-----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, BU1gG9Mgzk0Ulfb8U9qKzw24PPt5eMO6JpViEed/A4GNn9/Bk7Ioku5MqH6M6teC n0o/Vr9RQTWyOjP/1wm+ow== 0000216539-94-000015.txt : 19940519 0000216539-94-000015.hdr.sgml : 19940519 ACCESSION NUMBER: 0000216539-94-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940327 FILED AS OF DATE: 19940509 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06383 FILM NUMBER: 94526721 BUSINESS ADDRESS: STREET 1: 333 E GRACE ST CITY: RICHMOND STATE: VA ZIP: 23219 BUSINESS PHONE: 8046496000 10-Q 1 MEDIA GENERAL 1994 1ST QUARTER 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 27, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission file number 1-6383 MEDIA GENERAL, INC. (Exact name of registrant as specified in its charter) Virginia 54-0850433 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 333 E. Grace St., Richmond, VA 23219 (Address of principal executive offices) Zip Code (804) 649-6000 Registrant's telephone number, including area code N/A --- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----------- ----------- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of April 29, 1994. Class A Common shares: 25,682,925 Class B Common shares: 557,154 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements MEDIA GENERAL, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (000's except shares)
March 27, December 26, 1994 1993 ----------- ------------ ASSETS Current assets: Cash $ 2,551 $ 2,942 Accounts receivable - net 55,899 62,122 Inventories 10,348 10,290 Other 29,038 17,003 ----------- ----------- Total current assets 97,836 92,357 ----------- ----------- Investments in unconsolidated affiliates 45,151 46,675 Other assets 34,405 45,561 Property, plant and equipment - net 516,947 515,225 Excess of cost of businesses acquired over equity in net assets - net 45,312 45,424 ----------- ----------- $ 739,651 $ 745,242 =========== ===========
See accompanying notes. 3 MEDIA GENERAL, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (000's except shares)
March 27, December 26, 1994 1993 ----------- ------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 21,729 $ 20,994 Accrued expenses and other liabilities 66,314 61,066 Income taxes payable 1,936 746 ----------- ----------- Total current liabilities 89,979 82,806 ----------- ----------- Long-term debt 250,250 261,250 Deferred income taxes 88,914 88,679 Other liabilities and deferred credits 86,720 87,073 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 25,682,564 and 25,695,000 shares 128,413 128,475 Class B, authorized 600,000 shares; issued 557,154 shares 2,786 2,786 Additional paid-in capital 5,810 5,967 Unearned compensation (2,712) (3,108) Retained earnings 89,491 91,314 ----------- ----------- Total stockholders' equity 223,788 225,434 ----------- ----------- $ 739,651 $ 745,242 =========== ===========
See accompanying notes. 4 MEDIA GENERAL, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (000's except for per share data)
Three Months Ended March 27, March 28, 1994 1993 ----------- ----------- Revenues $ 149,390 $ 144,190 Operating costs: Production costs 81,743 79,838 Selling, distribution and administrative 41,196 39,913 Depreciation and amortization 14,012 14,586 ----------- ----------- Total operating costs 136,951 134,337 ----------- ----------- Operating income 12,439 9,853 ----------- ----------- Other income (expense): Interest expense (4,882) (5,379) Equity in net loss of unconsolidated affiliate (1,524) (539) Other, net (50) 1,087 ----------- ----------- Total other income (expense) (6,456) (4,831) ----------- ----------- Income before income taxes 5,983 5,022 ----------- ----------- Income taxes 2,034 1,613 ----------- ----------- Net income $ 3,949 $ 3,409 =========== =========== Earnings per common share and equivalent $ 0.15 $ 0.13 =========== =========== Dividends per common share $ 0.11 $ 0.11 =========== =========== Weighted average common shares and equivalents 26,258 26,105
See accompanying notes. 5 MEDIA GENERAL, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (000's)
Three Months Ended March 27, March 28, 1994 1993 ----------- ----------- Cash flows from operating activities: Net income $ 3,949 $ 3,409 Adjustments to reconcile net income: Depreciation and amortization 14,012 14,586 Deferred income taxes (6) (1,070) Equity in undistributed net loss of unconsolidated affiliate 1,524 539 Change in assets and liabilities 9,524 (1,477) ----------- ----------- Net cash provided by operating activities 29,003 15,987 ----------- ----------- Cash flows from investing activities: Capital expenditures (15,447) (6,837) Other, net (139) 2,724 ----------- ----------- Net cash used in investing activities (15,586) (4,113) ----------- ----------- Cash flows from financing activities: Net decrease in long-term debt (11,000) (10,000) Dividends paid (2,886) (2,882) Other, net 78 655 ----------- ----------- Net cash used in financing activities (13,808) (12,227) ----------- ----------- Net decrease in cash (391) (353) Cash at beginning of year 2,942 2,791 ----------- ----------- Cash at end of period $ 2,551 $ 2,438 =========== =========== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest (net of amount capitalized) $ 5,020 $ 6,050 Income taxes (net of refunds) 830 655
