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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from__________________to_________________
COMMISSION FILE NUMBER 1-9329
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PULITZER PUBLISHING COMPANY
(Exact name of registrant as specified in its charter)
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DELAWARE 430496290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
900 NORTH TUCKER BOULEVARD, ST. LOUIS, MISSOURI 63101
(Address of principal executive offices)
(314) 340-8000
(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act: Common Stock,
par value $.01 per share - New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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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/
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The aggregate market value of the voting stock held by non-affiliates
of the registrant was approximately $152,330,063 as of the close of business on
March 14, 1995.
The number of shares of Common Stock, $.01 par value, outstanding as
of March 14, 1995 was 4,474,485.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive Proxy Statement to be used in
connection with its Annual Meeting of Stockholders to be held on April 20, 1995
are incorporated by reference into Part III of this Report.
The registrant's fiscal year ends on the last Sunday of December in
each year. For ease of presentation, the registrant has used December 31 as
the fiscal year-end in this Annual Report. Except as otherwise stated, the
information in this Report on Form 10-K is as of December 31, 1994.
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PART I
ITEM 1. BUSINESS
GENERAL
The Company is engaged in newspaper publishing and television and
radio broadcasting. Its newspaper operations consist of two major metropolitan
dailies: the St. Louis Post-Dispatch (the "Post-Dispatch"), the only major
daily newspaper serving the St. Louis metropolitan area; and The Arizona Daily
Star (the "Star"), serving the Tucson metropolitan area. The Company's
broadcasting operations consist of nine network-affiliated television stations
located in Greenville, South Carolina; New Orleans, Louisiana; Lancaster,
Pennsylvania; Winston-Salem, North Carolina; Albuquerque, New Mexico;
Louisville, Kentucky; Omaha, Nebraska; Daytona Beach/Orlando, Florida and Des
Moines, Iowa; and two radio stations located in Phoenix, Arizona. The Daytona
Beach/Orlando and Des Moines television stations were acquired during 1993.
The Pulitzer Publishing Company was founded by the first Joseph
Pulitzer in 1878 to publish the original St. Louis Post-Dispatch and has
operated continuously since that time under the direction of the Pulitzer
family. Michael E. Pulitzer, a grandson of the founder, currently serves as
Chairman of the Board, President and Chief Executive Officer of the Company.
The following table sets forth certain historical financial
information regarding the Company's two business segments, publishing and
broadcasting, for the periods and at the dates indicated. The publishing
segment includes amounts from Pulitzer Community Newspapers ("PCN") prior to
its disposition on December 22, 1994. (See " -- Publishing -- Chicago
Publications.") The broadcasting segment includes amounts from WESH-TV and
KCCI-TV following their respective acquisitions on June 30, 1993 and September
9, 1993.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Operating revenues--net:
Publishing $304,779 $290,146 $285,004 $284,353 $287,241
Broadcasting 180,800 136,839 113,369 109,019 115,531
-------- -------- -------- -------- --------
Total $485,579 $426,985 $398,373 $393,372 $402,772
======== ======== ======== ======== ========
Operating income (loss):
Publishing $ 30,486 $ 23,702 $ 18,179 $ 9,041 $ 12,654
Broadcasting 47,963 27,947 23,311 17,793 21,550
Corporate (3,871) (3,692) (4,856) (3,424) (2,957)
-------- -------- -------- -------- --------
Total $ 74,578 $ 47,957 $ 36,634 $ 23,410 $ 31,247
======== ======== ======== ======== ========
Depreciation and
amortization:
Publishing $ 6,128 $ 6,938 $ 8,174 $ 12,322 $ 8,465
Broadcasting 24,358 16,854 10,695 11,451 13,036
-------- -------- -------- -------- --------
Total $ 30,486 $ 23,792 $ 18,869 $ 23,773 $ 21,501
======== ======== ======== ======== ========
Operating margins
(operating income to
revenues):
Publishing(1) 14.8% 11.8% 10.5% 5.7% 6.2%
Broadcasting 26.5% 20.4% 20.6% 16.3% 18.7%
</TABLE>
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(1) Operating margins for publishing are stated with St. Louis Agency
adjustment (which is recorded as an operating expense for financial
reporting purposes) added back to publishing operating income.
See " -- Publishing--Agency Agreements."
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<TABLE>
<CAPTION>
DECEMBER 31,
------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Assets:
Publishing $136,818 $156,398 $139,694 $101,842 $109,104
Broadcasting 254,410 270,250 120,380 121,629 125,249
Corporate 77,084 34,970 29,914 20,476 27,273
-------- -------- -------- -------- --------
Total $468,312 $461,618 $289,988 $243,947 $261,626
======== ======== ======== ======== ========
</TABLE>
OPERATING STRATEGY
Pulitzer's long-term operating strategy for its media assets is to
maximize each property's growth and profitability through maintenance of
editorial excellence, leadership in locally-responsive news, and tight control
of costs. Management believes that editorial excellence and leadership in
local provision of news will, over the long-term, allow Pulitzer to maximize
its revenue share in each of its respective markets. Experienced local managers
implement the Company's strategy in each media market, with centralized
Pulitzer management providing oversight and guidance in all areas of planning
and operations.
In addition to internal growth, Pulitzer selectively acquires media
properties which the Company believes are consistent with its operating
strategy and present attractive investment opportunities. Management believes
that the Company's strong cash flow and conservative capital structure, among
other reasons, will enable the Company to pursue additional acquisitions as
opportunities arise, although no acquisitions are presently contemplated.
Pulitzer believes that cost controls are an important tool in the
management of media properties which are subject to significant fluctuations in
advertising volume. The Company believes that tight control of costs permits
it to respond quickly when positive operating conditions offer opportunities to
expand market share and profitability and, alternatively, when deteriorating
operating conditions require cost reductions to protect profitability.
The Company aggressively employs production technology in all of its
media operations in order to minimize production costs and produce the most
attractive and timely news product for its readers, viewers and listeners.
Pulitzer's media operations are geographically diverse, placing the
Company in the Midwest, Southwest, Southeast, and Northeast regions of the
United States. Due to the close relationship between economic activity and
advertising volume, the Company believes that geographic diversity provides the
Company with valuable protection from regional economic variances.
PUBLISHING
The Company intends to continue the tradition of reporting and
editorial excellence that has resulted in 17 Pulitzer Prizes* over the years.
While opportunities to increase revenues in publishing are limited, management
believes that with strict financial controls and cost reductions, newspaper
publishing can produce good financial returns. In addition, given the mature
nature of the newspaper industry, management is continuing to seek ways to
leverage its newspaper assets, such as developing electronic publishing.
Further, the Company is pursuing a number of other initiatives to augment
advertising revenues. These include voice services delivered by phone,
electronic dissemination of information and alternative newspaper delivery
systems to provide advertisers with either targeted or total market coverage.
*Pulitzer Prizes are awarded annually at Columbia University by the Pulitzer
Prize Board, an independent entity affiliated with the Columbia University
School of Journalism, founded by the first Joseph Pulitzer.
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The Company publishes two major metropolitan daily newspapers, the
St. Louis Post-Dispatch and The Arizona Daily Star. Both daily newspapers have
weekly total market coverage sections to provide advertisers with market
saturation.
The Company's publishing revenues are derived primarily from
advertising and circulation, averaging approximately 86 percent of total
publishing revenue over the last five years. Advertising rates and rate
structures and resulting revenues vary among publications based, among other
things, on circulation, type of advertising, local market conditions and
competition. The following table provides a breakdown of the Company's
publishing revenues for the past five years.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Advertising:
Retail $ 88,450 $ 85,860 $ 86,846 $ 88,723 $ 89,932
General 7,830 7,154 9,476 9,534 9,754
Classified 84,738 75,670 73,692 75,149 81,968
-------- -------- -------- -------- --------
Total 181,018 168,684 170,014 173,406 181,654
Circulation 77,941 78,661 77,713 73,430 67,351
Other 45,820 42,801 37,277 37,517 38,236
-------- -------- -------- -------- --------
Total $304,779 $290,146 $285,004 $284,353 $287,241
======== ======== ======== ======== ========
</TABLE>
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Note Publishing revenues include amounts from Pulitzer Community Newspapers
("PCN") prior to its dispostion on December 22, 1994.
ST. LOUIS POST-DISPATCH
Founded in 1878 by the first Joseph Pulitzer, the Post-Dispatch has a
long history of reporting and editorial excellence and innovation in newspaper
publishing under the direction of the Pulitzer family. The Post-Dispatch is a
morning daily and Sunday newspaper serving primarily the greater St. Louis
metropolitan area. St. Louis is the sixteenth largest metropolitan statistical
area in the United States (Source: Sales and Marketing Management). Based on
Audit Bureau of Circulations ("ABC") Publisher's Statement and reports for the
six-month period ended September 30, 1994, the market penetration (i.e.,
percentage of households reached) of both the Post-Dispatch's daily and Sunday
editions is seventh in the United States among major metropolitan newspapers.
The newsstand price is $0.50 for the daily paper and $1.25 for the Sunday
edition.
The Post-Dispatch operates under an Agency Agreement between the
Company and The Herald Company, Inc. (the "Herald Company") pursuant to which
the Company performs all activities relating to the day-to-day operations of
the newspaper, but pursuant to which it must share one-half of the Agency's
operating income or one-half of the Agency's operating loss with the Herald
Company. The following table sets forth for the past five years certain
circulation and advertising information for the Post-Dispatch and operating
revenues for the St. Louis Agency, all of which are included in the Company's
consolidated financial statements. See " -- Publishing -- Agency Agreements."
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Post-Dispatch
circulation(1):
Daily (including
Saturday) 339,348 341,797 341,855 364,935 374,267
Sunday 552,764 564,761 566,095 573,237 561,773
</TABLE>
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<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Advertising linage
(in thousands of
inches):
Full run (all zones)
Retail 912 913 873 878 888
General 75 62 87 91 92
Classified 1,039 977 921 963 1,179
-------- -------- -------- -------- --------
Total 2,026 1,952 1,881 1,932 2,159
Part run 591 481 313 350 426
-------- -------- -------- -------- --------
Total inches 2,617 2,433 2,194 2,282 2,585
========= ======== ======== ======== ========
Operating revenues
(in thousands):
Advertising $125,704 $116,951 $115,206 $115,266 $117,844
Circulation 61,207 62,345 61,371 57,522 52,221
Other(2) 23,490 22,387 20,754 19,829 18,673
-------- -------- -------- -------- --------
Total $210,401 $201,683 $197,331 $192,617 $188,738
======== ======== ======== ======== ========
</TABLE>
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(1) Amounts for 1994 based on Company records for the twelve-month period
ended September 30, 1994. All other years based on ABC Publisher's
Statement for the twelve-month period ended September 30.
(2) Primarily revenues from preprinted inserts.
The Post-Dispatch's reporting and editorial excellence is evidenced by
the 17 times it and its staff members have been awarded the Pulitzer Prize for
outstanding accomplishments in journalism and by a number of other journalistic
awards received by members of its staff in recent years.
The Post-Dispatch has consistently been a leader in technological
innovation in the newspaper industry. It was the first major metropolitan
newspaper in the United States to be printed by the offset process. Currently,
sophisticated computer systems are used for writing, editing, composing and
producing the printing plates used in each edition. In the preparation of news
and advertising sections, the Post-Dispatch utilizes a Scitex color graphics
system which automates the processing of film and color separations. This
system is part of an ongoing project intended to give the Post-Dispatch the
capability of full-page pagination. At presstime, a microwave link allows the
Post-Dispatch to send full-page images and then print newspapers simultaneously
in its downtown and suburban plants, thereby allowing it to deliver newspapers
to suburban readers earlier in the morning. In the distribution process,
certain sections of the newspaper as well as advertising supplements are
handled using a sophisticated palletized inserting operation. This allows the
Post-Dispatch to efficiently distribute into selected geographic areas as
necessary. The Company's commitment to the ongoing enhancement of its
operating systems has enabled the Post-Dispatch to offer a continually
improving product to both readers and advertisers while also realizing
substantial savings in labor cost. The Company believes the Post-Dispatch has
adequate facilities to sustain up to a 30 percent increase in daily circulation
without incurring significant capital expenditures.
The Post-Dispatch is distributed primarily through independent home
delivery carriers and single copy dealers. Home delivery accounted for
approximately 76 percent of circulation for the daily Post-Dispatch and 60
percent of circulation for the Sunday edition during 1994.
THE ARIZONA DAILY STAR
Founded in 1877, the Star is published in Tucson, Arizona, by the
Company's wholly-owned subsidiary, Star Publishing Company. The Star, a morning
and Sunday newspaper, and the Tucson Citizen (the "Citizen"), an afternoon
newspaper owned by Gannett Co., Inc. ("Gannett"), are southern Arizona's
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leading dailies. The Star and the Citizen are published through an agency
operation (the "Tucson Agency") and have a combined weekday circulation of
approximately 146,000. Tucson is currently the 74th largest metropolitan
statistical area in the country with a population of approximately 722,600
(Source: Sales and Marketing Management).
The Tucson Agency operates through TNI Partners, an agency partnership
which is owned half by the Company and half by Gannett. TNI Partners is
responsible for all aspects of the business of the two newspapers other than
editorial opinion and gathering and reporting news. Revenues and expenses are
generally shared equally by the Star and the Citizen. Unlike the St. Louis
Agency, the Company's consolidated financial statements include only its share
of the combined operating revenues and operating expenses of the two
newspapers. See "-- Publishing -- Agency Agreements."
As a result of the Tucson Agency, the financial performance of the
Company's Star Publishing Company subsidiary is directly affected by the
operations and performance of both the Star and the Citizen. The following
table sets forth certain information concerning circulation and combined
advertising linage of the Star and the Citizen and the Company's share of the
operating revenues of the Star and the Citizen for the past five years.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Circulation(1):
Star daily 98,060 96,926 94,496 91,661 88,413
Citizen daily 48,279 49,560 50,146 50,475 50,654
Star Sunday 179,748 175,321 170,500 166,657 165,951
Combined advertising
linage (in thousands
of inches):
Full run (all zones)
Retail 1,565 1,675 1,750 1,616 1,775
General 50 45 42 60 90
Classified 1,608 1,462 1,362 1,222 1,112
------- ------- ------- ------- -------
Total 3,223 3,182 3,154 2,898 2,977
Part run 116 98 157 150 100
------- ------- ------- ------- -------
Total inches 3,339 3,280 3,311 3,048 3,077
======= ======= ======= ======= =======
Operating revenues
(in thousands):
Advertising $28,459 $25,562 $24,202 $23,569 $24,570
Circulation 11,434 11,065 10,757 10,061 9,381
Other(2) 5,833 5,298 4,582 4,976 5,515
------- ------- ------- ------- -------
Total $45,726 $41,925 $39,541 $38,606 $39,466
======= ======= ======= ======= =======
</TABLE>
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(1) Amounts for 1994 based on Company records for the 52 week period ended
December 31. All other years based on ABC Publisher's Statement for
the 52 week period ended December 31.
(2) Primarily revenues from preprinted inserts.
In 1994, the Star's daily edition accounted for approximately 67
percent of the combined daily circulation of the Tucson Agency publications.
The Star's daily and Sunday editions accounted for approximately 60 percent of
the agency's total advertising linage.
The Star and the Citizen are printed at TNI Partners' modern,
computerized facility equipped with two, eight-unit Metro offset presses.
Present inserter equipment enables all home delivery supplements to be inserted
on line at press speeds. In addition, the writing, editing and composing
functions have been computerized, increasing efficiency and reducing workforce
requirements.
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The newsstand prices of the daily editions of the Star and the Citizen
are $0.50 and $0.35, respectively, and the newsstand price of the Sunday
edition of the Star is $1.50. The Star and the Citizen are distributed by
independent contractors.
CHICAGO PUBLICATIONS
On December 22, 1994, the Company sold Pulitzer Community Newspapers,
Inc., a wholly-owned subsidiary with operations in the Chicago area. Since
1986, PCN's primary operations consisted of the publication of a daily suburban
newspaper, the Daily Southtown, and commercial printing services for several
national and local newspapers. The sale of PCN completes the Company's exit of
the Chicago area after having closed down and partially sold its weekly
community newspaper business, Lerner Newspapers, in October 1992.
The Company's 1994 consolidated and publishing segment operating
results include substantially a full year of PCN operations. During 1994,
advertising, preprints, circulation and contract printing accounted for
approximately 55 percent, 4 percent, 11 percent and 28 percent, respectively,
of PCN's total operating revenues of $48,652,000. The sale of PCN is not
expected to have a significant impact on the Company's future earnings results.
AGENCY AGREEMENTS
Newspapers in approximately 18 cities operate under joint operating or
agency agreements. Agency agreements generally provide for newspapers
servicing the same market to share certain printing and other facilities and to
pool certain revenues and expenses in order to decrease aggregate expenses and
thereby allow the continuing operation of multiple newspapers serving the same
market. The Newspaper Preservation Act of 1970 permits joint operating
agreements between newspapers under certain circumstances without violation of
the Federal antitrust laws.
St. Louis Agency. An agency operation between the Company and the
Herald Company is conducted under the provisions of an Agency Agreement, dated
March 1, 1961, as amended. For many years, the Post-Dispatch was the afternoon
and Sunday newspaper serving St. Louis, and the Globe-Democrat was the morning
paper and also published a weekend edition. Although separately owned, from
1961 through February 1984, the publication of both the Post-Dispatch and the
Globe-Democrat was governed by the St. Louis Agency Agreement. From 1961 to
1979, the two newspapers controlled their own news, editorial, advertising,
circulation, accounting and promotion departments and Pulitzer managed the
production and printing of both newspapers. In 1979, Pulitzer assumed full
responsibility for advertising, circulation, accounting and promotion for both
newspapers. In February 1984, after a number of years of unfavorable financial
results at the St. Louis Agency, the Globe-Democrat was sold by the Herald
Company and the St. Louis Agency Agreement was revised to eliminate any
continuing relationship between the two newspapers and to permit the
repositioning of the daily Post-Dispatch as a morning newspaper.
Following the renegotiation of the St. Louis Agency Agreement at the
time of the sale of the Globe-Democrat, the Herald Company retained the
contractual right to half the profits or losses (as defined) of the operations
of the St. Louis Agency, which from February 1984 forward consisted solely of
the publication of the Post-Dispatch. The St. Louis Agency Agreement provides
for the Herald Company to share half the cost of, and to share in a portion of
the proceeds from the sale of, capital assets used in the production of the
Post-Dispatch. Under the St. Louis Agency Agreement, Pulitzer supervises,
manages and performs all activities relating to the day-to-day publication of
the Post-Dispatch and is solely responsible for the news and editorial policies
of the newspaper.
The consolidated financial statements of the Company include all the
operating revenues and expenses of the St. Louis Agency. An agency adjustment
is provided as an operating expense which reflects that portion of the
operating income of the St. Louis Agency allocated to the Herald Company.
Under the
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St. Louis Agency Agreement, for fiscal 1994, 1993, 1992, 1991, and 1990, the
Company paid the Herald Company $14,706,000, $10,660,000, $11,690,000,
$7,290,000, and $5,253,000, respectively, in respect of the Herald Company's
share of the operating income of the St. Louis Agency. As a result of such
agency adjustment, the Company is, and during the term of the St. Louis Agency
will continue to be, entitled to only half the profits (as defined) from the
operations of the St. Louis Agency, the amount of which cannot be determined
until the end of each fiscal year.
The current term of the St. Louis Agency Agreement runs through
December 31, 2034, following which either party may elect to renew the
agreement for successive periods of 30 years each.
Tucson Agency. The Tucson Agency Agreement has, since 1940, governed
the joint operations of the Star and Citizen. For financial reporting purposes
the operations of the Tucson Agency are reflected in the Company's consolidated
financial statements differently from the operations of the St. Louis Agency.
The consolidated financial statements of the Company include only the Company's
share of the combined revenues, operating expenses and income of the Star and
Citizen. TNI Partners, as agent for the Company and Gannett, is responsible for
advertising and circulation, printing and delivery and collection of all
revenues of the Star and the Citizen. The Board of Directors of TNI Partners
presently consists of three directors chosen by the Company and three chosen by
Gannett. Budgetary, personnel and other non-news and editorial policy matters,
such as advertising and circulation policies and rates or prices, are
determined by the Board of Directors of TNI Partners. Each newspaper is
responsible for its own news and editorial content. Revenues and expenses are
recorded by TNI Partners, and the resulting profit is split 50-50 between
Pulitzer and Gannett. Both partners have certain administrative costs which
are borne separately. As a result of the Tucson Agency, the Star and the
Citizen benefit from increases and can be adversely affected by decreases in
each other's circulation.
The Tucson Agency Agreement runs through June 1, 2015, and contains
renewal provisions for successive periods of 25 years each.
COMPETITION
The Company's publications compete for readership and advertising
revenues in varying degrees with other metropolitan, suburban, neighborhood and
national newspapers and other publications as well as with television, radio,
direct mail and other news and advertising media. Competition for advertising
is based upon circulation levels, readership demographics, price and advertiser
results, while competition for circulation is generally based upon the content,
journalistic quality and price of the publication. In St. Louis and its
surrounding suburban communities, the Post-Dispatch's competition for
circulation and advertising revenues includes paid suburban daily newspapers as
well as a chain of community newspapers and shoppers. These community
newspapers and shoppers target selected geographic markets throughout the St.
Louis metropolitan area.
Due to the agency relationship existing in Tucson, the Star and the
Citizen cannot be viewed as competitors for advertising or circulation
revenues. The Star and the Citizen compete primarily against other media and
against Phoenix-area and suburban, neighborhood and national newspapers and
publications.
EMPLOYEE RELATIONS
The Company has contracts with substantially all of its production
unions related to the Post-Dispatch, with expiration dates ranging from
February 1999 through September 2002. In addition, the Company signed a new
eight-year contract with the St. Louis Newspaper Guild in December 1994. All
of the Post-Dispatch labor contracts contain no strike provisions.
TNI Partners has a one-year contract, expiring December 31, 1995, with
Tucson Graphic Communications Union Local No. 212, covering certain pressroom
employees.
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RAW MATERIALS
The publishing segment's results are significantly impacted by the
cost of newsprint which accounted for approximately 19 percent of the segment's
total 1994 operating expenses. During 1994, the Company used approximately
109,900 metric tons of newsprint in its production process. The Company's
recurring newsprint cost and metric tons of consumption for 1994, after giving
effect to the St. Louis Agency adjustment and excluding PCN, were approximately
$22,800,000 and 50,600 metric tons, respectively. In the last five years, the
Company's average cost per ton of newsprint has varied from a low of $402 per
ton in 1992 to a high of $495 per ton in 1990. After declining during the
first half of 1994, newsprint prices have since been on an upward trend through
early 1995. For the first quarter of 1995, the Company expects its average
cost per metric ton to increase to approximately $555. Based upon notification
from the Company's newsprint vendors of an increase scheduled for May 1995, the
Company's average cost per metric ton for the second quarter and the balance of
the year (assuming no further increases) are estimated to be approximately $625
and $680, respectively. These estimated higher newsprint prices for fiscal
year 1995 are expected to have a significant effect on the performance of the
publishing segment. No assurance, however, can be given that the estimated
newsprint average cost increases for fiscal 1995 will be as projected, and
actual average cost increases may be higher or lower.
The Post-Dispatch obtains the newsprint necessary for its operations
from six separate suppliers, three of which are Canadian. The Post-Dispatch has
guaranteed the future supply of certain volume levels through long-term
agreements with three of these newsprint suppliers. The Company believes that
the absence of long-term agreements with the remaining three newsprint
suppliers will not limit the Company's ability to obtain newsprint at
competitive prices.
TNI Partners obtains the newsprint necessary for the Tucson Agency's
operations pursuant to an arrangement with Gannett, the owner of the Citizen.
Gannett purchases newsprint on behalf of TNI Partners under various contractual
arrangements and agreements. Newsprint is also purchased on the spot market.
BROADCASTING
The Company's broadcasting operations currently consist of the
ownership and operation of eight network-affiliated VHF television stations,
one network-affiliated UHF television station, two satellite network television
stations and one AM and one FM radio station. Pulitzer Broadcasting has
traditionally focused on mid-sized television markets. The Company has
diversified its revenues by purchasing properties in different geographic
regions of the United States, thus insulating itself, somewhat, from regional
economic downturns. The local management of each of the Company's broadcasting
properties are partially compensated based on the cash flow performance of
their respective stations. Senior management believes that the success of a
local television station is driven by strong local news programming, and that
the Company has developed a particular strength in local news programming. As
is the case with all Company operations, there is major emphasis on cost
control in the broadcasting segment.
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TELEVISION
The following table sets forth certain information concerning the
television stations which the Company owns and the markets in which they
operate.
<TABLE>
<CAPTION>
COMMERCIAL
DMA-TV STATIONS EXPIRATION
HOUSEHOLDS DMA LOCAL OPERATING DATE OF
CALL NETWORK IN NATIONAL MARKET IN DATE FCC
STATION AND MARKET LETTERS AFFILIATION MARKET (1) RANK (2) RANK (3) MARKET (3) ACQUIRED LICENSE
- ------------------ ------- ----------- ---------- -------- -------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
VHF STATIONS (5):
Greenville/Spartanburg/
Asheville, SC/NC WYFF NBC 672,070 35 1 6 2/28/83 12/01/96
New Orleans, LA WDSU NBC 615,180 41 2 6 12/14/89 6/01/92(4)
Harrisburg/Lancaster/
Lebanon/York, PA WGAL NBC 577,980 44 1 7 8/13/79 8/01/99
Greensboro/Winston-Salem/
High Point, NC WXII NBC 548,460 48 3 7 2/28/83 12/01/96
Daytona Beach/Orlando/
Melbourne, FL WESH NBC 983,410 22 2 10 6/30/93 2/01/97
Albuquerque, NM (6) KOAT ABC 540,970 49 1 11 6/1/69 10/01/98
Omaha, NE KETV ABC 361,280 74 1 4 4/15/76 6/01/98
Des Moines, IA KCCI CBS 364,980 73 1 4 9/9/93 2/01/98
UHF STATIONS (5):
Louisville, KY WLKY CBS 538,640 50 3 6 6/23/83 8/01/97
</TABLE>
- ---------------
(1) Based upon the Designated Market Area ("DMA") for the station as reported
in the November, 1994 Nielsen Station Index ("NSI"). DMA is a
geographic area defined as all counties in which the local stations
receive a preponderance of total viewing hours. DMA data is a primary
factor in determining television advertising rates. NOTE: Previous
years' schedules include market data from the Arbitron Company which
ceased to provide local television market reports in 1994.
(2) National DMA rank for each market as reported in the November, 1994 NSI.
(3) Based on November, 1994 NSI audience estimates, 7:00am-1:00am,
Sunday-Saturday. The number of commercial stations operating in market
does not include public broadcasting stations, satellite stations or
translators which rebroadcast signals from distant stations.
(4) See " -- Federal Regulation of Broadcasting -- Broadcast Licenses."
(5) VHF (very high frequency) stations transmit on channels 2 through 13, and
UHF (ultra high frequency) stations transmit on channels 14
through 69. Technical factors, such as station power, antenna location
and height and topography of the area served, determine geographic market
served by a television station. In general, a UHF station requires
greater power or antenna height to cover the same area as a VHF station.
(6) The Company is also the licensee of KOVT, a satellite TV station licensed
to Silver City, New Mexico and the holder of a construction
permit to build a satellite TV station, KOFT, in Gallup, New Mexico.
Pulitzer has filed a Petition for Rule Making with the FCC requesting
that the community of license of KOFT be changed from Gallup to
Farmington, New Mexico. In 1993, the Company purchased the operating
assets of KVIO, a satellite TV station licensed to Carlsbad, New Mexico.
The call letters of KVIO were subsequently changed to KOCT.
11
<PAGE> 12
Average audience share, market rank and the number of stations serving
the market for each television station which the Company currently owns for the
past five years are shown in the following table.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
--------------------- --------------------- ---------------------- --------------------- ---------------------
Stations Stations Stations Stations Stations
Serving Serving Serving Serving Serving
Market/ Market/ Market/ Market/ Market/
Average Local Average Local Average Local Average Local Average Local
Audience Market Audience Market Audience Market Audience Market Audience Market
Station Share(1) Rank(2) Share(1) Rank(2) Share(1) Rank(2) Share(1) Rank(2) Share(1) Rank(2)
- ------- -------- ------- -------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WYFF 27% 6/1 29% 6/2 30% 6/2 31% 6/1 32% 6/1
WDSU 20 6/2 21 5/2 23 5/2 24 5/2 23 5/2
WGAL 36 7/1 36 7/1 35 6/1 36 6/1 37 6/1
WXII 23 7/3 26 7/3 25 7/3 27 7/3 27 8/2
WESH(3) 21 10/2 23 9/2 25 7/2 25 8/2 27 7/2
KOAT 30 11/1 32 10/1 33 10/1 32 12/1 32 10/1
KETV 27 4/1 29 4/1 29 4/1 31 4/1 31 4/1
KCCI(4) 41 4/1 35 4/1 35 4/1 33 4/1 37 4/1
WLKY(5) 28 6/3 29 5/1 28 5/1 26 5/3 22 5/3
</TABLE>
- ---------------
(1) Represents the number of television households tuned to a specific
station 9:00am-Midnight, Sunday-Saturday, as a percentage of Station
Total Households. Source: 1994 data from February, May and November
Nielsen Station Index ("NSI"). Schedules for 1990-1993 include both NSI
and Arbitron Ratings Audience Estimates information. NOTE: The Arbitron
Company ceased to provide local television market reports in 1994.
(2) Stations serving market and local market rank data for 1994 based on
November, 1994 NSI. Schedules for 1990-1993 include both NSI and
Arbitron Ratings Audience Estimates information.
(3) Acquired June 30, 1993.
(4) Acquired September 9, 1993.
(5) Switched affiliations from ABC to CBS in September, 1990.
12
<PAGE> 13
The Company's television stations are affiliated with national
television networks under ten-year contracts which are automatically renewed
for successive five-year terms unless the Company or network exercises its
right to cancel. Prior to executing new contracts in early 1995, the stations'
old network affiliation agreements were for two year periods with automatic
renewal provisions.
The ratings of the Company's television stations are affected by
fluctuations in the national ratings of its affiliated networks. The Company
believes that such network rating fluctuations are normal for the broadcasting
industry and in the past has not sought to change its network affiliations
based on the decline of the national ratings of an affiliated network.
ADVERTISING REVENUES
The principal source of broadcasting revenues for the Company is the
sale of time to advertisers. The Company derives television broadcasting
revenues from local and national spot advertising and network compensation.
Local advertising consists of short announcements and sponsored programs on
behalf of advertisers in the immediate area served by the station. National
spot advertising generally consists of short announcements and sponsored
programs on behalf of national and regional advertisers. Network revenue is
based upon a contractual agreement with a network and is dependent upon the
network programs broadcast by the stations. The following table sets forth the
television broadcasting revenues received by the Company from each of these
types of advertising during the past five years.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1993(1) 1992 1991 1990
---- ------- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Local $82,463 $63,565 $49,670 $46,969 $49,199
National spot 76,925 52,869 44,594 41,252 43,926
Network 6,557 5,840 5,210 5,988 6,565
Other 1,832 1,665 1,575 1,837 1,671
-------- -------- -------- ------- --------
Total $167,777 $123,939 $101,049 $96,046 $101,361
======== ======== ======== ======= ========
</TABLE>
- ---------------
(1) The Company acquired television stations WESH and KCCI on June 30,
1993 and September 9, 1993, respectively.
The Company believes that its stations are particularly strong in
local news programming, an important revenue source for network-affiliated
stations. Local news programs generate approximately a quarter of each
station's revenues.
Local time spots are sold by the Company's sales personnel at each
broadcast station. Company sales departments make extensive use of computers
to track and schedule all commercial spots sold, to maintain the broadcast
station operating schedule, to determine time spot availability and to record
accounts receivable. National spots are sold by the Company's three national
sales representative firms.
Advertising rates are based primarily on audience size, audience
share, demographics and time availability. The Company's ability to maximize
advertising revenues is dependent upon, among other things, its management of
the inventory of advertising time available for sale.
PROGRAMMING
The national television networks with which the Company's stations are
affiliated offer a variety of sponsored and unsponsored programs to affiliated
stations. The affiliated stations have the right of first refusal before the
programs may be offered to any other television station in the same city.
13
<PAGE> 14
When not broadcasting network programs, the Company's stations
broadcast local news programs, movies, syndicated programs acquired from
independent sources and public service programs. Movies and syndicated
programs have frequently been shown previously on network or cable television.
Syndicated programs are programs that are licensed to individual stations for
one or more showings in a particular market as distinguished from programs
licensed for national distribution through one of the major networks.
The Company's stations make programming decisions on the basis of a
number of factors, including program popularity and cost. On occasion, the
Company has not renewed a popular program when syndication costs exceeded the
level the Company believed appropriate compared to the potential advertising
revenues to be derived from the program.
RADIO
The Company owns two radio stations serving the Phoenix, Arizona
market: KTAR (AM) and KKLT (FM). Phoenix is the 20th largest Metro Market in
the United States, and the Phoenix Radio Metro Area is served by thirteen AM
and seventeen FM radio stations. KTAR (AM) ranks fourth in the Phoenix market
and KKLT (FM) ranks ninth, with 5.8 percent and 4.3 percent average quarter
hour market shares, respectively (source: Arbitron Radio Ratings Summary-Fall
1994). KTAR (AM) operates as a news/talk/sports radio station while KKLT (FM)
has an adult contemporary music format. The FCC licenses for KTAR (AM) and
KKLT (FM) expire on June 1, 1997.
Advertising rates charged by a radio station are based primarily upon
the number of homes in the station's primary market, the number of persons
using radio in the area and the number of persons listening to the station.
Advertising is sold by a national sales representative and by the stations'
advertising sales personnel, consisting of approximately twenty-one
salespersons and three sales managers. The Company's radio stations manage
their inventory of available advertising time in much the same manner as the
television stations. Radio broadcasting net revenues during each of the past
five years were as follows: 1994 - $13,023,000; 1993 - $12,900,000; 1992 -
$12,320,000; 1991 - $12,973,000; and 1990 - $14,170,000.
COMPETITION
Competition for television and radio audiences is based primarily on
programming content. Programming content for the Company's television stations
is significantly affected by network affiliation and by local programming
activities. Competition for advertising is based on audience size, audience
share, audience demographics, time availability and price. The Company's
television stations compete for audience and advertising with other television
stations and with radio stations, cable television and other news, advertising
and entertainment media serving the same markets. In addition, the Company's
television stations compete for audience and, to a lesser extent, advertising,
with other forms of home entertainment such as home video recorders and direct
broadcast satellite service. Cable systems, which operate generally on a
subscriber payment basis, compete by carrying television signals from outside
the broadcast market and by distributing signals from outside the broadcast
market and by distributing programming that is originated exclusively for cable
systems. The Company's television stations are also affected by local
competitive conditions, including the number of stations serving a particular
area and the programming content of those stations.
The Company believes that the competitive position of its radio and
television properties is enhanced by the Company's policy of operating its
broadcasting properties with a view to long-term growth. Strong local news
programming is an important factor for the competitive position of the
Company's television stations. The Company's system for managing advertising
inventory of its television and radio stations is also an important factor in
its ability to compete effectively for advertising revenues.
The Company's radio stations compete for audience and advertising with
other radio and television stations in the Phoenix area and with other print,
advertising and entertainment media. The Company's radio stations compete for
audience primarily on the basis of their broadcasting format.
14
<PAGE> 15
FEDERAL REGULATION OF BROADCASTING
Television and radio broadcasting are subject to the jurisdiction of
the Federal Communications Commission ("FCC") pursuant to the Communications
Act of 1934, as amended (the "Communications Act"). The Communications Act
prohibits the public dissemination of radio and television broadcasts except in
accordance with a license issued by the FCC and empowers the FCC to issue,
revoke, modify and renew broadcasting licenses and adopt such regulations as
may be necessary to carry out the provisions of the Communication Act.
BROADCAST LICENSES
Broadcasting licenses are granted for a maximum period of seven years
in the case of radio stations and five years in the case of television stations
and are renewable upon application. During the period when a renewal
application is pending, competing applicants may file for the frequency being
used by the renewal applicant. Petitions to deny license renewals and other
applications may also be filed against licensees and applicants. Such petitions
can be used by interested parties, including members of the public, to raise
issues before the FCC.
An application to renew the license of WDSU, New Orleans, was filed by
the Company with the FCC on January 19, 1992; the National Black Media
Coalition has filed with the FCC a petition to deny the grant of the
application based on alleged violations of the FCC's equal employment
opportunity rules. The Company has filed an opposition to the aforementioned
petition and is confident of a favorable outcome.
MULTIPLE OWNERSHIP
FCC regulations govern the multiple, common and cross ownership of
broadcast stations. Under the FCC's current multiple ownership rules, a
license for an AM radio or FM radio or television station will not be granted
if (i) the applicant already owns, operates or controls or has an interest in
another television station of the same type which provides service to
substantially the same area as the television station owned, operated or
controlled by the applicant, or (ii) the grant of the license would result in
the applicant's owning, operating or controlling or having an interest in more
than 20 AM stations, more than 20 FM stations or more than 12 television
stations, except in special situations. With respect to television stations,
there is an additional ownership limit based on audience reach. Under the
audience reach limitation, an entity may acquire cognizable ownership interests
in up to 12 markets, if the households reached by the television stations do
not exceed 25% of the national television household audience as determined by
the Arbitron ADI market rankings.
The common ownership rules generally prohibit ownership of a VHF
television station and either an AM or FM radio station in the same market, and
the AM-FM radio ownership rules prohibit granting a license to operate an AM or
FM radio station or television station to an applicant who already owns,
operates or controls or has an interest in a daily newspaper in the community
in which the broadcast license is requested. Further, the cross ownership
rules prohibit a cable television system from carrying the signal of a
television broadcast station if such system owns, operates, controls or has an
interest in a broadcast television station which serves substantially the same
area that the cable television system is serving. The FCC and the Congress are
currently considering the elimination or liberalization of various national and
local restrictions on the ownership of television stations.
RECENTLY ADOPTED AND PROPOSED FCC RULE CHANGES
There are currently pending before Congress bills which would allow
ownership of cable systems by the Bell Operating Companies located outside of
their service areas. There is pending before the courts an appeal of a
decision of the FCC which authorizes telephone companies to offer a type of
cable service, known as "video dialtone," by furnishing transmission facilities
on a common carrier basis to customers who desire to distribute video
programming.
15
<PAGE> 16
It is the current policy of the FCC to rely increasingly upon the
interplay of marketplace forces in lieu of direct government regulation and to
encourage increasing competition among different electronic communication
media. The FCC has granted several applications proposing to establish direct
broadcast satellite systems ("DBS"). Several other new technologies are in
their developmental stages, such as High Definition Television capable of
transmitting television pictures with higher resolution, truer color and wider
aspect ratios, and Digital Audio Broadcasting capable of transmitting radio
signals on a terrestrial basis and by space satellites. The potential impact
of these technologies on the Company's business cannot be predicted.
A controversy exists among television broadcasters, cable companies
and program producers relating to rules requiring cable television systems
("cable systems") to carry the signals of local television stations. On
March 11, 1993, the FCC adopted rules concerning the mandatory signal carriage
("must carry") rights of commercial and noncommercial television stations that
are local to the area serviced by a cable system and the requirement
prohibiting cable operators and other multichannel video programming providers
from carrying television stations without obtaining their consent
("retransmission consent") in certain circumstances. Later that year, a
three-judge panel of the United States District Court found that the FCC rules
governing must carry and retransmission consent are constitutional. On appeal,
the United States Supreme Court vacated the District Court decision and
remanded the case back to the three-judge panel for further proceedings. While
the case is pending, the must-carry provisions of the 1992 Cable Act remain in
effect, as do the Commission's must-carry rules and retransmission consent
requirements.
LIMITATIONS ON OWNERSHIP OF THE COMPANY'S STOCK
The Communications Act prohibits the assignment or transfer of
broadcasting licenses, including the transfer of control of any corporation
holding such licenses, without the prior approval of the FCC. The
Communications Act would prohibit the Company from continuing to control
broadcast licenses if, in the absence of FCC approval, any officer of the
Company or more than one-fourth of its directors were aliens, or if more than
one-fourth of the Company's capital stock were acquired or voted directly or
indirectly by alien individuals, corporations, or governments, or if it
otherwise fell under alien influence or control in a manner determined by the
FCC to be contrary to the public interest.
Because of the multiple, common and cross ownership rules, if a holder
of the Company's common stock or Class B common stock acquired an attributable
interest in the Company and had an attributable interest in other broadcast
stations, a cable television operation or a daily newspaper, there could be a
violation of FCC regulations depending upon the number and location of the
other broadcasting stations, cable television operations or daily newspapers
attributable to such holder.
The information contained under this heading does not purport to be a
complete summary of all the provisions of the Communications Act and the rules
and regulations of the FCC thereunder or of pending proposals for other
regulation of broadcasting and related activities. For a complete statement of
such provisions, reference is made to the Communications Act, to such rules and
regulations and to such pending proposals.
JOINT VENTURE INVESTMENT
On January 1, 1994, the Company acquired a one-third interest in RXL
Communications ("RXL") for $5,000,000. The joint venture, originally formed
by affiliates of Morgan-Murphy Broadcasting and The Rocky Company in 1988,
produces and broadcasts interactive educational programming as a curriculum
supplement to school systems across the United States. In addition, RXL
produces training, seminar and conference broadcasts and videos for a variety
of corporate, governmental and trade organizations. The joint venture, with
operating facilities in the states of Washington and Missouri, was renamed RXL
Pulitzer as of January 1, 1994.
16
<PAGE> 17
EMPLOYEES
At December 31, 1994, the Company had approximately 2,400 full-time
employees, of whom approximately 1,300 were engaged in publishing and 1,100 in
broadcasting. In St. Louis, a majority of the approximately 1,100 full-time
employees engaged in publishing are represented by unions. In addition,
certain employees of the broadcasting segment and TNI Partners are represented
by unions. The Company considers its labor relations with its employees to be
good.
17
<PAGE> 18
ITEM 2. PROPERTIES
The corporate headquarters of the Company is located at 900 North
Tucker Boulevard, Saint Louis, Missouri. The general character, location and
approximate size of the principal physical properties used by the Company at
December 31, 1994, are set forth below. Leases on the properties indicated as
leased by the Company expire at various dates through July 2012.
The Company believes that all of its owned and leased properties are
in good condition, well maintained and adequate for its current and immediately
foreseeable operating needs. The Company currently has two building projects
in process to address the long-term operating requirements of its New Orleans
televison station and Phoenix radio stations.
<TABLE>
<CAPTION>
GENERAL CHARACTER APPROXIMATE AREA
OF PROPERTY IN SQUARE FEET
----------- --------------
OWNED LEASED
----- ------
<S> <C> <C>
Publishing:
Printing plants, business and editorial
offices, and warehouse space located in:
St. Louis, Missouri* 536,000 109,700
Tucson, Arizona ** 265,000 21,100
Washington, D.C. - 2,250
Broadcasting:
Business offices, studios, garages and
transmitters located in:
St. Louis, Missouri - 5,300
Albuquerque, New Mexico 39,700 7,500
Omaha, Nebraska 37,900 600
Lancaster, Pennsylvania 55,200 2,200
Winston-Salem, North Carolina 41,100 800
Greenville, South Carolina 52,000 3,600
Louisville, Kentucky 20,800 -
New Orleans, Louisiana 27,500 14,500
Phoenix, Arizona 1,450 10,450
Orlando, Florida 61,300 2,900
Daytona Beach, Florida 28,100 -
Des Moines, Iowa 53,400 -
</TABLE>
- ---------------
* Property is subject to the provisions of the St. Louis Agency Agreement.
** The 265,000 square foot facility in Tucson, Arizona, is used in the
production of the Star and the Citizen and is jointly owned with
Gannett pursuant to the Tucson Agency. Approximately 900 square feet
of the leased properties in Tucson, Arizona, are leased by the Company
for use as a bureau office for the Star. The remaining leased
facilities are leased by TNI Partners pursuant to the Tucson Agency.
18
<PAGE> 19
ITEM 3. LITIGATION
The Company becomes involved from time to time in various claims and
lawsuits incidental to the ordinary course of its business, including such
matters as libel, slander and defamation actions and complaints alleging
discrimination. In addition, the Company is involved from time to time in
various governmental and administrative proceedings relating, among other
things, to renewal of broadcast licenses. While the results of litigation
cannot be predicted, management believes the ultimate outcome of such
litigation will not have a material adverse effect on the consolidated
financial statements of the Company and its subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
19
<PAGE> 20
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is listed and traded on the New York Stock
Exchange under the symbol "PTZ."
At March 14, 1995, there were approximately 454 record holders of the
Company's common stock and one record holder of its Class B common stock.
The following table sets forth the range of high and low sales prices
and dividends paid for each quarterly period in the past two years:
<TABLE>
<CAPTION>
High Low Dividend*
---- --- --------
<S> <C> <C> <C>
1993**
----
First Quarter $31.80 $24.40 $0.1075
Second Quarter 29.60 22.80 0.1075
Third Quarter 27.40 22.80 0.1075
Fourth Quarter 29.40 25.10 0.1075
</TABLE>
<TABLE>
<CAPTION>
High Low Dividend*
---- --- --------
<S> <C> <C> <C>
1994**
----
First Quarter $30.60 $27.90 $0.1150
Second Quarter 29.90 27.70 0.1150
Third Quarter 31.00 27.80 0.1150
Fourth Quarter 31.20 26.40 0.1150
</TABLE>
- ---------------
* In 1994 and 1993, the Company paid cash dividends of $0.46 and $0.43,
respectively, per share of common stock and Class B common stock (see
Note 5 of Notes to Consolidated Financial Statements for restrictions
on dividends).
** The high and low sales prices and dividends per share have been adjusted to
reflect the impact of a five-for-four stock split, effected in the form
of a 25 percent common and Class B common stock dividend, declared by
the Company's Board of Directors on January 4, 1995.
20
<PAGE> 21
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended December 31,
OPERATING RESULTS 1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Operating Revenues -- net $485,579 $426,985 $398,373 $393,372 $402,772
-------- -------- -------- -------- --------
Operating Expenses
Operations 191,570 180,998 170,307 184,784 198,317
Selling, general and administrative 174,239 163,578 160,873 154,115 146,454
St. Louis Agency adjustment 14,706 10,660 11,690 7,290 5,253
Depreciation and amortization 30,486 23,792 18,869 23,773 21,501
-------- -------- -------- -------- --------
Total operating expenses 411,001 379,028 361,739 369,962 371,525
-------- -------- -------- -------- --------
Operating income 74,578 47,957 36,634 23,410 31,247
Interest income 1,971 1,090 1,156 1,618 2,041
Interest expense (12,009) (9,823) (7,801) (9,443) (10,920)
Gain on sale of publishing property 2,791
Net other expense (1,461) (1,011) (756) (661) (519)
-------- -------- -------- -------- --------
Income before provision for income taxes
and cumulative effects of changes in
accounting principles 65,870 38,213 29,233 14,924 21,849
Provision for income taxes 25,960 15,260 5,331 4,365 9,325
-------- -------- -------- -------- --------
Income before cumulative effects
of changes in accounting principles 39,910 22,953 23,902 10,559 12,524
Cumulative effects of changes in
accounting principles, net of
applicable income taxes (719) 360 (25,147)
-------- -------- -------- -------- --------
Net income (loss) $39,191 $23,313 ($1,245) $10,559 $12,524
======== ======== ======== ======== ========
Earnings (loss) per share of stock (common
and Class B common): (1)
Income before cumulative effects of changes
in accounting principles $2.45 $1.51 $1.65 $0.73 $0.87
Cumulative effects of changes in
accounting principles (0.04) 0.02 (1.74)
-------- -------- -------- -------- --------
Earnings (loss) per share $2.41 $1.53 ($0.09) $0.73 $0.87
======== ======== ======== ======== ========
Dividends per share of common and
Class B common stock (1) $0.46 $0.43 $0.39 $0.38 $0.36
======== ======== ======== ======== ========
Weighted average number of shares
(common and Class B common stock)
outstanding (1) 16,241 15,278 14,424 14,404 14,404
======== ======== ======== ======== ========
</TABLE>
21
<PAGE> 22
ITEM 6. SELECTED FINANCIAL DATA - CONTINUED
<TABLE>
<CAPTION>
December 31,
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C> <C>
OTHER DATA
Working capital $ 96,729 $ 60,688 $ 45,989 $ 32,044 $ 34,863
Total assets (2) 468,312 461,618 289,988 243,947 261,626
Long-term debt, less current maturities(3) 128,750 161,920 57,661 74,372 90,975
Stockholders' equity (4) 155,019 122,143 67,074 72,851 67,610
</TABLE>
- ---------------
(1) In 1994, shares outstanding, dividends per share and earnings per share
were adjusted for 1994 and restated for 1993 - 1990 to reflect
the impact of a five-for-four stock split, effected in the form of a
25 percent common and Class B common stock dividend, declared by
the Company's Board of Directors on January 4, 1995. In 1992, shares
outstanding, dividends per share and earnings per share were adjusted
for 1992 and restated for 1991 - 1990 to reflect the impact of 10
percent common and Class B common stock dividend declared by the
Company's Board of Directors on January 4, 1993.
(2) During 1993 the Company acquired television stations WESH and KCCI for
approximately $164.7 million.
(3) As of December 31, 1993, approximately $118.6 million of new long-term
debt financing was outstanding related to the acquisition of WESH
and KCCI.
(4) On July 9, 1993, the Company sold 1.35 million shares of common stock in a
public offering. The $37 million in net proceeds from the offering
was used to partially finance the acquisition of WESH and KCCI in 1993.
22
<PAGE> 23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's operating revenues are significantly influenced by a
number of factors, including overall advertising expenditures, the appeal of
newspapers, television and radio in comparison to other forms of advertising,
the performance of the Company in comparison to its competitors in specific
markets, the strength of the national economy and general economic conditions
and population growth in the markets served by the Company.
The Company's business tends to be seasonal, with peak revenues and
profits generally occurring in the fourth and, to a lesser extent, second
quarters of each year as a result of increased advertising activity during the
Christmas and spring holiday periods. The first quarter is historically the
weakest quarter for revenues and profits.
1994 COMPARED WITH 1993
CONSOLIDATED
Operating revenues for the year ended December 31, 1994 increased 13.7
percent to $485.6 million from $427 million in 1993. The revenue comparison
was affected by the acquisitions of television stations WESH and KCCI on June
30, 1993 and September 9, 1993, respectively. The Company's 1994 results
included full periods for WESH and KCCI while the prior year included the
results of the two television stations only after their respective acquisition
dates. Excluding WESH (first six months only) and KCCI (first nine months
only) from the comparison, consolidated revenues would have increased 7.9
percent. These increases reflected gains in both broadcasting and publishing
revenues.
Operating expenses, excluding the St. Louis Agency adjustment, were
$396.3 million compared to $368.4 million in 1993, an increase of 7.6 percent.
Excluding WESH (first six months only) and KCCI (first nine months only) from
the comparison, consolidated operating expenses would have increased 1.5
percent. Major increases in comparable expenses included overall personnel
costs ($3.2 million), circulation delivery expense ($1.1 million), national
advertising representative commissions ($783,000) and newsprint expense
($396,000). Expense increases were partially offset by a decline in
programming rights expense ($2.9 million) and the reversal of an accrual due to
the settlement of a sales tax issue ($437,000).
Operating income for fiscal 1994 increased 55.5 percent to $74.6
million from $48 million in 1993. Excluding WESH (first six months only) and
KCCI (first nine months) from the comparison, operating income would have
increased 50.7 percent. The increase reflected improvements in operating
income in both the publishing and broadcasting segments due to a combination of
increased revenues and cost control.
Interest expense increased $2.2 million in 1994 compared to 1993, due
to higher debt levels in 1994. The Company's average debt level for 1994
increased to $160.1 million from $119.7 million in the prior year, due to
borrowings related to the 1993 acquisitions of WESH and KCCI. Lower rates on
the WESH and KCCI borrowings reduced the Company's average interest rate for
1994 to 7.5 percent from 7.8 percent in the prior year. Interest expense also
included a declining interest factor related to annual payments (1990-1994)
under a non-competition agreement entered into in connection with the 1989
acquisition of television station WDSU
23
<PAGE> 24
in New Orleans. Interest income for the year increased $881,000, due to both
higher average balances of invested funds and higher interest rates.
The effective income tax rate for 1994 decreased to 39.4 percent from
39.9 percent in the prior year. The rates in both 1994 and 1993 were affected
by non-recurring items. The 1994 rate included the effect of approximately
$1.8 million in tax expense related to the gain on the sale of Pulitzer
Community Newspapers, Inc. In addition, 1994 income tax expense was reduced by
a $500,000 positive adjustment related to the fourth-quarter settlement of the
1992 federal tax examination. The 1993 effective tax rate was lowered by a
$225,000 adjustment to the tax provision, reflecting a change in the Company's
deferred income tax rates as a result of the Revenue Reconciliation Act of
1993. Excluding these non-recurring items from both years, the effective
income tax rates for 1994 and 1993 would have been 39.2 percent and 40.5
percent, respectively. The lower 1994 rate reflected the Company's reduced
exposure to further tax adjustments for open tax years, following the
settlement of the 1990-1992 federal tax examinations during 1994, and the
impact of 1993 tax law changes in the deductibility of the amortization of
intangibles. The effective tax rates in both years also reflected the effect
of approximately $500,000 of non-deductible goodwill amortization expense. The
Company expects the estimated tax rate for 1995 will be in the 39 percent
range, approximately the same as the effective rate for 1994.
