<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED: SEPTEMBER 30, 1996
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)
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)
Registrant's telephone number, including area code: (214) 977-6606
Former name, former address and former fiscal year, if changed since last
report.
NONE
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT OCTOBER 31, 1996
----- --------------------------------
Common Stock, $1.67 par value 39,025,277
- -----------------------
* Consisting of 29,785,057 shares of Series A Common Stock and 9,240,220
shares of Series B Common Stock.
===============================================================================
<PAGE> 2
A. H. BELO CORPORATION
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations . . . . . . . . . . . . . 7
PART II OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . 9
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
i
<PAGE> 3
PART I.
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF EARNINGS
A. H. Belo Corporation and Subsidiaries
<TABLE>
<CAPTION>
Three months Nine months
ended September 30, ended September 30,
=====================================================================================================================
In thousands, except per share amounts
(unaudited) 1996 1995 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- - NET OPERATING REVENUES
Broadcasting $ 79,803 $ 78,678 $ 240,795 $ 236,643
Newspaper publishing 121,575 102,433 359,128 296,899
Other 769 1,340 2,287 1,717
- ---------------------------------------------------------------------------------------------------------------------
Total net operating revenues 202,147 182,451 602,210 535,259
- ---------------------------------------------------------------------------------------------------------------------
- - OPERATING COSTS AND EXPENSES
Salaries, wages and employee benefits 58,403 52,681 171,474 155,149
Other production, distribution and operating costs 56,050 50,900 157,807 144,234
Newsprint, ink and other supplies 35,236 35,833 113,487 98,138
Depreciation 11,077 10,555 34,216 31,638
Amortization 4,946 4,357 14,827 12,820
- ---------------------------------------------------------------------------------------------------------------------
Total operating costs and expenses 165,712 154,326 491,811 441,979
- ---------------------------------------------------------------------------------------------------------------------
Earnings from operations 36,435 28,125 110,399 93,280
- ---------------------------------------------------------------------------------------------------------------------
- - OTHER INCOME AND EXPENSE
Interest expense (5,380) (7,486) (20,531) (21,709)
Other, net (Notes 3 and 4) 436 453 5,381 3,776
- ---------------------------------------------------------------------------------------------------------------------
Total other income and expense (4,944) (7,033) (15,150) (17,933)
- ---------------------------------------------------------------------------------------------------------------------
- - EARNINGS
Earnings before income taxes 31,491 21,092 95,249 75,347
Income taxes 12,565 8,300 38,103 29,914
- ---------------------------------------------------------------------------------------------------------------------
Net earnings $ 18,926 $ 12,792 $ 57,146 $ 45,433
- ---------------------------------------------------------------------------------------------------------------------
- - EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE $ .42 $ .33 $ 1.36 $ 1.14
- ---------------------------------------------------------------------------------------------------------------------
Average shares outstanding (Note 2) 44,964 39,359 42,142 39,888
- ---------------------------------------------------------------------------------------------------------------------
Cash dividends declared per share $ .22 $ .16 $ .41 $ .315
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
1
<PAGE> 4
CONSOLIDATED CONDENSED BALANCE SHEETS
A. H. Belo Corporation and Subsidiaries
<TABLE>
<CAPTION>
=====================================================================================================================
In thousands September 30, December 31,
(Current year unaudited) 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - ASSETS
Current assets:
Cash and temporary cash investments $ 15,800 $ 12,846
Accounts receivable, net 115,384 120,541
Other current assets 28,523 31,919
- ---------------------------------------------------------------------------------------------------------------------
Total current assets 159,707 165,306
- ---------------------------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land 27,327 26,708
Buildings 158,562 155,877
Broadcast equipment 162,744 159,909
Newspaper publishing equipment 213,781 210,362
Other 54,145 51,156
Advance payments on plant and equipment expenditures 28,366 6,479
- ---------------------------------------------------------------------------------------------------------------------
Total property, plant and equipment 644,925 610,491
Less accumulated depreciation (281,860) (248,650)
- ---------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 363,065 361,841
- ---------------------------------------------------------------------------------------------------------------------
Intangible assets, net 587,164 571,060
Other assets, at cost 99,653 55,815
- ---------------------------------------------------------------------------------------------------------------------
Total assets $ 1,209,589 $1,154,022
=====================================================================================================================
</TABLE>
2
<PAGE> 5
CONSOLIDATED CONDENSED BALANCE SHEETS (CONTINUED)
A. H. Belo Corporation and Subsidiaries
<TABLE>
<CAPTION>
=====================================================================================================================
In thousands, except share data September 30, December 31,
(Current year unaudited) 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 59,412 $ 65,039
Other current liabilities 19,657 16,629
- ---------------------------------------------------------------------------------------------------------------------
Total current liabilities 79,069 81,668
- ---------------------------------------------------------------------------------------------------------------------
Long-term debt 361,657 557,400
Deferred income taxes 120,298 114,729
Other liabilities 10,876 11,761
Shareholders' equity:
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 35,066,733 shares at September 30, 1996
and 28,961,753 shares at December 31, 1995 58,561 48,366
Series B: Issued 9,233,902 shares at September 30, 1996
and 9,280,179 shares at December 31, 1995 15,421 15,498
Additional paid-in capital 295,692 97,930
Retained earnings 270,320 230,203
- ---------------------------------------------------------------------------------------------------------------------
Total 639,994 391,997
Deferred compensation - restricted shares (2,305) (3,533)
- ---------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 637,689 388,464
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 1,209,589 $1,154,022
=====================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
3
<PAGE> 6
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
A. H. Belo Corporation and Subsidiaries
<TABLE>
<CAPTION>
Nine months
ended September 30,
=====================================================================================================================
In thousands
(unaudited) 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - OPERATIONS
Net earnings $ 57,146 $ 45,433
Adjustments to reconcile net earnings
to net cash provided by operations:
Depreciation and amortization 49,043 44,458
Deferred income taxes 6,244 4,024
Non-cash adjustments and allowances (54) 399
Other, net (1,373) (3,382)
Net change in current assets and liabilities:
Accounts receivable 3,902 (8,518)
Other current assets 2,122 (8,580)
Accounts payable and accrued expenses (4,357) (5,617)
Other current liabilities (712) (6,495)
- ---------------------------------------------------------------------------------------------------------------------
Net cash provided by operations 111,961 61,722
- ---------------------------------------------------------------------------------------------------------------------
- - INVESTMENTS
Acquisitions (74,091) (163,303)
Capital expenditures (30,105) (28,683)
Sale of investment 3,750 4,327
Other, net (4,158) 392
- ---------------------------------------------------------------------------------------------------------------------
Net cash used for investments (104,604) (187,267)
- ---------------------------------------------------------------------------------------------------------------------
- - FINANCING
Net proceeds from sale of stock 198,513 -
Borrowings for acquisitions 75,180 163,313
Net proceeds from (payments on) debt (270,786) 14,687
Payments to repurchase stock - (49,386)
Payments of dividends on stock (12,156) (9,228)
Net proceeds from exercise of stock options 4,846 8,245
- ---------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing (4,403) 127,631
- ---------------------------------------------------------------------------------------------------------------------
Net increase in cash and temporary cash investments 2,954 2,086
- ---------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at beginning of period 12,846 9,294
- ---------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at end of period $ 15,800 $ 11,380
=====================================================================================================================
- - SUPPLEMENTAL DISCLOSURES
Interest paid, net of amounts capitalized $ 20,700 $ 23,019
Income taxes paid, net of refunds $ 32,196 $ 31,443
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
4
<PAGE> 7
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
A. H. Belo Corporation and Subsidiaries
(1) The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The
balance sheet at December 31, 1995 has been derived from the audited
consolidated financial statements at that date but does not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine-month periods
ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1996. For
further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 1995.
Certain amounts for the prior periods have been reclassified to
conform to the current year presentation.
(2) In May 1996, the Company completed an equity offering of 5,750,000
shares of Series A Common Stock for net proceeds of approximately
$198,500,000. The proceeds were used to pay down debt. If the
offering and subsequent debt reduction were assumed to have occurred
at January 1, 1996, net earnings per share for the nine months ended
September 30, 1996, would have been $1.33 per share.
(3) On February 2, 1996, the Company sold its interest in its programming
distribution partnership, Maxam Entertainment. A net gain of
$2,337,000 (6 cents per share) was recorded in connection with the
sale.
(4) In June 1995, A. H. Belo Corporation ("Belo") sold its investment in
15,267 shares of Stauffer Communications, Inc. stock for $4,327,000.
The carrying value of the stock was $1,921,000, resulting in a net
gain of $1,564,000 (4 cents per share).
