SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
For the fiscal year ended December 31, 1995
Commission File Number 1-16914
THE E.W. SCRIPPS COMPANY
(Exact name of registrant as specified in its charter)
Delaware 51-0304972
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1105 N. Market Street
Wilmington, Delaware 19801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (302) 478-4141
Title of each class Name of exchange on which registered
Securities registered pursuant to
Section 12(b) of the Act: New York Stock Exchange
Class A Common stock, $.01 par value
Securities registered pursuant to
Section 12(g) of the Act:
Not applicable
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
and 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 the 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 Class A Common stock of the Registrant
held by non-affiliates of the Registrant, based on the $40.625 per
share closing price for such stock on January 31, 1996, was
approximately $1,112,000,000. As of January 31, 1996 non-
affiliates held approximately 2,320,000 shares of Common Voting stock.
There is no active market for such stock.
As of January 31, 1996 there were 60,170,008 shares outstanding of the
Registrant's Class A Common stock, $.01 par value per share and
19,978,373 shares outstanding of the Registrant's Common Voting stock,
$.01 par value per share.
INDEX TO THE E. W. SCRIPPS COMPANY
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995
Item No. Page
PART I
1. Business
Newspapers 3
Broadcast Television 7
Entertainment 10
Employees 11
2. Properties 11
3. Legal Proceedings 11
4 Submission of Matters to a Vote of Securities Holders 11
PART II
5. Market for Registrant's Common Stock and Related Stockholder
Matters 12
6. Selected Financial Data 12
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 12
8. Financial Statements and Supplementary Data 12
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures 12
PART III
10.Directors and Executive Officers of the Registrant
Executive Officers 13
Directors 14
11.Executive Compensation
Summary Compensation Table 16
Option/SAR Grants in 1995 17
Aggregated Option/SAR Exercises in 1995 and FY-End
Option/SAR Values 17
Scripps Stock Plans to be Assumed by New Scripps 18
Compensation Committee Interlocks and Insider Participation 22
Pension Plan 23
12.Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners 24
Security Ownership of Management 26
13.Certain Relationships and Related Transactions 28
PART IV
14.Exhibits, Financial Statement Schedules, and Reports on Form 8-K 30
PART I
ITEM 1. BUSINESS
The E.W. Scripps Company ("Scripps") publishes daily newspapers in
fifteen markets, operates local television stations in nine markets,
operates cable television systems with 766,000 subscribers (at
December 31, 1995) in nine geographic clusters, and its entertainment
division primarily produces television programming and licenses comic
characters.
On October 28, 1995, Scripps and Comcast Corporation ("Comcast")
reached an agreement pursuant to which Scripps will contribute all of
its non-cable television assets to Scripps Howard, Inc. ("SHI" - a
wholly-owned subsidiary of Scripps and the direct or indirect parent
of all of Scripps' operations) and SHI's cable television system
subsidiaries ("Scripps Cable") will be transferred to and held
directly by Scripps. Scripps Cable will be acquired by Comcast
through a tax-free merger (the "Merger") with Scripps. The remaining
SHI business will continue as "New Scripps", which will be distributed
in a tax-free "spin-off" to Scripps shareholders (the "Spin-Off")
prior to the Merger and thereafter renamed The E.W. Scripps Company.
As a condition of the Merger Scripps has agreed to retire or defease
its $32 million aggregate principal amount 7.375% notes due in 1998
("Defeasance"). The Merger, Spin-off and Defeasance are collectively
referred to as the "Transactions."
The total value in Comcast shares that Scripps shareholders are
expected to receive is $1.575 billion, subject to certain closing
adjustments. In the Spin-Off Scripps shareholders will receive one
New Scripps Common Voting Share for each share of Scripps Common
Voting Stock held and one New Scripps Class A Common Share for each
share of Scripps Class A Common Stock held.
Scripps' historical basis in its assets and liabilities will be
carried over to New Scripps. The Transactions will be recorded as a
reverse-spin transaction, and accordingly New Scripps' results of
operations for periods prior to the consummation of the Transactions
will be identical to the historical results previously reported by
Scripps. Because Scripps Cable represents an entire business segment
that will be divested, its results are reported as "discontinued
operations" for all periods presented. Results of the remaining
business segments, including results for divested operating units
within these segments through their dates of sale, are reported as
"continuing operations." Management of New Scripps intends to
continue to pay the same quarterly dividend per share as Scripps.
