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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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<TABLE>
<CAPTION>
(MARK ONE)
<C> <C>
[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, 1996 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
</TABLE>
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PULITZER PUBLISHING COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<TABLE>
<S> <C>
DELAWARE 430496290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
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. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant was approximately $288,170,252 as of the close of business on
March 20, 1997.
The number of shares of Common Stock, $.01 par value, outstanding as of
March 20, 1997 was 6,548,546.
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 24, 1997
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, 1996.
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<PAGE> 2
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, and a group of community
newspapers acquired on July 1, 1996. 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 three radio stations
located in Phoenix, Arizona.
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.
On July 1, 1996, the Company acquired for approximately $216 million
(including approximately $6 million in working capital) all the stock of Scripps
League Newspapers, Inc. ("Scripps League"), a privately owned company that
published a group of community newspapers, including 14 dailies, which serve
smaller markets, primarily in the West and Midwest. The largest newspaper in the
group is the Provo, Utah property with daily circulation of approximately
33,000. The Company financed the acquisition of Scripps League with a
combination of cash ($81 million), variable rate credit agreement borrowings
($50 million) and fixed rate senior notes ($85 million). The operating results
of Scripps League (subsequently renamed Pulitzer Community Newspapers, Inc.
("PCN")) are included in the Company's financial statements from the date of
acquisition. (See "-- Publishing -- Pulitzer Community Newspapers, Inc.")
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. Comparability of publishing segment
amounts is affected by the acquisition of Scripps League on July 1, 1996 (See
"-- Publishing -- Pulitzer Community Newspapers, Inc.") and the sale of a
Chicago publishing subsidiary on December 22, 1994. (See "-- Publishing --
Chicago Publications.") Comparability of broadcasting segment amounts is
affected by the acquisitions of WESH-TV and KCCI-TV on June 30, 1993 and
September 9, 1993, respectively.
1
<PAGE> 3
ITEM 1. BUSINESS -- CONTINUED
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Operating revenues -- net:
Publishing............................... $309,096 $269,388 $304,779 $290,146 $285,004
Broadcasting............................. 224,992 202,939 180,800 136,839 113,369
-------- -------- -------- -------- --------
Total.................................... $534,088 $472,327 $485,579 $426,985 $398,373
======== ======== ======== ======== ========
Operating income (loss):
Publishing............................... $ 32,577 $ 25,393 $ 30,486 $ 23,702 $ 18,179
Broadcasting............................. 83,246 65,939 47,963 27,947 23,311
Corporate................................ (5,532) (4,666) (3,871) (3,692) (4,856)
-------- -------- -------- -------- --------
Total.................................... $110,291 $ 86,666 $ 74,578 $ 47,957 $ 36,634
======== ======== ======== ======== ========
Depreciation and amortization:
Publishing............................... $ 8,660 $ 4,307 $ 6,128 $ 6,938 $ 8,174
Broadcasting............................. 22,442 22,843 24,358 16,854 10,695
-------- -------- -------- -------- --------
Total.................................... $ 31,102 $ 27,150 $ 30,486 $ 23,792 $ 18,869
======== ======== ======== ======== ========
Operating margins (operating income to
revenues):
Publishing(1)............................ 15.1% 14.1% 14.8% 11.8% 10.5%
Broadcasting............................. 37.0% 32.5% 26.5% 20.4% 20.6%
Assets:
Publishing............................... $351,685 $141,441 $136,818 $156,398 $139,694
Broadcasting............................. 259,114 253,252 254,410 270,250 120,380
Corporate................................ 73,052 100,380 77,084 34,970 29,914
-------- -------- -------- -------- --------
Total.................................... $683,851 $495,073 $468,312 $461,618 $289,988
======== ======== ======== ======== ========
</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."
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
locally-responsive 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. Although the Company has no
significant agreements to acquire additional properties, management believes
that the Company's strong cash flow and conservative capital structure, among
other factors, will enable the Company to pursue additional acquisitions as
opportunities arise.
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.
2
<PAGE> 4
ITEM 1. BUSINESS -- CONTINUED
Pulitzer's media operations are geographically diverse, placing the Company
in the Midwest, Southwest, West, 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. In addition,
management continues to seek ways to leverage its newspaper assets, such as
electronic publishing, voice services delivered by phone, electronic
dissemination of information and alternative newspaper delivery systems to
provide advertisers with either targeted or total market coverage.
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. In addition, both newspapers also offer an electronic news,
information and communication web site on the Internet. Full access to these
"electronic publication" web sites, as well as full Internet access, is provided
on a subscription basis. The Star's service, StarNet (www.azstarnet.com), began
operations in May, 1995 and had grown to approximately 8,700 subscribers by
December 31, 1996. The service provided by the Post-Dispatch, POSTnet
(www.stlnet.com), started in January 1996 and had approximately 4,200
subscribers as of December 31, 1996.
The acquisition of Scripps League on July 1, 1996 added 14 daily community
newspapers to the Company's publishing segment with a combined average daily
circulation of approximately 168,000. The smaller markets served by these
newspapers and their locations provide the Company with further diversification
and new participation in several higher growth areas of the western United
States. Although smaller in size than the Company's two metropolitan dailies, a
strong focus on local reporting and editorial excellence is also considered the
key to long-term success in these new markets.
The Company's publishing revenues are derived primarily from advertising
and circulation, averaging approximately 87 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. Comparability is affected by the acquisition of Scripps League on July 1,
1996 (See "-- Publishing -- Pulitzer Community Newspapers, Inc.") and the sale
of a Chicago publishing subsidiary on December 22, 1994. (See "-- Publishing --
Chicago Publications.")
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Advertising:
Retail.................................. $ 91,373 $ 78,362 $ 88,450 $ 85,860 $ 86,846
General................................. 10,123 7,645 7,830 7,154 9,476
Classified.............................. 90,443 75,925 84,738 75,670 73,692
-------- -------- -------- -------- --------
Total................................ 191,939 161,932 181,018 168,684 170,014
Circulation............................. 81,434 76,349 77,941 78,661 77,713
Other................................... 35,723 31,107 45,820 42,801 37,277
-------- -------- -------- -------- --------
Total................................ $309,096 $269,388 $304,779 $290,146 $285,004
======== ======== ======== ======== ========
</TABLE>
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* 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.
3
<PAGE> 5
ITEM 1. BUSINESS -- CONTINUED
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 17th largest metropolitan statistical area
in the United States (Source: Claritas, Inc.). Based on Audit Bureau of
Circulations ("ABC") Publisher's Statement and reports for the six-month period
ended September 30, 1996, the market penetration (i.e., percentage of households
reached) of the Post-Dispatch's daily and Sunday editions is 8th and 6th,
respectively, 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,
----------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Post-Dispatch:
Circulation(1):
Daily (including Saturday)........... 324,180 323,137 335,819 341,797 341,855
Sunday............................... 542,997 545,882 555,488 564,761 566,095
Advertising lineage (in thousands of
inches):
Retail............................... 819 880 912 913 873
General.............................. 101 75 75 62 87
Classified........................... 1,007 1,057 1,039 977 921
-------- -------- -------- -------- --------
Total.............................. 1,927 2,012 2,026 1,952 1,881
Part run............................. 792 594 591 481 313
-------- -------- -------- -------- --------
Total inches....................... 2,719 2,606 2,617 2,433 2,194
======== ======== ======== ======== ========
Operating revenues (in thousands):
Advertising.......................... $137,054 $130,600 $125,704 $116,951 $115,206
Circulation.......................... 63,858 64,862 61,207 62,345 61,371
Other(2)............................. 23,231 24,404 23,490 22,387 20,754
-------- -------- -------- -------- --------
Total.............................. $224,143 $219,866 $210,401 $201,683 $197,331
======== ======== ======== ======== ========
</TABLE>
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(1) Amounts for 1996 based on Company records for the twelve-month period ended
September 30, 1996. 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 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 color sections, the Post-Dispatch utilizes a Scitex 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 fiber optic 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
4
<PAGE> 6
ITEM 1. BUSINESS -- CONTINUED
while also realizing substantial savings in labor cost. The Company believes the
Post-Dispatch has adequate facilities to sustain up to at least a 35 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
approximately 54 percent of circulation for the Sunday edition during 1996.
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 leading dailies. The
Star and the Citizen are published through an agency operation (the "Tucson
Agency") and have a combined weekday circulation of approximately 142,000.
Tucson is currently the 68th largest metropolitan statistical area in the
country with a population of approximately 758,500 (Source: Claritas, Inc.).
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,
-----------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Circulation (1):
Star daily................................ 96,196 97,134 98,050 96,926 94,496
Citizen daily............................. 45,996 47,240 48,272 49,560 50,146
Star Sunday............................... 182,249 180,170 179,652 175,321 170,500
Combined advertising (in thousands of inches):
Full run (all zones)
Retail.................................... 1,499 1,565 1,565 1,675 1,750
General................................... 45 49 50 45 42
Classified................................ 1,684 1,682 1,608 1,462 1,362
------- ------- ------- ------- -------
Total................................... 3,228 3,296 3,223 3,182 3,154
Part run.................................. 201 171 116 98 157
------- ------- ------- ------- -------
Total inches............................ 3,429 3,467 3,339 3,280 3,311
======= ======= ======= ======= =======
Operating revenues (in thousands):
Advertising............................... $31,765 $31,332 $28,459 $25,562 $24,202
Circulation............................... 11,194 11,487 11,434 11,065 10,757
Other(2).................................. 7,139 6,703 5,833 5,298 4,582
------- ------- ------- ------- -------
Total................................... $50,098 $49,522 $45,726 $41,925 $39,541
======= ======= ======= ======= =======
</TABLE>
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(1) Amounts for 1996 based on Company records for the 52 week period ended
December 31. Amounts for 1995 based on ABC Publisher's Statement for the 53
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.
5
<PAGE> 7
ITEM 1. BUSINESS -- CONTINUED
In 1996, the Star's daily edition accounted for approximately 68 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 the significant portion of daily 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.
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.
PULITZER COMMUNITY NEWSPAPERS, INC.
On July 1, 1996, the Company acquired in a purchase transaction all the
stock of Scripps League Newspapers, Inc. (subsequently renamed Pulitzer
Community Newspapers, Inc. ("PCN")), a privately owned company that published a
group of community newspapers which serve smaller markets, primarily in the West
and Midwest. The group includes 14 daily newspapers which publish afternoon
editions during the week and, generally, morning editions on the weekend. Home
delivery through independent contract carriers accounts for the significant
portion of each newspaper's circulation. With circulations ranging from
approximately 7,000 to 33,000, the ten largest daily circulation newspapers in
the PCN group are:
<TABLE>
<S> <C>
The Daily Herald...................................... Provo, Utah
The Arizona Daily Sun................................. Flagstaff, Arizona
The Daily Chronicle................................... DeKalb, Illinois
Santa Maria Times..................................... Santa Maria, California
The Napa Valley Register.............................. Napa, California
The Hanford Sentinel.................................. Hanford, California
The Garden Island..................................... Lihue, Hawaii
The World............................................. Coos Bay, Oregon
The Daily Journal..................................... Park Hills, Missouri
The Haverhill Gazette................................. Haverhill, Massachusetts
</TABLE>
For the six-month period ended December 31, 1996, PCN had consolidated
operating revenues of approximately $34.9 million, of which advertising,
preprints and circulation accounted for approximately 67 percent, 11 percent and
18 percent, respectively.
CHICAGO PUBLICATIONS
On December 22, 1994, the Company sold its wholly-owned publishing
subsidiary located in the Chicago area. Since 1986, the subsidiary'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 completed the Company's exit from the Chicago area after
having closed down and partially sold its weekly community newspaper business in
October 1992.
The Company's 1994 consolidated and publishing segment operating results
included substantially a full year of the subsidiary's operations. During 1994,
advertising, preprints, circulation and contract printing accounted for
approximately 55 percent, 4 percent, 11 percent and 28 percent, respectively, of
the subsidiary's total operating revenues of $48,652,000. The sale did not have
a significant impact on the Company's 1995 earnings results.
6
<PAGE> 8
ITEM 1. BUSINESS -- CONTINUED
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 St.
Louis Agency Agreement, for fiscal 1996, 1995, 1994, 1993 and 1992, the Company
paid the Herald Company $13,972,000, $12,502,000, $14,706,000, $10,660,000 and
$11,690,000, 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 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
7
<PAGE> 9
ITEM 1. BUSINESS -- CONTINUED
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, cable,
Internet, 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 closest 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 other
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 February 2010. In addition, the Company has a multi-year contract with
the St. Louis Newspaper Guild which expires in January 2003. All of the Post-
Dispatch labor contracts contain no strike provisions.
TNI Partners has a one-year contract, expiring December 31, 1997, with
Tucson Graphic Communications Union Local No. 212, covering certain pressroom
employees.
RAW MATERIALS
The publishing segment's results are significantly impacted by the cost of
newsprint which accounted for approximately 22 percent of the segment's total
1996 operating expenses. During 1996, the Company used approximately 90,300
metric tons of newsprint in its production process at a total cost of
approximately $58,300,000. Consumption at the Post-Dispatch represented
approximately 72,200 metric tons of the Company's total newsprint usage in 1996.
In the last five years, the Company's average cost per ton of newsprint has
varied from a low of $445 per metric ton in 1992 to a high of $675 per metric
ton in 1995. During 1996, the Company benefited from a decline in newsprint
prices from their five-year peak in 1995. During the first quarter of 1997, the
Company's average cost per metric ton for newsprint has been in the range of
$510. Newsprint suppliers increased the price to $575 per metric ton on March 1,
1997 which will begin to impact the Company's newsprint expense in the second
quarter of 1997.
The Post-Dispatch obtains the newsprint necessary for its operations from
five separate mills, two of which are located in Canada and three in the United
States. The Post-Dispatch has guaranteed the future supply of certain volume
levels through long-term agreements with two of its newsprint suppliers. The
Company believes that the absence of long-term agreements with the remaining
three newsprint suppliers will not affect the Company's ability to obtain
newsprint at competitive prices.
The Company acquired five newsprint contracts with the purchase of Scripps
League in 1996. Combined with the tonnage purchased for the Post-Dispatch, the
Company has been able to leverage its pricing power to
8
<PAGE> 10
ITEM 1. BUSINESS -- CONTINUED
obtain the best price available for its new community newspaper group, and to
assure adequate supplies for all locations.
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 rebroadcasting KOAT, two AM radio stations and one FM radio station.
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 is partially compensated based on the cash flow
performance of its respective station. 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.
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(4):
Greenville/Spartanburg/
Asheville, SC/NC...... WYFF NBC 700,470 35 2 7 2/28/83 12/01/01
New Orleans, LA......... WDSU NBC 620,760 41 2 8 12/14/89 6/01/97
Harrisburg/Lancaster/
Lebanon/York, PA...... WGAL NBC 584,080 45 1 7 8/13/79 8/01/99
Greensboro/
Winston-Salem/
High Point, NC........ WXII NBC 567,740 46 2 8 2/28/83 12/01/01
Daytona Beach/Orlando/
Melbourne, FL......... WESH NBC 1,021,970 22 2 11 6/30/93 2/01/05
Albuquerque, NM(5)...... KOAT ABC 554,290 48 1 12 6/1/69 10/01/98
Omaha, NE............... KETV ABC 364,960 75 1 5 4/15/76 6/01/98
Des Moines, IA.......... KCCI CBS 373,630 72 1 4 9/9/93 2/01/98
UHF STATIONS(4):
Louisville, KY.......... WLKY CBS 550,390 50 2 6 6/23/83 8/01/97
</TABLE>
- -------------------------
(1) Based upon the Designated Market Area ("DMA") for the station as reported in
the November, 1996 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.
(2) National DMA rank for each market as reported in the November, 1996 NSI.
9
<PAGE> 11
ITEM 1. BUSINESS -- CONTINUED
(3) Based on November, 1996 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) 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.
(5) 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. On February 1, 1996, the
FCC granted a Petition for Rule Making filed by Pulitzer 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.
Average audience share, number of stations serving the market and market
rank 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,
-----------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------------- ------------------- ------------------- ------------------- -------------------
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................. 28% 7/2 26% 7/1 27% 6/1 29% 6/2 30% 6/2
WDSU................. 25 8/2 21 8/2 20 6/2 21 5/2 23 5/2
WGAL................. 38 7/1 37 7/1 36 7/1 36 7/1 35 6/1
WXII................. 24 8/2 25 7/2 23 7/3 26 7/3 25 7/3
WESH(3).............. 24 11/2 23 10/2 21 10/2 23 9/2 25 7/2
KOAT................. 29 12/1 32 12/1 30 11/1 32 10/1 33 10/1
KETV................. 27 5/1 31 5/1 27 4/1 29 4/1 29 4/1
KCCI(4).............. 38 4/1 37 4/1 41 4/1 35 4/1 35 4/1
WLKY................. 25 6/2 24 6/3 28 6/3 29 5/1 28 5/1
</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: 1994-1996 data from February, May and November Nielsen
Station Index ("NSI"). Schedules for 1992-1993 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 1994-1996 based on
November NSI. Schedules for 1992-1993 include both NSI and Arbitron Ratings
Audience Estimates information.
(3) Acquired June 30, 1993.
(4) Acquired September 9, 1993.
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.
10
<PAGE> 12
ITEM 1. BUSINESS -- CONTINUED
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,
--------------------------------------------------------
1996 1995 1994 1993(1) 1992
---- ---- ---- ------- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Local..................................... $ 99,465 $ 88,419 $ 82,463 $ 63,565 $ 49,670
National spot............................. 91,395 80,760 76,925 52,869 44,594
Network................................... 16,788 17,096 6,557 5,840 5,210
Other..................................... 1,691 1,779 1,832 1,665 1,575
-------- -------- -------- -------- --------
Total(2)............................. $209,339 $188,054 $167,777 $123,939 $101,049
======== ======== ======== ======== ========
</TABLE>
- ------------------------
(1) The Company acquired television stations WESH and KCCI on June 30, 1993 and
September 9, 1993, respectively.
(2) Automotive advertising is significant and historically has represented
approximately 22 to 25 percent of total broadcast revenues.
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.
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.
11
<PAGE> 13
ITEM 1. BUSINESS -- CONTINUED
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 three radio stations serving the Phoenix, Arizona market:
KTAR (AM), KMVP (AM) and KKLT (FM). KMVP was acquired in a purchase transaction
for approximately $5 million in December 1996. Phoenix is the 18th largest Metro
Market in the United States, and the Phoenix Radio Metro Area is served by
thirteen AM and twenty FM radio stations. KTAR (AM) ranks first in the Phoenix
market and KKLT (FM) ranks fifteenth, with 7.1 percent and 3 percent average
quarter hour market shares, respectively (source: Arbitron Radio Ratings
Summary-Fall 1996). KTAR (AM) operates as a news/talk/sports radio station while
KKLT (FM) has an adult contemporary music format. KMVP (AM) began airing an "all
sports" information format in February 1997. The FCC licenses for KTAR (AM),
KMVP (AM) and KKLT (FM) expire on October 1, 1997.
The Company has entered into agreements to acquire the assets of WETR (AM),
Eden, North Carolina, and WAVG (AM), Louisville, Kentucky, and has filed
applications with the Federal Communications Commission on December 20, 1996,
and January 10, 1997, requesting FCC approval of the transactions.
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. 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: 1996 -- $15,653,000, 1995 -- $14,885,000; 1994 -- $13,023,000;
1993 -- $12,900,000 and 1992 -- $12,320,000.
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.
12
<PAGE> 14
ITEM 1. BUSINESS -- CONTINUED
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. The recently enacted
Telecommunications Act of 1996 ("Telecommunications Act") effected sweeping
changes in the Communications Act, many of which will influence the Company's
broadcasting operations.
BROADCAST LICENSES
Under the amendments to the Communications Act provided for in the new
legislation, broadcasting licenses for both radio and television stations will
now be granted for a maximum period of eight years. Such licenses are renewable
upon application, and the Telecommunications Act fundamentally changed the
manner in which the FCC processes renewal applications. Petitions to deny
license renewals may still be filed against licensees by interested parties,
including members of the public. However, competing applicants no longer may
file for the frequency being used by the renewal applicant during the period
when a renewal application is pending. In addition, the new law provides that
the FCC must grant renewal if it finds that the station has served the public
interest during its previous license term and has not otherwise engaged in
serious violations (or a pattern of lesser violations) of the Communications Act
or the FCC's Rules.
These changes in renewal procedures apply to renewal applications filed
after May 1, 1995. The Company will file applications to renew the licenses of
stations KTAR (AM), KMVP (AM) and KKLT (FM), Phoenix, Arizona on June 1, 1997.
The renewal application for the license for Station KCCI, Des Moines, Iowa, will
be filed on October 1, 1997. There is currently pending before the FCC
application to renew the licenses of WDSU, New Orleans, Louisiana, and WLKY,
Louisville, Kentucky.
MULTIPLE OWNERSHIP
While requiring FCC review every two years, the Telecommunications Act
substantially liberalized the FCC's regulations governing the multiple, common
and cross ownership of broadcast stations. The new law lifts the numerical
restrictions on the number of radio stations a licensee may own nationwide;
however, it restricts the number of stations a licensee may own in any
individual market based upon the total number of stations in the market; the mix
of stations in different services (e.g., AM or FM) that a licensee owns; and, in
the smallest communities, a limitation that a licensee may not own more than 50
percent of all stations in the market.
The Telecommunications Act also eliminates the cap on the number of TV
stations a party may own nationwide, provided that the total number of
households reached by any individual owner's stations does not exceed 35 percent
of the national household audience. For this purpose, only 50 percent of the
television households in a market are counted toward the 35 percent national
audience reach limitation if the owned station is a UHF station. With respect to
the local market, the new law requires the FCC to conduct a proceeding to
determine whether to preserve or eliminate its present rule forbidding the
common ownership of two television stations in the same market. Moreover, the
law permits the use of so-called Local Marketing Agreements (or "LMAs") between
television stations in the same market to the extent they are allowed by the
FCC's rules. The agreements permit one station in a market to lease and program
the broadcast time and sell the advertising time of another station in the
market. Proposals currently pending before the FCC could substantially alter
these standards.
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. In addition, they generally prohibit
ownership of a VHF television station and either an AM or FM radio station in
the same market. While the Telecommunications Act left the first restriction in
place, it expanded considerably the FCC's authority to grant waivers of
13
<PAGE> 15
ITEM 1. BUSINESS -- CONTINUED
the television/radio cross-ownership rule in the top 50 markets. The FCC has
instituted a rulemaking proceeding requesting comments on liberalizing its
application of the newspaper/radio cross-ownership rule.
Further, the Telecommunications Act repeals the law which prohibited 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. Although the FCC rule prohibiting such
cross-ownership remains in place, it is expected that the FCC will undertake a
proceeding to eliminate the rule.
CABLE CARRIAGE
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 in some circumstances ("retransmission
consent"). That same 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. On December 12, 1995, the three-judge district court panel
(one judge dissenting) upheld the must-carry rules against the cable industry's
First Amendment challenge. Following those proceedings, the Supreme Court on
February 20, 1996, announced that it would hear the cable industry's challenge
to the district court's ruling. The Supreme Court heard oral argument in October
1996. A final decision on the constitutionality of must carry is expected by
June 1997. 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.
