-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pj33k1iJ5C8uAgfO0VPgwvHqObN492qqs9cnFpI24AKMfB6FD/GmyoE0Q+mZVC1c pr+J3/1nHKyzOfBfVvMxeA== 0000916641-01-000388.txt : 20010326 0000916641-01-000388.hdr.sgml : 20010326 ACCESSION NUMBER: 0000916641-01-000388 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010323 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDIA GENERAL INC CENTRAL INDEX KEY: 0000216539 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 540850433 STATE OF INCORPORATION: VA FISCAL YEAR END: 1227 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-06383 FILM NUMBER: 1576951 BUSINESS ADDRESS: STREET 1: 333 E GRACE ST CITY: RICHMOND STATE: VA ZIP: 23219 BUSINESS PHONE: 8046496000 10-K405 1 0001.txt ANNUAL REPORT ON FORM 10-K405 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 For the fiscal year ended December 31, 2000 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 Franklin 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: Class A Common Stock American Stock Exchange (Title of class) (Name of exchange on which registered) 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. [X] The aggregate market value of voting stock held by nonaffiliates of the registrant, based upon the closing price of the Company's Class A Common Stock as reported on the American Stock Exchange, as of March 4, 2001, was approximately $996,000,000. The number of shares of Class A Common Stock outstanding on March 4, 2001, was 22,369,856. The number of shares of Class B Common Stock outstanding on March 4, 2001, was 556,574. Part I, Part II and Part IV incorporate information by reference from the Annual Report to Stockholders for the year ended December 31, 2000. Part III incorporates information by reference from the proxy statement for the Annual Meeting of Stockholders to be held on May 18, 2001. Index to Media General, Inc. Annual Report on Form 10-K for the Year Ended December 31, 2000 Item No. Page Part I 1. Business General 1 Publishing 2 Broadcast 3 Interactive Media 6 2. Properties 7 3. Legal Proceedings 8 4. Submission of Matters to a Vote of Security Holders 8 Executive Officers of Registrant 8 Part II 5. Market for Registrant's Common Equity and Related Stockholder Matters 8 6. Selected Financial Data 9 7. Management's Discussion and Analysis of Financial Condition and Results of Operation 9 7A. Quantitative and Qualitative Disclosures About Market Risk 9 8. Financial Statements and Supplementary Data 9 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 9 Part III 10. Directors and Executive Officers of the Registrant 9 11. Executive Compensation 9 12. Security Ownership of Certain Beneficial Owners and Management 9 13. Certain Relationships and Related Transactions 10 Part IV 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 10 Schedule II 11 Index to Exhibits 12 Signatures 16
Part I Item 1. Business General Media General, Inc., is an independent, publicly owned communications company situated primarily in the Southeast with interests in newspapers, television stations, interactive media and diversified information services. The Company employs approximately 9,000 people on a full or part-time basis. The Company's businesses are somewhat seasonal; the second and fourth quarters are typically stronger than the first and third quarters. Through a series of strategically targeted acquisitions and dispositions over the past several years, the Company has significantly expanded its reach in the Southeast and intensified its focus on newspapers and television stations in this thriving region. In March 2000 the Company acquired the common stock of Spartan Communications, Inc., which included 12 network-affiliated television stations and one UPN affiliate which is operated under a local marketing agreement. The total consideration approximated $610 million (including approximately $9 million of transaction costs and net of $5 million cash received). In August 2000 the Company acquired, for approximately $238 million, the assets of certain newspaper groups located primarily in South Carolina and Alabama from Thomson Newspapers (circulation - 88,000 daily, 91,000 Sunday). Additionally, in June 2000, the Company acquired a group of weekly newspapers in southwestern Virginia (circulation - 17,000 weekly) from Family Community Newspapers of Southwest Virginia, Inc., for approximately $9 million. These transactions culminated in the Company's ownership of 25 daily newspapers and nearly 100 other publications, as well as 26 (21 southeastern) television stations. In September 2000 the Company sold Garden State Paper (GSP) to an affiliate of Enron North America Corporation for approximately $76.6 million, including working capital. The Company recorded a loss of $13.8 million (net of income tax benefit of $6.2 million) which is subject to resolution with the buyer of certain income tax matters and other items. The transaction also included a seven-year, financial fixed-price newsprint agreement which the Company does not intend to retain. In October 1999 the Company sold its cable operations to Cox Communications, Inc., for approximately $1.4 billion in cash, at which time the Company recorded a gain of $799 million (net of income taxes of $510 million). In the second quarter of 2000, certain final post-closing adjustments related to this sale resulted in an additional gain of $8.3 million (net of income taxes of $3.6 million). Immediately following the sale in 1999, approximately $735 million of the proceeds were used to repay all amounts outstanding under the Company's revolving credit agreements and to terminate the associated interest rate swaps; the remaining proceeds were invested principally in prime-rated commercial paper. In June 1999 the Company sold 20% of the outstanding common stock of Denver Newspapers, Inc. (Denver), the parent company of The Denver Post (a Colorado daily newspaper), for $39 million, resulting in a $19 million after-tax gain. The Company still retains 20% ownership of the common stock of Denver. Additionally, the Company's preferred stock investment in Denver was redeemed in June 1999, for $34 million plus $19.2 million of accrued but unpaid dividends. In May 1999, the Company sold its WHOA-TV station in Montgomery, Alabama, for approximately $8 million. 1 In December 1999 the Company initiated a program to repurchase up to $250 million of its Class A common stock. Through December 2000, 4.1 million shares had been repurchased at a cost of approximately $204 million. In January 1998 the Company acquired, for approximately $93 million, the assets of the Bristol Herald Courier, a daily newspaper in southwestern Virginia (circulation - 42,000 daily, 44,000 Sunday), and two affiliated weekly newspapers (circulation - 6,000 weekly). In July 1998 the Company acquired, for approximately $40 million, the assets of the Hickory Daily Record, a daily newspaper in northwestern North Carolina (circulation - 20,000 daily, 21,000 Sunday). Additionally, in June 1998, the Company completed the sale of its Kentucky newspaper properties for approximately $24 million. Industry Segments During 2000 the Company was engaged in two significant industry segments. For financial information related to these segments see pages 33 through 35 of the 2000 Annual Report to Stockholders, which are incorporated herein by reference. On January 1, 2001, the Company launched a third segment, Interactive Media, the operations of which have historically (including during 2000) been a part of the Publishing and Broadcast Segments. Additional information related to each of the Company's significant industry segments is included below. Publishing Business At December 31, 2000, the Company's wholly owned publishing operations included daily and Sunday newspapers in Virginia, Florida, North Carolina, Alabama and South Carolina. For a listing of the Company's daily and Sunday newspapers by location, see page 46 of the 2000 Annual Report to Stockholders, which is incorporated herein by reference. Combined paid circulation for these newspapers in 2000 was as follows: Newspaper Location Daily Sunday Weekly - -------------------------------------------------------------- Virginia 365,000 411,000 49,000 Florida 232,000 310,000 1,000 North Carolina 168,000 180,000 8,000 Alabama 55,000 56,000 3,000 South Carolina 33,000 35,000 9,000 The Company also holds 20% of the common stock of the Denver Post Corporation, the parent company of The Denver Post, a daily newspaper in Denver, Colorado. Effective January 2001, The Denver Post and the Denver Rocky Mountain News entered into a joint-operating agreement under which the competing newspapers combined their advertising, circulation and production operations, while maintaining separate newsrooms. The newspaper publishing industry in the United States is comprised of hundreds of public and private companies ranging from large national and regional companies, publishing multiple newspapers across many states, to small privately held companies publishing one newspaper in one locality. The trend in the publishing industry (as well as the broadcast industry) has been toward consolidation. Generally, larger companies, like Media General, have acquired smaller family-owned entities based upon their availability; these properties do not reappear on the market unless the larger companies make strategic decisions to exit a particular market or to exit a segment of their business. 2 Acquisitions and growth achieved by the Company over the past several years have placed it in the top ten publicly held publishing companies in the United States based on both daily circulation and revenues. Moreover, the Company has achieved the number three position in circulation in its chosen southeastern area of focus, with its publications reaching over one million households across the Southeast every week. 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, broadcast and cable television, the Internet and other promotional media. All of the newspapers compete for circulation principally on the basis of content, quality of service and price. The primary raw material used by the Company in its publishing operations is newsprint, which is purchased at market prices from various Canadian and United States sources, including SP Newsprint Company (SPNC), in which the Company owns a one-third equity interest. SPNC has mills in Dublin, Georgia, and Newberg, Oregon, for a combined annual capacity of 970,000 short tons. The publishing operations of the Company consumed approximately 143,000 short tons of newsprint in 2000. Management of the Company believes that sources of supply under existing arrangements will be adequate in 2001. Broadcast Business The ownership, operation and sale of broadcast television stations, including those licensed to the Company, are subject to the jurisdiction of the Federal Communications Commission (FCC), which engages in extensive and changing regulation of the broadcasting industry under authority granted by the Communications Act of 1934 (Communications Act) and the rules and regulations of the FCC. The Communications Act requires broadcasters to serve the public interest. Among other things, the FCC assigns frequency bands; determines stations' locations and operating power; issues, renews, revokes and modifies station licenses; assigns and controls changes in ownership or control of station licenses; regulates equipment used by stations; adopts and implements regulations and policies that directly or indirectly affect the ownership, operation and employment practices of stations; regulates certain program content and commercial matters in children's programming; has the authority to impose penalties for violations of its rules or the Communications Act; and imposes annual fees on stations. Reference should be made to the Communications Act, the FCC's rules, public notices and rulings for further information concerning the nature and extent of federal regulation of broadcast television stations. 3 The Broadcast Television Division operates twenty-six network-affiliated television stations in the United States. The following table sets forth certain information on each of these stations:
Expiration Expiration National Date of Date of Station Location Market Station Audience FCC Network and Affiliation Rank (a) Rank (a) * % Share (a) * License (b) Agreement --------------- -------- -------- ----------- ----------- --------- WFLA-TV NBC 14 1 12% 2/1/05 12/31/04 Tampa, FL WSPA-TV CBS 35 1 17% 12/1/04 6/30/05 Greenville, SC Spartanburg, SC Satellite: WNEG-TV, Toccoa, GA WASV-TV UPN, (c) 35 7 2% 12/1/04 10/31/07 Anderson, SC Asheville, NC WIAT-TV CBS 39 4 9% 4/1/05 12/31/04 Birmingham, AL WJWB-TV WB 53 4 6% 2/1/05 1/12/04 Jacksonville, FL WKRG-TV CBS 62 1 16% 4/1/05 4/2/05 Mobile, AL Pensacola, FL KWCH-TV CBS 65 1 17% 6/1/06 6/30/05 Wichita, KS Satellites in Kansas: KBSD-TV, Dodge City KBSH-TV, Hays KBSL-TV, Goodland WTVQ-TV ABC 66 3 10% 8/1/05 1/1/06 Lexington, KY WSLS-TV NBC 68 3 12% 10/1/04 10/1/05 Roanoke, VA WDEF-TV CBS 86 3 10% 8/1/05 12/31/04 Chattanooga, TN WJTV-TV CBS 88 1 16% 6/1/05 12/31/04 Jackson, MS
4
Expiration Expiration National Date of Date of Station Location Market Station Audience FCC Network and Affiliation Rank (a) Rank (a) * % Share (a) * License (b) Agreement --------------- -------- ---------- ------------- ----------- --------- WJHL-TV CBS 93 2 15% 8/1/05 12/31/04 Johnson City, TN WSAV-TV NBC 100 2 11% 4/1/05 9/30/04 Savannah, GA WCBD-TV NBC 103 2 15% 12/1/04 12/31/04 Charleston, SC WNCT-TV CBS 106 1 15% 12/1/01 12/31/04 Greenville, NC WJBF-TV ABC 113 1 17% 4/1/05 3/6/05 Augusta, GA WBTW-TV CBS 114 1 23% 12/1/04 6/30/05 Florence, SC Myrtle Beach, SC WRBL-TV CBS 128 2 14% 4/1/05 3/31/05 Columbus, GA KIMT-TV CBS 153 3 13% 2/1/06 6/30/05 Mason City, IA WMBB-TV ABC 158 2 15% 2/1/02 3/6/05 Panama City, FL WHLT-TV CBS 167 2 8% 6/1/05 8/31/05 Hattiesburg, MS KALB-TV NBC 178 1 25% 6/1/05 10/1/05 Alexandria, LA
(a) Source: November 2000 Nielsen Rating Books. (b) Television broadcast licenses are granted for maximum terms of eight years and are subject to renewal upon application to the FCC. (c) This station is operated by the Company under a local marketing agreement. * Sign-On to Sign-Off. 5 The primary source of revenues for the Company's television stations 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. 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, the Internet and other promotional media. A number of cable television systems and direct-to-home satellite companies 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 and by presenting cable network and other program services. The television stations 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. The television broadcast industry presently is implementing the transition from analog to digital (DTV) technology in accordance with a mandated conversion timetable established by the FCC. The Company's Tampa and Greenville/Spartanburg television stations have begun digital broadcasting; the Company's other television stations must begin DTV service by May 1, 2002. Congress and the FCC have under consideration, and in the future may consider and adopt, new laws, regulations and policies regarding a wide variety of matters that could affect, directly or indirectly, the operation, ownership and profitability of the Company's broadcast television stations and affect the ability of the Company to acquire additional stations. In addition to the matters noted above, these include, for example, spectrum use fees, political advertising rates, potential restrictions on the advertising of certain products (such as alcoholic beverages) and ownership rule changes. Other matters that could potentially affect the Company's broadcast properties include technological innovations and developments generally affecting competition in the mass communications industry, such as satellite radio and television broadcast service, wireless cable systems, low-power television stations, radio technologies, the advent of telephone company participation in the provision of video programming services, and Internet delivered broadcast services. Interactive Media Business In January 2001 the Company launched its Interactive Media Division, which will operate in conjunction with its Publishing and Broadcast Divisions to provide online news, information and entertainment services to its customers without geographic restrictions. Historically, the Company's online activities have been reported and managed as a part of the Publishing and Broadcast Divisions, but as a result of this transition they will be reported and managed separately beginning in 2001. The Division is comprised of over 50 interactive enterprises, as well as minority investments in AdOne, L.L.P. (a leading online database of classified advertising), iPipe (a provider and distributor of top- rated content and advertising services for Web sites), and several other dot-com companies. The most significant component of the Division initially is Media General Financial Services, Inc., which compiles and makes available both current and historical data on publicly traded companies to a broad spectrum of users, primarily online financial data services, and also offers other specialized financial products. Among the online enterprises included in the Interactive Media Division, each of the Company's daily newspapers and television stations has a Web site featuring content from its published products or its television programs. Online revenues are derived primarily from advertising, which range from static banner ads to interactive advertising to targeted ad campaigns. Working in 6 conjunction with the Publishing Division, additional revenues are generated from classified advertisements placed on the Company's Web sites. The Interactive Media Division will act as the catalyst in the Company's convergence efforts, which can best be seen at TBO.com, where content from both The Tampa Tribune and WFLA-TV is leveraged to create the most comprehensive online news and information service in the Tampa metropolitan area. While the next several years will reflect the expense of starting and growing the Interactive Media Division, the Company expects that it will become profitable in 2003. The Company's online enterprises compete for advertising, as well as for users' discretionary time, with newspapers, magazines, radio, broadcast and cable television, other Web sites and other promotional media. These Web sites compete for users principally on the basis of depth of content, and for advertisers primarily on the strength of technology to deliver advertisements and the quality of that delivery. Item 2. Properties The headquarters buildings of Media General, Inc., and the Richmond Times- Dispatch are adjacent to one another in downtown Richmond, Virginia. The Company currently leases both of these headquarters buildings and has an option to buy them. The Richmond newspaper is printed at a production and distribution facility located on an 86 acre site in Hanover County, Virginia, near Richmond; the acreage beyond the foreseeable needs of the Company is being actively marketed. The Company owns eight other daily newspapers in Virginia, all of which are printed in or around their respective cities at production and distribution facilities situated on parcels of land ranging from one-half acre to six acres. The Tampa, Florida, newspaper is located in a single unit production plant and office building located on a six acre tract in that city. The headquarters of the Company's Brooksville and Sebring, Florida, daily newspapers are located on leased property in their respective cities; however, these newspapers are printed at the Tampa production facility. The Winston-Salem newspaper is headquartered in one building in downtown Winston-Salem; its newspaper is printed at a production and distribution facility located on a nearby 12 acre site. The remaining eleven daily newspapers (seven in North Carolina, three in Alabama, and one in South Carolina) are printed at production and distribution facilities on sites which range from one-half acre to seven acres, all located in or around their respective cities. The Company owns substantially all of its newspaper production equipment, production buildings and the land where these production facilities reside. The Company's station, WFLA-TV in Tampa, Florida, occupies its recently completed headquarters and studio building, which is leased by the Company with an option to buy. This building, which adjoins The Tampa Tribune, provides the television station with the ability to broadcast digital signal as well as a new and expanded newsroom for the Tampa newspaper. This structure also serves as a multimedia news center where efforts are combined and information is shared among The Tampa Tribune, WFLA-TV and TBO.com. The Company's 26 television stations are located in 12 states (ten southeastern) as follows: four each in Florida, Georgia, South Carolina and Kansas; two in both Mississippi and Tennessee; and one in Alabama, Kentucky, Louisiana, North Carolina, Iowa and Virginia. Substantially all of the television stations are located on land owned by the Company. Twenty station tower sites are owned by the Company; six are leased. 7 The Company considers all of its properties, together with the related machinery and equipment contained therein, to be well maintained, in good operating condition, and adequate for its present and foreseeable future needs. Item 3. Legal Proceedings None. Items 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 2000. Executive Officers of the Registrant