(5) On July 31, 1996, the Company entered into a new credit facility for
borrowings up to $1,000,000,000 with a syndicate of 18 banks led by
Texas Commerce Bank, Bank of Tokyo-Mitsubishi, Bank of America, and
NationsBank. The facility replaced a previously existing $800,000,000
revolving credit facility, the borrowings under which were refinanced
under the new facility. The new agreement expires on July 31, 2001
with extensions to July 31, 2003 at the request of the Company and
with the consent of the participating banks. The agreement also
provides for a facility fee of up to 18.75 basis points on the total
commitment. Loans under the new agreement bear interest at a rate
based, at the option of the Company, on the agent's alternate base
rate, certificate of deposit 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. Among other things, the
agreement requires the Company to maintain, as of the end of each
quarter and measured over the preceding four quarters, (i) a Funded
Debt to Pro Forma Operating Cash Flow ratio not exceeding 5.5 to 1.0,
(ii) a Funded Debt to Pro Forma Operating Cash Flow ratio (excluding
subordinated debt) not exceeding 5.0 to 1.0, and (iii) an Interest
Coverage ratio of not less than 2.5 to 1.0, all as such terms are
defined in the agreement. At September 30, 1996, the Company was in
compliance with these requirements.
(6) In September 1996, the Board of Directors increased the Company's
current stock repurchase authorization from 3,600,000 shares to
13,600,000 shares. In addition, the Company has in place a repurchase
program authorizing the purchase of up to $2,500,000 of Company stock
annually. As of September 30, 1996, no shares had been repurchased
in 1996. The Company repurchased 6,061,000 shares of its stock for an
aggregate cost of approximately $224,000,000 from October 1 through
November 1, 1996, funded primarily through borrowings under its
revolving credit facility.
5
<PAGE> 8
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
A. H. Belo Corporation and Subsidiaries
(7) Net operating revenues, earnings from operations, and depreciation
and amortization by industry segment are shown below (in
thousands):
<TABLE>
<CAPTION>
=====================================================================================================================
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET OPERATING REVENUES
Broadcasting $ 79,803 $ 78,678 $ 240,795 $ 236,643
Newspaper publishing 121,575 102,433 359,128 296,899
Other 769 1,340 2,287 1,717
- ---------------------------------------------------------------------------------------------------------------------
$ 202,147 $ 182,451 $ 602,210 $ 535,259
=====================================================================================================================
EARNINGS FROM OPERATIONS
Broadcasting $ 16,804 $ 17,311 $ 54,633 $ 59,071
Newspaper publishing 26,757 15,767 73,620 49,154
Other (112) (1,025) (1,106) (3,041)
Corporate expenses (7,014) (3,928) (16,748) (11,904)
- ---------------------------------------------------------------------------------------------------------------------
$ 36,435 $ 28,125 $ 110,399 $ 93,280
=====================================================================================================================
DEPRECIATION AND AMORTIZATION
Broadcasting $ 9,554 $ 9,690 $ 29,387 $ 28,170
Newspaper publishing 6,172 5,043 18,900 15,755
Other 54 6 130 13
Corporate 243 173 626 520
- ---------------------------------------------------------------------------------------------------------------------
$ 16,023 $ 14,912 $ 49,043 $ 44,458
=====================================================================================================================
</TABLE>
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RECENT DEVELOPMENT
On September 26, 1996, the Company announced the acquisition of The
Providence Journal Company ("PJC") in a proposed merger valued at approximately
$1.5 billion. Under the terms of the definitive merger agreement, the
stockholders of PJC will receive $12.33 in cash and 0.5333 shares of the
Company's Series A Common Stock for each PJC share, subject to certain
allocation and proration provisions. The transaction is expected to result in
(i) the issuance of approximately 25.4 million Series A shares, and (ii) the
payment of approximately $587 million in cash to PJC shareholders. The
transaction, which is expected to close during the first half of 1997, pending
regulatory and shareholder approvals, will be dilutive to the Company's
earnings primarily due to the amortization of goodwill resulting from the
transaction, and start-up losses from PJC's early-stage cable channel
investments. There will be no impact on the Company's 1996 earnings. Upon
completion of the merger, Belo would own two television stations in the
Seattle, Washington market (KIRO and KING). In accordance with Federal
Communications Commission regulations, Belo will be required to divest one of
these stations. Belo intends to either sell or exchange KIRO for another
television station(s).
RESULTS OF OPERATIONS
Net earnings for the third quarter of 1996 were $18,926,000 (42 cents per
share) compared to third quarter 1995 net earnings of $12,792,000 (33 cents per
share). Year-to-date earnings in 1996 were $57,146,000 ($1.36 per share) versus
$45,433,000 ($1.14 per share) for the same period in 1995. Year-to-date 1996
included a net gain of $2,337,000 (6 cents per share) on the sale of the
Company's interest in its programming distribution partnership. Year-to-date
earnings in 1995 included a net gain of $1,564,000 (4 cents per share) on the
sale of the Company's investment in Stauffer Communications, Inc. common stock.
Excluding these items, comparable year-to-date 1996 and 1995 earnings per share
were $1.30 and $1.10.
Total revenues for the three and nine-month periods ended September 30,
1996 were $202,147,000 and $602,210,000, respectively. Revenues in 1995 for
the same periods were $182,451,000 and $535,259,000. The increases of 10.8
percent and 12.5 percent over 1995 revenues were due in part to acquisitions
(KIRO-TV in February 1995, the Bryan-College Station Eagle in December 1995 and
the Owensboro Messenger-Inquirer in January 1996). Excluding the effect of
these acquisitions, total net operating revenues increased 7.1 percent and 8.3
percent for the three and nine-month periods, respectively.
Broadcasting revenues for the third quarter and year-to-date 1996 were
$79,803,000 and $240,795,000 respectively, compared to $78,678,000 and
$236,643,000 in 1995. The 1.4 percent quarter-to-quarter increase is due
primarily to gains in political revenue, particularly at the Company's Seattle,
Sacramento and New Orleans stations, offset by declines in national revenue,
particularly at the Company's Dallas and Houston stations. National revenues
were adversely affected by competition from the Summer Olympics broadcast by
NBC. Revenues for the year-to-date period increased 1.8 percent due mostly to
increases at KIRO-TV in Seattle and WWL-TV in New Orleans. The revenue gain at
KIRO was attributable to increased revenues from the broadcast of Mariners'
baseball and improved ratings. WWL had revenue increases in all advertising
categories. Both KIRO and WWL also had significant increases in political
revenue. These revenue increases, however, were offset by unfavorable
nine-month revenue comparisons at WFAA-TV in Dallas and KHOU-TV in Houston due
to national revenue weakness.
Newspaper publishing revenues for the three and nine-month periods of 1996
were $121,575,000 and $359,128,000, respectively, compared to $102,433,000 and
$296,899,000 for the same periods in 1995. The gains of 18.7 percent for the
quarter and 21 percent for the year-to-date were partly attributable to
publishing acquisitions in December 1995 and January 1996. Excluding the
effect of these two acquisitions, revenues increased 12.1 percent for the
quarter and 14.3 percent year-to-date. For the quarter, revenues at The Dallas
Morning News increased due to higher advertising rates in retail, general and
classified that were offset only slightly by volume declines in retail and
classified linage. General linage volumes improved over 1995 due to
advertising increases in automotive and telecommunications categories. For the
year-to-date period, The Dallas Morning News had similar revenue gains from
higher rates in all categories, offset some by volume declines in classified
advertising, primarily automotive and real estate. Circulation revenues were
higher for both the quarter and year-to-date periods due to higher rates,
offset somewhat by declines in both daily and Sunday volume.
7
<PAGE> 10
Operating expenses for the quarter and year-to-date periods in 1996 were
$165,712,000 and $491,811,000 compared to $154,326,000 and $441,979,000 in
1995, representing increases of 7.4 percent and 11.3 percent, respectively.
Excluding the effect of the acquisitions, expenses were up 3.7 percent and 6.7
percent, respectively. For the quarter, compensation and benefits increased
6.3 percent, excluding the acquisitions, due to more employees and merit
increases. Other production, distribution and operating costs were also up due
to higher outside services, distribution expense and communications. A
decrease of 4.4 percent in newsprint, ink and other supplies, again excluding
acquisitions, lessened the impact of these increases. This decrease was the
result of a lower cost per ton for newsprint and slightly less volume. While
newsprint prices escalated throughout 1995, prices have steadily declined since
the second quarter of 1996. For the nine-month period, however, newsprint,
ink and other supplies increased 12.5 percent, excluding the effect of
acquisitions. Also contributing to the 6.7 percent increase in year-to-date
operating expenses were higher direct compensation and benefits resulting from
a higher number of employees and merit increases and higher programming,
distribution and communications expenses.
Interest expense for the three and nine-month periods of 1996 was
$5,380,000 and $20,531,000, respectively, compared to $7,486,000 and
$21,709,000 in 1995. The 28.1 percent decrease for the three-month period is
due to both lower average debt levels and lower interest rates. Lower debt
levels for the quarter and year-to-date period were the result of the
application of the net proceeds (after offering expenses) of approximately
$198,500,000 from the Company's equity offering of 5,750,000 shares of Series A
Common Stock on May 7, 1996. Prior to the equity offering, 1996 debt levels
were higher than 1995 due to the acquisitions of KIRO-TV in February 1995, the
Bryan-College Station Eagle in December 1995 and the Owensboro
Messenger-Inquirer in January 1996.