OTHER RECENTLY ADOPTED RULE CHANGES
It has been the 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. This
policy was ratified by the Telecommunications Act which effected other changes
that may affect the competitive environment in the local markets served by the
Company's broadcast stations.
One such change authorizes local telephone companies to provide video
programming to subscribers in their local telephone service areas either as
cable operators or over their own networks known as "open video systems." The
new law provides that a telephone company offering video programming will be
regulated according to the method of delivering programming. However, under the
law, whether the telephone company operates as a cable operator or an open video
system operator, it will be subject to must carry and retransmission consent
obligations and the Commission's rules on sports exclusivity, network
nonduplication, and syndicated exclusivity. In addition, the Telecommunications
Act requires the FCC to adopt certain additional safeguards for broadcasters
which forbid a telephone company that provides video programming from
discriminating against broadcasters in favor of an affiliated programmer in
subscriber communications and placement on any on-screen program guide or menu.
In addition, a telephone company video provider must ensure that broadcasters
and other copyright holders are able to identify their programming, and if such
identifying information is carried as part of the programming signal, the
telephone company must transmit it without alteration.
The FCC has granted several applications to establish direct broadcast
satellite systems ("DBS"). Several other new technologies are in their
developmental stages, such as Digital 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.
The Telecommunications Act provides that if the FCC issues licenses for
Digital Television (DTV) services, only incumbent broadcast licensees and
construction permit holders will be eligible initially for these licenses. The
new law requires the Commission to adopt regulations that permit broadcasters to
use such
14
<PAGE> 16
ITEM 1. BUSINESS -- CONTINUED
digital DTV spectrum for ancillary or supplementary services, provided that such
secondary services may not impair the quality of the DTV signal.
This spectrum flexibility scheme would be highly advantageous for incumbent
television station owners such as the Company. It ensures that the Company will
not face competing applications from the general public as it applies for its
DTV licenses in the future. However, licenses for DTV services issued to
incumbent broadcast licensees or permittees must be preconditioned with a
requirement that either the new DTV channel or the original broadcast channel be
surrendered to the FCC for reallocation or reassignment at the end of a
transition period.
The advantages of this new law could be limited by proposals currently
pending in Congress to require broadcasters to bid for the new authorizations
for DTV spectrum at auction and use their payments to help to reduce the federal
government's budget deficit, or to require broadcasters to make the transition
to digital spectrum more quickly in order to recapture broadcasters' current
spectrum for auction. If implemented, such a proposal would substantially
increase the costs incurred by broadcasters to make the transition to the new
technology.
In connection with the Senate's passage of the Telecommunications Act, the
Republican leadership and Committee chairmen responsible for the measure in both
chambers sent a letter to the Chairman of the FCC requesting that the Commission
take no action on the licensing of new DTV spectrum until Congress has addressed
the spectrum auction proposal. The FCC responded that it would forbear from
issuing any licenses pending further legislation from Congress and that it may
be in a position to issue DTV authorizations in 1997. The broadcast industry has
vigorously opposed the auction proposal. On August 14, 1996, the FCC released a
Sixth Further Notice of Proposed Rulemaking that proposed a Table of Allotments
to allow broadcasters to make the transition to DTV. The FCC proposed policies
for developing the initial DTV allotments, procedures for assigning DTV
frequencies, and a plan for spectrum recovery. This rulemaking proceeding is
expected to be completed by the end of 1997.
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, 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
complete summary of all the provisions of the Communications Act and the rules
and regulations of the FCC thereunder or of pending proposals for the 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.
EMPLOYEES
At December 31, 1996, the Company had approximately 3,300 full-time
employees, of whom approximately 2,100 were engaged in publishing and 1,200 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, PCN and TNI Partners are represented by
unions. The Company considers its relationship with its employees to be good.
15
<PAGE> 17
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, 1996, 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, however, currently has building
projects planned to address the long-term operating requirements of its
Flagstaff publishing property and Louisville broadcasting property.
<TABLE>
<CAPTION>
APPROXIMATE AREA IN
SQUARE FEET
GENERAL CHARACTER --------------------
OF PROPERTY OWNED LEASED
----------------- ----- ------
<S> <C> <C>
Publishing:
Printing plants, business and editorial offices, and
warehouse space located in:
St. Louis, Missouri(1)................................. 536,100 117,100
St. Louis, Missouri.................................... 5,600
Tucson, Arizona(2)..................................... 265,000 32,700
Washington, D.C........................................ 2,250
Provo, Utah............................................ 22,900
Flagstaff, Arizona..................................... 9,100 15,300
DeKalb, Illinois....................................... 15,900
Santa Maria, California................................ 20,800
Napa, California....................................... 21,000
Hanford, California.................................... 16,500 2,100
Lihue, Hawaii.......................................... 8,500 23,600
Coos Bay, Oregon....................................... 15,200
Park Hills, Missouri................................... 9,100
Haverhill, Massachusetts............................... 24,500
Rhinelander, Wisconsin................................. 6,400
Hamilton, Montana...................................... 2,900
Newport, Vermont....................................... 6,700
Taft, California....................................... 5,000
Petaluma, California................................... 9,000
Hazard, Kentucky....................................... 2,100
Broadcasting:
Business offices, studios, garages and transmitters
located in:
St. Louis, Missouri.................................... 5,300
Albuquerque, New Mexico................................ 39,700 8,400
Omaha, Nebraska........................................ 37,900 600
Lancaster, Pennsylvania................................ 55,200 2,200
Winston-Salem, North Carolina.......................... 41,100 800
Greenville, South Carolina............................. 53,600 2,300
Louisville, Kentucky................................... 20,800
New Orleans, Louisiana................................. 50,500
Phoenix, Arizona....................................... 23,500
Orlando, Florida....................................... 61,300 1,300
Daytona Beach, Florida................................. 28,100
Des Moines, Iowa....................................... 53,350
</TABLE>
- -------------------------
(1) Property is subject to the provisions of the St. Louis Agency Agreement.
(2) 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.
16
<PAGE> 18
ITEM 3. LITIGATION
Subsequent to the Scripps League acquisition, Barry H. Scripps commenced an
action against Edward W. Scripps, Betty Knight Scripps and Pulitzer Community
Newspapers, Inc. Barry H. Scripps is the child of Edward W. Scripps and Betty
Knight Scripps. Barry Scripps alleges that as a former minority shareholder and
executive employee of Scripps League, the defendant Betty Knight Scripps formed
and implemented a wrongful scheme to transfer the ownership of Scripps League
outside the Scripps family in violation of the Scripps League corporate mission
by (1) inducing the defendant Edward W. Scripps to breach their life-long
promises to Barry Scripps to retain the ownership of Scripps League Newspapers
in the family and ultimately turn over its management and control to Barry
Scripps; (2) engineering an unlawful freeze-out of Barry Scripps as a minority
shareholder from Scripps League and its subsidiaries; and (3) tortiously causing
Scripps League to breach its promise to Barry Scripps of permanent employment.
The claims asserted are for breach of promise against Edward W. Scripps and
Betty Knight Scripps, breach of employment contract against Pulitzer Community
Newspapers, Inc. as successor to Scripps League, interference with contract
against Betty Knight Scripps, breach of fiduciary duty against Betty Knight
Scripps, and promissory estoppel against Edward W. and Betty Knight Scripps.
Barry Scripps seeks (1) money damages, together with interest and counsel fees
in the amount to be proven at trial against Edward and Betty Scripps; (2)
judgment rescinding each of the actions that Betty Knight Scripps caused to be
taken that allegedly froze out Barry Scripps as a stockholder in Scripps League;
and (3) against Pulitzer Community Newspapers, Inc., damages for loss of income
plus interest and counsel fees in an amount to be proven at trial for breach of
the purported employment agreement. The Sellers agreed to indemnify the Company
and its affiliates, officers, directors, stockholders, employees, agents,
successors and assigns at all times after the closing for any and all losses
arising from Barry Scripps' claims. On January 8, 1997, the defendants filed
their answers to the complaint in the Action. On January 11, 1997, the Court
entered an order for entry of a Judgment Nisi dismissing the complaint for want
of jurisdictional amount. The Court's judgment noted that the facts on which
Barry Scripps relies to determine money damages present no reasonable likelihood
that recovery will exceed $25,000.00, the Court's minimum jurisdictional amount,
and that a final judgment of dismissal would be entered fourteen days from the
entry of the Judgment Nisi, subject to the right of the parties to file written
responses and request a further hearing. On January 29 1997, Barry Scripps filed
a written response opposing the Judgment Nisi and requested a hearing on the
issues presented. On February 4, 1997, defendants filed their response in
support of the entry of the Judgment Nisi. To date, no hearing has been held.
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.
17
<PAGE> 19
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 20, 1997, there were approximately 413 record holders of the
Company's common stock and 2 record holders 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>
1995(2) HIGH LOW DIVIDEND(1)
------- ---- --- -----------
<S> <C> <C> <C>
First Quarter...................................... $27.56 $23.06 $0.10125
Second Quarter..................................... 33.94 27.38 0.10125
Third Quarter...................................... 39.75 30.47 0.10125
Fourth Quarter..................................... 39.19 32.91 0.10125
<CAPTION>
1996(2) HIGH LOW DIVIDEND(1)
- --------------------------------------------------- ------ ------ --------
<S> <C> <C> <C>
First Quarter...................................... $39.00 $33.38 $ 0.1125
Second Quarter..................................... 45.19 39.00 0.1125
Third Quarter...................................... 45.56 38.72 0.1125
Fourth Quarter..................................... 49.63 42.75 0.1200
</TABLE>
- -------------------------
(1) In 1996 and 1995, the Company paid cash dividends of $0.4575 and $0.4050
respectively, per share of common stock and Class B common stock (see Note 5
of Notes to Consolidated Financial Statements for restrictions on
dividends).
(2) The high and low sales prices and dividends per share have been restated for
1996 and 1995 to reflect the impact of a four-for-three stock split,
effected in the form of a 33 1/3 percent common and Class B common stock
dividend, declared by the Company's Board of Directors on September 12,
1996.
18
<PAGE> 20
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Operating Revenues -- net................. $534,088 $472,327 $485,579 $426,985 $398,373
-------- -------- -------- -------- --------
Operating Expenses
Operations.............................. 205,885 190,013 191,570 180,998 170,307
Selling, general and administrative..... 172,838 155,996 174,239 163,578 160,873
St. Louis Agency adjustment............. 13,972 12,502 14,706 10,660 11,690
Depreciation and amortization........... 31,102 27,150 30,486 23,792 18,869
-------- -------- -------- -------- --------
Total operating expenses............. 423,797 385,661 411,001 379,028 361,739
-------- -------- -------- -------- --------
Operating income.......................... 110,291 86,666 74,578 47,957 36,634
Interest income........................... 4,522 5,203 1,971 1,090 1,156
Interest expense.......................... (13,592) (10,171) (12,009) (9,823) (7,801)
Gain on sale of publishing property....... 2,791
Net other expense......................... (5,449) (2,330) (1,461) (1,011) (756)
-------- -------- -------- -------- --------
Income before provision for income taxes
and cumulative effects of changes in
accounting principles................... 95,772 79,368 65,870 38,213 29,233
Provision for income taxes................ 38,272 30,046 25,960 15,260 5,331
-------- -------- -------- -------- --------
Income before cumulative effects of
changes in accounting principles........ 57,500 49,322 39,910 22,953 23,902
Cumulative effects of changes in
accounting principles, net of applicable
income taxes............................ (719) 360 (25,147)
-------- -------- -------- -------- --------
Net income (loss)......................... $ 57,500 $ 49,322 $ 39,191 $ 23,313 ($ 1,245)
======== ======== ======== ======== ========
Earnings (loss) per share of stock (common
and Class B common):(1)
Income before cumulative effects of
changes in accounting principles........ $ 2.62 $ 2.26 $ 1.84 $ 1.13 $ 1.24
Cumulative effects of changes in
accounting principles................... (0.03) 0.02 (1.31)
-------- -------- -------- -------- --------
Earnings (loss) per share................. $ 2.62 $ 2.26 $ 1.81 $ 1.15 ($ 0.07)
======== ======== ======== ======== ========
Dividends per share of common and Class B
common stock(1)......................... $ 0.46 $ 0.41 $ 0.35 $ 0.32 $ 0.29
======== ======== ======== ======== ========
Weighted average number of shares (common
and Class B common stock)
outstanding(1).......................... 21,926 21,800 21,655 20,371 19,232
======== ======== ======== ======== ========
OTHER DATA
Working capital........................... $ 95,330 $128,853 $ 96,729 $ 60,688 $ 45,989
Total assets(2)........................... 683,851 495,073 468,312 461,618 289,988
Long-term debt, less current
maturities(3)........................... 235,410 114,500 128,750 161,920 57,661
Stockholders' equity(4)................... 249,937 198,771 155,019 122,143 67,074
</TABLE>
- -------------------------
(1) Shares outstanding, dividends per share and earnings per share have been
adjusted for the Company's four-for-three stock split, on September 12,
1996, five-for-four stock split, on January 4, 1995 and 10 percent stock
dividend on January 4, 1993.
(2) On July 1, 1996, the Company acquired Scripps League Newspapers, Inc.
("Scripps League") for approximately $216 million. During 1993 the Company
acquired television stations WESH and KCCI for approximately $164.7 million.
19
<PAGE> 21
ITEM 6. SELECTED FINANCIAL DATA -- CONTINUED
(3) As of December 31, 1996, approximately $135 million of new long-term debt
financing was outstanding related to the acquisition of Scripps League on
July 1, 1996. 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.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Statements in this Annual Report on Form 10-K concerning the Company's
business outlook or future economic performance; anticipated profitability,
revenues, expenses or other financial items, together with other statements that
are not historical facts, are "forward-looking statements" as that term is
defined under the Federal Securities Laws. Forward-looking statements are
subject to risks, uncertainties and other factors which could cause actual
results to differ materially from those stated in such statements. Such risks,
uncertainties and factors include, but are not limited to industry cyclicality,
the seasonal nature of the business, changes in pricing or other actions by
competitors, and general economic conditions, as well as other risks detailed in
the Company's filings with the Securities and Exchange Commission including this
Annual Report on Form 10-K.
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.
RECENT EVENTS
On July 1, 1996, the Company acquired in a purchase transaction all of the
stock of Scripps League Newspapers, Inc. ("Scripps League"), a privately owned
company that publishes a group of community newspapers, including 14 dailies,
which serve smaller markets, primarily in the West and Midwest. The significant
portion of the approximately $216 million purchase price (including
approximately $6 million in working capital) has been allocated to fixed and
intangible assets whose depreciation and amortization, in large part, is not tax
deductible. Dilution from the acquisition (excluding non-recurring costs) was
not significant for the second half of 1996 and the Company's after tax cash
flow was favorably impacted. After tax cash flow is defined as net income plus
depreciation and amortization. See Note 3 of Notes to Consolidated Financial
Statements for pro forma information regarding the acquisition.
1996 COMPARED WITH 1995
CONSOLIDATED
Operating revenues for the year ended December 31, 1996 increased 13.1
percent to $534.1 million from $472.3 million in 1995. The revenue comparison
was affected by the acquisition of Scripps League Newspapers, Inc. ("Scripps
League" which was subsequently renamed Pulitzer Community Newspapers, Inc.
("PCN")) on July 1, 1996. In addition, the revenue comparison was affected by an
extra week of operations in 1995; fiscal 1995 contained 53 weeks, versus 52
weeks in fiscal 1996. On a comparable basis (i.e., excluding
20
<PAGE> 22
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -- CONTINUED
PCN from 1996 and the extra week from 1995), consolidated revenues increased 7.6
percent. The increase reflected gains in both broadcasting and publishing
revenues.
Operating expenses, excluding the St. Louis Agency adjustment, were $409.8
million compared to $373.2 million in 1995, an increase of 9.8 percent. On a
comparable basis, excluding PCN from 1996 and the extra week from 1995,
operating expenses increased 3.2 percent. Major increases in comparable expenses
were overall personnel costs of $5.2 million, promotion expenses of $1.2
million, national advertising commissions of $951,000 and circulation
distribution expenses of $611,000. Partially offsetting these increases were
declines in newsprint expense of $1.1 million and inducement costs of $798,000.
Operating income for fiscal 1996 increased 27.3 percent to $110.3 million
from $86.7 million in 1995. On a comparable basis, excluding PCN from 1996 and
the extra week from 1995, operating income increased 25.9 percent. The 1996
increase reflected improvements in both the broadcasting and publishing
segments, resulting from increased revenues.
Interest expense increased $3.4 million in 1996 compared to 1995 due to
higher debt levels in the second half of 1996. New long-term borrowings related
to the acquisition of Scripps League added approximately $4.8 million to 1996
interest expense. The Company's average debt level for 1996 increased to $186.9
million from $133.2 million in the prior year. The Company's average interest
rate for 1996 decreased slightly to 7.3 percent from 7.5 percent in the prior
year. Interest income for the year decreased $681,000, due to both lower average
balances of invested funds and lower interest rates in 1996.
The effective income tax rate for 1996 increased to 40 percent from 37.9
percent in the prior year, due to approximately $2.1 million of nondeductible
goodwill amortization related to the Scripps League acquisition. The prior year
rate was affected by the settlement of a state tax examination which reduced
income tax expense by $911,000 in 1995. Excluding the non-recurring tax
settlement from the prior year, the effective income tax rate for 1995 would
have been 39 percent. The Company expects the estimated tax rate for 1997 will
be in the 41 percent range.
The Company's 1996 nonoperating expenses included a non-recurring charge of
approximately $2.7 million ($1.6 million after-tax) for the write-down in value
of a joint venture investment.
For the year ended December 31, 1996, the Company reported net income of
$57.5 million, or $2.62 per share, compared with net income of $49.3 million, or
$2.26 per share, in the prior year. Comparability of the earnings results was
affected by the joint venture write-off in 1996, non-recurring costs related to
the Scripps League acquisition ($1.1 million after tax) in 1996, and the
positive income tax adjustment in 1995. Excluding the non-recurring items from
both years, 1996 net income would have increased to $60.3 million, or $2.74 per
share, from $48.4 million, or $2.22 per share, for the prior year. The gain in
net income reflected a significant increase in the broadcasting segment's
operating profits.
PUBLISHING
Operating revenues from the Company's publishing segment for 1996 increased
14.7 percent to $309.1 million from $269.4 million in 1995. On a comparable
basis, excluding PCN from 1996 and the extra week from 1995, publishing revenues
increased 3.5 percent. The comparable increase reflected higher advertising
revenues in 1996.
Newspaper advertising revenues, on a comparable basis, excluding PCN from
1996 and the extra week from 1995, increased $9.5 million, or 6 percent, in
1996. The significant portion of the current year increase resulted from higher
classified advertising revenue at the St. Louis Post-Dispatch ("Post-Dispatch").
Increases in advertising rates for most categories and higher volume for zoned
advertising were the primary factors in the 1996 revenue increase. In the fourth
quarter of 1996 and the first quarter of 1997, varying rate increases were
implemented at the Post-Dispatch, The Arizona Daily Star ("Star") and most of
the Company's new community newspaper properties.
21
<PAGE> 23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -- CONTINUED
Circulation revenues, on a comparable basis, excluding PCN from 1996 and
the extra week from 1995, increased approximately $100,000, or 0.2 percent, in
1996. The Post-Dispatch and Star experienced only slight fluctuations in paid
circulation and average rates in 1996 compared to the prior year.
Operating expenses (including selling, general and administrative expenses
and depreciation and amortization) for the publishing segment, excluding the St.
Louis Agency adjustment, increased to $262.5 million in 1996 from $231.5 million
in 1995, an increase of 13.4 percent. On a comparable basis, excluding PCN from
1996 and the extra week from 1995, operating expenses increased 2.1 percent.
Major increases in comparable expenses were promotion expense of $1.5 million,
circulation distribution expenses of $611,000 and overall personnel costs of
$574,000. Partially offsetting these increases were declines in newsprint
expense of $1.1 million and inducement costs of $798,000.
Operating income from the Company's publishing activities increased 28.3
percent to $32.6 million in 1996 from $25.4 million in 1995. On a comparable
basis, excluding PCN from 1996 and the extra week from 1995, operating income
from the publishing segment increased 12 percent. The increase resulted from
higher advertising revenues on a comparable basis.
On a comparable basis, excluding PCN from 1996 and the extra week from
1995, lower newsprint prices resulted in a $1.1 million decline in 1996
newsprint expense ($862,000 after giving effect to the St. Louis Agency
adjustment). During the first quarter of 1997, the Company's average cost per
metric ton for newsprint has been in the range of $510. Newsprint suppliers
increased the price to $575 per metric ton on March 1, 1997 which will begin to
impact the Company's newsprint expense in the second quarter of 1997. The
Company's 1996 newsprint cost and metric tons consumed, after giving effect to
the St. Louis Agency adjustment and excluding PCN, were approximately $30.7
million and 47,751 tons, respectively.
BROADCASTING
Broadcasting operating revenues for 1996 increased 10.9 percent to $225
million from $202.9 million in 1995. On a comparable basis, excluding the extra
week from 1995, operating revenues increased 12.9 percent. Local spot
advertising increased 14.2 percent and national spot advertising increased 14.7
percent. The current year increases reflected strong Olympic-related advertising
at the Company's five NBC affiliated stations and significant political
advertising of $13.2 million, an increase of $10.3 million.
Broadcasting operating expenses (including selling, general and
administrative expenses and depreciation and amortization) increased 3.5 percent
to $141.7 million in 1996 from $137 million in 1995. On a comparable basis,
excluding the extra week from 1995, operating expenses increased 4.5 percent.
This increase was primarily attributable to higher overall personnel costs of
$4.2 million and higher national advertising commissions of $951,000.
Operating income from the broadcasting segment in 1996 increased 26.2
percent to $83.2 million from $65.9 million in the prior year. On a comparable
basis, excluding the extra week from 1995, operating income from the
broadcasting segment increased 30.9 percent. The 1996 gain resulted from the
significant increases in both local and national advertising revenues.
1995 COMPARED WITH 1994
CONSOLIDATED
Operating revenues for the year ended December 31, 1995 decreased 2.7
percent to $472.3 million from $485.6 million in 1994. The revenue comparison
was affected by the sale of the Company's Chicago publishing subsidiary,
Pulitzer Community Newspapers, Inc. ("PCN"), on December 22, 1994. The Company's
1994 results included substantially a full year of PCN operations while no
amounts for PCN were included in the 1995 results. In addition, the revenue
comparison was favorably affected by an extra week of operations in 1995; fiscal
1995 contained 53 weeks, versus 52 weeks in fiscal 1994. On a comparable basis
(i.e., excluding
22
<PAGE> 24
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -- CONTINUED
the extra week from 1995 and PCN from 1994), consolidated revenues increased 6.2
percent. The increase reflected gains in both broadcasting and publishing
revenues.
Operating expenses, excluding the St. Louis Agency adjustment, were $373.2
million compared to $396.3 million in 1994, a decrease of 5.8 percent. On a
comparable basis, excluding the extra week from 1995 and PCN from 1994,
operating expenses increased 5.2 percent. This increase was primarily
attributable to increased newsprint costs of $15.1 million, higher overall
personnel costs of $2.1 million, increased promotion expense of $934,000,
increased purchased supplement costs of $783,000, and the reversal in the prior
year of an accrual due to the settlement of a sales tax issue ($437,000).
