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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, 1997
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
Securities registered pursuant to Section 12(b) of the Act:
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<S> <C>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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 January 30, 1998, 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 $2,985,680,000. *
Shares of Common Stock outstanding at January 30, 1998: 62,347,236 shares.
(Consisting of 53,083,301 shares of Series A Common Stock and 9,263,935 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 13, 1998 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
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PAGE
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PART I
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Item 1. Business.......................................................................................... 1
Item 2. Properties........................................................................................ 7
Item 3. Legal Proceedings................................................................................. 7
Item 4. Submission of Matters to a Vote of Security Holders............................................... 7
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters............................. 8
Item 6. Selected Financial Data........................................................................... 9
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations............. 10
Item 7A. Quantitative and Qualitative Disclosures about Market Risks....................................... 17
Item 8. Financial Statements and Supplementary Data (see Index to Financial Statements below)............. 17
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.............. 18
PART III
Item 10. Directors and Executive Officers of the Registrant................................................ 18
Item 11. Executive Compensation............................................................................ 18
Item 12. Security Ownership of Certain Beneficial Owners and Management.................................... 18
Item 13. Certain Relationships and Related Transactions.................................................... 18
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K................................... 18
Signatures .................................................................................................. 22
INDEX TO FINANCIAL STATEMENTS
Report of Independent Auditors............................................................................... 24
Consolidated Statements of Earnings for the Years Ended December 31, 1997, 1996 and 1995..................... 25
Consolidated Balance Sheets as of December 31, 1997 and 1996................................................. 26
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1997, 1996
and 1995 ................................................................................................. 28
Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995................... 29
Notes to Consolidated Financial Statements................................................................... 30
Management's Responsibility for Financial Statements......................................................... 42
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PART I
ITEM 1. BUSINESS
A. H. Belo Corporation (the "Company" or "Belo") is one of the nation's
largest media companies, with a diversified group of television broadcasting,
newspaper publishing, cable news and electronic media assets. The Company's
group of 17 television stations currently reaches 14.2 percent of U.S.
television households. In addition, the Company manages four television stations
through local marketing agreements ("LMA") and owns three local or regional
cable news channels.
Three of the Company's television stations are located in major
metropolitan areas which are among the fastest growing in the country: WFAA
(ABC) in Dallas-Fort Worth, KHOU (CBS) in Houston and KING (NBC) in
Seattle-Tacoma. Belo has three stations in the top 12 television markets, seven
stations in the top 30 markets, 12 stations in the top 50 markets, and network
affiliations as follows: four ABC affiliates, six CBS affiliates, five NBC
affiliates and two FOX affiliates. Thirteen of the Company's 17 stations are
ranked either number one or two in overall sign-on/sign-off audience delivery.
Belo's Publishing Division is headed by The Dallas Morning News, which has
the country's eighth-largest Sunday circulation and ninth-largest daily
circulation, and the Providence Journal-Bulletin, the leading newspaper in terms
of both advertising and circulation in Rhode Island and southeastern
Massachusetts. During 1997, Belo increased its ownership interest in The
Press-Enterprise ("P-E"), a daily newspaper serving Riverside, California, from
38.45 percent to 100 percent. Belo's other daily newspapers are the
Messenger-Inquirer in Owensboro, Kentucky; The Eagle in Bryan-College Station,
Texas; and The Gleaner in Henderson, Kentucky. The Company also publishes the
Arlington Morning News and eight community newspapers in the Dallas-Fort Worth
suburban area and operates a commercial printing business.
The Dallas Morning News is one of the leading newspaper franchises in
America. The Dallas Morning News' success is founded upon the highest standards
of journalistic excellence, with a special emphasis on local news, information
and community service. The newspaper's reporting and editorial initiatives have
earned six Pulitzer Prizes since 1986.
The Providence Journal-Bulletin also has a long history of journalistic
excellence and service to its community. It is America's oldest major daily
newspaper of general circulation and continuous publication. The Providence
Journal-Bulletin has earned four Pulitzer Prizes during its 168-year history.
The Company believes the success of its media franchises is built upon
providing local news, information and community service of the highest caliber.
These principles have attracted and built relationships with viewers, readers
and advertisers and have guided the Company's success for 156 years.
Note 12 to the Consolidated Financial Statements contains information about
the Company's industry segments for the years ended December 31, 1997, 1996 and
1995.
TELEVISION BROADCASTING
The Company's television broadcasting operations began in 1950 with the
acquisition of WFAA in Dallas-Fort Worth shortly after the station commenced
operations. In 1984, the Company expanded its television broadcast operations
with the purchase of stations in Houston, Sacramento, Hampton-Norfolk and Tulsa.
In June 1994 and February 1995, the Company acquired stations in New Orleans and
Seattle, respectively. The Providence Journal Company ("PJC") acquisition in
February 1997 added nine television stations, including the top-ranked NBC-
affiliated KING-TV in Seattle, Washington. In accordance with Federal
Communications Commission ("FCC" or "Commission") regulations prohibiting
ownership of two or more stations in a single market, Belo exchanged its United
Paramount Network ("UPN") affiliate, KIRO-TV in Seattle, for CBS affiliate
KMOV-TV in St. Louis, Missouri, in June 1997. In October 1997, Belo acquired CBS
affiliate KENS-TV in San Antonio, Texas.
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The following table sets forth information for each of the Company's
stations and their markets:
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NUMBER OF STATION
COMMERCIAL STATION AUDIENCE
MARKET YEAR NETWORK STATIONS IN RANK IN SHARE IN
MARKET RANK(1) STATION ACQUIRED AFFILIATION CHANNEL MARKET(2) MARKET(3) MARKET(4)
------ ------- ------- -------- ----------- ------- --------- --------- ---------
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Dallas-Fort Worth... 8 WFAA-TV 1950 ABC 8 14 1 17
Houston............. 11 KHOU-TV 1984 CBS 11 14 2* 14
Seattle-Tacoma...... 12 KING-TV 1997 NBC 5 9 1 18
Sacramento.......... 20 KXTV 1984 ABC 10 9 2* 13
St. Louis........... 21 KMOV-TV 1997 CBS 4 7 2 18
Portland............ 24 KGW-TV 1997 NBC 8 8 1* 15
Charlotte........... 28 WCNC-TV 1997 NBC 36 8 3 9
San Antonio......... 38 KENS-TV 1997 CBS 5 7 2* 13
Hampton-Norfolk..... 39 WVEC-TV 1984 ABC 13 7 1* 16
New Orleans......... 41 WWL-TV 1994 CBS 4 8 1 22
Albuquerque......... 48 KASA-TV 1997 FOX 2 6 4 8
Louisville.......... 50 WHAS-TV 1997 ABC 11 6 3 16
Tulsa............... 58 KOTV 1984 CBS 6 8 1* 20
Honolulu............ 71 KHNL-TV 1997 NBC 13 8 2* 13
Spokane............. 73 KREM-TV 1997 CBS 2 5 2* 16
Tucson.............. 78 KMSB-TV 1997 FOX 11 7 4 7
Boise............... 125 KTVB-TV 1997 NBC 7 5 1 27
</TABLE>
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* Tied with one or more other stations in the market.
(1) Market rank is based on the relative size of the television market, or
Designated Market Area ("DMA"), among the 211 generally recognized DMAs
in the United States, based on November 1997 Nielsen estimates.
(2) Represents the number of television stations (both VHF and UHF)
broadcasting in the market, excluding public stations and national
cable channels.
(3) Station rank is derived from the station's rating, which is based on
November 1997 Nielsen estimates of the number of television households
tuned to the Company's station for the Sunday-Saturday 7:00 a.m. to
1:00 a.m. period ("sign-on/sign-off") as a percentage of the number of
television households in the market.
(4) Station audience share is based on November 1997 Nielsen estimates of
the number of television households tuned to the Company's station as a
percentage of the number of television households with sets in use in
the market for the sign-on/sign-off period.
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.
Commercial television stations generally fall into one of three categories.
The first category of stations includes those affiliated with one of the three
major national networks (ABC, CBS and NBC), and in recent years, FOX has
effectively evolved into a fourth major network. The second category is
comprised of stations affiliated with newer national networks, such as UPN and
the Warner Brothers ("WB") Television Network. The third category includes
independent stations that are not affiliated with any network and 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 ratings generated by a
network's programming can affect the rates at which a station can sell
advertising time. 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.
Each of the Company's network affiliation agreements provides the station
with the right to broadcast all programs transmitted by the network with which
the station is affiliated. In return, the network has the right to sell most of
the advertising time during such broadcasts. Each station receives a specified
amount of network compensation for broadcasting network programming. To the
extent that a station's preemptions of network programming exceed a designated
amount, that compensation may be reduced. These payments are also subject to
decreases by the network during the term of an affiliation agreement under other
circumstances, with provisions for advance notice and the right of termination
by the station in the event of a reduction in such payments. The Company has
long-term network affiliation agreements in place with ABC and CBS, and
shorter-term agreements in
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place with NBC and FOX. Final documentation of the ABC affiliation agreements
has not been completed. However, the Company is currently compensated under the
terms of the draft agreements with ABC.
NEWSPAPER PUBLISHING
The Company's principal newspaper, The Dallas Morning News, was established
in 1885. In late 1991, after years of intense competition, The Dallas Morning
News' principal newspaper competitor, the Dallas Times Herald, ceased
operations, and the Company purchased its assets. In late 1995 and early 1996,
the Company expanded its publishing division by acquiring daily newspapers
serving Bryan-College Station, Texas and Owensboro, Kentucky. The Providence
Journal-Bulletin was acquired in February 1997 and The Gleaner, serving
Henderson, Kentucky, was acquired in March 1997. In July 1997, Belo completed
the acquisition of The Press-Enterprise, a daily newspaper serving Riverside,
California, in which Belo previously held a 38.45 percent equity interest.
The following table sets forth information concerning the Company's daily
newspaper operations:
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1997 1996
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DAILY SUNDAY DAILY SUNDAY
NEWSPAPER LOCATION CIRCULATION(1) CIRCULATION(1) CIRCULATION(1) CIRCULATION(1)
- ------------------------------- --------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
The Dallas Morning News Dallas, TX 517,215 789,004 513,099 785,934
Providence Journal-Bulletin Providence, RI 170,292 242,755 171,824 247,777
The Press-Enterprise Riverside, CA 162,551 170,478 160,004 166,745
Messenger-Inquirer Owensboro, KY 31,754 34,657 31,717 34,250
The Eagle Bryan-College Station, TX 21,939 27,358 21,336 26,948
The Gleaner Henderson, KY 11,247 13,476 11,292 13,667
</TABLE>
(1) Average paid circulation for the six months ended September 30, 1997
and 1996, respectively, according to the Audit Bureau of Circulation's
FAS-FAX report.
Each of Belo's daily newspapers strives to serve community interests 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 all of its
newspaper publications.
The Company's three largest newspapers, The Dallas Morning News, Providence
Journal-Bulletin and The Press-Enterprise, provide coverage of local, state,
national and international news. The Dallas Morning News is distributed
throughout the Southwest, though its circulation is concentrated primarily in
the 12 counties surrounding Dallas. The Providence Journal-Bulletin is the
leading newspaper in Rhode Island and southeastern Massachusetts. The
Press-Enterprise is distributed throughout Riverside County and the inland
southern California area. Riverside County is expected to be among the fastest
growing counties in California over the next decade.
The basic material used in publishing Belo's newspapers is newsprint.
During 1997, the Company's publishing operations consumed approximately 250,000
metric tons of newsprint at an average cost of $530 per metric ton. The average
cost per ton of newsprint consumed in the previous year was approximately $660
per metric ton. The decrease in current year cost per ton was due to market-wide
price decreases beginning in the second quarter of 1996. At present, newsprint
is generally purchased from eight suppliers. In addition, Providence
Journal-Bulletin and The Press-Enterprise purchased approximately 35 percent and
70 percent, respectively, of their newsprint from other suppliers under
pre-existing contracts. These contracts provide for certain minimum purchases
per year at rates commonly available throughout the region. Management believes
its sources of newsprint, along with alternate sources that are available, are
adequate for its current needs.
COMPETITION
The success of broadcast operations depends on a number of factors,
including the general strength of the economy, the ability to provide attractive
programming, audience ratings, relative cost efficiency for advertisers in
reaching audiences as compared to other advertising media, technical
capabilities and governmental regulations and policies. The Company's television
broadcast stations compete for advertising revenues directly with other media
such as newspapers (including those owned and operated by the Company), other
television stations, direct satellite distribution, radio stations, cable
television systems, outdoor advertising, magazines and direct mail advertising.
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The four major national television networks are represented in each
television market in which the Company has a television broadcast station.
Competition for advertising sales and local viewers within each market is
intense, particularly among the network-affiliated television stations.
The entry of local telephone companies into the market for video
programming services, as permitted under the Telecommunications Act of 1996 (the
"1996 Act"), can be expected to have an impact on competition in the television
industry. The Company is unable to predict the effect that these or other
technological and related regulatory changes will have on the television
industry or on the future results of the Company's operations.
Each of the Company's daily newspapers compete for advertising with
television and radio stations (including television stations owned and operated
by the Company in overlapping markets), magazines, direct mail, cable
television, direct satellite distribution, outdoor advertising and other
newspapers. The Dallas Morning News' primary competitor in certain smaller
cities located between Dallas and Fort Worth is the Fort Worth Star-Telegram.
The Providence Journal-Bulletin and The Press-Enterprise each have five
competing daily newspapers in the Rhode Island and Riverside County markets,
respectively.
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, foreign governments or their
representatives, or by corporations formed under the laws of foreign countries.
The Act previously would have prohibited the Company's subsidiaries from
continuing as broadcast licensees if any officer or more than one-fourth of the
directors of the Company were aliens. The 1996 Act, however, eliminated the
restriction on alien officers and directors.
Prior to the passage of the 1996 Act, television broadcast licenses were
granted for a period of five years. Renewal applications were granted without a
hearing if there were no competing applications or issues raised by petitioners
to deny such applications that would cause the FCC to order a hearing. If
competing applications were filed, a full comparative hearing was required.
Under the 1996 Act, the statutory restriction on the length of a broadcast term
was amended to allow the FCC to grant broadcast licenses for terms of up to
eight years. In January 1997, the FCC adopted specific procedures to extend
broadcast license terms to the eight-year limit. The 1996 Act also requires
renewal of a broadcast license if the FCC finds that (1) the station has served
the public interest, convenience, and necessity; (2) there have been no serious
violations of either the Act or the FCC's rules and regulations by the licensee;
and (3) there have been no other violations of either the Act or the FCC's rules
and regulations by the licensee which, taken together, constitute a pattern of
abuse. In making its determination, the FCC cannot consider whether the public
interest would be better served by a party other than the renewal applicant.
Under the 1996 Act, competing applications for the same frequency may be
accepted only after the Commission has denied an incumbent's application for
renewal of license.
An application for renewal of the broadcast license for KMOV, which expired
on February 1, 1998, is pending before the FCC. The station's licenses are, by
statute, continued in effect pending action on the renewal application. The
current license expiration dates for each of the Company's other broadcast
stations are as follows: KOTV, June 1, 1998; KENS, August 1, 1998; KHOU, August
1, 1998; WFAA, August 1, 1998; KASA, October 1, 1998; KMSB, October 1, 1998;
KTVB, October 1, 1998; KXTV, December 1, 1998; KGW, February 1, 1999; KHNL,
February 1, 1999; KING, February 1, 1999; KREM, February 1, 1999; WVEC, October
1, 2004; WCNC, December 1, 2004; WWL, June 1, 2005; and WHAS, August 1, 2005.
4
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FCC ownership rules, as modified pursuant to the 1996 Act, limit the
aggregate audience reach 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, to 35 percent of the total national audience. 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 1996 Act left in place the FCC rule which prohibits common ownership of
two television stations serving the same area, but directed the Commission to
conduct a rulemaking proceeding to determine whether the restriction should be
eliminated or modified. In addition, the 1996 Act eliminated a statutory
prohibition against common ownership of television broadcast stations and cable
systems serving the same area, but left the FCC rule in place. The 1996 Act
stipulates that the FCC should not consider the repeal of this statutory ban in
any review of its applicable rules. The 1996 Act also left in place the FCC rule
which prohibits common ownership of a broadcast station and a daily newspaper
serving the same area, but required the Commission to review this and all other
cross-ownership rules biennially, beginning in 1998, to determine if they remain
necessary. The FCC recently announced the beginning of the biennial review
process, which will also include a review of a broad range of other rules
affecting broadcasters.
The Company's ownership of The Dallas Morning News and WFAA, which are both
located in the Dallas-Fort Worth area, predates the adoption of the FCC's rules
regarding newspaper/broadcast cross-ownership and was "grandfathered" by the
FCC.
The FCC ownership 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 FCC rules, the Company generally 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. However, the FCC's rules and policies (as
modified by the 1996 Act) provide that waivers of these restrictions generally
would be available to permit the Company's acquisition of radio stations in any
of the markets in which the Company currently owns television stations (other
than Tulsa) or of "satellite" television stations located within a parent
station's Grade B service contour which rebroadcasts all or most of the parent
station's programming.
The FCC has instituted proceedings looking toward possible relaxation of
certain of its rules regulating television station ownership and changes in the
standards used to determine what type of interests are considered to be
attributable under its rules. For example, the FCC has initiated proceedings
looking toward possible relaxation of its rules regulating the common ownership
of two television stations. In addition, other parties have challenged the
newspaper-television cross-ownership prohibition in court and in petitions to
the FCC, and legislation to repeal that prohibition has been introduced in the
U. S. Senate.
The FCC has significantly reduced its 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 eliminated its rules that restricted network participation
in program production and syndication. The FCC also eliminated the prime time
access rule ("PTAR"), effective August 30, 1996. The PTAR limited the ability of
some stations in the 50 largest television markets to broadcast network
programming (including syndicated programming previously broadcast over a
network) during prime time hours. The elimination of PTAR could increase the
amount of network programming broadcast over a station affiliated with ABC, NBC
or CBS. The U.S. Supreme Court refused to review a lower court decision that
upheld FCC action invalidating most aspects of the Fairness Doctrine, which
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.
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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 Commission
recently adopted stricter children's programming requirements, including a
requirement that broadcasters provide a minimum of three hours of "core"
children's educational programming per week.
The FCC also 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. In March 1997, the Supreme Court upheld a
statutory provision requiring cable systems to devote a specified portion of
their channel capacity to the carriage of the signals of local television
stations. Moreover, the 1992 Cable Act was amended in certain important respects
by the 1996 Act. Most notably, the 1996 Act repealed the cross-ownership ban
between cable and telephone entities and the FCC's video dial tone rules. These
provisions, among others, foreshadow the possibility of significant future
involvement by telephone companies in providing video services.
In April 1997, the FCC adopted rules for implementing digital television
("DTV") service in the United States. Implementation of DTV will improve the
technical quality of television signals received by viewers and will give
television broadcasters the flexibility to provide new services, including
high-definition television or multiple programs of standard definition
television and data transmission.
Under the FCC's recently adopted rules, all broadcasters who, as of April
3, 1997, held a license to operate a full-power television station or a
construction permit for such a station will be assigned, for an eight-year
transition period, a second channel on which to initially provide separate DTV
programming or simulcast its analog programming. Stations must construct their
DTV facilities and be on the air with a digital signal according to a schedule
set by the FCC based on the type of station and the size of the market in which
it is located. For example, all network affiliates in the 10 largest markets
must be on the air with a digital signal by May 1, 1999. (Twenty-four stations
in the top 10 markets, however, including WFAA, have voluntarily committed in
writing to the FCC to build DTV facilities by November 1, 1998.) Affiliates in
the top 30 markets must be transmitting digital signals by November 1999 and all
other commercial broadcasters must follow suit by 2002. At the end of the
transition period, analog television transmissions will cease, and DTV channels
will be reassigned to a smaller segment of the broadcasting spectrum. It is
likely that some of the vacated spectrum will be allocated to public safety,
while the remainder will be auctioned for use by other telecommunication
services.
The FCC hopes to complete the full transition to DTV by 2006. Local zoning
laws and the lack of qualified tall-tower builders to construct the facilities
needed for DTV operations, among other factors, may cause delays in this
transition. The FCC is currently considering a rule which would set strict time
limits within which local zoning authorities must act on zoning petitions by
local television stations. The Commission has announced that it will review the
progress of DTV every two years and make adjustments to the 2006 target date, if
necessary.
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.
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 Company cannot predict the effect of existing and proposed
federal legislation, regulations and policies on its broadcast business. 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, 1997, the Company had 6,760 full-time employees. The
Company has 966 employees who are represented by various employee unions. The
majority of these employees are located in Providence, Rhode Island, with the
remaining union employees working at various broadcast television stations. The
Company believes its relations with its employees are satisfactory.
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ITEM 2. PROPERTIES
At December 31, 1997, the Company owned broadcast operating facilities in
the following U. S. cities: Dallas, Texas (WFAA); Houston, Texas (KHOU);
Seattle, Washington (KING); Sacramento, California (KXTV); Portland, Oregon
(KGW); Charlotte, North Carolina (WCNC); San Antonio, Texas (KENS);
Hampton-Norfolk, Virginia (WVEC); New Orleans, Louisiana (WWL); Albuquerque, New
Mexico (KASA); Louisville, Kentucky (WHAS); Tulsa, Oklahoma (KOTV); Spokane,
Washington (KREM); Tucson, Arizona (KMSB); and Boise, Idaho (KTVB). The Company
also leases broadcast facilities for the operations of KMOV in St. Louis,
Missouri and KHNL in Honolulu, Hawaii. Four of the Company's broadcast
facilities use broadcast towers that are jointly owned with another
network-affiliated television station in the same market (WFAA, KXTV, KENS and
KOTV). The broadcast towers associated with the Company's other television
stations are wholly owned by the Company.
The Company leases a facility in Washington, D.C. that is used by its
broadcasting and publishing operations for the gathering and distribution of
news from the nation's capital. This facility includes a broadcast studio as
well as general office space.
The Company owns and operates a newspaper printing facility and
distribution center in Plano, Texas in which eight high-speed offset presses are
housed to print The Dallas Morning News. Certain other operations of The Dallas
Morning News are housed in a Company-owned five-story building in downtown
Dallas, which is equipped with computerized input and photocomposition equipment
and other equipment that is used in the production of both news and advertising
copy.
The Company also owns and operates a newspaper printing facility in
Providence, Rhode Island, in which three high-speed flexographic presses are
housed to print the Providence Journal-Bulletin. The remainder of the Providence
Journal-Bulletin's operations is housed in an historic Company-owned five-story
building in downtown Providence. This facility is equipped with computerized
input and photocomposition equipment and other equipment that is used in the
production of both news and advertising copy.
The Company owns and operates a newspaper publishing facility, a commercial
printing facility and various other properties in southern California. The
newspaper publishing facility is located in downtown Riverside, California and
is equipped with three high-speed offset presses to print The Press-Enterprise.
This facility also contains computerized input and photocomposition equipment
and other equipment that is used in the production of both news and advertising
copy.
The Company owns other newspaper production facilities in Owensboro and
Henderson, Kentucky and Bryan-College Station, Texas.
The Company's corporate operations, several departments of The Dallas
Morning News and certain broadcast administrative functions have offices located
in downtown Dallas in a 17-story office building owned by the Company.
All of the foregoing operations have additional leasehold and other
interests that are used in their respective activities. The Company believes its
properties are in satisfactory condition and are 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 and slander. In the opinion of management,
liabilities, if any, arising from these actions would not have a material
adverse effect on the consolidated results of 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 shareholders, through the solicitation
of proxies or otherwise, during the fourth quarter of the fiscal year covered by
this Form 10-K.
7
<PAGE> 10
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 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 10 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 8 of the 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 on the New York Stock Exchange for
each of the quarterly periods in the last two years.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
HIGH LOW CLOSE DIVIDENDS
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997 Fourth Quarter $56 1/8 $45 $56 1/8 $.11
Third Quarter $51 1/4 $41 1/16 $48 1/2 $.11
Second Quarter $43 $34 1/8 $41 5/8 $.11
First Quarter $39 1/2 $33 1/4 $36 7/8 $.11
- ----------------------------------------------------------------------------------------
1996 Fourth Quarter $40 $33 3/4 $34 7/8 $.11
Third Quarter $41 3/4 $33 5/8 $34 1/2 $.11
Second Quarter $39 7/8 $32 5/8 $37 1/4 $.11
First Quarter $37 3/8 $31 $34 $.08
- ----------------------------------------------------------------------------------------
</TABLE>
On January 30, 1998, the closing price for the Company's Series A Common
Stock, as reported on the New York Stock Exchange, was $53 11/16. The
approximate number of shareholders of record of the Series A and Series B Common
Stock at the close of business on such date was 870 and 492, respectively.
8
<PAGE> 11
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, 1997. For a more
complete understanding of this selected financial data, see Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Item 8. "Financial Statements and Supplementary Data," including
the Notes thereto.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
In thousands, except per share amounts 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Broadcasting revenues (a) $ 536,737 $ 333,396 $ 322,642 $ 258,040 $ 209,083
Newspaper publishing revenues (b) 693,777 487,242 409,099 369,366 335,651
Other (c) 17,867 3,670 3,602 719 101
- ---------------------------------------------------------------------------------------------------------------------------------
Net operating revenues $1,248,381 $ 824,308 $ 735,343 $ 628,125 $ 544,835
========== ========== ========== ========== ==========
Net earnings (d) $ 82,972 $ 87,505 $ 66,576 $ 68,867 $ 51,077
========== ========== ========== ========== ==========
Per share amounts (e):
Basic earnings per share $ 1.43 $ 2.14 $ 1.71 $ 1.73 $ 1.28
Diluted earnings per share $ 1.42 $ 2.11 $ 1.68 $ 1.70 $ 1.26
Cash dividends declared $ .44 $ .41 $ .315 $ .30 $ .28
Other data:
Segment operating cash flow (f):
Broadcasting $ 216,654 $ 122,837 $ 121,716 $ 106,396 $ 83,356
Newspaper publishing $ 206,440 $ 128,118 $ 90,915 $ 87,284 $ 61,667
Segment operating cash flow margins:
Broadcasting 40.4% 36.8% 37.7% 41.2% 39.9%
Newspaper publishing 29.8% 26.3% 22.2% 23.6% 18.4%
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets (a) (b) $3,622,954 $1,224,072 $1,154,022 $ 913,791 $ 796,156
Long-term debt (g) $1,614,045 $ 631,857 $ 557,400 $ 330,400 $ 277,400
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The Company purchased WWL in June 1994, KIRO in February 1995, nine
television stations as part of the PJC acquisition in February 1997 and
KENS in October 1997. KMOV was acquired in exchange for KIRO in June 1997.
(b) The Company purchased The Eagle in December 1995, the Messenger-Inquirer in
January 1996, the Providence Journal-Bulletin in February 1997, The Gleaner
in March 1997, and increased its ownership in The Press-Enterprise to 100
percent in July 1997.
(c) "Other" includes revenues associated with the Company's television
production subsidiary and a programming distribution partnership. The
Company sold its interest in the partnership in February 1996. Beginning in
March 1997, "Other" also includes certain cable news operations, a cable
network and electronic media assets acquired in connection with the PJC
transaction. The cable network was subsequently disposed of and its
operations are excluded effective July 1, 1997.
(d) Net earnings for 1993 include an increase of $6,599 (16 cents per share)
representing the cumulative effect of adopting Statement of Financial
Accounting Standards ("FAS") No. 109, "Accounting for Income Taxes,"
effective January 1, 1993.
(e) In accordance with FAS No. 128, basic earnings per share ("EPS") is
computed by dividing income available to common shareholders by the
weighted average number of common shares outstanding, while diluted EPS
assumes the conversion of all dilutive securities. All periods presented
have been restated to reflect the retroactive application of FAS No. 128.
(f) Operating cash flow is defined as segment earnings from operations plus
depreciation and amortization. Operating cash flow is used in the
broadcasting and publishing industries to analyze and compare companies on
the basis of operating performance, leverage and liquidity. However,
operating cash flow should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles. Operating cash flow for "Other"
and "Corporate" are not included herein. See Note 12 of Notes to
Consolidated Financial Statements.
(g) Long-term debt increased in 1997 as the Company borrowed $1,100,545 to
finance various acquisitions.
9
<PAGE> 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company is an owner and operator of 17 network-affiliated television
stations and an established publisher of six daily newspapers. The following
table sets forth the Company's major media assets by segment as of December 31,
1997:
<TABLE>
<CAPTION>
- --------------------------- ------------------ -------------- ------------- -------------- ----------------------------
BROADCASTING
- --------------------------- ------------------ -------------- ------------- -------------- ----------------------------
NETWORK
MARKET MARKET RANK (a) STATION AFFILIATION STATUS ACQUIRED
- --------------------------- ------------------ -------------- ------------- -------------- ----------------------------
<S> <C> <C> <C> <C> <C>
Dallas-Fort Worth 8 WFAA ABC Owned March 1950
Houston 11 KHOU CBS Owned February 1984
Seattle-Tacoma 12 KING NBC Owned February 1997
Seattle-Tacoma 12 KONG IND LMA February 1997(b)
Sacramento 20 KXTV ABC Owned February 1984
St. Louis 21 KMOV CBS Owned June 1997
Portland 24 KGW NBC Owned February 1997
Charlotte 28 WCNC NBC Owned February 1997
San Antonio 38 KENS CBS Owned October 1997
Hampton-Norfolk 39 WVEC ABC Owned February 1984
New Orleans 41 WWL CBS Owned June 1994
Albuquerque 48 KASA FOX Owned February 1997
Louisville 50 WHAS ABC Owned February 1997
Tulsa 58 KOTV CBS Owned February 1984
Honolulu 71 KHNL NBC Owned February 1997
Honolulu 71 KFVE UPN LMA February 1997
Spokane 73 KREM CBS Owned February 1997
Spokane 73 KSKN UPN LMA February 1997
Tucson 78 KMSB FOX Owned February 1997
Tucson 78 KTTU UPN LMA February 1997
Boise 125 KTVB NBC Owned February 1997
- --------------------------- ------------------ -------------- ------------- -------------- ----------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------ ------------------------------ ------------------ --------------- ----------------
NEWSPAPER PUBLISHING
- ------------------------------------ ------------------------------ ------------------ --------------- ----------------
DAILY SUNDAY
NEWSPAPER LOCATION ACQUIRED CIRCULATION(d) CIRCULATION(d)
- ------------------------------------ ------------------------------ ------------------ --------------- ----------------
<S> <C> <C> <C> <C>
The Dallas Morning News Dallas, TX (c) 517,215 789,004
Providence Journal-Bulletin Providence, RI February 1997 170,292 242,755
The Press-Enterprise Riverside, CA July 1997 162,551 170,478
Messenger-Inquirer Owensboro, KY January 1996 31,754 34,657
The Eagle Bryan-College Station, TX December 1995 21,939 27,358
The Gleaner Henderson, KY March 1997 11,247 13,476
- ------------------------------------ ------------------------------ ------------------ --------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------- ------------------------------------------------------------------------------------
OTHER
- ---------------------------------- ------------------------------------------------------------------------------------
COMPANY DESCRIPTION
- ---------------------------------- ------------------------------------------------------------------------------------
<S> <C>
Belo Productions, Inc. Produces television programming
Northwest Cable News Cable news network distributed to approximately 2 million homes in the
Pacific Northwest
Dallasnews.com Web site featuring daily content from The Dallas Morning News
Projo.com Web site featuring daily content from the Providence Journal-Bulletin
- ---------------------------------- ------------------------------------------------------------------------------------
</TABLE>
(a) Market rank is based on the relative size of the television market, or
Designated Market Area ("DMA"), among the 211 generally recognized DMAs in
the United States, based on November 1997 Nielsen estimates.
(b) The KONG local marketing agreement ("LMA") license was acquired in
connection with the February 1997 acquisition of PJC; however, operations
of KONG did not commence until July 1997.
(c) The first issue of The Dallas Morning News was published October 1, 1885.
(d) Average paid circulation for the six months ending September 30, 1997,
according to the Audit Bureau of Circulation's FAS-FAX report.
10
<PAGE> 13
The Company depends on advertising as its principal source of revenues. As
a result, the Company's operations are sensitive to changes in the economy,
particularly in the Dallas-Fort Worth metropolitan area, where two of its
largest properties are located. The Company also derives revenues, to a much
lesser extent, from the sale of newspapers and from compensation paid by the
networks to its television stations for broadcasting network programming.
All references herein to broadcast operating cash flow or newspaper
publishing operating cash flow refer to segment earnings from operations plus
depreciation and amortization, as defined in Item 6. "Selected Financial Data."
Operating cash flow as defined should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with generally
accepted accounting principles.
Statements in Items 7 and 7A and elsewhere in this Annual Report on Form
10-K concerning the Company's business outlook or future economic performance,
anticipated profitability, revenues, expenses, capital expenditures or other
financial items, together with the Year 2000 impact and other statements that
are not historical facts, are "forward-looking statements" as that term is
defined under applicable Federal Securities Laws. Forward-looking statements are
subject to risks, uncertainties and other factors that could cause actual
results to differ materially from those statements. Such risks, uncertainties
and factors include, but are not limited to, changes in advertising demand,
interest rates and newsprint prices; technological changes; development of
Internet commerce; industry cycles; changes in pricing or other actions by
competitors and suppliers; regulatory changes; the effects of Company
acquisitions and dispositions; and general economic conditions, as well as other
risks detailed in the Company's filings with the Securities and Exchange
Commission ("SEC"), including this Annual Report on Form 10-K.
RESULTS OF OPERATIONS
(dollars in thousands, except per share amounts)
1997 COMPARED TO 1996
Results for 1997 include the results of operations of the companies
acquired during 1997, as follows: The Providence Journal Company ("PJC")
beginning March 1, 1997; The Gleaner, a daily newspaper serving Henderson,
Kentucky, effective April 1, 1997; The Press-Enterprise, a daily newspaper
serving Riverside, California, beginning August 1, 1997; the effect of the
KIRO/KMOV exchange, which closed on June 2, 1997; and KENS-TV in San Antonio,
Texas, beginning October 15, 1997. Results also include the operations of the
Television Food Network ("TVFN") through June 30, 1997, at which time plans were
initiated to divest the Company's ownership interest in TVFN. The Company
acquired its interest in TVFN through the PJC acquisition.
Consolidated results
The Company recorded net earnings for 1997 of $82,972 or $1.42 per share,
compared to $87,505 or $2.11 per share in 1996. Results for 1996 included a net
gain of $3,895 (6 cents per share) on the sale of Maxam Entertainment, a
programming distribution partnership, to CBS. Net earnings and earnings per
share for 1997 have been diluted by the amortization of intangibles, increased
interest expense and an increase in shares outstanding as a result of the
Company's acquisitions during 1997 as described above.