Income tax expense for the three and nine-month periods in 1996 was
$12,565,000 and $38,103,000, respectively, representing effective rates of 39.9
percent and 40 percent. In 1995, income taxes for the comparable periods were
$8,300,000 and $29,914,000 or 39.4 percent and 39.7 percent, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations is the Company's primary source of liquidity.
During the nine months ended September 30, 1996, net cash provided by
operations was $111,961,000, compared to $61,722,000 for the first nine months
of 1995. The increase was due to an increase in net earnings and working
capital changes, primarily in accounts receivable and other current assets.
Accounts receivable increased significantly during the first nine months of
1995 due to the acquisition of KIRO in February 1995. The increase in other
current assets in 1995 was the result of unusually low newsprint inventory at
the end of December 1994. Cash from operations was more than sufficient to fund
capital expenditures and the payment of dividends during the nine months ended
September 30, 1996.
On January 1, 1996, the Company acquired the Owensboro Messenger-Inquirer
by issuing notes payable to the seller. These notes are due in various
installments over the next four years. During the third quarter of 1996,
Belo purchased an equity interest in the Press Enterprise Company, the parent
company of the Riverside Press-Enterprise newspaper in Riverside, California.
The purchase was completed using funds from Belo's revolving credit facility.
On July 31, 1996, the Company entered into a new credit facility for
borrowings up to $1,000,000,000 with a syndicate of 18 banks led by Texas
Commerce Bank, Bank of Tokyo-Mitsubishi, Bank of America, and NationsBank. The
facility replaced the previously existing $800,000,000 revolving credit
facility. For additional information regarding this new credit facility, see
Note 5 to the Consolidated Condensed Financial Statements. At September 30,
1996, the Company had borrowings under the new facility of $220,000,000. 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
unsecured notes through its revolving credit facility, short-term borrowings
are classified as long term. At September 30, 1996, $125,600,000 in
short-term notes were outstanding. Total debt outstanding, including the
current portion of long-term debt, decreased $195,606,000 from December 31,
1995. The decrease was due to the application of the net proceeds from the
equity offering of approximately $198,500,000 plus debt repayments using cash
from operations, net of borrowings for acquisitions. The Company is currently
evaluating financing alternatives to fund the cash to be paid to PJC
shareholders in the merger. It is currently expected that
8
<PAGE> 11
any new borrowings will be made through borrowings in the commercial paper
market, bank borrowings, borrowings from private or public lenders, or through
a combination of the foregoing.
In September 1996, the Board of Directors increased the Company's current
stock repurchase authorization from 3,600,000 shares to 13,600,000 shares. In
addition, the Company has in place a repurchase program authorizing the
purchase of up to $2,500,000 of Company stock annually. As of September 30,
1996, no shares had been repurchased in 1996. The Company repurchased
6,061,000 shares of its stock for an aggregate cost of approximately
$224,000,000 from October 1 through November 1, 1996, funded primarily through
borrowings under its revolving credit facility.
For the four quarters ended September 30, 1996, the Company's ratio of
funded debt to pro forma operating cash flow, as defined in the new credit
facility, was 1.52 compared to 2.77 for the four quarters ended December 31,
1995. The decrease was due to the application of the net proceeds from the May
1996 equity offering to existing debt.
Because substantially all of the Company's outstanding debt is currently at
floating interest rates, the Company is subject to interest rate volatility.
The weighted average interest rate for the first nine months of 1996 was
approximately 5.8 percent.
Capital expenditures for the nine months ended September 30, 1996 were
$30,105,000. Capital projects for the period included building renovations and
the purchase of property and equipment. The Company expects to finance future
capital expenditures using net cash generated from operations and, when
necessary, borrowings under the revolving credit facility.
The Company paid dividends of $12,156,000 or 30 cents per share on Series A
and Series B Common Stock outstanding during the first nine months of 1996
compared to $9,228,000 (23.5 cents per share) during the same period in 1995.
PART II.
ITEM 1. LEGAL PROCEEDINGS
There are a number of legal proceedings pending against the Company,
including several actions for alleged libel. In the opinion of management,
liabilities, if any, arising from these actions would not have a material
adverse effect on the operations or financial position of the Company.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
9
<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibits marked with an asterisk (*) are incorporated by reference to
documents previously filed by the Company with the Securities and
Exchange Commission as indicated. Exhibits marked with a tilde (~)
are management contracts or compensatory plan contracts or
arrangements filed pursuant to Item 601 (b)(10)(iii)(A) of Regulation
S-K. All other documents are filed with this report.
Exhibit 2.1* Agreement and Plan of Merger, dated as of September
26, 1996 (filed as Exhibit 2.1 to Form 8-K dated
September 27, 1996)
Exhibit 2.2 Stockholders Agreement dated as of September 26, 1996
by and among A. H. Belo Corporation and each of the
other parties signatory thereto
Exhibit 3.1* Certificate of Incorporation of the Company (filed as
Exhibit 3.1 to the Company's Annual Report on Form
10-K dated February 28, 1996 (the "1995 Form 10-K"))
Exhibit 3.2* Certificate of Correction to Certificate of
Incorporation dated May 13, 1987 (filed as Exhibit
3.2 to the 1995 Form 10-K)
Exhibit 3.3* Certificate of Designation of Series A Junior
Participating Preferred Stock of the Company dated
April 16, 1987 (filed as Exhibit 3.3 to the 1995 Form
10-K)
Exhibit 3.4* Certificate of Amendment of Certificate of
Incorporation of the Company dated May 4, 1988 (filed
as Exhibit 3.4 to the 1995 Form 10-K)
Exhibit 3.5* Certificate of Amendment of Certificate of
Incorporation of the Company dated May 3, 1995 (filed
as Exhibit 3.5 to the 1995 Form 10-K)
Exhibit 3.6* Amended Certificate of Designation of Series A Junior
Participating Preferred Stock of the Company dated
May 4, 1988 (filed as Exhibit 3.6 to the 1995 Form
10-K)
Exhibit 3.7* Certificate of Designation of Series B Common Stock
of the Company dated May 4, 1988 (filed as Exhibit
3.7 to the 1995 Form 10-K)
Exhibit 3.8* Bylaws of the Company, effective February 22, 1995
(filed as Exhibit 3.7 to the Company's Annual Report
on Form 10-K dated March 8, 1995 (the "1994 Form
10-K"))
Exhibit 4.1* Certain rights of the holders of the Company's Common
Stock are set forth in Exhibits 3.1-3.8 above
Exhibit 4.2* Specimen Form of Certificate representing shares of
the Company's Series A Common Stock (filed as Exhibit
4.2 to the Company's Annual Report on Form 10-K dated
March 18, 1993 (the "1992 Form 10-K"))
Exhibit 4.3* Specimen Form of Certificate representing shares of
the Company's Series B Common Stock (filed as Exhibit
4.3 to the Company's Annual Report on Form 10-K dated
March 20, 1989)
Exhibit 4.4* Form of Rights Agreement as Amended and Restated, as
of February 28, 1996 between the Company and Chemical
Mellon Shareholder Services, L.L.C., a New York
banking corporation (filed as Exhibit 4.4 to the 1995
Form 10-K)
Exhibit 4.5 Form of Supplement No. 1 to Amended and Restated
Rights Agreement between the Company and The First
National Bank of Boston
Exhibit 10.1 Contracts relating to television broadcasting:
*(1) Form of Agreement for Affiliation between WFAA-TV
in Dallas, Texas and ABC (filed as Exhibit 10.1(1)
to the 1995 Form 10-K)
*(2) Form of Agreement for Affiliation between KXTV in
Sacramento, California and ABC (filed as Exhibit
10.1(2) to the 1995 Form 10-K)
*(3) Contract for Affiliation between KHOU-TV in
Houston, Texas and CBS (filed as Exhibit 10.1(3) to
the 1995 Form 10-K)
