SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities and Exchange Act of 1934
Commission File Number ______________
SCRIPPS HOWARD, INC.
(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 45201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (513) 977-3000
Securities to be registered pursuant to the Section 12(b) of the Act:
Title of each class Name of each exchange
to be so registered on which each class is
to be registered
Class A Common Shares, $.01 par value New York Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act:
Not applicable
<PAGE>
INDEX TO FORM 10 REGISTRATION STATEMENT
Item No. Page
1. Business
Newspapers 4
Broadcast Television 7
Entertainment 10
Employees 11
2. Financial Information 11
3. Properties 11
4. Security Ownership of Certain Beneficial Owners and Management 12
5. Directors and Executive Officers 16
6. Executive Compensation 19
7. Certain Relationships and Related Transactions 27
8. Legal Proceedings 29
9. Market Price of and Dividends on the Registrant's Common Equity
and Related Stockholder Matters 30
10. Recent Sales of Unregistered Securities 30
11. Description of Registrant's Securities to be Registered 30
12. Indemnification of Directors and Officers 33
13. Financial Statements and Supplementary Data 33
14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 33
15. Financial Statements and Exhibits 34
<PAGE>
ITEM 1. BUSINESS
Scripps Howard, Inc. ("SHI") was formed on December 31, 1987 and is a
wholly-owned subsidiary of The E. W. Scripps Company ("Scripps"). SHI is a
direct or indirect parent of all of Scripps' operations.
On October 28, 1995, Scripps and Comcast Corporation ("Comcast") reached an
agreement pursuant to which Scripps will contribute all of its non-cable
television assets to SHI and SHI's cable television system subsidiaries
("Scripps Cable") will be transferred to and held directly by Scripps.
Scripps Cable will be acquired by Comcast through a tax-free merger (the
"Merger") with Scripps. The remaining SHI business will continue as "New
Scripps", which will be distributed in a tax-free "spin-off" to Scripps
shareholders (the "Spin-Off") prior to the Merger and thereafter renamed
The E.W. Scripps Company. The Merger and Spin-off are collectively
referred to as the "Transactions."
In connection with the Transactions, New Scripps has been recapitalized to
include Common Voting Shares and Class A Common Shares and the Articles of
Incorporation of New Scripps have been further amended to provide for
substantially the same shareholder voting rights and other terms as the
Scripps Certificate of Incorporation currently provides for. Prior to the
Spin-Off New Scripps will issue to Scripps: (i) a number of New Scripps
Common Voting Shares equal to the number of shares of Scripps Common Voting
Stock then outstanding and (ii) a number of New Scripps Class A Common
Shares equal to the number of shares of Scripps Class A Common Stock then
outstanding. These shares will then be distributed to Scripps'
shareholders in the Spin-Off. The total value in Comcast shares that
Scripps shareholders are expected to receive is $1.575 billion, subject to
certain closing adjustments.
The closing of the Transactions is expected to occur prior to the end
of 1996, subject to regulatory approvals and certain other conditions.
Controlling shareholders in Scripps and Comcast have agreed to vote in
favor of the Merger, and as a result completion of the Transactions is
assured so long as such conditions are satisfied and such regulatory
approvals are received. While there can be no assurances regarding
such approvals, management believes all such approvals will be obtained.
If all necessary regulatory approvals are not received and such other
conditions are not satisfied, the Transactions will not be consummated.
Accordingly all information herein assumes consummation of the
Transactions.
Scripps' historical basis in its assets and liabilities will be carried
over to New Scripps. The Transactions will be recorded as a reverse-spin
transaction, and accordingly New Scripps' results of operations for periods
prior to the consummation of the Transactions will be identical to the
historical results previously reported by Scripps. Because Scripps Cable
represents an entire business segment that will be divested, its results
are reported as "discontinued operations" for all periods presented.
Results of the remaining business segments, including results for divested
operating units within these segments through their dates of sale, are
reported as "continuing operations." Management of New Scripps intends to
continue to pay the same quarterly dividend per share as Scripps. Future
dividends will, however, be subject to New Scripps' earnings, financial
condition, and capital requirements.
<PAGE>
Newspapers
General - New Scripps publishes daily newspapers in sixteen markets,
acquiring the Vero Beach, Florida, daily newspaper in May 1996 for
$120 million. From its Washington bureau New Scripps operates the Scripps
Howard News Service, a supplemental wire service covering stories in the
capital, other parts of the United States, and abroad. New Scripps
acquired or divested the following newspaper operations in the five years
ended December 31, 1995:
1995 - Divested the Watsonville, California, daily newspaper.
1993 - Divested the Tulare, California, and San Juan, Puerto Rico
newspapers.
1992 - Acquired three daily newspapers in California. Divested The
Pittsburgh Press.
Revenues - New Scripps' newspaper operating revenues for the five years
ended December 31, 1995 are as follows:
<TABLE>
<CAPTION>
( in thousands )
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Newspaper advertising:
Local ROP $ 197,235 $ 190,147 $ 177,028 $ 168,286 $ 165,900
Classified ROP 179,694 161,835 141,994 122,081 118,641
National ROP 16,354 15,595 11,999 12,094 12,438
Preprint 68,645 63,103 57,304 50,720 45,729
Total newspaper advertising 461,928 430,680 388,325 353,181 342,708
Circulation 125,304 116,117 112,393 102,679 98,126
Joint operating agency distributions 43,863 44,151 38,647 40,018 36,647
Other 9,009 8,274 8,815 8,971 7,840
Total 640,104 599,222 548,180 504,849 485,321
Divested newspapers 294 3,716 19,874 103,838 205,565
Total newspaper operating revenues $ 640,398 $ 602,938 $ 568,054 $ 608,687 $ 690,886
</TABLE>
New Scripps' newspaper operating revenues are derived primarily from
advertising and circulation. Advertising rates and revenues vary among New
Scripps' newspapers depending on circulation, type of advertising, local
market conditions, and competition. Advertising revenues are derived from
run-of-paper ("ROP") advertisements included with news stories in the body
of the newspaper and from preprinted advertisements that are generally
produced by advertisers and inserted into the newspaper.
ROP is further broken down among "local," "classified," and "national"
advertising. Local refers to advertising that is not in the classified
advertising section and is purchased by in-market advertisers. Classified
refers to advertising in the section of the newspaper that is grouped by
type of advertising, e.g., automotive and help wanted. National refers to
advertising purchased by businesses that operate beyond the local market
and purchase advertising from many newspapers, primarily through
advertising agencies. A given volume of ROP advertisements is generally
more profitable to New Scripps than the same volume of preprinted
advertisements.
Advertising revenues vary through the year, with the first and third
quarters generally having lower revenues than the second and fourth
quarters. Advertising rates and volume are highest on Sundays, primarily
because circulation and readership is greatest on Sundays.
Advertising information for New Scripps' newspapers is as follows
(excluding divested newspapers):
<TABLE>
<CAPTION>
( in thousands )
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Newspaper advertising inches:
Local 6,810 6,941 6,618 7,016 7,247
Classified 6,704 6,576 6,080 5,438 5,446
National 338 319 283 310 372
Total full-run advertising inches 13,852 13,836 12,981 12,764 13,065
</TABLE>
Previously reported classified advertising inches have been restated to
report classified advertising inches as Standard Advertising Units ("SAU",
calculated on a 6 column page instead of a 10 column page).
<PAGE>
Circulation revenues are derived from home delivery sales of newspapers to
subscribers and from single-copy sales made through retail outlets and
vending machines. Circulation information for New Scripps' newspapers is
as follows:
<TABLE>
<CAPTION>
( in thousands ) (1) Morning (M)
Newspaper Evening (E) 1995 1994 1993 1992 1991
Daily Paid Circulation
<S> <C> <C> <C> <C> <C> <C>
Albuquerque (NM) Tribune (2) E 30.0 32.4 34.7 35.5 38.6
Birmingham (AL) Post-Herald (2) M (3) 58.2 59.6 60.1 61.9 60.6
Bremerton (WA) Sun M (4) 35.9 38.2 39.6 38.6 40.4
Cincinnati (OH) Post (2) E (6) 87.4 90.9 95.1 98.5 100.9
Denver (CO) Rocky Mountain News M 331.0 344.9 342.9 356.9 355.9
El Paso (TX) Herald Post (2) E 22.3 23.7 25.2 27.6 28.3
Evansville (IN) Courier (2) M 61.8 62.8 64.3 63.9 62.8
Knoxville (TN) News-Sentinel M 124.9 127.9 123.9 126.0 103.9
Memphis (TN) Commercial Appeal M 190.2 198.0 196.2 191.8 194.9
Monterey County (CA) Herald M (5) 34.7 35.3 34.3 36.7 35.3
Naples (FL) Daily News M 47.8 45.2 44.1 42.0 39.8
Redding (CA) Record-Searchlight M (4) 37.7 37.1 38.4 38.6 40.6
San Luis Obispo (CA)
Telegram-Tribune M (4) 32.2 32.2 32.5 31.5 32.5
Stuart (FL) News M 36.3 34.7 33.1 30.9 29.7
Ventura County (CA) Star M (4),(7) 96.3 102.9 99.6 97.8 98.9
Total Daily Circulation 1,226.7 1,265.8 1,264.0 1,278.2 1,263.1
Sunday Paid Circulation
Bremerton (WA) Sun 39.6 40.5 40.7 39.5
Denver (CO) Rocky Mountain News 436.1 447.2 453.3 430.1 425.4
Evansville (IN) Courier 114.0 116.4 118.6 118.1 117.7
Knoxville (TN) News-Sentinel 174.8 177.9 183.5 182.9 174.9
Memphis (TN) Commercial Appeal 269.4 279.9 279.5 282.3 282.4
Monterey County (CA) Herald (5) 38.1 39.1 35.1 38.2 37.3
Naples (FL) Daily News 61.4 58.4 57.4 54.8 51.7
Redding (CA) Record-Searchlight 39.9 40.3 40.7 40.9 40.0
Stuart (FL) News 44.4 43.1 40.6 37.5 35.4
Ventura County (CA) Star (7) 104.0 108.8 106.2 105.4 107.2
Total Sunday Circulation 1,321.7 1,351.6 1,355.6 1,329.7 1,272.0
(1) Based on Audit Bureau of Circulation
Publisher's Statements ("Statements") for the
six-month periods ending September 30, except
figures for the Naples Daily News and the
Stuart News which are from the Statements for
the twelve-month periods ending September 30.
(2) This newspaper is published under a JOA with
another newspaper in its market. See "Joint
Operating Agencies."
(3) Will move to evening distribution in 1996.
(4) Redding moved from evening to morning
distribution in 1994. Bremerton, San Luis
Obispo, and the Thousand Oaks and Simi Valley
editions of the Ventura County newspaper moved
to morning distribution in 1995.
(5) Acquired in 1992.
(6) Includes circulation of The Kentucky Post.
(7) Prior year amounts have been restated.
Ventura County, Thousand Oaks, and Simi Valley
Star are now reported as separate editions of a
single newspaper.
</TABLE>
Joint operating agency distributions represent New Scripps' share of
profits of newspapers managed by the other party to a joint operating
agency (see "Joint Operating Agencies"). Other newspaper operating
revenues include commercial printing.
<PAGE>
Joint Operating Agencies - New Scripps is currently a party to newspaper
joint operating agencies ("JOAs") in five 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. Except for
New Scripps' JOA in Cincinnati, all of New Scripps' JOAs were entered into
prior to the enactment of the NPA. From time to time the legality of pre-
NPA JOAs has been challenged on anti-trust grounds but no such challenge
has yet succeeded in the courts.
JOA revenues less JOA expenses, as defined in each JOA, equals JOA profits,
which are split between the parties to the JOA. In each case JOA expenses
exclude editorial expenses. New Scripps manages the JOA in Evansville and
receives approximately 80% of JOA profits. Each of the other four JOAs are
managed by the other party to the JOA. New Scripps receives approximately
20% to 40% of JOA profits for those JOAs.
The table below provides certain information about New Scripps' JOAs.
<TABLE>
<CAPTION>
Year JOA Year of JOA
Newspaper Publisher of Other Newspaper Entered Into Expiration
<S> <C> <C> <C>
Managed by New Scripps:
The Evansville Courier Hartmann Publications 1938 1998
Managed by Other Publisher:
The Albuquerque Tribune Journal Publishing Company 1933 2022
Birmingham Post-Herald Newhouse Newspapers 1950 2015
The Cincinnati Post Gannett Newspapers 1977 2007
El Paso Herald Post Gannett Newspapers 1936 2015
</TABLE>
The JOAs generally provide for automatic renewal terms of ten years unless
an advance notice of termination ranging from two to five years is given by
either party. New Scripps has notified Hartmann Publications of its intent
to terminate the Evansville JOA.
Competition - New Scripps' newspapers compete for advertising revenues
primarily with other local media, including other local newspapers,
television and radio stations, and direct mail. Competition for
advertising revenues is based upon audience size and demographics, price,
and effectiveness. Newspapers compete with all other information and
entertainment media for consumers' discretionary time.
All of New Scripps' newspaper markets are highly competitive, particularly
Denver, the largest market in which New Scripps publishes a newspaper.
Newspaper Production - New Scripps' daily newspapers are printed using
offset or flexographic presses and use computer systems for writing,
editing, and composing and producing the advertising and news material
printed in each edition.
Raw Materials and Labor Costs - New Scripps consumed approximately 190,000
metric tons of newsprint for the year ended December 31, 1995, a 6%
decrease from 1994. New Scripps purchases newsprint from various
suppliers, many of which are Canadian. Management believes that New
Scripps' sources of supply of newsprint are adequate for its anticipated
needs. Newsprint prices increased dramatically in 1994 and 1995. As a
result newsprint costs accounted for approximately 23% of New Scripps'
newspaper operating expenses in 1995 as compared to 19% in 1994, and were
26% of newspaper operating expenses in the first quarter of 1996. The
price of newsprint decreased in April 1996 and, as a result, the year-over-
year expense increase in the second quarter of 1996 is expected to be
approximately 10%. If the price does not change again, the year-over-year
third quarter newsprint expense will be about the same as, and the fourth
quarter expense is expected to be slightly less than, it was in 1995.
Labor costs accounted for approximately 43% of New Scripps' newspaper
operating expenses in 1995 and 45% in 1994. A substantial number of New
Scripps' newspaper employees are represented by labor unions. See
"Employees."
<PAGE>
Broadcast Television
General - New Scripps' television operations consist of nine network-
affiliated television stations. New Scripps acquired or divested the
following broadcast operations in the five years ended December 31, 1995:
1993 - Divested radio stations and Memphis television station.
1991 - Acquired Baltimore television station WMAR.
Revenues - New Scripps' broadcasting operating revenues for the five years
ended December 31, 1995 are as follows:
<TABLE>
<CAPTION>
( in thousands )
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Local advertising $ 150,489 $ 142,491 $ 130,603 $ 120,148 $ 106,610
National advertising 125,476 122,668 114,558 109,204 99,459
Political advertising 3,207 14,291 1,344 8,836 665
Other 16,056 8,734 8,439 9,037 9,661
Total 295,228 288,184 254,944 247,225 216,395
Divested television and radio stations 29,350 30,062 29,055
Total broadcasting operating revenues $ 295,228 $ 288,184 $ 284,294 $ 277,287 $ 245,450
</TABLE>
New Scripps' television operating revenues are derived primarily from the
sale of time to businesses for commercial messages that appear during
entertainment and news programming. Local advertising refers to time
purchased by local businesses; national refers to regional and national
businesses; political refers to campaigns for elective office and campaigns
for political issues.
The first and third quarters of each year generally have lower advertising
revenues than the second and fourth quarters. Advertising rates are based
primarily upon the size and demographics of the audience for each program.
Other revenues primarily consist of network compensation (see "Network
Affiliation and Programming"). The new and extended network affiliation
agreements signed in 1994 and 1995 with ABC require increased network
compensation payments.
<PAGE>
Information concerning New Scripps' stations and the markets in which they
operate is as follows:
<TABLE>
<CAPTION>
Current
Expiration Affiliation Stations
Network of FCC Rank of Agreement in
Station and Market Affiliation License Market(1) Expires Market(3) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WXYZ, Detroit, Ch. 7 ABC 1997 9 2004 6
Average Audience Share (2) 21 21 21 22 23
Station Rank in Market (3) 1 1 1 1 1
WEWS, Cleveland, Ch. 5 ABC 1997 13 2004 10
Average Audience Share (2) 19 20 20 21 20
Station Rank in Market (3) 1 1 1 1 1
WFTS, Tampa, Ch. 28 ABC (6) 1997 15 2004 10
Average Audience Share (2) 10 8 8 7 7
Station Rank in Market (3) 4 4 4 4 4
KNXV, Phoenix, Ch. 15 ABC (6) 1998 17 2004 11
Average Audience Share (2) 10 10 9 10 10
Station Rank in Market (3) 4 4 4 4 4
WMAR, Baltimore, Ch. 2 (4) ABC (6) 1996 23 2005 6
Average Audience Share (2) 15 17 19 17 21
Station Rank in Market (3) 3 3 2 2 1
WCPO, Cincinnati, Ch. 9 CBS (5) 1997 29 1996 5
Average Audience Share (2) 17 19 21 22 20
Station Rank in Market (3) 1 1 1 1 1
KSHB, Kansas City, Ch. 41 NBC (6) 1998 32 2004 7
Average Audience Share (2) 10 11 10 11 9
Station Rank in Market (3) 4 4 4 4 4
WPTV, W. Palm Beach, Ch. 5 NBC 1997 45 2004 6
Average Audience Share (2) 18 20 24 23 25
Station Rank in Market (3) 1 1 1 1 1
KJRH, Tulsa, Ch. 2 NBC 1998 59 2004 7
Average Audience Share (2) 16 16 15 16 17
Station Rank in Market (3) 3 4 3 3 3
All market and audience data is
based on November A.C. Nielsen
Company survey.
(1) Rank of Market represents the
relative size of the television
market in the United States.
(2) Represents the number of
television households tuned to a
specific station Sign-On/Sign-Off,
Sunday - Saturday, as a percentage of total
viewing households in Area of
Dominant Influence.
(3) Stations in Market does not
include public broadcasting
stations, satellite stations, or
translators which rebroadcast
signals from distant
stations. Station Rank in Market is
based on Average Audience Share as
described in (2).
(4) Station purchased May 30, 1991.
(5) Affiliation will change to ABC
in June 1996. The ABC affiliation
agreement has a term of ten years.
(6) Prior to January 1995 WFTS and
KNXV were FOX affiliates and WMAR
was a NBC affiliate; prior to
September 1994 KSHB was
a FOX affiliate.
</TABLE>
<PAGE>
Competition - New Scripps' television stations compete for advertising
revenues primarily with other local media, including other television
stations, radio stations, newspapers, and direct mail. Competition for
advertising revenues is based upon audience size and demographics, price,
and effectiveness. Television stations compete for consumers'
discretionary time with all other information and entertainment media.
Continuing technological advances will improve the capability of
alternative service providers such as traditional cable, "wireless" cable,
and direct broadcast satellite television to offer video services in
competition with terrestrial broadcasting. The degree of competition from
such service providers and from local telephone companies which are
pursuing efforts to enter this market is expected to increase. New Scripps
intends to undertake upgrades in its services as may be permitted by the
Federal Communications Commission ("FCC") to maintain its competitive
posture, and such facility upgrades may require large capital investments.
Technological advances in interactive media services will increase these
competitive pressures.
Network Affiliation and Programming - New Scripps' television stations are
affiliated with national television networks. The networks offer a variety
of programs to affiliated stations, which have the right of first refusal
before such programming may be offered to other television stations in the
same market. Networks compensate affiliated stations for carrying network
programming.
In addition to network programs, New Scripps' television stations broadcast
locally produced programs, syndicated programs, sports events, movies, and
public service programs. News is the focus of New Scripps' locally
produced programming. Advertising during local news programs accounts for
more than 30% of a station's revenues.
Federal Regulation of Broadcasting - Television broadcasting is subject to
the jurisdiction of the FCC pursuant to the Communications Act of 1934, as
amended ("Communications Act"). The Communications Act prohibits the
operation of television broadcasting stations except in accordance with a
license issued by the FCC and empowers the FCC to revoke, modify, and renew
broadcasting licenses, approve the transfer of control of any corporation
holding such licenses, determine the location of stations, regulate the
equipment used by stations, and adopt and enforce necessary regulations.
The Telecommunications Act of 1996 (the "1996 Act"), effective February 8,
1996, significantly relaxes the regulatory environment applicable to
broadcasters.
Under the new legislation, television broadcast licenses may be granted for
a term of eight years, rather than five, and they remain renewable upon
request. While there can be no assurance regarding the renewal of New
Scripps' television broadcast licenses, New Scripps has never had a license
revoked, has never been denied a renewal, and all previous renewals have
been for the maximum term. In January 1996 the FCC's staff granted the
application for renewal of the license for New Scripps' Phoenix station
that had been filed in 1993. The staff denied a petition to deny that
license filed by the League of United Latin American Citizens ("LULAC").
FCC regulations govern the multiple ownership of television stations and
other media. Under the multiple ownership rule, a license for a television
station will generally not be granted or renewed if (i) the applicant
already owns, operates, or controls a television station serving
substantially the same area, or (ii) the grant of the license would result
in the applicant's owning, operating, controlling, or having an interest
in, more than twelve television stations or in television stations whose
total national audience reach exceeds 25% of all television households.
The 1996 Act eliminates the twelve-station national cap and raises the
national household-percentage reach cap to 35%. The legislation also
directs the FCC to promptly reconsider its local multiple ownership limits
for television. The FCC rules also generally prohibit "cross-ownership" of
a television station and daily newspaper or cable television system in the
same service area. New Scripps' television station and daily newspaper in
Cincinnati were owned by New Scripps at the time the cross-ownership rules
were enacted and enjoy "grandfathered" status. These properties would
become subject to the cross-ownership rules upon their sale. The FCC has
also announced that it will consider during 1996 whether to amend its
newspaper/broadcast cross-ownership prohibition.
Under the Cable Television Consumer Protection and Competition Act of 1992
("1992 Act"), each television broadcast station gained "must-carry" rights
on any cable system defined as "local" with respect to that station.
Stations may waive their must-carry rights and instead negotiate
retransmission consent agreements with local cable companies. New Scripps'
stations have generally elected to negotiate retransmission consent
agreements with cable companies.
Management believes New Scripps is in substantial compliance with all
applicable regulatory requirements.
<PAGE>
Entertainment
General - New Scripps' Entertainment segment includes United Media, a
licensor and syndicator of news features and comics, Home & Garden
Television ("HGTV"), Scripps Howard Productions ("SHP"), Cinetel
Productions ("Cinetel"), an independent producer of cable television
programming, and New Scripps' equity interests in The Television Food
Network and SportSouth, both cable television networks. New Scripps'
equity interest in The Television Food Network was sold in May 1996
for $11 million. No material gain or loss was realized on the sale.
HGTV was launched on December 30, 1994. Cinetel was acquired on March 31,
1994. SHP began operations in 1993 and began selling programs in 1995.
Revenues - New Scripps' entertainment revenues for the five years ended
December 31, 1995 are as follows:
<TABLE>
<CAPTION>
( in thousands )
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Licensing $ 49,366 $ 49,236 $ 55,083 $ 57,136 $ 62,167
Newspaper feature distribution 18,915 17,998 18,814 19,013 19,827
Film and television production 13,789 5,725 10,757 11,060 9,617
Other 12,682 514 87
Total entertainment operating revenues $ 94,752 $ 73,473 $ 84,741 $ 87,209 $ 91,611
</TABLE>
New Scripps, under the trade name United Media, is a leading distributor of
news columns, comics, and other features for the newspaper industry.
Included among these features is "Peanuts", one of the most successful
strips in the history of comic art. United Media sold its worldwide
"Garfield" and "U.S. Acres" copyrights in 1994. Film and television
production revenues prior to 1994 were primarily related to "Garfield"
television programming.
United Media owns and licenses worldwide copyrights relating to "Peanuts"
and other character properties for use on numerous products, including
plush toys, greeting cards, and apparel, for promotional purposes, and for
exhibit on television, video cassettes, and other media. Merchandise,
literary, and exhibition licensing revenues are generally a negotiated
percentage of the licensee's sales. New Scripps generally receives a fixed
fee for the use of its copyrights for promotional and advertising purposes.
More than half of the licensing revenues are from markets outside the
United States. New Scripps generally pays a percentage of gross
syndication and licensing royalties to the creators of these properties.
HGTV features 24 hours of daily programming focusing on home repair and
remodeling, gardening, decorating, and other activities associated with the
home. New Scripps expects to invest an additional $35,000,000 in HGTV in
the next two years, including capital expenditures and pre-tax operating
losses.
HGTV revenues are derived from the sale of advertising time and from
program license fees received from cable television and other distribution
systems that carry the network. Such license fees are generally based on
the number of subscribers who receive HGTV.
HGTV programming is transmitted via satellite to cable television systems.
The HGTV audience includes satellite dish owners, who can view HGTV
programming without paying a fee. HGTV will begin to scramble its signal
in 1996.
SHP acquires, creates, develops, and produces programming product for
domestic and international television. Cinetel produces programs for cable
television, such as Club Dance at the Whitehorse Cafe and Shadetree
Mechanic.
New Scripps' film and television program production revenues are derived
from the licensing of programming to broadcast and cable television
networks, the fees for which are negotiated with the networks. The success
of New Scripps' programs is dependent upon public taste, which is
unpredictable and subject to change. Consequently, operating revenues are
subject to substantial fluctuations.
<PAGE>
Programs are developed and produced internally and in collaboration with a
number of independent writers, producers and creative teams under
production arrangements. SHP licenses a program prior to commencing
production. To date the initial license fees have approximated the
production costs of each program. SHP retains the distribution rights for
foreign, syndicated television, cable television, and home video markets.
Competition - New Scripps' newspaper feature distribution operations
compete for a limited amount of newspaper space with other distributors of
news columns, comics, and other features. Competition is primarily based
on price and popularity of the features. Popularity of licensed characters
is a primary factor in obtaining and renewing merchandise and promotional
licenses.
New Scripps' program and production operations compete with all forms of
entertainment. In addition to competing for market share with other
entertainment companies, New Scripps competes to obtain creative talents,
story properties, advertiser support and broadcast rights. A significant
number of other companies produce and/or distribute programs and provide
programming to cable television and other system operators. Competition is
primarily based on price, quality of the programming, and public taste.
Employees
As of December 31, 1995 New Scripps had approximately 6,700 full-time
employees, of whom approximately 4,800 were engaged in newspapers, 1,500 in
broadcasting, and 350 in entertainment. Various labor unions represent
approximately 1,900 employees, primarily in newspapers. Collective
bargaining agreements covering approximately 50% of union-represented
employees are being negotiated currently or will be negotiated in 1996.
Except for work stoppages at The Pittsburgh Press, which was sold in 1992,
New Scripps has not experienced any work stoppages since March 1985. New
Scripps considers its relationship with employees to be generally
satisfactory.
ITEM 2. FINANCIAL INFORMATION
The Selected Financial Data required by this item is filed as part of this
Form 10. See Index to Annual Consolidated Financial Statement Information
at page F-1 of this Form 10.
Management's Discussion and Analysis of Financial Condition and Results of
Operations required by this item is filed as part of this Form 10. See
Index to Annual Consolidated Financial Statement Information at page F-1 of
this Form 10 and Index to Quarterly Consolidated Financial Statement
Information at page F-40 of this Form 10.
ITEM 3. PROPERTIES
The properties used in New Scripps' newspaper operations generally include
business and editorial offices and printing plants.
New Scripps' television operations require offices and studios and other
real property for towers upon which broadcasting transmitters and antenna
equipment are located. Increased capital expenditures in 1994 and 1995 are
associated with more local news programming, primarily, in Kansas City,
Phoenix, and Tampa. Ongoing advances in the technology for delivering
video signals to the home, such as "high definition television," may, in
the future, require a high level of capital expenditures in order to
maintain competitive position.
New Scripps' entertainment operations require offices and studios and other
real and personal property to deliver programming product. HGTV and
Cinetel operate from an 80,000 square-foot production facility in
Knoxville.
Management believes New Scripps' present facilities are generally well-
maintained and are sufficient to serve its present needs.
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information with respect to persons
known to New Scripps to be the beneficial owners of more than five percent
of Scripps Class A Common Stock or Scripps Common Voting Stock. Unless
otherwise indicated, all information is as of July 31, 1996, and the
persons named in the table have sole voting and investment power with
respect to all shares shown therein as being beneficially owned by them.
Assuming that the Spin-Off had occurred as of the aforesaid date, the
information in the table below would also reflect the number of Class A
Common Shares and Common Voting Shares of New Scripps, and the respective
percentages thereof, beneficially owned by the persons named in such table.
<TABLE>
<CAPTION>
Common
Name and Address Class A Voting
of Beneficial Owner Common Stock Percent Stock Percent
<S> <C> <C> <C> <C>
The Edward W. Scripps Trust(1) 32,610,000 52.7% 16,040,000 82.38%
312 Walnut Street
Cincinnati, Ohio
Jack R. Howard(2) 3,659,198 5.9% 170,000 0.9%
c/o Scripps Howard, Inc.
Attn: Corporate Secretary
312 Walnut Street
Cincinnati, Ohio
Paul K. Scripps and 189,097 0.3% 1,616,113 8.3%
John P. Scripps Trust(3)
525 C Street, Suite 306
San Diego, California
The Capital Group Companies, Inc.(4) 4,226,400 6.8% 0
333 South Hope Street
Los Angeles, California
Chemical Bank, Trustee(5) 0 1,242,000 6.4%
270 Park Avenue
New York, New York
</TABLE>
<PAGE>
(1) Under the Trust Agreement establishing the Scripps Trust, the Scripps
Trust must retain voting stock sufficient to ensure control of Scripps
(and following the Spin-Off, New Scripps) until the final distribution
of the Scripps Trust estate unless earlier stock dispositions are
necessary for the purpose of preventing loss or damage to such estate.
The Scripps Trust will terminate upon the death of the last to survive
of four persons specified in the Scripps Trust, the youngest of whom
is 72 years of age. Upon the termination of the Scripps Trust,
substantially all of its assets (including all shares of capital stock
of Scripps or, following the Spin-Off, New Scripps, held by the
Scripps Trust) will be distributed to the grandchildren of Robert
Paine Scripps (a son of Edward W. Scripps), of whom there are 28.
Certain of these grandchildren have entered into an agreement among
themselves, other cousins and Scripps which will restrict transfer and
govern voting of shares of Scripps Common Voting Stock (and, following
the Spin-Off, New Scripps Common Voting Shares) to be held by them
upon termination of the Scripps Trust and distribution of the Scripps
Trust estate. This agreement will apply to the New Scripps Common
Voting Shares following the Spin-Off. See "Certain Relationships and
Related Transactions--Scripps Family Agreement."
(2) The shares listed for Mr. Howard consist of 3,327,385 shares of
Scripps Class A Common Stock and 170,000 shares of Scripps Common
Voting Stock held in an irrevocable trust established for the benefit
of Mr. Howard and his wife and of which Mr. Howard and his wife are
the sole trustees; and 331,813 shares of Scripps Class A Common Stock
owned by Mr. Howard's wife. Mr. Howard disclaims any beneficial
interest in the shares held by his wife.
(3) The shares listed for Mr. Paul K. Scripps include 119,520 shares of
Scripps Common Voting Stock and 400 shares of Scripps Class A Common
Stock held in various trusts for the benefit of certain relatives of
Paul K. Scripps and 100 shares of Scripps Class A Common Stock owned
by his wife. Mr. Scripps is a trustee of the aforesaid trusts. Mr.
Scripps disclaims beneficial ownership of the shares held in such
trusts and the shares owned by his wife. The shares listed also
include 1,445,453 shares of Scripps Common Voting Stock and 188,497
shares of Scripps Class A Common Stock held by five trusts of which
Mr. Scripps is a trustee. Mr. Scripps is the sole beneficiary of one
of such trusts, holding 349,018 shares of Scripps Common Voting Stock
and 47,124 shares of Scripps Class A Common Stock. He disclaims
beneficial ownership of the shares held in the other four trusts.
(4) The Capital Group Companies, Inc. ("Capital"), the parent company of
six investment management companies, has filed a Schedule 13G with the
Securities and Exchange Commission with respect to the Scripps Class A
Common Stock. According to the Schedule 13G for the year ended
December 31, 1995, Capital Guardian Trust Company and Capital Research
Management Company, operating subsidiaries of Capital, exercised as of
December 29, 1995 investment discretion with respect to 1,111,400 and
3,115,000 shares, respectively, or a combined total of 6.8% of the
outstanding Class A Common Stock, which was owned by various
institutional investors.
(5) Based on information provided by Chemical Bank for Scripps' 1996 proxy
statement, the 1,242,000 shares of Common Voting Stock are held in two
trusts of which Chemical Bank is the sole trustee. These trusts were
established by Jack R. Howard's parents for the benefit of his sister.
<PAGE>
Security Ownership of Management
The following information is set forth with respect to Scripps Class A
Common Stock and Scripps Common Voting Stock beneficially owned as of July
31, 1996, by each director, each named executive officer, and by all
directors and executive officers of Scripps as a group. Unless otherwise
indicated, the persons named in the table have sole voting and investment
power with respect to all shares shown therein as being beneficially owned
by them. Assuming that the Spin-Off had occurred as of the aforesaid date,
the information in the table below would also reflect the number of New
Scripps Class A Common Shares and New Scripps Common Voting Shares, and the
respective percentages thereof, beneficially owned by the persons named in
the table.
<TABLE>
<CAPTION>
Name of Individual Common
or Number of Persons Class A Voting
in Group Common Stock Percent Stock Percent
<S> <C> <C> <C> <C>
William R. Burleigh(1) 267,515 * 0
John H. Burlingame(2) 0 0
Ronald W. Tysoe 0 0
Lawrence A. Leser(3) 421,100 * 0
Daniel J. Meyer 300 * 0
Nicholas B. Paumgarten(4) 3,250 * 0
Charles E. Scripps(2)(5) 36,480 * 0
Paul K. Scripps(6) 189,097 * 1,616,113 8.3%
Robert P. Scripps(2) 0 0
Daniel J. Castellini(7) 158,735 * 0
Paul F. (Frank) Gardner(8) 83,319 * 0
Craig C. Standen(9) 77,630 * 0
Alan M. Horton(10) 67,299 * 0
All directors and executive
officers as a group
(23 persons) (11) 33,947,690 54.9% 17,656,113 90.7%
* Shares owned represent less than
one percent of the outstanding shares
of such class of stock.
</TABLE>
<PAGE>
(1) The shares listed for Mr. Burleigh include 205,000 shares of Scripps
Class A Common Stock underlying exercisable options held by him.
(2) This person is a Trustee of the Scripps Trust and has the power,
together with the other Trustees, to vote and dispose of the
32,610,000 shares of Scripps Class A Common Stock and the 16,040,000
shares of Scripps Common Voting Stock held by the Scripps Trust.
Messrs. Charles E. Scripps and Robert P. Scripps have a life income
interest in the Scripps Trust. Mr. Burlingame disclaims any
beneficial interest in the shares held by the Scripps Trust.
