-----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, JtCrvK8OW0pCIfZSwLR4OC0F6IOsq/+9i4FromNzvKft+YFyTwaR0SCNyzBfys6q ypJu5wUDnl2B/RWH52MCQQ== 0000916641-99-000654.txt : 19990811 0000916641-99-000654.hdr.sgml : 19990811 ACCESSION NUMBER: 0000916641-99-000654 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990810 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-Q SEC ACT: SEC FILE NUMBER: 001-06383 FILM NUMBER: 99681881 BUSINESS ADDRESS: STREET 1: 333 E GRACE ST CITY: RICHMOND STATE: VA ZIP: 23219 BUSINESS PHONE: 8046496000 10-Q 1 SECOND QUARTER REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC. 20549 Form 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 27, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number: 1-6383 MEDIA GENERAL, INC. (Exact name of registrant as specified in its charter) Commonwealth of Virginia 54-0850433 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 333 E. Franklin St., Richmond, VA 23219 (Address of principal executive offices) (Zip Code) (804) 649-6000 (Registrant's telephone number, including area code) N/A --- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --------- --------- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of August 1, 1999. Class A Common shares: 26,033,485 Class B Common shares: 556,574 MEDIA GENERAL, INC. TABLE OF CONTENTS FORM 10-Q REPORT JUNE 27, 1999 Page ---- Part I. Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheets - June 27, 1999, and December 27, 1998 1 Consolidated Condensed Statements of Operations - Second quarter and six months ended June 27, 1999, and June 28, 1998 3 Consolidated Condensed Statements of Cash Flows - Six months ended June 27, 1999, and June 28, 1998 4 Notes to Consolidated Condensed Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders 16 Item 6. Exhibits and Reports on Form 8-K 16 (a) Exhibits (b) Reports on Form 8-K Signatures 17
PART I - FINANCIAL INFORMATION Item 1. Financial Statements MEDIA GENERAL, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (000's except shares)
(Unaudited) June 27, December 27, 1999 1998 ----------------- ------------------ ASSETS Current assets: Cash and cash equivalents $ 6,079 $ 7,637 Accounts receivable - net 103,605 110,067 Inventories 20,328 20,341 Other 26,820 38,181 ----------------- ------------------ Total current assets 156,832 176,226 ----------------- ------------------ Investments in unconsolidated affiliates 147,183 146,702 Other assets 46,414 45,818 Property, plant and equipment - net 491,166 496,797 Excess of cost over fair value of net identifiable assets of acquired businesses - net 642,700 651,391 FCC licenses and other intangibles - net 392,079 400,412 ----------------- ------------------ $ 1,876,374 $ 1,917,346 ================= ==================
See accompanying notes. 1 MEDIA GENERAL, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (000's except shares)
(Unaudited) June 27, December 27, 1999 1998 ----------------- ------------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 23,316 $ 41,050 Accrued expenses and other liabilities 95,246 106,047 ----------------- ------------------ Total current liabilities 118,562 147,097 ----------------- ------------------ Long-term debt 909,941 928,101 Deferred income taxes 242,308 244,968 Other liabilities and deferred credits 118,964 119,831 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 26,027,926 and 26,214,721 shares 130,140 131,074 Class B, authorized 600,000 shares; issued 556,574 shares 2,783 2,783 Additional paid-in capital 11,868 18,694 Unearned compensation (3,737) (1,050) Retained earnings 345,545 325,848 ----------------- ------------------ Total stockholders' equity 486,599 477,349 ----------------- ------------------ $ 1,876,374 $ 1,917,346 ================= ==================
See accompanying notes. 2 MEDIA GENERAL, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (000's except for per share data)
Second Quarter Ended Six Months Ended ------------------------------- ------------------------------ June 27, June 28, June 27, June 28, 1999 1998 1999 1998 ------------- ------------- ------------ ------------- Revenues $ 199,554 $ 211,519 $ 391,365 $ 407,553 ------------- ------------- ------------ ------------- Operating costs: Production 96,316 101,447 192,732 199,686 Selling, distribution and administrative 52,835 54,651 106,254 107,440 Depreciation and amortization 20,209 18,975 40,299 38,535 ------------- ------------- ------------ ------------- Total operating costs 169,360 175,073 339,285 345,661 ------------- ------------- ------------ ------------- Operating income 30,194 36,446 52,080 61,892 ------------- ------------- ------------ ------------- Other income (expense): Interest expense (14,813) (15,703) (30,168) (31,935) Investment income - unconsolidated affiliates 4,118 6,092 9,140 12,010 Other, net 763 (433) 1,068 (950) ------------- ------------- ------------ ------------- Total other expense (9,932) (10,044) (19,960) (20,875) ------------- ------------- ------------ ------------- Income from continuing operations before income taxes 20,262 26,402 32,120 41,017 Income taxes 8,298 9,137 13,248 14,829 ------------- ------------- ------------ ------------- Income from continuing operations 11,964 17,265 18,872 26,188 Income from discontinued Cable opera- tions, net of income taxes - Note 2 4,492 4,276 8,890 8,098 ------------- ------------- ------------ ------------- Net income $ 16,456 $ 21,541 $ 27,762 $ 34,286 ============= ============= ============ ============= Earnings per common share: Income from continuing operations $ 0.45 $ 0.65 $ 0.71 $ 0.99 Income from discontinued Cable operations 0.17 0.16 0.33 0.30 ------------- ------------- ------------ ------------- Net income $ 0.62 $ 0.81 $ 1.04 $ 1.29 ============= ============= ============ ============= Earnings per common share - assuming dilution: Income from continuing operations $ 0.44 $ 0.64 $ 0.70 $ 0.97 Income from discontinued Cable operations 0.17 0.16 0.33 0.30 ------------- ------------- ------------ ------------- Net income $ 0.61 $ 0.80 $ 1.03 $ 1.27 ============= ============= ============ ============= Dividends paid per common share $ 0.15 $ 0.14 $ 0.30 $ 0.28 ============= ============= ============ =============
See accompanying notes. 3 MEDIA GENERAL, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (000's)
Six Months Ended -------------------------------------------- June 27, June 28, 1999 1998 -------------------------------------------- Operating activities: Net income $ 27,762 $ 34,286 Adjustments to reconcile net income: Depreciation and amortization 52,633 51,475 Deferred income taxes (1,529) (4,956) Investment income -- unconsolidated affiliates, net of distributions 490 (4,310) Change in assets and liabilities: Accounts receivable and inventories 5,277 9,219 Accounts payable (17,802) (292) Other (5,521) (582) ----------------- ------------------ Net cash provided by operating activities 61,310 84,840 ----------------- ------------------ Investing activities: Capital expenditures (30,203) (22,885) Purchase of businesses --- (92,656) Sale of businesses 8,058 23,645 Other, net (2,307) 1,863 ----------------- ------------------ Net cash used by investing activities (24,452) (90,033) ----------------- ------------------ Financing activities: Increase in debt 170,000 248,000 Payment of debt (188,359) (236,152) Stock redemption (13,609) --- Dividends paid (8,066) (7,478) Other, net 1,618 2,097 ----------------- ------------------ Net cash (used) provided by financing activities (38,416) 6,467 ----------------- ------------------ Net (decrease) increase in cash and cash equivalents (1,558) 1,274 Cash and cash equivalents at beginning of year 7,637 3,504 ----------------- ------------------ Cash and cash equivalents at end of period $ 6,079 $ 4,778 ================= ================== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest (net of amount capitalized) $ 30,929 $ 33,970 Income taxes $ 15,437 $ 21,493
