-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, rw+gTHNfh6Hb5JGeLyA74XwibMm4GA6BAyKHp4dsd7MYUQ2XzjtnnuZDbwUo98Pb DygVs8UiIz5ro5ioddSLeg== 0000216539-94-000012.txt : 19940328 0000216539-94-000012.hdr.sgml : 19940328 ACCESSION NUMBER: 0000216539-94-000012 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19931226 FILED AS OF DATE: 19940325 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDIA GENERAL INC CENTRAL INDEX KEY: 0000216539 STANDARD INDUSTRIAL CLASSIFICATION: 2711 IRS NUMBER: 540850433 STATE OF INCORPORATION: VA FISCAL YEAR END: 1226 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-06383 FILM NUMBER: 94517863 BUSINESS ADDRESS: STREET 1: 333 E GRACE ST CITY: RICHMOND STATE: VA ZIP: 23219 BUSINESS PHONE: 8046496000 10-K 1 1993 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 [fee required] For the fiscal year ended December 26, 1993 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 [no fee required] For the transition period ___________ to _________ Commission File No. 1-6383 MEDIA GENERAL, INC. (Exact name of registrant as specified in its charter) Commonwealth of Virginia 54-0850433 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 333 East Grace Street, Richmond, Virginia 23219 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (804) 649-6000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered Class A Common Stock American Stock Exchange Securities registered pursuant to Section 12 (g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of voting stock held by nonaffiliates of the registrant was $582,967,486 as of February 28, 1994. 2 The number of shares of Class A Common Stock outstanding on February 28, 1994, was 25,681,651. The number of shares of Class B Common Stock outstanding on February 28, 1994, was 557,154. Part I, Part II and Part IV incorporate information by reference from the Annual Report to Stockholders for the year ended December 26, 1993. Part III incorporates information by reference from the proxy statement for the Annual Meeting of Stockholders to be held on May 20, 1994. Part I Item 1. Business General For a general description of the Company's business, see Business in Brief on page 4 of the 1993 Annual Report to Stockholders, which is incorporated herein by reference. The Company employs approximately 7,300 people on a full or part-time basis. The Company's businesses are somewhat cyclical; the second and fourth quarters are typically stronger than the first and third quarters. Industry Segments The Company is engaged in three significant industry segments. For financial information concerning these segments and for information concerning the Company's foreign operations see pages 18, 31, 32, 50 and 51 of the 1993 Annual Report to Stockholders, which are incorporated herein by reference. Supplemental information concerning each of the Company's significant industry segments is included below. Newspaper Publishing Business See pages 6, 8, 10 and 48 of the 1993 Annual Report to Stockholders which are incorporated herein by reference for a description of the business done and principal products produced by the Company in its newspaper publishing business. The primary raw material used by the Company in its newspaper operations is newsprint, which is purchased from various Canadian and United States sources, including Garden State Paper Company, Inc., a wholly owned subsidiary of the Company, and Southeast Paper Manufacturing Co., in which the Company owns a one- third equity interest. The newspaper operations of the Company consumed approximately 123,000 tons of newsprint in 1993. Management of the Company believes that newsprint inventory and sources of supply under existing arrangements will be adequate in 1994. All of the Company's newspapers compete for circulation and advertising with other newspapers published nationally and in nearby cities and towns and for advertising with magazines, radio, television and other promotional media. All of the newspapers compete for circulation principally on the basis of performance, service and price. Since 1985, the Company has owned a 40% interest in Garden State Newspapers, Inc., (GSN) a company established to acquire and operate medium-sized daily newspapers throughout the United States. The Company's 1991 operations include a loss of $78.7 million ($78.3 million after-tax; $3.01 per share) from GSN which largely resulted from GSN management's decision to write down the carrying value of certain assets, mostly intangibles, in light of depressed market conditions. The 1991 loss reduced the Company's investment in GSN to zero. Although GSN's net income for the twelve months ended September 30, 1992, was $12 million, such net income was due 3 entirely to a nonrecurring gain from the sale of a newspaper property, net of operating losses. Consequently, in 1992 the Company did not recognize any equity in GSN's 1992 net income, nor has it since, because it is unlikely to realize any dividends or cash distributions from GSN operations. Subsequent to December 26, 1993, GSN failed to redeem the Series A and Series C Preferred Stock that previously had been issued to the Company and which was mandatorily redeemable on January 1, 1994. However, the Company has signed a Letter Agreement (Agreement) with GSN and a GSN affiliate whereby it has agreed to a process through which it would sell its 40% common equity interest in GSN, along with its GSN Series A and Series C Preferred Stock, for approximately $62.7 million. Under the terms of the 1 Agreement, the Company would simultaneously exchange its GSN Series B Preferred Stock for the 9% Preferred Stock of Denver Newspapers, Inc., currently owned by GSN. The Company would continue to hold a warrant to purchase 40% of the common equity of Denver Newspapers, Inc. The Agreement, which will terminate if the contemplated transactions have not occurred by April 29, 1994 (unless extended by mutual agreement of the parties), is subject to various conditions, including the buyer's ability to arrange financing. Consequently, there is no assurance that the transactions will be consummated and, in light of these contingencies, the Company continues to evaluate its options. Television Business See pages 12, 14 and 16 of the 1993 Annual Report to Stockholders which are incorporated herein by reference for a description of the business done by the Company in its television business. The television broadcasting and cable television operations of the Company are subject to the jurisdiction of the Federal Communications Commission (FCC) pursuant to the Communications Act of 1934, as amended (the Act). The Act provides, among other things, that television broadcasts may be made only by persons licensed by the FCC. The Company's television stations operate under such licenses. The Act authorizes the FCC to grant or modify licenses on a determination that the "public convenience, interest, or necessity" will be served thereby, and to revoke licenses for violations of the Act, the terms of the license, or for certain other reasons. Licenses may also be revoked by court order or by the FCC if a licensee is found guilty of violations of certain provisions of the antitrust laws. The maximum term for which the FCC may grant a broadcasting license for a television station is five years, and renewals for periods of not more than five years may be made by the FCC upon considerations similar to those that govern the granting of original licenses. The licenses of WFLA-TV in Tampa and WJKS-TV in Jacksonville were most recently renewed in January 1992, and for WCBD-TV in Charleston in November 1991, and will expire on February 1, 1997, and December 1, 1996, respectively. FCC rules prohibit further acquisitions which would result in the common ownership of a daily newspaper and a television station in the same market. The rules do not apply retroactively to require divestiture of station WFLA-TV which is under common ownership with the Company's Tampa newspaper. 4 The FCC has jurisdiction over and has adopted a regulatory program concerning the cable television industry. The FCC's regulations currently mandate blackout protection of certain local stations' network programs and certain sports programs and govern cable television engineering standards, registration and reporting obligations, and other matters, including rules which require the blackout of certain syndicated programs owned by television stations. In 1992, Congress passed, effective December 4, 1992, the Cable Television Consumer Protection and Competition Act of 1992 (Cable Act). It contains some provisions that are self-effectuating in that they do not require further FCC action and other provisions that require the FCC to adopt rules for their implementation. Examples of the former are provisions that prohibit cable systems from ownership of certain competitive multichannel video distribution services, a prohibition on franchise authorities awarding exclusive franchises, guidelines for awarding franchises and a provision which generally prohibits a cable operator from selling or otherwise transferring ownership in a cable system within 36 months following acquisition or initial construction of the system. Examples of provisions which required the FCC to adopt rules for their implementation include mandatory cable carriage of local television stations, a requirement that some television stations consent to carriage of their signals (retransmission consent), rate regulation, in-home wiring, new equal employment opportunity reporting requirements, consumer protection and customer service requirements, 2 provisions prohibiting a cable operator from requiring purchase of particular program packages (tiers), other than the basic service tier, in order to purchase premium program services, and restrictions on indecent programming on access channels. Several of the provisions and the implementing rules may require changes in the Company's operations, but it is impossible to predict with certainty the extent of any future adverse impact on the systems of some or all of these new requirements. Also in 1992, in its video dialtone ruling, the FCC authorized telephone companies to transmit video programming for programmer- customers on a common carrier basis without having to obtain a municipal cable franchise. On February 22, 1994, the FCC announced the adoption of further rules intended to govern rates which cable operators may charge subscribers. Although the specific rules have not yet been published, the Company's preliminary evaluation of the general provisions indicates that the effect will not be material to the Company. Cable rates are subject to local franchise authority and FCC review, and further rate regulation is possible. In addition, many of the rules and regulations described above, particularly those implementing the Cable Act, are the subject of appeals which are pending in court. In addition to regulation by the FCC, cable television systems are also subject to extensive regulation by franchising authorities, and must file semi- annual Statements of Account and copyright royalty payments with the Copyright Office of the United States. The information contained in the preceding discussion does not purport to be a complete summary of all the provisions of the Act, the Cable Act or of the rules and regulations of the FCC thereunder, or of pending proposals for other regulation of broadcasting and related activities. The Company has cable television franchises to operate its existing systems in portions of Fairfax County, Virginia, and adjoining cities and towns, and in Fredericksburg, Virginia, and portions of Spotsylvania and Stafford Counties, Virginia. At December 26, 1993, the Company's cable television systems served approximately 220,000 subscribers on a subscriber payment basis. 5 The primary source of revenues for WFLA-TV, WJKS-TV, and WCBD-TV is the sale of time to national and local advertisers. Since each of the stations is network affiliated, additional revenue is derived from the network programming carried by each. Expiration dates of the network contracts for WFLA-TV-NBC, WJKS-TV-ABC and WCBD-TV-ABC are April 1995, April 1994 and July 1995, respectively. The Company's television stations are in competition for audience and advertising revenues with other television and radio stations and cable television systems as well as magazines, newspapers and other promotional media. A number of cable television systems which operate generally on a subscriber payment basis are in business in the Company's broadcasting markets and compete for audience by importing out-of-market television signals or by originating programming. The Company's cable television systems have substantially the same competition as its television stations. The television stations and cable television systems compete for audience on the basis of program content and quality of reception, and for advertising revenues on the basis of price, share of market and performance. Reference is made to page 49 of the 1993 Annual Report to Stockholders which is incorporated herein by reference for market share and other information regarding the Company's television stations. Newsprint Paper Manufacturing Business For a description of the business done, principal products produced and sources and availability of raw materials used by the Company in its newsprint paper manufacturing business, see pages 16 and 18 of the 1993 Annual Report to Stockholders, which are incorporated herein by reference. 3 In addition to its Garden State Paper Company, Inc., (Garden State) mill in Garfield, New Jersey, the Company owns a 33 1/3% interest in the Southeast Paper Manufacturing Co. newsprint mill in Dublin, Georgia, which licenses and utilizes the Garden State process, a proprietary de-inking technology for the production of 100 percent recycled newsprint from recovered used newspapers. The Company earns royalties and fees pursuant to a contract with this venture, in addition to its share of operating results. The Company also owns a 49% interest in a Mexican newsprint mill near San Luis Potosi, Mexico, from which the Company receives option fees based on production. Under the terms of the Company's Option Agreement with this affiliate, the Company will continue to receive such fees through October 15, 1994. Unless some other form of divestiture is agreed to, on that date the affiliate's majority owner is expected to exercise its option to buy the Company's capital stock investment in the affiliate for $3.6 million, after which no further fees would be paid to the Company. Garden State owns certain United States patent rights and also has obtained patents in various foreign countries. Although these have been of value, their loss would not materially affect the conduct of its business as the Company has developed substantial proprietary knowledge related to its manufacturing process which enhances its competitive position. Garden State competes with approximately twenty Canadian and American companies in selling newsprint, its sole product, to newspaper publishers. Distribution from the Garden State mill is primarily by truck transportation. Competition is based principally on price, quality of product, and service, 6 although the percentage of recovered fiber contained in manufactured newsprint is becoming increasingly important to newspaper publishers to meet various existing and proposed state and federal standards. Item 2. Properties The Company's headquarters and Richmond Newspapers, Inc., are located in Richmond, Virginia, in five adjacent buildings. In addition, Richmond Newspapers, Inc., completed and placed in service, on June 1, 1992, a 428,000 square foot production and distribution facility, located on an 86 acre site in Hanover County, Virginia, near Richmond. The Tampa, Florida, newspapers are published in a single unit production plant and office building located on a six acre tract in that city. The Winston-Salem, North Carolina, newspapers are also published in a single unit plant, although a new 140,000 square foot production and distribution facility, scheduled for completion in mid-1994, is currently under construction on a 12 acre site located near the present facility. All of the foregoing properties are Company-owned. Television facilities for WFLA-TV Tampa, Florida, WJKS-TV Jacksonville, Florida, and WCBD-TV Charleston, South Carolina, are located on land owned by the Company in and around these respective cities. Media General Cable of Fairfax County, Inc., a subsidiary of the Company, has headquarters located in one building owned by the Company in Chantilly, Virginia, and two head-ends located in Fairfax County, Virginia, one on property owned by the Company and adjacent to its production studio and one on leased property. In addition, Fairfax Cable leases an operations center for its service maintenance fleet in Springfield, Virginia. The cable system includes a home subscriber network and a separate institutional network. Newsprint production facilities of Garden State consist of a mill in Garfield, New Jersey, housing two paper-making machines adjacent to a power plant which supplies it with steam and electric power. Both the mill and the power plant are owned by Garden State. Garden State also owns or leases substantial storage facilities for waste paper in the general vicinity of the newsprint mill. 4 Item 3. Legal Proceedings Certain of the Company's subsidiaries have been identified as potentially responsible parties, along with many other businesses unrelated to the Company, in connection with the alleged soil and/or groundwater contamination at a former commercial waste disposal site, a former industrial drum recycling location and a former waste oil recycling location. With respect to these matters, these subsidiaries have contributed, or may in the future be asked to contribute, to the costs of site assessment and cleanup. In addition, the Company and one of its subsidiaries are currently involved in environmental assessment and remediation projects at one facility formerly owned, and one facility currently owned. While the ultimate costs of the foregoing matters are not presently determinable, based on information currently available, management believes such costs will not be material to the Company's financial position or results of operations. 7 Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders during the fourth quarter of 1993. Executive Officers of the Registrant
Name Age Position and Office Year First Took Office* D. Tennant Bryan 87 Chairman of the Executive Committee 1930 J. Stewart Bryan III 55 Chairman, President, Chief Executive Officer 1990 Marshall N. Morton 48 Senior Vice President, Chief Financial Officer 1989 James L. Dillon 65 Vice President 1977 H. Graham Woodlief 49 Vice President 1989 George L. Mahoney 41 General Counsel, Secretary 1993 Stephen R. Zacharias 44 Treasurer 1989 - --------------- The year indicated is the year in which the officer first assumed an office with the Company or with Richmond Newspapers, Inc., the predecessor of the Company, involving essentially the same duties and responsibilities as the office presently held, regardless of its formal titles at that time. Prior to assuming his present position, J. Stewart Bryan III, had previously served during the past five years as Chief Operating Officer (1989-90) and as Vice Chairman and Executive Vice President (1985-90) of the Company. Mr. Mahoney previously served as Assistant General Counsel of Dow Jones & Company, Inc., for more than five years. Mr. Zacharias assumed executive officer responsibilities as of December 1993. Officers of the Company are elected at the Annual Meeting of the Board of Directors to serve, unless sooner removed, until the next Annual Meeting of the Board of Directors and/or until their successors are duly elected and qualified.
5 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Reference is made to page 47 of the 1993 Annual Report to Stockholders which is incorporated herein by reference for information required by this item. 8 Item 6. Selected Financial Data Reference is made to Note 5 on pages 31 through 32, and to pages 50 and 51 of the 1993 Annual Report to Stockholders which are incorporated herein by reference for information required by this item. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Reference is made to pages 40 through 46 of the 1993 Annual Report to Stockholders which are incorporated herein by reference for information required by this item. Item 8. Financial Statements and Supplementary Data Consolidated financial statements of the Company as of December 26, 1993, and December 27, 1992, and for the fiscal years ended December 26, 1993, December 27, 1992, and December 29, 1991, and the report of independent auditors thereon, as well as the Company's unaudited quarterly financial data for the fiscal years ended December 26, 1993, and December 27, 1992, are incorporated herein by reference from the 1993 Annual Report to Stockholders pages 23 through 39 and page 47. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None PART III Item 10. Directors and Executive Officers of the Registrant Incorporated herein by reference from the Company's definitive proxy statement for the Annual Meeting of Stockholders on May 20, 1994, except as to certain information regarding executive officers included in Part I. Matters regarding compliance with Section 16(a) of the Securities Exchange Act of 1934 are incorporated by reference from the Company's definitive proxy statement for the Annual Meeting of Stockholders on May 20, 1994. Item 11. Executive Compensation Incorporated herein by reference from the Company's definitive proxy statement for the Annual Meeting of Stockholders on May 20, 1994. Item 12. Security Ownership of Certain Beneficial Owners and Management Incorporated herein by reference from the Company's definitive proxy statement for the Annual Meeting of Stockholders on May 20, 1994. 6 Item 13. Certain Relationships and Related Transactions Incorporated herein by reference from the Company's definitive proxy statement for the Annual Meeting of Stockholders on May 20, 1994. 9 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a)1. and 2. The financial statements and schedules listed in the accompanying index to financial statements and financial statement schedules are filed as part of this annual report. 3.Exhibits The exhibits listed in the accompanying index to exhibits are filed as part of this annual report. (b)Reports on Form 8-K None 7 Index to Financial Statements and Financial Statement Schedules - Item 14(a) Annual Report Form to 10-K Stockholders Media General, Inc. (Registrant) Report of independent auditors 9 39 Consolidated statements of operations for the fiscal years ended December 26, 1993, December 27, 1992, and December 29, 1991 23 Consolidated balance sheets at December 26, 1993, and December 27, 1992 24-25 Consolidated statements of stockholders' equity for the fiscal years ended December 26, 1993, December 27, 1992, and December 29, 1991 26 Consolidated statements of cash flows for the fiscal years ended December 26, 1993, December 27, 1992, and December 29, 1991 27 Notes to consolidated financial statements 28-38 Schedules: V - Property, plant and equipment 10 VI - Accumulated depreciation and amortization of property, plant and equipment 11 VIII - Valuation and qualifying accounts and reserves 12-13 X - Supplementary income statement information 14 Schedules other than those listed above are omitted since they are not required or are not applicable, or the required information is shown in the financial statements or notes thereto. The consolidated financial statements of Media General, Inc., listed in the above index which are included in the Annual Report to Stockholders of Media General, Inc., for the fiscal year ended December 26, 1993, are incorporated herein by reference. With the exception of the pages listed in the above index and the information incorporated by reference included in Part I, II, and IV, the 1993 Annual Report to Stockholders is not deemed filed as part of this report. 8 10 CONSENT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Media General, Inc. We consent to the incorporation by reference in this Annual Report (Form 10-K) of Media General, Inc., of our report dated January 25, 1994, included in the 1993 Annual Report to Stockholders of Media General, Inc. Our audits also included the financial statement schedules of Media General, Inc., listed in Item 14(a). These schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in (a) the Registration Statement (Form S-8 No. 2-56905) pertaining to the 1971 Unqualified Stock Option Plan and the 1976 Qualified and Non-Qualified Stock Option Plans of Media General, Inc.; (b) the Registration Statement (Form S-8 No. 33-29478) pertaining to the Media General, Inc., Employees Thrift Plan; (c) the Registration Statement (Form S-8 No. 33-23698) pertaining to the 1987 Non-Qualified Stock Option Plan of Media General, Inc.; (d) the Registration Statement (Form S-3 No. 33-26853) pertaining to the Media General, Inc., Automatic Dividend Reinvestment and Stock Purchase Plan and (e) the Registration Statement (Form S- 8 No. 33-52472) pertaining to the 1987 Non-Qualified Stock Option Plan of Media General, Inc., amended and restated May 17, 1991, and in the Prospectus related to each, of our report dated January 25, 1994, with respect to the consolidated financial statements of Media General, Inc., incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedules of Media General, Inc., included in this Annual Report (Form 10-K) of Media General, Inc., for the fiscal year ended December 26, 1993. ERNST & YOUNG Richmond, Virginia March 22, 1994 9 11 Media General, Inc., and Subsidiaries Schedule V - Property, Plant and Equipment Fiscal Years Ended December 29, 1991, December 27, 1992, and December 26, 1993
Balance at *Other changes beginning Additions Retirements debit and/ Balance at end of period at cost and sales or (credit) of period ------------ ------------ ------------ ------------ ------------ 1991 Land.............................. $ 14,560,395 $ 911,608 $ --- $ 13,063,038 $ 28,535,041 Buildings......................... 59,014,313 1,658,634 45,233 183,226 60,810,940 Machinery and equipment........... 572,317,206 17,450,634 6,211,995 11,059,242 594,615,087 Construction in progress.......... 63,603,577 95,361,914 --- (24,561,364) 134,404,127 ------------ ------------ ------------ ------------ ------------ Totals......................... $709,495,491 $115,382,790(a) $ 6,257,228 $ (255,858) $818,365,195 ============ ============ ============ ============ ============ 1992 Land.............................. $ 28,535,041 $ 67,087 $ 42,305 $ (6,959,479) $ 21,600,344 Buildings......................... 60,810,940 1,783,999 90,785 69,993,788 132,497,942 Machinery and equipment........... 594,615,087 30,280,258 11,549,173 107,538,147 720,884,319 Construction in progress.......... 134,404,127 60,187,987 --- (185,469,373) 9,122,741 ------------ ------------ ------------ ------------ ------------ Totals......................... $818,365,195 $ 92,319,331(b) $ 11,682,263 $(14,896,917)(c) $884,105,346 ============ ============ ============ ============ ============ 1993 Land.............................. $ 21,600,344 $ 3,980 $ 69,360 $ 269,579 $ 21,804,543 Buildings......................... 132,497,942 2,034,941 47,066 684,294 135,170,111 Machinery and equipment........... 720,884,319 18,743,804 13,774,999 4,696,860 730,549,984 Construction in progress.......... 9,122,741 12,053,848 --- (5,595,429) 15,581,160 ------------ ------------ ------------ ------------ ------------ Totals......................... $884,105,346 $ 32,836,573 $ 13,891,425 $ 55,304 $903,105,798 ============ ============ ============ ============ ============ * Includes intercompany transfers and reclassifications. (a) Includes approximately $80.9 million related to the expansion and relocation of the Richmond Newspapers' production facility. (b) Includes approximately $53.2 million related to the expansion and relocation of the Richmond Newspapers' production facility. (c) Includes approximately $14.7 million transferred to other assets.
10 12 Media General, Inc., and Subsidiaries Schedule VI - Accumulated Depreciation and Amortization of Property, Plant and Equipment Fiscal Years Ended December 29, 1991, December 27, 1992, and December 26, 1993
Balance Retirements, *Other at beginning Charged to renewals & changes Balance at end of period income replacements add (deduct) of period ------------ ------------ ------------ ------------ ------------ 1991 Buildings......................... $ 24,265,655 $ 1,840,446 $ 24,726 $ --- $ 26,081,375 Machinery and equipment........... 235,367,169 46,128,877 5,995,314 27,199 275,527,931 ------------ ------------ ------------ ------------ ------------ Totals......................... $259,632,824 $ 47,969,323 $ 6,020,040 $ 27,199 $301,609,306 ============ ============ ============ ============ ============ 1992 Buildings......................... $ 26,081,375 $ 2,918,911 $ 29,384 $ (11,035) $ 28,959,867 Machinery and equipment........... 275,527,931 49,755,790 9,903,482 6,996 315,387,235 ------------ ------------ ------------ ------------ ------------ Totals......................... $301,609,306 $ 52,674,701 $ 9,932,866 $ (4,039) $344,347,102 ============ ============ ============ ============ ============ 1993 Buildings......................... $ 28,959,867 $ 3,689,691 $ 6,821 $ --- $ 32,642,737 Machinery and equipment........... 315,387,235 51,274,155 11,423,387 --- 355,238,003 ------------ ------------ ------------ ------------ ------------ Totals......................... $344,347,102 $ 54,963,846 $ 11,430,208 $ --- $387,880,740 ============ ============ ============ ============ ============ * Includes intercompany transfers and reclassifications.