See accompanying notes. 6 MEDIA GENERAL, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting, and with applicable quarterly reporting regulations of the Securities and Exchange Commission. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and, accordingly, should be read in conjunction with the consolidated financial statements and related footnotes included in the Company's Annual Report on Form 10-K for the year ended December 26, 1993. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of interim financial information have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the full fiscal year. 2. Inventories are principally raw materials. 3. At March 27, 1994, 1,092,824 shares of Class A common stock were reserved for issuance upon exercise of unqualified stock options granted. 4. Effective December 27, 1993, the Company adopted Statement of Financial Accounting Standards No. 112 (SFAS 112), "Employers' Accounting for Postemployment Benefits". This standard requires that the cost of certain benefits, such as workers' compensation, disability benefits and health care continuation coverage provided to former or inactive employees be recognized on the accrual basis of accounting. Prior to the date of adoption of SFAS 112, the Company already accounted for the majority of these benefit costs on the accrual method. Consequently, the effects on the Company of adopting the standard were not material and have been charged to operating costs in the accompanying Statement of Operations. 5. On April 7, 1994, the stock redemption agreement between the Company and Mr. D. Tennant Bryan, Chairman of the Executive Committee of the Board of Directors, was amended and restated. Under the terms of the former agreement, the Company was obligated to purchase some of the Class A shares of the Company owned by Mr. Bryan at his death. The number of shares required to be acquired was determined by reference to certain taxes and other expenses which would be incurred by Mr. Bryan's estate, and the price per share would be 90% of the market price of the shares during a period immediately preceding his death. At December 26, 1993, the Company's obligation for the purchase of Class A shares under the former agreement would have approximated $37 million. The amended agreement provides that upon Mr. Bryan's death, his estate has the option to sell and the Company has a separate option to buy the lesser of (a) 15% of the Company's Class A stock owned by Mr. Bryan at his death and (b) a sufficient number of shares of Class A stock to fund estate taxes and certain funeral and administrative expenses. The purchase price for each share redeemed under the amended agreement will equal 90% of the average daily closing price for a share of Class A stock during the 91 days preceding the date that is 30 days after the date of death. The agreement also provides that, if the estate pays taxes in installments over a period of time, and if a redemption right has been exercised, the Company in certain circumstances also may elect to pay the redemption price in installments, plus interest at the rate paid by the estate. Assuming the amended agreement had been in place on March 27, 1994, if the 7 Company or the estate had exercised an option, respectively, to buy or sell, the maximum cost to the Company of the redemption would have approximated $7 million. 6. As disclosed in Note 3 to the Company's 1993 Annual Report, Garden State Newspapers (GSN) has 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 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 closing date under the Agreement, has been extended from April 29, 1994, to May 19, 1994. The Agreement remains 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. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW Media General, Inc., is a diversified communications company with wholly owned subsidiaries operating within three principal business segments: newspaper publishing, broadcast and cable television operations, and newsprint manufacturing. In addition to the three principal business segments, the Company has auxiliary operations in the financial and business publishing, and commercial printing fields. The Company also participates in newspaper publishing and newsprint manufacturing joint venture operations, the operating results of which are recognized under the equity method of accounting. The Company's businesses are somewhat cyclical; the second and fourth quarters are typically stronger than the first and third quarters. The Company's fiscal year ends on the last Sunday in December. INCREASE (DECREASE) IN OPERATING COMPONENTS