Expense increases were partially offset by lower depreciation and amortization
of $1.4 million and lower programming rights expense of $1.2 million.
Operating income for fiscal 1995 increased 16.2 percent to $86.7 million
from $74.6 million in 1994. On a comparable basis, excluding the extra week from
1995 and PCN from 1994, operating income increased 15.7 percent. The 1995
increase reflected improvements in the broadcasting segment's operating income,
resulting from increased revenues.
Interest expense decreased $1.8 million in 1995 compared to 1994, due to
lower debt levels. The Company's average debt level for 1995 decreased to $133.2
million from $160.1 million in the prior year. The Company's average interest
rate for 1995 was unchanged from the prior year at 7.5 percent. Interest income
for the year increased $3.2 million, due to both a higher average balance of
invested funds and higher short-term interest rates.
The effective income tax rate for 1995 decreased to 37.9 percent from 39.4
percent in the prior year. The rates in both 1995 and 1994 were affected by
non-recurring items. Income tax expense for 1995 was reduced by a $911,000
positive adjustment related to the fourth-quarter settlement of a state tax
examination. 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. Excluding these non-recurring items from both years, the effective
income tax rates for 1995 and 1994 would have been 39 percent and 39.2 percent,
respectively.
As discussed in Note 9 to the Consolidated Financial Statements, effective
January 1, 1994 the Company adopted the provisions of Statement of Financial
Accounting Standards No. 112 ("SFAS 112"), Employers' Accounting for
Postemployment Benefits, and recorded its initial liability thereunder,
resulting in a one-time after-tax charge of $719,000. After recording the
one-time charge, the Company's ongoing expense under SFAS 112 does not differ
significantly from the prior pay-as-you-go basis.
On December 22, 1994, the Company sold its Chicago publishing subsidiary,
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
$0.05 per share, to 1994 net income. Other than the net gain of $1 million, the
sale of PCN had no effect on the net income comparisons because earnings
provided by PCN in 1994 were offset in 1995 by the after-tax investment income
generated by the sale proceeds.
For the year ended December 31, 1995, the Company reported net income of
$49.3 million, or $2.26 per share, compared with net income of $39.2 million, or
$1.81 per share, in the prior year. Comparability of the earnings results was
affected by several non-recurring items which included the positive income tax
adjustments in both years, the SFAS 112 adjustment in 1994 and the PCN gain in
1994. Excluding the non-recurring items from both years, 1995 net income
increased to $48.4 million, or $2.22 per share, from $38.4 million, or $1.77 per
share, for the prior year. The gain in net income reflected an improvement in
the broadcasting segment's operating profits and a reduction in interest
expense.
23
<PAGE> 25
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -- CONTINUED
PUBLISHING
Operating revenues from the Company's publishing segment for 1995 decreased
11.6 percent to $269.4 million from $304.8 million in 1994. On a comparable
basis, excluding the extra week from 1995 and PCN from 1994, publishing revenues
increased 3.4 percent. This increase reflected both higher advertising revenues,
particularly classified, at both newspaper properties and higher circulation
revenues.
Newspaper advertising revenues, on a comparable basis, excluding the extra
week from 1995 and PCN from 1994, increased $5.2 million, or 3.4 percent, in
1995. The current year increase was generated by higher average rates which
contributed $7.2 million but which was partially offset by a decline in
advertising volume totaling $2 million. In the first quarter of 1995, both the
Post-Dispatch and Star implemented rate increases for most advertising
categories, ranging from 4 percent to 6 percent and 6 percent to 8 percent,
respectively. In November 1995, additional rate increases, ranging from 7.5
percent to 9.5 percent, were implemented at the Star.
Circulation revenues, on a comparable basis, excluding the extra week from
1995 and PCN from 1994, increased $2.3 million, or 3.1 percent, in 1995. The
current year increase resulted from circulation price increases which
contributed $4.3 million but which was partially offset by average circulation
decreases of $2 million. 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 was 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, decreased to $231.5 million in 1995 from $259.6 million
in 1994, a decrease of 10.8 percent. On a comparable basis, excluding the extra
week from 1995 and PCN from 1994, operating expenses increased 6.9 percent. The
higher expenses, on a comparable basis, resulted primarily from increased
newsprint cost of $15.1 million, reflecting the impact of significant newsprint
price increases, and increased purchased supplement costs of $783,000.
Operating income from the Company's publishing activities decreased 16.7
percent to $25.4 million in 1995 from $30.5 million in 1994. On a comparable
basis, excluding the extra week from 1995 and PCN from 1994, operating income
from the publishing segment decreased 12.3 percent. The decline resulted from
the significant increase in newsprint costs which exceeded revenue gains on a
comparable basis.
BROADCASTING
Broadcasting operating revenues for 1995 increased 12.2 percent to $202.9
million from $180.8 million in 1994. On a comparable basis, excluding the extra
week from 1995, operating revenues increased 10.2 percent. Local spot
advertising increased 5.9 percent and national spot advertising increased 3.4
percent. In addition, network compensation revenue increased $10.2 million due
to new ten-year network affiliation agreements executed in early 1995. During
1995, approximately $2 million of this network revenue increase was invested
back into the Company's stations to strengthen their local news operations.
These costs were reflected in the ongoing annual expenses of the broadcasting
operations.
Reported broadcasting operating revenues included political advertising of
$2.9 million and $8.5 million in 1995 and 1994, respectively.
Broadcasting operating expenses (including selling, general and
administrative expenses and depreciation and amortization) increased 3.1 percent
to $137 million in 1995 from $132.8 million in 1994. On a comparable basis,
excluding the extra week from 1995, operating expenses increased 2.1 percent.
Major increases in comparable expenses were overall personnel costs of $3
million and promotion expense of $805,000. Also contributing to the current year
expense increase was the prior year reversal of an accrual due to the
24
<PAGE> 26
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -- CONTINUED
settlement of a sales tax issue ($437,000). Partially offsetting these increases
were declines in depreciation and amortization of $1.5 million and programming
rights expense of $1.2 million.
Operating income from the broadcasting segment in 1995 increased 37.5
percent to $65.9 million from $48 million in the prior year. On a comparable
basis, excluding the extra week from 1995, operating income from the
broadcasting segment increased 32.6 percent. The 1995 increase resulted from a
combination of increased advertising revenues and higher network compensation.
LIQUIDITY AND CAPITAL RESOURCES
Outstanding debt, inclusive of the short-term portion of long-term debt, as
of December 31, 1996, was $250.1 million, compared with $128.8 million at
December 31, 1995, reflecting the new debt financing incurred for the Scripps
League acquisition on July 1, 1996. During 1996, the Company made a scheduled
repayment of $14.3 million under its Senior Note Agreement which matures in
1997.
On July 1, 1996, in connection with the acquisition of Scripps League, the
Company issued $85 million of fixed rate senior notes to Prudential Insurance
Company of America ("Prudential") and entered into a $50 million credit
agreement with The First National Bank of Chicago, as Agent, for a group of
lenders ("FNBC"). The Company immediately borrowed the full amount under the
FNBC Credit Agreement to partially finance the Scripps League acquisition. See
Notes 3 and 5 of Notes to Consolidated Financial Statements for additional
information regarding the acquisition and long-term borrowings.
The Company's Senior Note Agreements with Prudential and FNBC Credit
Agreement 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, 1996, commitments for capital expenditures were
approximately $5.3 million, relating to normal capital equipment replacements.
Commitments for film contracts and license fees as of December 31, 1996 were
approximately $22.9 million. In addition, as of December 31, 1996, the Company
had capital contribution commitments of approximately $3.4 million related to
investments in two limited partnerships.
At December 31, 1996, the Company had working capital of $95.3 million and
a current ratio of 2.24 to 1. This compares to working capital of $128.9 million
and a current ratio of 3.22 to 1 at December 31, 1995.
The Company from time to time considers acquisitions of broadcasting,
newspaper and other properties when favorable investment opportunities are
identified. Other than agreements to acquire two small radio stations, the
Company has no agreements to acquire additional properties. In the event an
investment opportunity is identified, management expects that it would be able
to arrange financing on terms and conditions satisfactory to the Company.
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.
25
<PAGE> 27
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, 1996
Statements of Consolidated Financial Position at December 31, 1996 and 1995
Statements of Consolidated Stockholders' Equity for each of the Three Years
in the Period Ended December 31, 1996
Statements of Consolidated Cash Flows for each of the Three Years in the
Period Ended December 31, 1996
Notes to Consolidated Financial Statements for the Three Years in the
Period Ended December 31, 1996
26
<PAGE> 28
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, 1996
and 1995, and the related consolidated statements of income, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 1996. 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, 1996
and 1995, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
As discussed in Note 9 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.
DELOITTE & TOUCHE LLP
Saint Louis, Missouri
February 7, 1997
27
<PAGE> 29
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1996 1995 1994
---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
OPERATING REVENUES -- NET:
Publishing:
Advertising............................................ $191,939 $161,932 $181,018
Circulation............................................ 81,434 76,349 77,941
Other.................................................. 35,723 31,107 45,820
Broadcasting.............................................. 224,992 202,939 180,800
-------- -------- --------
Total operating revenues.......................... 534,088 472,327 485,579
-------- -------- --------
OPERATING EXPENSES:
Publishing operations..................................... 139,259 125,811 130,219
Broadcasting operations................................... 66,626 64,202 61,351
Selling, general and administrative....................... 172,838 155,996 174,239
St. Louis Agency adjustment (Note 2)...................... 13,972 12,502 14,706
Depreciation and amortization............................. 31,102 27,150 30,486
-------- -------- --------
Total operating expenses.......................... 423,797 385,661 411,001
-------- -------- --------
Operating income.......................................... 110,291 86,666 74,578
Interest income........................................... 4,522 5,203 1,971
Interest expense.......................................... (13,592) (10,171) (12,009)
Gain on sale of publishing property (Note 3).............. 2,791
Net other expense......................................... (5,449) (2,330) (1,461)
-------- -------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE.................. 95,772 79,368 65,870
PROVISION FOR INCOME TAXES (Note 10)........................ 38,272 30,046 25,960
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE................................................. 57,500 49,322 39,910
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF
APPLICABLE INCOME TAXES (Note 9).......................... (719)
-------- -------- --------
NET INCOME.................................................. $ 57,500 $ 49,322 $ 39,191
======== ======== ========
EARNINGS PER SHARE OF STOCK (COMMON AND CLASS B COMMON):
Income before cumulative effect of change in accounting
principle.............................................. $2.62 $2.26 $1.84
Cumulative effect of change in accounting principle....... (0.03)
-------- -------- --------
Total............................................. $2.62 $2.26 $1.81
======== ======== ========
WEIGHTED AVERAGE NUMBER OF SHARES (COMMON AND CLASS B COMMON
STOCK OUTSTANDING) (Note 7)............................... 21,926 21,800 21,655
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
28
<PAGE> 30
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1995
---- ----
(IN THOUSANDS)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 73,052 $ 100,380
Trade accounts receivable (less allowance for doubtful
accounts of $2,576 and $2,009).......................... 80,010 64,524
Inventory................................................. 4,976 6,190
Prepaid expenses and other................................ 5,650 7,041
Program rights............................................ 8,452 8,824
--------- ---------
Total current assets.................................. 172,140 186,959
--------- ---------
PROPERTIES:
Land...................................................... 14,692 11,779
Buildings................................................. 78,733 60,794
Machinery and equipment................................... 209,854 173,165
Construction in progress.................................. 2,071 8,745
--------- ---------
Total................................................. 305,350 254,483
Less accumulated depreciation............................. 149,418 135,296
--------- ---------
Properties -- net..................................... 155,932 119,187
--------- ---------
INTANGIBLE AND OTHER ASSETS:
Intangible assets -- net of applicable amortization (Notes
3 and 4)................................................ 298,305 117,470
Receivable from The Herald Company (Notes 2 and 9)........ 39,955 43,696
Other..................................................... 17,519 27,761
--------- ---------
Total intangible and other assets..................... 355,779 188,927
--------- ---------
TOTAL.............................................. $ 683,851 $ 495,073
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable.................................... $ 13,355 $ 14,145
Current portion of long-term debt (Note 5)................ 14,705 14,250
Salaries, wages and commissions........................... 14,897 11,757
Income taxes payable...................................... 1,267 2,618
Program contracts payable................................. 8,916 8,664
Interest payable.......................................... 7,177 3,415
Pension obligations (Note 8).............................. 2,123 1,023
Acquisition payable....................................... 9,804
Other..................................................... 4,566 2,234
--------- ---------
Total current liabilities............................. 76,810 58,106
--------- ---------
LONG-TERM DEBT (Note 5)..................................... 235,410 114,500
--------- ---------
PENSION OBLIGATIONS (Note 8)................................ 23,415 24,631
--------- ---------
POSTRETIREMENT AND POSTEMPLOYMENT BENEFIT OBLIGATIONS (Note
9)........................................................ 92,252 92,856
--------- ---------
OTHER LONG-TERM LIABILITIES................................. 6,027 6,209
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 6)......................
STOCKHOLDERS' EQUITY (Note 7):
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 -- 6,498,215 in 1996 and 4,704,268 in
1995.................................................... 65 47
Class B common stock, convertible, $.01 par value;
50,000,000 shares authorized; issued -- 27,214,842 in
1996 and 20,474,050 in 1995............................. 272 205
Additional paid-in capital................................ 129,173 125,539
Retained earnings......................................... 308,283 260,816
--------- ---------
Total................................................. 437,793 386,607
Treasury stock -- at cost; 22,811 and 16,712 shares of
common stock in 1996 and 1995, respectively, and
11,700,850 shares in 1996 and 8,775,638 in 1995 of Class
B common stock.......................................... (187,856) (187,836)
--------- ---------
Total stockholders' equity............................ 249,937 198,771
--------- ---------
TOTAL.............................................. $ 683,851 $ 495,073
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
29
<PAGE> 31
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CLASS B ADDITIONAL TOTAL
COMMON COMMON PAID-IN RETAINED TREASURY STOCKHOLDERS'
STOCK STOCK CAPITAL EARNINGS STOCK EQUITY
------ ------- ---------- -------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 1994.................. $35 $165 $120,901 $188,665 $(187,623) $122,143
Issuance of common stock grants............ 101 101
Common stock options exercised............. 898 898
Conversion of Class B common stock to
common stock.............................
Tax benefit from stock options exercised... 220 220
Net income................................. 39,191 39,191
Cash dividends declared and paid $.35 per
share of common and Class B common....... (7,534) (7,534)
Five-for-four stock split in the form of a
25 percent stock dividend (Note 7)....... 9 41 (50)
--- ---- -------- -------- --------- --------
BALANCES AT DECEMBER 31, 1994................ 44 206 122,070 220,322 (187,623) 155,019
Issuance of common stock grants............ 218 218
Common stock options exercised............. 2 2,327 2,329
Conversion of Class B common stock to
common stock............................. 1 (1)
Tax benefit from stock options exercised... 924 924
Net income................................. 49,322 49,322
Cash dividends declared and paid $.41 per
share of common and Class B common....... (8,828) (8,828)
Purchase of treasury stock................. (213) (213)
--- ---- -------- -------- --------- --------
BALANCES AT DECEMBER 31, 1995................ 47 205 125,539 260,816 (187,836) 198,771
Issuance of common stock grants............ 76 76
Common stock options exercised............. 1 2,166 2,167
Conversion of Class B common stock to
common stock............................. 1 (1)
Tax benefit from stock options exercised... 1,476 1,476
Net income................................. 57,500 57,500
Cash dividends declared and paid $.46 per
share of common and Class B common....... (10,033) (10,033)
Purchase of treasury stock................. (20) (20)
Four for three stock split in the form of a
33.3 percent stock dividend (Note 7)..... 16 68 (84)
--- ---- -------- -------- --------- --------
BALANCES AT DECEMBER 31, 1996................ $65 $272 $129,173 $308,283 $(187,856) $249,937
=== ==== ======== ======== ========= ========
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCK CLASS B COMMON STOCK
----------------------- -----------------------
HELD IN HELD IN
ISSUED TREASURY ISSUED TREASURY
------ -------- ------ --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
SHARE ACTIVITY:
BALANCES AT JANUARY 1, 1994............................... 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 7)............................... 888 (2) 4,122 (1,755)
----- --- ------ -------
BALANCES AT DECEMBER 31, 1994............................. 4,444 (11) 20,609 (8,776)
Issuance of common stock grants......................... 6
Common stock options exercised.......................... 119
Conversion of Class B common stock to common stock...... 135 (135)
Purchase of treasury stock.............................. (6)
----- --- ------ -------
BALANCES AT DECEMBER 31, 1995............................. 4,704 (17) 20,474 (8,776)
Issuance of common stock grants......................... 2
Common stock options exercised.......................... 140
Conversion of Class B common stock to common stock...... 84 (84)
Four for three split in the form of a 33.3 percent stock
dividend (Note 7)..................................... 1,568 (6) 6,825 (2,925)
----- --- ------ -------
BALANCES AT DECEMBER 31, 1996............................. 6,498 (23) 27,215 (11,701)
===== === ====== =======
</TABLE>
See accompanying notes to consolidated financial statements.
30
<PAGE> 32
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 57,500 $ 49,322 $ 39,191
Adjustments to reconcile net income to net cash provided
by operating activities:
Cumulative effect of change in accounting principle, net
of applicable income taxes............................. 719
Depreciation............................................ 20,434 19,281 20,466
Amortization of intangibles............................. 10,668 7,869 10,020
Increase (decrease) in postretirement and postemployment
benefit obligations.................................... (604) 890 (496)
Deferred income taxes................................... (1,943) (1,847) (4,617)
Gain on sale of assets.................................. (421) (2,791)
Changes in assets and liabilities (net of the effects of
the purchase and sale of properties) (Note 3) which
provided (used) cash:
Trade accounts receivable............................. (9,737) (1,581) (8,269)
Inventory............................................. 3,017 (3,121) 1,540
Other assets.......................................... 7,842 1,150 3,567
Trade accounts payable and other liabilities.......... 4,263 704 8,660
Income taxes payable.................................. (239) (3,713) 2,059
--------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... 90,780 68,954 70,049
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (17,787) (22,934) (13,313)
Purchase of publishing properties, net of cash acquired... (203,306)
Purchase of broadcast assets.............................. (5,187)
Investment in joint ventures and limited partnerships..... (2,983) (3,637) (5,593)
Sale of assets, net of cash sold.......................... 4,150 30,486
(Increase) decrease in notes receivable................... (4,904) 1,875 18
--------- -------- --------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES......... (230,017) (24,696) 11,598
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt.................. 135,000
Repayments on long-term debt.............................. (15,205) (14,250) (32,897)
Dividends paid............................................ (10,033) (8,828) (7,534)
Proceeds from exercise of stock options................... 2,167 2,329 898
Purchase of treasury stock................................ (20) (213)
--------- -------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES......... 111,909 (20,962) (39,533)
--------- -------- --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS........ (27,328) 23,296 42,114
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............. 100,380 77,084 34,970
--------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR.................... $ 73,052 $100,380 $ 77,084
========= ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the year for:
Interest paid........................................... $ 9,716 $ 10,147 $ 13,067
Interest received....................................... (4,872) (4,805) (1,834)
Income taxes............................................ 38,530 35,862 28,369
Income tax refunds...................................... (195) (1,280) (70)
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING
ACTIVITY:
Decrease in minimum pension liability and related
intangible asset
(Notes 4 and 8)......................................... $ (1,059) $ (227) $ (1,629)
</TABLE>
See accompanying notes to consolidated financial statements.
31
<PAGE> 33
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
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 of which are wholly-owned. All significant intercompany
transactions have been eliminated from the consolidated financial statements.
Fiscal Year -- The Company's fiscal year ends on the last Sunday of the
calendar year, which in 1995 resulted in a 14-week fourth quarter and a 53-week
year. In 1996 and 1994, the fourth quarter was 13 weeks and the year was 52
weeks. 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 investments 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. If the first-in, first-out cost method had been used,
inventory would have been $874,000 and $2,064,000 higher than reported at
December 31, 1996 and 1995, respectively. 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.
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.
Intangible Assets -- Intangibles consisting of goodwill, FCC licenses and
network affiliations acquired subsequent to the effective date of Accounting
Principles Board Opinion No. 17 ("Opinion No. 17") are being amortized over
lives of either 15 or 40 years while all other intangible assets are being
amortized over lives ranging from 4 to 23 years. Management periodically
evaluates the recoverability of intangible assets by reviewing the current and
projected cash flows of each of its properties. Intangibles in the amount of
$1,520,000, related to acquisitions prior to the effective date of 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 annually, as necessary, when a new
determination of the amount of the additional minimum pension liability is made
annually.
Long-Lived Assets -- The Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, in
March 1995. This statement became effective for the Company's 1996 fiscal year.
The general requirements of this statement are applicable to the properties and
intangible assets of the Company and require impairment to be considered
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Adoption of this standard on its effective date
of January 1, 1996 had no impact on the Company's financial position or results
of operations.
Income Taxes -- Deferred tax assets and liabilities are recorded for the
expected future tax consequences of events that have been included in either the
financial statements or tax returns of the Company. Under this
32
<PAGE> 34
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -- CONTINUED
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.
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 splits described in Note 7.
Employee Benefit 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. The
Company's liability and related expense for benefits under the plans are
recorded over the service period of active employees based upon annual actuarial
calculations. Plan funding strategies are influenced by tax regulations. Plan
assets consist primarily of government bonds and corporate equity securities.
The Company provides retiree medical and life insurance benefits under
varying postretirement plans at several of its operating locations. In addition,
the Company provides postemployment disability benefits to certain former
employee groups prior to retirement. The significant portion of these benefits
results from plans at the St. Louis Post-Dispatch. The Company's liability and
related expense for benefits under the postretirement plans are recorded over
the service period of active employees based upon annual actuarial calculations.
The Company accrues postemployment 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. All of the Company's
postretirement and postemployment benefits are funded on a pay-as-you-go basis.
Stock-Based Compensation Plans -- Effective January 1, 1996, the Company
adopted the disclosure requirements of Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), Accounting for Stock-Based Compensation. The new
standard defines a fair value method of accounting for stock options and similar
equity instruments. Under the fair value method, compensation cost is measured
at the grant date based on the fair value of the award and is recognized over
the service period, which is usually the vesting period. Pursuant to the new
standard, companies are encouraged, but not required, to adopt the fair value
method of accounting for employee stock-based transactions. Companies are also
permitted to continue to account for such transactions under Accounting
Principles Board Opinion No. 25 ("APB 25"), Accounting for Stock Issued to
Employees, but are required to disclose pro forma net income and, if presented,
earnings per share as if the company had applied the new method of accounting.
The accounting requirements of the new method are effective for all employee
awards granted after the beginning of the fiscal year of adoption, whereas the
disclosure requirements apply to all awards granted subsequent to December 31,
1994. The Company has adopted the disclosure requirements of SFAS 123 in fiscal
year 1996 but will continue to recognize and measure compensation for its
restricted stock and stock option plans in accordance with the existing
provisions of APB 25.