See accompanying notes. 4 MEDIA GENERAL, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting, and with applicable quarterly reporting regulations of the Securities and Exchange Commission. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and, accordingly, should be read in conjunction with the consolidated financial statements and related footnotes included in the Company's Annual Report on Form 10-K for the year ended December 27, 1998. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of interim financial information have been included. Certain items in 1998 have been reclassified to conform with the current year's presentation. The reclassifications have no effect on net income as previously reported. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the full fiscal year. 2. On April 22, 1999, the Company agreed to sell all of its cable operations to Cox Communications, Inc., for approximately $1.4 billion in cash. The transaction, which is subject to various municipal and regulatory approvals, is expected to close in the fourth quarter of 1999 and will result in a substantial gain for the Company. The results of the Cable Segment have been presented as discontinued operations in the accompanying consolidated condensed statements of operations as follows:
Quarter Ended Six Months Ended -------------------------- --------------------------- June 27, June 28, June 27, June 28, (in thousands) 1999 1998 1999 1998 -------- --------- --------- --------- Revenues $ 40,029 $ 39,643 $ 80,417 $ 78,290 Costs and Expenses 32,748 32,801 66,073 65,339 -------- --------- --------- --------- Income before income taxes 7,281 6,842 14,344 12,951 Income taxes 2,789 2,566 5,454 4,853 -------- --------- --------- --------- Income from discontinued Cable operations $ 4,492 $ 4,276 $ 8,890 $ 8,098 ======== ========= ========= =========
At June 27, 1999, the accompanying consolidated condensed balance sheet included the following approximate amounts related to the Cable operations: current assets of $15 million, noncurrent assets of $105 million, current liabilities of $25 million, and noncurrent liabilities of $25 million. The Company is considering its options for the use of the proceeds from the sale. However, income from continuing operations reflected in the accompanying consolidated condensed statements of operations does not include any proforma adjustments or other allocations to reflect the potential use of the proceeds for acquisitions, to repay debt, or repurchase shares and, as such, are not fully indicative of the ongoing operations of the Company. 3. On June 30, 1999, subsequent to the end of the second quarter, the Company completed the previously announced sale of 20% of the outstanding common stock of Denver Newspapers, Inc. (DNI) to MediaNews Group, Inc., for $39 million. Additionally, DNI redeemed, at maturity, the Company's preferred stock totaling $53.2 million. The Company also consummated the sale of WHOA-TV in Montgomery, Alabama, for approximately $8 million during the quarter. The proceeds from these transactions, approximately $100 million, have been used to reduce debt outstanding under the Company's revolving credit agreement. 5 On July 1, 1998, the Company acquired, for approximately $40 million, the assets of the Hickory Daily Record, a daily newspaper in northwestern North Carolina. The transaction was accounted for as a purchase and the Company's results of operations include the results of Hickory since the date of acquisition. Purchase price was allocated to the assets acquired based on an appraisal of fair values. On June 2, 1998, the Company completed the sale of its Kentucky newspaper properties for approximately $24 million. Additionally, the Company sold certain commercial printing assets in October 1998. 4. Inventories are principally raw materials. 5. On June 1, 1999, the estate of D. Tennant Bryan, the former Chairman Emeritus of the Company, exercised its option under the 1994 stock redemption agreement to sell to the Company 15% of the Company's Class A stock owned by Mr. Bryan at his death. This exercise resulted in the Company purchasing 326,897 shares from the estate for $13.6 million. 6. The following tables set forth the Company's financial performance by segment. Cable Segment results have not been presented as they are reflected as income from discontinued operations in the consolidated condensed statements of operations.
Broadcast (In thousands) Publishing Television Newsprint Total - --------------------------------------------------------------------------------------------------------- Three Months Ended June 27, 1999 Consolidated revenues * $ 130,801 $ 44,110 $ 24,643 $ 199,554 ========================================================== Segment operating cash flow $ 44,009 $ 13,930 $ (2,469) $ 55,470 Allocated amounts: Equity in net income of unconsolidated affiliates 128 2,403 2,531 License fees from unconsolidated affiliate 164 164 Depreciation and amortization (6,385) (2,719) (1,876) (10,980) ---------------------------------------------------------- Segment profit $ 37,752 $ 11,211 $ (1,778) 47,185 ========================================== Unallocated amounts: Interest expense (14,813) Acquisition intangible amortization (8,483) Corporate expenses (7,034) Other 3,407 ------------ Consolidated income from continuing operations before income taxes $ 20,262 ============ - --------------------------------------------------------------------------------------------------------- * Intercompany revenues are less than 1% of consolidated revenues and have been eliminated. 6 Broadcast (In thousands) Publishing Television Newsprint Total - --------------------------------------------------------------------------------------------------------- Three Months Ended June 28, 1998 Consolidated revenues * $ 132,424 $ 47,233 $ 31,862 $ 211,519 ========================================================== Segment operating cash flow $ 40,670 $ 15,495 $ 5,702 $ 61,867 Allocated amounts: Equity in net income of unconsolidated affiliates 867 3,691 4,558 License fees from unconsolidated affiliate 268 268 Depreciation and amortization (6,019) (2,468) (1,703) (10,190) ---------------------------------------------------------- Segment profit $ 35,518 $ 13,027 $ 7,958 56,503 ========================================== Unallocated amounts: Interest expense (15,703) Acquisition intangible amortization (8,344) Corporate expenses (5,437) Other (617) ------------ Consolidated income from continuing operations before income taxes $ 26,402 ============ - --------------------------------------------------------------------------------------------------------- Six Months Ended June 27, 1999 Consolidated revenues * $ 258,704 $ 81,171 $ 51,490 $ 391,365 ========================================================== Segment operating cash flow $ 83,456 $ 22,645 $ (1,700) $ 104,401 Allocated amounts: Equity in net income (loss) of unconsolidated affiliates (386) 6,353 5,967 License fees from unconsolidated affiliate 418 418 Depreciation and amortization (12,714) (5,423) (3,752) (21,889) ---------------------------------------------------------- Segment profit $ 70,356 $ 17,222 $ 1,319 88,897 ========================================== Unallocated amounts: Interest expense (30,168) Acquisition intangible amortization (16,967) Corporate expenses (13,834) Other 4,192 ------------ Consolidated income from continuing operations before income taxes $ 32,120 ============ - --------------------------------------------------------------------------------------------------------- Six Months Ended June 28, 1998 Consolidated revenues * $ 258,216 $ 84,760 $ 64,577 $ 407,553 ========================================================== Segment operating cash flow $ 76,742 $ 25,059 $ 11,162 $ 112,963 Allocated amounts: Equity in net income of unconsolidated affiliates 1,483 7,459 8,942 License fees from unconsolidated affiliate 536 536 Depreciation and amortization (12,175) (5,087) (3,407) (20,669) ---------------------------------------------------------- Segment profit $ 66,050 $ 19,972 $ 15,750 101,772 ========================================== Unallocated amounts: Interest expense (31,935) Acquisition intangible amortization (17,101) Corporate expenses (10,817) Other (902) ------------ Consolidated income from continuing operations before income taxes $ 41,017 ========================================================================================================= * Intercompany revenues are less than 1% of consolidated revenues and have been eliminated.