Three Months Ended March 27, 1994 Compared To Equivalent Period Last Year Increase (Decrease) Amount Percent ---------------------- Revenues $ 5,200 3.6 % Production costs 1,905 2.4 Selling, distribution and administrative 1,283 3.2 Depreciation and amortization (574) (3.9) Operating income 2,586 26.2 Other income (expense) (1,625) 33.6 Income before income taxes 961 19.1 Income taxes 421 26.1 Net income 540 15.8
9 REVENUES Consolidated revenues increased $5.2 million (3.6%) in the first quarter of 1994 compared to the equivalent quarter of 1993. Newspaper segment revenues for the first quarter were $77.9 million, up 4.8% from the comparable 1993 quarter. Within the three daily newspapers which comprise the Company's metropolitan newspaper group, advertising revenues increased 5.2%, reflecting a 2.8% average rate increase and a 2.3% rise in advertising inches. Classified advertising revenues, particularly in the automotive and employment categories, and general advertising revenues, driven by airline and cruise line spending, improved meaningfully from the year-ago period. Retail advertising remained soft overall, the result of severe winter weather and ongoing retail store closings and consolidations. Circulation revenues rose 2.2% from the first quarter of 1993, the result of average circulation rate increases of 5.4% which more than offset a 3% decline in combined circulation volume. The volume decline was primarily attributable to the selective pull-back of circulation by The Tampa Tribune in the more distant districts it serves, and to the effect of circulation rate increases implemented since the year-ago quarter. Television segment revenues increased $2.2 million (5.2%) compared to the first quarter of 1993. The increase was primarily attributable to the Company's three broadcast TV stations, where combined revenues rose $1.8 million (15.3%) in the current quarter from the year-ago period. Local and national advertising revenues increased 16.8% and 20%, respectively, in the quarter, led by strong growth in advertising by domestic and foreign car manufacturers. Revenues of the Company's Fairfax County, Virginia, cable system (Fairfax Cable) were essentially level with the year-ago period. Growth in installation revenues, the result of a 2.4% increase in the number of subscribers (to 207,700 at March 27, 1994), and an increase in pay-per-view revenues of 18.5% ($.3 million) was essentially offset by the effect of a 4.5% decline in revenue per subscriber (excluding pay-per-view), the result of a decrease in the percentage of total subscribers taking expanded programming services. The decrease in the percentage of subscribers taking expanded cable service is, to a significant degree, attributable to the Cable Television Consumer Protection and Competition Act of 1992 (Cable Act), which now allows subscribers who take basic cable service to subscribe directly to premium pay channels. On September 1, 1993, Fairfax Cable implemented new rates to comply with the rate regulation provisions of the Cable Act. Those rates resulted in increased bills for some subscribers, and decreased bills for others, but had an essentially revenue- neutral effect when compared to the total average monthly rate charged all subscribers as a group. On March 30, 1994, the Federal Communications Commission (FCC) announced the adoption of further detailed rules intended to govern rates which cable operators may charge subscribers. While the Company continues to study the new rules, its preliminary evaluation indicates that their overall effect is unlikely to be material to the Company's financial position or results of operations. Cable rates are subject to local franchise authority and FCC review, and further rate regulation by the FCC is possible. As a result of the Cable Act, Fairfax Cable's near-term revenue growth will be largely dependent upon its success in increasing its subscriber base and in expanding subscriber use of its unregulated services, such as pay-per-view programming. Newsprint segment revenues decreased $.9 million (3.7%) in the first quarter of 1994 from the comparable period of 1993. The decrease was principally attributable to the Company's Garden State Paper newsprint mill, where newsprint tonnage sold increased slightly (.6%) from the year-ago quarter, but average newsprint selling prices declined 7.2% (from approximately $417/ton to 10 $387/ton), the result of pricing pressure attributable to a continued supply and demand imbalance. Newsprint prices are expected to remain soft during most of the first-half 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. OPERATING COSTS Production costs increased $1.9 million (2.4%) in the first quarter of 1994 from the comparable 1993 period. The increase reflects the effects of a $1 million (3.4%) rise in compensation and employee benefit costs, and increases of $.7 million in fuel and utility costs and $.3 million in waste news costs (due to increased price and consumption in both cases), primarily in the Company's newsprint