Use of Management Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires that
management make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. The reported amounts of
revenues and expenses during the reporting period may also be affected by the
estimates and assumptions management is required to make. Actual results may
differ from those estimates.
Reclassifications -- Certain reclassifications have been made to the 1995
and 1994 consolidated financial statements to conform with the 1996
presentation.
33
<PAGE> 35
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -- CONTINUED
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 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
During 1996, the Company acquired in a purchase transaction all of the
stock of Scripps League Newspapers, Inc. ("Scripps League"), a privately owned
company that publishes a group of community newspapers, including 14 dailies,
which serve smaller markets, primarily in the West and Midwest. The purchase
price of approximately $216 million (including acquisition costs) includes all
of the operating assets of the newspapers, working capital of approximately $6
million and intangibles. The December 31, 1996 consolidated balance sheet
reflects a preliminary purchase price allocation subject to certain adjustments
based upon final working capital balances and final appraisals at June 30, 1996.
The acquisition was financed by long-term borrowings of $135 million (see Note
5) and cash of approximately $81 million (approximately $69 million net of cash
acquired). The results of the operations of Scripps League for the period
subsequent to June 30, 1996 are included in the Company's 1996 Statement of
Consolidated Income.
The following supplemental unaudited pro forma information shows the
results of operations of the Company for the years ended December 31, 1996 and
1995 adjusted for the acquisition of Scripps League, assuming such transaction
and the related debt 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
34
<PAGE> 36
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -- CONTINUED
operations that would have occurred had the transaction occurred at the
beginning of each year presented or of future results of operations.
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---- ----
(UNAUDITED)
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Operating Revenues -- net................................ $566,915 $536,803
Operating income......................................... $113,660 $ 93,896
Net income............................................... $ 54,519 $ 44,203
Earnings per share of stock (common and Class B
common)................................................ $ 2.49 $ 2.03
Weighted average number of shares (common and Class B
common) outstanding.................................... 21,926 21,800
</TABLE>
In December 1996, the Company acquired in a purchase transaction the assets
of an AM radio station in Phoenix, Arizona for approximately $5,187,000.
On December 22, 1994, the Company sold its wholly-owned publishing
subsidiary in Chicago, Illinois, for approximately $33,746,000. A gain of
$2,791,000 ($1,051,000 after taxes or $0.05 per share) was recognized on this
transaction. The Company's 1994 statement of consolidated income includes
substantially a full year of operating results for this subsidiary.
4. INTANGIBLE ASSETS
Intangible assets consist of:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
---- ----
(IN THOUSANDS)
<S> <C> <C>
FCC licenses and network affiliations.................... $112,161 $107,115
Goodwill................................................. 178,327 12,393
Intangible pension asset (Note 8)........................ 1,918 2,977
Other.................................................... 63,914 42,491
-------- --------
Total............................................. 356,320 164,976
Less accumulated amortization............................ 58,015 47,506
-------- --------
Total intangible assets -- net........................... $298,305 $117,470
======== ========
</TABLE>
5. FINANCING ARRANGEMENTS
Long-term debt consists of:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
---- ----
(IN THOUSANDS)
<S> <C> <C>
Credit Agreement......................................... $ 50,000 $ --
Senior notes maturing in substantially equal annual
installments:
8.8% due through 1997.................................. 14,500 28,750
6.76% due 1998-2001.................................... 50,000 50,000
7.22% due 2002-2005.................................... 50,000 50,000
7.86% due 2001-2008.................................... 85,000
Other.................................................. 615
-------- --------
Total............................................. 250,115 128,750
Less current portion..................................... 14,705 14,250
-------- --------
Total long-term debt..................................... $235,410 $114,500
======== ========
</TABLE>
35
<PAGE> 37
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -- CONTINUED
On July 1, 1996, in connection with the acquisition of Scripps League (see
Note 3), the Company issued to The Prudential Insurance Company of America
$85,000,000 principal amount of 7.86 percent Senior Notes due 2008 ("Notes"). In
addition, on July 1, 1996, the Company entered into a credit agreement with The
First National Bank of Chicago, as Agent, for a group of lenders ("FNBC"),
providing for a $50,000,000 five year variable rate revolving credit facility
("Credit Agreement"). The Company immediately borrowed the full amount under the
Credit Agreement and used the proceeds, together with the proceeds from the
Notes, to partially finance the Scripps League acquisition.
The Notes mature in equal annual installments beginning July 25, 2001. All
borrowings under the Credit Agreement are due on July 2, 2001, the termination
date of the facility. Prior to the credit facility's termination, loans may be
borrowed, repaid and reborrowed by the Company. In addition, the Company has the
option to repay any borrowings and terminate the credit facility prior to its
scheduled maturity.
The Credit Agreement allows the Company to elect an interest rate with
respect to each borrowing under the facility equal to a daily floating rate or
the Eurodollar rate plus 0.225 percent. As of December 31, 1996, the interest
rate on the Credit Agreement borrowings with FNBC was 5.875 percent.
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).
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. Pursuant to this calculation, approximately
$103,150,000 is available for distribution as dividends at December 31, 1996.
Approximate annual maturities of long-term debt for the five years
subsequent to December 31, 1996 are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-----------
(IN THOUSANDS)
<S> <C>
1997........................................................ $ 14,705
1998........................................................ 12,705
1999........................................................ 12,705
2000........................................................ 12,500
2001........................................................ 73,125
Thereafter.................................................. 124,375
--------
Total................................................ $250,115
========
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
At December 31, 1996, the Company and its subsidiaries had construction and
equipment commitments of approximately $5,263,000 and commitments for program
contracts payable and license fees of approximately $22,883,000.
The Company is an investor in two limited partnerships requiring future
capital contributions. As of December 31, 1996, the Company's unfunded capital
contribution commitment related to these investments was approximately
$3,405,000.
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
36
<PAGE> 38
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -- CONTINUED
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 $15.72 increased by 15%
compounded annually beginning May 12, 1986.
7. 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 substantially all outstanding shares of Class B common stock, which
represents 95.7% of the combined voting power of the Company, have deposited
their shares in a voting trust (the "Voting Trust").
During 1995, the Voting Trust Agreement dated January 17, 1991 was
terminated and a new Voting Trust Agreement with similar terms was entered into.
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 in interest 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 outside directors of
incentive stock options to purchase up to a maximum of 2,500,000 shares of
common stock. Under the 1994 Plan, options to purchase 1,667 shares of common
stock will be automatically granted to outside 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 outside directors under this automatic grant feature are limited to
a maximum of 166,667. 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 250,000 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.
37
<PAGE> 39
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -- CONTINUED
Stock option transactions are summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES PRICE RANGE PRICE
------ ----------- --------
<S> <C> <C> <C>
Common Stock Options:
Outstanding, January 1, 1994.............. 1,063,661 $ 9.27-$21.98 $15.51
Granted................................... 231,650 $21.53-$21.75 $21.53
Cancelled................................. (30,495) $11.73-$21.98 $19.54
Exercised................................. (66,445) $ 9.27-$18.55 $13.52
---------
Outstanding, December 31, 1994.............. 1,198,371 $ 9.27-$21.98 $16.69
Granted................................... 192,853 $30.47-$34.41 $34.31
Cancelled................................. (39,632) $11.73-$21.98 $16.69
Exercised................................. (158,304) $ 9.27-$21.98 $14.71
---------
Outstanding, December 31, 1995.............. 1,193,288 $ 9.27-$34.41 $19.80
---------
Granted................................... 179,809 $41.91-$46.25 $46.03
Cancelled................................. (2,146) $21.53-$34.41 $28.77
Exercised................................. (140,096) $ 9.27-$21.98 $15.47
---------
Outstanding, December 31, 1996............ 1,230,855 $ 9.27-$46.25 $24.11
=========
Exercisable at:
December 31, 1995......................... 807,011 $ 9.27-$21.98 $15.89
=========
December 31, 1996......................... 855,445 $ 9.27-$34.41 $18.19
=========
Shares Available for Grant at December 31,
1996................................... 1,909,000
=========
</TABLE>
Stock appreciation right transactions are summarized as follows:
<TABLE>
<CAPTION>
SHARES PRICE
------ -----
<S> <C> <C>
Common Stock Appreciation Rights:
Outstanding, January 1, 1994 and December 31, 1994........ 37,584 $14.87
Cancelled................................................. (10,183) $14.87
Exercised................................................. (27,401) $14.87
=======
Outstanding, December 31, 1995 and 1996................... --
=======
</TABLE>
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 416,667 shares of common stock
may be granted or purchased by employees. In addition, no more than 83,333
shares of common stock may be issued to an employee in any calendar year.
38
<PAGE> 40
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -- CONTINUED
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 are summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES PRICE RANGE PRICE
------ ----------- --------
<S> <C> <C> <C>
Common Stock Grant:
Outstanding, January 1, 1994............... --
Granted.................................... 4,843 $20.25-$21.38 $20.81
Vested..................................... (607) $20.25 $20.25
-------
Outstanding, December 31, 1994............. 4,236 $20.25-$21.38 $20.89
Granted.................................... 8,880 $24.53 $24.53
Vested..................................... (7,460) $20.25-$24.53 $23.93
-------
Outstanding, December 31, 1995............. 5,656 $20.25-$24.53 $22.60
Granted.................................... 2,093 $36.70 $36.70
Vested..................................... (1,864) $20.25-$24.53 $22.12
-------
Outstanding, December 31, 1996............. 5,885 $20.25-$36.70 $27.78
=======
Shares Available for Grant at December 31,
1996....................................... 400,851
=======
</TABLE>
As required by SFAS 123, the Company has estimated the fair value of its
option grants since December 31, 1994 by utilizing the binomial options pricing
model. The fair value calculation was made with estimated values for the risk
free rate of 6%, volatility rate of 21%, dividend rate of 1.25% and average
lives of 7 years. The pro forma compensation effects of this calculation were
insignificant and therefore have not been disclosed.
On September 12, 1996, the Board of Directors declared a four-for-three
stock split of the Company's common and Class B common stock payable in the form
of a 33.3% stock dividend. The dividend was distributed on November 1, 1996 to
stockholders of record on October 10, 1996. The Company's capital balances and
share amounts have been adjusted in 1996 to reflect the split.
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 28, 1997, the Company's Board of Directors unanimously adopted
the Pulitzer Publishing Company 1997 Employee Stock Purchase Plan (the "Plan"),
subject to stockholder approval. The Plan allows eligible employees to authorize
payroll deductions for the periodic purchase of the Company's Common Stock
("Common Stock") at a price generally equal to 85% of the Common Stock's fair
market value.
In general, all employees of the Company and its subsidiaries are eligible
to participate in the Plan after completing at least one year of employment.
Subject to appropriate adjustment for stock splits and other capital changes,
the Company may sell a total of 500,000 shares of its common stock under the
Plan. Shares sold under the Plan may be authorized and unissued or held by the
Company in its treasury. The Company may purchase shares for resale under the
Plan.
39
<PAGE> 41
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -- CONTINUED
8. PENSION PLANS
The pension cost components were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost for benefits earned during the year............ $ 4,154 $ 3,834 $ 4,463
Interest cost on projected benefit obligation............... 8,185 8,057 7,515
Actual loss (return) on plan assets......................... (12,507) (17,541) 1,437
Net amortization and deferrals.............................. 4,833 11,365 (7,779)
-------- -------- --------
Net periodic pension cost................................... $ 4,665 $ 5,715 $ 5,636
======== ======== ========
</TABLE>
The funded status of the Company's pension plans was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
---- ----
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation................................. $107,637 $106,552
======== ========
Accumulated benefit obligation............................ $108,380 $107,441
======== ========
Projected benefit obligation................................ $118,414 $116,331
Plan assets at fair value................................... 104,046 94,032
-------- --------
Plan assets less than projected benefit obligation.......... 14,368 22,299
Unrecognized transition obligation, net..................... (1,539) (1,760)
Unrecognized net gain....................................... 10,557 1,881
Unrecognized prior service cost............................. 234 257
Additional minimum liability................................ 1,918 2,977
-------- --------
Pension obligations......................................... $ 25,538 $ 25,654
======== ========
</TABLE>
The projected benefit obligation was determined using assumed discount
rates of 7.5% and 7.25% at December 31, 1996 and 1995, respectively. The
expected long-term rate of return on plan assets was 8.5% for both 1996 and
1995. For those plans that pay benefits based on final compensation levels, the
actuarial assumptions for overall annual rate of increase in future salary
levels was 5% for both December 31, 1996 and 1995.
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 1996, 1995
and 1994, were approximately $781,000, $731,000 and $715,000, 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 $1,668,000, $1,494,000
and $1,735,000 for 1996, 1995 and 1994, respectively.
40
<PAGE> 42
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -- CONTINUED
9. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
The net periodic postretirement benefit cost components were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1996 1995 1994
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost (for benefits earned during the
year)............................................. $ 926 $ 933 $1,462
Interest cost on accumulated postretirement benefit
obligation........................................ 4,683 5,799 5,898
Net amortization, deferrals and other components.... (2,308) (1,787) 13
------- ------- ------
Net periodic postretirement benefit cost............ $ 3,301 $ 4,945 $7,373
======= ======= ======
</TABLE>
The Company funds its postretirement benefit obligation on a pay-as-you-go
basis, and, for 1996, 1995 and 1994 made payments of $4,207,000, $4,071,000 and
$3,484,000, respectively.
The status of the Company's postretirement benefit plans was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1995
---- ----
(IN THOUSANDS)
<S> <C> <C>
Retirees and surviving beneficiaries....................... $37,734 $45,400
Actives eligible to retire................................. 13,516 18,917
Other actives.............................................. 11,142 12,893
------- -------
Accumulated postretirement benefit obligation.............. 62,392 77,210
Unrecognized prior service gain............................ 7,990 8,563
Unrecognized net gain...................................... 19,404 4,918
------- -------
Accrued postretirement benefit cost........................ $89,786 $90,691
======= =======
</TABLE>
The preceding amounts for the December 31, 1996 and 1995 accrued
postretirement benefit cost and the 1996, 1995 and 1994 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 accrued postretirement benefit cost as of December 31,
1996 and 1995.
For 1996 measurement purposes, health care cost trend rates of 9%, 7% and
5% were assumed for indemnity plans, PPO plans and HMO plans, respectively; the
indemnity and PPO rates were assumed to decrease gradually to 5.5% through the
year 2010 and remain at that level thereafter. For 1995 measurement purposes,
health care cost trend rates of 11%, 10% and 9% 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. 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 accrued postretirement benefit cost
at December 31, 1996 by approximately $718,000 and the 1996 annual net periodic
postretirement benefit cost by approximately $680,000.
Administrative costs related to indemnity plans were assumed to increase at
a constant annual rate of 6% for both 1996 and 1995. The assumed discount rate
used in estimating the accumulated postretirement benefit obligation was 7.5%
and 8% for 1996 and 1995, respectively.
41
<PAGE> 43
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -- CONTINUED
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 by approximately $719,000 or $0.03 per
share. After recording the cumulative effect adjustment, the Company's on-going
expense under the new standard does not differ significantly from the prior
pay-as-you-go basis.
The Company's postemployment benefit obligation was $2,466,000 and
$2,165,000 at December 31, 1996 and 1995, respectively.
10. INCOME TAXES
Provisions for income taxes (benefits) consist of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1996 1995 1994
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal.......................................... $33,465 $28,352 $25,156
State and local.................................. 5,750 $ 3,541 3,372
Deferred:
Federal.......................................... (805) (1,641) (2,264)
State and local.................................. (138) (206) (304)
------- ------- -------
Total......................................... $38,272 $30,046 $25,960
======= ======= =======
</TABLE>
Factors causing the effective tax rate to differ from the statutory Federal
income tax rate were:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Statutory rate.......................................... 35% 35% 35%
Favorable resolution of prior year federal and state tax
issues................................................ (1) (1)
Amortization of intangibles............................. 1 1
State and local income taxes, net of U.S. Federal income
tax benefit........................................... 4 3 3
Other-net............................................... 1 1
-- -- --
Effective rate..................................... 40% 38% 39%
== == ==
</TABLE>
42
<PAGE> 44
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -- CONTINUED
The Company's deferred tax assets and liabilities, net, which have been
included in other assets in the statements of consolidated financial position
consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1995
---- ----
(IN THOUSAND)
<S> <C> <C>
Deferred tax assets:
Pensions and employee benefits........................... $ 9,575 $ 8,960
Postretirement benefit costs............................. 19,284 19,367
Other.................................................... 2,110 795
------- -------
Total................................................. 30,969 29,122
------- -------
Deferred tax liabilities:
Depreciation............................................. 19,590 9,042
Amortization............................................. 9,882 2,235
------- -------
Total................................................. 29,472 11,277
------- -------
Net deferred tax asset..................................... $ 1,497 $17,845
======= =======
</TABLE>
The change in the Company's net deferred tax asset during 1996 includes the
initial recording of a net deferred tax liability of $18.3 million in connection
with the acquisition of Scripps League on July 1, 1996 (see Note 3). 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, 1996, 1995 and 1994.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has estimated the following fair value amounts for its
financial instruments using available market information and appropriate
valuation methodologies. However, considerable judgment is 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.
Cash and Cash Equivalents, Accounts Receivable, Accounts Payable and
Program Contracts Payable -- The carrying amounts of these items are a
reasonable estimate of their fair value.
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 of the Company's long-term
debt as of December 31, 1996 and 1995 were $259,958,000 and $132,833,000,
respectively.
The fair value estimates presented herein are based on pertinent
information available to management as of December 31, 1996 and 1995. 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.
43
<PAGE> 45
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -- CONTINUED
12. 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,
------------------------------
1996 1995 1994
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING REVENUES:
Publishing(a)............................................. $309,096 $269,388 $304,779
Broadcasting.............................................. 224,992 202,939 180,800
-------- -------- --------
Total................................................ $534,088 $472,327 $485,579
======== ======== ========
OPERATING INCOME (LOSS):
Publishing(a)............................................. $ 32,577 $ 25,393 $ 30,486
Broadcasting.............................................. 83,246 65,939 47,963
Corporate................................................. (5,532) (4,666) (3,871)
-------- -------- --------
Total................................................ $110,291 $ 86,666 $ 74,578
======== ======== ========
TOTAL ASSETS:
Publishing................................................ $351,685 $141,441 $136,818
Broadcasting.............................................. 259,114 253,252 254,410
Corporate................................................. 73,052 100,380 77,084
-------- -------- --------
Total................................................ $683,851 $495,073 $468,312
======== ======== ========
CAPITAL EXPENDITURES:
Publishing................................................ $ 6,433 $ 6,627 $ 6,097
Broadcasting.............................................. 11,354 16,307 7,216
-------- -------- --------
Total................................................ $ 17,787 $ 22,934 $ 13,313
======== ======== ========
DEPRECIATION & AMORTIZATION:
Publishing(a)............................................. $ 8,660 $ 4,307 $ 6,128
Broadcasting.............................................. 22,442 22,843 24,358
-------- -------- --------
Total................................................ $ 31,102 $ 27,150 $ 30,486
======== ======== ========
OPERATING MARGINS
(Operating income to revenues):
Publishing(a)(b).......................................... 15.1% 14.1% 14.8%
Broadcasting.............................................. 37.0% 32.5% 26.5%
</TABLE>
- -------------------------
(a) Publishing operations for 1996 include the results of Scripps League
Newspapers, Inc. (subsequently renamed Pulitzer Community Newspapers, Inc.),
which was acquired on July 1, 1996. Publishing operations for 1994 include
the results of the Company's former Chicago publishing subsidiary which was
sold on December 22, 1994. (See Note 3)
(b) 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.
44
<PAGE> 46
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -- CONTINUED
13. QUARTERLY FINANCIAL DATA (UNAUDITED)
Operating results for the years ended December 31, 1996 and 1995 by
quarters are as follows:
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER TOTAL
----------- ----------- ----------- ----------- -----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
1996
OPERATING REVENUES -- NET:................... $115,706 $127,574 $138,865 $151,943 $534,088
======== ======== ======== ======== ========
NET INCOME................................... $ 10,241 $ 16,185 $ 12,964 $ 18,110 $ 57,500
======== ======== ======== ======== ========
EARNINGS PER SHARE OF STOCK (Common and Class
B Common).................................. $ 0.47 $ 0.74 $ 0.59 $ 0.82 $ 2.62
======== ======== ======== ======== ========
WEIGHTED AVERAGE NUMBER OF SHARES (Common and
Class B Common Stock Outstanding).......... 21,864 21,912 21,949 21,978 21,926
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER TOTAL
----------- ----------- ----------- ----------- -----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
1995
OPERATING REVENUES -- NET:................... $108,523 $120,626 $111,607 $131,571 $472,327
======== ======== ======== ======== ========
NET INCOME................................... $ 8,853 $ 14,316 $ 9,697 $ 16,456 $ 49,322
======== ======== ======== ======== ========
EARNINGS PER SHARE OF STOCK (Common and Class
B Common).................................. $ 0.41 $ 0.66 $ 0.44 $ 0.75 $ 2.26
======== ======== ======== ======== ========
WEIGHTED AVERAGE NUMBER OF SHARES (Common and
Class B Common Stock Outstanding).......... 21,720 21,817 21,838 21,845 21,800
======== ======== ======== ======== ========
</TABLE>
In the fourth quarter of 1996, the Company determined that the carrying
value of one of its joint venture investments had been impaired. Accordingly,
the investment was reduced by a $2.7 million adjustment resulting in an
after-tax charge of $1.6 million or $0.07 per share. In the fourth quarter of
1995, a state tax examination was settled favorably resulting in a reduction of
income tax expense of approximately $900,000, or $0.04 per share for the
quarter.
Earnings per share are computed independently for each of the quarters
presented. Therefore, the sum of the quarterly earnings per share may not equal
the total for the year.
45
<PAGE> 47
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 1997 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 1997
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 1997
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 1997 Annual Meeting of Stockholders
is incorporated herein by reference.
46
<PAGE> 48
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, 1996.
(iii) Statements of Consolidated Financial Position at December 31,
1996 and 1995.
(iv) Statements of Consolidated Stockholders' Equity for each of the
Three Years in the Period Ended December 31, 1996.
(v) Statements of Consolidated Cash Flows for each of the Three Years
in the Period Ended December 31, 1996.
(vi) Notes to Consolidated Financial Statements for the Three Years in
the Period Ended December 31, 1996.
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:
<TABLE>
<CAPTION>
SEQUENTIAL PAGE
---------------
<S> <C>
Independent Auditors' Report................................ 51
Schedule II -- Valuation and Qualifying Accounts and
Reserves.................................................. 52
</TABLE>
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.
3. Exhibits Required by Securities and Exchange Commission Regulation SK
(a) The following exhibits are filed as part of this report:
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C>
10.8.1 Amendment, dated January 28, 1997, to Pulitzer Retirement
Savings Plan
10.8.2 Amendment, dated October 30, 1996, to Pulitzer Retirement
Savings Plan
10.8.3 Amendment, dated July 31, 1996, to Pulitzer Retirement
Savings Plan
10.8.4 Amendment, dated October 25, 1995, to Pulitzer Retirement
Savings Plan
10.10.1 Amendment, dated October 25, 1995, to Pulitzer Publishing
Company Pension Plan
10.28 Split Dollar Life Insurance Agreement, dated December 27,
1996, between Pulitzer Publishing Company and Richard A.