Effective January 1, 1994, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 112, Employers' Accounting for
Postemployment Benefits ("SFAS 112") and recorded its initial liability
thereunder, resulting in a one-time after-tax charge of $719,000 (see Note 10
of the Notes to Consolidated Financial Statements). After recording the
one-time charge, the Company's 1994 expense under SFAS 112 did not differ
significantly from the prior year pay-as-you-go amount.
On December 22, 1994, the Company sold its Chicago publishing
subsidiary, Pulitzer Community Newspapers, Inc. ("PCN"), for approximately
$33.7 million. The gain on the sale of PCN added approximately $1 million
($2.8 million less income taxes of $1.8 million), or $0.06 per share, to 1994
net income. The sale of PCN is not expected to have a significant impact on
the Company's future earnings results.
For the year ended December 31, 1994, the Company reported net income
of $39.2 million, or $2.41 per share, compared with net income of $23.3
million, or $1.53 per share, in the prior year. Net income for 1994 included
the non-recurring SFAS 112 charge of $719,000, or $0.04 per share. In 1993,
the Company adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes, resulting in a positive adjustment to income of
$360,000, or $0.02 per share.
Excluding the cumulative effects of accounting changes from both years
and the 1994 one-time gain from the sale of PCN, 1994 net income increased to
$38.9 million, or $2.39 per share, from $23 million, or $1.51 per share, for
the prior year. The 1994 gain in net income reflected improvements in
operating profits in both the publishing and broadcasting segments due to a
combination of increased revenues and cost control. The Company's earnings per
share comparison for the year-to-date period was affected by the larger average
number of shares outstanding in 1994 as a result of the public offering of 1.35
million shares in July 1993.
PUBLISHING
Operating revenues from the Company's publishing segment for 1994
increased 5 percent to $304.8 million from $290.1 million in 1993, primarily
reflecting increased revenues from advertising, particularly classified, at all
three newspaper locations.
24
<PAGE> 25
Newspaper advertising revenues increased $12.3 million, or 7.3
percent, in 1994. The 1994 increase resulted from higher advertising volume
which contributed $9.3 million and higher average rates which contributed $3
million. In January 1994, all publishing properties increased rates for
certain advertising categories, ranging from 3 percent to 6.5 percent. In the
first quarter of 1995, both the St. Louis Post-Dispatch ("Post-Dispatch") and
The Arizona Daily Star ("Star") implemented rate increases for most advertising
categories, ranging from 4 percent to 6 percent and 6 percent to 8 percent,
respectively.
Circulation revenues decreased $720,000, or 0.9 percent, in 1994. The
slight revenue decline for 1994 resulted from average circulation decreases at
the Post-Dispatch while average circulation rates were virtually unchanged
from the prior year. Average daily and Sunday circulation of the Post-Dispatch
for the fourth quarter of 1994 was 331,676 and 552,647 compared to 342,687 and
561,744, respectively, for the corresponding 1993 period. Effective February
5, 1995, the home-delivered price of the Sunday Post-Dispatch was increased
$1.00 per month. In addition, the home-delivered price of the daily Star will
be increased $0.80 per month, effective March 27, 1995.
Operating expenses (including selling, general and administrative
expenses and depreciation and amortization) for the publishing segment,
excluding the St. Louis Agency adjustment, increased to $259.6 million in 1994
from $255.8 million in 1993, an increase of 1.5 percent. The increase was
principally attributable to higher circulation delivery expense ($1.1 million),
increases in overall personnel costs ($746,000) and an increase in newsprint
expense ($396,000), due to higher newsprint consumption.
Operating income from the Company's publishing activities increased
28.6 percent to $30.5 million from $23.7 million in 1993, reflecting a
combination of increased revenues and cost control.
The publishing segment's 1994 results were favorably impacted by a
downward trend in newsprint prices during the first half of 1994. However,
during the second half of 1994, newsprint prices began to increase and have
continued to rise in early 1995. The Company's recurring newsprint cost and
metric tons of consumption for 1994, after giving effect to the St. Louis
Agency adjustment and excluding PCN, were approximately $22.8 million and
50,600 metric tons, respectively. For the first quarter of 1995, the Company
expects its average cost per metric ton to increase to approximately $555.
Based upon notification from the Company's newsprint vendors of an increase
scheduled for May 1995, the Company's average cost per metric ton for the
second quarter and the balance of the year (assuming no further price
increases) are estimated to be approximately $625 and $680, respectively.
These estimated higher newsprint prices for fiscal year 1995 are expected to
have a significant effect on the performance of the publishing segment. No
assurance, however, can be given that the estimated newsprint average cost
increases for fiscal 1995 will be as projected, and actual average cost
increases may be higher or lower.
BROADCASTING
Broadcasting operating revenues for 1994 increased 32.1 percent to
$180.8 million from $136.8 million in 1993. The revenue comparison was
affected by the Company's acquisition of television stations WESH and KCCI on
June 30, 1993 and September 9, 1993, respectively. Excluding WESH (first six
months only) and KCCI (first nine months only) from the comparison,
broadcasting revenues would have increased 14.1 percent in 1994. On a
comparable basis, local spot advertising would have increased 9.2 percent;
national spot advertising would have increased 23 percent; and network
compensation would have declined 4 percent. Political advertising, including
WESH and KCCI, increased $8.1 million in 1994.
Broadcasting operating expenses (including selling, general and
administrative expenses and depreciation and amortization) increased 22 percent
to $132.8 million in 1994 from $108.9 million in 1993. Excluding WESH (first
six months only) and KCCI (first nine months only) from the comparisons,
operating
25
<PAGE> 26
expenses would have increased 1.4 percent in 1994. Major increases in
comparable expenses were overall personnel costs ($2.4 million), national
advertising representative commissions ($783,000) and promotion expense
($395,000). Partially offsetting these increases were a decline in programming
rights expense ($2.9 million) and the reversal of an accrual due to the
settlement of a sales tax issue ($437,000).
Operating income from broadcasting operations in 1994 increased 71.6
percent to $48 million from $27.9 million in the prior year. Excluding WESH
(first six months only) and KCCI (first nine months only), broadcasting
operating income would have increased 63.2 percent in 1994, due to a
combination of increased advertising revenues and cost control.
Early in 1995, the Company executed a new 10-year network affiliation
agreement for each of its nine television stations. None of these new
agreements represents a change in affiliation from the prior year. On an
annual basis, beginning in 1995, the new agreements with ABC, CBS and NBC will
add approximately $10.5 million to the Company's annual network compensation
revenue. The Company anticipates, however, that approximately $2 million of
this revenue increase will be invested back into its stations to strengthen
their local news operations. These costs will be reflected in the ongoing
annual expenses of the broadcasting operations.
1993 COMPARED WITH 1992
CONSOLIDATED
Operating revenues for the year ended December 31, 1993 increased 7.2
percent to $427 million from $398.4 million in 1992. Revenue comparisons were
affected by the acquisitions of television stations WESH and KCCI on June 30,
1993 and September 9, 1993, respectively, and the closedown and partial sale of
certain assets of Pulitzer's Lerner Newspapers operation in Chicago on October
13, 1992. Revenues for the year ended December 31, 1993 included the
operations of the two television stations following their acquisitions. Prior
year revenues included Lerner's operations for the first nine months while no
amounts for Lerner are included in 1993. Excluding WESH and KCCI's 1993
revenues and Lerner's 1992 revenues from the comparisons, consolidated revenues
would have increased 3.5 percent. These increases reflected gains in both
broadcasting and publishing revenues.
Operating expenses, excluding the St. Louis Agency adjustment, were
$368.4 million compared to $350.1 million in 1992, an increase of $18.3
million, or 5.2 percent. Expense comparisons were also affected by the
television acquisitions, Lerner and two non-recurring charges in 1992 (a $3
million lawsuit settlement at the Post-Dispatch and a $1.5 million corporate
charge for a feature film write-off). Excluding WESH and KCCI's 1993 expenses
and 1992 items affecting comparability, consolidated operating expenses would
have increased $12.3 million or 3.7 percent. This 3.7 percent increase was
primarily attributable to increased overall personnel costs ($8.7 million) and
increased newsprint expense ($4.4 million). Expense increases were partially
offset by decreased depreciation and amortization ($1.5 million); decreased
purchased supplements in publishing ($1.1 million); and decreased programming
rights ($1 million).
Operating income for fiscal 1993 increased 30.9 percent, to $48
million from $36.6 million in 1992. Excluding the effects of WESH and KCCI
from 1993, and Lerner, the lawsuit settlement and the film write-off from
1992, operating income would have increased 9.7 percent for 1993. The 1993
increase reflected improvements in operating income in both the publishing and
broadcasting segments, primarily as a result of increased revenues.
Interest expense increased $2 million in 1993 compared to 1992, due to
higher debt levels in the second half of 1993. Interest expense on new
long-term borrowings related to the WESH and KCCI acquistions amounted to $3.8
million in 1993. The Company's average debt level for 1993 increased to $119.7
million from $80.6 million in the prior year. Lower rates on the new long
term borrowings reduced the Company's average interest rate for 1993 to 7.8
percent from 8.9 percent in the prior year. Interest expense
26
<PAGE> 27
also included a declining interest factor related to annual payments
(1990-1994) under a non-competition agreement entered into in connection with
the 1989 acquisition of television station WDSU in New Orleans. Interest
income for the year declined marginally as the benefit from higher average
invested funds was more than offset by lower interest rates.
The effective income tax rate for 1993 increased to 39.9 percent from
18.2 percent for 1992. The lower rate in 1992 resulted from two non-recurring
items; 1) an approximate $1.7 million tax benefit associated with the closedown
and partial sale of Lerner Newspapers, principally due to a tax deduction for
intangible assets, and 2) positive adjustments to the tax reserve in the 1992
second and fourth quarters amounting to $3.4 million and $2.5 million,
respectively, following the favorable settlement of federal tax examinations
for 1985 through 1989. Without giving effect to these non-recurring items,
the effective tax rate for 1992 would have been 42 percent. The effective tax
rates in 1993 and 1992 also reflected the effects of approximately $500,000 and
$1.4 million, respectively, of non-deductible goodwill amortization expense.
Effective January 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109") (see Note 11 of the Notes to Consolidated Financial
Statements). Adoption of SFAS 109 resulted in an increase in net income of
$360,000, or $0.02 per share, in 1993 to record deferred tax liabilities at the
current (lower) tax rate than when originally recorded. As of December 31,
1993, the Company had a net deferred tax asset of $10.9 million. The deferred
tax asset was recorded based upon management's belief that realization of the
deferred tax asset was likely considering the Company's sufficient taxable
income in prior carryback years (1993, 1992 and 1991) and anticipated
sufficient future levels of taxable income.
For the year ended December 31, 1993, the Company reported net income
of $23.3 million, or $1.53 per share, compared with a net loss of $1.2 million,
or $0.09 per share loss, in the prior year. Net income for 1993 included a
non-recurring positive adjustment to income of $360,000, or $0.02 per share, in
connection with the adoption of SFAS 109 effective January 1, 1993. The 1992
net loss resulted from the Company's adoption of Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" ("SFAS 106") and the related one-time after-tax
charge of $25.1 million, or $1.74 per share loss.
Excluding the cumulative effects of accounting changes, other
non-recurring items and WESH and KCCI, net income for 1993 would have been
$24.3 million, or $1.59 per share, compared with $20.3 million, or $1.41 per
share (see summary below). The gain in net income, on a comparable basis,
reflected improvements in operating profits in both the publishing and
broadcasting segments, primarily as a result of increased revenues. The
earnings per share comparison was impacted by the increase in shares
outstanding due to the public offering of 1.35 million shares in July 1993.
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------------------
1993 1992
-------------------------- --------------------------
Net Income EPS Net Income EPS
---------- --- ---------- ---
<S> <C> <C> <C> <C>
WESH/KCCI Acquisition Effect ($1,328) ($.08)
Lawsuit Settlement ($900) ($.07)
Lerner Closedown/Sale 147 .01
Lerner Exclusive of Closedown/Sale (628) (.04)
Film Write-Off (883) (.06)
Tax Settlement 1985/86/87 3,400 .23
Tax Settlement 1988/89 2,500 .17
SFAS 109 One-Time Credit 360 .02
SFAS 106 One-Time Charge (25,147) (1.74)
------- ----- ------- -----
Subtotal (968) (.06) (21,511) (1.50)
Net Income Excluding Non-recurring
items and Effect of TV Acquisitions 24,281 1.59 20,266 1.41
------- ----- ------ -----
Net Income (Loss) $23,313 $1.53 ($1,245) ($.09)
======= ===== ======= =====
Shares Outstanding 15,278 14,424
====== ======
</TABLE>
27
<PAGE> 28
During the third quarter of 1993, the Company completed the purchase
of two television stations, WESH in Daytona Beach/Orlando, Florida and KCCI in
Des Moines, Iowa. For the year ended December 31, 1992, these stations had
combined operating revenues of $44.8 million and combined operating expenses,
excluding depreciation and amortization, of $27.2 million. The Company closed
the WESH acquisition on June 30, 1993, paying a purchase price of $136.2
million plus $6.4 million for net receivables. The Company closed the KCCI
acquisition on September 9, 1993, paying a purchase price of $20.8 million plus
$1.3 million for net receivables. Substantially all of the purchase price for
the acquisitions was allocated to amortizable and depreciable property. The
depreciation, amortization and, to a lesser extent, the increased interest
expense resulting from the acquisitions, had a negative impact on the Company's
1993 net income of $0.08 per share.
PUBLISHING
Operating revenues from the Company's publishing operations for 1993
increased to $290.1 million from $285 million in 1992, an increase of 1.8
percent. Excluding Lerner's 1992 revenues, publishing revenues would have
increased 3.6 percent, reflecting increased revenues from advertising,
circulation and commercial printing.
Excluding Lerner's 1992 revenues from the comparison, newspaper
advertising revenues increased $3.1 million (1.9 percent) in 1993. A $9
million increase generated by increased advertising volumes was partially
offset by the price effect, totalling $5.9 million, of lower average rates.
Advertising rate increases of 5 percent to 6 percent were implemented at the
Tucson Agency in January 1993. Essentially no 1993 advertising rate increases
were put into effect at the Company's St. Louis or Chicago newspaper
operations. Average rates for the newspaper segment were lower for 1993 due to
the mix of advertising, frequency discounts and competitive pricing pressures.
Effective January 1994, advertising rates were increased at all publishing
properties in varying percentages among certain categories ranging from 3
percent to 6.5 percent.
Circulation revenues increased $900,000 (1.2 percent) for 1993. The
increase reflected the combination of circulation price increases, principally
at the St. Louis Post-Dispatch ("Post-Dispatch") and The Arizona Daily Star
("Star"), amounting to $1.3 million and of partially offsetting average
circulation decreases amounting to $400,000. The effect of the
closedown/partial sale of Lerner on circulation revenues was not material.
The home-delivered price of the daily Post-Dispatch was increased
$1.04 per month, effective March 2, 1992, and an additional $0.52 per month,
effective March 1, 1993. Average daily and Sunday circulation of the
Post-Dispatch for the fourth quarter of 1993 was 342,687 and 561,744 compared
to 347,971 and 570,983, respectively, for the corresponding 1992 period.
The single copy price of the daily Star was increased to $0.50 from
$0.35 as of October 4, 1993.
Operating expenses (including selling, general and administrative
expenses and depreciation and amortization) for the publishing segment,
excluding the St. Louis Agency adjustment, increased to $255.8 million in 1993
from $255.1 million in 1992, an increase of 0.3 percent. Excluding Lerner's
1992 expenses, the non-recurring Lerner sale/closedown charge of $1.6 million
and the $3 million lawsuit settlement from the comparison, publishing expenses
would have increased 4.6 percent. This 4.6 percent increase was principally
attributable to increased overall personnel costs ($5.9 million) and increased
newsprint expense ($4.4 million), due to both higher newsprint prices and
increased volume. Expense increases were partially offset by decreased
depreciation and amortization ($1.2 million) and decreased purchased
supplements ($1.1 million).
Operating income from the Company's publishing activities increased
30.4 percent to $23.7 million from $18.2 million in 1992. Excluding Lerner and
the lawsuit settlement from the prior year, publishing operating income for
1993 would have increased 6.2 percent due to increased revenues.
28
<PAGE> 29
BROADCASTING
Broadcasting operating revenues for 1993 increased 20.7 percent to
$136.8 million from $113.4 million in 1992. Revenue comparisons were affected
by the acquisitions of television stations WESH and KCCI during the third
quarter of 1993. Excluding the revenues of WESH and KCCI, broadcasting
revenues would have increased 3.3 percent for 1993. Exclusive of WESH and
KCCI, local spot advertising increased 7.6 percent; national spot advertising
decreased 0.9 percent; and network compensation decreased 1 percent for 1993.
The revenue comparison was affected by strong revenue gains in the prior year
due to the Summer Olympics carried on the NBC television network and political
advertising.
Broadcasting operating expenses (including selling, general and
administrative expenses and depreciation and amortization) increased 20.9
percent to $108.9 million in 1993 from $90.1 million in 1992. Excluding WESH
and KCCI, operating expenses would have increased 0.8 percent. This increase,
on a comparable basis, was due primarily to increased overall personnel costs
($2.6 million) offset in part by decreases in programming rights expense ($1
million), depreciation and amortization ($316,000) and bad debt expense
($254,000).
Operating income from the broadcasting operations increased 19.9
percent to $27.9 million from $23.3 million due to increased advertising
revenues and a $1.6 million contribution to operating income from WESH and
KCCI. Excluding WESH and KCCI, broadcasting operating results would have
increased $3 million or 13.1 percent in 1993. See Note 3 of Notes to
Consolidated Fiancial Statements for pro forma information related to the WESH
and KCCI acquisition.
LIQUIDITY AND CAPITAL RESOURCES
Outstanding debt, inclusive of the short-term portion of long-term
debt, as of December 31, 1994, was $143 million, compared with $176.2 million
at December 31, 1993. The decrease since the prior year end reflected a
scheduled repayment of $14.3 million under the Company's Senior Note Agreement
maturing in 1997 and $18.6 million in prepayments of borrowings under its
credit agreement with Canadian Imperial Bank of Commerce as Agent ("CIBC"). In
1994 CIBC prepayments reduced the credit agreement borrowings to zero and, in
December 1994, the Company terminated the credit agreement.
As of December 31, 1994, the Company's long-term borrowings consisted
of $143 million of fixed-rate senior notes with The Prudential Insurance
Company of America.
The Company's Senior Note Agreements require it to maintain certain
financial ratios, place restrictions on the payment of dividends and prohibit
new borrowings, except as permitted thereunder.
As of December 31, 1994, commitments for capital expenditures were
approximately $12.6 million, relating to normal capital equipment replacements
and a portion of the costs for new facilities for television station WDSU in
New Orleans and the radio operations in Phoenix. Commitments for film
contracts and license fees as of December 31, 1994 were approximately $28.9
million. At December 31, 1994, the Company had working capital of $96.7
million and a current ratio of 2.55 to 1. This compares to working capital of
$60.7 million and a current ratio of 2.00 to 1 at December 31, 1993.
The Company generally expects to generate sufficient cash from
operations to cover ordinary capital expenditures, film contract and license
fees, working capital requirements, debt installments and dividend payments.
29
<PAGE> 30
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of Pulitzer Publishing
Company and Subsidiaries are filed as part of this report. Supplementary
unaudited data with respect to the quarterly results of operations of the
Company are set forth in the Notes to Consolidated Financial Statements.
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
Independent Auditors' Report
Statements of Consolidated Income for each of the Three Years in the Period
Ended December 31, 1994
Statements of Consolidated Financial Position at December 31, 1994 and 1993
Statements of Consolidated Stockholders' Equity for each of the Three
Years in the Period Ended December 31, 1994
Statements of Consolidated Cash Flows for each of the Three Years in the
Period Ended December 31, 1994
Notes to Consolidated Financial Statements for the Three Years in the
Period Ended December 31, 1994
30
<PAGE> 31
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Pulitzer Publishing Company:
We have audited the accompanying statements of consolidated financial position
of Pulitzer Publishing Company and subsidiaries as of December 31, 1994 and
1993, and the related consolidated statements of income, stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the companies at December
31, 1994 and 1993, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1994 in conformity
with generally accepted accounting principles.
As discussed in Note 10 to the consolidated financial statements, in 1994 the
Company changed its method of accounting for postemployment benefits to conform
with Statement of Financial Accounting Standards No. 112, Employers' Accounting
for Postemployment Benefits. As discussed in Note 11 to the consolidated
financial statements, in 1993 the Company changed its method of accounting for
income taxes to conform with Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes. As discussed in Note 10 to the consolidated
financial statements, in 1992 the Company changed its method of accounting for
postretirement benefits other than pensions to conform with Statement of
Financial Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions.
DELOITTE & TOUCHE LLP
Saint Louis, Missouri
February 3, 1995
31
<PAGE> 32
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1994 1993 1992
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)
<S> <C> <C> <C>
OPERATING REVENUES - NET:
Publishing:
Advertising $ 181,018 $ 168,684 $ 170,014
Circulation 77,941 78,661 77,713
Other 45,820 42,801 37,277
Broadcasting 180,800 136,839 113,369
--------- --------- ---------
Total operating revenues 485,579 426,985 398,373
--------- --------- ---------
OPERATING EXPENSES:
Publishing operations 130,219 128,220 124,415
Broadcasting operations 61,351 52,778 45,892
Selling, general and administrative 174,239 163,578 160,873
St. Louis Agency adjustment (Note 2) 14,706 10,660 11,690
Depreciation and amortization 30,486 23,792 18,869
--------- --------- ---------
Total operating expenses 411,001 379,028 361,739
--------- --------- ---------
OPERATING INCOME 74,578 47,957 36,634
Interest income 1,971 1,090 1,156
Interest expense (12,009) (9,823) (7,801)
Equity in net losses of joint venture investments (560)
Gain on sale of publishing property (Note 3) 2,791
Net other expense (901) (1,011) (756)
--------- --------- ---------
INCOME BEFORE PROVISION FOR INCOME
TAXES AND CUMULATIVE EFFECTS OF
CHANGES IN ACCOUNTING PRINCIPLES 65,870 38,213 29,233
PROVISION FOR INCOME TAXES (Note 11) 25,960 15,260 5,331
--------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECTS OF
CHANGES IN ACCOUNTING PRINCIPLES 39,910 22,953 23,902
CUMULATIVE EFFECTS OF CHANGES IN
ACCOUNTING PRINCIPLES, NET OF
APPLICABLE INCOME TAXES (Notes 10 and 11) (719) 360 (25,147)
--------- --------- ---------
NET INCOME (LOSS) $ 39,191 $ 23,313 $ (1,245)
========= ========= =========
</TABLE>
(Continued)
-32-
<PAGE> 33
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1994 1993 1992
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)
<S> <C> <C> <C>
EARNINGS (LOSS) PER SHARE OF STOCK
(COMMON AND CLASS B COMMON):
Income before cumulative effects of changes
in accounting principles $ 2.45 $ 1.51 $ 1.65
Cumulative effects of changes in accounting
principles (0.04) 0.02 (1.74)
----------- ----------- -----------
Total $ 2.41 $ 1.53 $ (0.09)
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES (COMMON AND CLASS B
COMMON STOCK) OUTSTANDING
(Note 8) 16,241,013 15,278,211 14,423,953
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements. (Concluded)
-33-
<PAGE> 34
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1994 1993
(IN THOUSANDS)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 77,084 $ 34,970
Trade accounts receivable (less allowance for doubtful
accounts of $2,135 and $2,575) 62,943 61,953
Inventory 3,069 5,912
Prepaid expenses and other 6,783 6,959
Program rights 9,263 11,285
--------- ---------
Total current assets 159,142 121,079
--------- ---------
PROPERTIES:
Land 11,261 12,204
Buildings 58,795 69,315
Machinery and equipment 161,305 181,939
Construction in progress 4,444 2,937
--------- ---------
Total 235,805 266,395
Less accumulated depreciation 119,911 125,497
--------- ---------
Properties - net 115,894 140,898
--------- ---------
INTANGIBLE AND OTHER ASSETS:
Intangible assets - net of applicable amortization (Note 4) 125,415 144,140
Receivable from The Herald Company (Notes 2 and 10) 44,059 38,705
Program rights, long-term portion 1,997 4,305
Other 21,805 12,491
--------- ---------
Total intangible and other assets 193,276 199,641
--------- ---------
TOTAL $ 468,312 $ 461,618
========= =========
</TABLE>
(Continued)
-34-
<PAGE> 35
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1994 1993
(IN THOUSANDS)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Trade accounts payable $ 14,458 $ 11,807
Current portion of long-term debt (Note 5) 14,250 14,320
Salaries, wages and commissions 11,541 10,314
Income taxes payable 6,331 4,272
Program contracts payable (Note 6) 8,864 10,899
Interest payable 3,480 4,751
Pension obligations (Note 9) 2,827 588
Other 662 3,440
---------- ----------
Total current liabilities 62,413 60,391
---------- ----------
LONG-TERM DEBT (Note 5) 128,750 161,920
---------- ----------
PROGRAM CONTRACTS PAYABLE (Note 6) 2,109 4,234
---------- ----------
PENSION OBLIGATIONS (Note 9) 23,593 23,377
---------- ----------
POSTRETIREMENT AND POSTEMPLOYMENT BENEFIT
OBLIGATIONS (Note 10) 91,966 85,928
---------- ----------
OTHER LONG-TERM LIABILITIES 4,462 3,625
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' EQUITY (Note 8):
Preferred stock, $.01 par value; 25,000,000 shares authorized;
issued and outstanding - none
Common stock, $.01 par value; 100,000,000 shares authorized;
issued - 4,444,099 in 1994 and 3,511,674 in 1993 44 35
Class B common stock, convertible, $.01 par value; 50,000,000 shares
authorized; issued - 20,608,832 in 1994 and 16,488,076 in 1993 182 158
Additional paid-in capital 122,094 120,908
Retained earnings 220,322 188,665
---------- ----------
Total 342,642 309,766
Treasury stock - at cost: 11,462 shares in 1994 and 9,169 shares in 1993
of common stock and 8,775,638 shares in 1994 and 7,020,510 in 1993
of Class B common stock (187,623) (187,623)
---------- ----------
Total stockholders' equity 155,019 122,143
---------- ----------
TOTAL $ 468,312 $ 461,618
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements. (Concluded)
-35-
<PAGE> 36
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SHARES OF
SHARES OF CLASS B COMMON
COMMON STOCK STOCK
---------------------- -------------------------
HELD IN HELD IN
ISSUED TREASURY ISSUED TREASURY
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1991 1,882 (8) 14,989 (6,382)
Common stock options exercised 40
10% stock dividend (Note 8) 193 (1) 1,499 (639)
----- ----- ------ ------
BALANCES AT DECEMBER 31, 1992 2,115 (9) 16,488 (7,021)
Issuance of common stock grants 3
Common stock options exercised 44
Issuance of common stock 1,350
----- ----- ------ ------
BALANCES AT DECEMBER 31, 1993 3,512 (9) 16,488 (7,021)
Issuance of common stock grants 3
Common stock options exercised 40
Conversion of Class B common stock to common stock 1 (1)
Five-for-four stock split in the form of a 25
percent stock dividend (Note 8) 888 (2) 4,122 (1,755)
----- ----- ------ ------
BALANCES AT DECEMBER 31, 1994 4,444 (11) 20,609 (8,776)
===== ===== ====== ======
<CAPTION>
TOTAL
CLASS B ADDITIONAL STOCK-
COMMON COMMON PAID-IN RETAINED TREASURY HOLDERS'
STOCK STOCK CAPITAL EARNINGS STOCK EQUITY
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
BALANCES AT DECEMBER 31, 1991 $ 19 $ 150 $ 48,775 $ 211,526 $(187,619) $ 72,851
Common stock options exercised 1,007 1,007
Tax benefit from stock options execised 123 123
Net loss (1,245) (1,245)
Cash dividends declared and paid $.39 per share
of common stock and Class B common stock (5,662) (5,662)
10% stock dividend (Note 8) 2 8 32,629 (32,639)
--- ----- -------- -------- --------- ---------
BALANCES AT DECEMBER 31, 1992 21 158 82,534 171,980 (187,619) 67,074
Issuance of common stock grants 88 88
Common stock options exercised 1,007 1,007
Tax benefit from stock options exercised 210 210
Net income 23,313 23,313
Cash dividends declared and paid $.43 per share
of common stock and Class B common stock (6,628) (6,628)
Issuance of common stock 14 37,069 37,083
Purchase of treasury stock (4) (4)
--- ----- -------- -------- --------- ---------
BALANCES AT DECEMBER 31, 1993 35 158 120,908 188,665 (187,623) 122,143
Issuance of common stock grants 101 101
Common stock options exercised 898 898
Tax benefit from stock options exercised 220 220
Net income 39,191 39,191
Cash dividends declared and paid $.46 per share
of common stock and Class B common stock (7,534) (7,534)
Five-for-four stock split in the form of a 25
percent stock dividend (Note 8) 9 24 (33)
--- ----- -------- -------- --------- --------
BALANCES AT DECEMBER 31, 1994 $44 $ 182 $122,094 $220,322 $(187,623) $155,019
=== ===== ======== ======== ========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
-36-
<PAGE> 37
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------
1994 1993 1992
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 39,191 $ 23,313 $ (1,245)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Non-cash items:
Cumulative effects of changes in accounting principles,
net of applicable income taxes 719 (360) 25,147
Equity in net losses of joint venture investments 560
Depreciation 20,466 16,405 13,984
Amortization of intangibles 10,020 7,387 4,885
Incremental increase in postretirement and postemploy-
ment benefit obligations (496) 2,870 2,243
Deferred income taxes (4,617) (1,585) (1,903)
Gain on sale of publishing property (2,791)
Decrease (increase) in intangible assets related to
minimum pension liability 1,629 (1,283) 229
(Decrease) increase in pension obligation related to
minimum pension liability (1,629) 1,283 (229)
Changes in assets and liabilities (net of the effects of the
sale of publishing property and purchase of broadcast
properties) (Note 3) which provided (used) cash:
Trade accounts receivable (8,269) (1,959) 1,200
Inventory 1,540 62 361
Other assets 3,007 (3,481) 4,344
Trade accounts payable and other liabilities 8,490 3,532 (3,086)
Income taxes payable 2,059 2,536 (2,695)
Program rights - net of contracts payable 170 148 (648)
--------- --------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 70,049 48,868 42,587
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (13,313) (13,589) (9,259)
(Increase) decrease in notes receivable 18 116 (233)
Sale of publishing property, net of cash sold 30,486
Investment in joint venture (5,000)
Investment in limited partnership (593)
Purchase of broadcasting property assets (166,065)
--------- --------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES 11,598 (179,538) (9,492)
--------- --------- ---------
</TABLE>
(Continued)
-37-
<PAGE> 38
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1994 1993 1992
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt $ - $160,000 $ -
Proceeds from sale of common stock 37,083
Repayments on long-term debt (32,897) (55,732) (19,002)
Dividends paid (7,534) (6,628) (5,662)
Proceeds from exercise of stock options 898 1,007 1,007
Purchase of treasury stock (4)
-------- -------- --------
NET CASH (USED IN) PROVIDED BY FINANCING
ACTIVITIES (39,533) 135,726 (23,657)
-------- -------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 42,114 5,056 9,438
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 34,970 29,914 20,476
-------- -------- --------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 77,084 $ 34,970 $ 29,914
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid (received) during the year for:
Interest $ 13,067 $ 6,495 $ 7,941
Income taxes 28,369 14,638 14,089
Income tax refunds (70) (330) (2,808)
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITY - See Note
10 for information regarding the noncash activity relating to the Company's
adoption of Statement of Financial Accounting Standards No. 112, Employers'
Accounting for Postemployment Benefits in 1994, and Statement of Financial
Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits
Other Than Pensions in 1993.
See accompanying notes to consolidated financial statements. (Concluded)
- 38 -
<PAGE> 39
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation - The consolidated financial statements include the
accounts of Pulitzer Publishing Company (the "Company") and its subsidiary
companies. All significant intercompany transactions have been eliminated from
the consolidated financial statements.
Fiscal Year - The Company's fiscal year ends on the last Sunday prior to
December 31. For ease of presentation, the Company has used December 31 as the
year-end.
Cash Equivalents - For purposes of reporting cash flows, the Company considers
all highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.
Inventory Valuation - Inventory, which consists primarily of newsprint, is
stated at the lower of cost (determined primarily using the last-in, first-out
method) or market. The difference between inventory balances recorded under
the last-in, first-out method and the first-in, first- out method is not
significant. Ink and other miscellaneous supplies are expensed as purchased.
Program Rights - Program rights represent license agreements for the right to
broadcast programs over license periods which generally run from one to five
years. The total cost of each agreement is recorded as an asset and liability
when the license period begins and the program is available for broadcast.
Program rights covering periods greater than one year are amortized over the
license period using an accelerated method as the programs are broadcast. In
the event that a determination is made that programs will not be used prior to
the expiration of the license agreement, unamortized amounts are then charged
to operations. Payments are made in installments as provided for in the
license agreements. Program rights expected to be amortized in the succeeding
year and payments due within one year are classified as current assets and
current liabilities, respectively.
Payments made on license agreements prior to the availability of the program
for broadcast are classified as prepaid assets. When the license period begins
and the program is available for broadcast, these amounts are recorded as
program rights and the related obligations are recorded.
Property and Depreciation - Property is recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the
individual assets. Buildings are depreciated over 20 to 50 years and all other
property over lives ranging from 3 to 15 years.
Joint Venture Investments - The Company has a one-third interest in RXL
Pulitzer (see Note 3) and also participates in other joint ventures. These
investments are accounted for by the equity method.
Intangible Assets - Intangible assets are stated net of applicable
amortization. Intangibles in the amount of $1,520,000, related to acquisitions
prior to the effective date of Accounting Principles Board Opinion No. 17
("Opinion No. 17"), are not being amortized because, in the opinion of
management, their value is of undeterminable duration. In addition, the
intangible asset relating to the Company's additional minimum pension liability
under Statement of Financial Accounting Standards No. 87 is adjusted, as
necessary, when a new determination of the amount of the additional minimum
pension liability is made annually. Intangibles consisting of goodwill,
television licenses and network affiliations acquired
- 39 -
<PAGE> 40
subsequent to the effective date of Opinion No. 17 are being amortized over 40
years while all other intangible assets are being amortized over 4 to 21 years
with the exception of all the intangible assets acquired in conjunction with
the 1993 acquisition of WESH and KCCI (see Note 3) which are all being
amortized over 15 years.
Management periodically evaluates the recoverability of the Company's
intangible assets based upon the undiscounted cash flow method. If a permanent
impairment in value is determined to exist, any necessary write-down will be
charged to operations.
Income Taxes - In 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes, which requires the recognition
of deferred tax assets and liabilities for the expected future tax consequences
of events that have been included in the financial statements or tax returns.
Under this asset and liability approach, deferred tax assets and liabilities
are determined based on temporary differences between the financial statement
and tax bases of assets and liabilities by applying enacted statutory tax rates
applicable to future years in which the differences are expected to reverse.
Prior to 1993, income taxes were determined under the deferred method in
accordance with Accounting Principles Board Opinion No. 11, Accounting for
Income Taxes.
Earnings Per Share of Stock - Earnings per share of stock is computed using the
weighted average number of Common and Class B shares outstanding during the
applicable period, adjusted for the stock split described in Note 8.
Benefit Plans - The Company accounts for its pension plans in accordance with
Statement of Financial Accounting Standards No. 87, Employers Accounting for
Pensions, (see Note 9). Effective January 1, 1992, the Company accounts for
its postretirement benefit plans in accordance with Statement of Financial
Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits
Other Than Pensions (see Note 10). Prior to January 1, 1992, the Company's
postretirement benefits were expensed as paid. Effective January 1, 1994, the
Company accounts for its postemployment benefit plans in accordance with
Statement of Financial Accounting Standards No. 112, Employers' Accounting for
Postemployment Benefits (see Note 10). Prior to January 1, 1994, the Company's
postemployment benefits were expensed as paid.
Reclassifications - Certain reclassifications have been made to the 1993 and
1992 consolidated financial statements to conform with the 1994 presentation.
2. AGENCY AGREEMENTS
An agency operation between the Company and The Herald Company is conducted
under the provisions of an Agency Agreement, dated March 1, 1961, as amended.
For many years, the Post-Dispatch (owned by the Company) was the afternoon and
Sunday newspaper serving St. Louis, and the Globe-Democrat (formerly owned by
The Herald Company) was the morning paper and also published a weekend edition.
Although separately owned, from 1961 through February 1984, the publication of
both the Post-Dispatch and the Globe-Democrat was governed by the St. Louis
Agency Agreement. From 1961 to 1979, the two newspapers controlled their own
news, editorial, advertising, circulation, accounting and promotion departments
and Pulitzer managed the production and printing of both newspapers. In 1979,
Pulitzer assumed full responsibility for advertising, circulation, accounting
and promotion for both newspapers. In February 1984, after a number of years
of unfavorable financial results at the St. Louis Agency, the Globe-Democrat
was sold by The Herald Company and the St. Louis Agency Agreement was revised
to eliminate any continuing relationship between the two newspapers and to
permit the repositioning of the daily Post-Dispatch as a morning newspaper.
Following the renegotiation of the St. Louis Agency Agreement at the time of
the sale of the Globe-Democrat, The Herald Company retained the contractual
-40-
<PAGE> 41
right to receive one-half the profits (as defined), and the obligation to share
one-half the losses (as defined), of the operations of the St. Louis Agency,
which from February 1984 forward consisted solely of the publication of the
Post-Dispatch. The St. Louis Agency Agreement also provides for The Herald
Company to share one-half the cost of, and to share in a portion of the
proceeds from the sale of, capital assets used in the production of the
Post-Dispatch. Under the St. Louis Agency Agreement, Pulitzer supervises,
manages and performs all activities relating to the day-to-day publication of
the Post-Dispatch and is solely responsible for the news and editorial policies
of the newspaper. The consolidated financial statements of the Company include
all the operating revenues and expenses of the St. Louis Agency relating to the
Post-Dispatch.
In Tucson, Arizona, a separate partnership, TNI Partners, ("TNI"), acting as
agent for the Star (a newspaper owned by the Company) and the Citizen (a
newspaper owned by Gannett Co., Inc.), is responsible for printing, delivery,
advertising, and circulation of the Star and the Citizen. TNI collects all of
the receipts and income relating to the Star and the Citizen and pays all
operating expenses incident to the partnership's operations and publication of
the newspapers. Each newspaper is solely responsible for its own news and
editorial content. Net income or net loss of TNI is generally allocated
equally to the Star and the Citizen. The Company's consolidated financial
statements include its share of TNI's revenues and expenses.
3. ACQUISITION AND DISPOSITION OF PROPERTIES
On December 22, 1994, the Company sold its wholly-owned subsidiary, Pulitzer
Community Newspapers ("PCN"), Chicago, Illinois, for approximately $33,746,000.
The Company received approximately $31,862,000 when the transaction was
completed with an additional payment of approximately $1,884,000 expected in
the second quarter of 1995. The final proceeds from the sale of PCN are based
on net current assets reflected in its closing balance sheet. Any changes in
proceeds as a result of adjustments to the closing balance sheet are not
expected to be material. A gain of $2,791,000 ($1,051,000 after taxes or $0.06
per share) was recognized on this transaction. The Company's 1994 statement of
consolidated income includes substantially a full year of operating results for
PCN.
During 1993, the Company acquired in a purchase transaction substantially all
of the assets and operations of two television stations, WESH, Daytona
Beach/Orlando, Florida and KCCI, Des Moines, Iowa, for a purchase price of
$164,765,000, including approximately $7,765,000 in net receivables, plus
acquisition costs of approximately $1,300,000. The closing dates for WESH and
KCCI were June 30, 1993 and September 9, 1993, respectively. The results of
operations of WESH and KCCI are included in the Company's Statement of
Consolidated Income from their respective closing dates.
The cost of the acquisition (excluding acquisition costs) included goodwill of
$657,000, television licenses and network affiliations of $69,346,000 and other
intangibles of $23,660,000 all of which are being amortized over 15 years.
The following supplemental unaudited pro forma information shows the results of
operations of the Company for the years ended December 31, 1993 and 1992
adjusted for the acquisition of WESH and KCCI assuming such transaction and the
related debt and equity financing had been consummated at the beginning of each
year presented. The unaudited pro forma financial information is not
necessarily indicative either of results of operations that would have occurred
had the transaction occurred at the beginning of each year presented, or of
future results of operations.
41
<PAGE> 42
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1993 1992
(UNAUDITED)
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Operating revenues - net $450,116 $442,023
Operating income $ 48,646 $ 40,115
Income before cumulative effects of changes in accounting principles $ 21,026 $ 21,299
Net income (loss) $ 21,386 $ (3,848)
Earnings per share of stock (common and Class B common):
Income before cumulative effects of changes in accounting principles $ 1.30 $ 1.32
Net income (loss) $ 1.32 $ (0.24)
Weighted average number of shares (common and Class B common)
outstanding 16,186 16,111
</TABLE>
On January 1, 1994, the Company acquired for $5,000,000 a one-third interest in
RXL Communications (subsequently renamed RXL Pulitzer), a provider of
interactive educational programming. This joint venture investment is recorded
on the equity basis in the accompanying statement of consolidated financial
position.
During the third quarter of 1992, the Company recorded a pretax charge of
$1,535,000 in connection with the close-down and sale of certain assets of its
Lerner Newspapers ("Lerner") operation in Chicago. The charge, included in
publishing operations in the accompanying statements of consolidated income,
reflects the estimated loss from the disposition and abandonment of net assets,
anticipated operating losses from the respective measurement date through the
estimated date of disposal/close-down, and related contingencies. There were
associated tax benefits of $1,682,000, principally due to a tax deduction for
intangible assets, reflected in the current provision for income taxes.
4. INTANGIBLE ASSETS
Intangible assets consist of:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1994 1993
DESCRIPTION (IN THOUSANDS)
<S> <C> <C>
Television licenses and network affiliations $107,115 $106,873
Goodwill 12,393 21,617
Intangible pension asset (Note 9) 3,204 4,833
Other 42,491 55,260
-------- --------
Total 165,203 188,583
Less: Accumulated amortization 39,788 44,443
-------- --------
Total intangible assets - net $125,415 $144,140
======== ========
</TABLE>
The declines in goodwill, other intangibles and accumulated amortization
balances at December 31, 1994 result from the sale of PCN on December 22, 1994
(see Note 3).
- 42 -
<PAGE> 43
5. FINANCING ARRANGEMENTS
Long-term debt consists of:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
DESCRIPTION 1994 1993
(IN THOUSANDS)
<S> <C> <C>
Senior notes maturing in equal annual installments:
8.8% due through 1997 $ 43,000 $ 57,250
6.76% due 1998-2001 50,000 50,000
7.22% due 2002-2005 50,000 50,000
Credit Agreement:
Term portion 2,578
Revolving portion 16,000
Other 412
-------- --------
Total 143,000 176,240
Less: Current portion 14,250 14,320
-------- --------
Total long-term debt $128,750 $161,920
======== ========
</TABLE>
On June 30, 1993, in connection with the acquisition of WESH, Daytona
Beach/Orlando, Florida, the Company issued to The Prudential Insurance Company
of America $50,000,000 principal amount of 6.76% Senior Notes due 2001 and
$50,000,000 principal amount of 7.22% Senior Notes due 2005 (collectively, the
"Notes"). The proceeds received by the Company from the issuance of the Notes
were used to partially finance the acquisition of WESH. In addition, to
partially finance the WESH acquisition, the Company borrowed $40,000,000 on
June 30, 1993 from The Canadian Imperial Bank of Commerce ("CIBC") pursuant to
a $60,000,000 five-year revolving and term credit facility ("Credit
Agreement"), which the Company entered into on June 30, 1993. On July 12,
1993, the Company repaid $37,422,000 of the CIBC borrowings with the proceeds
from the issuance of 1,350,000 shares of the Company's common stock on July 9,
1993. This repayment of the CIBC borrowing permanently reduced the original
$40,000,000 term portion of the credit facility by the repayment amount. On
December 22, 1994, the Company repaid the remaining balance of the CIBC term
borrowing and elected to terminate the Credit Agreement prior to its scheduled
maturity in 1998.
On September 9, 1993, in connection with the acquisition of KCCI, Des Moines,
Iowa, the Company borrowed $20,000,000 under the revolving credit portion of
the Credit Agreement. In December 1993, the Company made a $4,000,000 payment
on the revolving credit facility. Prior to the termination of the Credit
Agreement in December 1994, the Company made additional payments during 1994
sufficient to eliminate the revolving credit borrowings.
At December 31, 1993, the interest rates on the term and revolving credit
borrowings with CIBC were 3.875% and 4%, respectively.
The terms of the various senior note agreements contain certain covenants and
conditions including the maintenance of cash flow and various other financial
ratios, limitations on the incurrence of other debt and limitations on the
amount of restricted payments (which generally includes dividends, stock
purchases and redemptions).
-43-
<PAGE> 44
Under the terms of the most restrictive borrowing covenants, in general, the
Company may pay annual dividends not to exceed the sum of $10,000,000, plus 75%
of consolidated net earnings commencing January 1, 1993, less the sum of all
dividends paid or declared and redemptions in excess of sales of Company stock
after December 31, 1992.
6. PROGRAM CONTRACTS PAYABLE
Program contracts payable represent amounts related to programs currently
available for broadcast. Maturities of program contracts payable over the
license periods are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
<S> <C>
1995 $ 8,864
1996 1,727
1997 306
1998 76
-------
TOTAL $10,973
=======
</TABLE>
7. COMMITMENTS AND CONTINGENCIES
At December 31, 1994, the Company and its subsidiaries had construction and
equipment commitments of approximately $12,564,000 and commitments for program
contracts payable and license fees of approximately $28,867,000.
During December 1994, the Company entered into a limited partnership agreement
with a maximum capital contribution commitment of $5,000,000. This commitment
extends over a three year funding period ending January 2, 1998. As of
December 31, 1994, the Company had funded approximately $593,000 of the total
investment commitment.
The Company and its subsidiaries are defendants in a number of lawsuits, some
of which claim substantial amounts. While the results of litigation cannot be
predicted, management believes the ultimate outcome of such litigation will not
have a material adverse effect on the consolidated financial statements of the
Company and its subsidiaries.
In connection with the September 1986 purchase of the Company's Class B common
stock, the Company agreed to make an additional payment to the selling
stockholders in the event that prior to May 13, 2001, the stockholders receive
dividends or distributions in excess of specified amounts in connection with
the sale of more than 85% of the voting securities or equity of the Company, a
merger, or a complete or partial liquidation or similar corporate transaction.
Any payment pursuant to this requirement would be based upon a percentage of
the dividend or distribution per share in excess of $23.06 increased by 15%
compounded annually beginning May 12, 1986.
8. STOCKHOLDERS' EQUITY
Each share of the Company's common stock is entitled to one vote and each share
of Class B common stock is entitled to ten votes on all matters. Holders of
all outstanding shares of Class B common stock, which represents 96.4% of the
combined voting power of the Company, have deposited their shares in a voting
trust (the "Voting Trust").
- 44 -
<PAGE> 45
The trustees generally hold all voting rights with respect to the shares of
Class B common stock subject to the Voting Trust; however, in connection with
certain matters, including any proposal for a merger, consolidation,
recapitalization or dissolution of the Company or disposition of all or
substantially all its assets, the calling of a special meeting of stockholders
and the removal of directors, the Trustees may not vote the shares deposited in
the Voting Trust except in accordance with written instructions from the
holders of the Voting Trust Certificates. The Voting Trust may be terminated
with the written consent of holders of two-thirds of all outstanding Voting
Trust Certificates. Unless extended or terminated by the parties thereto, the
Voting Trust expires on January 16, 2001.
On May 11, 1994, the Company's stockholders adopted the Pulitzer Publishing
Company 1994 Stock Option Plan (the "1994 Plan"), replacing the Pulitzer
Publishing Company 1986 Employee Stock Option Plan (the "1986 Plan"). The 1994
Plan provides for the issuance to key employees and non-employee directors of
incentive stock options to purchase up to a maximum of 1,875,000 shares of
common stock. Under the 1994 Plan, options to purchase 1,000 shares of common
stock will be automatically granted to non-employee directors on the date
following each annual meeting of the Company's stockholders and will vest on
the date of the next annual meeting of the Company's stockholders. Total
shares available for issue to non-employee directors under this automatic grant
feature are limited to a maximum of 125,000. The issuance of all other options
will be administered by the Compensation Committee of the Board of Directors,
subject to the 1994 Plan's terms and conditions. Specifically, the exercise
price per share may not be less than the fair market value of a share of common
stock at the date of grant. In addition, exercise periods may not exceed ten
years and the minimum vesting period is established at six months from the date
of grant. Option awards to an individual employee may not exceed 187,500
shares in a calendar year.
Prior to 1994, the Company issued incentive stock options to key employees
under the 1986 Plan. As provided by the 1986 Plan, certain option awards were
granted with tandem stock appreciation rights which allow the employee to elect
an alternative payment equal to the appreciation of the stock value instead of
exercising the option. Outstanding options issued under the 1986 Plan have an
exercise term of ten years from the date of grant and vest in equal
installments over a three-year period.
45
<PAGE> 46
Stock option transactions during 1994, 1993 and 1992 are summarized as follows:
<TABLE>
<CAPTION>
SHARES PRICE RANGE
<S> <C> <C>
Common Stock Options:
Outstanding, December 31, 1991 662,571 $12.36-$24.91
Cancelled (5,758) $12.36-$21.09
Exercised (55,600) $12.36-$21.09
-------
Outstanding, December 31, 1992 601,213 $12.36-$24.91
Granted 285,494 $24.00-$29.30
Cancelled (33,425) $12.36-$24.73
Exercised (55,536) $12.36-$24.91
-------
Outstanding, December 31, 1993 797,746 $12.36-$29.30
Granted 173,737 $28.70-$29.00
Cancelled (22,871) $15.64-$29.30
Exercised (49,834) $12.36-$24.73
-------
Outstanding, December 31, 1994 898,778 $12.36-$29.30
=======
Exercisable at:
December 31, 1993 473,509 $12.36-$24.91
=======
December 31, 1994 560,548 $12.36-$29.30
=======
</TABLE>
At December 31, 1994, 1,701,263 shares remain available for grant under the
Stock Plan.
<TABLE>
<CAPTION>
SHARES PRICE
<S> <C> <C>
Common Stock Appreciation Rights:
Outstanding, December 31, 1991 55,000 $19.82
Cancelled (4,125) $19.82
-------
Outstanding, December 31, 1992 50,875 $19.82
Exercised (22,687) $19.82
-------
Outstanding, December 31, 1993 and 1994 28,188 $19.82
=======
Exercisable at December 31, 1993 and 1994 28,188 $19.82
=======
</TABLE>
The Company recognizes compensation expense on stock appreciation rights as the
market value fluctuates above the $19.82 per share option price.
On May 11, 1994, the Company's stockholders adopted the Pulitzer Publishing
Company 1994 Key Employees' Restricted Stock Purchase Plan (the "1994 Stock
Plan") which replaced the Pulitzer Publishing Company 1986 Key Employees'
Restricted Stock Purchase Plan ("1986 Stock Plan"). The 1994 Stock Plan
provides that an employee may receive, at the discretion of the Compensation
Committee, a grant or right to purchase at a particular price, shares of common
stock subject to restrictions on transferability. A maximum of 312,500 shares
of common stock may be granted or purchased by employees. In addition, no more
than 62,500 shares of common stock may be issued to an employee in any calendar
year.
- 46 -
<PAGE> 47
Prior to 1994, the Company granted stock awards under the 1986 Stock Plan. For
grants awarded under both the 1994 and 1986 Stock Plans, compensation expense
is recognized over the vesting period of the grants. Stock Purchase Plan
transactions for 1994, 1993 and 1992 are summarized as follows:
<TABLE>
<CAPTION>
SHARES PRICE RANGE
<S> <C> <C>
Common stock grants:
Outstanding, December 31, 1991 8,250 $15.63
Vested (4,125) $15.63
------
Outstanding, December 31, 1992 4,125 $15.63
Granted 3,250 $26.99
Vested (7,375) $15.63-$26.99
------
Outstanding, December 31, 1993 -
Granted 3,632 $26.99-$28.53
Vested (455) $26.99
------
Outstanding, December 31, 1994 3,177 $26.99-$28.53
======
</TABLE>
At December 31, 1994, 308,868 shares remain available for grant or purchase
under the 1994 Stock Plan.
On January 4, 1995, the Board of Directors declared a five-for-four stock split
of the Company's common and Class B common stock payable in the form of a 25%
stock dividend. The dividend was distributed on January 24, 1995 to
stockholders of record on January 13, 1995. Even though this stock split was
declared subsequent to December 31, 1994, the Company's capital balances and
share amounts have been adjusted in 1994 to reflect the split.