7 7. The following tables set forth the computation of basic and diluted earnings per share from continuing operations: Quarter Ended June 27, 1999 Quarter Ended June 28, 1998 ---------------------------------------- ---------------------------------------- Income Shares Per Share Income Shares Per Share (In thousands, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS Income from continuing operations available to common stockholders $11,964 26,586 $ 0.45 $17,265 26,578 $ 0.65 ========= ========= Effect of dilutive securities Stock options 262 268 Restricted stock and other (9) 119 (5) 87 ---------------------- ---------------------- Diluted EPS Income from continuing operations available to common stockholders + assumed conversions $11,955 26,967 $ 0.44 $17,260 26,933 $ 0.64 ==================================== ===================================== Six Months Ended June 27, 1999 Six Months Ended June 28, 1998 ---------------------------------------- ---------------------------------------- Income Shares Per Share Income Shares Per Share (In thousands, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS Income from continuing operations available to common stockholders $18,872 26,616 $ 0.71 $26,188 26,541 $ 0.99 ========= ========= Effect of dilutive securities Stock options 263 262 Restricted stock and other (19) 116 (9) 83 ---------------------- ---------------------- Diluted EPS Income from continuing operations available to common stockholders + assumed conversions $18,853 26,995 $ 0.70 $26,179 26,886 $ 0.97 ==================================== =====================================
8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW - -------- Media General is an independent, publicly owned communications company situated primarily in the Southeast with interests in newspapers, broadcast and cable television, recycled newsprint production, and diversified information services. The Company's fiscal year ends on the last Sunday in December. ACQUISITIONS AND DISPOSITIONS - ----------------------------- In April 1999, the Company announced an agreement to sell its Cable operations, located primarily in Fairfax County and Fredericksburg, Virginia, to Cox Communications, Inc., for approximately $1.4 billion in cash; the transaction is expected to close in the fourth quarter of 1999. See Note 2 of this Form 10-Q for further details about the Cable disposition. See Note 3 of this Form 10-Q for information about 1999 and 1998 acquisitions and dispositions which affect Segment comparability. CONSOLIDATED OPERATING RESULTS - ------------------------------ (In thousands, except per share data)
Second Quarter Ended Six Months Ended ----------------------------------------- ---------------------------------------- June 27, June 28, June 27, June 28, 1999 1998 Change 1999 1998 Change ----------- ----------- ----------- ---------- ----------- ----------- Revenues $ 199,554 $ 211,519 (6) % $ 391,365 $ 407,553 (4) % Operating Income 30,194 36,446 (17) 52,080 61,892 (16) Income from Continuing Operations 11,964 17,265 (31) 18,872 26,188 (28) Income from Discontinued Cable Operations 4,492 4,276 5 8,890 8,098 10 Net income 16,456 21,541 (24) 27,762 34,286 (19) Earnings Per Share 0.62 0.81 (23) 1.04 1.29 (19) Earnings Per Share - Assuming Dilution 0.61 0.80 (24) 1.03 1.27 (19)
The results of the Cable Segment have been presented as discontinued operations in the accompanying consolidated condensed statements of operations. However, these statements do not include any proforma adjustments or other allocations to reflect the potential use of the proceeds for acquisitions, to repay debt, or repurchase shares and, as such, are not fully indicative of the ongoing operations of the Company. SEGMENT OPERATING RESULTS - ------------------------- Each segment's operating results include segment operating cash flow information in addition to revenues, operating expense and operating income. The segment operating cash flow amounts represent operating income plus depreciation and amortization. The Company believes the presentation of operating cash flow amounts is important for several reasons. First, fluctuations in depreciation and amortization from year to year are not necessarily indicative of the underlying performance of a company. Second, the year-over-year change in operating cash flow can be a useful measure of performance and presents a meaningful indicator of results that may occur in future periods. Finally, acquisition values of communications and media businesses are often based on multiples of operating cash flow. 9 Operating income, in the tables that follow, differs from segment profit, as presented in Note 5 of this Form 10-Q, because segment profit includes investment income from unconsolidated affiliates. PUBLISHING - ---------- (In thousands)
Second Quarter Ended Six Months Ended ----------------------------------------- ---------------------------------------- June 27, June 28, June 27, June 28, 1999 1998 Change 1999 1998 Change ----------- ----------- ----------- ---------- ----------- ----------- Revenues $ 130,801 $ 132,424 (1) % $ 258,704 $ 258,216 --- % Operating Expenses 93,177 97,773 (5) 187,962 193,649 (3) Operating Income 37,624 34,651 9 70,742 64,567 10 Depreciation & Amortization 6,385 6,019 6 12,714 12,175 4 Operating Cash Flow 44,009 40,670 8 83,456 76,742 9
The preceding chart contains the operating results of the Publishing Segment, including acquisitions and dispositions. As a direct result of net acquisitions and dispositions, Publishing Segment revenues decreased $1.5 million and $3.3 million, while operating income increased $.7 million and $1.3 million in the second quarter and first half of 1999 over the comparable prior-year periods. Excluding acquisitions and dispositions, Publishing revenues were relatively flat in the quarter, but increased $3.8 million in the first half of 1999 from the comparable 1998 period. At the Company's three largest metropolitan newspapers, second quarter 1999 revenues virtually mirrored those of the prior-year equivalent period; however, revenues rose $2.5 million in the year to date due to increased average advertising rates (up 3.5%) which were partially offset by a decline in linage (down 2.1%). The year to date revenue increase was the result of a $2.9 million rise in general advertising (led by the telecommunications and automotive categories) combined with a solid contribution from classified advertising, partially offset by a $1.5 million decline in retail advertising (due to weak performances in the financial and electronics categories). Additionally, the Company's daily and weekly community newspaper revenues increased $1.1 million over last year's first half, primarily on the strength of classified revenues (driven by the automotive and employment categories). Publishing operating expense, excluding acquisitions and dispositions, dropped $2.4 million and $1.1 million in the second quarter and first half of 1999. These decreases were more than fully accounted for by a $2.7 million and $3.6 million decrease in newsprint expense in the current quarter and year to date as a result of lower cost per ton (down 12.9% and 8.9%), partially offset by a $.6 million and $2.1 million rise in employee compensation and benefit expense. Excluding acquisitions and dispositions, operating income for the Publishing Segment rose $2.3 million and $4.9 million in the second quarter and first half of 1999 from the prior-year periods. The improved operating results were due to strong general advertising revenues in the year to date, coupled with a substantial drop in newsprint expense from both the second quarter and first six months of last year. Together, these were more than sufficient to offset increased employee compensation and benefit expense. 10 Investment income earned from the Company's Denver Newspapers, Inc. (DNI), affiliate decreased $.7 million in the second quarter and $1.9 million (from income of $1.5 million in 1998 to a loss of $.4 million in 1999) in the year to date from the prior-year equivalent periods. This reduced income was primarily attributable to increased circulation, production and newsprint expenses, which were only partially mitigated by a rise in both circulation and advertising revenues, all the result of circulation gains in the intensely competitive Colorado market. Subsequent to the close the second quarter, the Company completed the sale of 20% of the outstanding common stock of DNI to MediaNews Group, Inc. (see Note 3 of this Form 10-Q). BROADCAST TELEVISION - -------------------- (In thousands)