11 13 Media General, Inc., and Subsidiaries Schedule VIII - Valuation and Qualifying Accounts and Reserves Fiscal Years Ended December 29, 1991, December 27, 1992, and December 26, 1993
Additions (reductions) Balance at charged Balance beginning (credited) to Deductions- at end of period expense-net net Transfers of period ------------ ------------ ------------ ------------ ------------ 1991 Allowance for doubtful accounts... $ 5,322,316 $ 6,192,833 $ 8,096,311 $ --- $ 3,418,838 Allowance for discounts........... 774,562 7,908,106 7,922,541 --- 760,127 Allowance for note receivable..................... 3,315,000 --- --- 1,825,000 5,140,000 ------------ ------------ ------------ ------------ ------------ 9,411,878 14,100,939 16,018,852 1,825,000 9,318,965 ------------ ------------ ------------ ------------ ------------ Reserve for warranties............ 3,281,531 --- 919,502 --- 2,362,029 Reserve for disposition of certain operations............. 5,724,022 (990,229) 2,578,229 --- 2,155,564 Reserve for discontinuance of Broadcast Services.......... 10,496,916 (386,940) (429,105) (1,825,000) 8,714,081 ------------ ------------ ------------ ------------ ------------ Totals....................... $ 28,914,347 $ 12,723,770 $ 19,087,478 $ --- $ 22,550,639 ============ ============ ============ ============ ============ 1992 Allowance for doubtful accounts... $ 3,418,838 $ 5,377,424 $ 5,381,321 $ --- $ 3,414,941 Allowance for discounts........... 760,127 3,433,754 3,877,135 --- 316,746 Allowance for note receivable..................... 5,140,000 --- --- --- 5,140,000 ------------ ------------ ------------ ------------ ------------ 9,318,965 8,811,178 9,258,456 --- 8,871,687 ------------ ------------ ------------ ------------ ------------ Reserve for warranties............ 2,362,029 2,691,247 708,113 --- 4,345,163 Reserve for disposition of certain operations............. 2,155,564 (99,497) 325,119 --- 1,730,948 Reserve for discontinuance of Broadcast Services.......... 8,714,081 (5,457,039) 3,471,345 1,381,302 1,166,999 ------------ ------------ ------------ ------------ ------------ Totals....................... $ 22,550,639 $ 5,945,889 $ 13,763,033 $ 1,381,302 $ 16,114,797 ============ ============ ============ ============ ============
12 14 Media General, Inc., and Subsidiaries Schedule VIII - Valuation and Qualifying Accounts and Reserves - Continued Fiscal Years Ended December 29, 1991, December 27, 1992, and December 26, 1993
Additions (reductions) Balance at charged Balance beginning (credited) to Deductions- at end of period expense-net net Transfers of period ------------ ------------ ------------ ------------ ------------ 1993 Allowance for doubtful accounts... $ 3,414,941 $ 3,488,482 $ 3,205,662 $ --- $ 3,697,761 Allowance for discounts........... 316,746 437,720 754,466 --- --- Allowance for note receivable..................... 5,140,000 --- --- (5,140,000)(a) --- ------------ ------------ ------------ ------------ ------------ 8,871,687 3,926,202 3,960,128 (5,140,000) 3,697,761 ------------ ------------ ------------ ------------ ------------ Reserve for warranties............ 4,345,163 --- 544,248 167,091 3,968,006 Reserve for disposition of certain operations............. 1,730,948 (921,782) 809,166 --- --- Reserve for discontinuance of Broadcast Services.......... 1,166,999 --- 382,216 --- 784,783 ------------ ------------ ------------ ------------ ------------ Totals....................... $ 16,114,797 $ 3,004,420 $ 5,695,758 $ (4,972,909) $ 8,450,550 ============ ============ ============ ============ ============ (a) Amount transferred to other liabilities and deferred credits.
13 15 Media General, Inc., and Subsidiaries Schedule X - Supplementary Income Statement Information Fiscal Years Ended December 29, 1991, December 27, 1992, and December 26, 1993
Charged to costs and expenses ----------------------------------------------- 1991 1992 1993 Maintenance and repairs........... $ 15,939,230 $ 16,930,182 $ 17,391,044 ============ ============ ============ Note: Items and amounts not presented are less than 1% of consolidated revenues or are disclosed elsewhere in the consolidated financial statements or related notes.
14 16 Index to Exhibits Exhibit Number Description 2 Letter Agreement dated March 16, 1994, by and among Media General, Inc., Affiliated Newspaper Investment Company, and Garden State Newspapers, Inc. 3(i) The Amended and Restated Articles of Incorporation of Media General, Inc., incorporated by reference to Exhibit 3.1 of Form 10-K for the fiscal year ended December 31, 1989. 3(ii) Bylaws of Media General, Inc., amended as of May 31, 1993. 10.1 1971 Unqualified Stock Option Plan, incorporated by reference to Exhibit 1 to Post-Effective Amendment No. 2 to Registration Statement No. 2-38001. 10.2 Amendment to the 1971 Unqualified Stock Option Plan adopted February, 1974, incorporated by reference to Exhibit 1 to Post-Effective Amendment No. 6 of Registration Statement No. 2-38001. 10.3 Amendment to the 1971 Unqualified Stock Option Plan adopted July 29, 1983, incorporated by reference to Exhibit 10.3 of Form 10-K for the fiscal year ended December 31, 1983. 10.4 Form of Option granted under the 1971 Unqualified Stock Option Plan prior to February, 1974, incorporated by reference to Exhibit 2 to Post-Effective Amendment No. 2 of Registration Statement No. 2-38001. 10.5 Form of Option granted under the 1971 Unqualified Stock Option Plan subsequent to February, 1974, incorporated by reference to Exhibit 2 to Post-Effective Amendment No. 6 of Registration Statement No. 2-38001. 10.6 Addendum dated January, 1984, to Form of Option granted under the 1971 Unqualified Stock Option Plan, incorporated by reference to Exhibit 10.7 of Form 10-K for the fiscal year ended December 31, 1983. 10.7 Addendum dated June 19, 1992, to Form of Option granted under the 1971 Unqualified Stock Option Plan, incorporated by reference to Exhibit 10.7 of Form 10-K for the fiscal year ended December 27, 1992. 10.8 The 1976 Non-Qualified Stock Option Plan, incorporated by reference to Exhibit 1.2 to Registration Statement 2-56905. 10.9 Amendment to the 1976 Non-Qualified Stock Option Plan adopted July 29, 1983, incorporated by reference to Exhibit 10.9 of Form 10-K for the fiscal year ended December 31, 1983. 10.10 Amendment to the 1976 Non-Qualified Stock Option Plan adopted June 19, 1992, incorporated by reference to Exhibit 10.10 of Form 10-K for the fiscal year ended December 27, 1992. 10.11 Form of Option granted under the 1976 Non-Qualified Stock Option Plan, incorporated by reference to Exhibit 2.2 of Registration Statement 2- 56905. 17 10.12 Amendment to the 1976 Non-Qualified Stock Option Plan, dated December 9, 1978, incorporated by reference to Exhibit 1 to Post-Effective Amendment No. 3 of Registration Statement 2-56905. 10.13 Additional Form of Option to be granted under the 1976 Non-Qualified Stock Option Plan, incorporated by reference to Exhibit 2 to Post- Effective Amendment No. 3 Registration Statement 2-56905. 15 10.14 Addendum dated January, 1984, to Form of Option granted under the 1976 Non-Qualified Stock Option Plan, incorporated by reference to Exhibit 10.13 of Form 10-K for the fiscal year ended December 31, 1983. 10.15 Addendum dated June 19, 1992, to Form of Option granted under the 1976 Non-Qualified Stock Option Plan, incorporated by reference to Exhibit 10.15 of Form 10-K for the fiscal year ended December 27, 1992. 10.16 The 1987 Non-Qualified Stock Option Plan adopted May 15, 1987, and as amended on August 21, 1987, incorporated by reference to Exhibit 10.14 of Form 10-K for the fiscal year ended December 31, 1987. 10.17 The Media General, Inc., Restricted Stock Plan adopted May 17, 1991, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended June 30, 1991. 10.18 Amendment to the 1987 Non-Qualified Stock Option Plan, adopted May 17, 1991, incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarter ended June 30, 1991. 10.19 Amendment to the 1987 Non-Qualified Stock Option Plan adopted June 19, 1992, incorporated by reference to Exhibit 10.19 of Form 10-K for the fiscal year ended December 27, 1992. 10.20 Addendum dated June 19, 1992, to Form of Option granted under the 1987 Non-Qualified Stock Option Plan, incorporated by reference to Exhibit 10.20 of Form 10-K for the fiscal year ended December 27, 1992. 10.21 Media General, Inc., Executive Death Benefit Plan effective January 1, 1991, incorporated by reference to Exhibit 10.17 of Form 10-K for the fiscal year ended December 29, 1991. 10.22 Amendment to the Media General, Inc., Executive Death Benefit Plan dated July 24, 1991, incorporated by reference to Exhibit 10.18 of Form 10-K for the fiscal year ended December 29, 1991. 10.23 1984 Outside Directors Retirement Agreement, incorporated by reference to Exhibit 10.16 of Form 10-K for the fiscal year ended December 31, 1984. 10.24 Employment Agreement between Media General, Inc., and D. Tennant Bryan, dated January 1, 1973, incorporated by reference to Exhibit 10.9 of Form 8 dated August 3, 1981. 18 10.25 Amendment dated September 24, 1981, to Employment Agreement between Media General, Inc., and D. Tennant Bryan dated January 1, 1973, incorporated by reference to Exhibit 10 of Form 10-Q for the quarter ended September 30, 1981. 10.26 Shareholders Agreement, dated May 28, 1987, between Mary Tennant Bryan, Florence Bryan Wisner, J. Stewart Bryan III, and D. Tennant Bryan and J. Stewart Bryan III as Trustees under D. Tennant Bryan Media Trust, and Media General, Inc., incorporated by reference to Exhibit 10.50 of Form 10-K for the fiscal year ended December 31, 1987. 10.27 Amended and Restated Redemption Agreement between Media General, Inc., and D. Tennant Bryan, dated January 29, 1988, incorporated by reference to Exhibit 10.20 of Form 10-K for the fiscal year ended December 31, 1987. 10.28 Employment Contract between Media General, Inc., and Alan S. Donnahoe, dated January 1, 1977, incorporated by reference to Exhibit 10.15 of Form 8 dated August 3, 1981. 10.29 Amendment, dated March 22, 1979, to Employment Contract between Media General, Inc., and Alan S. Donnahoe, dated January 1, 1977, incorporated by reference to Exhibit 10.16 of Form 8 dated August 3, 1981. 16 10.30 Amendment, dated January 1, 1982, to Employment Contract between Media General, Inc., and Alan S. Donnahoe, dated January 1, 1977, incorporated by reference to Exhibit 10.23 of Form 10-K for the fiscal year ended December 31, 1981. 10.31 Amendment, dated December 1, 1984, to Employment Contract between Media General, Inc., and Alan S. Donnahoe, dated January 1, 1977, incorporated by reference to Exhibit 10.22 of Form 10-K for the fiscal year ended December 31, 1984. 10.32 Amendment, dated December 1, 1989, to Employment Contract between Media General, Inc., and Alan S. Donnahoe, dated January 1, 1977, incorporated by reference to Exhibit 10.25 of Form 10-K for the fiscal year ended December 31, 1989. 10.33 Consulting Agreement between Media General, Inc., and James S. Evans, dated January 1, 1992, incorporated by reference to Exhibit 10.29 of Form 10-K for the fiscal year ended December 29, 1991. 10.34 Media General, Inc., Supplemental Thrift Plan dated July 15, 1987, incorporated by reference to Exhibit 10.27 of Form 10-K for the fiscal year ended December 31, 1989. 10.35 Amended and Restated Media General, Inc., Executive Supplemental Retirement Plan adopted as of January 1, 1991, incorporated by reference to Exhibit 10.32 of Form 10-K for the fiscal year ended December 29, 1991. 19 10.36 Deferred Income Plan for Selected Key Executives of Media General, Inc., and form of Deferred Compensation Agreement thereunder dated as of December 1, 1984, incorporated by reference to Exhibit 10.29 of Form 10-K for the fiscal year ended December 31, 1989. 10.37 Amended and Restated Deferred Compensation Agreement between Media General, Inc., and James S. Evans, incorporated by reference to Exhibit 10.30 of Form 10-K for the fiscal year ended December 31, 1989. 10.38 Media General, Inc., Management Performance Award Program, adopted November 16, 1990, and effective January 1, 1991, incorporated by reference to Exhibit 10.35 of Form 10-K for the fiscal year ended December 29, 1991. 10.39 Media General, Inc., Deferred Compensation Plan dated March 28, 1991, effective July 1, 1991, incorporated by reference to Exhibit 10.38 of Form 10-K for the fiscal year ended December 29, 1991. 10.40 Media General, Inc., ERISA Excess Benefits Plan effective January 1, 1991, incorporated by reference to Exhibit 10.39 of Form 10-K for the fiscal year ended December 29, 1991. 10.41 Employment Contract between Media General, Inc., and Basil Snider, Jr., dated March 18, 1994 10.42 Amended and Restated Partnership Agreement, dated November 1, 1987, by and among Virginia Paper Manufacturing Corp., KR Newsprint Company, Inc., and CEI Newsprint, Inc., incorporated by reference to Exhibit 10.31 of Form 10-K for the fiscal year ended December 31, 1987. 10.43 Amended and Restated License Agreement, dated November 1, 1987, by and among Media General, Inc., Garden State Paper Company, Inc., and Southeast Paper Manufacturing Co., incorporated by reference to Exhibit 10.32 of Form 10-K for the fiscal year ended December 31, 1987. 10.44 Amended and Restated Umbrella Agreement, dated November 1, 1987, by and among Media General, Inc., Knight-Ridder, Inc., and Cox Enterprises, Inc., incorporated by reference to Exhibit 10.34 of Form 10-K for the fiscal year ended December 31, 1987. 17 10.45 Amended Newsprint Purchase Contract, dated November 1, 1987, by and among Southeast Paper Manufacturing Co., Media General, Inc., Knight- Ridder, Inc., and Cox Enterprises, Inc., incorporated by reference to Exhibit 10.35 of Form 10-K for the fiscal year ended December 31, 1987. 10.46 Television affiliations agreement, dated March 22, 1989, between WFLA-TV and National Broadcasting Company, Inc., incorporated by reference to Exhibit 10.32 of Form 10-K for the fiscal year ended December 31, 1988. 10.47 Amendments, dated May 27, 1993, to television affiliations agreement, between WFLA-TV and National Broadcasting Company, Inc., dated March 22, 1989. 20 10.48 Franchise Agreements, dated September 30, 1982, between Media General, Inc., Media General Cable of Fairfax County, Inc., and Fairfax County, Virginia, as amended January 30, 1984, incorporated by reference to Exhibit 10.32 of Form 10-K for the fiscal year ended December 31, 1983. 10.49 Agreement dated March 14, 1988, between Media General Cable of Fairfax County, Inc., and Warner Cable Communications of Reston, Inc., partially assigning Franchise Agreements dated September 30, 1982, incorporated by reference to Exhibit 10.34 of Form 10-K for the fiscal year ended December 31, 1988. 10.50 Cable Television Franchise Ordinance of the Town of Herndon, Virginia, accepted January 24, 1984, by Media General, Inc., and Media General Cable of Fairfax County, Inc., incorporated by reference to Exhibit 10.33 of Form 10-K for the fiscal year ended December 31, 1983. 10.51 Franchise Agreement, dated June 14, 1983, between Media General, Inc., Media General Cable of Fairfax County, Inc., and the City of Fairfax, Virginia, incorporated by reference to Exhibit 10.34 of Form 10-K for the fiscal year ended December 31, 1983. 10.52 Franchise Agreement, dated April 9, 1983, between Media General Cable of Fairfax County, Inc., and the Town of Vienna, Virginia, incorporated by reference to Exhibit 10.35 of Form 10-K for the fiscal year ended December 31, 1983. 10.53 Franchise Agreement, dated July 12, 1983, between Media General Cable of Fairfax County, Inc., Media General, Inc., and the City of Falls Church, Virginia, incorporated by reference to Exhibit 10.36 of Form 10-K for the fiscal year ended December 31, 1983. 10.54 Garden State Newspapers, Inc., Second Amended and Restated Stock Purchase and Shareholders' Agreement dated as of March 31, 1990, incorporated by reference to Exhibit 10.45 of Form 10-K for the fiscal year ended December 31, 1990. 13 Media General, Inc., Annual Report to Stockholders for the fiscal year ended December 26, 1993. 21 List of subsidiaries of the registrant. 23 Consent of Ernst & Young, independent auditors. Note: Exhibits 10.1-10.41 are management contracts or compensatory plans, contracts or arrangements. 18 21 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MEDIA GENERAL, INC. Date: March 17, 1994 By /s/ J. Stewart Bryan III --------------------------------------------- J. Stewart Bryan III, Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ D. Tennant Bryan Chairman of the Executive March 17, 1994 - ----------------------------- D. Tennant Bryan Committee and Director /s/ James S. Evans Vice Chairman and Director March 17, 1994 - ----------------------------- James S. Evans /s/ Marshall N. Morton Senior Vice President and March 17, 1994 - ----------------------------- Marshall N. Morton Chief Financial Officer /s/ Stephen Y. Dickinson Controller March 17, 1994 - ----------------------------- Stephen Y. Dickinson /s/ Robert P. Black Director March 17, 1994 - ----------------------------- Robert P. Black /s/ Charles A. Davis Director March 17, 1994 - ----------------------------- Charles A. Davis /s/ A. S. Donnahoe Director March 17, 1994 - ----------------------------- A. S. Donnahoe 22 /s/ Robert V. Hatcher, Jr. Director March 17, 1994 - ----------------------------- Robert V. Hatcher, Jr. /s/ John G. Medlin, Jr. Director March 17, 1994 - ----------------------------- John G. Medlin, Jr. /s/ Henry L. Valentine, II Director March 17, 1994 - ----------------------------- Henry L. Valentine, II 19 EX-2 2 LETTER AGREEMENT 1 GARDEN STATE NEWSPAPERS, INC. Loop Central One 4888 Loop Central Drive, suite 525 Houston, TX 77081 March 16, 1994 Mr. J. Stewart Bryan, III Chairman of the Board of Directors and President Media General, Inc. 333 East Grace Street Richmond, VA 23219 Dear Stewart: The purpose of this Letter Agreement is to set forth the terms and conditions pursuant to which Affiliated Newspapers Investment Company ("ANI") and Garden State Newspapers, Inc. ("GSN") will acquire all, but not less than all, of the common and preferred stock of GSN held by Media General, Inc. ("Media General"). ANI and GSN propose to effect the purchase on the following terms: 1. ANI and GSN have retained BT Securities Corporation ("BT") and will use their best efforts to assist BT in completing an underwritten public offering of senior debt securities to be issued by a newly formed holding company of ANI (the "ANI Securities") in an amount sufficient to allow ANI to simultaneously purchase (a) all, but not less than all, of the Class A Common Stock and Series A and Series C Preferred Stock of GSN held by Media General for $62,695,000 (the "Purchase Price") and (b) the warrant which Media General holds for the purchase of ANI's Class A Common Stock for $50,000 (the "Stock and Warrant Purchases"). Simultaneously therewith, GSN is issuing senior debt securities (the "GSN Securities") pursuant to an underwritten public offering. If the closing of the Stock and Warrant Purchases occurs after April 15, 1994, the Purchase Price shall be increased by $10,000 for each day from such date through and including the day of the closing. The payments for such purchases will be by wire transfer of same day funds to a bank account designated by Media General. ANI and GSN will be responsible for and pay all expenses related to the transactions described herein including, without limitation, BT's fees and any underwriting discounts or commissions, any Hart-Scott-Rodino Antitrust Improvements Act of 1976 filing fees that may be required due to the Stock and Warrant Purchases and ANI's and GSN's legal and accounting fees. Media General will be responsible for and pay any expenses it incurs for legal, accounting and financial services provided solely for its benefit in considering and consummating the transactions described herein. 2. Simultaneously with the Stock and Warrant Purchases, Media General will contribute $4,000,000 in cash to the common equity of Denver Newspapers, Inc. ("Denver"). 3. Media General's obligations under paragraphs 1 and 2 of this Agreement shall be subject to the satisfaction or waiver by it of the following conditions: (a) The Singleton/Scudder shareholders of Denver (the "Singleton/Scudder Shareholders") shall have contributed all of the outstanding shares of Class B 2 Common Stock of Denver (representing 60% of the equity interest in Denver on a fully diluted basis after giving effect to the transactions described in subparagraph (c) below) to ANI. (b) ANI shall have contributed $6,000,000 in cash to the common equity of Denver. (c) Denver shall have repurchased and canceled all of the 8% Cumulative Preferred Stock of Denver issued to The Times Mirror Company ("Times Mirror") for no more than $3,835,500, plus accumulated and unpaid dividends not exceeding $400,000, and purchased all of the Denver Media Holdings, Inc. ("DMHI") warrants issued to Times Mirror for no more than $7,400,000. (d) DMHI shall have been merged with and into Denver or DMHI's subsidiary, The Denver Post Corporation ("DPC"), and, in connection therewith, (i) all of the outstanding stock and warrants of DMHI shall have been canceled, (ii) the Denver Post Stockholders' Agreement, dated as of December 10, 1992, among DMHI, Times Mirror and the Singleton/Scudder Shareholders shall have been terminated and (iii) the Note Repurchase and Master Agreement dated as of November 10, 1992 by and among DPC, DMHI, Denver, Times Mirror and the other parties thereto (the "Times Mirror Agreement") shall have been terminated. (e) either (i) the Series B Preferred Stock of GSN (the "GSN Preferred"), now held by Media General, shall have been or shall be simultaneously with the Stock and Warrant Purchases exchanged for the 9% Cumulative Preferred Stock of Denver (the "Denver Preferred"), including the right to all accumulated and unpaid dividends, now held by GSN (the "Exchange") or (ii) Media General shall have received such other inducements that, in its sole discretion, would provide to Media General no less favorable economic benefits and legal protections than it would have received from the Exchange. (f) Denver shall not have declared or paid any dividends on the Denver Preferred. (g) All other arrangements between Denver and GSN or Media News Group, Inc. and the affiliates of either (excluding Media General), including, without limitation, (i) the Intercreditor Agreement (as defined in the Credit Agreement dated as of January 12, 1990 and as amended and restated as of December 10, 1992 (the "NJN Credit Agreement") among North Jersey Newspapers Company, NJN Holding L.P., ANI (the "NJN Credit Parties"), the banks parties thereto (the "NJN Banks"), and Bankers Trust Company, as agent), and (ii) the Support Documents (as defined in the Intercreditor Agreement), shall have been terminated (and all intercompany accounts and indebtedness shall have been settled, all DPC Collateral (as defined in the Intercreditor Agreement) shall have been released from the lien of the DPC Security Documents (as defined in the Intercreditor Agreement) and DPC and DMHI shall have been released from all obligations under their respective Guarantees); provided, however, the Management Agreement between Denver and Media News Group, Inc., may continue in effect. (h) ANI shall have agreed to be bound by the terms and conditions of the Amended and Restated Stock and Warrant Purchase and Stockholders' Agreement dated December 10, 1992 among Media General, GSN, Denver and the Singleton/Scudder Shareholders (the "Denver Shareholders' Agreement") to the same extent as the Singleton/Scudder Shareholders and shall have further agreed that, in connection with the Exchange, Media General shall succeed to all of the rights of GSN under the Denver Shareholders' Agreement in respect of its ownership of the Denver Preferred. 3 (i) The Singleton/Scudder interests shall have waived their right to the $4,500,000 payment required under Section 10 of the Second Amended and Restated Stock Purchase and Shareholders' Agreement of GSN, dated March 31, 1990 (the "GSN Shareholders' Agreement"). (j) The Amended and Restated Certificate of Incorporation of Denver shall have been further amended and restated to (i) remove the authorization of and all references to the 8% Cumulative Preferred Stock and (ii) amend the provisions regarding redemption of the Denver Preferred to read as set forth in Annex A hereto. (k) Denver shall have entered into a registration rights agreement with Media General granting Media General customary piggy-back and three demand registration rights in respect of its interest in Denver and the Denver Stockholders' Agreement shall have been amended on terms satisfactory to Media General to permit it to effect the public distribution of its interest in Denver without regard to the existing transfer restrictions and tag-along rights set forth in such Agreement but subject to rights of first refusal on the part of ANI and Denver; provided such rights are no more restrictive then the rights granted to Denver and NJN under Article XI of the Times Mirror Agreement. (l) Denver shall have agreed that no new DPC or Denver credit facility shall have any (a) cross-default or cross-acceleration provisions that would be triggered by a default on or acceleration of any Debt of ANI or any subsidiary of ANI (other than Denver and its subsidiaries) or (b) event of default or change of control provision that would require or permit the acceleration of DPC's or Denver's obligations thereunder as a result of a change of control of ANI; (m) ANI shall have agreed with Denver and Media General that, without Media General's consent, ANI and its Subsidiaries (other than Denver and its Subsidiaries) may not, directly or indirectly, issue or suffer to exist any Debt in respect of Capitalized Lease Obligations exceeding in the aggregate $10.0 million at any one time outstanding (capitalized terms in this paragraph (m) having the meanings set forth in the ANI registration statement in respect of the ANI Securities, as filed with the Securities and Exchange Commission on February 10, 1994 (the "ANI Registration Statement")); (n) Simultaneously with consummation of the Stock and Warrant Purchases, the Series A and Series C preferred Stock of GSN shall be contributed by ANI to GSN and canceled. (o) Satisfactory clearance shall have been received, if necessary, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 regarding the transactions. (p) Each of the agreements and instruments effecting the foregoing conditions shall be in form and substance satisfactory to Media General and Media General shall have received such opinions from counsel to Denver, ANI, GSN, the Singleton/Scudder Shareholders and the NJN Credit Parties in respect to the Denver Preferred and such agreements and instruments and the transactions contemplated hereby as it may reasonably request. 4. Prior to the consummation of the Stock and Warrant Purchases and the Exchange, nothing in this Agreement shall diminish the rights of the parties under the GSN Shareholders' Agreement. Upon consummation of the Stock and Warrant Purchase and the Exchange, the provisions of the GSN Shareholders' Agreement shall terminate. 4 5. Media General shall have the right to disapprove the offering materials and/or registration statements for the ANI Securities and the GSN Securities, including the prospectuses forming a part thereof for lack of factual accuracy including any material misstatement or omission to state a material fact before any refiling or distribution thereof. In addition, any change to the terms of the ANI Securities set forth in the ANI Registration Statement shall be subject to approval by Media General. Notwithstanding any review or right to disapprove the offering materials, registration statement and/or prospectus by Media General, ANI and GSN shall indemnify and hold Media General and its officers, directors and employees and controlling persons harmless from and against any and all loss, damage, cost or expense (including reasonable attorneys fees) as incurred, arising out of or related to the offerings of the ANI Securities and the GSN Securities. 