Depreciation and amortization expense in 1997 was $134,993 compared to
$65,183 in 1996. The majority of the current year increase is due to the PJC
acquisition in February. Amortization of intangibles associated with PJC was
approximately $39,024 for the year while additional depreciation expense due to
the step-up in fixed asset basis was $4,729 in 1997.
Interest expense for 1997 was $90,778 compared to $27,643 in 1996. Total
borrowings for current year acquisitions were $1,100,545, a significant portion
of which related to the PJC acquisition. Also contributing to the increase in
1997 interest expense was the additional debt associated with fourth quarter
1996 share repurchases of $306,146. In addition, during 1997 the Company
converted $1 billion in revolving debt to fixed-rate debt to reduce the
Company's exposure to interest rate risk. As a result, weighted average interest
rates for 1997 increased to 6.6 percent from 5.7 percent in 1996.
11
<PAGE> 14
The effective tax rate for 1997 was 46.2 percent compared to 39.2 percent
in 1996. The increase in the effective rate in 1997 was due primarily to the
amortization of nondeductible goodwill and higher state taxes, both of which
were a result of the PJC acquisition.
Segment results of operations
To enhance comparability of the Company's segment results of operations for
the years ended December 31, 1997 and 1996, certain information below is
presented on an "as adjusted" basis and includes the acquisitions of PJC, The
Gleaner, The Press-Enterprise, and KENS-TV and reflects the KIRO/KMOV exchange
as though each had occurred at the beginning of the respective periods
presented. The "as adjusted" amounts exclude TVFN, which was acquired from PJC
but subsequently disposed of in connection with the KENS acquisition.
<TABLE>
<CAPTION>
As Adjusted As Reported
------------------------------------ ----------------------------------------
Year ended December 31, 1997 1996 % change 1997 1996 % change
- ----------------------------- ----------- ----------- ------------ --- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net Operating Revenues:
Broadcasting $580,908 $560,759 3.6% $536,737 $333,396 61.0%
Newspaper publishing 769,972 718,085 7.2% 693,777 487,242 42.4%
Other 9,926 6,650 49.3% 17,867 3,670 *
Operating Cash Flow:
Broadcasting $235,375 $226,044 4.1% $216,654 $122,837 76.4%
Newspaper publishing 219,591 165,277 32.9% 206,440 128,118 61.1%
Other (4,159) (4,670) 10.9% (9,214) (1,038) *
- ----------------------------- ----------- ----------- ------------ --- ------------ ------------- -------------
</TABLE>
*Not meaningful.
The discussion that follows compares segment operations on an "as adjusted"
basis only.
Broadcasting
Broadcasting revenues in 1997 of $580,908 were $20,149 higher than 1996
broadcasting revenues of $560,759, an increase of 3.6 percent. Local and
national spot revenues combined for an increase of $41,011 while political
advertising revenues were down $24,636 compared to the prior year.
Local revenues were 8.4 percent higher in 1997 compared to 1996, with
increases in each of Belo's television markets with the exception of New Orleans
and Honolulu, where local economic conditions were generally unfavorable
throughout 1997. Of the 15 stations recording local revenue increases, 13 had
increases of 5 percent or more and six were up 10 percent or more. The largest
local revenue increases were in Seattle, Dallas, Houston, St. Louis, Sacramento,
Portland and Louisville, due largely to strong ratings, market growth and
substantial automotive advertising.
National revenues in 1997 were 9.1 percent higher than 1996 revenues, with
10 of Belo's television stations recording increases ranging from 8.1 percent to
22.6 percent. The most significant growth in national revenues occurred in the
Dallas, Seattle, Portland, Houston, St. Louis and San Antonio markets. Much of
this growth was due to automotive, communications and financial advertising.
Political revenues in 1997 decreased significantly from those in 1996, a
Presidential election year that also included Senate races in Texas and
California and several local and state political issues.
Belo's broadcasting division is comprised of six CBS affiliates, five NBC
affiliates, four ABC affiliates and two FOX stations. Additionally, the top
three Belo stations are each associated with a different national network (ABC
in Dallas, CBS in Houston and NBC in Seattle). This unique network balance
allows Belo to have stable revenues despite variations in network performance,
such as with prime-time programming and special events like the Olympics and the
Superbowl. Year-to-year spot revenue increases by affiliate group were as
follows: ABC, 6.1 percent; CBS, 1.1 percent; and NBC, 2.5 percent.
12
<PAGE> 15
Broadcast operating cash flow for 1997 was $235,375, an increase of 4.1
percent over 1996 operating cash flow of $226,044. Operating cash flow margins
grew slightly to 40.5 percent in 1997 compared to 40.3 percent in 1996. Revenues
increased 3.6 percent, while cash expenses increased 3.2 percent. Salaries,
wages and employee benefits expense was up 4.3 percent due to a greater number
of employees, normal merit increases and higher bonuses. Programming expenses
were 3.6 percent higher in 1997 due to increased rates for certain first-run
programming. These increases were offset by savings of 8 percent in advertising
and promotion expense, due to several significant advertising campaigns in 1996
that were not repeated in 1997.
Newspaper publishing
Newspaper publishing revenues increased 7.2 percent in 1997. Revenues were
up at The Dallas Morning News ("TDMN") by 7.5 percent. Providence
Journal-Bulletin ("PJB") revenues improved 7.8 percent while The
Press-Enterprise ("P-E") revenues were up 6.7 percent. Advertising revenues
comprised 84 percent of total 1997 newspaper publishing revenues while
circulation contributed 13 percent. Commercial printing contributed most of the
remainder.
Newspaper advertising volume is measured in column inches. Volume for TDMN
and PJB was as follows (in thousands):
<TABLE>
<CAPTION>
TDMN PJB
---------------------------------- ----------------------------------
Years ended December 31, 1997 1996 1997 1996
- -------------------------------------------- ----------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Full-run ROP inches (1):
Classified 2,053 2,057 548 527
Retail 1,485 1,435 754 730
General 327 296 74 70
----- ----- ----- -----
Total 3,865 3,788 1,376 1,327
- -------------------------------------------- ----------------- ---------------- ---------------- -----------------
</TABLE>
(1) Full-run ROP inches refers to the number of column inches of
display and classified advertising that is printed and distributed
in all editions of the newspaper. During the periods indicated
above, TDMN ran more full-run ROP advertising than any other
newspaper in the United States, according to Competitive Media
Reporting.
Classified advertising revenue at TDMN increased 11.2 percent despite
relatively flat volumes, due to higher average rates. Employment advertising led
the improvement in classified over last year with increases in both volume and
rate, while automotive and real estate advertising had higher rates but lower
volumes. Retail advertising at TDMN increased 7.7 percent due to a 3.5 percent
increase in volume combined with a 4.1 percent increase in average rates. A 7.9
percent increase in general advertising revenue was driven by a 10.5 percent
volume increase, primarily in the technology category, slightly offset by lower
average rates. While year-to-year circulation volumes were relatively unchanged,
circulation revenue at TDMN was down 3.4 percent due to changes in circulation
mix between home delivery and single-copy sales.
Advertising revenues at PJB increased 8.1 percent due to across-the-board
rate increases effective January 1, 1997, PJB's first rate increases since
October 1, 1995. Classified revenues in 1997 increased 12.5 percent over the
prior year, due primarily to the rate increases in the employment and automotive
categories. Volumes were also up 4 percent in classified advertising. Retail
advertising revenues were 11.6 percent higher than last year, due to the higher
rates and to a lesser extent, increased volumes of 3.3 percent. On average,
retail rates were up 9.6 percent over last year. Contributing to the volume
gains in 1997 were improvements in automotive and telecommunication advertising
and gains from a new monthly Health & Fitness section. General advertising
revenue was down slightly from last year as airline advertising, which was
significant in 1996 due to the opening of a new airport in Providence, was
replaced in 1997 by lower-rate automotive advertising. Circulation revenue for
PJB was up slightly due to increases in Sunday prices in February 1996 and daily
home delivery prices in January 1997, which were offset by volume declines of 1
percent and 2.4 percent for daily and Sunday, respectively.
The majority of P-E's 1997 revenue improvement over 1996 was attributable
to classified advertising, which was up 11.8 percent due to higher rates, offset
somewhat by a reduction in volume. Circulation revenues for P-E were up 2.6
percent due to both rate and volume increases over last year.
13
<PAGE> 16
Operating cash flow for newspaper publishing was $219,591 in 1997 and
$165,277 in 1996, resulting in operating cash flow margins of 28.5 percent and
23 percent, respectively. The 32.9 percent increase in operating cash flow and
corresponding improvement in operating cash flow margin were due to the 7.2
percent increase in revenues while cash expenses were substantially unchanged.
Newsprint, ink and other supplies expense was 13.5 percent lower than last year,
due primarily to lower prices for newsprint, offset somewhat by increased
consumption. Salaries, wages and employee benefits expense in 1997 was 4 percent
higher due to a greater number of employees and merit increases. Other operating
expenses were up 10.5 percent over last year due to increases in distribution
expenses, outside services, features and news services, solicitation fees,
advertising and promotion, and bad debt expense.
1996 COMPARED TO 1995
Consolidated results
The Company recorded 1996 net earnings of $87,505 or $2.11 per share,
compared to $66,576 or $1.68 per share in 1995. Excluding non-recurring items in
both periods, adjusted earnings per share were $2.05 for 1996 compared to $1.66
in 1995.
Depreciation and amortization expense for 1996 was $65,183 compared to
$59,447 in 1995. Expense was higher in 1996 due to the full-year effect of
amortization of goodwill and intangibles and depreciation expense associated
with the acquisitions of KIRO-TV in February 1995, The Eagle in December 1995
and the Messenger-Inquirer in January 1996.
Interest expense in 1996 was $27,643 compared to $29,987 in 1995. The
decrease in interest expense was primarily due to lower average rates, which
were approximately 5.7 percent for 1996 compared to 6.3 percent in 1995. Average
debt outstanding for the year was slightly lower than in 1995 as well. Belo used
the proceeds from its May 1996 equity offering to retire approximately $198,500
in revolving debt. However, borrowings increased substantially during the fourth
quarter of 1996 as Belo purchased 8,321,700 shares of treasury stock for an
aggregate purchase price of $306,146.
The effective tax rates for 1996 and 1995 of 39.2 percent and 40 percent,
respectively, were substantially unchanged.
Broadcasting
Broadcast revenues in 1996 were $333,396, an increase of 3.3 percent over
1995 revenues of $322,642. Results for 1995 included only 11 months of revenue
for KIRO-TV, which was purchased on February 1, 1995. On a same-station basis,
1996 revenues increased 2.5 percent over 1995.
The increase in 1996 broadcast revenues over the prior year was primarily
due to political advertising associated with the Presidential election, Senate
races in Texas and California and issues advertising. Local advertising revenues
also improved over 1995 due primarily to a contract between the Seattle Mariners
and UPN affiliate KIRO. Both local and national revenues were up at WWL in New
Orleans, as advertisers favored this long-established market leader when other
stations in the New Orleans market switched network affiliations in the first
part of 1996. These increases in revenues were offset by declining national
advertising. Stiff competition from NBC's prime-time lineup and Olympics
programming, as well as weak national sales in Dallas and Houston, combined for
decreased national revenues of 2.7 percent.
Broadcast operating cash flow for 1996 was $122,837, up slightly from 1995
operating cash flow of $121,716. Operating cash flow margins were 36.8 percent
in 1996 and 37.7 percent in 1995. Excluding the effect of KIRO in January of
1996, earnings from operations and margins improved only slightly. Salaries,
wages and employee benefits increased 7.1 percent (5.5 percent on a same-station
basis) due primarily to a greater number of employees, merit increases and
overtime associated with election coverage. Programming expense in 1996 was also
up significantly, due to the Seattle Mariners contract and more syndicated
programming at KIRO. Programming costs
14
<PAGE> 17
also increased slightly at other stations for certain syndicated programming.
These increases were partially offset by the elimination of a weekly news show
in Dallas and the cancellation of the Oakland A's contract in Sacramento.
Newspaper publishing
In 1996, newspaper publishing revenues represented 59.1 percent of total
revenues, compared to 55.6 percent in 1995. The increased contribution to total
revenues was partly due to the acquisitions of The Eagle in December 1995 and
the Messenger-Inquirer in January 1996. In addition, the Company's principal
newspaper, TDMN, had a revenue increase of nearly 13 percent over 1995.
Advertising revenues accounted for approximately 87 percent of publishing
revenues, while circulation revenues represented approximately 11 percent. Other
publishing revenues, primarily commercial printing, contributed the remainder.
Newspaper advertising volume for TDMN was as follows:
<TABLE>
<CAPTION>
------------------------------ -------------------------------------- -----------------------------
Years ended December 31, 1996 1995
------------------------------ -------------------------------------- -----------------------------
<S> <C> <C>
Full-run ROP inches:
Classified 2,057 2,125
Retail 1,435 1,429
General 296 254
------ ------
Total 3,788 3,808
------------------------------ -------------------------------------- -----------------------------
</TABLE>
Revenues from newspaper publishing in 1996 were $487,242, an increase of
19.1 percent over 1995 revenues of $409,099. Excluding the effect of the
recently acquired newspapers, revenues increased 12.4 percent. The full year
effect of two advertising rate increases in 1995, combined with additional rate
increases in January 1996, contributed the majority of the year-over-year
revenue improvement at TDMN. The rate increases were implemented in response to
escalating newsprint prices throughout 1995 and in the first quarter of 1996.
Classified advertising linage fell 3.2 percent as a result of the rate
increases, which were higher in classified than in other advertising categories.
Retail advertising volume was relatively unchanged over last year, with
additional grocery store ads offsetting declines in department store
advertising. General advertising linage improved 16.5 percent despite the higher
rates, with significant gains in the technology and automotive categories.
TDMN's preprint, total market coverage ("TMC") and other advertising revenues
increased 7.8 percent, primarily due to more TMC participation. Circulation
revenues were up nearly 10 percent over last year due to an October 1995
increase in the daily single-copy rate from $.25 to $.50 and a February 1996
increase in the home delivery rate. Circulation volumes declined slightly from
534,197 in 1995 to 513,099 in 1996 for daily and from 800,147 in 1995 to 785,934
in 1996 for Sunday delivery due primarily to these rate increases.
Newspaper publishing operating cash flow for 1996 was $128,118 compared to
$90,915 in 1995, an increase of 40.9 percent. Excluding the effect of the
newspaper acquisitions, operating cash flow increased 32.1 percent. The
operating cash flow margin for 1996 of 26.3 percent (26.1 percent without the
new newspapers) improved over the 1995 operating cash flow margin of 22.2
percent due to a combination of factors. While revenues increased 19.1 percent,
expenses increased only 13.3 percent. Other production, distribution and
operating expenses at TDMN were up the most compared to last year, due to higher
TMC distribution expenses, transportation costs, advertising and promotion and
outside services associated with election coverage, research and temporary help.
Salaries, wages and employee benefits were also higher than last year due to
more employees and higher performance bonuses. Newsprint, ink and other supplies
expense was up 6.5 percent (3.6 percent excluding the new newspapers) over last
year due to higher cost per ton, offset somewhat by lower consumption due to
decreased circulation. There have been significant fluctuations in newsprint
prices in recent years. Prices began increasing in mid 1994 from a low of $413
per metric ton to a high of nearly $745 per metric ton in February 1996 before
declining to approximately $510 per metric ton in December.
15
<PAGE> 18
LIQUIDITY AND CAPITAL RESOURCES
(dollars in thousands, except per share amounts)
Long-term debt increased $982,188 from December 31, 1996 to December 31,
1997 due primarily to the purchase of PJC. Specifically, Belo paid $587,096 to
shareholders of PJC, incurred approximately $100,000 in employee and transaction
costs and assumed $200,000 of PJC's debt. Also in connection with the PJC
acquisition, the Company issued 25,394,564 shares of Series A Common Stock. The
Gleaner, P-E and KENS acquisitions also resulted in increases in long-term debt.
Net cash provided by operations, bank borrowings and bond indebtedness are
the Company's primary sources of liquidity. On an as reported basis, 1997 net
cash provided by operations was $256,418, compared to $164,421 in 1996. The
increase was due primarily to higher cash earnings (defined as net earnings plus
depreciation and amortization) and timing of payments for income taxes resulting
from acquisition related transactions, including taxes on the gain related to
the disposal of TVFN. Other net working capital changes also resulted in
slightly higher cash flow provided by operations, due mostly to the timing of
cash payments and receipts. Net cash provided by operations was sufficient to
fund capital expenditures and common stock dividends.
During 1997, the Company issued $1 billion in fixed-rate debt securities as
follows: $250,000 of 5-year 6-7/8% Senior Notes; $300,000 of 10-year 7-1/8%
Senior Notes; $200,000 of 30-year 7-3/4% Senior Debentures; and $250,000 of
30-year 7-1/4% Senior Debentures. The weighted average effective interest rate
for these debt instruments is 7.3 percent. The Company also has $500,000
available for issuance under a shelf registration statement filed in April 1997.
The proceeds of the current year fixed-rate debt offerings were used to
refinance variable-rate debt. Future issues of fixed-rate debt may also be used
to refinance variable-rate debt in whole or in part.
At December 31, 1997, the Company had a $1 billion five-year variable-rate
revolving credit agreement with a syndicate of 27 banks led by The Chase
Manhattan Bank, Bank of Tokyo-Mitsubishi, Ltd., Bank of America NT & SA, and
NationsBank of Texas, N.A. under which borrowings were $570,000. This agreement
had previously provided a credit line of $1.5 billion, but was renegotiated
effective August 29, 1997. In addition, a $500,000 364-day credit facility was
canceled during 1997. The Company had $18,000 of short-term unsecured notes
outstanding at December 31, 1997. These borrowings may be converted at the
Company's option to revolving debt. Accordingly, such borrowings are classified
as long-term in the Company's financial statements.
The Company is required to maintain certain ratios as of the end of each
quarter, as defined in its revolving credit agreement. For the four quarters
ended December 31, 1997, the Company's ratio of funded debt to pro forma
operating cash flow, which is not to exceed 5.0, was 3.9. The Company's interest
coverage ratio for the four quarters ended December 31, 1997 was 3.8 compared to
a minimum coverage requirement of 2.5 times.
At December 31, 1997, the Company had authority from the Board of Directors
for the purchase of up to approximately 5,337,000 treasury shares. No treasury
share purchases were made during 1997. All previously acquired treasury shares
have been retired effective December 31, 1997.
The Company paid dividends of $24,428 or 44 cents per share on Series A and
Series B Common Stock outstanding during 1997, compared to $16,392 or 41 cents
per share in 1996. The higher dividends in 1997 were due to a higher dividend
rate and the shares issued in the PJC acquisition.
During 1997, capital expenditures were $83,317 for additional production
equipment and major building renovations at TDMN, a building and studio
remodeling project at WFAA, broadcast equipment for each of the Company's other
television stations and the purchase of new equipment for the Company's
publishing operations. Total capital expenditures in 1998 are expected to be
approximately $115,000, including around $30,000 for the conversion to digital
television. Approximately one-half of the amount for digital television is
expected to be spent at the Company's three largest stations in 1998. The
remaining portion will be spent at smaller market stations to prepare for their
conversion to digital television over the next several years. The Company
expects to spend a total of approximately $150,000 (including the $30,000 to be
expended in 1998) over the next five years to convert to digital television.
Also included in 1998 is a capital investment of approximately $15,000 for a
Texas cable news
16
<PAGE> 19
facility. The channel, which will combine the news gathering efforts of the
Company's Dallas, Houston and San Antonio properties, is expected to be launched
in January 1999.
As of December 31, 1997, required future payments for capital projects in
1998 were $12,657. The Company expects to finance future capital expenditures
using cash generated from operations and, when necessary, borrowings under the
revolving credit agreement.
The Company believes its current financial condition and credit
relationships are adequate to fund both its current obligations as well as
near-term growth.
OTHER MATTERS
Year 2000
Management has initiated an enterprise-wide evaluation to assess the
ability of the Company's computer systems and applications to properly execute
transactions in the Year 2000. The Company believes its Year 2000 issues will be
mitigated by the implementation of previously planned system replacements, which
are expected to be completed in the near term. Costs associated with these
system replacements have been included in the Company's capital plan (see
"Liquidity and Capital Resources"). The Company has also incurred expenses
related to assessing exposures and modifying certain systems, which totaled
$2,800 for the year ended December 31, 1997. The Company does not expect
expenses related to Year 2000 over the next two years to be material.
While the Company expects its Year 2000 projects to be completed on a
timely basis, there can be no assurance that systems of third parties which the
Company may rely upon will be timely converted, the impact of which cannot be
determined at this time.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The market risk inherent in the Company's financial instruments represents
the potential loss arising from adverse changes in interest rates. The Company's
strategy in managing its exposure to interest rate changes is to maintain a
balance of fixed and variable-rate debt instruments. See Note 3 to the
Consolidated Financial Statements for information concerning the contractual
interest rates of the Company's debt. At December 31, 1997, the fair value of
the Company's fixed-rate debt is estimated to be $1,024,515 using quoted market
prices and yields obtained through independent pricing sources, taking into
consideration the underlying terms of the debt, such as the coupon rate and term
to maturity. Such fair value exceeded the carrying value of fixed-rate debt at
December 31, 1997 by $24,515.
Market risk is estimated as the potential change in fair value resulting
from a hypothetical 10 percent change in interest rates and, on the Company's
fixed-rate debt, amounts to $61,964 at December 31, 1997. The Company also had
$588,000 in variable-rate debt outstanding at December 31, 1997. A hypothetical
10 percent change in interest rates underlying these borrowings would result in
a $3,587 annual change in the Company's pre-tax earnings and cash flows.
In addition to interest rate risk, the Company has exposure to changes in
the price of newsprint. The average price of newsprint may rise as much as 13 to
14 percent in 1998, although future price changes cannot be predicted with
certainty. The Company historically has managed such risk through a combination
of rate increases and other expense reductions.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements, together with the Report of
Independent Auditors, are included elsewhere in 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.
17
<PAGE> 20
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 13, 1998, 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 13,
1998, 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 13, 1998, is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the heading "Certain Transactions"
contained in the definitive Proxy Statement for the Company's Annual Meeting of
Shareholders to be held on May 13, 1998, 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
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.
18
<PAGE> 21
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
2.1 * Amended and Restated Agreement and Plan of Merger, dated as
of September 26, 1996 (Appendix A of the Joint Proxy
Statement/Prospectus of Belo and Providence Journal included
in Belo's Registration Statement on Form S-4 (Registration No.
333-19337) filed with the Commission on January 8, 1997)
3.1 * Certificate of Incorporation of the Company (Exhibit 3.1 to
the Company's Amended Annual Report on Form 10-K/A dated April
8, 1996 (the "1995 Form 10-K/A"))
3.2 * Certificate of Correction to Certificate of Incorporation dated
May 13, 1987 (Exhibit 3.2 to the 1995 Form 10-K/A)
3.3 * Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company dated April 16, 1987 (Exhibit 3.3
to the 1995 Form 10-K/A)
3.4 * Certificate of Amendment of Certificate of Incorporation of the
Company dated May 4, 1988 (Exhibit 3.4 to the 1995 Form 10-K/A)
3.5 * Certificate of Amendment of Certificate of Incorporation of
the Company dated May 3, 1995 (Exhibit 3.5 to the Company's
Annual Report on Form 10-K dated February 28, 1996 (the "1995
Form 10-K"))
3.6 * Amended Certificate of Designation of Series A Junior
Participating Preferred Stock of the Company dated May 4, 1988
(Exhibit 3.6 to the 1995 Form 10-K/A)
3.7 * Certificate of Designation of Series B Common Stock of the
Company dated May 4, 1988 (Exhibit 3.7 to the 1995 Form 10-K/A)
3.8 Amended and Restated Bylaws of the Company, effective February
13, 1998
4.1 Certain rights of the holders of the Company's Common Stock are
set forth in Exhibits 3.1-3.8 above.
4.2 Specimen Form of Certificate representing shares of the
Company's Series A Common Stock
4.3 Specimen Form of Certificate representing shares of the
Company's Series B Common Stock
4.4 * Amended and Restated Form of Rights Agreement as of February
28, 1996 between the Company and Chemical Mellon Shareholder
Services, L.L.C., a New York banking corporation (Exhibit 4.4 to
the 1995 Form 10-K)
4.5 * Supplement No. 1 to Amended and Restated Rights Agreement
between the Company and The First National Bank of Boston dated
as of November 11, 1996 (Exhibit 4.5 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended September 30,
1996)
4.6 Instruments defining rights of debt securities:
(1)* Indenture dated as of June 1, 1997 between the Company
and The Chase Manhattan Bank, as Trustee (Exhibit 4.6(1)
to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1997 (the "2nd Quarter
1997 Form 10-Q"))
19
<PAGE> 22
EXHIBIT
NUMBER DESCRIPTION
(2) * (a) $200 million 6-7/8% Senior Note due 2002 (Exhibit 4.6 (2)(a)
to the 2nd Quarter 1997 Form 10-Q)
* (b) $50 million 6-7/8% Senior Note due 2002 (Exhibit 4.6 (2)(b)
to the 2nd Quarter 1997 Form 10-Q)
(3) * (a) $200 million 7-1/8% Senior Note due 2007 (Exhibit 4.6 (3)(a)
to the 2nd Quarter 1997 Form 10-Q)
* (b) $100 million 7-1/8% Senior Note due 2007 (Exhibit 4.6 (3)(b)
to the 2nd Quarter 1997 Form 10-Q)
(4) * $200 million 7-3/4% Senior Debenture due 2027 (Exhibit 4.6 (4)
to the 2nd Quarter 1997 Form 10-Q)
(5) * Officer's Certificate dated June 13, 1997 establishing
terms of debt securities pursuant to Section 3.1 of the
Indenture (Exhibit 4.6 (5) to the 2nd Quarter 1997 Form
10-Q)
(6) * (a) $200 million 7-1/4% Senior Debenture due 2027
(Exhibit 4.6 (6)(a) to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended
September 30, 1997 (the "3rd Quarter 1997 Form
10-Q"))
* (b) $50 million 7-1/4% Senior Debenture due 2027
(Exhibit 4.6 (6) (b) to the 3rd Quarter 1997 Form 10-Q)
(7) * Officer's Certificate dated September 26, 1997
establishing terms of debt securities pursuant to
Section 3.1 of the Indenture (Exhibit 4.6 (7) to the 3rd
Quarter 1997 Form 10-Q)
10.1 Contracts relating to television broadcasting:
(1) * Form of Agreement for Affiliation between WFAA-TV in
Dallas, Texas and ABC (Exhibit 10.1 (1) to the 1995 Form
10-K/A)
10.2 Financing agreements:
(1) * Amended and Restated Credit Agreement (Five-year
$1,000,000,000 revolving credit and competitive advance
facility dated as of August 29, 1997 among the Company
and The Chase Manhattan Bank, as Administrative Agent
and Competitive Advance Facility Agent, Bank of America
National Trust and Savings Association and Bank of
Tokyo-Mitsubishi, Ltd. as Co-Syndication Agents, and
NationsBank as Documentation Agent) (Exhibit 10.2 (1) to
the 3rd Quarter 1997 Form 10-Q)
10.3 Compensatory plans:
~(1) The A. H. Belo Corporation Employee Savings and Investment Plan:
(a) The A. H. Belo Corporation Employee Savings and Investment
Plan Amended and Restated January 1, 1998
(b) Restated Master Trust Agreement between the Company
and Fidelity Management Trust Company, as restated
and dated March 13, 1998
20
<PAGE> 23
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
~(2) The A. H. Belo Corporation 1986 Long-Term Incentive Plan:
* (a) The A. H. Belo Corporation 1986 Long-Term Incentive Plan
(Effective May 3, 1989, as amended by Amendments 1, 2, 3, 4,
and 5) (Exhibit 10.3 (2) to the Company's Annual Report on
Form 10-K dated March 10, 1997 (the "1996 Form 10-K"))
(b) Amendment No. 6 to 1986 Long-Term Incentive Plan
* (c) Amendment No. 7 to 1986 Long-Term Incentive Plan
(Exhibit 10.3(9) to the 1995 Form 10-K)
~(3) A. H. Belo Corporation 1995 Executive Compensation Plan as
restated to incorporate amendments through December 4, 1997
~(4) * Management Security Plan (Exhibit 10.3 (1) to the 1996 Form 10-K)
~(5) A. H. Belo Corporation Supplemental Executive Retirement Plan:
* (a) A. H. Belo Corporation Supplemental Executive Retirement Plan
(Exhibit 10.3(27) to the Company's Annual Report on Form 10-K
dated March 18, 1994 (the "1993 Form 10-K"))
* (b) Trust Agreement dated February 28, 1994, between the Company
and Mellon Bank, N.A. (Exhibit 10.3(28) to the 1993
Form 10-K)
12 Ratio of Earnings to Fixed Charges
21 Subsidiaries of the Company
23 Consent of Ernst & Young LLP
27 Financial Data Schedule (filed electronically with the Securities and
Exchange Commission)
99 Unaudited Pro Forma Combined Condensed Statements of Earnings
reflecting the acquisition of the Providence Journal Company and the
exchange of Television Food Network for KENS-TV for the year ended
December 31, 1997
(b) Reports on Form 8-K.
During the last quarter covered by this report, a report on Form 8-K/A was
filed on October 30, 1997, containing information under Item 2.
"Acquisition or Disposition of Assets," and Item 7. "Financial Statements,
Pro Forma Financial Information and Exhibits" concerning the acquisition of
KENS-TV and the disposition of TVFN.
21
<PAGE> 24
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
Chairman of the Board, President
& Chief Executive Officer
Dated: March 18, 1998
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/ Chairman of the Board, President March 18, 1998
- ------------------------------------ & Chief Executive Officer
Robert W. Decherd
/s/ Vice Chairman of the March 18, 1998
- ------------------------------------ Board and President,
Ward L. Huey, Jr. Broadcast Division
/s/ Director, President, Publishing March 18, 1998
- ------------------------------------ Division and Publisher,
Burl Osborne The Dallas Morning News
/s/ Director March 18, 1998
- ------------------------------------
John W. Bassett, Jr.
/s/ Director March 18, 1998
- ------------------------------------
Henry P. Becton, Jr.
/s/ Director March 18, 1998
- ------------------------------------
Fanchon M. Burnham
/s/ Director March 18, 1998
- ------------------------------------
Judith L. Craven, M.D., M.P.H.
/s/ Director March 18, 1998
- ------------------------------------
Roger A. Enrico
/s/ Director March 18, 1998
- ------------------------------------
Peter B. Freeman
/s/ Director March 18, 1998
- ------------------------------------
Stephen Hamblett
/s/ Director March 18, 1998
- ------------------------------------
Dealey D. Herndon
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Director March 18, 1998
- ------------------------------------
Lester A. Levy
/s/ Director March 18, 1998
- ------------------------------------
Arturo Madrid, Ph.D.
/s/ Director and Former March 18, 1998
- ------------------------------------ Chairman of the Board
James M. Moroney, Jr.
/s/ Director March 18, 1998
- ------------------------------------
Hugh G. Robinson
/s/ Director March 18, 1998
- ------------------------------------
William T. Solomon
/s/ Director March 18, 1998
- ------------------------------------
Thomas B. Walker, Jr.
/s/ Director March 18, 1998
- ------------------------------------
J. McDonald Williams
/s/ Senior Corporate Vice President and March 18, 1998
- ------------------------------------ Chief Financial Officer
Michael D. Perry
</TABLE>
23
<PAGE> 26
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, 1997 and 1996, and the related
consolidated statements of earnings, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, 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, 1997 and 1996, and the consolidated
results of their operations and cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted accounting
principles.