*(4) Contract for Affiliation between WWL-TV in New
Orleans, Louisiana and CBS (filed as Exhibit
10.1(4) to the 1995 Form 10-K)
Exhibit 10.2 Financing agreements:
*(1) Loan Agreement dated October 1, 1985, between City
of Arlington Industrial Development Corporation and
Dallas-Fort Worth Suburban Newspapers, Inc. (filed
as Exhibit 10.5(2) to the Company's Annual Report
on Form 10-K dated March 19, 1992 (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 (filed as
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 (filed as
Exhibit 10.4(1) to the Second Quarter 1994 Form
10-Q)
*(4) First Amendment to Credit Agreement dated as of
July 28, 1995 (filed as Exhibit 10.4(1) to the
Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1995)
*(5) Amendment and Waiver Agreement dated as of August
5, 1994, by and between the Company and The Sanwa
Bank, Limited, Dallas Agency (filed as Exhibit
10.4(4) to the 1994 Form 10-K)
Exhibit 10.3 Compensatory plans:
*~(1) Management Security Plan (filed as Exhibit
10.4(1) to the 1991 Form 10-K)
*~(2) 1986 Long-Term Incentive Plan (filed as
Exhibit 10.4(7) to the 1991 Form 10-K)
*~(3) Amendment No. 1 to 1986 Long-Term Incentive Plan
(filed as Exhibit 10.4(8) to the 1991 Form 10-K)
*~(4) Amendment No. 2 to 1986 Long-Term Incentive Plan
(filed as Exhibit 10.3(9) to the 1992 Form 10-K)
*~(5) Amendment No. 3 to the 1986 Long-Term Incentive
Plan (filed as Exhibit 10.3(10) to the 1993 Form
10-K)
*~(6) Amendment No. 4 to 1986 Long-Term Incentive Plan
(filed as Exhibit 10.3(11) to the 1993 Form 10-K)
*~(7) Amendment No. 5 to 1986 Long-Term Incentive Plan
(filed as Exhibit 10.3(12) to the 1993 Form 10-K)
*~(8) Amendment No. 6 to 1986 Long-Term Incentive Plan
(filed as Exhibit 10.3(13) to the 1992 Form 10-K)
*~(9) Amendment No. 7 to 1986 Long-Term Incentive Plan
(filed as Exhibit 10.3(9) to the 1995 Form 10-K)
*~(10) The A. H. Belo Corporation Employee Savings and
Investment Plan Amended and Restated
February 2, 1996 (filed as Exhibit 10.3(10) to
the 1995 Form 10-K)
*~(11) The G. B. Dealey Retirement Pension Plan (as
Amended and Restated Generally Effective January
1, 1989) (filed as Exhibit 10.3(11) to the 1995
Form 10-K)
*~(12) Master Trust Agreement, effective as of July 1,
1992, between A. H. Belo Corporation and Mellon
Bank, N. A. (filed as Exhibit 10.3(26) to the
1993 Form 10-K)
*~(13) A. H. Belo Corporation Supplemental Executive
Retirement Plan (filed as Exhibit 10.3(27) to the
1993 Form 10-K)
*~(14) Trust Agreement dated February 28, 1994 between
the Company and Mellon Bank, N. A. (filed as
Exhibit 10.3(28) to the 1993 Form 10-K)
*~(15) Summary of A. H. Belo Corporation Executive
Compensation Plan (filed as Exhibit 10.3(15) to
the 1995 Form 10-K)
*~(16) A. H. Belo Corporation 1995 Executive
Compensation Plan (filed as Exhibit 10.3(16) to
the 1995 Form 10-K)
*~(17) A. H. Belo Corporation Employee Thrift Plan,
effective January 1, 1995 (filed as Exhibit
10.3(17) to the 1995 Form 10-K)
*~(18) First Amendment to A. H. Belo Corporation
Employee Thrift Plan (filed as Exhibit 10.3(18)
to the 1995 Form 10-K)
*~(19) Second Amendment to A. H. Belo Corporation
Employee Thrift Plan (filed as Exhibit 10.3(19)
to the 1995 Form 10-K)
*~(20) Master Defined Contribution Trust Agreement by
and between A. H. Belo Corporation and Mellon
Bank, N. A. (filed as Exhibit 10.3(20) to the
1995 Form 10-K)
*~(21) First Amendment to Master Defined Contribution
Trust Agreement (filed as Exhibit 10.3(21) to the
1995 Form 10-K)
*~(22) Second Amendment to Master Defined Contribution
Trust Agreement (filed as Exhibit 10.3(22) to the
1995 Form 10-K)
Exhibit 10.4
*(1) Credit Agreement dated as of July 31, 1996 among
the Company and Texas Commerce Bank, National
Association as Administrative Agent, The Chase
Manhattan Bank, as Competitive Advance Facility
Agent, Bank of America National Trust and Savings
Association and Bank of Tokyo-Mitsubishi, Ltd. as
Co-Syndication Agents, NationsBank as
Documentation Agent and Societe Generale and The
Fuji Bank, Limited as Co-Agents (filed as Exhibit
10.4(1) to the Company's quarterly report on Form
10-Q for the six months ended June 30, 1996)
Exhibit 10.5 Stockholders Agreement dated as of September 26,
1996 by and among The Providence Journal
Company and each of the other parties signatory
thereto
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
During the quarter covered by this report, there was a report on Form
8-K filed on September 27, 1996 containing information under Item 5
concerning an announced merger agreement with The Providence Journal
Company.
SIGNATURES
Pursuant to the requirements 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
November 5, 1996 By: /S/Michael D. Perry
-----------------------------
Michael D. Perry
Senior Vice President and Chief
Financial Officer
10
<PAGE> 13
EXHIBIT INDEX
Exhibits marked with an asterisk (*) are incorporated by reference to
documents previously filed by the Company with the Securities and
Exchange Commission as indicated. Exhibits marked with a tilde (~)
are management contracts or compensatory plan contracts or
arrangements filed pursuant to Item 601(b)(10)(iii)(A) of Regulation
S-K. All other documents are filed with this report.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
Exhibit 2.1* Agreement and Plan of Merger, dated as of September
26, 1996 (filed as Exhibit 2.1 to Form 8-K dated
September 27, 1996)
Exhibit 2.2 Stockholders Agreement dated as of September 26, 1996
by and among A.H. Belo Corporation and each of the
other parties signatory thereto
Exhibit 3.1* Certificate of Incorporation of the Company (filed as
Exhibit 3.1 to the Company's Annual Report on Form
10-K dated February 28, 1996 (the "1995 Form 10-K"))
Exhibit 3.2* Certificate of Correction to Certificate of
Incorporation dated May 13, 1987 (filed as Exhibit
3.2 to the 1995 Form 10-K)
Exhibit 3.3* Certificate of Designation of Series A Junior
Participating Preferred Stock of the Company dated
April 16, 1987 (filed as Exhibit 3.3 to the 1995 Form
10-K)
Exhibit 3.4* Certificate of Amendment of Certificate of
Incorporation of the Company dated May 4, 1988 (filed
as Exhibit 3.4 to the 1995 Form 10-K)
Exhibit 3.5* Certificate of Amendment of Certificate of
Incorporation of the Company dated May 3, 1995 (filed
as Exhibit 3.5 to the 1995 Form 10-K)
Exhibit 3.6* Amended Certificate of Designation of Series A Junior
Participating Preferred Stock of the Company dated
May 4, 1988 (filed as Exhibit 3.6 to the 1995 Form
10-K)
Exhibit 3.7* Certificate of Designation of Series B Common Stock
of the Company dated May 4, 1988 (filed as Exhibit
3.7 to the 1995 Form 10-K)
Exhibit 3.8* Bylaws of the Company, effective February 22, 1995
(filed as Exhibit 3.7 to the Company's Annual Report
on Form 10-K dated March 8, 1995 (the "1994 Form
10-K"))
Exhibit 4.1* Certain rights of the holders of the Company's Common
Stock are set forth in Exhibits 3.1-3.8 above
Exhibit 4.2* Specimen Form of Certificate representing shares of
the Company's Series A Common Stock (filed as Exhibit
4.2 to the Company's Annual Report on Form 10-K dated
March 18, 1993 (the "1992 Form 10-K"))
Exhibit 4.3* Specimen Form of Certificate representing shares of
the Company's Series B Common Stock (filed as Exhibit
4.3 to the Company's Annual Report on Form 10-K dated
March 20, 1989)
Exhibit 4.4* Form of Rights Agreement as Amended and Restated, as
of February 28, 1996 between the Company and Chemical
Mellon Shareholder Services, L.L.C., a New York
banking corporation (filed as Exhibit 4.4 to the 1995
Form 10-K)
Exhibit 4.5 Form of Supplement No. 1 to Amended and Restated
Rights Agreement between the Company and The First
National Bank of Boston
Exhibit 10.1 Contracts relating to television broadcasting:
*(1) Form of Agreement for Affiliation between WFAA-TV
in Dallas, Texas and ABC (filed as Exhibit 10.1(1)
to the 1995 Form 10-K)
*(2) Form of Agreement for Affiliation between KXTV in
Sacramento, California and ABC (filed as Exhibit
10.1(2) to the 1995 Form 10-K)
*(3) Contract for Affiliation between KHOU-TV in
Houston, Texas and CBS (filed as Exhibit 10.1(3) to
the 1995 Form 10-K)
*(4) Contract for Affiliation between WWL-TV in New
Orleans, Louisiana and CBS (filed as Exhibit
10.1(4) to the 1995 Form 10-K)
Exhibit 10.2 Financing agreements:
*(1) Loan Agreement dated October 1, 1985, between City
of Arlington Industrial Development Corporation and
Dallas-Fort Worth Suburban Newspapers, Inc. (filed