(3) The shares listed for Mr. Leser include 5,500 shares of Scripps
Class A Common Stock owned by his wife. Mr. Leser disclaims any
beneficial interest in these shares. The shares listed also include
321,100 shares of Scripps Class A Common Stock underlying exercisable
options held by Mr. Leser.
(4) The shares listed for Mr. Paumgarten include 2,000 shares of
Scripps Class A Common Stock held in trusts for the benefit of Mr.
Paumgarten's sons, and 850 shares of Scripps Class A Common Stock
owned by his wife. Mr. Paumgarten is the sole trustee of the
aforesaid trusts. Mr. Paumgarten disclaims beneficial ownership of
the shares held in such trusts and the shares owned by his wife.
(5) The shares listed for Mr. Charles E. Scripps include 500 shares
of Scripps Class A Common Stock owned by his wife. Mr. Scripps
disclaims any beneficial interest in these shares.
(6) The shares listed for Mr. Paul K. Scripps include 119,520 shares
of Scripps Common Voting Stock and 400 shares of Scripps Class A
Common Stock held in various trusts for the benefit of certain
relatives of Paul K. Scripps and 100 shares of Scripps Class A Common
Stock owned by his wife. Mr. Scripps is a trustee of the aforesaid
trusts. Mr. Scripps disclaims beneficial ownership of the shares held
in such trusts and the shares owned by his wife. The shares listed
also include 1,445,453 shares of Scripps Common Voting Stock and
188,497 shares of Scripps Class A Common Stock held by five trusts of
which Mr. Scripps is a trustee. Mr. Scripps is the sole beneficiary
of one of such trusts, holding 349,018 shares of Scripps Common Voting
Stock and 47,124 shares of Scripps Class A Common Stock. He disclaims
beneficial ownership of the shares held in the other four trusts.
(7) The shares listed for Mr. Castellini include 1,000 shares of
Scripps Class A Common Stock owned by his wife. Mr. Castellini
disclaims any beneficial interest in these shares. The shares listed
for Mr. Castellini also include 134,000 shares of Scripps Class A
Common Stock underlying exercisable options held by him.
(8) The shares listed for Mr. Gardner include 59,500 shares of
Scripps Class A Common Stock underlying exercisable options held by
him.
(9) The shares listed for Mr. Standen include 180 shares of Scripps Class
A Common Stock held by Mr. Standen as custodian for the benefit of his
children. Mr. Standen disclaims any beneficial interest in these
shares. The shares listed for Mr. Standen also include 66,275
shares of Scripps Class A Common Stock underlying exercisable options
held by him.
(10) The shares listed for Mr. Horton include 100 shares which are
held jointly with his wife. The shares listed for Mr. Horton also
include 57,550 shares of Class A Common Stock underlying exercisable
options held by him.
(11) The shares listed include the 32,610,000 shares of Scripps Class
A Common Stock and the 16,040,000 shares of Scripps Common Voting
Stock owned by the Scripps Trust.
<PAGE>
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
Executive Officers
The executive officers of New Scripps are as follows. Executive officers
serve at the pleasure of the Board of Directors. Certain information about
such officers appears in the table below.
Name Age Position
Lawrence A. Leser 60 Chairman of the Board of Directors (since
August 1994); Chief Executive Officer (1985 to May
1996); Director (since 1977); President (1985 to
August 1994)
William R. Burleigh 60 Chief Executive Officer (since May 1996);
President (since August 1994); Chief Operating
Officer (May 1994 to May 1996); Director (since
1990); Executive Vice President (1990 to August
1994); Senior Vice President/Newspapers and
Publishing (1986 to 1990)
Daniel J. Castellini 56 Senior Vice President/Finance and
Administration (since 1986)
F. Steven Crawford 47 Senior Vice President/Cable (since September
1992); Vice President, Cable (1990 to September
1992); General Manager, TeleScripps Cable Company
(1983 to 1990)
Paul F. (Frank) Gardner 53 Senior Vice President/Broadcasting (since
April 1993); Senior Vice President, News
Programming, Fox Broadcasting Company (1991 to
1993); Vice President and General Manager, WCPO
Television, Cincinnati (1988 to 1991)
Alan M. Horton 52 Senior Vice President/Newspapers (since May
1994); Vice President/Operations, Newspapers (1992
to May 1994); Editor, Naples Daily News (1987 to
1992)
Craig C. Standen 53 Senior Vice President/Corporate Development
(since August 1994); Vice President/Marketing-
Advertising, Newspapers (1990 to August 1994)
J. Robert Routt 41 Vice President and Controller (since 1985)
E. John Wolfzorn 50 Treasurer (since 1979)
M. Denise Kuprionis 39 Corporate Secretary (since 1987)
Gregory L. Ebel 40 Vice President/Human Resources (since 1994);
Senior Vice President, PNC Bank Ohio (1990 to
1994)
Richard A. Boehne 39 Vice President/Corporate Communications and
Investor Relations (since 1995); Director of
Corporate Communications and Investor Relations
(1989 to 1994)
Jeffrey J. Hively 42 Vice President/Newspaper Operations (since
May 1996); Vice President/Newspaper Operations of
Scripps Howard, Inc. (since May 1994); Director of
Circulation, Scripps Howard, Inc. (June 1992 to
May 1994); Director of Corporate Development,
Scripps Howard, Inc. (1989 to 1992)
Daniel K. Thommason 62 Vice President/News (since May 1996); Vice
President/News of Scripps Howard, Inc. (since
1986)
<PAGE>
James M. Hart 53 Vice President/Television (since May 1996);
Vice President/Television of Scripps Howard, Inc.
(since May 1995); President, Multimedia, Inc.'s
broadcasting division (September 1994 to May
1995); Vice President and General Manager WBIR, a
Multimedia television station (1981 to September
1994)
John H. Allen 41 Vice President/Information Systems (since May
1996); Vice President/Information Systems, Scripps
Howard, Inc. (since August 1990)
Directors
The directors of New Scripps are as follows. Each director serves until
the next succeeding annual meeting of stockholders and until his successor
is elected and qualified. Certain information about such directors appears
in the table below.
Director Principal Occupation or Occupation/
Name Age Since Business Experience for Past Five Years
Daniel J. Meyer(1) 59 1988 Chairman since January 1, 1991,
Chief Executive Officer since April 24,
1990, President and Chief Operating Officer
from November 1987 through April 1990, of
Cincinnati Milacron Inc. (a manufacturer of
metal working and plastics processing
machinery and systems).
Nicholas B. Paumgarten 50 1988 Managing Director of J.P. Morgan
& Co. Inc. since February 10, 1992 (an
investment banking firm); Managing Director
of Dillon, Read & Co. Inc. from March 19,
1991 through February 9, 1992 (an
investment banking firm); Managing Director
from 1981 through March 18, 1991 of The
First Boston Corporation (an investment
banking firm).
Ronald W. Tysoe 42 1996 Vice Chairman and Chief Financial
Officer of Federated Department Stores,
Inc., since April 1990.
John H. Burlingame(2) 62 1988 Executive Partner since 1982 of
Baker & Hostetler (law firm).
William R. Burleigh 60 1990 Chief Executive Officer since May
1996; President of Scripps since August
1994; Chief Operating Officer from May 1994
through May 1996, Executive Vice President
from March 1990 through August 1994.
Lawrence A. Leser(3) 60 1977 Chairman of Scripps since
August 1994, Chief Executive Officer from
July 1985 through May 1996, President from
July 1985 through August 1994.
Charles E. Scripps(4) 76 1946 Chairman of the Executive
Committee of Scripps since August 1994;
Chairman of the Board of Directors of
Scripps from 1953 to August 1994.
Paul K. Scripps(5) 50 1986 Chairman since December 1989 of
John P. Scripps Newspapers, a subsidiary of
Scripps.
Robert P. Scripps(6) 78 1949 A Director of Scripps since 1949.
<PAGE>
(1) Mr. Meyer is a director of Cincinnati Milacron Inc., Star Bank
Corporation (bank holding company) and Hubbell Incorporated
(manufacturer of wiring and lighting devices).
(2) Mr. Burlingame is a Trustee of The Edward W. Scripps Trust ("Scripps
Trust"). See Item 4 "Security Ownership of Certain Beneficial Owners
and Management."
(3) Mr. Leser is a director of Union Central Life Insurance Company and AK
Steel Holding Corporation (steel manufacturer).
(4) Mr. Charles E. Scripps is the brother of Robert P. Scripps and
Chairman of the Board of Trustees of the Scripps Trust.
(5) Mr. Paul K. Scripps serves as a director pursuant to an agreement
between the Scripps Trust and John P. Scripps. See Item 7 "Certain
Relationships and Related Transactions--John P. Scripps Newspapers."
(6) Mr. Robert P. Scripps is a Trustee of the Scripps Trust and the
brother of Charles E. Scripps.
Committees. The Scripps Board has, and after the Spin-Off the New Scripps
Board will have, an Executive Committee, an Audit Committee, a Compensation
Committee and an Incentive Plan Committee. The functions of each of these
committees are described and the members of each are listed below. The
functions of these committees will not change as a result of the Spin-Off,
and it is expected that the members of the New Scripps Committees following
the Spin-Off will be the same as those currently serving on the Scripps
Committees.
Charles E. Scripps, Lawrence A. Leser, William R. Burleigh and John H.
Burlingame are the members of the Executive Committee. The Executive
Committee exercises all of the powers of the Board in the management of
corporate business and affairs between Board meetings, except the power to
fill vacancies on the Board or its committees.
Daniel J. Meyer, Nicholas B. Paumgarten and Ronald W. Tysoe are the members
of the Audit Committee, which nominates the independent auditors each year,
reviews the audit plans of both the internal and independent auditors,
evaluates the adequacy of and monitors compliance with corporate accounting
policies, and reviews the annual financial statements. The internal and
independent auditors have unrestricted access to the Audit Committee.
Charles E. Scripps, Daniel J. Meyer, Ronald W. Tysoe and John H. Burlingame
are the members of the Compensation Committee, which establishes overall
compensation policy and determines compensation of senior management.
Daniel J. Meyer and Ronald W. Tysoe are the members of the Incentive Plan
Committee which determines annual bonus awards of senior management and
administers the 1987 Long-Term Incentive Plan ("Scripps Incentive Plan").
Meetings. The Scripps and New Scripps Boards held 4 regularly scheduled
and 5 special meetings during 1995. Each director of Scripps attended at
least 75% of all meetings of the Scripps and New Scripps Boards and
committees of the Scripps Board on which he serves.
Compensation of Directors. Each director elected by the holders of Scripps
Class A Common Stock receives an annual fee of $22,000, and an additional
$2,000 for each meeting that he attends of the Scripps Board or a committee
thereof on which he serves. Additionally, for each committee of which he
is chairman, such director receives an annual fee of $3,000. Directors
elected by the holders of Scripps Common Voting Stock, with the exception
of Charles E. Scripps and Lawrence A. Leser, do not receive any
compensation for services as directors or committee members. Charles E.
Scripps receives a fee for such services at the annual rate of $50,000, but
does not receive any additional fees for his attendance at Scripps Board or
Committee meetings. Effective May 1996 Lawrence A. Leser receives a fee
for consulting services at the annual rate of $250,000, but does not
receive any additional fees for his attendance at Scripps Board or
Committee meetings. It is expected that New Scripps will compensate
directors following the Spin-Off substantially in accordance with the
foregoing practices.
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION
Summary Compensation Table
Prior to the Spin-Off, Scripps executive officers will not have received
any compensation from New Scripps for serving as executive officers
thereof. It is expected that New Scripps will compensate its executive
officers following the Spin-Off substantially in accordance with the
compensation practices of Scripps.
The following table sets forth certain information regarding the
compensation earned by and paid and awarded to the Chief Executive Officer
of Scripps and each of the four other most highly compensated executive
officers of Scripps, during each of the last three fiscal years.
<TABLE>
<CAPTION>
Long-Term Compensation
Awards Payouts All
Restricted Securities Other
Annual Compensation Stock Underlying LTIP Compen-
Award(s) Options/ Payouts sation
Principal Position Year Salary Bonus (1) SARs (#) (2) (3)
<S> <C> <C> <C> <C> <C> <C> <C>
Lawrence A. Leser 1995 $ 675,000 $ 540,000 $ 0 0 $ 0 $ 4,500
Chairman (4) 1994 650,000 520,000 0 40,000 0 4,500
1993 630,000 250,000 0 140,000 76,000 7,075
William R. Burleigh 1995 $ 455,000 $ 227,500 $ 0 0 $ 0 $ 4,500
President and Chief 1994 423,333 211,667 180,780 30,000 0 4,500
Executive Officer (5) 1993 400,000 100,000 0 75,000 21,600 7,075
Paul F. (Frank) Gardner 1995 $ 380,000 $ 106,400 $ 0 0 $ 0 $ 4,500
Senior Vice President/ 1994 330,000 132,000 376,625 25,000 0 4,500
Broadcasting (6) 1993 225,000 120,000 413,925 56,500 0 6,000
Daniel J. Castellini 1995 $ 335,000 $ 134,000 $ 0 0 $ 0 $ 4,500
Senior Vice President/ 1994 325,000 130,000 0 20,000 0 4,500
Finance and Administration 1993 325,000 85,000 0 48,000 26,208 7,075
Craig C. Standen 1995 $ 325,000 $ 130,000 $ 0 0 $ 0 $ 4,500
Senior Vice President/ 1994 310,000 103,833 210,975 20,000 0 4,500
Corporate Development (7)
Alan M. Horton 1995 $ 325,000 $ 130,000 $ 0 0 $ 0 $ 4,500
Senior Vice President/ 1994 255,938 92,813 210,975 20,000 14,323 4,500
Newspapers (8)
</TABLE>
(1) The aggregate number and value of restricted stock holdings
("Restricted Stock Awards") for each named executive officer as of the
end of 1995 were as follows: Mr. Burleigh held 6,000 shares with a
value of $239,250; Mr. Gardner held 24,500 shares with a value of
$976,938; Mr. Standen and Mr. Horton each held 7,500 shares, with a
value of $299,063 each. Dividends were paid during 1995 on the shares
of restricted stock held by each named executive officer at a rate of
thirteen cents per share per quarter, except for the first quarter
when the dividend rate was eleven cents. Messrs. Leser and Castellini
did not hold any restricted stock at December 31, 1995. All
restricted shares are shares of Scripps Class A Common Stock. New
Scripps will assume the Restricted Stock Awards and the Scripps
Incentive Plan pursuant to the Spin-Off.
<PAGE>
(2) Represents compensation paid pursuant to the Scripps Medium Term Bonus
Plan. This plan terminated in 1991. The final vesting period, with
respect to contingent awards outstanding under this plan, was December
1993.
(3) Represents compensation paid pursuant to the Scripps Retirement and
Investment Plan.
(4) Mr. Leser retired from the position of Chief Executive Officer in May
1996.
(5) Mr. Burleigh was elected to the position of Chief Executive Officer in
May 1996. He previously had served as President and Chief Operating
Officer.
(6) Mr. Gardner was elected to the position of Senior Vice
President/Broadcasting on April 1, 1993. The compensation reported
for 1993 reflects his actual 1993 earnings.
(7) Mr. Standen was elected an executive officer of Scripps in August
1994. Prior to this appointment he was a Vice President of a
subsidiary of Scripps. The compensation reported for 1994 reflects
his actual 1994 earnings.
(8) Mr. Horton was elected an executive officer of Scripps in May 1994.
Prior to this appointment he was a Vice President of a subsidiary of
Scripps. The compensation reported for 1994 reflects his actual 1994
earnings.
Option/SAR Grants in 1995
Scripps maintains (i) the Scripps Incentive Plan and (ii) the 1994 Non-
Employee Directors' Stock Option Plan ("Scripps Directors' Plan," and
collectively, the "Scripps Stock Plans"). New Scripps will assume these
plans and the options and awards outstanding under them. Accordingly, upon
consummation of the Spin-Off, all references in such plans, options and
awards to Scripps and Scripps Class A Common Stock will be deemed to refer
to New Scripps and New Scripps Class A Common Shares. There were no option
grants to the named executives in 1995.
Aggregated Option/SAR Exercises in 1995 and FY-End Option/SAR Values
The following table sets forth certain information regarding the number and
value of options for shares of Scripps Class A Common Stock held by the
named executives at December 31, 1995. One executive exercised an option
during 1995. These options will be assumed by New Scripps pursuant to the
Spin-Off.
<TABLE>
<CAPTION>
Value of
Number of Securities Unexercised
Underlying Unexercised In-the-Money Options/
Shares Acquired Value Options/SARs at12/31/95 SARs at 12/31/95 ($)
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Lawrence A. Leser 325,500 / 12,000 $4,641,988 / 263,940
William R. Burleigh 195,000 / 10,000 $2,806,225 / 219,950
Paul F. (Frank) Gardner 22,000 $294,945 59,500 / 0 $555,938 / 0
Daniel J. Castellini 129,000 / 5,000 $1,865,525 / 109,975
Craig C. Standen 60,275 / 6,000 $934,807 / 131,970
Alan M. Horton 56,050 / 1,500 $781,061 / 32,993
</TABLE>
<PAGE>
Scripps Stock Plans to be Assumed by New Scripps
In connection with the Merger and related transactions, New Scripps will
assume the Scripps Stock Plans and the options and awards outstanding
thereunder. All references in such plans to Scripps and Scripps Class A
Common Stock will be deemed to refer to New Scripps and New Scripps Class A
Common Shares. Approval of the Merger by the holders of Scripps Common
Voting Stock will constitute approval of New Scripps' assumption of the
Scripps Stock Plans for purposes of the stockholder approval requirements
of Rule 16b-3 under the Exchange Act.
Scripps Incentive Plan. Upon consummation of the Spin-Off, New Scripps
will assume the Scripps Incentive Plan and all options and awards
outstanding thereunder. All such options and awards will be adjusted in
accordance with the plan by the Compensation Committee so as to prevent
enlargement or dilution of the rights represented by such options and
awards. No amendments will be made to the Scripps Incentive Plan as a
result of the Spin-Off. All information appearing below about the Scripps
Incentive Plan will continue to apply to the plan after assumption thereof
by New Scripps.
The purpose of the Scripps Incentive Plan is to promote the long-term
growth and profitability of Scripps by enabling it to attract and retain
the best available persons for positions of substantial responsibility.
Grants of incentive or nonqualified stock options, stock appreciation
rights (in tandem with or independent of options) ("SARs"), restricted or
nonrestricted share awards, performance units, or any combination thereof,
may be made under the Scripps Incentive Plan. Participation is limited to
officers and other key employees of Scripps selected by the Compensation
Committee. Directors who are not officers of Scripps are not eligible to
participate in the Scripps Incentive Plan. Scripps has reserved 4,761,609
shares of Class A Common Stock for issuance under the plan. The maximum
number of shares of Scripps Class A Common Stock with respect to which
options, SARs, restricted stock or performance units, or any combination
thereof, may be granted under the Scripps Incentive Plan to any employee in
any one calendar year is limited to 500,000 shares.
Stock Options and SARs. The exercise price of stock options granted under
the Scripps Incentive Plan shall not be less than 100% of the fair market
value of the shares on the date the option is granted. The Compensation
Committee may grant incentive or nonqualified options. Options may be
exercised upon payment of the exercise price in cash, in shares previously
acquired by the optionee, or a combination of cash and such shares.
Options may also be exercised in accordance with a "cashless" exercise
procedure that permits the optionee to sell all or a portion of the shares
underlying the option or obtain a margin loan from a broker sufficient to
enable payment in either case of the exercise price of the option. The
Compensation Committee shall determine the date or dates on which each
option shall become exercisable. The Compensation Committee may accelerate
the vesting of any option or SAR held by an employee who retires or whose
employment is otherwise terminated for any reason other than cause.
"Cause" means, generally, conviction of a felony, conduct that could cause
demonstrable and serious injury to Scripps, or gross dereliction of duty or
other grave misconduct. Retired employees have a period of five years
following retirement to exercise their options and SARs. Upon a change in
control of Scripps there will be an automatic acceleration of the vesting
of any outstanding option or SAR as of the date of such change in control.
<PAGE>
The Compensation Committee is authorized to grant SARs under the Scripps
Incentive Plan independently of or in tandem with stock options. The
exercise of an option shall result in an immediate forfeiture of its
corresponding tandem SAR, and the exercise of a tandem SAR shall cause an
immediate forfeiture of its corresponding option. A tandem SAR shall
expire at the same time as and shall be transferable only when and under
the same conditions as the related option. Tandem SARs shall be exercised
only when, to the extent and on the conditions that the related option is
exercisable. Upon exercise, the optionee shall be entitled to distribution
of an amount equal to the difference between the fair market value of a
share of Scripps Class A Common Stock on the date of exercise and the
exercise price of the option to which the SAR corresponds. The
Compensation Committee shall decide whether such distribution shall be in
cash, in shares, or in a combination thereof. All tandem SARs will be
exercised automatically on the last day prior to the expiration date of the
related option. An independent SAR will entitle an employee to receive,
with respect to each share of Class A Common Stock as to which the SAR is
exercised, the excess of the fair market value of one share of such stock
on the date of exercise over its fair market value on the date such SAR was
granted. As defined in the Scripps Incentive Plan, "fair market value"
means the average of the highest and lowest selling prices of the Scripps
Class A Common Stock as reported on the New York Stock Exchange on the date
in question. Independent SARs may become exercisable at such time or
times, and on such conditions as the Compensation Committee may specify,
except that no such SAR will become exercisable during the first six months
following the date on which it was granted. The Scripps Incentive Plan
provides that each independent SAR will be exercised automatically on the
last day prior to its expiration date. Payments of the amount to which an
employee is entitled upon the exercise of an independent SAR shall be made
in cash or shares of Scripps Class A Common Stock, or in any combination
thereof, as the Compensation Committee shall determine. To the extent that
the payment is made in shares, the shares will be valued at their fair
market value on the day of exercise of such SAR.
No option, SAR or performance unit shall be transferable by an employee
otherwise than by will or the laws of descent and distribution or pursuant
to a qualified domestic relations order. The Scripps Incentive Plan
provides that the Compensation Committee shall make adjustments as it deems
appropriate in the number and kind of shares reserved for issuance under
the Plan, and the number and kind of shares covered by grants made under
the plan and in the exercise price of outstanding options, in certain
events, such as reorganization, recapitalization, stock split or merger.
The Compensation Committee may also authorize cash awards to any
participant in order to assist him or her in meeting tax obligations with
respect to shares received under the plan.
Share Awards. The Compensation Committee may award shares of Scripps Class
A Common Stock under the Scripps Incentive Plan and place restrictions on
transfer of such shares. Each award shall specify the applicable
restrictions, if any, on such shares, the duration of such restrictions,
and the time at which such restrictions shall lapse. Participants will be
required to deposit shares with Scripps during the period of any
restriction on transfer.
Performance Units. The Compensation Committee may grant performance units
to participants under the Scripps Incentive Plan. Each unit shall have a
dollar value determined at the time of grant. The value of each unit may
be fixed or it may fluctuate based on a performance factor (e.g., return on
equity) selected by the Compensation Committee. The Compensation Committee
shall establish performance goals that, depending on the extent to which
they are met, will determine the final value of the performance units or
the final number of units actually earned by participants, or both.
Performance units that are earned by a participant may be paid in
restricted or nonrestricted shares, in cash, or in a combination of both at
the Compensation Committee's discretion.
Miscellaneous. The Scripps Incentive Plan provides for vesting, exercise
or forfeiture of rights granted under the Scripps Incentive Plan on
retirement, death, disability, termination of employment or a change of
control. The Board of Directors may modify, suspend or terminate the
Scripps Incentive Plan as long as it does not impair the rights of any
participant thereunder. The holders of Scripps Common Voting Stock must
approve any increase in the maximum number of shares reserved for issuance
under the plan, any change in the classes of employees eligible to
participate in the plan and any material increase in the benefits accruing
to participants. The Scripps Incentive Plan was approved by the holders of
Scripps Common Voting Stock in December 1987 and shall terminate in
December 1997 except with respect to awards or options then outstanding.
Scripps Directors' Plan. Upon consummation of the Spin-Off, New Scripps
will assume the Scripps Directors' Plan and all options outstanding
thereunder. All such options will be adjusted in accordance with the plan
by the Compensation Committee so as to prevent enlargement or dilution of
the rights represented by such options. No amendments will be made to this
plan as a result of the Spin-Off. All information appearing below about
the Scripps Directors' Plan will continue to apply to the plan after
assumption thereof by New Scripps.
<PAGE>
The purpose of the plan is to strengthen the alignment of interests between
non-employee directors and the stockholders of Scripps through the
increased ownership by such directors of shares of Scripps Class A Common
Stock. The total number of shares of Class A Common Stock of Scripps that
may be made subject to options awarded under the Plan is 50,000.
Participation is limited to non-employee directors of Scripps elected by
the holders of Class A Common Stock.
Under the plan, each qualified director shall receive a one-time non-
qualified stock option for 5,000 shares of Class A Common Stock at the time
of initial election. Directors Daniel J. Meyer, Nicholas B. Paumgarten,
Ronald W. Tysoe and former director David R. Huhn have received options for
5,000 shares of Class A Common Stock.
The exercise price of each option granted under the plan shall be equal to
the fair market value of a share of Scripps Class A Common Stock on the
date that the option is granted. Options may be exercised in whole or in
part upon payment of the exercise price in cash or in shares of Scripps
Class A Common Stock previously acquired or a combination of cash and such
shares. The plan also provides for "cashless exercise" of options pursuant
to which a participant pays the exercise price of his options by selling
all or part of the underlying common shares.
The stock options granted under the plan to the current and retired non-
employee directors of Scripps, with the exception of Ronald W. Tysoe, are
exercisable and shall expire on December 9, 2004. All other stock options
granted under the plan, including those granted to Mr. Tysoe, shall be
exercisable on the first anniversary of the recipient's election as a
director by the holders of Scripps Class A Common Stock and shall have
terms of ten years from the date of grant.
Options granted under the plan are not transferable except as permitted by
applicable law. The plan provides for appropriate adjustments in the
number and kind of shares reserved for issuance under the plan or covered
by options granted under the Plan and in the exercise price of outstanding
options in the event of a reorganization, stock split, merger, or similar
event. The plan will continue in effect until its expiration on December
9, 2004, and options then outstanding will continue in effect until the
expiration of their terms.
Rule 16b-3. Pursuant to Section 16(b) of the Exchange Act, directors,
certain officers and 10% stockholders of Scripps are generally liable to
Scripps for repayment of any "short-swing" profits realized from any non-
exempt purchase and sale of Scripps Common Stock occurring within a six-
month period. Rule 16b-3, promulgated under the Exchange Act, provides an
exemption from Section 16(b) liability for certain transactions by an
officer or director pursuant to an employee benefit plan that complies with
such rule. Specifically, the grant of an option under an employee benefit
plan that complies with Rule 16b-3 will not be deemed the purchase of a
security and the actual or deemed sale of shares in connection with certain
option exercises will not be deemed a sale for Section 16(b) purposes. The
Scripps Stock Plans are designed to comply with Rule 16b-3.
Federal Income Tax Consequences of the Scripps Stock Plans. The following
is a summary of the federal income tax consequences of transactions under
the Scripps Stock Plans.
Incentive Stock Options. No taxable income is realized by the optionee
upon the grant or exercise of an incentive stock option. If Class A Common
Stock is issued to an optionee pursuant to the exercise of an incentive
stock option, and if no disqualifying disposition of such stock is made by
such optionee within two years after the date of grant or within one year
after the transfer of such shares to such optionee, then (a) upon the sale
of such stock a long-term capital gain or loss will be realized in an
amount equal to the difference between the option price and the amount
realized by the optionee and (b) no deduction will be allowed to Scripps
for federal income tax purposes. The excess (if any) of the fair market
value of the shares on the date of exercise over the option price, however,
is includable in alternative minimum taxable income unless the shares are
disposed of in the taxable year the option is exercised.
If Class A Common Stock acquired upon the exercise of an incentive stock
option is disposed of prior to the expiration of either holding period
described above, generally (i) the optionee realizes ordinary income in the
year of disposition in an amount equal to the excess (if any) of the fair
market value of the shares on the date of exercise (or, if less, the amount
realized on the disposition of the shares) over the option price paid for
such shares and (ii) Scripps will be entitled to deduct the amount realized
as ordinary income by the optionee if Scripps satisfies applicable federal
withholding or reporting requirements. Any further gain (or loss) realized
by the participant will be taxed as short-term or long-term capital gain
(or loss), as the case may be, and will not result in any deduction for
Scripps.
<PAGE>
With respect to the exercise of an incentive stock option and the payment
of the option price by the delivery of shares of Class A Common Stock, to
the extent that the number of shares received does not exceed the number of
shares surrendered, no taxable income will be realized by the optionee at
that time, the tax basis of the shares received will be the same as the tax
basis of the shares surrendered, and the holding period (except for
purposes of the one-year period referred to above) of the optionee in
shares received will include his holding period in the shares surrendered.
To the extent that the number of shares received exceeds the number of
shares surrendered, no taxable income will be realized by the optionee at
that time; such excess shares will be considered incentive stock option
stock with a zero basis; and the holding period of the optionee in such
shares will begin on the date such shares are transferred to the optionee.
If the shares surrendered were acquired as the result of the exercise of an
incentive stock option and the surrender takes place within two years from
the date the option relating to the surrendered shares was granted or
within one year from the date of such exercise, the surrender will result
in a disqualifying disposition and the optionee will realize ordinary
income at that time in the amount of the excess, if any, of the fair market
value at the time of exercise of the shares surrendered over the basis of
the such shares. If any of the shares received are disposed of in a
disqualifying disposition, the optionee will be treated as first
disposing of the shares with a zero basis.
Non-Qualified Stock Options. With respect to non-qualified stock options
generally, (a) no income is realized by the optionee at the time the option
is granted, (b) upon exercise of the option, the optionee realizes ordinary
income in an amount equal to the excess, if any, of the fair market value
of the shares of Class A Common Stock on the date of exercise over the
option price paid for the shares, and Scripps is entitled to a tax
deduction in the amount of ordinary income realized (provided that
applicable withholding or reporting requirements are satisfied), and (c)
upon disposition of the Class A Common Stock received upon the exercise of
the option, the optionee receives, as either short-term or long-term
capital gain (or loss), depending upon the length of time that the optionee
has held the shares, income (or loss) equal to the difference between the
amount realized and the fair market value of the shares on the date of
exercise.
With respect to the exercise of a non-qualified stock option and the
payment of the option price by the delivery of shares of Class A Common
Stock, to the extent that the number of shares received does not exceed the
number of shares surrendered, no taxable income will be realized by the
optionee at that time, the tax basis of the shares received will be the
same as the tax basis of the shares surrendered, and the holding period of
the optionee in the shares received will include his holding period in the
shares surrendered. To the extent that the number of shares received
exceeds the number of shares surrendered, ordinary income will be realized
by the optionee at that time in the amount of the fair market value of such
excess shares, the tax basis of such excess shares will be such fair market
value, and the holding period of the optionee in such shares will begin on
the date such shares are transferred to the optionee.
Stock Appreciation Rights. No income will be realized by an optionee in
connection with the grant of a stock appreciation right under the Scripps
Incentive Plan. When the right is exercised, the optionee will generally
be required to recognize as ordinary income in the year of exercise an
amount equal to the sum of the amount of cash and the fair market value of
any shares received. Scripps will be entitled to a deduction equal to the
amount included in such optionee's ordinary income by reason of the
exercise if Scripps satisfies applicable federal withholding or reporting
requirements. If the optionee received Class A Common Stock upon the
exercise of a stock appreciation right, the post-exercise appreciation (or
depreciation) will be treated in the same manner as discussed above under
"Non-Qualified Stock Options."
Restricted Stock Awards. A recipient of a restricted stock award generally
will recognize ordinary income equal to the difference between the fair
market value of the restricted stock at the time the stock is transferable
or not subject to a substantial risk of forfeiture and the consideration,
if any, paid for the stock. A recipient may elect, however, within 30 days
of the date of grant, to recognize taxable ordinary income on the date of
grant equal to the excess of the fair market value of the shares of
restricted stock on such date (determined without regard to any
restrictions other than restrictions which will never lapse) over the
consideration, if any, paid for such restricted stock. Scripps generally
will be entitled to a deduction equal to the amount that is taxable as
ordinary income to the recipient if Scripps satisfies applicable federal
withholding or reporting requirements.
Performance Units. A recipient of performance units will recognize
ordinary income when the objectives for a performance unit are satisfied.
The time at which a recipient of a performance unit will recognize ordinary
income will generally depend upon whether the recipient receives restricted
or nonrestricted stock, cash or a combination thereof. Scripps generally
will be entitled to a deduction equal to the amount that is taxable as
ordinary income to the recipient if Scripps satisfies certain withholding
requirements.
<PAGE>
Capital Gains. Under current law, capital gains are subject to the same
tax rates that apply to ordinary income, except the rate on long-term
capital gains may not exceed 28%. Capital losses may be utilized to offset
capital gains to the extent of capital gains, and $3,000 of capital losses
in excess of capital gains ($1,500 in the case of a married individual
filing a separate return) is deductible against other income.
To receive long-term capital gain (loss) treatment with respect to any
appreciation (depreciation) in the value of Class A Common Stock acquired
pursuant to the Scripps Stock Plans, the participant must hold such shares
for more than one year. Shares held for one year or less will receive
short-term capital gain or loss treatment.
Dividends and Dividend Equivalents. Dividends paid on restricted stock
generally will be treated as compensation that is taxable as ordinary
income to the participant and may be deductible by Scripps. If, however,
the participant makes a Section 83(b) election, the dividends will be
taxable as ordinary income to the participants, but will not be deductible
by Scripps.
$1,000,000 Deduction Limitation. Scripps is not entitled to deduct annual
remuneration in excess of $1 million (the "Deduction Limitation") paid to
certain of its employees unless such remuneration satisfies an exception to
the Deduction Limitation, including an exception for performance-based
compensation. Thus, unless options, rights or awards granted under the
Scripps Incentive Plan satisfy an exception to the Deduction Limitation,
Scripps' deduction with respect to such options, rights or awards will be
subject to the Deduction Limitation.
Under Treasury Regulations, compensation attributable to a stock option,
stock appreciation right, restricted stock or performance unit is deemed to
satisfy the performance based compensation exception if:
"the grant or award ... is made by the
compensation committee; the plan under which the option
or right ... is granted states the maximum number of
shares with respect to which options or rights ... may
be granted during a specified period to any employee;
and, under the terms of the option or right ... the
amount of compensation the employee could receive is
based solely on an increase in the value of the stock
after the date of the grant or award . . ."
If a compensation committee comprised solely of two or more "outside
directors" within the meaning of Section 162(m) of the Internal Revenue
Code of 1986 (the "Code") makes grants, Scripps' deduction with respect to
options granted under the Scripps Incentive Plan will not be subject to the
Deduction Limitation.
Compensation Committee Interlocks and Insider Participation
Daniel J. Meyer, Charles E. Scripps, Ronald W. Tysoe and John H. Burlingame
are the members of Scripps' Compensation Committee. Following consummation
of the Spin-Off, it is expected that the members of Scripps' Compensation
Committee will continue to serve on New Scripps' Compensation Committee.