/s/ERNST & YOUNG LLP
Dallas, Texas
January 26, 1998
24
<PAGE> 27
CONSOLIDATED STATEMENTS OF EARNINGS
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years ended December 31,
- -------------------------------------------------------------------------------------------------------------------
In thousands, except per share amounts 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET OPERATING REVENUES (Note 2)
Broadcasting $ 536,737 $ 333,396 $322,642
Newspaper publishing 693,777 487,242 409,099
- -------------------------------------------------------------------------------------------------------------------
Other 17,867 3,670 3,602
- -------------------------------------------------------------------------------------------------------------------
Total net operating revenues 1,248,381 824,308 735,343
- -------------------------------------------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Salaries, wages and employee benefits (Notes 5 and 6) 391,726 231,856 204,833
Other production, distribution and operating costs (Note 7) 328,719 215,295 196,506
Newsprint, ink and other supplies 152,141 146,325 137,994
Depreciation 73,089 45,408 42,270
Amortization 61,904 19,775 17,177
- -------------------------------------------------------------------------------------------------------------------
Total operating costs and expenses 1,007,579 658,659 598,780
- -------------------------------------------------------------------------------------------------------------------
Earnings from operations 240,802 165,649 136,563
- -------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND EXPENSE
Interest expense (Note 3) (90,778) (27,643) (29,987)
Other, net (Note 9) 4,098 6,034 4,438
- -------------------------------------------------------------------------------------------------------------------
Total other income and expense (86,680) (21,609) (25,549)
- -------------------------------------------------------------------------------------------------------------------
EARNINGS
Earnings before income taxes 154,122 144,040 111,014
Income taxes (Note 4) 71,150 56,535 44,438
- -------------------------------------------------------------------------------------------------------------------
Net earnings $ 82,972 $ 87,505 $ 66,576
=========================================
Net earnings per share (Note 10):
Basic $1.43 $2.14 $1.71
Diluted $1.42 $2.11 $1.68
Weighted average shares outstanding (Note 10):
Basic 57,846 40,890 39,033
Diluted 58,561 41,502 39,534
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
25
<PAGE> 28
CONSOLIDATED BALANCE SHEETS
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
ASSETS December 31,
- -------------------------------------------------------------------------------------------------------------------
In thousands 1997 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and temporary cash investments $ 11,852 $ 13,829
Accounts receivable (net of allowance of $8,314
and $5,276 in 1997 and 1996, respectively) 220,297 129,976
Inventories 20,356 13,873
Deferred income taxes (Note 4) 12,626 5,692
Other current assets 11,865 8,555
- -------------------------------------------------------------------------------------------------------------------
Total current assets 276,996 171,925
Property, plant and equipment, at cost:
Land 70,710 27,468
Buildings and improvements 259,594 169,784
Broadcast equipment 222,523 165,752
Newspaper publishing equipment 278,037 212,401
Other 92,222 61,025
Advance payments on plant and equipment
expenditures (Note 7) 30,146 21,765
- -------------------------------------------------------------------------------------------------------------------
Total property, plant and equipment 953,232 658,195
Less accumulated depreciation 344,914 287,415
- -------------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net 608,318 370,780
Intangible assets, net (Note 2) 2,626,953 582,248
Other assets (Note 5) 110,687 99,119
- -------------------------------------------------------------------------------------------------------------------
Total assets $3,622,954 $1,224,072
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE> 29
CONSOLIDATED BALANCE SHEETS (CONTINUED)
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY December 31,
- -------------------------------------------------------------------------------------------------------------------
In thousands, except share and per share data 1997 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 43,818 $ 26,239
Accrued compensation and benefits 69,643 31,440
Other accrued expenses 41,374 10,326
Income taxes payable (Note 4) 29,355 7,908
Advance subscription payments 18,327 10,557
Accrued interest payable 11,945 2,843
- -------------------------------------------------------------------------------------------------------------------
Total current liabilities 214,462 89,313
Long-term debt (Note 3) 1,614,045 631,857
Deferred income taxes (Note 4) 435,695 121,808
Other liabilities 32,748 10,611
Commitments and contingent liabilities (Note 7)
Shareholders' equity (Notes 6 and 8):
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 52,998,586 and 35,404,850 shares
at December 31, 1997 and 1996, respectively; 88,508 59,126
Series B: Issued 9,283,001 and 9,177,133 shares
at December 31, 1997 and 1996, respectively. 15,503 15,326
Additional paid-in capital 1,015,345 302,737
Retained earnings 207,420 301,316
- -------------------------------------------------------------------------------------------------------------------
Total 1,326,776 678,505
Less cost of 8,321,700 shares of Series A treasury stock - 306,146
Less deferred compensation - restricted shares 772 1,876
- -------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 1,326,004 370,483
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $3,622,954 $1,224,072
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
27
<PAGE> 30
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, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK
Additional
Shares Shares Paid-in Retained Shares
Series A Series B Amount Capital Earnings Series A
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994 14,238,888 5,621,988 $ 33,168 $ 124,431 $ 230,959 --
Exercise of stock options 405,448 18,590 708 8,674
Change in restricted share valuation 698
Amortization of restricted shares
Forfeiture of restricted shares (27,905) (48) (917)
Tax benefit from long-term
incentive plan 3,427
Two-for-one stock split 15,137,977 4,709,794 33,146 (32,618) (316,000)
Purchase of treasury stock (1,546,848)
Retirement of treasury stock (1,862,848) (3,110) (5,765) (55,053) 1,862,848
Net earnings 66,576
Cash dividends declared
($.315 per share) (12,279)
Conversion of Series B
to Series A 1,070,193 (1,070,193)
- ------------------------------------------ ----------- ----------- ----------- ----------- ----------- ----------
BALANCE AT DECEMBER 31, 1995 28,961,753 9,280,179 $ 63,864 $ 97,930 $ 230,203 --
Exercise of stock options 498,302 2,360 835 9,098
Change in restricted share valuation 7
Amortization of restricted shares
Tax benefit from long-term
incentive plan 3,589
Employer's matching contribution to
Savings and Investment Plan 89,389 150 3,214
Sale of stock 5,750,000 9,603 188,899
Purchase of treasury stock (8,321,700)
Net earnings 87,505
Cash dividends declared
($.41 per share) (16,392)
Conversion of Series B
to Series A 194,795 (194,795)
- ------------------------------------------ ----------- ----------- ----------- ----------- ----------- ----------
BALANCE AT DECEMBER 31, 1996 35,404,850 9,177,133 $ 74,452 $ 302,737 $ 301,316 (8,321,700)
Exercise of stock options 416,446 110,239 880 11,046
Stock issued in acquisition of PJC 25,394,564 42,409 827,990
Change in restricted share valuation 672
Amortization of restricted shares
Tax benefit from long-term
incentive plan 4,560
Employer's matching contribution
to Savings and Investment Plan 100,055 167 4,005
Adjustment to unrealized gains
on available-for-sale securities,
net of tax 4,144
Retirement of treasury stock (8,321,700) (13,897) (135,665) (156,584) 8,321,700
Net earnings 82,972
Cash dividends declared
($.44 per share) (24,428)
Conversion of Series B
to Series A 104,426 (104,426)
- ------------------------------------------ ----------- ----------- ----------- ----------- ----------- ----------
BALANCE AT DECEMBER 31, 1997 52,998,586 9,283,001 $ 104,011 $ 1,015,345 $ 207,420 --
- ------------------------------------------ ----------- ----------- ----------- ----------- ----------- ----------
<CAPTION>
- -------------------------------------------------------------------------------------------
In thousands, except share and per share amounts
- -------------------------------------------------------------------------------------------
TREASURY STOCK Deferred
Compensation-
Restricted
Amount Shares Total
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994 $ -- $ (6,023) $ 382,535
Exercise of stock options 9,382
Change in restricted share valuation (698) --
Amortization of restricted shares 2,718 2,718
Forfeiture of restricted shares 470 (495)
Tax benefit from long-term
incentive plan 3,427
Two-for-one stock split (528) --
Purchase of treasury stock (63,400) (63,400)
Retirement of treasury stock 63,928 --
Net earnings 66,576
Cash dividends declared
($.315 per share) (12,279)
Conversion of Series B
to Series A --
- ------------------------------------------ ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1995 $ -- $ (3,533) $ 388,464
Exercise of stock options 9,933
Change in restricted share valuation (7) --
Amortization of restricted shares 1,664 1,664
Tax benefit from long-term
incentive plan 3,589
Employer's matching contribution to
Savings and Investment Plan 3,364
Sale of stock 198,502
Purchase of treasury stock (306,146) (306,146)
Net earnings 87,505
Cash dividends declared
($.41 per share) (16,392)
Conversion of Series B
to Series A --
- ------------------------------------------ ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1996 $ (306,146) $ (1,876) $ 370,483
Exercise of stock options 11,926
Stock issued in acquisition of PJC 870,399
Change in restricted share valuation (672) --
Amortization of restricted shares 1,776 1,776
Tax benefit from long-term
incentive plan 4,560
Employer's matching contribution
to Savings and Investment Plan 4,172
Adjustment to unrealized gains
on available-for-sale securities,
net of tax 4,144
Retirement of treasury stock 306,146 --
Net earnings 82,972
Cash dividends declared
($.44 per share) (24,428)
Conversion of Series B
to Series A --
- ------------------------------------------ ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1997 $ -- $ (772) $ 1,326,004
- ------------------------------------------ ----------- ----------- -----------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
28
<PAGE> 31
CONSOLIDATED STATEMENTS OF CASH FLOWS
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
CASH PROVIDED (USED) Years ended December 31,
- -------------------------------------------------------------------------------------------------------------------
In thousands 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS
Net earnings $ 82,972 $ 87,505 $ 66,576
Adjustments to reconcile net earnings to net cash
provided by operations:
Depreciation and amortization 134,993 65,183 59,447
Deferred income taxes (4,198) 6,610 6,823
Other, net 8,443 1,671 (3,807)
Net change in current assets and liabilities:
Accounts receivable (21,244) (11,867) (19,732)
Inventories and other current assets (3,859) 3,669 (12,918)
Accounts payable 8,808 (1,003) 1,270
Accrued compensation and benefits 9,931 5,207 (2,043)
Other accrued liabilities 12,735 785 2,796
Income taxes payable 27,837 6,661 (1,811)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operations 256,418 164,421 96,601
- -------------------------------------------------------------------------------------------------------------------
INVESTMENTS
Capital expenditures (83,317) (49,800) (40,830)
Acquisitions (946,259) (74,091) (217,428)
Sale of investment 3,045 3,750 -
Other, net 1,124 (3,788) 4,506
- -------------------------------------------------------------------------------------------------------------------
Net cash used for investments (1,025,407) (123,929) (253,752)
- -------------------------------------------------------------------------------------------------------------------
FINANCING
Net proceeds from sale of stock - 198,502 -
Borrowings for acquisitions 1,100,545 75,180 216,934
Refinancing of Providence Journal debt (200,000) - -
Net proceeds from fixed-rate debt offerings 989,994 - -
Net proceeds from (payments on) revolving debt (1,111,025) (586) 10,066
Payments of dividends on stock (24,428) (16,392) (12,279)
Net proceeds from exercise of stock options 11,926 9,933 9,382
Purchase of treasury stock - (306,146) (63,400)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing 767,012 (39,509) 160,703
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and
temporary cash investments (1,977) 983 3,552
- -------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at beginning of year 13,829 12,846 9,294
Cash and temporary cash investments at end of year $ 11,852 $ 13,829 $ 12,846
- -------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES (Note 11)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
29
<PAGE> 32
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.
All dollar amounts are in thousands except per share amounts, unless
otherwise indicated. Certain amounts for prior years have been
reclassified to conform to the current year presentation.
B) Cash and Temporary Cash Investments The Company considers all highly
liquid 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 are carried at
fair value.
C) Accounts Receivable Accounts receivable are net of a valuation reserve
that represents an estimate of amounts considered uncollectible.
Expense for such uncollectible amounts, which is included in other
production, distribution and operating costs, was $9,273, $5,647 and
$5,888 in 1997, 1996 and 1995, respectively. Accounts written off
during these years were $9,988, $4,535 and $5,683, 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 5-30 years
Broadcast equipment 5-15 years
Newspaper publishing equipment 5-20 years
Other 3-10 years
- -------------------------------------------------------------
</TABLE>
F) Intangible Assets, Net Intangible assets, net consists of excess cost
over values assigned to tangible assets of purchased subsidiaries and
is amortized primarily on a straight-line basis over 40 years.
Accumulated amortization of intangible assets was $218,067 and $163,278
at December 31, 1997 and 1996, respectively. The carrying values of all
intangible assets are periodically reviewed to determine whether
impairment exists, and adjustments to net realizable value are made as
needed. No such adjustments were required in 1997.
G) Other Assets The Company has classified its investments in equity
securities with readily determinable fair values as available-for-sale.
These equity securities are included in Other assets and are reported
at fair value, with unrealized gains and losses excluded from income
and reported as a component of shareholders' equity, net of tax.
H) Stock Options Stock options granted to employees are accounted for
using the intrinsic value of the options granted. Because it is the
Company's policy to grant stock options at the market price on the date
of the grant, the intrinsic value is zero, and therefore no
compensation expense is recorded.
I) Use of Estimates The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
30
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
NOTE 2: ACQUISITIONS
- --------------------------------------------------------------------------------
On February 28, 1997, Belo completed the acquisition of The Providence
Journal Company ("PJC") by issuing 25,394,564 shares of Series A Common Stock
and paying $587,096 to former shareholders of PJC. Belo also incurred
approximately $100,000 in employee and transaction costs and refinanced $200,000
of PJC debt. The acquisition has been accounted for as a purchase. The Company's
consolidated financial results for the year ended December 31, 1997 include the
operations of PJC since March 1, 1997 and exclude the results of the Company's
interest in America's Health Network ("AHN"), a cable network acquired as part
of the PJC transaction, but subsequently disposed of effective July 31, 1997.
The results of the Television Food Network ("TVFN"), also acquired as part of
the PJC transaction, are excluded effective July 1, 1997, as a result of the
Company's decision in June to divest its interest in TVFN.
The cost of the PJC acquisition has been allocated on the basis of the
estimated fair market value of the assets acquired and liabilities assumed. This
purchase price allocation resulted in goodwill and intangibles of $1,712,315,
which includes $294,166 of deferred taxes based on book and tax basis
differences of identifiable intangibles. Goodwill and intangibles arising from
the purchase of PJC are being amortized on a straight-line basis over 40 years,
except for the value assigned to the newspaper subscriber list, which is being
amortized over 18 years.
As a result of the PJC acquisition, the Company initially owned two
television stations in the Seattle, Washington market (KIRO and KING). To comply
with FCC regulations that required the Company to divest one of these stations,
the Company completed an exchange of assets among multiple parties on June 2,
1997, whereby KIRO was exchanged for CBS affiliate KMOV-TV in St. Louis,
Missouri. No gain was recorded on this exchange of like-kind assets.
On July 25, 1997, the Company completed the acquisition of the
Press-Enterprise Company ("P-E"), publisher of a daily newspaper serving
Riverside County and the inland southern California area. The transaction has
been accounted for as a purchase. The purchase price allocation, which is based
upon the estimated fair market value of the net assets acquired, is still
preliminary. The Company previously held a 38.45 percent interest in P-E.
On October 15, 1997, Belo exchanged its partnership interest in TVFN and
$75,000 in cash for CBS affiliate KENS-TV ("KENS") in San Antonio, Texas. The
transaction was accounted for as a purchase. The purchase price allocation,
which is based on the estimated fair market value of the net assets acquired, is
still preliminary.
The cash portion of each acquisition was financed through the Company's
revolving credit facility, a portion of which was converted to fixed-rate debt
during the current year. (See Note 3.)
Following is a summary of the combined purchase price allocations for the
current year acquisitions of PJC, P-E and KENS, based on the estimated fair
market value of the assets acquired and liabilities assumed as of the dates of
acquisition:
<TABLE>
<CAPTION>
-------------------------------------------------- ----------------
Combined Purchase Price Allocation
-------------------------------------------------- ----------------
<S> <C>
Current assets $ 109,774
Property, plant and equipment 252,180
Goodwill and other intangible assets 2,047,363
Other assets 43,318
Total liabilities, including deferred taxes (640,528)
-------------
Total $ 1,812,107
-------------------------------------------------- ----------------
</TABLE>
31
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
The pro forma financial results of operations below assume the PJC, P-E and
KENS acquisitions, the KIRO/KMOV exchange and the disposition of TVFN were
completed at the beginning of each of the periods presented and include
adjustments for incremental interest costs, depreciation, amortization and taxes
as they relate to the preliminary purchase price allocations of the transactions
for the years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
- -------------------------------------------- ----------------- -----------------
1997 1996
- -------------------------------------------- ----------------- -----------------
<S> <C> <C>
Net operating revenues $1,360,233 $1,274,738
Net earnings from continuing operations(a) $ 83,910 $ 50,730
Net earnings(b) $ 83,910 $ 48,052
Net earnings per share $ 1.34 $ .72
- --------------------------------------------------------------------------------
</TABLE>
(a) Net earnings from continuing operations for the year ended
December 31, 1997 include a pre-tax gain of $10,672 on the
sale of an investment. Net earnings from continuing
operations for the year ended December 31, 1996 include
pre-tax charges for PJC stock-based compensation ($12,394)
and PJC newspaper restructuring ($1,791). Both periods
exclude the effect of AHN and TVFN.
(b) Net earnings for the year ended December 31, 1996 include
an after-tax charge of $2,678 representing discontinued
operations attributable to PJC's former cable operations.
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 aforementioned transactions been completed as of the
indicated dates, nor is it indicative of future operating results.
NOTE 3: LONG-TERM DEBT
- --------------------------------------------------------------------------------
Long-term debt consists of the following at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
1997 1996
- ----------------------------------------------------------------------------------
<S> <C> <C>
6-7/8% Senior Notes Due June 1, 2002 $ 250,000 $ -
7-1/8% Senior Notes Due June 1, 2007 300,000 -
7-3/4% Senior Debentures Due June 1, 2027 200,000 -
7-1/4% Senior Debentures Due September 15, 2027 250,000 -
- ----------------------------------------------------------------------------------
Fixed-rate debt 1,000,000 -
Revolving credit agreement, including
short-term unsecured notes classified
as long-term debt 588,000 615,800
Other 26,045 16,057
- ----------------------------------------------------------------------------------
Total $1,614,045 $ 631,857
- ----------------------------------------------------------------------------------
</TABLE>
The Company's long-term debt maturities for the five years following
December 31, 1997 are $310 in 1998, $3,310 in 1999, $6,967 in 2000, $310 in 2001
and $838,310 in 2002. Of the amount due in the year 2002, $570,000 represents
revolving debt and $18,000 represents short-term unsecured notes, which could be
converted, at the Company's option, to revolving debt. Revolving debt is
extendable for one year periods, but not beyond August 2004, at the request of
the Company and with the consent of the participating banks.
During 1997, the Company issued $1 billion in fixed-rate debt. The net
proceeds from these debt offerings were used to retire debt previously
outstanding under the Company's revolving credit facility. At December 31, 1997,
the weighted average effective interest rate on the fixed-rate debt was 7.3
percent, and the fair value exceeded the carrying value by $24,515. The fair
value was estimated using quoted market prices for those instruments publicly
traded.
32
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
At the end of 1997, the Company had a revolving credit facility for $1
billion. Loans under the revolving credit agreement bear interest at a rate
based, at the option of the Company, on the banks' 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. At December 31, 1997 and 1996, the weighted average interest rates
for borrowings under the revolving credit agreement were 6.1 percent and 5.7
percent, respectively. The agreement also provides for a facility fee of up to
0.15 percent on the total commitment. Borrowings under the agreement mature upon
expiration of the agreement on August 29, 2002, with one year extensions
possible through August 29, 2004, at the request of the Company and with the
consent of the participating banks. The carrying value of borrowings under the
Company's revolving credit agreement approximates fair value.
The revolving credit agreement contains certain covenants, including a
requirement to maintain, as of the end of each quarter and measured over the
preceding four quarters, (1) a Funded Debt to Pro Forma Operating Cash Flow
ratio not exceeding 5.5 to 1.0, (2) a Funded Debt (excluding subordinated debt)
to Pro Forma Operating Cash Flow ratio not exceeding 5.0 to 1.0, and (3) an
Interest Coverage ratio of not less than 2.5 to 1.0, all as such terms are
defined in the agreement. At December 31, 1997, the Company was in compliance
with these requirements.
During 1997, the Company used various short-term unsecured notes as an
additional source of financing. The weighted average interest rate on this debt
was 6.5 percent and 7.3 percent at December 31, 1997 and 1996, respectively. Due
to the Company's intent to renew the short-term notes and its continued ability
to refinance these borrowings on a long-term basis through its revolving credit
agreement, $18,000 and $165,800 of short-term notes outstanding at December 31,
1997 and 1996, respectively, have been classified as long-term.
In 1997, 1996 and 1995, the Company incurred interest costs of $91,288,
$27,898 and $30,944, respectively, of which $510, $255 and $957, respectively,
were capitalized as components of construction cost.
At December 31, 1997, the Company had outstanding letters of credit of
$31,557 issued in the ordinary course of business.
NOTE 4: INCOME TAXES
- --------------------------------------------------------------------------------
The Company uses 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.
Income tax expense for the years ended December 31, 1997, 1996 and 1995
consists of the following:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $ 56,792 $42,298 $32,094
State 18,556 7,627 5,521
- ----------------------------------------------------------------------------------------------------------
Total current 75,348 49,925 37,615
Deferred
Federal 1,587 6,765 6,664
State (5,785) (155) 159
- ----------------------------------------------------------------------------------------------------------
Total deferred (4,198) 6,610 6,823
Total tax expense $ 71,150 $56,535 $44,438
- ----------------------------------------------------------------------------------------------------------
Effective tax rate 46.2% 39.2% 40.0%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
Income tax provisions for the years ended December 31, 1997, 1996 and
1995 differ from amounts computed by applying the applicable U.S. federal income
tax rate as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed expected income tax expense $ 53,943 $ 50,414 $ 38,855
Amortization of excess cost 9,645 2,235 2,235
State income taxes 8,301 4,857 3,692
Other (739) (971) (344)
- ----------------------------------------------------------------------------------------------------------
$ 71,150 $ 56,535 $ 44,438
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Significant components of the Company's deferred tax liabilities and assets
as of December 31, 1997 and 1996, are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
1997 1996
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Excess tax depreciation and amortization $ 442,949 $ 108,076
Basis differences in investments 22,769 18,252
Deferred compensation 10,600 -
Expenses deductible for tax purposes in a year
different from the year accrued 4,431 6,974
Other 1,328 367
- -----------------------------------------------------------------------------------------------------
Total deferred tax liabilities $ 482,077 $ 133,669
- -----------------------------------------------------------------------------------------------------
Deferred tax assets:
Deferred compensation $ 11,198 $ 4,828
State net operating losses 8,004 -
State taxes 6,179 4,561
Expenses deductible for tax purposes in a year
different from the year accrued 21,298 3,592
Other 12,329 4,572
- -----------------------------------------------------------------------------------------------------
Total deferred tax assets 59,008 17,553
- -----------------------------------------------------------------------------------------------------
Net deferred tax liability $ 423,069 $ 116,116
- -----------------------------------------------------------------------------------------------------
</TABLE>
State net operating loss carryforwards are generally associated with
entities acquired in the PJC acquisition and have expiration dates ranging from
1998 through 2010.
NOTE 5: EMPLOYEE RETIREMENT PLANS
- --------------------------------------------------------------------------------
The Company sponsors a noncontributory defined benefit pension plan
covering the majority of employees. The benefits are based on years of service
and the average of the employee's five consecutive years of highest annual
compensation earned during the most recently completed 10 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.
34
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
During 1997, the Company acquired PJC, which had a noncontributory defined
benefit pension plan covering substantially all of its employees. Effective
December 31, 1997, the PJC plan was merged into the Company's pension plan. The
following disclosures reflect these combined pension plans for the year ended
December 31, 1997. 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, 1997 and 1996:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
1997 1996
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation $ (198,845) $ (88,879)
Accumulated benefit obligation $ (211,398) $ (92,124)
Projected benefit obligation for service
rendered to date $ (273,879) $ (116,740)
Plan assets at fair value, invested primarily
in equity securities 273,418 108,008
- -----------------------------------------------------------------------------------------------------
Plan assets less than projected benefit obligation (461) (8,732)
Unrecognized net loss 18,422 26,742
Unrecognized net transition asset being recognized
over 12.3 years (371) (1,604)
Unrecognized prior service cost (2,113) (2,490)
- -----------------------------------------------------------------------------------------------------
Prepaid pension cost $ 15,477 $ 13,916
- -----------------------------------------------------------------------------------------------------
</TABLE>
The net periodic pension cost for the years ended December 31, 1997, 1996
and 1995 includes the following components:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 8,851 $ 5,462 $ 3,697
Interest cost on projected benefit obligation 16,555 8,290 7,331
Actual return on plan assets (38,860) (14,121) (17,035)
Net amortization and deferral 17,422 5,257 9,498
- -------------------------------------------------------------------------------------------------------------------
Net periodic pension cost $ 3,968 $ 4,888 $ 3,491
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Assumptions used in the accounting for the defined benefit plan are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate in determining benefit obligation 7.25% 7.50% 7.25%
Discount rate in determining net periodic pension
cost 7.50% 7.25% 8.50%
Expected long-term rate of return on assets 10.25% 10.25% 10.25%
Rate of increase in future compensation 5.50% 5.50% 5.50%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company sponsors defined contribution plans that cover substantially
all of its employees. Subject to certain dollar limits, employees may contribute
a percentage of their salaries to these plans, and the Company will match a
portion of the employees' contributions. The Company's contributions totaled
$6,069, $3,587 and $3,170 in 1997, 1996 and 1995, respectively.
The Company also sponsors non-qualified retirement plans for key employees.
Expense for the plans recognized in 1997, 1996 and 1995 was $1,138, $1,150 and
$1,089, respectively.
35
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
NOTE 6: LONG-TERM INCENTIVE PLAN
- --------------------------------------------------------------------------------
The Company has a long-term incentive plan under which awards 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.
Cash-based bonus awards are also available under the plan.
The non-qualified options granted to employees under the Company's
long-term incentive plan become exercisable in cumulative installments over
periods of three to seven years and expire after 10 years. Shares of common
stock reserved for grants under the plan were 2,697,816 and 2,626,904 at
December 31, 1997 and 1996, respectively.
Stock-based activity in the long-term incentive plan relates to
non-qualified stock options and is summarized in the following table:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
Weighted Weighted Option
Number of Average Number of Average Number of Price Per
Options Price Options Price Options Share (a)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January 1, .. 3,819,938 $ 28.43 3,097,777 $ 24.16 1,496,750 $24-$53
Two-for-one stock split -- -- -- -- 1,351,907 $12-$30
Granted ............... 947,100 $ 51.58 1,237,850 $ 35.63 699,300 $30-$35
Exercised ............. (526,685) $ 22.64 (500,662) $ 19.82 (424,038) $12-$27
Canceled .............. (18,012) $ 35.01 (15,027) $ 28.69 (26,142) $15-$27
--------- --------- ---------
Outstanding at December 31, 4,222,341 $ 34.31 3,819,938 $ 28.43 3,097,777 $12-$35
- ------------------------------------------------------------------------------------------------------------------------------
Weighted average fair value of
options granted $ 12.95 $ 9.68
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Disclosure of weighted average price information is required by Statement
of Financial Accounting Standards ("FAS") No. 123 for years beginning after
December 15, 1995.
The following table summarizes information about non-qualified stock
options outstanding at December 31, 1997:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Range of Number of Weighted Average Weighted Average Number of Weighted Average
Exercise Options Remaining Exercise Options Exercise
Prices Outstanding Life (years) Price Exercisable Price
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$12-$20 572,222 (a) 3.3 $16.64 572,222 $16.64
$22-$31 942,348 (b) 6.3 $25.76 921,348 $25.66
$35-$39 1,833,871 (c) 8.6 $35.48 697,745 $35.33
$44-$53 873,900 (c) 10.0 $52.65 - -
---------- ---------- -------
$12-$53 4,222,341 7.7 $34.31 2,191,315 $26.38
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Comprised of Series A Shares, except for 60,000 Series B Shares
(b) Comprised of Series A Shares
(c) Comprised of Series B Shares
Pro forma information regarding net earnings and earnings per share has
been determined as if the Company had accounted for its employee stock options
under the fair value method of FAS No. 123. The fair value for those options was
estimated at the date of grant using a Black-Scholes option pricing model with
the following weighted average assumptions for 1997 and 1996, respectively:
risk-free interest rates of 5.56 percent and 6.22 percent, dividend yields of
.91 percent and 1.23 percent, volatility factors of the expected market price of
the Company's common stock of .228 and .206, and weighted average expected lives
of the options of 4.03 and 5.07 years.
36
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting periods. Because
options vest over a period of several years and additional awards are generally
made each year, the full effect of applying FAS No. 123 for providing pro forma
disclosure will not be reflected until the completion of one full vesting cycle.
Therefore, the pro forma information presented below is not indicative of the
effects on reported or pro forma net earnings for future years. The Company's
pro forma information for the three years ending December 31, 1997 follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
1997 1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pro forma net earnings $ 79,474 $ 85,839 $ 66,505
Pro forma net earnings per share $ 1.37 $ 2.09 $ 1.68
- ---------------------------------------------------------------------------------------------
</TABLE>
The Company's long-term incentive plan also provides for the grant of
restricted shares of Series A Common Stock. These restricted shares generally
vest over a four year period and contain certain performance requirements for a
portion of the shares. Restricted stock activity for the three years ending
December 31, 1997 is summarized as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
Price Price Price
Shares Per Share Shares Per Share Shares Per Share
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January 1, 212,309 $15-$35 279,096 $15-$35 212,371 $29-$57
Two-for-one stock split - - - - 211,891 $15-$31
Granted - - - - - -
Vested (126,917) $15-$56 (66,787) $20-$35 (117,261) $15-$35
Forfeited - - - - (27,905) $15-$35
------- ------- --------- ---------
Outstanding at December 31, 85,392 $27-$56 212,309 $15-$35 279,096 $15-$35
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
A provision for restricted shares is made ratably over the restriction
period. Expense recognized under the plan for restricted shares was $1,776,
$1,664 and $2,223 in 1997, 1996 and 1995, respectively.
NOTE 7: 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 would not have a material adverse effect on the
consolidated financial position or results of operations of the Company.
Commitments for the purchase of broadcast film contract rights totaled
approximately $176,943, at December 31, 1997 for broadcasts scheduled through
August 2002.
Advance payments on plant and equipment expenditures at December 31, 1997
primarily relate to newspaper production equipment, broadcast equipment and
building renovations and improvements. Required future payments for capital
expenditures for 1998 and 1999 are $12,657 and $705, respectively.
37
<PAGE> 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
Total lease expense for property and equipment was $8,342, $3,333 and
$3,435 in 1997, 1996 and 1995, respectively. Future minimum rental payments for
operating leases at December 31, 1997, are as follows:
<TABLE>
<CAPTION>
--------------------------------------------------- -----------------
Operating
Leases
--------------------------------------------------- -----------------
<S> <C>
1998 $ 7,774
1999 6,488
2000 5,545
2001 3,344
2002 2,684
2003 & beyond 6,364
--------------------------------------------------- -----------------
Total commitments $ 32,199
--------------------------------------------------- -----------------
</TABLE>
NOTE 8: 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 10 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 1/100 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. At such time, each holder of a right (other than the acquiring
person or group) will have the right to purchase common stock of the Company
with a value equal to two times the exercise price of the right, which is
initially $150 (subject to adjustment). In addition, if the Company is acquired
in a merger or business combination, each right can be used to purchase the
common stock of the surviving company having a market value of twice the
exercise price of each right. Once a person or group has acquired 30 percent of
the common stock but before 50 percent of the voting power of the common stock
has been acquired, the Company may exchange each right (other than those held by
the acquiring person or group) for one share of Company common stock (subject to
adjustment). The Company may reduce the 30 percent threshold or may redeem the
rights. The number of shares of Series A Junior Participating Preferred Stock
reserved for possible conversion of these rights is equivalent to 1/100 of the
number of shares of common stock issued and outstanding plus the number of
shares reserved for options outstanding and for grant under the 1995 Executive
Compensation Plan and for options outstanding under the Company's predecessor
plan. The rights will expire in 2006, unless extended.
As discussed in Note 2, on February 28, 1997, in connection with the
acquisition of PJC, the Company issued 25,394,564 shares of Series A Common
Stock.
The Company has in place a stock repurchase program authorizing the
purchase of up to $2,500 of Company stock annually and, as of December 31, 1997,
the Company has authority to purchase an additional 5,336,872 shares. During
1996, the Company purchased 8,321,700 shares of its Series A Common Stock at an
aggregate cost of $306,146. These shares were retired effective December 31,
1997. No shares of stock were purchased during 1997.
NOTE 9: OTHER INCOME AND EXPENSE
In 1997, the Company sold 220,000 shares of Gemstar International Group
Limited ("Gemstar") common stock and donated 208,440 shares of Gemstar common
stock to The A. H. Belo Corporation Foundation. These transactions did not have
an effect on 1997 net earnings as the $4,560 charge for the charitable
contribution was offset by a gain on the disposition of the shares and the tax
benefit from the charitable contribution.
38
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
In 1995, Belo sold Stauffer Communications, Inc. stock, resulting in a gain
of $2,406 ($1,564 after tax or 4 cents per share). In 1996, the Company sold its
interest in its programming distribution partnership, resulting in a gain of
$3,895 ($2,337 after tax or 6 cents per share).
NOTE 10: EARNINGS PER SHARE
- --------------------------------------------------------------------------------
In 1997, the Financial Accounting Standards Board issued FAS No. 128,
"Earnings Per Share," which replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants and convertible securities. Diluted earnings per
share is very similar to the previously reported fully diluted earnings per
share. Earnings per share amounts for all periods have been restated to conform
to FAS No. 128, and all references herein to "per share" are assumed to be
diluted earnings per share.
The following table sets forth the reconciliation between weighted average
shares used for calculating basic and diluted earnings per share for the three
years ending December 31, 1997 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
-------------------------------------------------------- ---------- ---------- -----------
1997 1996 1995
-------------------------------------------------------- ---------- ---------- -----------
<S> <C> <C> <C>
Weighted average shares for basic earnings per share 57,846 40,890 39,033
Effect of employee stock options 715 612 501
------- ------ ------
Weighted average shares for diluted earnings per share 58,561 41,502 39,534
Options excluded due to exercise price in excess of
average market price
Number outstanding 864 55 654
Exercise price $52.75 $38.50 $34.75
-------------------------------------------------------- ---------- ---------- -----------
</TABLE>
NOTE 11: SUPPLEMENTAL CASH FLOW INFORMATION
- --------------------------------------------------------------------------------
Supplemental cash flow information and significant non-cash investing and
financing activities for the three years ending December 31, 1997, are as
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Supplemental cash flow information
Cash paid during the period for:
Interest, net of amounts capitalized $ 81,676 $ 27,201 $ 30,724
Income taxes, net of refunds $ 54,436 $ 43,344 $ 39,427
Supplemental non-cash investing and financing
activities:
Stock issued for PJC acquisition $ 870,399 $ - $ -
KIRO/KMOV asset exchange $ 152,000 $ - $ -
Non-cash consideration for KENS-TV $ 125,000 $ - $ -
- ----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 12: INDUSTRY SEGMENT INFORMATION
- --------------------------------------------------------------------------------
The Company operates in two primary industries: television broadcasting
and newspaper publishing. Operations in the broadcast industry involve the sale
of air time for advertising and the broadcast of news, entertainment and other
programming. The Company's television stations are located in Dallas, Houston
and San
39
<PAGE> 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
Antonio, Texas; Seattle and Spokane, Washington; Sacramento, California; St.
Louis, Missouri; Portland, Oregon; Charlotte, North Carolina; Norfolk, Virginia;
New Orleans, Louisiana; Albuquerque, New Mexico; Louisville, Kentucky; Tulsa,
Oklahoma; Honolulu, Hawaii; Tucson, Arizona; and Boise, Idaho. 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. The Company's major publishing units are The Dallas Morning
News, located in Dallas, Texas; the Providence Journal-Bulletin, located in
Providence, Rhode Island; and The Press-Enterprise, located in Riverside,
California. The Company has other newspaper operations in Owensboro and
Henderson, Kentucky and Bryan-College Station, Texas. The Company's other
industry segment is comprised of miscellaneous operations that include
television production and distribution, cable news and electronic media
services.