Future dividends will, however, be subject to New Scripps' earnings,
financial condition, and capital requirements.
The closing date of the Transactions is expected to be in the third
quarter of 1996, subject to regulatory approvals and certain other
conditions. Controlling shareholders in Scripps and Comcast have
agreed to vote in favor of the Merger, and as a result completion of
the Transactions is assured so long as such conditions are satisfied
and such regulatory approvals (including approval of the Spin-Off as a
tax-free transaction by the Internal Revenue Service and approval of
the Merger by the Federal Communications Commission and certain
franchise authorities) are received. While there can be no assurances
regarding such approvals, management believes all such approvals will
be obtained. Additional information related to Scripps Cable may be
found in Amendment Number 2 (filed on March 28, 1996) to Scripps
Current Report on Form 8-K filed on December 29, 1995.
If the Transactions are consummated, the newspaper, broadcasting and
entertainment businesses of Scripps will continue to be operated by
New Scripps. Accordingly, the discussion set forth below of the
Scripps newspaper, broadcasting and entertainment businesses also
serves as a discussion of the New Scripps businesses.
Newspapers
General - Scripps publishes daily newspapers in fifteen markets. From
its Washington bureau Scripps operates the Scripps Howard News
Service, a supplemental wire service covering stories in the capital,
other parts of the United States, and abroad. Scripps acquired or
divested the following newspaper operations in the five years ended
December 31, 1995:
1995 - Divested the Watsonville, California, daily newspaper.
1993 - Divested the Tulare, California, and San Juan, Puerto Rico
newspapers.
1992 - Acquired three daily newspapers in California (including The
Monterey County Herald in connection with the sale of The Pittsburgh
Press). Divested The Pittsburgh Press.
Revenues - The composition of Scripps' newspaper operating revenues
for the five years ended December 31, 1995 is as follows:
( in thousands )
1995 1994 1993 1992 1991
Newspaper advertising:
Local ROP $ 197,235 $ 190,147 $ 177,028 $ 168,286 $ 165,900
Classified ROP 179,694 161,835 141,994 122,081 118,641
National ROP 16,354 15,595 11,999 12,094 12,438
Preprint 68,645 63,103 57,304 50,720 45,729
Total newspaper advertising 461,928 430,680 388,325 353,181 342,708
Circulation 125,304 116,117 112,393 102,679 98,126
Joint operating agency distributions 43,863 44,151 38,647 40,018 36,647
Other 9,009 8,274 8,815 8,971 7,840
Total 640,104 599,222 548,180 504,849 485,321
Divested newspapers 294 3,716 19,874 103,838 205,565
Total newspaper operating revenues $ 640,398 $ 602,938 $ 568,054 $ 608,687 $ 690,886
Scripps' newspaper operating revenues are derived primarily from
advertising and circulation. Advertising rates and revenues vary
among Scripps' newspapers depending on circulation, type of
advertising, local market conditions, and competition. Advertising
revenues are derived from run-of-paper ("ROP") advertisements included
with news stories in the body of the newspaper and from preprinted
advertisements that are generally produced by advertisers and inserted
into the newspaper.
ROP is further broken down among "local," "classified," and "national"
advertising. Local refers to advertising that is not in the
classified advertising section and is purchased by in-market
advertisers. Classified refers to advertising in the section of the
newspaper that is grouped by type of advertising, e.g., automotive and
help wanted. National refers to advertising purchased by businesses
that operate beyond the local market and purchase advertising from
many newspapers, primarily through advertising agencies. A given
volume of ROP advertisements is generally more profitable to Scripps
than the same volume of preprinted advertisements.
Advertising revenues vary through the year, with the first and third
quarters generally having lower revenues than the second and fourth
quarters. Advertising rates and volume are highest on Sundays,
primarily because circulation and readership is greatest on Sundays.