6. ANI shall have (i) until April 22, 1994 to enter into a firm commitment underwriting agreement and price an offering of not less than $85,000,000 of ANI Securities and (ii) until April 29, 1994 to close the transactions contemplated by paragraphs 1 and 2. If (a) the offering has not been priced on or before April 22, 1994 or (b) the closing of the transactions contemplated by paragraphs 1 and 2 have not occurred on or before April 29, 1994 (unless the parties have mutually agreed in writing to extend such deadlines), in each case, as of such respective deadline, this agreement, as amended, shall terminate, with all expenses related to the transactions described herein to be paid by ANI, GSN and Media General as set forth in this agreement, and all provisions of the GSN Shareholders' Agreement shall remain in full force and effect. 7. Subject to the satisfaction or waiver by it of the conditions set forth in paragraph 3 of this Agreement and the consummation of the Stock and Warrant Purchases and the Exchange, Media General agrees that, following the redemption in full of the Denver Preferred, Media General will not unreasonably withhold its consent to the declaration of dividends on the Common Stock of Denver. This Agreement and the other writings referred to therein or delivered pursuant thereto contain the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous agreements and understandings with respect thereto, including, without limitation, the November 16, 1993 Letter Agreement by and between ANI, Garden State and Media General, as amended on December 24, 1993 and February 9, 1994. If the foregoing meets with your approval, please indicate your acceptance by signing and returning this Letter Agreement to me by March 17, 1994. If we do not receive your response by 5:00 p.m. on such date, the offer expressed in this Letter Agreement will no longer be outstanding. 5 Very truly yours, AFFILIATED NEWSPAPERS INVESTMENT COMPANY By: W. Dean Singleton William Dean Singleton Vice Chairman and President GARDEN STATE NEWSPAPERS, INC. By: W. Dean Singleton William Dean Singleton Vice Chairman and President AGREED AND ACCEPTED: MEDIA GENERAL, INC. By: J. Stewart Bryan J. Stewart Bryan III Chairman and President 6 ANNEX A Redemption. On the 9% Cumulative Preferred Stock Redemption Date (as hereinafter defined) the entire amount of the 9% Cumulative Preferred Stock issued and outstanding shall be purchased and redeemed, to the extent the Corporation may legally do so, and the holders of the shares so purchased or redeemed shall be paid an amount (the "Redemption Amount") in cash equal to (a) $25,000 per share, the Stated Value thereof (the "Capital Portion of the Redemption Amount"), plus (b) the unpaid cumulative preferred dividends thereon accrued from the date of issuance of each share of the 9% Cumulative Preferred Stock to the Redemption Date whether or not earned or declared (the "Dividend Portion of the Redemption Amount"). All payments made with respect to the 9% Cumulative Preferred Stock shall be credited, first, to accrued and unpaid dividends and, second, to the Capital Portion of the Redemption Amount. The 9% Cumulative Preferred Stock Redemption Date shall be the earliest of: (a) June 30, 1999, (b) the date on which such redemption shall be permissible under the Denver Post Credit Agreement, (c) the date on which the Corporation ceases to own directly at least 51% of all the outstanding capital stock of Denver Post and (d) the date on which the Corporation, directly or indirectly, causes or permits the Denver Post to dispose of (by sale, merger, or any other transaction) or to cease to own, voluntarily or involuntarily, all or substantially all of the assets of the Denver Post. As used herein, "Denver Post Credit Agreement" means the Credit Agreement dated as of December 10, 1992 among Bankers Trust Company, Denver Post, Denver Media Holdings Inc., the Corporation and the other banks parties thereto and all Loan Documents (as defined therein) as each such agreement may be amended, or supplemented or otherwise modified or waived from time to time, plus any agreement, instrument or indenture which refinances or refunds in whole or in part any of the obligations under any such agreement (including successive refinancings). EX-3.II 3 BYLAWS 1 MEDIA GENERAL, INC. By-Laws As Amended and Restated Through May 31,1993 INDEX Article I. Meetings of Stockholders.....................1 1. Place of Meetings .................................1 2. Annual Meetings ...................................1 3. Special Meetings ..................................1 4. Notice of Meetings.................................1 5. Quorum.............................................1 6. Voting.............................................1 Article II. Directors 1. General Powers ....................................1 2. Number, Election, Term and Qualification...........1 3. Vacancies .........................................1 4. Removal ...........................................1 5. Compensation.......................................2 6. Advisory Directors ................................2 Article III. Directors Meetings ..........................2 1. Annual Meeting ....................................2 2. Regular Meetings ..................................2 3. Special Meetings ..................................2 4. Notice.............................................2 5. Quorum.............................................2 6. Waiver of Notice ..................................2 7. Action Without a Meeting ..........................2 Article IV. Directors Committees ........................2 1. Executive Committee................................2 2. Other Committees ..................................3 Article V. Officers ....................................3 1. Officers...........................................3 2. Election, Term ....................................3 3. Removal of Officers ...............................3 4. Duties of Chairman of the Board....................3 5. Duties of Chairman of the Executive Committee......3 6. Duties of Vice Chairmen of the Board...............3 7. Duties of President................................3 8. Duties of Vice Presidents..........................3 9. Duties of General Counsel .........................3 10. Duties of Secretary ...............................4 11. Duties of Treasurer ...............................4 12. Duties of Controller ..............................4 13. Duties of Assistant Secretaries ...................4 14. Duties of Assistant Treasurers ....................4 15. Duties of Assistant Controllers ...................4 16. Salaries of Officers ..............................4 17. Bonds .............................................4 Article VI. Certificates of Stock .......................4 1. Form ..............................................4 2. Transfer Agents and Registrars.....................5 3. Lost, Destroyed and Mutilated Certificates.........5 4. Transfer of Stock..................................5 2 5. Closing of Transfer Books and Fixing Record Date...5 Article VII. Voting of Stock Held ........................5 Article VIII. Miscellaneous ...............................5 1. Checks, Notes, Etc. ...............................5 2. Fiscal Year .......................................5 3. Corporate Seal ....................................5 Article IX. Amendments ..................................5 1. New By-Laws and Alterations .......................5 2. Legislative Amendments ............................5 Article I -- Meetings of Stockholders Section 1. Place of Meetings -- Meetings of stockholders shall be held at the principal office of the Corporation in Richmond, Virginia or at such other place, either within or without the State of Virginia, as from time to time may be fixed by the Board of Directors. Section 2. Annual Meetings -- The Annual Meetings of Stockholders shall be held on the third Friday in May of each year, if not a legal holiday, and if a legal holiday, on the next business day following. Section 3. Special Meetings -- Special meetings of the stockholders may be called by the Chairman of the Board, a Vice Chairman, the President, the Board of Directors, or in such other manner as is permitted by law. Section 4. Notice of Meetings -- Written notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting (except as a different time is specified in these By-laws or by the laws of Virginia) either personally or by mail, by or at the direction of the Chairman of the Board, a Vice Chairman, the President, the Secretary, or the officer or persons calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. Notice of a stockholders' meeting to act on an amendment of the Articles of Incorporation, on a plan of merger or exchange of shares, on a sale of all or substantially all of the assets of the Corporation, or the dissolution of the Corporation shall be given, in the manner provided above, not less than twenty- five nor more than sixty days before the date of the meeting. Any such notice shall be accompanied by such additional documents as may be required by law. Section 5. Quorum -- A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders; provided however, that when any specified action is required to be voted upon by a Class of Stock voting as a Class, holders of a majority of the shares of such Class shall constitute a quorum for the transaction of such specified action. If a quorum is present, action on a matter is approved if the votes cast in favor of the action exceeds the votes cast opposing the action, except when a larger vote or a vote by class is required by the laws of the State of Virginia and except that in elections of Directors those receiving the greatest number of votes shall be deemed elected even though not receiving a majority. Less than a quorum may adjourn, without notice other than by announcement at the meeting, until a quorum shall attend. 3 Section 6. Voting -- Each holder of shares of a Class entitled to vote on a matter coming before a meeting of stockholders shall be entitled to one vote for each share he holds. A stockholder may vote either in person or by proxy executed by the stockholder or by his duly authorized attorney in fact. No proxy shall be valid after eleven months from its date, unless otherwise provided in the proxy. Article II -- Directors Section 1. General Powers -- All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors, subject to any requirement of stockholder action. Section 2. Number, Election, Term and Qualification -- The number of Directors of the Corporation shall be fixed by the shareholders or by the Board of Directors, but shall not be fewer than eight nor more than twelve. For the purpose of election of Directors only, the Directors shall be divided into two classes; the Directors whom the holders of Class A Common Stock are entitled to elect shall be designated Class A Directors, and the Directors whom the holders of Class B Stock are entitled to elect shall be designated Class B Directors. Directors shall, except as provided in Section 3 of this Article II, be elected by the classes of shares entitled to elect them, at each annual meeting of Stockholders, to hold office until the next annual meeting of Stockholders or until their death, resignation, retirement, removal or disqualification. Directors need not be residents of the State of Virginia or Stockholders of the Corporation. Except for a Director who may be or has been an officer of the Company, all Directors shall be under the age of 73 years, provided however, that a Director serving at the time he reaches such age shall be permitted to complete his term of office but shall not thereafter be eligible for reelection, and provided further, that this sentence shall not apply to any Director in office as of November 24,1977. Section 3. Vacancies -- Except as limited by law, any vacancy occurring in the Board of Directors may be filled by the affirmative vote of a majority of the remaining Directors though less than a quorum of the Board of Directors. Section 4. Removal -- At a meeting called expressly for that purpose any Director may be removed from office, with or without cause, by a vote of the Stockholders holding a majority of the shares of the Class of Stock which elected such Director. If any Directors are so removed, new Directors may be elected at the same meeting. 1 Section 5. Compensation -- The Board of Directors may compensate Directors for their services as such and may provide for the payment of all expenses incurred by Directors in attending regular and special meetings of the Board of Directors. Section 6. Advisory Directors -- The Directors may, from time to time, by a majority vote of all Directors, elect one or more persons to serve as advisory directors for such term(s) as the Directors by resolution shall establish or until such advisory director's death, resignation, retirement, disqualification or removal. Advisory directors shall not be Directors of the Corporation and shall have no rights, privileges or powers of Directors other than those specifically provided herein or as may be specifically assigned to them by the Directors. Advisory directors shall attend meetings of the Directors and 4 meetings of any committees of the Directors to which they may be appointed. Advisory directors shall not be entitled to vote on any business coming before the Directors or any Committee thereof and shall not be counted for the purpose of determining the number of Directors necessary to constitute a quorum, for the purpose of determining whether a quorum is present or for any other purpose whatsoever. Any or all advisory directors may be removed at any time with or without cause by vote of the shareholders or by action of the Directors. The termination of any person's relationship with the Corporation as an advisory director shall not be deemed to create a vacancy in the position of advisory director. Article III -- Directors Meetings Section 1. Annual Meetings -- The Annual Meeting of the Board of Directors (which meeting shall be considered a regular meeting for the purposes of notice) shall be held on the same day as the Annual Meeting of Stockholders, for the purpose of electing Officers, unless the Board shall determine otherwise, and carrying on such other business as may properly come before such meeting. Section 2. Regular Meetings -- Regular meetings of the Board of Directors shall be held for the purpose of carrying on such business as may properly come before the meeting in the months of January, March, May, July, September and November of each year on such day within such months and at such time and at such place, within or without the State of Virginia, as may be designated by the Chairman and specified in the notice of the meeting. Furthermore, regular meetings of the Board of Directors shall be held immediately following each special meeting of Stockholders to act upon any matter considered by the Stockholders and to consider such other business as may properly come before the meeting. Any such meeting shall be held at the place where the Stockholders' meeting was held. Section 3. Special Meetings -- Special meetings of the Board of Directors shall be held on the call of the Chairman of the Board, a Vice Chairman, the President, or any four members of the Board of Directors, at the principal office of the Corporation or at such other place as the President may direct. Section 4. Notice -- Notice of regular and special meetings of the Board of Directors shall be mailed to each Director at least two (2) days, or telegraphed at least twenty-four (24) hours, prior to the time of the meeting. Notice of a special meeting must set forth the purpose for which the meeting is called. Section 5. Quorum -- A majority of the Directors shall constitute a quorum for the transaction of business. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 6. Waiver of Notice -- Notwithstanding any other provisions of these By-laws, whenever notice of any meeting for any purpose is required to be given to any Director a waiver thereof in writing signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be the equivalent to the giving of such notice. A Director who attends a meeting shall be deemed to have had timely and proper notice thereof unless he attends for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Section 7. Action Without A Meeting -- Any action which is required to be taken at a meeting of the Directors or of a Director's Committee may be taken 5 without a meeting if a consent in writing, setting forth the action so to be taken, shall be signed before such action by all of the Directors or all of the members of the committee, as the case may be. Such consent shall have the same force and effect as a unanimous vote. Article IV -- Directors Committees Section 1. Executive Committee -- The Board of Directors, by a resolution adopted by a majority of the number of Directors, may designate no less than four (4) nor more than six (6) Directors, including the Chairman of the Board, the Chairman of the Executive Committee, any Vice Chairman and the President, to constitute an Executive Committee. Members of the Executive Committee shall serve until removed, until their successors are designated or until the Executive Committee is dissolved by the Board of Directors. All vacancies which may occur in the Executive Committee shall be filled by the Board of Directors. The Executive Committee, when the Board of Directors is not in session, may exercise all of the powers 2 of the Board of Directors except as limited by law, and may authorize the seal of the Corporation to be affixed as required. Regular meetings of the Executive Committee shall be held six (6) times per year, alternating with the regular meetings of the full Board of Directors, on such days and at such time and at such place, within or without the State of Virginia, as may be designated by the Chairman of the Board or Chairman of the Executive Committee and specified in the notice of the meeting. The Special Meetings, Quorum, Waiver of Notice, and Action Without A Meeting provisions applicable to meetings of the Board of Directors set forth in Article III, Sections 3, 5, 6, and 7, respectively, shall apply to meetings of the Executive Committee as well, with all references therein to Directors to refer to the members of the Executive Committee and all references therein to the Board of Directors to refer to the Executive Committee. Notice of regular and special Executive Committee meetings of the Board of Directors shall be telephoned or otherwise given to each member thereof at least twenty-four (24) hours prior to the time of the meeting. Notice of a special meeting must set forth the purpose for which the meeting is called. Section 2. Other Committees -- Other Committees with limited authority may be designated by a resolution adopted by a majority of the full number of Directors. Article V -- Officers Section 1. Officers -- The officers of the Corporation shall be a Chairman of the Board, a Chairman of the Executive Committee, one or more Vice Chairmen of the Board, a President, one or more Vice Presidents (any one or more of whom may be designated as an Executive Vice President or a Senior Vice President), a General Counsel, a Secretary, a Treasurer, a Controller and, in the discretion of the Board of Directors, one or more Assistant Secretaries, Assistant Treasurers and Assistant Controllers. The Chairman of the Board, the Chairman of the Executive Committee, the Vice Chairmen of the Board and the President shall be chosen from the members of the Board of Directors. Any two offices may be combined in the same person except the offices of President and Secretary. Section 2. Election, Term -- Officers shall be elected at the regular Annual Meeting of the Board of Directors or at such other time as the Board of Directors may determine and shall hold office, unless removed, until the next Annual Meeting of the Board of Directors or until their successors are elected and qualified. 6 Section 3. Removal of Officers -- Any Officer may be removed with or without cause at any time by the Board of Directors at any duly called meeting. Section 4. Duties of Chairman of the Board -- The Chairman of the Board shall be a member of the Executive Committee and, in the absence or incapacity of the President or vacancy in the office of President, shall perform the duties of that office until the Board of Directors shall otherwise determine. He shall preside at all meetings of the Stockholders and Directors, and shall see that all the orders and resolutions of the Board of Directors are carried into effect, subject, however, to the rights of the Directors to delegate any specific powers. He shall, in addition, have such powers and duties as may be specifically assigned to him by the Board of Directors. Section 5. Duties of Chairman of the Executive Committee -- The Chairman of the Executive Committee shall be a member of the Executive Committee, and shall preside at all meetings of the Executive Committee and shall see that all orders and resolutions of the Executive Committee are carried into effect, subject, however, to the rights of the Executive Committee to delegate any specific powers. He shall, in addition, have such powers and duties as may be specifically assigned to him by the Board of Directors. Section 6. Duties of Vice Chairmen of the Board -- Subject to the control of the Board of Directors and the Chairman of the Board and to the Provisions of the Articles of Incorporation and By-laws, the Vice Chairmen shall severally perform such duties as may, from time to time, be assigned to each by the Chairman of the Board or the Board of Directors. Section 7. Duties of President -- Subject to the control of the Board of Directors and the Chairman of the Board and to the Provisions of the Articles of Incorporation and By-laws, the President shall have general charge, supervision and control of all the business and affairs of the Corporation, and in the absence or incapacity of the Chairman of the Board or the Vice Chairmen, shall perform the duties of the Chairman or the Vice Chairmen until the Board of Directors shall otherwise determine. He shall make annual reports showing the condition of the affairs of the Corporation, making such recommendations as he thinks proper, and shall from time to time submit to the Board of Directors such information as may be required, relating to the business and property of the Corporation. He shall further perform all such duties as may from time to time be assigned or delegated to him by the Board of Directors. Section 8. Duties of Vice Presidents -- The Vice Presidents shall severally perform such duties as may, from time to time, be assigned to each by the Chairman of the Board, the Vice Chairmen, the President or the Board of Directors. Section 9. Duties of General Counsel -- The General Counsel shall be the chief legal officer of the Corporation. He shall, with the help of those whom he may employ (including any firm of which he may be a member) supervise the 3 handling of all claims made by or against the Corporation, the filing of such statements, reports or other documents as may be required by state and federal agencies controlling corporations and their securities, render legal advice to the Officers and Directors and generally manage all matters of a legal nature for the Corporation. 7 Section 10. Duties of Secretary -- The Secretary shall keep a record in proper books for the purpose of all meetings and proceedings of the Board of Directors and of the Executive Committee and also the minutes of the Stockholders' meetings, and record all the votes of the Corporation. He shall attend to the giving and serving of all notices of the Corporation and shall notify the Directors and Stockholders of their respective meetings. He shall have custody of the seal of the Corporation and shall affix the seal or cause it to be affixed to all documents which are authorized to be executed on behalf of the Corporation under its corporate seal. He shall have custody of all deeds, leases, and contracts and shall have charge of the books, records and papers of the Corporation relating to its organization and management. In addition, he shall perform such other duties as may from time to time be delegated to him by the Chairman of the Board, the Vice Chairmen, the President or the Board of Directors. Section 11. Duties of Treasurer -- The Treasurer shall have custody of all the funds and securities of the Corporation and shall dispose of the same as provided in these By-laws, or as directed by the Board of Directors or the Executive Committee, if created. He shall have the care and custody of all securities, books of account, documents and papers of the Corporation except such as are kept by the Secretary. He shall keep regular and full accounts showing his receipts and disbursements. He shall at all times submit to the Board of Directors such statements as to the financial condition of this Corporation as they may require and shall perform such other duties as may from time to time be delegated to him by the Chairman of the Board, the Vice Chairmen, the President or the Board of Directors. Section 12. Duties of Controller -- The Controller shall be responsible for all accounting, budgeting, and internal auditing functions of the Corporation, subject to the direction of the Chairman of the Board, the Vice Chairmen, the President, the Vice President designated as Principal Accounting Officer, or the Board of Directors. In addition, he shall perform such other duties as may from time to time be delegated to him by the Chairman of the Board, the Vice Chairmen, the President or the Board of Directors. Section 13. Duties of Assistant Secretaries -- The Assistant Secretaries shall, jointly or severally, in the absence or incapacity of the Secretary or vacancy in the office of Secretary, perform the duties of the Secretary. They shall also perform such other duties as may from time to time be delegated to them by the Chairman of the Board, the Vice Chairmen, the President, the Board of Directors or the Secretary. Section 14. Duties of Assistant Treasurers -- The Assistant Treasurers shall, jointly and severally, in the absence or incapacity of the Treasurer or vacancy in the office of Treasurer, perform the duties of the Treasurer. They shall also perform such other duties as may from time to time be delegated to them by the Chairman of the Board, the Vice Chairmen, the President, the Board of Directors or the Treasurer. Section 15. Duties of Assistant Controllers -- The Assistant Controllers shall, jointly and severally, in the absence or incapacity of the Controller or vacancy in the office of Controller, perform the duties of the Controller, and shall in general assist the Controller in the performance of his duties. They shall also perform such other duties as may from time to time be delegated to them by the Chairman of the Board, the Vice Chairmen, the President, the Board of Directors or the Controller. Section 16. Salaries of Officers -- The Board of Directors shall fix the salaries of all of the Officers of the Corporation. 