Palmer, Trustee of the Michael E. Pulitzer 1996 Life
Insurance Trust
10.29 Split Dollar Life Insurance Agreement, dated December 31,
1996, between Pulitzer Publishing Company and Rose M.
Elkins, Trustee of the Kennie J. Elkins Insurance Trust
</TABLE>
47
<PAGE> 49
<TABLE>
<S> <C>
10.30 Split Dollar Life Insurance Agreement, dated December 30, 1996, between Pulitzer Publishing Company
and Rebecca H. Penniman and Nicholas G. Penniman V, Trustees of the Nicholas G. Penniman IV
Irrevocable 1996 Trust
10.31 Split Dollar Life Insurance Agreement, dated December 30, 1996, between Pulitzer Publishing Company
and Doris D. Ridgway and Boatmen's Trust Company, Trustees of The Ronald H. Ridgway Insurance Trust
10.32 Consulting Agreement, dated May 1, 1996, between Pulitzer Publishing Company and Glenn A. Christopher
21 Subsidiaries of Registrant
23 Independent Auditors' Consent
24 Power of Attorney
27 Financial Data Schedule
</TABLE>
(b) The following exhibits are incorporated herein by reference:
<TABLE>
<S> <C> <C>
3.1 -- Restated Certificate of Incorporation of the Company.(iii)
3.2 -- By-Laws of the Company restated as of June 23, 1993.(ix)
4.1 -- Form of Certificate for Common Stock.(iii)
9.1 -- Voting Trust Agreement, dated June 19, 1995 between the
holders of voting trust certificates and Michael E.
Pulitzer, Emily Rauh Pulitzer, Ronald H. Ridgway, Nicholas
G. Penniman IV, Ken J. Elkins, Cole C. Campbell and David
Moore.(xiii)
9.2 -- Termination Agreement, dated June 19, 1995 between the
holders of voting trust certificates and Michael E.
Pulitzer, Emily Rauh Pulitzer, Ronald H. Ridgway, Nicholas
G. Penniman IV, Ken J. Elkins, Cole C. Campbell and David
Moore.(xiii)
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)
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, 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.(vi)
</TABLE>
48
<PAGE> 50
<TABLE>
<S> <C> <C>
10.7.2 -- Annual Incentive Compensation Plan.(iii)
10.8.5 -- Amendment, dated October 25, 1995, to Pulitzer Retirement
Savings Plan.(xiii)
10.8.6 -- Amendment, dated January 24, 1995, to Pulitzer Retirement
Savings Plan.(xi)
10.8.7 -- Amended and restated Pulitzer Retirement Savings Plan.(xi)
10.9 -- Amended and restated Joseph Pulitzer Pension Plan.(xi)
10.10.2 -- Amended and restated Pulitzer Publishing Company Pension
Plan.(xi)
10.11 -- Restated Supplemental Executive Benefit Pension Plan.(vii)
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)
10.14 -- Pulitzer Publishing Company Senior Executive Deferred
Compensation Plan.(xiii)
10.15 -- Consulting Agreement, dated May 1, 1993, between Pulitzer
Publishing Company and Glenn A. Christopher.(ix)
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.(x)
10.20.1 -- Amendment, dated April 24, 1996, to Pulitzer Publishing
Company 1994 Stock Option Plan.(xiv)
10.20.2 -- Amendment, dated April 20, 1995, to Pulitzer Publishing
Company 1994 Stock Option Plan.(xii)
10.20.3 -- Pulitzer Publishing Company 1994 Stock Option Plan.(x)
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.(viii)
10.25 -- Stock Purchase Agreement by and among Pulitzer Publishing
Company and Mr. Edward W. Scripps, Mrs. Betty Knight
Scripps, and the Edward W. Scripps and Betty Knight Scripps
Charitable Remainder Unitrust dated as of May 4, 1996.(xv)
10.26 -- Note Agreement, dated July 1, 1996, between Pulitzer
Publishing Company and The Prudential Insurance Company of
America.(xvi)
10.27 -- Credit Agreement among Pulitzer Publishing Company, The
Lending Institutions Party Hereto, as Lenders, and The First
National Bank of Chicago, as Agent, dated as of July 1,
1996.(xvi)
</TABLE>
- -------------------------
(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.
49
<PAGE> 51
(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, 1991.
(vii) Incorporated by reference to Annual Report on Form 10-K for the fiscal
year ended December 31, 1992.
(viii) Incorporated by reference to Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1993.
(ix) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.
(x) Incorporated by reference to the Company's definitive Proxy Statement used
in connection with the 1994 Annual Meeting of Stockholders.
(xi) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 1994.
(xii) Incorporated by reference to the Company's definitive Proxy Statement used
in connection with the 1995 Annual Meeting of Stockholders.
(xiii) Incorporated by reference to Annual Report on Form 10-K for the fiscal
year ended December 31, 1995.
(xiv) Incorporated by reference to the Company's definitive Proxy Statement used
in connection with the 1996 Annual Meeting of Stockholders.
(xv) Incorporated by reference to Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1996.
(xvi) Incorporated by reference to Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1996.
(c) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the fourth
quarter of fiscal year 1996.
50
<PAGE> 52
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, 1996 and 1995, and for each of
the three years in the period ended December 31, 1996, and have issued our
report thereon dated February 7, 1997; 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(a)2.(ii). 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 7, 1997
51
<PAGE> 53
SCHEDULE II
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
SCHEDULE II -- VALUATION & QUALIFYING ACCOUNTS & RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 & 1994
<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, 1996
Valuation Accounts:
Allowance for Doubtful Accounts....... $2,009 $2,131 $321(a) $1,885(b) $2,576
Reserves:
Accrued Medical Plan.................. 561 4,198 0 4,370(c) 389
Workers Compensation.................. 2,005 1,478 0 1,357 2,126
YEAR ENDED DECEMBER 31, 1995
Valuation Accounts:
Allowance for Doubtful Accounts....... $2,135 $1,538 $247(a) $1,911(b) $2,009
Reserves:
Accrued Medical Plan.................. 789 4,907 0 5,135(c) 561
Workers Compensation.................. 2,327 1,192 0 1,514 2,005
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
</TABLE>
- -------------------------
(a) -- Accounts reinstated, cash recoveries, etc.
(b) -- Accounts written off, except 1994 which also includes $761 related to
sale of a publishing subsidiary.
(c) -- Amounts represents:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Claims paid................ $3,830 $4,660 $5,383
Service fees............... 579 548 460
Cash refunds............... (39) (73) (36)
------ ------ ------
$4,370 $5,135 $5,807
====== ====== ======
</TABLE>
52
<PAGE> 54
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 26th day of March, 1997.
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
--------- ----- ----
<C> <C> <S>
/s/ Michael E. Pulitzer Director; Chairman, President and March 26, 1997
- --------------------------------------------- Chief Executive Officer
(Michael E. Pulitzer) (Principal Executive Officer)
/s/ Ronald H. Ridgway Director; Senior Vice President March 26, 1997
- --------------------------------------------- -- Finance (Principal Financial
(Ronald H. Ridgway) and Accounting Officer)
Ken J. Elkins* Director; Senior Vice President March 26, 1997
- --------------------------------------------- --Broadcasting Operations
(Ken J. Elkins)
David E. Moore* Director March 26, 1997
- ---------------------------------------------
(David E. Moore)
Nicholas G. Penniman IV* Director; Senior Vice President March 26, 1997
- --------------------------------------------- --Newspaper Operations
(Nicholas G. Penniman IV)
Peter J. Repetti * Director March 26, 1997
- ---------------------------------------------
(Peter J. Repetti)
Emily Rauh Pulitzer* Director March 26, 1997
- ---------------------------------------------
(Emily Rauh Pulitzer)
Alice B. Hayes* Director March 26, 1997
- ---------------------------------------------
(Alice B. Hayes)
James M. Snowden, Jr.* Director March 26, 1997
- ---------------------------------------------
(James M. Snowden, Jr.)
</TABLE>
By: /s/ Ronald H. Ridgway
------------------------------------
Ronald H. Ridgway*
attorney-in-fact
53
<PAGE> 55
PULITZER PUBLISHING COMPANY
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C>
10.8.1 Amendment, dated January 28, 1997, to Pulitzer Retirement
Savings Plan
10.8.2 Amendment, dated October 30, 1996, to Pulitzer Retirement
Savings Plan
10.8.3 Amendment, dated July 31, 1996, to Pulitzer Retirement
Savings Plan
10.8.4 Amendment, dated October 25, 1995, to Pulitzer Retirement
Savings Plan
10.10.1 Amendment, dated October 25, 1995, to Pulitzer Publishing
Company Pension Plan
10.28 Split Dollar Life Insurance Agreement, dated December 27,
1996, between Pulitzer Publishing Company and Richard A.
Palmer, Trustee of the Michael E. Pulitzer 1996 Life
Insurance Trust
10.29 Split Dollar Life Insurance Agreement, dated December 31,
1996, between Pulitzer Publishing Company and Rose M.
Elkins, Trustee of the Kennie J. Elkins Insurance Trust
10.30 Split Dollar Life Insurance Agreement, dated December 30,
1996, between Pulitzer Publishing Company and Rebecca H.
Penniman and Nicholas G. Penniman V, Trustees of the
Nicholas G. Penniman IV Irrevocable 1996 Trust
10.31 Split Dollar Life Insurance Agreement, dated December 30,
1996, between Pulitzer Publishing Company and Doris D.
Ridgway and Boatmen's Trust Company, Trustees of The Ronald
H. Ridgway InsuranceTrust
10.32 Consulting Agreement, dated May 1, 1996, between Pulitzer
Publishing Company and Glenn A. Christopher
21 Subsidiaries of Registrant
23 Independent Auditors' Consent
24 Power of Attorney
27 Financial Data Schedule
</TABLE>
54
<PAGE> 1
EXHIBIT 10.8.1
AMENDMENT OF THE
PULITZER RETIREMENT SAVINGS PLAN
Pursuant to resolutions adopted on December 18, 1996 and January 28,
1997 by the Board of Directors of Pulitzer Publishing Company, the Pulitzer
Retirement Savings Plan (the "Plan") is hereby amended, effective January 1,
1997, as follows:
1. Section 2.03. of the Plan is amended to read as follows:
"2.03. Special Rule for Pulitzer Community Newspapers, Inc. In
applying the provisions of this Article to Employees of Pulitzer Community
Newspapers, Inc., the following special rules shall apply:
(a) 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.
(b) An individual shall be credited with the period of
service that he or she was credited as of December 31, 1996 for eligibility
under the Scripps League Newspapers Retirement and Savings Plan (401(k))".
2. Section 3.01.(d) of the Plan is deleted in its entirety.
3. Section 6.02 of the Plan is amended by deleting the sentence
that begins immediately after the vesting table set forth in that section and
replacing it with the following:
<PAGE> 2
"In applying the provisions of this Section to Employees of Pulitzer
Newspapers, Inc., and individual shall be credited with the period of service
that he or she was credited as of December 31, 1996 for vesting under the
Scripps League Newspapers Retirement and Savings Plan (401(k))."
4. Schedule A to the Plan is replaced with the revised Schedule A
attached hereto.
5. Schedule B to the Plan is replaced with the revised Schedule B
attached hereto.
January 28, 1997 /s/ Ronald H. Ridgway
- ------------------ -------------------------------
Date Ronald H. Ridgway
Senior Vice President - Finance
<PAGE> 3
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. and WGAL-TV, Inc., Phoenix Broadcasting, Inc.
3. 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.
4. Effective April 1, 1997, (i) all non-union Participants and
(ii) all union Participants (but only to the extent provided under their
collective bargaining agreements) who are employees of Pulitzer Community
Newspapers shall be eligible for Employer Matching Contributions. No
Participant who is an employee of Pulitzer Community Newspapers shall be
eligible for Employer Matching Contributions prior to that date.
- ----------
* Amended through April 1, 1997
<PAGE> 4
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 and Pulitzer Community
Newspapers, Inc.
2. 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>
- -----------------
** Amended through January 1, 1997
<PAGE> 5
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 $30 3/1/88
Firemen & Oilers, Local No. 7 $40 3/1/95
$50 3/1/96
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
EXHIBIT 10.8.2
AMENDMENT
OF
PULITZER RETIREMENT SAVINGS PLAN
Pursuant to a resolution adopted on October 30, 1996 by the Board of
Directors of Pulitzer Publishing Company, the Pulitzer Retirement Savings Plan
(the "Plan") is hereby amended as follows:
1. The first sentence of Section 3.30 of the Plan is revised as follows,
effective January 1, 1997:
Except as otherwise provided in Schedule B annexed hereto, each Employer
will contribute $50 per month ($40 per month effective January 1, 1994
through December 31, 1996 and $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.
PULITZER PUBLISHING COMPANY
10/30/96 /s/ Ronald H. Ridgway
----------- -----------------------
Date 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 $30 3/1/88
Firemen & Oilers, Local No. 7 $40 3/1/95
$50 3/1/96
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
EXHIBIT 10.8.3
AMENDMENT OF THE
PULITZER RETIREMENT SAVINGS PLAN
Pursuant to a resolution adopted on July 31, 1996 by the Board of
Directors of Pulitzer Publishing Company, the Pulitzer Retirement Savings Plan
is hereby amended, effective July 31, 1996, by adding the following to the end
of Article III:
"3.07. Rollover Contributions. Subject to such rules as may be
established by the Administrative Committee, an Employee may make a rollover
contribution to the Trust of (a) part or all of a distribution received from
another employee benefit trust described in Section 401(a) of the Code and
exempt from tax under Section 501(a) of the Code, (b) part or all of a
distribution received from a qualified employee annuity plan described in
Section 403(a)(1) of the Code which meets the requirements of Section 404(a)(2)
of the Code, or (c) the entire amount received (including money and any other
property) from an individual retirement account. Any rollover contribution
must meet the income deferral requirements of Section 402(a)(5), Section
403(a)(4) or Section 408(d)(3) of the Code, as the case may be (including the
requirement that the rollover contribution be made no later than 60 days after
the day on which the Employee received the payment or distribution from
the other plan or account). The Administrative Committee and/or the Trustee may
require an Employee to furnish any relevant information or documentation and to
make any reasonable representations concerning the distribution from the prior
plan or account before deciding whether to accept a rollover contribution. The
amount of a rollover contribution shall be credited to the Employee's Account
and shall equal the sum of the cash plus the fair market value of the property
transferred (subject to the right of the Administrative Committee
<PAGE> 2
or the Trustee to refuse to accept property), determined as of the date the
property is received by the Trustee. For purposes of this section, rollover
contributions shall also include direct rollovers as described in Section
401(a)(31) of the Code."
July 31, 1996 /s/ Ronald H. Ridgway
- ------------- -------------------------
Date Ronald H. Ridgway
Senior Vice President - Finance
<PAGE> 1
EXHIBIT 10.8.4
AMENDMENT I
OF THE
PULITZER RETIREMENT
SAVINGS PLAN
The Pulitzer Retirement Savings Plan (the "Plan") is amended as
follows, effective January 1, 1989.
1. The words "any other Affiliate which adopts the Plan with the
consent of the Board" are deleted from Section 1.11, and the following words
are inserted in lieu thereof:
"any Affiliate or other entity in which the Company has an
ownership interest which thereafter adopts the Plan with the
consent of and subject to such terms and conditions as may be
prescribed by the Board".
2. The second sentence of Section 3.03 of the Plan is deleted and the
following new sentences are inserted in lieu thereof:
"For Participants who are part-time Employees, the monthly
contribution will be determined by multiplying the
contribution which would otherwise be made by a fraction, the
numerator of which is the number of hours of Service credited
to the Participant in the immediately preceding Plan Year and
the denominator of which is 1,950. For purposes of this
Section, a "part-time Employee" is a Participant who is not
expected to complete 1,950 hours of Service in a Plan Year and
who completed less than 1,950 hours of Service in the
immediately preceding Plan Year".
PULITZER PUBLISHING COMPANY
Dated: 10-25-95 By: /s/ Ronald H. Ridgway
--------- -----------------------------
Senior Vice-President of Finance
<PAGE> 1
EXHIBIT 10.10.1
AMENDMENT I
OF THE
PULITZER PUBLISHING COMPANY
PENSION PLAN
The Pulitzer Publishing Company Pension Plan (the "Plan") is amended as
follows.
1. Section 1.02(b) of the Plan is revised in its entirety to read
as follows, effective January 1, 1996:
"(b) for determining lump sum values, mortality rates from the
applicable mortality table prescribed by the Commissioner of
the Internal Revenue Service (which as of April 5, 1995 was the
1983 Group Annuity Mortality Table) and the annual rate of
interest on 30-year Treasury securities as of the fourth
calendar month preceding the first day of the calendar quarter
that includes the Annuity Starting Date for the distribution".
2. The following sentences are added at the end of Section 3.06 of
the Plan, effective January 1, 1989:
"Notwithstanding anything to the contrary contained herein, the
Accrued Benefit of a Participant who, by reason of a change in
employment status, ceases to be an Employee under the Plan and
becomes an active Participant in the Joseph Pulitzer Pension
Plan (or any other defined benefit plan of the Company or an
Affiliate), or vice versa, will be determined without regard to
the period of the Participant's employment with the Company or
an Affiliate during which he or she is or was actively
participating in (i.e., accruing benefits under) the Joseph
Pulitzer Pension Plan (or such other plan). In the case of
any such Participant, the Committee may direct the transfer of
assets and the accrued benefit liability from the Plan to, or
permit the receipt of assets and assumption of accrued benefit
liability from, the Joseph Pulitzer Pension Plan (or such other
plan), subject to the requirements of Section 414(1) of the
Code."
PULITZER PUBLISHING COMPANY
Dated: 10/25/95 By: /S/ Ronald H. Ridgway
-------- ---------------------------
Senior Vice President-Finance
<PAGE> 1
EXHIBIT 10.28
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
This Agreement made and entered into between PULITZER PUBLISHING COMPANY,
a Delaware corporation (the "Corporation"), and Richard A. Palmer, Trustee of
the Michael E. Pulitzer 1996 Life Insurance Trust (the "Trustee").
WHEREAS, the services of Michael E. Pulitzer (the "Employee"), the
Employee's experience and knowledge of the affairs of the Corporation, and the
Employee's reputation and contacts in the business are extremely valuable to
the Corporation;
WHEREAS, the Corporation desires that the Employee remain in its service
and wishes to receive the benefit of the Employee's knowledge, experience,
reputation and contacts;
WHEREAS, the Corporation is willing to encourage the Employee's continued
service to the Corporation by joining with the Trustee for the mutual benefit
of the parties hereto in an investment in life insurance on the life of the
Employee so as to provide life insurance protection for the Employee's family;
WHEREAS, the Trustee will be the owner of the Insurance Policies (as
defined below) on the life of the Employee acquired pursuant to the terms of
this Agreement, and the Corporation's Investment (as defined below) in each
Insurance Policy will be represented by an assignment from the Trustee to the
Corporation of certain ownership rights in the Insurance Policy; and
WHEREAS, this Agreement is intended to qualify as a life insurance
employee benefit plan as described in Rev. Rul. 64-328, 1964-2 CB 11.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the Corporation and the Trustee hereby agree
as follows:
ARTICLE I
Definitions
A. "Agreement" means this Agreement, as it may be amended from time to
time.
1.2 "Corporation's Investment" means the interest of the Corporation in an
Insurance Policy, as defined in Section 4.1 of the Agreement.
1.3 "Insurance Policies" means the policy or policies shown on the
attached Exhibit A, together with any other policies that may be added to this
Agreement.
1.4 "Insurer" means the insurance company issuing an Insurance Policy
subject to this Agreement.
<PAGE> 2
1.5 "Trust" means the trust or trusts created by that certain instrument
dated December 17, 1996, between Michael E. Pulitzer, as Grantor, and Richard
A. Palmer, as Trustee.
ARTICLE II
Insurance Policies
2.1 The Trustee has purchased insurance on the life of the Employee, for
the benefit of the Trust, under the Insurance Policies and in the amounts shown
on Exhibit A.
ARTICLE III
Premium Payments and Death Benefits
3.1 Subject to the provisions hereof, the Corporation shall pay the actual
premium required to keep each Insurance Policy in force on or before the due
date of the premium payment. The Corporation, in its discretion, may make a
premium payment with respect to each Insurance Policy in an amount greater than
the required amount, provided that such payment will not result in the
Insurance Policy's failing to meet the definition of a life insurance contract
under Section 7702 of the Internal Revenue Code of 1986, as amended.
3.2 The Trustee will elect Death Benefit Option 2 for each Insurance
Policy and may not change the election without the prior written consent of the
Corporation.
ARTICLE IV
Corporation's Investment
4.1 The Corporation's Investment in each Insurance Policy shall be the
greater of (a) the cash surrender value of the Insurance Policy or (b) the sum
of the amounts paid by the Corporation as premiums on the Insurance Policy
reduced by the sum of any withdrawals from the Insurance Policy by the
Corporation; provided, however, that the Corporation's Investment as determined
by this section shall be reduced by the sum of (i) the amount of any
indebtedness which may exist against the Insurance Policy and (ii) the amount
of any unpaid interest on such indebtedness.
4.2 The Trustee will collaterally assign each Insurance Policy acquired
pursuant to the terms of this Agreement to the Corporation as evidence of the
Corporation's Investment. Each collateral assignment will be in substantially
the form attached hereto as Exhibit B and will not be altered or changed
without the prior written consent of the Corporation.
4.3 The Corporation is prohibited from taking any action with respect to
each Insurance Policy which would endanger either the interest of the Trustee
therein or the payment of proceeds in excess of the Corporation's Investment to
any beneficiary designated by the Trustee upon the Employee's death.
<PAGE> 3
The Corporation is specifically prohibited from surrendering the Insurance
Policies for cancellation except as provided in section 6.2 hereof. However,
the Corporation is specifically authorized to borrow against or pledge the
Insurance Policies, to direct the investments of the cash values of the
Insurance Policies in accordance with the provisions thereof and to withdraw
funds from the Insurance Policies; provided, however, that if the loans or
withdrawals from the Insurance Policies result in the Trustee's being liable
for income taxes, the Corporation shall pay to the Trustee the amount of such
income taxes.
4.4 The Trustee specifically has the power to assign all rights of the
Trustee in the Insurance Policies and under this Agreement, change the
beneficiary designations of the Insurance Policies and exercise settlement
options under the Insurance Policies. In the event of an assignment, the
assignee shall possess all of the rights and obligations of the Trustee in the
Insurance Policies and under this Agreement. The Trustee has all rights to the
Insurance Policies not specifically granted to the Corporation by this
Agreement, except that the Insurance Policies may not be surrendered nor the
death benefit option be changed without the prior written consent of the
Corporation.
4.5 The Trustee shall have the right, exercisable from time to time
without the consent of the Corporation, to reduce the death benefit of the
Insurance Policies, provided that any reduction shall be made in accordance
with the provisions of each Insurance Policy, including, without limitation,
the requirement that the face amount of the Insurance Policy which remains
after the reduction shall be equal to or greater than the minimum face amount
determined in accordance with the Table of Minimum Face Amount Percentages
set forth in the Insurance Policy.
