UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number 0-16914
THE E. W. SCRIPPS COMPANY
(Exact name of registrant as specified in its charter)
Ohio 31-1223339
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
312 Walnut Street
Cincinnati, Ohio 45202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (513) 977-3000
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report.)
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 and Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. As of October 31, 2000
there were 59,517,363 of the Registrant's Class A Common Shares outstanding
and 19,216,913 of the Registrant's Common Voting Shares outstanding.
<PAGE>
INDEX TO THE E. W. SCRIPPS COMPANY
REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000
Item No. Page
PART I - FINANCIAL INFORMATION
1 Financial Statements 3
2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 3
3 Quantitative and Qualitative Disclosures About
Market Risk 3
PART II - OTHER INFORMATION
1 Legal Proceedings 3
2 Changes in Securities 3
3 Defaults Upon Senior Securities 3
4 Submission of Matters to a Vote of Security Holders 4
5 Other Information 4
6 Exhibits and Reports on Form 8-K 4
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
The information required by this item is filed as part of this Form 10-Q.
See Index to Financial Information at page F-1 of this Form 10-Q.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is filed as part of this Form 10-Q.
See Index to Financial Information at page F-1 of this Form 10-Q.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is filed as part of this Form 10-Q.
See Index to Financial Information at page F-1 of this Form 10-Q.
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in litigation arising in the ordinary course of
business, such as defamation actions and various governmental and
administrative proceedings relating to renewal of broadcast licenses, none
of which is expected to result in material loss.
ITEM 2. CHANGES IN SECURITIES
There were no changes in the rights of security holders during the quarter
for which this report is filed.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no defaults upon senior securities during the quarter for which
this report is filed.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
quarter for which this report is filed.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
The information required by this item is filed as part of this Form 10-Q.
See Index to Exhibits at page E-1 of this Form 10-Q.
Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which this report
is filed.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
THE E. W. SCRIPPS COMPANY
Dated: November 13, 2000 BY: D. J. Castellini
D. J. Castellini
Senior Vice President and
Chief Financial Officer
<PAGE>
THE E. W. SCRIPPS COMPANY
Index to Financial Information
Item Page
Consolidated Balance Sheets F-2
Consolidated Statements of Income F-4
Consolidated Statements of Cash Flows F-5
Consolidated Statements of Comprehensive Income and
Stockholders' Equity F-6
Notes to Consolidated Financial Statements F-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Forward Looking Statements F-14
Results of Operations F-15
Newspapers F-17
Category Media F-18
Broadcast Television F-19
Liquidity and Capital Resources F-20
Market Risk F-21
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
( in thousands ) As of
September 30, December 31, September 30,
2000 1999 1999
( Unaudited ) ( Unaudited )
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 18,599 $ 10,456 $ 14,726
Accounts and notes receivable (less
allowances -$14,608, $11,266, $11,358) 255,822 280,829 235,014
Program rights and production costs 117,445 93,001 102,782
Network distribution fees 19,671 17,899 16,649
Inventories 18,905 16,538 15,481
Deferred income taxes 28,404 27,643 27,682
Miscellaneous 32,261 31,095 31,395
Total current assets 491,107 477,461 443,729
Investments 230,756 210,308 216,258
Property, Plant and Equipment 484,149 485,596 482,436
Goodwill and Other Intangible Assets 1,201,281 1,187,274 1,181,638
Other Assets:
Program rights and production costs (less current portion) 86,437 75,702 68,530
Network distribution fees (less current portion) 45,231 50,066 53,972
Miscellaneous 24,860 33,974 34,758
Total other assets 156,528 159,742 157,260
TOTAL ASSETS $ 2,563,821 $ 2,520,381 $ 2,481,321
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
( in thousands, except share data ) As of
September 30, December 31, September 30,
2000 1999 1999
( Unaudited ) ( Unaudited )
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 209,237 $ 267,600 $ 257,158
Accounts payable 103,604 116,201 115,428
Customer deposits and unearned revenue 32,988 40,583 44,971
Accrued liabilities:
Employee compensation and benefits 62,910 46,464 50,032
Network distribution fees 47,808 41,712 39,329
Miscellaneous 65,523 64,908 52,997
Total current liabilities 522,070 577,468 559,915
Deferred Income Taxes 148,345 143,912 140,830
Long-Term Debt (less current portion) 501,788 501,847 501,869
Other Long-Term Obligations and Minority Interests (less current portion) 129,182 132,702 136,187
Stockholders' Equity:
Preferred stock, $.01 par - authorized: 25,000,000 shares; none outstanding
Common stock, $.01 par:
Class A - authorized: 120,000,000 shares; issued and
outstanding: 59,399,794; 58,925,449; and 58,989,873 shares 594 589 590
Voting - authorized: 30,000,000 shares; issued and
outstanding: 19,216,913; 19,216,913; and 19,218,913 shares 192 192 192
Total 786 781 782
Additional paid-in capital 156,140 136,731 141,577
Retained earnings 1,055,849 973,609 938,610
Unrealized gains on securities available for sale 57,891 57,298 65,969
Foreign currency translation adjustment 602 973 710
Unvested restricted stock awards (8,832) (4,940) (5,128)
Total stockholders' equity 1,262,436 1,164,452 1,142,520
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,563,821 $ 2,520,381 $ 2,481,321
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME ( UNAUDITED )
<CAPTION>
( in thousands, except per share data ) Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Operating Revenues:
Advertising $ 319,231 $ 281,055 $ 982,856 $ 863,144
Circulation 34,939 37,269 109,602 115,632
Licensing 16,731 14,520 50,391 45,571
Affiliate fees 14,464 13,012 43,629 37,651
Joint operating agency distributions 11,924 12,479 35,073 36,826
Other 12,346 14,597 38,167 41,653
Total operating revenues 409,635 372,932 1,259,718 1,140,477
Operating Expenses:
Employee compensation and benefits 129,672 123,647 386,278 364,658
Newsprint and ink 38,228 32,827 114,066 105,841