Name Age Position and Office Year First Took Office* J. Stewart Bryan III 62 Chairman, President, Chief Executive Officer 1990 Marshall N. Morton 55 Senior Vice President, Chief Financial Officer 1989 H. Graham Woodlief, Jr. 56 Vice President, President of Publishing Division 1989 James A. Zimmerman 54 Vice President, President of Broadcast Division 2001 Neal F. Fondren 42 Vice President, President of Interactive Media Division 2001 Lou Anne J. Nabhan 46 Vice President, Corporate Communications 2001 Stephen Y. Dickinson 55 Controller 1989 George L. Mahoney 48 General Counsel, Secretary 1993 John A. Schauss 45 Treasurer 2001
__________________ * The year indicated is the year in which the officer first assumed an office with the Company. 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. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Reference is made to page 43 of the 2000 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 pages 44 and 45 of the 2000 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 16 through 21 of the 2000 Annual Report to Stockholders, which are incorporated herein by reference, for information required by this item. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Reference is made to page 20 of the 2000 Annual Report to Stockholders, which is 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 31, 2000, and December 26, 1999, and for each of the three fiscal years in the period ended December 31, 2000, and the report of independent auditors thereon, as well as the Company's unaudited quarterly financial data for the fiscal years ended December 31, 2000, and December 26, 1999, are incorporated herein by reference from the 2000 Annual Report to Stockholders pages 22 through 43. 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 18, 2001, except as to certain information regarding executive officers included in Part I. Item 11. Executive Compensation Incorporated herein by reference from the Company's definitive proxy statement for the Annual Meeting of Stockholders on May 18, 2001. 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 18, 2001. 9 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 18, 2001. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) 1. and 2. The financial statements and schedule 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 Index to Financial Statements and Financial Statement Schedules - Item 14(a)
Annual Report to Form 10-K Stockholders --------- ------------ Media General, Inc. (Registrant) Report of independent auditors 22 Consolidated statements of operations for the fiscal years ended December 31, 2000, December 26, 1999, and December 27, 1998 23 Consolidated balance sheets at December 31, 2000, and December 26, 1999 24-25 Consolidated statements of cash flows for the fiscal years ended December 31, 2000, December 26, 1999, and December 27, 1998 26 Consolidated statements of stockholders' equity for the fiscal years ended December 31, 2000, December 26, 1999, and December 27, 1998 27 Notes to consolidated financial statements 28-42 Schedule: II - Valuation and qualifying accounts and reserves for the fiscal years ended December 31, 2000, December 26, 1999, and December 27, 1998 11
Schedules other than Schedule II, 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 31, 2000, are incorporated herein by reference. With the exception of the pages listed in the above index and the information incorporated by reference included in Parts I, II and IV, the 2000 Annual Report to Stockholders is not deemed filed as part of this report. 10 Media General, Inc. Schedule II - Valuation and Qualifying Accounts and Reserves Fiscal Years Ended December 31, 2000, December 26, 1999, and December 27, 1998
Balance at Additions Balance beginning charged to Deductions at end of period expense-net Net Transfers of period ------------ ----------- ----------- ---------------- ------------ 2000 Allowance for doubtful accounts $ 7,088,011 $4,750,536 $5,239,457 $ 871,590 (a)$ 7,470,680 Reserve for warranties 2,700,000 --- 211,781 --- 2,488,219 ----------- ---------- ---------- -------------- ----------- Totals $ 9,788,011 $4,750,536 $5,451,238 $ 871,590 $ 9,958,899 =========== ========== ========== ============== =========== 1999 Allowance for doubtful accounts $ 8,433,300 $5,278,081 $5,863,762 $ (759,608)(a)$ 7,088,011 Reserve for warranties 3,139,934 --- 439,934 --- 2,700,000 ----------- ---------- ---------- -------------- ----------- Totals $11,573,234 $5,278,081 $6,303,696 $ (759,608) $ 9,788,011 =========== ========== ========== ============== =========== 1998 Allowance for doubtful accounts $ 6,653,367 $6,727,114 $5,059,996 $ 112,815 (a)$ 8,433,300 Reserve for warranties 3,523,324 --- 383,390 --- 3,139,934 ----------- ---------- ---------- -------------- ----------- Totals $10,176,691 $6,727,114 $5,443,386 $ 112,815 $11,573,234 =========== ========== ========== ============== ===========
(a) Amount associated with net acquisitions and dispositions of businesses. 11 Index to Exhibits Exhibit Number Description 2.1 Agreement and Plan of Merger dated July 19, 1996, by and among Media General, Inc., MG Acquisitions, Inc., and Park Acquisitions, Inc., incorporated by reference to Exhibit 2.1 of Form 8-K dated January 7, 1997. 2.2 First Amendment to Agreement and Plan of Merger dated as of January 7, 1997, by and among Media General, Inc., MG Acquisitions, Inc., and Park Acquisitions, Inc., incorporated by reference to Exhibit 2.2 of Form 8-K dated January 7, 1997. 2.3 Plan and Agreement of Merger, dated December 8, 1999, by and among Media General, Inc., Media General Communications, Inc., Media General Broadcasting of South Carolina, Inc., Spartan Communications, Inc., and the Principal Shareholders, incorporated by reference to Exhibit 2.1 of Form 8-K dated March 27, 2000. 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 and restated as of July 31, 1997, incorporated by reference to Exhibit 3 (ii) of Form 10-Q for the period ended September 28, 1997. 10.1 Form of Option granted under the 1976 Non-Qualified Stock Option Plan, incorporated by reference to Exhibit 2.2 of Registration Statement 2-56905. 10.2 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. 10.3 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. 10.4 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. 10.5 The Media General, Inc., Amended and Restated Restricted Stock Plan, dated January 31, 1996, incorporated by reference to Exhibit 10.10 of Form 10-K for the fiscal year ended December 31, 1995. 10.6 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. 12 10.7 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. 10.8 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. 10.9 Shareholders Agreement, dated May 28, 1987, between Mary Tennant Bryan, Florence Bryan Wisner, J. Stewart Bryan III, and as trustees under D. Tennant Bryan Media Trust, and Media General, Inc., D. Tennant Bryan and J. Stewart Bryan III, incorporated by reference to Exhibit 10.50 of Form 10-K for the fiscal year ended December 31, 1987. 10.10 Media General, Inc., Supplemental 401(K) Plan, amended and restated as of January 1, 2001. 10.11 Media General, Inc., Executive Supplemental Retirement Plan, amended, and restated as of April 23, 1999, incorporated by reference to Exhibit 10 of Form 10-Q for the period ended June 27, 1999. 10.12 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. 10.13 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. 10.14 Media General, Inc., Deferred Compensation Plan, amended and restated as of January 1, 1999, incorporated by reference to Exhibit 4.3 of Registration Statement 333-69527. 10.15 Media General, Inc., ERISA Excess Benefits Plan, amended and restated as of November 17, 1994, incorporated by reference to Exhibit 10.33 of Form 10-K for the fiscal year ended December 25, 1994. 10.16 Media General, Inc., 1995 Long-Term Incentive Plan, adopted as of May 19, 1995, incorporated by reference to Exhibit 10.33 of Form 10-K for the fiscal year ended December 31, 1995. 10.17 Media General, Inc., 1996 Employee Non-Qualified Stock Option Plan, adopted as of January 30, 1996, incorporated by reference to Exhibit 10.20 of Form 10-K for the fiscal year ended December 29, 1996. 10.18 Media General, Inc., 1997 Employee Restricted Stock Plan, adopted as of May 16, 1997, incorporated by reference to Exhibit 10.21 of Form 10-K for the fiscal year ended December 29, 1996. 13 10.19 Media General, Inc., Directors' Deferred Compensation Plan, adopted as of May 16, 1997, incorporated by reference to Exhibit 10.22 of Form 10-K for the fiscal year ended December 29, 1996. 10.20 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. 10.21 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. 10.22 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. 10.23 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. 10.24 Television affiliation agreement, dated February 10, 1995, between WFLA-TV and the NBC Television Network incorporated by reference to Exhibit 10.38 of Form 10-K for the fiscal year ended December 25, 1994. 10.25 Amendments, dated May 17, 1993, to television affiliations agreement, between WFLA-TV and National Broadcasting Company, Inc., dated March 22, 1989, incorporated by reference to Exhibit 10.47 of Form 10-K for the fiscal year ended December 26, 1993. 10.26 Second Amended and Restated Stock and Warrant Purchase and Shareholders' Agreement dated May 20, 1994, by and among Media General, Inc., Affiliated Newspapers Investments, Inc., and Denver Newspapers, Inc., incorporated by reference to Exhibit 2 of Form 8- K dated September 28, 1994. 10.27 Asset Purchase Agreement dated February 13, 1997, by and among Media General Newspapers, Inc., and Newspaper Holdings, Inc., incorporated by reference to Exhibit 10.36 of Form 10-K dated March 27, 1997. 10.28 Credit Agreement, dated December 4, 1996, among Media General, Inc., and various lenders, incorporated by reference to Exhibit 10.30 of Form 10-K dated December 27, 1998. 13 Media General, Inc., Annual Report to Stockholders for the fiscal year ended December 31, 2000. 21 List of subsidiaries of the registrant. 14 23 Consent of Ernst & Young LLP, Independent Auditors. Note: Exhibits 10.1 - 10.19 are management contracts or compensatory plans, contracts or arrangements. 15 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 22, 2001 /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/ Marshall N. Morton Senior Vice President and March 22, 2001 - ----------------------------- Chief Financial Officer and Director Marshall N. Morton /s/ Stephen Y. Dickinson Controller March 22, 2001 - ----------------------------- Stephen Y. Dickinson /s/ Robert P. Black Director March 22, 2001 - ----------------------------- Robert P. Black /s/ Charles A. Davis Director March 22, 2001 - ----------------------------- Charles A. Davis Director March 22, 2001 - ----------------------------- Robert V. Hatcher, Jr. /s/ John G. Medlin, Jr. Director March 22, 2001 - ----------------------------- John G. Medlin, Jr. /s/ Roger H. Mudd Director March 22, 2001 - ---------------------- Roger H. Mudd /s/ Wyndham Robertson Director March 22, 2001 - ----------------------------- Wyndham Robertson /s/ Henry L. Valentine, II Director March 22, 2001 - ----------------------------- Henry L. Valentine, II
16 EX-10.10 2 0002.txt EXHIBIT 10.10 Exhibit 10.10 MEDIA GENERAL, INC. ------------------- SUPPLEMENTAL 401(K) PLAN ------------------------ Amended and Restated as of January 1, 2001 ARTICLE I INTRODUCTION ------------ Purpose of the Plan. The purpose of the Media General, Inc. Supplemental ------------------- 401(k) Plan (the "Plan") is to provide supplemental retirement savings to the Eligible Employees under the Plan, through a program of compensation reduction deferrals (that are matched, in part, by employer contributions, in accordance with the terms of the Plan). This Plan is specifically designed to allow a select group of key executives, whose pay exceeds the Internal Revenue Code Section 401(a)(17) compensation limit and whose elective deferral contributions to the MG Advantage 401(k) Plan (the "401(k) Plan") are thereby be limited under the provisions of the Code, to defer compensation under this Plan by means of compensation reductions (and otherwise receive the benefit of partial employer matching provided under the Plan). ARTICLE II DEFINITIONS ----------- Wherever used herein, the following terms have the following meanings (unless a different meaning is clearly required by the context): 2.01 "Administrator" means the Company or other person, entity or committee appointed to administer the Plan, in accordance with Article III. 2.02 "Affiliated Company" means (a) any corporation (other than the Company) that is a member of a controlled group of corporations (as defined in Code Section 414(b)) with the Company, (b) any trade or business (other than the Company), whether or not incorporated, that is under common control (as defined in Code Section 414(c)) with the Company, and (c) any trade or business (other than the Company) that is a member of an affiliated service group (as defined in Code Section 414(m)) of which the Company is also a member; provided that, the term "Affiliated Company" shall not include any corporation or unincorporated trade or business prior to the date on which such corporation, trade or business satisfies the affiliation or control tests of (a), (b) or (c) above. 2.03 "Beneficiary" means the person or persons entitled under Article VIII to receive benefits under the Plan upon the death of the Participant. 2.04 "Board of Directors" means the Board of Directors of the Company. 2.05 "Code" means the Internal Revenue Code of 1986, as amended from time to time. Reference to any section or subsection of the Code includes references to any comparable or succeeding provisions of any legislation that amends, supplements, or replaces such section or subsection. 2.06 "Company" means Media General, Inc., a Virginia corporation, and any successor to all or a major portion of its assets or business that assumes the obligations of the Company. 2.07 "Compensation" means compensation as defined under the 401(k) Plan, without regard to any reduction in compensation by reason of any compensation reduction agreement in effect between a Participant and a Participating Employer (and without any limitations otherwise imposed under the Internal Revenue Code). Otherwise, as to compensation for Plan purposes, see "Plan Compensation" below. 2.08 "Computation Period" means an Eligibility Computation Period or a Vesting Computation Period, as the context requires herein. 2.09 "Effective Date" means August 1, 1987. The Plan was amended and restated, effective November 17, 1994; and then, most recently, was amended and restated effective as of July 1, 2000. The "Effective Date" of this restatement is January 1, 2001. 2.10 "Eligible Employee" means: 1) an Employee of the Company or a Participating Employer; 2) who receives annual Compensation in excess of the compensation dollar limit imposed under Internal Revenue Code Section 401(a)(17) each year (for example, $170,000 for calendar year 2001); and 3) who otherwise is selected by the Company to participate in this Plan in accordance with the provisions of the Plan (and who has not thereafter become ineligible to participate). "Eligible Employee" shall exclude any Employee hired on an occasional or temporary basis. Also, "Eligible Employee" shall exclude any Employee covered under a collective bargaining agreement entered into by an Employer. Further, "Eligible Employee" shall exclude any independent contractor of any Employer. Otherwise, "Eligible Employee" shall exclude any employee who is not reported on an Employer's payroll records as a common law employee, even if later reclassified by any court or administrative agency as a common law employee of the Employer. 2.11 "Employee" means any person who is employed by an Employer, but excludes any person who is employed as an independent contractor. 2.12 "Employer" means the Company and any Participating Employer that shall adopt this Plan. When used in the Plan, the term "Employer" shall refer to the specific Employer of the Employee(s) or Participant(s) under consideration, rather than to all of the Employers in the aggregate, unless the context requires otherwise. 2.13 "401(k) Plan" means the MG Advantage 401(k) Plan (formerly the Thrift Plan Plus for Employees of Media General, Inc.) 2.14 "Matching Contribution" means, in the case of any Participant in the Plan, any unfunded matching contribution allocation made for the benefit of the Participant by a Participating Employer under Section 5.03. 2.15 "Matching Contribution Account" means, for any Participant, the unfunded Plan recordkeeping account described in Section 7.01 to which Matching Contributions for the Participant's benefit (and earnings attributable thereto) are credited under the Plan. 2.16 "Normal Retirement Date" means the date on which the Participant attains age 65 (the "Normal Retirement Age"). 2.17 "Participant" means each Eligible Employee who participates in the Plan, in accordance with Article IV hereof. 2.18 "Participating Employer" means the Company and any Affiliated Company that has adopted the Plan with the approval of the Company's Board of Directors. 2.19 "Plan" means the Media General, Inc. Supplemental 401(k) Plan (formerly the Media General, Inc. Supplemental Thrift Plan) as set forth herein, together with any and all amendments and supplements hereto. 2.20 "Plan Compensation" means the excess (if any) of: 1) the Participant's Compensation for the Plan Year, as defined above and under the 401(k) Plan, without regard to any reduction in compensation by reason of any compensation reduction agreement in effect between a Participant and a Participating Employer (and without any limitation otherwise imposed under the Internal Revenue Code); over, 2) the annual tax-qualified plan compensation limitation set forth under Internal Revenue Code Section 401(a)(17), as adjusted for that Plan Year. For example, Plan Compensation for the 2001 Plan Year for a Participant with overall Compensation of $205,000 would be $35,000 ($205,000-$170,000=$35,000). 2.21 "Plan Year" means the calendar year. 2.22 "Stock" means the Class A common stock of the Company. 2.23 "Supplemental Contribution" means, in the case of any Participant, that portion of a Participant's Plan Compensation that is deferred under the Plan in accordance with Article V hereof. 2.24 "Supplemental Contribution Account" means, for any Participant, the unfunded Plan recordkeeping account described in Section 7.01 to which Supplemental Contributions for the Participant's benefit (and earnings attributable thereto) are credited under the Plan. 2.25 "Trust" means the trust or trusts, if any, that may be established between the Company and a Trustee for the convenience of the Company, in connection with the Company's maintenance and operation of the Plan. All assets of any such trust shall be held solely for the benefit of, the Company; or, otherwise, shall be held in trust subject to the claims of the Company's creditors. The Plan shall remain solely an unfunded promise of the Company to pay benefits to Plan participants. 2.26 "Trust Fund" means any property held in trust by the Trustee for the benefit of the Company (or held in trust, subject to the claims of the Company's creditors). 2.27 "Trustee" means any person or persons appointed as Trustee pursuant to Section 6.02, any successor trustee or trustees, and any additional trustee or trustees. 2.28 "Valuation Date" means the last business day of March, June, September and December within each Plan Year. ARTICLE III ADMINISTRATION -------------- 3.01 Administrator. The Plan will be administered by the Company or by any ------------- person, entity or committee appointed from time to time by the Board of Directors to serve at its pleasure. A Participant may be appointed to serve as Administrator at the discretion of the Board of Directors. Except as may be directed by the Company, no person serving as Administrator will receive any compensation for his services as Administrator. The Company shall provide the Trustee with a written certification stating the name or names of the Administrator (or the designated persons authorized to direct the Trustee on behalf of the Administrator). The Trustee shall be entitled to rely upon such certification as to the identity of the Administrator (and any designated authorized persons) until the Company otherwise notifies the Trustee. 