Selected segment data for the years ended December 31, 1997, 1996 and 1995
is as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
1997(a) 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net operating revenues
Broadcasting (b) $ 536,737 $ 333,396 $ 322,642
Newspaper publishing (c) 693,777 487,242 409,099
Other 17,867 3,670 3,602
- ----------------------------------------------------------------------------------------------------------
$ 1,248,381 $ 824,308 $ 735,343
- ----------------------------------------------------------------------------------------------------------
Earnings from operations
Broadcasting (b) $ 132,237 $ 83,862 $ 83,921
Newspaper publishing (c) 159,090 103,046 69,999
Other (10,821) (1,238) (3,972)
Corporate expenses (39,704) (20,021) (13,385)
- ----------------------------------------------------------------------------------------------------------
$ 240,802 $ 165,649 $ 136,563
- ----------------------------------------------------------------------------------------------------------
Depreciation and amortization
Broadcasting (b) $ 84,417 $ 38,975 $ 37,795
Newspaper publishing (c) 47,350 25,072 20,916
Other 1,607 200 31
Corporate 1,619 936 705
- ----------------------------------------------------------------------------------------------------------
$ 134,993 $ 65,183 $ 59,447
- ----------------------------------------------------------------------------------------------------------
Identifiable assets
Broadcasting (b) $ 2,544,323 $ 709,884 $ 726,766
Newspaper publishing (c) 919,237 372,958 341,025
Other 3,554 6,118 8,126
Corporate 155,840 135,112 78,105
- ----------------------------------------------------------------------------------------------------------
$ 3,622,954 $ 1,224,072 $ 1,154,022
- ----------------------------------------------------------------------------------------------------------
Capital expenditures
Broadcasting (b) $ 48,176 $ 22,814 $ 19,605
Newspaper publishing (c) 23,224 18,268 19,217
Other 1,787 1,338 154
Corporate 10,130 7,380 1,854
- ----------------------------------------------------------------------------------------------------------
$ 83,317 $ 49,800 $ 40,830
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Segment results for 1997 include 10 months of operations of PJC,
which Belo acquired on February 28, 1997. (See Note 2.) PJC
operations include nine television stations, a daily newspaper,
certain cable news operations, a cable network and electronic
media services. The cable network was subsequently disposed of and
its operations are excluded effective July 1, 1997.
(b) In 1997, the broadcasting segment includes two-and-one-half months
of operations of KENS, which Belo acquired on October 15, 1997.
(See Note 2.)
(c) In 1997, the newspaper publishing segment includes five months of
operations of P-E, in which Belo increased its ownership interest
from 38 percent to 100 percent on July 25, 1997. (See Note 2.)
- --------------------------------------------------------------------------------
40
<PAGE> 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
NOTE 13: QUARTERLY RESULTS OF OPERATIONS (unaudited)
- -------------------------------------------------------------------------------
Following is a summary of the unaudited quarterly results of operations for
the years ending December 31, 1997 and 1996:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997
Net operating revenues
Broadcasting (a) $ 92,002 $ 152,194 $ 132,957 $ 159,584
Newspaper publishing (b) 137,179 171,358 182,958 202,282
Other (c) 3,521 8,265 3,141 2,940
- ------------------------------------------------------------------------------------------------------------------
$ 232,702 $ 331,817 $ 319,056 $ 364,806
- ------------------------------------------------------------------------------------------------------------------
Earnings from operations
Broadcasting (a) $ 16,869 $ 44,849 $ 26,063 $ 44,456
Newspaper publishing (b) 38,877 40,825 37,418 41,970
Other (c) (1,534) (5,755) (1,648) (1,884)
Corporate expenses (6,761) (9,205) (9,725) (14,013)
- ------------------------------------------------------------------------------------------------------------------
$ 47,451 $ 70,714 $ 52,108 $ 70,529
- ------------------------------------------------------------------------------------------------------------------
Net earnings $ 17,627 $ 26,313 $ 14,958 $ 24,074
- ------------------------------------------------------------------------------------------------------------------
Basic earnings per share $ .39 $ .43 $ .24 $ .39
Diluted earnings per share $ .38 $ .42 $ .24 $ .38
- ------------------------------------------------------------------------------------------------------------------
1996
Net operating revenues
Broadcasting $ 70,607 $ 90,385 $ 79,803 $ 92,601
Newspaper publishing 115,871 121,682 121,575 128,114
Other 766 752 769 1,383
- ------------------------------------------------------------------------------------------------------------------
$ 187,244 $ 212,819 $ 202,147 $ 222,098
- ------------------------------------------------------------------------------------------------------------------
Earnings from operations
Broadcasting $ 10,213 $ 27,616 $ 16,804 $ 29,229
Newspaper publishing 20,803 25,257 26,355 30,631
Other (1,001) 7 (112) (132)
Corporate expenses (4,104) (4,827) (6,612) (4,478)
- ------------------------------------------------------------------------------------------------------------------
$ 25,911 $ 48,053 $ 36,435 $ 55,250
- ------------------------------------------------------------------------------------------------------------------
Net earnings $ 12,724 (d) $ 25,496 $ 18,926 $ 30,359
- ------------------------------------------------------------------------------------------------------------------
Basic earnings per share $ .33 $ .61 $ .43 $ .78
Diluted earnings per share $ .33 $ .60 $ .42 $ .77
</TABLE>
- --------------------------------------------------------------------------------
(a) Broadcasting results include the operations of nine new television stations
beginning in March 1997, and KENS beginning in October 1997. (See Note 2.)
(b) Publishing results include the operations of the Providence
Journal-Bulletin beginning in March 1997, and The Press-Enterprise
beginning in August 1997. (See Note 2.)
(c) Results for TVFN are included from March through June 1997. (See Note 2.)
(d) Net earnings for the first quarter of 1996 include a gain of $3,895 on the
sale of Belo's interest in its programming distribution partnership. (See
Note 9.)
41
<PAGE> 44
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, 1997, 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 & Chief Executive Officer
/s/Michael D. Perry
Michael D. Perry
Senior Corporate Vice President and Chief Financial Officer
42
<PAGE> 45
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ------- ----------- ----------
<S> <C> <C>
2.1 Amended and Restated Agreement and Plan of Merger, dated as of
September 26, 1996 (Appendix A of the Joint Proxy Statement/Prospectus
of Belo and Providence Journal included in Belo's Registration
Statement on Form S-4 (Registration No. 333-19337) filed with the
Commission on January 8, 1997) N/A
3.1 Certificate of Incorporation of the Company (Exhibit 3.1 to the
Company's Amended Annual Report on Form 10-K/A dated April 8, 1996 (the
"1995 Form 10-K/A")) N/A
3.2 Certificate of Correction to Certificate of Incorporation dated May 13,
1987 (Exhibit 3.2 to the 1995 Form 10-K/A) N/A
3.3 Certificate of Designation of Series A Junior Participating Preferred
Stock of the Company dated April 16, 1987 (Exhibit 3.3 to the 1995 Form
10-K/A) N/A
3.4 Certificate of Amendment of Certificate of Incorporation of the Company
dated May 4, 1988 (Exhibit 3.4 to the 1995 Form 10-K/A) N/A
3.5 Certificate of Amendment of Certificate of Incorporation of the Company
dated May 3, 1995 (Exhibit 3.5 to the Company's Annual Report on Form
10-K dated February 28, 1996 (the "1995 Form 10-K")) N/A
3.6 Amended Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company dated May 4, 1988 (Exhibit 3.6 to the
1995 Form 10-K/A) N/A
3.7 Certificate of Designation of Series B Common Stock of the Company
dated May 4, 1988 (Exhibit 3.7 to the 1995 Form 10-K/A) N/A
3.8 Amended and Restated Bylaws of the Company, effective February 13, 1998
---
4.1 Certain rights of the holders of the Company's Common Stock are set
forth in Exhibits 3.1-3.8 above.
4.2 Specimen Form of Certificate representing shares of the Company's
Series A Common Stock ---
4.3 Specimen Form of Certificate representing shares of the Company's
Series B Common Stock ---
4.4 Amended and Restated Form of Rights Agreement as of February 28, 1996
between the Company and Chemical Mellon Shareholder Services, L.L.C., a
New York banking corporation (Exhibit 4.4 to the 1995 Form 10-K) N/A
4.5 Supplement No. 1 to Amended and Restated Rights Agreement between the
Company and The First National Bank of Boston dated as of November 11,
1996 (Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1996) N/A
</TABLE>
E-1
<PAGE> 46
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ------- ----------- ----------
<S> <C> <C>
4.6 Instruments defining rights of debt securities:
(1) Indenture dated as of June 1, 1997 between the Company and The
Chase Manhattan Bank, as Trustee (Exhibit 4.6(1) to the
Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1997 (the "2nd Quarter 1997 Form 10-Q"))
N/A
(2) (a) $200 million 6-7/8% Senior Note due 2002 (Exhibit 4.6
(2)(a) to the 2nd Quarter 1997 Form 10-Q) N/A
(b) $50 million 6-7/8% Senior Note due 2002 (Exhibit 4.6
(2)(b) to the 2nd Quarter 1997 Form 10-Q) N/A
(3) (a) $200 million 7-1/8% Senior Note due 2007 (Exhibit 4.6
(3)(a) to the 2nd Quarter 1997 Form 10-Q) N/A
(b) $100 million 7-1/8% Senior Note due 2007 (Exhibit 4.6
(3)(b) to the 2nd Quarter 1997 Form 10-Q) N/A
(4) $200 million 7-3/4% Senior Debenture due 2027 (Exhibit 4.6 (4)
to the 2nd Quarter 1997 Form 10-Q) N/A
(5) Officer's Certificate dated June 13, 1997 establishing terms
of debt securities pursuant to Section 3.1 of the Indenture
(Exhibit 4.6 (5) to the 2nd Quarter 1997 Form 10-Q) N/A
(6) (a) $200 million 7-1/4% Senior Debenture due 2027 (Exhibit 4.6
(6)(a) to the Company's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1997 (the "3rd
Quarter 1997 Form 10-Q")) N/A
(b) $50 million 7-1/4% Senior Debenture due 2027 (Exhibit 4.6
(6)(b) to the 3rd Quarter 1997 Form 10-Q) N/A
(7) Officer's Certificate dated September 26, 1997 establishing
terms of debt securities pursuant to Section 3.1 of the
Indenture (Exhibit 4.6 (7) to the 3rd Quarter 1997 Form 10-Q)
N/A
10.1 Contracts relating to television broadcasting:
(1) Form of Agreement for Affiliation between WFAA-TV in Dallas,
Texas and ABC (Exhibit 10.1 (1) to the 1995 Form 10-K/A) N/A
10.2 Financing agreements:
(1) Amended and Restated Credit Agreement (Five-year
$1,000,000,000 revolving credit and competitive advance
facility dated as of August 29, 1997 among the Company and The
Chase Manhattan Bank, as Administrative Agent and Competitive
Advance Facility Agent, Bank of America National Trust and
Savings Association and Bank of Tokyo-Mitsubishi, Ltd. as
Co-Syndication Agents, and NationsBank as Documentation Agent)
(Exhibit 10.2 (1) to the 3rd Quarter 1997 Form 10-Q) N/A
</TABLE>
E-2
<PAGE> 47
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ------- ----------- ----------
<S> <C> <C>
10.3 Compensatory plans:
(1) The A. H. Belo Corporation Employee Savings and Investment
Plan:
(a) The A. H. Belo Corporation Employee Savings and
Investment Plan Amended and Restated January 1, 1998
---
(b) Restated Master Trust Agreement between the Company
and Fidelity Management Trust Company, as restated
and dated March 13, 1998 ---
(2) The A. H. Belo Corporation 1986 Long-Term Incentive Plan:
(a) The A. H. Belo Corporation 1986 Long-Term Incentive
Plan (Effective May 3, 1989, as amended by Amendments
1, 2, 3, 4, and 5)(Exhibit 10.3(2) to the Company's
Annual Report on Form 10-K dated March 10, 1997 (the
"1996 Form 10-K")) N/A
(b) Amendment No. 6 to 1986 Long-Term Incentive Plan ---
(c) Amendment No. 7 to 1986 Long-Term Incentive Plan
(Exhibit 10.3(9) to the 1995 Form 10-K) N/A
(3) A. H. Belo Corporation 1995 Executive Compensation Plan as
restated to incorporate amendments through December 4, 1997 ---
(4) Management Security Plan (Exhibit 10.3 (1) to the 1996 Form
10-K) N/A
(5) A. H. Belo Corporation Supplemental Executive Retirement Plan:
(a) A. H. Belo Corporation Supplemental Executive
Retirement Plan (Exhibit 10.3(27) to the Company's
Annual Report on Form 10-K dated March 18, 1994 (the
"1993 Form 10-K")) N/A
(b) Trust Agreement dated February 28, 1994, between the
Company and Mellon Bank, N.A. (Exhibit 10.3(28) to
the 1993 Form 10-K) N/A
12 Ratio of Earnings to Fixed Charges ---
21 Subsidiaries of the Company ---
23 Consent of Ernst & Young LLP ---
27 Financial Data Schedule N/A
99 Unaudited Pro Forma Combined Condensed Statements of Earnings
reflecting the acquisition of the Providence Journal Company and the
exchange of Television Food Network for KENS-TV for the year ended
December 31, 1997 ---
</TABLE>
E-3
<PAGE> 1
EXHIBIT 3.8
AMENDED AND RESTATED
BYLAWS
OF
A. H. BELO CORPORATION
(A Delaware Corporation)
Effective February 13, 1998
<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. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3. Business at Regular or Special
Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4. Quorum of Directors . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5. Act of Directors' Meeting . . . . . . . . . . . . . . . . . . . . 12
Section 6. Action by Written Consent Without
a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V - COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VI - NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
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Section 1. Methods of Giving Notice . . . . . . . . . . . . . . . . . . . . 14
Section 2. Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3. Attendance as Waiver . . . . . . . . . . . . . . . . . . . . . . 15
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
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Right to Indemnification . . . . . . . . . . . . . . . . . . . 32
Section 8. Extent of Indemnification . . . . . . . . . . . . . . . . . . . . 33
Section 9. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 10. Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XII - AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
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<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 second Wednesday in May in each year, unless
such day is 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.
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
<PAGE> 6
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, 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.
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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 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
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
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<PAGE> 8
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 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
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<PAGE> 9
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 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
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.
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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 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
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<PAGE> 11
stockholders without further action by such director, the board of directors or
the stockholders of the corporation.
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 therefor. Members of special or
standing committees may be allowed like compensation for their services in such
capacities.
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ARTICLE IV
MEETINGS OF THE BOARD
Section 1. 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 2. 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 3. 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 4. 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 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 5. 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 6. 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.
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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 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 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
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<PAGE> 14
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 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.
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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 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 may designate. The Board of Directors may
appoint or authorize an officer of the corporation to appoint in writing
officers of a division.
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<PAGE> 16
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.
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.
-12-
<PAGE> 17
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 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 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
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<PAGE> 18
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.
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.
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<PAGE> 19
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 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 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
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<PAGE> 20
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 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
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<PAGE> 21
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 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
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
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<PAGE> 22
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 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.
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<PAGE> 23
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.
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.
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<PAGE> 24
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 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
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<PAGE> 25
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, 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 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
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<PAGE> 26
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 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
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<PAGE> 27
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 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 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.
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<PAGE> 28
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.
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 4.2
<TABLE>
<S> <C> <C>
COMMON COMMON
SERIES A SERIES A
PAR VALUE $1.67 EACH PAR VALUE $1.67 EACH
[NUMBER] [SHARES]
DS
INCORPORATED UNDER THE LAWS SEE REVERSE SIDE FOR
OF THE STATE OF DELAWARE RIGHTS PLAN CERTIFICATION
THIS CERTIFICATE IS TRANSFERABLE IN CUSIP 080555 10 5
BOSTON MASSACHUSETTS AND SEE REVERSE FOR CERTAIN DEFINITIONS
NEW YORK, NEW YORK AND RESTRICTIONS
A. H. BELO CORPORATION
THIS
CERTIFIES
THAT
IS THE
OWNER OF
FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK OF
A. H. Belo Corporation transferable on the books of the Corporation by the holder hereof in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are
issued under and shall be subject to all of the provisions of the Certificate of Incorporation and Bylaws of the
Corporation and any amendments thereto, copies of which are on file with the Corporation and the Transfer Agent, to all of
which the holder, by acceptance hereof, assents. This certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
[A. H. BELO
CORPORATION
DELAWARE
SEAL]
/s/ ROBERT W. JECKERD
CHAIRMAN OF THE BOARD
/s/ BRENDA C. MADDOX
TREASURER
Dated:
COUNTERSIGNED AND REGISTERED
THE FIRST NATIONAL BANK OF BOSTON
TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE
</TABLE>
<PAGE> 2
A.H. BELO CORPORATION
The Corporation is authorized to issue three series of Common Stock (Series
A, Series B, and Series C), and more than one series of preferred stock. Upon
written request of the record holder of this Certificate to the Corporation at
its principal place of business or registered office, a full statement of the
powers, designations, preferences, and relative, participating, optional, or
other special rights of each class of stock or series thereof and the
qualifications, limitations, or restrictions of such preferences and/or rights
will be furnished without charge.
The Communications Act of 1934 imposes restrictions on the ownership of
shares of the Corporation by aliens. Article IX, Section 5 of the Bylaws of the
Corporation provides that (a) not more than one-fourth of the equity or voting
power of the Corporation shall at any time by owned of record or voted by or for
the account of aliens, and (b) if the stock records of the Corporation shall at
any time disclose one-fourth alien ownership or voting power, no transfers of
shares to aliens will be made and, if it shall thereafter be found that such
shares are in fact held by or for the account of an alien, such shares will not
be entitled to vote, to receive dividends, or to any other rights, except the
right to transfer such shares to a United States citizen. For these purposes,
"alien" shall include the following or their representatives: any individual not
a citizen of the United States of America and any representative of any such
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 a United States citizen; 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.
-----------------------
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- _____________ Custodian ___________
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act _______________________________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, __________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
_______________________________________________________________________________
PLEASE PRINT OR TYPE NAME AND ADDRESS OF ASSIGNEE, INCLUDING ZIP CODE
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ____________________________________________
Attorney to transfer such stock on the books of the within-named Corporation
with full power of substitution in the premises.
Dated
----------------------------------
Signature(s) Guaranteed:
- ----------------------------------------
THE SIGNATURE(S) MUST BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between A.H. Belo Corporation and The
First National Bank of Boston, dated as of March 10, 1986, amended and restated
as of February 28, 1996, as amended or supplemented (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of A.H. Belo Corporation.
Under certain circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be evidenced by
this certificate. A.H. Belo Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge after receipt of a
written request therefor. Under certain circumstances, Rights beneficially owned
by Acquiring Persons (as defined in the Rights Agreement) may become null and
void.
<PAGE> 1
EXHIBIT 4.3
<TABLE>
<S> <C> <C>
THE SHARES REPRESENTED HEREBY ARE SUBJECT TO
[NUMBER] (i) RESTRICTIONS ON TRANSFER AND THE REGISTRATION OF [SHARES]
DB TRANSFER, AND (ii) MANDATORY CONVERSION UPON THE
OCCURRENCE OF CERTAIN EVENTS - SEE REVERSE SIDE.
A.H. BELO CORPORATION
SERIES B COMMON CUSIP 080555 20 4
PAR VALUE $1.67 EACH INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE. SEE REVERSE FOR
THIS CERTIFICATE IS TRANSFERABLE IN BOSTON MASSACHUSETTS CERTAIN DEFINITIONS
AND NEW YORK, NEW YORK AND RESTRICTIONS
SEE REVERSE SIDE FOR RIGHTS PLAN CERTIFICATION
This Certifies that
is the owner of
FULLY PAID AND NONASSESSABLE SHARES OF SERIES B COMMON STOCK OF
A.H. BELO CORPORATION transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney
upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued under and shall
be subject to all of the provisions of the Certificate of Incorporation and Bylaws of the Corporation and any amendments thereto,
copies of which are on file with the Corporation and the Transfer Agent, to all of which the holder, by acceptance hereof, assents.
This certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
[A. H. BELO
CORPORATION
DELAWARE
SEAL]
Dated:
/s/ ROBERT W. DECHERD /s/ BRENDA C. MADDOX
CHAIRMAN OF THE BOARD TREASURER
COUNTERSIGNED AND REGISTERED
THE FIRST NATIONAL BANK OF BOSTON
TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE
SEE REVERSE SIDE FOR RESTRICTIONS ON THE RIGHTS, PRIVILEGES, AND PREFERENCES OF THESE SHARES AND HOLDERS THEREOF.
</TABLE>
<PAGE> 2
A.H. BELO CORPORATION
The Corporation is authorized to issue three series of Common Stock (Series
A, Series B, and Series C), and more than one series of preferred stock. Upon
written request of the recordholder of this Certificate to the Corporation at
its principal place of business or registered office, a full statement of the
powers, designations, preferences, and relative, participating, optional, or
other special rights of each class of stock or series thereof and the
qualifications, limitations, or restrictions of such preferences and/or rights
will be furnished without charge.
The holders of Series B Stock are entitled to ten (10) votes per share,
voting as a single class with the holders of all outstanding shares of Series A
Stock and outstanding shares, if any, of Series C Stock. Shares of Series B
Stock are subject to significant restrictions on transfer and registration of
transfer and to mandatory conversion upon the occurrence of certain events. In
general, Series B Stock can be transferred only to "Permitted Transferees" (as
defined in Article Four of the Corporation's Certificate of Incorporation).
As a condition to transfer of Series B Stock the Corporation requires
affidavits or other proof acceptable to the Corporation and its transfer agent
that the transferee is a Permitted Transferee. Series B Stock presented for
transfer shall be presumed to be presented for conversion and delivery of Series
A Stock to a person who is not a Permitted Transferee unless accompanied by
such evidence to the contrary when delivered to the Corporation or its transfer
agent.
Shares of Series B Stock are freely convertible into shares of Series A
Stock. The holder of such shares may exercise the conversion privilege at any
time by surrendering the certificate(s) representing Series B Stock to the
Corporation or its transfer agent and completing and signing the written notice
of election to convert such shares into Series A Stock set forth at the bottom
of this certificate.
All statements herein are qualified in their entirety by reference to the
provisions of Article Four of the Corporation's Certificate of Incorporation and
the Certificate of Designation by which the Series B Stock was created, both of
which are incorporated herein by this reference.
The Communications Act of 1934 imposes restrictions on the ownership of
shares of the Corporation by aliens. Article IX, Section 5 of the Bylaws of the
Corporation provides that (a) not more than one-fourth of the equity or voting
power of the Corporation shall at any time by owned of record or voted by or for
the account of aliens, and (b) if the stock records of the Corporation shall at
any time disclose one-fourth alien ownership or voting power, no transfers of
shares to aliens will be made and, if it shall thereafter be found that such
shares are in fact held by or for the account of an alien, such shares will not
be entitled to vote, to receive dividends, or to any other rights, except the
right to transfer such shares to a United States citizen. For these purposes,
"alien"" shall include the following: any individual not a citizen of the United
States of America and any representative of any such 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.
-------------------------
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of the certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- _____________ Custodian ___________
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act __________________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
--------------------------
For Value Received, __________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
_______________________________________________________________________________
PLEASE PRINT OR TYPE NAME AND ADDRESS OF ASSIGNEE, INCLUDING ZIP CODE
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ____________________________________________
Attorney to transfer such stock on the books of the within-named Corporation
with full power of substitution in the premises.
Dated
--------------------------------
Signature(s) Guaranteed:
- ---------------------------------------------
THE SIGNATURE(S) MUST BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
Signature(s)
- ---------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
------------------------------
UNLESS THE FOLLOWING CERTIFICATE OF PERMITTED TRANSFEREE IS COMPLETED
AT TIME OF REQUEST FOR TRANSFER, SHARES OF SERIES A STOCK (RATHER THAN
SERIES B STOCK) WILL BE ISSUED AUTOMATICALLY ON A SHARE-FOR-SHARE BASIS
UPON TRANSFER PURSUANT TO THE FOREGOING ASSIGNMENT
CERTIFICATE OF PERMITTED TRANSFEREE
The undersigned hereby certifies that the undersigned, the assignee of
________________ shares of Series B Stock represented by the within certificate,
is ____________________________________________________________________________
(State relationship to assignor)
of the assignor and as such is a Permitted Transferee (as defined in Article
Four of the Corporation's Certificate of Incorporation). The undersigned hereby
requests that such shares of series B Stock be transferred to and registered in
the name of the undersigned. The undersigned hereby acknowledges that such
shares of Series B Stock may not be transferred into "street" or nominee name or
to any person who is not a Permitted Transferee and that any such shares
subsequently transferred to "street" or nominee name or to a person who is not
such a Permitted Transferee will be deemed to have been converted automatically
into shares of Series A Stock in accordance with Article Four of the
Corporation's Certificate of Incorporation.
_____________________________________ _____________________________________
Address Print Name
_____________________________________ _____________________________________
City, State, Zip Code Signature
Dated _____________________________________
NOTICE OF ELECTION TO CONVERT SHARES OF
SERIES B STOCK INTO SHARES OF SERIES A STOCK
The undersigned hereby converts ________________ shares of Series B Stock
represented by this certificate into a like number of shares of series A Stock
to be registered in the name of the undersigned (any balance of shares not
converted hereby will be returned to the undersigned as shares of Series B
Stock).
Dated _______________________________ _____________________________________
Signature
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between A.H. Belo Corporation and The
First National Bank of Boston, dated as of March 10, 1986, amended and restated
as of February 28, 1996, as amended or supplemented (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference and
a copy of which is on file at the principal executive offices of A.H. Belo
Corporation. Under certain circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. A.H. Belo Corporation will mail to the holder of
this certificate a copy of the Rights Agreement without charge after receipt of
a written request therefor. Under certain circumstances, Rights beneficially
owned by Acquiring Persons (as defined in the Rights Agreement) may become null
and void.
<PAGE> 1
EXHIBIT 10.3(1)(a)
A. H. BELO CORPORATION
EMPLOYEE SAVINGS AND INVESTMENT PLAN
As Restated Effective January 1, 1998
<PAGE> 2
A. H. BELO CORPORATION
EMPLOYEE SAVINGS AND INVESTMENT PLAN
A. H. Belo Corporation, a Delaware corporation, completely restates
the A. H. Belo Corporation Employee Savings and Investment Plan effective
January 1, 1998, to incorporate into the Plan amendments approved by the
Compensation Committee of the Board of Directors since the date of the prior
restatement. 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 has entered into trust
agreements with Fidelity Management Trust Company and U. S. Trust Company of
California, N.A. that provide for the investment and reinvestment of the assets
of the Plan. Effective January 1, 1998, the Journal Qualified Compensation
Deferral Plan, the Journal Broadcasting 401(k) Plan, the Copley/Colony, Inc.
Retirement Plan, the Press-Enterprise Tax Deferred Savings Plan and the Gleaner
and Journal Publishing Co. 401(k) Retirement Plan, each of which is qualified
defined contribution plan sponsored by a direct or indirect wholly-owned
subsidiary of the Company, were merged with and into the Plan. The
Copley/Colony, Inc. Retirement Plan holds benefits for certain deferred vested
participants and does not cover any active employees of the Company or any of
its subsidiaries.
Words and phrases with initial capital letters used throughout the
Plan are defined in Article 1.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 3 CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 4 ALLOCATIONS TO PARTICIPANTS' ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 5 VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 6 DISTRIBUTIONS TO PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 7 DISTRIBUTIONS TO BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 8 PROVISIONS REGARDING COMPANY STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 9 ADMINISTRATION OF THE PLAN AND TRUST AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 10 LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS TO
PARTICIPANTS' ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 11 RESTRICTIONS ON DISTRIBUTIONS TO PARTICIPANTS AND
BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 12 TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 13 ADOPTION OF PLAN BY CONTROLLED GROUP MEMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 14 AMENDMENT OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE 15 TERMINATION, PARTIAL TERMINATION AND COMPLETE
DISCONTINUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 16 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
APPENDIX A PARTICIPATING EMPLOYERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
</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 any or all of
the Participant's Deferral Contribution Account, Matching Contribution Account,
Profit Sharing Account and Transfer 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, and the Series B Common Stock, par value $1.67 per share, of
the Company.
1.8 "Compensation" means the base pay, overtime pay, shift
differential pay, premium pay, bonuses and commissions paid to an Employee by
the Participating Employers for services performed for the Participating
Employers, excluding any other form of remuneration. 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 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. The annual Compensation of an Employee who is covered by a
collective bargaining agreement will also be subject to any applicable limit on
the amount of such Compensation that may be taken into account for purposes of
the Plan.
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.
<PAGE> 5
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.
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
-2-
<PAGE> 6
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 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
-3-
<PAGE> 7
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 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 [Reserved]
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 1.31) 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.
Notwithstanding the foregoing, if an Employee is classified as
a part-time Employee in accordance with standard personnel practices of his
Participating Employer and is subject to the 1,000 Hour of Service requirement
of Section 1.31, the term 'One Year Break in Service' means a 12 consecutive
month computation period (determined under Section 1.31) in which the Employee
fails to complete more than 500 Hours of Service.
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 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.
-4-
<PAGE> 8
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
January 1 and ending on December 31.
1.25 "Qualified Plan" means an employee benefit plan that is
qualified under Code section 401(a).
1.26 "Transfer Account" means the Account established for each
Participant, the balance of which is attributable to the Participant's rollover
and transfer contributions made pursuant to Article 3 and earnings and losses
of the Trust Fund with respect to such contributions.
1.27 "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.
1.28 "Trust Fund" means the assets of the Plan held by the Trustee
pursuant to the Trust Agreement.
1.29 "Trustee" means the one or more individuals or organizations
who have entered into the Trust Agreement as Trustee, and any duly appointed
successor.
1.30 "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.
1.31 "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 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
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<PAGE> 9
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.
Notwithstanding the foregoing, if an Employee 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, the term 'Year of Service'
means the completion of 1,000 Hours of Service during the 12 consecutive months
beginning on the date the Employee first performs an Hour of Service, or during
the 12 consecutive months beginning on any anniversary of such date.
If a part-time Employee who is subject to the 1,000 Hour of
Service requirement of this Section transfers to full-time status, his service
for the computation period in which the transfer occurs (but not for prior
computation periods) will be determined under the elapsed time method, or if
more favorable to the Employee, on the basis of his Hours of Service completed
as of the date of such transfer. If a full-time Employee transfers to
part-time status and becomes subject to the 1,000 Hour of Service requirement
of this Section, he will receive credit for service under the elapsed time
method through the date of the transfer, and his service during the computation
period in which the transfer occurs will be credited on the basis of Hours of
Service (with any fractional year prior to the date of transfer converted to
hours on the basis of 190 Hours of Service for each month in which the Employee
was credited with at least one Hour of Service).
In determining whether an Employee of WWL-TV, Inc., a Delaware
corporation ("WWL-TV"), has completed a Year of Service for purposes of
eligibility to participate under Section 2.1, each such Employee who became an
employee of WWL-TV on June 1, 1994, and who immediately prior to that date was
an employee of Rampart Operating Partnership, a partnership organized under the
laws of the State of Louisiana ("Rampart"), will receive credit for an Hour of
Service for each hour for which the Employee was paid or entitled to payment by
Rampart or any affiliate of Rampart determined in accordance with Section 1.17
and will receive credit for his period of employment with Rampart or any
affiliate of Rampart calculated in the same manner as if it had been employment
with a Controlled Group Member.
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.
In determining whether an Employee of Bryan-College Station
Eagle, Inc., a Delaware corporation ("Bryan-College Station"), has completed a
Year of Service for purposes of
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<PAGE> 10
eligibility to participate under Section 2.1, each such Employee who became an
employee of Bryan-College Station on December 26, 1995, and who immediately
prior to that date was an employee of Worrell Enterprises, Inc. ("Worrell") or
Eagle Publishing Limited Partnership ("Eagle Publishing"), or any affiliate of
either company, will receive credit for an Hour of Service for each hour for
which the Employee was paid or entitled to payment by Worrell, Eagle Publishing
or any affiliate of either company determined in accordance with Section 1.17
and will receive credit for his period of employment with Worrell, Eagle
Publishing or any affiliate of either company calculated in the same manner as
if it had been employment with a Controlled Group Member.
In determining whether an Employee of Owensboro
Messenger-Inquirer, Inc., a Delaware corporation ("Owensboro"), has completed a
Year of Service for purposes of eligibility to participate under Section 2.1,
each such Employee who became an employee of Owensboro on January 1, 1996, and
who immediately prior to that date was an employee of Owensboro Publishing
Company ("OPC"), will receive credit for an Hour of Service for each hour for
which the Employee was paid or entitled to payment by OPC or any affiliate of
OPC determined in accordance with Section 1.17 and will receive credit for his
period of employment with OPC or any affiliate of OPC calculated in the same
manner as if it had been employment with a Controlled Group Member.
An Employee who became an employee of KMOV-TV, Inc. (formerly,
Third Avenue Television, Inc.) on June 2, 1997, and who immediately prior to
that date was an employee of Viacom Broadcasting of Missouri, Inc. ("Viacom")
will receive credit for an Hour of Service for each hour for which such
Employee was paid or entitled to be paid by Viacom or any affiliate of Viacom
determined in accordance with Section 1.17 and will receive credit for his
period of employment with Viacom or any affiliate of Viacom calculated in the
same manner as if it had been employment with a Controlled Group Member.
An Employee who became an employee of Henderson-Gleaner, Inc.
on March 31, 1997, and who immediately prior to that date was an employee of
Gleaner and Journal Publishing Co. will receive credit for an Hour of Service
for each hour for which such Employee was paid or entitled to be paid by
Gleaner and Journal Publishing Co. or any affiliate of Gleaner and Journal
Publishing Co. determined in accordance with Section 1.17 and will receive
credit for his period of employment with Gleaner and Journal Publishing Co. or
any affiliate of Gleaner and Journal Publishing Co. calculated in the same
manner as if it had been employment with a Controlled Group Member.
An Employee who was an employee of The Providence Journal
Company or any affiliate of The Providence Journal Company on February 28,
1997, prior to its merger with and into Belo Holdings, Inc. will receive credit
for an Hour of Service for each hour for which such Employee was paid or
entitled to be paid by The Providence Journal Company or any affiliate of The
Providence Journal Company determined in accordance with Section 1.17 and will
receive credit for his period of employment with The Providence Journal Company
or any affiliate of The Providence Journal Company calculated in the same
manner as if it had been employment with a Controlled Group Member.
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<PAGE> 11
An Employee who was an employee of The Press-Enterprise
Company or any affiliate of The Press- Enterprise Company on July 25, 1997,
will receive credit for an Hour of Service for each hour for which such
Employee was paid or entitled to be paid by The Press-Enterprise Company or any
affiliate of The Press-Enterprise Company determined in accordance with Section
1.17 and will receive credit for his period of employment with The Press-
Enterprise Company or any affiliate of The Press-Enterprise Company calculated
in the same manner as if it had been employment with a Controlled Group Member.
An Employee who became an employee of BHI Sub, Inc. on October
15, 1997, and who immediately prior to that date was an employee of Harte-Hanks
Communications, Inc. will receive credit for an Hour of Service for each hour
for which such Employee was paid or entitled to be paid by Harte-Hanks
Communications, Inc. or any affiliate of Harte- Hanks Communications, Inc.
determined in accordance with Section 1.17 and will receive credit for his
period of employment with Harte-Hanks Communications, Inc. or any affiliate of
Harte-Hanks Communications, Inc. calculated in the same manner as if it had
been employment with a Controlled Group Member.