8 Section 17. Bonds -- The Board of Directors may by resolution require that any or all Officers, Agents and Employees of the Corporation give bond to the Corporation, with sufficient sureties, conditioned on the faithful performance of the duties of their respective offices or positions, and comply with such other conditions as may from time to time be required by the Board of Directors. Article VI -- Certificates of Stock Section 1. Form -- Certificates representing shares of the capital stock of the Corporation shall be in such form as is permitted by law and prescribed by the Board of Directors and shall be signed by the President or a Vice President and the Secretary or an Assistant Secretary or any other Officer authorized by a resolution of the Board of Directors. They may, but need not, be sealed with the seal of the Corporation or a facsimile thereof. The signatures of the Officers upon such certificates may be facsimiles if the certificate is countersigned by a Transfer Agent or registered by a Registrar other than the Corporation itself or an employee of the Corporation. In case any Officer who has signed or whose facsimile signature has been placed upon a stock certificate shall have ceased to be such Officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue. 4 Section 2. Transfer Agents and Registrars - Transfer Agents and/or Registrars for the stock of the Corporation may be appointed by the Board of Directors and may be required to countersign stock certificates. Section 3. Lost, Destroyed and Mutilated Certificates -- Holders of the stock of the Corporation shall immediately notify the Corporation of any loss, destruction or mutilation of the certificate therefor, and the Board of Directors may in its discretion, or any Officer of the Corporation appointed by the Board of Directors for that purpose may in his or her discretion, cause one or more new certificates for the same number of shares in the aggregate to be issued to such Stockholder upon the surrender of the mutilated certificate or upon satisfactory proof of such loss or destruction and the deposit of a bond in such form and amount and with such surety as the Board of Directors may require. Section 4. Transfer of Stock -- The stock of the Corporation shall be transferable or assignable only on the books of the Corporation by the holders in person or by attorney on surrender of the certificates for such shares duly endorsed and, if sought to be transferred by attorney, accompanied by a written power of attorney to have the same transferred on the books of the Corporation. Section 5. Closing of Transfer Books and Fixing Record Date -- For the purposes of determining Stockholders entitled to notice of or to vote at any meeting of Stockholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of Stockholders for any other proper purpose, the Board of Directors of this Corporation may fix in advance a date as the record date for any such determination of Stockholders, such date in any case to be not more than seventy days prior to the date on which the particular action requiring such determination of Stockholders is to be taken. If no record date is fixed for the determination of Stockholders entitled to notice of or to vote at a meeting of Stockholders, or Stockholders entitled to receive payment of a dividend, the date on which the notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date 9 for such determination of Stockholders. When a determination of Stockholders has been made as provided in this section with respect to any meeting, such determination shall apply to any adjournment thereof. Article VII -- Voting of Stock Held Unless otherwise provided by the vote of the Board of Directors, the Chairman of the Board, a Vice Chairman, the President, or the Secretary may from time to time appoint an attorney or attorneys or agent or agents of this Corporation to cast the votes which this Corporation may be entitled to cast as a stockholder or otherwise in any other corporation, any of whose stock or securities may be held by this Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing to any action by any other such corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed on behalf of this Corporation such written proxies, consents, waivers or other instruments as he may deem necessary or proper in the premises; or the Chairman of the Board, a Vice Chairman, the President, or the Secretary may himself attend any meeting of the holders of stock or other securities of such other corporation and thereat vote or exercise any powers of this Corporation as the holder of such stock or other securities of such other corporation. Article VIII -- Miscellaneous Section 1. Checks, Notes, Etc. -- All checks and drafts on the Corporation's bank accounts and all bills of exchange, promissory notes, acceptances and other instruments of a similar character shall be signed by such officer or officers or agent or agents of the Corporation as shall be thereunto authorized from time to time by the Board of Directors. Section 2. Fiscal Year -- The fiscal year of the Corporation shall be determined in the discretion of the Board of Directors, but in the absence of any such determination it shall be the calendar year. Section 3. Corporate Seal -- The Corporate Seal shall be circular and shall have inscribed thereon, within and around the circumference, the words "Media General, Inc., Richmond, VA." In the center shall be the word "Seal." Article IX -- Amendments Section 1. New By-laws and Alterations -- These By-laws may be amended or repealed and new By-laws may be made at any regular or special meeting of the Board of Directors by a majority of the Board. However, By-laws made by the Board of Directors may be repealed or changed and new By-laws may be made by the Stockholders and the Stockholders may prescribe that any By-law made by them shall not be altered, amended, or repealed by the Directors. Section 2. Legislative Amendments -- In event any portion of these By-laws is subsequently altered by act of the General Assembly of Virginia those portions thereof which are not affected by such legislation shall remain in full force and effect until and unless altered or repealed in accordance with the other terms hereof. 5 EX-10.41 4 EMPLOYMENT CONTRACT 1 John Stewart Bryan III Chairman and President Media General, Inc. P.O. Box C-32333 Richmond, Virginia 23293-0001 March 18, 1994 Mr. Basil Snider, Jr. 13901 Turnberry Court Midlothian, Virginia 23113 Dear Bas: This will summarize the terms for the continuation of your part-time employment by Media General in 1994. 1. February 28, 1993, completed the initial year of your part-time status at a compensation rate of $125,000 annually for approximately 120 days of work. 2. During the period March 1 through December 31, 1994, you have agreed to work 65 days for compensation of $65,000, plus business travel and expenses and continuance of a car, club dues, etc., just as in 1993. We will continue to issue you a W-2, reflecting your part-time status. 3. You will continue to focus on the general newsprint area, with specific oversight and monitoring of Garden State Paper Company and our Pronapade interest. 4. Your responsibilities also will include legislative issues in the paper recycling area as well as AFPA activities, with input and assistance in other areas as we may request. 5. As previously agreed, your part-time status allows you to continue as an "employee" through December 31, 1994, for purposes of the Company's 1987 Non- Qualified Stock Option Plan and its Restricted Stock Plan. However, since your full-time employment ceased on February 28, 1993, that will be the date utilized for the calculation of your Death Benefit under the Company's Executive Death Benefit Plan. Please indicate your acceptance of these terms by signing the enclosed copy of this letter. Yours sincerely, J. Stewart Bryan III JSB:cc ACCEPTED AND AGREED: Basil Snider, Jr. EX-10.47 5 NETWORK AGREEMENT 1 30 Rockafeller Plaza A Division of New York, NY 10112 National Broadcasting 212 664-4444 Company, Inc. NBC TV NETWORK May 27, 1993 TAMPA TELEVISION, INC. TAMPA, FLORIDA Re: WFLA-TV Gentlemen: The following shall constitute an amendment to the television network affiliation agreement (the "Agreement") between the licenses of Station WFLA-TV ("Station") and National Broadcasting Company, Inc. ("NBC"), effective as of April 01, 1989. 1. During the term of the Agreement, Station shall, by the terms of this amendment, be entitled to invoke protection against the simultaneous duplication of NBC's network programming as carried by Station imported within a radius from Station's designated community of license as defined in Section 73.606 of the Rules of the Federal Communications Commission ("FCC") to the maximum geographic extent from said community of license permitted under the present Sections 76.92 and 73.658(m) of the FCC's Rules and in accordance with the terms and conditions of said Rules. 2. Either party shall have the right to terminate this amendment (a) on December 31, 1996, by written notice to the other on or before June 30, 1996, for any reason whatsoever; or (b) at any other time during the term of the Agreement, by written notice to the other given at least 60 days prior to the effective date of such termination, but only in the event of the following: (i) Station grants consent to the retransmission of its broadcast signal by any cable television system or, except as provided in subparagraph 2(b)(ii) below, to any other multichannel video program distributor ("MVPD"), as defined in Section 76.64(d) of the FCC Rules, whose carriage of broadcast signals requires retransmission consent, and such cable system or MVPD is located outside the Area of Dominant Influence ("ADI"), as defined by Arbitron, to which Station is assigned, unless Station's signal is actually carried by such cable system or MVPD as of April 1, 1993, or, with respect to such cable system, is "significantly viewed" (as determined by the FCC) as of April 1, 1993; provided, however, that at each renewal of the Agreement, in the event Station can demonstrate to NBC that it is "significantly viewed" (as determined by the FCC) in areas in addition to those in which it was "significantly viewed" as of April 1, 1993 ("Additional Viewing Areas"), NBC agrees that it will negotiate in good faith with Station regarding a possible extension of Station's grant of the right to retransmit its broadcast signal to cable systems in the Additional Viewing Areas; or 2 (ii) Station grants consent to the retransmission of its broadcast signal by any MVPD that provides such signal to any home satellite dish user, unless such user is located within Station's own ADI or is an "unserved household" as defined in Section 119(d) or any successor provision of Title 17 of the United States Code. Any notice of termination under paragraph 2(b) hereof given by either party may be withdrawn by such party if, as of the effective date provided therein, the circumstances giving rise to such party's right of termination no longer exist. To the extent that any term of the Agreement is inconsistent with the terms of this amendment, this amendment shall prevail. Except as modified by this amendment, the Agreement shall remain in full force and effect. Very truly yours, NATIONAL BROADCASTING COMPANY, INC. BY: Robert J. Niles AGREED AND ACCEPTED: TAMPA TELEVISION, INC. BY: James A. Zimmerman 3 30 Rockafeller Plaza A Division of New York, NY 10112 National Broadcasting 212 664-4444 Company, Inc. NBC TV NETWORK May 27, 1993 TAMPA TELEVISION, INC. TAMPA, FLORIDA Re: WFLA-TV Gentlemen: The following shall constitute an amendment to the television network affiliation agreement (the "Agreement") between the licenses of Station WFLA-TV ("Station") and National Broadcasting Company, Inc. ("NBC"), effective as of April 01, 1989. 1. In consideration of the grant by NBC to Station of the non-duplication protection provided in the amendment to the Agreement dated as of the date hereof, Station hereby agrees as follows: (a) Station shall not grant consent to the transmission of its broadcast signal by any cable television system, or, except as provided in subparagraph 1(b) below, to any other multichannel video program distributor ("MVPD"), as defined in Section 76.64(d) of the FCC Rules, whose carriage of broadcast signals requires retransmission consent, if such cable system or MVPD is located outside the Area of Dominant Influence ("ADI"), as defined by Arbitron, to which Station is assigned, unless Station's signal is actually carried by such cable system or MVPD as of April 1, 1993, or, with respect to such cable system, is "significantly viewed" (as determined by the FCC) as of April 1, 1993; provided, however, that at each renewal of the Agreement, in the event Station can demonstrate to NBC that it is "significantly viewed" (as determined by the FCC) in areas in addition to those in which it was "significantly viewed" as of April 1, 1993 ("Additional Viewing Areas"), NBC agrees that it will negotiate in good faith with Station regarding a possible extension of Station's grant of the right to retransmit its broadcast signal to cable systems in the Additional Viewing Areas; and (b) Station shall not grant consent to the retransmission of its broadcast signal by any MVPD that provides such signal to any home satellite dish user, unless such user is located within Station's own ADI or is an "unserved household" as defined in Section 119(d) or any successor provision of Title 17 of the United States Code. 2. Paragraph 5(f) of the Agreement shall be deleted, and the following shall be inserted in its place: (f) NBC reserves the right to reevaluate and change at any time by written notice to Station (i) the network station rate set forth in subparagraph 5(a)(i) above ("Network Station Rate"), (ii) the percentages set forth in the 4 compensation matrix table attached hereto ("Compensation Table"), or (iii) the percentage set forth in subparagraph 5(c) above ("Waiver Percentage"). Any increase in the Network Station Rate or in the percentages in the Compensation Table, or any decrease in the Waiver Percentage, shall become effective on the date specified in NBC's notice to Station. If NBC decreases the Network Station Rate or the percentages in the Compensation Table, or increases the Waiver Percentage, NBC shall notify Station in writing at least ninety (90) days prior to the effective date of such change, and Station may, if Station so elects, terminate this Agreement as of the effective date by giving NBC written notification within forty-five (45) days after the date of NBC's notice. Notwithstanding the foregoing, if any reduction in compensation hereunder is part of a general rate revision on the NBC Television Network, NBC may notify Station in writing at least thirty (30) days prior to the effective date of such change, and Station may, if Station so elects, terminate this Agreement as of the effective date by giving NBC written notification within fifteen (15) days after the date of NBC's notice. If, however, such general rate revision is attributable to a substantial increase in the network's music performance rights payments, Station shall not be entitled to terminate this Agreement as provided herein. Station agrees that a general rate revision on the NBC Television Network may be expressed as a modification of the Network Station Rate, the percentages in the Compensation Table and/or the Waiver Percentage. 3. Paragraph 14 of the Agreement shall be deleted, and the following shall be inserted in its place: 14. Station shall not authorize, cause, or permit, without NBC's consent, any television program, motion picture film, recording or other material furnished to Station hereunder to be recorded, duplicated, rebroadcast or otherwise transmitted or used for any purpose other than broadcasting by Station as provided herein. Notwithstanding the foregoing, Station shall not be restricted in the exercise of its signal carriage rights pursuant to any applicable rule or regulation of the FCC with respect to retransmission of its broadcast signal by any cable system or multichannel video program distributor (as defined in Section 76.64(d) of the FCC Rules) (a) located within the ADI in which Station is located, or (b) actually carrying Station's signal as of April 1, 1993, or (c) with respect to cable systems, serving an area in which Station is "significantly viewed" (as determined by the FCC in accordance with its Rules) as of April 1, 1993 or at any time thereafter; provided, however, that any such exercise pursuant to FCC Rules with respect to NBC programs shall not be deemed to constitute a license by NBC. NBC reserves the right to restrict such signal carriage with respect to NBC programs in the event of a change in applicable law. 4. If Station violates any of the provisions set forth in Paragraphs 1 and 3 of this amendment, NBC may, in addition to any other of its rights or remedies at law or in equity under the Agreement or any amendment thereto, terminate the Agreement by written notice to Station given at least 90 days prior to the effective date of such termination. To the extent that any term of the Agreement is inconsistent with the terms of this amendment, this amendment shall prevail. Except as modified by this amendment, the Agreement shall remain in full force and effect. 5 Very truly yours, NATIONAL BROADCASTING COMPANY, INC. BY: Robert J. Niles AGREED AND ACCEPTED: TAMPA TELEVISION, INC. BY: James A. Zimmerman EX-13 6 PORTION OF ANNUAL REPORT INCORPORATE BY REFERENCE 1 BUSINESS IN BRIEF Media General is a diversified communications company with major interests in newspapers, broadcast television and cable television, newsprint production, commercial printing and publications. Newspapers Wholly owned newspaper operations include morning and Sunday newspapers in Richmond, Virginia; Tampa, Florida; and Winston-Salem, North Carolina, with a combined average daily circulation approaching 575,000. The Company also holds a 40 percent interest in a group of 12 medium-sized daily newspapers totaling 460,000 in circulation in addition to a number of weekly newspapers. Television The television division operates three network-affiliated television stations in the Southeastern Sun Belt: Tampa and Jacksonville, Florida, and Charleston, South Carolina; two growing cable networks in Northern Virginia with more than 220,000 subscribers; and a cable advertising agency. Newsprint The newsprint division is a major producer of 100 percent recycled newsprint, with a wholly owned mill in Garfield, New Jersey, and a jointly owned mill in Dublin, Georgia. An affiliated mill is in Mexico. Auxiliary Auxiliary operations include financial publishing products drawn from a comprehensive database of more than 10,000 stocks, bonds, mutual funds and financial markets; a statewide business magazine; and commercial printing -- all three located in Richmond, Virginia. 4 2 NEWSPAPERS Media General's wholly owned newspaper operations consist of daily and Sunday newspapers in Richmond, Virginia; Tampa, Florida; and Winston-Salem, North Carolina. These newspapers had a combined average daily circulation of 573,800 in 1993 and combined average Sunday circulation exceeding 723,700. In addition, Media General publishes 14 weekly and semiweekly newspapers and shoppers covering the Tampa and West Central Florida region. Newspaper revenues increased to $307.1 million in 1993 from $299 million in 1992. Operating profit was $19.6 million for the year, up from $16.4 million in 1992. Since the beginning of the recession in 1989, the newspaper industry has encountered a series of challenges unparalleled in recent history. Widespread consolidations and mergers in the retail industry, the emergence of mass discounters, direct-response video shopping and mail order businesses have combined to put pressure on the traditional retail advertising base long enjoyed by newspapers. Corporate downsizing and plant closings have additionally changed the retail landscape as consumers have altered -- at least temporarily -- their buying patterns with a shift from goods to services. Media General's newspapers have responded to these and other challenges on several fronts: We have sharply refined our efforts to make newspaper advertising more productive to advertisers in terms of cost-effectiveness and in the products and services we provide. From a news and editorial standpoint, Media General's newspapers have increased coverage through expanded zones and special sections with particular emphasis on local news coverage. With the completion of Winston-Salem's new press facility in mid-1994, the Company's newspapers will have some of the most modern production facilities in the world. While the modernization programs have been capital intensive, they also have been essential long-term investments which will provide operating efficiencies, lower costs and improved profit margins. As indicated in the Chairman's letter, the Company's newspapers continue to develop new, non-traditional sources of revenues. Because many of the ventures will not require the addition of full-time staff, profit margins should benefit. With the digital convergence of all media rapidly becoming a reality, the vast potential of the Company's newspapers' databases is being explored. Projects include a joint venture with Cox Newspapers and BellSouth to produce local, interactive classified advertising, as well as an agreement with the Prodigy computer network to develop electronic access to The Tampa Tribune in 1994 and, eventually, to the Richmond Times-Dispatch and the Winston-Salem Journal. While it is difficult to determine precisely what the electronic future will bring, the outlook for Media General's newspapers remains bright. Tampa 3 The past year was a transitional one for The Tampa Tribune, a year in which cost-cutting, tighter Picture contained budgetary controls and the planned elimination of here in lower right inefficient and unprofitable circulation bases corner. See Appendix resulted in significant improvement in the to this document. newspaper's operating profits. The Tribune's 17- zoned editions 6 were reduced to 13, increasing concentration on the paper's 11-county area of dominant influence. After eliminating zones and home delivery in some areas, circulation declined as expected and caused at least a temporary pause in The Tribune's record as Florida's fastest-growing newspaper over the last five years. A comprehensive subscriber renewal/retention program was implemented by year-end, and a special payment program was initiated allowing subscribers to pay monthly rather than for the typical three-month period. The Tribune's promotional efforts were expanded and in 1993 involved annual sponsorship of more than 280 Tampa Bay events. The Tribune also entered into multi-year marketing agreements with various sports organizations, including the Tampa Bay Buccaneers, the Tampa Bay Lightning, the Hall of Fame Bowl, the GTE Suncoast Seniors Golf Classic, the Gasparilla Distance Marathon, the University of South Florida and the University of Tampa. New technology also played a larger role in bringing new revenues to The Tribune. Databased marketing and address-specific delivery were merged effectively with the successful test of the delivery of a major local retailer's catalog to six Hillsborough County ZIP codes. As The Tribune enters its centennial year, prospects for both the newspaper and the Tampa Bay area appear to be increasingly positive. Richmond Paced by strong gains in the classified and circulation categories, revenues at the Richmond Times-Dispatch in 1993 increased five percent from those of 1992, a year that included five months of revenues from The Richmond News Leader, which was merged into the Times-Dispatch on June 1, 1992. A series of changes occurred in the Richmond market in 1993 as several retail advertisers said good-bye and others moved in. Hess's, Hechingers and Ames closed their doors, and locally owned Standard Drug was sold to a national chain. Safeway groceries also exited the market, and one of two area Builders Square stores closed. In addition, two Herman's Sporting Goods stores announced their Richmond departure effective early in 1994. Fortunately, other major retailers either moved into the market or expanded their existing operations. Richmond Sports and Sports Town, both sporting goods "megastores", opened outlets. Hecht's opened a new store in Richmond's newest mall and its Richmond advertising schedule continued on par with its larger Washington and Baltimore markets. Leggett added another store in 1993, filling a space vacated by Hess's, and Proffitt's, based in Knoxville, Tennessee, took over the two remaining locations left by Hess's. 4 Newcomer Service Merchandise moved into the Richmond market with two stores and additional openings are planned in 1994 by Wal-Mart, J.C. Penney and Sears. From a production standpoint, the color, speed and cost-effectiveness of the new presses installed in mid-1992 have produced the anticipated results. The suburban Hanover County production facility began printing 220,000 inserts weekly for a major electronics retailer, as well as a weekly four-page, four- color section for an advertiser who formerly used direct mail. Other printing jobs included work ranging from the Virginia State lottery to the United Way, and these efforts will be expanded in 1994. Based upon fourth quarter 1993 operations, it appears that the Richmond economy may be on the Picture contained mend as advertising revenues reflected growth in here in lower right essentially all categories in last year's final corner. See Appendix quarter, including a more than five percent gain to this document. in the retail sector. 8 Winston-Salem Winston-Salem's economy began to show indications of improvement in 1993, sparked by several announcements of industrial growth and job creation. In early spring, Pepsi-Cola said some 1,000 jobs may result from a new telemarketing operation to be located in the former headquarters building of RJR Nabisco. That announcement was followed in the summer by the move to Winston-Salem of two Sara Lee divisions, which created 340 additional jobs. Siecor, which manufactures fiber-optic cable, intends to build a $30 million plant employing over 200 people, and Chesapeake Display will construct a new facility with some 110 jobs. While these economic development successes bode well for the future, they have not yet been realized fully in the retail economy. Adjusted for inflation, retail sales in the Winston-Salem market have been down or flat four of the last five years, and this lack of retail growth has had a significant impact on the Winston-Salem Journal. Run-of-press retail advertising declined at the Journal in 1993, the result of overall retail sluggishness and the decision by a major advertiser to switch to preprints. Revenues from the classified and general advertising categories improved from year-earlier levels, however, and circulation revenues rose nearly nine percent. The sharpest revenue gains resulted from the Journal's targeted niche product publications. Included in this category is the Journal's "Star Watch" publication, which was launched late in 1992 and now is being syndicated in 26 other newspapers across the country with a combined weekly circulation of more than 1.3 million. Progress was made also on the Journal's database marketing effort to produce and deliver targeted print information through niche products, other publishers' magazines, product catalogs, samples and related information. One such example, launched in 1993, was "K-12," a publication strictly for homes with children in 5 the public schools. "K-12" is popular with both readers and advertisers and is indicative of the potential for such custom sections to be expanded in 1994. Construction of the Journal's new production and distribution facility continued on schedule during the year. At a cost of $44 million, the 140,000-square-foot plant will house a new press, mailing room, circulation distribution center and newsprint storage space. Production is scheduled to begin at the new plant in mid-1994. The improved press capacity and mail room capability and a more positive advertising climate should result in revenue gains at the Journal in 1994. In summarizing the year, we would indeed be remiss in failing to acknowledge the achievements of three individuals who retired in 1993 and whose careers have contributed substantially to the success of Media General's newspapers. H. Doyle Harvill, chairman and publisher of The Tampa Tribune; Joseph C. Doster, Jr., president and publisher of the Winston-Salem Journal; and Alf Goodykoontz, senior vice president and executive editor of the Richmond Times-Dispatch, all made 1993 their last year in helping to guide their respective newspapers to new levels of success. Their vision, leadership and advice have been invaluable. Fortunately for Media General we have highly qualified and able successors in Jack Butcher, Picture contained Jonathon H. Witherspoon and William H. Millsaps, here in lower right Jr., who, respectively, have assumed the critical corner. See Appendix leadership positions vacated by their to this document. predecessors. 