Advertising information for Scripps' newspapers is as follows
(excluding divested newspapers):
( in thousands )
1995 1994 1993 1992 1991
Newspaper advertising inches:
Local 6,810 6,941 6,618 7,016 7,247
Classified 6,704 6,576 6,080 5,438 5,446
National 338 319 283 310 372
Total full-run advertising inches 13,852 13,836 12,981 12,764 13,065
Previously reported classified advertising inches have been restated
to report classified advertising inches as Standard Advertising Units
("SAU", calculated on a 6 column page instead of a 10 column page).
Circulation revenues are derived from home delivery sales of
newspapers to subscribers and from single-copy sales made through
retail outlets and vending machines. Circulation information for
Scripps' newspapers is as follows:
( in thousands ) (1) Morning(M)
Newspaper Evening(E) 1995 1994 1993 1992 1991
Daily Paid Circulation
Albuquerque (NM) Tribune (2) E 30.0 32.4 34.7 35.5 38.6
Birmingham (AL) Post-Herald (2) M (3) 58.2 59.6 60.1 61.9 60.6
Bremerton (WA) Sun M (4) 35.9 38.2 39.6 38.6 40.4
Cincinnati (OH) Post (2) E (6) 87.4 90.9 95.1 98.5 100.9
Denver (CO) Rocky Mountain News M 331.0 344.9 342.9 356.9 355.9
El Paso (TX) Herald Post (2) E 22.3 23.7 25.2 27.6 28.3
Evansville (IN) Courier (2) M 61.8 62.8 64.3 63.9 62.8
Knoxville (TN) News-Sentinel M 124.9 127.9 123.9 126.0 103.9
Memphis (TN) Commercial Appeal M 190.2 198.0 196.2 191.8 194.9
Monterey County (CA) Herald M (5) 34.7 35.3 34.3 36.7 35.3
Naples (FL) Daily News M 47.8 45.2 44.1 42.0 39.8
Redding (CA) Record-Searchlight M (4) 37.7 37.1 38.4 38.6 40.6
San Luis Obispo (CA)
Telegram-Tribune M (4) 32.2 32.2 32.5 31.5 32.5
Stuart (FL) News M 36.3 34.7 33.1 30.9 29.7
Ventura County (CA) Star M (4),(7) 96.3 102.9 99.6 97.8 98.9
Total Daily Circulation 1,226.7 1,265.8 1,264.0 1,278.2 1,263.1
Sunday Paid Circulation
Bremerton (WA) Sun 39.6 40.5 40.7 39.5
Denver (CO) Rocky Mountain News 436.1 447.2 453.3 430.1 425.4
Evansville (IN) Courier 114.0 116.4 118.6 118.1 117.7
Knoxville (TN) News-Sentinel 174.8 177.9 183.5 182.9 174.9
Memphis (TN) Commercial Appeal 269.4 279.9 279.5 282.3 282.4
Monterey County (CA) Herald (5) 38.1 39.1 35.1 38.2 37.3
Naples (FL) Daily News 61.4 58.4 57.4 54.8 51.7
Redding (CA) Record-Searchlight 39.9 40.3 40.7 40.9 40.0
Stuart (FL) News 44.4 43.1 40.6 37.5 35.4
Ventura County (CA) Star (7) 104.0 108.8 106.2 105.4 107.2
Total Sunday Circulation 1,321.7 1,351.6 1,355.6 1,329.7 1,272.0
(1) Based on Audit Bureau of Circulation
Publisher's Statements ("Statements") for the
six-month periods ending September 30, except
figures for the Naples Daily News and the Stuart News
which are from the Statements for the twelve-
month periods ending September 30.
(2) This newspaper is published under a JOA with
another newspaper in its market. See "Joint
Operating Agencies."
(3) Will move to evening distribution in 1996.
(4) Redding moved from evening to morning
distribution in 1994. Bremerton, San Luis
Obispo, and the Thousand Oaks and Simi Valley
editions of the Ventura County newspaper moved to
morning distribution in 1995.
(5) Acquired in 1992.
(6) Includes circulation of The Kentucky Post.
(7) Prior year amounts have been restated.
Ventura County, Thousand Oaks, and Simi Valley
Star are now reported as separate editions of a
single newspaper.