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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. Notwithstanding the foregoing:
(i) Each Employee of WWL-TV, Inc. who completed a Year of
Service on or before May 31, 1994, will become a Participant on June
1, 1994, if he is classified as a full-time Employee in accordance
with standard personnel practices of WWL-TV, Inc., and will become a
Participant on July 1, 1994, if he is classified as a part-time
Employee in accordance with such standard personnel practices.
(ii) Each Employee of Third Avenue Television, Inc. who,
on January 31, 1995, was making deferral contributions to the section
401(k) plan of KIRO, Inc. will become a Participant on February 1,
1995. Each other Employee of Third Avenue Television, Inc. who on
February 1, 1995, had satisfied the age and service requirements of
this Section for eligibility to participate will become a Participant
as of the first payroll period beginning on or after April 1, 1995.
(iii) Each Employee of Bryan-College Station Eagle, Inc.
who on December 25, 1995, was making deferral contributions to the
section 401(k) plan of Worrell Enterprises, Inc. or Eagle Publishing
Limited Partnership will become a Participant on December 26, 1995.
Each other Employee of Bryan-College Station Eagle, Inc. who on
December 26, 1995, had satisfied the age and service requirements of
this Section for eligibility to participate will become a Participant
as of the first payroll period beginning on or after April 1, 1996.
(iv) Each Employee of Owensboro Messenger-Inquirer, Inc.
who on December 31, 1995, was making deferral contributions to the
section 401(k) plan of Owensboro Publishing Company will become a
Participant on January 1, 1996. Each other Employee of Owensboro
Messenger-Inquirer, Inc. who on January 1, 1996, had satisfied the age
and service requirements of this Section for eligibility to
participate will become a Participant as of the first payroll period
beginning on or after April 1, 1996.
(v) Each Employee of KMOV-TV, Inc. (formerly, Third
Avenue Television, Inc.) who on June 1, 1997, was making deferral
contributions to a section 401(k) plan of
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<PAGE> 13
Viacom Broadcasting of Missouri, Inc. will become a Participant as of
the first payroll period beginning after June 2, 1997. Each other
Employee of KMOV-TV, Inc. who on June 2, 1997, had satisfied the age
and service requirements of this Section for eligibility to
participate will become a Participant as of the first payroll period
beginning on or after July 1, 1997.
(vi) Each Employee of Henderson-Gleaner, Inc. who on
December 31, 1997, was making deferral contributions to the Gleaner
and Journal Publishing Co. 401(k) Retirement Plan will become a
Participant as of the first payroll period that includes January 1,
1998. Each other Employee of Henderson-Gleaner, Inc. who on December
31, 1997, had satisfied the age and service requirements of this
Section for eligibility to participate will become a Participant as of
the first payroll period beginning on or after January 1, 1998.
Notwithstanding any other provision of this Section to the contrary,
an Employee of Henderson-Gleaner, Inc. whose date of employment is in
1997 will be eligible to become a Participant after completing 6
months of service and attaining age 21.
(vii) Each Employee who was making deferral contributions
to the Journal Qualified Compensation Deferral Plan or the Journal
Broadcasting 401(k) Plan (a "Journal Plan") on December 31, 1997, will
become will become a Participant as of the first payroll period that
includes January 1, 1998. Each other Employee of a Controlled Group
Member participating in a Journal Plan who on December 31, 1997, had
satisfied the age and service conditions of this Section for
eligibility to participate will become a participant as of the first
payroll period beginning on or after January 1, 1998. Notwithstanding
any other provision of this Section to the contrary, an Employee of a
Controlled Group Member participating in a Journal Plan whose date of
employment is in 1997 will be eligible to become a Participant after
completing 6 months of employment (without regard to the Employee's
age) if such Employee was classified as a "regularly scheduled
Employee" under the provisions of a Journal Plan.
(viii) Each Employee of The Press-Enterprise Company who on
December 31, 1997, was making deferral contributions to the
Press-Enterprise Tax Deferred Savings Plan will become a Participant
as of the first payroll period that includes January 1, 1998. Each
other Employee of The Press-Enterprise Company who on December 31,
1997, had satisfied the age and service requirements of this Section
for eligibility to participate will become a Participant as of the
first payroll period beginning on or after January 1, 1998.
(ix) Each Employee of BHI Sub, Inc. who on October 14,
1997, was making deferral contributions to a section 401(k) plan of
Harte-Hanks Communications, Inc. will become a Participant as of the
first payroll period beginning after October 15, 1997. Each other
Employee of BHI Sub, Inc. who on October 15, 1997 had satisfied the
age and service requirements of this Section for eligibility to
participate will become a Participant as of the first payroll period
beginning on or after January 1, 1998.
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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 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)); (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; (v) 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 (vi) 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.
(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 a number of
consecutive One Year Breaks in Service at least equal to the greater of five or
his aggregate Years of 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 a number of consecutive One Year Breaks in Service at least equal to
the greater of five or his aggregate Years of Service, he will be treated as a
new
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<PAGE> 15
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.
2.4 Veterans' Reemployment Rights.
(a) Service Credit. An Employee who returns to
employment with a Controlled Group Member following a period of Qualified
Military Service (as hereinafter defined) will not be treated as having
incurred any One Year Breaks in Service because of his period of Qualified
Military Service. In addition, each period of Qualified Military Service will,
upon reemployment with a Controlled Group Member, be deemed to be employment
with such Controlled Group Member for purposes of the Plan.
(b) Compensation. An Employee described in subsection
(a) above will be treated for Plan purposes as having received compensation
from the Controlled Group Member during each period of Qualified Military
Service equal to (i) the compensation the Employee would have received during
such period of Qualified Military Service if he were not in Qualified Military
Service, based on the rate of pay the Employee would have received from the
Controlled Group Member but for his absence during the period of Qualified
Military Service or (ii) if the compensation the Employee would have received
during his period of Qualified Military Service is not reasonably certain, the
Employee's average compensation from the employer during the 12-month period
immediately preceding the Qualified Military Service, or if shorter, during the
period of employment immediately preceding the Qualified Military Service.
(c) Qualified Military Service. For purposes of the
Plan, the term "Qualified Military Service" means service in the uniformed
services (within the meaning of the Uniformed Services Employment and
Reemployment Rights Act ("USERRA"), provided the Employee is entitled under
USERRA to reemployment rights with a Controlled Group Member and the Employee
returns to employment with the Controlled Group Member within the period in
which such reemployment rights are guaranteed.
(d) Make-Up Contributions. Pursuant to procedures
adopted from time to time by the Committee, an Employee described in subsection
(a) above may elect additional Deferral Contributions and will receive an
allocation of additional Participating Employer matching contributions for the
period of his Qualified Military Service. Such additional Deferral
Contributions and Participating Employer matching contributions may be made
during the period beginning on the date of the Employee's reemployment and
ending on the date that is five years later or, if less, during the period that
is three times the Employee's period of Qualified Military Service, which
period will begin on the Employee's date of reemployment. An Employee's
Deferral Contributions and allocation of Participating Employer matching
contributions made pursuant to this Section will be subject to the limitations
of the Plan and the Code applicable to
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the years of the Employee's period of Qualified Military Service, except that
the Average Deferral Percentage and Average Contribution Percentage limitations
described in Article 10 will not be recalculated for such years and will be
determined for the Plan Years in which the make-up Deferral Contributions and
Participating Employer matching contributions are made without regard to such
make-up Deferral Contributions and Participating Employer matching
contributions.
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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 beginning before January 1, 1996, will not be less than 2% nor
more than (i) for payroll periods beginning before July 1, 1993, 10% of his
Compensation for the Plan Year and (ii) for payroll periods beginning on and
after July 1, 1993, 15% of his Compensation for the Plan Year. For any payroll
period beginning on or after January 1, 1996, a Participant may elect to have
Deferral Contributions made to the Plan in any amount that does not exceed 15%
of his Compensation for the payroll period.
(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 each calendar quarter of the Plan Year. 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 until the first day of the calendar quarter following such suspension,
or such other time as the Committee prescribes. For Plan Years beginning on or
after January 1, 1996, if a Participant receives a distribution on account of
hardship pursuant to Section 6.3, such Participant's Deferral Contributions
will automatically be suspended for a 12- month period following the date on
which such Participant receives the hardship distribution. 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
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<PAGE> 18
Section will be reduced by any excess Deferral 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.
(i) Prior to 1995. The Participating Employers
will pay to the Trustee as a matching contribution for each Plan Year
(A) for payroll periods beginning before July 1, 1993, 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 Plan Year and (B) for
payroll periods beginning on and after July 1, 1993, and prior to
January 1, 1995, 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 in both cases Compensation earned before the
Participant was eligible to participate under Section 2.1; provided,
however, that the provisions of clause (B) will be effective with
respect to Participants who are covered by the Collective Bargaining
Agreement between The Dallas Morning News, Inc. and Dallas
Typographical Union, No. 173, at such time as the increase in matching
contributions is not prohibited by such Collective Bargaining
Agreement or any successor agreement. 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.
(ii) After 1994. 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. Effective with the first payroll period beginning
on or after January 1, 1997, the Participating Employers will pay to
the Trustee as a matching contribution for each payroll period an
amount equal to 55% 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 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. Notwithstanding the foregoing, the
Participating Employers will not make a matching contribution for any
Employee of Third Avenue Television, Inc. who is covered by collective
bargaining agreement with the Directors Guild of America, Inc., the
International Brotherhood of Electrical Workers, Local Union No. 4, or
the United Scenic Artists, Local Union No. 829, of the Brotherhood of
Painters and Allied Trades,
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<PAGE> 19
AFL-CIO, unless and until the terms of such collective bargaining
agreement, as amended or renewed from time to time, permit employer
matching contributions to be made. In no event will the matching
contribution made for such an Employee exceed the amount of matching
contributions permitted under such collective bargaining agreement.
Notwithstanding the foregoing, the Participating Employers will not
make a matching contribution for any Employee of KMOV-TV, Inc. who is
covered by collective bargaining agreement with the Directors Guild of
America, Inc., the International Brotherhood of Electrical Workers,
Local Union No. 4, or the United Scenic Artists, Local Union No. 829,
of the Brotherhood of Painters and Allied Trades, AFL-CIO, unless and
until the terms of such collective bargaining agreement, as amended or
renewed from time to time, permit employer matching contributions to
be made. In no event will the matching contribution made for such an
Employee exceed the amount of matching contributions permitted under
such collective bargaining agreement.
(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.
(c) Calculation of Matching Contributions for the 1993
Plan Year. Notwithstanding the provisions of Section 3.2(b), as of one or more
dates within the 1993 Plan Year, the Participating Employers will make an
additional matching contribution for a Participant to the extent necessary to
cause the total matching contributions for such Participant for the Plan Year
to be equal to the sum of (i) 35% of the Participant's Deferral Contributions
for the Plan Year to the extent that such Deferral Contributions do not exceed
5% of the Participant's Compensation for the Plan Year, (ii) 15% of the
Participant's Deferral Contributions made with respect to payroll periods
beginning on and after July 1, 1993, to the extent that such Deferral
Contributions do not exceed 5% of the Participant's Compensation for the Plan
Year attributable to payroll periods beginning on and after July 1, 1993, and
(iii) 50% of the Participant's Deferral Contributions made with respect to
payroll periods beginning on and after July 1, 1993, to the extent that such
Deferral Contributions are more than 5% and less than 6% of the Participant's
Compensation for the Plan Year attributable to payroll periods beginning on and
after July 1,
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1993. For purposes of this Section 3.2(c), Compensation does not include any
wages or other remuneration for services earned before the Participant was
eligible to participate under Section 2.1.
(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, and before December 31, 1996, 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.
(e) Limitation on Matching Contributions. Participating
Employer matching contributions will be subject to the contribution percentage
limitation set forth in Section 10.7.
3.3 Discretionary Profit Sharing Contributions. Each
Participating Employer may, in the discretion of its board of directors, make a
profit sharing contribution to the Plan for any payroll period in such amount
as is determined by the Participating Employer and is approved by the
Compensation Committee of the Board of Directors of the Company. No
Participating Employer will be required to make a profit sharing contribution
for any payroll period. A profit sharing contribution made by a Participating
Employer for a payroll period will be allocated to Participants in the manner
provided in Section 4.2(c).
3.4 Time of Payment. Deferral Contributions will be paid to the
Trustee as soon as practicable following the close of each payroll period.
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, and discretionary profit sharing contributions may be paid to the Trustee
on any date or dates selected by the Participating Employers, but in no event
later than the time prescribed by law (including extensions) for filing the
Participating Employer's federal income tax return for its tax year ending with
or within 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, provided, however, that from and after
January 1, 1994, a Participant who has attained age 55 may direct the Trustee
to transfer all or any portion of his Matching Contribution Account to any
other investment fund established under the Trust Agreement. 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
investment funds established 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 Account that may be invested in any one investment
fund.
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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. Any amounts
contributed to the Plan pursuant to this Section will be allocated to the
Participant's Transfer Account.
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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 to the extent applicable, a Profit Sharing Account and a
Transfer Account. The Committee may also establish one or more subaccounts of
a Participant's Accounts, if the Committee determines that subaccounts are
necessary or desirable in administering the Plan.
Notwithstanding any provision of the Plan to the contrary, any
amounts transferred to the Plan on behalf of an Employee from the Journal
Qualified Compensation Deferral Plan, the Journal Broadcasting 401(k) Plan, the
Press-Enterprise Tax Deferred Savings Plan or the Gleaner and Journal
Publishing Co. 401(k) Retirement Plan (each a "Transferror Plan") will be
allocated as follows: (i) amounts held in the Employee's compensation deferral
account under a Transferror Plan will be allocated to the Employee's Deferral
Contribution Account; (ii) amounts held in the Employee's employer matching
contribution account under a Transferror Plan will be allocated to the
Employee's Matching Contribution Account; (iii) amounts held in the Employee's
profit sharing account under a Transferror Plan will be allocated to the
Employee's Profit Sharing Account; and (iv) amounts held in the Employee's
after-tax account or rollover account under a Transferror Plan will be
allocated to the Employee's Transfer Account.
4.2 Allocation of Contributions and Forfeitures.
(a) Deferral Contributions. 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.
(b) Matching Contributions. 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 (i) for payroll periods beginning before July 1, 1993, 5% of each
Participant's Compensation and (ii) for payroll periods beginning on and after
July 1, 1993, 6% of each Participant's Compensation; provided, however, that
the provisions of clause (ii) will be effective with respect to Participants
who are covered by the Collective Bargaining Agreement between The Dallas
Morning News, Inc. and Dallas Typographical Union, No. 173, at such time as the
increase in matching contributions is not prohibited by such Collective
Bargaining Agreement or any successor agreement. 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
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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.
Notwithstanding the foregoing, no Participating Employer matching contributions
will be allocated to the Matching Contribution Account of any Participant who
is ineligible for matching contributions pursuant to Section 3.2(d), and any
Deferral Contributions made on behalf of such ineligible Participant will be
disregarded for purposes of allocating matching contributions to other
Participants.
(c) Profit Sharing Contributions. Each profit sharing
contribution made by a Participating Employer for a payroll period will be
allocated only to the Profit Sharing Accounts of Participants employed by the
Participating Employer on the last day of the payroll period. For purposes of
this allocation, an Employee will be a Participant in the Plan on the last day
of a payroll period if the Employee is eligible to make Deferral Contributions
as of the last day of the payroll period, without regard to whether the
Participant has elected to make Deferral Contributions. The amount of a
Participating Employer's profit sharing contribution to be allocated to the
Profit Sharing Account of each eligible Participant for a payroll period will
bear the same ratio to the Participating Employer's total profit sharing
contribution for the payroll period as the Participant's Compensation for the
payroll period bears to the total Compensation of all Participants eligible to
receive an allocation of the Participating Employer's profit sharing
contribution for the payroll period.
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 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.
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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 or 10.6(e) (with respect to discriminatory Matching Contributions),
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 Sections 5.2 or 10.6(e)
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, or if
earlier, the date on which the Participant becomes eligible to receive benefits
under the Social Security Act on account of total and permanent disability. 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.
(i) Normal Form of Distribution. The normal form
of distribution will be 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.
(ii) Optional Forms of Distribution for Journal
Plan Participants. The optional forms of distribution described in
this paragraph are available for distributions other than withdrawals
described in Section 6.2 and hardship distributions described in
Section 6.3 only to a Participant whose account balances were
transferred to the Plan from the Journal Qualified Compensation
Deferral Plan or the Journal Broadcasting 401(k) Plan and whose vested
Account balances exceed $3,500 ($5,000 for Plan Years beginning after
December 31, 1997). The optional forms of benefit will be (A)
periodic installment payments over a period of years not to exceed the
life expectancy of the Participant or the joint life expectancy of the
Participant and his Beneficiary and (B) a single life annuity or a
Qualified Joint and Survivor Annuity (as hereinafter defined)
purchased from an insurance company with the amount of the
Participant's vested Account balances, provided, however, that the
annuity option will be available to a former participant in the
Journal Broadcasting 401(k) Plan only if he was a participant in such
Plan prior to December 31, 1996. For purposes of this Section, the
term "Qualified Joint and Survivor Annuity" means an annuity payable
monthly for the life of the Participant with a survivor annuity
payable monthly for the life of the Participant's surviving spouse in
an amount equal to 50% of the amount of the monthly payment to the
Participant during his life.
(iii) Optional Form of Distribution for
Press-Enterprise and Gleaner Plan Participants. The optional form of
distribution described in this paragraph is available
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for distributions other than withdrawals described in Section 6.2 and
hardship distributions described in Section 6.3 only to a Participant
whose account balances were transferred to the Plan from the
Press-Enterprise Tax Deferred Savings Plan or the Gleaner and Journal
Publishing Co. 401(k) Retirement Plan and whose vested Account
balances exceed $3,500 ($5,000 for Plan Years beginning after December
31, 1997). The optional form of benefit will be periodic installment
payments over a period of years not to exceed the life expectancy of
the Participant or the joint life expectancy of the Participant and
his Beneficiary.
(iv) Rules Relating to Annuities. If a married
Participant elects to receive his vested Account balances in the form
of a single life annuity, the Participant's election will not be
effective without the written consent of his spouse, witnessed by a
notary public and acknowledging the effect of such election, unless it
is established to the satisfaction of the Committee that such consent
cannot be obtained because there is no spouse, because the spouse
cannot be located, or because of such other circumstances as
regulations under Code section 417 permit. An election under this
Section must be made, in accordance with rules and procedures
established from time to time by the Committee, within 90 days of the
date on which the Participant would receive his first payment of
benefits under the Plan. A Participant may revoke an election to
receive an annuity without the consent of his spouse before the date
on which the Trustee purchases the annuity. If a married Participant
revokes a prior election to receive an annuity, he may elect without
the consent of his spouse to receive his vested Account balances in a
lump sum payment, installments or a Qualified Joint and Survivor
Annuity. If a Participant who has elected to receive an annuity dies
before the Trustee has purchased the annuity from an insurance
company, the Participant's vested Account balances will be paid to the
Participant's surviving spouse, if any, and if none, to the
Participant's Beneficiary. If the Participant dies after the Trustee
has purchased the annuity, any benefits payable after the
Participant's death will be determined under the terms of the annuity.
For purposes of the Qualified Joint and Survivor Annuity, the term
"spouse" means the spouse to whom the Participant was married at the
time he elected the Qualified Joint and Survivor Annuity. If such
spouse dies before the Participant, the amount of the Participant's
monthly annuity will not be increased.
(c) Participant's Consent to Certain Payments. If the
amount of a Participant's vested Account balances exceed $3,500 ($5,000 for
Plan Years beginning after December 31, 1997), 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. A distribution
may be made less than 30 days after the Participant has been furnished an
explanation of his distribution options provided that (i) the Committee clearly
informs the Participant that he has the right to consider whether to accept a
distribution and whether to consent to a particular form of distribution for at
least 30 days after he has been provided the relevant information, (ii) the
Participant affirmatively elects to waive the 30-day notice period and receive
a distribution, and (iii) with respect to a distribution to which Code section
417 applies, the Participant is permitted to revoke the election and make a new
election at any time prior to the later of the date of distribution or the
expiration
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of the seven-day period after the explanation of distribution options is
provided to the Participant. 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 his Deferral Contribution Account in
the event of his hardship. A 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. For Plan Years beginning on or after January 1, 1996,
pursuant to Section 3.1(b), a Participant's Deferral Contributions will
automatically be suspended for a 12-month period after the date on which such
Participant receives a distribution on account of hardship.
(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) previously incurred by the
Participant, the Participant's spouse or any dependents of the Participant (as
defined in Code section 152) or necessary for such persons to obtain medical
care described in Code section 213(d); (ii) costs directly related to the
purchase of a principal residence for the Participant (excluding mortgage
payments); (iii) the payment of tuition and related educational fees for the
next 12 months of post-secondary education for the Participant, his spouse,
children, or dependents (as defined in Code section 152); (iv) payments
necessary 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
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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 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) and, with respect
to hardship distributions on and after June 1, 1994, the balance, if any, of
his Transfer Account.
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 Participant's Transfer Account, next from the
vested portion of his Profit Sharing Account, next from the vested portion of
his Matching Contribution Account, and last from his Deferral Contribution
Account. No distribution under this Section will be made in an amount that is
greater than the excess of the Participant's vested interest in the Accounts
from which the distributions are made over the aggregate amount of outstanding
loans, plus accrued interest, secured by such Accounts. For purposes of
determining the amount available for distribution, a Participant's Accounts
will be valued as of the Valuation Date immediately preceding the date on which
the Participant requests a distribution.
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, provided, however, that no loan may be made from the portion of the
Trust Fund that is invested in Company Stock. 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.
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(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; (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 upon receipt of adequate
security (the security for a loan will be the Participant's interest in the
separate investment fund established under subsection (g) for that loan) in an
amount that does not exceed 50% of the Participant's vested interest under the
Plan); (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) for Plan Years beginning before January 1, 1996, 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; (viii) for Plan Years beginning on or after
January 1, 1996, no more than two outstanding loans will be permitted with
respect to a Participant at any time; (ix) for Plan Years beginning on or after
January 1, 1996, no new home loans will be permitted; and (x) all loans will be
evidenced by a note containing such additional terms and conditions as the
Committee will determine. Notwithstanding anything in the foregoing to the
contrary, no amount of any indebtedness will be deducted pursuant to subsection
(vi) above from a Participant's Deferral Contribution Account prior to the time
that such Account is otherwise distributable.
(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 Transfer Account, next from his Profit Sharing Account, next from
his Matching Contribution Account, and last from his Deferral Contribution
Account.
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(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 invested in the investment funds under the Trust Agreement
in accordance with the Participant's latest investment directions pursuant to
Section 3.5.
(h) Grandfathered Loans. Loans that are transferred to
the Plan from another Qualified Plan will be administered in accordance with
their terms, notwithstanding the fact that the terms of such loans do not
satisfy the foregoing provisions of this Section.
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 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 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 trust described in Code
section 401(a) that is a defined contribution plan within the meaning of Code
section 414(i), that accepts the Distributee's Eligible Rollover Distribution.
However, in the case
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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 Section 414(p)
of the Code.
6.9 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). In addition, a Beneficiary may elect any optional form of
distribution that was available to the Participant under Section 6.1(b). The
Participant's Account balances will be valued as of the Valuation Date
coinciding 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 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
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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.
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
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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.
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
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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 the Trust Agreement and will have the authority
and discretion to (i) resolve all questions relating to the eligibility of
Employees to become Participants; (ii) determine the amount of benefits payable
to Participants or their Beneficiaries, and determine the time and manner in
which such benefits are to be paid; (iii) authorize and direct all
disbursements by the Trustee from the Trust Fund; (iv) engage any
administrative, legal, accounting, clerical, or other services it deems
appropriate in administering the Plan or the Trust Agreement; (v) construe and
interpret the Plan and the Trust Agreement, supply omissions from, correct
deficiencies in, and resolve ambiguities in the language of the Plan and the
Trust Agreement, and adopt rules for the administration of the Plan and the
Trust Agreement which are not inconsistent with the terms of such documents;
(vi) compile and maintain all records it determines to be necessary,
appropriate or convenient in connection with the administration of benefit
payments; (vii) determine the disposition of assets in the Trust Fund in the
event the Plan is terminated; (viii) review the performance of the Trustee with
respect to the Trustee's administrative duties, responsibilities and
obligations under the Plan and the Trust Agreement, report to the Board
regarding such administrative performance of the Trustee, and recommend to the
Board, if necessary, the removal of the Trustee and the appointment of a
successor Trustee; and (ix) resolve all questions of fact relating to any
matter for which it has administrative responsibility.
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 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.
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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
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
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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 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, payment of such benefit will be made
only to the guardian of the person or the estate of the minor, provided the
guardian acknowledges in writing, in a form acceptable to the Committee,
receipt of the payment on behalf of the minor. If any benefit becomes payable
to any other 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. Any payment made in accordance
with the provisions of this Section on behalf of a minor or other person under
a legal disability will fully 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(l)(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 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.
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(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. A Deferral Contribution will be taken into account
for a Plan Year only if (i) the allocation of such contribution is not
contingent on participation in the Plan or the performance of services after
the Plan Year, (ii) such contribution is paid to the Trustee within 12 months
after the end of the Plan Year, and (iii) such contribution relates to
Compensation that either would have been received by the Participant in the
Plan Year, or that is attributable to services performed during the Plan Year
and that would have been received within two and one-half months after the Plan
Year, but for the election to defer.
(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
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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 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) [Reserved.]
(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 (as
hereafter defined) 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) (but limited to
no more than 50 Employees or, if lesser, the greater of three Employees or 10%
of the Employees). 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
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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. The term "top-paid
group" means that group of Employees consisting of the top 20% of such
Employees ranked on the basis of Compensation received during the Plan Year.
For purposes of this subsection, Compensation will include Deferral
Contributions under the Plan or any other 401(k) arrangement and any amounts
that would have been received as cash but for an election to receive benefits
under a Code section 125 cafeteria plan. All determinations under this
definition will be made in accordance with Code section 414(q) and the Treasury
Regulations thereunder.
For Plan Years beginning after December 31, 1996, the
term "Highly Compensated Employee" means an Employee who was a 5-percent owner
of a Controlled Group Member at any time during the Plan Year or who for the
preceding Plan Year had Compensation in excess of $80,000 (as adjusted pursuant
to Code Section 415(d)) and, if the Company elects for the preceding Plan Year,
was in the top-paid group of Employees for the preceding Plan Year.
(n) "Includable Compensation" means an Employee's 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, effective for Plan Years beginning after
December 31, 1997, 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.
(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.
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(q) "Nonhighly Compensated Employee" means an Employee
who is neither 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 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.
(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 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.
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.
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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 allocated or otherwise allocable to his
Account would exceed the Maximum Annual Addition, the Participant's Deferral
Contributions will be returned to the Participant (together with earnings, if
any, attributable to the returned Deferral Contributions) to the extent
necessary to reduce the excess Annual Addition. If an excess Annual Addition
remains after the return of such Deferral Contributions plus earnings, the
Participating Employer contributions and forfeitures which would continue to
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 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 used in subsequent Limitation Years to
reduce Participating Employer contributions to the Plan. If a suspense account
is in existence at any time during a Limitation Year, all amounts in the
suspense account must be allocated before any contributions which would
constitute Annual Additions will be made to the Plan for that Limitation Year.
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
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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 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. The provisions of this Section
will apply to Plan Years ending before January 1, 2000. 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 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 the preceding Plan Year of
Participants who are Nonhighly Compensated Employees multiplied by 1.25; or
(ii) the lesser of (A) the Average Deferral Percentage for the preceding Plan
Year of Participants who are Nonhighly Compensated Employees plus two
percentage points or (B) the Average Deferral Percentage for the preceding Plan
Year of
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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 dollar amount of excess Deferral Contributions for each Highly Compensated
Employee will be calculated in the manner described in Code section
401(k)(8)(B) and the regulations thereunder, and the aggregate dollar amount of
the excess Deferral Contributions for all Highly Compensated Employees will be
distributed on the basis of the dollar amount of Deferral Contributions for
each such Participant (as hereinafter provided) until the aggregate amount of
excess Deferral Contributions has been distributed. The Deferral Contributions
of the Highly Compensated Employee with the highest dollar amount of Deferral
Contributions will be reduced first by the amount required to cause that
Participant's Deferral Contributions to equal the dollar amount of the Deferral
Contributions of the Highly Compensated Employee with the next highest dollar
amount, and this process will be repeated until the total amount of excess
Deferral Contributions has been distributed. Upon distribution of the total
excess Deferral Contributions in this manner, the Plan will be treated as
satisfying the limitations of subsection (a) above. Matching Contributions
made with respect to a Participant's excess Deferral Contributions will be
forfeited and applied as provided in Section 5.3. 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 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
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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).
(e) Discriminatory Matching Contributions. If the
allocation of Matching Contributions to a Participant's Matching Contribution
Account results in a discriminatory matching contribution (as determined under
Code sections 401(a)(4) or 401(m) and the regulations thereunder) for such
Participant because the Matching Contribution relates to a Deferral
Contribution that exceeds the limitations described in Section 3.1(c) or this
Section 10.6, or because of any other reason, and such discriminatory matching
contribution cannot be distributed as an excess Matching Contribution pursuant
to Section 10.7, such discriminatory matching contribution, or the portion
thereof that results in prohibited discrimination, will be forfeited
notwithstanding any other provision of the Plan to the contrary.
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 the preceding Plan Year of Participants who are Nonhighly
Compensated Employees multiplied by 1.25; or (ii) the lesser of (A) the Average
Contribution Percentage Test for the preceding Plan Year of Participants who
are Nonhighly Compensated Employees plus two percentage points or (B) the
Average Contribution Percentage for the preceding Plan Year of 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 dollar amount of excess Matching Contributions for each Highly
Compensated Employee will be calculated in the manner described in Code section
401(m)(6)(B) and the regulations thereunder, and the aggregate dollar amount of
the excess Matching Contributions for all Highly Compensated Employees will be
forfeited (if forfeitable) or (if not forfeitable) will be distributed on the
basis of the dollar amount of Matching Contributions for each such Participant
(as hereinafter provided) until the aggregate amount of excess Matching
Contributions has been forfeited or distributed. The Matching Contributions of
the Highly Compensated Employee with the highest dollar amount of Matching
Contributions will be reduced first by the amount required to cause that
Participant's Matching Contributions to equal the dollar amount of the Matching
Contributions of the Highly Compensated Employee with the next highest dollar
amount, and this process will be repeated until the total amount of excess
Matching Contributions has been forfeited or distributed. Upon forfeiture or
distribution of the
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total excess Matching Contributions in this manner, the Plan will be treated as
satisfying the limitations of subsection (a) above. 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.
(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 forfeited pursuant to Section
10.6 or distributed pursuant to 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 or forfeited
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 forfeited pursuant to Section 10.6 or distributed
pursuant to subsection (b) above for the period between the end of the Plan
Year and the date of such distribution or forfeiture 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, (i) 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, and
(ii) Controlled Group Members will be determined in accordance with the 50%
control rule of Code section 415(h).
(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 (unless such plans or arrangements may not be permissively
aggregated under applicable regulations). Plans that are aggregated for
purposes of satisfying the minimum coverage rules of Code section 410(b) (other
than for purposes of the average benefits percentage test) will be treated as a
single plan for such purposes.
(c) Code Section 401(m). 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
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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 (unless such plans may not be permissively
aggregated under applicable regulations). Plans that are aggregated for
purposes of satisfying the minimum coverage rules of Code section 410(b) (other
than for purposes of the average benefits percentage test) will be treated as a
single plan for such purposes.
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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(d)(4), without regard to clauses (i), (ii), (iii), and (iv) of
subparagraph (A), subparagraph (B), or subparagraph (F) 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 close of the Plan Year in which
occurs the latest of (i) the date on which the Participant attains age 62, (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.
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(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. On or
before December 31 of such calendar year and of each succeeding calendar year,
distribution of the entire amount of any additional balances in the
Participant's Accounts (determined as of the preceding Valuation Date) will be
made in a lump sum.
(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 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).
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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 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
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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 12.3(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 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
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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 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 (including Deferral
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
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<PAGE> 58
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 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 10.2(g) and (j).
(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 12.3(a) are met when such
requirements are applied with the substitution of "4%" for "3%"; (ii) the
Minimum Allocation requirements of Section 12.3(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.
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<PAGE> 59
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 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> 60
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> 61
ARTICLE 14
AMENDMENT OF THE PLAN
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 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.
(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.
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> 62
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, unless
distribution is prohibited by Section 11.2. 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.
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> 63
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 within one year after such
determination and the Plan and Trust Agreement will terminate, but only if the
application for determination was made within the time prescribed by law for
filing the Company's income tax return for the taxable year in which the Plan
and the Trust Agreement were adopted, or such later date as the Secretary of
the Treasury may prescribe.
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 member and each Employee who receives, handles,
disburses, or otherwise exercises custody or control of, any of the assets of
the Plan.
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<PAGE> 64
(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, 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).
Payment to an alternate payee pursuant to a qualified domestic relations order
will be made in an immediate lump sum payment, if the order so provides.
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,
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<PAGE> 65
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
TEXAS, INCLUDING WITHOUT LIMITATION, THE TEXAS STATUTE OF LIMITATIONS, BUT
WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS OF SUCH STATE.
Executed at Dallas, Texas, this 5th day of January, 1998.
A. H. BELO CORPORATION
By /s/ ILLEGIBLE
----------------------------
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<PAGE> 66
APPENDIX A
PARTICIPATING EMPLOYERS
A. H. Belo Corporation
BHI Sub, Inc.
(as of October 15, 1997)
Belo Capital Bureau, Inc.
(As of January 1, 1997)
Belo Management Services, Inc.
(As of January 1, 1996)
Belo Production, Inc.
(as of April 1, 1994)
Bryan-College Station Eagle, Inc.
(as of December 26, 1995)
Dallas-Ft. Worth Suburban Newspapers, Inc.
(through March 31, 1994)
The Dallas Morning News Company
DFW Printing Company, Inc.
(as of April 1, 1994)
DFW Suburban Newspapers, Inc.
(for the period from April 1, 1994,
through December 31, 1994; and for the period
beginning on January 1, 1997)
Great Western Broadcasting Corporation
KHOU-TV, Inc.
(formerly Gulf Television Corporation)
KMOV-TV, Inc.
(formerly Third Avenue Television, Inc.
as of February 1, 1995)
KOTV, Inc.
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<PAGE> 67
Owensboro Messenger-Inquirer, Inc.