Second Quarter Ended Six Months Ended ----------------------------------------- ---------------------------------------- June 27, June 28, June 27, June 28, 1999 1998 Change 1999 1998 Change ----------- ----------- ----------- ---------- ----------- ----------- Revenues $ 44,110 $ 47,233 (7) % $ 81,171 $ 84,760 (4) % Operating Expenses 32,899 34,206 (4) 63,949 64,788 (1) Operating Income 11,211 13,027 (14) 17,222 19,972 (14) Depreciation & Amortization 2,719 2,468 10 5,423 5,087 7 Operating Cash Flow 13,930 15,495 (10) 22,645 25,059 (10)
Broadcast revenues declined $3.1 million and $3.6 million in the second quarter and first half of 1999. These decreases were attributable to a combination of factors: a decline in political advertising revenues due to the absence of congressional and presidential elections this year; a generally weak performance at the Company's largest station, WFLA-TV (NBC) in Tampa, Florida, primarily due to a soft national ad market; and a decline in revenues at PCS, the Company's provider of equipment and studio design services, as customers displayed uncertainty regarding which digital equipment to purchase as the industry-mandated timetable to switch from analog to digital approaches. Together, these weak revenues were partially offset by a solid contribution from local advertising, led by the telecommunications and department store categories. The Segment's lower national and political advertising revenues reflect the decreased time sales which have resonated throughout the broadcast industry. Operating expense in the Broadcast Segment decreased $1.3 million and $.8 million in the current quarter and six months of 1999. These favorable expense levels were attributable to decreased cost of sales at PCS associated with lower equipment sales, combined with the absence of certain 1998 expenses related to the repositioning and relaunching efforts at several stations. Programming costs rose 10% and 13%, while employee compensation and benefit expense increased a more modest 2% and 3.5 % in the second quarter and first half of 1999. These increases reflected improved program offerings and enhanced employee benefits provided by the Company. Broadcast operating income decreased $1.8 million and $2.8 million in the second quarter and first half of 1999. The drop was attributable to a decline in political advertising revenues and a weak performance at WFLA-TV, combined with higher programming expense as the Company enhanced its program offerings. 11 NEWSPRINT - --------- (In thousands)
Second Quarter Ended Six Months Ended ----------------------------------------- ---------------------------------------- June 27, June 28, June 27, June 28, 1999 1998 Change 1999 1998 Change ----------- ----------- ----------- ---------- ----------- ----------- Revenues $ 24,643 $ 31,862 (23) % $ 51,490 $ 64,577 (20) % Operating Expenses 28,988 27,863 4 56,942 56,822 --- Operating Income (Loss) (4,345) 3,999 (209) (5,452) 7,755 (170) Depreciation & Amortization 1,876 1,703 10 3,752 3,407 10 Operating Cash Flow (2,469) 5,702 (143) (1,700) 11,162 (115)
Newsprint Segment revenues decreased $7.2 million and $13.1 million in the current quarter and first six months of 1999, reflecting the results of the Company's Garden State Paper (Garden State) newsprint mill, located in Garfield, New Jersey. This decline resulted from a 17% and 11% decrease in the average realized selling price per ton for the quarterly and year-to-date periods ended June 27, 1999, combined with an 8% and 11% decline in tons sold. Newsprint selling prices decreased steadily over the first half of 1999, with average realized newsprint selling prices falling from $528 per ton in December of 1998 to $422 per ton in June of 1999, due primarily to an excess supply from overseas. Despite the large decline in tons sold, Newsprint Segment operating expense increased $1.1 million in the second quarter of 1999 and remained virtually even with the first six months of 1998. The quarterly increase resulted from $.6 million in costs associated with the efficiency-motivated closing of a New Jersey recycling center, combined with $.7 million in market related inventory writedowns. A decrease in tons produced, coupled with a 3% and 8% rise in the cost of Garden State's principal raw material, recovered newspapers, resulted in a $30 and $36 cost per ton increase in the second quarter and first half of this year over the comparable prior-year periods. Newsprint operating income declined $8.3 million and $13.2 million in the second quarter and year to date period of 1999, from profits of $4 million and $7.8 million, to losses of $4.3 million and $5.4 million in the comparable 1999 periods. The decrease resulted primarily from an $88 and $59 erosion in average realized selling price per ton for the current quarter and year-to-date period. The Company's investment income from its Southeast Paper Manufacturing Company (SEPCO) newsprint affiliate decreased $1.3 million and $1.1 million in the current quarter and first half of 1999 from the comparable year-ago periods. SEPCO's revenues fell 7.3% and 3.7% in the second quarter and first half of 1999 despite a 9.7% and 7.5% rise in tons sold. Average realized selling price declined 14.4% and 9.5% in the second quarter and year-to-date period of 1999, reflecting the adverse pricing environment which continues to reverberate throughout the newsprint industry. INTEREST EXPENSE - ---------------- Interest expense of $14.8 million and $30.2 million represented a $.9 million and $1.8 million decrease in the second quarter and first half of 1999 from the comparable year-earlier periods. The decrease was due to a $34 million and $43 million decline in average debt outstanding, as the Company used funds generated from operations and the proceeds from the sale of WHOA-TV in Montgomery (see Note 3 of this Form 10-Q) to reduce its outstanding debt. The Company's average effective borrowing rate remained just under 7% in the second quarter and first half of both 1999 and 1998. 12 The Company has interest rate swaps totaling $725 million with maturities ranging from less than one year to five years. These swap agreements effectively convert most of the Company's variable rate debt to fixed rate debt at interest rates approximating 6.8%. INCOME TAXES - ------------ The Company's effective tax rate on income from continuing operations was approximately 41% in the second quarter and first six months of 1999, up from 34.6% and 36.2% in the previous year's comparable periods due to a reduction in tax benefits related to the Company's investment in unconsolidated affiliates and an adverse change in tax law limiting the deductibility of company-owned life insurance. Despite this increase in effective tax rate, income tax expense dropped $.8 million and $1.6 million from the second quarter and first half of 1999 due to pretax earnings decreases of $6.1 million and $8.9 million. INCOME FROM CONTINUING OPERATIONS - --------------------------------- Income from continuing operations for 1999's second quarter was $12 million ($0.45 per share, or $0.44 per share - assuming dilution) compared to $17.3 million ($0.65 per share, or $0.64 per share - assuming dilution) in the equivalent prior-year quarter. This $5.3 million decrease was more than fully accounted for by the Company's Newsprint Segment which produced a $9.7 million negative quarter-over-quarter swing from a $7.9 million profit in 1998 to a $1.8 million loss in 1999, as newsprint prices continued to be subject to disadvantageous supply and demand factors. Partially offsetting the poor results posted by the Newsprint Segment