Amortization of purchased programming 30,176 25,264 87,546 71,011
Other operating expenses 109,920 109,146 346,966 316,581
Depreciation 17,209 17,240 51,468 47,644
Amortization of intangible assets 10,079 9,443 29,884 28,795
Total operating expenses 335,284 317,567 1,016,208 934,530
Operating Income 74,351 55,365 243,510 205,947
Other Credits (Charges):
Interest expense (13,393) (11,279) (39,510) (33,378)
Investment results, net of expenses 900 (1,169) (9,611) (654)
Net gains (losses) on divested operations (73) 6,196
Miscellaneous, net 1,002 955 1,993 3,394
Net other credits (charges) (11,564) (11,493) (40,932) (30,638)
Income Before Taxes and Minority Interests 62,787 43,872 202,578 175,309
Provision for Income Taxes 26,319 17,933 84,266 71,898
Income Before Minority Interests 36,468 25,939 118,312 103,411
Minority Interests 1,040 1,077 3,159 3,223
Net Income $ 35,428 $ 24,862 $ 115,153 $ 100,188
Net Income per Share of Common Stock:
Basic $.45 $.32 $1.47 $1.28
Diluted .45 .32 1.46 1.27
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS ( UNAUDITED )
<CAPTION>
( in thousands ) Nine months ended
September 30,
2000 1999
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 115,153 $ 100,188
Adjustments to reconcile net income
to net cash flows from operating activities:
Depreciation and amortization 81,352 76,439
Deferred income taxes 3,298 6,572
Minority interests in income of subsidiary companies 3,159 3,223
Network distribution fee amortization greater (less) than payments 8,172 (6,719)
Program cost amortization greater (less) than payments (24,841) (28,389)
Other changes in certain working capital accounts, net (7,556) (14,386)
Miscellaneous, net 13,201 5,007
Net operating activities 191,938 141,935
Cash Flows from Investing Activities:
Additions to property, plant and equipment (44,535) (58,613)
Purchase of subsidiary companies and long-term investments (112,156) (43,435)
Sale of subsidiary companies and long-term investments 50,963
Change in short-term investments, net 20,485
Miscellaneous, net 10,695 11,777
Net investing activities (95,033) (69,786)
Cash Flows from Financing Activities:
Increase in long-term debt 737 3,865
Payments on long-term debt (58,270) (15,557)
Repurchase Class A Common shares (29,101)
Dividends paid (32,913) (32,881)
Dividends paid to minority interests (1,175) (1,176)
Miscellaneous, net (primarily employee stock compensation) 2,859 2,008
Net financing activities (88,762) (72,842)
Increase (Decrease) in Cash and Cash Equivalents 8,143 (693)
Cash and Cash Equivalents:
Beginning of year 10,456 15,419
End of period $ 18,599 $ 14,726
Supplemental Cash Flow Disclosures:
Interest paid, excluding amounts capitalized $ 35,691 $ 29,674
Income taxes paid 81,094 79,224
Destin newspaper traded for Fort Pierce newspaper (see Note 2) 3,857
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
AND STOCKHOLDERS' EQUITY ( UNAUDITED )
<CAPTION>
( in thousands, except share data )
Accumulated Unvested Comprehensive
Additional Other Restricted Total Income for the
Common Paid-in Retained Comprehensive Stock Stockholders' Three Months
Stock Capital Earnings Income Awards Equity Ended Sept. 30
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1998 as reported $ 785 $ 161,878 $ 870,315 $ 39,485 $ (3,731) $ 1,068,732
Change in accounting principle (see Note 1) 988 988
Restated balances at December 31, 1998 785 161,878 871,303 39,485 (3,731) 1,069,720
Comprehensive income:
Net income 100,188 100,188 $ 24,862
Unrealized gains, net of deferred tax
of $14,620 and $9,366 27,123 27,123 17,427
Less: reclassification adjustment for gains
in income, net of deferred tax of $31 (58) (58)
Increase in unrealized gains on securities 27,065 27,065 17,427
Foreign currency translation adjustments 129 129 546
Total 100,188 27,194 127,382 $ 42,835
Dividends: declared and paid - $.42 per share (32,881) (32,881)
Repurchase 655,100 Class A Common Shares (6) (29,095) (29,101)
Compensation plans, net: 348,435 shares issued;
200 shares forfeited; 28,229 shares repurchased 3 6,204 (1,397) 4,810
Tax benefits of compensation plans 2,590 2,590
Balances at September 30, 1999 $ 782 $ 141,577 $ 938,610 $ 66,679 $ (5,128) $ 1,142,520
Balances at December 31, 1999 as reported $ 781 $ 136,731 $ 973,432 $ 58,271 $ (4,940) $ 1,164,275
Change in accounting principle (see Note 1) 177 177
Restated balances at December 31, 1999 781 136,731 973,609 58,271 (4,940) 1,164,452
Comprehensive income:
Net income 115,153 115,153 $ 35,428
Unrealized gains, net of deferred tax
of $710 and ($816) 1,406 1,406 (1,418)
Less: reclassification adjustment for gains
in income, net of deferred tax of
($438) and ($4) (813) (813) (8)
Increase in unrealized gains on securities 593 593 (1,426)
Foreign currency translation adjustments (371) (371) (98)
Total 115,153 222 115,375 $33,904
Dividends: declared and paid - $.42 per share (32,913) (32,913)
Compensation plans, net: 502,895 shares issued;
1,500 shares forfeited; 27,050 shares repurchased 5 17,549 (3,892) 13,662
Tax benefits of compensation plans 1,860 1,860
Balances at September 30, 2000 $ 786 $ 156,140 $1,055,849 $ 58,493 $ (8,832) $ 1,262,436
See notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
______________________________________________________________________
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States of America for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The
information disclosed in the notes to consolidated financial
statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999, has not changed materially unless
otherwise disclosed herein. Financial information as of December 31,
1999, included in these financial statements has been derived from the
audited consolidated financial statements included in that report. In
management's opinion all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of the interim periods
have been made.
Results of operations are not necessarily indicative of the results
that may be expected for future interim periods or for the full year.
Change in Method of Accounting for Inventory - Effective July 1, 2000,
the Company began accounting for newsprint inventories by the first
in, first out ("FIFO") method. Newsprint inventories were previously
valued using the last in, first out ("LIFO") method. The Company
typically maintains a 30-day supply of newsprint and FIFO more
accurately reflects the current value of the Company's newsprint
inventory. Financial statements for all prior periods have been
restated to apply the new method retroactively. Retained earnings at
December 31, 1999, were increased $177,000 and retained earnings at
December 31, 1998, were increased $988,000.