10 TELEVISION Revenues and operating profit in Media General's television segment improved in 1993, as revenues increased 5.6 percent to $179.5 million, from $169.9 million in 1992, and operating income rose 35.8 percent to $35.2 million in 1993, from $25.9 million in 1992. Media General's television operations consist of network-affiliated television stations in Tampa and Jacksonville, Florida, and Charleston, South Carolina, along with two cable television systems in Virginia, one in Fairfax County and another in Fredericksburg. BROADCAST TELEVISION For the Company's broadcast television operations, the year's beginning was not encouraging. National advertising was particularly weak, and local advertisers also assumed a wait-and-see attitude with respect to President Clinton's proposed budget and economic recovery package. But as the second quarter progressed, prospects began to brighten. Some local advertisers returned to television and others stepped up their schedules. This trend continued through the remainder of the year, and revenues were further buoyed with the return of much-needed national advertising during the second half. As a result, the year ended with overall revenue improvement at the Company's stations, despite the absence of more than $1.3 million in political advertising the stations had enjoyed in 1992. 6 WFLA-TV, Tampa At WFLA-TV in Tampa, 1993 resulted in significant progress in implementing an ambitious strategic program to increase the station's audience share and demographic performance. Improved national time sales were realized, in part, through the selection of MMT Sales, Inc., the station's national sales representative. WFLA's "Live at Five News Hour" was reformatted into two separate half-hour programs, which produced immediate audience gains. Its news set and graphics look were updated and station identity reinforced. Joint efforts with The Tampa Tribune resulted in expanded marketing and new business development opportunities. NBC's 1994 carriage of the Super Bowl, its continued carriage of National Basketball Association games, and the return of Major League Baseball to the network, combined with a strengthening national and local economy, augur well for continued growth at WFLA-TV. WCBD-TV, Charleston In 1993 the Base Realignment and Closure Commission announced the closing of the Charleston Naval Shipyard and the Charleston Navy Base. Initial reports suggested that the projected loss in military-related jobs could be potentially catastrophic to the area's economy -- possibly as high as one-fourth of the entire local workforce. Although the effect of the closings now appears to have been substantially overstated, the impact on local advertising spending was both real and immediate. At WCBD-TV, Media General's ABC affiliate in Charleston, local advertising billings trailed those of 1992's by 4.4 percent during the first three quarters before rebounding in the year's last quarter. Despite an overall decline in local time sales, strong national advertising revenues, coupled with Picture contained effective cost cutting, produced a positive year- here in lower right to-year revenue gain and a four-fold improvement corner. See Appendix in operating results. The station also made to this document. important progress in terms of both ratings and revenues in several time periods and ended the year as number one in virtually every local time period. 12 Emphasis continued to be placed on WCBD-TV's news operations, resulting in the receipt of nine major broadcast news awards, including "The Best of Show Award" involving every major Southeast television market. With renewed local economic growth, WCBD-TV's revenue base and operating income should continue to improve this year. 7 WJKS-TV, Jacksonville By whatever measure -- revenues, profits, or expense controls -- 1993 was a highly successful year for WJKS-TV, Media General's ABC affiliate in Jacksonville. Paced by a strong return of the automotive business, revenues at WJKS-TV in 1993 rose more than nine percent, and solid gains were made in both national and local advertising time sales. Concurrently, the station maintained its aggressive cost-control programs, which produced expense reductions of more than three percent for the year. For the past two years, WJKS has produced a 10 p.m. weekday newscast for the local Fox network affiliate. The newscast's profitability increased significantly following substantial ratings improvements in the first half of 1993, and the program subsequently has been expanded to seven nights a week. In 1993 WJKS renewed efforts to create additional revenues and profits from its existing asset base. These programs included marketing its satellite uplink truck for teleconferencing, leasing its computerized editing suite during off- hours, and aggressively selling space on its transmitting tower. With a resurgence in the Jacksonville economy, the as-yet-undetermined benefits of being a new National Football League franchise city, and continued attention to expense controls, 1994 should be another year of growth. CABLE TELEVISION Despite the cumbersome time and administrative burdens imposed by the reregulation of cable television, Media General's two Northern Virginia franchises registered continued growth in 1993. Combined cable-related revenues rose nearly seven percent in 1993 to $125.4 million, with accompanying sharp gains in operating profitability. Subscriber growth also continued, and the two systems served 220,400 customers at year-end, with a joint penetration percentage rate of 68.1. Media General Cable of Fairfax County Revenues, operating income, total subscriber count and penetration levels rose to record highs in 1993 at Media General's flagship cable system in Fairfax County. Revenues rose to $115.3 million, from $108.9 million in 1992. Year-end subscriber count was 206,228, up from 201,789 a year earlier. Monthly revenue per home passed was $30.39, compared with $29.47 in 1992, and monthly average revenue per subscriber increased to $45.15 from $44.18 in 1992. Faced with new regulations that impose significant restrictions on so-called basic tier pricing, Fairfax Cable reemphasized efforts to expand the unregulated segments of its business. Pay-per-view revenue increased more than 16 percent during the year, representing nearly 900,000 transactions for movies, concerts and special events. 8 To increase the sales of premium units to subscribers, Fairfax Cable negotiated agreements with Cinemax, The Movie Channel, Disney and Home Team Sports to market those channels at reduced prices, while maintaining overall pay-per-view profit margins. As 1993 drew to a close, Fairfax Cable began conducting a test which could lead to further pay- Picture contained per-view gains. By using the cable system's here in lower right unique two-way capabilities, a test group of corner. See Appendix subscribers is able to order pay-per-view through to this document. their television remote con- 14 trols. This program is expected to be expanded to other customers in 1994. Fairfax's Media General Productions also enjoyed a strong year. Developed initially to provide for Fairfax Cable's own production needs, the unit has grown into a successful stand-alone operation, producing video projects for a number of major clients, including National Geographic and GTE Spacenet. Cable programming activities also were accelerated as Fairfax launched "Prevue Guide" and "The Dating Network," both new advertising-supported channels. Additionally, ethnic group target marketing was expanded with the addition of "The International Channel" to full-service subscribers and "HBO en Espanol" to the premium lineup. Mega Advertising successfully expanded its rapidly growing sales interconnect program during the year. Now representing five Washington-area cable companies with more than 520,000 total subscribers, Mega is ranked ninth nationally among other interconnects in gross billings. Media General Cable of Fredericksburg Media General Cable of Fredericksburg also turned in a successful year. Revenues increased more than 14 percent from 1992, and operating profit jumped sharply. Subscribers at the Fredericksburg system increased to more than 14,100, a gain of nearly six percent, and year-end penetration rose to 75.7 percent. Pay-per-view revenues grew more than 42 percent during the year, and buying rates doubled to 22 percent from 11 percent of addressable subscribers the previous year. Outlook Media General Cable of Fairfax plans to launch an aggressive three-year plan to further upgrade its system with the latest fiber-optic technology. Beginning in 1994, Fairfax Cable also will begin providing interactive services with the activation of 75,000 converter boxes already installed in subscribers' homes, enabling Fairfax County subscribers to be among the first in the world to "interact" and communicate through their television sets. NEWSPRINT 9 Media General's newsprint operations include Garden State Paper Company's wholly owned recycling mill in Garfield, New Jersey, with a rated annual capacity of 235,000 short tons, and minority interests in two affiliated recycling newsprint mills. Those include a one-third interest in Southeast Paper Manufacturing Company in Dublin, Georgia, with a rated capacity of more than 460,000 short tons, and a 49 percent interest in Pronapade, located in San Luis Potosi, Mexico, a joint affiliate with the Mexican government, with a capacity of 155,000 short tons. Newsprint revenue increased to $100.4 million in 1993 from $96.5 million in 1992, and operating income rose to $5.7 million from $1.3 million the previous year. Despite the improvement, prices remained under pressure throughout much of the year. Newsprint industry pricing had grown in a fairly predictable pattern for a number of years, but prices peaked in 1988 and then began a general decline after several new newsprint machines -- with their attendant higher production levels -- came on line just as the economy and newsprint demand began to weaken. Newsprint selling prices then began to erode almost steadily until late October 1992, when Picture contained customer inventories began to increase in here in lower right anticipation of a Canadian newsprint industry corner. See Appendix strike. Inventories rose for nine consecutive to this document. months before peaking in mid-1993. In line with the inventory build-up, selling prices for Media General's 16 newsprint improved gradually during the first half of 1993, then began to decline almost monthly as newspapers were able to take advantage of the oversupply position throughout the newsprint industry. While the resultant effect on newsprint profitability was substantial, the potential impact was significantly reduced because of continued cost-reduction efforts at Garden State Paper (GSP). Of particular benefit was the continuing contribution of GSP's fiber fuel project, which was essentially completed in mid-1992. The system captures a significant portion of the 100 tons of fiber daily that are not usable in the production of fresh newsprint, and the recaptured material is then thickened and burned as an alternate fuel. Burning the material, rather than disposing of it through the regional sewer system, resulted in effluent disposal costs savings in 1993 of approximately $4 million compared with 1992 charges. Recovery of the fuel value from the fiber mix also aided fuel costs. Affiliated Operations Media General, Knight-Ridder, Inc., and Cox Enterprises are the three partners in Southeast Paper Manufacturing Company. Southeast Paper, which sells its recycled newsprint principally in 10 Southeastern states, was also affected by the roller coaster pricing which characterized the newsprint industry in 1993. Looking toward a period of renewed price stability and increased demand, Southeast Paper announced in mid-year a $25 million expansion program that would boost its production of newsprint by 20,000 tons annually, to a total of 480,000 10 tons. Financing for the expansion will be facilitated through tax-exempt industrial revenue bonds. During the second half of 1993, the Mexican government announced its intention to privatize the newsprint operation in which Media General has a 49 percent interest. The Company anticipates that such a sale or some other form of divestiture will end Media General's involvement at Pronapade in 1994 as previously planned. Outlook It now appears that the newsprint oversupply situation will shrink over the course of 1994, but not to the degree that newsprint producers should anticipate a return to sharply higher profits. In the longer term, however, increased newspaper advertising linage and accompanying newsprint demand, coupled with the ongoing shutdown of older newsprint machines or their conversion to the production of other paper grades, should once again presage improved newsprint profitability. AUXILIARY Media General operates three relatively small companies related to its major businesses of information and communications. Each of these operations -- commercial printing, targeted regional business publishing, and an electronic financial database publishing unit -- experienced solid revenue gains in 1993 and shares the potential for improved longer-term growth and profitability. Financial Publishing Media General Financial Services (MGFS) had a record year in 1993, the result of growth and stability in its existing businesses as well as the successful introduction of two new products during the year. Media General Financial Services is a diversified financial data publisher with more than 20 years Picture contained of experience in serving the information needs of here in lower right institutional investors, corporations, corner. See Appendix universities, publications and others. to this document. Its first new product opportunity in 1993 occurred when the Securities and Exchange Commission introduced regulations that 18 required publicly held companies to provide detailed performance graphs in their proxy material. The new graph was required to show a five-year return comparison of the company stock against a related peer group and a broad equity market index. With the depth of its database, MGFS quickly notified 7,000 companies of its capability. Of the six firms offering this service today, MGFS is one of the principal providers. Another successful new product offering involved the American Association of Individual Investors (AAII) and the joint development of Stock Investor, a quarterly software/data product provided on diskettes. MGFS provides financial data on 7,000 companies and AAII markets, produces and distributes the product. The product was introduced in June 1993, and sales were brisk throughout the rest of the year. 11 Additionally, The Associated Press began developing a lineup of facsimile- delivered financial information services designed for private investors. MGFS data are at the heart of the new service, which is marketed by newspapers. Other new products and joint ventures are planned this year to complement and expand MGFS's successes in 1993. Business Publishing Media General Business Communications, publisher of Virginia Business magazine, made a substantial improvement in its operating performance in 1993. Revenues increased eight percent which, in combination with a nearly four percent expense reduction, resulted in a significant year-over-year improvement. Since its founding eight years ago, Virginia Business has strengthened its market position among readers and advertisers. The magazine has been a leader in covering the state's economic policy, the economics of health care and other business issues of statewide importance. The Virginia Press Association recognized its efforts this past year with five awards for editorial and graphics excellence. A series of in-depth reports on regions and industries within Virginia has bolstered the magazine's normal editorial content while generating strong advertising support. Virginia Business is well-positioned to benefit from an economic recovery. Costs are under control, and the advertising base is increasingly diversified. Commercial Printing Against a national backdrop of increased competition and static pricing in the commercial printing industry, Beacon Press had a highly successful year in 1993. Boosted by several new accounts, sales increased 15.6 percent during the year, and operating profit doubled. Periodicals accounted for some 65 percent of Beacon's revenues during the year, and new customers ranged from a gospel music publication to an art catalog. Increasingly, there is a trend for Beacon's customers to provide their material on a computer disk. Customers representing 56 percent of Beacon's sales now supply all or part of their material by this process, which was virtually non- existent in 1991. The result was a four-fold increase in Beacon's desktop publishing sales in 1993. For the fourth consecutive time, Beacon was selected to print the daily newspaper for the National Boy Scout Jamboree at Fort A. P. Hill, Virginia. The newspaper was provided nightly to Beacon on a computer disk. Beacon then printed 40,000 copies for distribution the following morning. Beacon continued to implement a series of cost-reduction and productivity improvements during the year, and successfully negotiated new two-year pressroom and bindery employee contracts. 12 Looking forward, there appear to be opportunities for additional revenue growth in 1994, but, Picture contained because of sharp price competition in the here in lower right industry, profit gains will again be determined corner. See Appendix largely by increased productivity and expense to this document. reductions. 20 13 Media General, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)
Fiscal Years Ended December 26, December 27, December 29, 1993 1992 1991 - ------------------------------------------------------------------------------------------ Revenues $600,824 $577,659 $585,900 Operating costs: Production costs 321,422 316,477 325,208 Selling, distribution and administrative 162,252 164,019 163,108 Depreciation and amortization 56,847 54,550 49,943 Special charges --- --- 11,300 - ------------------------------------------------------------------------------------------ Total operating costs 540,521 535,046 549,559 - ------------------------------------------------------------------------------------------ Operating income 60,303 42,613 36,341 - ------------------------------------------------------------------------------------------ Other income (expense): Interest expense (21,274) (17,559) (16,056) Equity in net loss of unconsolidated affiliates (990) (4,926) (75,640) Other, net 835 6,131 2,659 - ------------------------------------------------------------------------------------------ Total other income (expense) (21,429) (16,354) (89,037) - ------------------------------------------------------------------------------------------ Income (loss) before income taxes and cumulative effect of changes in accounting principles 38,874 26,259 (52,696) - ------------------------------------------------------------------------------------------ Income taxes 13,166 7,946 9,395 - ------------------------------------------------------------------------------------------ Income (loss) before cumulative effect of changes in accounting principles 25,708 18,313 (62,091) Cumulative effect of changes in accounting principles: Income taxes --- 15,066 --- Postretirement benefits (net of $8,434 income tax benefit) --- (14,379) --- - ------------------------------------------------------------------------------------------ Net income (loss) $ 25,708 $ 19,000 $(62,091) ========================================================================================== Earnings (loss) per common share and equivalent: Before cumulative effect of changes in accounting principles $ 0.98 $ 0.70 $ (2.39) Cumulative effect of changes in accounting principles --- 0.03 --- - ------------------------------------------------------------------------------------------ Net income (loss) $ 0.98 $ 0.73 $ (2.39) ========================================================================================== Notes to Consolidated Financial Statements begin on page 28. Weighted average common shares and equivalents were 26,152, 26,056 and 25,996 for 1993, 1992 and 1991, respectively.
23 14 Media General, Inc. CONSOLIDATED BALANCE SHEETS (In thousands, except shares) ASSETS
December 26, December 27, 1993 1992 - ------------------------------------------------------------------------------------------ Current assets: Cash $ 2,942 $ 2,791 Accounts receivable (less allowances for discounts and doubtful accounts 1993 -- $3,698; 1992 -- $3,732) 62,122 58,733 Inventories 10,290 9,222 Other 17,003 19,052 --------- --------- Total current assets 92,357 89,798 - ------------------------------------------------------------------------------------------ Investments in unconsolidated affiliates 46,675 50,515 - ------------------------------------------------------------------------------------------ Other assets 45,561 60,358 - ------------------------------------------------------------------------------------------ Property, plant and equipment, at cost: Land 21,805 21,600 Buildings 135,170 132,498 Machinery and equipment 730,550 720,885 Construction in progress 15,581 9,122 Accumulated depreciation (387,881) (344,347) --------- --------- Net property, plant and equipment 515,225 539,758 - ------------------------------------------------------------------------------------------ Excess of cost of businesses acquired over equity in net assets (less accumulated amortization 1993 -- $7,593; 1992 -- $7,143) 45,424 46,996 - ------------------------------------------------------------------------------------------ Total assets $745,242 $787,425 ========================================================================================== Notes to Consolidated Financial Statements begin on page 28.
24 15 LIABILITIES AND STOCKHOLDERS' EQUITY
December 26, December 27, 1993 1992 - ------------------------------------------------------------------------------------------ Current liabilities: Accounts payable $ 20,994 $ 23,066 Accrued expenses and other liabilities 60,560 57,032 Income taxes payable 746 43 Current portion of long-term debt 506 --- --------- --------- Total current liabilities 82,806 80,141 - ------------------------------------------------------------------------------------------ Long-term debt 261,250 320,506 - ------------------------------------------------------------------------------------------ Deferred income taxes 88,679 94,380 - ------------------------------------------------------------------------------------------ Other liabilities and deferred credits 87,073 82,457 - ------------------------------------------------------------------------------------------ Commitments (note 10) - ------------------------------------------------------------------------------------------ Stockholders' equity: Preferred stock ($5 cumulative convertible), par value $5 per share: Authorized 5,000,000 shares; none outstanding Common stock, par value $5 per share: Class A, authorized 75,000,000 shares; issued 25,695,000 and 25,541,413 shares 128,475 127,707 Class B, authorized 600,000 shares; issued 557,154 shares 2,786 2,786 Additional paid-in capital 5,967 4,052 Unearned compensation (3,108) (1,744) Retained earnings 91,314 77,140 --------- --------- Total stockholders' equity 225,434 209,941 - ------------------------------------------------------------------------------------------ Total liabilities and stockholders' equity $745,242 $787,425 ========================================================================================== Notes to Consolidated Financial Statements begin on page 28.
25 16 Media General, Inc. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands, except shares and per share amounts)
Additional Unearned Common Stock Paid-in Compen- Retained Class A Class B Capital sation Earnings Balance at December 31, 1990 $126,585 $ 2,787 $ 1,297 $ --- $143,149 Net loss ($2.39 per share) --- --- --- --- (62,091) Cash dividends ($0.44 per share) --- --- --- --- (11,440) Exercise of options on 31,652 Class A shares 158 --- (80) --- --- Issuance of 158,400 Class A shares under restricted stock plan 792 --- 2,406 (3,198) --- Income tax benefits relating to restricted share dividends and exercised options --- --- 195 --- --- Issuance of 6,308 Class A shares under dividend reinvestment plan 32 --- 91 --- --- Amortization of unearned compensation --- --- --- 1,185 --- --------- --------- --------- --------- --------- Balance at December 29, 1991 127,567 2,787 3,909 (2,013) 69,618 Net income ($0.73 per share) --- --- --- --- 19,000 Cash dividends ($0.44 per share) --- --- --- --- (11,478) Exercise of options on 25,000 Class A shares 125 --- (62) --- --- Income tax benefits relating to restricted share dividends and exercised options --- --- 179 --- --- Issuance of 7,153 Class A shares under dividend reinvestment plan 36 --- 92 --- --- Exchange of 200 Class B shares for Class A shares 1 (1) --- --- --- Amortization and forfeitures of unearned compensation (22) --- (66) 269 --- --------- --------- --------- --------- --------- Balance at December 27, 1992 127,707 2,786 4,052 (1,744) 77,140 Net income ($0.98 per share) --- --- --- --- 25,708 Cash dividends ($0.44 per share) --- --- --- --- (11,534) Exercise of options on 57,632 Class A shares 288 --- 169 --- --- Issuance of 107,600 Class A shares under restricted stock plan 538 --- 1,520 (2,058) --- Income tax benefits relating to restricted share dividends and exercised options --- --- 392 --- --- Issuance of 4,995 Class A shares under dividend reinvestment plan 25 --- 87 --- --- Amortization and forfeitures of unearned compensation (83) --- (253) 694 --- --------- --------- --------- --------- --------- Balance at December 26, 1993 $128,475 $ 2,786 $ 5,967 $ (3,108) $ 91,314 ========================================================================================== Notes to Consolidated Financial Statements begin on page 28.
26 17 Media General, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Fiscal Years Ended ------------------------------------------ December 26, December 27, December 29, 1993 1992 1991 - ------------------------------------------------------------------------------------------ Cash flows from operating activities: Net income (loss) $ 25,708 $ 19,000 $(62,091) Adjustments to reconcile net income (loss): Depreciation and amortization 56,847 54,550 49,943 Deferred income taxes 473 (20,922) (4,246) Change in accounting for post- retirement benefits --- 22,813 --- Provision for doubtful accounts 3,488 5,377 6,193 Equity in net loss of unconsolidated affiliates 990 4,926 75,640 Distributions from unconsolidated newsprint affiliate --- --- 5,000 Special charges --- --- 11,300 Change in assets and liabilities: Accounts receivable and inventories (7,946) (261) (2,294) Other current assets 2,015 6,347 (1,237) Accounts payable, accrued expenses and other liabilities 1,320 (14,964) (2,758) Other, net 2,270 (8,296) (4,892) --------- --------- --------- Net cash provided by operating activities 85,165 68,570 70,558 - ------------------------------------------------------------------------------------------ Cash flows from investing activities: Capital expenditures (32,837) (92,319) (115,383) Change in restricted bond proceeds held in trust 4,115 (10,699) --- Collection of note receivable 8,918 750 500 Proceeds from dispositions --- --- 3,030 Other, net 3,905 (2,868) 9,474 --------- --------- --------- Net cash used in investing activities (15,899) (105,136) (102,379) - ------------------------------------------------------------------------------------------ Cash flows from financing activities: Net cash proceeds from long-term borrowings --- 47,000 43,000 Payment of long-term debt (58,750) (3,696) (363) Cash dividends paid (11,534) (11,478) (11,440) Other, net 1,169 2,986 2,050 --------- --------- --------- Net cash provided (used) by financing activities (69,115) 34,812 33,247 - ------------------------------------------------------------------------------------------ Net increase (decrease) in cash 151 (1,754) 1,426 Cash at beginning of year 2,791 4,545 3,119 --------- --------- --------- Cash at end of year $ 2,942 $ 2,791 $ 4,545 ========================================================================================== Notes to Consolidated Financial Statements begin on page 28.