was a 6% rise in Publishing Segment profits, a decrease in interest expense resulting from lower average debt levels, and proceeds from company-owned life insurance. Income from continuing operations in the first half of 1999 was $18.9 million ($0.71 per share, or $0.70 per share - assuming dilution) compared to $26.2 million ($0.99 per share, or $0.97 per share - assuming dilution) in the comparable year-ago period. This $7.3 million decline was more than fully attributable to a 92% drop in the Newsprint Segment's profitability from the first half of 1998, partially offset by a 7% increase in the Publishing Segment's performance. As in the quarter, life insurance proceeds and lower interest expense contributed positively to income from continuing operations. INCOME FROM DISCONTINUED CABLE OPERATIONS - ----------------------------------------- As previously mentioned, in April 1999, the Company announced an agreement to sell its Cable operations to Cox Communications, Inc.; the sale is expected to close in the fourth quarter of this year. Income from discontinued Cable Television systems remained flat in both the second quarter and first half of 1999. Although revenues at the Company's Fairfax County, Virginia, cable system, increased as a result of a .7% growth in the number of subscribers, the increase was essentially offset by a rise in franchise fees precipitated by increased revenues and a higher fee structure in the new franchise agreements signed in mid-1998 and early 1999. Cable Segment results in 1999 also included income from the Company's Greater Washington Interconnect (GWI) affiliate. GWI is a cable advertising interconnect formed with several other cable providers in the metro Washington, D.C., area for the sole purpose of collectively selling national and regional spot advertising throughout the region. GWI provided $.5 million and $.9 million of income in the second quarter and first half of this year. 13 LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Funds generated by operating activities during the first six months of 1999 totaled $61.3 million, down $23.5 million from the comparable period of 1998. The decrease was due to a combination of factors, including: a $17.5 million increase in funds used in the current year to reduce accounts payable, a $6.5 million decrease in net income, and a $3.9 million reduction of funds generated in the current year from accounts receivable and inventory changes, partially offset by higher cash distributions from unconsolidated affiliates. Funds generated from operating and financing activities, coupled with the proceeds from the sale of WHOA-TV, supplied $30.2 million for capital expenditures, $18 million to reduce long-term debt, $13.6 million for redemption of stock (see Note 5 of this Form 10-Q), and $8.1 million for the payment of dividends to stockholders. Total debt outstanding at June 27, 1999, was $910 million, down $18 million from the year-end level of $928 million. The Company's unused credit lines available from its committed revolving credit facility were $355 million at June 27, 1999. Subsequent to the end of the quarter, the Company received approximately $92 million in cash related to the redemption of its DNI preferred stock and the sale of half of its DNI common stock (see Note 3 of this Form 10-Q). These funds were used to reduce debt. Additionally, the Company anticipates a large influx of cash late in the fourth quarter from the sale of its Cable Segment. See Note 2 of this Form 10-Q for details. These funds, together with internally generated funds provided by operations and existing credit facilities, will be more than adequate to finance possible acquisitions, projected capital expenditures, dividends to stockholders, potential debt termination costs (including outstanding derivatives), and other cash needs of the Company. YEAR 2000 - --------- The Company continues to address issues regarding the transition to the Year 2000 through a specially created task force comprised of corporate, divisional and operating unit personnel. The project has been divided into five phases: 1) identification/analysis, 2) plan development/scheduling, 3) remediation, 4) testing/integration, and 5) monitoring/continuous improvement. The Company continues to make progress in all phases for both information systems and operating systems with embedded technology. The Company believes its significant systems are ready for the Year 2000 and that the project will be complete well before the end of the fourth quarter. Inherent in all phases of the above is the assessment of the Year 2000 compliance by key suppliers and customers. The Company has initiated formal communications with these parties and most have indicated that there should be no disruption in their relationships with us. However, the Company cannot assure timely compliance of third parties and therefore could be adversely affected by failure of a significant third party to become Year 2000 compliant. Amounts expended exclusively to ensure Year 2000 compliance continue to be funded by cash flow from operations and have not had, nor are they expected to have, a material impact on the Company's financial position, results of operations or cash flows. While the Company believes its significant systems are ready for the Year 2000, its financial condition still could be adversely impacted by disruptions related to the Year 2000. The Company does not consider the possibility of such an occurrence to be reasonably likely. If Year 2000 disruptions occur, the Company believes its existing business recovery plans are adequate to address reasonably likely Year 2000 issues. However, the Company has a separate initiative underway to revise its business recovery plans; the initiative is much broader than the Year 2000 project but will certainly consider Year 2000 issues. 14 OUTLOOK - ------- The sale of the Company's Cable operations will facilitate growth opportunities while simultaneously providing significant financial flexibility. The Company continues to review and evaluate its options as to the most advantageous use of the proceeds to further enhance shareholder value. The Company is likely to reduce outstanding debt initially. In any event, the sale of our Cable operations will allow for increased directional focus toward newspapers and broadcast television in our chosen southeastern markets. 15 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. The Annual Meeting of Media General, Inc., was held on May 21, 1999, for the purpose of electing a board of directors. Each nominee for director was elected by the following vote: Class A Class A Shares Voted Shares Voted Class A Directors "FOR" "WITHHELD" - ----------------- ----- ---------- Charles A. Davis 17,592,212 6,108,222 Robert V. Hatcher, Jr. 17,581,730 6,118,704 John G. Medlin, Jr. 17,588,036 6,112,398 Class B Class B Shares Voted Shares Voted Class B Directors "FOR" "WITHHELD" - ----------------- ----- ---------- Robert P. Black 554,054 --- J. Stewart Bryan III 554,054 --- Marshall N. Morton 554,054 --- Roger H. Mudd 554,054 --- Wyndham Robertson 554,054 --- Henry L. Valentine, II 554,054 --- Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10 Media General, Inc., Executive Supplemental Retirement Plan, amended, and restated as of April 23,1999. 27.1 Financial Data Schedule for the period ended June 27, 1999. 27.2 Restated Financial Data Schedule for the period ended June 28, 1998. (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended June 27, 1999. 