Mr. Charles E. Scripps and Mr. Robert P. Scripps, directors of Scripps and
New Scripps, are general partners in Jefferson Building Partnership (the
"Jefferson Partnership"), which was formed in 1984. The Albuquerque
Publishing Company, a subsidiary of Scripps that is a 50% owned partnership
that operates The Albuquerque Tribune under a joint operating agreement,
leases the facilities for The Albuquerque Tribune from a partnership
controlled in part by the Jefferson Partnership. This lease terminates in
2004. Total rent under the lease for 1995 was approximately $1,851,790.
The Albuquerque Publishing Company has an option to purchase the property
that is exercisable until 2034. The purchase price will be equal to 7.7
times the base rent for the lease year in which the property is purchased.
The parties to the Albuquerque joint operating agreement lease the land on
which the Albuquerque facilities are situated to the Jefferson Partnership
under a lease terminating in 2034 and providing for rent of $150,000 per
year, subject to certain adjustments for inflation. The lease income for
1995 was $168,000. The Jefferson Partnership has subleased the land to the
Albuquerque Publishing Company as part of the facilities lease arrangement
described above.
Mr. Charles E. Scripps and Mr. John H. Burlingame are both Trustees of the
Scripps Trust. Both are expected to continue to serve as Trustees of the
Scripps Trust in 1996. As Trustees, Mr. Scripps and Mr. Burlingame share
the power, together with the other Trustee, to vote and dispose of the
32,610,000 shares of Scripps Class A Common Stock and 16,040,000 shares of
Scripps Common Voting Stock held by the Scripps Trust. Following the Spin-
off, the Scripps Trust will hold 32,610,000 New Scripps Class A Common
Shares and 16,040,000 New Scripps Common Voting Shares. Mr. Scripps has a
life income interest in the Scripps Trust. Mr. Burlingame is the Executive
Partner of Baker and Hostetler, general counsel to Scripps.
<PAGE>
Pension Plan
Executive officers and substantially all other non-union employees of
Scripps and New Scripps are participants in a non-contributory defined
benefit pension plan (the "Pension Plan"). Contributions to the Pension
Plan are based on separate actuarial computations for each business unit
and are made by the business unit compensating the particular individual.
Following the Spin-Off, New Scripps will continue the Pension Plan.
<TABLE>
<CAPTION>
Years of Service
Remuneration 15 Years 20 Years 25 Years 30 Years 35 Years
<C> <C> <C> <C> <C> <C>
$ 300,000 $ 55,000 $ 74,000 $ 92,000 $ 111,000 $ 129,000
400,000 74,000 99,000 123,000 148,000 173,000
500,000 93,000 124,000 155,000 186,000 216,000
600,000 112,000 149,000 186,000 223,000 260,000
700,000 130,000 174,000 217,000 261,000 304,000
800,000 149,000 199,000 248,000 298,000 348,000
900,000 168,000 224,000 280,000 336,000 391,000
1,000,000 187,000 249,000 311,000 373,000 435,000
1,500,000 280,000 374,000 467,000 561,000 654,000
</TABLE>
The above table shows the annual normal retirement benefits which, absent
the maximum benefit limitations (the "Benefit Limitations") imposed by
Section 415(b) of the Code would be payable pursuant to the Pension Plan
upon retirement at age 65 (based upon the 1996 social security integration
level under the Pension Plan), pursuant to a straight life annuity option,
for employees in the compensation ranges specified and under various
assumptions with respect to average final annual compensation and years of
credited services.
In general, the Benefit Limitations limit the annual retirement benefits
that may be paid pursuant to the Pension Plan to $120,000 (subject to
further cost-of-living increases promulgated by the United States Secretary
of the Treasury). Payments under the Pension Plan are supplemented with
direct pension payments equal to the amount, if any, by which the benefits
that otherwise would be payable under the Pension Plan exceed the benefits
that are permitted to be paid under the Benefit Limitations. Annual normal
retirement benefits are computed at the rate of 1% of average final annual
compensation up to the applicable social security integration level plus
1.25% of average final annual compensation in excess of the social security
integration level, multiplied by the employee's years of credited service.
An employee's benefits are actuarially adjusted if paid in a form other
than a life annuity.
An employee's average final compensation is the average annual amount of
his pensionable compensation (generally salary and bonus, excluding any
compensation pursuant to the Medium Term Bonus Plan, the Scripps Retirement
and Investment Plan and any other annual or long-term compensation
reflected in the Summary Compensation Table) for service during the five
consecutive years within the last ten years of his employment for which his
total compensation was greatest. The employee's years of credited service
equal the number of years of his employment with Scripps (subject to
certain limitations). As of December 31, 1995, the years of credited
service of the individuals named in the cash compensation table are as
follows: Mr. Leser-28; Mr. Burleigh-39; Mr. Castellini-25; Mr. Standen-5;
Mr. Gardner-11; Mr. Horton-25.
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Scripps Family Agreement. Scripps and certain persons and trusts are
parties to an agreement (the "Scripps Family Agreement") restricting the
transfer and governing the voting of shares of Scripps Common Voting Stock
that such persons and trusts may acquire or own at or after the termination
of the Scripps Trust. Such persons and trusts (the "Signatories") consist
of certain grandchildren of Robert Paine Scripps who are beneficiaries of
the Scripps Trust, the descendants of John P. Scripps, and certain trusts
of which descendants of John P. Scripps are trustees and beneficiaries.
Robert Paine Scripps and John P. Scripps were sons of the founder of
Scripps.
If the Scripps Trust were to have terminated as of July 31, 1996, the
Signatories would have held in the aggregate approximately 87% of the
outstanding shares of Scripps Common Voting Stock as of such date.
Once effective, the provisions restricting transfer of shares of Scripps
Common Voting Stock under the Scripps Family Agreement will continue until
twenty-one years after the death of the last survivor of the descendants of
Robert Paine Scripps and John P. Scripps alive when the Scripps Trust
terminates. The provisions of the Scripps Family Agreement governing the
voting of Scripps Common Voting Stock will be effective for a ten year
period after termination of the Scripps Trust and may be renewed for
additional ten year periods pursuant to certain provisions set forth in the
Agreement.
No Signatory will be able to dispose of any shares of Scripps Common Voting
Stock (except as otherwise summarized below) without first giving other
Signatories and Scripps the opportunity to purchase such stock.
Signatories will not be able to convert shares of Scripps Common Voting
Stock into shares of Scripps Class A Common Stock except for a limited
period of time after giving other Signatories and Scripps the aforesaid
opportunity to purchase and except in certain other limited circumstances.
Signatories will be permitted to transfer shares of Scripps Common Voting
Stock to their lineal descendants or trusts for the benefit of such
descendants, or to any trust for the benefit of such a descendant, or to
any trust for the benefit of the spouse of such descendant or any other
person or entity. Descendants to whom such shares are sold or transferred
outright, and trustees of trusts into which such shares are transferred,
must become parties to the Scripps Family Agreement or such shares shall be
deemed to be offered for sale pursuant to the Scripps Family Agreement.
Signatories will also be permitted to transfer shares of Scripps Common
Voting Stock by testamentary transfer to their spouses provided such shares
are converted to Scripps Class A Common Stock and to pledge such shares as
collateral security provided that the pledgee agrees to be bound by the
terms of the Scripps Family Agreement. If title to any such shares subject
to any trust is transferred to anyone other than a descendant of Robert
Paine Scripps or John P. Scripps, or if a person who is a descendant of
Robert Paine Scripps or John P. Scripps acquires outright any such shares
held in trust but is not or does not become a party to the Scripps Family
Agreement, such shares shall be deemed to be offered for sale pursuant to
the Scripps Family Agreement. Any valid transfer of shares of Scripps
Common Voting Stock made by Signatories without compliance with the Scripps
Family Agreement will result in automatic conversion of such shares to
Class A Common Shares.
The Scripps Family Agreement provides that Scripps will call a meeting of
the Signatories prior to each annual or special meeting of the stockholders
of Scripps held after termination of the Scripps Trust (each such meeting
hereinafter referred to as a "Required Meeting"). At each Required
Meeting, Scripps will submit for decision by the Signatories each matter,
including election of directors, that Scripps will submit to its
stockholders at the annual meeting or special meeting with respect to which
the Required Meeting has been called. Each Signatory will be entitled,
either in person or by proxy, to cast one vote for each share of Scripps
Common Voting Stock owned of record or beneficially by him on each matter
brought before the meeting. Each Signatory will be bound by the decision
reached with respect to each matter brought before such meeting, and, at
the related meeting of the stockholders of Scripps, will vote his shares of
Scripps Common Voting Stock in accordance with decisions reached at the
meeting of the Signatories.
Following the Spin-Off, the Scripps Family Agreement will apply to New
Scripps and to the New Scripps Common Voting Shares and the New Scripps
Class A Common Shares held by the Signatories after termination of the
Scripps Trust.
John P. Scripps Newspapers. In connection with the merger in 1986 of the
John P. Scripps Newspaper Group ("JPSN") into a wholly owned subsidiary of
Scripps (the "JPSN Merger"), Scripps and the Scripps Trust entered into
certain agreements discussed below. All of these agreements will apply to
New Scripps, the New Scripps Class A Common Shares and the New Scripps
Common Voting Shares following the Spin-Off.
<PAGE>
JPSN Board Representation Agreement. The Scripps Trust and John P. Scripps
entered into a Board Representation Agreement dated March 14, 1986 in
connection with the JPSN Merger. Under this agreement, the surviving adult
children of Mr. Scripps who are stockholders of Scripps have the right to
designate one person to serve on the Scripps Board so long as they continue
to own in the aggregate 25% of the sum of (i) the shares issued to them in
the JPSN Merger and (ii) the shares received by them from John P. Scripps'
estate. In this regard, the Scripps Trust has agreed to vote its Scripps
Common Voting Stock in favor of the person designated by John P. Scripps's
children. Pursuant to this agreement, Paul K. Scripps currently serves on
Scripps Board. The Board Representation Agreement terminates upon the
earlier of the termination of the Scripps Trust or the completion of a
public offering by Scripps of its Common Voting Stock.
Stockholder Agreement. The former stockholders of the John P. Scripps
Newspaper Group, including John P. Scripps and Paul K. Scripps, entered
into a Stockholder Agreement with Scripps in connection with the JPSN
Merger. This agreement restricts to certain transferees the transfer of
Scripps Common Voting Stock received by such stockholders pursuant to the
JPSN Merger. These restrictions on transfer will terminate on the earlier
of the termination of the Scripps Trust or completion of a public offering
of Scripps Common Voting Stock. Under the agreement, if a stockholder has
received a written offer to purchase 25% or more of his shares of Scripps
Common Voting Stock, Scripps has a "right of first refusal" to purchase
such shares on the same terms as the offer. On the death of any of these
stockholders, Scripps is obligated to purchase from the stockholder's
estate a sufficient number of shares of the Scripps Common Stock to pay
federal and state estate taxes attributable to all shares included in such
estate. This obligation expires in 2006. Under certain other
circumstances, such as bankruptcy or insolvency of a stockholder, Scripps
has an option to buy all shares of Scripps Common Stock owned by such
stockholder. Under the agreement, stockholders owning 25% or more of the
outstanding shares of Scripps Common Voting Stock issued pursuant to the
JPSN Merger may require Scripps to register shares of Scripps Common Voting
Stock (subject to the right of first refusal mentioned above) under the
Securities Act for sale at the stockholders' expense in a public offering.
In addition, the former stockholders of the John P. Scripps Newspaper Group
will be entitled, subject to certain conditions, to include shares of
Scripps Common Voting Stock (subject to the right of first refusal) that
they own in any registered public offering of shares of the same class by
Scripps. The registration rights expire three years from the date of a
registered public offering of shares of Scripps Common Voting Stock.
Other Transactions. Mr. Charles E. Scripps and Mr. Robert P. Scripps,
directors of Scripps and New Scripps, are general partners in Jefferson
Building Partnership (the "Jefferson Partnership"), which was formed in
1984. The Albuquerque Publishing Company, a subsidiary of Scripps that is
a 50% owned partnership that operates The Albuquerque Tribune under a joint
operating agreement, leases the facilities for The Albuquerque Tribune from
a partnership controlled in part by the Jefferson Partnership. This lease
terminates in 2004. Total rent under the lease for 1995 was approximately
$1,851,790. The Albuquerque Publishing Company has an option to purchase
the property that is exercisable until 2034. The purchase price will be
equal to 7.7 times the base rent for the lease year in which the property
is purchased. The parties to the Albuquerque joint operating agreement
lease the land on which the Albuquerque facilities are situated to the
Jefferson Partnership under a lease terminating in 2034 and providing for
rent of $150,000 per year, subject to certain adjustments for inflation.
Lease income in 1995 was $168,000. The Jefferson Partnership has subleased
the land to the Albuquerque Publishing Company as part of the facilities
lease arrangement described above.
Mr. Charles E. Scripps is a Trustee of the Scripps Trust. Mr. Scripps is
expected to continue to serve as a Trustee of the Scripps Trust in 1996.
As a Trustee, Mr. Scripps shares the power, together with the other two
Trustees, to vote and dispose of the 32,610,000 shares of Scripps Class A
Common Stock and 16,040,000 shares of Scripps Common Voting Stock held by
the Scripps Trust. Following the Spin-Off, the Scripps Trust will hold
32,610,000 New Scripps Class A Common Shares and 16,040,000 New Scripps
Common Voting Shares. Mr. Scripps has a life income interest in the
Scripps Trust.
Mr. John H. Burlingame, a director of Scripps and New Scripps and a Trustee
of the Scripps Trust, is the Executive Partner of Baker & Hostetler, which
is general counsel to Scripps and the Scripps Trust. Baker & Hostetler
performed legal services for Scripps and the Scripps Trust in 1995 and is
expected to perform such services in 1996. In 1995, Scripps and the
Scripps Trust paid approximately $7,000,000 in legal fees to Baker &
Hostetler.
Mr. Nicholas B. Paumgarten, a director of Scripps and New Scripps, is a
Managing Partner of J.P. Morgan & Co. Incorporated ("J.P. Morgan"). Morgan
Guaranty Trust Company of New York (an affiliate of J.P. Morgan) is a
lender to Scripps under a revolving credit agreement. Another affiliate of
J.P. Morgan, J.P. Morgan Securities Inc., has performed investment banking
services for Scripps in the past and may perform such services in the
future.
<PAGE>
Mr. Lawrence A. Leser, Chairman and Chief Executive Officer, entered into a
loan agreement with New Scripps in January 1996 pursuant to the Employee
Stock Purchase Loan Program. This Plan is designed to assist key employees
in exercising stock options. Mr. Leser borrowed $450,000 at an interest
rate of 6.02%, which was the applicable Federal rate in effect under
Section 1274(d) of the Internal Revenue Code of 1986, as of the day on
which the loan was made. In accordance with the terms of the loan program,
Mr. Leser agreed to repay the loan within ten years.
ITEM 8. LEGAL PROCEEDINGS
Stockholders' Litigation - On October 30, 1995, three purported class
actions on behalf of Scripps stockholders were filed in the Court of
Chancery, New Castle County, State of Delaware with respect to the
proposed transactions: Steven J. Gutter v. Daniel J. Meyer, et al.,
Case No. 14650; David Shaev v. Lawrence A. Leser, et al., Case No. 14653
and Jack Shanfield v. Lawrence A. Leser, et al., Case No.14655. These
actions are expected to be consolidated and are collectively referred to
herein as the "Scripps Stockholders' Litigation".
The Scripps Stockholders' Litigation challenges the terms of the proposed
transactions by Scripps and names as defendants Scripps and its directors.
The Scripps Stockholders' Litigation alleges that the defendants breached
their fiduciary duties to the stockholders of Scripps with respect to the
proposed transactions because they failed to obtain the best price for
the disposition of the cable assets and have failed to maximize stockholder
value. The Scripps Stockholders' Litigation further claims, among other
things, that the defendants breached their fiduciary duties to the Scripps
stockholders by entering into the transactions to benefit The Scripps Trust
and Scripps family members contrary to the best interests of the other
stockholders of Scripps.
The Scripps Stockholders' Litigation seeks to have the Merger enjoined or,
if the Merger is consummated, to have it rescinded and to recover
unspecified amounts of damages, fees and expenses. In addition, the actions
seek an order to have a Scripps stockholders' committee consisting of
class members to participate in the review of any transaction relating to
the disposition of the Scripps Cable Business.
Scripps and the other defendants named in the Scripps Stockholders'
Litigation deny the material allegations asserted against them. It is
their intention to defend vigorously the Scripps Stockholders' Litigation.
Scripps believes that the defendants have fulfilled their fiduciary duties
under Delaware law and that the Merger is in the best interests of all
stockholders of Scripps and has not been entered into solely for the benefit
of the Scripps Trust and Scripps family members as alleged. Thus, Scripps
believes that the Scripps Stockholders' Litigation is without merit and
will not have a material adverse effect on the financial condition or
results of operations of Scripps.
River City Litigation - On January, 3 1996, River City Cablevision, Inc.
("River City") commenced an action in California Superior Court, Sacramento
County, against Scripps Howard Cable Company of Sacramento ("Scripps
Howard Sacramento") relating to the partnership that operates the Scripps
Cable television system in Sacramento. River City is the minority partner
and Scripps Howard Sacramento is the majority partner of the partnership.
In the complaint, River City alleges breach of fiduciary duty, breach
of contract and other claims based upon the contention that
Scripps Howard Sacramento improperly misappropriated more than $100 million
from the partnership through unauthorized or improper loans, interest
payments and management fees. Scripps believes that this action is
without merit because Scripps Howard Sacramento fulfilled its fiduciary
duties, did not breach the partnership agreement, and did not misappropriate
any funds from the partnership. Thus, Scripps intends to contest this
action vigorously and does not believe that this action will have a
material adverse effect on Scripps' financial condition or results of
operations.
New Scripps is involved in other litigation arising in the ordinary course
of business, such as defamation actions and various governmental and
administrative proceedings primarily relating to renewal of broadcast
licenses, none of which is expected to result in material loss.
<PAGE>
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Prior to the Spin-Off New Scripps Class A Common Shares and New Scripps
Common Voting Shares will not have traded in a public market. Shares of
Scripps Class A Common Stock are traded on the New York Stock Exchange
("NYSE") under the symbol "SSP". As of July 31, 1996, there were
approximately 4,700 owners of Scripps' Class A Common Stock, based on
security position listings, and 27 owners of Scripps' Common Voting Stock
(which does not have a public market). Scripps has declared cash dividends
in every year since its incorporation in 1922.
The range of market prices of Scripps' Class A Common Stock, which
represents the high and low sales prices for each full quarterly period,
and quarterly cash dividends, are as follows:
<TABLE>
<CAPTION>
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
<S> <C> <C> <C> <C> <C>
1996
Market price of common stock:
High $43.500 $47.000
Low 38.125 40.625
Cash dividends per share of common stock $ .13 $ .13
1995
Market price of common stock:
High $32.750 $32.375 $34.625 $40.625
Low 26.750 28.000 30.625 33.500
Cash dividends per share of common stock $ .11 $ .13 $ .13 $ .13 $ .50
1994
Market price of common stock:
High $29.250 $29.500 $30.500 $31.000
Low 24.875 23.000 27.875 27.500
Cash dividends per share of common stock $ .11 $ .11 $ .11 $ .11 $ .44
</TABLE>
Upon completion of the Transactions the separate existence of Scripps will
cease. New Scripps' Class A Common Shares issued in the Spin-Off are
expected to be listed on the NYSE and to trade under the symbol "SSP".
Management of New Scripps intends to maintain the same quarterly dividend
per share as Scripps. Future dividends will, however, be subject to New
Scripps' earnings, financial condition, and capital requirements.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Not applicable.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
New Scripps is authorized to issue 120 million Class A Common Shares (of
which 60,531,220 would be issued pursuant to the Spin-Off if the Spin-
Off had been consummated as of April 30, 1996), 30 million Common Voting
Shares (of which 19,770,382 would be issued pursuant to the Spin-Off if
the Spin-Off had been consummated April 30, 1996), and 25 million
Preferred Shares. No Preferred Shares will be issued in the Spin-Off.
The authorized and unissued Class A Common Shares and the Preferred
Shares will be available after the Spin-Off for a variety of corporate
purposes, including future public offerings and corporate acquisitions.
Except in connection with stock splits, stock dividends or similar
transactions, the New Scripps Articles will prohibit the issuance of
additional Common Voting Shares.
As of the date hereof there are 375 New Scripps Common Voting Shares and
375 New Scripps Class A Common Shares issued and outstanding, all of
which are owned by Scripps.
<PAGE>
New Scripps Class A Common Shares and New Scripps Common Voting Shares
General. The New Scripps Articles are identical in all material
respects to the Scripps Charter. The rights, privileges and preferences
of the New Scripps Class A Common Shares and Common Voting Shares are
identical in all material respects to the rights, privileges and
preferences of the Scripps Common Voting Stock and Common Voting Stock,
respectively.
Voting Rights. Holders of New Scripps Class A Common Shares are entitled
to elect the greater of three or one-third of the directors of New Scripps
(or the nearest smaller whole number if one-third of the entire Board is
not a whole number), except directors, if any, to be elected by holders of
Preferred Shares or any series thereof. Holders of New Scripps Class A
Common Shares are not entitled to vote on any other matters except as
required by Ohio law. Under Ohio law, an amendment to a corporation's
articles of incorporation that purports to do any of the following would
require the approval of the holders of the corporation's class of capital
stock: (i) increase or decrease the par value of the issued stock of such
class (or of any other class of capital stock of the corporation if the
amendment would reduce or eliminate the stated capital of the corporation),
(ii) change issued stock of a class into a lesser number of shares or into
the same or a different number of shares of any other class theretofore or
then authorized (or so change any other class of capital stock of the
corporation if the amendment would reduce or eliminate the stated capital
of the corporation), (iii) change the express terms, or add express terms,
of the stock of a class in any manner substantially prejudicial to the
holders of such class, (iv) change the express terms of issued shares of
any class senior to the particular class in any manner substantially
prejudicial to the holders of such junior class, (v) authorize shares of
another class that are convertible into, or authorizes the conversion of
shares of another class into, such class, or authorize the directors to fix
or alter conversion rights of shares of another class that are convertible
into such class (or applies with respect to any other class of capital
stock of the corporation if the amendment would reduce or eliminate the
stated capital of the corporation upon the exercise of such conversion
rights), (vi) change substantially the purpose of the corporation, or
provides that thereafter an amendment to the corporation's articles of
incorporation may be adopted that changes substantially the purposes of the
corporation, or (vii) change the corporation into a nonprofit corporation.
Holders of New Scripps Common Voting Shares are entitled to elect all
remaining directors and to vote on all other matters. Nomination of
persons for election by either class of stock to the Board will be made by
the vote of a majority of all directors then in office, regardless of the
class of stock entitled to elect them. Holders of a majority of the
outstanding New Scripps Common Voting Shares will have the right to
increase or decrease the number of authorized and unissued New Scripps
Class A Common Shares and Common Voting Shares, but not below the number of
shares thereof then outstanding. New Scripps Class A Common Shares and New
Scripps Common Voting Shares will not have cumulative voting rights.
The holders of Common Voting Shares will have the power to defeat any
attempt to acquire control of New Scripps with a view to effecting a
merger, sale of assets or similar transaction even though such a change in
control may be favored by stockholders holding substantially more than a
majority of New Scripps' outstanding equity. This may have the effect of
precluding holders of shares in New Scripps from receiving any premium
above market price for their shares which may be offered in connection with
any such attempt to acquire control.
New Scripps' voting structure, which is similar to voting structures
adopted by a number of other media companies, will be designed to promote
the continued independence and integrity of New Scripps' media operations
under the control of the holders of New Scripps Common Voting Shares while
at the same time providing for equity ownership in New Scripps by a broader
group of stockholders through the means of a class of publicly-traded
common stock. This structure will render more difficult certain
unsolicited or hostile attempts to take over New Scripps which could
disrupt New Scripps, divert the attention of its officers, directors and
employees and adversely affect the independence and quality of its media
operations.
Dividend Rights. Each New Scripps Class A Common Share will be entitled to
dividends if, as and when dividends are declared by the Board of Directors
of New Scripps. Dividends must be paid on the New Scripps Class A Common
Shares and the New Scripps Common Voting Shares at any time that dividends
are paid on either. Any dividend declared and payable in cash, capital
stock of New Scripps (other than New Scripps Class A Common Shares or New
Scripps Common Voting Shares) or any other property must be paid equally,
share for share, on the New Scripps Common Voting Shares and the New
Scripps Class A Common Shares. Dividends and distributions payable in New
Scripps Common Voting Shares may be paid only on New Scripps Common Voting
Shares, and dividends and distributions payable in New Scripps Class A
Common Shares may be paid only on New Scripps Class A Common Shares. If a
dividend or distribution payable in New Scripps Class A Common Shares is
made on the New Scripps Class A Common Shares, a simultaneous dividend or
distribution payable in New Scripps Common Voting Shares must be made on
the New Scripps Class A Common Shares. If a dividend or distribution
payable in New Scripps Common Voting Shares is made on the New Scripps
Common Voting Shares, a simultaneous dividend or distribution in New
Scripps Class A Common Shares must be made on the New Scripps Class A
Common Shares. Pursuant to any such dividend or distribution, each New
Scripps Common Voting Share will receive a number of New Scripps Common
Voting Shares equal to the number of New Scripps Class A Common shares
payable on each New Scripps Class A Common Share.
<PAGE>
Conversion. Each New Scripps Common Voting Share will be convertible at
any time, at the option of and without cost to the stockholder, into one
New Scripps Class A Common Share.
Liquidation Rights. In the event of the liquidation, dissolution or
winding up of New Scripps, holders of New Scripps Class A Common Shares and
New Scripps Common Voting Shares will be entitled to participate equally,
share for share, in the assets available for distribution.
Preemptive Rights. Holders of New Scripps Class A Common Shares will not
have preemptive rights to purchase shares of such stock or shares of stock
of any other class that New Scripps may issue. Holders of New Scripps
Common Voting Shares will have preemptive rights to purchase any additional
New Scripps Common Voting Shares or any other stock with or convertible
into stock with general voting rights issued by New Scripps.
Preferred Shares
Following the Spin-Off, the Board of Directors of New Scripps will be
authorized to issue, by resolution and without any action by stockholders,
up to 25 million Preferred Shares. All Preferred Shares will be of equal
rank. Dividends on Preferred Shares will be cumulative and will have a
preference to the New Scripps Class A Common Shares and New Scripps Common
Voting Shares. So long as any Preferred Shares are outstanding, no
dividends may be paid on, and New Scripps may not redeem or retire, any
common shares or other securities ranking junior to the Preferred Shares
unless all accrued and unpaid dividends on the Preferred Shares have been
paid. In the event of a liquidation, dissolution or winding up of New
Scripps, the Preferred Shares are entitled to receive, before any amounts
are paid or distributed in respect of any securities junior to the
Preferred Shares, the amount fixed by the Board of Directors as a
liquidation preference, plus the amount of all accrued and unpaid
dividends. The Preferred Shares have no voting rights except as may be
required by Ohio law. See "New Scripps Class A Common Shares and News
Scripps Common Voting Shares--Voting Rights" for those amendments to the
New Scripps Articles that would require a vote of the holders of the
Preferred Shares. Except as specifically described in this section, the
Board of Directors of New Scripps will have the power to establish the
designations, dividend rate, conversion rights, terms of redemption,
liquidation preference, sinking fund terms and all other preferences and
rights of any series of Preferred Shares. The issuance of Preferred Shares
may adversely affect certain rights of the holders of the New Scripps Class
A Common Shares and the New Scripps Common Voting Shares.
Evaluation of Tender Offers and Similar Transactions
The New Scripps Articles will provide that the Board of Directors, when
evaluating any offer of another party to make a tender or exchange offer
for any equity security of New Scripps, or any proposal to merge of
consolidated New Scripps with another company, or to purchase or otherwise
acquire all or substantially all the properties and assets of New Scripps,
shall give due consideration to the effect of such a transaction on the
integrity, character and quality of New Scripps' operations, as well as to
all other relevant factors, including the long-term and short-term interest
of New Scripps and its stockholders, and the social, legal and economic
effects on employees, customers, suppliers and creditors and on the
communities and geographical areas in which New Scripps and its
subsidiaries operate or are located, and on any of the businesses and
properties of New Scripps or any of its subsidiaries. This provision may
have the effect of rendering more difficult or discouraging an acquisition
of New Scripps that is deemed undesirable by the Board of Directors.
Compliance With FCC Regulations
The New Scripps Articles will authorize New Scripps to obtain information
from stockholders and persons seeking to have shares of New Scripps'
capital stock transferred to them, in order to ascertain whether ownership
of, or exercise of rights with respect to, New Scripps' shares by such
persons would violate federal communications laws. If any person refuses
to provide such information or New Scripps concludes that such ownership or
exercise of such rights would result in the violation of applicable federal
communications laws, New Scripps may refuse to transfer shares to such
person or refuse to allow him to exercise any rights with respect to New
Scripps' shares if exercise thereof would result in such a violation.
Certain Ohio Anti-takeover Laws
Certain Ohio anti-takeover laws may have the effect of discouraging or
rendering more difficult an unsolicited acquisition of a corporation or its
capital stock to the extent the corporation is subject to such provisions.
The New Scripps Articles provide that none of these Ohio laws apply to New
Scripps except the tender offer disclosure statute.
<PAGE>
Registrar and Transfer Agent
The registrar and transfer agent for the New Scripps Common Shares will be
Fifth Third Bank, Cincinnati, Ohio.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Ohio Revised Code (the "Ohio Code") authorizes Ohio corporations to
indemnify officers and directors from liability if the officer or
director acted in good faith and in a manner reasonably believed by the
officer or director to be in or not opposed to the best interests of the
corporation, and with respect to any criminal actions, if the officer or
director had no reason to believe his action was unlawful. In the case
of an action by or on behalf of a corporation, indemnification may not
be made (i) if the person seeking indemnification is adjudged liable for
negligence or misconduct, unless the court in which such action was
brought determines such person is fairly and reasonably entitled to
indemnification, or (ii) if liability asserted against such person
concerns unlawful distributions. The indemnification provisions of the
Ohio Code require indemnification if a director or officer has been
successful on the merits or otherwise in defense of any action, suit or
proceeding that he was a party to or by reason of the fact that he is or
was a director or officer of the corporation. The indemnification
authorized under Ohio law is not exclusive and is in addition to any
other rights granted to officers and directors under the articles of
incorporation or code of regulations of the corporation or any agreement
between officers and directors and the corporation. A corporation may
purchase and maintain insurance or furnish similar protection on behalf
of any officer or director against any liability asserted against him
and incurred by him in his capacity, or arising out of the status, as an
officer or director, whether or not the corporation would have the power
to indemnify him against such liability under the Ohio Code.
New Scripps' Articles of Incorporation provide for the indemnification
of directors and officers of New Scripps to the maximum extent permitted
by Ohio law as authorized by the Board of Directors of New Scripps and
for the advancement of expenses incurred in connection with the defense
of any action, suit or proceeding that he is or was a party to by reason
of the fact that he is or was a director or officer of New Scripps upon
the receipt of the undertaking to repay such amount unless it is
ultimately determined that the director or officer is entitled to
indemnification.
New Scripps maintains a directors' and officers' insurance policy which
insures the directors and officers of New Scripps from claims arising
out of an alleged wrongful act by such persons in their respective
capacities as directors and officers of New Scripps, subject to certain
exceptions.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements and Supplementary Data required by this item is
filed as part of this Form 10. See Index to Annual Consolidated Financial
Statement Information at page F-1 of this Form 10 and Index to Quarterly
Consolidated Financial Statement Information at page F-40 of this Form 10.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
<PAGE>
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements and Supplemental Schedules
(a) The consolidated financial statements of New Scripps are filed as
part of this Form 10. See Index to Annual Consolidated Financial
Statement Information at page F-1 and Index to Quarterly
Consolidated Financial Statement Information at page F-40.
The report of Deloitte & Touche LLP, Independent Auditors, dated
January 22, 1996 is filed as part of this Form 10. See Index to
Annual Consolidated Financial Statement Information at page F-1.
(b) The consolidated supplemental schedules of New Scripps are filed as
part of this Form 10. See Index to Consolidated Financial Statement
Schedules at page S-1.
Exhibits
The information required by this item appears at page E-1 of this Form 10.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: August 28, 1996 By /s/ William R. Burleigh
William R. Burleigh
President and
Chief Executive Officer
<PAGE>
(This page intentionally left blank.)
<PAGE>
NEW SCRIPPS
INDEX TO ANNUAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION
Item No. Page
1. Selected Financial Data F-2
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Consolidated Results of Continuing Operations F-4
Newspapers F-9
Broadcast Television F-10
Entertainment F-11
Liquidity and Capital Resources F-12
3. Independent Auditors' Report F-13
4. Consolidated Balance Sheets F-14
5. Consolidated Statements of Income F-16
6. Consolidated Statements of Cash Flows F-17
7 Consolidated Statements of Stockholders' Equity F-18
8. Notes to Consolidated Financial Statements F-19
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
( in millions, except share data )
1995 (1) 1994 (1) 1993 (1) 1992 (1) 1991 (1)
<S> <C> <C> <C> <C> <C>
Summary of Operations
Operating Revenues:
Newspapers $ 640.1 $ 599.2 $ 548.2 $ 504.8 $ 485.3
Broadcast television 295.2 288.2 254.9 247.2 216.4
Entertainment 94.8 73.5 84.7 87.2 91.6
Total 1,030.1 960.9 887.9 839.3 793.3
Divested operating units (2) 0.3 3.7 57.4 178.1 281.0
Total operating revenues $ 1,030.4 $ 964.6 $ 945.2 $ 1,017.4 $ 1,074.3
Operating Income (Loss):
Newspapers $ 125.6 $ 119.8 $ 76.7 $ 88.7 $ 70.8
Broadcast television 86.9 94.5 69.1 61.6 49.6
Entertainment (14.5) (7.1) 3.2 7.7 9.6
Corporate (16.8) (15.5) (13.6) (15.0) (12.7)
Total 181.3 191.7 135.4 143.1 117.3
Divested operating units (2) (0.1) (0.2) 7.5 (14.6) 33.2
Unusual items (3) (7.9) (0.9)
Total operating income 181.2 183.6 142.0 128.5 150.4
Interest expense (11.2) (16.3) (26.4) (33.8) (38.4)
Net gains on divested operating units (1) 91.9 78.0
Gain on sale of Garfield copyrights (4) 31.6
Other unusual credits (charges) (5) (16.9) 2.5 (3.5)
Miscellaneous, net 1.5 (0.9) (2.4) (3.6) (0.5)
Income taxes (6) (74.5) (80.4) (86.4) (65.1) (48.4)
Minority interests (3.3) (7.8) (16.2) (9.1) (7.2)
Income from continuing operations $ 93.6 $ 92.8 $ 104.9 $ 91.4 $ 55.9
Share Data
Income from continuing operations (excluding
unusual items and net gains) $1.17 $1.25 $ .72 $ .80 $.75
Unusual items and net gains (losses) (1,3,4,5,6) (.04) .68 .42
Income from continuing operations $1.17 $1.22 $1.41 $1.22 $.75
Dividends $ .50 $ .44 $ .44 $ .40 $ .40
Other Financial Data
EBITDA(8) - excluding divested operating units(2) and unusual items(3):
Newspapers $ 162.1 $ 154.9 $ 114.1 $ 122.8 $ 100.8
Broadcast television 113.0 115.8 89.5 81.6 65.9
Entertainment (11.3) (5.3) 4.2 8.5 10.4
Corporate (15.9) (14.8) (13.0) (13.4) (11.7)
Total 247.9 250.6 194.7 199.6 165.5
Depreciation and amortization of intangible assets 66.6 58.9 60.8 64.3 56.2
Net cash provided by continuing operations 113.8 170.2 142.0 127.0 135.9
Investing activity:
Capital expenditures (57.3) (54.0) (36.8) (86.9) (114.2)
Other (investing)/divesting activity, net (30.9) 18.9 105.4 21.9 (127.9)
Total assets 1,349.7 1,286.7 1,255.1 1,286.6 1,296.3
Long-term debt (including current portion) (7) 80.9 110.4 247.9 441.9 491.8
Stockholders' equity (7) 1,191.4 1,083.5 859.6 733.1 676.6
Long-term debt % of total capitalization (7) 6% 9% 22% 38% 42%
Note: Certain amounts may not foot as each is rounded independently.
