date on which the
Participant is issued written notice of the amendment; and (iv) no
amendment will be effective to the extent that it has the effect of
decreasing a Participant's Account balance or eliminating an optional
form of distribution as it applies to an existing Account balance.
(b) Authority of the Board. The Company also
reserves to the Board of Directors the right to amend the Plan at any
time and from time to time to the extent it may deem advisable or
appropriate, subject to the limitations on amendments set forth in
subsection (a).
14.2 Amendment Procedure. Any amendment to the Plan will
be made only pursuant to action of the Board or of the Compensation
Committee of the Board. A certified copy of the resolutions adopting
any amendment and a copy of the executed amendment will be delivered
to the Trustee, the Committee and the Company. Upon such action by
the Board or the Compensation Committee of the Board, the Plan will be
deemed amended as of the date specified as the effective date by such
action or in the instrument of amendment. The effective date of any
amendment may be before, on or after the date of such action, except
as otherwise set forth in Section 14.1.
18. The last sentence of the first paragraph of Section 10.3(j),
relating to the aggregate benefit limitation under the Internal Revenue Code,
is amended in its entirety to read as follows:
A Participant's Projected Annual Benefit will be reduced, if
necessary, without any further action on the part of the Participating
Employers , the Board of Directors or the Committee, to meet this
limitation.
-13-
<PAGE> 14
19. Section 15.5 of the Plan is amended in its entirety to read as
follows:
15.5 Prevention of Discrimination on Early Termination.
(a) Limitation Concerning Highly Compensated
Employees. In the event that (i) the value of the Accrued Benefit of
a Participant who is a Highly Compensated Employee or a Highly
Compensated Former Employee (as such terms are hereafter defined)
equals or exceeds 1% of the value of all Accrued Benefits under the
Plan on the date payment of such Participant's benefits is to
commence, and (ii) after payment of such Participant's Accrued Benefit
the value of Plan assets is less than 110% of the value of the Plan's
current liabilities as defined in Code section 412(l)(7), such
Participant's Accrued Benefit will be paid in a form that produces
annual payments not in excess of the payments that would be made under
a single life annuity that is the Actuarial Equivalent of such
Participant's normal form of Retirement Pension. For purposes of this
Section, the term "Highly Compensated Employee" has the meaning set
forth in Code section 414(q), and the term "Highly Compensated Former
Employee" has the meaning set forth in Code section 414(q)(9).
(b) Benefits on Plan Termination. In the event
the Plan is terminated, benefits will be paid in a manner that does
not violate the nondiscrimination requirements of Code section
401(a)(4) and the applicable regulations.
20. Section 15.7 of the Plan is amended in its entirety to read as
follows:
15.7 Governing Law. The Plan will be construed and
governed in all respects in accordance with applicable federal law
and, to the extent not preempted by such federal law, in accordance
with the laws of the State of Texas, including without limitation, the
Texas statute of
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<PAGE> 15
limitations, but without giving effect to the principles of conflicts
of laws of such State.
21. Appendix A to the Plan ("Participating Employers") is amended
to delete Dallas - Ft. Worth Suburban Newspapers, Inc. as a Participating
Employer as of April 1, 1994, and to add as Participating Employers the
following Controlled Group Members: Belo Productions, Inc. (as of April 1,
1994); DFW Printing Company, Inc. (as of April 1, 1994); and WWL-TV, Inc. (as
of June 1, 1994).
22. The foregoing amendments will be effective as of the following
dates:
(a) The amendment set forth in paragraph 10 will be
effective as of January 1, 1988.
(b) The amendments set forth in paragraphs 16, 18 and 19
will be effective as of January 1, 1989.
(c) The amendment set forth in paragraph 12 will be
effective as of January 1, 1993.
(d) The amendments set forth in paragraphs 1, 3 and 4
will be effective as of January 1, 1994.
(e) The amendment set forth in paragraph 5 will be
effective as of April 1, 1994.
(f) The amendment set forth in paragraph 15 will be
effective with respect to any Participant who dies after December 31,
1994.
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<PAGE> 16
(g) The amendments set forth in paragraphs 2, 6, 7, 8, 9,
11, 13, 14, and 17 will be effective as of January 1, 1995.
Executed this 14th day of December, 1994.