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MEDIA GENERAL, INC. DATE: August 10, 1999 /s/ J. Stewart Bryan III ----------------------------------------- J. Stewart Bryan III, Chairman, President and Chief Executive Officer DATE: August 10, 1999 /s/ Marshall N. Morton ----------------------------------------- Marshall N. Morton Senior Vice President and Chief Financial Officer 17 EX-10 2 EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN MEDIA GENERAL, INC. ------------------- EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN -------------------------------------- Amended and Restated Effective April 23, 1999 Media General, Inc., hereby amends and restates the Media General, Inc. Executive Supplemental Retirement Plan (the "Plan") for the benefit of the eligible officers and executive employees of Media General, Inc., and its wholly owned subsidiaries (collectively the "Company") that was originally adopted on May 24, 1979 and amended and restated from time to time. 1. Purpose. The Plan is intended to advance the interests of the Company by providing certain of its officers and other key executive employees with supplemental retirement benefits and thus an additional incentive to promote the success of the Company and to encourage the employees to remain employed by the Company. The Plan is intended to be (and shall be construed and administered as) an "employee pension benefit plan" under the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), which is unfunded and maintained by the Company solely to provide retirement income to a select group of management or highly compensated employees, as such group is described under Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. 2. Administration of Plan. The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the "Committee"). 1 3. Eligibility and Participation. Any salaried executive employee of the Company shall be eligible to participate in the Plan. From the employees eligible to participate in the Plan, the Committee may from time to time select those employees whom the Committee shall recommend to the Board for participation in the Plan. In selecting those employees who shall be recommended at any time, the Committee shall consider the position and responsibilities of the eligible employees, the value of their services to the Company and such other factors as the Committee deems pertinent. As promptly as practicable after the Committee shall have made recommendations to the Board, the Board shall review the recommendations of the Committee and in the Board's discretion designate all or any number of those employees as shall have been recommended by the Committee as participants in the Plan. Set forth in Exhibit A and in Exhibits B and C attached hereto are the Participants and Special Participants, respectively, who have been designated from time to time. 4. Supplemental Retirement Benefit. (a) The Company shall pay a supplemental retirement benefit to each Participant upon his retirement after attaining age fifty-five (55). Upon the death of a Participant, a death benefit will be paid to his spouse or designated beneficiary in accordance with the provisions of paragraph 6 hereof. 2 (b) Subject to the provisions of (c), (d), (e) and (f) of this paragraph 4, the amount of the supplemental retirement benefit payable to a Participant shall be equal to the difference between the amounts determined under (1) and (2), as follows: (1) An amount equal to 55% of the Participant's average annual compensation for the five calendar years of his employment by the Company prior to his death or retirement during which his compensation was the highest. If the Participant has been employed by the Company for less than five years, the average compensation for such number of years shall be used in this computation. (2) An amount equal to the total of the annual retirement benefits the Participant is entitled to receive under the Employees Retirement Plan of the Participating Companies of Media General, Inc. (the "Retirement Plan") and all other retirement plans or benefit arrangements providing for a pension payable with respect to the Participant's employment by the Company or any other employer (collectively, the "Pension Plans"). For purposes of this Plan, the joint and survivor annuity provided under such Employees' Retirement Plan and the comparable form of benefit under any other retirement plan or benefit arrangement taken into account in this computation shall be deemed to be the applicable form of benefit. Distributions under the Thrift Plan Plus for Employees of Media General, Inc. or Media General, Inc. Deferred Compensation Plan shall not be taken into account in this computation, and in the case of Participants who are admitted to the Plan on or after January 1, 1991, benefits provided under a plan or arrangement that is sponsored by an employer other than the Company shall not be included in the determination of the amount under this paragraph 4(b)(2). No benefit shall be payable if the amount computed under (2) equals or exceeds the amount computed under (1). For purposes of the Plan, a Participant's compensation for a calendar year shall mean the sum of (i) a Participant's highest base rate salary that is payable during the calendar year and (ii) the Incentive Bonus that is payable to 3 such Participant with respect to the prior calendar year. The determination of compensation shall be made for each calendar year during which a Participant is employed by the Company irrespective of the number of days during each such calendar year that the Participant is actually employed by the Company. In the case of a Participant who is entitled to receive supplemental disability payments under paragraph 5, the benefit payable under paragraph 5 shall be treated as compensation for purposes of paragraph 4. (c) The benefit payments provided in paragraph 4(b) shall be reduced if such payments commence upon the Participant's retirement prior to attaining age sixty-three (63). If a Participant retires prior to attaining age sixty-three (63), the benefit payment shall be an amount equal to the amount of the benefit payment computed as provided in paragraph 4(b) multiplied by the applicable factor in the table set forth below: Age at Retirement Reduced Benefit Factor ----------------- ---------------------- 62 92.3% 61 84.6% 60 76.9% 59 70.7% 58 64.6% 57 58.4% 56 53.8% 55 49.2% The reduction of any benefit payment required by this paragraph 4(c) can be waived by the Committee in its sole discretion. (d) If a Participant who enters the Plan on or after January 1, 1991, terminates his employment with the Company, other than on account of 4 his death or disability, prior to completing 15 full years of service to the Company after his admission to the Plan, the percentage of average annual compensation used to determine the amount in paragraph 4(b)(1) shall be reduced to the following percentage: Years of Service (in Plan) Benefit Percentage -------------------------- ------------------ 14 54% 13 53% 12 52% 11 51% 10 50% 9 45% 8 40% 7 35% 6 30% 5 25% 4 20% 3 15% 2 10% 1 5% 0 0% (e) If a Participant who entered the Plan prior to January 1, 1991 terminates his employment with the Company prior to January 1, 1996, other than on account of his death or disability, the percentage of average annual compensation provided in paragraph 4(b)(1) shall be reduced to the following percentage: Year Employment Terminates Benefit Percentage -------------------------- ------------------ 1995 54% 1994 53% 1993 52% 1992 51% 1991 50% 5 (f) The benefit payment computed under paragraph 4(b), as reduced by paragraphs 4(c) and 4(d), shall be an annual amount which shall be payable in monthly installments commencing on the first day of the first month following the termination of the Participant's employment by the Company and terminating with the last installment paid prior to the Participant's death. (g) At the Participant's option, he may elect, at least ninety (90) days prior to the time benefit payments are first payable hereunder, to receive reduced benefit payments in exchange for the Company's agreement to make one hundred and twenty (120) monthly payments under the Plan irrespective of the death of the Participant and/or his spouse. The amount of the reduction of the benefit to be paid to the Participant and to his spouse upon his death will be determined by an actuarial consulting firm selected by the Company. The Participant shall designate who shall be the recipient of the guaranteed payments upon the death of the survivor of the Participant and his spouse. In the absence of such designation, payments shall be made to the Participant's estate. (h) Notwithstanding the foregoing provisions, Special Participants shall be entitled to receive only those supplemental retirement benefits specified in Exhibits B and C respectively. 