Joint operating agency distributions represent Scripps' share of
profits of newspapers managed by the other party to a joint operating
agency (see "Joint Operating Agencies"). Other newspaper operating
revenues include commercial printing.
Joint Operating Agencies - Scripps is currently a party to newspaper
joint operating agencies ("JOAs") in five markets. A JOA combines all
but the editorial operations of two competing newspapers in a market
in order to reduce aggregate expenses and take advantage of economies
of scale, thereby allowing the continuing operation of both newspapers
in that market. The Newspaper Preservation Act of 1970 ("NPA")
provides a limited exemption from anti-trust laws, generally
permitting the continuance of JOAs in existence prior to the enactment
of the NPA and the formation, under certain circumstances, of new JOAs
between newspapers. Except for Scripps' JOA in Cincinnati, all of
Scripps' JOAs were entered into prior to the enactment of the NPA.
From time to time the legality of pre-NPA JOAs has been challenged on
anti-trust grounds but no such challenge has yet succeeded in the
courts.
JOA revenues less JOA expenses, as defined in each JOA, equals JOA
profits, which are split between the parties to the JOA. In each case
JOA expenses exclude editorial expenses. Scripps manages the JOA in
Evansville and receives approximately 80% of JOA profits. Each of the
other four JOAs are managed by the other party to the JOA. Scripps
receives approximately 20% to 40% of JOA profits for those JOAs.
The table below provides certain information about Scripps' JOAs.
Year JOA Year of JOA
Newspaper Publisher of Other Newspaper Entered Into Expiration
Managed by Scripps:
The Evansville Courier Hartmann Publications 1938 1998
Managed by Other Publisher:
The Albuquerque Tribune Journal Publishing Company 1933 2022
Birmingham Post-Herald Newhouse Newspapers 1950 2015
The Cincinnati Post Gannett Newspapers 1977 2007
El Paso Herald Post Gannett Newspapers 1936 2015
The JOAs generally provide for automatic renewal terms of ten years
unless an advance notice of termination ranging from two to five years
is given by either party. Scripps has notified Hartmann Publications
of its intent to terminate the Evansville JOA.
Competition - Scripps' newspapers compete for advertising revenues
primarily with other local media, including other local newspapers,
television and radio stations, and direct mail. Competition for
advertising revenues is based upon audience size and demographics,
price, and effectiveness. Newspapers compete with all other
information and entertainment media for consumers' discretionary time.
All of Scripps' newspaper markets are highly competitive, particularly
Denver, the largest market in which Scripps publishes a newspaper.
Newspaper Production - Scripps' daily newspapers are printed using
offset or flexographic presses and use computer systems for writing,
editing, and composing and producing the advertising and news material
printed in each edition.
Raw Materials and Labor Costs - Scripps consumed approximately 190,000
metric tons of newsprint for the year ended December 31, 1995, a 6%
decrease from 1994. Scripps purchases newsprint from various
suppliers, many of which are Canadian. Management believes that
Scripps' sources of supply of newsprint are adequate for its
anticipated needs. Newsprint prices increased dramatically in 1994
and 1995. As a result newsprint costs accounted for approximately 23%
of Scripps' newspaper operating expenses in 1995 as compared to 19% in
1994. While the rate of increase in the price of newsprint is
expected to slow, the effects of anticipated increases in the price of
newsprint in 1996 and price increases which became effective in the
second half of 1995 are expected to result in a 20% increase in
newsprint and ink expense in 1996.
Labor costs accounted for approximately 43% of Scripps' newspaper
operating expenses in 1995 and 45% in 1994. A substantial number of
Scripps' newspaper employees are represented by labor unions. See
"Employees."
Broadcast Television
General - Scripps' television operations consist of nine network-
affiliated television stations. Scripps acquired or divested the
following broadcast operations in the five years ended December 31,
1995:
1993 - Divested radio stations and Memphis television station.
1991 - Acquired Baltimore television station WMAR.