3.02 Powers of Administrator. The Administrator will have full and ----------------------- exclusive power and discretion to administer the Plan, including as to all of its details. For this purpose, the Administrator's power will include, but will not be limited to, the following authority: (a) to make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan or as required to comply with applicable law; (b) to interpret the Plan, its interpretation thereof in good faith to be final and conclusive as to any Employee, former Employee, Participant, former Participant and Beneficiary; (c) to decide all questions concerning the Plan; (d) to compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary in accordance with the provisions of the Plan, and to determine the person or persons to whom such benefits will be paid; (e) to authorize the payment of Plan benefits; (f) to keep such records and submit such filings, elections, applications, returns or other documents or forms as may be required under the Code and applicable regulations, or under state or local law and regulations; and (g) to appoint such agents, counsel, accountants, consultants and recordkeepers as may be required to assist in administering the Plan. 3.03 Examination of Records. The Administrator will make available to each ---------------------- Participant such Plan records as pertain to the Participant, for examination at reasonable times during normal business hours. 3.04 Nondiscriminatory Exercise of Authority. Whenever, in the --------------------------------------- administration of the Plan, any discretionary review or action by the Administrator is required, the Administrator shall exercise such authority in a nondiscriminatory manner (so that all persons who are similarly situated will receive substantially the same treatment). 3.05 Reliance on Tables, etc. In administering the Plan, the Administrator ------------------ will be entitled, to the extent permitted by law, to rely conclusively on all tables, valuations, certificates, opinions and reports that are furnished by any trustee, counsel, accountant, consultant, recordkeeper or other professional who is employed or engaged by the Administrator or the Company. 3.06 Indemnification of Administrator and Trustee. The Company agrees to -------------------------------------------- indemnify and defend, to the fullest extent of the law, any Employee or former Employee who in good faith serves or has served in the capacity of Administrator, as a member of a committee designated as Administrator or as an authorized person acting on behalf of the Administrator, against any liabilities, damages, costs and expenses occasioned by having occupied any fiduciary position in connection with the Plan. The Company agrees to indemnify and defend, to the fullest extent of the law, any claims against the Trustee arising from actions taken by the Trustee pursuant to instructions from the Company or the Administrator; or, if the Trustee may not act in the absence of such instructions, its failure to act in the absence of such instructions. 3.07 Costs of Administration. All reasonable costs and expenses incurred by ----------------------- the Administrator and the Trustee in administering the Plan and Trust will be paid by the Company. ARTICLE IV PARTICIPATION ------------- 4.01 Participation. An Eligible Employee, who has satisfied the criteria ------------- established by the Company and is selected for participation by the Company (in its sole discretion), may become a Participant as of the first day of any subsequent month, by delivering an executed compensation reduction agreement (described in Section 5.02) to the Administrator (if such agreement is received and accepted by the Administrator prior to the beginning of the month for which such compensation reduction election is to be effective). 4.02 Notice to Participants. The Administrator will inform each Employee ---------------------- who becomes eligible to participate in the Plan of his eligibility to participate (and execute a compensation reduction agreement). ARTICLE V DEFERRALS AND MATCHING CONTRIBUTIONS ------------------------------------ 5.01 Supplemental (Deferral) Contributions. For each Participant, who has ------------------------------------- in effect for any pay period an effective compensation reduction agreement and otherwise is receiving Plan Compensation from a Participating Employer during such pay period, the Employer will reduce the Participant's Plan Compensation by (and the Company will record as a Supplemental Contribution) the amount (or percentage) of Plan Compensation specified in such Participant's compensation reduction agreement. Each unfunded Supplemental Contribution will be credited to the Participant's Supplemental Contribution Account, in accordance with Section 7.02. 5.02 Compensation Reduction Agreements. For purposes of Section 5.01, a --------------------------------- "compensation reduction agreement" is a written agreement between a Participant and his Participating Employer that satisfies the requirements of this Section 5.02. Each agreement will provide that the Participant's Plan Compensation will be reduced by the amount specified in the agreement. The aggregate compensation reduction for each Plan Year, however, shall not exceed the Internal Revenue Code Section 415 "annual additions" dollar limit in force for that Plan Year (for example, $35,000 for year 2001). Each agreement will be in a form prescribed or approved by the Administrator. Further, each executed agreement received and accepted by the Administrator in accordance with Section 4.01 will be: (a) irrevocable while the agreement is in effect with respect to Plan Compensation already earned; but (b) revocable as to future pay (in accordance with the terms of the Plan, as provided below). Otherwise, a Participant may elect to increase or decrease the amount by which his future Plan Compensation is to be reduced, by delivering a new compensation reduction agreement prior to the beginning of the month for which such new election is to be effective. 5.03 Matching Contributions. The Participating Employer shall provide to ---------------------- the Company, with respect to each Participant's Matching Contribution Account for each Plan Year, an amount equal to the lesser of: (a) one hundred percent (100%) of the amount of the Participant's Supplemental Contribution for the Plan Year; or (b) four percent (4%) of the Participant's Plan Compensation for the Plan Year. The Administrator shall estimate the unfunded Matching Contributions that will need to be recorded by the Company for the Participant during the Plan Year (based on the Participant's compensation reduction agreement and expected Plan Compensation). The Administrator then shall divide the tentative Matching Contribution for the Plan Year by the number of pay periods for the Participant for the Plan Year. The appropriate portion of the tentative Matching Contribution for the Plan Year, as determined above , will be credited to the Participant's unfunded Matching Contribution Account at the same time that the Participant's Supplemental Contributions are credited (after each pay period). Otherwise, the Employer or the Company may forward funds equivalent to such amount to the Trustee, as the Company elects. Following the end of each Plan Year, the Administrator shall adjust each Participant's final Matching Contributions for the completed Plan Year (to the final correct amount), by making a credit to, or deduction from, such Participant's Matching Contribution Account (generally by January 31 of the following year). If a Participant separates from employment prior to the end of the Plan Year, however, the Administrator generally shall proceed with final adjustment of the separated Participant's Matching Contributions (by making a final credit to, or final deduction from, such Participant's Matching Contribution Account by the last day of the month that next follows the Participant's separation). ARTICLE VI TRUST FUNDS ----------- 6.01 "Unfunded Plan". The Plan shall be and remain "unfunded" for federal --------------- income tax purposes and for purposes of Title I of ERISA. The Plan shall constitute only an unfunded promise by the Company to make future Plan benefit payments. Nevertheless, for the convenience of the Company, a trust fund (or trust funds) may be established to invest certain Company assets for the purpose of paying certain benefits. Any such trust shall be maintained for the benefit of the Company (or, in any case, subject to the claims of the Company's creditors). No Participant or Beneficiary shall have any right, title, or interest in, or to, any trust asset (and all assets shall remain subject to the claims of the Company's creditors). 6.02 Appointment of Trustee. The Company may appoint, by written notice, ---------------------- one or more individuals or corporations to act as Trustee under the Plan; and, may remove and appoint a successor to any such person or persons (at any time). The Trustee, and any Successor Trustee, shall be entitled to written notice from the Company, stating the date on which the removal is effective. Written notice of removal, resignation or appointment shall be provided to all Trustees under the Plan. The Company may enter into a separate trust agreement with the Trustee and make such amendments to such trust agreement or such further agreements as the Company, in its sole discretion, may deem necessary or desirable. 6.03 Investment Funds Within the Trust Fund. All contributions to a Trust -------------------------------------- (and all investments thereunder) shall be held by the Trustee in the applicable Trust Fund. The Trust Fund shall consist of Stock held by the Trustee, all cash held by the Trustee resulting from the receipt of dividends or other distributions on Stock held in the Trust, and all contributions paid in cash. All cash held by the Trustee is to be invested in Stock as soon as reasonably practicable. The Trustee, as directed by the Company, shall have the right to vote stock held in the Trust Fund, personally or by proxy, and to delegate the Trustee's powers and discretions with respect to stock to a proxy. 6.04 Acquisition of Stock. The Trustee shall purchase the Stock required -------------------- for the Trust from such sources, and at such prices, as the Trustee shall determine in its sole discretion. 6.05 Investment of Contributions and Earnings. All amounts credited to a ---------------------------------------- Participant's Supplemental Account and his Matching Contribution Account thereunder shall be hypothetically invested in Company Stock on the Plan's records, as provided under the Plan's provisions. Otherwise, any cash contributions otherwise delivered by the Company to a Trustee shall be invested in Company Stock as soon as reasonably practicable. 6.06 Protection of Trustee and Limitation of Liability. Each Trustee shall ------------------------------------------------- be fully protected in acting upon any instrument, certificate, or document believed by it to be genuine. The Trustee agrees to hold in trust and administer the Trust Fund subject to the terms and conditions of the Company, including as set forth under the Plan. The Trustee's responsibility shall be limited to holding and investing the assets of the Fund in its possession (including voting Stock as provided in Section 6.03). ARTICLE VII PARTICIPANT ACCOUNTS -------------------- 7.01 Accounts. The Administrator shall maintain on its books for each -------- Participant a Supplemental Contribution Account and a Matching Contribution Account. The Trustee may establish and maintain such sub-accounts as it deems necessary or desirable to fulfill the provisions of the Plan. 7.02 Adjustments of Accounts. The Administrator shall, as of each Valuation ----------------------- Date: (a) First, with respect to each Participant, reduce the balance of his Supplemental Contribution Account (until exhausted) and then the balance of his Matching Contribution Account, by the aggregate amount of all withdrawals and distributions provided to the Participant (or his Beneficiary) since the preceding Valuation Date; (b) Second, credit each Participant's Supplemental Contribution Account with the sum of the Supplemental Contributions made for his benefit for the period ending on such Valuation Date; (c) Third, credit each Participant's Matching Contribution Account with the Matching Contributions made for his benefit for the period ending on such Valuation Date; and (d) Fourth, adjust the respective balances of each Participant's Supplemental Contribution Account and Matching Contribution Account, to reflect the hypothetical earnings, losses and current fair market value allocable to such accounts, whether by reference to any Trust established by the Company for its convenience or otherwise. In adjusting each unfunded account under subsection (d) above to track the current value of assets in a Trust Fund, the Administrator will allocate to each account (in proportion to the balances therein immediately prior to such adjustment) an amount equal to the gain and loss (realized and unrealized) on the assets of the Trust Fund, valued at fair market value (including any costs of operating the Trust). In the case of each Participant (including any former Participant or Beneficiary), the Plan shall continue to maintain the unfunded accounts described herein, and adjust such accounts in the manner set forth above, until such Participant's accounts are distributed in their entirety. ARTICLE VIII DISTRIBUTION OF BENEFITS ------------------------ 8.01 Separation from Employment. Upon the Participant's separation from -------------------------- employment for any reason, each Participant (or his designated Beneficiary) will receive a Stock distribution in an amount equal to the final balance of his Supplemental Contribution Account and Matching Contribution Account, determined as of the Valuation Date coinciding with or next following the date his employment ends. Any remaining amounts held for the Participant (Beneficiary) under such Accounts that are equal only to a fractional share of Stock shall be paid in cash. Any payment required under this Section shall be made no later than 60 days from the Valuation Date coinciding with or next following the date employment ends. 8.02 Payments to Beneficiary. If the Participant dies prior to receiving ----------------------- all payments due him under the Plan, the Company (or the Trustee, at the direction of the Company) shall distribute all payments then due the Participant to the Participant's Beneficiary (at the time provided for in the Plan and in the amount that would have been provided to the Participant had he survived). 8.03 Beneficiary Designation. The Participant may from time to time, by ----------------------- signing a form approved by the Administrator, designate any legal or natural person or persons (who may be designated contingently or successively) to whom payments are to be made if the Participant dies before receiving payment of all amounts due hereunder. A beneficiary designation form will be effective only after the signed form is filed with the Administrator while the Participant is alive (and such designation will cancel, immediately upon filing, all beneficiary designations signed and filed previously). If the Participant fails to designate a Beneficiary as provided above, or if all designated Beneficiaries of the Participant die before the Participant or before complete payment of all amounts due hereunder, the Company shall pay any unpaid amounts to the Participant's estate. 8.04 Unsecured Contractual Obligation. The Company's (any Employer's) -------------------------------- obligation to make payments to any person under this Agreement is purely contractual, and the parties do not intend that the amounts payable hereunder be held by the Company "in trust" for the benefit of the Participant. Participants (and Beneficiaries) shall have only the status of unsecured creditors of the Company with respect to Plan benefits. 8.05 Benefits Non-Assignable. Benefits payable to, or for the benefit of, a ----------------------- Participant or Beneficiary shall not be assignable and shall not be subject to the claims of creditors of such Participant or Beneficiary. 8.06 Claims Procedure. Any claim by a Participant or his Beneficiary ---------------- (hereafter "Claimant") for benefits shall be submitted to the Administrator. The Administrator shall be responsible for deciding whether such claim properly relates to benefits provided by the Plan (and thus is a "Covered Claim") and for providing a final decision with respect to such claim. In addition, the Administrator shall provide a full and fair review of the claim, in accordance with the procedures described below. Each Claimant or other interested person shall file with the Administrator such pertinent information as the Administrator may specify, in such manner and form as the Administrator may specify and provide. Such person shall not have any rights or be entitled to any benefits or further benefits hereunder, as the case may be, unless such information is filed by the Claimant (or on behalf of the Claimant). Each Claimant shall supply at such times and in such manner, as may be required, written proof that the benefit is covered under the Plan. If it is determined that a Claimant has not incurred a Covered Claim or if the Claimant fails to furnish such proof as is requested, no benefits or further benefits hereunder, as the case may be, shall be payable to such Claimant. Notice of a decision by the Administrator with respect to any claim shall be furnished to the Claimant within 90 days following the receipt of the claim by the Administrator (or within 90 days following the expiration of the initial 90-day period, in a case where there are special circumstances requiring extension of time for processing the claim). If special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished by the Administrator to the Claimant before the expiration of the initial 90-day period. The notice of extension shall describe the special circumstances requiring the extension and the date by which the notice of decisions with respect to the claim shall be furnished. Commencement of benefit payments shall constitute notice of approval of a claim to the extent of the amount of the approved benefit. If such claim is wholly or partially denied, such notice shall be in writing and shall set forth (i) the specific reason or reasons for the denial; (ii) specific references to pertinent provisions of the Plan on which the denial is based; (iii) a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary; and (iv) an explanation of the Plan's claims review procedure. If the Administrator fails to notify the Claimant of the decision regarding his or her claim, the claim shall be deemed denied and the Claimant shall then be permitted to proceed with the claims review procedure provided herein. Within 60 days following receipt by the Claimant of notice of the claim denial, or within 60 days following the close of the 90-day period referred to herein if the Administrator fails to notify the Claimant of the decision within such 90-day period, the Claimant may appeal denial of the claim by filing a written application for review of the claim with the Administrator. Following such request for review, the Administrator shall fully and fairly review the decision denying the claim. Before the Administrator makes its decision, the Claimant shall be given an opportunity to review pertinent documents and to submit issues and comments to the Administrator in writing. The decision of the Administrator shall be made within 60 days following receipt by the Administrator of the request for review (or within 120 days after such receipt, in a case where there are special circumstances requiring extension of time for reviewing such denied claim). The Administrator shall deliver its decision to the Claimant in writing. If the decision on review is not furnished within the prescribed time, the claim shall be deemed denied on review. For all purposes under the Plan, the decision with respect to a claim (if no review is requested) or the decision with respect to a claim review (if review is requested) shall be final, binding and conclusive on all interested parties. ARTICLE IX AMENDMENT AND TERMINATION ------------------------- 9.01 Amendment. The Company reserves the right to amend, modify or --------- terminate the Plan, in whole or in part, at any time. Any such amendment, modification or termination of the Plan shall be made by a resolution adopted by the Board of Directors and communicated to Participants within a reasonable time following the later of the date of adoption or the effective date of such action. The Company shall not amend the Plan retroactively, however, in any manner that reduces any benefit payable to the Participant or Beneficiary (to the extent that such benefit was accrued and vested prior to the amendment, modification or termination). 