as Exhibit 10.5(2) to the Company's Annual Report
on Form 10-K dated March 19, 1992 (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 (filed as
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 (filed as
Exhibit 10.4(1) to the Second Quarter 1994 Form
10-Q)
*(4) First Amendment to Credit Agreement dated as of
July 28, 1995 (filed as Exhibit 10.4(1) to the
Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1995)
*(5) Amendment and Waiver Agreement dated as of August
5, 1994, by and between the Company and The Sanwa
Bank, Limited, Dallas Agency (filed as Exhibit
10.4(4) to the 1994 Form 10-K)
Exhibit 10.3 Compensatory plans:
*~(1) Management Security Plan (filed as Exhibit
10.4(1) to the 1991 Form 10-K)
*~(2) 1986 Long-Term Incentive Plan (filed as
Exhibit 10.4(7) to the 1991 Form 10-K)
*~(3) Amendment No. 1 to 1986 Long-Term Incentive Plan
(filed as Exhibit 10.4(8) to the 1991 Form 10-K)
*~(4) Amendment No. 2 to 1986 Long-Term Incentive Plan
(filed as Exhibit 10.3(9) to the 1992 Form 10-K)
*~(5) Amendment No. 3 to the 1986 Long-Term Incentive
Plan (filed as Exhibit 10.3(10) to the 1993 Form
10-K)
*~(6) Amendment No. 4 to 1986 Long-Term Incentive Plan
(filed as Exhibit 10.3(11) to the 1993 Form 10-K)
*~(7) Amendment No. 5 to 1986 Long-Term Incentive Plan
(filed as Exhibit 10.3(12) to the 1993 Form 10-K)
*~(8) Amendment No. 6 to 1986 Long-Term Incentive Plan
(filed as Exhibit 10.3(13) to the 1992 Form 10-K)
*~(9) Amendment No. 7 to 1986 Long-Term Incentive Plan
(filed as Exhibit 10.3(9) to the 1995 Form 10-K)
*~(10) The A. H. Belo Corporation Employee Savings and
Investment Plan Amended and Restated February 2, 1996
(filed as Exhibit 10.3(10) to the 1995 Form 10-K)
*~(11) The G. B. Dealey Retirement Pension Plan (as
Amended and Restated Generally Effective January
1, 1989) (filed as Exhibit 10.3(11) to the 1995
Form 10-K)
*~(12) Master Trust Agreement, effective as of July 1,
1992, between A. H. Belo Corporation and Mellon
Bank, N. A. (filed as Exhibit 10.3(26) to the
1993 Form 10-K)
*~(13) A. H. Belo Corporation Supplemental Executive
Retirement Plan (filed as Exhibit 10.3(27) to the
1993 Form 10-K)
*~(14) Trust Agreement dated February 28, 1994 between
the Company and Mellon Bank, N. A. (filed as
Exhibit 10.3(28) to the 1993 Form 10-K)
*~(15) Summary of A. H. Belo Corporation Executive
Compensation Plan (filed as Exhibit 10.3(15) to
the 1995 Form 10-K)
*~(16) A. H. Belo Corporation 1995 Executive
Compensation Plan (filed as Exhibit 10.3(16) to
the 1995 Form 10-K)
*~(17) A. H. Belo Corporation Employee Thrift Plan,
effective January 1, 1995 (filed as Exhibit
10.3(17) to the 1995 Form 10-K)
*~(18) First Amendment to A. H. Belo Corporation
Employee Thrift Plan (filed as Exhibit 10.3(18)
to the 1995 Form 10-K)
*~(19) Second Amendment to A. H. Belo Corporation
Employee Thrift Plan (filed as Exhibit 10.3(19)
to the 1995 Form 10-K)
*~(20) Master Defined Contribution Trust Agreement by
and between A. H. Belo Corporation and Mellon
Bank, N. A. (filed as Exhibit 10.3(20) to the
1995 Form 10-K)
*~(21) First Amendment to Master Defined Contribution
Trust Agreement (filed as Exhibit 10.3(21) to the
1995 Form 10-K)
*~(22) Second Amendment to Master Defined Contribution
Trust Agreement (filed as Exhibit 10.3(22) to the
1995 Form 10-K)
Exhibit 10.4
*(1) Credit Agreement dated as of July 31, 1996 among
the Company and Texas Commerce Bank, National
Association as Administrative Agent, The Chase
Manhattan Bank, as Competitive Advance Facility
Agent, Bank of America National Trust and Savings
Association and Bank of Tokyo-Mitsubishi, Ltd. as
Co-Syndication Agents, NationsBank as
Documentation Agent and Societe Generale and The
Fuji Bank, Limited as Co-Agents (filed as Exhibit
10.4(1) to the Company's quarterly report on Form
10-Q for the six months ended June 30, 1996)
Exhibit 10.5 Stockholders Agreement dated as of September 26, 1996
by and among The Providence Journal Company and each
of the other parties signatory thereto
Exhibit 27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 2.2
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of September 26, 1996 (this
"Agreement"), by and among A.H. Belo Corporation, a Delaware corporation
("Parent"), and each of the other parties signatory hereto (each a
"Stockholder" and, collectively, the "Stockholders").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, A H Finance Company, a
Delaware corporation and a direct wholly-owned subsidiary of Parent ("Sub"),
and The Providence Journal Company, a Delaware corporation (the "Company"), are
entering into an Agreement and Plan of Merger (as such agreement may hereafter
be amended from time to time, the "Merger Agreement"; initially capitalized and
other terms used but not defined herein shall have the meanings ascribed to
them in the Merger Agreement), pursuant to which the Company will be merged
with and into Sub (the "Merger");
WHEREAS, each of the Stockholders Beneficially Owns (as defined
herein) the number of shares, par value $1.00 per share, of Class A and/or
Class B Common Stock of the Company (the "Shares" or "Company Common Stock")
set forth opposite such Stockholder's name on Schedule I hereto;
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholders agree, and the
Stockholders have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto hereby agree as follows:
1. Provisions Concerning Company Common Stock. Each Stockholder
hereby agrees with Parent that, during the period commencing on the date hereof
and continuing until the first to occur of the Effective Time and termination
of the Merger Agreement in accordance with its terms, at any meeting of the
Company's stockholders, however called, or in connection with any written
consent of the Company's stockholders, such Stockholder shall vote (or, in the
case of joint ownership, use all reasonable efforts to cause to be voted) the
Shares Beneficially Owned (as defined below) by such Stockholder, whether
heretofore owned or hereafter acquired, (i) in favor of approval of the Merger
Agreement and any actions required in furtherance thereof and hereof; (ii)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement
of the Company under the Merger Agreement (after giving effect to any
materiality or similar qualifications contained therein); and (iii) except as
otherwise agreed to in writing in advance by Parent,
<PAGE> 2
against (x) any takeover proposal (other than the Merger and the transactions
contemplated by the Merger Agreement) or (y) any changes in a majority of the
persons who constitute the board of directors of the Company. Such Stockholder
shall not enter into any agreement or understanding with any person the effect
of which would be inconsistent or violative of the provisions and agreements
contained in Section 1 or 2 hereof. For purposes of this Agreement,
"Beneficially Own" or "Beneficial Ownership" with respect to any securities
shall mean a person's having direct ownership of and the right to vote such
securities in his or her individual capacity.
2. Other Covenants, Representations and Warranties. Each
Stockholder hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is the record and
Beneficial Owner of the number of Shares set forth opposite such Stockholder's
name on Schedule I hereto. On the date hereof, the Shares set forth opposite
such Stockholder's name on Schedule I hereto constitute all of the Shares
Beneficially Owned by such Stockholder. Such Stockholder has voting power with
respect to the matters set forth in Section 1 hereof with respect to all of the
Shares set forth opposite such Stockholder's name on Schedule I hereto, with no
limitations, qualifications or restrictions on such rights.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any law,
regulation or court order or any other agreement to which such Stockholder is a
party including, without limitation, any voting agreement, Stockholder
agreement or voting trust. This Agreement has been duly and validly executed
and delivered by such Stockholder and constitutes a valid and binding agreement
of such Stockholder, enforceable against such Stockholder in accordance with
its terms. If such Stockholder is married and such Stockholder's Shares
constitute community property, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding agreement of,
such Stockholder's spouse, enforceable against such person in accordance with
its terms.