The effect of the accounting change on net income as previously
reported for the quarter and nine months ended September 30, 1999 was
as follows:
<TABLE>
<CAPTION>
( in thousands ) Three months Nine months
ended ended
September 30, September 30,
1999 1999
<S> <C> <C>
Net income as previously reported $ 24,893 $ 101,125
Change in accounting for newsprint inventories (31) (937)
Net income as adjusted $ 24,862 $ 100,188
Net income per share of common stock - basic:
As previously reported $.32 $1.30
As adjusted $.32 $1.28
Net income per share of common stock - diluted:
As previously reported $.32 $1.28
As adjusted $.32 $1.27
</TABLE>
Net income for the first half of 2000 was increased $500,000 ($.01 per
share).
<PAGE>
Joint Operating Agencies - The Company is currently a partner in
newspaper joint operating agencies ("JOAs") in three markets. A JOA
combines all but the editorial operations of two competing newspapers in
a market in order to reduce aggregate expenses and take advantage of
economies of scale, thereby allowing the continuing operation of both
newspapers in that market. The Newspaper Preservation Act of 1970
("NPA") provides a limited exemption from anti-trust laws, generally
permitting the continuance of JOAs in existence prior to the enactment
of the NPA and the formation, under certain circumstances, of new JOAs
between newspapers.
On May 12, 2000, the Company and MediaNews Group Inc. filed an
application with the U.S. Department of Justice to form a JOA between
the Company's Denver Rocky Mountain News and MediaNews Group Inc.'s
Denver Post. The 50-year agreement would create a new entity called
the Denver Newspaper Agency L.L.C., which would be 50%-owned by each
partner. Both partners would contribute certain assets used in the
operations of their newspapers to the new entity. In addition, the
Company will pay $60,000,000 to MediaNews Group Inc. The proposed
Denver JOA requires approval of the U.S. Attorney General.
Net Income Per Share - The following table presents additional
information about basic and diluted weighted-average shares
outstanding:
<TABLE>
<CAPTION>
( in thousands ) Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Basic weighted-average shares outstanding 78,186 77,874 78,114 77,969
Effect of dilutive securities:
Unvested restricted stock held by employees 185 170 145 180
Stock options held by employees 802 881 760 851
Diluted weighted-average shares outstanding 79,173 78,925 79,019 79,000
</TABLE>
Recently Issued Accounting Standards - The Financial Accounting
Standards Board issued FAS No. 133 - Accounting for Derivative
Instruments and Hedging Activities. The standard must be adopted by
January 1, 2001. Under the new standard changes in the fair value of
foreign currency forward and option contracts qualifying as hedges
will be initially reported as a separate component of comprehensive
income and reclassified into earnings when the related licensing
revenue is earned. Newsprint forward contracts will be recorded at
fair value and changes in the value of the contracts will be initially
reported as a separate component of comprehensive income and
reclassified into earnings when the newsprint is consumed. The
Company currently does not hold any foreign currency or newsprint
derivatives. The Company's investment portfolio includes derivative
financial instruments, some of which may be required to be marked to
market through earnings. The Company has not yet quantified the
impact of the new standard on its investment portfolio.
Reclassifications - For comparative purposes, certain 1999 amounts have
been reclassified to conform to 2000 classifications.
<PAGE>
2. ACQUISITIONS AND DIVESTITURES
Acquisitions
2000 - In the first quarter the Company acquired the daily newspaper
in Fort Pierce, Florida, in exchange for its newspaper in Destin,
Florida, and cash, and acquired television station KMCI in
Lawrence, Kansas, which the Company had previously operated under
a Local Management Agreement.
In the third quarter the Company acquired the weekly newspaper in
Marco Island, Florida from The New York Times Company.
1999 - In the first quarter the Company acquired the 70% of Colorado
Real Estate On-Line, a provider of real estate listings on the
Internet, that it did not already own and acquired an additional
1.86% interest in The Television Food Network.
The following table presents additional information about the acquisitions:
<TABLE>
<CAPTION>
( in thousands )
Nine months ended
September 30,
2000 1999
<S> <C> <C>
Goodwill and other intangible assets acquired $ 55,589 $ 4,250
Other assets acquired 7,532 58
Total 63,121 4,308
Fair value of Destin newspaper (3,857)
Liabilities assumed (197) (806)
Cash paid $ 59,067 $ 3,502
</TABLE>
The acquisitions have been accounted for as purchases. The
allocations of the purchase prices are based on preliminary appraised
values of the assets acquired and liabilities assumed, and are
therefore subject to change. The operating results of the Fort Pierce
newspaper and the Marco Island newspaper are included in the
Consolidated Statements of Income from the dates of acquisitions. Pro
forma results are not presented because the combined results of
operations would not be significantly different than the reported
amounts. The operating results for KMCI were included in the
Consolidated Statements of Income while the Company operated the
station under the LMA.
Divestitures
2000 - In the first quarter the Company sold its independent
telephone directories in Memphis, Tennessee; Kansas City,
Missouri; and North Palm Beach, Florida, and traded its Destin,
Florida, newspaper and cash for the daily newspaper in Fort
Pierce, Florida. In the third quarter the Company sold its
remaining independent telephone directories in Louisiana. The
sales and trade resulted in year-to-date net gains of $6,196,000,
$3,700,000 after-tax ($.05 per share).
Included in the consolidated financial statements are the following
results of divested operations (excluding gains on sales):
<TABLE>
<CAPTION>
( in thousands ) Three months Nine months
ended ended
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Operating revenues $ 2,436 $ 3,847 $ 10,500 $ 14,456
Operating income (loss) 97 (372) (275) (684)
</TABLE>
<PAGE>
3. UNUSUAL CREDITS AND CHARGES
2000 - In addition to the gains on divested operations described in
Note 2, the Company's reported results of operations were affected
by the following items:
Net investment income includes recognized net investment gains
totaling $3,000,000 for the quarter and net investment losses totaling
$3,200,000 year-to-date. Accrued incentive compensation for Scripps
Ventures I's portfolio managers was increased $2,400,000 in the third
quarter, to $13,200,000 in conjunction with the increase in the net gain
on Scripps Ventures I's portfolio of $15,800,000, to $87,800,000. In
the first nine months of the year accrued incentive compensation was
increased $6,200,000 in conjunction with the $40,800,000 increase in the
net gain. Net investment results increased net income $800,000 ($.01
per share) for the third quarter and reduced net income $6,100,000 ($.08
per share) year-to-date.