On January 4, 1993, the Board of Directors declared a 10% special stock
dividend on its common and Class B common stock payable on January 22, 1993 to
stockholders of record on January 14, 1993. Even though this stock dividend
was consummated subsequent to December 31, 1992, the fair value of the dividend
was charged to retained earnings and credited to common and Class B common
stock and additional paid-in capital during 1992.
9. PENSION PLANS
The Company and its subsidiaries have several noncontributory pension plans
covering substantially all of their employees. Benefits under the plans are
generally based on salary and years of service. Plan funding strategies are
influenced by tax regulations. Plan assets consist primarily of government and
equity securities.
-47-
<PAGE> 48
The pension cost components for the pension plans in 1994, 1993 and 1992 were
as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------
1994 1993 1992
(in thousands)
<S> <C> <C> <C>
Service cost (for benefits earned during the year) $ 4,463 $ 3,486 $ 3,135
Interest cost on projected benefit obligation 7,515 6,936 6,359
Actual loss (return) on plan assets 1,437 (7,038) (5,892)
Net amortization and deferral (7,779) 1,007 (656)
------- ------- -------
Net periodic pension cost $ 5,636 $ 4,391 $ 2,946
======= ======= =======
</TABLE>
The funded status of the Company's pension plans at December 31, 1994 and 1993
is presented below (in thousands):
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $ 93,726 $ 93,652
======== ========
Accumulated benefit obligation $ 94,392 $ 94,636
======== ========
Projected benefit obligation $105,719 $104,383
Plan assets at fair value 75,276 80,450
-------- --------
Plan assets less than the projected benefit obligation (30,443) (23,933)
Unrecognized transition obligation, net 1,982 2,203
Unrecognized net loss 5,525 2,838
Unrecognized prior service cost (280) (240)
Additional minimum liability (3,204) (4,833)
-------- --------
Pension obligations $(26,420) $(23,965)
======== ========
</TABLE>
The projected benefit obligation was determined using assumed discount rates of
8% and 7% at December 31, 1994 and 1993, respectively. The expected long-term
rate of return on plan assets was 8.5% for both 1994 and 1993. For those plans
that pay benefits based on final compensation levels, the actuarial assumptions
for overall annual rate of increase in future salary levels ranged from 6% to
6.5% and 5.5% to 6% for December 31, 1994 and 1993, respectively.
Certain of the Company's employees participate in multi-employer retirement
plans sponsored by their respective unions. Amounts charged to operations,
representing the Company's required contributions to these plans in 1994, 1993
and 1992 were approximately $715,000, $822,000 and $701,000, respectively.
The Company also sponsors an employee savings plan under Section 401(k) of the
Internal Revenue Code. This plan covers substantially all employees.
Contributions by the Company amounted to approximately $1,735,000, $1,582,000
and $1,459,000 for 1994, 1993 and 1992, respectively.
10. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
Effective January 1, 1992, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions ("SFAS 106"), which requires the
accrual of retiree benefits during the years an employee provides services.
- 48 -
<PAGE> 49
These benefits, primarily medical and life insurance benefits at the
Post-Dispatch, were previously expensed as paid.
In applying this pronouncement, the Company immediately recognized the
Accumulated Postretirement Benefit Obligation of $40,625,000 (there are no
assets in the plans), net of the St. Louis Agency adjustment of $36,052,000, as
of January 1, 1992. On an after tax basis, this charge was $25,147,000 or
$1.74 per share. In addition to the one-time effect of the adjustment, the
application of SFAS No. 106 during 1992 decreased income before cumulative
effect of changes in accounting principles by $1,388,000 ($0.10 per share).
Net periodic postretirement benefit cost for 1994, 1993 and 1992 consists of
the following components:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------
1994 1993 1992
<S> <C> <C>
Service cost - benefits earned during the period $1,462,000 $1,547,000 $1,258,000
Interest cost on accumulated postretirement
benefit obligation 5,898,000 6,802,000 6,388,000
Net total of other components 13,000 404,000
---------- ---------- ----------
Net periodic postretirement benefit expense $7,373,000 $8,753,000 $7,646,000
========== ========== ==========
</TABLE>
The Company continues to fund its postretirement benefit obligation on a
pay-as-you-go basis, and, for 1994, 1993 and 1992 made payments of $3,484,000,
$3,561,000 and $3,587,000, respectively.
The accumulated postretirement benefit obligation included in the statements of
consolidated financial position as of December 31, 1994 and 1993 consists of
the following components:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Retirees and surviving beneficiaries $39,336,000 $ 52,786,000
Actives eligible to retire 16,396,000 21,522,000
Other actives 16,181,000 22,993,000
Unrecognized prior service gain 10,039,000
Unrecognized net gain (loss) 7,853,000 (11,373,000)
----------- ------------
Accumulated postretirement benefit obligation $89,805,000 $ 85,928,000
=========== ============
</TABLE>
The preceding amounts for the December 31, 1994 and 1993 accumulated
postretirement benefit obligation and the 1994, 1993 and 1992 net periodic
postretirement benefit expense have not been reduced for The Herald Company's
share of the respective amounts. However, pursuant to the St. Louis Agency
Agreement (see Note 2), the Company has recorded a receivable for The Herald
Company's share of the accumulated postretirement benefit obligation as of
December 31, 1994 and 1993.
For 1994 measurement purposes, health care cost trend rates of 13%, 11% and 10%
were assumed for indemnity plans, PPO plans and HMO plans, respectively; these
rates were assumed to decrease gradually to 6%, through the year 2008 and
remain at that level thereafter. For 1993 measurement purposes, health care
cost trend rates of 16% and 13% were assumed for indemnity plans and HMO plans,
respectively; these rates were assumed to decrease gradually to 5% through the
year 2008 and remain at that level thereafter. The health care cost trend rate
assumptions have a significant effect on the amount of obligation and expense
reported. A 1% increase in these annual trend rates would have increased the
accumulated benefit obligation at December 31, 1994 by approximately
$11,766,000 and the 1994 annual
-49-
<PAGE> 50
benefit expense by approximately $1,148,000. Administrative costs related to
indemnity plans were assumed to increase at a constant annual rate of 5% and 6%
for 1994 and 1993, respectively. The assumed discount rate used in estimating
the accumulated benefit obligation was 8% and 7% for 1994 and 1993,
respectively.
The changes in the December 31, 1994 reconciliation of the accumulated
postretirement benefit obligation compared to the prior year resulted primarily
from the modifications of certain interest rate and trend rate assumptions
(discussed above) and from current year changes in certain benefits under the
Company's postretirement plans.
Effective January 1, 1994, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 112, Employers' Accounting for
Postemployment Benefits ("SFAS 112"), to account for certain disability
benefits at the St. Louis Post-Dispatch. SFAS 112 requires that the cost of
these benefits provided to former employees prior to retirement be recognized
on the accrual basis of accounting. Previously, the Company recognized its
postemployment benefit costs when paid. The cumulative effect of adopting SFAS
112 was a reduction of 1994 net income of approximately $719,000 or $0.04 per
share. After recording the cumulative effect adjustment, the Company's
on-going expense under the new standard will not differ significantly from the
prior pay-as-you-go basis.
Under SFAS 112, the Company accrues the disability benefits when it becomes
probable that such benefits will be paid and when sufficient information exists
to make reasonable estimates of the amounts to be paid. As required by the
standard, prior year financial statements have not been restated to reflect the
change in accounting method.
11. INCOME TAXES
Effective January 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes ("SFAS
109"). This change in accounting method has been applied by recording a
positive cumulative effect adjustment of $360,000 or $0.02 per share in the
first quarter of 1993. The positive earnings impact of the cumulative effect
adjustment results principally from the recalculation of certain deferred
income taxes at the lower 34% federal statutory rate as opposed to the higher
tax rates which were in effect when certain of the deferred income taxes
originated. Prior years' consolidated financial statements have not been
restated to apply the provisions of SFAS 109.
Provisions for income taxes (benefits) consist of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------
1994 1993 1992
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal $ 25,156 $ 14,666 $ 5,259
State and local 3,372 2,179 1,975
Deferred:
Federal (2,264) (1,419) (1,613)
State and local (304) (166) (290)
-------- -------- --------
Total $ 25,960 $ 15,260 $ 5,331
======== ======== ========
</TABLE>
-50-
<PAGE> 51
Under the Revenue Reconciliation Act of 1993, the marginal corporate tax rate
was increased from 34% to 35%. The deferred tax benefit for 1993 was increased
by approximately $225,000 to reflect this change.
Factors causing the effective tax rate to differ from the statutory Federal
income tax rate were:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1994 1993 1992
<S> <C> <C> <C>
Statutory rate 35 % 35% 34 %
Favorable resolution of prior year federal and state tax issues (1) (19)
Amortization of intangibles 1 (2)
State and local income taxes, net of U.S. Federal income tax
benefit 3 4 4
Other - net 1 1 1
--- --- ---
Effective rate 39 % 40% 18 %
=== === ===
</TABLE>
The Company's current and noncurrent deferred taxes, included net in other
assets in the statements of consolidated financial position as of December 31,
1994 and 1993, consisted of the following deferred tax assets and liabilities:
<TABLE>
<Caption)
DECEMBER 31,
--------------------------
1994 1993
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Pensions and employee benefits $ 8,240 $ 8,224
Post retirement benefit costs 19,144 17,884
Other 305 245
------- ------
Total 27,689 26,353
------- ------
Deferred tax liabilities:
Depreciation 9,295 11,125
Amortization 2,396 4,308
------ ------
Total 11,691 15,433
------- -------
Net deferred tax asset $15,998 $10,920
======= =======
</TABLE>
During 1994, the Company settled federal tax examinations for 1990 through 1992
and paid additional taxes of approximately $2,048,000. This payment
represented an extension of the tax amortization period for certain prior year
acquisition intangibles. Accordingly, a deferred tax asset for the amount of
the payment was recorded during 1994.
The Company had no valuation allowance for deferred tax assets as of December
31, 1994, December 31, 1993 and January 1, 1993; therefore, there were no
changes in the valuation allowance for deferred tax assets for the years ended
December 31, 1994 and 1993.
-51-
<PAGE> 52
For 1992, the deferred tax provision, computed in accordance with Accounting
Principles Board Opinion No. 11, represent the effects of timing differences
between financial and income tax reporting. The significant components giving
rise to the timing differences for 1992 were:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------
1992
<S> <C>
Depreciation and amortization $ (494)
Pensions and postretirement benefits (17,284)
Other - net 397
--------
Total $(17,381)
========
</TABLE>
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
As required by Statement of Financial Accounting Standards No. 107, Disclosures
About Fair Value of Financial Instruments, the Company has estimated the
following fair value amounts using available market information and appropriate
valuation methodologies. However, considerable judgment is necessarily
required in interpreting market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts that the Company could realize in a current market exchange. The
use of different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.
<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1993
---------------------------- ---------------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents $77,084 $77,084 $ 34,970 $ 34,970
Accounts receivable 62,943 62,943 61,953 61,953
Liabilities:
Accounts payable 14,458 14,458 11,807 11,807
Program contracts payable 10,973 10,292 15,133 14,298
Long-term debt 143,000 136,930 176,240 178,692
</TABLE>
Cash and Cash Equivalents, Accounts Receivable, and Accounts Payable - The
carrying amounts of these items are a reasonable estimate of their fair value.
Program Contracts Payable - The estimated fair value is determined by
discounting the related future maturities (see Note 6) using the Company's
incremental borrowing rate.
Long-Term Debt - Interest rates that are currently available to the Company for
issuance of debt with similar terms and remaining maturities are used to
estimate fair value.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1994 and 1993. Although management
is not aware of any facts that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since that date, and current estimates of fair
value may differ from the amounts presented herein.
-52-
<PAGE> 53
13. BUSINESS SEGMENTS
The Company's operations are divided into two business segments, publishing and
broadcasting. The following is a summary of operations, assets and other data.
<TABLE>
<CAPTION>
AS OF AND FOR THE
YEARS ENDED DECEMBER 31,
---------------------------------
1994 1993 1992
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING REVENUES:
Publishing $ 304,779 $ 290,146 $ 285,004
Broadcasting 180,800 136,839 113,369
--------- --------- ---------
Total $ 485,579 $ 426,985 $ 398,373
========= ========= =========
OPERATING INCOME (LOSS):
Publishing $ 30,486 $ 23,702 $ 18,179
Broadcasting 47,963 27,947 23,311
Corporate (3,871) (3,692) (4,856)
--------- --------- ---------
Total $ 74,578 $ 47,957 $ 36,634
========= ========= =========
TOTAL ASSETS:
Publishing $ 136,818 $ 156,398 $ 139,694
Broadcasting 254,410 270,250 120,380
Corporate 77,084 34,970 29,914
--------- --------- ---------
Total $ 468,312 $ 461,618 $ 289,988
========= ========= =========
CAPITAL EXPENDITURES:
Publishing $ 6,097 $ 6,198 $ 4,934
Broadcasting 7,216 7,391 4,325
--------- --------- ---------
Total $ 13,313 $ 13,589 $ 9,259
========= ========= =========
DEPRECIATION AND AMORTIZATION:
Publishing $ 6,128 $ 6,938 $ 8,174
Broadcasting 24,358 16,854 10,695
--------- --------- ---------
Total $ 30,486 $ 23,792 $ 18,869
========= ========= =========
OPERATING MARGINS (Operating income to
revenues):
Publishing* 14.8 % 11.8 % 10.5 %
Broadcasting 26.5 20.4 20.6
</TABLE>
* Operating margins for publishing stated with St. Louis Agency adjustment
(which is recorded as an operating expense in the accompanying consolidated
financial statements) added back to publishing operating income.
- 53 -
<PAGE> 54
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
Operating results for the years ended December 31, 1994 and 1993 by
quarters are as follows:
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER TOTAL
--------------------------------------------------------
(in thousands,except per share data)
<S> <C> <C> <C> <C> <C>
1994
OPERATING REVENUES--NET $ 111,391 $ 122,730 $ 116,944 $ 134,514 $ 485,579
--------- --------- --------- --------- ---------
OPERATING EXPENSES:
Operations 46,697 46,638 46,870 51,365 191,570
Selling, general administrative 42,933 43,448 42,378 45,480 174,239
St. Louis Agency adjustment 2,719 4,233 3,452 4,302 14,706
Depreciation and amortization 7,562 7,580 7,604 7,740 30,486
--------- --------- --------- --------- ---------
Total 99,911 101,899 100,304 108,887 411,001
--------- --------- --------- --------- ---------
Operating income 11,480 20,831 16,640 25,627 74,578
Interest income 377 430 514 650 1,971
Interest expense (3,316) (3,084) (2,682) (2,927) (12,009)
Net other expense (248) (445) (347) 2,370 1,330
--------- --------- --------- --------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 8,293 17,732 14,125 25,720 65,870
Provision for income taxes 3,410 7,232 5,771 9,547 25,960
--------- --------- --------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 4,883 10,500 8,354 16,173 39,910
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
NET OF APPLICABLE INCOME TAXES (719) (719)
--------- --------- --------- --------- ---------
NET INCOME $ 4,164 $ 10,500 $ 8,354 $ 16,173 $ 39,191
========= ========= ========= ========= =========
EARNINGS PER SHARE OF STOCK (Common and Class B Common):
Income before cumulative effect of change in accounting
principle $ 0.30 $ 0.65 $ 0.51 $ 0.99 $ 2.45
Cumulative effect of change in accounting principle (.04) (0.04)
--------- --------- --------- --------- ---------
Total $ 0.26 $ 0.65 $ 0.51 $ 0.99 $ 2.41
========= ========= ========= ======== =========
WEIGHTED AVERAGE NUMBER OF SHARES (Common
and Class B Common) OUTSTANDING 16,221 16,238 16,249 16,261 16,241
========= ========= ========= ========= =========
1993
OPERATING REVENUES -- NET $ 93,591 $ 104,329 $ 106,833 $ 122,232 $ 426,985
--------- --------- --------- --------- ---------
OPERATING EXPENSES:
Operations 41,830 43,308 46,814 49,046 180,998
Selling, general and administrative 38,062 39,345 41,690 44,481 163,578
St. Louis Agency adjustment 2,202 2,835 2,145 3,478 10,660
Depreciation and amortization 4,303 4,328 7,394 7,767 23,792
--------- --------- --------- --------- ---------
Total 86,397 89,816 98,043 104,772 379,028
--------- --------- --------- --------- ---------
Operating income 7,194 14,513 8,790 17,460 47,957
Interest income 298 239 238 315 1,090
Interest expense (1,719) (1,501) (3,224) (3,379) (9,823)
Net other expense (224) (302) (293) (192) (1,011)
--------- --------- --------- --------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 5,549 12,949 5,511 14,204 38,213
Provision for income taxes 2,213 5,099 2,216 5,732 15,260
--------- --------- --------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 3,336 7,850 3,295 8,472 22,953
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
NET OF APPLICABLE INCOME TAXES 360 360
--------- --------- --------- --------- ---------
NET INCOME $ 3,696 $ 7,850 $ 3,295 $ 8,472 $ 23,313
========= ========= ========= ========= =========
EARNINGS PER SHARE OF STOCK (Common and Class B Common):
Income before cumulative effect of change in accounting
principle $ 0.24 $ 0.54 $ 0.20 $ 0.52 $ 1.51
Cumulative effect of change in accounting principle 0.02 0.02
--------- --------- --------- --------- ---------
Total $ 0.26 $ 0.54 $ 0.20 $ 0.52 $ 1.53
========= ========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF SHARES (Common
and Class B Common) OUTSTANDING 14,479 14,499 16,190 16,210 15,278
========= ========= ========= ========= =========
</TABLE>
-54-
<PAGE> 55
In the fourth quarter of 1994, a federal tax examination for 1992 was settled;
that settlement, together with the settlements earlier in the year of federal
tax examinations for 1990 and 1991, resulted in reduced income tax expense of
approximately $500,000, or $0.03 per share, in the 1994 fourth quarter. Due to
the Company's reduced exposure to further tax adjustments for open tax years,
and the impact of 1993 tax law changes in the deductibility of the amortization
of intangibles, the 1994 estimated tax rate was lowered from approximately 41
percent (estimated earlier in the year) to approximately 39 percent, resulting
in a gain of approximately $1,000,000, or $0.06 a share. The Company expects
to use the lower, approximately 39 percent, estimated tax rate in 1995.
* * * * * *
55
<PAGE> 56
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 caption "Management" in the
Company's definitive Proxy Statement to be used in connection with the 1995
Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the caption "Executive Compensation"
in the Company's definitive Proxy Statement to be used in connection with the
1995 Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Principal Stockholders"
in the Company's definitive Proxy Statement to be used in connection with the
1995 Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Compensation Committee
Interlocks and Insider Participation" in the Company's definitive Proxy
Statement to be used in connection with the 1995 Annual Meeting of Stockholders
is incorporated herein by reference.
56
<PAGE> 57
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) DOCUMENT LIST
1. Financial Statements
The following financial statements are set forth in Part II, Item 8 of
this report.
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES:
(i) Independent Auditors' Report.
(ii) Statements of Consolidated Income for each of the Three Years
in the Period Ended December 31, 1994.
(iii) Statements of Consolidated Financial Position at December 31,
1994 and 1993.
(iv) Statements of Consolidated Stockholders' Equity for each of
the Three Years in the Period Ended December 31, 1994.
(v) Statements of Consolidated Cash Flows for each of the Three
Years in the Period Ended December 31, 1994.
(vi) Notes to Consolidated Financial Statements for the Three Years
in the Period Ended December 31, 1994.
2. Supplementary Data and Financial Statement Schedules
(i) Supplementary unaudited data with respect to quarterly results of
operations is set forth in Part II, Item 8 of this Report.
(ii) The following financial statement schedule and opinion thereon
are filed as a part of this Report:
Sequential Page
---------------
Independent Auditors' Report 61
Schedule II - Valuation and Qualifying
Accounts and Reserves 62
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and, therefore have
been omitted.
57
<PAGE> 58
3. Exhibits Required by Securities and Exchange Commission Regulation S-K
(a) The following exhibits are filed as part of this report:
Exhibit No. Sequential Page
- ----------- ---------------
10.8.1 Amendment, dated January 24, 1995, to
Pulitzer Retirement Savings Plan. 65
10.8.2 Amended and restated Pulitzer
Retirement Savings Plan. 68
10.9 Amended and restated Joseph Pulitzer
Pension Plan. 120
10.10 Amended and restated Pulitzer Publishing
Company Pension Plan. 169
10.14 Deferred Compensation Agreement, dated
December 16, 1994, between the Pulitzer
Publishing Company and Michael E. Pulitzer. 216
10.25 Stock Purchase Agreement dated as of
December 22, 1994 by and among Pulitzer
Publishing Company, American Publishing
Company and American Publishing Holdings, Inc. 220
21 Subsidiaries of Registrant 274
23 Independent Auditors' Consent 275
24 Power of Attorney 276
27 Financial Data Schedule 277
(b) The following exhibits are incorporated herein by reference:
3.1 - Restated Certificate of Incorporation of the Company.(iii)
3.2 - By-Laws of the Company restated as of June 23, 1993.(x)
4.1 - Form of Certificate for Common Stock.(iii)
9.1 - Voting Trust Agreement, dated January 17, 1991 between the
holders of voting trust certificates and Michael E. Pulitzer,
Emily Rauh Pulitzer, Ronald H. Ridgway, Nicholas G. Penniman IV,
Ken J. Elkins, William F. Woo and David Moore.(vi)
10.1 - Agreement, dated January 1, 1961, between the Pulitzer
Publishing Company, a Missouri corporation, and the Globe-
Democrat Publishing Company, as amended on September 4, 1975,
April 12, 1979 and December 22, 1983.(i)
10.2.1 - Amended and Restated Joint Operating Agreement, dated December
30, 1988 between Star Publishing Company and Citizen Publishing
Company.(v)
10.2.2 - Partnership Agreement, dated December 30, 1988 between Star
Publishing Company and Citizen Publishing Company.(v)
58
<PAGE> 59
Exhibit No.
- -----------
10.3 - Agreement, dated as of May 12, 1986, among the Pulitzer
Publishing Company, Clement C. Moore, II, Gordon C. Weir,
William E. Weir, James R. Weir, Kenward G. Elmslie, Stephen E.
Nash and Manufacturers Hanover Trust Company, as Trustees and
Christopher Mayer.(i)
10.4 - Letter Agreement, dated September 29, 1986, among the Pulitzer
Publishing Company, Trust Under Agreement Made by David E. Moore,
David E. Moore, Frederick D. Pulitzer, Michael E. Pulitzer, Jr.,
Robert S. Pulitzer, Joseph Pulitzer, IV, Joseph Pulitzer, Jr.,
Michael E. Pulitzer, Stephen E. Nash and Manufacturers Hanover
Trust Company, as Trustees, Kenward G. Elmslie, Gordon C. Weir,
William E. Weir, James R. Weir, Peter W. Quesada, T. Ricardo
Quesada, Elinor P. Hempelmann, The Moore Foundation, Inc.,
Mariemont Corporation, Z Press Inc. and Clement C. Moore, II.(ii)
10.5 - Letter Agreement, dated May 12, 1986, among the Pulitzer
Publishing Company, Peter W. Quesada, T. Ricardo Quesada, Kate
Davis Pulitzer Quesada and Elinor P. Hempelmann.(i)
10.6 - Agreement, dated as of September 29, 1986, among the Pulitzer
Publishing Company, Peter W. Quesada, T. Ricardo Quesada, Kate
Davis Pulitzer Quesada and Elinor Hempelmann.(ii)
10.7.1 - Amendment, dated March 9, 1992, to the Pulitzer Publishing Annual
Incentive Plan.(vii)
10.7.2 - Annual Incentive Compensation Plan.(iii)
10.11 - Restated Supplemental Executive Benefit Pension Plan.(viii)
10.12 - Employment Agreement, dated October 1, 1986, between the Pulitzer
Publishing Company and Joseph Pulitzer, Jr.(i)
10.13 - Employment Agreement, dated January 2, 1986, between the Pulitzer
Publishing Company and Michael E. Pulitzer.(i)
10.15 - Consulting Agreement, dated May 1, 1993, between Pulitzer
Publishing Company and Glenn A. Christopher.(x)
10.16 - Supplemental Executive Retirement Pay Agreement dated June 5,
1984, between the Pulitzer Publishing Company and Glenn A.
Christopher.(i)
10.17 - Letter Agreement, dated October 26, 1984, between the Pulitzer
Publishing Company and Glenn A. Christopher.(i)
10.18 - Letter Agreement, dated October 21, 1986, between the Pulitzer
Publishing Company and David E. Moore.(i)
10.19 - Pulitzer Publishing Company 1994 Key Employees' Restricted Stock
Purchase Plan.(xi)
10.20 - Pulitzer Publishing Company 1994 Stock Option Plan.(xi)
59
<PAGE> 60
Exhibit No.
- -----------
10.21 - Registration Rights Agreement.(i)
10.22 - Note Agreement, dated April 22, 1987, between the Pulitzer
Publishing Company and The Prudential Insurance Company of
America.(iv)
10.23 - Employment Agreement, dated May 10, 1955, between the Pulitzer
Publishing Company and Joseph Pulitzer, Jr.(ii)
10.24 - Note Agreement, dated June 30, 1993, between Pulitzer
Publishing Company and The Prudential Insurance Company of
America.(ix)
- ---------------
(i) Incorporated by reference to Registration Statement on Form S-1 (No.
33-9953) filed with the Securities and Exchange Commission on
November 4, 1986.
(ii) Incorporated by reference to Amendment No. 1 to Registration
Statement on Form S-1 (No. 33-9953) filed with the Securities and
Exchange Commission on December 9, 1986.
(iii) Incorporated by reference to Amendment No. 2 to Registration
Statement on Form S-1 (no. 33-9953) filed with the Securities
and Exchange Commission on December 11, 1986.
(iv) Incorporated by reference to Current Report on Form 8-K dated May 4,
1987.
(v) Incorporated by reference to Annual Report on Form 10-K for the
fiscal year ended December 31, 1988.
(vi) Incorporated by reference to Annual Report on Form 10-K for the
fiscal year ended December 31, 1990.
(vii) Incorporated by reference to Annual Report on Form 10-K for the
fiscal year ended December 31, 1991.
(viii) Incorporated by reference to Annual Report on Form 10-K for the
fiscal year ended December 31, 1992.
(ix) Incorporated by reference to Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1993.
(x) Incorporated by reference to Annual Report on Form 10-K for the
fiscal year ended December 31, 1993.
(xi) Incorporated by reference to the Company's definitive Proxy
Statement used in connection with the 1994 Annual Meeting of
Stockholders
(c) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the fourth
quarter of fiscal year 1994.
60
<PAGE> 61
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of Pulitzer Publishing Company:
We have audited the consolidated financial statements of Pulitzer Publishing
Company and its subsidiaries as of December 31, 1994 and 1993, and for each of
the three years in the period ended December 31, 1994, and have issued our
report thereon dated February 3, 1995; such report is included elsewhere in
this Form 10-K. Our audits also included the consolidated financial statement
schedule of Pulitzer Publishing Company and its subsidiaries, listed in the
accompanying index at Item 14. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such consolidated financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
DELOITTE & TOUCHE LLP
Saint Louis, Missouri
February 3, 1995
61
<PAGE> 62
SCHEDULE II
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
SCHEDULE II - VALUATION & QUALIFYING ACCOUNTS & RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 & 1992
<TABLE>
<CAPTION>
Balance At Charged to Charged to Balance
Beginning Costs & Other At End Of
Description Of Period Expenses Accounts Deductions Period
----------- --------- -------- -------- ---------- -----------
(In thousands)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1994
Valuation Accounts:
Allowance for Doubtful
Accounts $2,575 $2,010 $159 (a) $2,609 (b) $2,135
Reserves:
Accrued Medical Plan 526 6,070 0 5,807 (c) 789
Workers Compensation 1,765 2,023 0 1,461 2,327
Year Ended December 31, 1993
Valuation Accounts:
Allowance for Doubtful
Accounts $2,357 $1,935 $625 (a) $2,342 (b) $2,575
Reserves:
Accrued Medical Plan 2,000 3,850 0 5,324 (c) 526
Workers Compensation 1,100 1,922 0 1,257 1,765
Year Ended December 31, 1992
Valuation Accounts:
Allowance for Doubtful
Accounts $2,562 $2,908 $188 (a) $3,301 (b) $2,357
Reserves:
Accrued Medical Plan 219 7,752 0 5,971 (c) 2,000
Workers Compensation 475 1,770 0 1,145 1,100
</TABLE>
(a) - Accounts reinstated, cash recoveries, etc.
(b) - Accounts written off, except 1994 which also includes $761 related to
sale of PCN.
<TABLE>
<CAPTION>
(c) - Amount represents: 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Claims paid $5,383 $5,101 $5,577
Service fees 460 522 456
Cash refunds (36) (299) (62)
------ ------ ------
$5,807 $5,324 $5,971
====== ====== ======
</TABLE>
62
<PAGE> 63
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized, on the 14th day of March, 1995.
PULITZER PUBLISHING COMPANY
By: /s/ Michael E. Pulitzer
----------------------------------
Michael E. Pulitzer,
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed by the following persons on behalf of the
Registrant in the capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael E. Pulitzer Director; Chairman, President and March 14, 1995
----------------------- Chief Executive Officer
(Michael E. Pulitzer) (Principal Executive Officer)
/s/ Ronald H. Ridgway Director; Senior Vice President-Finance March 14, 1995
--------------------- (Principal Financial and Accounting Officer)
(Ronald H. Ridgway)
Ken J. Elkins* Director; Senior Vice President - March 14, 1995
-------------- Broadcasting Operations
(Ken J.Elkins)
David E. Moore* Director March 14, 1995
---------------
(David E. Moore)
Nicholas G. Penniman IV* Director; Senior Vice President - March 14, 1995
------------------------ Newspaper Operations
(Nicholas G. Penniman IV)
Peter J. Repetti * Director March 14, 1995
------------------
(Peter J. Repetti)
Emily Rauh Pulitzer* Director March 14, 1995
--------------------
(Emily Rauh Pulitzer)
Alice B. Hayes* Director March 14, 1995
---------------
(Alice B. Hayes)
James M. Snowden, Jr.* Director March 14, 1995
----------------------
(James M. Snowden, Jr.)
</TABLE>
By: /s/ Ronald H. Ridgway
-----------------------------
Ronald H. Ridgway*
attorney-in-fact
63
<PAGE> 64
PULITZER PUBLISHING COMPANY
Report on Form 10-K for the Fiscal Year Ended
December 31, 1994
EXHIBIT INDEX
Exhibit No. Sequential Page
- ----------- ---------------
10.8.1 Amendment, dated January 24, 1995, to Pulitzer
Retirement Savings Plan. 65
10.8.2 Amended and restated Pulitzer Retirement Savings
Plan. 68
10.9 Amended and restated Joseph Pulitzer Pension Plan. 120
10.10 Amended and restated Pulitzer Publishing Company
Pension Plan. 169
10.14 Deferred Compensation Agreement, dated December 16,
1994, between the Pulitzer Publishing Company and
Michael E. Pulitzer. 216
10.25 Stock Purchase Agreement dated as of December 22,
1994 by and among Pulitzer Publishing Company,
American Publishing Company and American
Publishing Holdings, Inc. 220
21 Subsidiaries of Registrant 274
23 Independent Auditors' Consent 275
24 Power of Attorney 276
27 Financial Data Schedule 277
64
<PAGE> 65
AMENDMENT
OF
PULITZER RETIREMENT SAVINGS PLAN
Pursuant to resolutions adopted on January 24, 1995 by the Board of
Directors of Pulitzer Publishing Company, the Pulitzer Retirement Savings Plan
(the "Plan") is hereby amended as follows:
1. The monthly Employer Profit Sharing Contributions for participants
who are members of the St. Louis Newspaper Guild shall be $50 effective
February 1, 1995.
2. Schedule B annexed to the Plan is revised accordingly.
PULITZER PUBLISHING COMPANY
By: /s/ Ronald H. Ridgway
--------------------------------
Ronald H. Ridgway
Senior Vice President - Finance
<PAGE> 1
AMENDMENT
OF
PULITZER RETIREMENT SAVINGS PLAN
Pursuant to resolutions adopted on January 24, 1995 by the Board of
Directors of Pulitzer Publishing Company, the Pulitzer Retirement Savings Plan
(the "Plan") is hereby amended as follows:
1. The monthly Employer Profit Sharing Contributions for participants
who are members of the St. Louis Newspaper Guild shall be $50 effective
February 1, 1995.
2. Schedule B annexed to the Plan is revised accordingly.
PULITZER PUBLISHING COMPANY
By: /s/ Ronald H. Ridgway
--------------------------------
Ronald H. Ridgway
Senior Vice President - Finance
<PAGE> 2
SCHEDULE B
PULITZER RETIREMENT SAVINGS PLAN
SPECIAL RULES
FOR
EMPLOYER PROFIT SHARING CONTRIBUTIONS
The following special rules apply to Section 3.03 of the Plan:
1. There are no Employer Profit Sharing Contributions for
Participants who are Employees of Pulitzer Broadcasting Company (except
Participants who are Employees of the Pulitzer Broadcasting Corporate Group),
KOAT Television, Inc., KETV Television, Inc., WGAL-TV, Inc., Phoenix
Broadcasting, Inc., WDSU Television, Inc., and Star Publishing Company.
2. The Employer Profit Sharing Contribution for each Participant who
is a non-union Employee of Pulitzer Community Newspapers, Inc. is 2% of the
Employee's Base Compensation (excluding for this purpose 1/3 of the Employee's
commission income).
3. The Company will make monthly Employer Profit Sharing
Contributions on behalf of its covered union Employees included in the
following bargaining units in the amounts set forth opposite the names of the
unit:
<TABLE>
<CAPTION>
Monthly Employer
Profit Sharing Effective
Bargaining Unit Contribution Date
- --------------------- ------------------------ ------------
<S> <C> <C>
St. Louis Typographical $30 3/1/88
Union No. 8 $40 3/1/90
$50 3/1/92
Miscellaneous Drivers, Helpers, $30 3/1/88
Health Care and Public $40 3/1/90
Employees Local No. 610 $50 1/1/93
International Union of $30 3/1/88
Operating Engineers Local No. 2 $40 3/1/92
St. Louis Newspaper Guild $30 3/1/88
No. 47 $40 4/1/90
$50 2/1/95
</TABLE>
<PAGE> 3
SCHEDULE B
PULITZER RETIREMENT SAVINGS PLAN
SPECIAL RULES
FOR
EMPLOYER PROFIT SHARING CONTRIBUTIONS
<TABLE>
<CAPTION>
Monthly Employer
Profit Sharing Effective
Bargaining Unit Contribution Date
- --------------------- ------------------------ ------------
<S> <C> <C>
International Brotherhood of $30 3/1/88
Electrical Workers Local No. 1 $40 1/1/91
Communications Workers of $30 3/1/88
America, AFL-CIO CLC $40 2/1/91
Local 14620 (Mailers) $50 2/1/93
International Brotherhood of
Firemen & Oilers, Local No. 7 $30 3/1/88
International Association of
Machinists & Aerospace Workers, $30 3/1/88
District 9 $40 3/1/96
Graphics Communications $30 3/1/88
International Union, Local No. $40 5/1/91
38N (Pressmen) $50 5/1/93
Graphics Communications
International Union, Local No. $30 3/1/88
38N (Job Printing Pressmen) $40 7/1/91
Graphics Communications
International Union, Local No.
16H (Paperhandlers) $30 3/1/88
Graphics Communications $30 3/1/88
International Union, Local No. $40 10/1/94
505 (Photomechanical) $50 1/1/96
</TABLE>
<PAGE> 1
PULITZER RETIREMENT
SAVINGS PLAN
(As Amended Through December 31, 1994)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section
-------
<S> <C>
ARTICLE I - DEFINITIONS
Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01
Administrative Committee . . . . . . . . . . . . . . . . . . . . . . . . . 1.02
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.03
Base Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.04
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.05
Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.06
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.07
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.08
Elective Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 1.09
Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10
Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11
Employer Matching Contributions . . . . . . . . . . . . . . . . . . . . . 1.12
Employer Profit Sharing Contributions . . . . . . . . . . . . . . . . . . 1.13
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.14
Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . 1.15
Investment Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.16
Investment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.17
Non-Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . 1.18
Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . 1.19
Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.20
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.21
Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.22
Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.23
Total Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.24
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.26
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.27
Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.28
ARTICLE II - PARTICIPATION
General Participation Requirement . . . . . . . . . . . . . . . . . . . . 2.01
Re-Employment Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02
Special Rule for Pulitzer Community
Newspapers, Inc . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
ARTICLE III - CONTRIBUTIONS
Participants' Elective Contributions . . . . . . . . . . . . . . . . . . 3.01
Employer Matching Contributions . . . . . . . . . . . . . . . . . . . . . 3.02
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Employer Profit Sharing Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.03
Distribution of Excess Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.04
Return of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.05
Transfers from Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.06
ARTICLE IV - LIMITATIONS ON CONTRIBUTIONS
Statutory Nondiscrimination Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.01
Modification of Contribution Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02
Excess Elective Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03
Excess Employer Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
Other Limitations on Contributions
and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.05
ARTICLE V - ACCOUNTS AND INVESTMENT FUNDS
Maintenance of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.01
Adjustment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.02
Establishment of Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.03
Investment Directions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.04
ARTICLE VI - ELIGIBILITY FOR AND DISTRIBUTION OF BENEFITS
Normal Retirement or Total Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
Other Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.02
Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.03
Special Vesting Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
Required Commencement of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.06
Cashout of Small Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
ARTICLE VII - WITHDRAWALS
In-Service Withdrawals Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
Hardship Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.02
Withdrawal Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.03
ARTICLE VIII - TOP HEAVY PROVISIONS
Effect of Top Heavy Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
Definitions and Special Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.02
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE IX - ADMINISTRATION OF PLAN
Organization of Administrative Committee and
Procedural Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.01
Powers of Administrative Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.02
Operation of Administrative Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.03
Organization of Investment Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.04
Powers of Investment Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.05
Operation of the Investment Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.06
Resignation or Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.07
Records and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.08
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.09
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
Claim for Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11
Review of Denied Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.12
Standard of Judicial Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.13
ARTICLE X - TRUST FUND
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.01
No Diversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.02
Benefits Provided Solely by Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
Employer Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.04
Appointment of Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.05
ARTICLE XI - AMENDMENTS AND TERMINATION
Company May Amend Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
Withdrawal of Participating Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.02
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
Distributions Upon Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
Statutory Merger/Consolidation Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05
ARTICLE XII - MISCELLANEOUS
No Rights Conferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.01
Benefits Limited to Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.02
Spendthrift Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
Payment to Minors or Incompetents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04
Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.05
Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.06
Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.07
</TABLE>
<PAGE> 5
PULITZER RETIREMENT SAVINGS PLAN
The Pulitzer Retirement Savings Plan has been amended and
restated in its entirety, and subsequently updated as herein set forth, all
effective as of January 1, 1989 (unless and except to the extent otherwise
specified or required) to reflect changes made after January 1, 1989, and
to satisfy the applicable provisions of the Tax Reform Act of 1986, the
Omnibus Budget Reconciliation Act of 1986, the Omnibus Budget
Reconciliation Act of 1987, the Technical and Miscellaneous Revenue Act of
1988, the Omnibus Budget Reconciliation Act of 1989, the Unemployment
Compensation Amendments of 1992, and the Omnibus Budget Reconciliation Act
of 1993.
ARTICLE I
DEFINITIONS
Wherever used herein, the masculine includes the feminine,
the singular includes the plural, and the following terms have the
following meanings unless a different meaning is clearly required by the
context.
1.01. "Account" or "Accounts" means any one or more
of the bookkeeping accounts established and maintained hereunder,
representing a Participant's interest in the Trust Fund.
1.02. "Administrative Committee" means the
administrative committee appointed hereunder to administer the Plan.
<PAGE> 6
1.03. "Affiliate" means any entity (whether or not
incorporated) which, by reason of its relationship with the Company, is
required to be aggregated with the Company under Section 414(b), 414(c),
414(m) or 414(o) of the Code.
1.04. "Base Compensation" means a Participant's Total
Compensation for a Plan Year, reduced by the amount of any bonuses,
overtime pay, expense allowances and other extraordinary or irregular
payments (except commissions).
1.05. "Beneficiary" means any person entitled to
receive benefits under the Plan by reason of the death of a Participant,
former Participant or Beneficiary.
1.06. "Board" means the Board of Directors of the
Company.
1.07. "Code" means the Internal Revenue Code of 1986,
as it now exists and as it is hereafter amended.
1.08. "Company" means Pulitzer Publishing Company.
1.09. "Elective Contributions" means 401(k)
contributions for a Participant pursuant to the Participant's salary
reduction election.
1.10. "Employee" means an individual who performs
services for an Employer in an employer-employee relationship, other than
(a) an individual who is included in a unit of employees covered by a
collective bargaining agreement, except members of such unit who are
designated in the agreement or otherwise by the Employer as being eligible
for participation in the Plan, and (b) an individual who is on an
Employer's "temporary payroll" or who is classified as a union substitute
employee. Individuals who are treated as independent contractors by the
Company or an Affiliate, and leased employees within the meaning of Section
414(n)(2) of the Code will be deemed not to be Employees for purposes of
the Plan.
-2-
<PAGE> 7
1.11. "Employer" means the Company, any Affiliate
which was a participating Employer on December 31, 1988, WDSU Television,
Inc. (as of January 1, 1990), and any other Affiliate which thereafter
adopts the Plan with the consent of the Board.
1.12. "Employer Matching Contributions" means
matching contributions made by an Employer with respect to Participants'
Elective Contributions.
1.13. "Employer Profit Sharing Contributions" means
contributions made by an Employer in accordance with Section 3.03 of the
Plan.
1.14. "ERISA" means the Employee Retirement Income
Security Act of 1974, as it now exists and as it is hereafter amended.
1.15. "Highly Compensated Employee" means an Employee
described in Section 414(q) of the Code who is eligible to participate in
the Plan.
1.16. "Investment Committee" means the investment
committee appointed hereunder to select and monitor investment alternatives
and/or investment managers.
1.17. "Investment Fund" means any one or more of the
separate investment funds designated by the Investment Committee for
investment of the assets of the Trust Fund (including, without limitation,
each separate fund maintained by a registered investment company, if any,
selected by the Investment Committee).
1.18. "Non-Highly Compensated Employee" means an
Employee who is eligible to participate in the Plan and who is neither a
Highly Compensated Employee nor a family member of a Highly Compensated
Employee (within the meaning of Section 414(q)(6)(B) of the Code).
-3-
<PAGE> 8
1.19. "Normal Retirement Date" means the date on
which an Employee attains age 65.
1.20. "Participant" means an Employee participating
in the Plan in accordance with the provisions hereof.
1.21. "Plan" means the retirement savings plan as
set forth herein and any amendments thereto.
1.22. "Plan Year" means the nine-month period
beginning January 1, 1989 and ending September 30, 1989, each subsequent
twelve-month period beginning October 1 through September 30, 1994, the
three-month period beginning October 1, 1994 and ending December 31, 1994
and each calendar year thereafter.
1.23. "Service" means active employment with the
Company or an Affiliate, subject to the following special rules:
(a) an individual will be deemed to be actively
employed for the first twelve months of an absence from
work due to disability, sickness, layoff, leave of absence
or any other reason except voluntary termination of
employment, retirement, discharge or death;
(b) an individual will be deemed to be actively
employed during an absence from work due to voluntary
termination of employment, retirement or discharge if the
individual returns to active employment and performs an
hour of service within twelve months from the date of the
voluntary termination, retirement or discharge (or, if the
voluntary termination, retirement or discharge occurs
during a period of absence described in
(a) above, before the first anniversary of the date the
earlier period of absence began);
-4-
<PAGE> 9
(c) an individual will be deemed to be
actively employed during a period of active duty with the
armed forces of the United States if he or she returns to
active employment and performs an hour of service within
the period provided by law for the protection of his or
her re-employment rights; and
(d) if an individual is absent from work
for more than one year because of the individual's
pregnancy, the birth of the individual's child, the
adoption of a child by the individual, or the care of the
individual's newborn or newly adopted child, then, subject
to an intervening voluntary termination of employment or
discharge, the individual will neither be treated as
absent from work nor credited with Service during the
second twelve months of that absence.
The period of an individual's Service will be measured in days; and one
year of Service will be the equivalent of 365 days of Service. An "hour of
service" is each hour for which an individual is directly or indirectly
paid or entitled to payment by the Company or an Affiliate for the
performance of services. Subject to the provisions of applicable law, the
Board will determine the extent, if any, to which service with a
predecessor employer or service with an Employer prior to the Employer's
adoption of the Plan will be taken into account for purposes of eligibility
and/or vesting.
1.24. "Total Compensation" means all cash
compensation paid by an Employer to an Employee during a Plan Year which is
required to be reported as wages on the Participant's Form W-2 and such
additional amounts which are not includable in the Participant's gross
income during said Plan Year by reason of the application of
-5-
<PAGE> 10
Sections 125, 402(a)(8), or 402(h)(1)(B) of the Code. For each Plan Year
beginning after December 31, 1988, Compensation in excess of $150,000 (or
such greater amount as may be permitted by Section 401(a)(17) of the Code)
will be disregarded for all purposes under the Plan.
1.25. "Trust" means the trust established and
maintained as part of the Plan.
1.26. "Trustee" means the person or persons
(including a corporation) appointed and acting as trustee of the
Trust.
1.27. "Trust Fund" means the assets of the Plan
consisting of the amounts held in the Investment Funds.
1.28. "Valuation Date" means the last day of each
calendar quarter and such other date or dates as the Administrative
Committee (acting in its absolute discretion and in a nondiscriminatory
manner) may determine for valuing any one or more of the Investment Funds
or the Trust Fund.
-6-
<PAGE> 11
ARTICLE II
PARTICIPATION
2.01. General Participation Requirement. An Employee
will automatically be a Participant on January 1, 1989 if he or she was a
Participant on December 31, 1988. Any other Employee will become a
Participant on the first day of the calendar quarter coincident with or
next following the date on which he or she has completed one year of
Service; provided, however, that an individual who is not an Employee on
that day will initially become a Participant on the next succeeding date on
which he or she is an Employee.
2.02. Re-employment Rules. A former Employee who was
a Participant and who again becomes an Employee will again become a
Participant on the date on which he or she again completes an hour of
service as an Employee. Notwithstanding the preceding sentence, if a
former Employee separates from Service before completing at least one year
of Service, and if the period of such former Employee's separation is more
than five years, then the period of his or her prior Service will be
disregarded.
2.03. Special Rule for Pulitzer Community Newspapers,
Inc. In applying the provisions of this Article to Employees of Pulitzer
Community Newspapers, Inc., an individual will not be deemed to complete a
year of Service until the last day of the eligibility computation period
during which he or she is credited with 1,000 hours of Service (within the
meaning of DOL Reg. Section 2530.200b-2). An individual's eligibility
computation period is the twelve-month period beginning on the date he or
she is first credited with an hour of service (initially or following
re-employment, as the case may be), and any Plan Year beginning after that
date.
-7-
<PAGE> 12
ARTICLE III
CONTRIBUTIONS
3.01. Participants' Elective Contributions.
(a) Salary Reduction Election. Each
Employee who is a Participant may elect the percentage of his or her Base
Compensation to be withheld by the Employer and contributed to the Trust as
an Elective Contribution. The designated percentage must be at least 1%
and not more than 16% (10% in the case of Participants whose Base
Compensation for the preceding year was at least $50,000 adjusted as
provided by Section 414(q)(1)(c) of the Code). The total amount of a
Participant's Elective Contributions for a calendar year may not be more
than $7,627 (adjusted as provided by Section 402(g)(1) of the Code).
(b) Contribution to Trust. Each Employer
will pay Elective Contributions to the Trustee within 90 days or as soon as
is otherwise practicable after they are withheld from Participants' pay.
Each Participant's Elective Contributions will be credited to his or her
Account in accordance with the provisions hereof.
(c) Procedural Rules. Salary reduction
elections must be made on such forms, and may be modified, revoked or
suspended at such times and in accordance with such procedures, as may be
prescribed or permitted by the Administrative Committee acting in a uniform
and nondiscriminatory manner. A Participant's election will terminate when
the Participant ceases to be an Employee, and a new withholding election
must be filed if he or she wishes to resume Elective Contributions after
again becoming an Employee.
-8-
<PAGE> 13
(d) Special Rule for Pulitzer Community
Newspapers, Inc. In applying the provisions of subsection (a) above to
Employees of Pulitzer Community Newspapers, Inc., (1) "Total Compensation"
is substituted for "Base Compensation," and (2) the percentage limitation
will be 16% regardless of the amount of a Participant's Total Compensation.
3.02. Employer Matching Contributions. Except as
otherwise provided in Schedule A annexed hereto, an Employer will make
Employer Matching Contributions on behalf of each of its non-union
Employees equal to 50% of the Employee's Elective Contributions or, if
less, 2% of the Employee's Base Compensation (in respect of which the
Elective Contributions are made). Employer Matching Contributions will be
paid to the Trustee in cash and will be credited to the Participants'
Accounts in accordance with the provisions hereof as soon as practicable
after they are made.
3.03. Employer Profit Sharing Contributions. Except as
otherwise provided in Schedule B annexed hereto, each Employer will
contribute $40 per month ($30 per month prior to January 1, 1994) for each
Participant who is a non-union Employee (of the Employer) on the first day
of the month. The monthly amount will be reduced proportionately for
Participants who are part-time Employees in accordance with uniform and
non-discriminatory procedures approved by the Administrative Committee.
The Employer Profit Sharing Contributions will be paid to the Trustee in
cash and will be credited to the Participants' Accounts in accordance with
the provisions hereof as soon as practicable after they are made.
3.04. Distribution of Excess Deferrals. If, on or before
March 1 of any year, a Participant notifies the Administrative Committee
that all or part of the
-9-
<PAGE> 14
Elective Contributions made for his or her benefit during the preceding
taxable year represents an excess deferral within the meaning of Section
402(g) of the Code, then the Administrative Committee will cause the amount
of such excess deferral to be distributed to the Participant by the April
15 following such notification.
3.05. Return of Contributions. If a contribution by an
Employer to the Trust is (a) made by reason of a good faith mistake of
fact, or (b) believed by the Employer in good faith to be deductible under
Section 404 of the Code, but the deduction is disallowed, then the
Administrative Committee shall direct the Trustee to return to the
contributing Employer the amount of the mistaken or nondeductible
contribution. In no event may the return of an Employer contribution cause
the value of a Participant's interest in the Trust to be reduced to an
amount which is less than the amount it would have been had the mistaken or
nondeductible contribution not been made. The return of a contribution
hereunder must be made within one year after the mistaken contribution is
made or the deduction is disallowed, as the case may be.
3.06. Transfers from Other Plans. Subject to the
provisions of applicable law, the Administrative Committee may permit the
assets of other qualified plans maintained by employers who (or whose
assets) are acquired by the Company or an Affiliate, to be transferred to
the Trust to be held and administered in accordance with the provisions
hereof and of the Trust Agreement. The plan administrator and/or plan
trustee of a transferror plan will furnish a breakdown of the assets being
transferred so that those assets can be properly allocated to corresponding
Accounts established hereunder. The Administrative Committee shall take
such action as may be necessary or appropriate in order to separately
account for the assets of a transferror plan. The accrued benefits of a
transferror plan's participants and the optional forms of benefit
-10-
<PAGE> 15
available to those participants with respect to the transferred assets will
be preserved hereunder to the extent required by the provisions of
applicable law.
-11-
<PAGE> 16
ARTICLE IV
LIMITATIONS ON CONTRIBUTIONS
4.01. Statutory Nondiscrimination Requirements.
(a) Elective Contributions. Elective
Contributions for a Plan Year must satisfy either of the following tests:
(1) the average of the individual ratios
(expressed as percentages) of Elective Contributions to
Total Compensation (the "deferral percentages") for the
Plan Year for all Highly Compensated Employees is not more
than 125% of the average of the deferral percentages for
all Non-Highly Compensated Employees; or
(2) the average of the deferral percentages
for all Highly Compensated Employees is not more than
twice the average of the deferral percentages for all
Non-Highly Compensated Employees, and the average of the
deferral percentages for all Highly Compensated Employees
does not exceed the average of the deferral percentages
for all Non-Highly Compensated Employees by more than 2%.
Subject to the provisions of applicable law, the Administrative Committee
may treat Employer Matching Contributions for a Plan Year as Elective
Contributions if and to the extent such treatment would enable the Plan to
satisfy the provisions of this Section for the Plan Year and solely for
that purpose.
(b) Employer Matching Contributions. The
Employer Matching Contributions for a Plan Year must satisfy either of the
following tests:
-12-
<PAGE> 17
(1) the average of the individual ratios
(expressed as percentages) of the Employer Matching
Contributions to Total Compensation (the "contribution
percentages") for the Plan Year for all Highly Compensated
Employees is not more than 125% of the average of the
contribution percentages for all Non-Highly Compensated
Employees; or
(2) the average of the contribution
percentages for all Highly Compensated Employees is not
more than twice the average of the contribution
percentages for all Non-Highly Compensated Employees, and
the average of the contribution percentages for all Highly
Compensated Employees does not exceed the average of the
contribution percentages for all Non-Highly Compensated
Employees by more than 2% (provided, however, that this
clause 2 will not apply to the extent required by law in
order to prevent prohibited multiple use of the 200%/2%
deferral percentage and contribution percentage
nondiscrimination tests).
Subject to the provisions of applicable law, the Administrative Committee
may treat Elective Contributions for a Plan Year as Employer Matching
Contributions if and to the extent such treatment would enable the Plan to
satisfy the provisions of this Section and solely for that purpose.