(c) Restriction on Transfer, Proxies and Non-Interference. Such
Stockholder shall not, directly or indirectly: (i) except as contemplated by
the Merger Agreement, offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for sale,
sale, transfer, tender, pledge, encumbrance, assignment or other disposition
of, any or all of such Stockholder's Shares or any interest therein; (ii) grant
any proxies or powers of attorney, deposit any Shares into a voting trust or
enter into a voting agreement with respect to any Shares; or (iii) take any
action that would make any representation or warranty of such Stockholder
contained herein untrue or incorrect or have the effect of preventing or
disabling such Stockholder from performing such Stockholder's obligations under
this Agreement; provided, however, that, notwithstanding clause (i) of this
sentence, (x) such Stockholder shall be permitted to transfer any of such
Stockholder's Shares to a trust or similar entity for estate planning purposes
so long as such Stockholder retains, or another Stockholder acquires, (1) sole
power to vote such Shares
2
<PAGE> 3
(and votes such Shares in accordance with this Agreement) and (2) investment
power over such shares (and causes such trust or similar entity to retain such
Shares until the termination of this Agreement); (y) such Stockholder shall be
permitted to make one or more gifts or charitable donations of such Shares up
to such number of Shares as represents no more than 10% of the voting power
represented by the aggregate number of such Stockholder's Shares on the date
hereof; and (z) such Stockholder may pledge or margin any of such Stockholder's
Shares so long as such Stockholder retains sole power to vote such Shares (and
votes in accordance with this Agreement) for the term of this Agreement
(provided that such pledge or margin transaction shall be made only to or with
a financial institution extending credit to such Stockholder in the ordinary
course of such financial institution's business and unrelated to any
transaction or transactions involving an attempt to acquire control of the
Company).
(d) Other Potential Acquirors. Such Stockholder (i) shall
immediately cease any existing discussions or negotiations, if any, with any
parties conducted heretofore with respect to any acquisition of all or any
material portion of the assets of, or any equity interest in, the Company or
its subsidiaries or any business combination with the Company or its
subsidiaries, in his, her or its capacity as such, and (ii) from and after the
date hereof until termination of the Merger Agreement, unless and until the
Company is permitted to take such actions under Section 4.02 of the Merger
Agreement, shall not, in such capacity, directly or indirectly, initiate,
solicit or knowingly encourage (including, without limitation, by way of
furnishing non-public information or assistance), or take any other action to
facilitate knowingly, any inquiries or the making of any takeover proposal.
(e) Reliance by Parent. Such Stockholder understands and
acknowledges that Parent is entering into, and causing Sub to enter into, the
Merger Agreement in reliance upon such Stockholder's execution and delivery of
this Agreement.
3. Stop Transfer. Each Stockholder agrees with, and covenants
to, Parent that such Stockholder shall not request that the Company register
the transfer (book-entry or otherwise) of any certificate or uncertificated
interest representing any of such Stockholders' Shares, unless such transfer is
made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Company Common Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "Shares" shall be deemed to refer to and include the Shares as
well as all such stock dividends and distributions and any shares into which or
for which any or all of the Shares may be changed or exchanged.
4. Termination. Except as otherwise provided herein, the
covenants and agreements contained herein with respect to the Shares shall
terminate upon the earlier of (a) the termination of the Merger Agreement in
accordance with its terms and (b) the Effective Time.
5. Stockholder Capacity. No person executing this Agreement who
is or becomes during the term hereof a director of the Company or trustee of a
trust makes any agreement or understanding herein in his or her capacity as
such director or trustee. Each Stockholder signs solely in his or her capacity
as the Beneficial Owner of such Stockholder's Shares.
6. Miscellaneous.
3
<PAGE> 4
(a) Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof.
(b) Certain Events. Each Stockholder agrees that this Agreement
and the obligations hereunder shall attach to such Stockholder's Shares and
shall be binding upon any person to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise. Notwithstanding
any transfer of Shares, the transferor shall remain liable for the performance
of all obligations under this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation
of law or otherwise without the prior written consent of the other party;
provided, however, that Parent may assign, in its sole discretion, its rights
and obligations hereunder to any direct wholly-owned subsidiary of Parent, but
no such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, with respect
to any one or more Stockholders, except upon the execution and delivery of a
written agreement executed by the relevant parties hereto; provided, however,
that Schedule I hereto may be supplemented by Parent and one or more
stockholders of the Company by adding the name and other relevant information
concerning any stockholder of the Company who agrees to be bound by the terms
of this Agreement without the agreement of any other party hereto, and
thereafter such added stockholder shall be treated as a "Stockholder" for all
purposes of this Agreement.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram,
telex or telecopy, or by mail (registered or certified mail, postage prepaid,
return receipt requested) or by any courier service, such as Federal Express,
providing proof of delivery. All communications hereunder shall be delivered
to the respective parties at the following addresses:
If to any Stockholder: At the address set forth
on Schedule I hereto
The Providence Journal Company
75 Fountain Street
Providence, Rhode Island 02902
Telephone: (401) 277-7000
Facsimile: (401) 277-7889
Attention: Stephen Hamblett and
John L. Hammond, Esq.
4
<PAGE> 5
with a copy to: Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telephone: (212)403-1218
Facsimile: (212) 403-2000
Attention: Daniel A. Neff, Esq.
and
Edwards & Angell
2700 Hospital Trust Tower
Providence, RI 02903
Telephone: (401) 274-9200
Facsimile: (401) 276-6611
Attention: Walter G.D. Reed, Esq.
If to Parent
or Sub: Michael J. McCarthy, Esq.
Senior Vice President and General Counsel
A.H. Belo Corporation
400 South Record Street
Dallas, Texas 75202
Telephone: (214) 977-6600
Facsimile: (214) 977-8209
with a copy to: Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166
Telephone: (212) 351-4000
Facsimile: (212-351-4035
Attention: E. Michael Greaney, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the matter set forth above.
(f) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.
5
<PAGE> 6
(g) Specific Performance. Each of the parties hereto recognizes
and acknowledges that a breach by it of any covenants or agreements contained
in this Agreement will cause the other party to sustain damage for which it
would not have an adequate remedy at law for money damages, and therefore each
of the parties hereto agrees that in the event of any such breach the aggrieved
party shall be entitled to the remedy of specific performance of such covenants
and agreements and injunctive and other equitable relief in addition to any
other remedy to which it may be entitled, at law or in equity.
(h) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy or
to demand such compliance.
(i) Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware, without giving effect to
the principles of conflicts of law thereof.
(j) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
6
<PAGE> 7
IN WITNESS WHEREOF, Parent and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
A.H. BELO CORPORATION
By: /s/ ROBERT W. DECHERD
-------------------------------------
Name: Robert W. Decherd
Title: Chairman of the Board, President
and Chief Executive Officer
STOCKHOLDERS:
/s/ STEPHEN HAMBLETT
-----------------------------------------
Stephen Hamblett
/s/ JACK C. CLIFFORD
-----------------------------------------
Jack C. Clifford
/s/ JOHN A. BOWERS
-----------------------------------------
John A. Bowers
/s/ JOHN L. HAMMOND
-----------------------------------------
John L. Hammond
/s/ THOMAS N. MATLACK
-----------------------------------------
Thomas N. Matlack
/s/ JOHN E. HAYES
-----------------------------------------
John E. Hayes
/s/ PAUL H. McTEAR, JR.
-----------------------------------------
Paul H. McTear, Jr.
/s/ MICHAEL B. ISAACS
-----------------------------------------
Michael B. Isaacs
/s/ MINDY C. ISAACS
-----------------------------------------
Spousal consent, if applicable
7
<PAGE> 8
/s/ HARRY DYSON
-----------------------------------------
Harry Dyson
/s/ ROBERT G. COLUCCI
-----------------------------------------
Robert G. Colucci
/s/ JOEL P. RAWSON
-----------------------------------------
Joel P. Rawson
/s/ JOEL N. STARK
-----------------------------------------
Joel N. Stark
/s/ HOWARD G. SUTTON
-----------------------------------------
Howard G. Sutton
/s/ F. REMINGTON BALLOU
-----------------------------------------
F. Remington Ballou
/s/ HENRY P. BECTON, JR.
-----------------------------------------
Henry P. Becton, Jr.