</TABLE>
<PAGE>
Notes to Selected Financial Data
The income statement and cash flow data for the five years ended December
31, 1995 and the balance sheet data as of the same dates have been derived
from the audited consolidated financial statements of New Scripps. The
data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the
consolidated financial statements and notes thereto included elsewhere
herein. Unless otherwise noted, the data excludes the cable television
segment, which is reported as a discontinued business operation. New
Scripps will retain no proceeds from the divestiture of the cable
television business.
(1) In the periods presented New Scripps acquired and divested the following:
Acquisitions
1994 - The remaining 13.9% minority interest in Scripps Howard
Broadcasting Company ("SHB") in exchange for 4,952,659 shares of
Class A Common stock. Cinetel Productions (an independent producer
of programs for cable television).
1993 - Remaining 2.7% minority interest in the Knoxville News-
Sentinel. 5.7% of the outstanding shares of SHB.
1992 - Three daily newspapers in California (including The Monterey
County Herald in connection with the sale of The Pittsburgh Press).
1991 - Baltimore television station WMAR.
Divestitures
1995 - Watsonville, California, daily newspaper. No gain or loss was
realized as proceeds equaled the book value of net assets sold.
1993 - Book publishing; newspapers in Tulare, California, and San
Juan; Memphis television station; radio stations. The divestitures
resulted in net pre-tax gains of $91.9 million, increasing income
from continuing operations $46.8 million, $.63 per share.
1992 - The Pittsburgh Press; TV Data; certain other investments. The
divestitures resulted in net pre-tax gains of $78.0 million,
increasing income from continuing operations $45.6 million, $.61 per
share.
1991 - George R. Hall Company (contracting firm specializing in the
installation, relocation, and rebuilding of newspaper presses). No
gain or loss was realized as proceeds equaled the book value of net
assets sold.
(2) Non-cable television operating units sold prior to December 31, 1995.
(3) Total operating income included the following:
1994 - A $7.9 million loss on program rights expected be sold as a
result of changes in television network affiliations. The loss
reduced income from continuing operations $4.9 million, $.07 per
share.
1993 - A change in estimate of disputed music license fees increased
operating income $4.3 million; a gain on the sale of certain
publishing equipment increased operating income $1.1 million; a
charge for workforce reductions at 1) New Scripps' Denver newspaper
and 2) the newspaper feature distribution and the licensing
operations of United Media decreased operating income $6.3 million.
The planned workforce reductions were fully implemented in 1994.
These items totaled $0.9 million and reduced income from continuing
operations $0.6 million, $.01 per share.
1992 - Operating losses of $32.7 million during the Pittsburgh Press
strike (reported in divested operating units) reduced income from
continuing operations $20.2 million, $.27 per share.
(4) In 1994 New Scripps sold its worldwide Garfield and U.S. Acres
copyrights. The sale resulted in a pre-tax gain of $31.6 million, $17.4
million after-tax, $.23 per share.
(5) Other unusual credits (charges) included the following:
1994 - An estimated $2.8 million loss on sale of real estate
associated with changes in television network affiliations; $8.0
million special contribution to a charitable foundation; and $6.1
million accrual for lawsuits associated with a divested operating
unit. These items totaled $16.9 million and reduced income from
continuing operations $9.8 million, $.13 per share.
1993 - A $2.5 million fee received in connection with the change in
ownership of the Ogden, Utah, newspaper. Income from continuing
operations was increased $1.6 million, $.02 per share.
1992 - Write-downs of real estate and investments totaling $3.5
million. Income from continuing operations was reduced $2.3
million, $.03 per share.
(6) The provision for income taxes is affected by the following unusual items:
1994 - A change in estimated tax liability for prior years increased
the tax provision, reducing income from continuing operations $5.3
million, $.07 per share.
1993 - A change in estimated tax liability for prior years decreased
the tax provision, increasing income from continuing operations $5.4
million, $.07 per share; the effect of the increase in the federal
income tax rate to 35% from 34% on the beginning of the year
deferred tax liabilities increased the tax provision, reducing
income from continuing operations $2.3 million, $.03 per share.
1992 - A change in estimated tax liability for prior years decreased
the tax provision, increasing income from continuing operations $8.4
million, $.11 per share.
(7) Includes effect of discontinued cable television operations.
(8) Earnings before interest, income taxes, depreciation, and amortization
("EBITDA") is included in the discussion of segment results because:
Changes in depreciation and amortization are often unrelated to
current performance. Management believes the year-over-year change in
EBITDA is a more useful measure of year-over-year performance than the
change in operating income because, combined with information on
capital spending plans, it is a more reliable indicator of results
that may be expected in future periods. However, management's belief
that EBITDA is a more useful measure of year-over-year performance is
not shared by the accounting profession.
Banks and other lenders use EBITDA to determine New Scripps' borrowing
capacity.
Financial analysts use EBITDA to value communications media companies.
Acquisitions of communications media businesses are based on multiples
of EBITDA.
EBITDA should not, however, be construed as an alternative measure of
the amount of New Scripps' income or cash flows from operating
activities as EBITDA excludes significant costs of doing business.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Scripps Howard, Inc. ("SHI") was formed on December 31, 1987 and is a
wholly-owned subsidiary of The E.W. Scripps Company ("Scripps"). SHI is a
direct or indirect parent of all of Scripps' operations.
On October 28, 1995, Scripps and Comcast Corporation ("Comcast") reached an
agreement pursuant to which Scripps will contribute all of its non-cable
television assets to SHI and SHI's cable television system subsidiaries
("Scripps Cable") will be transferred to and held directly by Scripps.
Scripps Cable will be acquired by Comcast through a tax-free merger (the
"Merger") with Scripps. The remaining SHI business will continue as "New
Scripps", which will be distributed in a tax-free "spin-off" to Scripps
shareholders (the "Spin-Off") prior to the Merger and thereafter renamed
The E.W. Scripps Company. The Merger and Spin-off are collectively
referred to as the "Transactions."
In connection with the Transactions, New Scripps has been recapitalized to
include Common Voting Shares and Class A Common Shares and the Articles of
Incorporation of New Scripps have been further amended to provide for
substantially the same shareholder voting rights and other terms as the
Scripps Certificate of Incorporation currently provides for. Prior to the
Spin-Off New Scripps will issue to Scripps: (i) a number of New Scripps
Common Voting Shares equal to the number of shares of Scripps Common Voting
Stock then outstanding and (ii) a number of New Scripps Class A Common
Shares equal to the number of shares of Scripps Class A Common Stock then
outstanding. These shares will then be distributed to Scripps'
shareholders in the Spin-Off.
The closing of the Transactions is expected to occur prior to the end
of 1996, subject to regulatory approvals and certain other conditions.
Controlling shareholders in Scripps and Comcast have agreed to vote in
favor of the Merger, and as a result completion of the Transactions is
assured so long as such conditions are satisfied and such regulatory
approvals are received. While there can be no assurances regarding
such approvals, management believes all such approvals will be obtained.
If all necessary regulatory approvals are not received and such other
conditions are not satisfied, the Transactions (including the
recapitalization of New Scripps and distribution of New Scripps shares to
Scripps' shareholders in the Spin-Off) will not be consummated.
Accordingly this Management's Discussion and Analysis of Financial
Condition and Results of Operations has been prepared assuming consummation
of the Transactions.
Scripps' historical basis in its assets and liabilities has been carried
over to New Scripps. The Transactions will be recorded as a reverse-spin
transaction, and accordingly New Scripps' results of operations for periods
prior to the consummation of the Transactions are identical to the
historical results previously reported by Scripps. Because Scripps Cable
represents an entire business segment that will be divested, its results
are reported as "discontinued operations" for all periods presented.
Results of the remaining business segments, including results for divested
operating units within these segments through their dates of sale, are
reported as "continuing operations." Management of New Scripps intends to
continue to pay the same quarterly dividend per share as Scripps. Future
dividends will, however, be subject to New Scripps' earnings, financial
condition, and capital requirements.
<PAGE>
Consolidated results of continuing operations were as follows:
<TABLE>
<CAPTION>
( in thousands, except per share data )
For the years ended December 31,
1995 Change 1994 Change 1993
<S> <C> <C> <C> <C> <C>
Operating revenues:
Newspapers $ 640,104 6.8 % $ 599,222 9.3 % $ 548,180
Broadcast television 295,228 2.4 % 288,184 13.0 % 254,944
Entertainment 94,752 29.0 % 73,473 (13.3)% 84,741
Total 1,030,084 7.2 % 960,879 8.2 % 887,865
Divested operating units 294 3,716 57,350
Total operating revenues $ 1,030,378 6.8 % $ 964,595 2.1 % $ 945,215
Operating income:
Newspapers $ 125,614 4.9 % $ 119,759 56.1 % $ 76,701
Broadcast television 86,927 (8.1)% 94,540 36.9 % 69,071
Entertainment (14,483) (7,083) 3,239
Corporate (16,772) (8.4)% (15,471) (13.5)% (13,625)
Total 181,286 (5.5)% 191,745 41.6 % 135,386
Divested operating units (130) (220) 7,476
Unusual items (7,915) (900)
Total operating income 181,156 (1.3)% 183,610 29.3 % 141,962
Interest expense (11,223) (16,274) (26,397)
Net gains and unusual items 14,651 94,374
Miscellaneous, net 1,535 (917) (2,413)
Income taxes (74,532) (80,441) (86,387)
Minority interest (3,347) (7,833) (16,228)
Income from continuing operations $ 93,589 0.9 % $ 92,796 (11.5)% $ 104,911
Per share of common stock:
Income from continuing operations $ 1.17 (4.1)% $ 1.22 (13.5)% $ 1.41
Note Ref.
(i) Garfield gain ( .23)
(ii) Net gains on sales of divested operating units ( .63)
(iii) TV programs/property write-downs .09
(iv) Special charitable contribution .06
(v) Change in tax liability .07 ( .07)
(vi) Lawsuits re: divested operating units .05
(vii) ASCAP adjustment and other items .02
Adjusted income from continuing operations
(excluding unusual items and net gains) $ 1.17 (6.4)% $ 1.25 73.6 % $ .72
Note: The sum of the reported income per share from continuing
operations and the per share effect of unusual items and net
gains may not equal the adjusted income per share from continuing
operations as each is computed independently based on the weighted
average shares outstanding for the respective periods.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
( in thousands )
For the years ended December 31,
1995 Change 1994 Change 1993
<S> <C> <C> <C> <C> <C>
Other Financial and Statistical Data - excluding divested operating units and unusual items
Total advertising revenues $ 765,890 6.5 % $ 718,864 11.8 % $ 643,269
Advertising revenues as a percentage of total revenues 74.4 % 74.8 % 72.5 %
EBITDA:
Newspapers $ 162,084 4.6 % $ 154,917 35.8 % $ 114,061
Broadcast television 112,956 (2.5)% 115,829 29.5 % 89,477
Entertainment (11,279) (5,344) 4,156
Corporate (15,888) (7.2)% (14,820) (14.0)% (13,000)
Total $ 247,873 (1.1)% $ 250,582 28.7 % $ 194,694
Effective income tax rate 43.5 % 44.4 % 41.6 %
Weighted average shares outstanding 79,956 4.9 % 76,246 2.1 % 74,650
Total capital expenditures $ 57,300 6.2 % $ 53,951 49.6 % $ 36,073
</TABLE>
Earnings before interest, income taxes, depreciation, and amortization
("EBITDA") is included in the discussion of segment results because:
Changes in depreciation and amortization are often unrelated to
current performance. Management believes the year-over-year change in
EBITDA is a more useful measure of year-over-year performance than the
change in operating income because, combined with information on
capital spending plans, it is a more reliable indicator of results
that may be expected in future periods. However, management's belief
that EBITDA is a more useful measure of year-over-year performance is
not shared by the accounting profession.
Banks and other lenders use EBITDA to determine New Scripps' borrowing
capacity.
Financial analysts use EBITDA to value communications media companies.
Acquisitions of communications media businesses are based on multiples
of EBITDA.
EBITDA should not, however, be construed as an alternative measure of the
amount of New Scripps' income or cash flows from operating activities as
EBITDA excludes significant costs of doing business.
Operating losses for HGTV totaled $17,400,000, $10,700,000 after-tax, $.13
per share in 1995 and $7,700,000, $4,500,000 after-tax, $.06 per share in
1994.
In 1994 New Scripps acquired the remaining 13.9% minority interest in
Scripps Howard Broadcasting Company ("SHB") in exchange for 4,952,659
shares of Class A Common stock. In 1993 New Scripps purchased 5.7% of the
outstanding shares of SHB and the remaining 2.7% minority interest in the
Knoxville News-Sentinel.
The average balance of outstanding debt decreased $69,900,000 in 1995,
$202,000,000 in 1994 and $101,000,000 in 1993.
The effective income tax rate in 1994 and 1993 was affected by the changes
in estimate of the tax liability for prior years described in (v) below.
The effective income tax rate in 1996 is expected to be approximately 43%.
<PAGE>
Net gains and unusual items affecting the comparability of New Scripps'
reported results of operations include the following:
(i) In 1994 New Scripps sold its worldwide Garfield and U.S. Acres
copyrights. The sale resulted in a pre-tax gain of $31,600,000,
$17,400,000 after-tax, $.23 per share.
(ii) New Scripps divested the following operations:
1995 - Newspaper in Watsonville, California (no gain or loss was
realized as proceeds equaled the book value of the net assets sold).
1993 - Book publishing; newspapers in Tulare, California, and San
Juan; Memphis television station; radio stations.
The business units referred to above, and any related gains on the
sales of the business units, are hereinafter referred to as the
"Divested Operating Units."
The following items related to Divested Operating Units affected the
comparability of New Scripps' reported results of operations:
<TABLE>
<CAPTION>
( in thousands, except per share data )
1993
<S> <C>
Net gains recognized (before minority
interests and income taxes) $ 91,900
Net gains recognized (after minority
interests and income taxes) 46,800
Net gains recognized per share (after minority
interests and income taxes) $ .63
</TABLE>
(iii) In 1994 New Scripps' three television stations that had been
Fox affiliates changed their network affiliation. In connection with
the change certain program rights were expected to be sold at an
estimated loss of $7,900,000. Two of the stations are constructing
new buildings to accommodate expanded local news programming, and
currently owned real estate will be sold at an estimated loss of
$2,800,000. These estimated losses were recorded in 1994, reducing
income from continuing operations $6,600,000, $.09 per share.
(iv) In 1994 New Scripps made a special contribution to a charitable
foundation that reduced pre-tax income by $8,000,000 and income from
continuing operations by $4,500,000, $.06 per share.
(v) In 1993 management changed its estimate of the tax basis and
lives of certain intangible assets. The resulting change in the
estimated tax liability for prior years increased income from
continuing operations in 1993 by $5,400,000, $.07 per share. In 1994
the Internal Revenue Service proposed adjustments related to those
intangible assets. Based upon the proposed adjustments management
again changed its estimate of the tax liability for prior years,
decreasing income from continuing operations in 1994 by $5,300,000,
$.07 per share.
(vi) In 1994 New Scripps accrued an estimate of the ultimate costs of
certain lawsuits associated with a Divested Operating Unit. The
accrual reduced income from continuing operations by $3,600,000,
$.05 per share.
<PAGE>
(vii) Other unusual items in 1993 include the following:
Management changed the estimate of the additional amount of music
license fees New Scripps would owe when a dispute between the
television industry and the American Society of Composers, Authors and
Publishers was resolved. The adjustment increased operating income
$4,300,000 and income from continuing operations $2,300,000, $.03 per
share.
New Scripps realized a $1,100,000 gain on the sale of certain
publishing equipment and received a $2,500,000 fee in connection with
the change in ownership of the Ogden, Utah, newspaper, increasing
income from continuing operations $2,300,000, $.03 per share.
New Scripps recorded a $6,300,000 charge for workforce reductions 1)
in the circulation department of its Denver newspaper and 2) the
newspaper feature distribution and licensing operations of United
Media. The charge reduced income from continuing operations
$3,600,000, $.05 per share. The planned workforce reductions were
fully implemented in 1994.
The federal income tax rate was increased to 35% from 34%. The effect
on New Scripps' beginning of the year deferred tax liabilities reduced
income from continuing operations $2,300,000, $.03 per share.
Operating results, excluding the Divested Operating Units and unusual items
described above, for each of New Scripps' business segments are presented
on the following pages. The effects of the foregoing unusual items and the
Divested Operating Units are excluded from the segment operating results
because management believes they are not relevant to understanding New
Scripps' continuing operations.
<PAGE>
NEWSPAPERS - Operating results for the newspaper segment, excluding
Divested Operating Units and unusual items, were as follows:
<TABLE>
<CAPTION>
( in thousands )
For the years ended December 31,
1995 Change 1994 Change 1993
<S> <C> <C> <C> <C> <C>
Operating revenues:
Local $ 197,235 3.7 % $ 190,147 7.4 % $ 177,028
Classified 179,694 11.0 % 161,835 14.0 % 141,994
National 16,354 4.9 % 15,595 30.0 % 11,999
Preprint 68,645 8.8 % 63,103 10.1 % 57,304
Newspaper advertising 461,928 7.3 % 430,680 10.9 % 388,325
Circulation 125,304 7.9 % 116,117 3.3 % 112,393
Joint operating agency distributions 43,863 (0.7)% 44,151 14.2 % 38,647
Other 9,009 8.9 % 8,274 (6.1)% 8,815
Total operating revenues 640,104 6.8 % 599,222 9.3 % 548,180
Operating expenses:
Employee compensation and benefits 219,811 0.9 % 217,806 (1.1)% 220,176
Newsprint and ink 123,554 31.7 % 93,815 9.5 % 85,671
Other 134,655 1.5 % 132,684 3.4 % 128,272
Depreciation and amortization 36,470 3.7 % 35,158 (5.9)% 37,360
Total operating expenses 514,490 7.3 % 479,463 1.7 % 471,479
Operating income $ 125,614 4.9 % $ 119,759 56.1 % $ 76,701
Other Financial and Statistical Data:
Earnings before interest, income taxes,
depreciation, and amortization ("EBITDA") $ 162,084 4.6 % $ 154,917 35.8 % $ 114,061
Percent of operating revenues:
Operating income 19.6 % 20.0 % 14.0 %
EBITDA 25.3 % 25.9 % 20.8 %
Capital expenditures $ 22,184 4.5 % $ 21,225 (12.5)% $ 24,250
Advertising inches:
Local 6,810 (1.9)% 6,941 4.9 % 6,618
Classified 6,704 1.9 % 6,576 8.2 % 6,080
National 338 6.0 % 319 12.7 % 283
Total full run ROP 13,852 0.1 % 13,836 6.6 % 12,981
</TABLE>
Advertising revenue in 1995 increased primarily due to higher advertising
rates. In 1994 increased advertising volume and higher rates led to
increases in advertising revenues at all of New Scripps' newspapers. The
1995 increase in circulation revenues is due to price increases at certain
of New Scripps' newspapers.
Because the supply of newsprint exceeded demand, its price generally
declined from 1988 through August 1992. Since the first quarter of 1994
prices have increased sharply. Newsprint consumption decreased 6% in
1995, however the average price of newsprint increased more than 40%.
The price of newsprint decreased in April 1996. The year-over-year
expense increase in the second quarter of 1996 is expected to be
approximately 10%. If the price does not change again, the year-over-
year third quarter newsprint expense will be about the same as, and the
fourth quarter expense is expected to be slightly less than, in 1995.
<PAGE>
Capital expenditures in 1996 are expected to be approximately $36,000,000
and depreciation and amortization is expected to increase approximately 6%.
See "Liquidity and Capital Resources".
BROADCAST TELEVISION - Operating results for the broadcast television
segment, excluding Divested Operating Units and unusual items, were as
follows:
<TABLE>
<CAPTION>
( in thousands )
For the years ended December 31,
1995 Change 1994 Change 1993
<S> <C> <C> <C> <C> <C>
Operating revenues:
Local $ 150,489 5.6 % $ 142,491 9.1 % $ 130,603
National 125,476 2.3 % 122,668 7.1 % 114,558
Political 3,207 14,291 1,344
Other 16,056 83.8 % 8,734 3.5 % 8,439
Total operating revenues 295,228 2.4 % 288,184 13.0 % 254,944
Operating expenses:
Employee compensation and benefits 89,570 17.0 % 76,535 9.0 % 70,213
Program rights 41,930 (14.0)% 48,759 (9.1)% 53,621
Other 50,772 7.9 % 47,061 13.0 % 41,633
Depreciation and amortization 26,029 22.3 % 21,289 4.3 % 20,406
Total operating expenses 208,301 7.6 % 193,644 4.2 % 185,873
Operating income $ 86,927 (8.1)% $ 94,540 36.9 % $ 69,071
Other Financial and Statistical Data:
Earnings before interest, income taxes,
depreciation, and amortization ("EBITDA") $ 112,956 (2.5)% $ 115,829 29.5 % $ 89,477
Percent of operating revenues:
Operating income 29.4 % 32.8 % 27.1 %
EBITDA 38.3 % 40.2 % 35.1 %
Capital expenditures $ 23,630 0.4 % $ 23,532 154.9 % $ 9,234
</TABLE>
In 1995 New Scripps agreed to change its Cincinnati television station's
network affiliation to ABC from CBS in 1996. Also in 1995 New Scripps
changed its Baltimore station's affiliation to ABC from NBC. In 1994 New
Scripps negotiated 10-year affiliation agreements with ABC to replace Fox
affiliations at its Phoenix and Tampa stations and changed its Kansas City
station's affiliation from Fox to NBC.
Demand for local and national advertising moderated at New Scripps'
television stations in 1995. In 1994 increased demand for advertising time
led to increased EBITDA at all the television stations.
The increase in other revenue in 1995 is primarily due to the new and
extended affiliation agreements with ABC. The increase in employee costs,
other operating expenses, depreciation and amortization, and capital
expenditures in 1995 and in 1994 is due primarily to New Scripps' expanded
schedules of local news programs at the former Fox affiliates.
Depreciation and amortization also increased in 1995 as a result of the
acquisition of the remaining minority interest in SHB. The decrease in
program rights expense is due to the availability of more network
programming at the former Fox affiliates. Program rights also decreased in
1994 because the Baltimore station no longer carried Orioles baseball
games.
<PAGE>
Capital expenditures in 1996 are expected to be approximately $32,000,000.
See "Liquidity and Capital Resources". Depreciation and amortization in
1996 is expected to decrease slightly as certain intangible assets acquired
in the 1991 purchase of the Baltimore station become fully amortized.
ENTERTAINMENT - Operating results for the entertainment segment, excluding
unusual items, were as follows:
<TABLE>
<CAPTION>
( in thousands )
For the years ended December 31,
1995 Change 1994 Change 1993
<S> <C> <C> <C> <C> <C>
Operating revenues:
Licensing $ 49,366 0.3 % $ 49,236 (10.6)% $ 55,083
Newspaper feature distribution 18,915 5.1 % 17,998 (4.3)% 18,814
Film and television production 13,789 5,725 10,757
Other 12,682 514 87
Total operating revenues 94,752 29.0 % 73,473 (13.3)% 84,741
Operating expenses:
Employee compensation and benefits 20,071 43.0 % 14,040 1.4 % 13,849
Artists' royalties 33,708 (2.8)% 34,668 (5.3)% 36,592
Program rights and production costs 16,428 3,408 (57.4)% 7,993
Other 35,824 34.2 % 26,701 20.5 % 22,151
Depreciation and amortization 3,204 84.2 % 1,739 89.6 % 917
Total operating expenses 109,235 35.6 % 80,556 (1.2)% 81,502
Operating income (loss) $ (14,483) $ (7,083) $ 3,239
Other Financial and Statistical Data:
Earnings before interest,
income taxes, depreciation,
and amortization ("EBITDA") $ (11,279) $ (5,344) $ 4,156
Percent of operating revenues:
Operating income (loss) (15.3)% (9.6)% 3.8 %
EBITDA (11.9)% (7.3)% 4.9 %
Capital expenditures $ 9,574 19.8 % $ 7,989 $ 981
</TABLE>
Other revenue primarily includes subscriber fees and advertising for HGTV,
a 24-hour cable television network launched on December 30, 1994. New
Scripps expects to invest an additional $35,000,000 in HGTV in the next two
years, including capital expenditures and pre-tax operating losses. See
"Liquidity and Capital Resources". Operating losses for HGTV totaled
$17,400,000 in 1995 and $7,700,000 in 1994.
New Scripps acquired Cinetel Productions in Knoxville, Tennessee, on March
31, 1994 for $17.0 million in cash. Cinetel is one of the largest
independent producers of programs for cable television. Cinetel's results
of operations are included in the Entertainment segment from the date of
acquisition. The acquisition increased 1994 operating revenues and EBITDA
by 6.4% and 19%, respectively. SHP began operations in 1993 and sold its
first two programs in 1995.
<PAGE>
In 1994 New Scripps completed the sale of its Garfield and U.S. Acres
copyrights, resulting in the decrease in licensing and syndication
revenues. Film and television revenues prior to 1994 primarily relate to
Garfield. Excluding Garfield, U.S. licensing revenues increased 12% in
1995 and 7.6% in 1994. International licensing revenues increased 14% in
1995 and were flat in 1994.
United Media distributes news columns, comics, and features, and licenses
copyrights for "Peanuts" and other character properties on a worldwide
basis. Revenues derived from such international activities represent less
than 5% of New Scripps total revenues. The Japanese market provides more
than two-thirds of international revenues and approximately 45% of total
licensing revenue. The impact of changes in the value of the U.S. dollar
in foreign exchange markets does not have a significant effect on the
recorded value of New Scripps foreign-currency-denominated assets, which
are primarily related to uncollected licensing royalties and represent less
than 1% of total assets. New Scripps foreign-currency-denominated
liabilities are primarily related to payments due to creators of the
properties. However, comparison of year-over-year licensing revenues can
be significantly affected by changes in the exchange rate for the Japanese
yen. Japanese licensing revenues in local currency decreased 8% in 1995,
8% in 1994 and 12% in 1993. The change in the exchange rate for the
Japanese yen increased licensing revenues $1,700,000 in 1995, $1,600,000 in
1994 and $2,700,000 in 1993. The effect on licensing revenues of changes
in the exchange rate for other foreign currencies is not significant.
From time-to-time New Scripps uses foreign currency forward and option
contracts to hedge cash flow exposures denominated in Japanese yen. The
purpose of the contracts is to reduce the risk of changes in the exchange
rate on New Scripps' anticipated net licensing receipts (licensing
royalties less amounts due creators of the properties and certain direct
expenses) for the following year. The maturity of the contracts coincide
with the quarterly payment of licensing royalties. New Scripps does not
hold foreign currency contracts for trading purposes and does not hold
leveraged contracts. Information about New Scripps' foreign currency
contracts, which require New Scripps to sell yen at a specified rate, at
December 31, 1995 was as follows:
Maturity Contract Exchange US Dollar
Date Amount (in yen) Rate Equivalent
2/15/96 141,840,000 94.56 $1,500,000
5/31/96 83,060,000 83.06 1,000,000
8/15/96 142,650,000 95.10 1,500,000
11/15/96 143,835,000 95.89 1,500,000
Capital expenditures in 1995 and 1994 primarily relate to the launch of
HGTV. The increase in depreciation and amortization in 1995 is primarily
due to the start-up of HGTV and the 1994 increase is due to the Cinetel
acquisition. Capital expenditures in 1996 are expected to be approximately
$5,000,000 and depreciation and amortization is expected to increase
approximately 25%.
LIQUIDITY AND CAPITAL RESOURCES
New Scripps generates significant cash flow from operating activities,
primarily from its newspaper and broadcast television operations. There
are no significant legal or other restrictions on the transfer of funds
among New Scripps' business segments. Cash flows provided by the operating
activities of the newspaper and broadcast television segments in excess of
the capital expenditures of those segments are used to invest in the
entertainment segment and to fund corporate expenses. Management expects
total cash flow from continuing operating activities in 1996 will exceed
New Scripps' expected total capital expenditures, debt repayments, and
dividend payments.
Cash flow provided by continuing operating activities was $114,000,000 in
1995 compared to $170,000,000 in 1994 and $142,000,000 in 1993. Payment of
income taxes related to the settlement with the Internal Revenue Service of
the audits of the 1985 through 1987 federal income tax returns was the
primary cause of the decrease in 1995. The 1994 increase was primarily due
to improvement in EBITDA.
Net debt (borrowings less cash equivalent and other short-term investments)
decreased $63,800,000 to $40,900,000 at December 31, 1995 and decreased
$131,000,000 in 1994. At December 31, 1995 net debt was 3% of total
capitalization. Management believes New Scripps' cash and cash
equivalents, short-term investments, and substantial borrowing capacity,
taken together, provide adequate resources to fund the capital expenditures
and future expansion of existing businesses and the development or
acquisition of new businesses.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders,
The E.W. Scripps Company:
We have audited the accompanying consolidated balance sheets of New Scripps
(see Note 1) as of December 31, 1995 and 1994, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1995. Our audits also
included the financial statement schedule listed in the Index at Item S-1.
These financial statements and financial statement schedule are the
responsibility of New Scripps' management. Our responsibility is to
express an opinion on the financial statements and financial statement
schedule 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 New Scripps at December
31, 1995 and 1994, and the results of its operations and cash flows for
each of the three years in the period ended December 31, 1995 in conformity
with generally accepted accounting principles. Also, in our opinion, such
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.
As discussed in Note 1 to the consolidated financial statements, as of
December 31, 1993 New Scripps changed its method of accounting for certain
investments to conform with Statement of Financial Accounting Standards No.
115.
DELOITTE & TOUCHE LLP
Cincinnati, Ohio
January 22, 1996
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
( in thousands )
As of December 31,
1995 1994
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 30,021 $ 16,609
Short-term investments 25,013
Accounts and notes receivable (less allowances - 1995, $3,447; 1994, $4,538) 166,867 146,003
Program rights and production costs 52,402 35,073
Refundable income taxes 7,828 25,214
Inventories 11,459 11,768
Deferred income taxes 21,694 16,606
Miscellaneous 18,961 16,821
Total current assets 334,245 268,094
Net assets of discontinued operations 305,838 322,737
Investments 53,186 34,879
Property, Plant, and Equipment 425,959 419,534
Goodwill and Other Intangible Assets 495,773 514,396
Other Assets:
Program rights and production costs (less current portion) 26,829 38,779
Miscellaneous 13,722 11,005
Total other assets 40,551 49,784
TOTAL ASSETS $ 1,655,552 $ 1,609,424
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
( in thousands, except share data )
As of December 31,
1995 1994
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 78,698
Accounts payable 78,538 $ 123,120
Customer deposits and unearned revenue 21,307 20,757
Accrued liabilities:
Employee compensation and benefits 32,901 31,372
Artist and author royalties 6,843 8,177
Interest 2,169 1,999
Income taxes 634 2,507
Lawsuits and related settlements 8,803 12,600
Miscellaneous 36,226 30,837
Total current liabilities 266,119 231,369
Deferred Income Taxes 82,229 67,876
Long-Term Debt (less current portion) 2,177 110,431
Other Long-Term Obligations and Minority Interests 113,601 116,280
Commitments and Contingencies (Note 12)
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: 1995 - 60,085,408 shares; 1994 - 59,671,242 shares; 601 597
Voting - authorized: 30,000,000 shares; issued and
outstanding: 1995 - 19,978,373 shares; 1994 - 20,174,833 shares 200 202
Total 801 799
Additional paid-in capital 254,063 248,098
Retained earnings 916,602 823,204
Unrealized gains on securities available for sale 20,720 12,518
Unvested restricted stock awards (1,573) (2,036)
Foreign currency translation adjustment 813 885
Total stockholders' equity 1,191,426 1,083,468
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,655,552 $ 1,609,424
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
( in thousands, except per share data )
For the years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Operating Revenues:
Advertising $ 462,156 $ 433,551 $ 401,247
Circulation 125,354 116,684 116,413
Other newspaper revenue 52,888 52,703 50,394
Total newspapers 640,398 602,938 568,054
Broadcasting 295,228 288,184 284,294
Entertainment 94,752 73,473 84,741
Other 8,126
Total operating revenues 1,030,378 964,595 945,215
Operating Expenses:
Employee compensation and benefits 338,987 318,629 336,609
Newsprint and ink 123,579 94,160 89,062
Program rights and production costs 58,358 60,082 63,731
Other operating expenses 261,708 249,178 253,002
Depreciation 46,496 40,040 41,089
Amortization of intangible assets 20,094 18,896 19,760
Total operating expenses 849,222 780,985 803,253
Operating Income 181,156 183,610 141,962
Other Credits (Charges):
Interest expense (11,223) (16,274) (26,397)
Net gains and unusual items 14,651 94,374
Miscellaneous, net 1,535 (917) (2,413)
Net other credits (charges) (9,688) (2,540) 65,564
Income from Continuing Operations
Before Taxes and Minority Interests 171,468 181,070 207,526
Provision for Income Taxes 74,532 80,441 86,387
Income from Continuing Operations
Before Minority Interests 96,936 100,629 121,139
Minority Interests 3,347 7,833 16,228
Income From Continuing Operations 93,589 92,796 104,911
Income From Discontinued Operations 39,789 29,887 23,775
Net Income $ 133,378 $ 122,683 $ 128,686
Per Share of Common Stock:
Income from continuing operations $1.17 $1.22 $1.41
Income from discontinued operations .50 .39 .32
Net income $1.67 $1.61 $1.72
Note: The sum of the income per share amounts may not equal the
net income per share amount as each is computed
independently based on the weighted average shares outstanding.