5. Supplemental Disability Benefit. (a) In the event a Participant terminates his employment by the Company on account of his disability, which for purposes of the Plan is defined as the inability to perform the services required by his position with 6 the Company by reason of any medically determinable, physical or mental impairment which can be expected to be of long-continued and indefinite duration, he will not be treated as having retired from the Company during the period of his disability for purposes of paragraph 4, and he will be paid a supplemental disability benefit until the earlier of (i) the date he resumes his employment with the Company in his former position, or (ii) the date he attains the age of sixty three (63). (b) The supplemental disability benefit shall be an amount equal to the difference between the amounts determined under (1) and (2) below as follows: (1) An amount equal to the Participant's base compensation for the year in which he becomes disabled plus an amount equal to the incentive bonus, if any, that is payable to such Participant with respect to the calendar year next preceding the year in which he becomes disabled. Such amount will be increased or decreased for each subsequent calendar year by a factor that is equal to the increase or decrease in the average covered compensation of all participants in the Employees Retirement Plan of Media General, Inc., from year to year. (2) An amount equal to the aggregate amount of compensation received by the Participant with respect to services performed by the Participant for the Company and any other employer (including the Participant himself in the case of self-employment income) during the period he is receiving supplemental disability payments hereunder plus an amount equal to the Social Security benefits, if any, that such Participant is entitled to receive during the period. (c) The supplemental disability benefit payment provided in paragraph 5(b) shall be an annual amount which shall be payable in monthly installments commencing on the first day of the first month following the 7 suspension of the Participant's employment by the Company on account of his disability and continuing until he resumes his employment with the Company in his former position or until he attains the age of sixty-three (63). (d) If a Participant attains the age of sixty-three (63) while he is entitled to receive supplemental disability benefit payments under the Plan, he will be deemed to have retired from the Company for purposes of paragraph 4 as of such date, and such supplemental disability benefit payments will cease and he will be entitled to receive the benefit payment computed under paragraph 4 commencing on the first day of the first month following such date. (e) Notwithstanding the foregoing provisions, Special Participants shall not be entitled to any disability benefits. 6. Death Benefit. (a) Upon the death of a Participant receiving or entitled to receive benefit payments under the Plan, the Company shall pay a death benefit as hereinafter provided. (b) A spouse's benefit shall be payable only in the event the Participant was married to the spouse at the time of the termination of the Participant's employment by the Company. (c) The benefit payable to a Participant's spouse shall be an amount equal to the difference between the amounts computed under (1) and (2) as follows: 8 (1) An amount equal to 80% of the amount determined under paragraph 4(b)(1). (2) An amount equal to the total of the benefits the Participant's spouse is entitled to receive under the Pension Plans taken in account in computing the amount under paragraph 4(b)(2). No benefit shall be payable hereunder if the amount computed under (2) equals or exceeds the amount computed under (1). If the Participant has made an election to receive a reduced benefit pursuant to paragraph 4(g), the amount of the spouse's benefit will be determined by an actuarial consulting firm selected by the Company at the time such election is made. (d) The spouse's benefit shall be paid to the surviving spouse in monthly installments commencing on the first day of the first month following the Participant's death and continuing until the death or remarriage of the surviving spouse. (e) In the event of the death of a Participant prior to the termination of his employment by the Company, the spouse's benefit shall nevertheless be payable as provided herein. (f) Upon the death of a Participant who has not retired and who is not married at the time of his death, the Company shall pay to the estate of such Participant a lump sum payment equal to the present value of the benefit payments that would have been made to such Participant pursuant to paragraph 4 during the 10 year period following his death determined as if such Participant 9 had retired at age sixty-three (63) and lived for ten (10) years. In determining such present value, the discount rate shall be a rate equal to the yield on 10 year government obligations determined on the last day of the month next preceding the lump sum payment hereunder, which payment shall be made within ninety (90) days of the date of the Participant's death. (g) Notwithstanding the foregoing provisions, a surviving spouse of a Special Participant shall be entitled to a spousal benefit only in accordance with the schedule on Exhibit B. No other benefit shall be payable to any other person. 7. Election of Alternative Benefit. (a) Notwithstanding anything contained in any Section of this Plan to the contrary, a Participant who has at least fifteen (15) full years of service to the Company after his admission to the Plan may elect, either prior to the beginning of any Plan Year, so long as such date is at least ninety (90) days prior to the earliest date on which he otherwise would be eligible to receive benefits under the Plan, or within forty-five (45) days after the effective date of this amended and restated Plan, to exchange all or part of his Accrued Benefit (the "Election Amount") for rights in and to a life insurance contract, on the life of the Participant or the lives of the Participant and his spouse, as approved by the Company. Such alternative benefit election ("Election") shall be irrevocable. "Accrued Benefit" shall mean the benefit accrued under the Plan, determined as though the Participant had terminated employment as of the effective date of Participant's election, as set forth in Section 4. 10 (b) A Participant's Election shall be made on such forms provided by the Company and according to the procedures established by the Company. The Election of the Participant shall set forth the part of the Participant's Accrued Benefit to which it shall be applicable, the number and amount of annual payments to be invested by the Company in such life insurance contract, and the terms of the recoupment by the Company of its investment in such life insurance contract, plus a return at least equal to the Company's current net after-tax long-term borrowing rate, and shall be effective upon approval by the Company. Any life insurance contract in which the Company invests as a result of the Participant's Election may be owned by the Company, the Participant, or a third party, including a separate trust established by the Participant. The rights and obligations of the Company and the policy owner with respect to premium payments, policy cash values, policy death benefits, and other rights and obligations of ownership shall be set forth in an agreement entered into between the Company and the policy owner. If the insurance contract is owned by the Participant or a third party, then the insurance contract shall be collaterally assigned to the Company, and the Company's interest in the insurance policy shall be subject to the claims of its general creditors. (c) Subject to the approval by the Company of a Participant's Election, the Company agrees to invest the Election Amount during the lifetime(s) of the insured(s) in the life insurance contract. 