operations. Together, these more than offset reduced maintenance and repairs expenses, down $.5 million mainly as a result of a comparative decline in newsprint manufacturing equipment repairs, a $.4 million reduction in the cost of newsprint consumed, principally the result of a decline in the average cost of newsprint consumed by the Company's metropolitan newspapers, and a $.3 million decrease in insurance, reflecting the effect on workers' compensation costs of aggressive worker safety awareness programs within the Company's newspaper operations. Selling, distribution and administrative costs increased $1.3 million (3.2%) from the year-ago quarter. Increases in compensation and employee benefit costs (up 2.4%), agency commissions (up due to expanded advertising revenues), and in other administrative expenses more than offset declines in bad debt expense (down principally on improved collection results and receivables aging at the Company's newspapers) and reduced newspaper circulation promotion incentives. Depreciation and amortization expense declined $.6 million (3.9%) in the first quarter of 1994 from the comparable period of 1993. The decline, which occurred in all of the Company's significant business segments, was attributable to a comparative reduction in assets placed in service, and to certain newspaper press equipment becoming fully depreciated at the end of 1993. OTHER INCOME (EXPENSE) Interest expense declined $.5 million (9.2%) in the first quarter of 1994 from the comparable quarter of 1993. The decrease was principally the result of the significant ($66 million) decline in average debt outstanding from the year-ago period, which more than offset the effect of a 73 basis point rise (to approximately 7.7%) in the Company's average borrowing rate from the prior comparable quarter. The Company's share of the net loss of its unconsolidated affiliate, Southeast Paper Manufacturing Company (SEPCO), increased to $1.5 million in the current quarter from $.5 million in the first quarter of 1993. The increased loss was primarily attributable to the reduced average newsprint selling price realized by SEPCO during the quarter, down 8.1% from the year-ago period, which more than offset the combined effects of a slight increase in tons sold and reduced maintenance, chemical and fiber costs. Other income (expense), net, decreased $1.1 million from the first quarter of 1993, to an expense of $50 thousand in the current period. The decrease was primarily attributable to the quarter-to-quarter reduction in insurance proceeds recognized in connection with a late-1992 fire ($.8 million) and to a decrease in interest income ($.3 million), principally as a result of the repayment of a note receivable in 1993. 11 NET INCOME Net income for the first quarter of 1994 was $3.9 million, up $.5 million (15.8%) from the first three months of 1993. The following discussion focuses on the pretax operating income of each of the Company's principal business segments, and on income taxes. Newspaper segment operating income rose to $5.5 million in the first quarter of 1994 from $1.5 million in the same period of 1993. While all three of the Company's daily metropolitan newspapers contributed to the increased profitability, the major share of the earnings growth was produced by The Tampa Tribune, due mainly to significant growth in general and classified advertising revenues (up 22.9% and 14.9%, respectively) combined with the effects of meaningful operating cost reductions. Television segment operating income increased $.5 million (7.8%) from the year-ago period, primarily the result of strong revenue gains at the Company's three broadcast TV stations. Newsprint segment operating income declined from a profit of $1.7 million in the first quarter of 1993 to an operating loss of $.3 million in the current quarter, chiefly the result of a 7.2% decline in average realized newsprint prices from the year-earlier period. Income taxes rose $.4 million (26.1%) in the first quarter of 1994 from the comparable 1993 amount on a $1 million (19.1%) rise in income before income taxes. The Company's effective tax rate increased to 34% from 32.1% in the year-ago period, principally the result of the corporate tax rate increase enacted in August 1993 as well as a decrease in the favorable tax effects of certain insurance programs. LIQUIDITY AND CAPITAL RESOURCES Funds generated by operating activities during the first three months of 1994 totaled $29 million, up $13 million from the comparable period of 1993. The increase was due principally to improved profitability, to the increase in funds generated by comparative reductions in accounts receivable, inventories and other current assets, and to a reduction of funds applied to reduce accrued expenses and other current liabilities. The primary use of cash in the first quarter of 1994 was $15.4 million for capital expenditures ($10.2 million of which related to the new Winston-Salem Journal production facility