(as of January 1, 1996)
Third Avenue Television, Inc.
(as of February 1, 1995)
WFAA Television, Inc.
WVEC Television, Inc.
WWL-TV, Inc.
(as of June 1, 1994)
Henderson-Gleaner, Inc.
The Press-Enterprise Company
The Providence Journal Company
Rhode Island Monthly Communications, Inc.
King Broadcasting Company
King News Corporation
Belo Kentucky, Inc.
KMSB-TV, Inc.
WCNC-TV, Inc.
KASA-TV, Inc.
(all as of January 1, 1998)
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<PAGE> 1
EXHIBIT 10.3(1)(b)
RESTATED MASTER TRUST AGREEMENT
BETWEEN
-----------------------------------------------------------------------
A. H. BELO CORPORATION
AND
FIDELITY MANAGEMENT TRUST COMPANY
-----------------------------------------------------------------------
A. H. BELO CORPORATION DEFINED
CONTRIBUTION TRUST
RESTATED AND DATED AS OF MARCH 13, 1998
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
1 TRUST...................................................................................2
2 EXCLUSIVE BENEFIT AND REVERSION OF SPONSOR CONTRIBUTIONS................................2
3 DISBURSEMENTS...........................................................................3
(a) Directions from Administrator
(b) Limitations
4 INVESTMENT OF TRUST......................................................................4
(a) Selection of Investment Options
(b) Available Investment Options
(c) Participant Direction
(d) Mutual Funds
(e) Sponsor Stock
(f) Participant Loans
(g) Guaranteed Investment Contracts
(h) Reliance of Trustee on Directions
(i) Trustee Powers
5 RECORDKEEPING AND ADMINISTRATIVE SERVICES TO BE PERFORMED...............................9
(a) General
(b) Accounts
(c) Inspection and Audit
(d) Effect of Plan Amendment
(e) Returns, Reports and Information
6 COMPENSATION AND EXPENSES...............................................................10
7 DIRECTIONS AND INDEMNIFICATION..........................................................10
(a) Identity of Administrator and Named Fiduciary
(b) Directions from Administrator
(c) Directions from Named Fiduciary
(d) Co-Fiduciary Liability
(e) Indemnification
(f) Survival
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
-----------------
(CONTINUED)
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
8 RESIGNATION OR REMOVAL OF TRUSTEE.......................................................11
(a) Resignation
(b) Removal
9 SUCCESSOR TRUSTEE.......................................................................12
(a) Appointment
(b) Acceptance
(c) Corporate Action
10 TERMINATION.............................................................................12
11 RESIGNATION, REMOVAL, AND TERMINATION NOTICES...........................................12
12 DURATION................................................................................13
13 AMENDMENT OR MODIFICATION...............................................................13
14 GENERAL.................................................................................13
(a) Performance by Trustee, its Agents or Affiliates
(b) Entire Agreement
(c) Waiver
(d) Successors and Assigns
(e) Partial Invalidity
(f) Section Headings
(g) Delegation by Employer
15 GOVERNING LAW...........................................................................14
(a) Massachusetts Law Controls
(b) Trust Agreement Controls
SCHEDULES
A. Administrative Services
B. Fee Schedule
C. Investment Options
D. Administrator's Authorization Letter
E. Named Fiduciary's Authorization Letter
F. IRS Determination Letter or Opinion of Counsel
G. Existing GICs
H. Stock Operating Procedures Agreement
I. Operational Guidelines for Non-Fidelity Mutual Funds
J. Operating Procedures for the Managed Income Fund
K. Telephone Exchange Guidelines
ii
</TABLE>
<PAGE> 4
TRUST AGREEMENT, restated and dated as of the thirteenth day of March,
1998, between A. H. BELO CORPORATION, a Delaware corporation, having an office
at Communications Center, Houston and Young Streets, Dallas, Texas 75265 (the
"Sponsor"), and FIDELITY MANAGEMENT TRUST COMPANY, a Massachusetts trust
company, having an office at 82 Devonshire Street, Boston, Massachusetts 02109
(the "Trustee").
WITNESSETH:
WHEREAS, the Sponsor or a wholly owned subsidiary of the Sponsor is
the sponsor of the A.H. Belo Corporation Employee Savings and Investment Plan,
the Journal Broadcasting 401(k) Plan, the Journal-Guild 401(k) Plan, the
Journal Qualified Compensation Deferral Plan, the Copley/Colony, Inc.
Retirement Plan and the Colony Communications, Inc. Retirement Plan
(collectively and individually, the "Plan"); and
WHEREAS, the Sponsor wishes to establish three trusts: one, for which
State Street Bank and Trust Company serves as trustee, to hold assets
attributable to Sponsor loans extended to fund participant payouts due under a
Confederated Life guaranteed investment contract previously held by the Journal
Qualified Compensation Deferral Plan; a second, for which U.S. Trust serves as
trustee, to hold its Sponsor Stock assets of the Plan; and the third, for which
the Trustee serves as trustee, a trust to hold and invest the remaining plan
assets under the Plan for the exclusive benefit of participants in the Plan and
their beneficiaries; and
WHEREAS, the Sponsor now desires, and hereby directs the Trustee, in
accordance with Section 7(c), to liquidate all participant balances held in the
Fidelity Overseas Fund on March 31, 1998 and to invest the proceeds in the
Templeton Foreign Fund I. The parties hereto agree that the Trustee shall have
no discretionary authority with respect to this sale and transfer directed by
the Sponsor. Any variation from the procedure described herein may be
instituted only at the express written directions of the Sponsor; and
WHEREAS, the Administrative Committee (the "Named Fiduciary") is the
named fiduciary of the Plan (within the meaning of section 402(a) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")); and
<PAGE> 5
WHEREAS, the Trustee is willing to hold and invest the aforesaid Plan
assets in trust among several investment options selected by the Named
Fiduciary; and
WHEREAS, the Trustee shall maintain a separate account reflecting the
equitable share of each Plan in the Trust and in all investments, receipts,
disbursements and other transactions hereunder, and shall report the value if
such equitable share at such times as may be mutually agreed upon by the
Trustee and the Sponsor. Such equitable share shall be used solely for the
payments of benefits, expenses and other charges properly allocable to each
such Plan and shall not be used for the payment of benefits, expenses or other
charges properly allocable to any other Plan; and
WHEREAS, the Sponsor wishes to have the Trustee perform certain
ministerial recordkeeping and administrative functions under the Plan; and
WHEREAS, Administrative Committee (the "Administrator") is the
administrator of the Plan (within the meaning of section 3(16)(A) of ERISA);
and
WHEREAS, the Trustee is willing to perform recordkeeping and
administrative services for the Plan if the services are purely ministerial in
nature and are provided within a framework of plan provisions, guidelines and
interpretations conveyed in writing to the Trustee by the Administrator.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements set forth below, the Sponsor and the Trustee
agree as follows:
SECTION 1. TRUST. The Sponsor hereby establishes the A. H. Belo Defined
Contribution Trust (the "Trust"), with the Trustee. The Trust shall consist of
an initial contribution of money or other property acceptable to the Trustee in
its sole discretion, made by the Sponsor or transferred from a previous trustee
under the Plan, and such additional sums of money as shall from time to time be
delivered to the Trustee under the Plan, all investments made therewith and
proceeds thereof, and all earnings and profits thereon, less the payments that
are made by the Trustee as provided herein. The Trustee hereby accepts the
Trust on the terms and conditions set forth in this Agreement. In accepting
this Trust, the Trustee shall be accountable for the assets received by it,
subject to the terms and conditions of this Agreement.
SECTION 2. EXCLUSIVE BENEFIT AND REVERSION OF SPONSOR CONTRIBUTIONS.
(a) Except as provided in paragraphs (b), (c) and (d) of this Section,
or under applicable law, no part of the Trust may be used for, or diverted to,
purposes other than the exclusive benefit of the participants in the Plan or
their beneficiaries or the reasonable expenses of Plan administration.
2
<PAGE> 6
(b) In the case of contributions made by the Sponsor prior to the
receipt of an initial favorable determination letter from the Internal Revenue
Service with respect to the Plan, the Sponsor may direct the Trustee to return
to the Sponsor those contributions and all earning thereon within one year
after the Internal Revenue Service refuses in writing to issue such a letter.
(c) In the case of any portion of a contribution made by the Sponsor
by a mistake of fact, the Sponsor may direct the Trustee to return to the
Sponsor that portion of the contribution within one year after the payment of
that portion of the contribution.
(d) In the case of any portion of a contribution made by the Sponsor
and disallowed by the Internal Revenue Service as a deduction under Section 404
of the Internal Revenue Code of 1986, as amended, the Sponsor may direct the
Trustee to return to the Sponsor that portion of the contribution within one
year after the Internal Revenue Service disallows the deduction in writing.
(e) Earnings attributable to the contributions returnable under
paragraph (c) or (d) shall not be returned to the Sponsor, and any realized
loss in asset value attributable to those contributions shall reduce the amount
returned.
SECTION 3. DISBURSEMENTS.
(a) Directions from Administrator. The Trustee shall make
disbursements in the amounts and in the manner that the Administrator directs
from time to time in writing. The Trustee shall have no responsibility to
ascertain any direction's compliance with the terms of the Plan or of any
applicable law or the direction's effect for tax purposes or otherwise; nor
shall the Trustee have any responsibility to see to the application of any
disbursement.
(b) Participant Withdrawal Requests. The Sponsor hereby directs that,
pursuant to the Plan, a participant withdrawal request (in-service or full
withdrawal) may be made by the participant by telephone, or in such other
manner as may be agreed to from time to time by the Sponsor and Trustee, and
the Trustee shall process such request only after the identity of the
participant is verified by use of a personal identification number ("PIN") and
social security number. The Trustee shall process such withdrawal in accordance
with written guidelines provided by the Sponsor and documented in the Plan
Administrative Manual.
(c) Limitations. The Trustee shall not be required to make any
disbursement in excess of the net realizable value of the assets of the Trust
at the time of the disbursement. The Trustee shall make
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<PAGE> 7
cash disbursements in accordance with the applicable source and fund withdrawal
hierarchy as documented in the Plan Administrative Manual, unless the
Administrator has provided a written direction to the contrary.
SECTION 4. INVESTMENT OF TRUST.
(a) Selection of Investment Options. The Trustee shall have no
responsibility for the selection of investment options under the Trust and
shall not render investment advice to any person in connection with the
selection of such options.
(b) Available Investment Options. The Named Fiduciary shall direct the
Trustee as to the investment options in which the Trust shall be invested
during the period beginning on the date of the initial transfer of assets to
the Trust and ending on the date of the completion of the reconciliation of
participant records ("recordkeeping reconciliation period"), and the investment
options which Plan participants may invest following the reconciliation period,
subject to the following limitations. The Named Fiduciary may determine to
offer as investment options only: (i) securities issued by the investment
companies advised by Fidelity Management & Research Company and certain
securities issued by investment companies not advised by Fidelity Management &
Research Company (collectively, "Mutual Funds"), (ii) notes evidencing loans to
Plan participants in accordance with the terms of the Plan, (iii) equity
securities issued by the Sponsor or an affiliate which are publicly-traded and
which are "qualifying employer securities" within the meaning of Section
407(d)(5) of ERISA ("Sponsor Stock"), (iv) guaranteed investment contracts
chosen by the Trustee, (v) guaranteed investment contracts heretofore entered
into by the Sponsor or predecessor trustee and specifically identified on
Schedule "G" attached hereto ("Existing GICs"), and (vii) collective investment
funds maintained by the Trustee for qualified plans.
The Named Fiduciary hereby directs the Trustee to continue to hold
such Existing GICs until contract maturity or until the Named Fiduciary directs
otherwise, it being expressly understood that such direction is given in
accordance with Section 403(a) of ERISA. The Trustee shall be considered a
fiduciary with investment discretion only with respect to Plan assets
(including the proceeds from any existing GICs) that are invested in guaranteed
investment contracts chosen by the Trustee or in collective investment funds
maintained by the Trustee for qualified plans.
The investment options initially selected by the Named Fiduciary are
identified on Schedules "A" and "C" attached hereto. The Named Fiduciary may
add additional investment options with the consent of the Trustee and upon
mutual amendment of this Trust Agreement and the Schedules thereto to reflect
such additions.
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<PAGE> 8
(c) Participant Direction. As authorized under the Plan, each Plan
participant shall direct the Trustee in which investment option(s) to invest
the assets in the participant's individual accounts. Such directions may be
made by Plan participants by use of the telephone exchange system maintained
for such purposes by the Trustee or its agent, in accordance with written
Telephone Exchange Guidelines attached hereto as Schedule "K". In the event
that the Trustee fails to receive a proper direction, the assets shall be
invested in the investment option set forth for such purpose on Schedule "C",
until the Trustee receives a proper direction.
(d) Mutual Funds. The Named Fiduciary hereby acknowledges that it has
received from the Trustee a copy of the prospectus for each Mutual Fund
selected by the Named Fiduciary as a Plan investment option or short-term
investment fund. All transactions involving Mutual Funds not advised by
Fidelity Management & Research Company ("Non-Fidelity Mutual Funds") shall be
done in accordance with the Operational Guidelines attached hereto as Schedule
"I". Trust investments in Mutual Funds shall be subject to the following
limitations:
(i) Execution of Purchases and Sales. Purchases and sales of
Mutual Funds (other than for exchanges) shall be made on the date on which the
Trustee receives from the Administrator in good order all information,
documentation and wire transfer of funds (if applicable) necessary to
accurately effect such transactions. Exchanges of Mutual Funds shall be made in
accordance with the Telephone Exchange Guidelines attached hereto as Schedule
"K".
(ii) Voting. At the time of mailing of notice of each annual
or special stockholders' meeting of any Mutual Fund, the Trustee shall send a
copy of the notice and all proxy solicitation materials to each Plan
participant who has shares of the Mutual Fund credited to the participant's
accounts, together with a voting direction form for return to the Trustee or
its designee. The participant shall have the right to direct the Trustee as to
the manner in which the Trustee is to vote the shares credited to the
participant's accounts (both vested and unvested). The Trustee shall vote the
shares as directed by the participant. The Trustee shall not vote shares for
which it has received no directions from the participant.
During the recordkeeping reconciliation period, the Named Fiduciary
shall have the right to direct the Trustee as to the manner in which the
Trustee is to vote the shares of the Mutual Funds in the Trust. Following the
recordkeeping reconciliation period the Named Fiduciary shall continue to have
the right to direct the Trustee as to the manner in which the Trustee is to
vote the Mutual Funds shares held short-term liquidity reserve for a unitized
investment option.
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<PAGE> 9
With respect to all rights other than the right to vote, the Trustee
shall follow the directions of the participant and if no such directions are
received, the directions of the Named Fiduciary. The Trustee shall have no
further duty to solicit directions from participants or the Named Fiduciary.
(e) Sponsor Stock in which Fidelity Management Trust Company is not
the trustee. Transactions involving Sponsor Stock shall be executed in
accordance with the Operating Procedures set forth on Schedule "H" and attached
hereto.
(f) Participant Loans. The Administrator shall act as the Trustee's
agent for participant loan notes and as such shall (i) separately account for
repayments of such loans and clearly identify such assets as Plan assets and
(ii) collect and remit all principal and interest payments to the Trustee. To
originate a participant loan, the Plan participant shall direct the Trustee as
to the term and amount of the loan to be made from the participant's individual
account. Such directions shall be made by Plan participants by use of the
telephone exchange system maintained for such purpose by the Trustee or its
agent. The Trustee shall determine, based on the current value of the
participant's account on the date of the request and any guidelines provided by
the Sponsor, the amount available for the loan. Based on the interest rate
supplied by the Sponsor in accordance with the terms of the Plan, the Trustee
shall advise the participant of such interest rate, as well as the installment
payment amounts. The Trustee shall distribute the Participant loan agreement
and truth-in-lending disclosure with the proceeds check to the participant. To
facilitate recordkeeping, the Trustee may destroy the original of any
promissory note made in connection with a loan to a participant under the Plan,
provided that the Trustee first creates a duplicate by a photographic or
optical scanning or other process yielding a reasonable facsimile of the
promissory note and the Plan participant's signature thereon, which duplicate
may be reduced or enlarged in size from the actual size of the original
promissory note.
(g) Guaranteed Investment Contracts. Trust investments in guaranteed
investment contracts ("GICs") shall be subject to the following limitations:
(i) Collective Investment Funds. To the extent that the Named
Fiduciary selects as an investment option the Managed Income Portfolio of the
Fidelity Group Trust for Employee Benefit Plans (the "Group Trust"), the
Sponsor hereby (A) agrees to the terms of the Group Trust and adopts said terms
as a part of this Agreement and (B) acknowledges that it has received from the
Trustee a copy of the Group Trust, the Declaration of Separate Fund for the
Managed Income Portfolio of the Group Trust, and the Circular for the Managed
Income Portfolio.
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<PAGE> 10
(ii) Managed Income Fund. The Managed Income Fund shall
consist of existing GICs defined in Schedule "G" and the Managed Income
Portfolio. All transactions involving the Managed Income Fund shall be done in
accordance with the Operating Procedures attached hereto as Schedule "J".
(iii) In order to provide the necessary monies for exchanges
or redemptions from the GIC investment option, if any, under the Plan, the
Sponsor agrees that the Plan shall maintain a liquidity reserve allocated to
the Plan GIC investment option in Fidelity Institutional Cash Portfolios: Money
Market Portfolio: Class I or such other Mutual Fund or commingled money market
pool as agreed to by the Sponsor and the Trustee.
(h) Reliance of Trustee on Directions.
(i) The Trustee shall not be liable for any loss, or by
reason of any breach, which arises from any participant's exercise or
non-exercise of rights under this Section 4 over the assets in the
participant's accounts.
(ii) The Trustee shall not be liable for any loss, or by
reason of any breach, which arises from the Named Fiduciary's exercise or
non-exercise of rights under this Section 4, unless it was clear on their face
that the actions to be taken under the Named Fiduciary's directions were
prohibited by the fiduciary duty rules of section 404(a) of ERISA or were
contrary to the terms of the Plan or this Agreement.
(i) Trustee Powers. The Trustee shall have the following powers
and authority:
(i) Subject to paragraphs (b) and (c) of this Section 4, to
sell, exchange, convey, transfer, or otherwise dispose of any property held in
the Trust, by private contract or at public auction. No person dealing with the
Trustee shall be bound to see to the application of the purchase money or other
property delivered to the Trustee or to inquire into the validity, expediency,
or propriety of any such sale or other disposition.
(ii) Subject to paragraphs (b) and (c) of this Section 4, to
invest in guaranteed investment contracts and short term investments (including
interest bearing accounts with the Trustee or money market mutual funds advised
by affiliates of the Trustee) and in collective investment funds maintained by
the Trustee for qualified plans, in which case the provisions of each
collective investment
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<PAGE> 11
fund in which the Trust is invested shall be deemed adopted by the Sponsor and
the provisions thereof incorporated as a part of this Trust as long as the fund
remains exempt from taxation under Sections 401(a) and 501(a) of the Internal
Revenue Code of 1986, as amended.
(iii) To cause any securities or other property held as part
of the Trust to be registered in the Trustee's own name, in the name of one or
more of its nominees, or in the Trustee's account with the Depository Trust
Company of New York and to hold any investments in bearer form, but the books
and records of the Trustee shall at all times show that all such investments
are part of the Trust.
(iv) To keep that portion of the Trust in cash or cash
balances as the Named Fiduciary or Administrator may, from time to time, deem
to be in the best interest of the Trust.
(v) To make, execute, acknowledge, and deliver any and all
documents of transfer or conveyance and to carry out the powers herein granted.
(vi) To borrow funds from a bank not affiliated with the
Trustee in order to provide sufficient liquidity to process Plan transactions
in a timely fashion; provided that the cost of such borrowing shall be
allocated in a reasonable fashion to the investment fund(s) in need of
liquidity.
(vii) To settle, compromise, or submit to arbitration any
claims, debts, or damages due to or arising from the Trust; to commence or
defend suits or legal or administrative proceedings; to represent the Trust in
all suits and legal and administrative hearings; and to pay all reasonable
expenses arising from any such action, from the Trust if not paid by the
Sponsor.
(viii) To employ legal, accounting, clerical, and other
assistance as may be required in carrying out the provisions of this Agreement
and to pay their reasonable expenses and compensation from the Trust if not
paid by the Sponsor.
(ix) To invest all of any part of the assets of the Trust in
any collective investment trust or group trust which then provides for the
pooling of the assets of plans described in Section 401(a) and exempt from tax
under Section 501(a) of the Internal Revenue Code ("Code"), or any comparable
provisions of any future legislation that amends, supplements, or supersedes
those sections, provided that such collective investment trust or group trust
is exempt from tax under the Code or regulations or rulings issued by the
Internal Revue Service: the provisions of the document governing such
collective
8
<PAGE> 12
investment trusts or group trusts, as it may be amended from time to
time, shall govern any investment therein and are hereby made a part of this
Trust Agreement.
(x) To do all other acts although not specifically mentioned
herein, as the Trustee may deem necessary to carry out any of the foregoing
powers and the purposes of the Trust.
SECTION 5. RECORDKEEPING AND ADMINISTRATIVE SERVICES TO BE PERFORMED.
(a) General. The Trustee shall perform those recordkeeping and
administrative functions described in Schedule "A" attached hereto. These
recordkeeping and administrative functions shall be performed within the
framework of the Administrator's written directions regarding the Plan's
provisions, guidelines and interpretations.
(b) Accounts. The Trustee shall keep accurate accounts of all
investments, receipts, disbursements, and other transactions hereunder, and
shall report the value of the assets held in the Trust as of the last day of
each fiscal quarter of the Plan and, if not on the last day of a fiscal
quarter, the date on which the Trustee resigns or is removed as provided in
Section 8 of this Agreement or is terminated as provided in Section 10 (the
"Reporting Date"). Within thirty (30) days following each Reporting Date or
within sixty (60) days in the case of a Reporting Date caused by the
resignation or removal of the Trustee, or the termination of this Agreement,
the Trustee shall file with the Administrator a written account setting forth
all investments, receipts, disbursements, and other transactions effected by
the Trustee between the Reporting Date and the prior Reporting Date, and
setting forth the value of the Trust as of the Reporting Date. Except as
otherwise required under ERISA, upon the expiration of six (6) months from the
date of filing such account with the Administrator, the Trustee shall have no
liability or further accountability to anyone with respect to the propriety of
its acts or transactions shown in such account, except with respect to such
acts or transactions as to which the Sponsor shall within such six (6) month
period file with the Trustee written objections.
(c) Inspection and Audit. All records generated by the Trustee in
accordance with paragraphs (a) and (b) shall be open to inspection and audit,
during the Trustee's regular business hours prior to the termination of this
Agreement, by the Administrator or any person designated by the Administrator.
Upon the resignation or removal of the Trustee or the termination of this
Agreement, the Trustee shall provide to the Administrator, at no expense to the
Sponsor, in the format regularly provided to the Administrator, a statement of
each participant's accounts as of the resignation, removal, or termination, and
the Trustee shall provide to the Administrator or the Plan's new recordkeeper
such further records as are reasonable, at the Sponsor's expense.
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<PAGE> 13
(d) Effect of Plan Amendment. A confirmation of the current qualified
status of the Plan is attached hereto as Schedule "F". The Trustee's provision
of the recordkeeping and administrative services set forth in this Section 5
shall be conditioned on the Sponsor delivering to the Trustee a copy of any
amendment to the Plan as soon as administratively feasible following the
amendment's adoption, with, if requested, an IRS determination letter or an
opinion of counsel substantially in the form of Schedule "F" covering such
amendment, and on the Administrator providing the Trustee on a timely basis
with all the information the Administrator deems necessary for the Trustee to
perform the recordkeeping and administrative services and such other
information as the Trustee may reasonably request.
(e) Returns, Reports and Information. The Administrator shall be
responsible for the preparation and filing of all returns, reports, and
information required of the Trust or Plan by law. The Trustee shall provide the
Administrator with such information as the Administrator may reasonably request
to make these filings. The Administrator shall also be responsible for making
any disclosures to Participants required by law, except such disclosure as may
be required under federal or state truth-in-lending laws with regard to
Participant loans, which shall be provided by the Trustee.
SECTION 6. COMPENSATION AND EXPENSES. Within thirty (30) days of receipt of the
Trustee's bill, which shall be computed and billed in accordance with Schedule
"B" attached hereto and made a part hereof, as amended from time to time, the
Sponsor shall send to the Trustee a payment in such amount or the Sponsor may
direct the Trustee to deduct such amount from participants' accounts. All
expenses of the Trustee relating directly to the acquisition and disposition of
investments constituting part of the Trust, and all taxes of any kind
whatsoever that may be levied or assessed under existing or future laws upon or
in respect of the Trust or the income thereof, shall be a charge against and
paid from the appropriate Plan participants' accounts.
SECTION 7. DIRECTIONS AND INDEMNIFICATION.
(a) Identity of Administrator and Named Fiduciary. The Trustee shall
be fully protected in relying on the fact that the Named Fiduciary and the
Administrator under the Plan are the individuals or persons named as such above
or such other individuals or persons as the Sponsor may notify the Trustee in
writing.
(b) Directions from Administrator. Whenever the Administrator provides
a direction to the Trustee, the Trustee shall not be liable for any loss, or by
reason of any breach, arising from the direction (i) if the direction is
contained in a writing (or is oral and immediately confirmed in a writing)
signed by any individual whose name and signature have been submitted (and not
withdrawn) in writing to the
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<PAGE> 14
Trustee by the Administrator in the form attached hereto as Schedule "D", and
(ii) if the Trustee reasonably believes the signature of the individual to be
genuine, unless it is clear on the direction's face that the actions to be
taken under the direction would be prohibited by the fiduciary duty rules of
Section 404(a) of ERISA or would be contrary to the terms of this Agreement.
For purposes of this Section, such direction may also be made via electronic
data transfer (EDT) in accordance with procedures agreed to by the
Administrator and the Trustee; provided, however, that the Trustee shall be
fully protected in relying on such direction as if it were a direction made in
writing by the Administrator.
(c) Directions from Named Fiduciary. Whenever the Named Fiduciary or
Sponsor provides a direction to the Trustee, the Trustee shall not be liable
for any loss, or by reason of any breach, arising from the direction (i) if the
direction is contained in a writing (or is oral and immediately confirmed in a
writing) signed by any individual whose name and signature have been submitted
(and not withdrawn) in writing to the Trustee by the Named Fiduciary in the
form attached hereto as Schedule "E" and (ii) if the Trustee reasonably
believes the signature of the individual to be genuine, unless it is clear on
the direction's face that the actions to be taken under the direction would be
prohibited by the fiduciary duty rules of Section 404(a) of ERISA or would be
contrary to the terms of this Agreement. Such direction may also be made via
electronic EDT in accordance with procedures agreed to by the Named Fiduciary
and the Trustee; provided, however, that the Trustee shall be fully protected
in relying on such direction as if it were a direction made in writing by the
Named Fiduciary.
(d) Co-Fiduciary Liability. In any other case, the Trustee shall not
be liable for any loss, or by reason of any breach, arising from any act or
omission of another fiduciary under the Plan except as provided in section
405(a) of ERISA.
(e) Indemnification. The Sponsor shall indemnify the Trustee against,
and hold the Trustee harmless from, any and all loss, damage, penalty,
liability, cost, and expense, including without limitation, reasonable
attorneys' fees and disbursements, that may be incurred by, imposed upon, or
asserted against the Trustee by reason of any claim, regulatory proceeding, or
litigation arising from any act done or omitted to be done by any individual or
person with respect to the Plan or Trust, excepting only any and all loss,
etc., arising solely from the Trustee's negligence, bad faith or willful
misconduct.
(f) Survival. The provisions of this Section 7 shall survive the
termination of this Agreement.
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<PAGE> 15
SECTION 8. RESIGNATION OR REMOVAL OF TRUSTEE.
(a) Resignation. The Trustee may resign at any time upon sixty (60)
days' notice in writing to the Sponsor, unless a shorter period of notice is
agreed upon by the Sponsor.
(b) Removal. The Sponsor may remove the Trustee at any time upon sixty
(60) days' notice in writing to the Trustee, unless a shorter period of notice
is agreed upon by the Trustee.
SECTION 9. SUCCESSOR TRUSTEE.
(a) Appointment. If the office of Trustee becomes vacant for any
reason, the Sponsor may in writing appoint a successor trustee under this
Agreement. The successor trustee shall have all of the rights, powers,
privileges, obligations, duties, liabilities, and immunities granted to the
Trustee under this Agreement. The successor trustee and predecessor trustee
shall not be liable for the acts or omissions of the other with respect to the
Trust.
(b) Acceptance. When the successor trustee accepts its appointment
under this Agreement, the predecessor trustee shall execute all instruments and
do all acts that reasonably may be necessary or reasonably may be requested in
writing by the Sponsor or the successor trustee to vest title to all Trust
assets in the successor trustee or to deliver all Trust assets to the successor
trustee.
(c) Corporate Action. Any successor of the Trustee or successor
trustee, through sale or transfer of the business or trust department of the
Trustee or successor trustee, or through reorganization, consolidation, or
merger, or any similar transaction, shall, upon consummation of the
transaction, become the successor trustee under this Agreement.
SECTION 10. TERMINATION. This Agreement may be terminated at any time by the
Sponsor upon sixty (60) days' notice in writing to the Trustee. On the date of
the termination of this Agreement, the Trustee shall forthwith transfer and
deliver to such individual or entity as the Sponsor shall designate, all cash
and assets then constituting the Trust. If, by the termination date, the
Sponsor has not notified the Trustee in writing as to whom the assets and cash
are to be transferred and delivered, the Trustee may bring an appropriate
action or proceeding for leave to deposit the assets and cash in a court of
competent jurisdiction. The Trustee shall be reimbursed by the Sponsor for all
costs and expenses of the action or proceeding including, without limitation,
reasonable attorneys' fees and disbursements.
SECTION 11. RESIGNATION, REMOVAL, AND TERMINATION NOTICES. All notices of
resignation, removal, or termination under this Agreement must be in writing
and mailed to the party to which the notice is being given by certified or
registered mail, return receipt requested, to the Sponsor c/o Assistant General
Counsel, Communications Center, Houston and Young Streets, Dallas, Texas 75265,
and to the Trustee
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<PAGE> 16
c/o John M. Kimpel, Fidelity Investments, 82 Devonshire Street, Boston,
Massachusetts 02109, or to such other addresses as the parties have notified
each other of in the foregoing manner.
SECTION 12. DURATION. This Trust shall continue in effect without limit as to
time, subject, however, to the provisions of this Agreement relating to
amendment, modification, and termination thereof.
SECTION 13. AMENDMENT OR MODIFICATION. This Agreement may be amended or
modified at any time and from time to time only by an instrument executed by
both the Sponsor and the Trustee. Notwithstanding the foregoing, to reflect
increased operating costs the Trustee may once each calendar year amend
Schedule "B" without the Sponsor's consent upon seventy-five (75) days written
notice to the Sponsor.
SECTION 14. GENERAL.
(a) Performance by Trustee, its Agents or Affiliates. The Sponsor
acknowledges and authorizes that the services to be provided under this
Agreement shall be provided by the Trustee, its agents or affiliates, including
Fidelity Investments Institutional Operations Company, Inc. or its successor,
and that certain of such services may be provided pursuant to one or more other
contractual agreements or relationships.
(b) Entire Agreement. This Agreement together with the schedules
attached hereto, which are hereby incorporated herein, contains all of the
terms agreed upon between the parties with respect to the subject matter
hereof.
(c) Waiver. No waiver by either party of any failure or refusal to
comply with an obligation hereunder shall be deemed a waiver of any other or
subsequent failure or refusal to so comply.
(d) Successors and Assigns. The stipulations in this Agreement shall
inure to the benefit of, and shall bind, the successors and assigns of the
respective parties.
(e) Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
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<PAGE> 17
(f) Section Headings. The headings of the various sections and
subsections of this Agreement have been inserted only for the purposes of
convenience and are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
(g) Delegation by Employer. By authorizing the assets of any Plan as
to which it is an Employer to be deposited in the Trust, each Employer, other
than the Sponsor, hereby irrevocably delegates and grants to the Sponsor full
and exclusive power and authority to exercise all of the powers conferred upon
the Sponsor and each Employer by the terms of this Agreement, and to take or
refrain from taking any and all action which such Employer might otherwise take
or refrain from taking with respect to this Agreement, including the sole and
exclusive power to exercise, enforce or waive any rights whatsoever which such
Employer might otherwise have with respect to the Trust, and irrevocably
appoints the Sponsor as its agent for all purposes under this Agreement. The
Trustee shall have no obligation to account to any such Employer or to follow
the instructions of or otherwise deal with any such Employer, the intention
being that the Trustee shall deal solely with the Sponsor.
SECTION 15. GOVERNING LAW.
(a) Massachusetts Law Controls. This Agreement is being made in the
Commonwealth of Massachusetts, and the Trust shall be administered as a
Massachusetts trust. The validity, construction, effect, and administration of
this Agreement shall be governed by and interpreted in accordance with the laws
of the Commonwealth of Massachusetts, except to the extent those laws are
superseded under Section 514 of ERISA.
(b) Trust Agreement Controls. The Trustee is not a party to the Plan,
and in the event of any conflict between the provisions of the Plan and the
provisions of this Agreement, the provisions of this Agreement shall control.
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<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the day and year first
above written.
A. H. BELO CORPORATION
Attest: Mike McCarthy By: /s/Jeff Lamb
----------------------- ------------------------------
Secretary
Name: Jeff Lamb
------------------------------
Title: Vice President/Administration
------------------------------
Date: March 13, 1998
------------------------------
FIDELITY MANAGEMENT TRUST
COMPANY
Attest: By: /s/Cheryl Gladstone
----------------------- ------------------------------
Assistant Clerk
Name: Cheryl Gladstone
------------------------------
Title: Vice President
------------------------------
Date: March 13, 1998
------------------------------
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<PAGE> 19
SCHEDULE "A"
ADMINISTRATIVE SERVICES
Administration
* Establishment and maintenance of Participant account and election
percentages.