$3,200,000 of expenses associated with preparations for the
anticipated joint newspaper operations in Denver, of which $2,400,000
was recognized in the third quarter. Net income was reduced $1,600,000
($.02 per share) in the third quarter and $2,100,000 ($.03 per share)
year-to-date.
The combined effect of the above items was to reduce 2000 net
income $800,000 ($.01 per share) for the third quarter and
$4,500,000 ($.05 per share) year-to-date.
1999 - The Company's reported results of operations were affected by
the following items:
Net investment income includes recognized net investment gains
totaling $8,600,000 for the quarter. Scripps Ventures also accrued
$9,600,000 of incentive compensation for its managers in the third
quarter. Net investment results reduced net income $800,000 ($.01
per share) for the quarter and $400,000 ($.01 per share) year-to-date.
A $2,500,000 accrual for "make goods" to Home & Garden Television
("HGTV") advertisers and $800,000 of costs incurred to move the Food
Network's operations to a different location in Manhattan in the third
quarter. Net income was reduced $2,100,000 ($.03 per share). The
effect on year-to-date net income was $900,000 less, or $1,200,000 ($.02
per share), because $1,400,000 of the $2,500,000 accrual was for
advertisements aired in the first half of 1999.
Severance payments totaling $1,200,000 to certain television
station employees in the third quarter, reducing net income $700,000
($.01 per share).
The combined effect of the above items was to reduce 1999 net
income $3,600,000 ($.04 per share) for the quarter and $2,400,000
($.03 per share) year-to-date.
<PAGE>
4. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
( in thousands ) As of
September 30, December 31, September 30,
2000 1999 1999
<S> <C> <C> <C>
Variable rate credit facilities, including commercial paper $ 509,196 $ 565,689 $ 555,474
$100 million, 6.625% note, due in 2007 99,898 99,887 99,883
$100 million, 6.375% note, due in 2002 99,959 99,944 99,940
Other notes 1,972 3,927 3,730
Total long-term debt 711,025 769,447 759,027
Current portion of long-term debt 209,237 267,600 257,158
Long-term debt (less current portion) $ 501,788 $ 501,847 $ 501,869
</TABLE>
The Company has a Competitive Advance and Revolving Credit Facility
Agreement, which permits aggregate borrowings up to $700,000,000 (the
"Variable Rate Credit Facilities"). The Variable Rate Credit
Facilities are comprised of two unsecured lines, one limited to
$400,000,000 principal amount maturing in 2001 and the other limited
to $300,000,000 principal amount maturing in 2002. Borrowings under
the Variable Rate Credit Facilities are available on a committed
revolving credit basis at the Company's choice of three short-term
rates or through an auction procedure at the time of each borrowing.
The Variable Rate Credit Facilities are also used by the Company in
whole or in part, in lieu of direct borrowings, as credit support for
its commercial paper. The weighted-average interest rates on the
Variable Rate Credit Facilities were 6.7% at September 30, 2000, 6.0%
at December 31, 1999, and 5.5% at September 30, 1999.
<PAGE>
5. INVESTMENTS
Investments consisted of the following:
<TABLE>
<CAPTION>
( in thousands ) As of
September 30, December 31, September 30,
2000 1999 1999
<S> <C> <C> <C>
Securities available for sale (at market value):
Time Warner common stock (1,344,000 shares) $ 105,318 $ 97,227 $ 81,681
Centra Software (1,792,500 common shares) 11,653
garden.com Inc. (2,414,000 common shares and 276,000 warrants) 2,112 22,636 50,175
iVillage Inc. (41,000 common shares at September 30, 2000,
and 270,000 common shares at December 31 and September 30, 1999) 157 5,897 9,510
Other 4,285 9,177 4,053
Total available-for-sale securities 123,525 134,937 145,419
FOX SportSouth and other joint ventures 8,948 7,282 11,598
Other (primarily investments in private companies, at adjusted cost) 98,283 68,089 59,241
Total investments $ 230,756 $ 210,308 $ 216,258
Unrealized gains on securities available for sale $ 89,076 $ 88,214 $ 101,520
</TABLE>
Investments available for sale represent securities in publicly traded
companies which are recorded at fair value. Fair value is based upon
the closing price of the security on the reporting date. In the first
quarter of 2000 Centra Software completed an initial public offering of
its common stock. In the third quarter of 1999 garden.com completed an
initial public offering of its common stock and the Company sold its
interest in Family Point, Inc. to iVillage for cash and stock. These
investments had previously been included in the Other category.
The values of several of the Company's investments in available-for-sale
securities declined below historical cost in 2000. Investment results
(see Note 3) in the year-to-date period include a total of $10,700,000
in write-downs to market value for such investments. During the third
quarter the Company received $5,000,000 upon delivery of 229,000
iVillage shares under the provisions of a zero-cost collar.
Securities of private companies do not trade in public markets, so they
do not have readily determinable fair values. However, if fair value is
assumed to be the price from the most recent round of financing or, for
some securities, less based on management's judgment of the
circumstances, then the total estimated value of these investments was
$173,000,000 on September 30, 2000, and $96,000,000 on December 31,
1999. There can be no assurance as to the amounts the Company would
receive if these securities were sold.
The Company's Scripps Ventures Funds I and II invest in new businesses
focusing primarily on new media technology. Scripps Ventures I invested
$54,000,000. The managers' compensation includes a share of the
portfolio's cumulative net gain (realized and unrealized) through June
2001 if a specified minimum return is achieved. This incentive
compensation, which will be paid in 2001, was $13,200,000 at September
30, 2000, based on the portfolio's net gain of $87,800,000. Scripps
Ventures II is authorized to invest up to $100,000,000, and $35,800,000
was invested as of September 30, 2000. The managers have a minority
equity interest in the return on Scripps Ventures II's investments if a
specified minimum return is achieved.
6. SEGMENT INFORMATION
The Company's reportable segments are strategic businesses that offer
different products and services. The Company primarily evaluates the
operating performance of its segments based on earnings before
interest, income taxes, depreciation and amortization ("EBITDA"),
excluding divested operating units, unusual items and all credits and
charges classified as non-operating in the Consolidated Statements of
Income. No single customer provides more than 10% of the Company's
revenue. The Company derives less than 10% of its revenues from
markets outside of the U.S.