A. H. BELO CORPORATION
By /s/ Michael J. McCarthy
________________________
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<PAGE> 1
EXHIBIT 10.3 (31)
EIGHTH AMENDMENT
TO
G. B. DEALEY RETIREMENT PENSION PLAN
A. H. Belo Corporation, a Delaware corporation, pursuant to
authorization of its Board of Directors, adopts the following amendments to the
G. B. Dealey Retirement Pension Plan (the "Plan").
1. Section 1.14 of the Plan ("Credited Service") is amended by
the addition of the following sentence:
In determining the Credited Service of an Employee who became an
employee of Third Avenue Television, Inc., a Delaware corporation, on
February 1, 1995, and who immediately prior to that date was an
employee of KIRO, Inc., a Washington corporation ("KIRO"), such
Employee will receive credit for his period of employment with KIRO or
any affiliate of KIRO, calculated in the same manner as if it had been
employment with a Controlled Group Member, for purposes of eligibility
to participate in the Plan under Section 2.1 and for purposes of his
vested interest in his retirement benefit under Article 4 of the Plan,
but not for purposes of determining the amount of his retirement
benefit or for any other purpose of the Plan.
2. Section 2.1 of the Plan is amended by the addition of the
following sentence:
In addition, each Employee of Third Avenue Television, Inc. who
completed a year of Credited Service and attained age 21 on or before
January 31, 1995, will become a Participant on February 1, 1995.
<PAGE> 2
3. Appendix A to the Plan ("Participating Employers") is amended
by the addition of the following corporation:
Third Avenue Television, Inc.
(as of February 1, 1995)
4. The foregoing amendments will be effective from and after
February 1, 1995.
Executed at Dallas, Texas, this 22nd day of February, 1995.
A. H. BELO CORPORATION
By /s/ Michael J. McCarthy
_______________________
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<PAGE> 1
EXHIBIT 10.4(4)
AMENDMENT AGREEMENT
This Amendment and Waiver Agreement ("Agreement") is entered into
effective as of August 5, 1994 by and between A. H. Belo Corporation, a
Delaware corporation (the "Guarantor"), and The Sanwa Bank Limited, Dallas
Agency (the "Bank").
WHEREAS, the Guarantor executed that certain Guaranty dated as of June
2, 1987 in favor of the Bank (the "Guaranty") in connection with that certain
Letter of Credit and Reimbursement Agreement dated as of June 2, 1987 between
the Bank and Dallas-Fort Worth Suburban Newspapers, Inc.;
WHEREAS, effective as of August 5, 1994, the Guarantor terminated that
certain Credit Agreement dated as of October 27, 1988 among the Guarantor and
certain banks (the "1988 Agreement") and entered into that certain Credit
Agreement dated as of August 5, 1994 among the Guarantor and certain banks (the
"1994 Agreement"); and
WHEREAS, the Guarantor has requested the Bank to amend Section 7(f) of
the Guaranty to provide that the covenants, including applicable defined terms,
contained in the 1994 Agreement shall be effective with respect to the Guaranty
in accordance with the terms hereof;
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Section 7(f) is hereby amended to read in its entirety as follows:
(f) Compliance with Certain Covenants. Comply with each of
the covenants contained in Article 6 of that certain Credit Agreement
dated as of August 5, 1994, among the Guarantor, as borrower, Citicorp
Securities, Inc., as syndication agent, The First National Bank of
Chicago, as administrative agent, and Texas Commerce Bank National
Association, as documentation agent, and certain other banks, attached
hereto as Exhibit A (said Agreement, as it may hereafter be amended or
waived from time to time, being the "1994 Agreement"). Such covenants
contained in the 1994 Agreement are incorporated herein by reference
the same as if stated verbatim herein (including, where pertinent, the
definitions of defined terms used in such incorporated covenants), it
being understood that no material amendment or waiver with respect to
such covenants contained in the 1994 Agreement shall be effective with
respect to this Guaranty unless both (x) Guarantor shall give the Bank
written notice of such amendment or waiver and (y) the Bank shall not
object thereto by notifying Guarantor in writing within ten (10) days
of Guarantor's notice to the Bank. Guarantor agrees that such
covenants contained in the 1994 Agreement will remain applicable and
effective for purposes of this Guaranty even after the 1994 Agreement
has been terminated.