* Maintenance of the following plan investment options for the A.H. Belo
Corporation Employee Savings and Investment Plan:
o Fidelity Retirement Government Money Market
o Fidelity Puritan Fund
o Fidelity Magellan Fund
o Fidelity Growth & Income Portfolio
o A.H. Belo Series A Common Stock Fund
o Fidelity Intermediate Bond Fund
o Fidelity Overseas Fund (no longer an option effective 4/1/98)
o A.H. Belo Series B Common Stock Fund
o Spartan U.S. Equity Index Fund
o PBHG Growth Fund
o Fidelity Dividend Growth Fund
o Templeton Foreign Fund I
o Managed Income Fund
* Maintenance of the following plan investment options for the Journal-Guild
401(k) Plan:
o Fidelity Puritan Fund
o Spartan U.S. Equity Index Fund
o Fidelity Dividend Growth Fund
o Templeton Foreign Fund
o Managed Income Fund
* Maintenance of the following plan investment options for the Copley/Colony,
Inc. Retirement Plan:
o Fidelity Puritan Fund
o Spartan U.S. Equity Index Fund
o Fidelity Dividend Growth Fund
o Templeton Foreign Fund
o Managed Income Fund
* Maintenance of the following plan investment options for the Colony
Communications, Inc. Retirement Plan:
o Fidelity Puritan Fund
o Spartan U.S. Equity Index Fund
o Fidelity Dividend Growth Fund
o Templeton Foreign Fund
o Managed Income Fund
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<PAGE> 20
* Maintenance of the following money classifications for the A.H. Belo
Corporation Employee Savings and Investment Plan:
o After Tax Contributions
o Company Match
o Rollover
o Employee Pre-Tax
o IRA Contribution - QVEC
o Prior Company
o Profit Sharing
o Unmatched Comp. Deferral
* Maintenance of the following money classifications for the Journal-Guild
401(k) Plan:
o Matched Compensation Deferral
o Unmatched Compensation Deferral
o After-Tax Contributions
o Matching Company
o Rollover
o Company Basic Contribution
* Maintenance of the following money classifications for the Copley/Colony,
Inc. Retirement Plan (frozen):
o Pre-tax Contributions
o Employer Match
o Rollover
o Employer Base
* Maintenance of the following money classifications for the Colony
Communications, Inc. Retirement Plan (frozen):
o Pre-tax Contributions
o Employer Match
o Rollover
o Employer Base
* Processing of mutual fund trades.
The Trustee will provide only the recordkeeping and administrative
services set forth on this Schedule "A" and no others.
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<PAGE> 21
A) PROVIDE PARTICIPANT TELEPHONE SERVICES
1.Fidelity registered representatives are available from 8:30 a.m. -
12:00 midnight ET to provide toll free telephone service for
participant inquiries and transactions. Additionally, participants
have 24 hour account balance inquiry access utilizing our automated
voice response system.
2.For security purposes, all calls are recorded. In addition, several
levels of security are available including the verification of a
Personal Identification Number (PIN) and/or any other indicative
data resident on the system.
3.Through our telephone services, Fidelity provides the following
services:
o Provide mutual fund investment information.
o Maintain plan and GIC specific provisions.
o Process exchanges (transfers) between Fidelity's mutual funds
on a daily basis.
o Perform exchanges between Mutual Funds and/or GICs.
o Maintain and process changes to participants' contribution
allocations for all money sources.
o Allow participants to change their deferral and after-tax
percentages and provide updates via EDT for customer to apply to
its payrolls accordingly.
o Consult with participants in various loan scenarios and generate
all documentation.
o Process all participant loan and withdrawal requests via
o Fidelity's toll-free telephone service according to plan
provisions on a daily basis.
o Enroll new participants via telephone; provide confirmation of
enrollment within five (5) days of the request.
o In-service withdrawals via telephone due to certain circumstances
previously approved by the Sponsor.
o Hardship withdrawals via telephone as directed and approved by
Sponsor.
B) PLAN ACCOUNTING
1. Process payroll contributions according to your payroll frequency
via electronic data transfer (EDT). The data format will be provided
by Fidelity.
2. Provide plan and participant level accounting for all money
classifications for each Plan.
3. Audit and reconcile the plan and participant accounts daily.
4. Provide daily plan and participant level accounting for all
investment options.
5. Reconcile and process participant withdrawal requests as approved
and directed by the Sponsor. All requests are paid based on the
current market values of participants' accounts, not advanced or
estimated values. A distribution report will accompany each check.
6. Track individual participant loans; process loan withdrawals;
re-invest loan repayments; and prepare and deliver comprehensive
reports to plan sponsor to assist in the administration of
participant loans.
18
<PAGE> 22
7. Fidelity's Guaranteed Investments Daily Equity System (GUIDE) is an
automatic GIC daily portfolio accounting system. GUIDE provides the
Sponsor with daily valuation of their plan assets whether
individually managed or in our Managed Income Portfolio.
8. Maintain and process changes to participants' prospective and
existing investment mix elections via Fidelity's toll-free telephone
service.
C) PARTICIPANT REPORTING
1. Mail confirmation to participants of all transactions initiated via
Fidelity Telephone Services within three (3) calendar days of the
transaction.
2. Prepare and mail via first class to each plan participant a
quarterly detailed participant statement reflecting all activity for
the period. Statements will be mailed no later than twenty (20)
calendar days after each quarter end.
3. Mail required 402(f) notification for distributions from the plan.
This notice advises participants of tax consequences of their plan
distribution.
D) PLAN REPORTING
1. Prepare, reconcile and deliver a monthly Trial Balance Report
presenting all money classes and investments. This report is based
on the market value as of the last business day of the month. The
report will be delivered not later than twenty (20) days after the
end of each month in the absence of unusual circumstances.
2. Prepare, reconcile and deliver a Quarterly Administrative Report
presenting both on a participant and a total plan basis all money
classes, investment positions and a summary of all activity of the
participant and plan as of the last business day of the quarter. The
report will be delivered not later than twenty (20) days after the
end of each quarter in the absence of unusual circumstances.
E) GOVERNMENT REPORTING
Process year-end tax reports for participants - 1099R, as well as
financial reporting to assist in the preparation of Form 5500.
F) COMMUNICATION SERVICES
Employee communications describing available investment options,
including multimedia informational materials and group presentations.
19
<PAGE> 23
G) OTHER
Performance of non-discrimination limitation testing upon request. In
order to obtain this service, the client shall be required to provide
the information identified in the Fidelity Discrimination Testing
Package Guidelines.
<TABLE>
<CAPTION>
A.H. BELO CORPORATION FIDELITY MANAGEMENT TRUST
BENEFITS ADMINISTRATIVE COMPANY
COMMITTEE
<S> <C> <C> <C>
By: /s/Jeff Lamb March 13, 1998 By: /s/Cheryl Gladstone March 13, 1998
----------------------------------------- ----------------------------------------
Date Vice President Date
</TABLE>
20
<PAGE> 24
SCHEDULE "B"
FEE SCHEDULE
<TABLE>
<CAPTION>
<S> <C>
Annual Participant Fee: $5.00 per participant*, billed and payable
quarterly. The Copley/Colony, Inc. Retirement Plan
and the Colony Communications Retirement Plan will
each be subject to a $1,500 annual minimum for this
fee.
Enrollments by Phone: $5.00 per non-active employee residing on
Fidelity's participant recordkeeping system.
Loan Fee: Establishment fee of $35.00 per loan account;
annual fee of $15.00 per loan account.
Non-Fidelity Mutual Funds: .35% annual administration fee on Non-Fidelity
Mutual Fund assets which are equity/balanced funds
in the Templeton and PBHG fund families (to be paid
by the Non-Fidelity Mutual Fund vendor).
Stock Administration Fee: $6,500 per year.
Return of Excess Contribution Fee: $25.00 per participant, one-time charge per
calculation and check generation.
Plan Sponsor WebStation: First two User IDs provided free of charge. Each
additional User ID, $500 per year.
</TABLE>
* This fee will be imposed pro rata for each calendar quarter, or any part
thereof, that it remains necessary to keep a participant's account(s) as
part of the Plan's records, e.g., vested, deferred, forfeiture, top-heavy
and terminated participants who must remain on file through calendar
year-end for 1099-R reporting purposes.
GIC FEES
Existing GIC Recordkeeping Fee .05% on all existing GIC assets.
Expenses associated with the custody of assets underlying synthetic
investment contracts will be borne by the portfolio.
21
<PAGE> 25
OTHER FEES
Separate charges for optional non-discrimination testing, extraordinary
expenses resulting from large numbers of simultaneous manual transactions
or from errors not caused by Fidelity, or for reports not contemplated in
this Agreement. The Administrator may withdraw reasonable administrative
fees from the Trust by written direction to the Trustee.
Note: These fees have been negotiated and accepted based on the following:
current plan assets of $249 million, current participation of 7,180
participants, $127 million in Fidelity actively managed mutual funds,
$28 million in Fidelity non-actively managed mutual funds, $39 million
in stable value investment options, $46 million in Sponsor Stock, $8
million in non-Fidelity Mutual Funds and projected cash flows of $16.5
million per year. Fees will be subject to revision if these plan
characteristics change significantly by either falling below or
exceeding current projected levels.
<TABLE>
<CAPTION>
A.H. BELO CORPORATION FIDELITY MANAGEMENT TRUST
COMPANY
<S> <C>
By: /s/Jeff Lamb March 13, 1998 By: /s/Cheryl Gladstone March 13, 1998
---------------------------------- -----------------------------------------
Date Vice President Date
</TABLE>
22
<PAGE> 26
SCHEDULE "C"
INVESTMENT OPTIONS
In accordance with Section 4(b), the Named Fiduciary hereby directs
the Trustee that participants' individual accounts may be invested in the
following investment options:
* Maintenance of the following plan investment options for the A.H. Belo
Corporation Employee Savings and Investment Plan:
o Fidelity Retirement Government Money Market
o Fidelity Puritan Fund
o Fidelity Magellan Fund
o Fidelity Growth & Income Portfolio
o A.H. Belo Series A Common Stock Fund
o Fidelity Intermediate Bond Fund
o Fidelity Overseas Fund (no longer an option effective 4/1/98)
o A.H. Belo Series B Common Stock Fund
o Spartan U.S. Equity Index Fund
o PBHG Growth Fund
o Fidelity Dividend Growth Fund
o Templeton Foreign Fund I
o Managed Income Fund
* Maintenance of the following plan investment options for the
Journal-Guild 401(k) Plan:
o Fidelity Puritan Fund
o Spartan U.S. Equity Index Fund
o Fidelity Dividend Growth Fund
o Templeton Foreign Fund
o Managed Income Fund
* Maintenance of the following plan investment options for the Copley/Colony,
Inc. Retirement Plan:
o Fidelity Puritan Fund
o Spartan U.S. Equity Index Fund
o Fidelity Dividend Growth Fund
o Templeton Foreign Fund
o Managed Income Fund
* Maintenance of the following plan investment options for the Colony
Communications, Inc. Retirement Plan:
o Fidelity Puritan Fund
o Spartan U.S. Equity Index Fund
o Fidelity Dividend Growth Fund
o Templeton Foreign Fund
o Managed Income Fund
23
<PAGE> 27
The investment option referred to in Section 4(c) and Section 4(e)(v)
(B)(5)shall be the Spartan U.S. Equity Index Fund.
<TABLE>
<CAPTION>
A. H. BELO CORPORATION
BENEFITS ADMINISTRATIVE COMMITTEE
<S> <C>
By: /s/Jeff Lamb March 13, 1998 By: /s/Joe Daume March 13, 1998
-------------------------------------- ----------------------------------------
Date Date
By: /s/Kerri McSween March 13, 1998 By: /s/Dunia Shive March 13, 1998
-------------------------------------- -----------------------------------------
Date Date
By: /s/Michael D. Perry March 13, 1998 By: /s/Vicky Teherani March 13, 1998
--------------------------------------- ----------------------------------------
Date Date
By: /s/Lee Salzberger March 13, 1998 By: /s/Brenda Maddox March 13, 1998
-------------------------------------- ----------------------------------------
Date Date
By: /s/Jeff Lamb March 13, 1998 By: /s/Joe Daume March 13, 1998
--------------------------------------- -----------------------------------------
Date Date
By: /s/Marian Spitzberg March 13, 1998 By: /s/Mark Ryan March 13, 1998
-------------------------------------- ---------------------------------------------
Date Date
By: /s/Ellen Wilson March 13, 1998 By: /s/Lisa Kovacs March 13, 1998
--------------------------------------- ----------------------------------------
Date Date
</TABLE>
24
<PAGE> 28
SCHEDULE "D"
[ADMINISTRATOR'S LETTERHEAD]
[DATE]
Ms. Carolyn Redden
Fidelity Investments Institutional Operations Company, Inc.
82 Devonshire Street- MM3H
Boston, Massachusetts 02109
[NAME OF PLAN]
*** NOTE: This schedule should contain names and signatures for
ALL individuals who will be providing directions to Fidelity
representatives in connection with the Plan.
Fidelity representatives will be unable to accept directions from
any individual whose name does not appear on this schedule. ***
Dear Ms. Redden:
This letter is sent to you in accordance with Section 7(b) of the
Trust Agreement, dated as of [date], between [name of Plan Sponsor] and
Fidelity Management Trust Company. [I or We] hereby designate [name of
individual], [name of individual], and [name of individual], as the individuals
who may provide directions upon which Fidelity Management Trust Company shall
be fully protected in relying. Only one such individual need provide any
direction. The signature of each designated individual is set forth below and
certified to be such.
You may rely upon each designation and certification set forth in this
letter until [I or we] deliver to you written notice of the termination of
authority of a designated individual.
Very truly yours,
[ADMINISTRATOR]
By
[signature of designated individual]
- ------------------------------------
[name of designated individual]
[signature of designated individual]
- ------------------------------------
[name of designated individual]
[signature of designated individual]
- ------------------------------------
[name of designated individual]
25
<PAGE> 29
SCHEDULE "E"
[NAMED FIDUCIARY'S LETTERHEAD]
[DATE]
Ms. Carolyn Redden
Fidelity Investments Institutional Operations Company, Inc.
82 Devonshire Street - MM3H
Boston, Massachusetts 02109
[NAME OF PLAN]
Dear Ms. Redden:
This letter is sent to you in accordance with Section 7(c) of the
Trust Agreement, dated as of [date], between [name of Plan Sponsor] and
Fidelity Management Trust Company. [I or We] hereby designate [name of
individual], [name of individual], and [name of individual], as the individuals
who may provide directions upon which Fidelity Management Trust Company shall
be fully protected in relying. Only one such individual need provide any
direction. The signature of each designated individual is set forth below and
certified to be such.
You may rely upon each designation and certification set forth in this
letter until [I or we] deliver to you written notice of the termination of
authority of a designated individual.
Very truly yours,
[NAMED FIDUCIARY]
By
[signature of designated individual]
- ------------------------------------
[name of designated individual]
[signature of designated individual]
- ------------------------------------
[name of designated individual]
[signature of designated individual]
- ------------------------------------
[name of designated individual]
26
<PAGE> 30
SCHEDULE "F"
[LAW FIRM LETTERHEAD]
** NOTE: MAY SUBSTITUTE THE PLAN'S IRS DETERMINATION LETTER IF THE LETTER IS
NO MORE THAT TWO YEARS OLD.
Ms. Carolyn Redden
Fidelity Investments Institutional Operations Company, Inc.
82 Devonshire Street - MM3H
Boston, MA 02109
[NAME OF PLAN]
Dear Ms. Redden
In accordance with your request, this letter sets forth our opinion
with respect to the qualified status under section 401(a) of the Internal
Revenue Code of 1986 (including amendments made by the Employee Retirement
Income Security Act of 1974) (the "Code"), of the [name of plan], as amended to
the date of this letter (the "Plan").
The material facts regarding the Plan as we understand them are as
follows. The most recent favorable determination letter as to the Plan's
qualified status under section 401(a) of the Code was issued by the [location
of Key District] District Director of the Internal Revenue Service and was
dated [date] (copy enclosed). The version of the Plan submitted by [name of
company] (the "Company") for the District Director's review in connection with
this determination letter did not contain amendments made effective as of
[date]. These amendments, among other matters, [brief description of
amendments]. [Subsequent amendments were made on [date] to amend the provisions
dealing with [brief description of amendments].]
The Company has informed us that it intends to submit the Plan to the
[location of Key District] District Director of the Internal Revenue Service
and to request from him a favorable determination letter as to the Plan's
qualified status under section 401(a) of the Code. The Company may have to make
some modifications to the Plan at the request of the Internal Revenue Service
in order to obtain this favorable determination letter, but we do not expect
any of these modifications to be material. The Company has informed us that it
will make these modifications.
Based on the foregoing statements of the Company and our review of the
provisions of the Plan, it is our opinion that the Internal Revenue Service
will issue a favorable determination letter as to the qualified status of the
Plan, as modified at the request of the Internal Revenue Service, under section
401(a) of the Code, subject to the customary condition that continued
qualification of the Plan, as modified, will depend on its effect in operation.
[Furthermore, in that the assets are in part invested in common stock
issued by the Company or an affiliate, it is our opinion that the Plan is an
"eligible individual account plan" (as defined under Section 407(d)(3) of
ERISA) and that the shares of common stock of the Company held and to be
purchased under the Plan are "qualifying employer securities" (as
27
<PAGE> 31
defined under Section 407(d)(5) of ERISA). Finally, it is our opinion that
interests in the Plan are not required to be registered under the Securities
Act of 1933, as amended, or, if such registration is required, that such
interests are effectively registered under said Act.]
Sincerely,
[name of law firm]
By [signature]
-----------------------------
[name of partner]
28
<PAGE> 32
SCHEDULE "G"
EXISTING GICS
In accordance with Section 4(e), the Named Fiduciary hereby directs the
Trustee to continue to hold the following Existing GICs until such time as the
Named Fiduciary directs otherwise:
-- Principal Financial #4-06074-01
-- Principal Financial #4-06074-02
-- John Hancock GAC 7466
-- John Hancock GAC 7912
-- John Hancock GAC 8563
A. H. BELO CORPORATION
BENEFITS ADMINISTRATIVE COMMITTEE
By: /s/Jeff Lamb March 13, 1998
------------------------------------
Date
29
<PAGE> 33
SCHEDULE "I"
OPERATIONAL GUIDELINES FOR NON-FIDELITY MUTUAL FUNDS
PRICING
By 7:00 p.m. Eastern Time ("ET") each Business Day, the Non-Fidelity Mutual
Fund Vendor (Fund Vendor) will input the following information ("Price
Information") into the Fidelity Participant Recordkeeping System ("FPRS")
via the remote access price screen that Fidelity Investments Institutional
Operations Company, Inc. ("FIIOC"), an affiliate of the Trustee, has
provided to the Fund Vendor: (1) the net asset value for each Fund at the
Close of Trading, (2) the change in each Fund's net asset value from the
Close of Trading on the prior Business Day, and (3) in the case of an
income fund or funds, the daily accrual for interest rate factor ("mil
rate"). FIIOC must receive Price Information each Business Day (a "Business
Day" is any day the New York Stock Exchange is open). If on any Business
Day the Fund Vendor does not provide such Price Information to FIIOC, FIIOC
shall pend all associated transaction activity in the Fidelity Participant
Recordkeeping System ("FPRS") until the relevant Price Information is made
available by Fund Vendor.
TRADE ACTIVITY AND WIRE TRANSFERS
By 7:00 a.m. ET each Business Day following Trade Date ("Trade Date plus
One"), FIIOC will provide, via facsimile, to the Fund Vendor a consolidated
report of net purchase or net redemption activity that occurred in each of
the Funds up to 4:00 p.m. ET on the prior Business Day. The report will
reflect the dollar amount of assets and shares to be invested or withdrawn
for each Fund. FIIOC will transmit this report to the Fund Vendor each
Business Day, regardless of processing activity. In the event that data
contained in the 7:00 a.m. ET facsimile transmission represents estimated
trade activity, FIIOC shall provide a final facsimile to the Fund Vendor by
no later than 9:00 a.m. ET. Any resulting adjustments shall be processed by
the Fund Vendor at the net asset value for the prior Business Day.
The Fund Vendor shall send via regular mail to FIIOC transaction confirms
for all daily activity in each of the Funds. The Fund Vendor shall also
send via regular mail to FIIOC, by no later than the fifth Business Day
following calendar month close, a monthly statement for each Fund. FIIOC
agrees to notify the Fund Vendor of any balance discrepancies within twenty
(20) Business Days of receipt of the monthly statement.
30
<PAGE> 34
For purposes of wire transfers, FIIOC shall transmit a daily wire for
aggregate purchase activity and the Fund Vendor shall transmit a daily wire
for aggregate redemption activity, in each case including all activity
across all Funds occurring on the same day.
PROSPECTUS DELIVERY
FIIOC shall be responsible for the timely delivery of Fund prospectuses
and periodic Fund reports ("Required Materials") to Plan participants, and
shall retain the services of a third-party vendor to handle such mailings.
The Fund Vendor shall be responsible for all materials and production
costs, and hereby agrees to provide the Required Materials to the
third-party vendor selected by FIIOC. The Fund Vendor shall bear the costs
of mailing annual Fund reports to Plan participants. FIIOC shall bear the
costs of mailing prospectuses to Plan participants.
PROXIES
The Fund Vendor shall be responsible for all costs associated with the
production of proxy materials. FIIOC shall retain the services of a
third-party vendor to handle proxy solicitation mailings and vote
tabulation. Expenses associated with such services shall be billed directly
to the Fund Vendor by the third-party vendor.
PARTICIPANT COMMUNICATIONS
The Fund Vendor shall provide internally-prepared fund descriptive
information approved by the Funds' legal counsel for use by FIIOC in its
written participant communication materials. FIIOC shall utilize historical
performance data obtained from third-party vendors (currently Morningstar,
Inc., FACTSET Research Systems and Lipper Analytical Services) in telephone
conversations with plan participants and in quarterly participant
statements. The Sponsor hereby consents to FIIOC's use of such materials
and acknowledges that FIIOC is not responsible for the accuracy of such
third-party information. FIIOC shall seek the approval of the Fund Vendor
prior to retaining any other third-party vendor to render such data or
materials under this Agreement.
COMPENSATION
FIIOC shall be entitled to fees as set forth in a separate agreement with
the Fund Vendor.
31
<PAGE> 35
SCHEDULE "J"
OPERATING PROCEDURES FOR THE MANAGED INCOME FUND
I. DESCRIPTION OF INVESTMENT OPTION
The Managed Income Fund (the "Fund") will be comprised of units in the
Fidelity Institutional Cash Portfolios: Money Market Portfolio: Class
I ("STIF"), units in the Fidelity Group Trust for Employee Benefits
Plan Managed Income Portfolio ("MIP") and the existing Guaranteed
Investment Contracts ("GICs") outlined in Schedule "G" of the Trust
Agreement between the Trustee and the Sponsor.
II. INVESTMENT OPTION TRANSACTIONS
All transactions for the Fund will be coordinated by the Trustee based
on the procedures outlined in this document.
III. VALUATION
The Trustee will value the Fund, at a net asset value of $1 per share,
on a daily basis and produce a blended mil rate to reflect the net
income earned by the Fund.
IV. MONEY MOVEMENT
All money transfers to and from the Fund will be made through the STIF
portion of the Fund.
V. CASH MANAGEMENT
The Sponsor will maintain 3% of the Fund in STIF. The Trustee will
monitor the cashflows and the balance of the STIF. If the STIF balance
exceeds 3%, the Trustee will transfer the excess to the MIP. If the
STIF balance falls below 3%, the Trustee will request money from the
GIC carriers and/or the MIP on a LIFO Prorata basis to replenish the
balance to 3%.
VI. INVESTMENT CONTRACT MATURITIES AND PAYMENTS
The proceeds from a maturing investment contract will be transferred
to the STIF portion of the Fund for subsequent reinvestment in the
MIP. The Trustee will provide wiring instructions to the investment
contract issuer.
VII. RECONCILIATION
The Fidelity Participant Recordkeeping System (FPRS) will be
reconciled to the Managed Income Portfolio Accounting System (GUIDE)
on a daily and monthly basis. The investment contracts positions on
GUIDE will be reconciled to the issuer balances on a monthly basis.
32
<PAGE> 36
VIII. FEE COLLECTION FOR ACCOUNTING SERVICES
The Trustee will accrue its fee for Accounting services on a daily
basis, and will deduct the fee monthly from the earnings of the Fund.
IX. CHANGES TO THE SCHEDULE
This Schedule may be amended or modified by a written instrument
executed by both the Trustee and the Sponsor.
X. DISCONTINUANCE OF ACCOUNTING SERVICES
The Trustee will discontinue accounting services for the Managed
Income Fund once all the GICs have matured.
<TABLE>
<CAPTION>
A.H. BELO CORPORATION FIDELITY MANAGEMENT TRUST
BENEFITS ADMINISTRATIVE COMPANY
COMMITTEE
<S> <C>
By: /s/Jeff Lamb March 13, 1998 By: /s/Cheryl Gladstone March 13, 1998
---------------------------- ---------------------------------------------
Date Date
</TABLE>
33
<PAGE> 37
SCHEDULE "K"
TELEPHONE EXCHANGE GUIDELINES
The following telephone exchange guidelines are currently employed by Fidelity
Institutional Retirement Services Company (FIRSCO).
Telephone exchange hours are 8:30 a.m. (ET) to 12:00 midnight (ET) on each
Business Day. A "Business Day" is any day on which the New York Stock Exchange
is open.
FIRSCO reserves the right to change these telephone exchange guidelines at its
discretion.
MUTUAL FUNDS
EXCHANGES BETWEEN MUTUAL FUNDS
Participants may call on any Business Day to exchange between the mutual funds.
If the request is received before 4:00 p.m. (ET), it will receive that day's
trade date. Calls received after 4:00 p.m. (ET) will be processed on a next
Business Day basis.
SPONSOR STOCK
I. EXCHANGES FROM MUTUAL FUNDS INTO SPONSOR STOCK
Sponsor Stock exchanges are processed on a monthly cycle. Participants
who wish to exchange out of a mutual fund into Sponsor Stock may call
between the 1st and the 15th of the month. No calls will be accepted
after 4:00 p.m. (ET) on the 15th (or previous Business Day if the 15th
is not a Business Day).
Mutual fund shares are sold on the 15th of the month (or the previous
Business Day if the 15th is not a Business Day) and the Sponsor Stock
is purchased within two (2) Business Days after the date on which the
mutual fund shares are sold.
II. EXCHANGES FROM SPONSOR STOCK INTO MUTUAL FUNDS
Participants who wish to exchange out of Sponsor Stock into mutual
funds may call between the 1st and the 15th of the month. No calls
will be accepted after 4:00 p.m. (ET) on the 15th (or previous
Business Day if the 15th is not a Business Day).
The Sponsor Stock is sold on the 16th (or the next Business Day if the
16th is not a Business Day) and the subsequent purchase into mutual
funds will take place three (3) Business Days later. This allows for
settlement of the stock trade at the custodian and the corresponding
transfer to Fidelity.
34
<PAGE> 38
MANAGED INCOME FUND
I. EXCHANGES BETWEEN MUTUAL FUNDS AND MANAGED INCOME FUND
Participants who wish to exchange between a mutual fund and the
Managed Income Fund may call on any Business Day. If the request is
received before 4:00 p.m. (ET), it will receive that day's trade date.
Calls received after 4:00 p.m. (EST) will be processed on a next
Business Day basis.
II. EXCHANGES FROM MANAGED INCOME FUND INTO SPONSOR STOCK
Participants who wish to exchange out of the Managed Income Fund into
Sponsor Stock may call between the 1st and the 15th of the month. No
calls will be accepted after 4:00 p.m. (ET) on the 15th (or previous
Business Day if the 15th is not a Business Day).
Managed Income Fund shares are sold on the 15th of the month (or the
previous Business Day if the 15th is not a Business Day) and the
Sponsor Stock is purchased within two (2) Business Days after the date
on which the Managed Income Fund shares are sold.
III. EXCHANGES FROM SPONSOR STOCK INTO MANAGED INCOME FUND
Participants who wish to exchange out of Sponsor Stock into Managed
Income Funds may call between the 1st and the 15th of the month. No
calls will be accepted after 4:00 p.m. (ET) on the 15th (or previous
Business Day if the 15th is not a Business Day).
The Sponsor Stock is sold on the 16th (or the next Business Day if the
16th is not a Business Day) and the subsequent purchase into Managed
Income Funds will take place three (3) Business Days later. This
allows for settlement of the stock trade at the custodian and the
corresponding transfer to Fidelity.
IV. EXCHANGE RESTRICTIONS
Participants will not be permitted to make direct transfers from the
Managed Income Fund into a competing fund. Participants who wish to
exchange from the Managed Income Fund into a competing fund, must
first exchange into a non-competing fund for a period of 90 days.
A.H. BELO CORPORATION
BENEFITS ADMINISTRATIVE COMMITTEE
By: /s/Jeff Lamb March 13, 1998
--------------------------------------
Date
35
<PAGE> 1
EXHIBIT 10.3(2)(b)
AMENDMENT NO. 6 TO
THE A. H. BELO CORPORATION
1986 LONG TERM INCENTIVE PLAN
WHEREAS, A. H. Belo Corporation (the "Company") has heretofore adopted
THE A. H. BELO CORPORATION 1986 LONG TERM INCENTIVE PLAN (the "1986 Plan"); and
WHEREAS, pursuant to the provisions of paragraphs 16 and 18 of the
1986 Plan, the Board of Directors of the Company desires herein to amend the
1986 Plan; and
WHEREAS, the shareholders of the Company approved the proposed
amendment at their Annual Meeting on May 6, 1992;
NOW, THEREFORE, the 1986 Plan is hereby amended as follows:
1. Paragraph 2 of the 1986 Plan is amended by substituting the
number "3,600,000" at each place the number "2,400,000"
appears.
2. Paragraph 4 of the 1986 Plan as previously amended by Amendment
No. 3 is further amended by adding the following paragraphs
immediately after the fourth paragraph:
"Each nonemployee director at the close of business of the
1992 annual meeting of shareholders of the Corporation shall also be
granted an option to purchase 2,500 shares of Series A Common Stock
(the "additional option") on the date of each annual meeting of the
shareholders beginning with the 1992 annual meeting of shareholders
and ending with the 1996 annual meeting of shareholders, provided that
the director continues to be a nonemployee director at the close of
business of each such annual meeting. An individual who first becomes
a nonemployee director on or after the date of the 1992 annual meeting
of shareholders shall be granted an option for 10,000 shares on the
date of such election as a director and shall be granted an additional
option for 2,500 shares on the date of each of the five following
annual meetings of shareholders, provided that the director continues
to be a nonemployee director at the close of business of each such
annual meeting. For purposes of this paragraph, the date of an annual
meeting of shareholders is the date on which the meeting is convened
or, if later, the date of the last adjournment thereof.
Notwithstanding the provisions of paragraph 18 of the 1986
Plan, the provisions of the two immediately preceding paragraphs may
not be amended more than once every six months, other than to comply
with changes in the Code, the Employee Retirement Income Security Act
of 1974, as amended, or the rules and regulations thereunder."
<PAGE> 2
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed in its name and on its behalf by the officer thereunto duly authorized
as of the 6th day of May, 1992.
H. BELO CORPORATION
By: /s/Robert W. Decherd
---------------------------------
Chairman of the Board and
Chief Executive Officer
ATTEST:
/s/Michael J. McCarthy
- ----------------------------
Secretary
STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on May 2, 1992, by Robert
W. Decherd, Chairman of the Board of A. H. Belo Corporation, a Delaware
corporation, on behalf of said corporation.
/s/Ulrike J. Conway
-------------------------------------
Notary Public in and for
the State of Texas
My Commission Expires: Print Name of Notary:
5/1/93 /s/Ulrike J. Conway
- ---------------------- -------------------------------------
<PAGE> 1
EXHIBIT 10.3(3)
A. H. BELO CORPORATION
1995 EXECUTIVE COMPENSATION PLAN
(As Restated to Incorporate Amendments
through December 4, 1997)
A. H. Belo Corporation, a Delaware corporation (the "Company"),
established the A. H. Belo Corporation 1995 Executive Compensation Plan (the
"Plan"), effective as of January 1, 1995, and has restated the Plan to
incorporate amendments through December 4, 1997.
1. Purpose. The purpose of the Plan is to attract and retain the
best available talent and encourage the highest level of performance by
directors, executive officers and selected employees, and to provide them
incentives to put forth maximum efforts for the success of the Company's
business, in order to serve the best interests of the Company and its
shareholders.
2. Definitions. The following terms, when used in the Plan with
initial capital letters, will have the following meanings:
(a) "Appreciation Right" means a right granted pursuant
to Paragraph 7.
(b) "Award" means an Executive Compensation Plan Bonus,
an Appreciation Right, a Stock Option, a Performance Unit or a grant
or sale of Restricted Stock.
(c) "Board" means the Board of Directors of the Company.
(d) "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;
(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, 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
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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 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.
(e) "Code" means the Internal Revenue Code of 1986, as in
effect from time to time.
(f) "Committee" means the Compensation Committee of the
Board and, to the extent the administration of the Plan has been
assumed by the Board pursuant to Paragraph 15, the Board.
(g) "Common Stock" means the Series A Common Stock, par
value $1.67 per share, and the Series B Common Stock, par value $1.67
per share, of the Company or any security into which such Common Stock
may be changed by reason of any transaction or event of the type
described in Paragraph 12. Shares of Common Stock issued or
transferred pursuant to the Plan will be shares of Series A Common
Stock or Series B Common Stock, as determined by the Committee in its
discretion. Notwithstanding the foregoing, the Committee will not
authorize the issuance or transfer of Series B Common Stock if the
Committee determines that such issuance or transfer would cause the
Series A Common Stock to be excluded from trading in the principal
market in which the Common Stock is then traded.
(h) "Date of Grant" means (i) with respect to
Participants, the date specified by the Committee on which a grant of
Stock Options, Appreciation Rights or Performance Units or a grant or
sale of Restricted Stock will become effective (which date will not be
earlier than the date on which the Committee takes action with respect
thereto) and (ii) with respect to Directors, the date of the
applicable annual meeting of shareholders of the Company as specified
in Paragraph 6.
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(i) "Director" means a member of the Board who is not a
regular full-time employee of the Company or any Subsidiary.
(j) "Executive Compensation Plan Bonus" means the right
to receive an annual incentive compensation payment made pursuant to
and subject to the conditions set forth in Paragraph 10.
(k) "Grant Price" means the price per share of Common
Stock at which an Appreciation Right not granted in tandem with a
Stock Option is granted.