<PAGE>
Financial information for the Company's business segments is as
follows:
<TABLE>
<CAPTION>
( in thousands ) Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
OPERATING REVENUES
Newspapers $ 231,296 $ 224,040 $ 700,593 $ 672,611
Category media 72,540 53,968 232,329 158,354
Broadcast television 79,793 72,205 243,951 229,177
Licensing and other media 23,570 21,372 72,345 66,979
Total 407,199 371,585 1,249,218 1,127,121
Unusual item (2,500) (1,100)
Divested operating units 2,436 3,847 10,500 14,456
Per consolidated financial statements $ 409,635 $ 372,932 $1,259,718 $1,140,477
EBITDA
Newspapers $ 63,272 $ 66,900 $ 191,368 $ 200,457
Category media 13,806 2,137 54,323 20,021
Broadcast television 28,191 19,457 84,655 68,614
Licensing and other media 3,947 2,357 12,577 9,610
Corporate (5,518) (4,067) (15,079) (12,916)
Total 103,698 86,784 327,844 285,786
Unusual items (2,407) (4,500) (3,243) (3,100)
Divested operating units 348 (236) 261 (300)
Per consolidated financial statements $ 101,639 $ 82,048 $ 324,862 $ 282,386
DEPRECIATION
Newspapers $ 10,293 $ 10,560 $ 30,653 $ 28,240
Category media 1,896 1,447 5,337 3,896
Broadcast television 4,787 4,367 14,196 13,470
Licensing and other media (218) 477 166 993
Corporate 255 291 759 782
Total 17,013 17,142 51,111 47,381
Divested operating units 196 98 357 263
Per consolidated financial statements $ 17,209 $ 17,240 $ 51,468 $ 47,644
AMORTIZATION OF INTANGIBLE ASSETS
Newspapers $ 5,841 $ 5,433 $ 17,214 $ 16,661
Category media 1,802 1,574 5,402 4,756
Broadcast television 2,381 2,367 7,089 7,107
Licensing and other media 31 150
Total 10,024 9,405 29,705 28,674
Divested operating units 55 38 179 121
Per consolidated financial statements $ 10,079 $ 9,443 $ 29,884 $ 28,795
OPERATING INCOME
Newspapers $ 47,138 $ 50,907 $ 143,501 $ 155,556
Category media 10,108 (884) 43,584 11,369
Broadcast television 21,023 12,723 63,370 48,037
Licensing and other media 4,165 1,849 12,411 8,467
Corporate (5,773) (4,358) (15,838) (13,698)
Total 76,661 60,237 247,028 209,731
Unusual items (2,407) (4,500) (3,243) (3,100)
Divested operating units 97 (372) (275) (684)
Per consolidated financial statements $ 74,351 $ 55,365 $ 243,510 $ 205,947
OTHER NONCASH ITEMS
Category media $ (7,029) $ (5,123) $ (17,118) $ (37,843)
Broadcast television 595 1,923 449 2,735
Total $ (6,434) $ (3,200) $ (16,669) $ (35,108)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
( in thousands ) Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
Newspapers $ 11,690 $ 6,497 $ 19,338 $ 21,594
Category media 2,721 6,901 4,543 15,322
Broadcast television 2,852 5,964 15,326 15,525
Licensing and other media 1,016 2,558 4,832 5,192
Corporate 111 231 404 513
Total 18,390 22,151 44,443 58,146
Divested operating units 161 92 467
Per consolidated financial statements $ 18,390 $ 22,312 $ 44,535 $ 58,613
BUSINESS ACQUISITIONS AND
OTHER ADDITIONS TO LONG-LIVED ASSETS
Newspapers $ 17,334 107 $ 50,140 $ 1,236
Category media 3,833 $ 6,044 12,825 22,841
Broadcast television 50 35 14,710 105
Licensing and other media 4,874 12,443 50,936 41,957
Total $ 26,091 $ 18,629 $ 128,611 $ 66,139
ASSETS
Newspapers $1,241,792 $1,222,001
Category media 496,022 417,668
Broadcast television 500,583 503,194
Licensing and other media 260,211 238,301
Corporate 56,980 58,714
Total 2,555,588 2,439,878
Unusual items
Divested operating units 8,233 41,443
Total $2,563,821 $2,481,321
</TABLE>
Other noncash items include programming and program production
expenses in excess of (less than) the amounts paid, and, for category
media, amortization of network distribution fees in excess of (less
than) distribution fee payments. Other additions to long-lived assets
include investments and network distribution fees. Corporate assets
are primarily cash, investments, and refundable and deferred income
taxes.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company operates in three reportable segments: newspapers, category
media, and broadcast television.
FORWARD-LOOKING STATEMENTS
This discussion and the information contained in the notes to the
consolidated financial statements contain certain forward-looking
statements that are based on management's current expectations.
Forward-looking statements are subject to certain risks, trends and
uncertainties that could cause actual results to differ materially
from the expectations expressed in the forward-looking statements.
Such risks, trends and uncertainties, which in most instances are
beyond the Company's control, include changes in advertising demand
and other economic conditions; consumers' taste; newsprint prices;
program costs; labor relations; technological developments;
competitive pressures; interest rates; regulatory rulings; and
reliance on third-party vendors for various products and services.
The words "believe," "expect," "anticipate," "estimate," "intend" and
similar expressions identify forward-looking statements. All forward-
looking statements, which are as of the date of this filing, should be
evaluated with the understanding of their inherent uncertainty.