27 18 Media General, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1: Principles of Consolidation - -------------------------------------------------------------------------------- The accompanying financial statements include the accounts of the Company and subsidiaries more than 50% owned. All significant intercompany balances and transactions have been eliminated. The Company's fiscal year ends on the last Sunday in December. Cost in excess of net assets acquired through 1970 is not amortized unless there is evidence of diminution in value; such excess cost incurred after 1970 is being amortized by the straight-line method over periods not exceeding 40 years. Note 2: Inventories - -------------------------------------------------------------------------------- Inventories, principally raw materials, are valued at the lower of cost or market. The cost of raw material used in the production of newsprint is determined on the basis of average cost. The cost of newsprint inventories is determined on the first-in, first-out method. Note 3: Investments in Unconsolidated Affiliates - -------------------------------------------------------------------------------- The Company has a one-third partnership interest in Southeast Paper Manufacturing Company (SEPCO), a domestic newsprint manufacturer which pays licensing and other fees to the Company. The Company also has a 40% interest in Garden State Newspapers (GSN), a domestic daily and weekly newspaper company. Summarized financial information for these investments accounted for by the equity method follows: Southeast Paper Manufacturing Company:
(In thousands) 1993 1992 1991 - ------------------------------------------------------------------------------------------ Current assets $ 71,503 $ 69,219 $ 79,102 Noncurrent assets 378,414 380,956 407,359 Current liabilities 55,238 40,744 45,087 Noncurrent liabilities 255,947 263,874 284,889 ========================================================================================== Net sales $185,784 $178,253 $205,700 ========================================================================================== Gross profit $ 33,403 $ 27,778 $ 54,225 ========================================================================================== Net income (loss) $ (6,436) $(10,928) $ 9,096 ========================================================================================== Company's equity in net income (loss) $ (990) $ (4,926) $ 3,032 ==========================================================================================
19 The 1993 net loss of SEPCO includes a charge of approximately $3.6 million relating to its adoption of Statement of Financial Accounting Standards No. 106 (SFAS 106), "Employers' Accounting for Postretirement Benefits Other Than Pensions." The Company's share of this charge was included in the Company's equity in the net loss of SEPCO in 1992, the year in which the Company adopted SFAS 106. In addition to the equity in net income (loss) from SEPCO, the Company also recognized license and other fees from another newsprint company and the above affiliate aggregating $3.9 million in 1993, $3.6 million in 1992, and $5.9 million in 1991. Retained earnings at December 26, 1993, includes $10.6 million related to undistributed earnings of SEPCO. 28 Garden State Newspapers:
(In thousands) 1993 1992 1991 - ------------------------------------------------------------------------------------------ Current assets $ 35,513 $ 34,300 $ 33,683 Noncurrent assets 220,079 213,398 261,465 Current liabilities 28,404 22,390 37,021 Noncurrent liabilities 238,421 226,538 271,392 Redeemable preferred stock 97,553 91,281 85,009 ========================================================================================== Net sales $181,490 $163,155 $179,203 ========================================================================================== Gross profit $ 63,037 $ 56,948 $ 43,063 ========================================================================================== Net income (loss) $(10,649) $ 12,036 $(90,384) ========================================================================================== Company's equity in net income (loss) $ --- $ --- $(78,672) ==========================================================================================
The above summarized information for GSN includes results for the twelve months ended September 30 of each year. The prior years' information has been revised to conform with the current year's presentation. The redeemable preferred stock of GSN is owned by the Company. The Company's 1991 operations include a loss of $78.7 million ($78.3 million after-tax; $3.01 per share) from GSN which largely resulted from GSN management's decision to write down the carrying value of certain assets, mostly intangibles, in light of depressed market conditions. The 1991 loss reduced the Company's investment in GSN to zero. Although GSN's net income for the twelve months ended September 30, 1992, was $12 million, such net income was due entirely to a nonrecurring gain from the sale of a newspaper property, net of operating losses. Consequently, in 1992 the Company did not recognize any equity in GSN's 1992 net income, nor has it since, because it is unlikely to realize any dividends or cash distributions from GSN operations. Subsequent to December 26, 1993, GSN failed to redeem the Series A and Series C Preferred Stock that previously had been issued to the Company and which was mandatorily redeemable on January 1, 1994. However, the Company has signed a Letter Agreement (Agreement) with GSN and a GSN affiliate whereby it has agreed to a process through which it would sell its 40% common equity interest in GSN, 20 along with its GSN Series A and Series C Preferred Stock, for approximately $62.7 million. Under the terms of the Agreement, the Company would simultaneously exchange its GSN Series B Preferred Stock for the 9% Preferred Stock of Denver Newspapers, Inc., currently owned by GSN. The Company would continue to hold a warrant to purchase 40% of the common equity of Denver Newspapers, Inc. The Agreement, which will terminate if the contemplated transactions have not occurred by April 29, 1994 (unless extended by mutual agreement of the parties), is subject to various conditions, including the buyer's ability to arrange financing. Consequently, there is no assurance that the transactions will be consummated and, in light of these contingencies, the Company continues to evaluate its options. Note 4: Long-term Debt - -------------------------------------------------------------------------------- Long-term debt at December 26, 1993, and December 27, 1992, was as follows:
(In thousands) 1993 1992 - ------------------------------------------------------------------------------------------ Revolving credit agreements $ 70,000 $110,000 9.27% notes due annually through 1996 106,250 125,000 8.62% senior notes due annually from 1998 to 2002 65,000 65,000 7.125% revenue bonds due 2022 20,000 20,000 Other 506 506 --------- -------------- 261,756 320,506 Less current portion of long-term debt 506 --- --------- -------------- Long-term debt $261,250 $320,506 ==========================================================================================
29 The Company has revolving credit agreements which commit five banks and financial institutions to lend the Company up to $160 million. In general, the agreements bear interest at current market rates, none of which exceeds prime. Under the agreements, the Company is obligated to pay commitment fees equal to 1/4 of 1% per annum on unused balances. The agreements remain in effect until 13 months notice is given by the lenders. In 1992, the Company issued $20 million of New Jersey Economic Development Authority tax-exempt revenue bonds. The bonds are secured by a letter of credit, under which the Company pays an annual fee equal to 3/4 of 1% per annum on outstanding bond principal and interest payable. The bonds contain certain optional and mandatory redemption provisions, and the bond proceeds are restricted for capital expenditures related to the Company's Garden State Paper newsprint operations in New Jersey. At December 26, 1993, and December 27, 1992, $6.6 million and $10.7 million, respectively, of unused restricted bond proceeds held in trust were invested in U.S. Treasury bills classified in other noncurrent assets. The carrying amount of these investments approximated fair value at those dates. 21 In December 1991, the Company entered into an agreement with an insurance company to issue senior notes under a three year $150 million shelf facility. The notes can have average lives and maturities of three to fifteen years with interest rates determined by market conditions at the time of issuance. In March 1992, the Company issued $65 million of its senior notes, at a fixed interest rate of 8.62%. The Company's bond, note and credit agreements require the maintenance of a minimum net worth of $180 million and impose certain limitations on debt to equity ratios or debt to earnings ratios, as defined, subject to certain exceptions. At December 27, 1992, $18.8 million due in 1993 under the 9.27% notes was classified as long-term debt in accordance with the Company's intention and ability to refinance the obligation on a long-term basis. The repayment of $18.8 million was made in 1993 and was funded with borrowings from the revolving credit agreements. At December 26, 1993, $18.8 million due in 1994 under the 9.27% notes was classified as long-term debt in accordance with the Company's intention and ability to refinance such obligation on a long-term basis. Excluding the $70 million of borrowings under revolving credit agreements and the $18.8 million of 9.27% notes referred to above, long-term debt maturities during the five years subsequent to December 26, 1993, aggregating $101,006,000, are as follows: 1994 - $506,000; 1995 - $43,750,000; 1996 - $43,750,000; 1997 - none; and 1998 - $13,000,000. At December 26, 1993, the Company had an interest rate swap agreement of $50 million which, combined with the favorable effect of the 1991 termination of a counter swap agreement, effectively converts the variable interest rate on $50 million of revolving debt to a fixed interest rate approximating 8%. To the extent that variable interest rates are below 9%, the Company is unable to take advantage of such lower rates on the above-mentioned $50 million. The swap agreement expires in June 1995. In 1992, the Company entered into interest rate swap agreements of $65 million which effectively convert the $65 million senior notes with a fixed rate of 8.62% into variable rate debt. This swap was terminated in 1993, at a gain, which is being amortized over the original life of the terminated swap, effectively lowering the interest rate of the 8.62% senior notes to 8.4%. Also in 1992, the Company entered into interest rate swap agreements in amounts which matched the maturities of the Company's 9.27% notes. These swaps were terminated in 1992, at a gain, which is being amortized over the remaining life of the 9.27% notes, likewise lowering their interest rate to 8.4%. The following information is provided solely in connection with the provisions of Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments." The borrowings under the Company's revolving credit agreements approximate their fair value. The fair value of the Company's remaining debt of $191.8 million at December 26, 1993, and $210.5 million at December 27, 1992, was approximately $214 million and $228 million, respectively. The fair value of this remaining debt was estimated using discounted cash flow analyses based on the Company's incremental borrowing rates for similar types of borrowings. The fair value of the $50 million swap at December 26, 1993, and the $50 million and $65 million swaps at December 27, 1992, approximated $3 million and $5 million, respectively, based on the estimated cost to the Company to terminate these swaps. 30 22 Note 5: Business Segments - -------------------------------------------------------------------------------- The Company is a diversified communications company with three principal business segments. The Newspaper segment currently includes three daily (four, prior to the June 1992, merger of The Richmond News Leader into the Richmond Times-Dispatch), and 14 weekly, semiweekly and triweekly newspapers and shoppers, ten of which were acquired in December 1990. Prior to their sale in April 1990, the Newspaper segment also included 30 weekly newspapers located on the West Coast. Television operations consist of three television stations, two cable television operations, and a cable advertising interconnect. The Newsprint segment includes the Company's recycled newsprint operations. Intersegment sales (principally newsprint) comprise less than 2% of consolidated totals and are not shown separately. Corporate assets are principally property, plant and equipment and investments in unconsolidated affiliates. Other income, net, for 1992 includes $2.9 million of insurance proceeds related to a 1991 fire at the Company's Garden State Paper newsprint mill in Garfield, New Jersey, and $2.1 million resulting from the termination of obligations previously established upon the disposition of certain operations. Operations for 1991 include special charges of $11.3 million ($7.1 million after-tax), $10.6 million of which relates to the Newspaper segment, for costs associated with the Company's 1991 early retirement program ($8.8 million) and the planned merger, which was consummated in June 1992, of the Company's two Richmond newspapers ($2.5 million). Newspaper segment revenues and operating profit for 1990 include a $5.3 million pretax gain from the sale of the Company's West Coast weekly newspapers. Television segment operating profit for 1990 includes a $5.3 million favorable impact of reductions to loss estimates provided in connection with the 1988 discontinuance of media placement operations. The 1990 operating profits of the Newsprint and Auxiliary segments include losses of $1.9 million and $5.7 million, respectively, accrued in connection with the sales, concluded during the first-half of 1991, of certain recycling center, publishing and other assets. Operations for 1989 include a $10.3 million ($6.5 million after-tax) special charge involving the write-off of unrecovered costs and expenses relating to the Company's lawsuit against William B. Tanner and others. Information as to revenues, profitability and assets is as follows:
(In thousands) 1993 1992 1991 1990 1989 - ------------------------------------------------------------------------------------------ Revenues Newspaper $307,058 $299,038 $299,173 $302,010 $298,138 Television 179,477 169,946 159,596 153,427 139,399 Newsprint 100,371 96,540 116,717 132,915 131,310 Auxiliary 13,918 12,135 10,414 25,315 26,285 - ------------------------------------------------------------------------------------------ Total $600,824 $577,659 $585,900 $613,667 $595,132 ========================================================================================== 23 (In thousands) 1993 1992 1991 1990 1989 - ------------------------------------------------------------------------------------------ Operating profit Newspaper $ 19,610 $ 16,382 $ 681 $ 26,760 $ 24,725 Television 35,178 25,912 18,406 24,622 16,181 Newsprint 5,725 1,277 18,527 21,109 18,179 Auxiliary (210) (958) (1,273) (8,666) (4,671) - ------------------------------------------------------------------------------------------ 60,303 42,613 36,341 63,825 54,414 Interest expense (21,274) (17,559) (16,056) (19,831) (25,385) Equity in net income (loss) of unconsolidated affiliates (990) (4,926) (75,640) (1,303) 10,562 Other, net 835 6,131 2,659 814 684 Corporate special charge --- --- --- --- (10,275) - ------------------------------------------------------------------------------------------ Income(loss) before income taxes $ 38,874 $ 26,259 $(52,696) $ 43,505 $ 30,000 ========================================================================================== 31 Identifiable assets Newspaper $330,613 $344,255 $306,754 $240,347 $206,162 Television 228,952 243,382 262,349 274,109 278,676 Newsprint 84,329 86,315 81,495 76,534 83,276 Auxiliary 24,592 24,606 23,954 15,108 19,805 Corporate 77,090 89,587 88,059 170,218 195,018 Segment eliminations (334) (720) (300) (372) (280) - ------------------------------------------------------------------------------------------ Total assets $745,242 $787,425 $762,311 $775,944 $782,657 ========================================================================================== Capital expenditures Newspaper $ 12,259 $ 63,631 $ 90,165 $ 38,800 $ 30,038 Television 15,337 13,314 14,352 26,595 28,032 Newsprint 4,413 14,899 10,558 7,815 8,793 Auxiliary 226 59 95 94 477 Corporate 602 416 213 382 1,777 - ------------------------------------------------------------------------------------------ Total $ 32,837 $ 92,319 $115,383 $ 73,686 $ 69,117 ========================================================================================== Depreciation and amortization Newspaper $ 21,623 $ 19,337 $ 14,528 $ 11,874 $ 11,716 Television 25,969 26,701 27,465 26,927 25,124 Newsprint 6,837 6,161 5,638 6,215 6,276 Auxiliary 859 864 880 1,063 1,080 Corporate 1,559 1,487 1,432 1,468 1,439 - ------------------------------------------------------------------------------------------ Total $ 56,847 $ 54,550 $ 49,943 $ 47,547 $ 45,635 ==========================================================================================
24 Note 6: Income Taxes - -------------------------------------------------------------------------------- In 1992, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109), which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this "liability" method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities by applying enacted statutory tax rates applicable to future years in which the differences are expected to reverse. The cumulative effect (for years prior to 1992) of SFAS 109, which was adopted at the beginning of fiscal 1992, was to increase 1992 net income by $15.1 million ($0.58 per share), which represents the net decrease in the Company's deferred tax liability as of that date. In accordance with SFAS 109, the Company recognized an increase in the deferred tax liability in 1993 to reflect the increase in the federal statutory tax rate, from 34% to 35%. At the date of enactment, the cumulative effect of the increased tax rate, which was made retroactively to January 1, 1993, was a decrease in 1993 net income of $2.3 million ($0.09 per share). This decrease in net income was substantially offset by the effects of resolving various tax examinations. Prior to 1992, the provision for income taxes was determined under the "deferred" method, based on income and expenses included in the consolidated statements of operations. Differences between taxes so computed and taxes payable under applicable statutes and regulations were classified as deferred taxes arising from timing differences. Investment tax credits are accounted for as a reduction of income taxes in the year realized. Prior to January 1, 1983, federal investment tax credits were deferred and are being amortized over the estimated useful lives of related assets. 32 25 Significant components of income taxes are as follows:
Deferred Liability Method Method ---------------- ------ (In thousands) 1993 1992 1991 - ------------------------------------------------------------------------------------------ Current: Federal $ 10,956 $ 4,015 $ 11,158 State 1,990 1,601 3,272 Investment tax credits -- flow-through method (253) (248) (789) --------- --------- --------- 12,693 5,368 13,641 --------- --------- --------- Deferred: Federal (1,697) 3,323 (3,185) Change in enacted tax rates 2,262 --- --- Investment tax credits amortized (579) (601) (614) State 487 (144) (447) --------- --------- --------- 473 2,578 (4,246) --------- --------- --------- $ 13,166 $ 7,946 $ 9,395 ========================================================================================== Temporary differences which give rise to significant components of the Company's deferred tax liabilities and assets as of December 26, 1993, and December 27, 1992, are as follows: (In thousands) 1993 1992 - ------------------------------------------------------------------------------------------ Deferred tax liabilities: Tax over book depreciation $126,367 $119,366 Other 13,111 21,809 --------- --------- Total deferred tax liabilities 139,478 141,175 --------- --------- Deferred tax assets: Employee benefits (27,112) (25,110) Alternative minimum tax credit (14,892) (12,119) Other (15,435) (14,866) --------- --------- Total deferred tax assets (57,439) (52,095) --------- --------- Deferred tax liabilities, net 82,039 89,080 Deferred tax assets included in other current assets 6,640 5,300 --------- --------- Deferred tax liabilities $ 88,679 $ 94,380 ========================================================================================== 26 The components of deferred income taxes are as follows: Deferred Method (In thousands) 1991 - ------------------------------------------------------------------------------------------ Excess of tax over book depreciation $ 3,141 Alternative minimum tax (1,600) Deferred costs (785) Asset dispositions 953 Employee benefits (1,508) Special charges and related adjustments (3,976) Tax reform adjustments (538) Deferred interest 2,150 Insurance reserves (1,841) Other (242) --------- $ (4,246) ========================================================================================== 33 Reconciliation of income taxes computed at the federal statutory tax rate to actual income tax expense is as follows: Deferred Liability Method Method ---------------- ------ (In thousands) 1993 1992 1991 - ------------------------------------------------------------------------------------------ Income taxes computed at federal statutory tax rate $ 13,606 $ 8,928 $(17,917) Increase (reduction) in income taxes resulting from: State income taxes, net of federal income tax benefit 1,446 798 1,344 Equity in net loss of unconsolidated affiliates --- --- 26,314 Life insurance plans (1,756) (1,820) (654) Change in enacted tax rates 2,068 --- --- Tax examination adjustments and settlements (2,085) --- --- Other (113) 40 308 --------- --------- --------- $ 13,166 $ 7,946 $ 9,395 ==========================================================================================
27 Income taxes paid during 1993, 1992 and 1991, net of refunds from prior years, were $11.6 million, $7.2 million and $30.1 million, respectively. In 1991, the Company paid $20.4 million of contested tax and interest in connection with certain adjustments proposed by the Internal Revenue Service (IRS) relating to an examination of the Company's income tax returns for the years 1982 through 1985. In 1992, the Company reached a settlement with the IRS concerning the contested deficiency. In 1993, the Company reached a settlement with the IRS relating to examinations of the Company's income tax returns for the years 1986 through 1989. As a result of these two settlements with the IRS, the Company will receive refunds of approximately $10 million. The Company's income tax returns for the years 1990 and 1991 are currently under examination by the IRS. The Company believes that adjustments, if any, arising from this examination will not be material to its results of operations or financial position. Note 7: Common Stock and Stock Options - -------------------------------------------------------------------------------- Holders of the Class A common stock are entitled to elect 30% of the Board of Directors and, with the holders of Class B common stock, also are entitled to vote on the reservation of shares for stock awards and on certain specified types of major corporate reorganizations or acquisitions. Class B common stock can be converted into Class A common stock on a share-for-share basis at the option of the holder. Both classes of common stock receive the same dividends per share. The Company has two nonqualified stock option plans under which options to purchase Class A common stock may be granted to key employees. The plans are administered by the Compensation & Stock Option Committee of the Board of Directors. The Committee sets option prices and determines when options become exercisable. The option price for the 1976 plan is presently not less than $2.50 per share, while the 1987 plan stipulates option prices equal to the fair market value on the date of grant. Every option must become exercisable on or before the fifth anniversary of its grant. In general, portions of the options vest and become exercisable in each of the first three to five years after their grant. Options under the plans are then exercisable during the continued employment of the optionee, and for a period of not greater than three years after termination of employment, but not for a period greater than ten years after the date of grant for options granted subsequent to the 1991 amendment to the 1987 plan. The plans continue until terminated by the Company. 34 28
Price Nonqualified Option Shares Outstanding Exercisable Per Share - ------------------------------------------------------------------------------------------ Balance at December 31, 1990 593,522 373,802 $ 2-46 Became exercisable --- 75,280 32-46 Exercised (31,652) (31,652) 2 Issued 242,100 97,500 20 Canceled/forfeited (50,400) (20,400) 2-46 --------- --------- Balance at December 29, 1991 753,570 494,530 2-46 Became exercisable --- 113,480 20-46 Exercised (25,000) (25,000) 2 Issued 165,000 --- 19 --------- --------- Balance at December 27, 1992 893,570 583,010 2-46 Became exercisable --- 152,134 19-32 Exercised (57,632) (57,632) 2-20 Issued 200,000 --- 19 Canceled/forfeited (87,355) (74,144) 2-46 --------- --------- Balance at December 26, 1993 948,583 603,368 2-46 ========================================================================================== Number of shares reserved for future grants: At December 29, 1991 987,970 At December 27, 1992 765,350 At December 26, 1993 584,385
Under the terms of the Company's restricted stock plan, adopted in 1991, certain key employees were granted 107,600 and 158,400 restricted shares of the Company's Class A stock in 1993 and 1991, respectively. Shares were awarded in the name of each of the participants, who have all the rights of other Class A stockholders, subject to certain restrictions and forfeiture provisions. Restrictions on the shares expire no more than ten years after the date of award, or earlier if certain performance targets are met. Unearned compensation was recorded at the date of award based on the market value of shares. Unearned compensation, which is shown as a separate component of stockholders' equity, is being amortized to expense over the ten year vesting period, or in certain circumstances upon normal retirement. The amount amortized to expense in 1993, 1992 and 1991 was $358,000, $181,000 and $1,185,000, respectively. Shares reserved for future grants at the end of 1993, 1992 and 1991 were 155,000, 245,900 and 241,600, respectively. Note 8: Retirement Plans - -------------------------------------------------------------------------------- The Company has a non-contributory defined benefit retirement plan which covers substantially all employees. Benefits are based on salary and years of service. The Company's funding policy is to contribute annually the tax-deductible amounts required by statute. Plan assets include marketable securities, U.S. government obligations and cash equivalents. The Company also has a non- contributory unfunded executive supplemental retirement plan which supplements 29 the coverage available to certain executives under the defined benefit retirement plan. Certain employees of the Company's newsprint operations participate in multi- employer defined benefit and contribution pension plans. The plans provide benefits to substantially all union employees. Net pension cost for 1993, 1992 and 1991 is summarized below. The increase in 1991 pension expense resulted from early retirement arrangements. 35
(In thousands) 1993 1992 1991 - ------------------------------------------------------------------------------------------ Benefits earned during the year $ 3,786 $ 3,408 $ 4,076 Interest cost on projected benefit obligations 10,507 9,703 8,141 Actual return on plan assets (18,103) (10,700) (23,980) Net amortization and deferral 2,857 (3,811) 10,552 Early retirement cost --- --- 8,795 --------- -------------- -------------- Defined benefit plan expense (credit) (953) (1,400) 7,584 Supplemental retirement plan expense 1,814 1,923 2,506 Multi-employer plans expense 623 622 599 --------- -------------- -------------- Total expense $ 1,484 $ 1,145 $ 10,689 ========================================================================================== The non-contributory defined benefit retirement plan's status was as follows: December 26, December 27, December 29, (In thousands) 1993 1992 1991 - ------------------------------------------------------------------------------------------ Actuarial present value of benefit obligations: Vested $113,896 $ 86,646 $ 77,959 Non-vested 4,379 2,807 5,472 --------- -------------- -------------- Total accumulated benefit obligations $118,275 $ 89,453 $ 83,431 - ------------------------------------------------------------------------------------------ Plan assets at fair value $154,555 $145,119 $142,092 Projected benefit obligations 145,623 113,683 109,268 --------- -------------- -------------- Plan assets in excess of projected benefit obligations 8,932 31,436 32,824 Unrecognized net gain (20,047) (43,223) (45,574) Unrecognized prior service costs 6,702 7,278 7,853 Unrecognized net asset from transition (7,085) (8,098) (9,110) --------- -------------- -------------- Net pension liability $(11,498) $(12,607) $(14,007) ========================================================================================== 30 Assumptions used in determining the funded status of the non-contributory defined benefit retirement plan are as follows: 1993 1992 1991 ---- ---- ---- Discount rate 7.25% 9.00% 9.00% Average rate of increase in compensation levels 4.75% 6.50% 6.50% Expected long-term rate of return on plan assets 10.00% 10.00% 10.00%