which is expected to be completed during the third quarter of 1994 at a cost of approximately $44 million), $11 million for the curtailment of debt, and $2.9 million for the payment of dividends to stockholders. At March 27, 1994, total debt was $250.8 million compared to $261.8 million at December 26, 1993, and $310.5 million at March 28, 1993. Although the Company's debt level may rise temporarily in the second and third quarters of 1994 as construction of the Winston-Salem project enters it final phases, the Company anticipates that, barring unexpected funds requirements, internally generated funds provided by operations during 1994 will be more than adequate to finance projected capital expenditures, dividends to shareholders, and working capital needs, and that excess funds will be utilized to further reduce debt from the current level. However, to ensure continued flexibility should unexpected needs or opportunities arise, at March 27, 1994, the Company had available to it unused credit lines of $101 million under revolving credit agreements with five banks, and an uncommitted credit facility with an insurance company which 12 provides for additional borrowings of up to $85 million at prevailing interest rates. OUTLOOK While prospects remain favorable for the Company's newspaper and broadcast TV operations in the second quarter, newsprint profitability will remain under pressure in all likelihood, and the Company's cable TV performance will continue to be limited by restrictive reregulation provisions. Overall, however, the Company continues to expect solid year-over-year operating gains, with much of the improvement coming in the latter half of the year. 13 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 2 Amendment dated May 3, 1994, to Letter Agreement dated March 16, 1994, by and among Media General, Inc., Affiliated Newspaper Investment Company, and Garden State Newspapers, Inc. Exhibit 10.1 Amended and Restated Redemption Agreement between Media General, Inc., and D. Tennant Bryan, dated April 7, 1994. (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended March 27, 1994. SIGNATURES Pursuant to the requirements 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: May 9, 1994 /s/ J. Stewart Bryan III --------------------------------- J. Stewart Bryan III, Chairman, President and Chief Executive Officer DATE: May 9, 1994 /s/ Marshall N. Morton --------------------------------- Marshall N. Morton, Senior Vice-President and Chief Financial Officer EX-2 2 AMENDMENT TO LETTER AGREEMENT 1 Exhibit 2 Garden State Newspapers, Inc. Loop Central One 4888 Loop Central Drive, Suite 425 Houston, Texas 77081 May 3, 1994 Mr. Stewart Bryan, III Chairman of the Board of Directors and President Media General, Inc. 333 East Grace Street Richmond, VA 23219 Dear Stewart: This letter will serve as an amendment to the March 16, 1994 Letter Agreement (the "Letter Agreement") pursuant to which Affiliated Newspapers Investment Company will acquire all of the common and preferred stock of Garden State held by Media General. Except as expressly provided herein, all of the existing terms of the Letter Agreement will remain unchanged and will continue in full force and effect. 1. Paragraph 6 of the Letter Agreement is amended in its entirety to read as follows: "ANI shall have (i) until May 12, 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 May 19, 1994 to close the transactions contemplated by paragraphs 1 and 2. If (a) the offering has not been priced on or before May 12, 1994, or (b) the closing of the transactions contemplated by paragraphs 1 and 2 have not occurred on or before May 19, 1994 (unless the parties have mutually agreed in writing to extend such deadline), 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." Please confirm your acceptance of the terms of this amendment to the Letter Agreement by signing the attached facsimile of this letter and returning a signed copy of this letter by facsimile to me by May 3, 1994. If we do not receive your response by 5:00 p.m. on such date, we will assume that the Letter Agreement shall no longer be of any force or effect. 2 Yours very truly, AFFILIATED NEWSPAPERS INVESTMENT COMPANY By: /s/ Joseph J. Lodovic Joseph J. Lodovic, IV Executive Vice President Chief Financial Officer and Treasurer GARDEN STATE NEWSPAPERS, INC. By: /s/ Joseph J. Lodovic Joseph J. Lodovic, IV Executive Vice President Chief Financial Officer and Treasurer AGREED AND ACCEPTED: MEDIA GENERAL, INC. By: /s/ J. Stewart Bryan, III J. Stewart Bryan, III Chairman and President EX-10.1 3 AMENDED & RESTATED REDEMPTION AGREEMENT 1 Exhibit 10.1 AMENDED AND RESTATED REDEMPTION AGREEMENT April 7, 1994 The REDEMPTION AGREEMENT dated November 19, 1985, between MEDIA GENERAL, INC., a Virginia corporation (the "Company"), and D. TENNANT BRYAN (the "Shareholder"), and amended and restated as of January 29, 1988, is hereby amended and restated as of April 7, 1994, as follows: RECITALS: A. The Shareholder owns 