9.02 Distributions Upon Termination of the Plan. Upon any termination of ------------------------------------------ the Plan, if and as directed by the Administrator in writing, the Trustee will make distributions to each Participant in an amount equal to the entire balance of the Participant's Supplemental Contribution Account and Matching Contribution Account (determined as of the termination date, which shall serve as the final Valuation Date unless the Administrator otherwise directs). Upon completion of account distributions to all Participants (by the Company or any Trustee), the Plan will terminate, the Company and the Administrator will be relieved from all liability under the Plan, and no Participant or other person will have any further claims rights or other rights thereunder. ARTICLE X APPLICABLE LAW -------------- This Plan shall be construed in accordance with applicable federal law and, to the extent otherwise applicable, the laws of the Commonwealth of Virginia. IN WITNESS WHEREOF, Media General, Inc. has caused this document to be signed by its duly authorized officer this _________ day of ___________________, 2001. MEDIA GENERAL, INC. By: /s/ J. Stewart Bryan III --------------------------- EX-13 3 0003.txt ANNUAL REPORT Exhibit 13 MEDIA GENERAL, INC., MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion addresses the principal factors affecting the Company's operations during the past three years and should be read in conjunction with the financial statements and the Ten-Year Financial Summary found in this report. OVERVIEW Over the past several years, the Company has transformed itself into a leading provider of high-quality news, information and entertainment services in the Southeast through a series of strategically targeted acquisitions and dispositions. By concentrating its newspapers, television stations and online enterprises in the Southeast, the Company has positioned itself to take advantage of this region's economic growth while leveraging the power of multimedia. The Company continues to strengthen its regional presence through growth and expansion of its existing businesses in their current markets, as well as by entering into beneficial strategic alliances. In January 2001 the Company launched its Interactive Media Division which, as a new segment, will operate in conjunction with the Publishing and Broadcast Divisions to foster the Company's strategy of convergence by: delivering information and entertainment through the Company's existing Web sites, capitalizing on new online growth opportunities, and providing expanded choices for its advertisers, readers, viewers and users. The Internet represents a dynamic marketplace which will provide the Company with the medium to facilitate convergence by combining the strengths of all three of its divisions. The Company has engaged in a series of acquisitions, exchanges, investments and dispositions which have significantly increased its penetration of southeastern households through the Company's chosen media of newspapers, television stations and, most recently, interactive media. This transition began in October 1995 with the purchase of four daily newspapers and several weekly publications in Virginia from Worrell Enterprises, Inc. The expansion continued with the purchase of Park Communications, Inc., in January 1997, which was followed by the subsequent sale of several non-southeastern properties acquired in that transaction. In September of 1997, the Company made an initial investment in Hoover's, Inc., a leading provider of online financial information. Further expanding its reach and tightening its focus over the past three years, the Company's growing southeastern presence has been punctuated by the following events: . January 1998, purchase of the Bristol Herald Courier (Bristol, VA). . June 1998, sale of the Company's Kentucky newspaper properties. . July 1998, purchase of the Hickory Daily Record (Hickory, NC). . May 1999, sale of WHOA-TV (Montgomery, AL). . June 1999, sale of 20% of the common stock of Denver Newspapers, Inc. (Denver), resulting in a $19 million after-tax gain. . August 1999, initial investment in AdOne, L.L.P., the leading online database of classified advertising. . October 1999, disposition of its Cable operations, resulting in a $799 million after-tax gain; in June 2000, an additional $8.3 million after-tax gain was recognized due to certain post-closing adjustments related to the sale. . March 2000, opening of a new fully digital, state-of-the-art multimedia center (the News Center) in Tampa bringing together WFLA-TV, The Tampa Tribune, and TBO.com. . March 2000, purchase of Spartan Communications, Inc. (Spartan), which doubled the number of the Company's television stations from 13 to 26. . April 2000, initial investment in iBlast, a company that will use a portion of the new digital broadcasting spectrum to send information directly to business and consumer PC devices. . July 2000, initial investment in iPipe, a provider and distributor of top-rated content and advertising services for Web sites. . July 2000, initial investment in KOZ.com, a company that creates commercial Web sites and provides the support systems that make them successful. 16 . July 2000, sale of a small daily newspaper in southeastern Virginia and in a tri-weekly northeastern North Carolina. . August 2000, purchase of five daily and two weekly newspapers from Thomson Newspapers (Thomson) in South Carolina and Alabama. . August 2000, disposition of Garden State Paper, resulting in a $13.8 million after-tax loss. The aforementioned transactions culminated in the Company's ownership of 25 daily newspapers and nearly 100 other publications, as well as 26 (21 southeastern) television stations. Additionally, the Company continues to cultivate and expand relationships with several innovative dot-com companies, having invested approximately $18 million over the past three years. In December 1999 the Company initiated a program to repurchase up to $250 million of its Class A common stock. Through December 2000, approximately 4.1 million shares had been repurchased at a cost of $204 million. The Company's decision to sell Garden State Paper (GSP) was influenced by the trend toward consolidation within the newsprint industry combined with the significant capital expenditures which would have been necessary at GSP to remain competitive in this industry. The Company recorded a loss of $13.8 million (net of income tax benefit of $6.2 million), which is subject to resolution with the buyer of certain post-closing income tax matters and other items. The transaction also included a seven-year, financial fixed-price newsprint swap agreement which the Company does not intend to retain. Concurrent with the sale, the Company retired $20 million of 7.125% municipal revenue bonds. The Company's decision to sell its Cable operations in 1999 was propelled by the fast-moving trend toward consolidation within this specialized industry. The significant size gained by operators of multiple systems provides them with competitive advantages unavailable to single-system operators. The Company recorded a gain of $799 million (net of income taxes of $510 million) in 1999; in the second quarter of 2000, certain final post-closing adjustments related to this sale resulted in an additional gain of $8.3 million (net of income taxes of $3.6 million). The sales of GSP and the Cable operations allow the Company to focus its resources fully on those media segments, namely newspapers and television stations, where it has achieved critical mass in the Southeast, as well as on the Internet, where geographical distinctions are not as critical. The purchases of Spartan and certain Thomson newspapers, with their concentrations of television stations and newspapers in the Southeast, were natural progressions in the Company's southeastern evolution. The Company continues to evaluate opportunities to further its strategy in this thriving region. RESULTS OF OPERATIONS Net Income Results for both 2000 and 1999 were heavily influenced by several significant and non-recurring events, including the sales of Garden State Paper in 2000, the Cable operations in 1999, and 20% of the common stock of Denver in 1999. Additionally, 2000 included a fifty-third week of results as compared to fifty-two weeks in 1999 and 1998. Concurrent with the gain on sale of the Company's Cable operations was an extraordinary charge representing costs associated with the early redemption of debt. The accompanying chart facilitates a better understanding of the Company's year-over-year comparative performance excluding these unusual items on an after-tax basis. Inclusive of these unique items, net income for 2000 was $53.7 million ($2.22 per share assuming dilution). (in millions) 2000 1999 ---- ---- Net income $ 53.7 $ 881.3 Adjusted for: Gain on sale of Cable operations --- (798.7) Extraordinary item (debt redemption) --- 1.3 Gain on sale of Denver --- (18.9) (Income) loss from discontinued operations 4.3 (5.1) Loss on sale of Garden State Paper 13.8 --- Gain on Cable sale - adjustment (8.3) --- -------- --------- Net income as adjusted $ 63.5 $ 59.9 ======== ========= Excluding these unique items, net income rose 6% in 2000 over the prior year. This rise was principally due to a 77% increase in Broadcast operating profits, primarily attributable to the solid results (in large part due to Political advertising) posted by the newly acquired Spartan properties. Publishing Segment results were flat despite the acquisition of the Thomson properties. Strong Broadcast results 17 more than offset a 55% rise in acquisition-related intangibles amortization expense, as well as a 19% increase in Corporate expense due to the expanded resources necessary to support the Company's broadened operations, as well as to an additional week of expenses in the current year. The significant growth of the Company over the past several years, combined with the need for more timely dissemination and retrieval of information have, in particular, necessitated these infrastructure investments. Earnings per share assuming dilution, excluding the items in the previous chart, increased 18% to $2.63 per share from $2.23 per share. This seemingly disproportionate percentage increase in EPS as compared to net income is primarily accounted for by the Company's stock repurchase program, which lowered average shares outstanding by 2.7 million shares, just over 10%. Comparative results for 1999 were also meaningfully influenced by the unusual items highlighted in the previous chart; net income was $881.3 million ($33.25 per share, or $32.78 per share - assuming dilution). Excluding these one-time items, net income rose 25% on the strength of a solid year-over-year performance within the Publishing Segment (up 11%), a 26% decline in interest expense due to decreased debt, and $9.4 million of interest income attributable to the investment of proceeds derived from the Cable sale. Together, these more than offset an 11% decrease in Broadcast Segment profits and a 50% decline in the Company's share of income from its investment in SP Newsprint Company (SPNC) as the average realized newsprint selling price declined $71 per ton. Earnings per share assuming dilution, excluding the previously discussed items, increased 25% from $1.78 per share to $2.23 per share, paralleling the rise in net income. Publishing Operating income for the Publishing Segment remained relatively flat in 2000, decreasing less than $1 million from 1999. Excluding the recently acquired Thomson properties, which contributed $5.7 million of operating income in 2000, revenues increased $26.1 million but were more than offset by a $32.6 million rise in operating expenses. The accompanying chart illustrates improved revenues in all advertising categories over a three-year period, with the exception of lackluster retail advertising revenues in 1999 (due to reduced grocery and department store advertising). Classified revenues showed the largest increase on the strength of automotive advertising; General advertising was up due to strong telecommunications advertising in 2000 and robust automotive advertising in 1999. In recent years, Preprints (advertiser supplements inserted into a newspaper) have taken on a role of greater importance in newspaper advertising; to help illustrate this distinction, Preprint revenues have been differentiated from ROP (Run-of-Press) revenues in the accompanying chart. Publishing Segment Advertising Revenues by Category Retail Classified General 2000 ROP 149.4 187.1 32.1 Preprints 59.6 3.5 6.1 1999 ROP 141.4 171.4 26.6 Preprints 54.7 2.3 5.7 1998 ROP 149.2 164.5 19.7 Preprints 51.4 1.8 5.5 Excluding the Thomson properties, Publishing Segment operating expenses rose significantly due to a combination of factors. Employee compensation and benefit expense increased $12.6 million in 2000 as a result of salary increases combined with staffing new positions principally for online operations. Newsprint expense rose $5.4 million due to increased consumption, coupled with higher average cost per ton. Finally, other operating costs were up due to higher circulation, marketing and promotion, and occupancy costs. The Tampa Tribune incurred additional expense and rental costs related to moving its newsroom to the News Center, which also houses WFLA-TV and the Company's area online presence, TBO.com. Operating income for the Publishing Segment increased $14.6 million (11%) in 1999 over the comparable 1998 amount; $3.5 million of this increase was contributed by properties acquired or disposed of in those years. Excluding acquisitions and dispositions, this robust performance was driven by an $11.8 million rise in revenues combined with a $3.2 million decrease in operating expenses. This year-over-year revenue gain was the result of a strong performance in classified and general advertising (both led by the automotive category), which more than offset soft retail advertising revenues (down in the grocery and department store categories) as illustrated in the chart. Newsprint expense decreased 14% in 18 1999 from the prior year as a result of lower cost per ton, but was partially offset by a 2% increase in employee compensation and benefits expense due to enhanced employee benefit offerings. In June 1999 the Company completed the sale of 20% of the outstanding common stock of Denver Newspapers, Inc.; the Company retained a 20% ownership in the common stock of Denver. Investment income earned from that affiliate fell from a $3.2 million profit in 1998 to a $.4 million loss in 1999 and slid further to a $.9 million loss in 2000. These comparisons reflect the Company's 40% ownership in 1998, versus its 20% ownership beginning June 30, 1999. This pattern of reduced income was primarily attributable to increased circulation and newsprint expenses, which were only partially mitigated by a rise in advertising revenues; increased expenses resulted from higher average newsprint cost combined with elevated circulation expense in the intensely competitive Colorado market. Effective in January 2001, The Denver Post and the Denver Rocky Mountain News entered into a joint-operating agreement under which the competing newspapers combined their advertising, circulation and production operations, while maintaining separate newsrooms. This arrangement should be beneficial to both newspapers and return The Denver Post to profitability in 2001. Broadcast Broadcast operating income rose $28.6 million in 2000; $25 million of this increase was due to the addition in the second quarter of the Spartan properties. Excluding Spartan, revenues rose a solid $13.9 million, while operating expenses increased $10.3 million. The accompanying chart illustrates improved time sales in all advertising categories, with the exception of political advertising during 1999's off-election year. In 2000, Political advertising posted a very strong year-over-year revenue increase as a result of the hotly contested presidential and congressional elections; National revenues rose on the strength of the automotive advertising category; and Local advertising improved due to vigor in the telecommunications and services categories. Excluding Spartan, the small to mid-size stations posted nearly 50% of this total advertising revenue increase in 2000, while the Company's largest station, WFLA in Tampa, was responsible for the remainder. Broadcast Segment Advertising Time Sales by Category Local National Political 2000 Media General Stations 102.0 63.1 12.2 2000 Former Spartan Stations 43.9 32.8 6.3 1999 Media General Stations 98.3 61.3 2.7 1998 Media General Stations 91.0 61.6 10.3 Excluding Spartan, employee compensation and benefit expense rose 6.5% due to normal salary and benefit cost adjustments, while programming costs increased 4.5% as a result of enhanced programming. The Company's Tampa station was responsible for a large portion of these increased operating expenses for the reasons mentioned above as well as higher occupancy costs as WFLA moved into the News Center early in 2000. The Segment has begun to reap the benefits of the investment made in previous years in its small to mid-market stations to invigorate their performance. In 2000, these stations combined to produce, collectively, an 18% year-over-year increase in operating profits. Broadcast operating income decreased $4.7 million in 1999, down 11% from 1998. This decline was driven by a $1.9 million drop in revenues combined with a $2.8 million increase in operating expenses. Throughout the industry, advertising spending was severely affected in 1999 by the lack of political activity and the absence of advertising associated with an Olympic year. The Company's largest station, WFLA in Tampa, bore the brunt of the impact from this lack of political spending, while simultaneously suffering from a generally weak national advertising market. WFLA's 23% decline in operating profits in 1999 more than accounted for the entire Segment's shortfall from the prior year's level. An overall increase in operating expense at the Company's remaining stations was more than offset by a corresponding rise in revenues produced by these stations. Higher 1999 expense levels ensued as a result of improved programming and higher employee compensation and benefits expense, as the Company continued to invest in its smaller stations in an effort to improve their audience shares. Excluding WFLA, the Company's remaining stations posted a combined 1% increase in operating profits despite the challenges posed by the combination of 1999 being an off-election and non-Olympic year. 19 Newsprint Expense The sale of Garden State Paper considerably reduced the Company's overall exposure to fluctuations in newsprint prices. Additionally, in conjunction with the sale of GSP, the Company entered into a financial newsprint swap agreement that it does not intend to retain (see Note 4 to the accompanying consolidated financial statements). Under the agreement, the Company receives a floating price per metric ton ($605 per metric ton at December 31, 2000) and pays a fixed price of $596 per metric ton. Currently, a $50 increase or decrease in average newsprint price over the term of the contract on the overhedged portion would result in income or expense, respectively, to the Company of approximately $3.5 million; it would have a significant effect on the fair value of the hedged portion of the swap contract recorded on the Balance Sheet as well. The Company also benefits from rising newsprint prices due to its one-third ownership of SPNC. The current trend in the newsprint industry is toward increasing newsprint prices as evidenced by the March 1, 2001 announced price increase of $50 per metric ton by all major newsprint suppliers. Intangibles Amortization Expense Intangibles amortization expense increased $18.5 million in 2000 from the prior-year equivalent period as a result of the purchases of Spartan and Thomson. The accompanying chart illustrates the components which comprise intangibles amortization expense, as well as where the year-over-year fluctuations occurred.