<PAGE>
RESULTS OF OPERATIONS
All per share disclosures included in management's discussion and
analysis of financial condition and results of operation are on a
diluted basis. Consolidated results of operations were as follows:
<TABLE>
<CAPTION>
( in thousands, except per share data ) Quarterly Period Year-to-Date
2000 Change 1999 2000 Change 1999
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Newspapers $ 231,296 3.2 % $ 224,040 $ 700,593 4.2 % $ 672,611
Category media 72,540 34.4 % 53,968 232,329 46.7 % 158,354
Broadcast television 79,793 10.5 % 72,205 243,951 6.4 % 229,177
Licensing and other media 23,570 10.3 % 21,372 72,345 8.0 % 66,979
Total 407,199 9.6 % 371,585 1,249,218 10.8 % 1,127,121
Unusual item (2,500) (1,100)
Divested operating units 2,436 3,847 10,500 14,456
Total operating revenues $ 409,635 9.8 % $ 372,932 $1,259,718 10.5 % $1,140,477
Operating income:
Newspapers $ 47,138 (7.4)% $ 50,907 $ 143,501 (7.7)% $ 155,556
Category media 10,108 (884) 43,584 11,369
Broadcast television 21,023 65.2 % 12,723 63,370 31.9 % 48,037
Licensing and other media 4,165 125.3 % 1,849 12,411 46.6 % 8,467
Corporate (5,773) (32.5)% (4,358) (15,838) (15.6)% (13,698)
Total 76,661 27.3 % 60,237 247,028 17.8 % 209,731
Unusual items (2,407) (4,500) (3,243) (3,100)
Divested operating units 97 (372) (275) (684)
Total operating income 74,351 34.3 % 55,365 243,510 18.2 % 205,947
Interest expense (13,393) (11,279) (39,510) (33,378)
Investment results, net of expenses 900 (1,169) (9,611) (654)
Net gains on divested operations (73) 6,196
Miscellaneous, net 1,002 955 1,993 3,394
Income taxes (26,319) (17,933) (84,266) (71,898)
Minority interest (1,040) (1,077) (3,159) (3,223)
Net income $ 35,428 42.5 % $ 24,862 $ 115,153 14.9 % $ 100,188
Per share of common stock:
Net income $.45 40.6 % $.32 $1.46 15.0 % $1.27
Weighted-average shares outstanding 79,173 0.3 % 78,925 79,019 0.0% 79,000
Reconciliation to earnings from core operations:
Reported net income 35,428 42.5 % 24,862 115,153 14.9 % 100,188
Investment results (772) 763 6,072 427
Net gains on divested operations 47 (3,716)
Denver JOA expenses 1,565 2,108
Category Media 2,053 1,182
Broadcast television severance 746 746
Net income from core operations 36,268 27.6 % 28,424 119,617 16.7 % 102,543
Reported net income per share of common stock $.45 40.6 % $.32 $1.46 15.0 % $1.27
Investment results (.01) .01 .08 .01
Net gains on divested operations (.05)
Denver JOA expenses .02 .03
Category Media .03 .02
Broadcast television severance .01 .01
Net income from core operations per
share of common stock $.46 27.8 % $.36 $1.51 16.2 % $1.30
</TABLE>
<PAGE>
Other financial and statistical data, excluding divested operations, is
as follows:
<TABLE>
<CAPTION>
( in thousands ) Quarterly Period Year-to-Date
2000 Change 1999 2000 Change 1999
<S> <C> <C> <C> <C> <C> <C>
Total advertising revenues $ 316,926 13.2 % $ 279,963 $ 972,739 14.4 % $ 850,599
Advertising revenues as a
percentage of total revenues 77.8 % 75.3 % 77.9 % 75.5 %
EBITDA:
Newspapers $ 63,272 (5.4)% $ 66,900 $ 191,368 (4.5)% $ 200,457
Category media 13,806 2,137 54,323 171.3 % 20,021
Broadcast television 28,191 44.9 % 19,457 84,655 23.4 % 68,614
Licensing and other media 3,947 67.5 % 2,357 12,577 30.9 % 9,610
Corporate (5,518) (35.7)% (4,067) (15,079) (16.7)% (12,916)
Total $ 103,698 19.5 % $ 86,784 $ 327,844 14.7 % $ 285,786
Effective income tax rate 41.9 % 40.9 % 41.6 % 41.0 %
Net cash provided by operating activities $ 76,298 $ 59,014 $ 191,938 $ 141,935
Capital expenditures (18,390) (22,151) (44,443) (58,146)
Business acquisitions and other
additions to long-lived assets (26,091) (18,629) (128,611) (66,139)
Increase (decrease) in long-term debt (50,098) (15,666) (57,533) (11,692)
Dividends paid, including minority interests (11,382) (11,339) (34,088) (34,057)
Purchase and retirement of common stock (884) (29,101)
</TABLE>
Earnings before interest, income taxes, depreciation and amortization
("EBITDA") is included in the discussion of results of operations
because:
Management believes the year-over-year change in EBITDA, combined
with information on past and future capital spending, is a more
useful and reliable measure of year-over-year performance than the
change in operating income.
Banks and other lenders use EBITDA to determine the Company's
borrowing capacity.
Financial analysts and acquirors use EBITDA, combined with capital
spending requirements, to value communications media companies.
EBITDA should not, however, be construed as an alternative measure of
the amount of the Company's income or cash flows from operating
activities.
See Note 1 to the Consolidated Financial Statements on page F-7
regarding a change in the method of accounting for newsprint
inventories. All prior periods have been restated to apply the new
method retroactively.
See Note 2 to the Consolidated Financial Statements on page F-9
regarding acquisitions and divestitures.
See Note 3 to the Consolidated Financial Statements on page F-10
regarding unusual credits and charges. Excluding these items, which
management believes is required to determine earnings from core
operations, net income per share for the third quarter was $.46 in
2000 and $.36 in 1999. Earnings from core operations for the year-to-
date period were $1.51 in 2000 and $1.30 in 1999.
See Note 1 to the Consolidated Financial Statements on page F-8
regarding the JOA in the Denver market. Excluding operating losses at
the Denver Rocky Mountain News, third quarter earnings per share from
core operations were $.50 in 2000 and $.38 in 1999 and for the year-to-
date period were $1.70 in 2000 and $1.39 in 1999.
Operating results for each of the Company's reportable segments,
excluding divested operating units and unusual items, are presented on
the following pages.