/s/ FANCHON M. BURNHAM
-----------------------------------------
Fanchon M. Burnham
/s/ KAY K. CLARKE
-----------------------------------------
Kay K. Clarke
/s/ PETER B. FREEMAN
-----------------------------------------
Peter B. Freeman
/s/ BENJAMIN P. HARRIS, III
-----------------------------------------
Benjamin P. Harris, III
/s/ PAUL A. MAEDER
-----------------------------------------
Paul A. Maeder
/s/ PRISCILLA W. BALLOU
-----------------------------------------
Spousal consent, if applicable
/s/ GWILL E. YORK
-----------------------------------------
Spousal consent, if applicable
8
<PAGE> 9
STOCKHOLDERS:
/s/ TRYGVE E. MYHREN
-----------------------------------------
Trygve E. Myhren
/s/ JOHN W. ROSENBLUM
-----------------------------------------
John W. Rosenblum
/s/ W. NICHOLAS THORNDIKE
-----------------------------------------
W. Nicholas Thorndike
/s/ JOHN W. WALL
-----------------------------------------
John W. Wall
/s/ PATRICK R. WILMERDING
-----------------------------------------
Patrick R. Wilmerding
/s/ MARY S. WALL
-----------------------------------------
Spousal consent, if applicable
9
<PAGE> 10
ACKNOWLEDGED AND AGREED TO
(with respect to Section 3):
THE PROVIDENCE JOURNAL COMPANY
By: /s/ STEPHEN HAMBLETT
--------------------------------------
Name: Stephen Hamblett
Title: Chairman of the Board, Chief
Executive Office and Publisher
10
<PAGE> 11
Schedule I to
Stockholders Agreement
<TABLE>
<CAPTION>
Name and Address Number of Shares Owned
- ---------------- ----------------------
Class A Class B
-------- -------
<S> <C> <C>
Stephen Hamblett 338,474 66,600
35 Benefit Street
Providence, RI 02906
Jack C. Clifford 106,147
2 Tallwood Drive
Barrington, RI 02806
John A. Bowers 49,831
2 Maryland Drive
W. Warwick, RI 02893
John L. Hammond 21,402
54 Cindy Ann Drive
East Greenwich, RI 02818
Thomas N. Matlack 16,635
17 Woodhaven Road
Barrington, RI 02806
John E. Hayes 40,055
32 Mallard Cove Way
Barrington, RI 02806
Paul H. McTear, Jr. 20,612
11 Gladys Drive
North Kingstown, RI 02852
Michael B. Isaacs 20,609
46 Bunker Hill Lane
East Greenwich, RI 02818
Harry Dyson 19,209
24 Metcalf Drive
Cumberland, RI 02864
Robert G. Colucci 2,004
10 Pineridge Drive
Smithfield, RI 02917
</TABLE>
11
<PAGE> 12
Schedule I to
Stockholders Agreement
<TABLE>
<CAPTION>
Name and Address Number of Shares Owned
- ---------------- ----------------------
Class A Class B
------- -------
<S> <C> <C>
Joel P. Rawson 60
235 Collins Taft Road
Harrisville, RI 02830
Joel N. Stark 16,245
137 Briarcliff Avenue
Warwick, RI 02889
Howard G. Sutton 21,595
11 Courageous Circle
Bristol, RI 02809
F. Remington Ballou 18,450 10,800
25 John Street
Providence, RI 02906
Henry P. Becton, Jr. 10,100 0
338 Boston Post Road
Weston, MA 02134
Fanchon M. Burnham 52,650 66,150
3554 Edmunds Street NW
Washington, DC 20007
Kay K. Clarke 3,827 0
89 River Road
East Haddam, CT 06423
Peter B. Freeman 139,950 180,000
100 Alumni Avenue
Providence, RI 02906
Benjamin P. Harris, III 18,914 21,600
130 Prospect Street
Providence, RI 02906
Paul A. Maeder 82 0
17 Lowell Street
Cambridge, MA 02138
</TABLE>
12
<PAGE> 13
Schedule I to
Stockholders Agreement
<TABLE>
<CAPTION>
Name and Address Number of Shares Owned
- ---------------- ----------------------
Class A Class B
------- -------
<S> <C> <C>
Trygve E. Myhren 158,696 0
30 Appletree Lane
Barrington, RI 02806
or
760 Potato Patch Drive
Vail, CO 81657
John W. Rosenblum 4,050 0
Route 3, Box 53
Crozet, VA 22932
W. Nicholas Thorndike 64,800 48,600
150 Dudley Street
Brookline, MA 02146
John W. Wall 19,800 32,400
106 Prospect Street
Providence, RI 02906
Patrick R. Wilmerding 58,874 129,312
35 Crafts Road
Chestnut Hill, MA 02167-1823
</TABLE>
13
<PAGE> 1
EXHIBIT 4.5
SUPPLEMENT NO. 1 TO AMENDED AND RESTATED RIGHTS AGREEMENT
This Supplement No. 1 to the Amended and Restated Rights Agreement
(the "Rights Agreement") dated as of March 10, 1986, as amended and restated as
of February 28, 1996, between A. H. Belo Corporation, a Delaware corporation
(the "Company"), and Chemical Mellon Shareholder Services, L.L.C., a New York
banking corporation ("Chemical Mellon"), is made and entered into by and among
the Company and The First National Bank of Boston ("Bank of Boston").
RECITALS
A. In accordance with the provisions of Section 21 of the Rights
Agreement, the Company has caused the removal of Chemical Mellon as the Rights
Agent under the Rights Agreement, effective as of November ___, 1996.
B. To replace Chemical Mellon, the Company desires to appoint Bank of
Boston as Rights Agent and Bank of Boston desires to accept such appointment.
NOW THEREFORE, pursuant to the provisions of Section 21 of the Rights
Agreement, Bank of Boston is hereby appointed by the Company as Rights Agent
under the Rights Agreement and is hereby vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Rights Agent.
Additionally, Section 31 of the Rights Agreement is hereby restated in
its entirety as follows:
"This Agreement and each Right Certificate issued hereunder
shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by
and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely
within such State; except that the rights, duties and
obligations of The First National Bank of Boston under this
Agreement shall be governed by the laws of the State of
Massachusetts without reference to the choice of law doctrine
of such
<PAGE> 2
State."
IN WITNESS WHEREOF, the parties hereto have caused this Supplement No.
1 to be duly executed and attested as of the ____ day of November, 1996.
A. H. BELO CORPORATION
ATTEST:
- ------------------------------ ---------------------------------
Name: Name:
------------------------- ----------------------------
Title: Title:
------------------------ ---------------------------
THE FIRST NATIONAL BANK OF BOSTON
ATTEST:
- ------------------------------ ---------------------------------
Name: Name:
------------------------- ----------------------------
Title: Title:
------------------------ ---------------------------
Page -2-
<PAGE> 1
EXHIBIT 10.5
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of September 26, 1996 (this
"Agreement"), by and among The Providence Journal Company, a Delaware
corporation (the "Company"), and each of the other parties signatory hereto
(each a "Stockholder" and, collectively, the "Stockholders").
W I T N E S S E T H:
WHEREAS, concurrently herewith, the Company, A.H. Belo Corporation, a
Delaware corporation ("Acquiror"), and A H Finance Company, a Delaware
corporation and a direct wholly-owned subsidiary of Acquiror ("Sub"), are
entering into an Agreement and Plan of Merger (as such agreement may hereafter
be amended from time to time, the "Merger Agreement"; initially capitalized and
other terms used but not defined herein shall have the meanings ascribed to
them in the Merger Agreement), pursuant to which the Company will be merged
with and into Sub (the "Merger");
WHEREAS, each of the Stockholders Beneficially Owns (as defined
herein) the number of shares, par value $1.67 per share, of Series A and/or
Series B Common Stock of Acquiror (the "Shares" or "Acquiror Common Stock") set
forth opposite such Stockholder's name on Schedule I hereto;
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, the Company has required that the Stockholders agree, and the
Stockholders have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto hereby agree as follows:
1. Provisions Concerning Acquiror Common Stock. Each Stockholder
hereby agrees with the Company that, during the period commencing on the date
hereof and continuing until the first to occur of the Effective Time and
termination of the Merger Agreement in accordance with its terms, at any
meeting of Acquiror's stockholders, however called, or in connection with any
written consent of Acquiror's stockholders, such Stockholder shall vote (or, in
the case of joint ownership, use all reasonable efforts to cause to be voted)
the Shares Beneficially Owned (as defined below) by such Stockholder, whether
heretofore owned or hereafter acquired, (i) in favor of the issuance of shares
of Series A Common Stock of Acquiror (the "Series A Stock") pursuant to the
Merger Agreement and any actions required in furtherance thereof and hereof;
(ii) against any action or agreement that would result in a breach in any
respect of any covenant, representation or warranty or any other obligation or
agreement of
<PAGE> 2
Acquiror under the Merger Agreement (after giving effect to any materiality or
similar qualifications contained therein); and (iii) except as otherwise agreed
to in writing in advance by the Company, against any changes in a majority of
the persons who constitute the board of directors of Acquiror. Such
Stockholder shall not enter into any agreement or understanding with any person
the effect of which would be inconsistent or violative of the provisions and
agreements contained in Section 1 or 2 hereof. For purposes of this Agreement,
"Beneficially Own" or "Beneficial Ownership" with respect to any securities
shall mean a person's having direct ownership of and the right to vote such
securities in his or her individual capacity.
2. Other Covenants, Representations and Warranties. Each
Stockholder hereby represents and warrants to the Company as follows:
(a) Ownership of Shares. Such Stockholder is the record and
Beneficial Owner of the number of Shares set forth opposite such Stockholder's
name on Schedule I hereto. On the date hereof, the Shares set forth opposite
such Stockholder's name on Schedule I hereto constitute all of the Shares
Beneficially Owned by such Stockholder. Such Stockholder has sole voting power
with respect to the matters set forth in Section 1 hereof with respect to all
of the Shares set forth opposite such Stockholder's name on Schedule I hereto
with no limitations, qualifications or restrictions on such rights.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any law,
regulation or court order or any other agreement to which such Stockholder is a
party including, without limitation, any voting agreement, Stockholder
agreement or voting trust. This Agreement has been duly and validly executed
and delivered by such Stockholder and constitutes a valid and binding agreement
of such Stockholder, enforceable against such Stockholder in accordance with
its terms. If such Stockholder is married and such Stockholder's Shares
constitute community property, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding agreement of,
such Stockholder's spouse, enforceable against such person in accordance with
its terms.