Intangibles Amortiation Other Intangibles Network Affiliations FCC Licenses Excess of Cost over Fair Value 2000 11.8 4.7 13.6 22.5 1999 7.8 2.3 6.6 17.4 1998 7.8 2.3 6.6 17.5
Interest Income and Expense Interest expense in 2000 and 1999 decreased $2.5 million and $16 million, respectively, from the prior-year equivalent periods due primarily to a $56 million and a $240 million reduction in average debt outstanding. These debt reductions were effected when a portion of the proceeds from the October 1999 sale of the Company's Cable operations was used to repay all bank debt then outstanding and to terminate the associated interest rate swaps. In 2000, the second quarter purchase of Spartan and the third quarter purchase of the Thomson properties increased the Company's debt; however, average debt outstanding still remained appreciably lower than prior-year levels. The effective interest rate rose from just over 7% in 1998 and 1999 to approximately 7.5% in 2000. In October 1999, the Company invested the remaining proceeds from the Cable sale of approximately $665 million in prime-rated commercial paper and earned interest income of $8.2 million in the first quarter of 2000 and $9.4 million in the fourth quarter of 1999 on these investments. Concurrent with the Spartan acquisition, the Company entered into several new interest rate swap agreements as part of an overall risk management strategy (see Note 4 to the accompanying consolidated financial statements). The objective is to manage interest cost and risk associated with variable interest rates, primarily short-term changes in LIBOR, not to trade such instruments for profit or loss. These interest rate swaps total $300 million in notional amount with maturities that range from less than one year to three years; they effectively convert that portion of the Company's variable rate debt to fixed rate debt with a weighted average interest rate approximating 7.4%. If short- term interest rates were to be either higher or lower by one percentage point throughout 2001 and the Company's interest rate swap agreements and long-term debt levels were consistent with 2000, the Company's interest expense and income before taxes would change by approximately $3 million. This amount is determined by considering the impact of the hypothetical interest rates on the Company's borrowing cost, short-term investment balances, and interest rate swap agreements Income Taxes The Company's effective tax rate on income from continuing operations was approximately 38%, 39% and 36% in 2000, 1999 and 1998. The slight dip in 2000's effective tax rate was primarily due to a lower effective state tax rate precipitated by a reorganization of corporate entities following recent acquisitions and dispositions. The lower 1998 effective tax rate was primarily the result of a favorable settlement of a state tax examination. 20 LIQUIDITY The proceeds from the maturity of short-term investments, from the sale of GSP, and from the post-closing settlement related to the Cable disposition, together with cash on hand and funds generated from operations and financing activities, combined to provide funds for several large transactions during 2000. The most significant of these were: approximately $610 million for the purchase of Spartan, approximately $532 million of federal and state tax payments (the majority of which were attributable to the gain on the October 1999 sale of the Company's Cable operations), approximately $238 million for the purchase of the Thomson properties, and in excess of $192 million of current- year stock repurchases. These funds also supplied $43 million for capital expenditures, approximately $9 million for the purchase of a group of small weekly newspapers in southwestern Virginia, and $15.3 million for the payment of dividends to stockholders. In order to comply with FCC regulations and to remain competitive within the broadcast industry, the Company presently expects to invest approximately $50 million over the next two years implementing the transition to digital broadcasting. Additionally, the Company anticipates increases in other capital expenditures in 2001 over the prior year, due in large part to the construction of a new station in Charleston for WCBD-TV, remodeling several other facilities, and the investment necessary to launch the new Interactive Media Division. The Company expects income from continuing operations to be sufficient to fully utilize, over the next several years, net operating losses (NOLs) acquired from Spartan (see Note 6 to the accompanying consolidated financial statements). The Company anticipates that internally generated funds provided by operations, together with existing credit facilities, will be more than adequate to finance projected capital expenditures, dividends to stockholders and 2001 working capital needs, as well as other initiatives. OUTLOOK FOR 2001 With the sale of GSP and the Cable operations, the Company has positioned itself to concentrate on its core operations while capitalizing on the advantages of media convergence. With our newly launched Interactive Media Division, 2001 will be a year focused on development, as well as the genesis of a new corporate structure comprised of three divisions with interconnected capabilities. While the next several years will reflect the expense of starting and building our Interactive Media Division, we expect that it will become profitable in 2003 and will have an immediate impact on the Company's convergence efforts. The Publishing Division will be facing a softer advertising environment, particularly early in the year, and higher year-over-year newsprint expenses. Despite the positive contributions expected from our Spartan stations, the Broadcast Division will be challenged in 2001 by the combination of both an off-election and non-Olympic year. However, the Company expects to benefit from higher income from its investment in SPNC. As Media General further develops its new alignment, it will be able to advance its strategy of southeastern expansion, to maximize its ability to leverage content and other resources through media convergence, and to support new services through interactive media innovations. * * * * * * * Certain statements in this annual report that are not historical facts are "forward-looking" statements, as that term is defined by the federal securities laws. Forward-looking statements include statements related to pending transactions, the impact of the Internet and expectations regarding newsprint prices, advertising levels and the financial newsprint swap agreement. Forward- looking statements, including those which use words such as the Company "believes," "anticipates," "expects," "estimates," "intends" and similar statements, are made as of the date of this filing and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by such statements. Some significant factors that could affect actual results include: changes in advertising demand, the availability and pricing of newsprint, changes in interest rates, regulatory rulings and the effects of acquisitions, investments and dispositions on the Company's results of operations and its financial condition. 21 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 accounting principles generally accepted in the United States, and accordingly include amounts that are based on Management's informed 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, which is composed solely of outside directors, meets periodically with Management, internal auditors and the independent auditors to review their respective activities and the discharge of their responsibilities. Media General operates under a strict Code of Ethics that all employees are required to follow without exception. The Code requires ethical standards in all of the Company's relationships, including those with customers, suppliers and government agencies. January 26, 2001 J. Stewart Bryan III Marshall N. Morton Chairman, President and Chief Executive Senior Vice President and Chief Officer Financial Officer 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 31, 2000, and December 26, 1999, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three fiscal years in the period ended December 31, 2000. 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 auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Media General, Inc., at December 31, 2000, and December 26, 1999, and the consolidated results of its operations and its cash flows for each of the three fiscal years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. January 26, 2001 Ernst & Young LLP Richmond, Virginia 22 Media General, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)
Fiscal Years Ended --------------------------------------------- December 31, December 26, December 27, 2000 1999 1998 (53 weeks) - -------------------------------------------------------------------------------------------------- Revenues $ 830,601 $ 692,902 $ 688,677 Operating costs: Production 343,949 288,677 299,807 Selling, distribution and administrative 261,272 209,209 205,523 Depreciation and amortization 101,547 72,440 69,055 - --------------------------------------------------------------------------------------------------- Total operating costs 706,768 570,326 574,385 - --------------------------------------------------------------------------------------------------- Operating income 123,833 122,576 114,292 - --------------------------------------------------------------------------------------------------- Other income (expense): Interest expense (42,558) (45,014) (61,027) Investment income - unconsolidated affiliates 5,131 9,067 22,193 Gain on sale of Denver Newspapers, Inc. stock --- 30,983 --- Other, net 16,520 12,637 (636) - --------------------------------------------------------------------------------------------------- Total other income (expense) (20,907) 7,673 (39,470) - --------------------------------------------------------------------------------------------------- Income from continuing operations before income taxes and extraordinary item 102,926 130,249 74,822 Income taxes 39,369 51,431 26,967 - --------------------------------------------------------------------------------------------------- Income from continuing operations before extra- ordinary item 63,557 78,818 47,855 Discontinued operations: Income (loss) from discontinued operations (net of income tax benefit of $2,471 in 2000; income taxes of $2,576 in 1999 and $13,334 in 1998) (4,350) 5,107 23,019 Gain (loss) on sale of operations (net of income tax benefit of $2,604 in 2000 and income taxes of $509,760 in 1999) (5,488) 798,719 --- Extraordinary item from early redemption of debt (net of income tax benefit of $800) --- (1,328) --- - --------------------------------------------------------------------------------------------------- Net income $ 53,719 $ 881,316 $ 70,874 =================================================================================================== Earnings per common share: Income from continuing operations before extraordinary item $ 2.66 $ 2.97 $ 1.80 Income (loss) from discontinued operations (0.41) 30.33 0.87 Extraordinary item --- (0.05) --- --------------------------------------------- Net income $ 2.25 $ 33.25 $ 2.67 ============================================= Earnings per common share - assuming dilution: Income from continuing operations before extraordinary item $ 2.63 $ 2.93 $ 1.78 Income (loss) from discontinued operations (0.41) 29.90 0.85 Extraordinary item --- (0.05) --- --------------------------------------------- Net income $ 2.22 $ 32.78 $ 2.63 =============================================
Notes to Consolidated Financial Statements begin on page 28. Page 23 Media General, Inc. CONSOLIDATED BALANCE SHEETS (In thousands, except shares and per share amounts)
ASSETS December 31, December 26, 2000 1999 - --------------------------------------------------------------------------------------------------- Current assets: Cash, cash equivalents and short-term investments $ 10,404 $ 646,046 Accounts receivable (less allowance for doubtful accounts 2000 - $7,471; 1999 - $7,088) 117,254 102,834 Inventories 7,168 14,282 Other 38,054 33,572 --------------- -------------- Total current assets 172,880 796,734 - --------------------------------------------------------------------------------------------------- Investments in unconsolidated affiliates 90,739 87,871 - --------------------------------------------------------------------------------------------------- Other assets 59,565 58,945 - --------------------------------------------------------------------------------------------------- Property, plant and equipment, at cost: Land 30,465 28,432 Buildings 157,504 164,384 Machinery and equipment 459,012 534,514 Construction in progress 6,795 10,749 Accumulated depreciation (273,826) (356,603) --------------- -------------- Net property, plant and equipment 379,950 381,476 - --------------------------------------------------------------------------------------------------- Excess of cost over fair value of net identifiable assets of acquired businesses (less accumulated amortization 2000 - $80,817; 1999 - $58,553) 958,443 631,597 - --------------------------------------------------------------------------------------------------- FCC licenses and other intangibles (less accumulated amortization 2000 - $81,555; 1999 - $51,657) 899,705 383,751 - --------------------------------------------------------------------------------------------------- Total assets $ 2,561,282 $ 2,340,374 ===================================================================================================
Notes to Consolidated Financial Statements begin on page 28. Page 24 LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, December 26, 2000 1999 - --------------------------------------------------------------------------------------------------- Current liabilities: Accounts payable $ 27,203 $ 32,032 Accrued expenses and other liabilities 87,338 75,190 Income taxes payable --- 508,966 Current maturity of long-term debt --- 13,000 --------------- --------------- Total current liabilities 114,541 629,188 - ---------------------------------------------------------------------------------------------------- Long-term debt 822,077 46,838 - ---------------------------------------------------------------------------------------------------- Deferred income taxes 351,491 217,437 - ---------------------------------------------------------------------------------------------------- Other liabilities and deferred credits 101,251 116,009 - ---------------------------------------------------------------------------------------------------- Commitments and contingencies (Note 9) - ---------------------------------------------------------------------------------------------------- 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 22,158,070 and 25,911,614 shares 110,790 129,558 Class B, authorized 600,000 shares; issued 556,574 shares 2,783 2,783 Additional paid-in capital --- 3,040 Accumulated other comprehensive income - unrealized gains (losses) on equity securities (3,481) 7,392 Unearned compensation (2,145) (2,973) Retained earnings 1,063,975 1,191,102 --------------- --------------- Total stockholders' equity 1,171,922 1,330,902 - ---------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 2,561,282 $ 2,340,374 ====================================================================================================
Notes to Consolidated Financial Statements begin on page 28. Page 25 Media General, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Fiscal Years Ended --------------------------------------------- December 31, December 26, December 27, 2000 1999 1998 (53 weeks) - --------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 53,719 $ 881,316 $ 70,874 Adjustments to reconcile net income: Extraordinary item --- 1,328 --- Depreciation and amortization 105,293 97,532 100,201 Deferred income taxes 3,327 (5,484) (5,945) Provision for doubtful accounts 4,751 4,676 6,269 Investment income - unconsolidated affiliates (5,131) (10,333) (22,193) Distribution from unconsolidated affiliates 3,400 30,372 7,700 Gain on sale of Denver Newspapers, Inc. common stock --- (30,983) --- Net loss on disposition of Garden State Paper 13,774 --- --- Net gain on disposition of Cable operations (8,286) (798,719) --- ------------- ------------ ------------- Net cash provided by operations 170,847 169,705 156,906 Change in assets and liabilities: Accounts receivable and inventories (13,457) (6,317) (6,810) Other current assets (829) (2,694) 15,986 Accounts payable, accrued expenses and other liabilities (9,513) (33,778) (5,631) Income taxes payable (516,812) 1,868 (10,016) Other, net (2,842) (5,765) (11,044) ------------- ------------ ------------- Net cash (used) provided by operating activities (372,606) 123,019 139,391 - ---------------------------------------------------------------------------------------------------- Cash flows from investing activities: Capital expenditures (42,873) (60,829) (49,480) Purchase of businesses (857,570) --- (132,680) Proceeds from disposition of Garden State Paper 76,623 --- --- Proceeds from disposition of Cable operations 10,063 1,404,407 --- Proceeds from sale of other businesses 3,825 8,058 28,123 Denver Newspapers, Inc.: Proceeds from sale of common stock --- 39,000 --- Redemption of preferred stock --- 34,000 --- Proceeds (purchases) of short-term investments - net 390,748 (390,748) --- Other investments (12,283) (6,780) --- Other, net 255 1,198 2,924 ------------- ------------ ------------- Net cash (used) provided by investing activities (431,212) 1,028,306 (151,113) - ---------------------------------------------------------------------------------------------------- Cash flows from financing activities: Increase in debt 1,095,000 268,000 463,000 Repayment of debt (333,333) (1,136,509) (436,383) Stock repurchase (192,692) (22,743) --- Cash dividends paid (15,299) (16,062) (14,974) Other, net 5,248 3,650 4,212 ------------- ------------ ------------- Net cash provided (used) by financing activities 558,924 (903,664) 15,855 - ---------------------------------------------------------------------------------------------------- Net (decrease) increase in cash and cash equivalents (244,894) 247,661 4,133 Cash, cash equivalents and short-term investments: Cash and cash equivalents at beginning of year 255,298 7,637 3,504 ------------- ------------ ------------- Cash and cash equivalents at end of year 10,404 255,298 7,637 Short-term investments at end of year --- 390,748 --- ------------- ------------ ------------- Cash, cash equivalents and short-term investments at end of year $ 10,404 $ 646,046 $ 7,637 ====================================================================================================
Notes to Consolidated Financial Statements begin on page 28. Page 26 Media General, Inc. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands, except shares and per share amounts)
Accu- mulated Addi- Other tional Compre- Unearned Common Stock Paid-in hensive Compen- Retained ------------------ Total Class A Class B Capital Income sation Earnings - ----------------------------------------------------------------------------------------------------------------------------------- Balance at December 28, 1997 $ 418,226 $ 130,862 $ 2,783 $ 16,733 $ -- $ (2,100) $ 269,948 Net income 70,874 -- -- -- -- -- 70,874 Cash dividends ($0.56 per share) (14,974) -- -- -- -- -- (14,974) Purchase and retirement of 77,011 Class A shares (3,571) (385) -- (3,186) -- -- -- Exercise of options on 112,560 Class A shares 3,049 563 -- 2,486 -- -- -- Income tax benefits relating to restricted shares and exercised options 2,406 -- -- 2,406 -- -- -- Issuance of 6,748 Class A shares under dividend reinvestment plan 289 34 -- 255 -- -- -- Amortization of unearned compensation 1,050 -- -- -- -- 1,050 -- ----------- ---------- --------- -------- -------- ----------- ----------- Balance at December 27, 1998 477,349 131,074 2,783 18,694 -- (1,050) 325,848 - ----------------------------------------------------------------------------------------------------------------------------------- Net income 881,316 -- -- -- -- -- 881,316 Unrealized gain on equity securities (net of deferred taxes of $4,454) 7,392 -- -- -- 7,392 -- -- ----------- Comprehensive income 888,708 Cash dividends ($0.60 per share) (16,062) -- -- -- -- -- (16,062) Purchase and retirement of 580,456 Class A shares (26,448) (2,902) -- (23,546) -- -- -- Exercise of options on 197,726 Class A shares 4,234 988 -- 3,246 -- -- -- Issuance of 72,200 Class A shares under restricted stock plan -- 361 -- 3,098 -- (3,459) -- Income tax benefits relating to restricted shares and exercised options 1,227 -- -- 1,227 -- -- -- Issuance of 7,423 Class A shares under dividend reinvestment plan 358 37 -- 321 -- -- -- Amortization of unearned compensation 1,536 -- -- -- -- 1,536 -- ----------- ---------- --------- -------- -------- ----------- ----------- Balance at December 26, 1999 1,330,902 129,558 2,783 3,040 7,392 (2,973) 1,191,102 - ----------------------------------------------------------------------------------------------------------------------------------- Net income 53,719 -- -- -- -- -- 53,719 Unrealized loss on equity securities (net of deferred tax benefit of $6,346) (10,873) -- -- -- (10,873) -- -- ----------- Comprehensive income 42,846 Cash dividends ($0.64 per share) (15,299) -- -- -- -- -- (15,299) Purchase and retirement of 3,890,136 Class A shares (192,817) (19,451) -- (7,819) -- -- (165,547) Exercise of options on 136,969 Class A shares 4,023 685 -- 3,338 -- -- -- Income tax benefits relating to restricted shares and exercised options 1,478 -- -- 1,478 -- -- -- Issuance of 5,723 Class A shares under dividend reinvestment plan 254 29 -- 225 -- -- -- Amortization and forfeitures of unearned compensation 535 (31) -- (262) -- 828 -- ----------- ---------- --------- -------- -------- ----------- ----------- Balance at December 31, 2000 $ 1,171,922 $ 110,790 $ 2,783 $ -- $ (3,481) $ (2,145) $ 1,063,975 ===================================================================================================================================