4.02. Modification of Contribution Elections. The
Administrative Committee may modify a Participant's salary reduction
election order to enable the Plan to satisfy the limitations of applicable
law with respect to Elective Contributions and Employer Matching
Contributions, including the limitations prescribed by Sections 401(k)(3),
401(m), 402(g)(1) and 415 of the Code. The modification of a Participant's
-13-
<PAGE> 18
election may not result in increased Elective Contributions for the
Participant without his or her consent.
4.03. Excess Elective Contributions. If the average
of the deferral percentages for Highly Compensated Employees
for a Plan Year exceeds the amount permitted for that Plan Year, then the
excess will be eliminated in the manner provided in this Section. First,
in accordance with the provisions of applicable law, the deferral
percentages of some or all of the Highly Compensated Employees will be
reduced (in descending order starting with the highest deferral
percentages) until the average of the deferral percentages for the Highly
Compensated Employees satisfies one of the nondiscrimination tests.
Second, the amount of each Highly Compensated Employee's excess Elective
Contributions will be determined based upon the reduction of his or her
deferral percentage in accordance with the preceding sentence. Third, the
amount of each Highly Compensated Employee's Elective Contributions, as so
determined, together with income or loss thereon, will be distributed to
him or her as soon as practicable, but in no event later than the last day
of the Plan Year following the Plan Year for which the excess amount was
contributed.
4.04. Excess Employer Matching Contributions. If the
average of the contribution percentages for Highly Compensated Employees
for a Plan Year exceeds the amount permitted for that Plan Year, then the
excess will be eliminated in the manner provided in this Section. First,
in accordance with the provisions of applicable law, the contribution
percentages of some or all of the Highly Compensated Employees will be
reduced (in descending order starting with the highest contribution
percentages) until the average of the contribution percentages for the
Highly Compensated Employees satisfies the applicable nondiscrimination
test. Second, the amount of each
-14-
<PAGE> 19
Highly Compensated Employee's excess Employer Matching Contributions will
be determined based upon the reduction of his or her contribution
percentage in accordance with the preceding sentence. Third, the amount of
each Highly Compensated Employee's excessive Employer Matching
Contributions, as so determined, together with income or loss thereon, will
be distributed to him or her as soon as practicable, but in no event later
than the last day of the Plan Year following the Plan Year for which the
excess amount was contributed.
4.05. Other Limitations on Contributions and
Benefits. The annual addition to a Participant's Accounts for any
limitation year, when added to the annual additions to his or her accounts
under all other defined contribution plans (if any) maintained by the
Company or an Affiliate for such year, may not exceed the lesser of (1)
$30,000 (or, if greater, one-fourth of the limitation in effect for the
Plan Year under Section 415(b)(1)(A) of the Code), and (2) 25 percent of
the Participant's compensation for the year (all as determined in
accordance with Section 415 of the Code). As long as the Company or an
Affiliate maintains a defined benefit pension plan, a Participant's
benefits under that plan will be reduced in lieu of a reduction of annual
additions under this Plan if and to the extent necessary to comply with the
requirements of Section 415(e) of the Code. For the purposes of applying
Section 415 of the Code, the limitation year will be the calendar year.
-15-
<PAGE> 20
ARTICLE V
ACCOUNTS AND INVESTMENT FUNDS
5.01. Maintenance of Accounts. The Administrative
Committee will establish and maintain separate Accounts for each
Participant to reflect the Participant's interest in the Trust attributable
to Elective Contributions, Employer Matching Contributions, Employer Profit
Sharing Contributions, and amounts transferred from another qualified plan
in a transaction described in Section 414(l) of the Code. The
Administrative Committee will also maintain or cause to be maintained such
other Accounts or sub-Accounts as it deems necessary or desirable in order
to carry out the intent and purposes of the Plan or to comply with
applicable law. Each Participant's Accounts will be credited, charged and
adjusted in accordance with the provisions hereof.
5.02. Adjustment of Accounts. As of each Valuation
Date with respect to an Investment Fund or the Trust Fund, as the case may
be, each Participant's Accounts will be adjusted to reflect changes in the
value of the Participant's interest in the Investment Fund or the Trust
Fund since the last Valuation Date. Unless the Administrative Committee,
acting in a uniform and equitable manner, determines otherwise, such
adjustment shall be made as follows:
(a) first, the value of each Account
will be adjusted as of the preceding Valuation Date to
reflect distributions, transfers and withdrawals made
therefrom since that Valuation Date;
(b) second, each Account will be
adjusted to reflect its proportionate share (based upon
the adjusted Account values as of the
-16-
<PAGE> 21
preceding Valuation Date) of transfers made to, and the
net increase or decrease in the fair market value of,
the Investment Fund or Trust Fund since the last Valuation
Date; and
(c) third, as of each Valuation Date,
each Participant's Accounts will be credited with the
Elective Contributions, Employer Matching Contributions
and Employer Profit Sharing Contributions made on behalf
of the Participant for the period ending on such Valuation
Date.
The fair market value of the Trust Fund or any Investment Fund will be
determined with regard to expenses incurred by or equitably charged to such
Fund.
5.03. Establishment of Investment Funds. The Trust
Fund will be segregated into such separate Investment Funds as shall be
established at the direction of the Investment Committee, including,
without limitation, a fixed income fund (designed to preserve capital and
generate income) and a general investment fund (designed to generate income
and/or capital appreciation primarily through investment in equity
securities). Amounts contributed or accepted pursuant to the Plan will be
invested and re-invested in the separate Investment Funds in accordance
with the Participants' and Beneficiaries' elections.
5.04. Investment Directions. Each Participant and
Beneficiary will direct the investment and reinvestment of the amounts in
and/or subsequently contributed to his or her Accounts among the available
Investment Funds. Investment (and re-investment) directions may be given
in such manner, at such times and subject to such conditions as may be
prescribed by the Administrative Committee (or its designee). In the
absence of a properly-transmitted investment direction, the amounts in
and/or subsequently contributed to a Participant's (or Beneficiary's)
Accounts will
-17-
<PAGE> 22
be invested in a fixed income Investment Fund designated for this purpose
by the Investment Committee.
-18-
<PAGE> 23
ARTICLE VI
ELIGIBILITY FOR AND DISTRIBUTION OF BENEFITS
6.01. Normal Retirement or Total Disability. A
Participant who retires at or after age 65 or whose employment terminates
by reason of total disability will be entitled to receive 100% of his or
her Accounts determined as of the Valuation Date coincident with or next
preceding the date of distribution (and adjusted for contributions and
withdrawals since that Valuation Date). For this purpose, total disability
means the inability of a participant to perform the duties of any
occupation for which he or she is reasonably suited by reason of a physical
or mental illness or disease which is expected to result in death or to
last indefinitely. Subject to the provisions hereof and of applicable law,
distribution of the Participant's Accounts will be made as soon as
practicable after his or her retirement or termination of employment. A
retired or disabled Participant's Accounts will continue to be invested as
part of the Trust Fund and will continue to be adjusted in accordance with
the provisions hereof until the distribution thereof is completed.
6.02. Other Termination of Employment. A Participant
whose employment is terminated for any reason (other than death or total
disability) prior to age 65 will be entitled to receive 100% of his or her
Accounts not attributable to Employer Matching Contributions, plus the
vested portion of his or her Account attributable to Employer Matching
Contributions determined under the following vesting schedule as of the
Valuation Date coincident with or immediately preceding the distribution
date (adjusted for contributions and withdrawals since that Valuation
Date):
-19-
<PAGE> 24
<TABLE>
<CAPTION>
Years of Service Percentage Vested
---------------- -----------------
<S> <C>
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
</TABLE>
The vesting provisions of this Section will apply to the Employer Profit
Sharing Contribution Accounts (as opposed to Employer Matching Contribution
Accounts) of Participants who are Employees of Pulitzer Community
Newspapers, Inc. Subject to the provisions hereof and of applicable law,
the distribution of a terminated Participant's vested Accounts will be made
at such time as the Participant elects. A terminated Participant's vested
Accounts will continue to be invested as part of the Trust Fund and will
continue to be adjusted in accordance with the provisions hereof until the
distribution of the Accounts is completed.
6.03. Forfeitures. If a Participant's Service is
severed before the completion of 5 years of Service, then the nonvested
portion of the Participant's account will be forfeited as soon as
practicable after the vested portion of the Participant's Account is
distributed (or, if earlier, the fifth anniversary of the date the
Participant was last credited with Service). Forfeitures (and earnings
thereon) will be applied to reduce Employer contributions otherwise
required hereunder. If a former Participant who received the vested
portion of his or her Account because of a termination of employment
returns to Service within 5 years from the date of his or her separation
from Service, then the Employer will restore the amount of the forfeiture
attributable to such termination of employment. The source of the
restoration will be other forfeitures and, to the extent necessary,
additional Employer contributions.
-20-
<PAGE> 25
Restoration of a prior forfeiture will be credited to the Participant's
Account as soon as practicable after it is paid or otherwise made available
to the Plan.
6.04. Special Vesting Rule. If a distribution or
withdrawal is made to or by a Participant from an Account which is less
than 100% vested (including, without limitation, an Account which has been
restored pursuant to the preceding Section), then, unless and until the
Account becomes 100% vested, the vested portion of the Account will be
determined in accordance with the following formula: P(AB +D) -D, where P
is the applicable percentage determined under the Plan's vesting schedule;
AB is the account balance; and D is the amount of the prior distribution or
withdrawal.
6.05. Method of Payment. Except as otherwise
provided herein or required by applicable law, distribution of a
Participant's Accounts will be made in the form of a single sum payment.
To the extent required by applicable law, a married Participant's Account
attributable to a transfer from another qualified plan will be
distributable in the form of a qualified joint and survivor annuity unless
the Participant, with the consent of his or her spouse, elects a different
form of distribution in accordance with Sections 401(a)(11), 401(a)(17) and
411(d)(6) of the Code and regulations thereunder.
6.06. Required Commencement of Benefits. Unless a
Participant elects an earlier distribution, payment of his or her vested
Accounts will be made at or as soon as practicable after the Participant's
Normal Retirement Date, or, if later, the date of the Participant's
termination of employment with the Company and its Affiliates (but in no
event later than the 60th day of the year following the year in which such
date occurs). Payment of an active Participant's Accounts must begin no
later than the April 1 following the close of the calendar year in which
the Participant attains age 70
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1/2 and, prior to the Participant's termination of employment, will be made
at such times and in such amounts as are necessary to satisfy the minimum
distribution requirements of Section 401(a)(9) of the Code and regulations
thereunder.
6.07. Cashout of Small Benefits. Notwithstanding
anything to the contrary contained herein, if the value of a Participant's
(or deceased Participant's) Accounts is less than $3,500, then the total
amount of those Accounts will be distributed to the Participant (or
Beneficiary) in a single sum payment as soon as practicable after the
Participant's termination of employment or death.
6.08. Death.
(a) Distribution of Accounts. If a
Participant dies before the complete distribution of his or her Accounts,
then the deceased Participant's Beneficiary will be entitled to receive a
single sum payment of the balance in those Accounts determined as of the
Valuation Date coincident with or next preceding the date of distribution
(and adjusted for contributions and withdrawals since that Valuation Date).
Subject to the provisions hereof and of applicable law, the distribution of
a deceased Participant's Accounts will be made as soon as practicable
after the deceased Participant's death (but in no event later than one year
thereafter). A deceased Participant's Accounts will continue to be
invested as part of the Trust Fund and will continue to be adjusted in
accordance with the provisions hereof until the distribution of those
Accounts is completed.
(b) Designation of Beneficiary. Except as
provided in subsection (c) of this Section, an individual may designate a
Beneficiary by written notice filed with the Administrative Committee and
may change his or her Beneficiary at any time by designating a new
Beneficiary in the same manner, and no notice need
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be given to any prior designated Beneficiary. If no designated Beneficiary
shall survive a deceased Participant or Beneficiary, then payment of the
deceased Participant's Accounts will be made to the deceased Participant's
estate.
(c) Spouse Must Be Beneficiary of Deceased
Married Participant. The surviving spouse of a deceased married
Participant will be the Participant's Beneficiary unless the surviving
spouse consents to the designation of another Beneficiary. The spouse's
consent must be in writing and must acknowledge the effect of the
Participant's designation, and the spouse's signature must be witnessed by
a notary public or an appropriate Plan official. Spousal consent to a
different Beneficiary designation will not be required if (1) the
Participant's spouse cannot be located, (2) the spouse's consent cannot be
obtained because of any other circumstances permitted by applicable law, or
(3) the Participant's spouse has not been married to the Participant
throughout the one-year period ending on the earlier of the date of the
Participant's death or the date on which distribution of the Participant's
Accounts begins.
6.09 Distributions Made on or After January 1, 1993.
This Section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Section, a distributee
may elect, at the time and in the manner prescribed by the Administrative
Committee, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a
direct rollover. For the purposes of this Section, the following terms
shall have the following meanings:
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(a) 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 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 joint life
expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten
years or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of the
Code; and the portion of any distribution that is not
includable in gross income (determined without regard to
the exclusion for net unrealized appreciation with respect
to employer securities).
(b) Eligible Retirement Plan. An eligible
retirement plan is an individual retirement account
described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of
the Code, an annuity plan described in Section 403(a)
of the Code, or a qualified trust described
in Section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement
annuity.
(c) Distributee. A distributee includes
an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse
who is the alternate payee under a qualified domestic
relations order, as
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defined in Section 414(p) of the Code, are distributes
with regard to the interest of the spouse or former
spouse.
(e) Direct Rollover. A direct rollover is a payment by the
Plan to the eligible retirement plan specified by the
distributee.
If a distribution is one to which Sections 401(a)(11) and 417 of the Code
do not apply, such distribution may commence less than 30 days after the
notice required under Section 1.411(a)-11(c) of the Federal Income Tax
Regulations is given, provided that (a) the Participant is notified that
he or she has at least 30 days to consider the decision of whether to elect
a distribution and, if applicable, a particular distribution option, and
(b) the Participant, after receiving such notice, affirmatively elects a
distribution and, if applicable, a particular distribution option.
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ARTICLE VII
WITHDRAWALS
7.01. In-Service Withdrawals Generally. Subject to
the provisions hereof and of applicable law, a Participant may withdraw
funds from his or her vested Accounts after reaching age 59 1/2 or on
account of a hardship pursuant to Section 7.02. Hardship withdrawals from
an Account may not exceed the balance in the Account as of the Valuation
Date coincident with or immediately preceding the withdrawal (reduced by
withdrawals, if any, made from the Account since that Valuation Date), but
may not be made from post-1988 earnings attributable to Elective
Contributions. Unless the Administrative Committee determines otherwise,
withdrawals will be made from a Participant's Accounts in the following
order: after-tax Participant contributions or other accounts attributable
to a transferror plan (if any), Elective Contributions, Employer Profit
Sharing Contributions, and Employer Matching Contributions. If the amount
in a Participant's Account is invested in more than one Investment Fund,
then withdrawals from the Account will be allocated among the applicable
Investment Funds in accordance with an order of priority established by the
Administrative Committee.
7.02. Hardship Withdrawals.
(a) General. Except as otherwise provided
in this Section, a Participant may make a hardship withdrawal only if the
withdrawal (1) is made on account of an immediate and heavy financial need
(as described in subsection (b) below) and (2) is necessary to satisfy such
financial need (as determined under subsection (c) below).
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(b) Immediate and Heavy Financial Need.
For purposes of subsection (a) of this Section, a proposed withdrawal will
be deemed to be on account of an immediate and heavy financial need if the
proceeds will be used to pay (1) medical expenses for the Participant or
the Participant's spouse or dependents which are not eligible for
reimbursement; (2) costs (exclusive of mortgage payments) directly related
to the purchase of the Participant's principal residence; (3) payment of
tuition and related educational fees for the next twelve months of
post-secondary education for the Participant or for the spouse, children or
other dependents of the Participant; (4) amounts required to prevent the
eviction of the Participant from, or the foreclosure of a mortgage on, the
Participant's principal residence; or (5) such additional expenses as may
be specified by the Internal Revenue Service as a deemed immediate and
heavy financial need for this purpose.
(c) Amounts Necessary to Meet the Financial
Need. A withdrawal will be deemed to be necessary to satisfy an immediate
and heavy financial need of a Participant if (1) the amount of the
withdrawal is not more than the amount of the immediate and heavy financial
need; and (2) the Participant has obtained all distributions and
withdrawals (other than hardship withdrawals) and all nontaxable loans, if
any, available under all plans maintained by the Company or an Affiliate.
The amount of an immediate and heavy financial need may include any amounts
necessary to pay income taxes or penalties reasonably anticipated to result
from the withdrawal.
(d) Suspension of Future Elective
Contributions. If a Participant withdraws Elective Contributions on
account of an immediate and heavy financial need, then, notwithstanding any
other provision to the contrary contained in the Plan or in any other plan
maintained by the Company, (1) the Participant's
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Elective Contributions (pre-tax and after-tax) under the Plan and under any
such other plan will be suspended until the first day of the calendar
quarter next following the date which is twelve months after the date of
the withdrawal, and (2) the Participant's elective pre-tax deferral
limitation under Section 402(g)(1) of the Code for the taxable year
following the year of the withdrawal will be reduced by the amount, if any,
of the Participant's Elective Contributions under the Plan (and elective
pre-tax deferrals under any other plan maintained by the Company or an
Affiliate) during the year in which the withdrawal is made.
7.03. Withdrawal Requests. Requests for in-service
withdrawals must be filed with the Administrative Committee on forms
prescribed or approved for that purpose. Withdrawal amounts will be paid
to a Participant as soon as practicable after a properly completed
withdrawal request is received by the Administrative Committee.
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ARTICLE VIII
TOP HEAVY PROVISIONS
8.01. Effect of Top Heavy Status. Notwithstanding
anything contained herein to the contrary, if the Plan is a top heavy plan
for any Plan Year, and if any Participant who is a non-key Employee does
not accrue the minimum benefit or contribution described in Section
416(c)(1) or (c)(2) of the Code for that Plan Year under this Plan and any
other defined benefit and defined contribution plan which is required or
permitted to be aggregated with the Plan for purpose of applying Section
416 of the Code, then the Company shall make such additional contributions,
if any, on behalf of such Participant (regardless of whether such
Participant completes 1,000 Hours of Service for such Year and regardless
of his or her level of compensation) as shall be necessary in order to
satisfy the minimum contribution requirements of Section 416(c)(2) of the
Code (determined with regard to Section 416(f) of the Code) with respect to
such Participant for such Plan Year. The minimum contribution will not be
required (or the minimum contribution will be reduced, as the case may be)
for a Participant if and to the extent that the minimum top heavy
contribution or benefit requirement is satisfied by another qualified plan
of the Company or an Affiliate.
8.02. Definitions and Special Rules.
(a) Top Heavy Status. The Plan is a top
heavy plan if, as of the determination date, the aggregate Account values
of all key Employees under the Plan (required to be taken into account for
this purpose) plus the aggregate account values and the aggregate present
values of accrued benefits for all key Employees under all other plans
which are aggregated with this Plan (required to be taken into account
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for this purpose) exceed sixty percent of all such aggregate values for all
Employees or former Employees (other than former key Employees) under the
Plan and such other plans. The determination of the top heavy status of
the Plan will be made in accordance with the provisions of Section 416 of
the Code and the regulations promulgated thereunder which are specifically
incorporated herein by reference.
(b) Aggregation of Plans. Each plan of the
Company or an Affiliate in which a key Employee participates and each other
plan which enables such plan to meet the requirements of Section 401(a)(4)
or Section 410(b) of the Code will be aggregated with this Plan, and all
additional plans which the Company designates will be aggregated with this
Plan if and to the extent that the resulting group of plans satisfies the
coverage and nondiscrimination tests of Sections 401(a)(4) and 410 of the
Code.
(c) Determination Date. For purposes of
determining whether the Plan is a top heavy plan for a Plan Year, the
determination date is the last day of the preceding Plan Year.
(d) Key Employee. The term "key Employee"
means a key employee described in Section 416(i)(1) of the Code, and the
term "non-key Employee" means any Employee who is not a key Employee.
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ARTICLE IX
ADMINISTRATION OF PLAN
9.01. Organization of Administrative Committee and
Procedural Matters. The Plan will be administered by an Administrative
Committee composed of at least three individuals appointed by the Board.
Each member of the Administrative Committee will serve at the pleasure of
the Board and without compensation. Action by the Administrative Committee
may be taken by a vote of a majority of its members then serving or in a
writing without a meeting signed by all of its members. Unless the Board
appoints officers, the Administrative Committee may designate one of its
members as the Chairman and shall elect a Secretary who may but need not be
a member of the Administrative Committee. No member of the Administrative
Committee shall participate in the determination of any of his or her
rights or benefits under the Plan.
9.02. Powers of Administrative Committee. The
Administrative Committee will administer the Plan and will have complete
control in the administration thereof. In exercising any of its
discretionary powers with respect to the administration of the Plan, the
Administrative Committee will act in a uniform and non-discriminatory
manner. The Administrative Committee will have all powers which are
reasonably necessary to carry out its responsibilities under the Plan
including, without limitation, the power to construe the Plan and to
determine all questions which may arise thereunder. The decision of the
Administrative Committee as to any disputed question arising hereunder,
including questions of construction, interpretation and administration,
shall be final and conclusive on all persons. All disbursements by
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the Trustee, except for reasonable expenses of administering the Trust
assets, shall be made upon and in accordance with the instructions of the
Administrative Committee. The Administrative Committee shall have no
power, authority or responsibility with respect to the management,
investment or control of Trust assets.
9.03. Operation of Administrative Committee. The
Administrative Committee may adopt such rules and regulations as it deems
necessary or appropriate for the conduct of its affairs. The
Administrative Committee may appoint from among its members such
subcommittees with such powers as it shall determine and may employ such
accountants, actuaries, counsel, administrators and other agents (clerical
and otherwise) and services as it deems necessary or desirable in
connection with the performance of its functions hereunder and in order to
carry out the provisions of the Plan. Decisions and directions of the
Administrative Committee may be communicated to the Trustee, a Participant,
a Beneficiary, the Company or any other person who is to receive such
decision or direction by a document signed by any one or more members of
the Administrative Committee (or persons other than members) so authorized,
and such decision or direction of the Administrative Committee may be
relied upon by its recipient as being the decision or direction of the
Administrative Committee.
9.04. Organization of Investment Committee. The Plan
assets will be administered and invested in the manner determined by an
Investment Committee composed of not less than three members appointed by
the Board. Each member of the Investment Committee will serve at the
pleasure of the Board and without compensation. The Investment Committee
(and each member thereof) is a "named fiduciary" of the Plan. Action by
the Investment Committee may be taken by the vote of a majority of its
members then serving at a meeting or in a writing without a
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meeting signed by all of its members. Unless the Board appoints officers,
the Investment Committee may designate one of its members as the Chairman
and shall elect a Secretary who may but need not be a member.
9.05. Powers of Investment Committee. The Investment
Committee shall establish a funding policy and method consistent with the
objectives of the Plan and requirements of ERISA, and shall communicate
such policy to the Trustee and any investment manager. The Investment
Committee shall have the following powers, duties and authority with
respect to the investment of Plan assets:
(a) to select Investment Fund alternatives
to be made available to Participants and Beneficiaries
and, if deemed appropriate, to select and appoint one or
more investment managers to manage, acquire or dispose of
any or all of the assets of the Plan, provided, however,
that any such investment manager is described in Section
3(38)(B) of ERISA and has acknowledged in writing that he
is a fiduciary with respect to the Plan;
(b) to monitor and evaluate the performance
of any Investment Fund and/or investment manager;
(c) to direct the Trustee in connection
with the exercise of investment or asset management
responsibilities under the Trust Agreement; and
(d) to approve accounts rendered from time
to time by the Trustee, and to release, relieve and
discharge the Trustee with respect to all matters set
forth in any such account, or to object to any such
account.
9.06. Operation of the Investment Committee. The
Investment Committee may adopt such rules and regulations as it deems desirable
for the conduct
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of its affairs, and may employ such accountants, actuaries, counsel and
other specialists as it deems necessary or desirable in connection with the
performance of its functions hereunder. The Investment Committee shall be
entitled to rely conclusively upon, and shall be fully protected in any
action taken by it in good faith in relying upon, any opinions or reports
which shall be furnished to it by any such accountant, actuary, counsel or
other specialist. Decisions and directions of the Investment Committee may
be communicated to the Trustee, an investment manager, the Company or any
other person who is to receive such decision or direction by a document
signed by any one or more members of the Investment Committee (or persons
other than members) so authorized, and such decision or direction of the
Investment Committee may be relied upon by its recipient as being the
decision or direction of the Investment Committee.
9.07. Resignation or Removal. Any member of the
Administrative Committee or the Investment Committee may resign by giving
written notice to the Board not less than 30 days before the effective date
of his or her resignation. Any member of the Administrative Committee or
the Investment Committee may be removed, with or without cause, at any time
by the Board. The Board shall fill vacancies as soon as is reasonably
practicable after a vacancy occurs and, until a new appointment is made,
the remaining members shall have the full authority to act.
9.08. Records and Reports. The Administrative
Committee and the Investment Committee shall keep records of their
proceedings and acts and shall keep or cause to be kept all such books of
account, records and other data as may be necessary in connection with the
performance of their functions hereunder.
9.09. Expenses. All expenses incurred in connection
with the administration of the Plan and the Trust Fund, including, without
limitation, fees of
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accountants, actuaries, counsel, investment managers and other agents, and
other costs of administering the Plan and the Trust Fund, shall be paid by
the Trustee out of the Trust Fund, unless paid by the Company.
9.10. Indemnification. The Company shall indemnify
each member of the Administrative Committee, each member of the Investment
Committee, each member of the Board, and any of its (or an Affiliate's)
employees to whom a fiduciary responsibility with respect to the Plan is
allocated or delegated from and against all liabilities, costs and
expenses, including counsel fees, amounts paid in settlement and amounts of
judgments, fines or penalties, incurred or imposed upon such person in
connection with any claim, action, suit or proceeding, whether civil,
criminal, administrative or investigative, arising by reason of or in
connection with acts or omissions in his or her capacity as a fiduciary
hereunder, provided that such act or omission is not the result of willful
neglect or fraud.
9.11. Claim for Benefits. When a benefit is due, the
Participant or Beneficiary should submit his claim to the person or office
designated by the Administrative Committee to receive claims. Under normal
circumstances, a final decision shall be made as to a claim within 90 days
after receipt of the claim. If the Administrative Committee notifies the
claimant in writing during the initial 90 day period, it may extend the
period up to 180 days after the initial receipt of the claim. The written
notice must contain the circumstances necessitating the extension and the
anticipated date for the final decision. If a claim is denied during the
claims period, the Administrative Committee must notify the claimant in
writing. The denial must include the specific reasons for it, the Plan
provisions upon which the denial is based,
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and the claims review procedure. If no action is taken during the claims
period, the claim is treated as if it were denied on the last day of the
claims period.
9.12. Review of Denied Claims. If a Participant's or
Beneficiary's claim is denied and the claimant wants a review, he or she
must apply to the Administrative Committee in writing. That application
may include any comment or argument the claimant wants to make. The
claimant may either represent himself or appoint a representative, either
of whom has the right to inspect all documents pertaining to the claim and
its denial. The Administrative Committee may schedule any meeting with the
claimant or his representative that it finds necessary or appropriate to
complete its review. The request for review must be filed within 60 days
after the denial. If it is not, the denial becomes final. If a timely
request is made, the Administrative Committee must make its decision, under
normal circumstances, within 60 days of the receipt of the request for
review. However, if the Administrative Committee notifies the claimant
prior to the expiration of the initial review period, it may extend the
period of review up to 120 days following the initial receipt of the
request for a review. All decisions of the Administrative Committee must
be in writing and must include the specific reasons for their action and
the Plan provisions on which their decision is based. If a decision is not
given to the claimant within the review period, the claim is treated as if
it were denied on the last day of the review period.
9.13. Standard of Judicial Review. The
Administrative Committee has full and absolute discretion in the exercise
of each and every aspect of its authority under the Plan, including without
limitation, the authority to determine any person's right to benefits under
the Plan, the correct amount and form of any benefits, the authority to
decide any appeal, the authority to review and correct the actions of any
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prior administrative committee, and all of the rights, powers, and
authorities specified in the Plan. Notwithstanding any provision of law or
any explicit or implicit provision of this document or, any action taken,
or ruling or decision made, by the Administrative Committee in the exercise
of any of its powers and authorities under the Plan shall be final and
conclusive as to all parties (other than the Company, an Employer other
than the Company or the Trustee), including without limitation all
Participants and Beneficiaries, regardless of whether the Administrative
Committee or one or more of its members may have an actual or potential
conflict of interest with respect to the subject matter of the action,
ruling, or decision. No final action, ruling, or decision of the
Administrative Committee shall be subject to de novo review in any judicial
proceeding; and no final action, ruling, or decision of the Administrative
Committee may be set aside unless it is held to have been arbitrary and
capricious by a final judgment of a court having jurisdiction with respect
to the issue.
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ARTICLE X
TRUST FUND
10.01. General. The Trust corpus will consist of all
payments to the Trustee as provided herein, together with the net income or
loss (including capital items) produced by the investments of the Trust or
the sale of any such investments, which will be added to or deducted from
the Trust. The Trust assets will be held, administered and invested in the
manner provided in the agreement pursuant to which the Trust is governed.
10.02. No Diversion. All assets of the Trust will be
owned by the Trustee. Except as otherwise provided herein, no part of the
Trust assets may be used for or diverted to purposes other than for the
exclusive benefit of Participants and their Beneficiaries.
10.03. Benefits Provided Solely by Trust Fund. All
benefits payable under the Plan will be paid or provided solely from the
Trust assets, and the Company assumes no liability or responsibility
therefor.
10.04. Employer Securities. Notwithstanding anything
herein to the contrary, no part of the Trust assets may be invested in
securities of the Company or an Affiliate unless such securities constitute
qualifying employer securities within the meaning of Section 407(d)(5) of
ERISA and no part of the Trust assets may be invested in real property
which is leased to the Company or an Affiliate unless such real property
constitutes qualifying employer real property within the meaning of Section
407(d)(4) of ERISA. The Trustee or investment manager, as the case may be,
may invest up to 100% of the Plan's assets in qualifying employer
securities and/or
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qualifying employer real property, provided that any such investment is
deemed advisable and proper in carrying out the purposes of the Plan and
the Trust, and provided further that such investment would not constitute a
prohibited transaction or be otherwise impermissible under applicable law.
10.05. Appointment of Investment Manager. The
Investment Committee may appoint one or more investment managers to manage
any assets of the Plan, including all or part of the assets of any
Investment Fund. As used herein, the term "investment manager" means any
person or entity who: (a) has power to manage, acquire or dispose of any
assets of the Plan; (b) is (1) registered as an investment adviser under
the Investment Advisers Act of 1940 (2) a bank, as defined in that Act, or
(3) an insurance company qualified under the laws of more than one state to
perform services described in (a) above; and (c) has acknowledged in a
writing delivered to the Administrative Committee and the Trustee that he
is a fiduciary with respect to the Plan. The investment manager(s) will
have such powers and responsibilities as may be conferred under the Trust
Agreement and the investment management agreement.
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ARTICLE XI
AMENDMENTS AND TERMINATION
11.01. Company May Amend Plan. The Company reserves
the right, by action of the Board at any time or from time to time, to
modify or amend this Plan in whole or in part. No amendment will:
(a) vest in an Employer an interest in the
Trust Fund;
(b) cause or permit the Trust Fund to be
diverted to any purpose other than the exclusive benefit
of Participants and Beneficiaries;
(c) decrease the Account of any Participant
or eliminate an optional form of payment;
(d) increase substantially the duties or
liabilities of the Trustee or the members of the Investment
Committee without its or their written consent; or
(e) change the vesting schedule to one
which would result in the nonforfeitable percentage of a
Participant's Account (determined as of the later of the
date of adoption of the amendment or the effective date of
the amendment) being less than the nonforfeitable
percentage computed under the Plan without regard to the
amendment. If the Plan's vesting schedule is amended,
each Participant with at least three years of Service may
elect to have his or her nonforfeitable percentage
computed without regard to the amendment. The election
must be made by the latest of the following dates: (1) 60
days after the amendment is adopted,
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(2) 60 days after the amendment becomes effective, or
(3) 60 days after the Participant is issued written notice
of the amendment.
11.02. Withdrawal of Participating Employer. An
Employer may withdraw from the Plan and the Trust Fund by
giving
written notice to the Administrative Committee of its intent to withdraw.
The Administrative Committee will then determine the portion of the Trust
Fund attributable to the Participants employed by the withdrawing Employer
and will notify the Trustee to segregate those assets and transfer them to
the successor trustee or trustees when it receives a designation of the
successor from the withdrawing Employer. A withdrawal will not terminate
the Plan with respect to the withdrawing Employer if the Employer appoints
a successor trustee or trustees and establishes another plan and trust
intended to qualify under Section 401(a) of the Code.
11.03. Termination. The Board may terminate the Plan
with respect to any or all Employers. Any Employer (by action of its board
of directors) may terminate the Plan with respect to itself. If there is a
partial or total termination of the Plan or there is a complete
discontinuance of an Employer's Contributions, all affected Participants
will immediately become 100% vested in their Accounts.
11.04. Distributions Upon Termination. Subject to the
provisions of applicable law (or the provisions of a Plan amendment adopted
in connection with a Plan termination), distribution of a Participant's
Account as a result of the termination of the Plan is permitted only if:
(a) the balance of the Accounts is not more than $3,500, or (b) the balance
exceeds $3,500 and either (1) the Participant consents to the distribution
or (2) neither the Employer nor any Affiliate maintains another defined
contribution plan. However if the Employer or an Affiliate maintains
another defined
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contribution plan, then, even though the Participant's Accounts cannot be
distributed without his or her consent, the Accounts may be transferred to
the other defined contribution plan to be held for the Participant's
benefit. Except to the extent required by applicable law, all
distributions in respect of the termination of the Plan will be in the form
of single sum payments.
11.05. Statutory Merger/Consolidation Rule. In the
case of any merger or consolidation of the Plan with, or any transfer of
assets or liabilities of the Plan to, any other plan, the benefit which
each Participant would be entitled to receive immediately after the merger,
consolidation or transfer (if the Plan then terminates) shall be equal to
or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation or transfer (as if the Plan
had then terminated).
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ARTICLE XII
MISCELLANEOUS
12.01. No Rights Conferred. Nothing herein will be
deemed to give any individual any right to be retained in the employ of the
Company or an Affiliate or any other rights in the future other than as
herein specifically set forth. Except as otherwise specifically required
herein or by law, no Participant, Beneficiary or other person will be
entitled to inspect the books, records, reports, financial statements or
tax returns of the Company.
12.02. Benefits Limited to Trust Fund. No person will
have any right or interest in the Trust other than as provided herein. Any
final payment or distribution to a Participant or Beneficiary will be in
full satisfaction of all claims against the Trust, the Trustee, the
Administrative and Investment Committees, the Company, an Affiliate, the
Board and any fiduciary of the Plan or Trust. The Trustee or the
Administrative Committee may require a Participant or Beneficiary to
execute a receipt and a general release of any and all such claims upon a
final payment or distribution, or a receipt and/or release to the extent of
any partial payment or distribution.
12.03. Spendthrift Provision. Except to the extent
required by law, no benefit under the Plan shall be subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, encumber or charge the same shall be void. No such
benefit shall be in any way liable for or subject to the debts, contracts,
liabilities, engagements or torts of any person entitled to those benefits.
The Committee will
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<PAGE> 48
establish such procedures as may be necessary or appropriate in order to
comply with the provisions of ERISA and the Code in connection with
domestic relations orders issued with respect to a Participant's Accounts.
If an order so provides, payment of the interest of an alternate payee (as
defined in Section 414(p) of the Code) may be made in a single sum as soon
as practicable after the Administrative Committee determines that the order
constitutes a qualified domestic relations order.
12.04. Payment to Minors or Incompetents. If any
person to whom a benefit is payable hereunder is an infant or if the
Administrative Committee determines that any person to whom such benefit is
payable is incompetent by reason of a physical or mental disability, the
Administrative Committee may cause the payments becoming due to such person
to be made to another for his or her benefit without responsibility of the
Administrative Committee or the Trustee to see to the application of such
payments.
12.05. Headings. The headings in this Plan have been
inserted for convenience of reference only and are to be ignored in any
construction of the provisions hereof.
12.06. Severability. If any provision of the Plan or
the application of such provision to any person or circumstance is held
invalid, the remainder of the Plan (and the application of such provision
to any person or circumstance other than the person or circumstance to
which it is held invalid) will not be affected thereby.
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<PAGE> 49
12.07. Construction. The provisions of the Plan will
be construed, regulated and administered according to the provisions of
ERISA, the Code and to the extent not inconsistent therewith or preempted
thereby, in accordance with the laws of the State of Missouri.
PULITZER PUBLISHING COMPANY
Dated: 12/15/94 By: /s/ Ronald H. Ridgway
-------- ---------------------
Senior Vice President -- Finance
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<PAGE> 50
SCHEDULE A
PULITZER RETIREMENT SAVINGS PLAN
SPECIAL RULES
FOR
EMPLOYER MATCHING CONTRIBUTIONS
The following special rules apply to Section 3.02 of the Plan:
1. The percentage limitation is 3% (instead of 2%)
for Participants who are Employees of Star Publishing Company.
2. Prior to January 1, 1990, there are no Employer
Matching Contributions for Participants who are Employees of Pulitzer
Broadcasting Company (except Participants who were Employees of the
Pulitzer Broadcasting Corporate Group, WXII-TV and WYFF-TV), KOAT
Television, Inc., KETV Television, Inc., WGAL-TV, Inc., Phoenix
Broadcasting, Inc., and Pulitzer Community Newspapers, Inc.
3. After December 31, 1989, there are no Employer
Matching Contributions for Participants who are Employees of Pulitzer
Community Newspapers, Inc.
4. After December 31, 1989, Employer Matching
Contributions will be made on behalf of the union Employees of Pulitzer
Broadcasting Company, KETV Television, Inc., WGAL-TV, Inc. and WDSU
Television, Inc.
A - 1
<PAGE> 51
SCHEDULE B
PULITZER RETIREMENT SAVINGS PLAN
SPECIAL RULES
FOR
EMPLOYER PROFIT SHARING CONTRIBUTIONS*
The following special rules apply to Section 3.03 of
the Plan:
1. There are no Employer Profit Sharing
Contributions for Participants who are Employees of Pulitzer Broadcasting
Company (except Participants who are Employees of the Pulitzer Broadcasting
Corporate Group), KOAT Television, Inc., KETV Television, Inc., WGAL-TV,
Inc., KETV Television, Inc., WGAL-TV, Inc., Phoenix Broadcasting, Inc.,
WDSU Television, Inc., and Star Publishing Company.
2. The Employer Profit Sharing Contribution for
each Participant who is a non-union Employee of Pulitzer Community
Newspapers, Inc. is 2% of the Employee's Base Compensation (excluding for
this purpose 1/3 of the Employee's commission income).
3. The Company will make monthly Employer Profit
Sharing Contributions on behalf of its covered union Employees included in
the following bargaining units in the amounts set forth opposite the names
of the unit:
<TABLE>
<CAPTION>
Monthly Employer
Profit Sharing Effective
Bargaining Unit Contribution Date
--------------- ------------ ----
<S> <C> <C>
St. Louis Typographical $30 3/1/88
Union No. 8 $40 3/1/90
$50 3/1/92
Miscellaneous Drivers, Helpers, $30 3/1/88
Health Care and Public $40 3/1/90
Employees Local No. 610 $50 1/1/93
International Union of $30 3/1/88
Operating Engineers Local No. 2 $40 3/1/92
</TABLE>
__________________________________
* Amended through December 31, 1994.
B - 1
<PAGE> 52
<TABLE>
<CAPTION>
Monthly Employer
Profit Sharing Effective
Bargaining Unit Contribution Date
--------------- ------------ ----
<S> <C> <C>
St. Louis Newspaper Guild $30 3/1/88
No. 47 $40 4/1/90
International Brotherhood of $30 3/1/88
Electrical Workers Local No. 1 $40 1/1/91
Communications Workers of America, $30 3/1/88
AFL-CIO CLC $40 2/1/91
Local 14620 (Mailers) $50 2/1/93
International Brotherhood of
Firemen & Oilers, Local No. 7 $30 3/1/88
International Association of Machinists and
Aerospace Workers, District 9 $30 3/1/88
$40 3/1/96
Graphics Communications $30 3/1/88
International Union, Local No. $40 5/1/91
38N (Pressmen) $50 5/1/93
Graphics Communications
International Union, Local No. $30 3/1/88
38N (Job Printing Pressmen) $40 7/1/91
Graphics Communications
International Union, Local No.
16H (Paperhandlers) $30 3/1/88
Graphics Communications $30 3/1/88
International Union, Local No. $40 10/1/94
505 (Photomechanical) $50 1/1/96
</TABLE>
B - 2
<PAGE> 1
JOSEPH PULITZER
PENSION PLAN
(As Amended Through December 31, 1994)
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Section
-------
<S> <C>
ARTICLE I-DEFINITIONS
Accrued Benefit................................................................... 1.01
Actuarial Equivalent.............................................................. 1.02
Administrative Committee.......................................................... 1.03
Affiliate......................................................................... 1.04
Annuity Starting Date............................................................. 1.05
Beneficiary....................................................................... 1.06
Break in Service.................................................................. 1.07
Board............................................................................. 1.08
Code.............................................................................. 1.09
Company........................................................................... 1.10
Compensation...................................................................... 1.11
Early Retirement Date............................................................. 1.12
Employee.......................................................................... 1.13
Employer.......................................................................... 1.14
ERISA............................................................................. 1.15
Hour of Service................................................................... 1.16
Investment Committee.............................................................. 1.17
Monthly Compensation.............................................................. 1.18
Monthly 1965 Compensation......................................................... 1.19
Normal Retirement Date............................................................ 1.20
Participant....................................................................... 1.21
Plan.............................................................................. 1.22
Plan Year......................................................................... 1.23
Retirement Benefit................................................................ 1.24
Spouse............................................................................ 1.25
Trust............................................................................. 1.26
Trustee........................................................................... 1.27
Year of Benefit Service........................................................... 1.28
Year of Vesting Service........................................................... 1.29
ARTICLE II - PARTICIPATION
General Participation Requirements................................................ 2.01
Re-Employment Rules............................................................... 2.02
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE III - RETIREMENT AND DISABILITY BENEFITS
Section
-------
<S> <C>
Normal Retirement Benefit........................................................ 3.01
Special Benefit Accrual Provisions............................................... 3.02
Rate of Accrual of Retirement Benefit............................................ 3.03
Late Retirement Benefit.......................................................... 3.04
Early Retirement Benefit......................................................... 3.05
Maximum Benefit Provisions....................................................... 3.06
Non-Duplication of Benefits...................................................... 3.07
Special Retirement Incentive Payments............................................ 3.08
ARTICLE IV - BENEFITS UPON TERMINATION OF EMPLOYMENT
Vesting.......................................................................... 4.01
Deferred Vested Retirement Benefit............................................... 4.02
Cashout of Accrued Benefit....................................................... 4.03
ARTICLE V - FORM AND PAYMENT OF RETIREMENT BENEFITS
Normal Form of Benefit........................................................... 5.01
Waiver of Qualified Joint and
Survivor Annuity............................................................ 5.02
Forms of Payment................................................................. 5.03
Commencement of Benefits......................................................... 5.04
Special Distribution Rules....................................................... 5.05
Suspension of Benefits........................................................... 5.06
ARTICLE VI - DEATH BENEFITS
Eligibility for Death Benefits................................................... 6.01
Preretirement Survivor Annuity................................................... 6.02
Cashout of Spouse's Annuity...................................................... 6.03
Time of Payment.................................................................. 6.04
Reduction of Benefits............................................................ 6.05
Waiver of Preretirement Survivor Annuity......................................... 6.06
ARTICLE VII - TOP HEAVY PROVISIONS
Effect of Top Heavy Status....................................................... 7.01
Definitions and Special Rules.................................................... 7.02
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
ARTICLE VIII - ADMINISTRATION OF PLAN
Section
-------
<S> <C>
Organization of Administrative Committee and
Procedural Matters......................................................... 8.01
Powers of Administrative Committee.............................................. 8.02
Operation of Administrative Committee........................................... 8.03
Organization of Investment Committee............................................ 8.04
Powers of Investment Committee.................................................. 8.05
Operation of the Investment Committee........................................... 8.06
Resignation or Removal.......................................................... 8.07
Records and Reports............................................................. 8.08
Expenses........................................................................ 8.09
Indemnification................................................................. 8.10
Claim for Benefits.............................................................. 8.11
Review of Denied Claims......................................................... 8.12
Standard of Judicial Review..................................................... 8.13
ARTICLE IX - CONTRIBUTIONS AND TRUST FUND
Employer Contributions.......................................................... 9.01
General......................................................................... 9.02
No Diversion.................................................................... 9.03
Benefits Provided Solely by Trust Fund.......................................... 9.04
Return of Contributions......................................................... 9.05
Appointment of Investment Manager............................................... 9.06
ARTICLE X - AMENDMENTS AND TERMINATION
Company May Amend Plan.......................................................... 10.01
Withdrawal of Participating Employer............................................ 10.02
Termination..................................................................... 10.03
Distributions Upon Termination.................................................. 10.04
Restrictions on Benefits and Distributions...................................... 10.05
Statutory Merger/Consolidation Rule............................................. 10.06
ARTICLE XI - MISCELLANEOUS
No Rights Conferred............................................................. 11.01
Benefits Limited to Trust Fund.................................................. 11.02
Spendthrift Provision........................................................... 11.03
Payment to Minors or Incompetents............................................... 11.04
Severability.................................................................... 11.05
Construction.................................................................... 11.06
</TABLE>
-iii-
<PAGE> 5
JOSEPH PULITZER
PENSION PLAN
The Joseph Pulitzer Pension Plan (originally effective as of December
31, 1944) has been amended and restated in its entirety, and subsequently
updated as herein set forth, all effective as of January 1, 1989 (unless and
except to the extent otherwise specified or required) to reflect changes made
after January 1, 1989 and to satisfy the applicable provisions of the Tax
Reform Act of 1986, the Omnibus Budget Reconciliation Act of 1986, the Omnibus
Budget Reconciliation Act of 1987, the Technical and Miscellaneous Revenue Act
of 1988, the Omnibus Budget Reconciliation Act of 1989, the Unemployment
Compensation Amendments of 1992, and the Omnibus Budget Reconciliation Act of
1993.
ARTICLE I
DEFINITIONS
Wherever used herein, the masculine includes the feminine, the singular
includes the plural, and the following terms have the following meanings unless
a different meaning is clearly required by the context.
1.01. "Accrued Benefit" means the amount of the Retirement Benefit
earned by a Participant under Article III as of the determination date.
1.02. "Actuarial Equivalent" means equality in value of the
aggregate amounts expected to be received under different forms of payment based
upon the following mortality and interest rate assumptions: (a) for determining
the value of
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<PAGE> 6
benefit forms other than a lump sum, an annual interest rate of 7% and
mortality rates under a mortality table constructed from 80% of the male rates
and 20% of the female rates from the 1971 Group Annuity Mortality Table; and (b)
for determining lump sum values, mortality rates from the UP 84 Table (with no
adjustments) and the immediate and deferred interest rates for determining lump
sum distributions under terminating plans promulgated by the Pension Benefit
Guaranty Corporation as of the first day of the calendar quarter in which the
determination is made.
1.03. "Administrative Committee" means the administrative committee
appointed hereunder to administer the Plan.
1.04. "Affiliate" means any entity (whether or not incorporated)
which, by reason of its relationship with the Company, is required to be
aggregated with the Company under Section 414(b), 414(c), 414(m) or 414(o) of
the Code.
1.05. "Annuity Starting Date" means the first day of the first
period for which an amount is payable as an annuity, or, in the case of a
benefit not payable in the form of an annuity, the first day on which all events
have occurred which entitle the Participant to such a benefit.
1.06. "Beneficiary" means any person entitled to receive benefit
payments under the Plan upon a Participant's death which are not otherwise
payable to the Participant's surviving Spouse. A Participant may designate a
Beneficiary on such forms and in such manner as may be prescribed or permitted
by the Administrative Committee. If no designated Beneficiary shall survive a
deceased Participant, then the Beneficiary shall be deemed to be the deceased
Participant's surviving Spouse, or, if none, the deceased Participant's estate.
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<PAGE> 7
1.07. "Break in Service" means a Plan Year during which an
individual does not complete more than 500 Hours of Service (390 in the case of
regular part time Employees, and zero in the case of mechanical priority
substitute Employees). Solely for the purpose of determining whether a Break in
Service occurs, an individual who is absent from work because of the
individual's pregnancy, the birth of the individual's child, the adoption of a
child by the individual, or the care of the individual's newborn or newly
adopted child, will be credited with the Hours of Service which would otherwise
have been credited in the Plan Year in which the absence from work begins if
such crediting is necessary to prevent a Break in Service in that Plan Year or,
if not, in the following Plan Year.
1.08. "Board" means the Board of Directors of the Company.
1.09. "Code" means the Internal Revenue Code of 1986 as it now
exists and as it is hereafter amended.
1.10. "Company" means Pulitzer Publishing Company.
1.11. "Compensation" means all regular cash compensation paid by an
Employer to an Employee during a Plan Year which is required to be reported as
wages on the Employee's Form W-2, including such additional amounts (401(k)
deferrals) which are not includable in the Employee's gross income during said
Plan Year by reason of the application of Section 402(a)(8) of the Code, and
excluding expense allowances, as well as bonuses, overtime pay, and other
extraordinary or irregular payments (except commissions). For each Plan Year
beginning after December 31, 1988, Compensation in excess of $150,000 (or such
greater amount as may be permitted by Section 401(a)(17) of the Code) will be
disregarded for all purposes under the Plan.
-3-
<PAGE> 8
1.12. "Early Retirement Date" means the first day of any month
coinciding with or following the date the Participant attains age 55, but not
age 65, and has completed at least 5 Years of Vesting Service.
1.13. "Employee" means a common-law employee of an Employer who is
(a) a guard employed on an hourly basis, or (b) a member of a unit of employees
covered by a collective bargaining agreement, except to the extent that the
members of such unit are designated in the agreement or otherwise by the
Employer as being ineligible for participation in the Plan (including those
listed on Schedule A). Individuals who are on an Employer's "temporary payroll"
and individuals who are leased employees within the meaning of Section 414(n)(2)
of the Code will be deemed not to be Employees for purposes of the Plan.
1.14. "Employer" means the Company, and any Affiliate which adopts
the Plan with the consent of the Board.
1.15. "ERISA" means the Employee Retirement Income Security Act of
1974, as it now exists and as it is hereafter amended.
1.16. "Hour of Service" means the sum of:
(a) each hour for which an individual is directly or
indirectly paid or entitled to payment by the Company or an
Affiliate for the performance of services;
(b) each hour for which an individual is paid or entitled
to payment directly or indirectly by the Company or an Affiliate on
account of his or her absence due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty
or leave of absence, provided,
-4-
<PAGE> 9
however, that an individual shall be credited with no more than
501 Hours of Service in respect of any continuous period of
absence; and
(c) any additional hours for which back pay is
awarded or agreed to by an Employer, irrespective of mitigation
of damages, which additional hours will be credited to the period
or periods to which the award or agreement pertains rather than
the period in which the award, agreement or payment is made
(limited to 501 hours for a period during which the individual
did not or would not have performed duties).
The provisions of Section 2530.200(b) of the regulations issued by the
Department of Labor are incorporated herein by reference for purposes of
computing and crediting Hours of Service for reasons other than the performance
of duties. No Hours of Service will be taken into account in respect of a
period described in Section 2500.200b-2(b)(3) of the Department of Labor
regulations. Notwithstanding the foregoing, an individual will be credited with
Hours of Service during a period of active duty with the armed forces of the
United States (based upon the number of hours which would have been worked
during that period) if he or she returns to active employment with the Company
or an Affiliate and actually performs an Hour of Service within the period
provided by law for the protection of his or her re-employment rights. If an
individual incurs a Break in Service, his or her Hours of Service prior to the
Break in Service will be disregarded for purposes of determining participation,
vesting and Benefit accrual after the Break in Service unless and until he or
she again completes at least 1,000 Hours of Service (390 Hours of Service in the
case of regular part time Employees and one Hour of Service in the case of
mechanical priority substitute Employees) in a Plan Year or in an eligibility
computation period (described in Section 2.01), as the case may
-5-
<PAGE> 10
be, provided, however, that, if the individual incurs five consecutive
Breaks in Service before completing at least five Years of Vesting Service, then
his or her Hours of Service prior to the Break in Service will be disregarded
for all purposes hereof.
1.17. "Investment Committee" means the investment committee
appointed hereunder to oversee and monitor the investment of Plan assets.
1.18. "Monthly Compensation" means, for each Plan Year, an amount
equal to an Employee's Compensation divided by twelve, or, if less, the number
of months during the Plan Year in which the Employee is credited with at least
one Hour of Benefit Service.
1.19. "Monthly 1965 Compensation" means a Participant's Monthly
Compensation for 1965; provided, however, that, in the case of an Employee on
an Employer's regular payroll, Monthly 1965 Compensation means the Employee's
highest weekly Compensation during 1965 (or during such last year prior to
1965 in which he or she was an Employee) multiplied by 4.333.