<PAGE> 2
2. From and after the effective date hereof, each reference in the
Guaranty, as amended, to the 1994 Agreement shall be deemed to mean the 1994
Agreement as the same may be hereafter amended or modified by any amendment or
waiver to the 1994 Agreement that becomes effective with respect to the
Guaranty pursuant to Section 7(f) thereof.
3. The Guaranty, as amended or modified hereby, shall remain in full
force and effect and is hereby ratified, approved and confirmed in all
respects.
4. This Agreement shall not be deemed to (a) be a waiver of or a consent
to the modification of or deviation from any other term or condition of the
Guaranty or any of the other instruments or agreements referred to therein, or
(b) prejudice any other right or rights which the Bank may now have or may have
in the future under or in connection with the Guaranty or any of the other
instruments, agreements or documents referred to therein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on the 26 day of September, 1994, to be effective as of the
date first above written.
A. H. BELO CORPORATION
By: /s/ VICKY C. TEHERANI
Title: VP & TREASURER
THE SANWA BANK LIMITED,
DALLAS AGENCY
By: /s/ ROSS S. SMITH
Title: ASSISTANT VICE PRESIDENT
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EXHIBIT A
(See Attached)
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EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
STATE OF
NAME OF CORPORATION INCORPORATION
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<S> <C>
NEWSPAPER PUBLISHING:
The Dallas Morning News, Inc. d/b/a The Dallas Morning News Delaware
DFW Printing Company, Inc. Delaware
DFW Suburban Newspapers, Inc. d/b/a Arlington News Delaware
Garland News
Grand Prairie News
Irving News
Las Colinas Business News
Metrocrest News
Mid-Cities News
Richardson News
TELEVISION BROADCASTING:
Great Western Broadcasting Corp. d/b/a KXTV, Channel 10 Delaware
KHOU-TV, Inc. d/b/a KHOU, Channel 11 Delaware
KOTV, Inc. d/b/a KOTV, Channel 6 Delaware
Third Avenue Television, Inc. d/b/a KIRO, Channel 7 Delaware
WFAA-TV, Inc. d/b/a WFAA, Channel 8 Delaware
WVEC Television, Inc. d/b/a WVEC, Channel 13 Delaware
WWL-TV, Inc. d/b/a WWL, Channel 4 Delaware
Blue Ridge Tower Corporation Texas
Hill Tower, Inc. Texas
Transtower, Inc. California
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Except as noted below, all of the subsidiaries are wholly-owned subsidiaries of
the Company. The Company through wholly-owned subsidiaries owns 50% of the
outstanding common stock of Hill Tower, Inc.; 50% of the outstanding common
stock of Blue Ridge Tower Corporation; and 33 1/3% of the outstanding common
stock of Transtower, Inc.
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Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-30994 and Form S-8 No. 33- 32526) pertaining to the Employee
Savings and Investment Plan and Long-Term Incentive Plan of A. H. Belo
Corporation of our report dated January 26, 1995, except for Note 13, as to
which the date is February 1, 1995, with respect to the consolidated financial
statements of A. H. Belo Corporation included in this Annual Report (Form 10-K)
for the year ended December 31, 1994.
/S/ERNST & YOUNG LLP
Dallas, Texas
March 10, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 9,294
<SECURITIES> 0
<RECEIVABLES> 103,784
<ALLOWANCES> 3,959
<INVENTORY> 9,439
<CURRENT-ASSETS> 130,337
<PP&E> 521,978
<DEPRECIATION> (209,824)
<TOTAL-ASSETS> 913,791
<CURRENT-LIABILITIES> 83,737
<BONDS> 330,400
<COMMON> 33,168
0
0
<OTHER-SE> 349,367
<TOTAL-LIABILITY-AND-EQUITY> 913,791
<SALES> 0
<TOTAL-REVENUES> 628,125
<CGS> 0
<TOTAL-COSTS> 450,721
<OTHER-EXPENSES> 46,405
<LOSS-PROVISION> 4,506
<INTEREST-EXPENSE> 16,112
<INCOME-PRETAX> 107,897
<INCOME-TAX> 39,030
<INCOME-CONTINUING> 68,867
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,867
<EPS-PRIMARY> 3.41
<EPS-DILUTED> 3.41
</TABLE>