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
( in thousands )
For the years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Income from continuing operations $ 93,589 $ 92,796 $ 104,911
Adjustments to reconcile income from continuing operations
to net cash flows from continuing operating activities:
Depreciation and amortization 66,590 58,936 60,849
Deferred income taxes 3,814 2,400 41,174
Minority interests in income of subsidiary companies 3,347 7,833 16,228
Net gains and unusual items (1,109) (91,878)
Settlement of 1985 - 1987 federal income tax audits (45,000)
Other changes in certain working capital accounts, net (13,979) 9,040 315
Miscellaneous, net 5,410 337 10,424
Net cash provided by continuing operating activities 113,771 170,233 142,023
Discontinued cable operations:
Income 39,789 29,887 23,775
Adjustment to derive cash flows from operating activities 62,290 48,737 59,754
Net cash provided 102,079 78,624 83,529
Net operating activities 215,850 248,857 225,552
Cash Flows from Investing Activities:
Additions to property, plant, and equipment (57,300) (53,952) (36,845)
Purchase of subsidiary companies and long-term investments (12,167) (32,389) (41,459)
Change in short-term investments, net (25,013)
Sale of subsidiary companies, copyrights, and long-term investments 2,729 47,592 140,538
Miscellaneous, net 3,598 3,659 6,398
Net cash used in investing activities of continuing operations (88,153) (35,090) 68,632
Net cash used in investing activities of discontinued cable operations (44,938) (40,496) (64,007)
Net investing activities (133,091) (75,586) 4,625
Cash Flows from Financing Activities:
Payments on long-term debt (29,703) (137,885) (194,015)
Dividends paid (39,980) (33,457) (32,847)
Dividends paid to minority interests (2,601) (3,817) (4,189)
Miscellaneous, net 5,437 1,649 1,998
Net cash used in financing activities of continuing operations (66,847) (173,510) (229,053)
Net cash used in financing activities of discontinued cable operations (2,500) (1,758) (1,494)
Net financing activities (69,347) (175,268) (230,547)
Increase (Decrease) in Cash and Cash Equivalents 13,412 (1,997) (370)
Cash and Cash Equivalents:
Beginning of year 16,609 18,606 18,976
End of year $ 30,021 $ 16,609 $ 18,606
Supplemental Cash Flow Disclosures:
Interest paid, excluding amounts capitalized $ 11,053 $ 17,109 $ 32,123
Income taxes paid 55,176 127,009 44,962
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
( in thousands, except share data ) Unrealized
Gains on Unvested Foreign
Additional Securities Restricted Currency
Common Paid-in Retained Available Stock Translation
Stock Capital Earnings for Sale Awards Adjustment
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1992 $ 746 $ 94,366 $ 638,139 $ (516) $ 369
Net income 128,686
Dividends: declared and paid - $.44 per share (32,847)
Class A Common shares issued pursuant to
compensation plans, net:
165,775 shares issued, 4,270 shares forfeited,
and 17,071 shares repurchased 2 3,054 (817)
Tax benefits of compensation plans 525
Amortization of restricted stock awards 324
Foreign currency translation adjustment 223
Adoption of FAS No. 115, net of
deferred income tax of $14,744 $ 27,381
As of December 31, 1993 748 97,945 733,978 27,381 (1,009) 592
Net income 122,683
Dividends: declared and paid - $.44 per share (33,457)
Acquisition of minority interest in Scripps Howard
Broadcasting Company in exchange for
4,952,659 shares of Class A Common stock 49 146,675
Class A Common shares issued pursuant to
compensation plans, net:
140,025 shares issued, 2,810 shares forfeited,
and 5,127 shares repurchased 2 3,226 (1,527)
Tax benefits of compensation plans 252
Amortization of restricted stock awards 500
Foreign currency translation adjustment 293
Increase (decrease) in unrealized gains
on securities available for sale, net
of deferred income tax of $7,992 (14,863)
As of December 31, 1994 799 248,098 823,204 12,518 (2,036) 885
Net income 133,378
Dividends: declared and paid - $.50 per share (39,980)
Conversion of 196,460 Voting common shares
to 196,460 Class A common shares
Class A Common shares issued pursuant to
compensation plans, net:
238,850 shares issued, 1,250 shares forfeited,
and 19,894 shares repurchased 2 5,099 (538)
Tax benefits of compensation plans 866
Amortization of restricted stock awards 1,001
Foreign currency translation adjustment (72)
Increase in unrealized gains
on securities available for sale, net
of deferred income tax of $4,417 8,202
As of December 31, 1995 $ 801 $ 254,063 $ 916,602 $ 20,720 $ (1,573) $ 813
See notes to consolidated financial statements.
</TABLE>
<PAGE>
NEW SCRIPPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations - Scripps Howard, Inc. ("SHI") was formed on December
31, 1987 and is a wholly-owned subsidiary of The E.W. Scripps Company
("Scripps"). SHI is a direct or indirect parent of all of Scripps'
operations.
On October 28, 1995, Scripps and Comcast Corporation ("Comcast") reached an
agreement pursuant to which Scripps will contribute all of its non-cable
television assets to SHI and SHI's cable television system subsidiaries
("Scripps Cable") will be transferred to and held directly by Scripps.
Scripps Cable will be acquired by Comcast through a tax-free merger (the
"Merger") with Scripps. The remaining SHI business will continue as "New
Scripps", which will be distributed in a tax-free "spin-off" to Scripps
shareholders (the "Spin-Off") prior to the Merger and thereafter renamed
The E.W. Scripps Company. The Merger and Spin-off are collectively
referred to as the "Transactions."
In connection with the Transactions, New Scripps has been recapitalized to
include Common Voting Shares and Class A Common Shares and the Articles of
Incorporation of New Scripps have been further amended to provide for
substantially the same shareholder voting rights and other terms as the
Scripps Certificate of Incorporation currently provides for. Prior to the
Spin-Off New Scripps will issue to Scripps: (i) a number of New Scripps
Common Voting Shares equal to the number of shares of Scripps Common Voting
Stock then outstanding and (ii) a number of New Scripps Class A Common
Shares equal to the number of shares of Scripps Class A Common Stock then
outstanding. These shares will then be distributed to Scripps'
shareholders in the Spin-Off.
The closing of the Transactions is expected to occur prior to the end
of 1996, subject to regulatory approvals and certain other conditions.
Controlling shareholders in Scripps and Comcast have agreed to vote in
favor of the Merger, and as a result completion of the Transactions is
assured so long as such conditions are satisfied and such regulatory
approvals are received. While there can be no assurances regarding
such approvals, management believes all such approvals will be obtained.
If all necessary regulatory approvals are not received and such other
conditions are not satisfied, the Transactions (including the
recapitalization of New Scripps and distribution of New Scripps shares to
Scripps' shareholders in the Spin-Off) will not be consummated.
Accordingly the accompanying financial statements and the notes thereto
have been prepared assuming consummation of the Transactions.
Scripps' historical basis in its assets and liabilities has been carried
over to New Scripps. The Transactions will be recorded as a reverse-spin
transaction, and accordingly New Scripps' results of operations for periods
prior to the consummation of the Transactions are identical to the
historical results previously reported by Scripps. Because Scripps Cable
represents an entire business segment that will be divested, its results
are reported as "discontinued operations" for all periods presented. See
Note 14. Results of the remaining business segments, including results for
divested operating units within these segments through their dates of sale,
are reported as "continuing operations."
New Scripps publishes daily newspapers in fifteen markets, operates local
television stations in nine markets, and its entertainment division
primarily produces television programming and licenses comic characters.
The relative importance of each line of business to continuing operations
segment is indicated in the Segment Information presented in Note 11.
The newspaper and television operations are diversified geographically and
New Scripps has a diverse customer base. Approximately 75% of New Scripps'
operating revenues are derived from advertising, and as a result operating
results can be affected by changes in the demand for advertising nationally
and in New Scripps' local markets.
New Scripps grants credit to substantially all of its customers.
Management believes bad debt losses resulting from default by a single
customer, or defaults by customers in any depressed region or business
sector, would not have a material effect on New Scripps' financial
position.
<PAGE>
Use of Estimates - Preparation of the financial statements requires the use
of estimates. New Scripps' financial statements include estimates for such
items as income taxes payable and self-insured risks. Self-insured risks
are primarily employee medical costs and disability income, workers'
compensation, and general liability. The recorded liability for self-
insured risks is calculated using actuarial methods and is not discounted.
The recorded liability for self-insured risks totaled $19,200,000 at
December 31, 1995. Management does not believe it is likely that its
estimates for such items will change materially in the near term.
Consolidation - The consolidated financial statements include the accounts
of New Scripps and its majority-owned subsidiary companies.
Revenue Recognition - Significant revenue recognition policies are as
follows:
Advertising revenues are recognized based on dates of publication or
broadcast.
Circulation revenue is recognized based on date of publication.
Royalties from merchandise licensing are recognized as products are
sold by the licensee. Royalties from promotional licensing are recognized
over the lives of the licensing agreements.
Program license fees are recognized when the program material is
available for broadcast and certain other conditions are met.
Payments received from customers prior to the time revenues are recognized
are recorded as unearned income.
Program Rights and Production Costs - Program rights are recorded at the
time such programs become available for broadcast. Amortization is computed
using the straight-line method based on the license period or based on
usage, whichever yields the greater accumulated amortization for each
program. The liability for program rights is not discounted for imputed
interest.
Production costs represent costs incurred in the production of programming
for distribution. Amortization of capitalized costs is based on the
percentage of current period revenues to anticipated total revenues for
each program.
Program and production costs are stated at the lower of unamortized cost or
fair value. The portion of the unamortized balance expected to be
amortized within one year is classified as a current asset.
Program rights liabilities payable within the next twelve months are
included in accounts payable. Non-current program rights liabilities are
included in other long-term obligations. Estimated fair values (which are
based on current rates available to New Scripps for debt of the same
remaining maturity) and the carrying amounts of New Scripps' program rights
liabilities were as follows:
<TABLE>
<CAPTION>
( in thousands )
As of December 31,
1995 1994
<S> <C> <C>
Liabilities for programs available for broadcast:
Carrying amount $ 51,400 $ 48,300
Fair value 48,000 42,800
</TABLE>
Goodwill and Other Intangible Assets - Goodwill and other intangible assets
are stated at the lower of unamortized cost or fair value. Fair value is
estimated based upon estimated future net cash flows. An impairment loss
is recognized when the unamortized cost of the asset exceeds the
undiscounted estimated future net cash flows. Goodwill represents the cost
of acquisitions in excess of tangible assets and identifiable intangible
assets received. Non-competition agreements are amortized on a straight-
line basis over the terms of the agreements. Goodwill acquired after
October 1970, customer lists, and other intangible assets are amortized on
a straight-line basis over periods of up to 40 years. Goodwill acquired
before November 1970 ($6,600,000) is not amortized.
<PAGE>
The Financial Accounting Standards Board ("FASB") issued Financial
Accounting Standard ("FAS") No. 121 - Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of in March 1995.
The standard requires that long-lived assets and certain identifiable
intangible assets be reviewed for impairment and that long-lived assets to
be disposed of be reported at the lower of carrying amount or fair value
less costs to sell. The standard, which New Scripps is required to adopt
in 1996, is not expected to have any immediate impact on New Scripps'
results of operations or financial position.
Property, Plant, and Equipment - Depreciation is computed using the
straight-line method over estimated useful lives as follows:
Buildings and improvements 35 years
Printing presses 20 years
Other newspaper production equipment 5 to 10 years
Television transmission towers 15 years
Other television and program production equipment 5 to 15 years
Office and other equipment 5 to 10 years
Interest costs related to major capital projects are capitalized and
classified as property, plant, and equipment.
Income Taxes - Deferred income taxes are provided for temporary differences
between the tax basis and reported amounts of assets and liabilities that
will result in taxable or deductible amounts in future years. New Scripps'
temporary differences primarily result from accelerated depreciation and
amortization for tax purposes and accrued expenses not deductible for tax
purposes until paid. Also, New Scripps received a tax certificate from the
Federal Communications Commission upon the 1993 sale of the Memphis
television and radio stations, enabling New Scripps to defer payment of
income taxes on the $60,500,000 tax-basis gain. The deferred gain will
reduce the tax basis of certain cable television assets acquired on January
6, 1996.
Other Long-Term Obligations - Other long-term obligations include non-
current program rights liabilities, deferred compensation and retiree
benefits, non-current self-insured risks, and non-current income taxes
payable.
Investments - New Scripps adopted FAS No. 115 - Accounting for Certain
Investments in Debt and Equity Securities on December 31, 1993, increasing
stockholders' equity $27,381,000. There was no effect on income from
continuing operations as a result of adopting the new standard.
Investments in 20%- to 50%-controlled companies and in all joint ventures
are accounted for under the equity method. Investments in other debt and
equity securities are classified as available for sale and are carried at
fair value. Fair value is determined by reference to quoted market prices
for those or similar securities. Unrealized gains or losses on those
securities are recognized as a separate component of stockholders' equity.
The cost of securities sold is determined by specific identification.
Newspaper Joint Operating Agencies - New Scripps is currently a party to
newspaper joint operating agencies ("JOAs") in five markets. A JOA
combines all but the editorial operations of two competing newspapers in a
market. In each JOA the managing party distributes a portion of JOA
profits to the other party. New Scripps manages the JOA in Evansville.
The JOAs in Albuquerque, Birmingham, Cincinnati, and El Paso are managed by
the other parties to the JOAs.
New Scripps includes the full amount of company-managed JOA assets and
liabilities, and revenues earned and expenses incurred in the operation of
the JOA, in the consolidated financial statements. Distributions of JOA
operating profits to the non-managing party are included in other operating
expenses in the Consolidated Statements of Income.
For JOAs managed by the other party, New Scripps includes distributions of
JOA operating profits in operating revenues in the Consolidated Statements
of Income. New Scripps does not include any assets or liabilities of JOAs
managed by other parties in its Consolidated Balance Sheets as New Scripps
has no residual interest in the net assets of the JOAs.
<PAGE>
Inventories - Inventories are stated at the lower of cost or market. The
cost of newsprint included in inventory is computed using the last in,
first out ("LIFO") method. At December 31 newsprint inventories were
approximately 66% of total inventories in 1995 and 65% in 1994. The cost
of other inventories is computed using the first in, first out ("FIFO")
method. Inventories would have been $4,500,000 and $1,200,000 higher at
December 31, 1995 and 1994 if FIFO (which approximates current cost) had
been used to compute the cost of newsprint.
Postemployment Benefits - Postretirement benefits are recognized during the
years that employees render service. Other postemployment benefits, such
as disability-related benefits and severance, are recognized when the
benefits become payable.
Stock-Based Compensation - Scripps 1987 Long-Term Incentive Plan provides
for the awarding of options to purchase shares of Scripps Class A Common
Stock and awards of Scripps Class A Common Stock to certain employees of
New Scripps. Stock options are awarded to purchase Scripps Class A Common
Stock at not less than 100% of the fair market value on the date of the
award. Stock options and awards of Scripps Class A Common Stock vest over
an incentive period, conditional upon the individual's employment through
that period. Pursuant to the Transactions, New Scripps will assume Scripps
1987 Long-Term Incentive Plan. See Note 13.
The FASB issued FAS No. 123 - Accounting for Stock-Based Compensation in
October 1995. The standard defines a fair-value-based method of accounting
for stock-based compensation, but permits compensation expense to continue
to be measured using the intrinsic-value-based method previously used. New
Scripps intends to continue measuring compensation expense using the
intrinsic-value-based method and under the provisions of the standard,
which must be adopted in 1996, will be required to make pro forma
disclosures of net income and earnings per share as if the fair value
method had been used.
Cash and Cash Equivalents - Cash and cash equivalents represent cash on
hand, bank deposits, and highly liquid debt instruments with an original
maturity of up to three months. Cash equivalents are stated at cost plus
accrued interest, which approximates fair value.
Short-term Investments - Short-term investments represent excess cash
invested in securities not meeting the criteria to be classified as cash
equivalents. Short-term investments are carried at cost plus accrued
dividends, which approximates fair value.
Net Income Per Share - Net income per share computations are based upon the
weighted average common shares outstanding. Common stock equivalents in
the form of stock options are excluded from the computations as they have
no material effect on the per share amounts. Weighted average shares
outstanding were as follows:
<TABLE>
<CAPTION>
( in thousands )
For the years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Weighted average shares outstanding 79,956 76,246 74,650
</TABLE>
<PAGE>
2. ACQUISITIONS AND DIVESTITURES
Acquisitions
1995 - There were no acquisitions in 1995.
1994 - New Scripps acquired the remaining 13.9% minority interest in
Scripps Howard Broadcasting Company ("SHB") in exchange for 4,952,659
shares of Class A Common stock. New Scripps acquired Cinetel Productions
(an independent producer of programs for cable television) for $17,000,000
in cash.
1993 - New Scripps acquired the remaining 2.7% minority interest in the
Knoxville News-Sentinel for $2,800,000. New Scripps purchased 5.7% of the
outstanding shares of SHB for $28,900,000.
The following table presents additional information about the acquisitions:
<TABLE>
<CAPTION>
( in thousands )
For the years ended December 31,
1994 1993
<S> <C> <C>
Goodwill and other intangible assets acquired $ 108,690 $ 19,486
Other assets acquired (primarily property and equipment and program costs) 14,596
Reduction in minority interests 45,958 12,287
Class A Common stock issued (146,724)
Liabilities assumed and notes issued (899)
Cash paid $ 21,621 $ 31,773
</TABLE>
Goodwill and other intangible assets acquired includes the excess of cost
over book value of SHB allocated to Scripps Cable ($26,100,000 in 1994 and
$6,900,000 in 1993).
The acquisitions have been accounted for as purchases. The acquired
operations have been included in the Consolidated Statements of Income from
the dates of acquisition. Pro forma results are not presented because the
combined results of operations would not be significantly different from
the reported amounts.
<PAGE>
Divestitures
New Scripps divested the following operating units:
1995 - Newspaper in Watsonville, California.
1993 - Book publishing; newspapers in Tulare, California, and San Juan;
Memphis television station; radio stations.
The following table presents additional information about the divestitures:
<TABLE>
<CAPTION>
( in thousands, except per share data )
For the years ended December 31,
1995 1993
<S> <C> <C>
Cash received $ 2,711 $ 140,509
Net assets disposed 2,711 48,635
Net gains recognized (before minority
interests and income taxes) $ 0 $ 91,874
Net gains recognized (after minority
interests and income taxes) $ 46,800
Net gains recognized per share (after minority
interests and income taxes) $ .63
</TABLE>
Included in the consolidated financial statements are the following results
of divested operating units (excluding gains on sales):
<TABLE>
<CAPTION>
( in thousands )
For the years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Operating revenues $ 300 $ 3,700 $ 57,400
Operating income (loss) (100) (200) 7,500
</TABLE>
<PAGE>
3. UNUSUAL CREDITS AND CHARGES
1994 - New Scripps sold its worldwide Garfield and U.S. Acres copyrights.
The sale resulted in a pre-tax gain of $31,600,000, $17,400,000 after tax,
$.23 per share.
New Scripps' three television stations that had been Fox affiliates changed
their network affiliation. In connection with the change certain program
rights were expected to be sold at a loss of $7,900,000 and certain real
estate, due to space limitations, was expected to be sold at a loss of
$2,800,000. These estimated losses were recorded in 1994, reducing income
from continuing operations $6,600,000, $.09 per share.
New Scripps made a special contribution of 589,165 shares of Turner
Broadcasting Class B common stock to a charitable foundation. The
contribution reduced pre-tax income by $8,000,000 and income from
continuing operations by $4,500,000, $.06 per share.
Management changed its estimate of the tax liability for prior years as a
result of an audit by the Internal Revenue Service ("IRS"). The adjustment
decreased income from continuing operations by $5,300,000, $.07 per share
(see Note 4).
Estimated costs to defend and settle lawsuits filed by certain former
employees and independent contractors of a divested operating unit reduced
income from continuing operations by $3,600,000, $.05 per share (see Note
12).
1993 - Operating results include net pre-tax gains of $91,900,000,
$46,800,000 after-tax, $.63 per share (see Note 2).
Management changed the estimate of the additional amount of music license
fees New Scripps would owe when a dispute between the television industry
and the American Society of Composers, Authors and Publishers ("ASCAP") was
resolved. The adjustment increased operating income $4,300,000 and income
from continuing operations $2,300,000, $.03 per share.
New Scripps realized a $1,100,000 gain on sale of certain publishing
equipment and received a $2,500,000 fee in connection with the change in
ownership of the Ogden, Utah, newspaper, increasing income from continuing
operations $2,300,000, $.03 per share.
New Scripps recorded a $6,300,000 charge related to workforce reductions 1)
in the circulation department at its Denver newspaper and 2) the newspaper
feature distribution and licensing operations of United Media. The charge
reduced income from continuing operations $3,600,000, $.05 per share. The
planned headcount reductions were fully implemented in 1994.
Management changed its estimate of the tax liability for prior years (see
Note 4). The adjustment increased income from continuing operations
$5,400,000, $.07 per share. The federal income tax rate was increased to
35% from 34%. The effect on New Scripps' beginning of the year deferred
tax liabilities reduced income from continuing operations $2,300,000, $.03
per share.
<PAGE>
4. INCOME TAXES
In 1993 management changed its estimate of the tax basis and lives of
certain intangible assets. The resulting change in the estimated tax
liability for prior years increased income from continuing operations
$5,400,000, $.07 per share. In 1994 the IRS proposed adjustments related
to those intangible assets. Based upon the proposed adjustments management
again changed its estimate of the tax liability for prior years, decreasing
income from continuing operations in 1994 $5,300,000, $.07 per share. In
1995 Scripps reached agreement with the IRS to settle the audits of its
1985 through 1987 tax returns. The settlement payment was charged to the
estimated tax liability for prior years. The liability was not adjusted as
a result of the settlement.
The IRS is currently examining Scripps' consolidated income tax returns for
the years 1988 through 1991. Pursuant to the terms of the Merger New
Scripps will indemnify Comcast against all tax liabilities of Scripps Cable
attributable to periods prior to completion of the Merger. Management
believes that adequate provision for income taxes has been made for all
open years.
The approximate effects of the temporary differences giving rise to New
Scripps' deferred income tax liabilities (assets) are as follows:
<TABLE>
<CAPTION>
( in thousands )
As of December 31,
1995 1994 1993
<S> <C> <C> <C>
Accelerated depreciation and amortization $ 77,259 $ 60,087 $ 90,314
Deferred gain on sale of Memphis television and radio stations 23,599 23,599 23,126
Investments 10,654 4,927 12,900
Accrued expenses not deductible until paid (26,195) (27,745) (20,625)
Deferred compensation and retiree benefits (12,398) (12,470) (10,380)
Other temporary differences, net (9,099) 6,008 1,167
Total 63,820 54,406 96,502
State net operating loss carryforwards (9,186) (7,922) (7,258)
Foreign tax credits and other carryforwards (1,371)
Valuation allowance for state deferred tax assets and foreign tax credits 5,901 4,786 5,033
Net deferred tax liability $ 60,535 $ 51,270 $ 92,906
</TABLE>
New Scripps' state net operating loss carryforwards expire from 1996
through 2010. At each balance sheet date management estimates the amount
of state net operating loss carryforwards that are not expected to be
utilized prior to expiration of the carryforward period. The tax effect of
these unused state net operating loss carryforwards is included in the
valuation allowance. The increase in the valuation allowance in 1995 is
primarily due to additional state net operating losses in 1995. The
valuation allowance in 1994 decreased by $1,371,000 as management
determined the foreign tax credit carryforwards would be utilized prior to
expiration of the carryforward period. This decrease was offset by an
increase in the allowance due to additional state net operating losses in
1994.
<PAGE>
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
( in thousands )
For the years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Current:
Federal $ 60,044 $ 61,026 $ 33,114
State and local 5,027 12,351 7,829
Foreign 4,781 4,412 3,745
Total current 69,852 77,789 44,688
Deferred:
Federal 6,911 (6,787) 51,813
Other 1,320 1,195 4,105
Total deferred 8,231 (5,592) 55,918
Total income taxes 78,083 72,197 100,606
Income taxes allocated to stockholders' equity (3,551) 8,244 (14,219)
Provision for income taxes $ 74,532 $ 80,441 $ 86,387
</TABLE>
The difference between the statutory rate for federal income tax and the
effective income tax rate is summarized as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Statutory rate 35.0 % 35.0 % 35.0 %
Effect of:
State and local income taxes 4.0 4.7 3.7
Amortization of goodwill 2.9 2.2 2.4
Increase in tax rate to 35% on deferred tax liabilities 1.1
Change in estimated tax basis and lives of certain assets 2.1 (2.5)
Miscellaneous 1.6 0.4 1.9
Effective income tax rate 43.5 % 44.4 % 41.6 %
</TABLE>
<PAGE>
5. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
( in thousands )
As of December 31,
1995 1994
<S> <C> <C>
7.375% notes, due in 1998 $ 31,658 $ 61,161
9.0% notes, due in 1996 47,000 47,000
Other notes 2,217 2,270
Total long-term debt 80,875 110,431
Current portion of long-term debt 78,698
Long-term debt (less current portion) $ 2,177 $ 110,431
Fair value of long-term debt * $ 83,100 $ 109,600
* Fair value is estimated based on current rates available to New Scripps for
debt of the same remaining maturity.
</TABLE>
New Scripps has a Competitive Advance/Revolving Credit Agreement ("Variable
Rate Credit Facility") which expires in September 1996 and permits maximum
borrowings up to $50,000,000. Maximum borrowings under the Variable Rate
Credit Facility are changed as New Scripps' anticipated needs change and
are not indicative of New Scripps' short-term borrowing capacity. The
Variable Rate Credit Facility may be extended upon mutual agreement.
Certain long-term debt agreements contain maintenance requirements on net
worth and coverage of interest expense and restrictions on dividends and
incurrence of additional indebtedness. New Scripps is in compliance with
all debt covenants.
In connection with the Merger, New Scripps agreed to retire or defease its
7.375% notes due in 1998.
Interest costs capitalized were as follows:
<TABLE>
<CAPTION>
( in thousands )
For the years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Capitalized interest costs $ 400 $ 0 $ 100
</TABLE>
<PAGE>
6. INVESTMENTS
Investments consisted of the following:
<TABLE>
<CAPTION>
( in thousands, except share data )
As of December 31,
1995 1994
<S> <C> <C>
Securities available for sale:
Short-term investments, primarily preferred stocks $ 25,013
Turner Broadcasting Class C preferred stock
(convertible into 1,309,092 shares of Class B common stock) 34,036 $ 21,436
Other 7,000 2,351
Total securities available for sale 66,049 23,787
Investments accounted for under the equity method 12,150 11,092
Total investments $ 78,199 $ 34,879
Unrealized gains on securities available for sale $ 31,890 $ 19,270
</TABLE>
7. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment consisted of the following:
<TABLE>
<CAPTION>
( in thousands )
As of December 31,
1995 1994
<S> <C> <C>
Land and improvements $ 39,774 $ 40,668
Buildings and improvements 180,180 176,769
Equipment 520,733 484,495
Total 740,687 701,932
Accumulated depreciation 314,728 282,398
Net property, plant, and equipment $ 425,959 $ 419,534
</TABLE>
<PAGE>
8. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets consisted of the following:
<TABLE>
<CAPTION>
( in thousands )
As of December 31,
1995 1994
<S> <C> <C>
Goodwill $ 440,932 $ 439,462
Customer lists 133,329 133,334
Licenses and copyrights 28,221 28,221
Non-competition agreements 18,039 18,689
Other 32,263 32,247
Total 652,784 651,953
Accumulated amortization 157,011 137,557
Net goodwill and other intangible assets $ 495,773 $ 514,396
</TABLE>
9. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information is as follows:
<TABLE>
<CAPTION>
( in thousands )
For the years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Other changes in certain working capital accounts, net:
Accounts receivable $ (20,864) $ (3,182) $ (9,320)
Inventories 270 (2,099) 2,324
Accounts payable (3,888) 6,486 (5,427)
Accrued income taxes 15,076 (1,241) 1,115
Accrued interest 170 (835) (5,726)
Other accrued liabilities (744) 5,525 8,385
Other, net (3,999) 4,386 8,964
Total $ (13,979) $ 9,040 $ 315
Program rights purchased $ 61,900 $ 30,700 $ 51,600
</TABLE>
<PAGE>
10. EMPLOYEE BENEFIT PLANS
New Scripps sponsors defined benefit plans covering substantially all non-
union employees. Benefits are generally based on the employees'
compensation and years of service. Funding is based on the requirements of
the plans and applicable federal laws.
New Scripps also sponsors defined contribution plans covering substantially
all non-union employees. New Scripps matches a portion of employees'
voluntary contributions to these plans.
Union-represented employees are covered by retirement plans jointly
administered by subsidiaries of New Scripps and the unions or by union-
administered, multi-employer plans. Funding is based upon negotiated
agreements.
Retirement plans expense consisted of the following:
<TABLE>
<CAPTION>
( in thousands )
For the years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Service cost $ 7,929 $ 8,729 $ 7,819
Interest cost 12,907 11,509 13,111
Actual return on plan assets (41,698) 1,637 (13,487)
Net amortization and deferral 27,203 (14,990) (2,619)
Defined benefit plans 6,341 6,885 4,824
Multi-employer plans 1,020 1,028 1,044
Defined contribution plans 3,612 3,573 3,570
Total 10,973 11,486 9,438
Curtailment losses included in gain
on the sales of subsidiary companies 253
Total retirement plans expense $ 10,973 $ 11,486 $ 9,691
</TABLE>
Assumptions used in the accounting for the defined benefit plans were as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Discount rate as of December 31 7.0% 8.5% 7.0%
Expected long-term rate of return on plan assets 8.0% 9.5% 8.0%
Rate of increase in compensation levels 3.5% 5.0% 3.5%
</TABLE>
The plans' long-term rate of return on plan assets has been approximately
one percentage point greater than the discount rate. Management believes
the discount rate plus one percentage point is the best estimate of the
long-term return on plan assets at any point in time. Therefore, when the
discount rate changes, management's expectation for the future long-term
rate of return on plan assets changes in tandem.
<PAGE>
The funded status of the defined benefit plans at December 31 was as
follows:
<TABLE>
<CAPTION>
( in thousands )
1995 1994 1993
<S> <C> <C> <C>
Actuarial present value of vested benefits $ (158,953) $ (124,502) $ (136,719)
Actuarial present value of accumulated benefits $ (170,875) $ (133,472) $ (146,178)
Actuarial present value of projected benefits $ (206,324) $ (164,333) $ (180,843)
Plan assets at fair value 195,667 157,694 172,688
Projected benefits in excess of plan assets (10,657) (6,639) (8,155)
Unrecognized net loss 7,089 3,464 11,025
Unrecognized prior service cost 8,337 9,492 9,836
Unrecognized net asset at the date FAS No. 87 was
adopted, net of amortization (9,222) (10,669) (12,116)
Net pension asset (liability) recognized in the balance sheet $ (4,453) $ (4,352) $ 590
</TABLE>
Plan assets consist of marketable equity and fixed-income securities.
New Scripps has unfunded health and life insurance benefit plans that are
provided to certain retired employees. The combined number of 1) active
employees eligible for such benefits and 2) retired employees receiving
such benefits is approximately 5% of New Scripps' current workforce. The
actuarial present value of the projected benefit obligation at December 31
was $7,000,000 in 1995 and $6,900,000 in 1994. The cost of the plan was:
1995, $300,000; 1994, $500,000; and 1993, $600,000.
11. SEGMENT INFORMATION
The Other segment includes book publishing operations which were sold in
1993.
Broadcasting operating income in 1994 was reduced by $7,900,000 as a result
of the program rights write-down and was increased in 1993 by $4,300,000 as
a result of the change in estimate of the additional amount of copyright
fees owed ASCAP (see Note 3).
<PAGE>
Financial information relating to New Scripps' business segments is as
follows:
<TABLE>
<CAPTION>
( in thousands )
For the years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
OPERATING REVENUES
Newspapers $ 640,398 $ 602,938 $ 568,054
Broadcasting 295,228 288,184 284,294
Entertainment 94,752 73,473 84,741
Other 8,126
Total continuing operations $ 1,030,378 $ 964,595 $ 945,215
OPERATING INCOME
Newspapers $ 125,484 $ 119,539 $ 75,389
Broadcasting 86,927 86,625 81,958
Entertainment (14,483) (7,083) (1,561)
Other (199)
Corporate (16,772) (15,471) (13,625)
Total continuing operations $ 181,156 $ 183,610 $ 141,962
DEPRECIATION
Newspapers $ 30,206 $ 28,399 $ 30,070
Broadcasting 12,578 9,323 9,470
Entertainment 2,828 1,667 899
Other 25
Corporate 884 651 625
Total continuing operations $ 46,496 $ 40,040 $ 41,089
AMORTIZATION OF INTANGIBLE ASSETS
Newspapers $ 6,267 $ 6,858 $ 6,902
Broadcasting 13,451 11,966 12,212
Entertainment 376 72 18
Other 628
Total continuing operations $ 20,094 $ 18,896 $ 19,760
ASSETS
Newspapers $ 606,989 $ 621,008 $ 667,167
Broadcasting 520,308 515,617 465,622
Entertainment 124,178 84,816 82,538
Corporate 98,239 65,246 39,770
Total continuing operations $ 1,349,714 $ 1,286,687 $ 1,255,097
CAPITAL EXPENDITURES
Newspapers $ 22,184 $ 21,226 $ 24,523
Broadcasting 23,630 23,532 9,733
Entertainment 9,574 7,989 981
Corporate 1,912 1,205 1,608
Total continuing operations $ 57,300 $ 53,952 $ 36,845
</TABLE>
Corporate assets are primarily cash, investments, and refundable and
deferred income taxes.
<PAGE>
12. COMMITMENTS AND CONTINGENCIES
In 1994 New Scripps accrued an estimate of the ultimate costs, including
attorneys' fees and settlements, of lawsuits filed by certain former
employees and independent contractors of a divested operating unit. The
lawsuits allege that the employees were due severance pay and that certain
contractual obligations were unfulfilled, respectively. The accrual
reduced income from continuing operations by $3,600,000, $.05 per share.
Management believes the claims are without merit, however a recent judgment
with respect to one of the severance pay lawsuits was not favorable to New
Scripps. This judgment has been appealed. Management believes the
possibility of incurring a loss greater than the amount accrued is remote.
In 1994 Scripps Cable accrued an estimate of the ultimate costs, including
attorneys' fees and settlements, of certain lawsuits against the Sacramento
cable television system related primarily to employment issues and to the
timing and amount of late-payment fees assessed to subscribers. The
accrual reduced income from discontinued operations $4,000,000. In 1995
Scripps Cable adjusted the accrual based upon a reassessment of the
probable costs of these and additional employment-related lawsuits. The
additional accrual reduced income from discontinued operations $900,000.
Management believes the possibility of incurring a loss greater than the
amount accrued is remote. Pursuant to the terms of the Merger New Scripps
will indemnify Comcast against losses related to these lawsuits.
Amounts accrued, less payments for settlements and attorney fees, are
included in accrued lawsuits and settlements in the accompanying
Consolidated Balance Sheets.
New Scripps is also involved in other litigation arising in the ordinary
course of business, none of which is expected to result in material loss.