Notes to Consolidated Financial Statements begin on page 28. Page 27 Media General, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1: Principles of Consolidation The accompanying financial statements include the accounts of Media General, Inc., and subsidiaries more than 50% owned (the Company). All significant intercompany balances and transactions have been eliminated. See Note 9 for a summary of the Company's accounting policies. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Certain prior-year financial information has been reclassified to conform with the current year's presentation. The Company's fiscal year ends on the last Sunday in December. Results for 2000 are for the 53-week period ended December 31, 2000, while results for 1999 and 1998 are for the 52-week periods ended December 26, 1999, and December 27, 1998, respectively. Note 2: Acquisitions, Dispositions and Discontinued Operations Over the past few years, the Company has completed several acquisitions. All of these transactions were accounted for as purchases and have been included in the Company's consolidated results of operations since their respective dates of acquisition. Purchase price has been allocated to the assets acquired based on appraisals of estimated fair values. Such estimated values are preliminary for those acquisitions completed in 2000 and may change as more facts become known. The excess of the purchase price over the fair market value of the tangible net assets acquired was allocated to FCC licenses, other identifiable intangibles, and excess cost over net assets acquired and is being amortized on a straight-line basis over periods ranging from 3 to 40 years. In March 2000 the Company acquired the common stock of Spartan Communications, Inc. (Spartan); the transaction included 12 network-affiliated television stations and one UPN affiliate which is operated under a local marketing agreement. The total consideration approximated $610 million (including approximately $9 million of transaction costs and net of $5 million cash received). Approximately $500 million of the purchase price was funded with borrowings under an existing $1.2 billion revolving credit facility; concurrent with this acquisition, the Company entered into several new interest rate swap agreements as part of an overall risk management strategy (see Note 4). Approximately $540 million of the purchase price was allocated to FCC licenses and other identifiable intangibles and $129 million to excess cost over the net assets acquired. The following summary presents the Company's unaudited pro forma consolidated results of operations for the year ended December 31, 2000, and December 26, 1999, as if the Spartan acquisition had been completed at the beginning of each period. Certain Spartan items have been reclassified to conform with Media General's presentation. The pro forma information is presented for comparative purposes only and does not purport to be indicative of what would have occurred had the acquisition actually been made at such date, nor is it necessarily indicative of future operating results: Page 28
Pro Forma Pro Forma Year Ended Year Ended (In thousands, except per share amounts) December 31, 2000 December 26, 1999 - ------------------------------------------------------------------------------------------------------ Revenues $ 853,135 $ 804,834 ========== =========== Income from continuing operations before extraordinary item $ 57,966 $ 50,005 Discontinued operations (9,838) 803,826 Extraordinary item --- (1,328) ---------- ----------- Net income $ 48,128 $ 852,503 ========== =========== Income per common share: Income from continuing operations before extraordinary item $ 2.42 $ 1.88 Income (loss) from discontinued operations (0.41) 30.33 Extraordinary item --- (0.05) ---------- ----------- Net income $ 2.01 $ 32.16 ========== =========== Income per common share - assuming dilution: Income from continuing operations before extraordinary item $ 2.40 $ 1.86 Income (loss) from discontinued operations (0.41) 29.90 Extraordinary item --- (0.05) ---------- ----------- Net income $ 1.99 $ 31.71 ========== ===========
In August 2000 the Company acquired, for approximately $238 million, the assets of certain newspaper groups located in South Carolina and Alabama from Thomson Newspapers. This transaction was also funded with borrowings under the Company's existing $1.2 billion revolving credit facility. Additionally, in June 2000, the Company acquired a group of weekly newspapers in southwestern Virginia from Family Community Newspapers of Southwest Virginia, Inc., for approximately $9 million. The portion of the purchase price for these acquisitions allocated to identifiable intangibles (principally subscriber lists) was $6 million and to excess cost over the net assets acquired was $223 million. Pro forma information for these acquisitions has not been provided because such information would not differ significantly from the results provided above. In September 2000 the Company sold Garden State Paper (GSP) to an affiliate of Enron North America Corporation for approximately $76.6 million, including working capital. The Company recorded a loss of $13.8 million (net of income tax benefit of $6.2 million) which is subject to resolution with the buyer of certain income tax matters and other items. The transaction also included a seven-year, financial fixed-price newsprint agreement which the Company does not intend to retain. Concurrent with the sale, the Company retired $20 million of 7.125% municipal revenue bonds (see Note 4). In October 1999 the Company sold its cable operations to Cox Communications, Inc., for approximately $1.4 billion in cash, at which time the Company recorded a gain of $799 million (net of income taxes of $510 million). In the second quarter of 2000, certain final post-closing adjustments related to this sale resulted in an additional gain of $8.3 million (net of income taxes of $3.6 million). Immediately following the sale in 1999, approximately $735 million of the proceeds were used to pay off all amounts then outstanding under the Company's revolving credit agreements and to terminate the associated interest rate swaps (see Note 4), and the remaining proceeds of approximately $665 million were invested, primarily in prime-rated commercial paper. Page 29 The following results of GSP and the Cable Segment have been presented as income (loss) from discontinued operations in the accompanying consolidated statements of operations:
Fiscal Years Ended --------------------------------------------- December 31, December 26, December 27, 2000 1999 1998 --------------------------------------------- Revenues $ 55,656 $ 225,670 $ 284,352 Costs and expenses 62,477 217,987 247,999 --------------------------------------------- Income (loss) before income taxes (6,821) 7,683 36,353 Income taxes (benefit) (2,471) 2,576 13,334 --------------------------------------------- Income (loss) from discontinued operations $ (4,350) $ 5,107 $ 23,019 =============================================
In January 1998 the Company acquired, for approximately $93 million, the assets of the Bristol Herald Courier (Bristol), a daily newspaper in southwestern Virginia, and two affiliated weekly newspapers. In July 1998 the Company acquired, for approximately $40 million, the assets of the Hickory Daily Record (Hickory), a daily newspaper in northwestern North Carolina. The portion of the purchase price for these acquisitions allocated to identifiable intangibles (principally subscriber lists) was $8 million, to other assets, net (principally property, plant and equipment) was $17 million, and to excess cost over the net assets acquired was $108 million. Also, in June 1998, the Company completed the sale of its Kentucky newspaper properties for approximately $24 million. The Bristol and Hickory acquisitions were funded with borrowings under an existing revolving credit facility, coupled with proceeds from the disposition of the Kentucky newspaper properties. Note 3: Investments in Unconsolidated Affiliates In June 1999 the Company sold 20% of the outstanding common stock of Denver Newspapers, Inc. (DNI), the parent company of The Denver Post (a Colorado daily newspaper), to MediaNews, Inc., for $39 million, resulting in a $19 million after-tax gain. Subsequently, DNI's name was changed to The Denver Post Corporation (Denver). The Company still retains 20% ownership of the common stock of Denver and, for the three-year period ending June 2002, will share in any realized appreciation in value of its original 20% ownership if that stock is sold to a third party or publicly offered. Additionally, the Company's preferred stock investment in DNI was redeemed in June 1999, for $34 million plus $19.2 million of accrued but unpaid dividends. Using the equity method, the Company recognized, on a one-month lag, 20% of Denver's net income applicable to common stockholders in 2000 and 1999 (after the sale), and 40% of net income applicable to common stockholders in 1999 (before the sale) and 1998. The Denver Post and the Denver Rocky Mountain News have entered into a joint-operating agreement, effective in January 2001, under which the competing newspapers combined their advertising, circulation and production operations, while maintaining separate newsrooms. The Company also has a one-third partnership interest in SP Newsprint Company (SPNC), a domestic newsprint manufacturer which also pays licensing fees to the Company. In November 1999, SPNC acquired Smurfit Newsprint Corporation's Newberg, Oregon mill. The Company has purchased, at market prices, approximately 40 thousand tons of newsprint from SPNC in each of the past three years. Retained earnings of the Company at December 31, 2000, included $22.6 million related to undistributed earnings of unconsolidated affiliates. Additionally, the Company owns approximately 7.4% of AdOne, L.L.P., a national online database of classified advertising and e-commerce, which is being accounted for under the equity method. Page 30 Note 4: Long-Term Debt and Other Financial Instruments Long-term debt at December 31, 2000, and December 26, 1999, was as follows: (In thousands) 2000 1999 - ------------------------------------------------------------------------------- Revolving credit facility $ 790,000 $ --- 8.62% senior notes due annually from 2001 to 2002 26,000 39,000 7.125% revenue bonds --- 20,000 Bank lines 5,000 --- Capitalized leases 1,077 838 Less: current maturity of long-term debt --- (13,000) ----------- ------------ Long-term debt $ 822,077 $ 46,838 =============================================================================== In December 1996 the Company entered into a seven-year revolving credit facility committing a syndicate of banks to lend the Company up to $1.2 billion. This facility has mandatory commitment reductions of 25% each year by the end of 2001 and 2002. Interest rates under the facility are typically based on the London Interbank Offered Rate (LIBOR) plus a margin ranging from .225% to .75% (.375% at December 31, 2000), based on the Company's debt to cash flow ratio (leverage ratio), as defined. Under this facility, the Company pays commitment fees (.10% at December 31, 2000) on the unused portion of the facility at a rate based on its leverage ratio. The Company's debt covenants contain a minimum net worth requirement ($435.1 million at December 31, 2000), and require the maintenance of an interest coverage ratio and a leverage ratio, as defined. Long-term debt maturities during the five years subsequent to December 31, 2000, aggregating $822.0 million are as follows: 2001 - $18.0 million; 2002 - $203.3 million; 2003 - $600.3 million; 2004 - $.2 million; 2005 - $.2 million. At December 31, 2000, the Company had borrowings of $5 million from bank lines and $13 million of senior notes due within one year classified as long- term debt in accordance with the Company's intention and ability to refinance these obligations on a long-term basis under existing facilities. The interest rate on the bank lines was 7% at December 31, 2000. In October 1999 the Company used proceeds from the sale of its cable operations (see Note 2) to pay off all amounts outstanding under its revolving credit agreements. The associated interest rate swap agreements covering $725 million of that debt were terminated as well, resulting in an extraordinary charge of $1.3 million ($0.05 per share, both basic and assuming dilution), net of a $.8 million tax benefit. In March 2000 the Company borrowed funds under the aforementioned credit facility to purchase Spartan Communications, Inc. (see Note 2); concurrent with this acquisition, the Company entered into several new interest rate swap agreements to manage interest cost and risk associated with increasing variable interest rates, primarily short-term changes in LIBOR. These interest rate swaps totaled $300 million in notional amount with maturities that range from less than one year to three years; they effectively convert a portion of the Company's variable rate debt to fixed rate debt with a weighted average interest rate approximating 7.4%. Prior to the adoption on January 1, 2001, of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, the Company used the accrual method to account for all interest rate swap agreements. Amounts which were due to or from interest rate swap counterparties were recorded as an adjustment to interest expense in the periods in which they accrued. The Company's exposure to credit loss on its interest rate swap agreements in the event of nonperformance by the counterparties is believed to be remote due to the Company's requirement that counterparties have a strong credit rating. In September 2000, concurrent with the sale of Garden State Paper (GSP), the Company retired $20 million of 7.125% municipal revenue bonds. In conjunction with the sale, the Company entered into a financial newsprint swap agreement that it does not intend to retain. The agreement, under which the Company receives a floating price per metric ton and pays a fixed price of $596 per metric ton, is being accounted for as a derivative under the accrual method. Predominantly, the agreement hedges the Company's exposure to changes in the cost of newsprint; however, a portion of the agreement currently exceeds the Company's newsprint usage. For the year ended December 31, 2000, the Company recognized an unrealized gain of approximately $1.2 million in "Other, net" on the accompanying Statement of Operations related to the change in fair value of the portion of the swap not designated as a hedge by the Company for the time period between the GSP sale and December 31, 2000. The Company's exposure to credit loss on its newsprint swap agreement in the event of nonperformance by the counterparty is believed to be remote due to the financial strength of that party. Page 31 Effective January 1, 2001, the Company adopted SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities. These statements require that all derivatives be recognized as either assets or liabilities on the balance sheet at fair value. If a derivative is a hedge, depending upon the nature of the hedge, a change in its fair value will either be offset against the change in the fair value of the hedged assets, liabilities, or firm commitments through earnings, or recognized in other comprehensive income (OCI) until the hedged item is recognized in earnings. Any difference between fair value of the hedge and the item being hedged, known as the ineffective portion, will be immediately recognized in earnings. The Company has several interest rate swap agreements and a newsprint swap agreement that are derivatives; the interest rate swaps and a designated portion of the newsprint swap qualify as cash flow hedges under the new standard. The interest rate swaps are not expected to have an impact on the Company's Statement of Operations but will affect the Company's Balance Sheet and Statement of Stockholders' Equity; the magnitude of the impact will vary over time dependent on market LIBOR rates. Changes in value of the effective portion of the newsprint swap will impact the Company's Balance Sheet and Statement of Stockholders' Equity, and changes in the ineffective portion will be recorded directly in the Statement of Operations. The magnitude of the impact will vary over time dependent principally on changes in future newsprint prices; currently, a $1 increase or decrease in the average newsprint price over the term of the contract would result in income or expense, respectively, to the Company of approximately $70 thousand. The table below includes information about the carrying values and estimated fair values of the Company's financial instruments at December 31, 2000 and December 26, 1999:
(In thousands) 2000 1999 - ----------------------------------------------------------------------------------------- Carrying Fair Carrying Fair Amounts Value Amounts Value - ----------------------------------------------------------------------------------------- Assets: Investments $ 13,318 $ 13,318 $ 20,648 $ 20,648 Newsprint swap agreement --- 11,991 --- --- Liabilities: Long-term debt: Revolving credit facility 790,000 790,000 --- --- 8.62% senior notes 26,000 26,478 39,000 39,696 7.125% revenue bonds --- --- 20,000 21,023 Bank lines 5,000 5,000 --- --- Interest rate swap agreements --- 5,324 --- --- - -----------------------------------------------------------------------------------------
The Company's investments which have a readily determinable value and are classified as available-for-sale are carried at fair value, with unrealized gains or losses, net of deferred taxes, reported as a separate component of stockholders' equity. The Company's other investments which do not have readily determinable fair values are carried at cost which approximates fair value. The fair values of the interest rate swaps and the newsprint swap were based on a discounted cash flow analysis of the estimated amounts the Company would have received or paid to terminate the swaps. Fair values of the Company's long-term debt were estimated, in both years, using discounted cash flow analyses based on the Company's incremental borrowing rates for similar types of borrowings. The borrowings under the Company's revolving credit facility and bank lines approximated their fair value. Page 32 Note 5: Business Segments The Company, located primarily in the southeastern United States, is a diversified communications company which has two business segments: Publishing and Broadcasting. The Publishing Segment, the Company's largest based on revenue and segment profit, includes 25 daily newspapers and nearly 100 weekly newspapers and other publications, the Company's 20% interest in Denver, the Company's 7% interest in AdOne, LLP, as well as its online financial data service. The Broadcasting Segment consists of 26 network-affiliated broadcast television stations and a provider of equipment and studio design services. See Note 2 for a discussion of the disposition of the Company's Newsprint and Cable operations. Management measures segment performance based on operating cash flow (operating income plus depreciation and amortization) as well as profit or loss from operations before interest, income taxes, and acquisition related amortization. Amortization of the excess of cost over fair value of net identifiable assets, as well as FCC licenses and other intangibles, is not allocated to individual segments although the intangible assets themselves are included in identifiable assets for each segment. Investments in Denver and AdOne are not allocated to segment assets although the equity income is included in the Publishing Segment. Intercompany sales are accounted for as if the sales were at current market prices and are eliminated in the consolidated financial statements. The Company's reportable segments, which are managed separately, are strategic business enterprises that provide distinct products and services using diverse technology and production processes. Information by segment is as follows:
(In thousands) Publishing Broadcasting Total - --------------------------------------------------------------------------------------------------- 2000 Consolidated revenues * $ 567,673 $ 262,928 $ 830,601 ======================================= Segment operating cash flow $ 177,653 $ 84,501 $ 262,154 Allocated amounts: Equity in net loss of unconsolidated affiliates (2,546) (2,546) Depreciation and amortization (26,303) (18,617) (44,920) --------------------------------------- Segment profit $ 148,804 $ 65,884 214,688 ========================= Unallocated amounts: Interest expense (42,558) Investment income - SP Newsprint 7,677 Acquisition intangibles amortization (52,501) Corporate expenses (35,535) Other 11,155 ---------- Consolidated income from continuing operations before income taxes $ 102,926 ========== Segment assets $ 1,024,068 $ 1,383,414 $2,407,482 Corporate 153,800 ---------- Consolidated assets $2,561,282 ========== Segment capital expenditures $ 18,577 $ 13,008 $ 31,585 Discontinued Newsprint capital expenditures 6,015 Corporate 5,273 ---------- Consolidated capital expenditures $ 42,873 ========== - ---------------------------------------------------------------------------------------------------
* Intercompany revenues are less than 1% of consolidated revenues and have been eliminated. Page 33
(In thousands) Publishing Broadcasting Total - --------------------------------------------------------------------------------------------------- 1999 Consolidated revenues * $ 524,017 $ 168,885 $ 692,902 ======================================= Segment operating cash flow $ 174,929 $ 47,854 $ 222,783 Allocated amounts: Equity in net loss of unconsolidated affiliates (673) (673) Depreciation and amortization (24,617) (10,542) (35,159) --------------------------------------- Segment profit $ 149,639 $ 37,312 186,951 ========================= Unallocated amounts: Interest expense (45,014) Investment income - SP Newsprint 6,567 Acquisition intangibles amortization (33,934) Corporate expenses (29,932) Gain on sale of Denver Newspapers, Inc. common stock 30,983 Other 14,628 ---------- Consolidated income from continuing operations before income taxes and extraordinary item $ 130,249 ========== Segment assets $ 788,625 $ 670,612 $1,459,237 Discontinued Newsprint assets 91,272 Corporate 789,865 ---------- Consolidated assets $2,340,374 ========== Segment capital expenditures $ 12,570 $ 14,389 $ 26,959 Discontinued Cable and Newsprint capital expenditures 30,902 Corporate 2,968 ---------- Consolidated capital expenditures $ 60,829 ========== - --------------------------------------------------------------------------------------------------- 1998 Consolidated revenues * $ 517,880 $ 170,797 $ 688,677 ======================================= Segment operating cash flow $ 155,452 $ 51,318 $ 206,770 Allocated amounts: Equity in net income of unconsolidated affiliate 3,226 3,226 Depreciation and amortization (23,627) (9,311) (32,938) --------------------------------------- Segment profit $ 135,051 $ 42,007 177,058 ========================= Unallocated amounts: Interest expense (61,027) Investment income - SP Newsprint 12,831 Acquisition intangibles amortization (34,111) Corporate expenses (23,011) Other 3,082 ---------- Consolidated income from continuing operations before income taxes $ 74,822 ========== Segment assets $ 809,803 $ 691,787 $1,501,590 Discontinued Cable and Newsprint assets 216,537 Corporate 199,219 ---------- Consolidated assets $1,917,346 ========== Segment capital expenditures $ 11,534 $ 10,061 $ 21,595 Discontinued Cable and Newsprint capital expenditures 26,065 Corporate 1,820 ---------- Consolidated capital expenditures $ 49,480 ========== ===================================================================================================
* Intercompany revenues are less than 1% of consolidated revenues and have been eliminated. Page 34 The substantial decrease and increase in assets attributable to Corporate during 2000 and 1999, respectively, was primarily due to short-term investments which were generated as a direct result of the sale of the Company's Cable operations in 1999. These investments were sold in 2000 to pay the income taxes related to that transaction, as well as to fund a portion of the Spartan acquisition. Note 6: Taxes on Income The Company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes, 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 Company's federal income tax returns for fiscal years 1997 and 1998 are currently under examination by the Internal Revenue Service. The Company's federal income tax returns have been examined by the Internal Revenue Service through fiscal year 1996 and settled through 1993. Various state returns are currently under examination by state tax authorities. The results of these examinations are not expected to be material to the Company's results of operations, financial position or cash flow. Significant components of income taxes from continuing operations are as follows:
(In thousands) 2000 1999 1998 - ------------------------------------------------------------------------------------------------------ Current: Federal $ 21,234 $ 45,895 $ 24,643 State 2,551 7,620 5,367 ---------- ----------- ----------- 23,785 53,515 30,010 ---------- ----------- ----------- Deferred: Federal 18,339 (1,927) (2,670) State (2,755) (157) (373) ---------- ----------- ----------- 15,584 (2,084) (3,043) ---------- ----------- ----------- $ 39,369 $ 51,431 $ 26,967 ======================================================================================================
The Company's provision for state income taxes for the fiscal year 2000 reflects a $3 million deferred state income tax benefit due to a reduction in the Company's effective state tax rate. Temporary differences which gave rise to significant components of the Company's deferred tax liabilities and assets at December 31, 2000, and December 26, 1999, are as follows:
(In thousands) 2000 1999 - ------------------------------------------------------------------------------------------------------ Deferred tax liabilities: Difference between book and tax bases of intangible assets $ 306,730 $ 155,770 Tax over book depreciation 87,583 88,508 Other 15,645 17,414 ----------- ----------- Total deferred tax liabilities 409,958 261,692 ----------- ----------- Deferred tax assets: Employee benefits (34,535) (36,918) Acquired net operating losses (19,445) --- Other (12,820) (15,542) ----------- ----------- Total deferred tax assets (66,800) (52,460) ----------- ----------- Deferred tax liabilities, net 343,158 209,232 Deferred tax assets included in other current assets 8,333 8,205 ----------- ----------- Deferred tax liabilities $ 351,491 $ 217,437 ======================================================================================================
Page 35 Reconciliation of income taxes computed at the federal statutory tax rate to actual income tax expense from continuing operations is as follows:
(In thousands) 2000 1999 1998 - ------------------------------------------------------------------------------------------------------ Income taxes computed at federal statutory tax rate $ 36,024 $ 45,587 $ 26,187 Increase (reduction) in income taxes resulting from: State income taxes, net of federal income tax benefit (133) 4,850 3,204 Investment income - unconsolidated affiliates 261 (397) (2,622) Amortization of excess cost (goodwill) 3,697 2,815 2,960 Life insurance plans 125 (1,139) (1,905) Other (605) (285) (857) ---------- ----------- ----------- $ 39,369 $ 51,431 $ 26,967 ======================================================================================================
Net of refunds, in 2000, 1999 and 1998, the Company paid income taxes of $531.9 million, $52.1 million and $56.5 million, respectively. The significant increase in taxes paid in 2000 was attributable to the gain on the sale of the Company's Cable operations in 1999. As a result of an acquisition in 2000, the Company has a federal net operating loss of approximately $45.8 million that will expire in the year 2014. The Company also has state net operating losses as a result of this acquisition. 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. Each non-employee member of the Board of Directors of the Company participates in the Directors' Deferred Compensation Plan. The plan provides that each non-employee Director shall receive half of his or her annual compensation for services to the Board in the form of Deferred Stock Units (DSU); each Director additionally may elect to receive the balance of his or her compensation in cash or DSU. Other than dividend credits, deferred stock units do not entitle Directors to any rights due to a holder of common stock. DSU account balances may be settled as of the Director's retirement date by a cash lump-sum payment, a single distribution of common stock, or annual installments of either cash or common stock over a period of up to ten years. The Company records expense annually based on the amount of compensation paid to each director as well as an adjustment for changes in the Company's stock price. Expense recognized in 1999 and 1998 under the plan was $456,000 and $550,000; a benefit of $169,000 was recognized in 2000. Stock-based awards are granted to key employees in the form of nonqualified stock options and restricted stock under the 1995 Long-Term Incentive Plan (LTIP). The plan is administered by the Compensation Committee of the Board of Directors. Grant prices of stock options are determined by the Committee and shall not be less than the fair market value on the date of grant. Options are exercisable during the continued employment of the optionee but not for a period greater than ten years and not for a period greater than one year after termination of employment, and they become exercisable at the rate of one-third each year from the date of grant. Restricted stock is awarded in the name of each of the participants; these shares have all the rights of other Class A shares, subject to certain restriction and forfeiture provisions. In 1999, 72,200 shares were granted under terms of the plan. Restrictions on the shares expire no more than ten years after the date of award, or earlier if pre- established performance targets are met. The pre-established performance targets were met for the 1997 award and of the 91,000 shares granted, 31,600 shares remained outstanding under that award at December 31, 2000. The plan will continue until terminated by the Company. Page 36 Options to purchase Class A common stock were granted to key employees under the 1976 and 1987 nonqualified stock option plans prior to the 1995 LTIP. The Company will not make any future awards under these plans and past awards are not affected. Options outstanding under the plans are exercisable during the continued employment of the optionee, 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 and for a period of not greater than three years after termination of employment. Restricted shares of the Company's Class A common stock were granted to certain key employees under the 1991 restricted stock plan. The Company will not make any future awards under the plan and past awards are not affected. At December 31, 2000, 18,000 shares granted in 1995 remain restricted under the terms of the plan. Shares were awarded in the name of each of the participants; these shares have all the rights of other Class A shares, subject to certain restrictions and forfeiture provisions. Restrictions on the shares expire no more than ten years after the date of the award, or earlier if certain performance targets are met. Unearned compensation was recorded at the date of the restricted stock awards based on the market value of the shares. Unearned compensation, which is shown as a separate component of stockholders' equity, is being amortized to expense over a vesting period (not exceeding ten years) based upon expectations of meeting certain performance targets. The amount amortized to expense in 2000, 1999 and 1998 was $.4 million, $1.5 million and $1.0 million, respectively. In December 1999, the Board of Directors authorized a program to repurchase up to $250 million of the Company's Class A common stock. The Company repurchased stock, at market prices, throughout 2000 and, at December 31, 2000, 4.1 million shares had been repurchased at a cost of $204 million since the program's inception, including $7.5 million from the Company's thrift plan. Additionally, the Company entered into a stock redemption agreement in 1985, which was amended in 1988, and 1994, with the late D. Tennant Bryan, former Chairman Emeritus of the Company. In June 1999, the estate of D. Tennant Bryan exercised its option under the 1994 stock redemption agreement to sell to the Company 15% of Mr. Bryan's ownership in Media General Class A Stock at the time of his death. This exercise resulted in the Company purchasing 326,897 shares from the estate, at a 10% discount from average stock price, for $13.6 million. The following information is provided solely in connection with the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation. If the Company had elected to recognize compensation cost related to its stock options granted in 2000, 1999 and 1998 in accordance with the provisions of SFAS No. 123, earnings per share would have declined $0.08 ($0.07 assuming dilution), $0.05 ($0.07 assuming dilution) and $0.05 ($0.04 assuming dilution) in 2000, 1999 and 1998, and pro forma net income and earnings per share would have been $52.0 million, $880.1 million and $69.7 million; and $2.17 ($2.15 assuming dilution), $33.20 ($32.73 assuming dilution) and $2.62 ($2.59 assuming dilution), respectively. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions for 2000, 1999 and 1998, respectively: risk-free interest rates of 6.71%, 4.72% and 5.61%; dividend yields of 1.26%, 1.31% and 1.45%; volatility factors of .331, .293 and .287; and an expected life of 8 years. Page 37 A summary of the Company's stock option activity, and related information for the years ended December 31, 2000, December 26, 1999 and December 27, 1998, follows:
2000 1999 1998 -------------------------- ----------------------- ------------------------- Weighted- Weighted- Weighted- Average Average Average Exercise Exercise Exercise Options Shares Price Shares Price Shares Price - ----------------------------------------------------------------------------------------------------------------------- Outstanding-beginning of year 986,773 $ 32.96 1,056,203 $ 28.96 1,049,097 $ 26.68 Granted 176,500 52.06 136,000 47.91 122,000 46.38 Exercised (136,969) 29.37 (197,726) 21.42 (112,560) 27.08 Forfeited (19,569) 42.97 (7,704) 43.90 (2,334) 6.64 ------------ ----------- ------------ Outstanding-end of year 1,006,735 36.61 986,773 32.96 1,056,203 28.96 ------------ ----------- ------------ Price range at end of year $ 2 to $52 $ 2 to $48 $ 2 to $46 Price range for exercised shares $ 2 to $48 $ 2 to $48 $ 2 to $46 Available for grant at end of year 319,408 467,100 603,100 Exercisable at end of year 751,887 749,558 799,388 Weighted-average fair value of options granted during the year $ 23.35 $ 17.82 $ 17.68
The following table summarizes information about stock options outstanding at December 31, 2000:
Options Outstanding Options Exercisable - --------------------------------------------------------------------- ---------------------------- Range of Weighted-Average Exercise Number Remaining Weighted-Average Number Weighted-Average Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price - ------------------------------------------------------------------------------------------------------ $ 2.50 12,700 * $ 2.50 12,700 $ 2.50 18.81-20.19 134,500 1 year 19.36 134,500 19.36 27.63-31.81 360,868 5 years 29.94 360,868 29.94 32.50-46.50 209,867 ** 42.14 180,111 41.44 47.91-52.06 288,800 9 years 50.45 63,708 49.00 --------- ------- 2.50-52.06 1,006,735 36.61 751,887 31.95 ========= =======
(*) Exercisable during lifetime of optionee (**) Exercisable during the continued employment of the optionee and for a three-year period thereafter with the exception of 99,367 options which were issued on 1/28/98 for $46.38 with a remaining contractual life of seven years Note 8: Retirement Plans The Company has non-contributory defined benefit retirement plans which cover substantially all employees, and non-contributory unfunded supplemental executive retirement and ERISA excess plans which supplement the coverage available to certain executives. The Company also provides certain health and life insurance benefits for retired employees. The previously mentioned plans are collectively referred to as the "Plans." The assumptions used in the measurement of the Company's benefit obligation are shown as follows:
Weighted-average Assumptions Pension Benefits Other Benefits ----------------------- ---------------------- at End of Year 2000 1999 2000 1999 - ------------------------------------------------------------------------------------------------------ Discount rate 7.50% 7.75% 7.50% 7.75% Expected return on plan assets 10.50 10.50 --- --- Rate of compensation increase 4.50 4.75 4.50 4.75
Page 38 For measurement purposes, an 8.75% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2000. The rate was assumed to decrease gradually each year to a rate of 5.25% for 2007 and remain at that level thereafter. With the passage of time, actual experience differs from the assumptions used in determining the Company's pension and postretirement benefit obligations. These differences, coupled with external economic factors, cause periodic revision of the assumptions. The effects of actual versus assumed experience, as well as changes in assumptions, give rise to actuarial gains and losses in the table that follows. These actuarial gains and losses represent differences in actual versus expected return on plan assets and other changes in assumptions and are recognized over the expected service period of active participants. The following table provides a reconciliation of the changes in the Plans' benefit obligations and fair value of assets for the years ended December 31, 2000, and December 26, 1999, and a statement of the funded status at December 31, 2000, and December 26, 1999:
Pension Benefits Other Benefits ---------------------- ------------------------ (In thousands) 2000 1999 2000 1999 - ---------------------------------------------------------------------------------------------------------- Change in benefit obligation: Benefit obligation at beginning of year $ 206,911 $ 220,157 $ 32,085 $ 32,648 Service cost 8,012 7,618 356 462 Interest cost 17,558 15,053 2,575 2,215 Participant contributions --- --- 506 279 Actuarial (gain) loss 19,922 (22,576) 2,409 (1,618) Acquisitions 4,677 --- 439 --- Curtailment --- (2,099) --- --- Benefit payments (13,219) (11,242) (2,828) (1,901) --------- --------- --------- --------- Benefit obligation at end of year 243,861 206,911 35,542 32,085 --------- --------- --------- --------- Change in plan assets: Fair value of plan assets at beginning of year 239,571 240,162 --- --- Actual return on plan assets (972) 9,365 --- --- Acquisitions 5,562 --- --- --- Employer contributions 1,695 1,286 2,828 1,901 Benefit payments (13,219) (11,242) (2,828) (1,901) --------- --------- --------- --------- Fair value of plan assets at end of year 232,637 239,571 --- --- --------- --------- --------- --------- Funded status: Plan assets greater than (less than) benefit obligation (11,224) 32,660 (35,542) (32,085) Unrecognized transition asset --- (1,012) --- --- Unrecognized prior-service cost 2,178 2,786 --- --- Unrecognized actuarial (gain) loss (14,668) (60,614) 5,993 3,201 --------- --------- --------- --------- Accrued benefit cost $ (23,714) $ (26,180) $ (29,549) $ (28,884) =========================================================================================================
Page 39 The following table provides the components of net periodic benefit cost for the Plans for fiscal years 2000, 1999 and 1998:
Pension Benefits Other Benefits --------------------------- ----------------------------- (In thousands) 2000 1999 1998 2000 1999 1998 - ------------------------------------------------------------------------------------------------------- Service cost $ 8,013 $ 7,618 $ 6,469 $ 356 $ 462 $ 469 Interest cost 17,558 15,053 14,906 2,575 2,215 2,214 Expected return on plan assets (23,853) (21,221) (19,285) --- --- --- Amortization of transition asset (1,012) (706) (499) --- --- --- Amortization of prior-service cost 608 588 829 --- --- --- Amortization of net (gain) loss (1,200) (53) 2 123 114 --- Multi-employer plans expense 467 621 589 --- --- --- -------- -------- -------- -------- -------- ------ Net periodic benefit cost $ 581 $ 1,900 $ 3,011 $ 3,054 $ 2,791 $2,683 =======================================================================================================
The Company recorded a $1.8 million curtailment gain in 1999 as a result of the sale of its Cable operations, which was included in the gain on disposal of that segment. The Company's policy is to fund benefits under the supplemental executive retirement, excess, and postretirement benefits plans as claims and premiums are paid. As of December 31, 2000, and December 26, 1999, the benefit obligation related to the supplemental executive retirement and ERISA excess plans included in the preceding tables was $28.9 million and $24.7 million, respectively. Assumed health care cost rates have an effect on the amounts reported for the health care plans. A one percent change in assumed health care cost trend rates would have the following effects:
(In thousands) 1% Increase 1% Decrease - ------------------------------------------------------------------------------------------------ Effect on total of service and interest cost components of net periodic postretirement health care benefit cost $ 110 $ (101) Effect on the health care component of the accumulated postretirement benefit obligation 1,580 $ (1,440)
The Company also sponsors a thrift plan covering substantially all employees. Company contributions represent a partial matching of participant contributions up to a maximum of 3.3% of the employee's salary. Contributions charged to expense under the plan were $5.3 million, $5.5 million and $5.0 million in 2000, 1999 and 1998, respectively. Beginning in 2001, the Company will increase its match to 100% of participant contributions up to a maximum of 4% of the employee's salary. Note 9: Other Revenue recognition The principal sources of revenue are the sale of advertising in newspapers, the sale of newspapers to individual subscribers and distributors and the sale of airtime on television stations. In addition, the sale of advertising on its newspaper and television websites and portals, as well as revenues derived from the online sale of financial data by a specialized financial services company, are becoming increasingly important. Advertising revenue is recognized when advertisements are published, aired or displayed, or when related advertising services are rendered. Subscription revenue is recognized on a pro-rata basis over the term of the subscription. Revenue from the sale of online financial data is recognized pro-rata over the term of the contract, subject to adjustment in certain circumstances, for usage volume. Depreciation and amortization Plant and equipment are depreciated, primarily on a straight-line basis, over their estimated useful lives which are generally 40 years for buildings and range from 3 to 20 years for machinery and equipment. Depreciation deductions are computed by accelerated methods for income tax purposes. Internal use software is amortized on a straight-line basis over its estimated useful life, not to exceed 5 years. Page 40 Excess of cost over fair value of net identifiable assets of acquired businesses through 1970 (approximately $32 million) 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. FCC licenses and other intangibles are being amortized by the straight- line method over periods ranging from 3 to 40 years. Amortization of the excess of cost over fair value of net identifiable assets of acquired businesses and FCC licenses and other intangibles was $52.6 million, $34.1 million and $34.3 million in 2000, 1999 and 1998, respectively. Management periodically evaluates the recoverability of long-lived assets, where indicators of impairment are present, by reviewing current and projected profitability or undiscounted cash flows of such assets. Interest In 2000, 1999 and 1998, the Company's interest expense from continuing operations was $42.6 million, $45 million and $61 million, respectively. Interest paid during 2000, 1999 and 1998, net of amounts capitalized, was $42.8 million, $50.9 million and $65.3 million, respectively. In 2000 and 1999, the Company earned interest income of $8.3 million and $9.4 million on investments in highly-rated commercial paper and United States Government securities. These amounts are included in Other, net on the Consolidated Statements of Operations. Cash, cash equivalents and short-term investments Cash in excess of current operating needs is invested in various short-term instruments carried at cost that approximates fair value. Those short-term investments having an original maturity of three months or less are classified in the balance sheet as cash equivalents. Derivatives The Company utilizes derivative financial instruments from time to time to manage interest cost and risk associated with variable interest rates, primarily short-term changes in LIBOR. The Company uses the accrual method to account for all interest rate swap agreements. Realized gains or losses on termination of interest rate swaps, where the underlying debt has not been terminated, are deferred and amortized over their remaining original terms as an adjustment to interest expense. Amounts which are due to or from interest rate swap counterparties are recorded as an adjustment to interest expense in the periods in which they accrue. Inventories Inventories consist principally of raw materials (primarily newsprint) and broadcast equipment, and are valued at the lower of cost or market. The cost of newsprint inventories and broadcast equipment is determined by the first-in, first-out, and specific identification methods, respectively. Other current assets Other current assets included program rights of $15.3 million and $13.6 million at December 31, 2000, and December 26, 1999, respectively. Accrued expenses and other liabilities Accrued expenses and other liabilities consisted of the following:
(In thousands) 2000 1999 - ------------------------------------------------------------------------------------------------------ Payroll and employee benefits $ 18,767 $ 20,806 Program rights 15,240 12,839 Advances from unconsolidated newsprint affiliate 6,667 6,667 Unearned revenue 17,007 14,566 Other 29,657 20,312 ----------- ----------- Total $ 87,338 $ 75,190 ======================================================================================================
Page 41 Lease obligations The Company rents certain facilities and equipment under operating leases. These leases extend for varying periods of time ranging from one year to more than twenty years and in many cases contain renewal options. Total rental expense amounted to $16.9 million in 2000, $15.6 million in 1999 and $14.2 million in 1998. Minimum rental commitments under operating leases with noncancelable terms in excess of one year are as follows: 2001 - $5.3 million; 2002 -$4.3 million; 2003 - $2.5 million; 2004 - $1.8 million; 2005 - $1.3 million; subsequent years - $2.8 million. Concentrations 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 southeastern United States. The Company's trade receivables result primarily from its publishing and broadcast 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. Comprehensive Income The Company's comprehensive income consists of net income and unrealized gains and losses on certain investments in equity securities. Earnings per share The following chart is a reconciliation of the numerators and the denominators of the basic and diluted per share computations for income from continuing operations before extraordinary item, as presented in the Consolidated Statements of Operations.