1.20. "Normal Retirement Date" means the later of the date a
Participant attains age 65 or the fifth anniversary of the date he or she
became a Participant.
1.21. "Participant" means an Employee participating in the Plan
in accordance with the provisions hereof.
1.22. "Plan" means the pension plan as set forth herein and
any amendments thereto.
1.23. "Plan Year" means each twelve-month period (during the
existence of the Plan) beginning January 1 and ending December 31.
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<PAGE> 11
1.24. "Retirement Benefit" or "Benefit" means the retirement income
which a Participant is receiving, or is or shall become entitled to receive
under the Plan.
1.25. "Spouse" means the person to whom a Participant is legally
married on the Participant's Annuity Starting Date, or, if earlier, the date of
the Participant's death.
1.26. "Trust" means the trust established and maintained as part of
the Plan.
1.27. "Trustee" means the person or persons (including a
corporation) appointed and acting as trustee of the Trust.
1.28. "Year of Benefit Service" means a Plan Year in which a
Participant is credited with at least 1,000 Hours of Service (390 Hours of
Service in the case of regular part time employees and one Hour of Service in
the case of mechanical priority substitute employees) as an Employee for an
Employer. An Employee who is not credited with a Year of Benefit Service in the
first or last Plan Year of his or her employment will be credited with a partial
Year of Benefit Service for that Plan Year (or both Plan Years, as the case may
be) based on a fraction, the numerator of which is the number of months during
the Plan Year in which he or she completes at least one Hour of Service as an
Employee, and the denominator of which is 12.
1.29. "Year of Vesting Service" means a Plan Year in which an
individual is credited with at least 1,000 Hours of Service (390 Hours of
Service in the case of regular part time employees and one Hour of Service in
the case of mechanical priority substitute employees) for the Company or an
Affiliate, whether or not as an Employee, excluding Hours of Service (if any)
before the individual reaches age 18.
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<PAGE> 12
ARTICLE II
PARTICIPATION
2.01. General Participation Requirements. An Employee will
automatically be a Participant in the Plan on January 1, 1989 if he or she was a
Participant on December 31, 1988. Except as otherwise provided in this Article,
any other Employee will initially become a Participant on the first day of the
month (after December 31, 1988) coincident with or next following the later of
(a) the last day of the first eligibility computation period during which he or
she is credited with at least 1,000 Hours of Service (390 Hours of Service in
the case of regular part time employees and one Hour of Service in the case of
mechanical priority substitute employees), or (b) the date he or she reaches age
21. An individual's eligibility computation period is the twelve-month period
beginning on the date he or she is first credited with an Hour of Service (or,
if applicable, on the first date following a Break in Service on which he or she
is credited with an Hour of Service) and any Plan Year beginning after that
date.
2.02. Re-Employment Rules. A former Employee who was a Participant
and who again becomes an Employee will again become a Participant on the date as
of which he or she is again credited with an Hour of Service as an Employee;
provided, however, that, a nonvested former Participant whose prior Hours of
Service are permanently disregarded (under the definition of "Hours of Service")
will be treated as a new employee when he or she resumes employment and again
completes an Hour of Service.
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<PAGE> 13
ARTICLE III
RETIREMENT AND DISABILITY BENEFITS
3.01. Normal Retirement Benefit. Except as otherwise
provided in this Article III, the monthly Retirement Benefit payable under
Article V to a Participant who retires on or after the Participant's Normal
Retirement Date shall be equal to the sum of (a) and (b), where --
(a) is the number of the Participant's Years of
Benefit Service prior to 1966 (excluding the first 5 pre-1966 Years of
Benefit Service or, if greater, all Years of Benefit Service completed
before age 35) multiplied by the sum of (1) 1% of the first $550 of the
Participant's Monthly 1965 Compensation, and (2) 1.25% of the
Participant's Monthly 1965 Compensation in excess of $550, and
(b) is, for each Year of Benefit Service after
1965, the sum of (1) 1% of the first $550 of the Participant's
Monthly Compensation, and (2) 1.5% of the Participant's Monthly
Compensation in excess of $550;
provided, however, that, (x) if the Participant has completed more than
30 Years of Benefit Service (including Years of Benefit Service prior to 1966),
only the last 30 will be taken into account, (y) if the Participant has
completed more than 20 Years of Vesting Service, the Participant's monthly
Retirement Benefit at or after his or her Normal Retirement Date will be no less
than the greater of (1) $100, or (2) the amount by which 1/3 of the average of
the Participant's Monthly Compensation for all post-1965 Years of Benefit
Service exceeds $45, and (z) the Participant's monthly Retirement
-9-
<PAGE> 14
Benefit will in no event be less than his or her Accrued Benefit (if
any) as of December 31, 1988 under the terms of the Plan in effect on that date.
3.02. Special Benefit Accrual Provisions.
(a) Typographical Union Local No. 8. The monthly
Retirement Benefit payable to an Employee who is a member of
Typographical Union Local No. 8, who holds priority on September 11, 1989, and
who had completed at least 10 years of Plan participation as of December 31,
1985, will be equal to the greater of (1) the amount determined under Section
3.01, or (2) the sum of (A) and (B), where --
(A) is the number of the Participant's Years of
Vesting Service prior to 1986 (excluding the first 5 Years of
Vesting Service or, if greater, all Years of Vesting Service
completed before age 35 if and to the extent such Years of
Vesting Service end prior to 1966) multiplied by the sum of (1)
1% of the first $550 of the average amount of the Participant's
Monthly Compensation during his Years of Benefit Service from
January 1, 1981 through December 31, 1985, and (2) 1.5% of said
average amount of Monthly Compensation in excess of $550, and
(B) is, for each Year of Benefit Service after
1985, the sum of (1) 1% of the first $550 of the Participant's
Monthly Compensation, and (2) 1.5% of the Participant's Monthly
Compensation in excess of $550;
provided, however, that, if the Participant has completed more than 30
Years of Benefit Service, then only the last 30 will be taken into account.
(b) Globe-Democrat Publishing Company Division of the Herald
Company. An individual who was employed on April 13, 1979 by the Globe-
Democrat Publishing Company Division of the Herald Company (the "Globe-
Democrat") and who,
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<PAGE> 15
on or before May 7, 1979, became an Employee of the Company, shall, for
purposes of participation, vesting and benefit accrual under the Plan, receive
credit for service with the Globe-Democrat (and a predecessor company thereof),
to the extent such individual's service was credited for those purposes under
the Globe-Democrat's pension plan. An individual who was employed on February
27, 1984 by the Globe-Democrat, who was a participant in the Globe-Democrat
Publishing Company Pension Plan on said date and who became an Employee on or
after February 27, 1984 and before October 1, 1984, will also receive credit
under this Plan for his or her service credited under said Pension Plan,
provided, however, that the individual's Benefit under this Plan will be reduced
by the value of the Benefit's payable to or with respect to such individual
under said Pension Plan.
3.03. Rate of Accrual of Retirement Benefit. At
any point in time prior to a Participant's Normal Retirement Date, the
Participant's Accrued Benefit (expressed as a monthly annuity commencing at the
Participant's Normal Retirement Date) shall be equal to (a) multiplied by the
sum of (b) plus (c), where --
(a) is a fraction, the numerator of which is the
number of the Participant's Years of Benefit Service through
the determination date, and the denominator of which is the
total number of Years of Benefit Service for which the
Participant could receive credit if his or her employment
continued from the date his or her Plan participation began
until his or her Normal Retirement Date;
(b) is the Retirement Benefit (expressed as a monthly
annuity commencing at the Participant's Normal Retirement Date)
computed as
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<PAGE> 16
of the determination date pursuant to the Benefit formula set
forth in Section 3.01 (or 3.02, as the case may be); and
(c) is the excess of (1) the projected Retirement
Benefit which the Participant would earn under Section 3.01 (or
3.02, as the case may be) at his or her Normal Retirement Date if
his or her employment continued from the determination date with
Monthly Compensation equal to the average of the Monthly
Compensation during the Participant's ten most recent Years of
Vesting Service (or, if the Participant has less than ten Years
of Benefit Service as of the determination date, during the ten
most recent years of Benefit Service and Vesting Service, or, if
the Participant has less than ten years of Benefit Service and
Vesting Service, during all of the Participant's Years of Vesting
Service), over (2) the amount described in (b) above;
provided, however, that, where applicable, the Participant's Accrued
Benefit will not be less than the minimum Benefit calculated as of the
determination date under Section 3.01.
3.04. Late Retirement Benefit. The monthly Retirement Benefit
payable to a Participant who retires after his or her Normal Retirement Date
shall not be less than the Actuarial Equivalent of the monthly Retirement
Benefit accrued by the Participant through his or her Normal Retirement Date.
3.05. Early Retirement Benefit. The monthly Retirement Benefit
payable under Article V to a Participant who retires on an Early Retirement Date
shall be the Participant's Accrued Benefit calculated in accordance with Section
3.03 as of the date he or she retires, reduced by 1/180 for each of the first 60
months that the Participant's
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<PAGE> 17
Early Retirement Date precedes his or her Normal Retirement Date and by
1/360 for each additional such month.
3.06. Maximum Benefit Provisions. No Benefit will be payable to a
Participant or Beneficiary in excess of the benefit permitted to be paid under
Section 415 of the Code and the regulations thereunder. As long as the
Employer maintains a defined contribution plan, the Participant's Accrued
Benefit under this Plan will be reduced in lieu of a reduction in contributions
or allocations under the defined contribution plan. For the purpose of applying
Section 415 of the Code, the limitation year will be the calendar year.
3.07. Non-Duplication of Benefits. The Retirement Benefit payable
under the Plan to a Participant shall be reduced by any other pension benefits
payable to such Participant under any other qualified defined benefit plan
which is maintained by the Company and/or any Affiliate or to which the Company
and/or any Affiliate contributes, to the extent that such other benefits are
accrued during a period of employment with an Employer during which the
Participant also accrues a Benefit under the Plan, unless and except to the
extent otherwise provided in a collective bargaining agreement covering the
Participant's employment. When any such reduction is required, it shall be
made by actuarially converting the value of the other pension benefits into a
pension payable on the same basis and terms as the Benefit payable under the
Plan.
3.08. Special Retirement Incentive Payments. Notwithstanding
anything to the contrary contained herein, a Participant's Retirement Benefit
may be increased by the Company to reflect post-1983 amounts payable to the
Participant as a result of his or her acceptance of an early retirement
incentive offer made by the Company. The Administrative Committee will
maintain appropriate records to reflect any such
-13-
<PAGE> 18
increase of a Participant's Retirement Benefit, and the Plan will be
deemed to be amended accordingly upon the approval of such increase by the
Board.
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ARTICLE IV
BENEFITS UPON TERMINATION OR EMPLOYMENT
4.01. Vesting. A Participant will become fully vested in his or
her Accrued Benefit upon the completion of five Years of Vesting Service. A
Participant will have no vested interest in his or her Accrued Benefit before
the completion of five Years of Vesting Service.
4.02. Deferred Vested Retirement Benefit. A Participant who
separates from the service of the Employer and Affiliates (for any reason other
than death) before reaching his or her Early Retirement Date but after becoming
vested in his or her Accrued Benefit will be entitled, on his or her Normal
Retirement Date, to his or her Accrued Benefit calculated in accordance with
Section 3.03 as of the date of the separation from service. A Participant may
elect to receive his or her vested Accrued Retirement Benefit on or after the
Participant's Early Retirement Date, subject to the reductions set forth in
Section 3.05. A Participant's deferred vested Retirement Benefit will be
payable in accordance with Article V.
4.03. Cashout of Accrued Benefit. Notwithstanding any other
provision of the Plan, if the Actuarial Equivalent of the vested Accrued
Benefit of a separated Participant (or of an alternate payee under a qualified
domestic relations order) does not exceed $3,500 (or such greater amount which
may be cashed out without consent under Section 417(e) of the Code), then the
Benefit will be paid to the Participant (or the alternate payee) in the form of
an immediate lump sum. Any such payment shall be made as soon as practicable
after the Participant's termination of service or retirement (or the date it
would otherwise become payable under a qualified domestic
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<PAGE> 20
relations order), and shall be in lieu of the Benefits otherwise payable
hereunder. If a Participant receives a single sum cashout and later resumes
employment covered under the Plan, then, except as otherwise required by
applicable law, the Participant's Benefits upon a later termination of service
will be computed without regard to the Compensation and Years of Benefit
Service attributable to his or her prior period of service.
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<PAGE> 21
ARTICLE V
FORM AND PAYMENT OF RETIREMENT BENEFITS
5.01. Normal Form of Benefit. Unless a Participant elects an
optional form of payment, his or her Retirement Benefit shall be payable in the
form of a single life annuity, as described in Section 5.03(a), or, in the case
of a Participant who is married on the Annuity Starting Date, in the form of a
qualified joint and survivor annuity, as described in Section 5.03(b). 5.02.
Waiver of Qualified Joint and Survivor Annuity.
(a) Notice of Election. Within a reasonable time (but not more
than 90 days) before the Annuity Starting Date, the Administrative Committee
shall provide a Participant with a written explanation of (1) the terms and
conditions of the qualified joint and survivor annuity, (2) the Participant's
right to waive that form of payment and the effect of the waiver, (3) the
rights of the Participant's Spouse with respect to the waiver, (4) the right to
make, and the effect of, a revocation of a previous waiver, and (5) the
relative values of the optional forms of payment of the Participant's
Retirement Benefit.
(b) Conditions of Waiver. A Participant may elect to waive the
qualified joint and survivor annuity form of payment and to receive payment of
his or her Retirement Benefit under another payment form only if the waiver is
made within the 90-day period ending on the Participant's Annuity Starting
Date. The waiver shall not take effect unless the Participant's Spouse
consents to the waiver and to the designation of another Beneficiary and/or the
election of another form of payment. The Spouse's consent must be in writing
and the Spouse's signature must be witnessed by
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<PAGE> 22
a notary public or an appropriate Plan official. Spousal consent will not be
required if it is established to the satisfaction of the Administrative
Committee that the Participant does not have a Spouse, that the Participant's
Spouse cannot be located or that the Spouse's consent cannot be obtained
because of other circumstances permitted by applicable law. Subject to
applicable law, the Spouse's consent may provide that no further consent will
be required if, before the Annuity Starting Date, the Participant elects a
different form of payment and/or designates a different Beneficiary. An
election to waive the qualified joint and survivor annuity form of payment may
be revoked by a Participant at any time prior to the Annuity Starting Date.
5.03. Forms of Payment. Subject to the provisions hereof with
respect to mandatory single sum cashouts and mandatory qualified joint and
survivor annuity payouts, a Participant may elect to receive his or her
Retirement Benefits in one of the forms set forth below. Payments under each
form shall be made in monthly installments. Payments under a form other than a
single life annuity described in Section 5.03(a) shall be the Actuarial
Equivalent of the single life annuity form of payment.
(a) Life Annuity. Under this option, payment of monthly
installments will be made to the Participant for the lifetime of the
Participant and will cease upon the Participant's death.
(b) Qualified Joint and Survivor Annuity. Under this option,
payment of reduced monthly installments will be made to the Participant
for the lifetime of the Participant. If the Participant predeceases his
or her Spouse, payment of monthly installments equal to 50% of the
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<PAGE> 23
Participant's monthly installments will continue to the Spouse
for the Spouse's lifetime.
(c) Joint and Survivor Annuity. Under this
option, payment of reduced monthly installments will be made to
the Participant for the lifetime of the Participant. If the
Participant predeceases his or her Beneficiary, payment of
monthly installments equal to 50% or 100% of the Participant's
monthly installments, as elected by the Participant prior to the
Annuity Starting Date, will be made to the Beneficiary for the
Beneficiary's lifetime.
(d) Ten Years Certain and Life Annuity. Under
this option, which is available only to Participants who
terminate employment after December 31, 1988, payment of reduced
monthly installments will be made to the Participant for the
Participant's lifetime. If the Participant dies before 120
monthly installments have been paid, then payment of the same
monthly installments will be made to the Participant's
Beneficiary until a total of 120 monthly installments have been
paid. If, upon the Participant's death, there is no living
designated Beneficiary, the commuted value of the unpaid
installments shall be paid to the Participant's estate.
5.04. Commencement of Benefits. The payment of
Benefits to a Participant shall commence no later than 60 days after the close
of the Plan Year in which the Participant reaches his or her Normal Retirement
Date, or, if later, in which the Participant separates from service with the
Employer and Affiliates. Notwithstanding anything to the contrary contained
herein, distribution of a
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<PAGE> 24
Participant's Benefits must commence no later than the April 1 following the
year in which the Participant attains age 70 1/2; provided, however,
that, in the case of an active Participant who attained age 70 1/2 prior to
January 1, 1988 and who is not a 5% owner (as defined in Section 416 of the
Code), distribution need not commence until the April 1 of the year following
the year in which the Participant actually retires.
5.05. Special Distribution Rules.
(a) General. Except as otherwise provided in Section 5.03(b) (with
respect to the payment of a qualified joint and survivor annuity), the
provisions of this Section will apply to any distribution of a Participant's
Benefit and will take precedence over any inconsistent provisions of the Plan.
All benefit distributions must comply with Sections 401(a)(9) and (14) of the
Code and regulations thereunder.
(b) Payout Periods. Subject to the requirements of applicable law
with respect to the incidentality of death benefits, payment of a Participant's
Benefits, if not made in a single sum, shall be made over one of the following
periods (or a combination thereof): (1) the life of the Participant, (2) the
lives of the Participant and a designated Beneficiary, (3) a period not
extending beyond the life expectancy of the Participant, or (4) a period not
extending beyond the life expectancy of the Participant and a designated
Beneficiary.
(c) Benefits Payable on Death. If the distribution of a Participant's
Benefit has begun in accordance with the preceding paragraph and the
Participant dies, then the remaining Benefit, if any, payable to the deceased
Participant's Beneficiary shall be distributed at least as rapidly as under the
method of distribution in effect as of the Participant's date of death.
-20-
<PAGE> 25
5.06 Distributions Made on or After January 1, 1993. This Section
applies to distributions made on or after January 1, 1993. Notwithstanding any
provision of the Plan to the contrary that would otherwise limit a
distributee's election under this Section, a distributee may elect, at the time
and in the manner prescribed by the Administrative Committee, to have any
portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover. For the
purposes of this Section, the following terms shall have the following
meanings:
(a) 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 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 joint life
expectancies) of the distributee and the distributee's designated
beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under
Section 401(a)(9) of the Code; and the portion of any
distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation
with respect to employer securities.)
(b) Eligible Retirement Plan. An eligible retirement
plan is an individual retirement account described in Section 408(a)
of the Code, an individual retirement annuity described in
Section 403(b) of the Code, an annuity plan described in Section
403(a) of the Code, or a qualified trust described in Section
401(a) of the Code, that accepts the distributee's eligible
rollover
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<PAGE> 26
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan
is an individual retirement account or individual retirement
annuity.
(c) Distributee. A distributee includes an Employee or
former Employee. In addition, the Employee's or former
Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in
Section 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
(d) Direct Rollover. A direct rollover is a payment
by the Plan to the eligible retirement plan specified by the
distributee.
If a distribution is one to which Sections 401(a)(11) and 417 of the Code
do not apply, such distribution may commence less than 30 days after the
notice required under Section 1.411(a)-11(c) of the Federal Income Tax
Regulations is given, provided that (a) the Participant is notified that he or
she has at least 30 days to consider the decision of whether or not to elect a
distribution and, if applicable, a particular distribution option, and (b) the
Participant, after receiving such notice, affirmatively elects a distribution
and, if applicable, a particular distribution option.
5.07. Suspension of Benefits.
(a) Suspension on Re-Employment. Retirement Benefits in pay status
will be suspended for each calendar month following the Annuity Starting Date
during which a Participant completes at least 40 Hours of Service with an
Employer, or, if the actual number of Hours of Service is not determined, such
Participant performs an Hour of Service on each of 8 or more days (or separate
work shifts).
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<PAGE> 27
(b) Resumption of Payments. Payment of Benefits
suspended in accordance with this Section shall resume no later than the first
day of the third calendar month following the calendar month in which the
Participant again fails to complete at least 40 Hours of Service with an
Employer or to perform an Hour of Service on each of 8 or more days (or
separate work shifts). The initial payment upon resumption shall include the
payment scheduled to occur in the calendar month when payments resume and any
amounts withheld during the period between the last cessation of employment and
the resumption of payments, less any amounts which are subject to offset.
(c) Notice of Suspension. No Benefit payments may be
suspended pursuant to this Section unless the Administrative Committee
notifies the Participant of the suspension by personal delivery or first class
mail during the first calendar month of the suspension. Such notice shall
comply in form and content with the provisions of applicable law.
(d) Amount of Suspended Payments. The amount of a
Participant's monthly Benefit which may be suspended shall not exceed the
lesser of: (1) the amount which would have been payable to the Participant
if he or she had been receiving monthly benefits under the Plan since actual
retirement based on a single life annuity commencing at actual retirement age,
or (2) the actual amount paid or scheduled to be paid to the Participant for
such month.
(e) Procedures. The Administrative Committee shall
establish procedures which are consistent with Department of Labor Regulation
Section 2530.203-3, including, but not limited to, procedures for the
resumption of benefits and the offsetting of benefit overpayments, if any.
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<PAGE> 28
ARTICLE VI
DEATH BENEFITS
6.01. Eligibility for Death Benefits.
(a) Death After Benefits Begin. If a Participant dies after
payment of his or her Retirement Benefit begins, then no benefit will be
payable by reason of the Participant's death except as provided under the form
of payment of the Participant's Benefit in effect at the time of the
Participant's death.
(b) Death Before Benefits Begin. Except as otherwise provided
in Section 6.01(c) (with respect to surviving Spouses' annuities), no benefit
is payable by reason of the death of a Participant if the Participant dies
before payment of his or her Retirement Benefit begins.
(c) Preretirement Spouse Benefit. If a vested Participant (1) dies
before payment of his or her Retirement Benefit begins, (2) is survived by a
Spouse to whom the Participant was married throughout the one-year period
ending on the date of the Participant's death, (3) is credited with at least
one Hour of Service with an Employer after 1975, and (4) was alive on August
23, 1984, then, unless waived, the Participant's surviving Spouse will be
entitled to receive the preretirement survivor annuity described in Section
6.02.
6.02. Preretirement Survivor Annuity.
(a) Death After Age 55. If a Participant described in Section
6.01(c) dies after age 55, then the Participant's surviving Spouse will be
entitled to receive monthly payments for the Spouse's lifetime equal to the
monthly payments which would have been made if the Participant had retired on
the day before his or her death
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<PAGE> 29
and had begun to receive a Retirement Benefit in the form of a
qualified joint and survivor annuity as described in Section
5.03(b).
(b) Death at or Before Age 55. If a Participant
described in Section 6.01(c) dies at or before age 55, then the
Participant's surviving Spouse will be entitled to receive
monthly payments for the Spouse's lifetime equal to the monthly
payments which would have been made if the Participant had (1)
separated from Service on his or her date of death (or actual
date of separation from Service, if earlier), (2) survived until
age 55, (3) retired at that time with a qualified joint and
survivor annuity as described in Section 5.03(b), and (4) died on
the day thereafter.
6.03. Cashout of Spouse's Annuity. Notwithstanding
any other provision of the Plan, if the Actuarial Equivalent of a
preretirement survivor annuity payable under Section 6.02 does
not exceed $3,500 (or such greater amount which may be cashed out
without consent under Section 417(e) of the Code), then payment
will be made in the form of a single sum in lieu of the
preretirement survivor annuity which would otherwise be payable.
No single sum payment may be made in lieu of a preretirement
survivor annuity after the Annuity Starting Date, unless the
surviving Spouse consents in writing to such payment.
6.04. Time of Payment. Unless the surviving Spouse
elects a later date (no later than the Normal Retirement Date of
the deceased Participant), preretirement survivor annuity
payments described in Section 6.02 shall commence as of the first
day of the month coincident with or next following the later of
(a) the date of the Participant's death, and (b) the date the
Participant would have reached age 55 if he or she had not died.
-25-
<PAGE> 30
6.05. Reduction of Benefits. Except as may be prohibited by
applicable law, a Participant's Retirement Benefit will be reduced for each
year (or portion thereof) during which the Plan's preretirement survivor
annuity coverage was in effect. The applicable reduction percentage for
each year (or portion thereof) after 1988 will be as follows:
<TABLE>
<CAPTION>
Age in Year of Coverage Survivor Reduction Percentage
Below age 35 None
<S> <C>
35-44 .1% per year
45-54 .2% per year
55 and over .5% per year
</TABLE>
The total reduction percentage will be the sum of the annual reduction
percentages determined under the above table, plus the reduction percentage
(if any) which had accumulated under the Plan prior to 1989.
6.06. Waiver of Preretirement Survivor Annuity.
(a) Notice of Election. The Administrative Committee will
provide a Participant with a written explanation of (1) the terms and
conditions of the Plan's preretirement survivor annuity, (2) the
Participant's right to waive the survivor annuity and the effect of the
waiver, (3) the rights of the Participant's Spouse with respect to the
waiver, and (4) the right to make, and the effect of, a revocation of a
previous waiver. Except as otherwise permitted by applicable law, the
written explanation will be furnished within whichever of the following
periods ends last: (x) the period beginning with the first day of the Plan
Year in which the Participant attains age 32 and ending with the close
of the Plan Year preceding the Plan Year in which the Participant attains
age 35; (y) a reasonable period ending after the Participant becomes
covered by the Plan; and (z) a reasonable period ending after
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<PAGE> 31
Section 401(a)(11) of the Code first becomes applicable to the
Participant. In the case of a Participant who separates from
service with the Employer and Affiliates before age 35, the
applicable period will be a reasonable period of time ending
after the Participant's separation from service; and, if the
Participant thereafter returns to service, the applicable period
for the Participant shall be redetermined.
(b) Conditions of Waiver. A Participant may elect to
waive the Plan's preretirement survivor annuity within the period
beginning on the first day of the Plan Year in which the
Participant attains age 35 or separates from service with the
Employer and Affiliates, whichever is earlier, and ending on the
date of the Participant's death. The waiver shall not take
effect unless the Participant's Spouse consents to the waiver.
The Spouse's consent must be in writing and must acknowledge the
effect of the waiver, and the Spouse's signature must be
witnessed by a notary public or an appropriate Plan official.
Spousal consent will not be required if it is established to the
satisfaction of the Administrative Committee that the Participant
does not have a Spouse, that the Spouse cannot be located or that
the Spouse's consent cannot be obtained because of other
circumstances permitted by applicable law. An election to waive
the Plan's preretirement survivor annuity may be revoked by the
Participant at any time prior to the Participant's death.
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<PAGE> 32
ARTICLE VII
TOP HEAVY PROVISIONS
7.01. Effect of Top Heavy Status. Notwithstanding
anything contained herein to the contrary, if the Plan is a top
heavy plan for any Plan Year, and if any Participant who is a
non-key Employee does not accrue the minimum benefit or
contribution described in Section 416(c)(1) or (c)(2) of the Code
for that Plan Year under this Plan and any other defined benefit
and defined contribution plan which is required or permitted to
be aggregated with the Plan for purpose of applying Section 416
of the Code, then the Participant's Benefit accrual for the Plan
Year shall be increased (regardless of whether such Participant
completes 1,000 Hours of Service for such Year and regardless of
his or her level of compensation) if and to the extent necessary
in order to satisfy the minimum benefit requirements of Section
416(c)(1) of the Code (determined with regard to Section 416(f)
of the Code) with respect to such Participant for such Plan Year.
In addition, to the extent required, vesting in such
Participant's minimum required Benefit shall be determined under
the vesting schedule of Section 416(b)(1)(B) of the Code. The
additional benefit accrual and modified vesting requirements of
Section 416 of the Code will not affect Benefits and vesting
under this Plan for a Participant if and to the extent that the
minimum top heavy contribution or benefit requirement is
satisfied by another qualified plan of the Company or an
Affiliate.
7.02. Definitions and Special Rules.
(a) Top Heavy Status. The Plan is a top heavy plan
if, as of the determination date, the aggregate present values of
the Accrued Benefits of all key
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<PAGE> 33
Employees under the Plan (required to be taken into account for
this purpose) plus the aggregate account values and the aggregate
present values of accrued benefits for all key Employees under
all other plans which are aggregated with this Plan (required to
be taken into account for this purpose) exceed sixty percent of
all such aggregate values for all Employees or former Employees
(other than former key Employees) under the Plan and such other
plans. The determination of the top heavy status of the Plan
will be made in accordance with the provisions of Section 416 of
the Code and the regulations promulgated thereunder which are
specifically incorporated herein by reference.
(b) Aggregation of Plans. Each plan of the Company or
an Affiliate in which a key Employee participates and each other
plan which enables such plan to meet the requirements of Section
401(a)(4) or Section 410(b) of the Code will be aggregated with
this Plan, and all additional plans which the Company designates
will be aggregated with this Plan if and to the extent that the
resulting group of plans satisfies the coverage and
nondiscrimination tests of Sections 401(a)(4) and 410 of the
Code.
(c) Determination Date. For purposes of determining
whether the Plan is a top heavy plan for a Plan Year, the
determination date is the last day of the preceding Plan Year.
(d) Key Employee. The term "key Employee" means a key
employee described in Section 416(i)(1) of the Code, and the term
"non-key Employee" means any Employee who is not a key Employee.
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<PAGE> 34
ARTICLE VIII
ADMINISTRATION OF PLAN
8.01. Organization of Administrative Committee and
Procedural Matters. The Plan will be administered by an
Administrative Committee composed of at least three individuals
appointed by the Board. Each member of the Administrative
Committee will serve at the pleasure of the Board and without
compensation. Action by the Administrative Committee may be
taken by a vote of a majority of its members then serving or in a
writing without a meeting signed by all of its members. Unless
the Board appoints officers, the Administrative Committee may
designate one of its members as the Chairman and shall elect a
Secretary who may but need not be a member of the Administrative
Committee. No member of the Administrative Committee shall
participate in the determination of any of his or her rights or
benefits under the Plan.
8.02. Powers of Administrative Committee. The
Administrative Committee will administer the Plan and will have
complete control in the administration thereof. In exercising
any of its discretionary powers with respect to the
administration of the Plan, the Administrative Committee will act
in a uniform and non-discriminatory manner. The Administrative
Committee will have all powers which are reasonably necessary to
carry out its responsibilities under the Plan including, without
limitation, the power to construe the Plan and to determine all
questions which may arise thereunder. The decision of the
Administrative Committee as to any disputed question arising
hereunder, including questions of construction, interpretation
and administration, shall be final and conclusive on all persons.
All disbursements by
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<PAGE> 35
the Trustee, except for reasonable expenses of administering the
Trust assets, shall be made upon and in accordance with the
instructions of the Administrative Committee. The Administrative
Committee shall have no power, authority or responsibility with
respect to the management, investment or control of Trust assets.
8.03. Operation of Administrative Committee. The
Administrative Committee may adopt such rules and regulations as
it deems necessary or appropriate for the conduct of its affairs.
The Administrative Committee may appoint from among its members
such subcommittees with such powers as it shall determine and may
employ such accountants, actuaries, counsel, administrators and
other agents (clerical and otherwise) and services as it deems
necessary or desirable in connection with the performance of its
functions hereunder and in order to carry out the provisions of
the Plan. Decisions and directions of the Administrative
Committee may be communicated to the Trustee, a Participant, a
Beneficiary, the Company or any other person who is to receive
such decision or direction by a document signed by any one or
more members of the Administrative Committee (or persons other
than members) so authorized, and such decision or direction of
the Administrative Committee may be relied upon by its recipient
as being the decision or direction of the Administrative
Committee.
8.04. Organization of Investment Committee. The
Plan assets will be administered and invested in the manner
determined by an Investment Committee composed of not less than
three members appointed by the Board. Each member of the
Investment Committee will serve at the pleasure of the Board and
without compensation. The Investment Committee (and each member
thereof) is a "named fiduciary" of the Plan. Action by the
Investment Committee may be taken by the vote of a majority of
its members then serving at a meeting or in a writing without a
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<PAGE> 36
meeting signed by all of its members. Unless the Board appoints
officers, the Investment Committee may designate one of its
members as the Chairman and shall elect a Secretary who may but
need not be a member.
8.05. Powers of Investment Committee. The
Investment Committee shall establish a funding policy and method
consistent with the objectives of the Plan and requirements of
ERISA, and shall communicate such policy to the Trustee and any
investment manager. The Investment Committee shall have the
following powers, duties and authority with respect to the
investment of Plan assets:
(a) to select and appoint one or more investment
managers to manage, acquire or dispose of any or all of the
assets of the Plan, provided, however, that any such investment
manager is described in Section 3(38)(B) of ERISA and has
acknowledged in writing that he is a fiduciary with respect to
the Plan;
(b) to monitor and evaluate the performance of
the Trustee and/or any investment manager;
(c) to direct the Trustee in connection with the
exercise of investment or asset management responsibilities under
the Trust Agreement; and
(d) to approve accounts rendered from time to
time by the Trustee, and to release, relieve and discharge the
Trustee with respect to all matters set forth in any such
account, or to object to any such account.
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<PAGE> 37
8.06. Operation of the Investment Committee. The
Investment Committee may adopt such rules and regulations as it
deems desirable for the conduct of its affairs, and may employ
such accountants, actuaries, counsel and other specialists as it
deems necessary or desirable in connection with the performance
of its functions hereunder. The Investment Committee shall be
entitled to rely conclusively upon, and shall be fully protected
in any action taken by it in good faith in relying upon, any
opinions or reports which shall be furnished to it by any such
accountant, actuary, counsel or other specialist. Decisions and
directions of the Investment Committee may be communicated to the
Trustee, an investment manager, the Company or any other person
who is to receive such decision or direction by a document signed
by any one or more members of the Investment Committee (or
persons other than members) so authorized, and such decision or
direction of the Investment Committee may be relied upon by its
recipient as being the decision or direction of the Investment
Committee.
8.07. Resignation or Removal. Any member of the
Administrative Committee or the Investment Committee may resign
by giving written notice to the Board not less than 30 days
before the effective date of his or her resignation. Any member
of the Administrative Committee or the Investment Committee may
be removed, with or without cause, at any time by the Board. The
Board shall fill vacancies as soon as is reasonably practicable
after a vacancy occurs and, until a new appointment is made, the
remaining members shall have the full authority to act.
8.08. Records and Reports. The Administrative
Committee and the Investment Committee shall keep records of
their proceedings and acts and shall keep or cause to be kept all
such books of account, records and other data as may be necessary
in connection with the performance of their functions hereunder.
8.09. Expenses. All expenses incurred in
connection with the administration of the Plan and the Trust
Fund, including, without limitation, fees of accountants,
actuaries, counsel, investment managers and other agents, and
other costs of administering the Plan and the Trust Fund, shall
be paid by the Trustee out of the Trust Fund, unless paid by the
Company.
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<PAGE> 38
8.10. Indemnification. The Company shall indemnify
each member of the Administrative Committee, each member of the
Investment Committee, each member of the Board, and any of its
(or an Affiliate's) employees to whom a fiduciary responsibility
with respect to the Plan is allocated or delegated from and
against all liabilities, costs and expenses, including counsel
fees, amounts paid in settlement and amounts of judgments, fines
or penalties, incurred or imposed upon such person in connection
with any claim, action, suit or proceeding, whether civil,
criminal, administrative or investigative, arising by reason of
or in connection with acts or omissions in his or her capacity as
a fiduciary hereunder, provided that such act or omission is not
the result of willful neglect or fraud.
8.11 Claim for Benefits. When a benefit is due, the
Participant or Beneficiary should submit his claim to the person
or office designated by the Administrative Committee to receive
claims. Under normal circumstances, a final decision shall be
made as to a claim within 90 days after receipt of the claim. If
the Administrative Committee notifies the claimant in writing
during the initial 90 day period, it may extend the period up to
180 days after the initial receipt of the claim. The written
notice must contain the circumstances necessitating the extension
and the anticipated date for the final decision. If a claim is
denied during the claims period, the Administrative Committee
must notify the claimant in writing. The denial must include the
specific reasons for it, the Plan provisions upon which the
denial is based, and the claims review procedure. If no action
is taken during the claims period, the claim is treated as if it
were denied on the last day of the claims period.
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<PAGE> 39
8.12 Review of Denied Claims. If a Participant's or
Beneficiary's claim is denied and the claimant wants a review, he
or she must apply to the Administrative Committee in writing.
That application may include any comment or argument the claimant
wants to make. The claimant may either represent himself or
appoint a representative, either of whom has the right to inspect
all documents pertaining to the claim and its denial. The
Administrative Committee may schedule any meeting with the
claimant or his representative that it finds necessary or
appropriate to complete its review. The request for review must
be filed within 60 days after the denial. If it is not, the
denial becomes final. If a timely request is made, the
Administrative Committee must make its decision, under normal
circumstances, within 60 days of the receipt of the request for
review. However, if the Administrative Committee notifies the
claimant prior to the expiration of the initial review period, it
may extend the period of review up to 120 days following the
initial receipt of the request for a review. All decisions of
the Administrative Committee must be in writing and must include
the specific reasons for their action and the Plan provisions on
which their decision is based. If a decision is not given to the
claimant within the review period, the claim is treated as if it
were denied on the last day of the review period.
8.13 Standard of Judicial Review. The Administrative
Committee has full and absolute discretion in the exercise of
each and every aspect of its authority under the Plan, including
without limitation, the authority to determine any person's right
to benefits under the Plan, the correct amount and form of any
benefits, the authority to decide any appeal, the authority to
review and correct the actions of any prior administrative
committee, and all of the rights, powers, and authorities
specified in the Plan. Notwithstanding any provision of law or
any explicit or implicit provision
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<PAGE> 40
of this document or, any action taken, or ruling or decision
made, by the Administrative Committee in the exercise of any of
its powers and authorities under the Plan shall be final and
conclusive as to all parties (other than the Company, an Employer
other than the Company or the Trustee), including without
limitation all Participants and Beneficiaries, regardless of
whether the Administrative Committee or one or more of its
members may have an actual or potential conflict of interest with
respect to the subject matter of the action, ruling, or decision.
No final action, ruling, or decision of the Administrative
Committee shall be subject to de novo review in any judicial
proceeding; and no final action, ruling, or decision of the
Administrative Committee may be set aside unless it is held to
have been arbitrary and capricious by a final judgment of a court
having jurisdiction with respect to the issue.
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<PAGE> 41
ARTICLE IX
CONTRIBUTIONS AND TRUST FUND
9.01. Employer Contributions. The contributions
required to fund the cost of the benefits provided by the Plan
will be made solely by the Employers at such times and in such
amounts as the Company, acting upon advice of the Plan's
independent actuarial consultants, shall determine.
9.02. General. The Trust corpus will consist of
all payments to the Trustee as provided herein, together with the
net income or loss (including capital items) produced by the
investments of the Trust or the sale of any such investments,
which will be added to or deducted from the Trust. The Trust
assets will be held, administered and invested in the manner
provided in the agreement pursuant to which the Trust is
governed.
9.03. No Diversion. All assets of the Trust will
be owned by the Trustee. Except as otherwise provided herein, no
part of the Trust assets may be used for or diverted to purposes
other than for the exclusive benefit of Participants and their
Beneficiaries.
9.04. Benefits Provided Solely by Trust Fund. All
benefits payable under the Plan will be paid or provided solely
from the Trust assets, and no Employer assumes any liability or
responsibility therefor.
9.05. Return of Contributions. All Employer
contributions are conditioned upon their deductibility for
federal income tax purposes under Section 404 of the Code and
upon continuing qualification of the Plan under Section 401(a) of
the
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<PAGE> 42
Code. Notwithstanding anything to the contrary contained herein,
amounts contributed by an Employer shall be returned to the
Employer under the following conditions:
(a) if a contribution was made by a mistake of
fact, the excess of the amount of such contribution over the
amount that would have been contributed had there been no mistake
of fact shall be returned to the Employer within one year after
the payment of the contribution;
(b) if the Employer makes a contribution which is
not deductible under Section 404 of the Code, such contribution
(but only to the extent disallowed) shall be returned to the
Employer within one year after the disallowance of the deduction;
and
(c) if the Employer makes a contribution which is
conditioned upon initial qualification of the Plan (as to that
Employer) under the Code and if the Plan does not so qualify,
then such contribution shall be returned to the Employer within
one year after the date of denial of qualification of the Plan.
9.06. Appointment of Investment Manager. The
Investment Committee may appoint one or more investment managers
to manage any assets of the Plan. As used herein, the term
"investment manager" means any person or entity who: (a) has
power to manage, acquire or dispose of any assets of the Plan;
(b) is (1) registered as an investment adviser under the
Investment Advisers Act of 1940, (2) a bank, as defined in that
Act, or (3) an insurance company qualified under the laws of more
than one state to perform services described in (a) above; and
(c) has acknowledged in a writing delivered to the Investment
Committee and the Trustee that he is a fiduciary with respect to
the Plan. The investment manager(s) will have such powers and
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<PAGE> 43
responsibilities as may be conferred under the Trust Agreement
and the investment management agreement.
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<PAGE> 44
ARTICLE X
AMENDMENTS AND TERMINATION
10.01. Company May Amend Plan. The Company reserves
the right, by action of the Board at any time or from time to
time, to modify or amend this Plan in whole or in part. No
amendment will:
(a) vest in an Employer an interest in the Trust
Fund, or cause or permit the Trust Fund to be diverted to any
purpose other than the exclusive benefit of Participants and
Beneficiaries prior to the satisfaction of all liabilities to
Participants and Beneficiaries;
(b) decrease accrued benefits of any Participant
or Beneficiary or eliminate an optional form of payment, except
to the extent permitted by applicable law;
(c) discriminate in favor of Participants who are
highly compensated employees (within the meaning of Section
414(q) of the Code) in a manner which is prohibited by Section
401(a)(4) of the Code and regulations thereunder; or
(d) increase substantially the duties or
liabilities of the Trustee or the members of the Investment
Committee without its or their written consent.
10.02. Withdrawal of Participating Employer. An
Employer may withdraw from the Plan and the Trust by giving
written notice to the Administrative Committee of its intent to
withdraw. The Administrative Committee will then determine the
portion of the Trust assets attributable to the Participants
employed by
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<PAGE> 45
the withdrawing Employer and will notify the Trustee to segregate
those assets and transfer them to the successor trustee or
trustees when it receives a designation of the successor from the
withdrawing Employer. A withdrawal will not terminate the Plan
with respect to the withdrawing Employer if the Employer appoints
a successor trustee or trustees and establishes another plan and
trust intended to qualify under Section 401(a) of the Code.
10.03. Termination. The Board may terminate the
Plan with respect to any or all Employers. Any Employer (by
action of its board of directors) may terminate the Plan with
respect to itself. If there is a partial or total termination of
the Plan, all affected Participants will immediately become 100%
vested in their Accrued Benefits.
10.04. Distributions Upon Termination. Subject to
the provisions of applicable law (or the provisions of a Plan
amendment adopted in connection with a Plan termination),
distribution of affected Participants' Accrued Benefits as a
result of the termination or partial termination of the Plan
shall be made as soon as practicable. Plan assets will be
allocated in accordance with Section 4044 of ERISA. To the
extent permitted by law, any residual assets of the Plan shall be
distributed to the Employer after all liabilities of the Plan to
Participants and Beneficiaries have been satisfied.
10.05. Restrictions on Benefits and Distributions.
Notwithstanding anything to the contrary contained herein, the
following restrictions on Benefits and distributions will apply
in connection with a termination of the Plan:
(a) the Benefit of any highly compensated
employee (as defined in Section 414(q) of the Code) will be
limited to a Benefit which is
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<PAGE> 46
nondiscriminatory under Section 401(a)(4) of the Code and
regulations thereunder; and
(b) if and to the extent required by Section
401(a)(4) of the Code and regulations thereunder, annual payments
to each of the 25 highly compensated current and former employees
with the greatest compensation shall be limited to payments which
would be made under a single life annuity which is the actuarial
equivalent of such employee's accrued and other benefits under
the Plan.
10.06. Statutory Merger/Consolidation Rule. In the case of any
merger or consolidation of the Plan with, or any transfer of assets or
liabilities of the Plan to, any other plan, the benefit which each Participant
would be entitled to receive immediately after the merger, consolidation or
transfer (if the Plan then terminates) shall be equal to or greater than the
benefit he or she would have been entitled to receive immediately before the
merger, consolidation or transfer (as if the Plan had then terminated).
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<PAGE> 47
ARTICLE XI
MISCELLANEOUS
11.01. No Rights Conferred. Nothing herein will be deemed to give
any individual any right to be retained in the employ of the Company or an
Affiliate or any other rights in the future other than as herein specifically
set forth. Except as otherwise specifically required herein or by law, no
Participant, Beneficiary or other person will be entitled to inspect the books,
records, reports, financial statements or tax returns of the Company or an
Affiliate.
11.02. Benefits Limited to Trust Fund. No person will have any
right or interest in the Trust other than as provided herein. Any final
payment or distribution to a Participant or Beneficiary will be in full
satisfaction of all claims against the Trust, the Trustee, the Administrative
and Investment Committees, the Company, an Affiliate, the Board and any
fiduciary of the Plan or Trust. The Trustee or the Administrative Committee
may require a Participant or Beneficiary to execute a receipt and a general
release of any and all such claims upon a final payment or distribution, or a
receipt and/or release to the extent of any partial payment or distribution.
11.03. Spendthrift Provision. Except to the extent required by law
(e.g., in connection with qualified domestic relations orders within the
meaning of Section 414(p) of the Code), no benefit under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, encumber or charge the same shall be void. No such benefit
shall be in any way liable for or subject to the
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<PAGE> 48
debts, contracts, liabilities, engagements or torts of any person entitled to
those benefits. The Administrative Committee will establish such
procedures as may be necessary or appropriate in order to comply with the
provisions of ERISA and the Code in connection with qualified domestic
relations orders issued with respect to a Participant's interest in the Plan.
11.04. Payment to Minors or Incompetents. If any person to whom a
benefit is payable hereunder is an infant or if the Administrative Committee
determines that any person to whom such benefit is payable is incompetent by
reason of a physical or mental disability, the Administrative Committee may
cause the payments becoming due to such person to be made to another for
his or her benefit without responsibility of the Administrative Committee or
the Trustee to see to the application of such payments.
11.05. Severability. If any provision of the Plan or the
application of such provision to any person or circumstance is held invalid,
the remainder of the Plan (and the application of such provision to any person
or circumstance other than the person or circumstance to which it is held
invalid) will not be affected thereby.
11.06. Construction. The provisions of the Plan will be construed,
regulated and administered according to the provisions of ERISA, the Code and
to the extent not inconsistent therewith or preempted thereby, in accordance
with the laws of the State of Missouri.
PULITZER PUBLISHING COMPANY
Dated: 12/15/94 By: /s/ Ronald H. Ridgway
------------ -------------------------------
Senior Vice President - Finance
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<PAGE> 49
SCHEDULE A
JOSEPH PULITZER PENSION PLAN
NON-COVERED BARGAINING UNIT EMPLOYEES
Individuals who are employed by an Employer and who are
described below are not treated as Employees under Section 1.13
of the Plan:
1. A member of the International Brotherhood of
Teamsters, Chauffeurs, Warehousemen and Helpers, Local No. 610.
2. An individual who is a participant in the Pulitzer
Publishing Company Pension Plan or who would become a participant
in that plan upon satisfaction of that plan's eligibility
requirements, and members of any other bargaining unit not
specified above which is not designated as eligible to
participate by an Employer under the collective bargaining
agreement or otherwise.
<PAGE> 1
PULITZER PUBLISHING COMPANY
PENSION PLAN
(As Amended Through December 31, 1994)
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS
<TABLE>
<CAPTION>
Section
-------
<S> <C>
Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01
Actuarial Equivalent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.02
Administrative Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.03
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.04
Annuity Starting Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.05
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.06
Benefit Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.07
Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.08
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.09
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11
Covered Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.12
Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.13
Early Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.14
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.15
Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.16
Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.17
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.18
Investment Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.19
Monthly Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.20
Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.21
Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.22
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.23
Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.24
Prior Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25
Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.26
Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.27
Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.28
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.29
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.30
<CAPTION>
ARTICLE II - PARTICIPATION
<S> <C>
General Participation Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
Re-Employment Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02
Special Rule for Employees of
WDSU Television, Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
</TABLE>
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<PAGE> 3
ARTICLE III - RETIREMENT AND DISABILITY BENEFITS
<TABLE>
<CAPTION>
Section
-------
<S> <C>
Normal Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01
Late Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.02
Early Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.03
Disability Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.04
Maximum Benefit Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.05
Non-Duplication of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.06
ARTICLE IV - BENEFITS UPON TERMINATION OF EMPLOYMENT
Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.01
Deferred Vested Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02
Cashout of Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03
ARTICLE V - FORM AND PAYMENT OF RETIREMENT BENEFITS
Normal Form of Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.01
Waiver of Qualified Joint and
Survivor Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.02
Forms of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.03
Commencement of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.04
Special Distribution Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.05
Suspension of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.06
ARTICLE VI - DEATH BENEFITS
Eligibility for Death Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
Preretirement Survivor Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.02
Cashout of Spouse's Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.03
Time of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
Reduction of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
Waiver of Preretirement Survivor Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . 6.06
ARTICLE VII - TOP HEAVY PROVISIONS
Effect of Top Heavy Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
Definitions and Special Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.02
</TABLE>
-ii-
<PAGE> 4
ARTICLE VIII - ADMINISTRATION OF PLAN
<TABLE>
<CAPTION>
Section
-------
<S> <C>
Organization of Administrative Committee and
Procedural Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
Powers of Administrative Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.02
Operation of Administrative Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.03
Organization of Investment Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.04
Powers of Investment Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.05
Operation of the Investment Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.06
Resignation or Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.07
Records and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.08
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.09
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10
Claim for Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.11
Review of Denied Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.12
Standard of Judicial Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.13
ARTICLE IX - CONTRIBUTIONS AND TRUST FUND
Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.01
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.02
No Diversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.03
Benefits Provided Solely by Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.04
Return of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.05
Appointment of Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.06
ARTICLE X - AMENDMENTS AND TERMINATION
Company May Amend Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.01
Withdrawal of Participating Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.02
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
Distributions Upon Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.04
Restrictions on Benefits and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . 10.05
Statutory Merger/Consolidation Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.06
ARTICLE XI - MISCELLANEOUS
No Rights Conferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
Benefits Limited to Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.02
Spendthrift Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
Payment to Minors or Incompetents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05
Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.06
</TABLE>
-iii-
<PAGE> 5
PULITZER PUBLISHING COMPANY
PENSION PLAN
The Pulitzer Publishing Company Pension Plan was originally
established as of January 1, 1989, with benefits being based upon accruals
under certain Prior Plans, as well as future accruals under the Plan. The Plan
has also been updated as of January 1, 1989 (or such other dates specified
herein) to reflect changes made since January 1, 1989 and to satisfy the
applicable provisions of the Tax Reform Act of 1986, the Omnibus Budget
Reconciliation Act of 1986, the Omnibus Budget Reconciliation Act of 1987, the
Technical and Miscellaneous Revenue Act of 1988, the Omnibus Budget
Reconciliation Act of 1989, the Unemployment Compensation Amendments of 1992,
and the Omnibus Budget Reconciliation Act of 1993.
ARTICLE I
DEFINITIONS
Wherever used herein, the masculine includes the feminine, the
singular includes the plural, and the following terms have the following
meanings unless a different meaning is clearly required by the context.
1.01. "Accrued Benefit" means the amount of the Retirement
Benefit earned by a Participant under the Plan as of the determination date.
1.02. "Actuarial Equivalent" means equality in value of the
aggregate amounts expected to be received under different forms of payment
based upon the
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<PAGE> 6
following mortality and interest rate assumptions: (a) for determining the
value of benefit forms other than a lump sum, an annual interest rate of 7% and
mortality rates under a mortality table constructed from 80% of the male rates
and 20% of the female rates from the 1971 Group Annuity Mortality Table; and
(b) for determining lump sum values, mortality rates from the UP 84 Table (with
no adjustments) and the immediate and deferred interest rates for determining
lump sum distributions under terminating plans promulgated by the Pension
Benefit Guaranty Corporation as of the first day of the calendar quarter in
which the determination is made.
1.03. "Administrative Committee" means the administrative
committee appointed hereunder to administer the Plan.
1.04. "Affiliate" means any entity (whether or not
incorporated) which, by reason of its relationship with the Company, is
required to be aggregated with the Company under Section 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.05. "Annuity Starting Date" means the first day of the
first period for which an amount is payable as an annuity, or, in the case of a
benefit not payable in the form of an annuity, the first day on which all
events have occurred which entitle the Participant to such a benefit.
1.06. "Beneficiary" means any person entitled to receive
benefit payments under the Plan upon a Participant's death which are not
otherwise payable to the Participant's surviving Spouse. A Participant may
designate a Beneficiary on such forms and in such manner as may be prescribed
or permitted by the Administrative Committee. If no designated Beneficiary
shall survive a deceased Participant, then the Beneficiary shall be deemed to
be the deceased Participant's surviving Spouse, or, if none, the deceased
Participant's estate.
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<PAGE> 7
1.07. "Benefit Service" means all Service as an Employee
after 1988, except that no credit will be given for Service during a period of
absence due to voluntary termination of employment, retirement or discharge.
1.08. "Board" means the Board of Directors of the Company.