2,179,491 shares of the Company's Class A common stock (the "Shares") as of the date of this Agreement. B. The Shareholder wishes to ensure that his estate will be able to sell a sufficient number of the Shares to pay a portion of the federal and state transfer taxes and expenses incurred as a result of the Shareholder's death. C. The Company believes it is in its best interests and the best interests of its remaining shareholders to be in a position to redeem a portion of the Shares from the Shareholder's estate for a number of reasons, including among others, an ability to purchase a portion of the Shares at a discount from prevailing market prices. D. The parties intend that payments in redemption of any of the Shares pursuant to this Agreement qualify as distributions in payment for the Shares pursuant to section 303(a) of the Internal Revenue Code of 1986, as amended (the "Code"). Therefore in consideration of the foregoing and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 2 1. Purchase of Shares. Following the death of the Shareholder, the Company shall have the right to purchase from the Shareholder's Personal Representative, and the Personal Representative shall have the right to sell to the Company, upon proper notice to the other party pursuant to Section 3 and on the terms and conditions set forth in this Agreement, the number of the Shares designated by the Company or the Personal Representative, as the case may be, pursuant to Section 3. 2. Purchase Price. The purchase price for each of the Shares purchased will equal 90 percent of the average daily closing price for a share of the Company's Class A common stock in the principal market in which the Shares are traded on trading days falling within the 91 calendar day period preceding the date that is 30 days after the date of the Shareholder's death (the "Purchase Price"). 3. Number of Shares to be Purchased. The number of the Shares that the Company shall purchase from the Personal Representative, if any, shall be within the discretion of the party, i.e., the Company or the Personal Representative, as the case may be, that elects by appropriate notice pursuant to this Section 3, to have some of the Shares so purchased (the "Electing Party"). Notwithstanding the foregoing, however, the largest number of Shares that the Electing Parties collectively may elect to have the Company purchase shall be the lesser of: (a) 15 percent of the Shares owned by the Shareholder at his death; and (b) the number of the Shares (to the nearest Share) obtained by dividing (i) the sum of the estate, inheritance, legacy, and succession taxes (including any interest collected as a part of such taxes) imposed because of the Shareholder's death, and the amount of the funeral and administrative expenses allowable as deductions to the Shareholder's estate under section 2053 of the Code, by (ii) the Purchase Price per share. The Electing Party shall notify the other party of the number of the Shares it elects to have the Company 3 purchase as soon as possible after the Shareholder's death, but in no event later than seven months after the Shareholder's death. If either party elects to have the Company purchase some of the Shares, then the Personal Representative shall notify the Company whether the Personal Representative has elected, anticipates electing or has obtained permission to extend the period of time for paying Federal and Virginia estate taxes owed by the Shareholder's estate. Any election hereunder shall be without prejudice to the right of the other party to elect, by appropriate notice pursuant to this Section 3, to have the Company purchase such additional number of the Shares as shall cause the total number purchased by the Company not to exceed the maximum number permitted by this Section 3. 4. Closing and Payment (a) Closing. The closing for any purchase of the Shares pursuant to this Agreement shall take place at the principal office of the Company, 333 East Grace Street, Richmond, Virginia, on or before the forty-fifth (45th) day following the date the Electing Party notifies the other party of its election to have some of the Shares purchased pursuant to Section 3 of this Agreement. Except as otherwise provided in Section 4(b) hereof, the payment of the purchase price shall be made by the Company by "same day funds" against delivery by the Personal Representative of a certificate or certificates for the Shares to be purchased free and clear of any liens or encumbrances, other than unpaid Federal and Virginia estate taxes, and in proper form and duly endorsed for transfer to the Company. (b) Installment Payments. Notwithstanding the provisions of Section 4(a) hereof, if the Personal Representative shall elect or shall provide notice to the Company of its intention to elect to extend the time for payment of Federal estate taxes owed by the Shareholder's estate pursuant to section 6166 of the Code, or shall obtain permission from the Internal Revenue Service