ARTICLE V
Termination
5.1 This Agreement shall terminate only upon the happening of any one of
the following events: (a) mutual consent of the Corporation and the Trustee;
(b) termination of employment of the Employee for any reason other than (i)
retirement on or after age 65, (ii) retirement on or after age 62 upon at least
four months prior written notice to, and with the prior written consent of, the
Corporation, (iii) disability, or (iv) death; (c) delivery by the Trustee to
the Corporation of written notice of termination; (d) surrender of all of the
Insurance Policies with the consent of both the Corporation and the Trustee;
and (e) payment in full to the Corporation at any time of the Corporation's
Investment in each Insurance Policy, and upon such payment the Corporation
shall release the collateral assignment(s) and deliver the Insurance Policies
to the Trustee.
<PAGE> 4
ARTICLE VI
Termination of Corporation's Investment
6.1 Upon the death of the Employee, the Corporation shall receive from the
proceeds of each Insurance Policy payable upon such death the full amount of
the Corporation's Investment in such Insurance Policy. The balance of the
proceeds of such Insurance Policy shall be paid (a) to the beneficiary or
beneficiaries designated by the Trustee, or (b) if no such beneficiary has been
designated, to the Trust.
6.2 In the event of the termination of this Agreement under Article V
(except as provided in section 5.1(e) of Article V), the Trustee shall have 90
days in which to pay to the Corporation an amount equal to the sum of the
Corporation's Investment in each Insurance Policy. Upon the payment of such
amount, the Corporation shall release the collateral assignment(s) of the
Insurance Policies. If the Trustee does not pay such amount to the Corporation
within the 90 day period, (a) the Corporation may surrender such Insurance
Policies without the consent of the Trustee or (b) the Trustee may transfer
ownership of the Insurance Policies to the Corporation, in either event
discharging in full the obligation of the Trustee to pay to the Corporation an
amount equal to the sum of the Corporation's Investment in each Insurance
Policy and terminating all rights of the Trustee to the Insurance Policies
under this Agreement.
ARTICLE VII
Insurers
7.1 The Insurer issuing an Insurance Policy shall not be deemed to be a
party to this Agreement for any purpose or responsible in any way for its
validity or enforcement. The Insurer shall not be obligated to inquire as to
the distribution or application of any monies payable or paid by the Insurer
under the Insurance Policy if the Insurer makes appropriate payment or
otherwise performs its contractual obligations in accordance with the terms of
the Insurance Policy. The Insurer shall be bound only by the provisions of,
and endorsements to, the Insurance Policy. Any payments made or actions taken
by the Insurer in accordance with the Insurance Policy shall fully discharge
the Insurer from liability.
ARTICLE VIII
Amendments and Binding Effect
8.1 This Agreement shall not be modified or amended except by a written
instrument signed by the Corporation and the Trustee. This Agreement shall be
binding upon and inure to the benefit of the assigns and the successors of the
parties to this Agreement.
8.2 The provisions of this Agreement shall be construed and enforced
according to the laws of the State of Delaware.
<PAGE> 5
ARTICLE IX
Miscellaneous
9.1 The Corporation is the named fiduciary of the plan established by this
Agreement (the "Plan") for purposes of the Employee Retirement Income Security
Act of 1974, as amended, and shall have the authority to control and manage the
operation and administration of the Plan.
9.2 The funding policy of the Plan will be through premium payments to the
Insurer pursuant to this Agreement.
9.3 The basis of payments from the Plan will consist of payments by the
Insurer in accordance with each Insurance Policy.
9.4 If for any reason a claim for benefits under the Plan is denied, the
Corporation shall deliver to the claimant a written explanation setting forth
the specific reasons for the denial, pertinent references to the Plan section
on which the denial is based, such other data as may be pertinent and
information on the procedures to be followed by the claimant in obtaining a
review of his claim, all written in a manner calculated to be understood by the
claimant. For this purpose:
(a) the claimant's claim shall be deemed filed when presented
orally or in writing to the Corporation.
(b) the Corporation's explanation shall be in writing delivered
to the claimant within 90 days of the date the claim is filed.
The claimant shall have 60 days following his receipt of the denial of the
claim to file with the Corporation a written request for review of the denial.
For such review, the claimant or his representative may submit pertinent
documents and written issues and comments.
9.5 The Corporation shall decide the issue on review and furnish the
claimant with a copy within 60 days of receipt of the claimant's request for
review of his claim. The decision on review shall be in writing and shall
include specific reasons for the decision, written in a manner calculated to be
understood by the claimant, as well as specific references to the pertinent
Plan provisions on which the decision is based. If a copy of the decision is
not so furnished to the claimant within such 60 days, the claim shall be deemed
denied on review.
<PAGE> 6
ARTICLE X
Notice
10.1 All Notices which are required by or may be given pursuant to the
terms of this Agreement must be in writing and must be delivered personally,
sent by certified mail, return receipt requested, first-class, postage prepaid,
or sent for next business day delivery by a nationally recognized overnight
delivery serve as follows:
If to Corporation: Pulitzer Publishing Company
Attn: James V. Maloney
900 North Tucker Boulevard
St. Louis, Missouri 63101
If to Trustee: Richard A. Palmer, Trustee
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10021
Any of the addresses or addresses set forth above may be changed from time to
time by written notice from the party requesting the change. Such notices and
other communications will for all purposes of this Agreement be treated as
being effective immediately if delivered personally, or five days after mailing
by certified mail, return receipt requested, first-class postage prepaid, or
one business day after deposit for next business day delivery by a nationally
recognized overnight delivery service.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
27th day of December, 1996.
PULITZER PUBLISHING COMPANY
By /s/ James M. Vogelpohl
----------------------------
Name: James M. Vogelpohl
Title: Treasurer
MICHAEL E. PULITZER 1996 LIFE INSURANCE
TRUST
By /s/ Richard A. Palmer
---------------------------
Richard A. Palmer
Trustee
<PAGE> 7
EXHIBIT A
The policy or policies covered by the foregoing Split Dollar Life
Insurance Agreement between Pulitzer Publishing Company and Richard A. Palmer,
Trustee, include the following:
Insurer Policy No. Initial Face Amount
- -------- ---------- -------------------
Massachusetts Mutual Life
Insurance Company 0025511 $5,000,000.00
EXECUTED this 27th day of December, 1996.
PULITZER PUBLISHING COMPANY
By /s/ James M. Vogelpohl
---------------------------
Name: James M. Vogelpohl
Title: Treasurer
MICHAEL E. PULITZER 1996 INSURANCE TRUST
By /s/ Richard A. Palmer
--------------------------
Name: Richard A. Palmer
Title: Trustee
<PAGE> 8
EXHIBIT B
SPLIT DOLLAR COLLATERAL ASSIGNMENT
Issuing Company: Massachusetts Mutual Life Insurance Company ("Insurer")
Policy No.: 0025511 ("Policy")
--------------------------------------------
Insured: Michael E. Pulitzer ("Insured")
--------------------------------------------
Owner/Assignor: Richard A. Palmer, Trustee under the Michael E. Pulitzer
1996 Insurance Trust
("Assignor")
Assignee: Pulitzer Publishing Company ("Assignee")
RECITALS
A. The Assignor desires to assign to the Assignee a collateral interest in
the Policy as collateral for certain liabilities of the Assignor to the
Assignee pursuant to the Split-Dollar Life Insurance Agreement between the
Assignor and the Assignee (the "Split Dollar Agreement") regarding the Policy
in accordance with Rev. Rul. 64-328, 1964-2 CB 11.
B. The Assignee, by accepting this Assignment, agrees to the terms and
conditions hereof.
ASSIGNMENT
1. FOR VALUE RECEIVED, the Assignor hereby assigns, transfers
and sets over to the Assignee, its successors and assigns, a
collateral interest in and to the Policy, subject to all of the terms
and conditions of the Policy and to all superior liens, if any, which
the Insurer may have against the Policy.
2. (a) It is expressly agreed that the Assignee's collateral
interest in the Policy shall be strictly limited to the following:
(1) Upon surrender of the Policy, the right to obtain
the whole of the surrender proceeds payable under the terms of
the Policy (taking into account any outstanding Policy loan).
(2) Upon the death of the Insured, the right to obtain
that portion of the death proceeds as is equal to the greater of
the Aggregate Premiums Paid (as hereinafter defined) or the
surrender proceeds payable under the terms of the Policy (taking
into account any outstanding Policy loan).
(b) For the purposes of this Assignment, the Aggregate
Premiums Paid at any time equals the then cumulative net premiums paid
by the Assignee under the Policy reduced by the sum of (i) any
indebtedness which may exist against the Policy, (ii) any unpaid
interest on such indebtedness and (iii) any withdrawals from the
Policy; provided, however, that Aggregate Premiums Paid shall not
include premiums waived pursuant to the terms of any disability waiver
of premiums rider to the Policy.
3. Notwithstanding any other provision of this Assignment, the
Assignee shall have the right to make loans on the Policy, to allocate
net premiums among the Guaranteed Principal Account (as defined in the
Policy) and the divisions of the Separate Account (as defined in the
Policy), to make transfers of values among the Guaranteed Principal
Account and the divisions of the Separate Account, and to make
withdrawals but not in excess of the then cash surrender value of the
Policy. If the Split Dollar Agreement is terminated at any time
(other than in accordance with Section 5.1(e) of Article V of the
Split Dollar Agreement) and if the Assignee is not paid an amount
equal to its collateral interest in the Policy
<PAGE> 9
within 90 days thereafter, the Assignee may surrender the Policy
without the consent of the Assignor.
4. Subject to paragraph 3 above, all other rights and
interests in the Policy, including, but not limited to, the right
to surrender the Policy, the right to designate the beneficiary
of the death proceeds under the Policy in excess of the
Assignee's collateral interest and the right to reduce the death
benefit in accordance with Section 4.5 of Article IV of the Split
Dollar Agreement, shall be retained by the Assignor, except the
Assignor shall not have the right to make loans on the Policy,
transfers of values among the Guaranteed Principal Account and
divisions of the Separate Account or withdrawals from the Policy
and the Assignor may surrender the Policy or change the death
benefit option only with the consent of the Assignee.
5. The Insurer is hereby authorized to recognize the
claims of the Assignee hereunder without any investigation
thereof, or giving notice to anyone, including the Assignor, and
the Insurer shall not be responsible for the application by the
Assignee of any amounts paid by the Insurer. The signature of
the Assignee alone shall be sufficient for the exercise of its
rights under the Policy assigned hereby, and the receipt of the
Assignee for any sums received by it shall be a full discharge
and release of the Insurer therefor.
6. The Assignor declares that there are no proceedings
in bankruptcy pending against the Assignor and that the
Assignor's property is not subject to any assignment for the
benefit of creditors.
7. While this Assignment is in force, the Assignor
directs that all premium notices be sent to the Assignee at the
address furnished by the Assignee.
8. All provisions of this Assignment shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
Signed at New York, New York on December 27, 1996 .
---------------------- --------------------
(City and State) (Date)
MICHAEL E. PULITZER 1996 INSURANCE TRUST
[Assignor]
By: /s/ Richard A. Palmer
--------------------------
Name: Richard A. Palmer
Title: Trustee
ACCEPTANCE OF ASSIGNMENT
Date: December 27, 1996
-----------------
PULITZER PUBLISHING COMPANY
[Assignee]
By: /s/ James M. Vogelpohl
-----------------------
Name: James M. Vogelpohl
Title: Treasurer
<PAGE> 1
EXHIBIT 10.29
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
This Agreement made and entered into between PULITZER PUBLISHING COMPANY,
a Delaware corporation (the "Corporation"), and Rose M. Elkins, Trustee of the
Kennie J. Elkins Insurance Trust (the "Trustee").
WHEREAS, the services of Ken J. Elkins (the "Employee"), the Employee's
experience and knowledge of the affairs of the Corporation, and the Employee's
reputation and contacts in the business are extremely valuable to the
Corporation;
WHEREAS, the Corporation desires that the Employee remain in its service
and wishes to receive the benefit of the Employee's knowledge, experience,
reputation and contacts;
WHEREAS, the Corporation is willing to encourage the Employee's continued
service to the Corporation by joining with the Trustee for the mutual benefit
of the parties hereto in an investment in life insurance on the life of the
Employee so as to provide life insurance protection for the Employee's family;
WHEREAS, the Trustee will be the owner of the Insurance Policies (as
defined below) on the life of the Employee acquired pursuant to the terms of
this Agreement, and the Corporation's Investment (as defined below) in each
Insurance Policy will be represented by an assignment from the Trustee to the
Corporation of certain ownership rights in the Insurance Policy; and
WHEREAS, this Agreement is intended to qualify as a life insurance
employee benefit plan as described in Rev. Rul. 64-328, 1964-2 CB 11.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the Corporation and the Trustee hereby agree
as follows:
ARTICLE I
Definitions
A. "Agreement" means this Agreement, as it may be amended from time to
time.
1.2 "Corporation's Investment" means the interest of the Corporation in an
Insurance Policy, as defined in Section 4.1 of the Agreement.
1.3 "Insurance Policies" means the policy or policies shown on the
attached Exhibit A, together with any other policies that may be added to this
Agreement.
1.4 "Insurer" means the insurance company issuing an Insurance Policy
subject to this Agreement.
1.5 "Trust" means the trust or trusts created by that certain instrument
dated July 21, 1987, between Kennie J. Elkins, as Grantor, and Rose M. Elkins,
as Trustee.
<PAGE> 2
ARTICLE II
Insurance Policies
2.1 The Trustee has purchased insurance on the life of the Employee, for
the benefit of the Trust, under the Insurance Policies and in the amounts shown
on Exhibit A.
ARTICLE III
Premium Payments and Death Benefits
3.1 Subject to the provisions hereof, the Corporation shall pay the actual
premium required to keep each Insurance Policy in force on or before the due
date of the premium payment. The Corporation, in its discretion, may make a
premium payment with respect to each Insurance Policy in an amount greater than
the required amount, provided that such payment will not result in the
Insurance Policy's failing to meet the definition of a life insurance contract
under Section 7702 of the Internal Revenue Code of 1986, as amended.
3.2 The Trustee will elect Death Benefit Option 2 for each Insurance
Policy and may not change the election without the prior written consent of the
Corporation.
ARTICLE IV
Corporation's Investment
4.1 The Corporation's Investment in each Insurance Policy shall be the
greater of (a) the cash surrender value of the Insurance Policy or (b) the sum
of the amounts paid by the Corporation as premiums on the Insurance Policy
reduced by the sum of any withdrawals from the Insurance Policy by the
Corporation; provided, however, that the Corporation's Investment as determined
by this section shall be reduced by the sum of (i) the amount of any
indebtedness which may exist against the Insurance Policy and
(ii) the amount of any unpaid interest on such indebtedness.
4.2 The Trustee will collaterally assign each Insurance Policy acquired
pursuant to the terms of this Agreement to the Corporation as evidence of the
Corporation's Investment. Each collateral assignment will be in substantially
the form attached hereto as Exhibit B and will not be altered or changed
without the prior written consent of the Corporation.
4.3 The Corporation is prohibited from taking any action with respect to
each Insurance Policy which would endanger either the interest of the Trustee
therein or the payment of proceeds in excess of the Corporation's Investment to
any beneficiary designated by the Trustee upon the Employee's death. The
Corporation is specifically prohibited from surrendering the Insurance Policies
for cancellation except as provided in section 6.2 hereof. However, the
Corporation is specifically authorized to borrow against or pledge the
Insurance Policies, to direct the investments of the cash values of the
Insurance Policies in
<PAGE> 3
accordance with the provisions thereof and to withdraw funds from the Insurance
Policies; provided, however, that if the loans or withdrawals from the
Insurance Policies result in the Trustee's being liable for income taxes, the
Corporation shall pay to the Trustee the amount of such income taxes.
4.4 The Trustee specifically has the power to assign all rights of the
Trustee in the Insurance Policies and under this Agreement, change the
beneficiary designations of the Insurance Policies and exercise settlement
options under the Insurance Policies. In the event of an assignment, the
assignee shall possess all of the rights and obligations of the Trustee in the
Insurance Policies and under this Agreement. The Trustee has all rights to the
Insurance Policies not specifically granted to the Corporation by this
Agreement, except that the Insurance Policies may not be surrendered nor the
death benefit option be changed without the prior written consent of the
Corporation.
4.5 The Trustee shall have the right, exercisable from time to time
without the consent of the Corporation, to reduce the death benefit of the
Insurance Policies, provided that any reduction shall be made in accordance
with the provisions of each Insurance Policy, including, without limitation,
the requirement that the face amount of the Insurance Policy which remains
after the reduction shall be equal to or greater than the minimum face amount
determined in accordance with the Table of Minimum Face Amount Percentages set
forth in the Insurance Policy.
ARTICLE V
Termination
5.1 This Agreement shall terminate only upon the happening of any one of
the following events: (a) mutual consent of the Corporation and the Trustee;
(b) termination of employment of the Employee for any reason other than (i)
retirement on or after age 65, (ii) retirement on or after age 62 upon at least
four months prior written notice to, and with the prior written consent of, the
Corporation, (iii) disability, or (iv) death; (c) delivery by the Trustee to
the Corporation of written notice of termination; (d) surrender of all of the
Insurance Policies with the consent of both the Corporation and the Trustee;
and (e) payment in full to the Corporation at any time of the Corporation's
Investment in each Insurance Policy, and upon such payment the Corporation
shall release the collateral assignment(s) and deliver the Insurance Policies
to the Trustee.
ARTICLE VI
Termination of Corporation's Investment
6.1 Upon the death of the Employee, the Corporation shall receive from the
proceeds of each Insurance Policy payable upon such death the full amount of
the Corporation's Investment in such Insurance Policy. The balance of the
proceeds of such Insurance Policy shall be paid (a) to the beneficiary or
beneficiaries designated by the Trustee, or (b) if no such beneficiary has been
designated, to the Trust.
<PAGE> 4
6.2 In the event of the termination of this Agreement under Article V
(except as provided in section 5.1(e) of Article V), the Trustee shall have 90
days in which to pay to the Corporation an amount equal to the sum of the
Corporation's Investment in each Insurance Policy. Upon the payment of such
amount, the Corporation shall release the collateral assignment(s) of the
Insurance Policies. If the Trustee does not pay such amount to the Corporation
within the 90 day period, (a) the Corporation may surrender such Insurance
Policies without the consent of the Trustee or (b) the Trustee may transfer
ownership of the Insurance Policies to the Corporation, in either event
discharging in full the obligation of the Trustee to pay to the Corporation an
amount equal to the sum of the Corporation's Investment in each Insurance
Policy and terminating all rights of the Trustee to the Insurance Policies
under this Agreement.
ARTICLE VII
Insurers
7.1 The Insurer issuing an Insurance Policy shall not be deemed to be a
party to this Agreement for any purpose or responsible in any way for its
validity or enforcement. The Insurer shall not be obligated to inquire as to
the distribution or application of any monies payable or paid by the Insurer
under the Insurance Policy if the Insurer makes appropriate payment or
otherwise performs its contractual obligations in accordance with the terms of
the Insurance Policy. The Insurer shall be bound only by the provisions of,
and endorsements to, the Insurance Policy. Any payments made or actions taken
by the Insurer in accordance with the Insurance Policy shall fully discharge
the Insurer from liability.
ARTICLE VIII
Amendments and Binding Effect
8.1 This Agreement shall not be modified or amended except by a written
instrument signed by the Corporation and the Trustee. This Agreement shall be
binding upon and inure to the benefit of the assigns and the successors of the
parties to this Agreement.
8.2 The provisions of this Agreement shall be construed and enforced
according to the laws of the State of Delaware.
ARTICLE IX
Miscellaneous
9.1 The Corporation is the named fiduciary of the plan established by this
Agreement (the "Plan") for purposes of the Employee Retirement Income Security
Act of 1974, as amended, and shall have the authority to control and manage the
operation and administration of the Plan.
<PAGE> 5
9.2 The funding policy of the Plan will be through premium payments to the
Insurer pursuant to this Agreement.
9.3 The basis of payments from the Plan will consist of payments by the
Insurer in accordance with each Insurance Policy.
9.4 If for any reason a claim for benefits under the Plan is denied, the
Corporation shall deliver to the claimant a written explanation setting forth
the specific reasons for the denial, pertinent references to the Plan section
on which the denial is based, such other data as may be pertinent and
information on the procedures to be followed by the claimant in obtaining a
review of his claim, all written in a manner calculated to be understood by the
claimant. For this purpose:
(a) the claimant's claim shall be deemed filed when presented
orally or in writing to the Corporation.
(b) the Corporation's explanation shall be in writing delivered
to the claimant within 90 days of the date the claim is filed.
The claimant shall have 60 days following his receipt of the denial of the
claim to file with the Corporation a written request for review of the denial.
For such review, the claimant or his representative may submit pertinent
documents and written issues and comments.
9.5 The Corporation shall decide the issue on review and furnish the
claimant with a copy within 60 days of receipt of the claimant's request for
review of his claim. The decision on review shall be in writing and shall
include specific reasons for the decision, written in a manner calculated to be
understood by the claimant, as well as specific references to the pertinent
Plan provisions on which the decision is based. If a copy of the decision is
not so furnished to the claimant within such 60 days, the claim shall be deemed
denied on review.
<PAGE> 6
ARTICLE X
Notice
10.1 All Notices which are required by or may be given pursuant to the
terms of this Agreement must be in writing and must be delivered personally,
sent by certified mail, return receipt requested, first-class, postage prepaid,
or sent for next business day delivery by a nationally recognized overnight
delivery serve as follows:
If to Corporation: Pulitzer Publishing Company
Attn: James V. Maloney
900 North Tucker Boulevard
St. Louis, Missouri 63101
If to Trustee: Rose M. Elkins, Trustee
720 Twin Fawns
St. Louis, MO 63131
Any of the addresses or addresses set forth above may be changed from time to
time by written notice from the party requesting the change. Such notices and
other communications will for all purposes of this Agreement be treated as
being effective immediately if delivered personally, or five days after mailing
by certified mail, return receipt requested, first-class postage prepaid, or
one business day after deposit for next business day delivery by a nationally
recognized overnight delivery service.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
31st day of December, 1996.
PULITZER PUBLISHING COMPANY
By /s/ James M. Vogelpohl
-----------------------------
Name: James M. Vogelpohl
Title: Treasurer
KENNIE J. ELKINS INSURANCE TRUST
By /s/ Rose M. Elkins
-----------------------------
Rose M. Elkins
Trustee
<PAGE> 7
EXHIBIT A
The policy or policies covered by the foregoing Split Dollar Life
Insurance Agreement between Pulitzer Publishing Company and Rose M. Elkins,
Trustee, include the following:
<TABLE>
<CAPTION>
Insurer Policy No. Initial Face Amount
- -------- ---------- -------------------
<S> <C> <C>
Massachusetts Mutual Life 0025509
Insurance Company $3,900,00.00
</TABLE>
EXECUTED this 31st day of December, 1996.