1.09. "Code" means the Internal Revenue Code of 1986 as it
now exists and as it is hereafter amended.
1.10. "Company" means Pulitzer Publishing Company.
1.11. "Compensation" means all regular cash compensation
(including commissions) paid by an Employer to an Employee during a
Plan Year which is required to be reported as wages on the Employee's Form W-2,
including such additional amounts (401(k) deferrals) which are not includable
in the Employee's gross income during said Plan Year by reason of the
application of Section 402(a)(8) of the Code, and excluding expense allowances,
as well as bonuses, overtime pay, and other extraordinary or irregular payments
(except commissions). For each Plan Year, Compensation in excess of $150,000
(or such greater amount as may be permitted by Section 401(a)(17) of the Code)
will be disregarded for all purposes under the Plan.
1.12. "Covered Compensation" means the amount of monthly
compensation with respect to which old age and survivors insurance benefits
would be provided to the Participant under the Social Security Act in effect as
of the date such Covered Compensation is determined, based on the following
assumptions:
(a) the determination of Covered Compensation is
made for each calendar year until the year in which the
Participant ceases to be an Employee;
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<PAGE> 8
(b) the Covered Compensation shall be determined
as if, for each calendar year before and including the year of
computation, the Participant's annual Compensation was equal
to the maximum amount of earnings subject to tax under the
Federal Insurance Contributions Act;
(c) for each subsequent calendar year through the
year in which the Participant reaches his or her Social Security
Retirement Age under Section 216(l) of the Social Security Act
(without regard to the age increase factor and as if the
retirement age under section 216(l)(2) were age 62), the
Participant's annual compensation equals the maximum amount of
earnings subject to tax under the Federal Insurance
Contributions Act; and
(d) 35 years of compensation shall be taken into
account in this determination, ending with the year in which
occurs the Participant's Social Security Retirement Age (as
described in (c) above).
1.13. "Disability" means the inability of an Employee to
perform the duties of any occupation for which he or she is reasonably suited
by reason of a physical or mental illness or disease which is expected to
result in death or to last indefinitely.
1.14. "Early Retirement Date" means the first day of any
month coinciding with or following the date the Participant attains age 55, but
not age 65 and has completed at least 5 years of Service.
1.15. "Effective Date" means January 1, 1989.
1.16. "Employee" means an individual who performs services
for an Employer in an employer-employee relationship, other than (a) an
individual who is included in a unit of employees covered by a collective
bargaining agreement, except
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<PAGE> 9
members of such unit who are designated in the agreement or otherwise by the
Employer as being eligible for participation in the Plan (listed on Schedule
A), (b) an individual who is on an Employer's "temporary payroll" or who is
classified as a union substitute employee, (c) guards employed on an hourly
basis by the Company, and (d) Joseph Pulitzer, Jr. Individuals who are treated
as independent contractors by the Company or an Affiliate, and leased employees
within the meaning of Section 414(n)(2) of the Code will be deemed not to be
Employees for purposes of the Plan.
1.17. "Employer" means the Company, Pulitzer Broadcasting
Company, Frank Popper Productions, Inc., WDSU Television, Inc. (as of January
1, 1990), and any other Affiliate which thereafter adopts the Plan with the
consent of the Board. Prior to merging into Pulitzer Broadcasting Company on
September 3, 1990, the following additional entities were Employers: KOAT
Television, Inc., KETV Television, Inc., Phoenix Broadcasting, Inc., and
WGAL-TV, Inc.
1.18. "ERISA" means the Employee Retirement Income Security
Act of 1974, as it now exists and as it is hereafter amended.
1.19. "Investment Committee" means the investment committee
appointed hereunder to oversee and monitor the investment of Plan assets.
1.20. "Monthly Compensation" means, for each Plan Year, an
amount equal to an Employee's Compensation divided by twelve, or, if less, the
number of months during the Plan Year in which the Employee is credited with at
least one hour of Benefit Service.
1.21. "Normal Retirement Date" means the later of the date
a Participant attains age 65 or the fifth anniversary of the date he or she
became a Participant.
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<PAGE> 10
1.22. "Participant" means an Employee participating in the
Plan in accordance with the provisions hereof.
1.23. "Plan" means the pension plan as set forth herein and any
amendments thereto.
1.24. "Plan Year" means the twelve-month period beginning
on the Effective Date and ending December 31, 1989, and each succeeding
twelve-month period thereafter.
1.25. "Prior Plan" means each of the following plans as in
effect on December 31, 1988:
Joseph Pulitzer Pension Plan
Employee Retirement Plan of KETV Television, Inc.
Retirement Plan for Employees of KOAT Television, Inc.
Phoenix Broadcasting, Inc. Retirement Plan
WGAL Pension Plan
Retirement Plan for Employees of WLKY and WPTA
Retirement Plan for Non-Bargained Employees of WYFF and WXII
Pension Plan for Bargained Employees of WXII.
1.26. "Retirement Benefit" or "Benefit" means the
retirement income which a Participant is receiving, or is or shall become
entitled to receive under the Plan.
1.27. "Service" means active employment with the Company or
an Affiliate, subject to the following special rules:
(a) for eligibility, vesting and Benefit accrual
purposes, an individual will be deemed to be actively
employed for the first twelve months of an absence from
work due to disability, sickness, layoff, leave of absence
or any other reason except voluntary termination of
employment, retirement, discharge or death;
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<PAGE> 11
(b) for eligibility and vesting purposes, but not
for Benefit accrual purposes, an individual will be deemed to
be actively employed during an absence from work due to
voluntary termination of employment, retirement or discharge
if the individual returns to active employment and performs an
hour of service within twelve months from the date of the
voluntary termination, retirement or discharge (or, if the
voluntary termination, retirement or discharge occurs during a
period of absence described in (a) above, before the first
anniversary of the date the earlier period of absence began);
(c) an individual will be deemed to be actively
employed during a period of active duty with the armed forces
of the United States (not included in (a) or (b) above) if he
or she returns to active employment and performs an hour of
service within the period provided by law for the protection
of his or her re-employment rights;
(d) if an individual is absent from work for more
than one year because of the individual's pregnancy, the birth
of the individual's child, the adoption of a child by the
individual, or the care of the individual's newborn or newly
adopted child, then, subject to an intervening voluntary
termination of employment or discharge, the individual will
neither be treated as absent from work nor credited with
Service during the second twelve months of that absence; and
(e) if an individual is separated from Service
for at least one year, his or her pre-separation Service will
not be taken into account for purposes of post-separation
participation, vesting and Benefit accrual
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<PAGE> 12
unless and until he or she again completes a year of Service,
provided, however, that, if the individual is separated from
Service before completing at least five years of Service and
if the period of the separation is more than five years, then
the period of his or her pre-separation Service will be
disregarded for all purposes hereof.
The period of an individual's Service will be measured in days; and one year of
Service will be the equivalent of 365 days of Service. An "hour of service" is
each hour for which an individual is directly or indirectly paid or entitled to
payment by the Company or an Affiliate for the performance of services.
Subject to the provisions of applicable law, the Board will determine the
extent, if any, to which service with a predecessor employer or service with an
Employer prior to the Employer's adoption of the Plan will be taken into
account for purposes of eligibility, vesting and/or Benefit accrual.
1.28. "Spouse" means the person to whom a Participant is
legally married on the Participant's Annuity Starting Date, or, if earlier, the
date of the Participant's death.
1.29. "Trust" means the trust established and maintained as
part of the Plan.
1.30. "Trustee" means the person or persons (including a
corporation) appointed and acting as trustee of the Trust.
-8-
<PAGE> 13
ARTICLE II
PARTICIPATION
2.01. General Participation Requirements. An Employee who
was a participant in a Prior Plan on December 31, 1988, will automatically
become a Participant in this Plan on the Effective Date. Any other Employee
will become a Participant on the first day of the month coincident with or next
following the attainment of age 21 and the completion of one year of Service.
2.02. Re-Employment Rules. A former Employee who was a
Participant and who again becomes an Employee will again become a Participant
on the date as of which he or she is again credited with Service as an
Employee; provided, however, that, a nonvested former Participant whose prior
Service is permanently disregarded (under the definition of "Service") will be
treated as a new employee upon his or her return to Service.
2.03. Special Rule for Employees of WDSU Television, Inc.
Service as an employee of WDSU Television, Inc. before January 1, 1990 will be
taken into account in determining Service for purposes of eligibility to
participate and vesting (but not for Benefit accrual) under the Plan.
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<PAGE> 14
ARTICLE III
RETIREMENT AND DISABILITY BENEFITS
3.01. Normal Retirement Benefit. Subject to the provisions
of Article VII, the monthly Retirement Benefit payable under Article V to a
Participant who retires on or after the Participant's Normal Retirement Date
shall be equal to the sum of (a) and (b), where --
(a) is the amount of the monthly normal
retirement benefit accrued by the Participant under a Prior
Plan as of December 31, 1988; and
(b) is the sum of:
(1) 1.5% of the Participant's Monthly
Compensation for each of the first 25 years of the
Participant's Benefit Service,
(2) 1% of the Participant's Monthly
Compensation for each subsequent year of
Benefit Service, and
(3) 0.5% of the Participant's Monthly
Compensation in excess of his or her Covered
Compensation for each year of Benefit Service
immediately preceding the determination date,
provided, however, that the number of years of
Benefit Service which may be taken into
account under this Section 3.01(b)(3) will not be
greater than the excess of 35 over the number of years
taken into consideration under Section 3.01(a).
Notwithstanding the above, except for Participants who are highly compensated
employees within the meaning of Section 414(q)(1)(A) or (B) of the Code, the
portion
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<PAGE> 15
of a Participant's Normal Retirement Benefit attributable to the 1989 Plan Year
shall not be less than the excess of the benefit the Participant would have
accrued under a Prior Plan if the Prior Plan had continued to the earlier of
the applicable determination date and December 31, 1989, over the benefit
actually accrued by the Participant under the Prior Plan as of December 31,
1988. No Plan distribution will be made after December 31, 1988 and before
January 1, 1990 to a Participant who is a highly compensated employee within
the meaning of Section 414(q)(1)(A) or (B) of the Code if and to the extent it
is based on an Accrued Benefit which exceeds the benefit accrued by the
Participant under a Prior Plan as of December 31, 1988.
3.02. Late Retirement Benefit. The monthly Retirement
Benefit payable to a Participant who retires after his or her Normal Retirement
Date shall not be less than the Actuarial Equivalent of the monthly Benefit
accrued by the Participant through his or her Normal Retirement Date.
3.03. Early Retirement Benefit. The monthly Retirement
Benefit payable under Article V to a Participant who retires on an Early
Retirement Date shall be the Participant's Accrued Benefit calculated in
accordance with Section 3.01, reduced by 1/180 for each of the first 60 months
that the Participant's Early Retirement Date precedes his or her Normal
Retirement Date and by 1/360 for each additional such month.
3.04. Disability Retirement Benefit. If a Participant's
employment is terminated by reason of Disability before the Participant's
Normal Retirement Date, then, for the purpose of determining the Participant's
Retirement Benefit under Section 3.01 or 3.03, as the case may be, the
Participant will be deemed to have continued his or her Service (and Benefit
Service) at the same rate of Compensation as in effect at
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<PAGE> 16
the time the Disability was incurred until the earliest of (a) the
Participant's Normal Retirement Date, (b) the Participant's Early Retirement
Date (as of which payment of the Participant's Benefit commences), (c) the date
the Participant's Disability ceases, and (d) the date of the Participant's
death; provided, however, that the disabled Participant's Covered Compensation
during the period of his or her Disability will be determined as of the date
the Disability was incurred.
3.05. Maximum Benefit Provisions. No Benefit will be
payable to a Participant or Beneficiary in excess of the benefit permitted to
be paid under Section 415 of the Code and the regulations thereunder. As long
as the Employer maintains a defined contribution plan, the Participant's
Benefit under this Plan will be reduced in lieu of a reduction in contributions
or allocations under the defined contribution plan. For the purpose of
applying Section 415 of the Code, the limitation year will be the calendar
year.
3.06. Non-Duplication of Benefits. The Retirement Benefit
payable under the Plan to a Participant shall be reduced by any other pension
benefits payable to such Participant under any other qualified defined benefit
plan maintained by the Company and/or any Affiliate with respect to the same
period of service. When any such reduction is required, it shall be made by
actuarially converting the value of the other pension benefits into a pension
payable on the same basis and terms as the Benefit payable under the Plan.
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<PAGE> 17
ARTICLE IV
BENEFITS UPON TERMINATION OF EMPLOYMENT
4.01. Vesting. A Participant will become fully vested in
his or her Accrued Benefit upon the completion of five years of Service
(excluding, for this purpose, Service prior to age 18 and Service otherwise
disregarded hereunder). A Participant will have no vested interest in his or
her Accrued Benefit before the completion of five years of Service (as
described in the preceding sentence).
4.02. Deferred Vested Benefit. A Participant who separates
from Service (for any reason other than death or Disability) before reaching
his or her Early Retirement Date but after becoming vested in his or her
Accrued Benefit will be entitled, on his or her Normal Retirement Date, to the
Retirement Benefit determined under section 3.01 (as of the date of the
separation from Service). A Participant may elect to receive his or her
deferred vested Benefit on or after the Participant's Early Retirement Date,
subject to the reductions set forth in Section 3.03. A Participant's deferred
vested Benefit will be payable in accordance with Article V.
4.03. Cashout of Accrued Benefit. Notwithstanding any
other provision of the Plan, if the Actuarial Equivalent of the vested Accrued
Benefit of a separated Participant (or of an alternate payee under a qualified
domestic relations order) does not exceed $3,500 (or such greater amount which
may be cashed out without consent under Section 417(e) of the Code), then the
Benefit will be paid to the Participant (or the alternate payee) in the form
of an immediate lump sum. Any such payment shall be made as soon as practicable
after the Participant's termination of Service or retirement (or the date it
would otherwise become payable under a qualified domestic
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<PAGE> 18
relations order), and shall be in lieu of the Benefits otherwise payable
hereunder. If a Participant receives a single sum cashout and later resumes
employment covered under the Plan, then, except as otherwise required by
applicable law, the Participant's Benefits upon a later termination of Service
will be computed without regard to the Compensation and Benefit Service
attributable to his or her prior period of Service.
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<PAGE> 19
ARTICLE V
FORM AND PAYMENT OF RETIREMENT BENEFITS
5.01. Normal Form of Benefit. Unless a Participant elects
an optional form of payment, his or her Retirement Benefit shall be payable in
the form of a single life annuity, as described in Section 5.03(a), or, in the
case of a Participant who is married on the Annuity Starting Date, in the form
of a qualified joint and survivor annuity, as described in Section 5.03(b).
5.02. Waiver of Qualified Joint and Survivor Annuity.
(a) Notice of Election. No less than 30 days and
no more than 90 days before the Annuity Starting Date, the Administrative
Committee shall provide a Participant with a written explanation of (1) the
terms and conditions of the qualified joint and survivor annuity, (2) the
Participant's right to waive that form of payment and the effect of the waiver,
(3) the rights of the Participant's Spouse with respect to the waiver, (4) the
right to make, and the effect of, a revocation of a previous waiver, and (5)
the relative values of the optional forms of payment of the Participant's
Retirement Benefit.
(b) Conditions of Waiver. A Participant may
elect to waive the qualified joint and survivor annuity form of payment and to
receive payment of his or her Retirement Benefit under another payment form
only if the waiver is made within the 90-day period ending on the Participant's
Annuity Starting Date. The waiver shall not take effect unless the
Participant's Spouse consents to the waiver and to the designation of another
Beneficiary and/or the election of another form of payment. The Spouse's
consent must be in writing and the Spouse's signature must be witnessed by
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<PAGE> 20
a notary public or an appropriate Plan official. Spousal consent will not be
required if it is established to the satisfaction of the Administrative
Committee that the Participant does not have a Spouse, that the Participant's
Spouse cannot be located or that the Spouse's consent cannot be obtained
because of other circumstances permitted by applicable law. Subject to
applicable law, the Spouse's consent may provide that no further consent will
be required if, before the Annuity Starting Date, the Participant elects a
different form of payment and/or designates a different Beneficiary. An
election to waive the qualified joint and survivor annuity form of payment may
be revoked by a Participant at any time prior to the Annuity Starting Date.
5.03. Forms of Payment. Subject to the provisions hereof
with respect to mandatory single sum cashouts and mandatory qualified joint and
survivor annuity payouts, a Participant may elect to receive his or her
Retirement Benefits in one of the forms set forth below. Payments under each
form shall be made in monthly installments. Payments under a form other than a
single life annuity described in Section 5.03(a) shall be the Actuarial
Equivalent of the single life annuity form of payment.
(a) Life Annuity. Under this option, payment of
monthly installments will be made to the Participant for the
lifetime of the Participant and will cease upon the
Participant's death.
(b) Qualified Joint and Survivor Annuity. Under
this option, payment of reduced monthly installments will be
made to the Participant for the lifetime of the Participant.
If the Participant predeceases his or her Spouse, payment of
monthly installments equal to 50% of the
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<PAGE> 21
Participant's monthly installments will continue to the
Spouse for the Spouse's lifetime.
(c) Joint and Survivor Annuity. Under this
option, payment of reduced monthly installments will be made
to the Participant for the lifetime of the Participant. If the
Participant predeceases his or her Beneficiary, payment of
monthly installments equal to 50% or 100% of the
Participant's monthly installments, as elected by the
Participant prior to the Annuity Starting Date, will be made
to the Beneficiary for the Beneficiary's lifetime.
(d) Ten Years Certain and Life Annuity. Under
this option, payment of reduced monthly installments will be
made to the Participant for the Participant's lifetime. If
the Participant dies before 120 monthly installments have been
paid, then payment of the same monthly installments will be
made to the Participant's Beneficiary until a total of 120
monthly installments have been paid. If, upon the
Participant's death, there is no living designated
Beneficiary, the commuted value of the unpaid installments
shall be paid to the Participant's estate.
A Participant who was a participant in a Prior Plan may elect an optional form
of payment available under the Prior Plan which is not otherwise available
under this Plan.
5.04. Commencement of Benefits. The payment of Benefits to
a Participant shall commence no later than 60 days after the close of the Plan
Year in which the Participant reaches his or her Normal Retirement Date, or, if
later, in which the Participant separates from Service. Notwithstanding
anything to the contrary
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<PAGE> 22
contained herein, distribution of a Participant's Benefits must commence no
later than the April 1 following the year in which the Participant attains age
70 1/2; provided, however, that, in the case of an active Participant who
attained age 70 1/2 prior to January 1, 1988 and who is not a 5% owner (as
defined in Section 416 of the Code), distribution need not commence until the
April 1 of the year following the year in which the Participant actually
retires.
5.05. Special Distribution Rules.
(a) General. Except as otherwise provided in
Section 5.03(b) (with respect to the payment of a qualified joint and
survivor annuity), the provisions of this Section will apply to any
distribution of a Participant's Benefit and will take precedence over
any inconsistent provisions of the Plan. All benefit distributions
must comply with Sections 401(a)(9) and (14) of the Code and
regulations thereunder.
(b) Payout Periods. Subject to the requirements
of applicable law with respect to the incidentality of death benefits,
payment of a Participant's Benefits, if not made in a single sum,
shall be made over one of the following periods (or a combination
thereof): (1) the life of the Participant, (2) the lives of the
Participant and a designated Beneficiary, (3) a period not extending
beyond the life expectancy of the Participant, or (4) a period not
extending beyond the life expectancy of the Participant and a
designated Beneficiary.
(c) Benefits Payable on Death. If the
distribution of a Participant's Benefit has begun in accordance with
the preceding paragraph and the Participant dies, then the remaining
Benefit, if any, payable to the deceased Participant's Beneficiary
shall be distributed at least as rapidly as under the method of
distribution in effect as of the Participant's date of death.
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<PAGE> 23
5.06 Distributions Made on or After January 1, 1993. This
Section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this Section, a distributee may elect, at
the time and in the manner prescribed by the Administrative Committee, to have
any portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover. For the
purposes of this Section, the following terms shall have the following
meanings:
(a) 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 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 joint life expectancies) of the distributee and
the distributee's designated beneficiary, or for a specified period of
ten years or more; any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; and the portion of any
distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities.)
(b) Eligible Retirement Plan. An eligible retirement
plan is an individual retirement account described in Section 408(a)
of the Code, an individual retirement annuity described in Section
403(b) of the Code, an annuity plan described in Section 403(a) of the
Code, or a qualified trust described in Section 401(a) of the Code,
that accepts the distributee's eligible rollover
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<PAGE> 24
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is
an individual retirement account or individual retirement annuity.
(c) Distributee. A distributee includes an Employee or
former Employee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's spouse or
former spouse who is the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the Code, are
distributees with regard to the interest of the spouse or former
spouse.
(d) Direct Rollover. A direct rollover is a payment by
the Plan to the eligible retirement plan specified by the distributee.
If a distribution is one to which Sections 401(a)(11) and 417 of the Code do
not apply, such distribution may commence less than 30 days after the notice
required under Section 1.411(a)-11(c) of the Federal Income Tax Regulations is
given, provided that (a) the Participant is notified that he or she has at
least 30 days to consider the decision of whether or not to elect a
distribution and, if applicable, a particular distribution option, and (b) the
Participant, after receiving such notice, affirmatively elects a distribution
and, if applicable, a particular distribution option.
5.07 Suspension of Benefits.
(a) Suspension on Re-Employment. Retirement
Benefits in pay status will be suspended for each calendar month following the
Annuity Starting Date during which a Participant completes at least 40 hours of
service with an Employer, or, if the actual number of hours of service is not
determined, such Participant performs an hour of service on each of 8 or more
days (or separate work shifts).
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(b) Resumption of Payments. Payment of Benefits
suspended in accordance with this Section shall resume no later than the first
day of the third calendar month following the calendar month in which the
Participant again fails to complete at least 40 hours of service with an
Employer or to perform an hour of service on each of 8 or more days (or
separate work shifts). The initial payment upon resumption shall include the
payment scheduled to occur in the calendar month when payments resume and any
amounts withheld during the period between the last cessation of employment and
the resumption of payments, less any amounts which are subject to offset.
(c) Notice of Suspension. No Benefit payments
may be suspended pursuant to this Section unless the Administrative Committee
notifies the Participant of the suspension by personal delivery or first class
mail during the first calendar month of the suspension. Such notice shall
comply in form and content with the provisions of applicable law.
(d) Amount of Suspended Payments. The amount of
a Participant's monthly Benefit which may be suspended shall not exceed the
lesser of: (1) the amount which would have been payable to the Participant if
he or she had been receiving monthly benefits under the Plan since actual
retirement based on a single life annuity commencing at actual retirement age,
or (2) the actual amount paid or scheduled to be paid to the Participant for
such month.
(e) Procedures. The Administrative Committee
shall establish procedures which are consistent with Department of Labor
Regulation Section 2530.203-3, including, but not limited to, procedures for
the resumption of benefits and the offsetting of benefit overpayments, if any.
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ARTICLE VI
DEATH BENEFITS
6.01. Eligibility for Death Benefits.
(a) Death After Benefits Begin. If a Participant
dies after payment of his or her Retirement Benefit begins, then no benefit
will be payable by reason of the Participant's death except as provided under
the form of payment of the Participant's Benefit in effect at the time of the
Participant's death.
(b) Death Before Benefits Begin. Except as
otherwise provided in Section 6.01(c) (with respect to surviving Spouses'
annuities), no benefit is payable by reason of the death of a Participant if
the Participant dies before payment of his or her Retirement Benefit begins.
(c) Preretirement Spouse Benefit. If a vested
Participant (1) dies before payment of his or her Retirement Benefit begins,
(2) is survived by a Spouse to whom the Participant was married throughout the
one-year period ending on the date of the Participant's death, and (3) is
credited with at least one hour of service with an Employer after 1975, then,
unless waived, the Participant's surviving Spouse will be entitled to receive
the preretirement survivor annuity described in Section 6.02.
6.02. Preretirement Survivor Annuity.
(a) Death After Age 55. If a Participant
described in Section 6.01(c) dies after age 55, then the Participant's
surviving Spouse will be entitled to receive monthly payments for the Spouse's
lifetime equal to the monthly payments which would have been made if the
Participant had retired on the day before his or her death and had begun to
receive a Retirement Benefit in the form of a qualified joint and
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survivor annuity as described in Section 5.03(b), or, if the Participant dies
after December 31, 1990, and after reaching age 60 and completing at least 20
years of Service, in the form of a joint and 100% survivor annuity as described
in Section 5.03(c), with the Participant's Spouse as the survivor annuitant.
(b) Death at or Before Age 55. If a Participant
described in Section 6.01(c) dies at or before age 55, then the Participant's
surviving Spouse will be entitled to receive monthly payments for the Spouse's
lifetime equal to the monthly payments which would have been made if the
Participant had (1) separated from Service on his or her date of death (or
actual date of separation from Service, if earlier), (2) survived until age 55,
(3) retired at that time with a qualified joint and survivor annuity as
described in Section 5.03(b), and (4) died on the day thereafter.
6.03. Cashout of Spouse's Annuity. Notwithstanding any
other provision of the Plan, if the Actuarial Equivalent of a preretirement
survivor annuity payable under Section 6.02 does not exceed $3,500 (or such
greater amount which may be cashed out without consent under Section 417(e) of
the Code), then payment will be made in the form of a single sum in lieu of the
preretirement survivor annuity which would otherwise be payable. No single sum
payment may be made in lieu of a preretirement survivor annuity after the
Annuity Starting Date, unless the surviving Spouse consents in writing to such
payment.
6.04. Time of Payment. Unless the surviving Spouse elects
a later date (no later than the Normal Retirement Date of the deceased
Participant), preretirement survivor annuity payments described in Section 6.02
shall commence as of the first day of the month coincident with or next
following the later of (a) the date of the
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Participant's death, and (b) the date the Participant would have reached
age 55 if he or she had not died.
6.05. Reduction of Benefits. Except as may be prohibited
by applicable law, a Participant's Retirement Benefit will be reduced for
each year (or portion thereof) during which the Plan's preretirement survivor
annuity coverage was in effect. The applicable reduction percentage for
each year (or portion thereof) after 1988 will be as follows:
<TABLE>
<CAPTION>
Age in Year of Coverage Survivor Reduction Percentage
----------------------- -----------------------------
<S> <C>
Below age 35 None
35-44 .1% per year
45-54 .2% per year
55 and over .5% per year
</TABLE>
The total reduction percentage will be the sum of the annual reduction
percentages determined under the above table, plus the reduction percentage (if
any) which had accumulated under a Prior Plan.
6.06. Waiver of Preretirement Survivor Annuity.
(a) Notice of Election. The Administrative
Committee will provide a Participant with a written explanation of (1) the
terms and conditions of the Plan's preretirement survivor annuity, (2) the
Participant's right to waive the survivor annuity and the effect of the
waiver, (3) the rights of the Participant's Spouse with respect to the
waiver, and (4) the right to make, and the effect of, a revocation of a
previous waiver. Except as otherwise permitted by applicable law, the
written explanation will be furnished within whichever of the following
periods ends last: (x) the period beginning with the first day of the
Plan Year in which the Participant attains age 32 and ending with the
close of the Plan Year preceding the Plan Year in
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which the Participant attains age 35; (y) a reasonable period ending after
the Participant becomes covered by the Plan; and (z) a reasonable period
ending after Section 401(a)(11) of the Code first becomes applicable
to the Participant. In the case of a Participant who separates from
Service before age 35, the applicable period will be a reasonable period
of time ending after the Participant's separation from Service; and,
if the Participant thereafter returns to Service, the applicable period for the
Participant shall be redetermined.
(b) Conditions of Waiver. A Participant may
elect to waive the Plan's preretirement survivor annuity within the period
beginning on the first day of the Plan Year in which the Participant attains
age 35 or separates from Service, whichever is earlier, and ending on the date
of the Participant's death. The waiver shall not take effect unless the
Participant's Spouse consents to the waiver. The Spouse's consent must be in
writing and must acknowledge the effect of the waiver, and the Spouse's
signature must be witnessed by a notary public or an appropriate Plan official.
Spousal consent will not be required if it is established to the satisfaction
of the Administrative Committee that the Participant does not have a Spouse,
that the Spouse cannot be located or that the Spouse's consent cannot be
obtained because of other circumstances permitted by applicable law. An
election to waive the Plan's preretirement survivor annuity may be revoked by
the Participant at any time prior to the Participant's death.
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ARTICLE VII
TOP HEAVY PROVISIONS
7.01. Effect of Top Heavy Status. Notwithstanding anything
contained herein to the contrary, if the Plan is a top heavy plan for any Plan
Year, and if any Participant who is a non-key Employee does not accrue the
minimum benefit or contribution described in Section 416(c)(1) or (c)(2) of the
Code for that Plan Year under this Plan and any other defined benefit and
defined contribution plan which is required or permitted to be aggregated with
the Plan for purpose of applying Section 416 of the Code, then the
Participant's Benefit accrual for the Plan Year shall be increased (regardless
of whether such Participant completes 1,000 Hours of Service for such Year and
regardless of his or her level of compensation) if and to the extent necessary
in order to satisfy the minimum benefit requirements of Section 416(c)(1) of
the Code (determined with regard to Section 416(f) of the Code) with respect to
such Participant for such Plan Year. In addition, to the extent required,
vesting in such Participant's minimum required Benefit shall be determined
under the vesting schedule of Section 416(b)(1)(B) of the Code. The additional
benefit accrual and modified vesting requirements of Section 416 of the Code
will not affect Benefits and vesting under this Plan for a Participant if and
to the extent that the minimum top heavy contribution or benefit requirement is
satisfied by another qualified plan of the Company or an Affiliate.
7.02. Definitions and Special Rules.
(a) Top Heavy Status. The Plan is a top heavy
plan if, as of the determination date, the aggregate Account values of all key
Employees under the Plan
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(required to be taken into account for this purpose) plus the aggregate account
values and the aggregate present values of accrued benefits for all key
Employees under all other plans which are aggregated with this Plan (required
to be taken into account for this purpose) exceed sixty percent of all such
aggregate values for all Employees or former Employees (other than former key
Employees) under the Plan and such other plans. The determination of the top
heavy status of the Plan will be made in accordance with the provisions of
Section 416 of the Code and the regulations promulgated thereunder which are
specifically incorporated herein by reference.
(b) Aggregation of Plans. Each plan of the
Company or an Affiliate in which a key Employee participates and each other
plan which enables such plan to meet the requirements of Section 401(a)(4) or
Section 410(b) of the Code will be aggregated with this Plan, and all
additional plans which the Company designates will be aggregated with this Plan
if and to the extent that the resulting group of plans satisfies the coverage
and nondiscrimination tests of Sections 401(a)(4) and 410 of the Code.
(c) Determination Date. For purposes of
determining whether the Plan is a top heavy plan for a Plan Year, the
determination date is the last day of the preceding Plan Year.
(d) Key Employee. The term "key Employee" means
a key employee described in Section 416(i)(1) of the Code, and the term
"non-key Employee" means any Employee who is not a key Employee.
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<PAGE> 32
ARTICLE VIII
ADMINISTRATION OF PLAN
8.01. Organization of Administrative Committee and
Procedural Matters. The Plan will be administered by an Administrative
Committee composed of at least three individuals appointed by the Board. Each
member of the Administrative Committee will serve at the pleasure of the Board
and without compensation. Action by the Administrative Committee may be taken
by a vote of a majority of its members then serving or in a writing without a
meeting signed by all of its members. Unless the Board appoints officers, the
Administrative Committee may designate one of its members as the Chairman and
shall elect a Secretary who may but need not be a member of the Administrative
Committee. No member of the Administrative Committee shall participate in the
determination of any of his or her rights or benefits under the Plan.
8.02. Powers of Administrative Committee. The
Administrative Committee will administer the Plan and will have complete
control in the administration thereof. In exercising any of its discretionary
powers with respect to the administration of the Plan, the Administrative
Committee will act in a uniform and non-discriminatory manner. The
Administrative Committee will have all powers which are reasonably necessary to
carry out its responsibilities under the Plan including, without limitation,
the power to construe the Plan and to determine all questions which may arise
thereunder. The decision of the Administrative Committee as to any disputed
question arising hereunder, including questions of construction, interpretation
and administration, shall be final and conclusive on all persons. All
disbursements by
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the Trustee, except for reasonable expenses of administering the Trust assets,
shall be made upon and in accordance with the instructions of the
Administrative Committee. The Administrative Committee shall have no power,
authority or responsibility with respect to the management, investment or
control of Trust assets.
8.03. Operation of Administrative Committee. The
Administrative Committee may adopt such rules and regulations as it deems
necessary or appropriate for the conduct of its affairs. The Administrative
Committee may appoint from among its members such subcommittees with such
powers as it shall determine and may employ such accountants, actuaries,
counsel, administrators and other agents (clerical and otherwise) and services
as it deems necessary or desirable in connection with the performance of its
functions hereunder and in order to carry out the provisions of the Plan.
Decisions and directions of the Administrative Committee may be communicated to
the Trustee, a Participant, a Beneficiary, the Company or any other person who
is to receive such decision or direction by a document signed by any one or
more members of the Administrative Committee (or persons other than members) so
authorized, and such decision or direction of the Administrative Committee may
be relied upon by its recipient as being the decision or direction of the
Administrative Committee.
8.04. Organization of Investment Committee. The Plan
assets will be administered and invested in the manner determined by an
Investment Committee composed of not less than three members appointed by the
Board. Each member of the Investment Committee will serve at the pleasure of
the Board and without compensation. The Investment Committee (and each member
thereof) is a "named fiduciary" of the Plan. Action by the Investment
Committee may be taken by the vote of a majority of its members then serving at
a meeting or in a writing without a
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<PAGE> 34
meeting signed by all of its members. Unless the Board appoints officers, the
Investment Committee may designate one of its members as the Chairman and shall
elect a Secretary who may but need not be a member.
8.05. Powers of Investment Committee. The Investment
Committee shall establish a funding policy and method consistent with the
objectives of the Plan and requirements of ERISA, and shall communicate such
policy to the Trustee and any investment manager. The Investment Committee
shall have the following powers, duties and authority with respect to the
investment of Plan assets:
(a) to select and appoint one or more investment
managers to manage, acquire or dispose of any or all of the
assets of the Plan, provided, however, that any such
investment manager is described in Section 3(38)(B) of ERISA
and has acknowledged in writing that he is a fiduciary with
respect to the Plan;
(b) to monitor and evaluate the performance of
the Trustee and/or any investment manager;
(c) to direct the Trustee in connection with
the exercise of investment or asset management
responsibilities under the Trust Agreement; and
(d) to approve accounts rendered from time to
time by the Trustee, and to release, relieve and discharge the
Trustee with respect to all matters set forth in any such
account, or to object to any such account.
8.06. Operation of the Investment Committee. The Investment
Committee may adopt such rules and regulations as it deems desirable for the
conduct of its affairs, and may employ such accountants, actuaries, counsel and
other specialists
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as it deems necessary or desirable in connection with the performance of its
functions hereunder. The Investment Committee shall be entitled to rely
conclusively upon, and shall be fully protected in any action taken by it in
good faith in relying upon, any opinions or reports which shall be furnished to
it by any such accountant, actuary, counsel or other specialist. Decisions and
directions of the Investment Committee may be communicated to the Trustee, an
investment manager, the Company or any other person who is to receive such
decision or direction by a document signed by any one or more members of the
Investment Committee (or persons other than members) so authorized, and such
decision or direction of the Investment Committee may be relied upon by its
recipient as being the decision or direction of the Investment Committee.
8.07. Resignation or Removal. Any member of the
Administrative Committee or the Investment Committee may resign by giving
written notice to the Board not less than 30 days before the effective date of
his or her resignation. Any member of the Administrative Committee or the
Investment Committee may be removed, with or without cause, at any time by the
Board. The Board shall fill vacancies as soon as is reasonably practicable
after a vacancy occurs and, until a new appointment is made, the remaining
members shall have the full authority to act.
8.08. Records and Reports. The Administrative Committee
and the Investment Committee shall keep records of their proceedings and acts
and shall keep or cause to be kept all such books of account, records and other
data as may be necessary in connection with the performance of their functions
hereunder.
8.09. Expenses. All expenses incurred in connection with
the administration of the Plan and the Trust Fund, including, without
limitation, fees of accountants, actuaries, counsel, investment managers and
other agents, and other costs
-31-
<PAGE> 36
of administering the Plan and the Trust Fund, shall be paid by the Trustee out
of the Trust Fund, unless paid by the Company.
8.10. Indemnification. The Company shall indemnify each
member of the Administrative Committee, each member of the
Investment Committee, each member of the Board, and any of its (or an
Affiliate's) employees to whom a fiduciary responsibility with respect to the
Plan is allocated or delegated from and against all liabilities, costs and
expenses, including counsel fees, amounts paid in settlement and amounts of
judgments, fines or penalties, incurred or imposed upon such person in
connection with any claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative, arising by reason of or in connection with
acts or omissions in his or her capacity as a fiduciary hereunder, provided
that such act or omission is not the result of willful neglect or fraud.
8.11 Claim for Benefits. When a benefit is due, the
Participant or Beneficiary should submit his claim to the person or office
designated by the Administrative Committee to receive claims. Under normal
circumstances, a final decision shall be made as to a claim within 90 days
after receipt of the claim. If the Administrative Committee notifies the
claimant in writing during the initial 90 day period, it may extend the period
up to 180 days after the initial receipt of the claim. The written notice must
contain the circumstances necessitating the extension and the anticipated date
for the final decision. If a claim is denied during the claims period, the
Administrative Committee must notify the claimant in writing. The denial must
include the specific reasons for it, the Plan provisions upon which the denial
is based, and the claims review procedure. If no action is taken during the
claims period, the claim is treated as if it were denied on the last day of the
claims period.
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<PAGE> 37
8.12 Review of Denied Claims. If a Participant's or
Beneficiary's claim is denied and the claimant wants a review, he or she must
apply to the Administrative Committee in writing. That application may include
any comment or argument the claimant wants to make. The claimant may either
represent himself or appoint a representative, either of whom has the right to
inspect all documents pertaining to the claim and its denial. The
Administrative Committee may schedule any meeting with the claimant or his
representative that it finds necessary or appropriate to complete its review.
The request for review must be filed within 60 days after the denial. If it is
not, the denial becomes final. If a timely request is made, the Administrative
Committee must make its decision, under normal circumstances, within 60 days of
the receipt of the request for review. However, if the Administrative
Committee notifies the claimant prior to the expiration of the initial review
period, it may extend the period of review up to 120 days following the initial
receipt of the request for a review. All decisions of the Administrative
Committee must be in writing and must include the specific reasons for their
action and the Plan provisions on which their decision is based. If a decision
is not given to the claimant within the review period, the claim is treated as
if it were denied on the last day of the review period.
8.13 Standard of Judicial Review. The Administrative
Committee has full and absolute discretion in the exercise of each and every
aspect of its authority under the Plan, including without limitation, the
authority to determine any person's right to benefits under the Plan, the
correct amount and form of any benefits, the authority to decide any appeal,
the authority to review and correct the actions of any prior administrative
committee, and all of the rights, powers, and authorities specified in the
Plan. Notwithstanding any provision of law or any explicit or implicit
provision
-33-
<PAGE> 38
of this document or, any action taken, or ruling or decision made, by the
Administrative Committee in the exercise of any of its powers and authorities
under the Plan shall be final and conclusive as to all parties (other than the
Company, an Employer other than the Company or the Trustee), including without
limitation all Participants and Beneficiaries, regardless of whether the
Administrative Committee or one or more of its members may have an actual or
potential conflict of interest with respect to the subject matter of the
action, ruling, or decision. No final action, ruling, or decision of the
Administrative Committee shall be subject to de novo review in any judicial
proceeding; and no final action, ruling, or decision of the Administrative
Committee may be set aside unless it is held to have been arbitrary and
capricious by a final judgment of a court having jurisdiction with respect to
the issue.
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ARTICLE IX
CONTRIBUTIONS AND TRUST FUND
9.01. Employer Contributions. The contributions required
to fund the cost of the benefits provided by the Plan will be made solely by
the Employers at such times and in such amounts as the Company, acting upon
advice of the Plan's independent actuarial consultants, shall determine.
9.02. General. The Trust corpus will consist of all
payments to the Trustee as provided herein, together with the net income or
loss (including capital items) produced by the investments of the Trust or the
sale of any such investments, which will be added to or deducted from the
Trust. The Trust assets will be held, administered and invested in the manner
provided in the agreement pursuant to which the Trust is governed.
9.03. No Diversion. All assets of the Trust will be owned
by the Trustee. Except as otherwise provided herein, no Part of the Trust
assets may be used for or diverted to purposes other than for the exclusive
benefit of Participants and their Beneficiaries.
9.04. Benefits Provided Solely by Trust Fund. All benefits
payable under the Plan will be paid or provided solely from the Trust assets,
and no Employer assumes any liability or responsibility therefor.
9.05. Return of Contributions. All Employer contributions
are conditioned upon their deductibility for federal income tax purposes under
Section 404 of the Code and upon continuing qualification of the Plan under
Section 401(a) of the
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<PAGE> 40
Code. Notwithstanding anything to the contrary contained herein, amounts
contributed by an Employer shall be returned to the Employer under the
following conditions:
(a) if a contribution was made by a mistake of
fact, the excess of the amount of such contribution over the
amount that would have been contributed had there been no
mistake of fact shall be returned to the Employer within one
year after the payment of the contribution;
(b) if the Employer makes a contribution which is
not deductible under Section 404 of the Code, such
contribution (but only to the extent disallowed) shall be
returned to the Employer within one year after the
disallowance of the deduction; and
(c) if the Employer makes a contribution which is
conditioned upon initial qualification of the Plan (as to that
Employer) under the Code and if the Plan does not so qualify,
then such contribution shall be returned to the Employer
within one year after the date of denial of qualification of
the Plan.
9.06. Appointment of Investment Manager. The Investment
Committee may appoint one or more investment managers to manage any
assets of the Plan. As used herein, the term "investment manager" means any
person or entity who: (a) has power to manage, acquire or dispose of any assets
of the Plan; (b) is (1) registered as an investment adviser under the Investment
Advisers Act of 1940, (2) a bank, as defined in that Act, or (3) an insurance
company qualified under the laws of more than one state to perform services
described in (a) above; and (c) has acknowledged in a writing delivered to the
Investment Committee and the Trustee that he is a fiduciary with respect to the
Plan. The investment manager(s) will have such powers and
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<PAGE> 41
responsibilities as may be conferred under the Trust Agreement and the
investment management agreement.
-37-
<PAGE> 42
ARTICLE X
AMENDMENTS AND TERMINATION
10.01. Company May Amend Plan. The Company reserves the
right, by action of the Board at any time or from time to time, to modify or
amend this Plan in whole or in part. No amendment will:
(a) vest in an Employer an interest in the Trust
Fund, or cause or permit the Trust Fund to be diverted to any
purpose other than the exclusive benefit of Participants and
Beneficiaries prior to the satisfaction of all liabilities to
Participants and Beneficiaries;
(b) decrease accrued benefits of any Participant
or Beneficiary or eliminate an optional form of payment,
except to the extent permitted by applicable law;
(c) discriminate in favor of Participants who are
highly compensated employees (within the meaning of Section
414(q) of the Code) in a manner which is prohibited by Section
401(a)(4) of the Code and regulations thereunder; or
(d) increase substantially the duties or
liabilities of the Trustee or the members of the Investment
Committee without its or their written consent.
10.02. Withdrawal of Participating Employer. An Employer may
withdraw from the Plan and the Trust by giving written notice to the
Administrative Committee of its intent to withdraw. The Administrative
Committee will then determine the portion of the Trust assets attributable to
the Participants employed by
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the withdrawing Employer and will notify the Trustee to segregate those assets
and transfer them to the successor trustee or trustees when it receives a
designation of the successor from the withdrawing Employer. A withdrawal will
not terminate the Plan with respect to the withdrawing Employer if the Employer
appoints a successor trustee or trustees and establishes another plan and trust
intended to qualify under Section 401(a) of the Code.
10.03. Termination. The Board may terminate the Plan with
respect to any or all Employers. Any Employer (by action of its board of
directors) may terminate the Plan with respect to itself. If there is a
partial or total termination of the Plan or there is a complete discontinuance
of an Employer's Contributions, all affected Participants will immediately
become 100% vested in their Accrued Benefits.
10.04. Distributions Upon Termination. Subject to the
provisions of applicable law (or the provisions of a Plan amendment adopted in
connection with a Plan termination), distribution of affected Participants'
Accrued Benefits as a result of the termination or partial termination of the
Plan shall be made as soon as practicable. Plan assets will be allocated in
accordance with Section 4044 of ERISA. To the extent permitted by law, any
residual assets of the Plan shall be distributed to the Employer after all
liabilities of the Plan to Participants and Beneficiaries have been satisfied.
10.05. Restrictions on Benefits and Distributions.
Notwithstanding anything to the contrary contained herein, the following
restrictions on Benefits and distributions will apply in connection with a
termination of the Plan:
(a) the Benefit of any highly compensated
employee (as defined in Section 414(q) of the Code) will be
limited to a Benefit which is
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nondiscriminatory under Section 401(a)(4) of the Code and
regulations thereunder; and
(G) if and to the extent required by Section
401(a)(4) of the Code and regulations thereunder, annual
payments to each of the 25 highly compensated current and
former employees with the greatest compensation shall be
limited to payments which would be made under a single life
annuity which is the actuarial equivalent of such employee's
accrued and other benefits under the Plan.
10.06. Statutory Merger/Consolidation Rule. In the case
of any merger or consolidation of the Plan with, or any transfer of
assets or liabilities of the Plan to, any other plan, the benefit which each
Participant would be entitled to receive immediately after the merger,
consolidation or transfer (if the Plan then terminates) shall be equal to or
greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation or transfer (as if the Plan had
then terminated).
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ARTICLE XI
MISCELLANEOUS
11.01. No Rights Conferred. Nothing herein will be deemed
to give any individual any right to be retained in the employ of the Company or
an Affiliate or any other rights in the future other than as herein
specifically set forth. Except as otherwise specifically required herein or by
law, no Participant, Beneficiary or other person will be entitled to inspect
the books, records, reports, financial statements or tax returns of the
Company, or an Affiliate.
11.02. Benefits Limited to Trust Fund. No person will have
any right or interest in the Trust other than as provided herein. Any final
payment or distribution to a Participant or Beneficiary will be in full
satisfaction of all claims against the Trust, the Trustee, the Administrative
and Investment Committees, the Company, an Affiliate, the Board and any
fiduciary of the Plan or Trust. The Trustee or the Administrative Committee
may require a Participant or Beneficiary to execute a receipt and a general
release of any and all such claims upon a final payment or distribution, or a
receipt and/or release to the extent of any partial payment or distribution.
11.03. Spendthrift Provision. Except to the extent required
by law (e.g., in connection with qualified domestic relations orders within the
meaning of Section 414(p) of the Code), no benefit under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, encumber or charge the same shall be void. No such benefit
shall be in any way liable for or subject to the
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debts, contracts, liabilities, engagements or torts of any person entitled to
those benefits. The Administrative Committee will establish such procedures as
may be necessary or appropriate in order to comply with the provisions of ERISA
and the Code in connection with qualified domestic relations orders issued with
respect to a Participant's interest in the Plan.
11.04. Payment to Minors or Incompetents. If any person to
whom a benefit is payable hereunder is an infant or if the Administrative
Committee determines that any person to whom such benefit is payable is
incompetent by reason of a physical or mental disability, the Administrative
Committee may cause the payments becoming due to such person to be made to
another for his or her benefit without responsibility of the Administrative
Committee or the Trustee to see to the application of such payments.
11.05. Severability. If any provision of the Plan or the
application of such provision to any person or circumstance is held invalid,
the remainder of the Plan (and the application of such provision to any person
or circumstance other than the person or circumstance to which it is held
invalid) will not be affected thereby.
11.06. Construction. The provisions of the Plan will be
construed, regulated and administered according to the provisions of ERISA, the
Code and to the extent not inconsistent therewith or preempted thereby, in
accordance with the laws of the State of Missouri.
PULITZER PUBLISHING COMPANY
Dated: 12/15/94 By: /s/ Ronald H. Ridgway
-------- -----------------------
Senior Vice President - Finance
-42-
<PAGE> 47
SCHEDULE A
PULITZER PUBLISHING COMPANY
PENSION PLAN
COVERED BARGAINING UNIT EMPLOYEES
Individuals who are employed by an Employer and who are
members of the following bargaining units (at the indicated locations) are
treated as Employees under Section 1.16(a) of the Plan:
International Brotherhood of Electrical Workers, Radio
Broadcast Technicians Local #379, AFL-CIO (WXII-TV)
Teamsters Local Union #771, Affiliated with International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers
of America, Affiliated with Teamsters Joint Council #53 of
Philadelphia, PA (WGAL-TV)
American Federation of Television and Radio Artists, Omaha
Local, AFL-CIO (KETV-TV)
National Association of Broadcast Employees and Technicians,
AFL-CIO, Local #45 (KETV-TV)
American Federation of Television and Radio Artists, New
Orleans Local (WDSU-TV)
Local Union #1139 of the International Brotherhood of
Electrical Workers (WDSU-TV)
A - 1
<PAGE> 1
PULITZER PUBLISHING COMPANY
900 North Tucker Boulevard
St. Louis, Missouri 63101
314/340-8000 Telephone
314/340-3133 Fax
December 16, 1994
Mr. Michael E. Pulitzer
c/o Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, MO 63101
Re: 1994 Bonus Deferral
Dear Mr. Pulitzer:
The purpose of this letter is to confirm our agreement
with respect to the deferred payment of a portion of your
1994 incentive bonus award.
1. Deferral. Payment of your 1994 incentive bonus
award will be deferred if and to the extent that the amount
thereof, when added to other remuneration paid or to be paid
to you in 1994 by Pulitzer Publishing Company (the
"Company"), exceeds the $1,000,000 deduction limitation
imposed by Section 162(m) of the Internal Revenue Code of
1986. The amount, if any, of your deferred bonus will earn
interest from January 1, 1995 until the date of actual
payment at an annual rate equal to the one-year treasury rate
at the beginning of each year.
2. Payment of Deferred Bonus. The amount of your
deferred bonus, together with interest as aforesaid, will be
payable by the Company to you or, in the event of your prior
death, to your beneficiary, in a lump sum on the first day of
<PAGE> 2
December 16, 1994
Page Two
the calendar year next following the date of your termination
of employment with the Company. If payment can be made at an
earlier date following your termination of employment without
loss of deduction to the Company (taking into account other
remuneration paid or payable to you in the year of your
termination of employment), then payment of the bonus
deferral, together with interest, will be made on or as soon
as practicable after such earlier date. Unless you designate
a different beneficiary (by filing a written, signed
beneficiary designation with the Secretary of the Company
which may be changed at any time in a similar manner), your
beneficiary will be deemed to be your estate.
3. Unsecured Obligation of the Company. The Company's
obligation to pay you the deferred bonus amount, together
with interest, constitutes an unsecured obligation. The
Company has no obligation to set aside any assets, generally
or specifically, in order to enable it to satisfy its
obligations hereunder. Your right to receive the deferred
amount, together with interest, is and will be that of a
general unsecured creditor of the Company.
4. Withholding. Any payments made to you hereunder
will be subject to applicable income tax withholding
requirements. It is understood that the amount of
<PAGE> 3
December 16, 1994
Page Three
the deferred bonus will be subject to employment
taxes (medicare/FICA) in 1994, the year of deferral.
5. Adoption of Deferred Compensation Plan. It is
contemplated that the Company will adopt a deferred
compensation plan for senior executives, pursuant to which
participating executives may defer all or a portion of their
annual bonus awards. If such a plan is adopted and if you
become a participating executive in the plan, then the amount
deferred, together with interest, under this agreement will
be transferred to and made a part of your account under the
plan, in which event this agreement will terminate and be of
no further force and effect.
6. In-Service Withdrawal. You may request an earlier
payout of all or a portion of your deferral account. The
Board of Directors of the Company, acting in its sole and
absolute discretion, may approve or deny your request, in
whole or in part.
Assuming the foregoing comports with your understanding
of the subject matter, please date and sign a copy of this
letter in the space provided below and return the signed copy
to the Company.
<PAGE> 4
December 16, 1994
Page Four
Very truly yours,
PULITZER PUBLISHING COMPANY
By: /s/ Ronald H. Ridgway
----------------------
Ronald H. Ridgway
Sr. Vice President-Finance
Accepted and agreed to this
16th day of December, 1994.
- ----
/s/ Michael E. Pulitzer
- -----------------------
Michael E. Pulitzer
<PAGE> 1
STOCK PURCHASE AGREEMENT
DATED AS OF DECEMBER 22, 1994
BY AND AMONG
PULITZER PUBLISHING COMPANY,
AMERICAN PUBLISHING COMPANY
AND
AMERICAN PUBLISHING HOLDINGS INC.
<PAGE> 2
STOCK PURCHASE AGREEMENT
Table of Contents
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
1. Sale and Purchase of the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Adjustments to Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Effective Time; Closing Date; Deliveries at the Closing . . . . . . . . . . . . . . . . . . . . 4
4. Representations and Warranties of Pulitzer . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5. Representations and Warranties of AMPC and Buyer . . . . . . . . . . . . . . . . . . . . . . . . 26
6. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7. Covenants of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8. Conditions to the Obligations of Pulitzer to Effect the
Transactions Contemplated Hereby . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9. Conditions to the Obligations of AMPC and Buyer to
Effect the Transactions Contemplated Hereby . . . . . . . . . . . . . . . . . . . . . . . . . 35
10. Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12. Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
<PAGE> 3
LIST OF EXHIBITS AND SCHEDULES
------------------------------
Exhibit A -- Pre-Closing Statement
Exhibit B -- Form of Opinion of Kirkpatrick & Lockhart
Exhibit C -- Form of Opinion of Fulbright & Jaworski L.L.P.