(In thousands, except 2000 1999 1998 ----------------------------------- ----------------------------------- ----------------------------------- per share amounts) Income Shares Per Share Income Shares Per Share Income Shares Per Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount --------- ----------- ------ --------- ----------- ------ --------- ----------- ------ Basic EPS Income from continuing operations available to common stock- holders before extraordinary item $ 63,557 23,920 $ 2.66 $ 78,818 26,506 $ 2.97 $ 47,855 26,579 $ 1.80 ======= ======= ======= Effect of Dilutive Securities Stock options 172 253 245 Restricted stock and other (25) 97 (34) 126 (17) 90 -------- ------- --------- ------- --------- ------- Diluted EPS Income from continuing operations available to common stock- holders plus assumed conversions before extraordinary item $ 63,532 24,189 $ 2.63 $ 78,784 26,885 $ 2.93 $ 47,838 26,914 $ 1.78 ================================= ================================== =================================
Commitments and contingencies Over the next five years the Company is committed to purchase approximately $28.6 million of program rights which currently are not available for broadcast, including programs not yet produced. If such programs are not produced the Company's commitment would expire without obligation. During 1997 and 1998, the Company entered into lease agreements whereby the owner constructed real estate facilities costing approximately $96 million; the facilities are leased to the Company for a term of up to 5 years. The Company may cancel the leases by purchasing or arranging for the sale of the facilities. The Company has guaranteed recovery of a portion (88%) of the owner's cost. Page 42 Media General, Inc. Quarterly Review (In thousands, except per share amounts)
First Second Third Fourth Quarter Quarter Quarter Quarter - --------------------------------------------------------------------------------------------------------------------------- 2000 Revenues $ 172,458 $ 211,299 $ 201,865 $ 244,979 Operating income 23,552 35,670 20,400 44,211 Income from continuing operations 17,267 17,053 8,458 20,779 Discontinued operations (2,905) (7,415) --- 482 Net income 14,362 9,638 8,458 21,261 Income per share from continuing operations 0.67 0.71 0.37 0.91 Income per share from continuing operations - assuming dilution 0.66 0.70 0.36 0.91 Net income per share 0.56 0.40 0.37 0.93 Net income per share - assuming dilution 0.55 0.39 0.36 0.93 - --------------------------------------------------------------------------------------------------------------------------- Shares traded 3,697 3,456 2,802 4,131 Stock price range $ 49.13-54.75 $ 46.88-53.00 $ 47.00-53.50 $ 33.65-49.50 Quarterly dividend paid $ 0.16 $ 0.16 $ 0.16 $ 0.16 - --------------------------------------------------------------------------------------------------------------------------- 1999 Revenues $ 164,964 $ 174,911 $ 166,621 $ 186,406 Operating income 22,745 33,803 29,509 36,519 Income from continuing operations before extraordinary item 7,814 14,779 28,187 28,038 Discontinued operations 3,492 1,677 2,259 796,398 Extraordinary item --- --- --- (1,328) Net income 11,306 16,456 30,446 823,108 Income per share from continuing operations before extraordinary item 0.29 0.56 1.06 1.06 Income per share from continuing operations before extraordinary item - assuming dilution 0.29 0.55 1.05 1.05 Net income per share before extraordinary item 0.42 0.62 1.15 31.20 Net income per share before extraordinary item - assuming dilution 0.42 0.61 1.14 30.77 - --------------------------------------------------------------------------------------------------------------------------- Shares traded 1,840 4,382 4,676 3,787 Stock price range $ 44.50-53.50 $ 44.31-59.50 $ 46.13-53.94 $ 46.75-55.75 Quarterly dividend paid $ 0.15 $ 0.15 $ 0.15 $ 0.15 - ---------------------------------------------------------------------------------------------------------------------------
. 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 February 28, 2001, was: Class A common - 2,083, Class B common - 12. . The Company sold its Newsprint operation in the third quarter 2000 and reported a loss of $13.8 million, net of a tax benefit of $6.2 million, including a small adjustment in the fourth quarter. The prior year and first quarter of 2000 have been restated to reflect these items as discontinued operations (net of tax). . The Company sold its Cable Television operations in the fourth quarter 1999 and reported a net gain of $799 million, net of income taxes of $510 million; in the second quarter of 2000, certain adjustments related to this sale resulted in an additional net gain of $8.3 million, net of income taxes of $3.6 million. . Fourth quarter 1999 results include an extraordinary item of $1.3 million ($0.05 per share), net of a tax benefit of $800 thousand, representing the cost associated with the termination of interest rate swaps. Page 43 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 management's discussion and analysis, which appear elsewhere in this report.
2000 1999 1998 1997 - ------------------------------------------------------------------------------------------------------ Summary of Operations Operating revenues $ 830,601 $ 692,902 $ 688,677 $ 641,910 - ------------------------------------------------------------------------------------------------------ Net income (loss) $ 53,719 $ 881,316 $ 70,874 $ (10,490) Adjustments to reconcile to operating cash flow: (Income) loss from discontinued operations (a) 4,350 (5,107) (23,019) (14,019) Loss on sale of GSP operations (a) 13,774 -- -- -- Gain on sale of Cable (8,286) (798,719) -- -- operations (a) Extraordinary item (b) -- 1,328 -- 63,000 Cumulative effect of changes in accounting principles (c) -- -- -- -- Gain on sale of Denver Newspapers, Inc. common stock -- (30,983) -- -- Gain on sale of Garden State Newspapers investment -- -- -- -- Investment (income) loss --unconsolidated affiliates (5,131) (9,067) (22,193) (21,037) Other, net (16,520) (12,637) 636 (1,798) Interest expense 42,558 45,014 61,027 59,131 Income taxes 39,369 51,431 26,967 25,516 ----------- ----------- ----------- ---------- Operating income (d) 123,833 122,576 114,292 100,303 Depreciation and amortization 101,547 72,440 69,055 65,936 ----------- ----------- ----------- ---------- Operating cash flow $ 225,380 $ 195,016 $ 183,347 $ 166,239 ===================================================================================================== Per Share Data: (a) (b) (c) Income (loss) from continuing $ 2.66 $ 2.97 $ 1.80 $ 1.46 operations Discontinued operations (0.41) 30.33 0.87 0.53 Extraordinary item -- (0.05) -- (2.39) Cumulative effect of change in accounting principles -- -- -- -- ----------- ----------- ----------- ---------- Net income (loss) $ 2.25 $ 33.25 $ 2.67 $ (0.40) - ----------------------------------------------------------------------------------------------------- Per Share Data-- assuming dilution: (a) (b) (c) Income (loss) from continuing $ 2.63 $ 2.93 $ 1.78 $ 1.44 operations Discontinued operations (0.41) 29.90 0.85 0.53 Extraordinary item -- (0.05) -- (2.37) Cumulative effect of change in accounting principles -- -- -- -- ----------- ----------- ----------- ---------- Net income (loss) $ 2.22 $ 32.78 $ 2.63 $ (0.40) - ----------------------------------------------------------------------------------------------------- Other Financial Data: Total assets $ 2,561,282 $ 2,340,374 $ 1,917,346 $1,814,201 Working capital 58,339 167,546 29,129 34,716 Capital expenditures 42,873 60,829 49,480 41,599 Total debt 822,077 59,838 928,101 900,140 Cash dividends per share 0.64 0.60 0.56 0.53 =====================================================================================================
(a) The Company sold its Newsprint operation in September 2000 and reported a loss of $13.8 million, net of a tax benefit of $6.2 million, and sold its Cable Television operations in October 1999 and reported a gain of $807 million, net of income taxes of $513.4 million, including a small favorable adjustment in 2000. All prior periods have been restated to show income from discontinued operations (net of tax). (b) In 1999 the Company incurred a charge of $1.3 million (net of a tax benefit of $800 thousand), representing the cost associated with the termination of interest rate swaps, while in 1997 the Company incurred a charge of $63 million (net of a tax benefit of $38.6 million), representing the debt repayment premium and write-off of associated debt issuance costs related to the redemption of debt assumed in the January 1997 Park acquisition. Page 44
1996 1995 1994 1993 1992 1991 - --------------------------------------------------------------------------------------- $ 491,235 $ 427,477 $ 394,531 $ 374,097 $ 363,752 $ 367,831 - --------------------------------------------------------------------------------------- $ 70,498 $ 53,232 $ 117,009 $ 25,708 $ 19,000 $ (62,091) (14,953) (14,614) (8,394) (11,545) (6,792) (10,667) -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- (687) -- -- -- -- -- -- -- -- -- (91,520) -- -- -- (27,188) (19,034) (2,935) 990 4,926 75,640 (1,979) (6,292) (2,300) (3,838) (6,635) (1,890) 12,680 3,858 4,118 8,343 3,950 26 30,335 18,837 21,001 5,782 4,232 3,227 - ----------- ----------- ----------- ----------- ----------- ----------- 69,393 35,987 36,979 25,440 17,994 4,245 32,571 27,765 26,577 27,308 25,212 20,578 - ----------- ----------- ----------- ----------- ----------- ----------- $ 101,964 $ 63,752 $ 63,556 $ 52,748 $ 43,206 $ 24,823 ======================================================================================= $ 2.11 $ 1.48 $ 4.17 $ 0.55 $ 0.44 $ (2.81) 0.57 0.56 0.33 0.44 0.26 0.41 -- -- -- -- -- -- -- -- -- -- 0.03 -- - ----------- ----------- ----------- ----------- ----------- ----------- $ 2.68 $ 2.04 $ 4.50 $ 0.99 $ 0.73 $ (2.40) - -------------------------------------------------------------------------------------- $ 2.09 $ 1.46 $ 4.13 $ 0.53 $ 0.44 $ (2.81) 0.56 0.55 0.32 0.45 0.26 0.41 -- -- -- -- -- -- -- -- -- -- 0.03 -- - ----------- ----------- ----------- ----------- ----------- ----------- $ 2.65 $ 2.01 $ 4.45 $ 0.98 $ 0.73 $ (2.40) - -------------------------------------------------------------------------------------- $ 1,025,484 $ 1,016,743 $ 787,165 $ 745,242 $ 787,425 $ 762,311 13,373 22,938 14,833 9,551 9,657 3,668 28,510 29,076 56,919 32,837 92,319 115,383 276,318 327,235 173,144 262,550 321,487 277,428 0.50 0.48 0.44 0.44 0.44 0.44 ======================================================================================
(c) Includes the recognition, at the beginning of fiscal 1992, of the accumulated postretirement benefit obligation related to prior service costs of $22.8 million ($14.4 million after-tax; $0.55 per share, basic and assuming dilution) as the cumulative effect of a change in accounting principle for the adoption of Statement of Financial Accounting Standards No. 106, Employer's Accounting for Postretirement Benefits Other Than Pensions and the adoption of Financial Accounting Standards No. 109, Accounting for Income Taxes which increased 1992 net income by $15.1 million ($0.58 per share, basic and assuming dilution), which represented the net decrease in the Company's deferred tax liability at that date. (d) Operating income in 1991 included pretax special charges of $11.3 million for early retirement program and newspaper merger costs. Page 45 OPERATING LOCATIONS PUBLISHING DAILY NEWSPAPERS Virginia Richmond Times-Dispatch Bristol Herald Courier The (Lynchburg) News & Advance The (Charlottesville) Daily Progress Potomac News (Prince Wm. County) Danville Register & Bee The (Waynesboro) News Virginian Manassas Journal Messenger Culpeper Star-Exponent North Carolina Winston-Salem Journal (Concord & Kannapolis) Independent Tribune Hickory Daily Record Statesville Record & Landmark The (Morganton) News Herald The Reidsville Review The (Eden) Daily News The (Marion) McDowell News Florida The Tampa Tribune Highlands Today (Sebring) Hernando Today (Brooksville) Jackson County Floridan Alabama The Dothan Eagle Opelika-Auburn News Enterprise Ledger South Carolina (Florence) Morning News OTHER OPERATIONS Colorado The Denver Post (20% ownership) Washington, D.C. Media General News Service North Carolina Media General Syndication Services . Star Watch . Spotlight . Parent's Post . Mature Times . LapbyLap . Frontiers NEWSPRINT AFFILIATE SP Newsprint Co. (33% ownership) Dublin, Ga.; Newberg, Ore. OTHER PERIODICALS Virginia A Magazine (Bristol) Belvoir Eagle Better Living (Danville) Bland Messenger The Burg (Lynchburg) Charlottesville Business Journal Clinch Valley News Culpeper News The Draft (Stuarts Draft) Floyd Press Greene County Record HealthBeat (Charlottesville) Madison County Eagle Orange County Review Quantico Sentry Region 2000 Business (Lynchburg) Richlands Mountain Advisor Richlands News Press Rural Virginian (Charlottesville) Smyth County News & Messenger Stafford County Sun Virginia Business (statewide) Washington County News Southwest Virginia Enterprise North Carolina The Davidson Gazette The (Madison) Messenger The Mooresville Tribune Florida The Brandon News Carrollwood News East Bay Breeze The (Plant City) Courier South Tampa News Town 'N Country News The Sun (Sun City Center) The Suncoast News Temple Terrace News West Pasco Press Alabama Army Flier (Fort Rucker) The Ashford Power The Auburn Bulletin The Dothan Progress The Headland Observer South Carolina Lake City News & Post Marion Star & Mullins Enterprise The Weekly Observer (Hemingway) BROADCAST TELEVISION STATIONS WIAT-CBS, Birmingham, Ala. WKRG-CBS, Mobile, Ala./Pensacola, Fla. WJWB-WB, Jacksonville, Fla. WMBB-ABC, Panama City, Fla. WFLA-NBC, Tampa, Fla. WJBF-ABC, Augusta, Ga. WRBL-CBS, Columbus, Ga. WSAV-NBC, Savannah, Ga. WNEG-CBS, Toccoa, Ga. KIMT-CBS, Mason City, Iowa KBSD-CBS, Dodge City, Kan. KBSL-CBS, Goodland, Kan. KBSH-CBS, Hays, Kan. KWCH-CBS, Wichita, Kan. WTVQ-ABC, Lexington, Ky. KALB-NBC, Alexandria, La. WHLT-CBS, Hattiesburg, Miss. WJTV-CBS, Jackson, Miss. WNCT-CBS, Greenville, N.C. WASV-UPN, Greenville/Spartanburg/ Anderson, S.C./Asheville, N.C. WCBD-NBC, Charleston, S.C. WBTW-CBS, Florence/Myrtle Beach, S.C. WSPA-CBS, Greenville/Spartanburg/ Anderson, S.C./Asheville, N.C. WDEF-CBS, Chattanooga, Tenn. WJHL-CBS, Johnson City, Tenn. WSLS-NBC, Roanoke, Va. Professional Communications Systems, Tampa, Fla. INTERACTIVE MEDIA Media General Financial Services, Richmond, Va. Tampa Bay Online (TBO.com) Tampa, Fla. gatewayva.com, Richmond, Va. timesdispatch.com, Richmond, Va. JournalNow.com, Winston-Salem, N.C. FlorenceMyrtleBeach.com, Florence, S.C. Media General also operates more than 50 additional online enterprises related to its publications and television stations. Page 46 EX-21 4 0004.txt LIST OF SUBSIDIARIES OF THE REGISTRANT Exhibit 21 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 - ------------------ ------------- --------- Media General Communications, Inc. Delaware 100% Media General Broadcasting of Birmingham Holdings, LLC Alabama 100% Media General Operations, Inc. Delaware 100% MG Broadcasting of Birmingham II, LLC Alabama 100% Media General Broadcasting of South Carolina, Inc. Delaware 100% Professional Communications, Inc. Florida 100% The Tribune Company Holdings, Inc. Delaware 100% NES II, Inc. Virginia 100% Virginia Paper Manufacturing Corp. Virginia 100% SP Newsprint Company (Partnership) Georgia 33.33% Media General Financial Services, Inc. Virginia 100% Denver Post Corporation Delaware 20%
EX-23 5 0005.txt CONSENT OF ERNST & YOUNG, LLP Exhibit 23 Consent of Independent Auditors We consent to the incorporation by reference in this Annual Report (Form 10-K) of Media General, Inc., of our report dated January 26, 2001, included in the 2000 Annual Report to Stockholders of Media General, Inc. Our audits also included the financial statement schedule of Media General, Inc., listed in Item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in the following Registration Statements of our report dated January 26, 2001, 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 schedule of Media General, Inc., included in this Annual Report (Form 10-K) of Media General, Inc., for the fiscal year ended December 31, 2000. Registration Statement Number Description ----------------------------- ----------- 2-56905 Form S-8 33-23698 Form S-8 33-26853 Form S-3 33-52472 Form S-8 333-16731 Form S-8 333-16737 Form S-8 333-69527 Form S-8 333-54624 Form S-8 /s/ Ernst & Young LLP Richmond, Virginia March 21, 2001 -----END PRIVACY-ENHANCED MESSAGE-----