11 (d) The Participant's Election under this Section 7 shall supersede any form or timing of payment of benefits under the Plan with regard to the Election Amount. The Participant shall not be entitled to receive any other form of benefit under the Plan with respect to the Election Amount. In addition, the Participant shall accrue no further benefit under the Plan after the effective date of the Election for a period of two years (the calendar year in which the Election occurs and the year following). In determining any benefit payable under the Plan, service and compensation for such years shall be disregarded. 8. Non-Compete Provision. A Participant shall not, without the written consent of the Company, directly or indirectly enter into or in any manner take part in any business, profession or other endeavor which shall be in competition with the business of the Company, either as an employee, agent, independent contractor, owner or otherwise in any state in which the Company is conducting business. 9. Miscellaneous Provisions. (a) No Participant or spouse shall have any right to receive benefits under the Plan prior to the termination of the Participant's employment by the Company. (b) In the event of the termination of a Participant's employment by the Company prior to his death, disability or retirement, or in the event a Participant breaches the noncompete provision in paragraph 7, all 12 rights of the Participant and his spouse and all obligations of the Company under the Plan shall cease. (c) The Plan shall be unfunded for federal income tax purposes and for purposes of Title I of ERISA. The Plan constitutes a mere promise by the Company to make future benefit payments. Nevertheless, for the convenience of the Company, a trust fund may be established to segregate certain assets for the purpose of paying benefits under the Plan. The Company shall be the beneficial owner of such assets, and no Participants or Beneficiary shall have any right, title, or interest in or to any such assets. (d) 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. (e) The Company reserves the right at any time to amend, modify or terminate the Plan, in whole or in part. Any such amendment, modification or termination of the Plan shall be made by a resolution adopted by the Board of Directors and distributed to Participants within sixty (60) days from the later of the date of adoption or the effective of such action; provided, however, that the Company shall not amend the Plan retroactively in such a manner as to deprive any Participant or Beneficiary of any benefit to the extent that such benefit was accrued and vested prior to the amendment, modification or termination. 13 (f) A Participant shall not have the power to pledge, transfer, assign, anticipate, mortgage or otherwise encumber or dispose of in advance any interest in amounts payable hereunder or any of the payments provided for herein, nor shall any interest in amounts payable hereunder or in any payments be subject to seizure for payment of any debts or judgments, or be reached or transferred by operation of law in the event of bankruptcy, insolvency or otherwise. 10. Waiver of Vesting and Benefit Accrual Limitations. The Board may, in its sole discretion, waive, modify or amend all or any portion of the provisions of the Plan that have the effect of limiting the amount or the timing of payments that are to be made under the Plan. Such action by the Board may be made on a case by case basis or may be made with respect to all Participants. 11. Claims Procedure. Any claim by a Participant or his Beneficiary (hereafter "Claimant") for benefits shall be submitted to the Committee. The Committee shall be responsible for deciding whether such claim is within the scope provided by the Plan (a "Covered Claim") and for providing full and fair review of the decision with respect to such claim. In addition, the Committee shall provide a full and fair review in accordance with ERISA, including without limitation Section 503 thereof. Each Claimant or other interested person sh all file with the Committee such pertinent information as the Committee may specify, and in such manner and form as the Committee may specify and provide, and such person shall not have any rights or be entitled to any benefits or further benefits hereunder, as the 14 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 shall fail to furnish such proof as is requested, no benefits or no further benefits hereunder, as the case may be, shall be payable to such Claimant. Notice of a decision by the Committee with respect to a claim shall be furnished to the Claimant within ninety (90) days following the receipt of the claim by the Committee (or within ninety (90) days following the expiration of the initial ninety (90) day period, in a case where there are special circumstances requiring extension of time for processing the claim). If special circumstances require and extension of time for processing the claim, written notice of the extension shall be furnished by the Committee to the Claimant prior to the expiration of the initial ninety (90) day period. The notice of extension shall indicate 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 15 wholly or partially denied, such notice shall be in writing and worded in a manner calculated to be understood by the Claimant, and shall set forth (i) the specific reason or reasons for the denial; (ii) specific reference 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 Committee fails to notify the Claimant of the decision regarding his or her claim in accordance with these "Claims Procedure" provisions, the claim shall be deemed denied and the Claimant shall then be permitted to proceed with the claims review procedure provided herein. Within sixty (60) days following receipt by the Claimant of notice of the claim denial, or within sixty (60) days following the close of the ninety (90) day period referred to herein, or if the Committee fails to notify the Claimant of the decision within such ninety (90) day period, the Claimant may appeal denial of the claim by filing a written application for review with the Committee. Following such request for review, the Committee shall fully and fairly review the decision denying the claim. Prior to the decision of the Committee, the Claimant shall be given an opportunity to review pertinent documents and to submit issues and comments to the Committee in writing. The decision of the Committee shall be made within sixty (60) days following receipt 16 by the Committee of the request for review (or within one hundred and twenty (120) days after such receipt, in a case where there are special circumstances requiring extension of time for reviewing such denied claim). The Committee 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 and the decision with respect to a claim if review is requested shall be final, binding and conclusive on all interested parties as to matters relating to the Plan. IN WITNESS WHEREOF, the Plan has been duly amended, restated as of the 23rd day of April, 1999. MEDIA GENERAL, INC. By /s/ Marshall N. Morton --------------------------- 0509985.01 17 EX-27.1 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDIA GENERAL, INC.'S CONSOLIDATED CONDENSED BALANCE SHEETS AND CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-mos DEC-26-1999 JUN-27-1999 6,079 0 111,207 7,602 20,328 156,832 1,129,035 637,869 1,876,374 118,562 909,941 0 0 132,923 353,676 1,876,374 391,365 391,365 192,732 192,732 40,299 0 30,168 32,120 13,248 18,872 8,890 0 0 27,762 1.04 1.03
EX-27.2 4 1998 RESTATED FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDIA GENERAL, INC.'S CONSOLIDATED CONDENSED BALANCE SHEETS AND CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-mos DEC-27-1998 JUN-28-1998 4,778 0 108,805 7,300 21,300 154,634 1,097,836 606,338 1,863,079 138,358 912,434 0 0 133,644 312,508 1,863,079 407,553 407,553 199,686 199,686 38,535 0 31,935 41,017 14,829 26,188 8,098 0 0 34,286 1.29 1.27
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