Exhibit D -- Purchase Price Allocation
Schedule 4(e)(ii) -- Real Property
Schedule 4(e)(iii) -- Tangible Personal Property
Schedule 4(e)(iv) -- Leases
Schedule 4(e)(v) -- Permitted Encumbrances
Schedule 4(f)(i) -- Financial Statements
Schedule 4(f)(ii) -- Undisclosed Liabilities
Schedule 4(g) -- Subsequent Changes
Schedule 4(h) -- Contracts
Schedule 4(j) -- Accounts Receivable
Schedule 4(k) -- Intellectual Property
Schedule 4(l)(i) -- Taxes
Schedule 4(l)(ii) -- Taxes
Schedule 4(l)(v) -- Taxes
Schedule 4(m) -- Litigation
Schedule 4(n)(i) -- Benefit Plans
Schedule 4(n)(iv) -- Company Plans Qualified Under I.R.C.
Section 401(a)
Schedule 4(n)(vi) -- Defined Benefit Plans
Schedule 4(n)(vii) -- Terminated Defined Benefit Plans
Schedule 4(n)(xi) -- "Welfare-Type" Plans
Schedule 4(o) -- Consents and Approvals
Schedule 4(p) -- Licenses, Permits
Schedule 4(r) -- Guarantees
Schedule 4(s) -- Bank Accounts
Schedule 4(t)(i) -- Corporate and Personnel Data
Schedule 4(t)(ii) -- Employment Agreements
Schedule 4(t)(iii) -- Independent Contractor Agreements
Schedule 4(u) -- Compliance with Laws
Schedule 4(v)(i) -- Environmental Matters
Schedule 4(v)(ii) -- Environmental Matters
Schedule 4(v)(iii) -- Environmental Matters
Schedule 4(v)(iv) -- Environmental Matters
Schedule 4(v)(v) -- Environmental Matters
Schedule 4(v)(vi) -- Environmental Matters
Schedule 4(v)(vii) -- Environmental Matters
Schedule 4(v)(viii) -- Environmental Matters
Schedule 4(v)(ix) -- Environmental Matters
Schedule 4(v)(x) -- Environmental Matters
Schedule 4(v)(xi) -- Environmental Matters
Schedule 4(v)(xii) -- Environmental Matters
Schedule 4(w) -- Circulation
Schedule 4(x) -- WARN Matters
<PAGE> 4
INDEX OF DEFINED TERMS
----------------------
DEFINED TERMS SECTION IN
- ------------- -----------
WHICH DEFINED
-------------
ACM 4(v)(iv)
Accounting Arbitrator 2(d)
Affiliate 7(c)(i)
Agreement Recitals
AMPC Recitals
Annual Reports 4(w)(ii)
Assets 4(e)(i)
Base Purchase Price 1(a)
Benefit Plan 4(n)(i)
Benefit Plans 4(n)(i)
Business Recitals
Buyer Recitals
Buyer's Damages 11(b)
CERCLA 4(v)(viii)(A)
Chicago Metropolitan Area 7(c)(i)
Closing 3(a)
Closing Date 3(a)
Company Recitals
Company Plan 4(n)(i)
Company Plans 4(n)(i)
Contract 4(h)
Current Assets of the Company 2(b)
Current Liabilities of the Company 2(b)
Defined Benefit Plan 4(n)(vi)
DOL 4(n)(iii)
Draft Post-Closing Statement 2(c)
Effective Time 2(c)
Encumbrances 4(e)(i)
Entity 7(c)(ii)
Environmental Law 4(v)(i)
ERISA 4(n)(i)
Exon-Florio Act 5(b)
Final Adjustment 1(c)
Financial Statements 4(f)
GAAP 2(c)
Governmental Approvals 4(v)(i)
Governmental Authority 4(v)(i)
Governmental Filings 4(v)(i)
HSR Act 4(o)
Indemnified Party 11(d)
Indemnifying Party 11(d)
Intellectual Property 4(k)
<PAGE> 5
Interim Payment 2(d)
IRS 4(n)(iii)
Net Pension Liability 2(b)
Net Working Capital 2(b)
New 401(k) Plan 7(f)
Newspaper Recitals
Newspapers Recitals
Participating Employees 7(f)
PBGC 4(n)(iii)
PCBs 4(v)(iv)
Permitted Encumbrances 4(e)(v)
Post-Closing Statement 2(c)
Post-Dispatch 2(b)
Post-Dispatch Receivables 2(b)
Pre-Closing Statement 2(a)
Preliminary Adjustment 1(b)
Pulitzer Recitals
Pulitzer's 401(k) Plan 7(f)
Purchase Price 1
Qualified Plan 4(n)(iv)
Real Property 4(e)(ii)
Regulated Materials 4(v)(vi)
Release 4(v)(vii)
Restricted Activities 7(c)(i)
Seller's Damages 11(c)
Selling Group 4(1)(v)
Shares Recitals
Storage Tanks 4(v)(v)
Subsequent Loss 10(e)
Tax Audit 10(h)
Tax 4(1)(i)
Taxes 4(1)(i)
Tax Return 4(1)(i)
Tax Returns 4(1)(i)
Tax Code 4(1)(iii)
TRA '86 4(n)(xiv)
Transaction Costs 12(b)
USWA Pension Plan 2(b)
WARN Act 4(x)
<PAGE> 6
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT"), dated as of this 22nd day
of December, 1994, by and among Pulitzer Publishing Company, a Delaware
corporation ("PULITZER"), American Publishing Company, a Delaware corporation
("AMPC"), and American Publishing Holdings Inc., a Delaware corporation (the
"BUYER"),
WITNESSETH:
WHEREAS, Pulitzer owns all of the issued and outstanding capital stock of
Pulitzer Community Newspapers, Inc., a Delaware corporation (the "COMPANY"),
consisting of one hundred (100) shares of common stock (the "SHARES");
WHEREAS, the Company owns and operates a commercial printing business in
the Chicago metropolitan area and, in connection therewith, owns and publishes
the Daily Southtown, a daily newspaper, and the News Marketer, a shopper
publication (collectively, the "NEWSPAPERS" and individually, a "NEWSPAPER")
(the Newspapers and such commercial printing operations are sometimes
hereinafter referred to collectively as the "BUSINESS");
WHEREAS, AMPC owns all of the issued and outstanding capital stock of
Buyer; and
WHEREAS, subject to the terms and conditions set forth herein, Buyer
desires to acquire from Pulitzer, and Pulitzer desires to sell to Buyer, the
Shares.
NOW, THEREFORE, in consideration of the premises and the respective
covenants herein contained, the parties, intending to be legally bound, hereby
agree as follows:
1. Sale and Purchase of the Shares.
Subject to the terms and conditions hereof, Pulitzer will sell, transfer
and deliver to Buyer at Closing (as defined in Section 3(a) hereof) the Shares,
and Buyer will purchase the Shares, free and clear of all security interests,
liens, claims, encumbrances, pledges, agreements (other than this Agreement),
rights of first refusal and options of any kind or nature whatsoever, for an
aggregate cash purchase price (the "PURCHASE PRICE") equal to:
<PAGE> 7
(a) Twenty-Seven Million Six Hundred Fifty Thousand Dollars
($27,650,000) (the "BASE PURCHASE PRICE"); plus
(b) Four Million Two Hundred Twelve Thousand Two Hundred
Thirty-Six Dollars ($4,212,236), equal to the amount of Net Working Capital
reflected on the Pre-Closing Statement prepared pursuant to Sections 2(a) and
2(b) hereof (the "PRELIMINARY ADJUSTMENT"); and plus or minus
(c) the amount of any post-closing adjustment (the "FINAL
ADJUSTMENT") pursuant to Section 2(e) hereof.
The Base Purchase Price plus the Preliminary Adjustment will be paid in
full to Pulitzer by Buyer at the Closing by wire transfer in immediately
available funds to a bank account to be designated in writing by Pulitzer. Any
Final Adjustment to the Base Purchase Price will be payable as set forth in
Section 2(e) hereof.
2. Adjustments to Purchase Price.
(a) Pulitzer has prepared a written statement of the Net Working
Capital of the Company as of November 27, 1994 (the "Pre-Closing Statement"), a
copy of which is attached hereto as Exhibit A. The Pre-Closing Statement
illustrates the pro forma effect of the transactions contemplated in
Section 7(b) hereof, as if such transactions had been effected as of
November 27, 1994. The parties have agreed to use the amount of Net Working
Capital reflected on the Pre-Closing Statement as the amount of the Preliminary
Adjustment.
(b) For purposes hereof, "NET WORKING CAPITAL" shall be defined as
the difference between (i) the Current Assets of the Company and (ii) the
Current Liabilities of the Company (as such terms are hereinafter defined).
For purposes hereof, "CURRENT ASSETS OF THE COMPANY" shall mean the sum of
(A) cash, (B) accounts receivable other than the Post-Dispatch Receivables (as
hereinafter defined), (C) newsprint inventory reflected at the Company's actual
cost thereof (giving effect to all the discounts received by the Company or
Pulitzer with respect thereto), (D) prepaid postage, prepaid rents, prepaid
maintenance agreements, and prepaid supplies and sports tickets of the Company,
and (E) accounts receivable owed by Pulitzer or the ST. LOUIS POST-DISPATCH
(the "POST-DISPATCH") to the Company with respect to printing services provided
by the Company to the Post-Dispatch, without reduction for an allowance for
collectibility (the "POST-DISPATCH RECEIVABLES"); and "CURRENT LIABILITIES OF
THE COMPANY" shall mean the sum of (F) trade accounts payable, (G) payroll
taxes accrued and withheld, (H) accrued salaries, (I)
- 2 -
<PAGE> 8
accrued vacations, (J) deferred subscription revenue, and (K) the difference
between the aggregate market value of the assets held by the Retirement Plan
for Bargaining Employees of Pulitzer Community Newspapers, Inc., as amended and
restated effective April 1, 1989 (the "USWA Pension Plan") and the present
value of the aggregate accumulated benefit obligation to participants in the
USWA Pension Plan, determined on the basis of the Company's valuation dated as
of January 1, 1994 previously furnished to AMPC (the "Net Pension Liability").
(c) As soon as practicable after Closing, the parties shall
prepare a statement (the "Draft Post-Closing Statement" and, as finally
determined as herein provided, the "Post-Closing Statement") of the Net Working
Capital of the Company effective as of 11:59 p.m., Central Standard Time (the
"Effective Time"), on December 22, 1994. The amounts of the various components
of Net Working Capital as of such time and date will be fairly presented on the
Draft Post-Closing Statement in accordance with generally accepted accounting
principles ("GAAP") applied consistently with the Company's historical
practices and, in particular but without limitation, will include all
adjustments (including adjustments normally made at year-end) necessary to
present fairly the Net Working Capital of the Company as at such time and date.
(d) The parties shall use reasonable efforts during a period of
sixty (60) days after the date of delivery of the Draft Post-Closing Statement
to amicably resolve any disagreements or objections they may have with respect
to the Draft Post-Closing Statement. If the parties resolve all such
disagreements they shall jointly prepare the Post-Closing Statement. If the
parties resolve some, but not all, of such disagreements, payment (hereinafter
an "Interim Payment") shall be made, as appropriate, to effect any agreements
(including partial agreements) so reached between the parties regarding the
Final Adjustment, and any matters remaining in controversy shall be referred,
for final, binding and conclusive resolution, to Price Waterhouse LLP (the
"Accounting Arbitrator"). If Price Waterhouse LLP is not willing to serve as
the Accounting Arbitrator on the terms herein provided, Pulitzer and AMPC shall
select another mutually-agreeable nationally recognized firm of certified
public accountants to serve as the Accounting Arbitrator, and the firm so
selected shall, for all purposes hereunder, be deemed to be the Accounting
Arbitrator. The Accounting Arbitrator shall be directed to, and shall agree
to, render a decision, in writing, to each of Pulitzer and AMPC within thirty
(30) days of the selection of the Accounting Arbitrator, and the Post-Closing
Statement, as determined by the Accounting Arbitrator, shall be, for all
purposes, the Post-Closing Statement hereunder.
- 3 -
<PAGE> 9
(e) In the event that the aggregate amount of Net Working Capital
reflected on the Post-Closing Statement exceeds the amount reflected on the
Pre-Closing Statement, Buyer shall pay to Pulitzer the amount of any such
excess. In the event that the aggregate amount of Net Working Capital
reflected on the Post-Closing Statement is less than the amount reflected on
the Pre-Closing Statement, Pulitzer shall pay to Buyer the amount of any such
deficiency. The aggregate amount of any Interim Payments shall be taken into
account in determining the amount of any such payments. Buyer or Pulitzer
shall promptly make any payments provided for in Sections 2(d) and 2(e) hereof
by wire transfer of funds.
3. Effective Time; Closing Date; Deliveries at the Closing.
(a) The sale and purchase of the Shares (the "Closing") will be
effective as of the Effective Time on December 22, 1994 (the "Closing Date").
The Closing will take place at the offices of Mayer, Brown & Platt, 190 South
La Salle Street, Chicago, Illinois.
(b) At Closing, Pulitzer will deliver the stock certificate
representing the Shares, with any necessary stock transfer tax stamps affixed
thereto, accompanied by a stock power duly executed in blank with signature
guaranteed by a bank or member of the New York Stock Exchange, Inc., and any
other documents necessary to transfer to Buyer title to the Shares as provided
in Section 1 and otherwise herein, against payment by Buyer of the Base
Purchase Price, plus the Preliminary Adjustment, to Pulitzer as provided in
Section 1 hereof.
4. Representations and Warranties of Pulitzer.
Pulitzer hereby represents and warrants to each of AMPC and Buyer as
follows:
(a) Capital Stock. The authorized capital stock of the Company
consists of one thousand (1,000) shares of common stock, par value $100.00 per
share, of which one hundred (100) shares are issued and outstanding and are
held of record and owned beneficially solely by Pulitzer. The Shares
constitute all of the issued and outstanding capital stock of the Company, and
all such shares are validly issued, fully paid and non-assessable. There are
no outstanding or authorized subscriptions, agreements (other than this
Agreement), options, warrants, calls or other commitments, rights (including
conversion rights) or privileges (whether preemptive or contractual) pursuant
to which the Company is or may become obligated to issue, sell or transfer any
shares
- 4 -
<PAGE> 10
of its capital stock or any debt security of the Company or any other security
convertible into or evidencing the right to subscribe for any shares of the
Company's capital stock or any debt security of the Company. There are no
shareholder or voting trust agreements, rights of first refusal, options to
purchase or restrictions upon transfer or alienability of or with respect to
the capital stock of the Company, or any other similar agreement (other than
this Agreement) or understanding otherwise affecting the Shares.
(b) Title to the Shares. Pulitzer has good, marketable and
unencumbered title to the Shares, free and clear of all pledges, security
interests, liens, claims, encumbrances, agreements (other than this Agreement),
rights of first refusal and options of any kind or nature whatsoever, and has
full right and authority to transfer and deliver the Shares to Buyer as
contemplated hereby. Upon consummation of the transactions contemplated
hereby, Pulitzer will have transferred to Buyer good, marketable and
unencumbered title to the Shares, free and clear of all pledges, security
interests, liens, claims, encumbrances, agreements (other than this Agreement),
rights of first refusal and options of any kind or nature whatsoever.
(c) Due Incorporation; Authority Concerning this Agreement. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and has the requisite
corporate power and authority to carry on its business and operations as
presently conducted by it, and to own, lease and operate the Assets (as defined
in Section 4(e) hereof). The Company is duly qualified or licensed and in good
standing to do business as a foreign corporation in each jurisdiction in which
the property owned, leased or operated by it or the nature of its business and
operations makes such qualification necessary, except where the failure to be
so qualified or licensed or in good standing would not have a material adverse
effect on the business, operations, financial condition or prospects of the
Company. Pulitzer has the requisite corporate power and authority to execute
and deliver this Agreement and the other transaction documents referred to
herein, to perform its obligations hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby. The execution and delivery
of this Agreement and the other transaction documents referred to herein, the
performance of Pulitzer's obligations hereunder and thereunder, and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of
Pulitzer. This Agreement and the other transaction documents delivered
hereunder have been duly and validly executed and delivered by Pulitzer, and
the Agreement constitutes the legal, valid and binding agreement of Pulitzer,
enforceable in
- 5 -
<PAGE> 11
accordance with its terms, subject to (i) bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereafter in effect
relating to creditors' rights, and (ii) the possibility that the remedies of
specific performance or injunctive or other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought. Complete and correct copies of
the Certificate of Incorporation and Bylaws of the Company, together with all
amendments thereto, have been delivered to AMPC.
(d) Subsidiaries. The Company does not own securities
representing or convertible into more than 5% of the outstanding capital stock
of any corporation or more than 5% of the equity interest in any partnership or
other entity.
(e) Title to and Condition of Assets; Leases.
(i) Except for (A) the Permitted Encumbrances (as
hereinafter defined), (B) the real property leases described in Section
4(e)(ii) hereof, (C) personal property leases, and (D) computer software
licensed for use by the Company, the Company owns good, marketable and
unencumbered title, free and clear of any lien, security interest,
mortgage, encumbrance, claim, agreement, title defect, charge, assessment,
encroachment, restriction or burden of any kind or nature whatsoever
(individually or collectively, the "ENCUMBRANCES"), to all of the tangible
and intangible assets used in or held for use in the business and
operations of the Company as now being conducted (collectively, the
"ASSETS").
(ii) All real property owned or leased by the Company (the
"REAL PROPERTY") is listed and described on Schedule 4(e)(ii) attached
hereto. Except as described in Schedule 4(e)(ii) there are no leases,
subleases, tenancies or other rights of occupancy affecting all or any
part of the Real Property owned by the Company. All buildings and
improvements on the Real Property owned by the Company comply in all
material respects with all applicable ordinances, regulations and zoning
or other laws and do not encroach upon or over any other parcel of real
estate or any easement or right of way or building line except as
disclosed in the surveys of the Real Property owned by the Company
furnished by Pulitzer to AMPC and identified on Schedule 4(e)(ii) attached
hereto. As of the date hereof, there are no restrictive covenants which
in any material way restrict or prohibit the use of the lands, buildings
or other improvements included with the Real Property owned by the
Company. As of the date hereof, to the best of
- 6 -
<PAGE> 12
Pulitzer's knowledge, there are no (A) ordinances, regulations or zoning
or other laws which in any material way restrict or prohibit the use of
the lands, buildings or improvements included with the Real Property owned
by the Company for their current uses, (B) pending or threatened changes
of any ordinance, regulation or zoning or other law affecting the Real
Property, or (C) pending or threatened condemnation of any of the Real
Property owned by the Company. All improvements, structures, and fixtures
on the Real Property owned by the Company are in good condition and repair
and fit for their current use, subject only to normal wear and tear taking
into account the age of the particular item, and are adequate to conduct
the business and operations of the Business as they are now being
conducted.
(iii) Schedule 4(e)(iii) attached hereto describes (A) all
material items of tangible personal property owned by the Company and (B)
all material leases of personal property of the Company. All material
machinery and equipment owned or leased by the Company and used currently
in the operations of the Company conform in all material respects to all
applicable ordinances, regulations and zoning or other laws. Except as
described in Schedule 4(e)(iii), all items of tangible personal property
listed on such Schedule are in good operating condition and repair,
subject only to normal wear and tear taking into account the age of the
particular item, and are adequate to conduct the business and operations
of the Business as they are now being conducted.
(iv) Pulitzer has delivered to AMPC complete and correct
copies of all written leases relating to real or personal property listed
on Schedules 4(e)(ii) and 4(e)(iii) hereof and, except as described in
Schedule 4(e)(iv), all such leases are in full force and effect, no event
of default has been declared thereunder that remains uncured and, to the
best of Pulitzer's knowledge, no basis for any default exists.
(v) For purposes of this Agreement, "Permitted Encumbrances"
shall mean (i) all liens, encumbrances, mortgages, security interests,
claims, agreements, title defects, charges, assessments, encroachments,
covenants, conditions, restrictions, easements and other exceptions to
title which (A) are set forth on the marked title commitments issued by
Chicago Title Insurance Company in connection with Closing on the Real
Property owned by the Company or (B) do not materially impair the value or
use of the Assets in connection with the operations or businesses of any
of the Newspapers or the Company; (ii) liens for
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<PAGE> 13
current taxes not yet due; and (iii) mechanic's liens, landlord liens and
other statutory liens arising in the ordinary course of business which are
not due and payable or, in the case of liens identified on Schedule
4(e)(v), are being contested in good faith by appropriate proceedings
which suspend the enforcement thereof against the Real Property subject
thereto.
(f) Financial Statements; Undisclosed Liabilities.
(i) The unaudited balance sheets of the Company as at
December 26, 1993 and November 27, 1994 and the related unaudited
statements of income for the twelve- and eleven-month periods then ended
previously delivered to AMPC and annexed to Schedule 4(f)(i) attached
hereto (collectively, the "FINANCIAL STATEMENTS"), present fairly in all
material respects the financial position of the Company as at the dates
indicated and the results of operations for the periods indicated in
accordance with GAAP applied consistently with past practice, except that
the Financial Statements do not contain any footnote disclosures thereto
and the interim financial statements do not reflect normally recurring
year-end adjustments and except as otherwise set forth on
Schedule 4(f)(i). The Financial Statements are based upon the information
contained in the books and records of the Company.
(ii) Except as set forth in Schedule 4(f)(ii) attached
hereto, as of the dates indicated, the Company had no debt or liability,
whether accrued, absolute, contingent or otherwise, not reflected or
reserved against in the Financial Statements.
(g) Absence of Certain Changes or Events. Since November 27,
1994, the Company has conducted its business and operations only in the
ordinary course of business in substantially the same manner as heretofore
conducted. Except as set forth in Schedule 4(g) attached hereto or as
specifically contemplated by Section 7(b) hereof, since November 27, 1994 there
has not been:
(i) any material adverse change in the business, financial
condition, operations or prospects of the Company or the Business;
(ii) any damage, destruction or casualty loss, whether
covered by insurance or not, materially and adversely affecting the
business, operations, financial condition or prospects of the Company or
the Business;
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<PAGE> 14
(iii) any material increase in the rate or terms of
compensation payable or to become payable to employees of the Company,
except increases occurring in accordance with customary practices or in
accordance with existing collective bargaining or employment agreements,
or any material modification in employee benefits, or any borrowing of
money from the Company by any employee of the Company (other than routine
travel and similar advances) in excess of $2,000;
(iv) any waiver by the Company or Pulitzer with respect to
the Company or the Business of any rights or claims having value, except
rights or claims not in excess of $10,000 or that were waived in the
ordinary course of business and consistent with past practice;
(v) any failure to collect the accounts receivable or to
pay the accounts payable and other current liabilities of the Company in
any manner other than consistent with past practice;
(vi) any sale, assignment, lease, transfer or other
disposition, or the execution of any agreement for the sale, assignment,
lease, transfer or other disposition, of any material Assets, except in the
ordinary course of business and consistent with past practice;
(vii) any change by the Company in accounting or bookkeeping
methods, principles or practices, except as required by GAAP;
(viii) any borrowing of money, including any increase or
extension of purchase money credit by the Company or any increase in the
liabilities of the Company from those reflected in the Financial
Statements, other than current liabilities incurred in the ordinary course
of business and consistent with past practice;
(ix) any intercompany transaction with Pulitzer or with any
officer or director or with any other subsidiary or operating unit or
affiliate of Pulitzer or the Company, other than in the ordinary course of
business and consistent with past practice;
(x) any settlement of any tax claim against the Company or
any litigation (net of applicable insurance proceeds) in excess of $5,000
individually or $10,000 in the aggregate;
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<PAGE> 15
(xi) any declaration or payment of any dividend or other
distribution on or with respect to, or any redemption or purchase or other
acquisition of, the capital stock of the Company; or
(xii) any agreement, arrangement or understanding, whether
oral or written, to do any of the foregoing matters listed in clauses (i)
through (xi) inclusive.
(h) Contracts. For purposes of this Section_4(h), "Contract"
means any unexpired agreement, arrangement, commitment, instrument,
understanding or contract in writing to which the Company, either of the
Newspapers or Pulitzer with respect to the Company or the Business is a party
or is bound. Schedule 4(h) lists all Contracts (i) to which the Company, the
Business, the Newspapers or Pulitzer with respect to the Company or the
Business is a party or is bound, (ii) which may not be terminated by the
Company with less than thirty-two (32) days notice without obligation being
incurred by the Company, and (iii) which:
(A) arise outside of the ordinary course of business;
(B) provide for the purchase by the Company of any
materials, supplies, equipment or services in excess of $25,000 per year;
(C) provide for the sale by the Company of any printing or
advertising service in excess of $25,000;
(D) provide for the purchase or improvement of any fixed or
capital assets in excess of $10,000 as to any individual item;
(E) provide for the sale of any fixed or capital assets
after November 27, 1994 in excess of $5,000 as to any individual item; or
(F) provide for trade, barter and similar arrangements for
the sale of printing, advertising, publication or any other service in
exchange for consideration other than cash in excess of $30,000.
True and complete copies of all written Contracts listed in Schedule 4(h) have
been delivered to AMPC. Neither Pulitzer nor the Company nor, to the best
knowledge of Pulitzer, any other party to any of such Contracts is (with or
without the lapse of time or the giving of notice, or both) in material
violation thereof or in material default thereunder. To the best of Pulitzer's
knowledge, none of the Company, the Business or the
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<PAGE> 16
Newspapers is a party to any oral contract which arises outside the ordinary
course of business.
(i) Inventory. The inventory reflected in the Financial
Statements is sufficient and adequate for, but is not in excess of the level
appropriate to, the customary conduct of the Business and operations of the
Business as previously conducted.
(j) Accounts Receivable. Except as otherwise set forth in
Schedule 4(j) attached hereto, all accounts receivable of the Company have
arisen in the ordinary course of business and have been reflected in the
Financial Statements in accordance with GAAP.
(k) Intellectual Property. Schedule 4(k) attached hereto
describes all of the registered trademarks and trade names, fictitious name
filings and applications therefor, and permits, licenses or governmental
authorizations to use the names Daily Southtown and News Marketer, owned, used
or employed by the Company or the Business (hereinafter referred to
collectively as the "Intellectual Property"). Except as otherwise described in
Schedule 4(k), the Company owns adequate and enforceable rights (within the
respective geographic areas where products and services of the Company, the
Business and the Newspapers are currently marketed, sold or distributed) to,
and property interests in, the Intellectual Property, free and clear of any
Encumbrances other than Permitted Encumbrances. No claim, suit or action is
pending, or, to the best of Pulitzer's knowledge, threatened, alleging that the
Company, either of the Newspapers or Pulitzer with respect to the Company or
the Newspapers is infringing upon the intangible property rights of others, or
that the Company's or the Newspapers' use of the Intellectual Property
infringes or conflicts with the rights of others.
(l) Taxes.
(i) The Company has filed or caused to be filed on a timely
basis, or will file or cause to be filed on a timely basis, all returns,
declarations, reports, claims for refund, or information returns or
statements, including any schedules or attachments thereto, and including
any amendments thereof (individually, a "TAX RETURN" and collectively, the
"TAX RETURNS"), relating to any federal, state, local or foreign taxes of
any kind whatsoever, including any interest or penalty thereon or addition
thereto, whether disputed or not (individually, a "TAX" and collectively,
the "TAXES"), that were or are required to be filed by it prior to or on
the Closing Date, pursuant to the laws of those governmental authorities
with taxing power over it. The Company has paid, or made provision for
the
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<PAGE> 17
payment of, all Taxes that have or may become due as shown on said Tax
Returns or pursuant to any assessment received as an adjustment of such
Tax Returns, except such Taxes, if any, as are being contested in good
faith and such accrued and unpaid Taxes, if any, for which appropriate
accruals are reflected in the Financial Statements. Except as set forth
on Schedule 4(l)(i) attached hereto, the Company is not currently the
beneficiary of any extension of time within which to file any Tax Return.
To the best of Pulitzer's knowledge, no claim has ever been made by a
taxing authority in a jurisdiction where the Company does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction.
(ii) Except as set forth on Schedule 4(l)(ii), to the best of
Pulitzer's knowledge, the Company has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder, or other
third party.
(iii) The Company has not filed a consent under Section 341(f)
of the Internal Revenue Code of 1986, as amended (the "Tax Code"),
concerning collapsible corporations. The Company has not made any
payments, is not obligated to make any payments, and is not a party to any
agreement that under certain circumstances could obligate it to make any
payments, that will not be deductible under Section 280G of the Tax Code.
(iv) The Company is not a party to any income Tax allocation or
sharing agreement (other than this Agreement).
(v) Except as set forth on Schedule 4(l)(v) attached hereto,
there is no pending and, to the best of Pulitzer's knowledge, there is no
threatened or anticipated assessment of additional federal income Taxes
against any member of Pulitzer's affiliated group of corporations within
the meaning of Section 1504(a) of the Tax Code (the "Selling Group") for
any taxable period during which the Company (or any predecessor company)
was a member of the Selling Group. No member of the Selling Group has
waived any statute of limitations in respect of any federal income Taxes
or agreed to any extension of time with respect to a federal income Tax
assessment or deficiency for any taxable period during which the Company
was a member of the Selling Group.
(m) Litigation. Except as set forth in Schedule 4(m) attached
hereto, there are no pending claims, actions, suits, proceedings or
investigations against or affecting the Company,
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<PAGE> 18
the Business or Pulitzer with respect to the Company or the Business at law or
in equity or before or by any court or foreign, Federal, state, local or other
governmental department, commission, board, agency or instrumentality which
could result in or cause a material adverse effect upon the Company or the
Business (without taking into account any applicable insurance coverage) and,
to the best of Pulitzer's knowledge, no such matter is threatened. Neither
Pulitzer nor the Company is subject to any continuing court or administrative
order, writ, injunction or decree applicable to any of the Company, the
Business, the Assets, or, to the best of Pulitzer's knowledge, any of the
employees of the Company, except garnishment and similar matters. All material
information in the possession of Pulitzer or the Company relating to all
matters listed in Schedule 4(m) has been delivered to AMPC.
(n) Employee Benefit Plans; ERISA.
(i) Schedule 4(n)(i) attached hereto contains a complete and
correct list of all Benefit Plans (as hereinafter defined) maintained or
sponsored by the Company or with respect to which the Company has or may
have liability under or is obligated to contribute to, or which otherwise
covers any of the current or former employees of the Company or their
beneficiaries, or as to which any such current or former employees or
their beneficiaries participated or were entitled to participate or accrue
or have accrued any rights thereunder, whether or not funded and whether
or not terminated (hereinafter individually referred to as a "COMPANY
PLAN" and collectively referred to as the "COMPANY PLANS"). As used in
this Agreement, the terms "BENEFIT PLAN" and "BENEFIT PLANS" shall mean
all written and unwritten "employee benefit plans" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1971, as
amended ("ERISA"), and any profit sharing, pension, savings, deferred
compensation, fringe benefit, insurance, medical, medical reimbursement,
life, disability, accident, post-retirement health or welfare benefit,
stock option, stock purchase, sick pay, vacation, employment, severance,
termination or other compensation or benefit plan, agreement, contract,
policy, trust fund or arrangement.
(ii) The Company has no obligations to contribute to or
liability or potential liability, whether direct or indirect, under or
with respect to any Benefit Plan of the type described in Section 4063 and
4064 of ERISA or Section 413(c) of the Tax Code.
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<PAGE> 19
(iii) Each of the Company Plans, and all related trusts,
insurance contracts and funds, have been created, maintained, funded and
administered in all material respects in substantial compliance with all
laws (including, without limitation, ERISA and the Tax Code), orders and
government rules and regulations applicable thereto, and in substantial
compliance with the plan document, trust agreement, insurance policy or
other writing creating or forming a part of the same and the terms of any
collective bargaining agreements applicable thereto. No reportable event
(within the meaning of Section 4043 of ERISA) notice of which is not
waived under the applicable regulations has occurred or is threatened to
occur with respect to any Company Plan covered by Title IV of ERISA. All
material reports and material disclosures relating to the Company Plans
required to be filed with or delivered to governmental agencies,
participants, or beneficiaries on or prior to the Closing Date have been
or will be filed or delivered in a timely manner and in accordance with
applicable law. Other than routine claims for benefits submitted by
participants or beneficiaries, there is no litigation, legal action,
investigation, claim, or proceeding pending or, to the best knowledge of
Pulitzer, threatened against any Company Plan or against or affecting any
fiduciary thereof or the assets of any trust or insurance contract
thereunder, at law or in equity, by or before any court or governmental
department, agency or instrumentality, and, to the best knowledge of
Pulitzer, there is no basis for any such action, suit, investigation or
proceeding. There are presently no outstanding judgments, decrees or
orders of any court or any governmental or administrative agency against
or adversely affecting the Company Plans, any fiduciaries thereof or the
assets of any trust, insurance contract or other funding instrument
thereunder. Neither Pulitzer nor the Company has knowledge of or has
received any written notice that any Company Plan is under audit or
investigation by the Internal Revenue Service ("IRS"), the United States
Department of Labor (the "DOL"), the Pension Benefit Guaranty Corporation
(the "PBGC") or other governmental authority and no such completed audit,
if any, has resulted in the imposition of any tax, fine or penalty which
has not been satisfied.
(iv) Schedule 4(n)(iv) attached hereto identifies each
Company Plan that purports to be a qualified plan under Section 401(a) of
the Tax Code and exempt from United States federal income tax under
Section 501(a) of the Tax Code (a "QUALIFIED PLAN"). Each Qualified Plan
has received a determination letter (or opinion or notification letter, if
applicable) from the IRS that such plan is qualified under Section 401(a)
of the Tax Code and exempt from federal
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<PAGE> 20
income tax under Section 501(a) of the Tax Code. No determination,
opinion or notification letter has been revoked nor has revocation been
threatened, nor has any Qualified Plan been amended since the date of the
most recent such letter in any way that would adversely affect the
qualified status of such Qualified Plan or of any related trust or other
funding instrument. Each Qualified Plan has been administered
substantially according to its terms, and neither the Company, nor, to the
best knowledge of Pulitzer, any fiduciary of any Qualified Plan, nor, to
the best knowledge of Pulitzer, any agent of any of the foregoing has done
anything which would adversely affect the qualified status of a Qualified
Plan or of any related trust or other funding instrument.
(v) Each of the Company and Pulitzer has made full and
timely payment in all material respects of all amounts which are required
under the terms of each Company Plan and any related trust or other
funding instrument or collective bargaining agreement or which are
otherwise required by law to be paid as a contribution to each such
Company Plan with respect to all periods through the Closing Date. No
accumulated funding deficiency (as defined in Section 302 of ERISA and
Section 412 of the Tax Code) exists nor has any funding waiver from the
IRS been received or requested with respect to any Company Plan and no
excise tax or other taxes are due or owing because of any failure to
comply with the minimum funding standards of the Tax Code and ERISA with
respect to any of such Company Plans.
(vi) Schedule 4(n)(vi) attached hereto identifies each
Company Plan that is a defined benefit plan as defined in Section 3(35) of
ERISA (a "DEFINED BENEFIT PLAN"). No amendments or other modifications to
such Defined Benefit Plans described in the preceding sentence or to such
Defined Benefit Plans' actuarial assumptions were adopted since the date
as of which the Defined Benefit Plans' most recent actuarial report as set
forth in the preceding sentence was prepared.
(vii) No Company Plan that is a Defined Benefit Plan has been
terminated or partially terminated within the last five (5) years, except
as set forth on Schedule 4(n)(vii) attached hereto. Each Defined Benefit
Plan listed as terminated on Schedule 4(n)(vii) has met the requirements
for standard termination of single-employer plans contained in Section
4041(b) of ERISA. The PBGC has not instituted proceedings to terminate
any Company Plan nor, to the best knowledge of Pulitzer, do conditions
currently exist which could give rise to a termination proceeding brought
by the
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<PAGE> 21
PBGC with regard to any such plan. No notice of intent to terminate has
been filed and no amendment has been adopted to treat any Company Plan as
terminated or otherwise cause any Company Plan to incur or reasonably
expect to incur any liability under Title IV of ERISA (other than for
premiums due to the PBGC, all of which have been timely paid). There are
no events or conditions which have occurred that could constitute grounds
under Section 4042 of ERISA for termination or appointment of a trustee to
administer any of the Company Plans.
(viii) No Company Plan is a multiemployer plan as defined in
Section 3(37) or 4001(a)(3) of ERISA.
(ix) During the five year period ending on the Closing Date,
neither the Company nor Pulitzer has transferred a defined benefit plan
(as defined in Section 3(35) of ERISA) to a corporation that was (at the
time of transfer) a member of a different controlled group of corporations
(within the meaning of Section 4001(a)(14) of ERISA) than the transferor.
(x) With respect to the Company Plans, no prohibited
transaction (within the meaning of Section 406 of ERISA and Section 4975
of the Tax Code) exists which could subject the Company to any material
liability or tax under Part 5 of Title I of ERISA or Section 4975 of the
Tax Code. Neither the Company, nor Pulitzer, nor, to the best knowledge
of Pulitzer, any administrator or fiduciary of any Company Plan, nor, to
the best knowledge of Pulitzer, any agent of any of the foregoing, has
engaged in any transaction or acted or failed to act in a manner which may
subject the Company to any material liability for a breach of fiduciary or
other duty under ERISA or any other applicable law.
(xi) Schedule 4(n)(xi) attached hereto identifies each
Company Plan which provides health, life insurance, accident or other
"welfare-type" benefits described in Section 3(1) of ERISA to current or
future retirees or other former employees or their spouses or dependents
(other than in accordance with Section 4980B of the Tax Code or any
applicable state continuation coverage law) and sets forth a reasonable
estimate of the actuarial present value of the potential liability of the
Company with respect to each such plan.
(xii) The Company has complied in all material respects with
the continuation coverage requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1986, as amended, and all successor legislation.
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<PAGE> 22
(xiii) The consummation of the transactions contemplated hereby
will not create, accelerate or increase any liability under any Company
Plan because of the creation, acceleration or increase of any of the
rights or benefits to which employees may be entitled thereunder,
including any obligation to make any payment upon a "change in ownership
or control" as such term is defined for purposes of Section 280G of the
Tax Code.
(xiv) For each Company Plan, to the extent applicable to each
such Company Plan, complete and correct copies of the following have been
delivered to AMPC: (A) the documents embodying the Company Plans,
including, but not limited to, the plan documents, all amendments thereto,
the related trust or funding agreements, investment management agreements,
administrative service contracts, insurance contracts, union or trade
agreements and, in the case of any unwritten Company Plans, written
descriptions thereof; (B) annual reports, including without limitation
Forms 5500 and all schedules thereto for the last three years; (C)
financial statements for the last three years; (D) actuarial reports for
the last three years; (E) each communication (other than routine
communications) received by the Company or Pulitzer from or furnished by
the Company or Pulitzer to the IRS, DOL, PBGC or other governmental
authorities; (F) each communication to employees regarding changes or
amendments to the Company Plans, not yet made to such Company Plans,
pursuant to the Tax Reform Act of 1986 ("TRA '86") and subsequent
amendments to the Tax Code and IRS regulations and rulings for which the
"remedial amendment period" under Section 401(b) of the Tax Code has not
yet expired; and (G) descriptions of all procedures and provisions
designed to comply with TRA '86. Pulitzer has also delivered to AMPC a
copy of the current summary plan description and each summary of material
modifications prepared in the last three years for each Company Plan, and
all employee manuals, handbooks, policy statements and other written
materials given to employees relating to any Company Plans. To the best
knowledge of Pulitzer, no oral or written representations or commitments
inconsistent with such written materials have been made to any employee of
the Company by the Company or Pulitzer or any employee or agent thereof.
(o) Consents and Approvals; No Violation. Except for the
provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), and except for those matters set forth in Schedule
4(o) attached hereto, there is no requirement applicable to Pulitzer or the
Company to make any filing with, or to obtain any permit, authorization,
license,
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<PAGE> 23
consent or approval of, any foreign or domestic governmental or regulatory
authority or any other person as a condition to the lawful consummation of the
sale of the Shares pursuant to this Agreement and the other transactions
contemplated by this Agreement. Except as set forth in Schedule 4(o), the
execution and delivery of this Agreement by Pulitzer and the performance by
Pulitzer of the obligations hereunder and under the other transaction documents
contemplated hereby will not: (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or Bylaws of Pulitzer or the
Company; (ii) result in a material default or give rise to any right of
termination, cancellation, acceleration or modification under any of the terms,
conditions or provisions of any credit agreement, note, bond, mortgage,
indenture, lease, or Contract for printing services listed on Schedule 4(h), to
which any of the Company, the Newspapers, or Pulitzer is a party or by which
any of the Company, the Newspapers or Pulitzer or any of the material Assets
may be bound, except for such defaults or rights of termination, cancellation,
acceleration or modification as to which requisite waivers or consents have
been obtained or will be obtained on or prior to the Closing Date and of which
copies thereof have been or will be delivered to AMPC; (iii) violate any order,
writ, judgment, injunction or decree of any court or governmental body or
agency applicable to the Company, the Business, the Assets or Pulitzer; or
(iv) result in the creation or imposition of any Encumbrance (except for the
terms of this Agreement) upon the Real Property owned by the Company or any of
the other Assets.
(p) Licenses, Permits and Authorizations. Schedule 4(p) attached
hereto lists all material licenses, permits and authorizations that are
currently held by each of the Company, the Business or Pulitzer with respect to
the Company or the Business, or which are required for the conduct of the
business or operations of the Business as presently conducted other than
Governmental Approvals (as defined in Section 4(v) hereof). Except as set
forth in Schedule 4(p): (i) such licenses, permits and authorizations are not
subject to any restrictions or conditions not reflected on the face thereof
that limit in any material respect the business or operations of the Company as
presently conducted; and (ii) there are no applications by any of the Company,
the Business or Pulitzer with respect to the Company or the Business, or
complaints by other persons pending or, to the best of Pulitzer's knowledge,
threatened as of the date hereof before any domestic or foreign governmental
agency relating to any material licenses, permits or authorizations applicable
to the Company, the Business or Pulitzer with respect to the Company or the
Business. Except as set forth in Schedule 4(p), to the best of Pulitzer's
knowledge no foreign or domestic governmental or regulatory consents or
approvals are necessary for the licenses, permits and authorizations listed on
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<PAGE> 24
Schedule 4(p) to continue in full force and effect following consummation of
the transactions contemplated hereby.
(q) Insurance. Each of the Company or Pulitzer with respect to
the Company or the Business carries insurance with respect to the Company's
properties and the Business in such amounts as are adequate and reasonable and
against such risks as are customary in relation to the character and location
of such properties and the nature of the Business.
(r) Guarantees. Except as set forth in Schedule 4(r) attached
hereto and except for the Company's obligations as a member of the Selling
Group, the Company is not directly or indirectly, (i) liable, by guarantee or
otherwise, upon or with respect to, (ii) obligated by discount or repurchase
agreement or in any other way to provide funds with respect to, or (iii)
obligated to guarantee or assume, any debt, dividend or other obligation of any
person, corporation, association, partnership or other entity (including,
without limitation, Pulitzer or any parent, subsidiary or other affiliate of
Company), except endorsements made in the ordinary course of business in
connection with the deposit of items for collection.
(s) Bank Accounts. Schedule 4(s) attached hereto contains a
complete and correct description of all banking, safe deposit box and lockbox
arrangements currently maintained by the Company and/or the Business, all
powers of attorney in connection with such arrangements, and the names of all
persons authorized to draw thereon or to have access thereto.
(t) Corporate and Personnel Data; Labor Relations.
(i) Schedule 4(t)(i) attached hereto lists (A) the names and
titles of all officers and directors (or similar officials) of the Company
and (B) the names of all persons employed by the Company as of the date
hereof who had annual compensation as reflected on IRS Forms W-2 or 1099
in an amount greater than $50,000 during the year ended December 31, 1993.
(ii) Schedule 4(t)(ii) attached hereto sets forth a list of
all oral or written employment agreements, management agreements and
consulting or similar agreements to which any of the Company, the Business
or Pulitzer with respect to the Company or the Business is a party or is
bound. True and correct copies of all such agreements as are in writing
have been delivered to AMPC.
(iii) Except as set forth in Schedule 4(t)(iii) attached
hereto: (A) the Company is in compliance in all
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<PAGE> 25
material respects with all applicable laws and regulations relating to the
employment of labor and employment practices, including those related to
terms and conditions of employment, wages, hours, collective bargaining,
discrimination, occupational safety and health, and the payment of Social
Security or similar taxes; (B) to the best of Pulitzer's knowledge, the
Company is not engaged in any unfair labor practice; (C) there are no
unfair labor practice claims or charges pending involving the Company or
the Business; (D) neither the Company nor Pulitzer with respect to the
Company or the Business is a party to any collective bargaining agreement
or bound by any other agreement with a labor union; (E) there are no
proceedings pending for certification or representation before the
National Labor Relations Board with respect to the employees of the
Company nor, to the best of Pulitzer's knowledge, has there been any
attempt within the past five (5) years to organize any of the employees of
the Company or the Business into a collective bargaining unit; (F) there
is no labor strike or concerted work slowdown or stoppage actually pending
nor, to the best of Pulitzer's knowledge, threatened against or involving
the Company and, to the best of Pulitzer's knowledge, there is no other
pending labor dispute against or involving the Company which could result
in or cause a material adverse effect upon the Company or the Business;
(G) no discrimination charge of any kind with respect to the employees of
the Company is pending and, to the best of Pulitzer's knowledge, no claim
therefor is threatened; (H) no grievance with respect to the employees of
the Company or the Business is pending which could result in or cause a
material adverse effect upon the Company or the Business or upon the
conduct or operations of the Business and, to the best of Pulitzer's
knowledge, no claim therefor is threatened; and (I) to the best of
Pulitzer's knowledge, neither the Company nor the Business has in the past
five (5) years experienced any concerted work slowdown or stoppage.
(u) Compliance with Laws. Except as set forth in Schedule 4(u)
attached hereto, the Company has conducted and operated the Business in
compliance in all material respects with all applicable laws and regulations
and all orders of any foreign or domestic governmental authority having
jurisdiction over the Company or the Business. Except as set forth in the
Schedules attached hereto, none of the Company, the Business or Pulitzer with
respect to the Company or the Business has received any written complaint or
notice from any foreign or domestic governmental authority alleging that it has
violated any law, ordinance, regulation or order, and, to the best of
Pulitzer's knowledge, no such complaint or notice is threatened.
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<PAGE> 26
(v) Environmental Matters.
(i) Except as set forth on Schedule 4(v)(i) attached hereto,
the Company and Pulitzer have obtained, hold, and maintain all material
authorizations, consents, approvals, waivers, exceptions, variances,
orders, franchises, permits, licenses, or exemptions ("GOVERNMENTAL
APPROVALS") issued by any federal, state, local, foreign, regional or
other judicial, governmental, administrative or regulatory authority or
instrumentality ("GOVERNMENTAL AUTHORITY") required under any federal,
state, local or foreign statutory or common law, rule, regulation,
ordinance, code, or Governmental Approvals, and any applicable judicial or
administrative interpretation thereof, including any judicial or
administrative order, decree or judgment, relating to the protection of
human health and safety, including occupational safety, or the environment
("ENVIRONMENTAL LAW") for the ownership, use, occupation, and operation of
the Business, the Real Property owned by the Company and any other real
property operated by the Company. Except as set forth on Schedule
4(v)(i), the Company and Pulitzer have made to any Governmental Authority
all material filings, reports, registrations, notices or other submissions
("GOVERNMENTAL FILINGS") required under Environmental Laws with respect to
the ownership, use, occupation, and operation of the Business, the Real
Property owned by the Company and any other real property operated by the
Company.
(ii) Except as set forth on Schedule 4(v)(ii) attached
hereto, to the best of Pulitzer's knowledge, (A) each of the Governmental
Approvals set forth in Schedule 4(v)(i) is in full force and effect and is
final, any fixed period for appeal or review having elapsed (other than as
to ongoing compliance or modification during the term of such Governmental
Approval as otherwise provided by law or as indicated in Schedule 4(v)(i))
and (B) no such Governmental Approval is subject to any pending suit,
action, investigation of which Pulitzer or the Company has written notice,
proceeding or appeal (whether judicial, administrative or otherwise) and
no such matter is threatened.
(iii) Except as set forth on Schedule 4(v)(iii) attached
hereto:
(A) The Company and Pulitzer with respect to the Company,
the Business, the Real Property owned by the Company and
any other real property now or previously owned, or
operated
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<PAGE> 27
by the Company, have complied in all material respects
with, and currently are in compliance in all material
respects with: (x) the terms and conditions of all
Governmental Approvals issued or required pursuant to
any Environmental Law, and (y) all other limitations,
restrictions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any
Environmental Law, or in any written notice, order, or
demand letter issued, entered, promulgated, or approved
pursuant to any Environmental Law;
(B) Neither the Company nor Pulitzer has any outstanding or
unresolved written notice of violation or other
notification from any Governmental Authority, or any
written notice from any third party, alleging that the
Company or Pulitzer is now or has been in violation of
any Environmental Law, with respect to the Business, the
Company, the Real Property owned by the Company or any
other real property now or previously owned or operated
by the Company;
(C) Neither the Company nor Pulitzer is subject to any
administrative or judicial proceedings, or any
investigations of which the Company or Pulitzer has
written notice, pursuant to any Environmental Law, with
respect to the Company, the Business, the Real Property
owned by the Company or any other real property now or
previously owned or operated by the Company.
(iv) Except as set forth on Schedule 4(v)(iv) attached
hereto, to the best of Pulitzer's knowledge, no polychlorinated biphenyls
("PCBS") or asbestos containing material ("ACM") is present at any of the
Real Property owned by the Company or other real property operated by the
Company, and the Company and Pulitzer have complied in all material
respects with all regulatory requirements relating to the storage,
removal, disposal or release, if any, of ACM or PCBs which currently are
or may in the past have been located on the Real Property owned by the
Company or any other real property now or previously owned or operated by
the Company.
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<PAGE> 28
(v) Except as set forth on Schedule 4(v)(v) attached hereto,
to the best of Pulitzer's knowledge, there are not now any underground or
aboveground storage tanks (collectively, "STORAGE TANKS") on or at any of
the Real Property owned by the Company or any other real property now
operated by the Company, nor has the Company owned or operated any Storage
Tanks on real property previously owned or operated by the Company.
Except as set forth on Schedule 4(v)(v), (A) all Storage Tanks described
on Schedule 4(v)(v) and associated piping are being operated in
substantial compliance with any and all Environmental Laws, (B) any
Storage Tanks which have been removed were removed in compliance with all
Environmental Laws, and (C) any associated releases were remediated in
accordance with all Environmental Laws.
(vi) Except as set forth on Schedule 4(v)(vi) attached
hereto, to the best of Pulitzer's knowledge, neither the Real Property
owned by the Company nor any other real property now or previously owned,
leased, or operated by the Company, contains any asbestos; PCBs; petroleum
or petroleum products; or "hazardous substances", "hazardous waste",
"hazardous materials", "extremely hazardous substances", "regulated
substances", "industrial waste", "residual waste", "solid waste", "toxic
substances", "toxic pollutants", "contaminants" or "pollutants" as any of
those terms is currently defined in or for the purposes of any applicable
Environmental Law (collectively, "REGULATED MATERIALS") that, under any
Environmental Law currently in effect, (A) impose or could reasonably be
expected to impose a material liability for removal, remediation, or other
cleanup; (B) could reasonably be expected to have a material adverse
effect on the value of the Real Property owned by the Company or the
Business; or (C) could reasonably be expected to result in the imposition
of a lien on the Real Property owned by the Company or other assets of the
Company.
(vii) Except as set forth on Schedule 4(v)(vii) attached
hereto, to the best of Pulitzer's knowledge, there has been no Release of
Regulated Materials caused by the act or omission of the Company at, on or
under the Real Property owned by the Company or any other real property
now or previously owned, or operated by the Company that would (A) impose
or would reasonably be expected to impose a material liability for
removal, remediation, or other cleanup, or (B) which would have required
reporting under any federal Environmental Laws. For purposes hereof,
"RELEASE" includes, but is not limited to, releasing, spilling,
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<PAGE> 29
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping.
(viii) Except as set forth on Schedule 4(v)(viii) attached
hereto, neither the Company nor Pulitzer, with respect to the Company, the
Business, the Real Property owned by the Company or any other real
property now or previously owned, leased or operated by the Company, has
received
(A) any written request for information from any
Governmental Authority or other person related to any
site which is, or may be, subject to actions for
removal, response, remediation or cleanup of Regulated
Materials, including but not limited to any information
request pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), comparable state statutes, or other
Environmental Law;
(B) any written order, notice, demand, or other claim (A)
for removal, response, remediation or cleanup of any
Regulated Materials at any site or property; (B) for
damage of natural resources; or (C) for personal injury
or property damage related to the emission, release,
discharge or disposal of Regulated Materials.