New Scripps purchased program rights totaling $61,900,000 in 1995,
$30,700,000 in 1994, and $51,600,000 in 1993, the payments for which are
generally made over the lives of the contracts. At December 31, 1995 New
Scripps was committed to purchase approximately $100,000,000 of program
rights that are not currently available for broadcast, including programs
not yet produced. If such programs are not produced New Scripps'
commitment would expire without obligation.
Minimum payments on non-cancelable leases at December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
( in thousands )
<S> <C>
1996 $ 9,000
1997 8,400
1998 8,400
1999 7,300
2000 6,400
Later years 30,700
Total $ 70,200
</TABLE>
Rental expense for cancelable and non-cancelable leases was as follows:
<TABLE>
<CAPTION>
( in thousands )
For the years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Rental expense, net of sublease income $ 13,300 $ 11,700 $ 9,700
</TABLE>
<PAGE>
13. CAPITAL STOCK AND INCENTIVE PLANS
The capital structure of Scripps includes Common Voting Stock and Class A
Common Stock. The articles of Scripps provide that the holders of Class A
Common Stock, who are not entitled to vote on any other matters except as
required by Delaware law, are entitled to elect the greater of three or one-
third of the directors.
In connection with the Transactions, New Scripps will be recapitalized to
include Common Voting Shares and Class A Common Shares and the Articles of
Incorporation of New Scripps will be further amended to provide for
substantially the same shareholder voting rights and other terms as the
Scripps Certificate of Incorporation currently provides for. Prior to the
Spin-Off New Scripps will issue to Scripps: (i) a number of New Scripps
Common Voting Shares equal to the number of shares of Scripps Common Voting
Stock then outstanding and (ii) a number of New Scripps Class A Common
Shares equal to the number of shares of Scripps Class A Common Stock then
outstanding. These shares will then be distributed to Scripps'
shareholders in the Spin-Off.
Pursuant to the Transactions, New Scripps will assume Scripps' incentive
plans. The 1987 Long-Term Incentive Plan ("1987 Plan") provides for the
awarding of stock options, stock appreciation rights, performance units,
and Class A Common Stock to key employees and the 1994 Non-Employee
Directors' Stock Option Plan (collectively the "Plans") provides for the
awarding of stock options to non-employee directors. The number of shares
authorized for issuance under the Plans is 3,300,000.
Stock options may be awarded to purchase Class A Common Stock at not less
than 100% of the fair market value on the date the option is granted.
Stock options will vest over an incentive period, conditioned upon the
individual's employment through that period. The plan expires on December
9, 1997, except for options then outstanding. In connection with the
Transactions, the number of options and the option price will be adjusted
based on the average market price of Scripps Class A Common Stock before
the Transactions are completed, and the average market price of New Scripps
Class A Common Shares after the Transactions are completed. The number of
options outstanding is expected to increase and the option exercise price
is expected to decrease in order to preserve the economic value and to
prevent any enlargement or dilution of outstanding options. Information
related to stock options is as follows:
<TABLE>
<CAPTION>
Number Price
of Shares per Share
<S> <C> <C>
Outstanding at December 31, 1992 1,246,550 $16 - 27
Granted in 1993 667,500 24 - 34
Exercised in 1993 (133,775) 16 - 24
Forfeited in 1993 (40,775) 18 - 27
Outstanding at December 31, 1993 1,739,500 16 - 34
Granted in 1994 493,500 27 - 30
Exercised in 1994 (87,025) 18 - 26
Forfeited in 1994 (20,000) 18 - 26
Outstanding at December 31, 1994 2,125,975 16 - 34
Granted in 1995 25,000 29 - 34
Exercised in 1995 (221,350) 18 - 30
Forfeited in 1995 (10,000) 18 - 30
Outstanding at December 31, 1995 1,919,625 $16 - 34
Exercisable at December 31, 1995 1,739,125 $16 - 34
</TABLE>
Options issued to employees of Scripps Cable totaled 207,150 at December
31, 1995, of which 186,150 were exercisable. Options issued to employees
of Scripps Cable will vest and become exercisable upon completion of the
Transactions.
<PAGE>
Awards of Class A Common Stock vest over an incentive period, conditioned
upon the individual's employment throughout that period. During the
vesting period shares issued are non-transferable, but the shares are
entitled to all the rights of an outstanding share. Upon vesting, when the
stock awards become taxable to the employees, additional awards of cash may
also be made. Information related to awards of Class A Common Stock is as
follows:
<TABLE>
<CAPTION>
( in thousands, except share data )
For the years ended
December 31,
1995 1994 1993
<S> <C> <C> <C>
Shares of Class A Common stock:
Awarded 17,500 53,000 32,000
Forfeited 1,250 2,810 4,270
Compensation expense recognized:
Continuing operations $ 915 $ 435 $ 270
Scripps Cable 85 65 30
</TABLE>
Unvested awards of Class A Common Stock issued to employees of Scripps
Cable will vest upon completion of the Transactions. There were 6,000
unvested shares issued to employees of Scripps Cable at December 31, 1995.
14. DISCONTINUED CABLE TELEVISION OPERATIONS
Summarized operating results for the discontinued cable television
operations are as follows:
<TABLE>
<CAPTION>
( in thousands )
For the years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Operating revenues $ 279,482 $ 255,356 $ 251,792
Income before income taxes 65,247 33,526 44,811
Income taxes (25,458) (3,484) (20,363)
Minority interests (155) (673)
Income from discontinued cable operations $ 39,789 $ 29,887 $ 23,775
</TABLE>
In 1994 customers of the Sacramento system were awarded special rebates
totaling $3,000,000 in connection with litigation concerning the
system's pricing in the late 1980s. The rebates reduced income from
discontinued operations $1,600,000. Also in 1994 Scripps Cable accrued
$6,500,000 as an estimate of the ultimate costs of certain lawsuits (see
Note 12). The accrual reduced income from discontinued operations
$4,000,000. In 1995 the accrual was increased $1,400,000 based upon
reassessment of the probable costs of the lawsuits, reducing income from
discontinued operations $900,000. Also in 1994 the IRS proposed
adjustments related to certain intangible assets and a deduction related
to the redemption of a partnership interest in certain of its cable
television systems. Based upon the proposed adjustments management
changed its estimate of the tax liabilities for prior years. The
resulting change in the liability for prior year income taxes increased
1994 income from discontinued operations $11,800,000.
<PAGE>
Summarized balance sheet data for the discontinued cable television
operations are as follows:
<TABLE>
<CAPTION>
( in thousands )
As of December 31,
1995 1994
<S> <C> <C>
Property, plant, and equipment $ 294,557 $ 294,229
Goodwill and other intangible assets 93,496 101,717
Other assets 26,014 34,926
Deferred income tax liabilities (76,210) (77,691)
Other liabilities (32,019) (30,444)
Net assets of discontinued cable television operations $ 305,838 $ 322,737
</TABLE>
The major components of cash flow for discontinued operations are as
follows:
<TABLE>
<CAPTION>
( in thousands )
For the years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Income from discontinued operations $ 39,789 $ 29,887 $ 23,775
Depreciation and amortization 53,999 57,331 60,029
Other, net 8,291 (8,594) (275)
Net cash provided by discontinued cable operating activities $ 102,079 $ 78,624 $ 83,529
Capital expenditures $ (47,484) $ (41,616) $ (67,019)
Other, net 2,546 1,120 3,012
Net cash used in investing activities of discontinued cable $ (44,938) $ (40,496) $ (64,007)
operations
</TABLE>
<PAGE>
15. SUMMARIZED QUARTERLY FINANCIAL INFORMATION (Unaudited)
Summarized financial information is as follows:
<TABLE>
<CAPTION>
( in thousands, except per share data )
1st 2nd 3rd 4th
1995 Quarter Quarter Quarter Quarter Total
<S> <C> <C> <C> <C> <C>
Operating revenues:
Newspapers $ 151,607 $ 161,112 $ 155,913 $ 171,766 $ 640,398
Television 66,968 77,080 67,663 83,517 295,228
Entertainment 26,694 21,115 21,155 25,788 94,752
Total operating revenues 245,269 259,307 244,731 281,071 1,030,378
Operating expenses:
Employee compensation and benefits 83,820 84,233 84,861 86,073 338,987
Newsprint and ink 26,871 29,381 32,008 35,319 123,579
Program rights and production costs 15,546 12,523 14,081 16,208 58,358
Other operating expenses 62,732 65,191 63,299 70,486 261,708
Depreciation and amortization 16,063 16,429 17,140 16,958 66,590
Total operating expenses 205,032 207,757 211,389 225,044 849,222
Operating income 40,237 51,550 33,342 56,027 181,156
Interest expense (3,353) (2,829) (2,441) (2,600) (11,223)
Miscellaneous, net 782 394 1,427 (1,068) 1,535
Income taxes (16,971) (21,127) (14,187) (22,247) (74,532)
Minority interests (935) (868) (784) (760) (3,347)
Income from continuing operations 19,760 27,120 17,357 29,352 93,589
Income from discontinued operations (net of income taxes) 9,354 9,019 10,277 11,139 39,789
Net income $ 29,114 $ 36,139 $ 27,634 $ 40,491 $ 133,378
Per share of common stock:
Income from continuing operations $ .25 $ .34 $ .22 $ .37 $ 1.17
Income from discontinued operations .12 .11 .13 .14 .50
Net income $ .36 $ .45 $ .35 $ .51 $ 1.67
Weighted average shares outstanding 79,854 79,927 80,010 80,031 79,956
Cash dividends per share of common stock $ .11 $ .13 $ .13 $ .13 $ .50
The sum of the quarterly net income per share amounts may not equal the
reported annual amount and the sum of the income from continuing operations
per share and the income from discontinued operations per share may not
equal the net income per share amount because each is computed
independently based upon the weighted average number of shares outstanding
for that period.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
( in thousands, except per share data )
1st 2nd 3rd 4th
1994 Quarter Quarter Quarter Quarter Total
<S> <C> <C> <C> <C> <C>
Operating revenues:
Newspapers $ 142,037 $ 151,765 $ 147,145 $ 161,991 $ 602,938
Broadcasting 60,353 73,892 68,200 85,739 288,184
Entertainment 20,978 18,676 16,689 17,130 73,473
Total operating revenues 223,368 244,333 232,034 264,860 964,595
Operating expenses:
Employee compensation and benefits 77,574 79,577 77,337 84,141 318,629
Newsprint and ink 20,657 22,131 23,586 27,786 94,160
Program rights and production costs 12,285 14,473 13,557 19,767 60,082
Other operating expenses 56,150 57,543 59,870 75,615 249,178
Depreciation and amortization 14,283 14,903 14,548 15,202 58,936
Total operating expenses 180,949 188,627 188,898 222,511 780,985
Operating income 42,419 55,706 43,136 42,349 183,610
Interest expense (4,576) (4,529) (3,829) (3,340) (16,274)
Net gains and unusual items 31,621 (16,970) 14,651
Miscellaneous, net 172 (371) (188) (530) (917)
Income taxes (16,681) (35,685) (15,231) (12,844) (80,441)
Minority interests (1,917) (2,886) (2,265) (765) (7,833)
Income from continuing operations 19,417 43,856 21,623 7,900 92,796
Income from discontinued operations (net of income taxes) 5,680 3,968 4,482 15,757 29,887
Net income $ 25,097 $ 47,824 $ 26,105 $ 23,657 $ 122,683
Per share of common stock:
Income from continuing operations $ .26 $ .59 $ .29 $ .10 $ 1.22
Income from discontinued operations .08 .05 .06 .20 .39
Net income $ .34 $ .64 $ .35 $ .30 $ 1.61
Weighted average shares outstanding 74,762 74,776 75,638 79,808 76,246
Cash dividends per share of common stock $ .11 $ .11 $ .11 $ .11 $ .44
The sum of the quarterly net income per share amounts may not equal the
reported annual amount and the sum of the income from continuing operations
per share and the income from discontinued operations per share may not
equal the net income per share amount because each is computed
independently based upon the weighted average number of shares outstanding
for that period.
</TABLE>
<PAGE>
INDEX TO QUARTERLY CONSOLIDATED FINANCIAL STATEMENT INFORMATION
Item Page
Consolidated Balance Sheets F-41
Consolidated Statements of Income F-43
Consolidated Statements of Cash Flows F-44
Consolidated Statements of Stockholders' Equity F-45
Notes to Consolidated Financial Statements F-46
Management's Discussion and Analysis of Financial
Condition and Results of Operations F-50
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
( in thousands ) As of
June 30, December 31, June 30,
1996 1995 1995
( Unaudited ) ( Unaudited )
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 15,594 $ 30,021 $ 25,073
Short-term investments 25,013
Accounts and notes receivable (less
allowances -$3,736, $3,447, $4,193) 157,426 166,867 148,084
Program rights and production costs 32,960 52,402 20,205
Refundable income taxes 7,119 7,828 18,115
Inventories 11,126 11,459 14,210
Deferred income taxes 23,365 21,694 19,177
Miscellaneous 20,748 18,961 21,144
Total current assets 268,338 334,245 266,008
Net assets of discontinued operations 354,234 305,838 307,585
Investments 51,273 53,186 40,885
Property, Plant, and Equipment 437,635 425,959 426,915
Goodwill and Other Intangible Assets 596,454 495,773 505,741
Other Assets:
Program rights and production costs (less current portion) 38,983 26,829 31,298
Miscellaneous 17,511 13,722 9,679
Total other assets 56,494 40,551 40,977
TOTAL ASSETS $ 1,764,428 $ 1,655,552 $ 1,588,111
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
( in thousands, except share data ) As of
June 30, December 31, June 30,
1996 1995 1995
( Unaudited ) ( Unaudited )
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 32,040 $ 78,698 $ 47,046
Accounts payable 68,149 78,538 49,742
Customer deposits and unearned revenue 31,931 21,307 19,363
Accrued liabilities:
Employee compensation and benefits 30,281 32,901 27,295
Artist and author royalties 9,555 6,843 9,805
Interest 1,462 2,169 1,953
Income taxes 1,183 634 3,006
Lawsuits and related settlements 5,745 8,803 11,188
Miscellaneous 20,318 36,226 27,085
Total current liabilities 200,664 266,119 196,483
Deferred Income Taxes 63,987 82,229 73,631
Long-Term Debt (less current portion) 131,815 2,177 63,433
Other Long-Term Obligations and Minority Interests 114,786 113,601 117,439
Commitments and Contingencies (Note 5)
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: 60,981,720; 60,085,408; and 59,996,430 shares 610 601 600
Voting - authorized: 30,000,000 shares; issued and
outstanding: 19,470,382; 19,978,373; and 19,990,833 shares 195 200 200
Total 805 801 800
Additional paid-in capital 266,833 254,063 251,785
Retained earnings 966,916 916,602 869,282
Unrealized gains on securities available for sale 22,285 20,720 15,952
Unvested restricted stock awards (4,332) (1,573) (2,028)
Foreign currency translation adjustment 669 813 1,334
Total stockholders' equity 1,253,176 1,191,426 1,137,125
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,764,428 $ 1,655,552 $ 1,588,111
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME ( UNAUDITED )
<CAPTION>
( in thousands, except per share data )
Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Operating Revenues:
Advertising $ 120,746 $ 116,315 $ 234,748 $ 224,566
Circulation 32,102 31,165 65,666 62,485
Other newspaper revenue 14,134 13,632 25,411 25,668
Total newspapers 166,982 161,112 325,825 312,719
Broadcast television 85,203 77,080 155,925 144,048
Entertainment 25,138 21,115 49,819 47,809
Total operating revenues 277,323 259,307 531,569 504,576
Operating Expenses:
Employee compensation and benefits 89,333 84,112 176,216 167,865
Newsprint and ink 33,162 29,381 67,330 56,252
Program, production and copyright costs 16,492 15,146 33,068 32,532
Other operating expenses 66,961 62,689 128,586 123,648
Depreciation 11,742 11,370 24,179 22,387
Amortization of intangible assets 5,210 5,059 10,291 10,105
Total operating expenses 222,900 207,757 439,670 412,789
Operating Income 54,423 51,550 91,899 91,787
Other Credits (Charges):
Interest expense (2,224) (2,829) (3,637) (6,182)
Miscellaneous, net 705 394 323 1,176
Net other credits (charges) (1,519) (2,435) (3,314) (5,006)
Income from Continuing Operations
Before Taxes and Minority Interests 52,904 49,115 88,585 86,781
Provision for Income Taxes 22,998 21,127 38,272 38,098
Income from Continuing Operations
Before Minority Interests 29,906 27,988 50,313 48,683
Minority Interests 798 868 1,485 1,803
Income From Continuing Operations 29,108 27,120 48,828 46,880
Income From Discontinued Operations 12,782 9,019 22,377 18,373
Net Income $ 41,890 $ 36,139 $ 71,205 $ 65,253
Per Share of Common Stock:
Income from continuing operations $.36 $.34 $.61 $.59
Net income $.52 $.45 $.89 $.82
Dividends declared $.13 $.13 $.26 $.24
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS ( UNAUDITED )
<CAPTION>
( in thousands ) Six months ended
June 30,
1996 1995
<S> <C> <C>
Cash Flows from Operating Activities:
Income from continuing operations $ 48,828 $ 46,880
Adjustments to reconcile income from continuing operations
to net cash flows from continuing operating activities:
Depreciation and amortization 34,470 32,492
Deferred income taxes 2,343 1,183
Minority interests in income of subsidiary companies 1,485 1,803
Settlement of 1985 - 1987 federal income tax audits (45,000)
Other changes in certain working capital accounts, net 11,642 (29,663)
Miscellaneous, net (13,987) 11,343
Net cash provided by continuing operating activities 84,781 19,038
Discontinued cable operations:
Income 22,377 18,373
Adjustment to derive cash flows from operating activities 21,259 41,019
Net cash provided 43,636 59,392
Net operating activities 128,417 78,430
Cash Flows from Investing Activities:
Additions to property, plant, and equipment (36,774) (30,816)
Purchase of subsidiary companies and investments (22,678) (4,903)
Change in short-term investments, net 25,013
Sale of subsidiary companies and other investments 11,400 2,729
Miscellaneous, net 7,305 1,152
Net cash provided by (used in) investing activities of continuing operations (15,734) (31,838)
Net cash provided by (used in) investing activities of discontinued cable operations (93,332) (18,918)
Net investing activities (109,066) (50,756)
Cash Flows from Financing Activities:
Increases in long-term debt 32,000
Payments on long-term debt (49,020) (26)
Dividends paid (20,891) (19,175)
Dividends paid to minority interests (838) (832)
Miscellaneous, net 5,596 2,698
Net cash provided by (used in) financing activities of continuing operations (33,153) (17,335)
Net cash provided by (used in) financing activities of discontinued cable operations (625) (1,875)
Net financing activities (33,778) (19,210)
Increase (Decrease) in Cash and Cash Equivalents (14,427) 8,464
Cash and Cash Equivalents:
Beginning of year 30,021 16,609
End of period $ 15,594 $ 25,073
Supplemental Cash Flow Disclosures:
Interest paid, excluding amounts capitalized $ 4,344 $ 6,228
Income taxes paid 32,246 78,348
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY ( UNAUDITED )
<CAPTION>
( in thousands, except share data )
Unrealized
Gains on Unvested Foreign
Additional Securities Restricted Currency
Common Paid-in Retained Available Stock Translation
Stock Capital Earnings for Sale Awards Adjustment
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1994 $ 799 $ 248,098 $ 823,204 $ 12,518 $ (2,036) $ 885
Net income 65,253
Dividends: declared and
paid - $.24 per share (19,175)
Conversion of 184,000 Voting common shares
to 184,000 Class A common shares
Class A Common shares issued pursuant to
compensation plans, net:
157,950 shares issued,
and 16,762 shares repurchased 1 3,194 (492)
Tax benefits of compensation plans 493
Amortization of restricted stock awards 500
Foreign currency translation adjustment 449
Increase in unrealized gains on
securities available for sale, net
of deferred income taxes of $1,849 3,434
Balances at June 30, 1995 $ 800 $ 251,785 $ 869,282 $ 15,952 $ (2,028) $ 1,334
Balances at December 31, 1995 $ 801 $ 254,063 $ 916,602 $ 20,720 $ (1,573) $ 813
Net income 71,205
Dividends: declared and
paid - $.26 per share (20,891)
Conversion of 507,991 Common Voting shares
to 507,991 Class A Common shares
Class A Common shares issued pursuant to
compensation plans, net:
390,950 shares issued,
and 2,629 shares repurchased 4 11,195 (5,598)
Tax benefits of compensation plans 1,575
Amortization of restricted stock awards 2,839
Foreign currency translation adjustment (144)
Increase in unrealized gains on
securities available for sale, net
of deferred income taxes of $843 1,565
Balances at June 30, 1996 $ 805 $ 266,833 $ 966,916 $ 22,285 $ (4,332) $ 669
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 generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Except as disclosed herein, there
has been no material change in the information disclosed in the
notes to consolidated financial statements for the year ended
December 31, 1995. Financial information as of December 31, 1995
included in these financial statements has been derived from the
audited consolidated financial statements. 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.
Net Income Per Share - Net income per share computations are based
upon the weighted average common shares outstanding. The weighted
average common shares outstanding were as follows:
<TABLE>
<CAPTION>
( in thousands ) Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Weighted average shares outstanding 80,308 79,927 80,256 79,891
</TABLE>
2. ACQUISITIONS AND DIVESTITURES
A. Acquisitions
1996 - In May New Scripps purchased the Vero Beach, Florida, Press-
Journal.
1995 - There were no acquisitions in the six months ended June 30, 1995.
The following table presents additional information about the
acquisitions:
<TABLE>
<CAPTION>
( in thousands ) Six months
ended
June 30,
1996
<S> <C>
Goodwill and other intangible assets acquired $ 110,967
Other assets acquired 10,900
Total 121,867
Liabilities assumed (1,794)
6.17% note issued to seller, due in 1997 (100,000)
Cash paid $ 20,073
</TABLE>
The acquisition has been accounted for as a purchase and accordingly
the purchase price has been allocated to assets and liabilities
based on the estimated fair values, which are subject to adjustment,
as of the date of acquisition.
<PAGE>
The acquired operation has been included in the Consolidated
Statements of Income from the date of acquisition. The following
table summarizes, on an unaudited, pro forma basis, the estimated
combined results of operations of Scripps and the Press-Journal
assuming the acquisition had taken place at the beginning of the
respective periods. The pro forma information includes adjustments
for interest expense that would have been incurred to finance the
acquisition, additional depreciation based on the fair market value
of the property, plant, and equipment, and the amortization of
intangible assets resulting from the acquisition. The unaudited pro
forma results of operations are not necessarily indicative of the
results which actually would have occurred had the acquisition been
completed at the beginning of the respective periods.
<TABLE>
<CAPTION>
( in thousands ) Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Operating revenues $ 278,958 $ 262,880 $ 537,524 $ 512,229
Income from continuing operations 28,079 26,035 46,718 45,070
Net income 40,861 35,054 69,095 63,443
Per share of common stock:
Income from continuing operations $.35 $.33 $.58 $.56
Net income .51 .44 .86 .79
</TABLE>
B. Divestitures
1996 - New Scripps sold its equity interest in The Television Food
Network, a cable programming network. No material gain or loss was
realized.
1995 - New Scripps sold its Watsonville, California, daily newspaper.
No material gain or loss was realized as proceeds approximated the
net book value of the net assets sold.
3. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
( in thousands ) As of
June 30, December 31, June 30,
1996 1995 1995
<S> <C> <C> <C>
6.17% note, due in 1997 $ 100,000
7.375% notes, due in 1998 29,658 $ 31,658 $ 61,235
Variable Rate Credit Facilities 32,000
9.0% notes, due in 1996 47,000 47,000
Other notes 2,197 2,217 2,244
Total long-term debt 163,855 80,875 110,479
Current portion of long-term debt 32,040 78,698 47,046
Long-term debt (less current portion) $ 131,815 $ 2,177 $ 63,433
</TABLE>
New Scripps has a Competitive Advance/Revolving Credit Agreement and
other variable rate credit facilities ("Variable Rate Credit
Facilities") which expire through September 1996 and permit maximum
borrowings up to $50,000,000. Maximum borrowings under the
facilities are changed as New Scripps' anticipated needs change and are
not indicative of New Scripps' short-term borrowing capacity. The
credit facilities may be extended upon mutual agreement.
Certain long-term debt agreements contain maintenance requirements
on net worth and coverage of interest expense and restrictions on
dividends and incurrence of additional indebtedness. New Scripps is in
compliance with all debt covenants.
<PAGE>
4. DISCONTINUED CABLE TELEVISION OPERATIONS
On October 28, 1995, The E.W. Scripps Company ("Scripps") and
Comcast Corporation ("Comcast") reached an agreement pursuant to which
Scripps will contribute all of its non-cable television assets to
Scripps Howard, Inc. ("SHI" - a wholly-owned subsidiary of Scripps and
the direct or indirect parent of all of Scripps' operations) and SHI's
cable television system subsidiaries ("Scripps Cable") will be transferred
to and held directly by Scripps. Scripps Cable will be acquired by Comcast
through a tax-free merger (the "Merger") with Scripps. The
remaining SHI business will continue as "New Scripps", which will be
distributed in a tax-free "spin-off" to Scripps shareholders (the
"Spin-Off") prior to the Merger and thereafter renamed The E.W.
Scripps Company. The Merger and Spin-off are collectively referred
to as the "Transactions."
The closing of the Transactions is expected to occur prior to the
end of 1996, subject to regulatory approvals and certain other
conditions. Controlling shareholders in Scripps and Comcast have
agreed to vote in favor of the Merger, and as a result completion of
the Transactions is assured so long as such conditions are satisfied
and such regulatory approvals are received. While there can be no
assurances regarding such approvals, management believes all such
approvals will be obtained.
Because Scripps Cable represents an entire business segment that
will be divested, its results are reported as "discontinued
operations" for all periods presented.
Summarized operating results for the discontinued cable television
operations are as follows:
<TABLE>
<CAPTION>
( in thousands ) Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Operating revenues $ 77,182 $ 69,750 $ 153,432 $ 136,745
Income before income taxes 21,191 14,956 37,098 29,314
Income taxes (8,409) (5,937) (14,721) (10,941)
Income from discontinued cable operations $ 12,782 $ 9,019 $ 22,377 $ 18,373
</TABLE>
Summarized balance sheet data for the discontinued cable television
operations are as follows:
<TABLE>
<CAPTION>
( in thousands ) As of
June 30, December 31, June 30,
1996 1995 1995
<S> <C> <C> <C>
Property, plant, and equipment $ 314,363 $ 294,557 $ 289,694
Goodwill and other intangible assets 138,933 93,496 97,306
Other assets 28,204 26,014 26,112
Deferred income tax liabilities (97,435) (76,210) (76,642)
Other liabilities (29,831) (32,019) (28,885)
Net assets of discontinued cable television operations $ 354,234 $ 305,838 $ 307,585
</TABLE>
<PAGE>
The major components of cash flow for discontinued operations are as
follows:
<TABLE>
<CAPTION>
( in thousands ) Six months ended
June 30,
1996 1995
<S> <C> <C>
Income from discontinued operations $ 22,377 $ 18,373
Depreciation and amortization 27,923 27,862
Other, net (6,664) 13,157
Net cash provided by discontinued cable operating activities $ 43,636 $ 59,392
Capital expenditures $ (31,378) $ (18,808)
Acquisition of cable television systems (primarily equipment and intangible assets) (62,152) (222)
Other, net 198 112
Net cash used in investing activities of discontinued cable operations $ (93,332) $ (18,918)
</TABLE>
In January 1996 Scripps Cable acquired cable television systems
adjacent to its Knoxville and Chattanooga systems (the "Mid-Tenn.
Purchase") for $62,500,000, including assumed liabilities. The
acquired cable television systems are included in the results of
discontinued operations from the date of acquisition.
5. COMMITMENTS AND CONTINGENCIES
In 1994 New Scripps accrued an estimate of the ultimate costs, including
attorneys' fees and settlements, of lawsuits filed by certain former
employees and independent contractors of a divested operating unit.
The lawsuits allege that the employees were due severance pay and
that certain contractual obligations were unfulfilled, respectively.
In April 1996 New Scripps reached an agreement to settle the severance
pay lawsuits. There was no additional charge resulting from the
settlement. Management believes the possibility of incurring a loss
greater than the amount accrued for the independent contractor
lawsuits is remote.
In 1994 Scripps Cable accrued an estimate of the ultimate costs,
including attorneys' fees and settlements, of certain lawsuits
against the Sacramento cable television system related primarily to
employment issues and to the timing and amount of late-payment fees
assessed to subscribers. In May 1996 Scripps Cable agreed to settle
the late-payment fee lawsuits. There was no additional charge
resulting from the settlement. Management believes the possibility
of incurring a loss greater than the amount accrued for the
employment issues lawsuits is remote. Pursuant to the terms of the
Merger, New Scripps will indemnify Comcast against losses related to
these lawsuits.
Amounts accrued, less payments for settlements and attorneys fees,
are included in accrued lawsuits and related settlements in the
Consolidated Balance Sheets.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Consolidated results of continuing operations were as follows:
<TABLE>
<CAPTION>
( in thousands, except per share data ) Quarterly Period Year-to-Date
1996 Change 1995 1996 Change 1995
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Newspapers $ 166,982 3.6 % $ 161,112 $ 325,825 4.3 % $ 312,425
Broadcast television 85,203 10.5 % 77,080 155,925 8.2 % 144,048
Entertainment 25,138 19.1 % 21,115 49,819 4.2 % 47,809
Total 277,323 6.9 % 259,307 531,569 5.4 % 504,282
Divested operating units 294
Total operating revenues $ 277,323 6.9 % $ 259,307 $ 531,569 5.3 % $ 504,576
Operating income:
Newspapers $ 35,234 1.4 % $ 34,755 $ 61,505 (4.3)% $ 64,277
Broadcast television 29,994 20.5 % 24,890 47,477 15.3 % 41,186
Entertainment (2,161) (2,882) (3,811) (3,352)
Corporate (4,644) (4,266) (8,854) (8,895)
Total 58,423 11.3 % 52,497 96,317 3.3 % 93,216
Unusual items (4,000) (4,000)
Divested operating units (947) (418) (1,429)
Total operating income 54,423 5.6 % 51,550 91,899 0.1 % 91,787
Interest expense (2,224) (2,829) (3,637) (6,182)
Miscellaneous, net 705 394 323 1,176
Income taxes (22,998) (21,127) (38,272) (38,098)
Minority interest (798) (868) (1,485) (1,803)
Income from continuing operations $ 29,108 $ 27,120 $ 48,828 $ 46,880
Per share of common stock:
Income from continuing operations $.36 5.9 % $.34 $.61 3.4 % $.59
Unusual charge .03 .03
Adjusted income from continuing operations $.39 14.7 % $.34 $.64 8.5 % $.59
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
( in thousands ) Quarterly Period Year-to-Date
1996 Change 1995 1996 Change 1995
<S> <C> <C> <C> <C> <C> <C>
Other Financial and Statistical Data - excluding divested operating units and unusual items:
Total advertising revenues $ 210,194 7.5 % $ 195,495 $ 398,106 7.1 % $ 371,726
Advertising revenues as a
percentage of total revenues 75.8 % 75.4 % 74.9 % 73.7 %
EBITDA:
Newspapers $ 44,200 1.1 % $ 43,718 $ 79,979 (2.9)% $ 82,347
Broadcast television 36,757 17.4 % 31,307 61,096 13.5 % 53,822
Entertainment (1,256) (2,144) (1,981) (2,046)
Corporate (4,326) (3,955) (8,307) (8,418)
Total $ 75,375 9.4 % $ 68,926 $ 130,787 4.0 % $ 125,705
Effective income tax rate 43.5 % 43.0 % 43.2 % 43.9 %
Weighted average shares outstanding 80,308 0.5 % 79,927 80,256 0.5 % 79,891
Total capital expenditures $ 19,378 6.6 % $ 18,178 $ 36,774 19.3 % $ 30,816
</TABLE>
Earnings before interest, income taxes, depreciation, and
amortization ("EBITDA") is included in the discussion of segment
results because:
Changes in depreciation and amortization are often unrelated to
current performance. Management believes the year-over-year
change in EBITDA is a more useful measure of year-over-year
performance than the change in operating income because,
combined with information on capital spending plans, it is a
more reliable indicator of results that may be expected in
future periods. However, management's belief that EBITDA is a
more useful measure of year-over-year performance is not shared
by the accounting profession.
Banks and other lenders use EBITDA to determine New Scripps'
borrowing capacity.
Financial analysts use EBITDA to value communications media
companies.
Acquisitions of communications media businesses are based on
multiples of EBITDA.
EBITDA should not, however, be construed as an alternative measure
of the amount of New Scripps' income or cash flows from operating
activities as EBITDA excludes significant costs of doing business.
In the second quarter of 1996 New Scripps incurred an unusual charge of
approximately $4,000,000, $2,600,000 after-tax, $.03 per share, for
New Scripps' share of certain costs associated with restructuring
portions of the distribution system of the Cincinnati joint
operating agency.
New Scripps acquired the Vero Beach daily newspaper on May 9, 1996, sold
its equity interest in The Television Food Network ("TV Food") in
the second quarter of 1996, and sold its Watsonville, California,
daily newspaper in the first quarter of 1995.
Year-to-date operating losses for the Home & Garden Television
network ("HGTV") totaled $6,900,000, $4,200,000 after-tax, $.05 per
share in 1996 and $6,600,000, $4,100,000 after-tax, $.05 per share
in 1995. Operating losses for the quarterly periods were
$3,100,000, $1,900,000 after-tax, $.02 per share in 1996 and
$3,400,000, $2,100,000 after-tax, $.03 per share in 1995.
Interest expense decreased in the quarter and year-to-date periods
as a result of reduced average borrowings. However, primarily
because of the acquisition of the Vero Beach newspaper, total long-
term debt increased $97,000,000 in the quarter to $164,000,000,
which is $53,000,000 more than at the end of the second quarter in
1995.
<PAGE>
Operating results, excluding TV Food and the Watsonville newspaper,
are presented below and on the following pages. The results of the
divested operating units are excluded from the segment operating
results because management believes they are not relevant to
understanding New Scripps' ongoing operations.