to 4 extend the time for such payment pursuant to section 6161 of the Code, then, at the option of the Company, the Company's payment of the purchase price at the closing may be made partly in "same day funds" and partly by a nontransferable term installment note. (1) Section 6166 Election. If, prior to the closing of any purchase of Shares, the Personal Representative shall have made an election or shall have provided notice of its intention to make an election pursuant to section 6166 of the Code, then the portion of the purchase price paid in "same day funds" shall be an amount determined by multiplying (i) the product of the Purchase Price and the number of Shares to be purchased at the closing (the "closing purchase price"), by (ii) a fraction, the numerator of which shall be the amount of the federal and Virginia estate taxes not paid in installments under section 6166 of the Code, and the denominator of which shall be the total federal and Virginia estate taxes owed by the Shareholder's estate. For example, if the closing purchase price is $10X, the total federal and Virginia estate taxes are $50X, and the amount of federal and Virginia estate taxes not paid in installments under section 6166 of the Code is $5X, then the portion of the purchase price paid in same day funds shall be not less than $10X multiplied by $5X/$50X, or $1X. The installment note shall provide for payments of principal and interest to be made five days before any day on which payments of estate taxes and interest will be made and for which the Personal Representative shall have provided at least fifteen days' notice. Until the total closing purchase price shall have been paid, the principal amount of each such installment payment shall be determined by multiplying the closing purchase price by a fraction, the numerator of which shall be the principal amount of the federal and Virginia estate taxes then being paid, and the denominator of which shall be the total federal and Virginia 5 estate taxes owed by the Shareholder's estate without reduction for any such taxes previously paid. The installment note shall bear interest on the unpaid balance of the closing purchase price, from the closing date, payable at such times as installments of principal are payable, at such rate or rates as shall equal the rate or rates of interest payable by the Shareholder's estate with respect to the unpaid portion of the estate tax. (2) Section 6161 Extension. If, prior to the closing of any purchase of Shares, the Personal Representative shall have obtained permission from the Internal Revenue Service to extend the time for payment of Federal estate taxes pursuant to section 6161 of the Code, then the portion of the closing purchase price paid in same day funds shall be the greater of (i) the portion of the closing purchase price that would be required to be paid in same day funds pursuant to Section 4(b)(1) above if an election had been made pursuant to section 6166, and (ii) the sum of the Shareholder's debts at the time of his death, specific cash bequests in the Shareholder's will or any trust agreement, and the reasonably anticipated costs of administering the Shareholder's estate for the first year of such administration. The installment note shall provide for payments of principal and interest to be made five days before any day on which payments of estate taxes and interest will be made and for which the Personal Representative shall have provided at least fifteen days' notice, but not less often than annually. Until the total closing purchase price shall have been paid, the principal amount of each such installment payment shall be not less than the sum of (i) an amount which shall be determined by multiplying the closing purchase price by a fraction, the numerator of which shall be the principal amount of the federal and Virginia estate taxes then being paid, and the denominator of which shall be the total federal and Virginia estate taxes owed by the Shareholder's estate without reduction for any such taxes previously paid, and (ii) the administrative 6 expenses of the estate reasonably anticipated to be payable within the next twelve months. The installment note shall bear interest on the unpaid balance of the closing purchase price, from the closing date, payable at such times as installments of principal are payable, at such rate or rates as shall equal the rate or rates of interest payable by the Shareholder's estate with respect to the unpaid portion of the estate tax. 5. Effect of Stock Splits. If the number of outstanding shares of the Company increases between the Shareholder's death and the date of the closing as set forth in Section 4 of this Agreement as a result of a stock split or stock dividend, the Purchase Price and the number of the Shares to be purchased under Section 3 of this Agreement shall be adjusted accordingly. 