At December 26, 1993, and December 27, 1992, the projected benefit obligation of the supplemental retirement plan totaled $12 million, of which $10.4 million and $10 million in 1993 and 1992, respectively, was included as a liability in the accompanying balance sheet. The Company also sponsors a thrift plan covering substantially all employees. Company contributions represent a partial matching of employee contributions up to a maximum of 3.3% of the employee's salary. Contributions charged to expense under the plan were $3.5 million, $3.4 million and $3.5 million in 1993, 1992 and 1991, respectively. Note 9: Postretirement Benefits - -------------------------------------------------------------------------------- The Company provides certain health and life insurance benefits for retired employees. Substantially all of the Company's full-time employees hired before 1992 may become eligible for all or a portion of those benefits if they retire after age 55 with at least ten years of service. Employees hired after 1991 are not eligible for Company paid health care and life insurance benefits at retirement. The postretirement health care plan for participants retiring after December 31, 1991, is contributory and contains cost-sharing features. The annual health care benefit paid by the Company is fixed and determined by years of service and retirement age and is limited to $4,500 per employee. Company paid life insurance benefits are based on age and compensation, with a maximum insurance coverage limitation of $50,000 for post-1991 retirees. The Company's policy is to fund postretirement benefits as claims and premiums are paid. 36 In 1992, the Company adopted Statement of Financial Accounting Standards No. 106 (SFAS 106), "Employers' Accounting for Postretirement Benefits Other Than Pensions." SFAS 106 requires the cost of providing postretirement health care and life insurance benefits to be accrued over the service period of employees. The Company recognized, at the beginning of fiscal 1992, the accumulated postretirement benefit obligation related to prior service costs of $22.8 million ($14.4 million after-tax; $0.55 per share) as the cumulative effect of a change in accounting principle. The effect of adopting the new standard increased 1992 net periodic postretirement benefit cost by approximately $.6 million and decreased net income by approximately $.4 million. Postretirement benefit cost for 1991 approximated $1 million based on annual claims incurred and insurance premiums. The following table sets forth components of the accumulated postretirement benefit obligation included in the accompanying balance sheet at December 26, 1993, and December 27, 1992: 31
Medical Life Insurance (In thousands) Plans Plans - ------------------------------------------------------------------------------------------ 1993 1992 1993 1992 ---- ---- ---- ---- Retirees $ 12,589 $ 11,961 $ 5,860 $ 5,444 Fully eligible plan participants 158 169 142 136 Other active plan participants 5,510 4,295 1,688 1,434 --------- --------- --------- --------- Accumulated postretirement benefit obligation 18,257 16,425 7,690 7,014 Unrecognized accumulated net loss 1,478 --- 524 --- --------- --------- --------- --------- Accrued postretirement benefit cost $ 16,779 $ 16,425 $ 7,166 $ 7,014 ========================================================================================== Net periodic postretirement benefit cost for 1993 and 1992 includes the following components: Medical Life Insurance (In thousands) Plans Plans - ------------------------------------------------------------------------------------------ 1993 1992 1993 1992 ---- ---- ---- ---- Service cost $ 333 $ 303 $ 133 $ 117 Interest cost 1,359 1,334 573 525 --------- --------- --------- --------- Net periodic postretirement benefit cost $ 1,692 $ 1,637 $ 706 $ 642 ==========================================================================================
The annual assumed rate of increase in the health care cost trend rate is 14.25% for 1994 (15% for 1993), and is assumed to decrease gradually to 6.25% in 2009 and thereafter for pre-65 benefits, and to 5.25% in 2011 and thereafter for post-65 benefits. Increasing the health care cost trend rate assumption by one percentage point in each year would increase the accumulated postretirement benefit obligation at December 26, 1993, and December 27, 1992, by $1.1 million, and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for 1993 and 1992 by $.1 million. The discount rate used to determine the accumulated postretirement benefit obligation was 7.25% and 8.0% for 1993 and 1992, respectively. The average rate of increase in compensation levels used to determine life insurance benefits was 4.75% and 6.0% for 1993 and 1992, respectively. Note 10: Other - -------------------------------------------------------------------------------- Interest - -------- The Company incurred interest costs of $21.6 million, $22.3 million and $22.1 million in 1993, 1992 and 1991. Included in these amounts is interest 32 capitalized in those years of $.3 million, $4.7 million and $6 million. Interest payments, net of amounts capitalized, made during 1993, 1992 and 1991 were $23.5 million, $19.6 million and $16.6 million, respectively. Depreciation and amortization - ----------------------------- Plant and equipment are depreciated over their estimated useful lives primarily by use of the straight-line method. Depreciation deductions are computed by accelerated methods for income tax purposes. 37 Amortization of excess of cost of businesses acquired over equity in net assets and other intangibles was $1,883,000, $1,875,000 and $1,974,000 in 1993, 1992 and 1991, respectively. Revenue recognition - ------------------- Advertising revenue is recognized when ads are published or aired, or when related advertising services are rendered. Subscription revenue is recognized on a pro-rata basis over the term of the subscription. Newsprint revenue is recognized upon shipment of newsprint. Accrued expenses and other liabilities - -------------------------------------- Accrued expenses and other liabilities consist of the following:
(In thousands) 1993 1992 - ------------------------------------------------------------------------------------------ Payroll $ 14,301 $ 13,385 Advances from unconsolidated newsprint affiliate 6,667 6,667 Unearned revenue 5,323 5,027 Employee medical claims 4,290 3,456 Other 29,979 28,497 --------- --------- Total $ 60,560 $ 57,032 ==========================================================================================
Lease obligations - ----------------- The Company and its subsidiaries rent certain facilities and equipment under operating leases. These leases extend for varying periods of time up to 11 years and in most cases contain renewal options. Total rental expense amounted to $7 million in 1993, $7.1 million in 1992 and $7.2 million in 1991. Minimum rental commitments under operating leases with noncancelable terms in excess of one year are as follows: 33
Machinery Land and and (In thousands) Buildings Equipment Total - ------------------------------------------------------------------------------------------ 1994 $ 4,894 $ 1,599 $ 6,493 1995 3,737 1,232 4,969 1996 2,926 1,058 3,984 1997 2,598 1,054 3,652 1998 2,323 258 2,581 Subsequent years 5,167 --- 5,167 --------- --------- --------- Total minimum required $ 21,645 $ 5,201 $ 26,846 ==========================================================================================
Concentration of credit risk - ---------------------------- Media General is a diversified communications company which sells products and services to a wide variety of customers located principally in the eastern United States. The Company's trade receivables result primarily from its newspaper, television and newsprint operations. The Company routinely assesses the financial strength of significant customers, and this assessment, combined with the large number and geographic diversity of its customer base, limits its concentration of risk with respect to trade receivables. Commitments - ----------- The Company has outstanding commitments for capital expenditures of approximately $36 million at December 26, 1993, approximately $34 million of which relates to the acquisition of new presses and the construction of a new production facility for the Winston-Salem Journal. The construction is expected to be completed in 1994. The Company entered into a stock redemption agreement in November 1985, which was amended in January 1988, with Mr. D. Tennant Bryan, Chairman of the Executive Committee of the Board of Directors. Under the terms of the agreement, the Company will purchase some of the Class A shares of the Company which are owned by Mr. Bryan at his death. The number of shares covered by this agreement is determined by reference to certain taxes and other expenses which would be incurred by Mr. Bryan's estate. The price for shares purchased under this agreement would be 90% of the market price of the shares during a period immediately preceding the date of death. At December 26, 1993, the Company would have been obligated to purchase approximately 1,459,000 Class A shares, and the discounted price per share would have been $25.26. 38 34 Media General, Inc. Management Statement Primary responsibility for the integrity and objectivity of the Company's financial statements rests with Management. The financial statements report on Management's stewardship of Company assets. They are prepared in conformity with generally accepted accounting principles and accordingly include amounts that are based on Management's best estimates and judgments. Nonfinancial information included in the annual report has also been prepared by Management and is consistent with the financial statements. Media General, Inc., maintains an accounting system and related controls designed to provide reasonable assurance that there is proper authorization and accounting for all transactions, that financial records are reliable for preparing financial statements, and that assets are safeguarded against loss or unauthorized use. The system is supported by written policies and guidelines, a program of internal audit and the selection and training of qualified personnel. The Audit Committee of the Board of Directors is composed of outside directors. The Committee meets periodically with Management, internal auditors and the independent auditors. January 25, 1994 J. Stewart Bryan III Marshall N. Morton Chairman, President and Senior Vice President and Chief Executive Officer Chief Financial Officer - -------------------------------------------------------------------------------- Media General, Inc. Report of Independent Auditors The Board of Directors and Stockholders, Media General, Inc.: We have audited the accompanying consolidated balance sheets of Media General, Inc., as of December 26, 1993, and December 27, 1992, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three fiscal years in the period ended December 26, 1993. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. 35 In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Media General, Inc., at December 26, 1993, and December 27, 1992, and the consolidated results of its operations and its cash flows for each of the three fiscal years in the period ended December 26, 1993, in conformity with generally accepted accounting principles. In 1992, the Company adopted new methods of accounting for income taxes and postretirement benefits other than pensions to comply with the accounting provisions of Statements of Financial Accounting Standards Nos. 109 and 106, respectively. See Notes 6 and 9 to the accompanying consolidated financial statements. January 25, 1994 Ernst & Young Richmond, Virginia 39 36 FINANCIAL REVIEW AND MANAGEMENT ANALYSIS This discussion, which addresses the principal factors affecting the Company's operations during the past three years, should be read in conjunction with the Company's financial statements, the Ten Year Summary, and discussions of operations for the Company's major operating segments which appear elsewhere in this report. RESULTS OF OPERATIONS --------------------- REVENUES - -------- 1993 Compared to 1992 Consolidated revenues for 1993 rose 4% to $600.8 million from $577.7 million in 1992. Led by its Television and Newspaper operations, all of the Company's business segments contributed to the revenue growth. Newspaper Segment revenues for 1993 were $307.1 million, up 2.7% from $299 million in 1992. Within the three daily newspapers (four, prior to the June 1992 merger of The Richmond News Leader into the Richmond Times-Dispatch) which comprise the Company's metropolitan newspaper group, advertising revenues increased 1.8%, reflecting a 5.8% average rate increase which more than offset a 3.8% decline in advertising inches. Classified advertising revenues, particularly in the automotive and employment categories, improved meaningfully from 1992 levels. However, retail advertising declined from the prior year due to persistent weakness in the department store category, combined with a continued trend toward the use of preprinted newspaper inserts by retail advertisers. Circulation revenues rose 5.4% in 1993, the result of an 11.5% average rate increase which more than offset a 5.5% combined decrease in circulation volume. The volume decline was primarily attributable to the previously mentioned 1992 merger of the Company's Richmond newspapers; to the selective pull-back of circulation by The Tampa Tribune in the more distant districts it serves; and to the effect of rate increases implemented by all three daily newspapers during the year. Television Segment revenues increased to $179.5 million in 1993, up 5.6% from $169.9 million in 1992. All of the Company's broadcast and cable TV operations experienced revenue growth from 1992 levels. The Company's Fairfax County, Virginia, cable system (Fairfax Cable) generated 1993 revenue growth of $6.4 million, up 5.9% from 1992. Most of the growth was attributable to the effect of the 2.2% increase in the number of subscribers, to 206,200 at December 26, 1993, combined with a 16.1% ($.8 million) increase in pay-per-view revenue. The growth in revenue per subscriber (excluding pay-per-view) moderated significantly during the current year, increasing only 1.8% in 1993, compared to a 5.2% rise in 1992, evidencing the impact of the Cable Television Consumer Protection Act of 1992 (Cable Act). On September 1, 1993, Fairfax Cable implemented new rates to comply with the rate regulation provisions of the Cable Act. The new rates resulted in increased bills for some subscribers, and decreased bills for others, but had an essentially revenue-neutral effect when viewed in terms of the total average monthly rate charged all subscribers as a group. On February 22, 1994, the Federal Communications Commission (FCC) announced the adoption of further rules intended to govern rates which cable operators may charge subscribers. Although the specific rules have not yet been 37 published by the FCC, the Company's preliminary evaluation of the general provisions indicates that the effect should not be material to the Company's financial position or results of operations. Cable rates are subject to local franchise authority and Federal Communications Commission (FCC) review, and further rate regulation by the FCC is possible. Revenues for the Company's three broadcast TV stations rose $1.5 million (2.9%) in 1993. Local and national advertising revenues increased 8.8% and 4.7%, respectively, during the year, aided in large part by expanded automotive advertising. Together, these increases more than offset the 1993 decline in political advertising revenues, down due to the absence of any significant political campaign activity in the Company's franchise areas. Pursuant to the Cable Act, during 1993, all of the Company's broadcast and cable TV operations successfully negotiated "must carry/retransmission consent" agreements which provide for continued carriage of local broadcast TV station programming on cable TV systems within their respective markets. The combined financial effect of these agreements on the Company is expected to be negligible. 40 Newsprint Segment revenues increased to $100.4 million in 1993, up 4% from $96.5 million in 1992. The increase was primarily attributable to the Company's Garden State Paper newsprint mill, located in Garfield, New Jersey, where a 3.8% increase in the 1993 average realized selling price per ton of newsprint more than offset a .9% (1,900 ton) decline in tons sold. Average newsprint selling prices moved through a broad range throughout 1993, beginning the year at an average of $414 per ton, rising to a high of $430 per ton during the second quarter on the combined effect of announced selling price discount reductions and increased demand by newspaper customers in anticipation of a Canadian newsprint strike, and falling to $397 per ton by December, when the anticipated Canadian shortage did not occur and customers worked-down their inventory levels. Despite the year-end low in realized prices, the average realized price for 1993 improved to $416 per ton from $400 per ton in 1992. Realized newsprint prices are expected to remain soft during the early part of 1994. Even though newsprint supply and demand may not come back into balance in 1994, there are indications that the severity of the oversupply situation is lessening. The average realized selling price for 1994 is not, however, expected to rise to the level achieved in 1993. Newsprint Segment revenues for 1993 include $3.5 million ($3.3 million in 1992) of license and other fees received from a Mexican newsprint affiliate. Under the terms of the Company's Option Agreement with that affiliate, the Company will continue to receive such fees (expected to aggregate $2.9 million in 1994) through October 15, 1994. Unless some other form of divestiture is agreed to, on that date, the affiliate's majority owner is expected to exercise its option to buy the Company's capital stock investment in the affiliate for $3.6 million, after which no further fees would be paid to the Company. 1992 Compared to 1991 Consolidated revenues for 1992 decreased 1.4% to $577.7 million from $585.9 million in 1991. The decrease was wholly attributable to the Company's Newsprint Segment, where the steep newsprint price decline experienced in 1992 more than offset increased revenues in the Company's cable TV operations. Newspaper and broadcast television revenues in 1992 were essentially level with 1991. Newspaper Segment revenues for 1992 were $299 million, down nominally from $299.2 million in 1991. Within the three daily newspapers (four, prior to the June 1, 1992, merger of The Richmond News Leader into the Richmond Times- 38 Dispatch) which comprise the Company's metropolitan newspaper group, advertising revenues decreased .2%, reflecting a 6.5% decline in advertising inches which more than offset the effect of a 6.6% average rate increase. Classified advertising revenues improved from 1991 levels, particularly in the automotive and, to a lesser degree, in the employment categories. Retail advertising revenues declined from the prior year, however, the result of continued weakness in that segment of the nation's economy, as well as the effect on revenues of the merger of the Company's two Richmond newspapers and the continued trend toward the use of preprints by retail advertisers. Circulation revenues increased 1% in 1992, the result of a 1.5% average rate increase which more than compensated for a .5% drop in circulation. Among the members of the group, circulation revenues at the Company's Tampa and Winston-Salem newspapers rose 6.2% and 4.0%, respectively, from 1991, while those of the Company's Richmond newspaper declined 4.6%, principally the result of the previously mentioned merger. Television Segment revenues of $169.9 million in 1992 were up $10.3 million (6.5%) from $159.6 million in 1991. Revenues of the Company's Fairfax County, Virginia, cable system reflected a 3.3% growth in subscribers to 201,800 at December 27, 1992. This increase in subscribers, combined with a 5.2% growth in revenue per subscriber, resulted in a 1992 Fairfax revenue increase of $8.8 million, up 8.8% from 1991. Approximately 51% of the increase resulted from subscriber growth and the balance from a January 1992 rate increase. Revenues for the Company's three broadcast TV stations rose slightly (.5%) in 1992. Increased political advertising revenues more than offset declines, due to the sluggish national economy, in the local and national retail advertising and network compensation categories. Newsprint Segment revenues decreased to $96.5 million in 1992 from $116.7 million in 1991. This $20.2 million (17.3%) decline, $2.5 million of which resulted from reduced management and other fees earned by the Company from its unconsolidated newsprint affiliate, was the direct result of the precipitous newsprint price decreases experienced throughout the industry during the year. At the Company's Garden State Paper newsprint mill, located in Garfield, New Jersey, newsprint prices fell to the lowest levels since 1980, beginning the year averaging $422 per ton, but dropping to a 1992 low of $390 per ton in May. Although the average selling price recovered somewhat later in the year, to $408 per ton in December 1992, the full-year 1992 average selling price of $400 per ton was 16.2% less than that realized in 1991. During 1992, the mill produced a record 235,886 tons, up 2.4% 41 from the previous record production of 230,291 tons in 1991. Tons sold rose a similar 2.3%, to 235,014 tons in 1992, also a new record, thus mitigating to some extent the effect of the decline in average selling price. While significant competitive price discounting continued as a result of weak demand nationally, user demand for Garden State's 100% recycled newsprint remained high at year end, and the mill continued to operate at full capacity. OPERATING COSTS - --------------- 1993 Compared to 1992 Total 1993 operating costs of $540.5 million increased $5.5 million (1%) from the previous year (excluding the cumulative effect of changes in accounting principles related to postretirement benefits and income taxes discussed in the 39 following 1992 to 1991 comparison). The following discussion focuses on the direct operating costs of each of the Company's significant business segments, excluding consolidated depreciation and amortization expense which is addressed separately. Newspaper Segment operating costs increased $1.6 million (.6%) in 1993 from the comparable 1992 amount. Contributing to the increase were employee compensation and benefit cost increases of $2.3 million, up 1.9%; the cost of newsprint, up $1.4 million (2.8%) due to average 1993 price increases of 5.6% (which more than offset a 2.7% decrease in tons consumed); and a $.4 million increase in property taxes and utility costs. Together, these increases more than offset the benefit of decreased bad debt expense, down $1.5 million (37.1%) as a result of improved collection experience and receivables aging, and reduced circulation promotion incentives of $1.5 million, down 9.7% relating primarily to The Tampa Tribune. Operating costs for the Television Segment rose $1.2 million (1.1%) in 1993 over 1992. While 1993 costs at the Company's three broadcast TV stations declined by $1.1 million (3.1%), operating costs for the Company's cable TV operations, including its cable advertising interconnect, rose by $2.3 million, or 3.1%. For the Segment as a whole, employee compensation and benefit costs rose $2 million (4.8%), reflecting normal compensation increases as well as moderate growth in the employee complement at the Company's cable advertising interconnect due to expanded operations. In addition, franchise fees, insurance, and repairs and maintenance costs increased $.4 million, $.4 million and $.2 million, respectively, in 1993, principally the result of the expanded subscriber base and support services at the Company's Fairfax Cable system, and $.3 million of new costs were incurred (principally legal and consulting) in connection with the provisions of the Cable Act. Together, these increases were offset somewhat by a $2.1 million decline in overall programming costs, the result of program line-up changes and lower program rates at both the Company's broadcast and cable TV operations. Newsprint Segment operating costs declined $1.6 million (1.9%) in 1993 from the comparable 1992 amount. At the Company's Garden State Paper subsidiary, a $4.3 million (41%) decrease in waste treatment expense, primarily attributable to the Garfield mill's new (in August 1992) fiber fuel burning system, more than offset increases in energy costs, up $1.3 million (9%) due to both fuel price and consumption increases, insurance costs, up $.8 million principally as a result of increased worker compensation claims, repairs and maintenance, up $.7 million primarily as a result of increased first-half repairs to certain power house equipment, replaced later in 1993, and employee compensation and benefit costs, up $.2 million. Consolidated depreciation and amortization expense increased $2.3 million (4.2%) in 1993 from the comparable 1992 amount. Increased depreciation of $2.9 million at Richmond Newspapers' production facility, which was placed in service in June 1992, and of $.7 million at the Company's Garfield newsprint mill (principally attributable to the fiber fuel burning system), more than offset depreciation declines in the Company's television and other newspaper operations, the result of a reduced level of new capital assets placed in service combined with the effect of certain assets, particularly electronic broadcast equipment, becoming fully depreciated during the year. 1992 Compared to 1991 Total 1992 operating costs of $535 million (which exclude the cumulative effect of changes in accounting principles relating to postretirement benefits and income taxes discussed later) decreased $14.5 million (2.6%) from 1991. 40 Operating costs for 1991 included special charges of $11.3 million for costs associated with an early retirement program ($8.8 million) and the merger, which was consummated in June 1992, of the Company's two Richmond newspapers ($2.5 million). Excluding the effects of the 1991 special charges, consolidated operating costs decreased $3.2 million (.6%) in 1992 when compared to 1991. The following discussion focuses on the direct operating costs of each of the Company's significant business segments, excluding both the 1991 special charges and the consolidated depreciation and amortization expense which is discussed separately. 42 Newspaper Segment operating costs decreased $6.2 million (2.4%) in 1992 from the comparable 1991 amount. Contributing to the decrease were broadly based expense reductions at the Company's Richmond Newspapers, Inc., subsidiary, which resulted from the merger of its two newspapers in June 1992, an $8.3 million decrease in the cost of newsprint ($11.1 million of which was due to an average 20% newsprint price decrease, offset by $2.8 million due to a 6.2% rise in consumption) at the Company's metropolitan newspapers, and the continuation of extensive cost control measures. Together, these reductions more than offset promotion and circulation expense increases (up $1.6 million) related primarily to The Tampa Tribune's circulation growth, and increases in insurance, fuel and utilities, and employee benefit costs, up $.6 million, $.5 million and $1 million, respectively. Operating costs for the Television Segment rose 5.7% in 1992 over 1991. While operating costs at the Company's three broadcast TV stations rose nominally (2.2%), a large increase was experienced at the Company's Fairfax County, Virginia, cable system. That system, which had a growth of 6,500 subscribers during 1992, experienced increases in program costs of $1.9 million, in payroll and employee benefit costs of $.7 million, in insurance costs of $.5 million, and in municipal franchise fees of $.4 million. These cost increases were primarily the result of the growth in subscribers, programming rate increases, and expansion of the system and its support services during the year. Newsprint Segment operating costs declined $.9 million (1.1%) in 1992 from the comparable 1991 amount. At the Company's Garfield mill, a $1.3 million (11.7%) increase in waste treatment costs and a $.3 million increase in energy costs was more than offset by lower negotiated chemical and waste news costs, down 17.3% and 6% in the year, respectively. During the latter half of 1992 the mill's new fiber fuel burning system became operational, serving to moderate the significant waste treatment cost increases experienced during the previous two years. Total depreciation and amortization expense increased $4.6 million (9.2%) in 1992. The majority of the increase ($4.2 million) was attributable to the new Richmond Newspapers' production facility which was placed in service in June 1992. OTHER INCOME (EXPENSE) - ---------------------- The principal components of other income (expense) are interest on Company indebtedness, the Company's equity in the net income or loss of its unconsolidated affiliates, and income from other sources. 1993 Compared to 1992 41 Interest expense increased $3.7 million (21.2%) to $21.3 million in 1993 from $17.6 million in 1992. The increase was primarily attributable to a $4.4 million comparative decrease in the amount of interest capitalized, principally the result of the June 1992 completion of the Richmond Newspapers' production facility. Offsetting this somewhat were the beneficial effects of a $14 million decrease in average debt outstanding during 1993, and a slight drop in the Company's average 1993 borrowing rate. The Company's equity in the net loss of unconsolidated affiliates declined to $1 million in 1993 from $4.9 million in 1992. The decline was wholly attributable to the decreased current year loss of the Company's affiliate, Southeast Paper Manufacturing Company (SEPCO). The improvement in SEPCO's performance was primarily the result of the increased average newsprint selling price realized for the year, up 5.3% from 1992, which more than offset a 4,700 ton (1%) reduction in tons sold. SEPCO's realized newsprint selling price, which averaged $398 per ton at the beginning of 1993, rose to $422 per ton in the second quarter. However, for reasons similar to those mentioned previously in connection with Garden State Paper, SEPCO's realized newsprint prices declined to $390 per ton in late 1993, and are expected to remain soft in early 1994. As discussed more fully in Note 3 to the accompanying consolidated financial statements, the Company's investment in its 40% owned Garden State Newspapers (GSN) affiliate was reduced to zero in 1991, and the Company has not recognized any further equity in that affiliate's operating results since then. As also discussed more fully in Note 3, subsequent to the Company's 1993 year-end, GSN failed to redeem certain preferred stock owned by the Company which was mandatorily redeemable on January 1, 1994. Although a Letter Agreement has been signed by the parties agreeing to a process through which the Company would sell its interest in GSN for $62.7 million, that sale is subject to various conditions including the buyer's ability to arrange financing. There is no assurance that the transaction will be consummated. Other income, net, decreased to $.8 million in 1993 from $6.1 million in 1992. The decline was primarily due to comparative year-to-year decreases in fire insurance proceeds recognized (down $2.2 million), adjustments of 43 estimated obligations relating to disposed operations (down $2.1 million) and interest income (down $.9 million). 