<PAGE>
NEWSPAPERS - Operating results, excluding divested operations and
unusual items, were as follows:
<TABLE>
<CAPTION>
( in thousands ) Quarterly Period Year-to-Date
2000 Change 1999 2000 Change 1999
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Local $ 63,294 0.5 % $ 62,963 $ 199,751 2.5 % $ 194,798
Classified 79,284 7.3 % 73,905 231,335 8.2 % 213,828
National 9,254 13.3 % 8,171 28,126 8.7 % 25,884
Preprint and other 29,235 13.9 % 25,656 86,155 15.0 % 74,944
Newspaper advertising 181,067 6.1 % 170,695 545,367 7.0 % 509,454
Circulation 34,939 (6.1)% 37,206 109,542 (5.1)% 115,455
Joint operating agency distributions 11,924 (4.4)% 12,479 35,073 (4.8)% 36,826
Other 3,366 (8.0)% 3,660 10,611 (2.4)% 10,876
Total operating revenues 231,296 3.2 % 224,040 700,593 4.2 % 672,611
Expenses, excluding depreciation and amortization:
Editorial and newspaper content 25,696 (4.7)% 26,971 79,277 0.1 % 79,195
Newsprint and ink 37,317 17.1 % 31,860 111,254 8.2 % 102,861
Other press and production 24,158 2.0 % 23,690 73,068 5.6 % 69,197
Circulation and distribution 26,821 0.5 % 26,677 83,352 10.2 % 75,614
Commercial printing and other 9,225 51.8 % 6,078 27,048 49.8 % 18,062
Advertising sales and marketing 21,007 (1.2)% 21,254 65,249 5.6 % 61,808
General and administrative 23,103 12.4 % 20,552 67,587 3.7 % 65,194
Total 167,327 6.5 % 157,082 506,835 7.4 % 471,931
EBITDA 63,969 (4.5)% 66,958 193,758 (3.4)% 200,680
Share of pre-tax earnings of equity-method investments (697) (58) (2,390) (223)
Total EBITDA 63,272 (5.4)% 66,900 191,368 (4.5)% 200,457
Depreciation and amortization 16,134 0.9 % 15,993 47,867 6.6 % 44,901
Operating income $ 47,138 (7.4)% $ 50,907 $ 143,501 (7.7)% $ 155,556
Other Financial and Statistical Data:
Percent of operating revenues:
EBITDA 27.4 % 29.9 % 27.3 % 29.8 %
Operating income 20.4 % 22.7 % 20.5 % 23.1 %
Capital expenditures $ 11,690 $ 6,497 $ 19,338 $ 21,594
Business acquisitions and other
additions to long-lived assets 17,334 107 50,140 1,236
</TABLE>
Circulation revenue decreased primarily due to promotions and
discounts offered in the Denver market. Year-to-date circulation and
distribution costs increased primarily due to the effort to gain
market share in Denver. Excluding Denver, EBITDA decreased 1% in the
quarter and was flat year-to-date.
Newsprint prices increased 17% year-over-year in the third quarter.
The newspapers' Internet businesses had EBITDA of $(1.2) million,
compared to $(0.4) million in the third quarter of 1999. Year-to-date
the newspapers' Internet businesses had EBITDA of $(3.7) million,
compared to $(0.8) million in 1999.
<PAGE>
CATEGORY MEDIA - Operating results, excluding unusual items, were as
follows:
<TABLE>
<CAPTION>
( in thousands ) Quarterly Period Year-to-Date
2000 Change 1999 2000 Change 1999
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Advertising $ 56,559 51.4 % $ 37,349 $ 184,736 64.0 % $ 112,657
Affiliate fees 14,464 11.2 % 13,012 43,629 15.9 % 37,651
Other 1,517 (57.9)% 3,607 3,964 (50.7)% 8,046
Total operating revenues 72,540 34.4 % 53,968 232,329 46.7 % 158,354
Operating expenses, excluding depreciation and amortization:
Programming and production 22,040 20.7 % 18,265 63,514 32.2 % 48,039
Operations and distribution 7,568 9.0 % 6,941 23,936 27.0 % 18,845
Amortization of distribution fees 4,869 30.9 % 3,721 13,893 19.7 % 11,607
Sales and marketing 16,517 7.4 % 15,375 49,066 26.2 % 38,885
General and administrative 9,452 9.1 % 8,661 30,979 32.9 % 23,306
Total 60,446 14.1 % 52,963 181,388 28.9 % 140,682
EBITDA - consolidated networks 12,094 1,005 50,941 17,672
Share of pre-tax earnings of equity-method investments 1,712 1,132 3,382 2,349
Total EBITDA 13,806 2,137 54,323 20,021
Depreciation and amortization 3,698 22.4 % 3,021 10,739 24.1 % 8,652
Operating income (loss) $ 10,108 $ (884) $ 43,584 $ 11,369
Other Financial and Statistical Data:
Percent of operating revenues:
EBITDA 19.0 % 4.0 % 23.4 % 12.6 %
Operating income (loss) 13.9 % (1.6)% 18.8 % 7.2 %
Payments for programming and network
distribution fees less than (greater than)
amounts recognized as expense $ (7,029) $ (5,123) $ (17,118) $ (37,843)
Capital expenditures 2,721 6,901 4,543 15,322
Business acquisitions and other
additions to long-lived assets 3,833 6,044 12,825 22,841
</TABLE>
According to the Nielsen Homevideo Index ("Nielsen"), HGTV was
distributed to 65.9 million homes in September 2000, up 8 million from
September 1999 and up 3 million in the third quarter. Food Network
was distributed to 52.3 million homes in September 2000, up 10 million
from September 1999 and up 3.2 million in the quarter.
The Company launched DIY, its third network, in the fourth quarter of
1999. DIY had EBITDA of $(2.7) million in the third quarter of 2000,
$(7.3) million year-to-date compared to $(0.9) million in the third
quarter of 1999, $(2.1) million year-to-date.
During the second quarter the Company announced that it will launch a
fourth cable television and Internet network, Fine Living, in the
second half of 2001. Fine Living will be a 24-hour cable TV network,
with companion Web site, targeting higher income viewers and the $200
billion-plus luxury consumer goods and services market. Fine Living's
impact on EBITDA is expected to be negligible in 2000 and is expected
to reduce EBITDA by up to $12 million in 2001.
Unlike the fourth quarter of 1999, management does not expect year-
over-year revenue growth rates to accelerate in the fourth quarter of
2000, due largely to sharply reduced ad spending by Internet
companies. Category media revenues for the fourth quarter 2000 are
currently expected to increase 15 to 20 percent. Internet sector
advertising revenues for category media are expected to be $2 million
in the fourth quarter compared to $6 million in the year-ago period.