6. Limitations on the Company's Obligation to Repurchase (a) No Impairment of the Company's Capital. Notwithstanding any other provision of this Agreement, no redemption of Shares shall be made by the Company if the capital of the Company is then impaired or if the redemption of the Shares would cause any impairment of the capital of the Company within the meaning of Sec. 13.1-653(C)(2) of the Virginia Stock Corporation Act or any similar applicable statute or regulation, or if the Company is then insolvent or unable to pay its debts as they become due in the usual course of business or the redemption of the Shares would render the Company insolvent or unable so to pay its debts within the meaning of Sec. 13.1-653(C)(1) of the Virginia Stock Corporation Act or any similar applicable statute or regulation. (b) Compliance with Securities Laws. Notwithstanding any other provision of this Agreement, the Company shall not be obligated to redeem the Shares if, in the opinion of the Company or its counsel, to do so would cause the Company to violate applicable federal or state securities laws, rules or regulations, or to violate any obligation imposed on the Company by such laws, 7 rules or regulations or administrative or court decision thereunder. (c) Suspension of Obligation to Redeem the Shares. If, pursuant to Section 6(a) or 6(b) hereof, the Company does not redeem the Shares at the initial date for such redemption set forth in Section 4(a) above, then the Company shall notify the Personal Representative as soon as the condition precluding the redemption no longer applies, and then will redeem the Shares within forty-five (45) days following the delivery of a new notification to or receipt of a new notification from the Personal Representative pursuant to Section 3 hereof; provided, however, that the Personal Representative shall not be obligated to sell the Shares if, in the opinion of its counsel, to do so would cause it to violate applicable federal or state securities laws, rules or regulations, or to violate any obligation imposed on the Personal Representative by such laws, rules or regulations or administrative or court decision thereunder or incur a liability under Section 16(b) of the Securities Exchange Act of 1934 or the corresponding provision of any subsequent law. The Shareholder's estate shall continue to be the owner of the Shares for all purposes, until the closing of any purchase of the Shares. In the event that the condition precluding the redemption continues for a period of twelve (12) consecutive months following the delivery of the initial notice to or receipt of the initial notice from the Personal Representative pursuant to Section 3 hereof, then the Company shall so notify the Personal Representative and any further obligation or right of the Company to redeem the Shares under this Agreement shall cease and be of no further force or effect. The Company shall not be liable to any person for any failure to redeem the Shares by reason of the prohibitions set forth in this Section 6. 7. Notices. All notices under this Agreement must be in writing, and shall be duly given if delivered by hand or by certified mail to the following address or such other address as either party may hereafter designate by written notice to the other: to the Company at 333 East Grace Street, 8 Richmond, Virginia 23219, Attention: Chief Financial Officer; to the Shareholder at 211 Ampthill Road, Richmond, Virginia 23226; and to any Personal Representative of the Shareholder at such address as the Personal Representative shall give in writing to the Company. If mailed, notice shall be deemed given on the date of delivery shown on any post office receipt or, if none, on the fifth (5th) day after deposit of such notice in the United States mail with first class postage prepaid. 8. Personal Representative Defined. For purposes of this Agreement, the term "Personal Representative" shall include the following acting together as a group: (a) the executors or administrators of the Shareholder's estate; (b) the trustees of any trust created by the Shareholder (either at the Shareholder's death or during the Shareholder's lifetime); and (c) any other fiduciary acting in any similar capacity. 9. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company and its successor or assigns and upon the Shareholder, his heirs, and his Personal Representative, and each member of the group constituting his Personal Representative. 10. Applicable Law. This Agreement shall be governed by and construed according to the laws of the Commonwealth of Virginia. 11. Modification. No change or modification to this Agreement shall be effective unless it is in writing and signed by each of the parties. 9 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. /s/D. Tennant Bryan --------------------------- D. Tennant Bryan Date: 13 April '94 ---------------------- MEDIA GENERAL, INC. By:/s/ Marshall N. Morton --------------------------- Senior Vice President and Chief Financial Officer Date: 4/13/94 ---------------------- -----END PRIVACY-ENHANCED MESSAGE-----