PULITZER PUBLISHING COMPANY
By /s/ James M. Vogelpohl
-----------------------------
Name: James M. Vogelpohl
Title: Treasurer
KENNIE J. ELKINS INSURANCE TRUST
By /s/ Rose M. Elkins
-----------------------------
Name: Rose M. Elkins
Title: Trustee
<PAGE> 8
EXHIBIT B
SPLIT DOLLAR COLLATERAL ASSIGNMENT
Issuing Company: Massachusetts Mutual Life Insurance Company ("Insurer")
Policy No.: 0025509 ("Policy")
--------------------------------------
Insured: Ken J. Elkins ("Insured")
--------------------------------------
Owner/Assignor: Rose M. Elkins, Trustee under the Kennie J. Elkins
Insurance Trust ("Assignor")
Assignee: Pulitzer Publishing Company ("Assignee")
RECITALS
A. The Assignor desires to assign to the Assignee a collateral interest in
the Policy as collateral for certain liabilities of the Assignor to the
Assignee pursuant to the Split-Dollar Life Insurance Agreement between the
Assignor and the Assignee (the "Split Dollar Agreement") regarding the Policy
in accordance with Rev. Rul. 64-328, 1964-2 CB 11.
B. The Assignee, by accepting this Assignment, agrees to the terms and
conditions hereof.
ASSIGNMENT
1. FOR VALUE RECEIVED, the Assignor hereby assigns,
transfers and sets over to the Assignee, its successors and
assigns, a collateral interest in and to the Policy, subject
to all of the terms and conditions of the Policy and to all
superior liens, if any, which the Insurer may have against
the Policy.
2. (a) It is expressly agreed that the Assignee's
collateral interest in the Policy shall be strictly limited
to the following:
(1) Upon surrender of the Policy, the right
to obtain the whole of the surrender proceeds
payable under the terms of the Policy (taking
into account any outstanding Policy loan).
(2) Upon the death of the Insured, the
right to obtain that portion of the death
proceeds as is equal to the greater of the
Aggregate Premiums Paid (as hereinafter defined)
or the surrender proceeds payable under the
terms of the Policy (taking into account any
outstanding Policy loan).
(b) For the purposes of this Assignment, the Aggregate
Premiums Paid at any time equals the then cumulative net
premiums paid by the Assignee under the Policy reduced by
the sum of (i) any indebtedness which may exist against the
Policy, (ii) any unpaid interest on such indebtedness and
(iii) any withdrawals from the Policy; provided, however,
that Aggregate Premiums Paid shall not include premiums
waived pursuant to the terms of any disability waiver of
premiums rider to the Policy.
3. Notwithstanding any other provision of this
Assignment, the Assignee shall have the right to make loans
on the Policy, to allocate net premiums among the Guaranteed
Principal Account (as defined in the Policy) and the divisions
of the Separate Account (as defined in the Policy), to make
transfers of values among the Guaranteed Principal Account
and the divisions of the Separate Account, and to make
withdrawals but not in excess of the then cash surrender value
of the Policy. If the Split Dollar Agreement is terminated at
any time (other than in accordance with Section 5.1(e) of
Article V of the Split Dollar Agreement) and if the Assignee
is not paid an amount equal to its collateral interest in the
Policy within 90 days thereafter, the Assignee may surrender
the Policy without the consent of the Assignor.
<PAGE> 9
4. Subject to paragraph 3 above, all other rights and
interests in the Policy, including, but not limited to, the
right to surrender the Policy, the right to designate the
beneficiary of the death proceeds under the Policy in excess
of the Assignee's collateral interest and the right to
reduce the death benefit in accordance with Section 4.5 of
Article IV of the Split Dollar Agreement, shall be retained
by the Assignor, except the Assignor shall not have the
right to make loans on the Policy, transfers of values among
the Guaranteed Principal Account and divisions of the
Separate Account or withdrawals from the Policy and the
Assignor may surrender the Policy or change the death
benefit option only with the consent of the Assignee.
5. The Insurer is hereby authorized to recognize the
claims of the Assignee hereunder without any investigation
thereof, or giving notice to anyone, including the Assignor,
and the Insurer shall not be responsible for the application
by the Assignee of any amounts paid by the Insurer. The
signature of the Assignee alone shall be sufficient for the
exercise of its rights under the Policy assigned hereby, and
the receipt of the Assignee for any sums received by it
shall be a full discharge and release of the Insurer
therefor.
6. The Assignor declares that there are no proceedings
in bankruptcy pending against the Assignor and that the
Assignor's property is not subject to any assignment for the
benefit of creditors.
7. While this Assignment is in force, the Assignor
directs that all premium notices be sent to the Assignee at
the address furnished by the Assignee.
8. All provisions of this Assignment shall be binding
upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
Signed at St. Louis, MO on 12-31-96 .
------------------ --------------------
(City and State) (Date)
KENNIE J. ELKINS INSURANCE TRUST
[Assignor]
By: /s/ Rose M. Elkins
-----------------------------
Name: Rose M. Elkins
Title: Trustee
ACCEPTANCE OF ASSIGNMENT
Date: December 31, 1996
--------------------------------
PULITZER PUBLISHING COMPANY
[Assignee]
By: /s/ James M. Vogelpohl
-----------------------------
Name: James M. Vogelpohl
Title: Treasurer
<PAGE> 1
EXHIBIT 10.30
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
This Agreement made and entered into between PULITZER PUBLISHING COMPANY,
a Delaware corporation (the "Corporation"), and Rebecca H. Penniman and
Nicholas G. Penniman V, Trustees of the Nicholas G. Penniman IV Irrevocable
1996 Trust (collectively, the "Trustee").
WHEREAS, the services of Nicholas G. Penniman IV (the "Employee"), the
Employee's experience and knowledge of the affairs of the Corporation, and the
Employee's reputation and contacts in the business are extremely valuable to
the Corporation;
WHEREAS, the Corporation desires that the Employee remain in its service
and wishes to receive the benefit of the Employee's knowledge, experience,
reputation and contacts;
WHEREAS, the Corporation is willing to encourage the Employee's continued
service to the Corporation by joining with the Trustee for the mutual benefit
of the parties hereto in an investment in life insurance on the life of the
Employee so as to provide life insurance protection for the Employee's family;
WHEREAS, the Trustee will be the owner of the Insurance Policies (as
defined below) on the life of the Employee acquired pursuant to the terms of
this Agreement, and the Corporation's Investment (as defined below) in each
Insurance Policy will be represented by an assignment from the Trustee to the
Corporation of certain ownership rights in the Insurance Policy; and
WHEREAS, this Agreement is intended to qualify as a life insurance
employee benefit plan as described in Rev. Rul. 64-328, 1964-2 CB 11.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the Corporation and the Trustee hereby agree
as follows:
ARTICLE I
Definitions
A. "Agreement" means this Agreement, as it may be amended from time to
time.
1.2 "Corporation's Investment" means the interest of the Corporation in an
Insurance Policy, as defined in Section 4.1 of the Agreement.
1.3 "Insurance Policies" means the policy or policies shown on the
attached Exhibit A, together with any other policies that may be added to this
Agreement.
1.4 "Insurer" means the insurance company issuing an Insurance Policy
subject to this Agreement.
1.5 "Trust" means the trust or trusts created by that certain instrument
dated December 17, 1996, between Nicholas G. Penniman IV, Grantor, and Rebecca
H. Penniman and Nicholas G. Penniman V, as Trustees.
<PAGE> 2
ARTICLE II
Insurance Policies
2.1 The Trustee has purchased insurance on the life of the Employee, for
the benefit of the Trust, under the Insurance Policies and in the amounts shown
on Exhibit A.
ARTICLE III
Premium Payments and Death Benefits
3.1 Subject to the provisions hereof, the Corporation shall pay the actual
premium required to keep each Insurance Policy in force on or before the due
date of the premium payment. The Corporation, in its discretion, may make a
premium payment with respect to each Insurance Policy in an amount greater than
the required amount, provided that such payment will not result in the
Insurance Policy's failing to meet the definition of a life insurance contract
under Section 7702 of the Internal Revenue Code of 1986, as amended.
3.2 The Trustee will elect Death Benefit Option 2 for each Insurance
Policy and may not change the election without the prior written consent of the
Corporation.
ARTICLE IV
Corporation's Investment
4.1 The Corporation's Investment in each Insurance Policy shall be the
greater of (a) the cash surrender value of the Insurance Policy or (b) the sum
of the amounts paid by the Corporation as premiums on the Insurance Policy
reduced by the sum of any withdrawals from the Insurance Policy by the
Corporation; provided, however, that the Corporation's Investment as determined
by this section shall be reduced by the sum of (i) the amount of any
indebtedness which may exist against the Insurance Policy and (ii) the amount
of any unpaid interest on such indebtedness.
4.2 The Trustee will collaterally assign each Insurance Policy acquired
pursuant to the terms of this Agreement to the Corporation as evidence of the
Corporation's Investment. Each collateral assignment will be in substantially
the form attached hereto as Exhibit B and will not be altered or changed
without the prior written consent of the Corporation.
4.3 The Corporation is prohibited from taking any action with respect to
each Insurance Policy which would endanger either the interest of the Trustee
therein or the payment of proceeds in excess of the Corporation's Investment to
any beneficiary designated by the Trustee upon the Employee's death. The
Corporation is specifically prohibited from surrendering the Insurance Policies
for cancellation except as provided in section 6.2 hereof. However, the
Corporation is specifically authorized to borrow against or
<PAGE> 3
pledge the Insurance Policies, to direct the investments of the cash
values of the Insurance Policies in accordance with the provisions thereof and
to withdraw funds from the Insurance Policies; provided, however, that if the
loans or withdrawals from the Insurance Policies result in the Trustee's being
liable for income taxes, the Corporation shall pay to the Trustee the amount of
such income taxes.
4.4 The Trustee specifically has the power to assign all rights of the
Trustee in the Insurance Policies and under this Agreement, change the
beneficiary designations of the Insurance Policies and exercise settlement
options under the Insurance Policies. In the event of an assignment, the
assignee shall possess all of the rights and obligations of the Trustee in the
Insurance Policies and under this Agreement. The Trustee has all rights to the
Insurance Policies not specifically granted to the Corporation by this
Agreement, except that the Insurance Policies may not be surrendered nor the
death benefit option be changed without the prior written consent of the
Corporation.
4.5 The Trustee shall have the right, exercisable from time to time
without the consent of the Corporation, to reduce the death benefit of the
Insurance Policies, provided that any reduction shall be made in accordance
with the provisions of each Insurance Policy, including, without limitation,
the requirement that the face amount of the Insurance Policy which remains
after the reduction shall be equal to or greater than the minimum face amount
determined in accordance with the Table of Minimum Face Amount Percentages set
forth in the Insurance Policy.
ARTICLE V
Termination
5.1 This Agreement shall terminate only upon the happening of any one of
the following events: (a) mutual consent of the Corporation and the Trustee;
(b) termination of employment of the Employee for any reason other than (i)
retirement on or after age 65, (ii) retirement on or after age 62 upon at least
four months prior written notice to, and with the prior written consent of, the
Corporation, (iii) disability, or (iv) death; (c) delivery by the Trustee to
the Corporation of written notice of termination; (d) surrender of all of the
Insurance Policies with the consent of both the Corporation and the Trustee;
and (e) payment in full to the Corporation at any time of the Corporation's
Investment in each Insurance Policy, and upon such payment the Corporation
shall release the collateral assignment(s) and deliver the Insurance Policies
to the Trustee.
ARTICLE VI
Termination of Corporation's Investment
6.1 Upon the death of the Employee, the Corporation shall receive from the
proceeds of each Insurance Policy payable upon such death the full amount of
the Corporation's Investment in such Insurance
<PAGE> 4
Policy. The balance of the proceeds of such Insurance Policy shall be
paid (a) to the beneficiary or beneficiaries designated by the Trustee, or (b)
if no such beneficiary has been designated, to the Trust.
6.2 In the event of the termination of this Agreement under Article V
(except as provided in section 5.1(e) of Article V), the Trustee shall have 90
days in which to pay to the Corporation an amount equal to the sum of the
Corporation's Investment in each Insurance Policy. Upon the payment of such
amount, the Corporation shall release the collateral assignment(s) of the
Insurance Policies. If the Trustee does not pay such amount to the Corporation
within the 90 day period, (a) the Corporation may surrender such Insurance
Policies without the consent of the Trustee or (b) the Trustee may transfer
ownership of the Insurance Policies to the Corporation, in either event
discharging in full the obligation of the Trustee to pay to the Corporation an
amount equal to the sum of the Corporation's Investment in each Insurance
Policy and terminating all rights of the Trustee to the Insurance Policies
under this Agreement.
ARTICLE VII
Insurers
7.1 The Insurer issuing an Insurance Policy shall not be deemed to be a
party to this Agreement for any purpose or responsible in any way for its
validity or enforcement. The Insurer shall not be obligated to inquire as to
the distribution or application of any monies payable or paid by the Insurer
under the Insurance Policy if the Insurer makes appropriate payment or
otherwise performs its contractual obligations in accordance with the terms of
the Insurance Policy. The Insurer shall be bound only by the provisions of,
and endorsements to, the Insurance Policy. Any payments made or actions taken
by the Insurer in accordance with the Insurance Policy shall fully discharge
the Insurer from liability.
ARTICLE VIII
Amendments and Binding Effect
8.1 This Agreement shall not be modified or amended except by a written
instrument signed by the Corporation and the Trustee. This Agreement shall be
binding upon and inure to the benefit of the assigns and the successors of the
parties to this Agreement.
8.2 The provisions of this Agreement shall be construed and enforced
according to the laws of the State of Delaware.
<PAGE> 5
ARTICLE IX
Miscellaneous
9.1 The Corporation is the named fiduciary of the plan established by this
Agreement (the "Plan") for purposes of the Employee Retirement Income Security
Act of 1974, as amended, and shall have the authority to control and manage the
operation and administration of the Plan.
9.2 The funding policy of the Plan will be through premium payments to the
Insurer pursuant to this Agreement.
9.3 The basis of payments from the Plan will consist of payments by the
Insurer in accordance with each Insurance Policy.
9.4 If for any reason a claim for benefits under the Plan is denied, the
Corporation shall deliver to the claimant a written explanation setting forth
the specific reasons for the denial, pertinent references to the Plan section
on which the denial is based, such other data as may be pertinent and
information on the procedures to be followed by the claimant in obtaining a
review of his claim, all written in a manner calculated to be understood by the
claimant. For this purpose:
(a) the claimant's claim shall be deemed filed when presented orally
or in writing to the Corporation.
(b) the Corporation's explanation shall be in writing delivered to
the claimant within 90 days of the date the claim is filed.
The claimant shall have 60 days following his receipt of the denial of the
claim to file with the Corporation a written request for review of the denial.
For such review, the claimant or his representative may submit pertinent
documents and written issues and comments.
9.5 The Corporation shall decide the issue on review and furnish the
claimant with a copy within 60 days of receipt of the claimant's request for
review of his claim. The decision on review shall be in writing and shall
include specific reasons for the decision, written in a manner calculated to be
understood by the claimant, as well as specific references to the pertinent
Plan provisions on which the decision is based. If a copy of the decision is
not so furnished to the claimant within such 60 days, the claim shall be deemed
denied on review.
<PAGE> 6
ARTICLE X
Notice
10.1 All Notices which are required by or may be given pursuant to the
terms of this Agreement must be in writing and must be delivered personally,
sent by certified mail, return receipt requested, first-class, postage prepaid,
or sent for next business day delivery by a nationally recognized overnight
delivery serve as follows:
<TABLE>
<S> <C>
If to Corporation: Pulitzer Publishing Company
Attn: James V. Maloney
900 North Tucker Boulevard
St. Louis, Missouri 63101
If to Trustee: Rebecca H. Penniman, Trustee
2120 Del Norte
St. Louis, MO 63117
and
Nicholas G. Penniman V, Trustee
89 Sudbury Road
Stow, MA 01775
</TABLE>
Any of the addresses or addresses set forth above may be changed from time to
time by written notice from the party requesting the change. Such notices and
other communications will for all purposes of this Agreement be treated as
being effective immediately if delivered personally, or five days after mailing
by certified mail, return receipt requested, first-class postage prepaid, or
one business day after deposit for next business day delivery by a nationally
recognized overnight delivery service.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
30th day of December, 1996.
PULITZER PUBLISHING COMPANY
By /s/ James M. Vogelpohl
--------------------------
Name: James M. Vogelpohl
Title: Treasurer
NICHOLAS G. PENNIMAN IV IRREVOCABLE 1996 TRUST
By /s/ Rebecca H. Penniman
---------------------------
Rebecca H. Penniman
Trustee
By /s/ Nicholas G. Penniman V
---------------------------
Nicholas G. Penniman V
Trustee
<PAGE> 7
EXHIBIT A
The policy or policies covered by the foregoing Split Dollar Life
Insurance Agreement between Pulitzer Publishing Company and Rebecca H. Penniman
and Nicholas G. Penniman V, Trustees, include the following:
<TABLE>
<CAPTION>
Insurer Policy No. Initial Face Amount
- -------- ---------- -------------------
<S> <C> <C>
Massachusetts Mutual Life
Insurance Company 0025510 $3,040,000.00
</TABLE>
EXECUTED this 30th day of December 1996.
PULITZER PUBLISHING COMPANY
By /s/ James M. Vogelpohl
---------------------------------
Name: James M. Vogelpohl
Title: Treasurer
NICHOLAS G. PENNIMAN IV IRREVOCABLE 1996
TRUST
By /s/ Rebecca H. Penniman
----------------------------------
Name: Rebecca H. Penniman
Title: Trustee
By /s/ Nicholas G. Penniman V
-----------------------------------
Name: Nicholas G. Penniman V
Title: Trustee
<PAGE> 8
EXHIBIT B
SPLIT DOLLAR COLLATERAL ASSIGNMENT
<TABLE>
<S> <C>
Issuing Company: Massachusetts Mutual Life Insurance Company ("Insurer")
Policy No.: 0025510 ("Policy")
--------------------------------------------------------------------------------------------------
Insured: Nicholas G. Penniman IV ("Insured")
--------------------------------------------------------------------------------------------------
Owner/Assignor: Rebecca H. Penniman and Nicholas G. Penniman V, Trustees under the Nicholas G. Penniman IV Irrevocable 1996 Trust
("Assignor")
Assignee: Pulitzer Publishing Company ("Assignee")
</TABLE>
RECITALS
A. The Assignor desires to assign to the Assignee a collateral interest in
the Policy as collateral for certain liabilities of the Assignor to the
Assignee pursuant to the Split-Dollar Life Insurance Agreement between the
Assignor and the Assignee (the "Split Dollar Agreement") regarding the Policy
in accordance with Rev. Rul. 64-328, 1964-2 CB 11.
B. The Assignee, by accepting this Assignment, agrees to the terms and
conditions hereof.
ASSIGNMENT
1. FOR VALUE RECEIVED, the Assignor hereby assigns,
transfers and sets over to the Assignee, its successors and
assigns, a collateral interest in and to the Policy, subject
to all of the terms and conditions of the Policy and to all
superior liens, if any, which the Insurer may have against
the Policy.
2. (a) It is expressly agreed that the Assignee's
collateral interest in the Policy shall be strictly limited
to the following:
(1) Upon surrender of the Policy, the
right to obtain the whole of the surrender
proceeds payable under the terms of the Policy
(taking into account any outstanding Policy loan).
(2) Upon the death of the Insured, the
right to obtain that portion of the death
proceeds as is equal to the greater of the
Aggregate Premiums Paid (as hereinafter defined)
or the surrender proceeds payable under the
terms of the Policy (taking into account any
outstanding Policy loan).
(b) For the purposes of this Assignment, the Aggregate
Premiums Paid at any time equals the then cumulative net
premiums paid by the Assignee under the Policy reduced by
the sum of (i) any indebtedness which may exist against the
Policy, (ii) any unpaid interest on such indebtedness and
(iii) any withdrawals from the Policy; provided, however,
that Aggregate Premiums Paid shall not include premiums
waived pursuant to the terms of any disability waiver of
premiums rider to the Policy.
3. Notwithstanding any other provision of this
Assignment, the Assignee shall have the right to make loans
on the Policy, to allocate net premiums among the Guaranteed
Principal Account (as defined in the Policy) and the divisions
of the Separate Account (as defined in the Policy), to make
transfers of values among the Guaranteed Principal Account and
the divisions of the Separate Account, and to make withdrawals
but not in excess of the then cash surrender value of the
Policy. If the Split Dollar Agreement is terminated at any
time (other than in accordance with Section 5.1(e) of Article
V of the Split Dollar Agreement) and if the Assignee is not
paid an amount equal to its collateral interest in the Policy
within 90 days thereafter, the Assignee may surrender the
Policy without the
<PAGE> 9
consent of the Assignor.
4. Subject to paragraph 3 above, all other rights and
interests in the Policy, including, but not limited to, the
right to surrender the Policy, the right to designate the
beneficiary of the death proceeds under the Policy in excess
of the Assignee's collateral interest and the right to
reduce the death benefit in accordance with Section 4.5 of
Article IV of the Split Dollar Agreement, shall be retained
by the Assignor, except the Assignor shall not have the
right to make loans on the Policy, transfers of values among
the Guaranteed Principal Account and divisions of the
Separate Account or withdrawals from the Policy and the
Assignor may surrender the Policy or change the death
benefit option only with the consent of the Assignee.
5. The Insurer is hereby authorized to recognize the
claims of the Assignee hereunder without any investigation
thereof, or giving notice to anyone, including the Assignor,
and the Insurer shall not be responsible for the application
by the Assignee of any amounts paid by the Insurer. The
signature of the Assignee alone shall be sufficient for the
exercise of its rights under the Policy assigned hereby, and
the receipt of the Assignee for any sums received by it
shall be a full discharge and release of the Insurer
therefor.
6. The Assignor declares that there are no proceedings
in bankruptcy pending against the Assignor and that the
Assignor's property is not subject to any assignment for the
benefit of creditors.
7. While this Assignment is in force, the Assignor
directs that all premium notices be sent to the Assignee at
the address furnished by the Assignee.
8. All provisions of this Assignment shall be binding
upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
<TABLE>
<S> <C>
Signed at St. Louis, Missouri on December 30, 1996 .
- ----------------------------------------------------- ---------------------------
(City and State) (Date)
</TABLE>
NICHOLAS G. PENNIMAN IV IRREVOCABLE 1996 TRUST
[Assignor]
By: /s/ Rebecca H. Penniman
-------------------------
Name: Rebecca H. Penniman
Title: Trustee
By: /s/ Nicholas G. Penniman V
-------------------------------
Name: Nicholas G. Penniman V
Title: Trustee
ACCEPTANCE OF ASSIGNMENT
Date: December 30, 1996
PULITZER PUBLISHING COMPANY
[Assignee]
By: /s/ James M. Vogelpohl
-------------------------
Name: James M. Vogelpohl
Title: Treasurer
<PAGE> 1
EXHIBIT 10.31
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
This Agreement made and entered into between PULITZER PUBLISHING COMPANY, a
Delaware corporation (the "Corporation"), and Doris D. Ridgway and Boatmen's
Trust Company, Trustees of The Ronald H. Ridgway Insurance Trust (collectively,
the "Trustee").