(l) "Management Objectives" means the objectives, if any,
established by the Committee for a Performance Period that are to be
achieved with respect to an Award granted to a Participant under the
Plan. Management Objectives may be described in terms of Company-wide
objectives or in terms of objectives that are related to performance
of the division, Subsidiary, department or function within the Company
or a Subsidiary in which the Participant receiving the Award is
employed or on which the Participant's efforts have the most
influence. The Management Objectives established by the Committee for
any Performance Period under the Plan will consist of one or more of
the following:
(i) earnings per share and/or growth in earnings
per share in relation to target objectives;
(ii) cash flow and/or growth in cash flow in
relation to target objectives;
(iii) net income and/or growth in net income in
relation to target objectives, excluding the effect of
extraordinary items;
(iv) total shareholder return (measured as the
total of the appreciation of and dividends declared on the
Common Stock) in relation to target objectives;
(v) return on invested capital in relation to
target objectives;
(vi) return on shareholder equity in relation to
target objectives; and
(vii) return on assets in relation to target
objectives.
Management Objectives may be established in absolute terms or relative
to the performance of a specified group of other companies. The
Committee may adjust Management Objectives and any minimum acceptable
level of achievement with respect to any Management Objectives if, in
the sole judgment of the Committee, events or transactions have
occurred after the establishment of the Management Objectives
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(including without limitation any change in accounting standards by
the Financial Accounting Standards Board) which are unrelated to
performance and result in a distortion of the Management Objectives or
such minimum acceptable level of achievement.
(m) "Market Value per Share" means, at any date, the
closing sale price of the Common Stock on that date (or, if there are
no sales on that date, the last preceding date on which there was a
sale) in the principal market in which the Common Stock is traded.
(n) "Option Price" means the purchase price per share
payable on exercise of a Stock Option.
(o) "Participant" means a person who is selected by the
Committee to receive benefits under the Plan and who is at that time
an executive officer or other key employee of the Company or any
Subsidiary. Except for Stock Options granted to Directors pursuant to
Paragraph 6, a Director will not receive benefits under the Plan.
(p) "Performance Period" means, with respect to an Award,
a period of time established by the Committee within which the
Management Objectives relating to such Award are to be measured. The
Performance Period for an Executive Compensation Plan Bonus will be a
period of 12 months. The Performance Period for all other Awards will
be a period of not less than three years.
(q) "Performance Unit" means a unit equivalent to $100
(or such other value as the Committee determines) granted pursuant to
Paragraph 9.
(r) "Restricted Stock" means shares of Common Stock
granted or sold pursuant to Paragraph 8 as to which neither the
ownership restrictions nor the restrictions on transfer referred to
therein has expired.
(s) "Rule 16b-3" means Rule 16b-3 under the Section 16 of
the Securities Exchange Act of 1934, as amended, as such Rule is in
effect from time to time.
(t) "Spread" means the excess of the Market Value per
Share on the date an Appreciation Right is exercised over (i) the
Option Price provided for in the related Stock Option or (ii) if there
is no tandem Stock Option, the Grant Price provided for in the
Appreciation Right, multiplied by the number of shares of Common Stock
in respect of which the Appreciation Right is exercised.
(u) "Stock Option" means the right to purchase a share of
Common Stock upon exercise of an option granted pursuant to Paragraph
5 or Paragraph 6.
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(v) "Subsidiary" means any corporation, partnership,
joint venture or other entity in which 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.
3. Shares Available Under Plan. Subject to adjustment as
provided in Paragraph 12, the shares of Common Stock which may be issued or
transferred and covered by outstanding Awards granted under the Plan will not
exceed in the aggregate 5,000,000 shares. Such shares may be shares of
original issuance or treasury shares or a combination of the foregoing. Upon
exercise of any Appreciation Rights that are paid in shares of Common Stock,
there will be deemed to have been delivered under the Plan for purposes of this
Paragraph 3 only the number of shares of Common Stock paid to the Participant,
and the balance (if any) of the shares of Common Stock covered by the
Appreciation Rights or the related Stock Options will remain available for
issuance under the Plan. Upon exercise of any Appreciation Rights that are
paid in cash, the total number of shares of Common Stock covered by the
Appreciation Rights or the related Stock Options will remain available for
issuance under the Plan. Subject to the provisions of the preceding sentences,
any shares of Common Stock which are subject to Stock Options or Appreciation
Rights or are granted or sold as Restricted Stock that are terminated,
unexercised, forfeited or surrendered or which expire for any reason will again
be available for issuance under the Plan.
4. Limitations on Awards. Subject to adjustment as provided in
Paragraph 12, awards under the Plan will be subject to the following
limitations:
(a) Of the aggregate 5,000,000 shares reserved for
issuance under the Plan, no more than 1,200,000 shares of Common Stock
will be issued or transferred as Restricted Stock.
(b) No more than 5,000,000 shares of Common Stock
reserved for issuance under the Plan will be issued under Stock
Options.
(c) The maximum aggregate number of shares of Common
Stock that may be subject to Stock Options, Appreciation Rights and
Restricted Stock granted to a Participant during any calendar year
will not exceed 500,000 shares. The foregoing limitation will apply
to the grant of Appreciation Rights whether the Spread on exercise is
paid in cash or in shares of Common Stock.
(d) The maximum aggregate cash value of payments to any
Participant for any Performance Period pursuant to an award of
Performance Units will not exceed $3,000,000.
(e) The payment of an Executive Compensation Plan Bonus
to any Participant will not exceed $1,500,000.
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5. Stock Options for Participants. The Committee may from time
to time authorize grants to any Participant of options to purchase shares of
Common Stock upon such terms and conditions as it may determine in accordance
with the following provisions:
(a) Each grant will specify the number of shares of
Common Stock to which it pertains.
(b) Each grant will specify the Option Price, which will
not be less than 100% of the Market Value per Share on the Date of
Grant.
(c) Each grant will specify that the Option Price will be
payable (i) in cash or by check acceptable to the Company, (ii) by the
transfer to the Company of shares of Common Stock owned by the
Participant for at least six months (or, with the consent of the
Committee, for less than six months) having an aggregate Market Value
per Share at the date of exercise equal to the aggregate Option Price,
(iii) with the consent of the Committee, by authorizing the Company to
withhold a number of shares of Common Stock otherwise issuable to the
Participant having an aggregate Market Value per Share on the date of
exercise equal to the aggregate Option Price or (iv) by a combination
of such methods of payment; provided, however, that the payment
methods described in clauses (ii) and (iii) will not be available at
any time that the Company is prohibited from purchasing or acquiring
such shares of Common Stock. Any grant may provide for deferred
payment of the Option Price from the proceeds of sale through a broker
of some or all of the shares to which such exercise relates.
(d) Successive grants may be made to the same Participant
whether or not any Stock Options previously granted to such
Participant remain unexercised.
(e) Each grant will specify the required period or
periods of continuous service by the Participant with the Company or
any Subsidiary and/or the Management Objectives to be achieved before
the Stock Options or installments thereof will become exercisable, and
any grant may provide for the earlier exercise of the Stock Options in
the event of a Change in Control or other similar transaction or
event.
(f) Stock Options granted under this Paragraph 5 may be
(i) options which are intended to qualify under particular provisions
of the Code, (ii) options which are not intended to so qualify or
(iii) combinations of the foregoing.
(g) No Stock Option will be exercisable more than ten
years from the Date of Grant.
(h) If a Participant terminates employment by reason of
death, disability or retirement at or after attaining the earliest age
that qualifies as the Participant's Early
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Retirement Age under the G. B. Dealey Retirement Pension Plan, as
amended from time to time, each outstanding Stock Option granted to
the Participant will remain exercisable until the term of the Stock
Option expires (determined without regard to the Participant's
termination of employment).
(i) Each grant of Stock Options will be evidenced by an
agreement executed on behalf of the Company by the Chief Executive
Officer (or another officer designated by the Committee) and delivered
to the Participant and containing such terms and provisions,
consistent with the Plan, as the Committee may approve.
6. Stock Options for Directors. On the date of each annual
meeting of shareholders of the Company that is held on or after the date of the
1998 annual meeting of shareholders, each Director will be granted (i) options
to purchase Common Stock that have a fair market value (as hereinafter
determined) on the Date of Grant equal to 50% of the Director's annual
compensation from the Company and (ii) at the Director's election made prior to
the date of the annual meeting on which the applicable option is granted in
accordance with the terms of this Plan and procedures adopted from time to time
by the Committee, options to purchase Common Stock that have a fair market
value on the Date of Grant equal to all or any portion of the Director's
remaining annual compensation from the Company that the Director elects. A
Stock Option granted to a Director pursuant to this paragraph as payment of all
or a portion of the Director's annual compensation will be in payment for
services to be performed by the Director for the 12-month period beginning on
the date of the annual meeting of shareholders on which the Stock Option is
granted. Any portion of the Director's annual compensation from the Company
that is not paid to the Director in the form of a Stock Option will be paid in
cash on the date of the annual meeting of shareholders.
For purposes of this Paragraph 6, (i) a Director's annual
compensation, as described in the preceding paragraph, does not include
unscheduled meeting fees which may become payable to the Director, and any such
fees will be paid in cash; (ii) the date of an annual meeting of shareholders
of the Company is the date on which the meeting is convened or, if later, the
date of the last adjournment thereof; and (iii) the fair market value of
options granted to a Director will be determined by the Committee using the
Black-Scholes Option Pricing Model.
Each Stock Option granted to a Director will contain the
following terms and conditions:
(a) Each grant will specify the number of shares of
Common Stock to which it pertains.
(b) Each grant will specify the Option Price, which will
be 100% of the Market Value per Share on the Date of Grant.
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(c) Each grant will specify that the Option Price will be
payable (i) in cash or by check acceptable to the Company, (ii) by the
transfer to the Company of shares of Common Stock owned by the
Director for at least six months having an aggregate Market Value per
Share at the date of exercise equal to the aggregate Option Price,
(iii) by authorizing the Company to withhold a number of shares of
Common Stock otherwise issuable to the Director having an aggregate
Market Value per Share on the date of exercise equal to the aggregate
Option Price or (iv) by a combination of such methods of payment;
provided, however, that the payment methods described in clauses (ii)
and (iii) will not be available at any time that the Company is
prohibited from purchasing or acquiring such shares of Common Stock.
Any grant may provide for deferred payment of the Option Price from
the proceeds of sale through a broker of some or all of the shares to
which such exercise relates.
(d) Each grant will specify that the Stock Option may
not be exercised until the first anniversary of the Date of Grant and
will be fully exercisable thereafter, without regard to whether the
Director continues to be a member of the Board on such first
anniversary, until the Stock Option expires by its terms. No Stock
Option will be exercisable more than ten years from the Date of Grant.
(e) Each grant of Stock Options will be evidenced by an
agreement executed on behalf of the Company by the Chief Executive
Officer (or another officer designated by the Committee) and delivered
to the Director and containing such terms and provisions, consistent
with the Plan, as the Committee may approve.
7. Appreciation Rights. The Committee may also from time to time
authorize grants to any Participant of Appreciation Rights upon such terms and
conditions as it may determine in accordance with this Paragraph 7.
Appreciation Rights may be granted in tandem with Stock Options or separate and
apart from a grant of Stock Options. An Appreciation Right will be a right of
the Participant to receive from the Company upon exercise an amount which will
be determined by the Committee at the Date of Grant and will be expressed as a
percentage of the Spread (not exceeding 100%) at the time of exercise. An
Appreciation Right granted in tandem with a Stock Option may be exercised only
by surrender of the related Stock Option. Each grant of an Appreciation Right
may utilize any or all of the authorizations, and will be subject to all of the
limitations, contained in the following provisions:
(a) Each grant will state whether it is made in tandem
with Stock Options and, if not made in tandem with any Stock Options,
will specify the number of shares of Common Stock in respect of which
it is made.
(b) Each grant made in tandem with Stock Options will
specify the Option Price and each grant not made in tandem with Stock
Options will specify the Grant Price,
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which in either case will not be less than 100% of the Market Value
per Share on the Date of Grant.
(c) Any grant may specify that the amount payable on
exercise of an Appreciation Right may be paid by the Company in (i)
cash, (ii) shares of Common Stock having an aggregate Market Value per
Share equal to the percentage of the Spread to be paid to the
Participant or (iii) any combination thereof, as determined by the
Committee in its sole discretion at the time of payment.
(d) Any grant may specify that the amount payable on
exercise of an Appreciation Right may not exceed a maximum amount
specified by the Committee at the Date of Grant (valuing shares of
Common Stock for this purpose at their Market Value per Share at the
date of exercise).
(e) Each grant will specify the required period or
periods of continuous service by the Participant with the Company or
any Subsidiary and/or Management Objectives to be achieved before the
Appreciation Rights or installments thereof will become exercisable,
and will provide that no Appreciation Right may be exercised except at
a time when the Spread is positive and, with respect to any grant made
in tandem with Stock Options, when the related Stock Option is also
exercisable. Any grant may provide for the earlier exercise of the
Appreciation Rights in the event of a Change in Control or other
similar transaction or event.
(f) If a Participant terminates employment by reason of
death, disability or retirement at or after attaining the earliest age
that qualifies as the Participant's Early Retirement Age under the G.
B. Dealey Retirement Pension Plan, as amended from time to time, each
outstanding Appreciation Right granted to the Participant will remain
exercisable until the Appreciation Right expires by its terms
(determined without regard to the Participant's termination of
employment).
(g) Each grant of an Appreciation Right will be evidenced
by an agreement executed on behalf of the Company by the Chief
Executive Officer (or another officer designated by the Committee) and
delivered to and accepted by the Participant receiving the grant,
which agreement will describe such Appreciation Right, identify any
Stock Option granted in tandem with such Appreciation Right, state
that such Appreciation Right is subject to all the terms and
conditions of the Plan and contain such other terms and provisions,
consistent with the Plan, as the Committee may approve.
8. Restricted Stock. The Committee may also from time to time
authorize grants or sales to any Participant of Restricted Stock upon such
terms and conditions as it may determine in accordance with the following
provisions:
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(a) Each grant or sale will constitute an immediate
transfer of the ownership of shares of Common Stock to the Participant
in consideration of the performance of services, entitling such
Participant to voting and other ownership rights, but subject to the
restrictions hereinafter referred to. Each grant or sale may limit
the Participant's dividend rights during the period in which the
shares of Restricted Stock are subject to any such restrictions.
(b) Each grant or sale will specify the Management
Objectives, if any, that are to be achieved in order for the ownership
restrictions to lapse.
(c) Each such grant or sale may be made without
additional consideration or in consideration of a payment by such
Participant that is less than the Market Value per Share at the Date
of Grant.
(d) Each such grant or sale will provide that the shares
of Restricted Stock covered by such grant or sale will be subject, for
a period to be determined by the Committee at the Date of Grant, to
one or more restrictions, including, without limitation, a restriction
that constitutes a "substantial risk of forfeiture" within the meaning
of Section 83 of the Code and the regulations of the Internal Revenue
Service thereunder, and any grant or sale may provide for the earlier
termination of any such restrictions in the event of a Change in
Control or other similar transaction or event.
(e) Each such grant or sale will provide that during the
period for which such restriction or restrictions are to continue, the
transferability of the Restricted Stock will be prohibited or
restricted in a manner and to the extent prescribed by the Committee
at the Date of Grant (which restrictions may include, without
limitation, rights of repurchase or first refusal in the Company or
provisions subjecting the Restricted Stock to continuing restrictions
in the hands of any transferee).
(f) Each grant or sale of Restricted Stock will be
evidenced by an agreement executed on behalf of the Company by the
Chief Executive Officer (or another officer designated by the
Committee) and delivered to and accepted by the Participant and
containing such terms and provisions, consistent with the Plan, as the
Committee may approve.
9. Performance Units. The Committee may also from time to time
authorize grants to any Participant of Performance Units, which will become
payable upon achievement of specified Management Objectives, upon such terms
and conditions as it may determine in accordance with the following provisions:
(a) Each grant will specify the number of Performance
Units to which it pertains.
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(b) Each grant will specify the Management Objectives
that are to be achieved.
(c) Each grant will specify the time and manner of
payment of Performance Units which have become payable, which payment
may be made in (i) cash, (ii) shares of Common Stock having an
aggregate Market Value per Share equal to the aggregate value of the
Performance Units which have become payable or (iii) any combination
thereof, as determined by the Committee in its sole discretion at the
time of payment.
(d) Each grant of a Performance Unit will be evidenced by
an agreement executed on behalf of the Company by the Chief Executive
Officer (or another officer designated by the Committee) and delivered
to and accepted by the Participant and containing such terms and
provisions, consistent with the Plan, as the Committee may approve,
including provisions relating to a Change in Control or other similar
transaction or event.
10. Executive Compensation Plan Bonuses. The Committee may from
time to time authorize payment of annual incentive compensation in the form of
an Executive Compensation Plan Bonus to a Participant, which will become
payable upon achievement of specified Management Objectives. Executive
Compensation Plan Bonuses will be payable upon such terms and conditions as the
Committee may determine in accordance with the following provisions:
(a) The Committee will specify the Management Objectives
that are to be achieved by the Participant in order for the
Participant to receive payment of the Executive Compensation Plan
Bonus.
(b) The Committee will specify the time and manner of
payment of an Executive Compensation Plan Bonus which becomes payable,
which payment may be made in (i) cash, (ii) shares of Common Stock
having an aggregate Market Value per Share equal to the aggregate
value of the Executive Compensation Plan Bonus which has become
payable or (iii) any combination thereof, as determined by the
Committee in its sole discretion at the time of payment.
(c) As soon as practicable after the beginning of a
Performance Period, the Committee will notify each Participant of the
terms of the Executive Compensation Plan Bonus program for that
Performance Period, which notification will state that such Executive
Compensation Plan Bonus is subject to all the terms and conditions of
the Plan, and contain such other terms and provisions, consistent with
the Plan, as the Committee may approve.
11. Transferability. Except as otherwise provided in the
agreement evidencing a Participant's Award or an award of Stock Options to a
Director under Paragraph 6, (i) no Stock
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Option, Appreciation Right, Performance Unit that has not become payable or
Executive Compensation Plan Bonus that has not become payable will be
transferable by the Participant or the Director other than by will or the laws
of descent and distribution and (ii) no Stock Option or Appreciation Right
granted to the Participant or the Director will be exercisable during the
Participant's or Director's lifetime by any person other than the Participant
or Director, or such person's guardian or legal representative.
12. Adjustments. The Committee will make or provide for such
adjustments in the maximum number of shares specified in Paragraphs 3, 4 and 6
in the numbers of shares of Common Stock covered by outstanding Stock Options
and Appreciation Rights granted hereunder, in the Option Price or Grant Price
applicable to any such Stock Options and Appreciation Rights, and/or in the
kind of shares covered thereby (including shares of another issuer), as the
Committee in its sole discretion, exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of the rights of
Participants that otherwise would result from any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital
structure of the Company, merger, consolidation, spin-off, reorganization,
partial or complete liquidation, issuance of rights or warrants to purchase
securities or any other corporate transaction or event having an effect similar
to any of the foregoing.
13. Fractional Shares. The Company will not be required to issue
any fractional share of Common Stock pursuant to the Plan. The Committee may
provide for the elimination of fractions or for the settlement of fractions in
cash.
14. Withholding Taxes. To the extent that the Company is required
to withhold federal, state, local or foreign taxes in connection with any
payment made or benefit realized by a Participant or other person under the
Plan, or is requested by a Participant to withhold additional amounts with
respect to such taxes, and the amounts available to the Company for such
withholding are insufficient, it will be a condition to the receipt of such
payment or the realization of such benefit that the Participant or such other
person make arrangements satisfactory to the Company for payment of the balance
of such taxes required or requested to be withheld. In addition, if permitted
by the Committee, a Participant may elect to have any withholding obligation of
the Company satisfied with shares of Common Stock that would otherwise be
transferred to the Participant in payment of the Participant's Award.
15. Administration of the Plan. (a) Unless the administration of
the Plan has been expressly assumed by the Board pursuant to a resolution of
the Board, the Plan will be administered by the Committee, which at all times
will consist of two or more Directors appointed by the Board, all of whom will
qualify as "non-employee directors" as defined in Rule 16b-3 and as "outside
directors" as defined in regulations adopted under Section 162(m) of the Code,
as such terms may be amended from time to time. A majority of the Committee
will constitute a quorum, and the action of the members of the Committee
present at any meeting at which a quorum is present, or acts unanimously
approved in writing, will be the acts of the Committee.
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(b) The Committee has the full authority and discretion
to administer the Plan and to take any action that is necessary or advisable in
connection with the administration of the Plan, including without limitation
the authority and discretion to interpret and construe any provision of the
Plan or of any agreement, notification or document evidencing the grant of an
Award. The interpretation and construction by the Committee of any such
provision and any determination by the Committee pursuant to any provision of
the Plan or of any such agreement, notification or document will be final and
conclusive. No member of the Committee will be liable for any such action or
determination made in good faith.
16. Amendments, Etc. (a) The Plan may be amended from time to
time by the Committee or the Board but may not be amended without further
approval by the shareholders of the Company if such amendment would result in
the Plan no longer satisfying any applicable requirements of the New York Stock
Exchange (or any other exchange or market system upon which shares of Common
Stock are listed or admitted to trading), Rule 16b-3 or Section 162(m) of the
Code.
(b) The Plan may be terminated at any time by action of
the Board. The termination of the Plan will not adversely affect the terms of
any outstanding Award.
(c) The Plan will not confer upon any Participant any
right with respect to continuance of employment or other service with the
Company or any Subsidiary, nor will it interfere in any way with any right the
Company or any Subsidiary would otherwise have to terminate such Participant's
employment or other service at any time.
(d) If the Committee determines, with the advice of legal
counsel, that any provision of the Plan would prevent the payment of any Award
intended to qualify as performance-based compensation within the meaning of
Section 162(m) of the Code from so qualifying, such Plan provision will be
invalid and cease to have any effect without affecting the validity or
effectiveness of any other provision of the Plan.
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EXHIBIT 12
A. H. Belo Corporation
Computation of Ratio of Earnings to Fixed Charges
(dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
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1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Earnings:
Earnings before income taxes
and the cumulative effect
of accounting changes $ 75,578 $107,897 $111,014 $144,040 $154,122
Add: Total fixed charges 18,792 17,294 32,089 29,009 94,069
Less: Interest capitalized 1,961 138 957 255 510
-------- -------- -------- -------- --------
Adjusted earnings $ 92,409 $125,053 $142,146 $172,794 $247,681
======== ======== ======== ======== ========
Fixed Charges:
Interest $ 16,976 $ 16,250 $ 30,944 $ 27,898 $ 91,288
Portion of rental expense
representative of the
interest factor (1) 1,816 1,044 1,145 1,111 $ 2,781
-------- -------- -------- -------- --------
Total fixed charges $ 18,792 $ 17,294 $ 32,089 $ 29,009 $ 94,069
======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges 4.92 x 7.23 x 4.43 x 5.96 x 2.63 x
======== ======== ======== ======== ========
</TABLE>
- ------------------------------
(1) For purposes of calculating fixed charges, an interest factor of one third
was applied to total rent expense for the period indicated.
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
(AS OF DECEMBER 31, 1997)
<TABLE>
<CAPTION>
STATE OF
NAME OF CORPORATION INCORPORATION
- ------------------- -------------
<S> <C> <C>
NEWSPAPER PUBLISHING:
The Dallas Morning News, Inc. d/b/a The Dallas Morning News Delaware
The Providence Journal Company d/b/a Providence Journal-Bulletin Delaware
Press-Enterprise Company d/b/a The Press-Enterprise California
Owensboro Messenger-Inquirer, Inc. d/b/a Messenger-Inquirer Delaware
Bryan-College Station Eagle, Inc. d/b/a The Eagle Delaware
Henderson Gleaner, Inc. d/b/a The Gleaner Delaware
DFW Printing Company, Inc. Delaware
DFW Suburban Newspapers, Inc. Delaware
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
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
KENS-TV, Inc. d/b/a KENS, Channel 5 Delaware
KMOV-TV, Inc. d/b/a KMOV, Channel 4 Delaware
KASA-TV, Inc. d/b/a KASA, Channel 2 New Mexico
KMSB-TV, Inc. d/b/a KMSB, Channel 11 Arizona
WCNC-TV, Inc. d/b/a WCNC, Channel 36 North Carolina
Belo Kentucky, Inc. d/b/a WHAS, Channel 11 Kentucky
King Broadcasting Company d/b/a KING, Channel 5 Washington
d/b/a KHNL, Channel 13
d/b/a KREM, Channel 2
d/b/a KTVB, Channel 7
d/b/a KGW, Channel 8
King News Corporation d/b/a Northwest Cable News Washington
Hill Tower, Inc. Texas
Transtower, Inc. California
Tulsa Tower Joint Venture Oklahoma
Texas Tall Tower Texas
</TABLE>
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, Tulsa Tower Joint Venture and Texas
Tall Tower, and 33 1/3% of the outstanding common stock of Transtower, Inc.
<PAGE> 1
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-30994, Form S-8 No. 33-32526, Form S-8 No. 33-18771, Form S-8
No. 33-61439, and Form S-3 No. 333-25579) pertaining to the Employee Savings and
Investment Plan, Long-Term Incentive Plan, 1995 Executive Compensation Plan, and
the registration of $1,500,000,000 of debt securities and warrants to purchase
debt securities of A. H. Belo Corporation of our report dated January 26, 1998,
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, 1997.
/s/ ERNST & YOUNG LLP
Dallas, Texas
March 17, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 11,582
<SECURITIES> 0
<RECEIVABLES> 228,611
<ALLOWANCES> (8,314)
<INVENTORY> 20,356
<CURRENT-ASSETS> 276,996
<PP&E> 953,232
<DEPRECIATION> (344,914)
<TOTAL-ASSETS> 3,622,954
<CURRENT-LIABILITIES> 214,462
<BONDS> 1,614,045
0
0
<COMMON> 104,011
<OTHER-SE> 1,221,993
<TOTAL-LIABILITY-AND-EQUITY> 3,622,954
<SALES> 0
<TOTAL-REVENUES> 1,248,381
<CGS> 0
<TOTAL-COSTS> 872,586
<OTHER-EXPENSES> 134,993
<LOSS-PROVISION> 9,273
<INTEREST-EXPENSE> 90,778
<INCOME-PRETAX> 154,122
<INCOME-TAX> 71,150
<INCOME-CONTINUING> 82,972
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 82,972
<EPS-PRIMARY> 1.43
<EPS-DILUTED> 1.42
</TABLE>
<PAGE> 1
EXHIBIT 99
A. H. Belo Corporation
Unaudited Pro Forma Combined Condensed Statement of Earnings
Year Ended December 31, 1997
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical
--------------------------------------------------------------
Providence
A. H. Belo Journal Less: Add:
Corporation Company TVFN KENS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Operating Revenues
Broadcasting $ 536,737 $ 28,421 $ -- $ 21,186
Newspaper Publishing 693,777 19,590 -- --
Other 17,867 4,351 (9,480) --
----------- ----------- ----------- -----------
Total Net Operating Revenues 1,248,381 52,362 (9,480) 21,186
Operating Costs and Expenses 872,586 56,324 (18,527) 11,485
Depreciation 73,089 6,289 (753) 805
Amortization 61,904 3,080 (1,233) --
----------- ----------- ----------- -----------
Earnings (Loss) From Operations 240,802 (13,331) 11,033 8,896
Interest Expense (90,778) (2,700) 46 --
Other, Net 4,098 13,946 (771) --
----------- ----------- ----------- -----------
Earnings (Loss) Before Income Taxes 154,122 (2,085) 10,308 8,896
Income Taxes 71,150 (509) 3,992 3,374
----------- ----------- ----------- -----------
Net Earnings (Loss) $ 82,972 $ (1,576) $ 6,316 $ 5,522
=========== =========== =========== ===========
Net Earnings Per Share (j): $ 1.42
===========
Weighted Average Shares Outstanding 58,561
===========
<CAPTION>
PRO FORMA
-----------------------------------------------------------------
Elimination PJC TVFN/KENS
AHN (a) Adjustments Adjustments Combined
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Operating Revenues
Broadcasting $ -- $ -- $ -- $ 586,344
Newspaper Publishing -- -- -- 713,367
Other (297) -- -- 12,441
----------- ----------- ----------- -----------
Total Net Operating Revenues (297) -- -- 1,312,152
Operating Costs and Expenses (8,069) -- -- 913,799
Depreciation (305) 946 (b) 1,862(b) 81,933
Amortization -- 4,725 (c) 3,827(f) 72,303
----------- ----------- ----------- -----------
Earnings (Loss) From Operations 8,077 (5,671) (5,689) 244,117
Interest Expense -- (6,054)(d) (3,919)(g) (103,405)
Other, Net (2,454) -- (1,273)(h) 13,546
----------- ----------- ----------- -----------
Earnings (Loss) Before Income Taxes 5,623 (11,725) (10,881) 154,258
Income Taxes -- (2,800)(e) (4,203)(i) 71,004
----------- ----------- ----------- -----------
Net Earnings (Loss) $ 5,623 $ (8,925) $ (6,678) $ 83,254
=========== =========== =========== ===========
Net Earnings Per Share (j): $ 1.33
===========
Weighted Average Shares Outstanding 62,666
===========
</TABLE>
See Notes to Pro Forma Combined Condensed Statements of Earnings
<PAGE> 2
A. H. Belo Corporation
Unaudited Pro Forma Combined Condensed Statement of Earnings
Year Ended December 31, 1996
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical
--------------------------------------------------------
Providence
A. H. Belo Journal Less: Add:
Corporation Company TVFN KENS
----------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Net Operating Revenues
Broadcasting $ 333,396 $ 213,770 $ -- $ 26,110
Newspaper Publishing 487,242 130,486 -- --
Other 3,670 15,343 (13,404) --
--------- --------- --------- ---------
Total Net Operating Revenues 824,308 359,599 (13,404) 26,110
Operating Costs and Expenses 593,476 329,370 (30,495) 14,222
Depreciation 45,408 25,295 (1,424) 1,044
Amortization 19,775 18,222 (734) --
--------- --------- --------- ---------
Earnings (Loss) From Operations 165,649 (13,288) 19,249 10,844
Interest Expense (27,643) (18,892) 87 --
Other, Net 6,034 24,670 1,925 --
--------- --------- --------- ---------
Earnings (Loss) Before Income Taxes 144,040 (7,510) 21,261 10,844
Income Taxes 56,535 3,542 9,355 4,113
--------- --------- --------- ---------
Net Earnings (Loss) $ 87,505 $ (11,052) $ 11,906 $ 6,731
========= ========= ========= =========
Net Earnings Per Share (j): $ 2.11
=========
Weighted Average Shares Outstanding 41,502
=========
<CAPTION>
Pro Forma
-----------------------------------------------------------------------
Elimination of PJC TVFN/KENS
AHN (a) Adjustments Adjustments Combined
-------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Operating Revenues
Broadcasting $ -- $ -- $ -- $ 573,276
Newspaper Publishing -- -- -- 617,728
Other (475) 3,677(k) -- 8,811
----------- ----------- ----------- -----------
Total Net Operating Revenues (475) 3,677 -- 1,199,815
Operating Costs and Expenses (33,169) 8,436(k) -- 881,840
Depreciation (1,367) 6,129(b)(k) 2,235(b) 77,320
Amortization -- 28,608(c)(k) 4,593(f) 70,464
----------- ----------- ----------- -----------
Earnings (Loss) From Operations 34,061 (39,496) (6,828) 170,191
Interest Expense -- (32,226)(d)(k) (4,500)(g) (83,174)
Other, Net (13,488) 1,131(k) (2,311)(h) 17,961
----------- ----------- ----------- -----------
Earnings (Loss) Before Income Taxes 20,573 (70,591) (13,639) 104,978
Income Taxes (5,699) (5,884)(e) (5,312)(i) 56,650
----------- ----------- ----------- -----------
Net Earnings (Loss) $ 26,272 $ (64,707) $ (8,327) $ 48,328
=========== =========== =========== ===========
Net Earnings Per Share (j): $ 0.72
===========
Weighted Average Shares Outstanding 66,897
===========
</TABLE>
See Notes to Pro Forma Combined Condensed Statements of Earnings
<PAGE> 3
A. H. Belo Corporation
Notes to Unaudited Pro Forma Combined
Condensed Statements of Earnings
NOTE 1: GENERAL
The pro forma combined condensed statements of earnings reflect the acquisition
of The Providence Journal Company and other significant transactions occurring
during the period, as follows:
(i) Issuance of 25,395,000 shares of A. H. Belo Corporation (the "Company"
or "Belo") Series A Common Stock at a price of $34.275 per share and
the payment of $587,096,000 in cash to acquire all of the issued and
outstanding shares of The Providence Journal Company ("PJC") effective
February 28, 1997;
(ii) Exclusion of the operations of America's Health Network ("AHN"). The
Company's interest in AHN was terminated effective July 31, 1997;
(iii) In 1996, acquisition by PJC for controlling interest in Television Food
Network ("TVFN") prior to execution of the PJC acquisition agreement;
(iv) Purchase of KENS-TV in exchange for Belo's interest in TVFN and $75
million in cash, effective October 15, 1997.
NOTE 2: UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF EARNINGS
Pro forma adjustments giving effect to the PJC acquisition and the TVFN/KENS
exchange in the unaudited pro forma combined condensed statements of earnings
reflect the following:
(a) Elimination of the results of operations of AHN. See Note 1 (ii).
(b) Depreciation of the step-up in basis to the fair market value for fixed
assets acquired.
(c) Amortization of the excess of the purchase price over net tangible
assets acquired, on a straight-line basis over 40 years, except for
certain amounts attributable to newspaper subscriber lists, which are
being amortized over 18 years. This adjustment is net of the
elimination of the PJC historical amortization of excess acquisition
costs over the values assigned to net tangible assets acquired in prior
acquisitions.
(d) Increase in interest expense resulting from net borrowings incurred to
finance a portion of the purchase price. The interest rate on
borrowings is assumed to be 6.1% and 5.8% for 1997 and 1996,
respectively, which is based on Belo's weighted average borrowing rates
during the periods.
(e) Income tax effect of PJC pro forma adjustments.
(f) Amortization of the excess of the KENS purchase price over net tangible
assets acquired, on a straight-line basis over 40 years.
(g) Increase in interest expense resulting from net borrowings incurred to
finance the cash portion of the KENS purchase price. The interest rate
on borrowings is assumed to be 6.6% and 6.0% for 1997 and 1996,
respectively, which is based on Belo's weighted average borrowing rates
during the periods.
(h) Reversal of TVFN minority interest included in the consolidated results.
<PAGE> 4
(i) Income tax effect of TVFN/KENS pro forma adjustments.
(j) Earnings per share based upon the weighted average number of shares of
Belo common and common equivalent shares outstanding, including
25,395,000 shares of Series A Common Stock issued in connection with
the acquisition, as if they had been issued at the beginning of the
year.
(k) To reflect the pro forma effect of PJC increasing its investment and
obtaining a controlling interest in TVFN as if the transaction had been
effected as of the beginning of 1996.