<PAGE>
BROADCAST TELEVISION - Operating results, excluding unusual items, were
as follows:
<TABLE>
<CAPTION>
( in thousands ) Quarterly Period Year-to-Date
2000 Change 1999 2000 Change 1999
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Local $ 39,451 0.5 % $ 39,248 $ 128,602 2.3 % $ 125,689
National 26,588 (4.2)% 27,758 90,002 1.9 % 88,348
Political 10,202 979 14,108 1,508
Other 3,552 (15.8)% 4,220 11,239 (17.6)% 13,632
Total operating revenues 79,793 10.5 % 72,205 243,951 6.4 % 229,177
Operating expenses, excluding depreciation and amortization:
Programming and station operations 36,241 (3.2)% 37,453 110,354 (1.8)% 112,378
Sales and marketing 8,989 3.5 % 8,684 30,138 5.8 % 28,494
General and administrative 6,372 (3.6)% 6,611 18,804 (4.5)% 19,691
Total 51,602 (2.2)% 52,748 159,296 (0.8)% 160,563
EBITDA 28,191 44.9 % 19,457 84,655 23.4 % 68,614
Depreciation and amortization 7,168 6.4 % 6,734 21,285 3.4 % 20,577
Operating income $ 21,023 65.2 % $ 12,723 $ 63,370 31.9 % $ 48,037
Other Financial and Statistical Data:
Percent of operating revenues:
EBITDA 35.3 % 26.9 % 34.7 % 29.9 %
Operating income 26.3 % 17.6 % 26.0 % 21.0 %
Capital expenditures $ 2,852 $ 5,964 $ 15,326 $ 15,525
Business acquisitions and other
additions to long-lived assets 50 35 14,710 105
</TABLE>
EBITDA improved primarily due to increased political advertising and
cost containment initiatives. In the fourth quarter of 1996 and 1998
the Company's television stations carried $12.4 million and $12.8
million in political advertising. Such advertising in the fourth
quarter of 2000 is expected to be approximately $20 million. Total
operating revenue is expected to increase approximately 15% year over
year in the fourth quarter.
Other revenue is primarily network compensation. The Company's network
compensation revenues decreased $0.6 million in the third quarter of
2000, and decreased $3.0 million year-to-date. Network compensation
revenues are expected to be flat in the fourth quarter.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company generates significant cash flow from operating activities.
There are no significant legal or other restrictions on the transfer
of funds among the Company's business segments. Cash flow provided by
operating activities in excess of capital expenditures is used
primarily to fund corporate expenditures or to invest in new
businesses. Management expects total cash flow from operating
activities in 2000 will be sufficient to meet the Company's expected
total capital expenditures, required interest payments and dividend
payments.
A 1998 authorization by the Board of Directors allows for the repurchase
of an additional 2.2 million Class A Common shares.
The Company's Scripps Ventures Funds invest in new businesses focusing
primarily on new media technology. See Note 5 to the Consolidated
Financial Statements. The Board of Directors has authorized up to
$150 million of such investments. At September 30, 2000, an
additional $65 million remains to be invested under the authorization.
If the Denver JOA is approved, the Company will make a $60 million
payment to MediaNews.
Fine Living is expected to launch in the second half of 2001.
Depending upon the launch date, start-up operating losses could be as
much as $12 million in 2001, and the cash required for launch will
substantially exceed the reported operating losses.
Net debt (borrowings less cash equivalent and other short-term
investments) decreased $58 million in the first nine months of 2000,
to $711 million at September 30, 2000.
Management believes the Company's cash flow from operations and
substantial borrowing capacity, taken together, provide adequate
resources to fund expansion of existing businesses and the development
or acquisition of new businesses.
<PAGE>
MARKET RISK
The Company's earnings and cash flow can be affected by, among other
things, interest rate changes, foreign currency fluctuations (primarily
in the exchange rate for the Japanese yen) and changes in the price of
newsprint. The information disclosed in Market Risk in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, has not
changed materially unless otherwise disclosed herein.
The Company may use foreign currency forward and option contracts to
hedge its cash flow exposures denominated in Japanese yen and forward
contracts to reduce the risk of changes in the price of newsprint on
anticipated newsprint purchases. The Company held no foreign currency
or newsprint forward contracts at September 30, 2000, or December 31,
1999.
The following table presents additional information about the Company's
market-risk-sensitive financial instruments:
<TABLE>
<CAPTION>
( in thousands ) As of September 30, 2000 As of December 31, 1999
Cost Fair Cost Fair
Basis Value Basis Value
<S> <C> <C> <C> <C>
Financial instruments subject to interest rate risk:
Variable rate credit facilities, including commercial paper $ 509,196 $ 509,196 $ 565,689 $ 565,689
$100 million, 6.625% note, due in 2007 99,898 97,100 99,887 94,668
$100 million, 6.375% note, due in 2002 99,959 98,800 99,944 98,107
Other notes 1,972 857 3,927 2,836
Total long-term debt $ 711,025 $ 705,953 $ 769,447 $ 761,300
Financial instruments subject to market value risk:
Time Warner common stock (1,344,000 shares) $ 27,814 $ 105,318 $ 27,816 $ 97,227
Centra Software (1,792,500 common shares) 3,652 11,653
garden.com Inc. (2,414,000 common shares
and 276,000 warrants) 2,112 2,112 9,625 22,636
iVillage Inc. (41,000 common shares at September 30, 2000,
and 270,000 common shares at December 31, 1999) 157 157 5,897 5,897
Other available-for-sale securities 714 4,285 3,385 9,177
Total investments in publicly-traded companies 34,449 123,525 46,723 134,937
Investments in private companies 98,283 (a) 68,089 (a)
(a) Securities of private companies do not trade in public markets,
so they do not have readily determinable fair values. However,
if fair value is assumed to be the price from the most recent
round of financing or, for some securities, less based on
management's judgment of the circumstances, then the estimated
value of these investments was $173,000,000 on September 30, 2000,
and $96,000,000 on December 31, 1999. There can be no assurance
as to the amounts the Company would receive if these securities
were sold.
</TABLE>
The Company manages interest rate risk primarily by maintaining a mix of
fixed-rate and variable-rate debt. The Company currently does not use
interest rate swaps, forwards or other derivative financial instruments
to manage its interest rate risk. See Note 4 to the Consolidated
Financial Statements. The weighted-average interest rate on borrowings
under the Variable Rate Credit Facilities was 6.7% at September 30,
2000, and 6.0% at December 31, 1999.
The Company holds 1,792,500 shares of Centra Software, which became
publicly traded in January 2000. The Company's investment in Centra
Software had previously been included in private companies in the
above table. The estimated fair value of the Centra Software
investment on December 31, 1999, was $6 million.
Several of the Company's investments in available for sale securities
declined below historical cost during 2000 and were written down to
fair value.
<PAGE>
THE E. W. SCRIPPS COMPANY
Index to Exhibits
Exhibit
No. Item Page
12 Ratio of Earnings to Fixed Charges E-2
18 Independent Auditors' Letter of Preferability E-3
27 Financial Data Schedule E-4