(c) Restriction on Transfer, Proxies and Non-Interference. Such
Stockholder shall not, directly or indirectly: (i) except as contemplated by
the Merger Agreement, offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for sale,
sale, transfer, tender, pledge, encumbrance, assignment or other disposition
of, any or all of such Stockholder's Shares or any interest therein; (ii) grant
any proxies or powers of attorney, deposit any Shares into a voting trust or
enter into a voting agreement with respect to any Shares; or (iii) take any
action that would make any representation or warranty of such Stockholder
contained herein untrue or incorrect or have the effect of preventing or
disabling such Stockholder from performing such Stockholder's obligations under
this Agreement; provided, however, that, notwithstanding clause (i) of this
sentence, (x) such Stockholder shall be permitted to transfer any of such
Stockholder's Shares to a trust or similar entity for estate planning purposes
so long as such Stockholder retains, or another Stockholder acquires, (1) sole
power to vote such Shares
2
<PAGE> 3
(and votes such Shares in accordance with this Agreement) and (2) investment
power over such shares (and causes such trust or similar entity to retain such
Shares until the termination of this Agreement); (y) such Stockholder shall be
permitted to make one or more gifts or charitable donations of such Shares up
to such number of Shares as represents no more than 10% of the voting power
represented by the aggregate number of such Stockholder's Shares on the date
hereof; and (z) such Stockholder may pledge or margin any of such Stockholder's
Shares so long as such Stockholder retains sole power to vote such Shares (and
votes in accordance with this Agreement) for the term of this Agreement
(provided that such pledge or margin transaction shall be made only to or with
a financial institution extending credit to such Stockholder in the ordinary
course of such financial institution's business and unrelated to any
transaction or transactions involving an attempt to acquire control of the
Company).
(d) Reliance by the Company. Such Stockholder understands and
acknowledges that the Company is entering into the Merger Agreement in reliance
upon such Stockholder's execution and delivery of this Agreement.
3. Stop Transfer. Each Stockholder agrees with, and covenants
to, the Company that such Stockholder shall not request that Acquiror register
the transfer (book-entry or otherwise) of any certificate or uncertificated
interest representing any of such Stockholders' Shares, unless such transfer is
made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Acquiror Common Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "Shares" shall be deemed to refer to and include the Shares as
well as all such stock dividends and distributions and any shares into which or
for which any or all of the Shares may be changed or exchanged.
4. Termination. Except as otherwise provided herein, the
covenants and agreements contained herein with respect to the Shares shall
terminate upon the earlier of (a) the termination of the Merger Agreement in
accordance with its terms and (b) the Effective Time.
5. Stockholder Capacity. No person executing this Agreement who
is or becomes during the term hereof a director of Acquiror or a trustee of a
trust makes any agreement or understanding herein in his or her capacity as
such director or trustee. Each Stockholder signs solely in his or her capacity
as the Beneficial Owner of such Stockholder's Shares.
6. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof.
(b) Certain Events. Each Stockholder agrees that this Agreement
and the obligations hereunder shall attach to such Stockholder's Shares and
shall be binding upon any person to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise. Notwithstanding
any transfer of Shares, the transferor shall remain liable for the performance
of all obligations under this Agreement of the transferor.
3
<PAGE> 4
(c) Assignment. This Agreement shall not be assigned by operation
of law or otherwise without the prior written consent of the other party.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, with respect
to any one or more Stockholders, except upon the execution and delivery of a
written agreement executed by the relevant parties hereto; provided, however,
that Schedule I hereto may be supplemented by the Company and one or more
stockholders of Acquiror by adding the name and other relevant information
concerning any stockholder of the Company who agrees to be bound by the terms
of this Agreement without the agreement of any other party hereto, and
thereafter such added stockholder shall be treated as a "Stockholder" for all
purposes of this Agreement.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram,
telex or telecopy, or by mail (registered or certified mail, postage prepaid,
return receipt requested) or by any courier service, such as Federal Express,
providing proof of delivery. All communications hereunder shall be delivered
to the respective parties at the following addresses:
If to any Stockholder: At the address set forth
on Schedule I hereto
with a copy to: Michael J. McCarthy, Esq.
Senior Vice President and General Counsel
A.H. Belo Corporation
400 South Record Street
Dallas, Texas 75202
Telephone: (214) 977-6600
Facsimile: (214) 977-8209
and
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166
Telephone: (212) 351-4000
Facsimile: (212) 351-4035
Attention: E. Michael Greaney, Esq.
4
<PAGE> 5
If to the Company: The Providence Journal Company
75 Fountain Street
Providence, Rhode Island 02902
Telephone: (401) 277-7000
Facsimile: (401) 277-7889
Attention: Stephen Hamblett and
John L. Hammond, Esq.
with a copy to: Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10166
Telephone: (212) 403-1000
Facsimile: (212) 403-2000
Attention: Daniel A. Neff, Esq.
and
Edwards & Angell
2700 Hospital Trust Tower
Providence, RI 02903
Telephone: (401) 274-9200
Facsimile: (401) 276-6611
Attention: Walter G.D. Reed, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the matter set forth above.
(f) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.
(g) Specific Performance. Each of the parties hereto recognizes
and acknowledges that a breach by it of any covenants or agreements contained
in this Agreement will cause the other party to sustain damage for which it
would not have an adequate remedy at law for money damages, and therefore each
of the parties hereto agrees that in the event of any such breach the aggrieved
party shall be entitled to the remedy of specific performance of such covenants
and agreements and injunctive and other equitable relief in addition to any
other remedy to which it may be entitled, at law or in equity.
(h) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in
5
<PAGE> 6
equity, or to insist upon compliance by any other party hereto with its
obligations hereunder, and any custom or practice of the parties at variance
with the terms hereof, shall not constitute a waiver by such party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.
(i) Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware, without giving effect to
the principles of conflicts of law thereof.
(j) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the Company and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
THE PROVIDENCE JOURNAL COMPANY
By: /s/ STEPHEN HAMBLETT
----------------------------------------
Name: Stephen Hamblett
Title: Chairman of the Board, Chief
Executive Officer and Publisher
STOCKHOLDERS:
/s/ ROBERT W. DECHERD
-------------------------------------------
Robert W. Decherd
/s/ MAUREEN H. DECHERD
-------------------------------------------
Maureen H. Decherd
/s/ DEALEY D. HERNDON
-------------------------------------------
Dealey D. Herndon
/s/ JAMES M. MORONEY, JR.
-------------------------------------------
James M. Moroney, Jr.
/s/ HELEN CLAIRE WILHOIT MORONEY
-------------------------------------------
Helen Claire Wilhoit Moroney
/s/ JOHN W. BASSETT, JR.
-------------------------------------------
John W. Bassett, Jr.
6
<PAGE> 7
ACKNOWLEDGED AND AGREED TO
(with respect to Section 3):
A.H. BELO CORPORATION
By: /s/ ROBERT W. DECHERD
----------------------------------------
Name: Robert W. Decherd
Title: Chairman of the Board, President
and Chief Executive Officer
7
<PAGE> 8
Schedule I to
Stockholders Agreement
<TABLE>
<CAPTION>
Name and Address Number of Shares Owned
- ---------------- ----------------------
Series A Series B
-------- --------
<S> <C> <C>
Robert W. Decherd 583,509 1,972,908
A.H. Belo Corporation
400 South Record Street
Dallas, Texas 75202
Dealey D. Herndon 1,048,146 1,305,624
322 Congress Avenue
Austin, Texas 78701
James M. Moroney, Jr. 494,235 154,922
A.H. Belo Corporation
400 South Record Street
Dallas, Texas 75202
John W. Bassett, Jr. 3,200 3,200
A.H. Belo Corporation
400 South Record Street
Dallas, Texas 75202
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 15,800
<SECURITIES> 0
<RECEIVABLES> 119,649
<ALLOWANCES> (4,265)
<INVENTORY> 16,235
<CURRENT-ASSETS> 159,707
<PP&E> 644,925
<DEPRECIATION> (281,860)
<TOTAL-ASSETS> 1,209,589
<CURRENT-LIABILITIES> 79,069
<BONDS> 361,657
0
0
<COMMON> 73,982
<OTHER-SE> 563,707
<TOTAL-LIABILITY-AND-EQUITY> 1,209,589
<SALES> 0
<TOTAL-REVENUES> 202,147
<CGS> 0
<TOTAL-COSTS> 149,689
<OTHER-EXPENSES> 16,023
<LOSS-PROVISION> 3,986
<INTEREST-EXPENSE> 5,380
<INCOME-PRETAX> 31,491
<INCOME-TAX> 12,565
<INCOME-CONTINUING> 18,926
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,926
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