WHEREAS, the services of Ronald H. Ridgway (the "Employee"), the Employee's
experience and knowledge of the affairs of the Corporation, and the Employee's
reputation and contacts in the business are extremely valuable to the
Corporation;
WHEREAS, the Corporation desires that the Employee remain in its service
and wishes to receive the benefit of the Employee's knowledge, experience,
reputation and contacts;
WHEREAS, the Corporation is willing to encourage the Employee's continued
service to the Corporation by joining with the Trustee for the mutual benefit of
the parties hereto in an investment in life insurance on the life of the
Employee so as to provide life insurance protection for the Employee's family;
WHEREAS, the Trustee will be the owner of the Insurance Policies (as
defined below) on the life of the Employee acquired pursuant to the terms of
this Agreement, and the Corporation's Investment (as defined below) in each
Insurance Policy will be represented by an assignment from the Trustee to the
Corporation of certain ownership rights in the Insurance Policy; and
WHEREAS, this Agreement is intended to qualify as a life insurance employee
benefit plan as described in Rev. Rul. 64-328, 1964-2 CB 11.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the Corporation and the Trustee hereby agree as
follows:
ARTICLE I
Definitions
A. "Agreement" means this Agreement, as it may be amended from time to
time.
1.2 "Corporation's Investment" means the interest of the Corporation in an
Insurance Policy, as defined in Section 4.1 of the Agreement.
1.3 "Insurance Policies" means the policy or policies shown on the attached
Exhibit A, together with any other policies that may be added to this Agreement.
1.4 "Insurer" means the insurance company issuing an Insurance Policy
subject to this Agreement.
<PAGE> 2
1.5 "Trust" means the trust or trusts created by that certain instrument
dated December 20, 1996, between Ronald H. Ridgway, Grantor, and Doris D.
Ridgway and Boatmen's Trust Company, as Trustees.
ARTICLE II
Insurance Policies
2.1 The Trustee has purchased insurance on the life of the Employee, for
the benefit of the Trust, under the Insurance Policies and in the amounts shown
on Exhibit A.
ARTICLE III
Premium Payments and Death Benefits
3.1 Subject to the provisions hereof, the Corporation shall pay the actual
premium required to keep each Insurance Policy in force on or before the due
date of the premium payment. The Corporation, in its discretion, may make a
premium payment with respect to each Insurance Policy in an amount greater than
the required amount, provided that such payment will not result in the Insurance
Policy's failing to meet the definition of a life insurance contract under
Section 7702 of the Internal Revenue Code of 1986, as amended.
3.2 The Trustee will elect Death Benefit Option 2 for each Insurance Policy
and may not change the election without the prior written consent of the
Corporation.
ARTICLE IV
Corporation's Investment
4.1 The Corporation's Investment in each Insurance Policy shall be the
greater of (a) the cash surrender value of the Insurance Policy or (b) the sum
of the amounts paid by the Corporation as premiums on the Insurance Policy
reduced by the sum of any withdrawals from the Insurance Policy by the
Corporation; provided, however, that the Corporation's Investment as determined
by this section shall be reduced by the sum of (i) the amount of any
indebtedness which may exist against the Insurance Policy and
(ii) the amount of any unpaid interest on such indebtedness.
4.2 The Trustee will collaterally assign each Insurance Policy acquired
pursuant to the terms of this Agreement to the Corporation as evidence of the
Corporation's Investment. Each collateral assignment will be in substantially
the form attached hereto as Exhibit B and will not be altered or changed without
the prior written consent of the Corporation.
4.3 The Corporation is prohibited from taking any action with respect to
each Insurance Policy which would endanger either the interest of the Trustee
therein or the payment of proceeds in excess
<PAGE> 3
of the Corporation's Investment to any beneficiary designated by the Trustee
upon the Employee's death. The Corporation is specifically prohibited from
surrendering the Insurance Policies for cancellation except as provided in
section 6.2 hereof. However, the Corporation is specifically authorized to
borrow against or pledge the Insurance Policies, to direct the investments of
the cash values of the Insurance Policies in accordance with the provisions
thereof and to withdraw funds from the Insurance Policies; provided, however,
that if the loans or withdrawals from the Insurance Policies result in the
Trustee's being liable for income taxes, the Corporation shall pay to the
Trustee the amount of such income taxes.
4.4 The Trustee specifically has the power to assign all rights of the
Trustee in the Insurance Policies and under this Agreement, change the
beneficiary designations of the Insurance Policies and exercise settlement
options under the Insurance Policies. In the event of an assignment, the
assignee shall possess all of the rights and obligations of the Trustee in the
Insurance Policies and under this Agreement. The Trustee has all rights to the
Insurance Policies not specifically granted to the Corporation by this
Agreement, except that the Insurance Policies may not be surrendered nor the
death benefit option be changed without the prior written consent of the
Corporation.
4.5 The Trustee shall have the right, exercisable from time to time without
the consent of the Corporation, to reduce the death benefit of the Insurance
Policies, provided that any reduction shall be made in accordance with the
provisions of each Insurance Policy, including, without limitation, the
requirement that the face amount of the Insurance Policy which remains after the
reduction shall be equal to or greater than the minimum face amount determined
in accordance with the Table of Minimum Face Amount Percentages set forth in the
Insurance Policy.
ARTICLE V
Termination
5.1 This Agreement shall terminate only upon the happening of any one of
the following events: (a) mutual consent of the Corporation and the Trustee; (b)
termination of employment of the Employee for any reason other than (i)
retirement on or after age 65, (ii) retirement on or after age 62 upon at least
four months prior written notice to, and with the prior written consent of, the
Corporation, (iii) disability, or (iv) death; (c) delivery by the Trustee to the
Corporation of written notice of termination; (d) surrender of all of the
Insurance Policies with the consent of both the Corporation and the Trustee; and
(e) payment in full to the Corporation at any time of the Corporation's
Investment in each Insurance Policy, and upon such payment the Corporation shall
release the collateral assignment(s) and deliver the Insurance Policies to the
Trustee.
<PAGE> 4
ARTICLE VI
Termination of Corporation's Investment
6.1 Upon the death of the Employee, the Corporation shall receive from the
proceeds of each Insurance Policy payable upon such death the full amount of the
Corporation's Investment in such Insurance Policy. The balance of the proceeds
of such Insurance Policy shall be paid (a) to the beneficiary or beneficiaries
designated by the Trustee, or (b) if no such beneficiary has been designated, to
the Trust.
6.2 In the event of the termination of this Agreement under Article V
(except as provided in section 5.1(e) of Article V), the Trustee shall have 90
days in which to pay to the Corporation an amount equal to the sum of the
Corporation's Investment in each Insurance Policy. Upon the payment of such
amount, the Corporation shall release the collateral assignment(s) of the
Insurance Policies. If the Trustee does not pay such amount to the Corporation
within the 90 day period, (a) the Corporation may surrender such Insurance
Policies without the consent of the Trustee or (b) the Trustee may transfer
ownership of the Insurance Policies to the Corporation, in either event
discharging in full the obligation of the Trustee to pay to the Corporation an
amount equal to the sum of the Corporation's Investment in each Insurance Policy
and terminating all rights of the Trustee to the Insurance Policies under this
Agreement.
ARTICLE VII
Insurers
7.1 The Insurer issuing an Insurance Policy shall not be deemed to be a
party to this Agreement for any purpose or responsible in any way for its
validity or enforcement. The Insurer shall not be obligated to inquire as to
the distribution or application of any monies payable or paid by the Insurer
under the Insurance Policy if the Insurer makes appropriate payment or otherwise
performs its contractual obligations in accordance with the terms of the
Insurance Policy. The Insurer shall be bound only by the provisions of, and
endorsements to, the Insurance Policy. Any payments made or actions taken by
the Insurer in accordance with the Insurance Policy shall fully discharge the
Insurer from liability.
ARTICLE VIII
Amendments and Binding Effect
8.1 This Agreement shall not be modified or amended except by a written
instrument signed by the Corporation and the Trustee. This Agreement shall be
binding upon and inure to the benefit of the assigns and the successors of the
parties to this Agreement.
8.2 The provisions of this Agreement shall be construed and enforced
according to the laws of the State of Delaware.
<PAGE> 5
ARTICLE IX
Miscellaneous
9.1 The Corporation is the named fiduciary of the plan established by this
Agreement (the "Plan") for purposes of the Employee Retirement Income Security
Act of 1974, as amended, and shall have the authority to control and manage the
operation and administration of the Plan.
9.2 The funding policy of the Plan will be through premium payments to the
Insurer pursuant to this Agreement.
9.3 The basis of payments from the Plan will consist of payments by the
Insurer in accordance with each Insurance Policy.
9.4 If for any reason a claim for benefits under the Plan is denied, the
Corporation shall deliver to the claimant a written explanation setting forth
the specific reasons for the denial, pertinent references to the Plan section on
which the denial is based, such other data as may be pertinent and information
on the procedures to be followed by the claimant in obtaining a review of his
claim, all written in a manner calculated to be understood by the claimant. For
this purpose:
(a) the claimant's claim shall be deemed filed when presented orally
or in writing to the Corporation.
(b) the Corporation's explanation shall be in writing delivered to the
claimant within 90 days of the date the claim is filed.
The claimant shall have 60 days following his receipt of the denial of the claim
to file with the Corporation a written request for review of the denial. For
such review, the claimant or his representative may submit pertinent documents
and written issues and comments.
9.5 The Corporation shall decide the issue on review and furnish the
claimant with a copy within 60 days of receipt of the claimant's request for
review of his claim. The decision on review shall be in writing and shall
include specific reasons for the decision, written in a manner calculated to be
understood by the claimant, as well as specific references to the pertinent Plan
provisions on which the decision is based. If a copy of the decision is not so
furnished to the claimant within such 60 days, the claim shall be deemed denied
on review.
<PAGE> 6
ARTICLE X
Notice
10.1 All Notices which are required by or may be given pursuant to the
terms of this Agreement must be in writing and must be delivered personally,
sent by certified mail, return receipt requested, first-class, postage prepaid,
or sent for next business day delivery by a nationally recognized overnight
delivery serve as follows:
If to Corporation: Pulitzer Publishing Company
Attn: James V. Maloney
900 North Tucker Boulevard
St. Louis, Missouri 63101
If to Trustee: Doris D. Ridgway, Trustee
2001 Meadowbrook Way Drive
Chesterfield, MO 63017
and
Boatmen's Trust Company, Trustee
100 North Broadway
St. Louis, Missouri 63102
Any of the addresses or addresses set forth above may be changed from time to
time by written notice from the party requesting the change. Such notices and
other communications will for all purposes of this Agreement be treated as being
effective immediately if delivered personally, or five days after mailing by
certified mail, return receipt requested, first-class postage prepaid, or one
business day after deposit for next business day delivery by a nationally
recognized overnight delivery service.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
30th day of December, 1996.
PULITZER PUBLISHING COMPANY
By /s/ James M. Vogelpohl
-------------------------
Name: James M. Vogelpohl
Title: Treasurer
THE RONALD H. RIDGWAY INSURANCE TRUST
By /s/ Doris D. Ridgway
---------------------
Doris D. Ridgway
Trustee
BOATMEN'S TRUST COMPANY, TRUSTEE
By /s/ F. Carl Schumacher Jr.
-----------------------------
Name: F. Carl Schumacher Jr.
Title: Vice President
<PAGE> 7
EXHIBIT A
The policy or policies covered by the foregoing Split Dollar Life Insurance
Agreement between Pulitzer Publishing Company and Doris D. Ridgway and Boatmen's
Trust Company, Trustees, include the following:
Insurer Policy No. Initial Face Amount
Massachusetts Mutual Life 0025512
Insurance Company $2,810,000.00
EXECUTED this 30th day of December, 1996
PULITZER PUBLISHING COMPANY
By /s/ James M. Vogelpohl
-------------------------
Name: James M. Vogelpohl
Title: Treasurer
THE RONALD H. RIDGWAY INSURANCE TRUST
By /s/ Doris D. Ridgway
-----------------------
Name: Doris D. Ridgway
Title: Trustee
BOATMEN'S TRUST COMPANY, TRUSTEE
By /s/ F. Carl Schumacher Jr.
-----------------------------
Name: F. Carl Schumacher Jr.
Title: Vice President
<PAGE> 8
EXHIBIT B
SPLIT DOLLAR COLLATERAL ASSIGNMENT
Issuing Company: Massachusetts Mutual Life Insurance Company ("Insurer")
Policy No.: 0025512 ("Policy")
-------------------------------------------
Insured: Ronald H. Ridgway ("Insured")
-------------------------------------------
Owner/Assignor: Doris D. Ridgway and Boatmen's Trust Company, Trustees
--------------------------------------------
under The Ronald H. Ridgway Insurance Trust ("Assignor")
Assignee: Pulitzer Publishing Company ("Assignee")
RECITALS
A. The Assignor desires to assign to the Assignee a collateral interest in
the Policy as collateral for certain liabilities of the Assignor to the Assignee
pursuant to the Split-Dollar Life Insurance Agreement between the Assignor and
the Assignee (the "Split Dollar Agreement") regarding the Policy in accordance
with Rev. Rul. 64-328, 1964-2 CB 11.
B. The Assignee, by accepting this Assignment, agrees to the terms and
conditions hereof.
ASSIGNMENT
1. FOR VALUE RECEIVED, the Assignor hereby assigns, transfers and
sets over to the Assignee, its successors and assigns, a collateral
interest in and to the Policy, subject to all of the terms and
conditions of the Policy and to all superior liens, if any, which the
Insurer may have against the Policy.
2. (a) It is expressly agreed that the Assignee's collateral
interest in the Policy shall be strictly limited to the following:
(1) Upon surrender of the Policy, the right to obtain the
whole of the surrender proceeds payable under the terms of the
Policy (taking into account any outstanding Policy loan).
(2) Upon the death of the Insured, the right to obtain that
portion of the death proceeds as is equal to the greater of the
Aggregate Premiums Paid (as hereinafter defined) or the surrender
proceeds payable under the terms of the Policy (taking into
account any outstanding Policy loan).
(b) For the purposes of this Assignment, the Aggregate Premiums
Paid at any time equals the then cumulative net premiums paid by the
Assignee under the Policy reduced by the sum of (i) any indebtedness which
may exist against the Policy, (ii) any unpaid interest on such indebtedness
and (iii) any withdrawals from the Policy; provided, however, that
Aggregate Premiums Paid shall not include premiums waived pursuant to the
terms of any
<PAGE> 9
disability waiver of premiums rider to the Policy.
3. Notwithstanding any other provision of this Assignment, the
Assignee shall have the right to make loans on the Policy, to allocate
net premiums among the Guaranteed Principal Account (as defined in the
Policy) and the divisions of the Separate Account (as defined in the
Policy), to make transfers of values among the Guaranteed Principal
Account and the divisions of the Separate Account, and to make
withdrawals but not in excess of the then cash surrender value of the
Policy. If the Split Dollar Agreement is terminated at any time
(other than in accordance with Section 5.1(e) of Article V of the
Split Dollar Agreement) and if the Assignee is not paid an amount
equal to its collateral interest in the Policy within 90 days
thereafter, the Assignee may surrender the Policy without the consent
of the Assignor.
4. Subject to paragraph 3 above, all other rights and interests
in the Policy, including, but not limited to, the right to surrender
the Policy, the right to designate the beneficiary of the death
proceeds under the Policy in excess of the Assignee's collateral
interest and the right to reduce the death benefit in accordance with
Section 4.5 of Article IV of the Split Dollar Agreement, shall be
retained by the Assignor, except the Assignor shall not have the right
to make loans on the Policy, transfers of values among the Guaranteed
Principal Account and divisions of the Separate Account or withdrawals
from the Policy and the Assignor may surrender the Policy or change
the death benefit option only with the consent of the Assignee.
5. The Insurer is hereby authorized to recognize the claims of
the Assignee hereunder without any investigation thereof, or giving
notice to anyone, including the Assignor, and the Insurer shall not be
responsible for the application by the Assignee of any amounts paid by
the Insurer. The signature of the Assignee alone shall be sufficient
for the exercise of its rights under the Policy assigned hereby, and
the receipt of the Assignee for any sums received by it shall be a
full discharge and release of the Insurer therefor.
6. The Assignor declares that there are no proceedings in
bankruptcy pending against the Assignor and that the Assignor's
property is not subject to any assignment for the benefit of
creditors.
7. While this Assignment is in force, the Assignor directs that
all premium notices be sent to the Assignee at the address furnished
by the Assignee.
8. All provisions of this Assignment shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns.
Signed at St. Louis, MO on 12/30/96
---------------------------------- -----------------
(City and State) (Date)
THE RONALD H. RIDGWAY INSURANCE TRUST
[Assignor]
By:/s/ Doris D. Ridgway
-----------------------
Name: Doris D. Ridgway
Title: Trustee
<PAGE> 10
BOATMEN'S TRUST COMPANY, TRUSTEE
By:/s/ F. Carl Schumacher Jr.
-----------------------------
Name: F. Carl Schumacher Jr.
Title: Vice President
ACCEPTANCE OF ASSIGNMENT
Date: December 30, 1996
PULITZER PUBLISHING COMPANY
[Assignee]
By:/S/ James M. Vogelpohl
-------------------------
Name: James M. Vogelpohl
Title: Treasurer
<PAGE> 1
EXHIBIT 10.32
CONSULTING AGREEMENT
AGREEMENT made as of this 1st day of May, 1996, by and between Glenn A.
Christopher, an individual who resides at 10020 Canterbury Farms Court, St.
Louis Missouri 63128 (the "Executive"), and Pulitzer Publishing Company, a
Delaware corporation with offices at 900 North Tucker Boulevard, St. Louis,
Missouri 63101 (the "Company").
WITNESSETH
WHEREAS, Executive and the Company are parties to a Consulting
Agreement dated May 1, 1993 (the "Consulting Agreement") which established the
terms and conditions of Executive's association with the Company for the period
ending April 30, 1996;
WHEREAS, the Executive and the Company desire that the Executive
continue to be retained as a consultant to the Company in order to assure the
Executive's continued services on behalf of the Company;
NOW, THEREFORE, in consideration of the mutual obligations herein
contained, the parties hereto, intending to be legally bound hereby, covenant
and agree as follows:
1. Duties. (a) The Company hereby agrees to employ the Executive as a
non-employee consultant, and the Executive hereby agrees to perform services
for the Company, for the period specified in Section 2 hereof and upon the
other terms and conditions herein provided.
(b) During the term of this Agreement, the Executive hereby agrees to
perform such duties and responsibilities as he may be assigned from time to
time by the Chairman of the Board of Directors and the President of the
Company. During the term hereof, the Executive also agrees to serve as an
emeritus member of the Board of Directors of the Company.
(c) The Company and Executive recognize and agree that Executive's
service to the Company as a consultant will be on a part-time basis.
2. Term. The period of the Executive's service as a consultant
hereunder shall commence as of the date hereof and shall continue for a one
year period ending April 30, 1997, subject to earlier termination in the event
Executive dies or by the Company in accordance with Section 6 hereof.
3. Compensation. (a) As compensation for the services to be rendered
by the Executive hereunder during the term of this agreement, the Company
hereby agrees to pay, or cause to be paid, to the Executive, and the Executive
hereby agrees to accept, compensation at the rate of $25,000 per annum, payable
in accordance with the practices of the Company.
(b) In addition to payments of compensation under Section 3(a) hereof,
the Executive shall continue to be entitled to receive supplemental monthly
compensation payments as provided in the deferred compensation agreement
between Executive and Company dated October 26, 1984, as previously amended.
Executive shall also be entitled to continue to receive the pension benefits to
which he is entitled under The Joseph Pulitzer Pension Plan in accordance with
the terms of such plan. The benefits to which Executive is entitled pursuant
to the Supplemental Executive Retirement Pay Agreement between Executive and
the Company dated June 5, 1984 (the "Supplemental Executive Retirement Pay
Agreement"), shall continue to be deferred until such date as mutually agreed
by the Executive and the Company.
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
- --------------------------
Pulitzer Broadcasting Company
Star Publishing Company
WDSU Television, Inc.
WESH Television, Inc.
KCCI Television, Inc.
Pulitzer Technologies, Inc.
News Information, Inc.
Frank Popper Productions, Inc.
WEJ Investment Company
Pulitzer Ventures, Inc.
Pulitzer Ventures II, Inc.
Pulitzer Ventures III, Inc.
Pulitzer Sports, Inc.
Pulitzer Sports II, Inc.
Lerner Newspapers, Inc.
Pulitzer Community Newspapers, Inc.
First Scripps League Realty Company
PCN Service Company
Hanford Sentinel, Inc.
Perry County Publishing Company
Napa Valley Publishing Company
Scripps Vermont Newspaper Company
Flagstaff Publishing Company
Santa Maria Times, Inc.
Haverhill Publishing, Inc.
Sonoma-Marin Publishing Company
Kauai Publishing Company
Northern Lakes Publishing Company
Northern Illinois Publishing Company
Southwestern Oregon Publishing Company
Eastern Missouri Publishing Company
Midway Driller, Inc.
Southwest Montana Publishing Company
<PAGE> 1
EXHIBIT 23
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 7, 1997, appearing in this Annual Report on Form 10-K of
Pulitzer Publishing Company for the year ended December 31, 1996.
DELOITTE & TOUCHE LLP
Saint Louis, Missouri
March 21, 1997
<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 and New York 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 27, 1997
- ----------------------------- Chief Executive Officer
(Michael E. Pulitzer) (Principal Executive Officer)
/s/ Ronald H. Ridgway Director; Senior Vice President-Finance January 27, 1997
- ----------------------------- (Principal Financial and Accounting Officer)
(Ronald H. Ridgway)
/s/ Ken J. Elkins Director; Senior Vice President - January 27, 1997
- ----------------------------- Broadcasting Operations
(Ken J. Elkins)
/s/ David E. Moore Director January 27, 1997
- -----------------------------
(David E. Moore)
/s/ Nicholas G. Penniman IV Director; Senior Vice President - January 27, 1997
- ----------------------------- Newspaper Operations
(Nicholas G. Penniman IV)
/s/ Peter J. Repetti Director January 27, 1997
- -----------------------------
(Peter J. Repetti)
s/ Emily Rauh Pulitzer Director January 27, 1997
- -----------------------------
(Emily Rauh Pulitzer)
/s/ Alice B. Hayes Director January 27, 1997
- -----------------------------
(Alice B. Hayes)
/s/ James M. Snowden Jr. Director January 27, 1997
- -----------------------------
(James M. Snowden, Jr.)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 73,052
<SECURITIES> 0
<RECEIVABLES> 82,586
<ALLOWANCES> 2,576
<INVENTORY> 4,976
<CURRENT-ASSETS> 172,140
<PP&E> 305,350
<DEPRECIATION> 149,418
<TOTAL-ASSETS> 683,851
<CURRENT-LIABILITIES> 76,810
<BONDS> 235,410
0
0
<COMMON> 337
<OTHER-SE> 437,456
<TOTAL-LIABILITY-AND-EQUITY> 683,851
<SALES> 534,088
<TOTAL-REVENUES> 534,088
<CGS> 205,885
<TOTAL-COSTS> 205,885
<OTHER-EXPENSES> 31,102
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,592
<INCOME-PRETAX> 95,772
<INCOME-TAX> 38,272
<INCOME-CONTINUING> 57,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,500
<EPS-PRIMARY> 2.62
<EPS-DILUTED> 0
</TABLE>