NEWSPAPERS - Operating results for the newspaper segment, excluding
the Watsonville newspaper, were as follows:
<TABLE>
<CAPTION>
( in thousands ) Quarterly Period Year-to-Date
1996 Change 1995 1996 Change 1995
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Local $ 49,617 1.9 % $ 48,683 $ 98,202 2.8 % $ 95,498
Classified 50,204 7.7 % 46,594 95,825 8.0 % 88,688
National 4,751 7.4 % 4,425 8,997 8.2 % 8,314
Preprint 16,174 (2.6)% 16,613 31,724 (0.4)% 31,838
Newspaper advertising 120,746 3.8 % 116,315 234,748 4.6 % 224,338
Circulation 32,102 3.0 % 31,165 65,666 5.2 % 62,435
Joint operating agency distributions 11,704 1.7 % 11,508 20,615 (4.9)% 21,681
Other 2,430 14.4 % 2,124 4,796 20.8 % 3,971
Total operating revenues 166,982 3.6 % 161,112 325,825 4.3 % 312,425
Operating expenses:
Employee compensation and benefits 55,928 2.5 % 54,567 110,644 1.2 % 109,347
Newsprint and ink 33,161 12.9 % 29,381 67,330 19.7 % 56,227
Other 33,693 0.7 % 33,446 67,872 5.2 % 64,504
Depreciation and amortization 8,966 0.0 % 8,963 18,474 2.2 % 18,070
Total operating expenses 131,748 4.3 % 126,357 264,320 6.5 % 248,148
Operating income $ 35,234 1.4 % $ 34,755 $ 61,505 (4.3)% $ 64,277
Other Financial and Statistical Data:
Earnings before interest,
income taxes, depreciation,
and amortization ("EBITDA") $ 44,200 1.1 % $ 43,718 $ 79,979 (2.9)% $ 82,347
Percent of operating revenues:
Operating income 21.1 % 21.6 % 18.9 % 20.6 %
EBITDA 26.5 % 27.1 % 24.5 % 26.4 %
Capital expenditures $ 12,674 85.9 % $ 6,816 $ 17,905 78.9 % $ 10,010
Advertising inches:
Local 1,688 9.5 % 1,541 3,381 3.2 % 3,275
Classified 1,765 6.7 % 1,654 3,295 2.7 % 3,207
National 96 20.0 % 80 179 7.2 % 167
Total full run ROP 3,549 8.4 % 3,275 6,855 3.1 % 6,649
</TABLE>
Higher advertising rates were the primary cause of the increase in
advertising revenues as volume decreased in many of New Scripps'
newspaper markets. The May 9, 1996 acquisition of The Vero Beach
newspaper also had a slight positive effect on year-over-year
advertising revenues.
<PAGE>
The price of newsprint in the first half of 1996 was approximately
24% higher than in the first half of 1995. However, the rate of
increase in the price of newsprint in the second quarter of 1996 was
reduced to 13% as newsprint prices decreased in April 1996. Newsprint
prices decreased again in July and August. As a result, the year-over-year
third quarter newsprint expense will be approximately 8% less than,
and the fourth quarter expense is expected to be approximately 15%
less than, in 1995. For the first half of 1996 newsprint consumption
decreased 4.4%.
BROADCAST TELEVISION - Operating results for the broadcast
television segment were as follows:
<TABLE>
<CAPTION>
( in thousands ) Quarterly Period Year-to-Date
1996 Change 1995 1996 Change 1995
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Local $ 42,763 9.4 % $ 39,072 $ 78,323 5.4 % $ 74,328
National 36,479 7.5 % 33,937 65,856 6.9 % 61,605
Political 1,718 310 3,100 371
Other 4,243 12.8 % 3,761 8,646 11.6 % 7,744
Total operating revenues 85,203 10.5 % 77,080 155,925 8.2 % 144,048
Operating expenses:
Employee compensation and benefits 24,446 9.7 % 22,293 48,173 9.5 % 44,003
Program and copyright costs 11,365 (3.5)% 11,774 22,568 (2.6)% 23,182
Other 12,635 7.9 % 11,706 24,088 4.5 % 23,041
Depreciation and amortization 6,763 5.4 % 6,417 13,619 7.8 % 12,636
Total operating expenses 55,209 5.8 % 52,190 108,448 5.4 % 102,862
Operating income $ 29,994 20.5 % $ 24,890 $ 47,477 15.3 % $ 41,186
Other Financial and Statistical Data:
Earnings before interest,
income taxes, depreciation,
and amortization ("EBITDA") $ 36,757 17.4 % $ 31,307 $ 61,096 13.5 % $ 53,822
Percent of operating revenues:
Operating income 35.2 % 32.3 % 30.4 % 28.6 %
EBITDA 43.1 % 40.6 % 39.2 % 37.4 %
Capital expenditures $ 6,077 1.2 % $ 6,007 $ 17,582 70.3 % $ 10,325
</TABLE>
The increase in employee costs is due primarily to New Scripps' expanded
schedules of local news programs. Construction of new facilities at
the Phoenix and Tampa stations resulted in the increase in capital
spending. Depreciation and amortization in the third quarter of
1996 is expected to be less than it was in the third quarter of 1995
and the second quarter of 1996 as certain intangible assets acquired
in the 1991 purchase of the Baltimore station become fully
amortized.
<PAGE>
ENTERTAINMENT - Operating results for the entertainment segment, excluding
TV Food, were as follows:
<TABLE>
<CAPTION>
( in thousands ) Quarterly Period Year-to-Date
1996 Change 1995 1996 Change 1995
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Licensing $ 12,176 1.1 % $ 12,049 $ 24,782 (10.1)% $ 27,558
Newspaper feature distribution 5,075 14.8 % 4,419 9,883 12.3 % 8,803
Program production 1,734 (3.6)% 1,798 4,375 (34.5)% 6,678
Subscriber fees 1,566 443 2,698 834
Advertising 4,245 2,100 7,433 3,340
Other 342 11.8 % 306 648 8.7 % 596
Total operating revenues 25,138 19.1 % 21,115 49,819 4.2 % 47,809
Operating expenses:
Employee compensation and benefits 5,666 16.0 % 4,885 11,232 19.3 % 9,416
Artists' royalties 8,781 3.8 % 8,456 17,655 (5.8)% 18,741
Programming and production costs 5,095 51.1 % 3,372 10,442 11.7 % 9,350
Other 6,852 4.7 % 6,546 12,471 1.0 % 12,348
Depreciation and amortization 905 22.6 % 738 1,830 40.1 % 1,306
Total operating expenses 27,299 13.8 % 23,997 53,630 4.8 % 51,161
Operating income (loss) $ (2,161) $ (2,882) $ (3,811) $ (3,352)
Other Financial and Statistical Data:
Earnings before interest,
income taxes, depreciation,
and amortization ("EBITDA") $ (1,256) $ (2,144) $ (1,981) $ (2,046)
Capital expenditures $ 504 $ 4,920 $ 1,040 $ 9,113
</TABLE>
Program production revenues are subject to substantial fluctuation
due to changes in public tastes and demand for programming by
broadcast and cable television networks. In addition, quarterly
revenues are affected by the timing of completion and delivery of
programming to the networks. Program production revenues decreased
in the year-to-date period as fewer programs were completed and
delivered by Scripps Howard Productions ("SHP") and Cinetel.
Program production revenues for the full year of 1996 are expected
to increase however, as SHP has commitments for four network prime-
time programs to be delivered in 1996 compared to two in 1995.
Subscriber fees and advertising revenue increased due to the
continued growth of HGTV.
Year-to-date operating losses for HGTV totaled $6,900,000 in 1996
and $6,600,000 in 1995. Operating losses for the quarterly periods
were $3,100,000 in 1996 and $3,400,000 in 1995.
Programming and production costs increased due to higher programming
costs at HGTV.
Author royalties decreased in the year-to-date period due to the
decrease in licensing revenues.
<PAGE>
United Media distributes news columns, comics, and features,
and licenses copyrights for "Peanuts" and other character
properties on a worldwide basis. Revenues derived from such
international activities represent less than 5% of New Scripps'
total revenues. The Japanese market provides more than two-
thirds of international revenues and approximately 45% of total
licensing revenue. The impact of changes in the value of the
U.S. dollar in foreign exchange markets does not have a
significant effect on the recorded value of New Scripps' foreign-
currency-denominated assets, which are primarily related to
uncollected licensing royalties and represent less than 1% of
total assets. New Scripps' foreign-currency-denominated
liabilities are primarily related to payments due to creators
of the properties. However, comparison of year-over-year
licensing revenues can be significantly affected by changes in
the exchange rate for the Japanese yen. Japanese licensing
revenues in local currency increased 13% in 1996, however the
change in the exchange rate caused such revenues to decrease 6%
in dollar terms. The effect on licensing revenues of changes
in the exchange rate for other foreign currencies is not
significant.
From time-to-time New Scripps uses foreign currency forward and
option contracts to hedge cash flow exposures denominated in
Japanese yen. The purpose of the contracts is to reduce the
risk of changes in the exchange rate on New Scripps' anticipated
net licensing receipts (licensing royalties less amounts due
creators of the properties and certain direct expenses) for the
following year. The maturities of the contracts coincide with
the quarterly payments of licensing royalties. New Scripps does
not hold foreign currency contracts for trading purposes and
does not hold leveraged contracts.
Information about New Scripps' foreign currency contracts, which
require New Scripps to sell yen at a specified rate, at June 30, 1996
was as follows:
Maturity Contract Exchange US Dollar
Date Amount (in yen) Rate Equivalent
8/15/96 142,650,000 95.10 1,500,000
11/15/96 143,835,000 95.89 1,500,000
2/18/97 151,635,000 101.09 1,500,000
5/15/97 150,345,000 100.23 1,500,000
Capital expenditures in 1995 primarily relate to the launch of HGTV.
The increase in depreciation and amortization is primarily due to
the start-up of HGTV.
LIQUIDITY AND CAPITAL RESOURCES
New Scripps generates significant cash flow from operating activities,
primarily from its newspaper and broadcast television operations.
There are no significant legal or other restrictions on the transfer
of funds among New Scripps' business segments. Cash flows provided by
the operating activities of the newspaper and broadcast television
segments in excess of the capital expenditures of those segments are
used to invest in the entertainment segment and to fund corporate
expenses. Management expects total cash flow from continuing
operating activities in 1996 will exceed New Scripps' expected total
capital expenditures, debt repayments, and dividend payments.
Cash flow provided by continuing operating activities was
$84,800,000 in 1996 compared to $19,000,000 in 1995. Cash flow
provided by continuing operating activities in 1995 was reduced by a
$45,000,000 payment to settle the audit of New Scripps' 1985 through
1987 federal income tax returns.
Net debt (borrowings less cash equivalent and other short-term
investments) totaled $163,900,000 at June 30, 1996 and was 12% of
total capitalization. Management believes New Scripps' cash and cash
equivalents and substantial borrowing capacity, taken together,
provide adequate resources to fund the capital expenditures and
future expansion of existing businesses and the development or
acquisition of new businesses. The ability of New Scripps' continuing
operations to produce significant cash flow and New Scripps' significant
borrowing capacity were primary factors in structuring the
divestiture of its cable television assets so as to transfer the
proceeds of the divestiture tax-free to shareholders.
<PAGE>
NEW SCRIPPS
Index to Consolidated Financial Statement Schedules
Valuation and Qualifying Accounts S-2
<PAGE>
<TABLE>
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993 SCHEDULE II
<CAPTION>
( in thousands )
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
INCREASE
ADDITIONS DEDUCTIONS (DECREASE)
BALANCE CHARGED TO AMOUNTS RECORDED BALANCE
BEGINNING COSTS AND CHARGED ACQUISITIONS END OF
CLASSIFICATION OF PERIOD EXPENSES OFF-NET (DIVESTITURES) PERIOD
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995:
Allowance for doubtful
accounts receivable $ 3,937 $ 5,385 $ 5,875 $ 3,447
Allowance for sales returns 601 601 0
Total receivable allowances $ 4,538 $ 5,385 $ 6,476 $ 3,447
YEAR ENDED DECEMBER 31, 1994:
Allowance for doubtful
accounts receivable $ 5,049 $ 3,317 $ 4,429 $ 3,937
Allowance for sales returns 679 78 601
Total receivable allowances $ 5,728 $ 3,317 $ 4,507 $ 4,538
YEAR ENDED DECEMBER 31, 1993:
Allowance for doubtful
accounts receivable $ 4,709 $ 5,116 $ 4,249 $ (527) $ 5,049
Allowance for sales returns 6,148 1,262 876 (5,855) 679
Total receivable allowances $ 10,857 $ 6,378 $ 5,125 $ (6,382) $ 5,728
</TABLE>
<PAGE>
NEW SCRIPPS
Index to Exhibits
<TABLE>
<CAPTION>
Exhibit Exhibit No.
Number Description of Item Page Incorporated
<S> <C> <C> <C>
3.01 Articles of Incorporation E-4
3.02 Code of Regulations E-13
4.01 Class A Common Share Certificate (4) 4
4.02 Form of Indenture (2) 4.1
4.03 Form of Debt Securities (2) 4.2
10 Agreement and Plan of Merger by and among The E.W. Scripps Company,
Scripps Howard, Inc., and Comcast Corporation (11) 10.0
10.01 Amended and Restated Joint Operating Agreement, dated January 1, 1979, among
Journal Publishing Company, New Mexico State Tribune Company, and
Albuquerque Publishing Company, as amended (1) 10.01
10.02 Amended and Restated Joint Operating Agreement, dated February 29, 1988, among
Birmingham News Company and Birmingham Post Company (1) 10.02
10.03 Joint Operating Agreement, dated September 23, 1977, between the
Cincinnati Enquirer, Inc., and the Company, as amended (1) 10.03
10.04 Joint Operating Agreement, dated May 24, 1989, between the El Paso Times, Inc.
and the Company, as amended (8) 10.04
10.05 Amended and Restated Joint Operating Agreement, dated October 23, 1986, among
Evansville Press Company, Inc., Hartmann Publications, Inc., and Evansville
Printing Corporation (1) 10.05
10.06 Building Lease, dated April 25, 1984, among Albuquerque Publishing Company,
Number Seven, and Jefferson Building Partnership (1) 10.08A
10.06A Ground Lease, dated April 25, 1984, among Albuquerque Publishing Company,
New Mexico State Tribune Company, Number Seven, and Jefferson Building
Partnership (1) 10.08B
10.07 Agreement, dated August 17, 1989, between United Feature Syndicate, Inc. and
Charles M. Schulz and the Trustees of the Schulz Family Renewal Copyright
Trust, as amended (1) 10.11
10.20 Competitive Advance and Revolving Credit Facility Agreement, dated
September 30, 1988, among the Company, Scripps Howard, Inc., and
Chemical Bank, et.al. (3) 10.15
10.20A Consent and Agreement, dated September 22, 1989, among Scripps Howard, Inc.
and each of the banks party to the Competitive Advance and Revolving Credit
Facility Agreement, dated September 30, 1988 (5) 10.29D
10.20B First Amendment, dated June 30, 1990, to the Competitive Advance and Revolving
Credit Facility Agreement, dated September 30, 1988 (5) 10.29B
10.20C Consent and Second Amendment, dated September 23, 1990, among Scripps Howard, Inc.
and each of the banks party to the Competitive Advance and Revolving Credit
Facility Agreement, dated September 30, 1988 (5) 10.29A
10.20D Consent and Second Amendment, dated September 22, 1991, among
Scripps Howard, Inc. and each of the banks party to the Competitive Advance
and Revolving Credit Facility Agreement dated September 30, 1988 (5) 10.29C
10.20E Third Amendment Agreement dated December 6, 1991, amending the Competitive
Advance and Revolving Credit Facility Agreement dated September 30, 1988 (2) 10.03
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Exhibit No.
Number Description of Item Page Incorporated
<S> <C> <C> <C>
10.21 Master Note Agreement dated June 15, 1990 (5) 10.34
10.22 Short-Term/Medium-Term Note Facility (5) 10.33
10.22A First Amendment Agreement, dated December 9, 1991, amending Credit Agreement,
dated September 21, 1990, between Scripps Howard, Inc., the Lenders named
therein, and the Travelers Insurance Company, as agent for the Lenders (2) 10.09
10.23 9.0% Senior Notes due February 15, 1996 (Various agreements totaling $50,000,000) (5) 10.32
10.25 Scripps Howard, Inc. Medium Term Notes (7) 1
10.25A Scripps Howard, Inc. Medium Term Note, Series A, Fixed Rate (7) 4.1
10.25B Scripps Howard, Inc. Medium Term Note, Series A, Floating Rate (7) 4.2
10.43A Asset Purchase Agreement Among Scripps Howard Broadcasting Company,
Ellis Communications, Inc., and Elcom of Memphis, Inc. (9) (C)
10.43B Asset Purchase Agreement Between Scripps Howard Broadcasting Company
and Capitol Broadcasting Company, Incorporated (9) (C)
10.43C Asset Purchase Agreement Among Scripps Howard Broadcasting Company,
Baycom Oregon L.P., and Baycom Partners, L.P. (9) (C)
10.44 Agreement and Plan Merger by and among Scripps Howard Broadcasting Company:
The E.W. Scripps Company, and SHB Merger Corporation (10) 10.58
10.52 Description of Annual and Medium Term Bonus Plan (1) 10.34
10.52A Description of Deferred Compensation Plan (1) 10.35A
10.52B Form of Election Agreement for Annual Bonus Plan Deferral (1) 10.35B
10.52C Form of Election Agreement for Medium Term Bonus Plan Deferral (1) 10.35C
10.53 1987 Long-Term Incentive Plan (1) 10.36
10.53A Form of Nonqualified Stock Option Agreement (1) 10.36A
10.53B Form of Restricted Share Award Agreement (1) 10.36B
10.54 Agreement, dated December 24, 1959, between the Company and Charles E. Scripps,
as amended (1) 10.39A
10.54A Assignment, Assumption, and Release Agreement, dated December 31, 1987,
between the Company, Scripps Howard, Inc., and Charles E. Scripps (1) 10.39B
10.54B Amendment, dated June 21, 1988 to December 24, 1959 Agreement between
the Company and Charles E. Scripps (1) 10.39C
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10.55 Board Representation Agreement, dated March 14, 1986, between
The Edward W. Scripps Trust and John P. Scripps (1) 10.44
10.56 Shareholder Agreement, dated March 14, 1986, between the Company and the
Shareholders of John P. Scripps Newspapers (1) 10.45
10.57 Scripps Family Trust Agreement dated October 15, 1992 (6) 1
12.1 Computation of Ratio of Earnings to Fixed Charges for the Year Ended
December 31, 1995 E-18
12.2 Computation of Ratio of Earnings to Fixed Charges for the Quarter Ended
June 30, 1996 E-19
22 Subsidiaries of the Company E-20
27 Financial Data Schedule E-21
</TABLE>
(1) Incorporated by reference to Registration Statement of The E.W. Scripps
Company on Form S-1 (File No. 33-21714).
(2) Incorporated by reference to Registration Statement of The E.W. Scripps
Company on Form S-3 (File No. 33-43989).
(3) Incorporated by reference to The E.W. Scripps Company Annual Report on
Form 10-K for the year ended December 31, 1988.
(4) Incorporated by reference to The E.W. Scripps Company Annual Report on
Form 10-K for the year ended December 31, 1990.
(5) Incorporated by reference to Form 8 Amendment No. 1 to The E.W. Scripps
Company Annual Report on Form 10-K for the year ended December 31, 1990.
(6) Incorporated by reference to The E.W. Scripps Company Current Report
on Form 8-K dated October 15, 1992.
(7) Incorporated by reference to The E.W. Scripps Company Current Report
on Form 8-K dated May 15, 1992.
(8) Incorporated by reference to The E.W. Scripps Company Annual Report
on Form 10-K for the year ended December 31, 1991.
(9) Incorporated by reference to Scripps Howard Broadcasting Company
Current Report on Form 8-K dated August 3, 1993.
(10) Incorporated by reference to Registration Statement on Form S-4
(File No. 33-54591).
(11) Incorporated by reference to The E.W. Scripps Company Current Report
on Form 8-K dated December 28, 1995.
EXHIBIT 3.01
AMENDED AND RESTATED ARTICLES OF INCORPORATION OF SCRIPPS HOWARD, INC.
FIRST: Name. The name of the Corporation is Scripps Howard, Inc.
(the "Corporation").
SECOND: Principal Office. The place in the State of Ohio where the
principal office of the Corporation is to be located is Cincinnati,
Hamilton County.
THIRD: Purpose. The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be formed under
Sections 1701.01 to 1701.98, inclusive, of the Ohio Revised Code.
FOURTH: Classes and Number of Shares. The total number of shares of
all classes of stock that the Corporation shall have authority to
issue is 175,000,000 shares. The classes and the aggregate number of
shares of stock of each class that the Corporation shall have
authority to issue are as follows:
(i) 30,000,000 Common Voting Shares, $0.01 par value ("Common
Voting Shares").
(ii) 120,000,000 Class A Common Shares, $0.01 par value ("Class A
Common Shares").
(iii) 25,000,000 Preferred Shares, $0.01 par value ("Preferred
Shares").
The 750 Common Shares, without par value, of the Corporation
heretofore authorized, issued and outstanding are hereby changed into
375 Common Voting Shares and 375 Class A Common Shares.
Powers and Rights of the Common Voting Shares and the Class A Common
Shares.
1. Election of Directors. Holders of Class A Common Shares, voting
separately and as a class, shall be entitled to elect the greater of
three or one-third (or the nearest smaller whole number if the
aforesaid fraction is not a whole number) of the directors of the
Corporation to be elected from time to time except directors, if any,
to be elected by holders of Preferred Shares or any series thereof;
and holders of Common Voting Shares, voting separately and as a class,
shall be entitled to elect the balance of such directors.
2. Other Matters. Except as provided in this Article FOURTH with
respect to Class A Common Shares or in any resolution providing for
the issue of Preferred Shares or any series thereof, and as otherwise
required by the Ohio Revised Code, the entire voting power shall be
vested solely and exclusively in the holders of the Common Voting
Shares, the holders of Common Voting Shares to be entitled to one vote
for each Common Voting Share held by them upon all matters requiring a
vote of shareholders of the Corporation, and the holders of Preferred
Shares or any series thereof or Class A Common Shares shall have no
voting power and shall not have the right to participate in any
meeting of shareholders or to have notice thereof. The number of
authorized Class A Common Shares may be increased or decreased (but
not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the outstanding
Common Voting Shares.
3. Dividends and Distributions. At any time Common Voting Shares
are outstanding, as and when dividends or other distributions payable
in either cash, capital stock of the Corporation (other than Class A
Common Shares or Common Voting Shares) or other property of the
Corporation may be declared by the Board of Directors, the amount of
any such dividend payable on each of the Class A Common Shares shall
be equal in all cases to the amount of such dividend payable on each
of the Common Voting Shares, and the amount of any such dividend
payable on each of the Common Voting Shares shall be equal in all
cases to the amount of the dividend payable on each of the Class A
Common Shares. Dividends and distributions payable in Common Voting
Shares may not be made on or to shares of any class of the
Corporation's capital stock other than the Common Voting Shares and
dividends payable in Class A Common Shares may not be made on or to
shares of any class of the Corporation's capital stock other than the
Class A Common Shares. If a dividend or distribution payable in Class
A Common Shares shall be made on the Class A Common Shares, a dividend
or distribution payable in Common Voting Shares shall be made
simultaneously on the Common Voting Shares, and the number of Common
Voting Shares payable on each of the Common Voting Shares pursuant to
such dividend or distribution shall be equal to the number of Class A
Common Shares payable on each of the Class A Common Shares pursuant to
such dividend or distribution.
<PAGE>
In the case of any dividend or other distribution payable in stock of
any corporation which just prior to the time of the distribution is a
wholly owned subsidiary of the Corporation and which possesses
authority to issue class A common shares and common voting shares with
voting characteristics identical to those of the Class A Common Shares
and the Common Voting Shares, respectively, provided in these Amended
and Restated Articles of Incorporation, including a distribution
pursuant to a stock dividend, a stock split or division of stock of
the Corporation, or a spin-off or split-up reorganization of the
Corporation, only class A common shares of such subsidiary shall be
distributed with respect to Class A Common Shares and only common
voting shares of such subsidiary shall be distributed with respect to
Common Voting Shares.
4. Distribution of Assets Upon Liquidation. In the event the
Corporation shall be liquidated, dissolved or wound up, whether
voluntarily or involuntarily, after there shall have been paid or set
aside for the holders of all Preferred Shares then outstanding the
full preferential amounts to which they are entitled under the
resolutions authorizing the issuance of such Preferred Shares, the net
assets of the Corporation remaining shall be divided among the holders
of the Class A Common Shares and Common Voting Shares in such a manner
that the amount of such net assets distributed to each of the Class A
Common Shares shall be equal to the amount of such assets distributed
to each of the Common Voting Shares.
5. Issuance of Common Voting Shares. Common Voting Shares may be
issued (i) in accordance with and pursuant to the terms of the
Contribution and Assumption Agreement to be entered into by and
between the Corporation and The E.W. Scripps Company, a Delaware
corporation ("EWSCO"), pursuant to the Agreement and Plan of Merger
among EWSCO, the Corporation, and Comcast Corporation, a Pennsylvania
corporation, dated October 28, 1995, as it may be amended, or (ii) in
the form of a distribution or distributions pursuant to a stock
dividend or division or split-up of the Common Voting Shares and only
then in respect of the issued Common Voting Shares.
6. Preemptive Rights of Common Voting Shares. Holders of shares of
Common Voting Shares shall have the preemptive right to subscribe to
any additional issue of stock of any class of the Corporation or any
series thereof that by its express terms and provisions grants
general, continuous and unconditional voting rights to the holders
thereof and to any class of securities of the Corporation convertible
into any such stock or series thereof. Except as set forth in the
first sentence of this Section 6, no holder of shares of the
Corporation of any class shall be entitled as such, as a matter of
right, to subscribe for or purchase shares of any class, now or
hereafter authorized, or to subscribe for or purchase securities
convertible into or exchangeable for shares of the Corporation or to
which shall be attached or appertain any warrants or rights entitling
the holder thereof to subscribe for or purchase shares, except such
rights of subscription or purchase, if any, for such considerations
and upon such terms and conditions as its Board of Directors from time
to time may determine.
<PAGE>
7. Conversion of Common Voting Shares. Each Common Voting Share may
at any time be converted at the election of the holder thereof into
one Class A Common Share. Any holder of Common Voting Shares may
elect to convert any or all of such shares at one time or at various
times in such holder's discretion. Such right shall be exercised by
the surrender of the certificate representing each Common Voting Share
to be converted to the Corporation at its principal executive offices,
accompanied by a written notice of the election by the holder thereof
to convert and (if so required by the Corporation) by instruments of
transfer, in form satisfactory to the Corporation, duly executed by
such holder or his duly authorized attorney. The issuance of a
certificate or certificates for the Class A Common Shares upon
conversion of Common Voting Shares shall be made without charge for
any stamp or other similar tax in respect of such issuance. However,
if any such certificate or certificates are to be issued in a name
other than that of the holder of Common Voting Shares to be converted,
the person or persons requesting the issuance thereof shall pay to the
Corporation the amount of any tax which may be payable in respect of
any such transfer, or shall establish to the satisfaction of the
Corporation that such tax has been paid. As promptly as practicable
after the surrender for conversion of a certificate or certificates
representing Common Voting Shares and the payment of any tax as
hereinabove provided, the Corporation will deliver to, or upon the
written order of, the holder of such certificate or certificates, a
certificate or certificates representing the number of Class A Common
Shares issuable upon such conversion, issued in such name or names as
such holder may direct. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of the
surrender of the certificate or certificates representing Common
Voting Shares (or, if on such date the transfer books of the
Corporation shall be closed, then immediately prior to the close of
business on the first date thereafter that such books shall be open),
and all rights of such holder arising from ownership of Common Voting
Shares shall cease at such time, and the person or persons in whose
name or names the certificate or certificates representing Class A
Common Shares are to be issued shall be treated for all purposes as
having become the record holder or holders of such Class A Common
Shares at such time and shall have and may exercise all the rights and
powers appertaining thereto. No adjustments in respect of past cash
dividends shall be made upon the conversion of any Common Voting
Shares; provided that if any Common Voting Shares shall be converted
into Class A Common Shares subsequent to the record date for the
payment of a dividend or other distribution on Common Voting Shares
but prior to such payment, the registered holder of such Common Voting
Shares at the close of business on such record date shall be entitled
to receive on the payment date, with respect to the Class A Common
Shares received upon such conversion, the dividend or other
distribution which would have been payable had such Class A Common
Shares been outstanding and held of record on such dividend record
date by the registered holder on such dividend record date of the
Common Voting Shares so converted in lieu of the dividend otherwise
payable on the Common Voting Shares so converted. The Corporation
shall at all times reserve and keep available, solely for the purpose
of issuance upon conversion of outstanding Common Voting Shares, such
number of Class A Common Shares as may be issuable upon the conversion
of all such outstanding Common Voting Shares; provided that the
Corporation may deliver Class A Common Shares which are held in the
treasury of the Corporation for any Common Voting Shares to be
converted. If registration with or approval of any governmental
authority under any federal or state law is required before such Class
A Common Shares may be issued upon such conversion, the Corporation
will endeavor to cause such shares to be duly registered or approved,
as the case may be. The Corporation will endeavor to list Class A
Common Shares required to be delivered upon conversion prior to such
delivery upon any national securities exchange or national market
system on which the outstanding Class A Common Shares may be listed at
the time of such delivery. All Class A Common Shares which may be
issued upon conversion of Common Voting Shares will, upon issuance, be
fully paid and nonassessable. The aggregate amount of stated capital
represented by Class A Common Shares issued upon conversion of Common
Voting Shares shall be the same as the aggregate amount of stated
capital represented by the Common Voting Shares so converted. When
Common Voting Shares have been converted, they shall have the status
of retired shares.
8. Other Rights. Except as otherwise required by the Ohio Revised
Code or as otherwise provided in these Amended and Restated Articles
of Incorporation, each Class A Common Share and each Common Voting
Share shall have identical powers, preferences and rights.
<PAGE>
Powers and Rights of the Preferred Shares. The Preferred Shares shall
have the following express terms:
1. Series. The Preferred Shares may be issued from time to time in
one or more series. All Preferred Shares shall be of equal rank and
shall be identical, except in respect of the matters that may be fixed
by the Board of Directors as hereinafter provided, and each share of a
series shall be identical with all other shares of such series, except
as to the dates from which dividends shall accrue and be cumulative.
Subject to the provisions of Sections 2 through 6, inclusive, which
provisions shall apply to all Preferred Shares, the Board of Directors
hereby is authorized to cause such shares to be issued in one or more
series and with respect to each such series to determine and fix prior
to the issuance thereof (and thereafter, to the extent provided in
clause (b) of this Section) those rights, preferences and terms that
maybe fixed by the Board of Directors, including the following:
(a) The designation of the series, which may be by
distinguishing number, letter or title;
(b) The authorized number of shares of the series, which
number the Board of Directors may (except where otherwise
provided in the creation of the series) increase or decrease
from time to time before or after the issuance thereof (but
not below the number of shares thereof then outstanding);
(c) The dividend rate or rates of the series, including the
means by which such rates may be established;
(d) The date or dates from which dividends shall accrue and
be cumulative and the dates on which and the period or periods
for which dividends, if declared, shall be payable, including
the means by which such dates and periods may be established;
(e) The redemption rights and price or prices, if any, for
shares of the series;
(f) The terms and amount of the sinking fund, if any, for the
purchase or redemption of shares of the series;
(g) The amounts payable on shares of the series in the event
of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation;
(h) Whether the shares of the series shall be convertible
into Class A Common Shares or Common Voting Shares (the Class
A Common Shares and Common Voting Shares being referred to
hereinafter in this Division B collectively as the "Common
Shares") or shares of any other class and, if so, the
conversion rate or rates or price or prices, any adjustments
thereof and all other terms and conditions upon which such
conversion may be made; and
(i) Restrictions, if any, on the issuance of shares of the
same series or of any other class or series.
The Board of Directors is authorized to adopt from time to time
amendments to the Amended and Restated Articles of Incorporation
fixing, with respect to each such series, the matters described in
clauses (a) through (i), inclusive, of this Section and is authorized
to take such actions with respect thereto as may be required or
permitted by law in order to effect such amendments.
2. Dividends.
(a) The holders of Preferred Shares of each series, in
preference to the holders of Common Shares and of any other
class of shares ranking junior to the Preferred Shares, shall
be entitled to receive out of any funds legally available
therefor, and when and as declared by the Board of Directors,
dividends in cash at the rate or rates for such series fixed
in accordance with the provisions of Section 1 of this
Division B and no more, payable on the dates fixed for such
series. Such dividends shall accrue and be cumulative, in the
case of shares of a particular series, from and after the date
or dates fixed with respect to such series. No dividends
shall be paid upon or declared or set apart for any series of
the Preferred Shares for any dividend period unless at the
same time a like proportionate dividend for the dividend
periods terminating on the same or any earlier date, ratably
in proportion to the respective dividend rates fixed therefor,
shall have been paid upon or declared or set apart for all
Preferred Shares of all series then issued and outstanding and
entitled to receive such dividend.
<PAGE>
(b) So long as any Preferred Shares shall be outstanding no
dividend, except a dividend payable in Common Shares or other
shares ranking junior to the Preferred Shares, shall be paid
or declared or any distribution be made, except as aforesaid,
in respect of the Common Shares or any other shares ranking
junior to the Preferred Shares, nor shall any Common Shares or
any other shares ranking junior to the Preferred Shares be
purchased, retired or otherwise acquired by the Corporation,
except out of the proceeds of the sale of Common Shares or
other shares of the Corporation ranking junior to the
Preferred Shares received by the Corporation subsequent to the
date of first issuance of Preferred Shares of any series,
unless:
(1) All accrued and unpaid dividends on Preferred Shares,
including the full dividends for all current dividend
periods, shall have been declared and paid or a sum
sufficient for payment thereof set apart; and
(2) There shall be no arrearages with respect to the
redemption of Preferred Shares of any series from any
sinking fund provided for shares of such series in
accordance with the provisions of Section 1 of this
Division.
3. Redemption.
(a) Subject to the express terms of each series, the
Corporation:
(1) May, from time to time, at the option of the Board of
Directors, redeem all or any part of any redeemable series
of Preferred Shares at the time outstanding at the
applicable redemption price for such series fixed in
accordance with the provisions of Section 1 of this
Division; and
(2) Shall, from time to time, make such redemptions of each
series of Preferred Shares as may be required to fulfill the
requirements of any sinking fund provided for shares of such
series at the applicable sinking fund redemption price fixed
in accordance with the provisions of Section 1 of this
Division; and shall in each case pay all accrued and unpaid
dividends to the redemption date.
(b) (1) Notice of every such redemption shall be mailed,
postage prepaid, to the holders of record of the Preferred
Shares to be redeemed at their respective addresses then
appearing on the books of the Corporation, not less than 30
days nor more than 60 days prior to the date fixed for such
redemption, or such other time prior thereto as the Board of
Directors shall fix for any series pursuant to Section 1 of
this Division prior to the issuance thereof. At any time
after notice as provided above has been deposited in the
mail, the Corporation may deposit the aggregate redemption
price of Preferred Shares to be redeemed, together with
accrued and unpaid dividends thereon to the redemption date,
with any bank or trust company having capital and surplus of
not less than $100,000,000, named in such notice and direct
that there be paid to the respective holders of the
Preferred Shares so to be redeemed amounts equal to the
redemption price of the Preferred Shares so to be redeemed,
together with such accrued and unpaid dividends thereon, on
surrender of the share certificate or certificates held by
such holders; and upon the deposit of such notice in the
mail and the making of such deposit of money with such bank
or trust company, such holders shall cease to be
shareholders with respect to such shares; and from and after
the time such notice shall have been so deposited and such
deposit of money shall have been so made, such holders shall
have no rights or claim against the Corporation with respect
to such shares, except only the right to receive such money
from such bank or trust company without interest or to
exercise before the redemption date any unexpired privileges
of conversion. In the event less than all of the
outstanding Preferred Shares are to be redeemed, the
Corporation shall select by lot the shares so to be redeemed
in such manner as shall be prescribed by the Board of
Directors.