(ix) Except as set forth on Schedule 4(v)(ix) attached
hereto, to the best of Pulitzer's knowledge, neither the Company nor
Pulitzer with respect to the Company or the Business (A) has disposed of
or transported or arranged for the disposal or transportation of any
Regulated Materials at or to any location not on the Real Property owned
by the Company, or (B) has received notice that any of the Real Property
owned by the Company, or other property now or previously owned or
operated by the Company is listed or proposed for listing or investigation
under CERCLA, a comparable state statute, or other Environmental Law, or
is the subject of any enforcement action or other investigation by a
Governmental Authority which may lead to claims against the Company or
Pulitzer for clean-up costs, remedial work, including, but not limited to,
claims under CERCLA.
(x) Except as set forth on Schedule 4(v)(x) attached hereto,
to the best of Pulitzer's knowledge, the Company and Pulitzer with respect
to the Company or the Business have
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<PAGE> 30
fully complied with all applicable provisions of any Environmental Laws
that condition, restrict or prohibit the transfer, sale, lease or closure
of any property for environmental reasons, neither the Company nor
Pulitzer is required to place any notice or restriction relating to the
presence of Regulated Materials in any instrument or deed to the Real
Property owned by the Company or other real property currently owned or
operated by the Company, no environmental lien has attached to any portion
of the Company, the Business, the Real Property owned by the Company and
no governmental actions have been taken or are in progress that could
subject any or all of the foregoing to any such lien.
(xi) Except as set forth on Schedule 4(v)(xi) attached
hereto, to the best of Pulitzer's knowledge, there have been no past and
there are no pending or contemplated claims by the Company or Pulitzer
with respect to the Company or the Business under any Environmental Laws
based on actions of others that may have impacted the Real Property owned
by the Company or other real property now or previously owned or operated
by the Company, and neither the Company nor Pulitzer with respect to the
Company or the Business has entered into any agreement with any person
regarding any Environmental Law, remedial action or other environmental
liability or expense (including contingent liabilities).
(xii) Except as set forth on Schedule 4(v)(xii) attached
hereto, to the best of Pulitzer's knowledge, the Company prior to the date
hereof has not agreed to retain, assume or guarantee the costs of any
removal, response, remediation or cleanup on any property not now owned by
the Company or Pulitzer.
(w) Circulation.
(i) The average daily paid circulation for the Daily Southtown
for the six months ended September 30, 1994 and the current weekly free
distribution for the News Marketer was not less than the respective
amounts set forth on Schedule 4(w) attached hereto. Except as set forth
on Schedule 4(w), there has been no decline in excess of five percent (5%)
in the average daily paid circulation of the Daily Southtown or the weekly
distribution of the News Marketer since September 30, 1994.
(ii) The Company has filed all Statements of Ownership,
Management and Circulation required by 39 U.S.C. Section 3685 (the "ANNUAL
REPORTS") with the U.S. Postal Service with respect to the Newspapers for
the past two (2) years.
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<PAGE> 31
All such Annual Reports, when filed, were true and complete in all
material respects. Pulitzer has delivered to AMPC true and complete
copies of all Annual Reports relating to the Newspapers, along with copies
of all circulation or distribution audits by the Audit Bureau of
Circulations or similar organizations relating to the Newspapers, for the
past two (2) years.
(x) WARN Matters. Except as set forth in Schedule 4(x) attached
hereto, neither the Company nor Pulitzer with respect to the Company or the
Business has taken any action within the ninety (90) day period prior to the
date hereof which resulted or will result in an "employment loss" as such term
is defined in the Worker Adjustment and Retraining Notification Act, 29 U.S.C.
Section Section 2101-2109 (the "WARN ACT"), with respect to any employee of
the Company, and neither the Company nor Pulitzer has taken or implemented any
actions which would constitute, prior to the date hereof, a plant closing, mass
layoff or other event requiring advance notification under the WARN Act or any
other federal, state or local law, regulation or ordinance applicable to the
Company relating to plant closings, layoffs, sales or work force reductions.
(y) Certain Fees. Neither the Company nor Pulitzer, nor any of
their respective officers, directors or employees, has employed any broker,
finder or similar party, or incurred any liability for any financial advisory,
brokerage, or finders' fees or commissions, in connection with the transactions
contemplated hereby.
(z) Accuracy of Information Furnished. No statement contained in
this Agreement or any Exhibit or Schedule attached hereto delivered by or on
behalf of Pulitzer or the Company and no statement contained in any certificate
or other transaction document delivered or to be delivered by or on behalf of
Pulitzer or the Company pursuant to this Agreement, contains any untrue
statement of a material fact or omits to state any material fact that is
necessary to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
5. Representations and Warranties of AMPC and Buyer.
AMPC and Buyer hereby jointly and severally represent and warrant to
Pulitzer as follows:
(a) Due Incorporation. Each of AMPC and Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, and each has
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<PAGE> 32
the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
(b) Authority Concerning this Agreement. Each of AMPC and Buyer
has the requisite corporate power and authority to execute and deliver this
Agreement and the other transaction documents referred to herein and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the transaction documents referred to herein and
the consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary corporate action on the part of
each of AMPC and Buyer. This Agreement has been duly and validly executed and
delivered by each of AMPC and Buyer and constitutes the legal, valid and
binding agreement of each of AMPC and Buyer and is enforceable in accordance
with its terms, subject to (i) bankruptcy, insolvency, reorganization,
moratorium and other similar laws now or hereafter in effect relating to
creditors' rights, (ii) the possibility that the remedies of specific
performance or injunctive or other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, and (iii) the possibility that the
transactions contemplated hereby may be subject to the provisions of the
Defense Production Act, 50 U.S.C. Section Section 2158, et seq. or regulations
proposed or adopted thereunder concerning acquisitions by or on behalf of a
foreign person (collectively, the "EXON-FLORIO ACT").
(c) Consents and Approvals; No Violation. Except for provisions
of the HSR Act and the Exon-Florio Act, there is no requirement applicable to
AMPC or Buyer to make any filing with, or to obtain any permit, authorization,
license, consent or approval of, any foreign or domestic governmental or
regulatory authority or other person as a condition to the lawful consummation
of the transactions contemplated by this Agreement. The execution and delivery
of this Agreement and the other transaction documents referred to herein by
each of AMPC and Buyer and the performance by each of AMPC and Buyer of their
respective obligations hereunder and thereunder will not: (A) conflict with or
result in any breach of any provision of the respective Certificate of
Incorporation or By-Laws of AMPC or Buyer; (B) result in a default or give rise
to any right of termination, cancellation, acceleration or modification under
any of the terms, conditions or provisions of any note, credit agreement, bond,
mortgage, indenture, agreement, lease, or other instrument or obligation to
which AMPC or any of its subsidiaries including Buyer is a party or by which
AMPC or Buyer or any of their respective assets may be bound, except for such
defaults or rights of termination, cancellation, acceleration or modification
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<PAGE> 33
as to which requisite waivers or consents have been obtained by AMPC or Buyer
and copies of which have been delivered to Pulitzer; or (C) violate any order,
writ, injunction or decree applicable to AMPC or any of its subsidiaries
including Buyer or any of their assets.
(d) Litigation. There are no pending claims, actions, suits,
proceedings or, to the best knowledge of AMPC, investigations to which AMPC or
Buyer is a party at law or in equity or before or by any court or foreign,
federal, state, local or other governmental department, commission, board,
agency or instrumentality which may have a material adverse effect on the
performance by AMPC and Buyer of their obligations hereunder or the
consummation by AMPC and Buyer of the transactions contemplated hereby and, to
the best knowledge of AMPC, no such matter is threatened.
(e) Investment Intent. Except as may be required in connection
with the debt financing previously disclosed to Pulitzer, Buyer is purchasing
the Shares for its own account with the present intention of holding the Shares
for investment purposes and not with a view towards any public distribution of
the Shares.
(f) Certain Fees. Neither AMPC nor any Buyer nor any of their
respective officers, directors or employees has employed any broker, finder or
similar party, or incurred any liability for any financial advisory, brokerage
or finders' fees or commissions, in connection with the transactions
contemplated hereby.
6. Survival of Representations and Warranties.
(a) Notwithstanding any investigation made by or on behalf of any
party to this Agreement, the representations and warranties made under and in
connection with this Agreement shall survive the Closing and consummation of
all the transactions contemplated hereby and shall automatically expire and
terminate on the second anniversary of the Closing Date to the extent that
claim for breach thereof has not theretofore been made in writing by a party to
the other party, except that (i) with respect to Tax and ERISA matters,
Pulitzer's representations and warranties shall terminate on the expiration of
the applicable statutes of limitations to the extent that claim for breach
thereof has not theretofore been made in writing, (ii) the representations and
warranties contained in Section 4(v) shall terminate on the fifth anniversary
of the Closing Date to the extent that claim for breach has not theretofore
been made in writing, and (iii) the
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<PAGE> 34
representations and warranties contained in Sections 4(a) and 4(b) shall
survive without time limit.
(b) Prompt notice of any matter that a party believes to involve a
breach of a representation, warranty or covenant and an estimate of the dollar
amount of the loss or potential loss which has resulted or may result from such
breach shall be given to the party that committed the alleged breach. AMPC,
Buyer and Pulitzer will consult promptly concerning the subject matter of any
notice sent pursuant to this Section 6(b). To facilitate such consultation,
AMPC, Buyer and Pulitzer shall have reasonable access to all relevant,
non-privileged information and shall be entitled to participate in any
non-privileged meetings or discussions with third parties relating to such
matter. Following such consultation, the party that committed the alleged
breach shall have a reasonable opportunity to correct the alleged breach at its
expense, subject to, and prior to becoming obligated to satisfy any claim for
indemnity, pursuant to Section 11 hereof.
7. Covenants of the Parties.
(a) Certain Business Records. For a period of six (6) years and
one (1) month following the Closing Date, AMPC and Buyer shall cause the
Company to preserve all of its books and records, to provide such access to
such books and records during normal business hours as Pulitzer may reasonably
request, and to permit Pulitzer to make copies thereof, at Pulitzer's sole
expense. AMPC and Buyer shall also cause the Company to provide such
information as Pulitzer may reasonably request for purposes of financial
accounting, preparing Tax reports or returns, and responding to audits thereof.
(b) Certain Transactions. Prior to or on the Closing Date,
Pulitzer shall, and shall cause the Company to, take all action necessary to
effect (i) the transfer to Pulitzer of the Company's prepaid insurance and
loans to employees; (ii) the assumption by Pulitzer of the Company's
liabilities and obligations for income Taxes payable, Pulitzer's Supplemental
Executive Benefit Pension Plan, post-retirement obligations and deferred income
Taxes; (iii) Pulitzer's capital contribution to the Company of all intercompany
obligations owed by the Company to Pulitzer; and (iv) terminate all
intercompany agreements and arrangements (including management fee
arrangements) between the Company, on the one hand, and Pulitzer and its
Affiliates (as defined in Section 7(c) hereof), on the other hand, other than
printing services by the Company with respect to the TV Book for the
Post-Dispatch.
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<PAGE> 35
(c) Noncompetition.
(i) Pulitzer, on behalf of itself and all its Affiliates (as
hereinafter defined), covenants and agrees that it will not, for a period of
five (5) years after the Closing Date, without AMPC's prior written consent, by
itself or in partnership or in conjunction with any other person, firm,
corporation or other entity or as a management company or consultant, either
directly or indirectly, undertake or carry on or be engaged or have any
financial or other interest in, or in any other manner advise or assist any
person, firm, corporation or other entity engaged or interested in, any
newspaper publishing business or any other business involving the printing,
publication or distribution of any newspaper, flyer, shopper, circular or other
publication carrying advertising similar to those published historically by the
Company, or any commercial printing business (collectively, the "RESTRICTED
ACTIVITIES"), carried on in the Chicago Metropolitan Area (as hereinafter
defined). For purposes of this Agreement, "CHICAGO METROPOLITAN AREA" shall
mean the geographic area comprising (A) Cook County, Illinois and (B) the
counties of Lake, DuPage, Kane, McHenry and Will in Illinois and Lake County,
Indiana. For purposes hereof, "AFFILIATE" shall mean a person or entity that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, Pulitzer.
(ii) Notwithstanding the provisions of Section 7(c)(i) of this
Agreement, nothing contained in this Agreement shall be deemed to limit or
otherwise restrict in any way whatsoever the right of Pulitzer and/or any
present or future Affiliate thereof;
(A) to print, publish, distribute, operate or otherwise
conduct the businesses of the Post-Dispatch and its related
activities;
(B) to maintain its contractual and business relationships
with any of the Gannett Co., Inc. entities or any of the Newhouse
entities and the successors and assigns thereof;
(C) to manage or operate, or to acquire through whatever
form of transaction any or all of the interests in, or any or all
of the assets of, any person, firm, corporation or other entity
which now or at any time hereafter owns, manages, operates and/or
provides services to, any radio, television and/or cable television
operations and/or any other businesses or activities licensed or
regulated by the Federal Communications Commission;
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<PAGE> 36
(D) to manage or operate, or to acquire through whatever
form of transaction any or all the interests in, or any or all of
the assets of, or to affiliate in any way with, any person, firm,
corporation or other entity which now or at any time hereafter
owns, manages and/or operates any electronic information services;
or
(E) to be engaged or have any financial or other interest
in, or in any other manner to advise or assist, or to acquire
through whatever form of transaction any or all of the interests
in, or any or all of the assets of, or subsequently operate and
manage, any person, firm, corporation or other entity (the
"Entity"), so long as the revenues, on a consolidated basis, of the
Entity are not principally derived from Restricted Activities in
the Chicago Metropolitan Area.
Further, notwithstanding the provisions of Section 7(c)(i) of this Agreement,
nothing contained in this Agreement shall be deemed to limit or otherwise
restrict the sale, transfer or assignment in whatever form of any or all the
interests in, or any or all of the assets of, Pulitzer and/or any of its
present or future Affiliates to, or the subsequent management and operation of
the businesses thereof by, any person, firm, corporation or other entity which
now or at any time hereafter conducts, by itself or through any Affiliate, any
Restricted Activities in the Chicago Metropolitan Area or elsewhere.
(iii) Pulitzer, on behalf of itself and all its Affiliates,
hereby agrees to hold in strict confidence all secret or confidential
information (other than such information as is publicly available from a source
other than Pulitzer or its officers, directors and representatives) relating to
the Company or the Business and will not, without the prior written consent of
AMPC disclose such information to anyone other than as required by law.
(iv) Pulitzer agrees and warrants that the covenants contained in
this Section 7(c) are reasonable, that valid consideration has been and will be
received therefor and that the agreements set forth herein are the result of
arms-length negotiation between the parties hereto.
(v) Pulitzer acknowledges and agrees that in the event of any
violation of the covenants contained in this Section 7(c), AMPC's and Buyer's
damages will be difficult to ascertain and their remedy at law will be
inadequate. Accordingly, Pulitzer agrees that, in addition to such remedies as
AMPC and Buyer may have at law, AMPC and Buyer shall be entitled to specific
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<PAGE> 37
performance of such covenants and to an injunction to prevent any continuing
violation thereof.
(vi) If any of the provisions of or covenants contained in this
Section 7(c) is hereafter construed to be invalid or unenforceable in any
jurisdiction, the same shall not affect the remainder of the provisions or the
enforceability thereof in any other jurisdiction, which shall be given full
effect, without regard to the invalidity or unenforceability in such other
jurisdiction. If any of the provisions of or covenants contained in this
Section 7(c) is held to be unenforceable in any jurisdiction because of the
duration or geographic scope thereof, the parties agree that the court making
such determination shall have the power to reduce the duration or geographic
scope of such provision or covenant and, in its reduced form, said provision or
covenant shall be enforceable; provided, however, that the determination of
such court shall not affect the enforceability of this Section 7(c) in any
other jurisdiction.
(d) Change of Company's Name. On the Closing Date, or as soon
thereafter as reasonably practicable, Pulitzer and Buyer shall (and shall cause
the Company to) take all action necessary to effect a change of the Company's
corporate name to a name not including "Pulitzer" or confusingly similar
thereto. All right, title and interest in and to the name "Pulitzer Community
Newspapers" shall revert to and become the exclusive property of Pulitzer
following the change of the Company's name.
(e) USWA Pension Plan. The Company shall continue as the sponsor
of the USWA Pension Plan after the Closing. As soon as practicable after the
Closing, the Company shall establish a trust to hold the assets of the USWA
Pension Plan. As soon as practicable, but in any event no later than sixty
(60) days after Pulitzer's receipt from the Company of an executed copy of the
agreement for the trust so established by the Company for the USWA Pension
Plan, Pulitzer shall cause to be transferred from Pulitzer's master pension
trust to the trust established by the Company for the USWA Pension Plan an
amount in cash or other property acceptable to the new trustee equal to the
value on the date of such transfer of the assets of such master trust
attributable to the USWA Pension Plan.
(f) New 401(k) Plan. Each of the employees of the Company who
were participants (the "Participating Employees") in the Pulitzer Retirement
Savings Plan ("Pulitzer's 401(k) Plan") on the Closing Date shall be eligible
to become a participant in a new or existing qualified 401(k) plan maintained
by AMPC or its subsidiaries (the "New 401(k) Plan"). The New 401(k) Plan shall
recognize for purposes of determining a participant's eligibility
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<PAGE> 38
for and vesting of benefits thereunder the years of service credited under
Pulitzer's 401(k) Plan for purposes of determining a participant's eligibility
for and vesting of benefits thereunder. As soon as practicable, but in any
event no later than sixty (60) days after Buyer notifies Pulitzer of the
identity of the New 401(k) Plan, Pulitzer shall cause to be transferred from
Pulitzer's 401(k) Plan to the New 401(k) Plan an amount in cash equal to the
aggregate account balances of all Participating Employees held in Pulitzer's
401(k) Plan as of the date of such transfer of such amounts, except that all
promissory notes reflecting participant loans to Participating Employees
outstanding as of such transfer date shall be transferred in kind, and
simultaneously therewith the benefit liabilities of Pulitzer's 401(k) Plan with
respect to the Participating Employees will be transferred to the New 401(k)
Plan. All of the actions referred to in the immediately preceding sentence
will be taken in accordance with Section 414(1) of the Tax Code. All
Participating Employees shall be fully vested in the transferred account
balances. Pulitzer represents and warrants to AMPC and Buyer that no
Participating Employee has any right to an annuity distribution with respect to
any of the assets allocated to his or her account under Pulitzer's 401(k) Plan.
Pulitzer (on the one hand) and AMPC, Buyer and the Company (on the other hand)
will cooperate fully in furnishing documents reasonably requested by the other
and in all other respects completing the actions contemplated by Sections 7(e)
and 7(f) hereof, including but not limited to the preparation and filing of the
IRS Form 5310A and all other necessary governmental filings and reporting
obligations.
8. Conditions to the Obligations of Pulitzer to Effect the Transactions
Contemplated Hereby.
The obligations of Pulitzer to effect the transactions contemplated hereby
shall be subject to the fulfillment at or prior to the Closing Date of the
following conditions, any one or more of which may be waived by Pulitzer:
(a) None of the parties hereto nor the Company shall be subject on
the Closing Date to any order, decree or injunction (temporary, preliminary or
final) of a court of competent jurisdiction which enjoins or prohibits the
consummation of the transactions contemplated by this Agreement, nor shall
there be pending a suit, proceeding or investigation by any foreign or domestic
governmental authority or other person that seeks injunctive or other relief in
connection with any of such transactions.
(b) AMPC and Buyer shall have performed and complied in all
respects with the respective covenants and agreements contained
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<PAGE> 39
in this Agreement required to be performed and complied with by them at or
prior to the Closing Date.
(c) All applicable waiting periods, if any, under the HSR Act
shall have expired or been terminated, and all other governmental filings,
authorizations and approvals required for the consummation of the transactions
contemplated hereby (other than pursuant to the Exon-Florio Act) shall have
been duly made and obtained.
(d) All of the following transaction documents shall have been
delivered by AMPC and Buyer to Pulitzer:
(i) An officer's certificate from the Executive Vice
President of AMPC and Buyer dated the Closing Date confirming the matters
referred to in Sections 8(a) and 8(b) hereof as they relate to AMPC and
Buyer;
(ii) An officer's certificate of the Secretary or an
Assistant Secretary of AMPC and Buyer confirming the adoption and
continued effect of resolutions of the Executive Committee of AMPC's Board
of Directors and of Buyer's Board of Directors authorizing the execution,
delivery and performance by AMPC and Buyer of this Agreement and all
instruments delivered in connection therewith and the transactions
contemplated hereby and thereby; and
(iii) A certificate of incumbency for any person executing
this Agreement or any other transaction document on behalf of AMPC or
Buyer.
(e) Pulitzer shall have received an opinion from Kirkpatrick &
Lockhart, counsel to AMPC and Buyer, dated as of the Closing Date and
substantially in the form of Exhibit B attached hereto. As to any matter
contained in such opinion that involves the laws of any jurisdiction other than
the Federal laws of the United States or the laws of the Commonwealth of
Pennsylvania or the Delaware General Corporation Law, such counsel may rely
upon opinions of counsel admitted to practice in such other jurisdictions. As
to matters of fact, such opinion may expressly rely upon certificates furnished
by appropriate officers of AMPC or Buyer and by public officials. Any opinions
of counsel admitted to practice in such other jurisdictions or certificates of
officers or public officials relied upon by Kirkpatrick & Lockhart as aforesaid
shall be delivered together with such opinion.
(f) Pulitzer shall have received (i) copies of AMPC's and Buyer's
Certificates of Incorporation certified by the Secretary of State of Delaware;
and (ii) Certificates of Good Standing from
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the Secretary of State of Delaware evidencing AMPC's and Buyer's good standing
in such jurisdiction.
9. Conditions to the Obligations of AMPC and Buyer to Effect the Transactions
Contemplated Hereby.
The obligations of AMPC and Buyer to effect the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions, any one or more of which may be waived by AMPC and
Buyer:
(a) None of the parties hereto nor the Company shall be subject on
the Closing Date to any order, decree or injunction (temporary, preliminary or
final) of a court of competent jurisdiction which enjoins or prohibits the
consummation of the transactions contemplated by this Agreement, nor shall
there be pending a suit, proceeding or investigation by any foreign or domestic
governmental authority or other person that seeks injunctive or other relief in
connection with any of such transactions.
(b) Pulitzer shall have performed and complied in all respects
with all covenants and agreements contained in this Agreement required to be
performed and complied with by it at or prior to the Closing Date.
(c) All applicable waiting periods, if any, under the HSR Act
shall have expired or been terminated, and all other governmental filings,
authorizations and approvals required for the consummation of the transactions
contemplated hereby (other than pursuant to the Exon-Florio Act) shall have
been duly made and obtained.
(d) All of the following transaction documents shall have been
delivered by Pulitzer to AMPC and Buyer:
(i) An officer's certificate from the Senior Vice President
- Newspaper Operations of Pulitzer dated the Closing Date confirming the
matters referred to in Sections 9(a) and 9(b) hereof as they relate to
Pulitzer and the Company;
(ii) An officer's certificate from the Secretary or an
Assistant Secretary of Pulitzer confirming the adoption and continued
effect of resolutions of the Board of Directors of Pulitzer authorizing
the execution, delivery and performance by Pulitzer of this Agreement and
all instruments in connection therewith and the transactions contemplated
hereby and thereby; and
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<PAGE> 41
(iii) A certificate of incumbency for any person executing
this Agreement or any other transaction document on behalf of Pulitzer and
the Company.
(e) Buyer shall have received (i) a copy of the Company's
Certificate of Incorporation certified by the Secretary of State of Delaware;
and (ii) Certificates of Good Standing from the Secretary of State of Delaware
and Illinois evidencing the Company's good standing in each such jurisdiction.
(f) Buyer shall have received written resignations, effective as
of the Closing Date, from each of the directors and officers of the Company.
(g) AMPC and Buyer shall have received an opinion from Fulbright &
Jaworski L.L.P., counsel to Pulitzer and the Company, dated as of the Closing
Date and substantially in the form of Exhibit C attached hereto. As to any
matter contained in such opinion that involves the laws of any jurisdiction
other than the Federal laws of the United States or the laws of the State of
New York or the Delaware General Corporation Law, such counsel may rely upon
opinions of counsel admitted to practice in such other jurisdictions. As to
matters of fact, such opinion may expressly rely upon certificates delivered by
appropriate officers and directors of Pulitzer or the Company and by public
officials. Any opinions of counsel admitted to practice in such other
jurisdictions or certificates of officers, directors or public officials relied
upon by counsel to Company as aforesaid shall be delivered together with such
opinion.
(h) Buyer shall have received the original corporate records, the
corporate minute book, the stock record book, the corporate seal, the stock
ledgers and records and other corporate records relating to the organization,
ownership and maintenance of the Company.
(i) Buyer shall have obtained, from one or more title insurance
companies selected by AMPC, ALTA (1990-Form B with appropriate state
endorsements) owner's policies of title insurance at standard rates, insuring
good and marketable title to the Real Property (owned by the Company) in the
Company or Buyer's designees, as the case may be, with mechanic's lien coverage
and such endorsements as Buyer may request, and with exceptions for and subject
only to (i) zoning rules, restrictions, regulations, resolutions, ordinances,
building restrictions, building codes, fire laws, environmental and other
governmental rules, laws and regulations of general applicability affecting the
operation or use of the Real Property; and (ii) real estate Taxes not yet due
and payable. In connection with the issuance of such title insurance policies,
Pulitzer
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<PAGE> 42
shall deliver to Buyer's title insurer ALTA extended coverage owner's
affidavits regarding title, mechanics liens and other customary matters as may
be reasonably requested by Buyer or Buyer's title insurer and "gap" indemnities
in customary form.
10. Certain Tax Matters.
(a) Sales and Transfer Taxes. All sales and transfer Taxes
(including stock transfer Taxes, if any), incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by Pulitzer,
and Pulitzer shall, at its own expense, file or prepare for filing all
necessary Tax Returns and other documentation with respect to all such sales or
transfer Taxes and, if required by applicable law or if necessary to secure any
applicable exemption, Buyer shall join in the execution of any such Tax Returns
or other documentation.
(b) Tax Returns and Payment of Taxes for Periods Through the
Closing Date. Pulitzer will include the income of the Company on Pulitzer's
consolidated federal income Tax Return (including any income resulting from an
election under Section 338(h)(10) of the Tax Code with respect to the
acquisition of the Shares) for all periods through the Closing Date and will
pay any Taxes due thereon. Pulitzer also will pay any state or local income
Taxes of the Company for all taxable periods ending on or before the Closing
Date, including such Taxes resulting from an election under Section 338(h)(10)
of the Tax Code or the corresponding provision of any state or local
counterpart Tax law. AMPC and Buyer will cause the Company to furnish
information to Pulitzer for inclusion in Pulitzer's federal consolidated income
Tax Return and the Company's state or local income Tax Returns for the period
up to and including the Closing Date in accordance with the Company's past
custom and practice. The income of the Company will be apportioned for the
period up to and including the Closing Date and the period after the Closing
Date by closing the books of the Company as of the end of the Closing Date.
(c) Taxes of Other Persons. Pulitzer agrees to indemnify AMPC,
Buyer and the Company and will hold AMPC, Buyer and the Company harmless, from
and against any damages that AMPC, Buyer or the Company may suffer resulting
from, arising out of, relating to, in the nature of, or caused by any liability
of the Company for Taxes of any person other than the Company attributable to
periods through and including the Closing Date.
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<PAGE> 43
(d) Indemnity for and Refunds of Taxes.
(i) Pulitzer shall be entitled to any credits or refunds of
Taxes (including interest), and shall pay, indemnify, defend and hold
harmless AMPC, Buyer and the Company against, all Taxes (including
interest and penalties and any pending or future assessments),
attributable to the Company with respect to any taxable period ending on
or prior to the Closing Date. The amount of Pulitzer's indemnification
obligation under this Section 10(d) shall be reduced by any amount
previously reserved or accrued for Taxes on the Post-Closing Statement.
Notwithstanding any other provision of this Agreement, the obligation of
Pulitzer to indemnify and hold harmless AMPC, Buyer and the Company from
Taxes under this Section 10(d) shall begin on the Closing Date and end
thirty (30) days following the expiration of the statute of limitations
applicable to the assessment and collection of any Taxes for and against
which AMPC, Buyer and the Company are indemnified and held harmless by
Pulitzer hereunder, to the extent that a claim for indemnity hereunder has
not theretofore been made in writing. Any Tax refund (including interest)
to which Pulitzer is entitled under this Section 10(d) but that is
received by or credited to AMPC, Buyer or the Company at any time after
the Closing Date shall promptly be paid to Pulitzer following such receipt
or crediting.
(ii) In determining the amount of any payment by Pulitzer
pursuant to this Section 10(d), there shall be deducted or added,
respectively, from or to the amount to be paid an amount equal to (A) the
present value of any net Tax benefit (federal, state, local or foreign)
realized, or reasonably expected to be realized, by AMPC, Buyer or the
Company by reason of such payment, or (B) the present value of any net Tax
detriment (federal, state, local or foreign) that is, or is reasonably
expected to be, incurred by AMPC, Buyer or the Company as a consequence of
the receipt of any indemnity payment pursuant to this Section 10(d).
(iii) For purposes of this Section 10(d), "present value"
shall be calculated using the applicable annual Federal mid-term rate, as
that term is defined in the Tax Code, as in effect for the month in which
the payment is to be made. For purposes of this Section 10(d), the amount
of any "Tax benefit" and "Tax detriment" shall be calculated using the
highest effective tax rate applicable or known to be applicable with
respect to the taxable period or periods for which the Tax benefit or the
Tax detriment, as the case may be, is reasonably expected to be realized
or incurred.
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<PAGE> 44
(e) Carrybacks. With respect to any Tax, the Company will not
carry back any item of loss, deduction or credit that arises in any taxable
period ending after the Closing Date (a "Subsequent Loss") to a Tax Return of
Pulitzer or the Company for any taxable period ending on or before the Closing
Date. Notwithstanding the previous sentence, if a Subsequent Loss with respect
to any Tax is carried back to a Tax Return of Pulitzer or Company for any
taxable period ending on or before the Closing Date, AMPC, Buyer or the Company
will be entitled to any refund or credit of Taxes realized as a result thereof.
(f) Election under Tax Code Section 338(h)(10). Pulitzer will
join with Buyer in making an election under Section 338(h)(10) of the Tax Code
(and any corresponding elections under state or local Tax law) with respect to
the purchase and sale of the Shares. Pulitzer will pay any Tax attributable to
or related to the making of these elections and will indemnify AMPC, the Buyer
and the Company and will hold AMPC, the Buyer and the Company harmless from and
against any damages or losses arising in connection with any failure to pay
such Tax.
(g) Allocation of Purchase Price.
(i) The Purchase Price and liabilities of the Company will
be allocated among the assets of the Company for all purposes (including
Tax and financial accounting purposes) as set forth in Exhibit D attached
hereto. The parties agree that they shall, as promptly as practicable
following the Closing, enter into good-faith negotiations regarding a
mutually agreeable allocation of the portion of the Purchase Price and
liabilities of the Company which is allocated to the fixed assets of the
Company. With respect to that portion of the Purchase Price and
liabilities of the Company which is allocated to intangible assets of the
Company, the parties agree to rely on an appraisal by the firm of
Harrison, Bond & Pecaro to be obtained, at Pulitzer's expense and
delivered to Buyer as soon as reasonably practicable after the Closing,
but in any event not later than February 1, 1995, unless Buyer reasonably
objects in writing to the results of such appraisal within thirty (30)
days after Buyer's receipt of a copy thereof. In the event Buyer
reasonably objects to the results of such appraisal within the thirty-day
period prescribed by the immediately preceding sentence, the parties
shall, as promptly as practicable, enter into good-faith negotiations
regarding a mutually agreeable allocation of the portion of the Purchase
Price and liabilities of the Company to be allocated among the intangible
assets of the Company. In the event of any failure by the parties to
resolve any disagreements regarding the allocation of the Purchase Price
and
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<PAGE> 45
liabilities of the Company, the items in dispute will be referred, for
final, binding and conclusive resolution, to the Accounting Arbitrator or,
if the parties so determine, to another mutually-agreeable nationally
recognized firm of valuation experts.
(ii) The parties will file all Tax Returns (including amended
Tax Returns and claims for refund) and information reports in a manner
consistent with the allocation prescribed in this Section 10(g), provided,
however, that if any taxing authority makes or proposes an allocation with
respect to the assets of the Company which differs materially from such
allocation, each of AMPC, Buyer and the Company, on the one hand, and
Pulitzer, on the other hand, shall have the right, at such party's or
parties' election and expense, to contest such taxing authority's
determination. In the event of such a contest, the other party or parties
agree(s) to cooperate reasonably with the contesting party or parties and
shall have the right to file such protective claims or returns as may be
reasonably required to protect its or their interest. Each party shall
provide the other party with all notices and information reports filed
with taxing authorities and agencies with respect to the Section
338(h)(10) elections and any allocation of the Purchase Price.
(h) Tax Audits. Pulitzer shall have the right, at its own
expense, to control any audit or examination by any taxing authority (a "Tax
Audit"), initiate any claim for refund, contest, resolve and defend against any
assessment, notice of deficiency, or other adjustment or proposed adjustment
relating to any and all Taxes for any taxable period of the Company ending on
or before the Closing Date; provided, however, that Pulitzer shall in no event
take any position in any such proceeding which would subject AMPC, Buyer or the
Company to any civil fraud or any civil or criminal penalty, and provided,
further, that Pulitzer shall not consent, without the prior written approval of
AMPC, Buyer or the Company, which prior written approval shall not be
unreasonably withheld, to any change in the treatment of any item which would
in any material respect adversely affect the Tax liability of AMPC, Buyer or
the Company for a period subsequent to the Closing Date. AMPC, Buyer and the
Company shall have the right, at their expense, to control any other Tax Audit,
initiate any other claim for refund, and contest, resolve and defend against
any other assessment, notice of deficiency, or other adjustment or proposed
adjustment relating to Taxes for any taxable period ending after the Closing
Date with respect to the Company; provided, however, that AMPC, Buyer and the
Company shall in no event take any position in any such proceeding which would
subject Pulitzer to any civil fraud or any civil or
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<PAGE> 46
criminal penalty, and provided, further, that AMPC, Buyer and the Company shall
not consent, without the prior written approval of Pulitzer, which prior
written approval shall not be unreasonably withheld, to any change in the
treatment of any item which would in any material respect adversely affect the
Tax liability of Pulitzer for any period, whether prior to or subsequent to the
Closing Date.
(i) Mutual Cooperation. AMPC, Buyer, the Company and Pulitzer
shall each provide the other, and AMPC and Buyer shall cause the Company to
provide Pulitzer, with such assistance as may reasonably be requested by any of
them in connection with the preparation of any Tax Return, any Tax Audit or
other examination by any taxing authority, or any judicial or administrative
proceedings relating to liability for Taxes, and each will retain and provide
the other with any records or information that may be relevant to such Tax
Return, Tax Audit or examination, proceedings or determination. Such
assistance shall include making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder and shall include providing copies of any relevant Tax
Returns and supporting work schedules. The party requesting assistance
hereunder shall reimburse the other for reasonable expenses incurred in
providing such assistance. Without limiting in any way the foregoing
provisions of this Section 10, AMPC and Buyer hereby agree that the Company
will retain, until the appropriate statutes of limitations (including any
extensions) expire, copies of all Tax Returns, supporting work schedules and
other records or information that may be relevant to such returns of the
Company (or any predecessor company) for all taxable periods that include the
dates from January 1, 1988 to the Closing Date, inclusive, and that it will not
destroy or otherwise dispose of such records covering the period from January
1, 1988 through the Closing Date without first providing Pulitzer with a
reasonable opportunity to review and copy such records.
11. Indemnification.
(a) The provisions of Section 10 shall govern Pulitzer's
indemnification obligations hereunder with respect to Tax matters; the
provisions of Sections 11(b) and (c) shall govern all other indemnification
obligations of the parties hereunder; and the provisions of Section 11(d) shall
govern the procedural aspects of indemnification for all purposes hereunder.
(b) Subject to the limitations set forth in this Section 11 and in
Section 6 hereof, Pulitzer shall indemnify, defend and hold AMPC, Buyer and the
Company harmless from and against any and all losses, liabilities, costs,
expenses and damages,
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<PAGE> 47
including without limitation litigation costs, penalties and interest and
reasonable attorneys' fees, experts' fees and court costs actually incurred,
sustained or paid by AMPC, Buyer or the Company (collectively, "BUYER'S
DAMAGES") that: (i) would not have been sustained, incurred or paid if all of
the representations, warranties, agreements and covenants of Pulitzer hereunder
had been true, correct and duly performed; or (ii) relate to or arise out of
any claim or other cause of action asserted or brought by an unaffiliated third
party which alleges any state of facts or other circumstances which (whether or
not meritorious) could result in or constitute a breach or violation of any of
the representations, warranties, agreements or covenants of Pulitzer hereunder.
Pulitzer shall not be obligated to indemnify AMPC, Buyer and the Company
pursuant to this Section 11(b) until (and then shall be obligated only to the
extent that) the aggregate amount of all Buyer's Damages exceeds One Hundred
Thousand Dollars ($100,000); provided, however, that the foregoing $100,000
indemnity threshold shall not apply to any claims under Sections 4(a), 4(b) or
10 hereof, and Pulitzer shall indemnify and hold AMPC, Buyer and the Company
harmless without regard to such threshold for any and all Buyer's Damages
relating to or arising from any such claim. Nothing in this Agreement shall
entitle AMPC, Buyer and the Company to multiple recovery of Buyer's Damages for
the same matter giving rise to indemnification hereunder.
(c) Subject to the limitations set forth in this Section 11 and
Section 6 hereof, AMPC and Buyer shall jointly and severally indemnify, defend
and hold Pulitzer harmless from and against any and all losses, liabilities,
costs, expenses, and damages, including without limitation litigation costs,
penalties and interest and reasonable attorneys' fees and experts' fees and
court costs actually incurred, sustained or paid by Pulitzer (collectively,
"SELLER'S DAMAGES") that: (i) would not have been sustained, incurred or paid
if all the representations, warranties, agreements and covenants of AMPC and
Buyer hereunder had been true, correct and duly performed; or (ii) relate to or
arise out of any claim or other cause of action asserted or brought by an
unaffiliated third party which alleges any state of facts or other
circumstances which (whether or not meritorious) could result in or constitute
a breach or violation of any of the representations, warranties, agreements or
covenants of AMPC or Buyer hereunder; or (iii) relate to any claims and/or
causes of action for or relating to severance, termination or separation pay,
and/or claims or causes of action arising under the WARN Act, the National
Labor Relations Act, as amended, and/or the Company's existing collective
bargaining agreement with the United Steelworkers of America, that arise from
or result as a consequence of any action taken by AMPC, Buyer or the Company
with respect to the employees of the Company (including but not
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<PAGE> 48
limited to lay off, termination, or the transactions contemplated by Section
7(e) hereof) on or after the Effective Time on the Closing Date.
(d) Any party or parties entitled to indemnification hereunder is
hereinafter referred to (individually and collectively) as an "INDEMNIFIED
PARTY" and any party obligated to indemnify hereunder is hereinafter referred
to as an "INDEMNIFYING PARTY". If any claim is made by a third party against
an Indemnified Party based upon any state of facts or other circumstances the
existence of which could constitute a breach of any of the representations,
warranties, covenants or agreements herein of an Indemnifying Party, or any
other matter is discovered by an Indemnified Party which could be reasonably
likely to result in any Buyer's Damages or Seller's Damages, as the case may
be, that are subject to indemnification hereunder, the Indemnified Party shall
diligently investigate the matter and give to the Indemnifying Party prompt
written notice thereof and request the Indemnifying Party to defend or remedy
the same; provided, however, that with respect to a claim for a breach of a
representation or warranty, written notice under this Section 11(d) shall not
be given by the Indemnified Party unless the Indemnified Party shall have first
complied with the provisions of Section 6(b) hereof. The Indemnifying Party
shall have the right to defend against such claim or other matter at the
Indemnifying Party's expense, but only with counsel reasonably satisfactory to
the Indemnified Party, and the Indemnifying Party shall give written notice to
the Indemnified Party of the commencement of such defense promptly after
receiving written notice of the claim or other matter from the Indemnified
Party. The Indemnified Party shall be entitled to participate with the
Indemnifying Party in such defense, but shall not be entitled in any way to
release, waive, settle, modify or pay such claim without the consent of the
Indemnifying Party if the Indemnifying Party has promptly assumed and
diligently prosecuted such defense. In the event the Indemnifying Party has
promptly assumed said defense and has employed counsel reasonably satisfactory
to the Indemnified Party with respect thereto, the Indemnified Party shall also
be entitled to employ counsel at the Indemnified Party's expense. In the event
the Indemnifying Party does not promptly provide and diligently and properly
prosecute the defense of the matter as provided above, the Indemnified Party
shall have the full right to defend against such claim or other matter and
shall be entitled to settle or agree to pay in full such claimed liability in
its sole discretion and thereafter pursue its rights against the Indemnifying
Party. In the event the Indemnified Party shall assume the defense, the
Indemnifying Party and the Indemnified Party shall cooperate in the defense of
such action and each shall be entitled to participate in any nonprivileged
meeting or
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<PAGE> 49
discussions regarding the matter, and the nonprivileged records of each party
shall be available to the others with respect to such defense. The
Indemnifying Party shall at all times be entitled to remedy the alleged breach
giving rise to the claim for indemnity at its sole cost. The indemnification
obligations of Pulitzer under Section 10 and of the parties hereto under this
Section 11 shall survive the consummation of the sale of the Shares hereunder
and shall continue without time limit with respect to all claims that are
timely made in accordance with the provisions of Section 6 and this
Section 11(d).
12. Miscellaneous Provisions.
(a) Commissions. Pulitzer, on the one hand, and AMPC and Buyer,
on the other hand, shall each pay all their respective brokerage fees,
commissions and finder's fees, if any, and shall indemnify and hold the other
harmless from and against any and all other claims or liabilities for brokerage
fees, commissions and finder's fees incurred by reason of any action taken by
any such party.
(b) Certain Expenses. Whether or not the transactions
contemplated hereby are consummated, except as otherwise provided herein, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby (the "TRANSACTION COSTS") will be paid by the
party incurring such costs and expenses. Without limiting the generality of
the foregoing: (i) Pulitzer's Transaction Costs shall be paid by Pulitzer and
no costs or expenses properly attributable to Pulitzer shall be charged to the
Company or the Business or be assumed by AMPC or the Buyer; (ii) AMPC or Buyer
shall pay all costs associated with any title insurance premiums with respect
to the title insurance policies obtained by Buyer and surveys in connection
with the Real Property; (iii) all costs associated with any realty transfer or
other transfer taxes relating to the sale of the Shares as contemplated hereby
shall be borne solely by Pulitzer; (iv) the fees, costs and expenses of the
Accounting Arbitrator, if any, shall be borne equally by AMPC and Pulitzer; and
(v) the fee associated with the parties' filings under the HSR Act shall be
borne by AMPC or Buyer.
(c) Dollar Amounts. Except as expressly indicated, all dollar
amounts in this Agreement are stated in and shall be interpreted to be in
United States dollars.
(d) Further Assurances. From time to time as and when requested by
AMPC, Buyer, or their respective successors or assigns, Pulitzer shall execute
and deliver such deeds and other instruments of transfer and shall take or
cause to be taken such
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<PAGE> 50
further or other actions as shall be necessary or advisable in order to carry
out the purpose and intention of this Agreement or to vest or perfect in the
Company, or to confirm of record or otherwise to the Company, title to and
possession of all of the property, interests, assets, rights, privileges,
franchises, immunities, powers and purposes of the Company. Effective as of
Closing, Pulitzer shall be deemed to have assigned to the Company, to the
extent permitted by law, any indemnification rights from third parties and/or
rights arising from representations and warranties made to Pulitzer by such
third parties, to which Pulitzer may be entitled under the terms of any
agreement to which Pulitzer is a party and which are related to Pulitzer's
purchase of any of the Assets from such third parties; provided, however, that
the foregoing shall not be construed to expand Pulitzer's obligations to
indemnify AMPC, Buyer and the Company under this Agreement.
(e) Amendment and Modification. This Agreement may be amended,
modified or supplemented at any time after the Closing Date but only by a
written agreement that identifies this Agreement and is signed by all the
parties hereto.
(f) Waiver of Compliance; Consents. Except as otherwise provided
in this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be made, if given, in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this Section 12(f).
(g) Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been given when delivered by hand,
overnight courier, facsimile transmission or telex or upon receipt when mailed
by registered or certified mail (return receipt requested), postage prepaid, to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
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<PAGE> 51
(i) If to Pulitzer:
Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, MO 63101
Attention: Mr. Nicholas G. Penniman IV
Senior Vice President -
Newspaper Operations
Copies to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, NY 10103-3198
Attention: Richard A. Palmer, Esquire
(ii) If to AMPC or Buyer:
American Publishing Company
c/o American Publishing
Management Services, Inc.
107-115 South Emma Street
West Frankfort, Illinois 62896
Attention: Mr. Larry J. Perrotto
President and Chief Executive
Officer
Copies to:
Kirkpatrick & Lockhart
1500 Oliver Building
Pittsburgh, Pennsylvania 15222
Attention: Jerry H. Owens, Esquire
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned by any party
hereto without the prior written consent of the other parties. This Agreement
and all of the provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, successors and permitted
assigns.
(i) Governing Law and Jurisdiction. This Agreement shall be
governed by and construed under the laws of the State of New York without
regard to its conflicts of law rules. The parties hereto agree that any claim
or dispute arising under or in
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<PAGE> 52
connection with this Agreement or the transactions contemplated hereby (except
with respect to any final and binding decision by the accounting firm in
accordance with Sections 2(d) or 10(g) hereof) shall be submitted for
adjudication exclusively in the United States District Court for the Southern
District of New York or, if such court, by its rules, will not exercise
jurisdiction, the applicable New York state court of original jurisdiction, and
each of the parties hereto expressly agrees to be bound by such selection of
jurisdiction and venue for purposes of such adjudication. The parties hereto
hereby expressly waive any claim such person may now or hereafter have that (A)
such court is not a convenient forum for any such adjudication, and (B) the
substantive laws of the State of New York or the procedural laws of such court
shall not apply to the resolution of any matter in dispute. The parties hereto
further agree and consent to the personal jurisdiction of such court with
respect to any claim or dispute arising under or in connection with this
Agreement or the transactions contemplated hereby and agree that process issued
out of such court or in accordance with the rules of practice of such court
shall be properly served if served personally or served by certified mail or
other form of substituted service, as provided under the rules of practice of
such court. AMPC, Buyer and Pulitzer expressly acknowledge that the choice of
law, choice of forum and other provisions set forth herein are a result of
arms' length negotiations between the parties hereto.
(j) Counterparts. This Agreement may be executed in one or more
counterparts, none of which need contain the signatures of all parties, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
(k) No Third Party Beneficiaries. No person who is not a party to
this Agreement, including without limitation any employee or former employee of
the Company or any predecessor owner of the Business or of any of the Assets,
shall be deemed to be a beneficiary of any provision of this Agreement, and no
such person shall have any claim, cause of action, right or remedy pursuant to
this Agreement.
(l) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
tribunal to be invalid, void, unenforceable or against its public or regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
(m) Interpretation. The descriptive headings contained in this
Agreement are for convenience of reference only and shall
- 47 -
<PAGE> 53
have no effect on the interpretation or meaning hereof. The word "Agreement"
refers to the body of this Agreement and all Exhibits and Schedules attached
hereto or referred to herein. "Herein," "hereof" and the like refer to this
Agreement as a whole. As used in this Agreement, the singular shall include
the plural, the plural shall include the singular and each gender shall include
all genders. For purposes of the Agreement, the phrase, "to the best knowledge
of Pulitzer" or variations thereof shall mean to the knowledge, after
reasonable inquiry but without consultation with other employees of Pulitzer or
the Company who may have had relevant information, prior to Closing of (i) any
person who was an officer or director of Pulitzer prior to Closing, (ii) Thomas
Jackson, (iii) Gerald Smith, or (iv) George Voleta.
(n) Prevailing Party. In the event of any litigation or
arbitration between AMPC and Buyer (on the one hand) and Pulitzer (on the other
hand) arising out of this Agreement or any of the transactions contemplated
hereby (other than with respect to the Post-Closing Statement and the
allocation of the Purchase Price), the prevailing party shall be entitled to
reimbursement of its reasonable attorneys' fees and expenses from the
nonprevailing party.
(o) Entire Agreement. This Agreement, including the Exhibits and
Schedules attached hereto (and any other instruments executed and delivered at
the Closing), embodies the entire agreement and understanding of the parties
with respect to the transactions contemplated by this Agreement. The Exhibits
and Schedules hereto are an integral part of this Agreement and are
incorporated by reference herein. This Agreement supersedes all prior
discussions, negotiations, agreements and understandings (both written and
oral) between the parties with respect to the transactions contemplated hereby
that are not reflected or set forth in this Agreement or the Exhibits and
Schedules attached hereto, including without limitation that certain letter of
intent dated as of November 21, 1994, between AMPC and Pulitzer and that
certain confidentiality agreement dated as of April 20, 1994, between AMPC and
the Company, both of which shall be deemed to terminate as of the Closing Date.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 48 -
<PAGE> 54
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
WITNESS: PULITZER PUBLISHING COMPANY
/s/ Ronald H. Ridgway By: /s/ Nicholas G. Penniman
- --------------------- ------------------------
Name: Nicholas G. Penniman IV
-----------------------
Title: Senior Vice President
---------------------
ATTEST: AMERICAN PUBLISHING COMPANY
By: /s/ Joan R. Williams By: /s/ Larry J. Perrotto
-------------------- ---------------------
Joan R. Williams, Larry J. Perrotto,
Assistant Secretary President and Chief
Executive Officer
ATTEST: AMERICAN PUBLISHING HOLDINGS
INC.
By: /s/ Joan R. Williams By: /s/ Larry J. Perrotto
-------------------- ---------------------
Joan R. Williams, Larry J. Perrotto,
Assistant Secretary President and Chief
Executive Officer
<PAGE> 1
SUBSIDIARIES OF REGISTRANT
Pulitzer Broadcasting Company
Star Publishing Company
WDSU Television, Inc.
WESH Television, Inc.
KCCI Television, Inc.
Pulitzer Technologies, Inc.
News Information, Inc.
Pulitzer Ventures, Inc.
Pulitzer Ventures II, Inc.
Lerner Newspapers, Inc.
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
To Pulitzer Publishing Company:
We consent to the incorporation by reference in Registration Statements Nos.
33-56263 and 33-56265 of Pulitzer Publishing Company on Form S-8 of our reports
dated February 3, 1995, appearing in this Annual Report on Form 10-K of
Pulitzer Publishing Company for the year ended December 31, 1994.
DELOITTE & TOUCHE LLP
Saint Louis, Missouri
March 17, 1995
<PAGE> 1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints MICHAEL E. PULITZER and RONALD H.
RIDGWAY, and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign Pulitzer Publishing
Company's Annual Report on Form 10-K, and to file the same, with all exhibits
thereto and other documents in connection therewith, and any amendments
thereto, with the Securities and Exchange Commission, National Association of
Securities Dealers, Inc. and Midwest Stock Exchange, Inc., granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or each of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael E. Pulitzer Director; Chairman, President and January 24, 1995
- ----------------------- Chief Executive Officer
(Michael E. Pulitzer) (Principal Executive Officer)
/s/ Ronald H. Ridgway Director; Senior Vice President-Finance January 24, 1995
- --------------------- (Principal Financial and Accounting Officer)
(Ronald H. Ridgway)
/s/ Ken J. Elkins Director, Senior Vice President - January 24, 1995
- ----------------- Broadcasting Operations
(Ken J. Elkins)
/s/ David E. Moore Director January 24, 1995
- ------------------
(David E. Moore)
/s/ Nicholas G. Penniman IV Director, Senior Vice President - January 24, 1995
- --------------------------- Newspaper Operations
(Nicholas G. Penniman IV)
/s/ Peter J. Repetti Director January 24, 1995
- --------------------
(Peter J. Repetti)
/s/ Emily Rauh Pulitzer Director January 24, 1995
- -----------------------
(Emily Rauh Pulitzer)
/s/ Alice B. Hayes
- ------------------ Director January 24, 1995
(Alice B. Hayes)
/s/ James M. Snowden, Jr.
- ------------------------- Director January 24, 1995
(James M. Snowden, Jr.)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 77,084
<SECURITIES> 0
<RECEIVABLES> 65,078
<ALLOWANCES> 2,135
<INVENTORY> 3,069
<CURRENT-ASSETS> 159,142
<PP&E> 235,805
<DEPRECIATION> 119,911
<TOTAL-ASSETS> 468,312
<CURRENT-LIABILITIES> 62,413
<BONDS> 128,750
<COMMON> 226
0
0
<OTHER-SE> 342,416
<TOTAL-LIABILITY-AND-EQUITY> 468,312
<SALES> 485,579
<TOTAL-REVENUES> 485,579
<CGS> 191,570
<TOTAL-COSTS> 191,570
<OTHER-EXPENSES> 30,486
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,009
<INCOME-PRETAX> 65,870
<INCOME-TAX> 25,960
<INCOME-CONTINUING> 39,910
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (719)
<NET-INCOME> 39,191
<EPS-PRIMARY> 2.41
<EPS-DILUTED> 0
</TABLE>