1992 Compared to 1991 Interest expense rose $1.5 million (9.4%) in 1992 from the prior year's level. The increase was primarily attributable to a $61 million rise in average outstanding borrowings during the year, and to a $1.3 million comparative decrease in the amount of interest capitalized. Together, these more than offset the reduction in the Company's average annual borrowing rate, which decreased by .5% (to 7.3%) in 1992, and the comparative increase in interest rate swap income of $1.1 million earned during the year and reflected as a reduction of interest expense. The Company's equity in the net loss of unconsolidated affiliates declined sharply in 1992, to $4.9 million from $75.6 million in 1991. As discussed more fully in Note 3 to the accompanying consolidated financial statements, the 1991 loss included $78.7 million attributable to the Company's share of the net loss of Garden State Newspapers (GSN), due principally to a GSN management decision to write down the carrying value of certain assets, mostly intangibles, in light of depressed market conditions. The loss reduced the Company's investment in GSN to zero, but without impacting its liquidity or cash flow. The Company's 42 share of the loss of its Southeast Paper Manufacturing Company (SEPCO) affiliate was $4.9 million in 1992, compared to income of $3 million in 1991. The 1992 loss was primarily attributable to the reduced average newsprint selling price realized by SEPCO during the year (down 16.8% from 1991), which more than offset a 3.9% increase in tons sold, and included $1.3 million relating to accounting for postretirement benefits other than pensions. Other income, net, increased to $6.1 million in 1992 from $2.7 million in 1991. The increase resulted from $2.9 million of insurance proceeds received in 1992 (versus $.8 million received in 1991) related to a 1991 fire at the Company's Garden State Paper newsprint mill in Garfield, New Jersey, and $2.1 million resulting from the termination of previously recognized obligations relating to disposed operations. Together, these more than offset a $.8 million net reduction in income from interest, fixed asset dispositions, and other miscellaneous items. NET INCOME - ---------- 1993 Compared to 1992 Net income for 1993 was $25.7 million ($0.98 per share), up 35.3% from $19 million ($0.73 per share) in 1992. Net income for 1992 included a $.7 million ($0.03 per share) increase resulting from the (net) cumulative effect of changes in accounting principles related to postretirement benefits and income taxes. See Notes 6 and 9 to the accompanying consolidated financial statements for additional information regarding the 1992 changes in accounting principles. Following is a discussion and comparison of pretax operating income for each significant business segment, excluding the cumulative effect of the accounting changes discussed above. Newspaper Segment operating income rose 19.7% in the current year, to $19.6 million from $16.4 million in 1992. The increase resulted from combined growth in both advertising and circulation revenues, up 1.8% and 5.4%, respectively, the effect of which was only slightly offset by a moderate (1.4%) increase in operating costs. A decline in 1993 operating income of the Company's Winston- Salem newspaper was more than offset by improved results of the Company's other metropolitan daily newspapers in Tampa and Richmond, aided largely, in the case of The Tampa Tribune, by circulation cost reductions. Television Segment operating income increased $9.3 million (35.8%) in 1993, to $35.2 million from $25.9 million in 1992. Though led by the Company's Fairfax Cable system, all of the Company's cable and broadcast TV operations registered increases in both revenues and operating income during 1993. At Fairfax Cable, operating profits rose, principally as a result of an increase in subscribers (up 2.2%, to 206,200 in December 1993), and increased pay-per-view revenue. Revenue per subscriber grew by only 1.8% in 1993 (versus 5.2% in 1992), however, primarily the result of rate regulation imposed by the Cable Act of 1992, discussed previously. Broadcast TV operating income improved as a result of both increased revenues, up a combined 2.9% primarily on the strength of the local and national advertising categories, as well as decreased operating costs, down 3.5%, largely the result of lower program costs. Operating income for the Newsprint Segment increased to $5.7 million in 1993 from $1.3 million in the prior year. The increase was primarily attributable to the performance of the Company's Garden State newsprint mill, where the average newsprint price realized during the year increased by $16 per ton (to $416 per 43 ton in 1993 from $400 per ton in 1992), and where operating costs declined 1%, principally the result of significantly reduced waste treatment expense. Newsprint prices dropped to their lowest level of the 1993 year (to $397 per ton) in December, and 44 are expected to remain soft during the first half of 1994. As mentioned previously, option fees received by the Company from its Mexican newsprint affiliate are expected to decline by approximately $.6 million (to $2.9 million) in 1994, and to zero thereafter. Unless some other form of divestiture is agreed to, the affiliate's majority owner is expected to exercise an option to buy back the Company's capital stock investment in the affiliate for $3.6 million in late-1994. Income tax expense for 1993 increased $5.2 million (65.7%) from the prior year, principally the result of the $12.6 million (48%) rise in pretax income. 1993 income taxes include $2.3 million of additional tax expense related to the cumulative effect of the corporate tax rate increase (from 34% to 35%) imposed by the Omnibus Budget Reconciliation Act of 1993, which was signed into law on August 10, 1993. Approximately $2.1 million of the additional tax expense resulted from the application of the increased tax rate to existing deferred tax liabilities in accordance with the provisions of SFAS No. 109, "Accounting For Income Taxes", which was adopted by the Company in 1992. The impact of the tax rate increase was substantially offset by the effects of resolving various tax examinations. The increase in the Company's effective tax rate, to 33.9% in 1993 from 30.3% in 1992 (excluding the effects of the postretirement benefit and income tax accounting changes adopted in that year), resulted principally from the newly enacted corporate tax rate increase and from a comparative decrease in the favorable tax effect of certain insurance programs, net of the effects of resolving various tax examinations. For additional information regarding income taxes, see Note 6. 1992 Compared to 1991 Net income for 1992 was $19 million ($0.73 per share) compared to a net loss of $62.1 million ($2.39 per share) in 1991. Net income for 1992 included a $.7 million ($0.03 per share) increase resulting from the (net) cumulative effect of changes in accounting principles related to the Company's adoption of Statement of Financial Accounting Standards (SFAS) Nos. 106 and 109. SFAS No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions", requires that the cost of providing postretirement health care and life insurance benefits be accrued over the service period of employees. The Company recognized, at the beginning of fiscal 1992, the accumulated postretirement benefit obligation related to prior service costs of $22.8 million ($14.4 million after-tax, or $0.55 per share) as the cumulative effect of a change in accounting principle. SFAS No. 109 "Accounting for Income Taxes", requires that deferred tax liabilities be determined based on the statutory income tax rates in effect at the balance sheet date. The cumulative effect of this change in accounting principle, also recognized by the Company at the beginning of fiscal 1992, was an increase in net income of $15.1 million ($0.58 per share), which represents the net decrease in the Company's deferred tax liability as of that date. See notes 6 and 9 to the accompanying consolidated financial statements for additional information regarding the 1992 changes in accounting principles. The net loss for 1991 included after-tax amounts of $78.3 million ($3.01 per share) attributable to the Company's share of losses from its unconsolidated affiliate, Garden State Newspapers, a charge of $5.5 million ($0.21 per share) for costs associated with an early retirement program, and a $1.6 million ($0.06 per share) charge accrued in connection with the merger of the Company's two 44 Richmond newspapers. Excluding the previously mentioned cumulative effect of the 1992 accounting changes and the 1991 nonrecurring charges, net income from continuing comparable operations declined approximately 21% in 1992 from the comparable 1991 level. Following is a discussion and comparison of pretax operating income for each significant business segment, excluding the cumulative effect of accounting changes and nonrecurring items discussed above. Newspaper Segment operating income rose 46% in 1992. While revenues were essentially unchanged from the prior year, operating expenses declined, reflecting the results of continued and extensive cost control measures, efficiencies achieved as a result of the Richmond Newspapers' merger, and the reduced cost of newsprint. Operating profits at all three of the Company's metropolitan daily newspapers increased from the prior year as a consequence of these factors. Television Segment operating income increased $7.1 million (38%) in 1992, on the strength of the Company's cable operations. The significant rise in cable income was primarily attributable to the Company's Fairfax County, Virginia, cable system, which added 6,500 new subscribers during the year and experienced a 5.2% rise in revenue per subscriber. The small decrease in broadcast TV profitability resulted from a 2.2% increase in operating expenses which more than offset a .5% revenue gain. Among the three broadcast TV stations within the group, results of the Jacksonville, Florida (WJKS-TV) and the Charleston, South Carolina (WCBD-TV) stations improved, while those of WFLA-TV in Tampa, Florida, declined. 45 Newsprint Segment operating income in 1992 decreased sharply (by $17.3 million, or 93.1%) from 1991. At the Company's Garfield mill the average sales price realized during the year declined 16.2%, reflecting the intensified newsprint price discounting experienced throughout the industry during 1992. The price decline had the effect of reducing the mill's realized operating profit per ton by approximately 97% from the 1991 level, despite achieving a production cost decrease of $6 per ton for the year. The steep competitive price discounting did abate somewhat during the last quarter of 1992: the realized sales price rose to $408 per ton in December from its May 1992 low of $390 per ton. Income tax expense for 1992 (which excludes the effects of the 1992 changes in accounting principles) declined $1.4 million (15.4%) from 1991. However, absent the 1991 GSN loss from which the Company derived virtually no tax benefit, the Company's effective tax rate on normal operations declined from 39.2% in 1991 to 28.1% in 1992. The decrease in effective rate was primarily attributable to the favorable tax effect of certain insurance programs. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- Funds generated by operating activities during 1993 totaled $85.2 million, up $16.6 million from 1992. The increase was due principally to improved profitability and to the comparative reduction in funds applied to reduce accrued expenses and other current liabilities. Together, these more than offset the effect of comparative increases in accounts receivable and inventories which rose in 1993 as a result of increased sales and production demands. The $85.2 million of funds generated by operating activities in 1993, along with a combined $18.1 million from other sources, was used to curtail 45 $58.8 million of long-term debt, and to fund capital expenditures and dividends to stockholders of $32.8 million and $11.5 million, respectively. Capital expenditures of $32.8 million made during 1993 included $10.4 million for the continued growth and expansion of the Fairfax Cable system, and $8.7 million for the new Winston-Salem Journal production facility. That facility is expected to be completed in mid-1994, as planned, at a total cost of approximately $44 million. During 1993, the Company applied excess cash generated from operations and other sources toward the reduction of debt. As a consequence, total debt outstanding declined to $261.8 million at December 26, 1993, a reduction of $58.8 million from the year-ago level of $320.5 million. Although capital expenditures are expected to increase during 1994, to approximately $69 million (including $33 million for the Winston-Salem production facility) from the 1993 level of $32.8 million, barring unforeseen circumstances the Company anticipates that it will be able to reduce its debt level further during 1994. At December 26, 1993, the Company had available unused credit lines of $90 million under revolving credit agreements with five banks. The Company also had an uncommitted credit facility with an insurance company which provides for additional borrowings of up to $85 million at prevailing interest rates. However, the Company anticipates that internally generated funds provided by operations during the coming fiscal year will be more than adequate to finance projected capital expenditures, dividends to stockholders, and working capital needs, and that excess funds will be utilized to pay down debt. OUTLOOK FOR 1994 - ---------------- Fourth quarter 1993 results indicate that overall economic prospects for 1994 are more favorable than they have been for the past several years, except perhaps with respect to newsprint pricing. The Company enters the new year in a solid financial position, with modern, productive facilities, and with encouraging prospects for growth. 46 46 Media General, Inc. Quarterly Review (In thousands, except per share amounts)
First Second Third Fourth Quarter Quarter Quarter Quarter - ------------------------------------------------------------------------------------------ 1993 Revenues $ 144,190 $ 152,583 $ 147,527 $ 156,524 Operating income 9,853 16,299 12,611 21,540 Net income 3,409 8,144 5,095 9,060 Net income per share 0.13 0.31 0.20 0.34 - ------------------------------------------------------------------------------------------ Shares traded 1,298 1,096 2,148 2,728 Stock price range $16.88-21.38 $18.50-22.00 $20.63-25.25 $24.88-30.63 Quarterly dividend $ 0.11 $ 0.11 $ 0.11 $ 0.11 - ------------------------------------------------------------------------------------------ 1992 Revenues $ 141,667 $ 147,093 $ 139,967 $ 148,932 Operating income 7,106 12,268 6,932 16,307 Net income 3,337 6,279 1,803 7,581 Net income per share 0.13 0.24 0.07 0.29 - ------------------------------------------------------------------------------------------ Shares traded 1,475 1,023 981 2,393 Stock price range $17.25-22.63 $17.25-20.25 $16.38-20.50 $14.50-19.00 Quarterly dividend $ 0.11 $ 0.11 $ 0.11 $ 0.11 - ------------------------------------------------------------------------------------------ * Media General, Inc., Class A common stock is listed on the American Stock Exchange under the symbol MEG.A. The approximate number of equity security holders of record at December 26, 1993, was: Class A common - 2,900, Class B common - 19. * First quarter 1993 includes $.8 million ($.4 million after-tax; $0.02 per share) of insurance proceeds related to a 1992 fire at the Company's Garden State Paper newsprint mill in Garfield, N.J. * Second quarter 1993 includes nonoperating income of $.6 million ($.4 million after-tax; $0.01 per share) resulting principally from the termination of obligations previously established upon the disposition of certain operations. * Third quarter 1993 includes a charge of $2.3 million ($0.09 per share) to income tax expense for the effect of the increase in the federal income tax rate from 34% to 35%. This adjustment was substantially offset by the effects of resolving various tax examinations. * Second quarter 1992 includes approximately $1.5 million ($.9 million after-tax; $0.03 per share) of income from insurance proceeds related to a 1991 fire at the Company's Garden State Paper newsprint mill. * Fourth quarter 1992 includes approximately $1.4 million ($.8 million after-tax; $0.03 per share) of income from insurance proceeds related to a 1991 fire at the Company's Garden State Paper newsprint mill, and $1.3 million ($.9 million after-tax; $0.03 per share) resulting from the termination of obligations previously established upon the disposition of certain operations.
47 47 Media General, Inc. Operating Information (Dollar amounts in thousands) Media General Metropolitan Newspapers - -------------------------------------
Richmond (a) Tampa Winston-Salem ------------------------------ ------------------------------ ---------------------------- 1993 1992 1991 1993 1992 1991 1993 1992 1991 - ------------------------------------------------------------------------------------------------------------------------ Average Circulation Daily 212,805 228,272 240,074 269,496 289,091 287,272 91,513 91,515 91,735 Sunday 253,537 254,636 252,105 364,864 377,249 373,566 105,380 107,417 104,946 - ------------------------------------------------------------------------------------------------------------------------ ROP full run (inches) Retail 781,884 904,090 1,177,101 662,952 729,879 871,630 719,606 767,869 775,590 General 58,637 73,533 104,819 74,606 81,212 82,578 34,916 29,841 37,450 Classified 684,856 774,626 936,249 840,680 827,537 847,347 754,332 734,715 661,592 ---------------------------------------------------------------------------------------------------------- Total 1,525,377 1,752,249 2,218,169 1,578,238 1,638,628 1,801,555 1,508,854 1,532,425 1,474,632 ROP part run (inches) 202,610 241,638 122,687 4,500,283 4,963,129 2,694,867 131,099 138,668 149,964 Preprints (inches) Full run 693,560 819,130 865,029 846,584 708,385 739,038 359,909 358,102 330,198 Part run 55,055 71,030 99,404 999,444 1,120,102 1,006,939 674,860 600,194 555,695 ---------------------------------------------------------------------------------------------------------- Total 748,615 890,160 964,433 1,846,028 1,828,487 1,745,977 1,034,769 958,296 885,893 - ------------------------------------------------------------------------------------------------------------------------ Advertising Revenue Retail $ 41,566 $ 42,089 $ 45,957 $ 60,632 $ 62,105 $ 62,624 $ 17,446 $ 17,913 $ 18,166 General 6,167 6,036 6,084 11,184 11,265 11,612 1,970 1,777 2,007 Classified 29,967 27,605 25,910 45,205 42,308 41,728 10,527 10,056 9,078 Other 4,052 3,458 2,372 4,006 3,807 3,604 1,165 1,379 1,195 ---------------------------------------------------------------------------------------------------------- Total $ 81,752 $ 79,188 $ 80,323 $ 121,027 $ 119,485 $ 119,568 $ 31,108 $ 31,125 $ 30,446 - ------------------------------------------------------------------------------------------------------------------------ Circulation Revenue $ 26,038 $ 23,423 $ 24,562 $ 23,436 $ 23,736 $ 22,357 $ 7,562 $ 6,948 $ 6,680 - ------------------------------------------------------------------------------------------------------------------------ Population 721,700 712,600 702,500 871,500 866,700 853,500 273,000 270,700 267,800 Households 283,000 278,500 273,900 340,500 338,000 332,700 110,900 109,600 108,200 Retail Sales $6,853,367 $5,845,873 $6,102,674 $6,806,996 $6,602,012 $6,646,071 $2,700,871 $2,457,880 $2,454,546 - ------------------------------------------------------------------------------------------------------------------------ (a) Data for 1991 and the first five months of 1992 includes figures for The Richmond News Leader which was merged into the Richmond Times-Dispatch on June 1, 1992.
48 48 Media General Broadcast Television Group - ----------------------------------------
(Dollar amounts in thousands) 1993 1992 1991 ---------- ---------- ----------- WFLA (NBC) - Tampa, Fla. (a) Market Gross Time Sales (b) $ 169,675 $ 163,400 $ 157,900 Population 3,173,000 3,150,000 3,133,000 Homes with TV 1,384,150 1,374,300 1,366,000 Market Rank 15 14 14 Audience % Share* 18 17 18 Station Rank* 2 2 2 WJKS (ABC) - Jacksonville, Fla. (c) Market Gross Time Sales (b) $ 65,300 $ 57,900 $ 57,000 Population 1,226,100 1,235,200 1,223,300 Homes with TV 487,300 475,700 471,500 Market Rank 54 54 54 Audience % Share* 11 11 13 Station Rank* 3 3 3 WCBD (ABC) - Charleston, S.C. (c) Market Gross Time Sales (b) $ 26,968 $ 26,000 $ 24,100 Population 635,500 624,100 616,300 Homes with TV 230,100 225,700 223,100 Market Rank 106 105 105 Audience % Share* 21 22 23 Station Rank* 2 2 2 (a) Source: November Nielsen Rating Books (b) Includes local, national and political time sales only (c) Source: November Arbitron Rating Books * Sign On To Sign Off. Media General Cable of Fairfax - ------------------------------ (Dollar amounts in thousands except per home and subscriber amounts) 1993 1992 1991 -------- -------- -------- Population, Fairfax County 867,442 856,200 844,600 Subscribers 206,228 201,789 195,290 Homes passed 304,936 298,785 292,044 Penetration % 67.6 67.5 66.9 Pay to basic ratio .89 .94 .96 Cumulative miles of cable installed 3,939 3,862 3,770 Revenue $ 115,315 $ 108,898 $ 100,103 Monthly revenue per home passed (in dollars) 30.39 29.47 27.87 Monthly average revenue 45.15 44.18 42.56 per subscriber (in dollars) Capital expenditures 12,658 12,313 13,977
49 49 Media General, Inc. Ten Year Financial Summary (In thousands, except per share amounts) Certain of the following data were compiled from the consolidated financial statements of Media General, Inc., and should be read in conjunction with those statements and the financial review and management analysis which appear elsewhere in this report.
1993 1992 1991 1990 - ------------------------------------------------------------------------------------------ Summary of Operations Operating revenues: Newspaper $307,058 $299,038 $299,173 $302,010 Television (d) 179,477 169,946 159,596 153,427 Newsprint (d) 100,371 96,540 116,717 132,915 Auxiliary 13,918 12,135 10,414 25,315 --------- --------- --------- --------- Total operating revenues $600,824 $577,659 $585,900 $613,667 - ------------------------------------------------------------------------------------------ Operating income (a)(d) $ 60,303 $ 42,613 $ 36,341 $ 63,825 Interest expense (21,274) (17,559) (16,056) (19,831) Equity in net income (loss) of unconsolidated affiliates (990) (4,926) (75,640) (1,303) Other, net 835 6,131 2,659 814 --------- --------- --------- --------- Income (loss) before income taxes and cumulative effect of changes in accounting principles 38,874 26,259 (52,696) 43,505 Income taxes (13,166) (7,946) (9,395) (18,025) Cumulative effect of changes in accounting principles (b) --- 687 --- --- --------- --------- --------- --------- Net income (loss) $ 25,708 $ 19,000 $(62,091) $ 25,480 ========================================================================================== Per Share Data: (b)(c) Income (loss) before cumulative effect of changes in accounting principles $ 0.98 $ 0.70 $ (2.39) $ 0.98 Cumulative effect of changes in accounting principles --- 0.03 --- --- - ------------------------------------------------------------------------------------------ Net income (loss) 0.98 0.73 (2.39) 0.98 Cash dividends 0.44 0.44 0.44 0.44 Common stock price High 30.63 22.63 22.88 31.63 Low 16.88 14.50 16.63 15.38 Stockholders' equity 8.59 8.04 7.74 10.58 ========================================================================================== Other Financial Data: Total assets $745,242 $787,425 $762,311 $775,944 Working capital 9,551 9,657 3,668 21,333 Capital expenditures 32,837 92,319 115,383 73,686 Total debt 261,756 320,506 277,202 234,565 Stockholders' equity 225,434 209,941 201,868 273,818 Total debt/total capital ratio 53.7% 60.4% 57.9% 46.1% Shares outstanding at fiscal year-end 26,252 26,099 26,071 25,874 ========================================================================================== 50 (a) Operating income includes the following pretax special charges: 1991-$11,300 for an early retirement program and newspaper merger costs; 1989-$10,275 for the write-off of unrecovered costs related to a lawsuit against William B. Tanner and others; 1988- $66,316 primarily related to the Company's discontinuance of Broadcast Services operations; 1986-$30,849 related to the write-off of certain newspaper, broadcast television and other assets. (b) See notes 6 and 9 for information regarding changes in accounting principles. (c) Per share data is restated for 1987 and 1986 stock splits. (d) In December 1988, the Company discontinued its Broadcast Services operations and sold its media placement division, and agreed to dispose of its West Coast newsprint mill and related operations. Television segment information includes revenues of the disposed broadcast operation totaling $62.4 million and operating losses totaling $59.3 million for the year ended December 31, 1988. Newsprint segment information includes revenues of the disposed newsprint operations totaling $74.3 million and operating profits totaling $14.8 million for the year ended December 31, 1988.
50 51 Media General, Inc. Ten Year Financial Summary - Continued (In thousands, except per share amounts)
1989 1988 1987 1986 1985 1984 - ------------------------------------------------------------------------------------------------------------------- Summary of Operations Operating revenues: Newspaper $298,138 $298,915 $285,767 $264,136 $251,636 $240,023 Television (d) 139,399 198,201 193,544 167,062 128,710 97,589 Newsprint (d) 131,310 216,142 194,026 164,621 161,206 170,916 Auxiliary 26,285 25,613 29,811 30,054 30,496 30,811 --------- --------- --------- --------- --------- --------- Total operating revenues $595,132 $738,871 $703,148 $625,873 $572,048 $539,339 - ------------------------------------------------------------------------------------------------------------------- Operating income (a)(d) $ 44,139 $ 15,412 $ 77,638 $ 28,959 $ 55,036 $62,151 Interest expense (25,385) (18,089) (15,780) (13,026) (11,424) (6,303) Equity in net income (loss) of unconsolidated affiliates 10,562 16,507 11,898 8,339 6,404 4,319 Other, net 684 369 265 415 108 4,003 --------- --------- --------- --------- --------- --------- Income (loss) before income taxes and cumulative effect of changes in accounting principles 30,000 14,199 74,021 24,687 50,124 64,170 Income taxes (9,280) (5,380) (31,100) (7,580) (17,300) (24,410) Cumulative effect of changes in accounting principles (b) --- --- --- --- --- --- --------- --------- --------- --------- --------- --------- Net income (loss) $ 20,720 $ 8,819 $ 42,921 $ 17,107 $ 32,824 $ 39,760 =================================================================================================================== Per Share Data: (b)(c) Income (loss) before cumulative effect of changes in accounting principles $ 0.80 $ 0.31 $ 1.50 $ 0.60 $ 1.15 $ 1.40 Cumulative effect of changes in accounting principles --- --- --- --- --- --- - ------------------------------------------------------------------------------------------------------------------- Net income (loss) 0.80 0.31 1.50 0.60 1.15 1.40 Cash dividends 0.42 0.39 0.34 0.30 0.29 0.27 Common stock price High 40.00 49.00 48.25 24.69 21.63 16.35 Low 30.38 33.75 21.31 18.00 15.88 13.07 Stockholders' equity 10.02 9.80 12.34 11.15 10.17 9.34 =================================================================================================================== Other Financial Data: Total assets $782,657 $852,764 $823,094 $740,485 $688,092 $563,278 Working capital 62,210 55,488 60,439 52,459 64,342 43,603 Capital expenditures 69,117 77,717 80,593 100,314 90,621 89,681 Total debt 275,928 274,985 234,348 203,711 183,074 112,339 Stockholders' equity 258,637 252,419 348,431 314,459 305,351 278,105 Total debt/total capital ratio 51.6% 52.1% 40.2% 39.3% 37.5% 28.8% Shares outstanding at fiscal year-end 25,806 25,751 28,233 14,101 7,509 7,447 ===================================================================================================================
51 52 APPENDIX Page 6 picture - Richmond Newspapers employee Donna Pinnix at her desk Page 8 picture - Tampa Tribune employee Ben Strakos standing beside press Page 10 picture - Winston-Salem employee Michelle Lowe at her desk Page 12 picture - WFLA-TV, Tampa employee Roger Girson at computer terminal Page 14 picture - WCBD-TV, Charleston employee Monica Simmons at her desk Page 16 picture - Media General Cable of Fairfax employee Mickey Frey at his desk Page 18 picture - Garden State Paper employee Ernie Rosolen standing next to fire pump house Page 20 picture - Media General Financial Services employee Jim Barron at his desk EX-21 7 SUBSIDIARIES 1 Subsidiaries of the Registrant Listed below are the major subsidiaries of the Company, including equity investees, each of which is in the consolidated financial statements of the Company and its Subsidiaries, and the percentage of ownership by the Company (or if indented, by the subsidiary under which it is listed). Subsidiaries omitted from the list would not, if aggregated, constitute a significant subsidiary: Jurisdiction of Securities Name of Subsidiary Incorporation Ownership Charleston Television, Inc. South Carolina 100% Garden State Newspapers, Inc. (a) Delaware 40% Garden State Paper Company, Inc. Virginia 100% Jacksonville Television, Inc. Florida 100% Media General Cable of Fairfax County, Inc. Virginia 100% Piedmont Publishing Company, Inc. North Carolina 100% Richmond Newspapers, Inc. Virginia 100% Tampa Television, Inc. Florida 100% The Tribune Company Florida 100% Virginia Paper Manufacturing Corp. Virginia 100% Southeast Paper Manufacturing Co. (Partnership) Georgia 33.33% (a) Prior to 1992, the Company consistently followed the policy of recording its share of Garden State Newspapers' (GSN) net income or loss before its investment in GSN was reduced to zero in 1991. The Company has not recognized any equity in GSN's, 1992 net income, nor has it since, because it is unlikely it will realize any dividends or cash distributions from GSN operations. EX-23 8 CONSENT 1 CONSENT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Media General, Inc. We consent to the incorporation by reference in this Annual Report (Form 10-K) of Media General, Inc., of our report dated January 25, 1994, included in the 1993 Annual Report to Stockholders of Media General, Inc. Our audits also included the financial statement schedules of Media General, Inc., listed in Item 14(a). These schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in (a) the Registration Statement (Form S-8 No. 2-56905) pertaining to the 1971 Unqualified Stock Option Plan and the 1976 Qualified and Non-Qualified Stock Option Plans of Media General, Inc.; (b) the Registration Statement (Form S-8 No. 33-29478) pertaining to the Media General, Inc., Employees Thrift Plan; (c) the Registration Statement (Form S-8 No. 33-23698) pertaining to the 1987 Non-Qualified Stock Option Plan of Media General, Inc.; (d) the Registration Statement (Form S-3 No. 33-26853) pertaining to the Media General, Inc., Automatic Dividend Reinvestment and Stock Purchase Plan and (e) the Registration Statement (Form S- 8 No. 33-52472) pertaining to the 1987 Non-Qualified Stock Option Plan of Media General, Inc., amended and restated May 17, 1991, and in the Prospectus related to each, of our report dated January 25, 1994, with respect to the consolidated financial statements of Media General, Inc., incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedules of Media General, Inc., included in this Annual Report (Form 10-K) of Media General, Inc., for the fiscal year ended December 26, 1993. ERNST & YOUNG Richmond, Virginia March 22, 1994 9 -----END PRIVACY-ENHANCED MESSAGE-----