(2) If the holders of Preferred Shares which have been called
for redemption shall not within six years after such deposit
claim the amount deposited for the redemption thereof, any
such bank or trust company shall, upon demand, pay over to
the Corporation such unclaimed amounts and thereupon such
bank or trust company and the Corporation shall be relieved
of all responsibility in respect thereof and to such
holders.
(c) Any Preferred Shares which are (1) redeemed by the
Corporation pursuant to the provisions of this Section, (2)
purchased and delivered in satisfaction of any sinking fund
requirements provided for shares of such series, (3) converted
in accordance with the express terms thereof, or (4) otherwise
acquired by the Corporation, shall resume the status of
authorized but unissued Preferred Shares without serial
designation.
<PAGE>
4. Liquidation.
(a) (1) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of Preferred Shares of any series
shall be entitled to receive in full out of the assets of
the Corporation, including its capital, before any amount
shall be paid or distributed among the holders of the Common
Shares or any other shares ranking junior to the Preferred
Shares, the amounts fixed with respect to shares of such
series in accordance with Section 1 of this Division, plus
an amount equal to all dividends accrued and unpaid thereon
to the date of payment of the amount due pursuant to such
liquidation, dissolution or winding up of the affairs of the
Corporation. In the event the net assets of the Corporation
legally available therefor are insufficient to permit the
payment upon all outstanding Preferred Shares of the full
preferential amount to which they are respectively entitled,
then such net assets shall be distributed ratably upon all
outstanding Preferred Shares, in proportion to the full
preferential amount to which each such share is entitled.
(2) After payment to the holders of Preferred Shares of the
full preferential amounts as aforesaid, the holders of
Preferred Shares, as such, shall have no right or claim to
any of the remaining assets of the Corporation.
(b) The merger or consolidation of the Corporation into or with
any other corporation, the merger of any other corporation
into it, or the sale, lease or conveyance of all or
substantially all the assets of the Corporation, shall not be
deemed to be a dissolution, liquidation or winding up for the
purposes of this Section.
Section 5. Voting. Holders of Preferred Shares shall have no voting
rights, except as otherwise from time to time required by law.
Section 6. Definitions. For the purpose of this Division:
(a) Whenever reference is made to shares "ranking prior to
the Preferred Shares," such reference shall mean and include
all shares of the Corporation in respect of which the rights
of the holders thereof as to the payment of dividends or as to
distributions in the event of a voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation are given preference over the rights of the
holders of Preferred Shares;
(b) Whenever reference is made to shares "on a parity with
the Preferred Shares," such reference shall mean and include
all other shares of the Corporation in respect of which the
rights of the holders thereof as to the payment of dividends
or as to distributions in the event of a voluntary or
involuntary liquidation, dissolution or winding up of the
affairs of the Corporation rank equally (except as to the
amounts fixed therefor) with the rights of the holders of
Preferred Shares; and
(c) Whenever reference is made to shares "ranking junior to
the Preferred Shares," such reference shall mean and include
all shares of the Corporation other than those defined under
Subsections (a) and (b) of this Section as shares "ranking
prior to" or "on a parity with" the Preferred Shares.
Issuance of the Common Shares and the Preferred Shares.
The Board of Directors of the Corporation may from time to time
authorize by resolution the issuance of any or all of the Common
Shares and the Preferred Shares herein authorized in accordance with
the terms and conditions set forth in these Amended and Restated
Articles of Incorporation for such purposes, in such amounts, to such
persons, corporations, or entities, for such consideration, and in the
case of the Preferred Shares, in one or more series, all as the Board
of Directors in its discretion may determine and without any vote or
other action by the shareholders, except as otherwise required by law.
<PAGE>
FIFTH: Share Ownership.
A. Requests for Information. So long as the Corporation or any of
its subsidiaries holds authority from the Federal Communications
Commission ("FCC") (or any successor thereto) to operate any
television or radio broadcasting station, if the Corporation has
reason to believe that the ownership, or proposed ownership, of shares
of capital stock of the Corporation by any shareholder or any person
presenting any shares of capital stock of the Corporation for transfer
into his name (a "Proposed Transferee") may be inconsistent with, or
in violation of, any provision of the Federal Communication Laws (as
hereinafter defined) such shareholder or Proposed Transferee, upon
request of the Corporation, shall furnish promptly to the Corporation
such information (including, without limitation, information with
respect to citizenship, other ownership interests and affiliations) as
the Corporation shall reasonably request to determine whether the
ownership of, or the exercise of any rights with respect to, shares of
capital stock of the Corporation by such shareholder or Proposed
Transferee is inconsistent with, or in violation of, the Federal
Communication Laws. For purposes of this Article FIFTH, the term
"Federal Communication Laws" shall mean any law of the United States
now or hereafter in effect (and any regulation thereunder) pertaining
to the ownership of, or the exercise of rights of ownership with
respect to, capital stock of corporations holding, directly or
indirectly, television or radio station authorizations, including,
without limitation, the Communications Act of 1934, as amended (the
"Communications Act"), and regulations thereunder pertaining to the
ownership, or the exercise of the rights of ownership, of capital
stock of corporations holding, directly or indirectly, television or
radio station authorizations, by (i) aliens, as defined in or under
the Communications Act, as it may be amended from time to time, (ii)
persons and entities having interests in television or radio stations,
newspapers, and cable television systems or (iii) persons or entities,
unilaterally or otherwise, seeking direct or indirect control of the
Corporation, as construed under the Communications Act, without having
obtained any requisite prior Federal regulatory approval of such
control.
B. Denial of Rights; Refusal to Transfer. If any shareholder or
Proposed Transferee from whom information is requested should fail to
respond to such request pursuant to Division A of this Article FIFTH
or the Corporation shall conclude that the ownership of, or the
exercise of any rights of ownership with respect to, shares of capital
stock of the Corporation by such shareholder or Proposed Transferee,
could result in any inconsistency with or violation of the Federal
Communication Laws, the Corporation may refuse to permit the transfer
of shares of capital stock of the Corporation to such Proposed
Transferee or may suspend those rights of stock ownership the exercise
of which would result in any inconsistency with, or violation of, the
Federal Communication Laws, such refusal of transfer or suspension to
remain in effect until the requested information has been received or
until the Corporation has determined that such transfer, or the
exercise of such suspended rights, as the case may be, is permissible
under the Federal Communication Laws; and the Corporation may exercise
any and all appropriate remedies, at law or in equity, in any court of
competent jurisdiction, against any such shareholder or Proposed
Transferee, with a view towards obtaining such information or
preventing or curing any situation which would cause any inconsistency
with or violation of any provision of the Federal Communication Laws.
C. Legends. The Corporation may note on the certificates of its
capital stock that the shares represented by such certificates are
subject to the restrictions set forth in this Article FIFTH.
D. Certain Definitions. For purposes of this Article, the word
"person" shall include not only natural persons but partnerships,
associations, corporations, limited liability companies, joint
ventures and other entities, and the word "regulation" shall include
not only regulations but rules, published policies and published
controlling interpretations of an administrative agency or body
empowered to administer a statutory provision of the Federal
Communication Laws.
SIXTH: Deliberations of Directors. The Board of Directors of the
Corporation, when evaluating any offer of another party to make a
tender or exchange offer for any equity security of the Corporation,
to merge or consolidate the Corporation with another corporation or to
purchase or otherwise acquire all or substantially all of the
properties and assets of the Corporation, shall, in connection with
the exercise of its judgment in determining what is in the best
interests of the Corporation and its shareholders, give due
consideration to the effect of such a transaction on the integrity,
character and quality of the Corporation's operations, all other
relevant factors, including, without limitation, long-term as well as
short-term interests of the Corporation and shareholders (including,
without limitation, the possibility that these interests may be best
served by the continued independence of the Corporation), and the
social, legal, and economic effects on the employees, customers,
suppliers and creditors of the Corporation and its subsidiaries, on
the communities and geographical areas in which the Corporation and
its subsidiaries operate or are located, and on any of the businesses
and properties of the Corporation or any of its subsidiaries, as well
as such other factors as the directors deem relevant.
<PAGE>
SEVENTH: Directors' Liability; Indemnification.
A. Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that
he or she is or was a director or officer of the Corporation or is or
was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation (including a subsidiary of
the Corporation) or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans
(hereinafter an "indemnitee"), whether the basis of such proceeding is
alleged action in an official capacity as such a director, officer,
employee, trustee or agent, or in any other capacity while serving as
such a director, officer, employee, trustee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Ohio Revised Code, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Corporation to provide
broader indemnification rights than such law permitted the Corporation
to provide prior to such amendment), against all expense, liability
and loss (including, without limitation, attorneys' fees, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in
connection therewith, and such indemnification shall continue as to an
indemnitee who has ceased to be such a director, officer, employee,
trustee or agent and shall inure to the benefit of the indemnitee's
heirs, executors and administrators; provided, however, that, except
as provided in Division B of this Article SEVENTH with respect to
proceedings to enforce rights to indemnification, the Corporation
shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding
(or part thereof) was authorized by the board of directors of the
Corporation. The right to indemnification conferred in this Division
B shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding
in advance of its final disposition (hereinafter an "advancement of
expenses"); provided, however, that if the Ohio Revised Code requires,
an advancement of expenses incurred by an indemnitee in his or her
capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such indemnitee, including,
without limitation, service to an employee benefit plan) shall be made
only upon delivery to the Corporation of an undertaking, by or on
behalf of such indemnitee, to repay all amounts so advanced if it
shall ultimately be determined by final judicial decision from which
there is no further right to appeal that such indemnitee is not
entitled to be indemnified for such expenses under this Section or
otherwise (hereinafter an "undertaking").
B. Right of Indemnitee to Bring Suit. If a claim for
indemnification pursuant to this Article SEVENTH is not paid in full
by the Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be
twenty days, the indemnitee may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit or in a suit brought
by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the indemnitee shall be entitled to be
paid also the expense of prosecuting or defending such suit. In any
suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a
right to an advancement of expenses) it shall be a defense that, and
in any suit by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking the Corporation shall be
entitled to recover such expenses upon a final adjudication that, the
indemnitee has not met the applicable standard of conduct set forth in
the Ohio Revised Code. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement
of such a suit that indemnification of the indemnitee is proper in the
circumstances because the indemnitee has met the applicable standard
of conduct set forth in the Ohio Revised Code nor an actual
determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the indemnitee
has not met such applicable standard of conduct shall create a
presumption that the indemnitee has not met the applicable standard of
conduct or, in the case of such suit brought by the indemnitee, be a
defense to such suit. In any suit brought by the indemnitee to
enforce a right hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the
burden of proving that the indemnitee is not entitled to be
indemnified or entitled to such advancement of expenses under this
Article SEVENTH or otherwise shall be on the Corporation.
C. Non-Exclusivity of Rights. The rights to indemnification and
advancement of expenses conferred in this Article SEVENTH shall not be
exclusive of any other right that any person may have or hereafter
acquire under any statute, certificate of incorporation, bylaw,
agreement, vote of stockholders or disinterested directors, or
otherwise.
D. Insurance. The Corporation may purchase and maintain insurance,
at its expense, to protect itself and any director, officer, employee,
trustee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have
the power to indemnify such person against such expense, liability or
loss under the Ohio Revised Code.
<PAGE>
E. Indemnity Contracts. The Corporation may enter into contracts
from time to time with such of its directors, officers, agents or
employees and providing for such indemnification, insurance, and
advancement of expenses as the Board of Directors determines to be
appropriate.
EIGHTH: Meetings of the shareholders of the Corporation may be called
by the chairman of the board or the president, or by a majority of the
directors in office acting at a meeting or by written consent, or by
the holders of record of fifty percent (50%) of the outstanding Common
Voting Shares acting at a meeting or by written consent.
NINTH: The provisions of Sections 1701.831 and 1707.43 and Chapter
1704 of the Ohio Revised Code shall not apply to the Corporation.
TENTH: No shareholder of the Corporation may cumulate his voting
power in the election of directors.
ELEVENTH: Notwithstanding any provision of Sections 1701.01 to
1701.98, inclusive, of the Ohio Revised Code, or any successor
statutes now or hereafter in force, requiring for the authorization or
taking of any action the vote or consent of the holders of shares
entitling them to exercise two-thirds or any other proportion of the
voting power of the Corporation or of any class or classes of shares
thereof, such action, unless otherwise expressly required by law or
these Amended and Restated Articles of Incorporation, may be
authorized or taken by the vote or consent of the holders of shares
entitling them to exercise a majority of the voting power of the
Corporation or of such class or classes of shares thereof.
TWELFTH: To the extent permitted by law, the Corporation, by action
of its Board of Directors, may purchase or otherwise acquire shares of
any class issued by it at such times, for such consideration and upon
such terms and conditions as the board of directors may determine.
THIRTEENTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in these Amended and Restated
Articles of Incorporation, in the manner now or hereafter prescribed
by statute, and all rights and powers conferred herein upon
shareholders, directors and officers are subject to this reservation.
FOURTEENTH: These Amended and Restated Articles of Incorporation
shall take the place of and supersede the Corporation's existing
Articles of Incorporation, as amended.
EXHIBIT 3.02
AMENDED AND RESTATED CODE OF REGULATIONS
OF SCRIPPS HOWARD, INC.
ARTICLE I
Meetings Of Shareholders
Section 1. Annual Meetings. The annual meeting of shareholders shall
be held on such date, at such time and at such place within or without
the State of Ohio as may be designated by the board of directors and
stated in the notice of the meeting, for the election of directors,
the consideration of reports to be laid before the meeting and the
transaction of such other business as may properly come before the
meeting.
Section 2. Special Meetings. Special meetings of the shareholders
may be called by the chairman of the board of directors or the
president, the directors by action at a meeting, a majority of the
directors acting by written consent, or by the holders of record of a
majority of the outstanding shares of Common Voting Shares, $0.01 par
value, of the Corporation ("Common Voting Shares") acting at a meeting
or by written consent. Calls for such meetings shall specify the
purposes thereof. No business other than that specified in the call
shall be considered at any special meeting.
Section 3. Notices of Meetings. Unless waived, written notice of
each annual or special meeting stating the place, date, time and
purposes thereof shall be given by personal delivery or mail to each
shareholder of record entitled to vote at or receive notice of such
meeting, not less than 10 nor more than 60 days before the meeting.
If mailed, such notice shall be directed to the shareholder at his
address as the same appears upon the records of the Corporation. Any
shareholder, either before or after any meeting, may waive any notice
required to be given by law or under this code of regulations.
Section 4. Quorum. The holders of a majority of the shares of stock
issued and outstanding and entitled to vote at any meeting, present in
person or by proxy, shall constitute a quorum for the transaction of
business at such meeting; provided that when any specified action is
required to be voted upon by a class of stock voting separately as a
class, the holders of a majority of the outstanding shares of such
class, present in person or by proxy, shall constitute a quorum for
the transaction of such specified action. If a quorum shall not be
present at any meeting of the shareholders, the shareholders entitled
to vote thereat, present in person or by proxy, shall have the power
to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum is present; provided,
however, that if the holders of any class of stock of the Corporation
are entitled to vote separately as a class upon any matter at such
meeting, any adjournment of the meeting in respect of action by such
class upon such matter shall be determined by the holders of a
majority of the shares of such class present in person or by proxy and
entitled to vote at such meeting. At the adjourned meeting the
shareholders, or the holders of any class of stock entitled to vote
separately as a class, as the case may be, may transact any business
that might have been transacted by them at the original meeting. If
the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each shareholder of
record entitled to vote at the adjourned meeting. When a quorum is
present at any meeting, the vote of the holders of a majority of the
shares of stock issued and outstanding and entitled to vote thereat,
present in person or by proxy, shall decide any question brought
before such meeting, unless the question is one upon which, by express
provision of law, the certificate of incorporation or this code of
regulations, a different vote is required, in which case such express
provision shall govern and control the decision of such question.
Section 5. Record Date. In order that the Corporation may determine
the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof or entitled to consent to
corporate action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other
lawful action, the board of directors may fix a record date in
accordance with the General Corporation Law of the State of Ohio.
Section 6. Proxies. A person who is entitled to attend a
shareholders meeting, to vote thereat, or to execute consents, waivers
or releases, may be represented at such meeting or vote thereat, and
execute consents, waivers and releases, and exercise any of his other
rights, by proxy or proxies appointed by a writing signed by such
person.
<PAGE>
ARTICLE II
Directors
Section 1. Number; Nominations. Until changed in accordance with the
provisions of this section, the number of directors of the Corporation
shall be twelve (12). The number of directors may be increased or
decreased by the vote of a majority of the directors then in office,
or by the affirmative vote of the holders of a majority of the Common
Voting Shares issued and outstanding, but in no case shall the number
of directors be less than nine (9). Nominations of persons for
election to the board shall be made by the vote of a majority of the
directors in office.
Section 2. Term of Office; Election. Each director shall hold office
until the annual meeting next succeeding his election and until his
successor is elected and qualified or until his earlier resignation,
removal from office, or death.
Election of directors shall be by ballot whenever requested by any
shareholder entitled to vote at such election; but, unless such
request is made, the election may be conducted in any manner approved
at such meeting. At each meeting of shareholders for the election of
directors, the persons receiving the greatest number of votes shall be
directors.
Section 3. Removal, Vacancies and Additional Directors. The
shareholders may remove, with or without cause, at any special meeting
called for that purpose, any director and fill the vacancy; provided
that whenever any director shall have been elected by the holders of
any class of stock of the Corporation voting separately as a class
under the provisions of the certificate of incorporation, such
director may be removed and the vacancy filled only by the holders of
that class of stock voting separately as a class. Vacancies caused by
any such removal and not filled by the shareholders at the meeting at
which such removal shall have been made, or any vacancy caused by the
death or resignation of any director or for any other reason, and any
newly created directorship resulting from any increase in the number
of directors, may be filled by a majority of the directors then in
office, and any director so elected to fill any such vacancy or newly
created directorship shall hold office until his successor is elected
and qualified or until his earlier resignation, removal from office,
or death.
Section 4. Annual Meeting. Annual meetings of the board of directors
shall be held immediately following annual meetings of the
shareholders, or as soon thereafter as is practicable. If no annual
meeting of the shareholders is held, or if directors are not elected
thereat, then the annual meeting of the board of directors shall be
held immediately following any special meeting of the shareholders at
which directors are elected, or as soon thereafter as is practicable.
If such annual meeting of directors is held immediately following a
meeting of the shareholders, it shall be held at the same place at
which such shareholders' meeting was held.
Section 5. Regular Meetings. Regular meetings of the board of
directors shall be held at such times and places, within or without
the State of Ohio, as the board of directors may, by resolution, from
time to time determine. The secretary shall give notice of each such
resolution to any director who was not present at the time the same
was adopted, but no further notice of such regular meetings need be
given.
Section 6. Special Meetings. Special meetings of the board of
directors may be called by the chairman of the board, the president,
or any two members of the board of directors, and shall be held at
such times and places, within or without the State of Ohio, as may be
specified in such call.
Section 7. Notice of Annual or Special Meetings. Notice of the time
and place of each annual or special meeting shall be given to each
director by the secretary or by the person or persons calling such
meeting. Such notice need not specify the purpose or purposes of the
meeting and may be given in any manner or method and at such time so
that the director receiving it may have reasonable opportunity to
attend the meeting. Such notice shall, in all events, be deemed to
have been properly and duly given if given by personal delivery or
mailed, or conveyed in writing by any type of telecommunications
equipment, at least two days prior to the meeting and directed to the
residence of each director as shown upon the secretary's records. The
giving of notice shall be deemed to have been waived by any director
who shall attend and participate in such meeting, and may be waived in
writing by any director either before or after such meeting.
Section 8. Quorum and Transaction of Business. A majority of the
directors in office shall constitute a quorum for the transaction of
business. Whenever less than a quorum is present at the time and
place appointed for any meeting of the board, a majority of those
present may adjourn the meeting from time to time, until a quorum is
present. The act of a majority of the directors present at a meeting
at which a quorum is present shall be the act of the board, except as
otherwise provided by law, the certificate of incorporation or this
code of regulations.
<PAGE>
Section 9. Compensation. The directors, as such, shall be entitled
to receive such reasonable compensation, if any, for their services as
may be fixed from time to time by resolution of the board, and
expenses of attendance, if any, may be allowed for attendance at each
annual, regular or special meeting of the board. Nothing contained
herein shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
Members of the executive committee or of any standing or special
committee may be allowed, by resolution of the board, such
compensation for their services as the board may deem reasonable, and
additional compensation may be allowed to directors for special
services rendered.
Section 10. By-Laws. For the government of its actions, the Board of
Directors may adopt by-laws consistent with the Articles of
Incorporation and this Code of Regulations.
ARTICLE III
Committees
Section 1. Executive Committee. The board of directors may, from
time to time, by resolution passed by a majority of the directors in
office, create an executive committee of three or more directors, the
members of which shall be elected by the board of directors to serve
during the pleasure of the board. If the board of directors does not
designate a chairman of the executive committee, the executive
committee shall elect a chairman from its own number. Except as
otherwise provided herein and in the resolution creating an executive
committee, such committee shall, during the intervals between the
meetings of the board of directors, possess and may exercise all of
the powers of the board in the management of the business and affairs
of the Corporation, other than that of filling vacancies among the
directors or in any committee of the directors. The executive
committee shall keep full records and accounts of its proceedings and
transactions. All action by the executive committee shall be reported
to the board of directors at its meeting next succeeding such action
and shall be subject to control, revision and alteration by the board
of directors, provided that no rights of third persons shall be pre
judicially affected thereby. Vacancies in the executive committee
shall be filled by the directors, and the directors may appoint one or
more directors as alternate members of the committee who may take the
place of any absent member or members at any meeting.
Section 2. Meetings of Executive Committee. Subject to the
provisions of this code of regulations, the executive committee shall
fix its own rules of procedure and shall meet as provided by such
rules or by resolutions of the board of directors, and it shall also
meet at the call of the president, the chairman of the executive
committee or any two members of such committee. Unless otherwise
provided by such rules or such resolutions, the provisions of
Article II relating to the notice required to be given of meetings of
the board of directors shall also apply to meetings of the executive
committee. A majority of the executive committee shall be necessary
to constitute a quorum. The executive committee may act in a writing
without a meeting, but no such action of the executive committee shall
be effective unless concurred in by all members of the committee.
Section 3. Other Committees. The board of directors may provide by
resolution for such other standing or special committees as it deems
desirable, and discontinue the same at its pleasure. Each such
committee shall have such powers and perform such duties, not
inconsistent with law, as may be delegated to it by the board of
directors. The provisions of this Article shall govern the
appointment and action of such committees so far as consistent, unless
otherwise provided by the board of directors. Vacancies in such
committees shall be filled by the board of directors or as it may
provide.
ARTICLE IV
Officers
Section 1. General Provisions. The board of directors shall elect a
chairman of the board, a president, such number of vice presidents, if
any, as the board may determine from time to time, a secretary and a
treasurer. The board of directors may create from time to time such
offices and appoint such other officers, subordinate officers and
assistant officers as it may determine. The chairman of the board and
the president shall be, but the other officers need not be, chosen
from among the members of the board of directors. Any two or more of
such offices, other than those of president and vice president, or
president and secretary, may be held by the same person, but no
officer shall execute, acknowledge or verify any instrument in more
than one capacity.
<PAGE>
Section 2. Term of Office. The officers of the Corporation shall
hold office during the pleasure of the board of directors, and, unless
sooner removed by the board of directors, until the annual meeting of
the board of directors following the date of their election and until
their successors are chosen and qualified. The board of directors may
remove any officer at any time, with or without cause. A vacancy in
any office, however created, shall be filled by the board of
directors. Section 3. Compensation. The compensation, if any, of the
officers of the Corporation shall be fixed by the board of directors or
by such one or more officers or directors as the board of directors shall
designate.
ARTICLE V
Duties Of Officers
Section 1. Chairman of the Board. The chairman of the board shall
preside at all meetings of the board of directors and the shareholders
and shall have such other powers and perform such other duties as may
from time to time be assigned to him by the board of directors.
Section 2. President. The president shall be the chief executive
officer of the Corporation and, subject to the direction of the board
of directors, shall have general and active management of the business
of the Corporation. During any vacancy in the office of the chairman
or during the absence of the chairman for any reason, the president
shall perform the duties and exercise the powers of the chairman of
the board. The president shall have authority to sign all
certificates for shares and all deeds, mortgages, bonds, agreements,
notes, and other instruments requiring his signature; and shall have
all the powers and duties prescribed by the General Corporation Law of
the State of Ohio and such others as the board of directors may from
time to time assign to him.
Section 3. Vice Presidents. The vice presidents shall have such
powers and perform such duties as may be assigned to them from time to
time by the board of directors, the chairman, or the president. At
the request of the president, or in the case of his absence or
disability, the vice president designated by the president (or in the
absence of such designation, the vice president designated by the
board) shall perform all the duties of the president and, when so
acting, shall have all the powers of the president. The authority of
vice presidents to sign in the name of the Corporation certificates
for shares and deeds, mortgages, bonds, agreements, notes and other
instruments shall be coordinate with like authority of the president.
Section 4. Secretary. The secretary shall keep the minutes of all
the proceedings of the shareholders and directors of the Corporation
and make a proper record of the same, which shall be attested by him.
He shall keep such books as may be required by the board of directors
and shall have charge of the stock book of the Corporation and
generally perform such duties as the board, the chairman or the
president may require of him.
Section 5. Treasurer. The treasurer shall receive and have charge of
all money, bills, notes, bonds, deeds, leases, mortgages and similar
property belonging to the Corporation and shall do with the same as
may be ordered by the financial vice president or the board. On the
expiration of his term in office he shall turn over to his successor
or to the board of directors all property, books, papers and money of
the Corporation in his possession or under his control. The treasurer
shall furnish bond for the faithful performance of his duties in such
an amount as the board of directors may require, and with sureties to
their satisfaction. He shall cause to be kept adequate and correct
accounts of the business transactions of the Corporation, including
accounts of its assets, liabilities, receipts, disbursements, gains,
losses, stated capital and shares, together with such other accounts
as may be required; and he shall have such other powers and duties as
may from time to time be assigned to him by the board of directors,
the chairman of the board or the president.
Section 6. Assistant and Subordinate Officers. Each other officer
shall perform such duties as the board of directors, the chairman of
the board or the president may prescribe. The board of directors may
authorize from time to time any officer to appoint and remove
subordinate officers, to prescribe their authority and duties, and to
fix their compensation.
Section 7. Duties of Officers May Be Delegated. In the absence of
any officer of the Corporation or for any other reason that it may
deem sufficient, the board of directors may delegate the powers or
duties, or any of them, of such officers to any other officer or to
any director.
<PAGE>
ARTICLE VI
Certificates For Shares
Section 1. Form and Execution. Certificates for shares, certifying
the number of full-paid shares owned, shall be issued to each
shareholder in such form as shall be approved by the board of
directors. Such certificates shall be signed by the chairman of the
board of directors or the president or a vice president and by the
secretary or an assistant secretary or the treasurer or an assistant
treasurer; provided, however, that if such certificates are
countersigned by an incorporated transfer agent or registrar the
signatures of any of such officers and the seal of the Corporation
upon such certificates may be facsimiled, engraved, stamped or
printed. If any officer or officers who shall have signed, or whose
facsimile signature shall have been used, printed or stamped on any
certificate or certificates for shares, shall cease to be such officer
or officers, because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the
Corporation, such certificate or certificates if authenticated by the
endorsement thereon of the signature of a transfer agent or registrar
shall nevertheless be as effective in all respects when delivered as
though signed by a duly elected, qualified and authorized officer or
officers, and as though the person or persons who signed such certifi
cate or certificates, or whose facsimile signature or signatures shall
have been used thereon, had not ceased to be an officer or officers of
the Corporation.
Section 2. Registration of Transfer. Any certificate for shares of
the Corporation shall be transferable in person or by attorney upon
the surrender thereof to the Corporation or any transfer agent
therefor (for the class of stock represented by the certificate
surrendered) properly endorsed for transfer and accompanied by such
assurances as the Corporation or such transfer agent may require as to
the genuineness and effectiveness of each necessary endorsement.
Section 3. Lost, Destroyed or Stolen Certificates. A new stock
certificate or certificates may be issued in place of any certificate
theretofore issued by the Corporation which is alleged to have been
lost, destroyed or wrongfully taken upon (i) the execution and
delivery to the Corporation by the person claiming the certificate to
have been lost, destroyed or wrongfully taken of an affidavit of that
fact, specifying whether or not, at the time of such alleged loss,
destruction or taking, the certificate was endorsed, and (ii) the
furnishing to the Corporation of indemnity and other assurances, if
any, satisfactory to the Corporation and to all transfer agents and
registrars of the class of shares represented by the certificate
against any and all losses, damages, costs, expenses or liabilities to
which they or any of them may be subjected by reason of the issue and
delivery of such new certificate or certificates or in respect of the
original certificate.
Section 4. Registered Shareholders. A person in whose name shares
are registered of record on the books of the Corporation shall
conclusively be deemed the unqualified owner and holder thereof for
all purposes and to have capacity to exercise all rights of ownership.
Neither the Corporation nor any transfer agent of the Corporation
shall be bound to recognize any equitable interest in or claim to such
shares on the part of any other person, whether disclosed upon such
certificate or otherwise, nor shall they be obliged to see to the
execution of any trust or obligation.
ARTICLE VII
Fiscal Year
The fiscal year of the Corporation shall end on the 31st day of
December in each year or on such other date as may be fixed from time
to time by the board of directors.
ARTICLE VIII
Seal
The board of directors may provide a suitable seal containing the name
of the Corporation. If deemed advisable by the board of directors,
duplicate seals may be provided and kept for the purposes of the
Corporation.
ARTICLE IX
Amendments
This code of regulations shall be subject to alteration, amendment,
repeal, or the adoption of a new code of regulations by a majority by
the vote or written consent of the holders of record of a majority of
the Common Voting Shares issued and outstanding.
<TABLE>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12.1
<CAPTION>
( in thousands )
Years ended December
31,
1995 1994 1993
<S> <C> <C> <C>
EARNINGS AS DEFINED:
Earnings from operations before income taxes after eliminating
undistributed earnings of 20%- to 50%-owned affiliates $ 179,127 $ 185,611 $ 209,278
Fixed charges excluding capitalized interest and preferred stock
dividends of majority-owned subsidiary companies 15,652 20,966 30,240
Earnings as defined $ 194,779 $ 206,577 $ 239,518
FIXED CHARGES AS DEFINED:
Interest expense, including amortization of debt issue costs $ 11,223 $ 16,274 $ 26,397
Interest capitalized 447 66
Portion of rental expense representative of the interest factor 4,429 3,696 3,181
Preferred stock dividends of majority-owned subsidiary companies 80 80 82
Share of interest expense related to guaranteed debt
50%-owned affiliated company 996 662
Fixed charges as defined $ 16,179 $ 21,046 $ 30,388
RATIO OF EARNINGS TO FIXED CHARGES 12.04 9.82 7.88
</TABLE>
<TABLE>
RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12.2
<CAPTION>
( in thousands ) Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
EARNINGS AS DEFINED:
Earnings from operations before income taxes after
eliminating undistributed earnings of 20%- to
50%-owned affiliates $ 52,673 $ 49,851 $ 89,042 $ 92,485
Fixed charges excluding capitalized interest and
preferred stock dividends of majority-owned
subsidiary companies 3,095 3,733 5,325 8,026
Earnings as defined $ 55,768 $ 53,584 $ 94,367 $ 100,511
FIXED CHARGES AS DEFINED:
Interest expense, including amortization of
debt issue costs $ 2,224 $ 2,829 $ 3,637 $ 6,182
Interest capitalized 226 54 409 87
Portion of rental expense representative
of the interest factor 871 904 1,688 1,844
Preferred stock dividends of majority-owned
subsidiary companies 20 20 40 40
Fixed charges as defined $ 3,341 $ 3,807 $ 5,774 $ 8,153
RATIO OF EARNINGS TO FIXED CHARGES 16.69 14.08 16.34 12.33
</TABLE>
<TABLE>
NEW SCRIPPS EXHIBIT 22
<CAPTION>
Jurisidiction of
Name of Subsidiary Incorporated
<S> <C>
Birmingham Post Company (Birmingham Post Herald) Alabama
Channel 7 of Detroit, Inc., (WXYZ) Michigan
Collier County Publishing Company (The Naples Daily News) Florida
Denver Publishing Company (Rocky Mountain News) Colorado
Evansville Courier Company, Inc., 91.5%-owned Indiana
Herald Post Publishing Company, 92.0%-owned (El Paso Herald Post) Texas
John P. Scripps Newspapers, Inc. (Bremerton Sun, Redding Record Searchlight,
San Luis Obispo Telegram-Tribune, Ventura County Newspapers,
Watsonville Register-Pajaronian) California
Knoxville News-Sentinel Company Tennessee
Memphis Publishing Company, 91.3%-owned (The Commercial Appeal) Delaware
New Mexico State Tribune Company (The Albuquerque Tribune) New Mexico
Monterey County Herald Company Pennsylvania
Scripps Howard Broadcasting Company, (WMAR, Baltimore;
WCPO, Cincinnati; WEWS, Cleveland; KSHB, Kansas City;
KNXV, Phoenix; KJRH, Tulsa; WPTV, West Palm Beach,
Home & Garden Television Network, Cinetel) Ohio
Scripps Howard Productions, Inc. California
Stuart News Company (Stuart News, Jupiter Courier, Vero Beach Press-Journal) Florida
Tampa Bay Television, (WFTS) Delaware
United Feature Syndicate, Inc. (United Media, Newspaper Enterprise Association) New York
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-END> DEC-31-1996 JUN-30-1996
<CASH> 30,021 15,594
<SECURITIES> 25,013 0
<RECEIVABLES> 170,314 161,162
<ALLOWANCES> 3,447 3,736
<INVENTORY> 11,459 11,126
<CURRENT-ASSETS> 334,245 268,338
<PP&E> 740,687 771,349
<DEPRECIATION> 314,728 333,714
<TOTAL-ASSETS> 1,655,552 1,764,428
<CURRENT-LIABILITIES> 266,119 200,664
<BONDS> 2,177 131,815
0 0
0 0
<COMMON> 801 805
<OTHER-SE> 1,190,625 1,252,371
<TOTAL-LIABILITY-AND-EQUITY> 1,655,552 1,764,428
<SALES> 0 0
<TOTAL-REVENUES> 1,030,378 531,569
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 843,088 436,762
<LOSS-PROVISION> 6,134 2,908
<INTEREST-EXPENSE> 11,223 3,637
<INCOME-PRETAX> 171,468 88,585
<INCOME-TAX> 74,532 38,272
<INCOME-CONTINUING> 93,589 48,828
<DISCONTINUED> 39,789 22,377
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 133,378 71,205
<EPS-PRIMARY> $1.17 $.61
<EPS-DILUTED> $1.17 $.61
</TABLE>