Revenues - The composition of Scripps' broadcasting operating revenues
for the five years ended December 31, 1995 is as follows:
( in thousands )
1995 1994 1993 1992 1991
Local advertising $ 150,489 $ 142,491 $ 130,603 $ 120,148 $ 106,610
National advertising 125,476 122,668 114,558 109,204 99,459
Political advertising 3,207 14,291 1,344 8,836 665
Other 16,056 8,734 8,439 9,037 9,661
Total 295,228 288,184 254,944 247,225 216,395
Divested television and radio stations 29,350 30,062 29,055
Total broadcasting operating revenues $ 295,228 $ 288,184 $ 284,294 $ 277,287 $ 245,450
Scripps' television operating revenues are derived primarily from the
sale of time to businesses for commercial messages that appear during
entertainment and news programming. Local advertising refers to time
purchased by local businesses; national refers to regional and
national businesses; political refers to campaigns for elective office
and campaigns for political issues.
The first and third quarters of each year generally have lower
advertising revenues than the second and fourth quarters, due in part
to higher retail advertising during the holiday seasons, political
advertising in election years, and "sweeps" periods. Advertising
rates are based primarily upon the size and demographics of the
audience for each program.
Other revenues primarily consist of network compensation (see
"Network Affiliation and Programming"). The new and extended network
affiliation agreements signed in 1994 and 1995 with ABC require
increased network compensation payments.
Information concerning Scripps' stations and the markets in which they
operate is as follows:
Current
Expiration Affiliation Stations
Network of FCC Rank of Agreement in
Station and Market Affiliation License Market(1) Expires Market(3) 1995 1994 1993 1992 1991
WXYZ, Detroit, Ch. 7 ABC 1997 9 2004 6
Average Audience Share (2) 21 21 21 22 23
Station Rank in Market (3) 1 1 1 1 1
WEWS, Cleveland, Ch. 5 ABC 1997 13 2004 10
Average Audience Share (2) 19 20 20 21 20
Station Rank in Market (3) 1 1 1 1 1
WFTS, Tampa, Ch. 28 ABC (6) 1997 15 2004 10
Average Audience Share (2) 10 8 8 7 7
Station Rank in Market (3) 4 4 4 4 4
KNXV, Phoenix, Ch. 15 ABC (6) 1998 17 2004 11
Average Audience Share (2) 10 10 9 10 10
Station Rank in Market (3) 4 4 4 4 4
WMAR, Baltimore, Ch. 2 (4) ABC (6) 1996 23 2004 6
Average Audience Share (2) 15 17 19 17 21
Station Rank in Market (3) 3 3 2 2 1
WCPO, Cincinnati, Ch. 9 CBS (5) 1997 29 1996 5
Average Audience Share (2) 17 19 21 22 20
Station Rank in Market (3) 1 1 1 1 1
KSHB, Kansas City, Ch. 41 NBC (6) 1998 32 2004 7
Average Audience Share (2) 10 11 10 11 9
Station Rank in Market (3) 4 4 4 4 4
WPTV, W. Palm Beach, Ch. 5 NBC 1997 45 2004 6
Average Audience Share (2) 18 20 24 23 25
Station Rank in Market (3) 1 1 1 1 1
KJRH, Tulsa, Ch. 2 NBC 1998 59 2004 7
Average Audience Share (2) 16 16 15 16 17
Station Rank in Market (3) 3 4 3 3 3
All market and audience data is
based on November A.C. Nielsen
Company survey.
(1) Rank of Market represents the
relative size of the television
market in the United States.
(2) Represents the number of
television households tuned to a
specific station Sign-On/Sign-Off,
Sunday - Saturday,
as a percentage of total
viewing households in Area of
Dominant Influence.
(3) Stations in Market does not
include public broadcasting
stations, satellite stations, or
translators which rebroadcast
signals from distant
stations. Station Rank in Market is
based on Average Audience Share as
described in (2).
(4) Station purchased May 30, 1991.
(5) Affiliation will change to ABC
in June 1996. The ABC affiliation
agreement has a term of ten years.
(6) Prior to January 1995 WFTS and
KNXV were FOX affiliates and WMAR
was a NBC affiliate; prior to
September 1994 KSHB was
a FOX affiliate.
Competition - Scripps' television stations compete for advertising
revenues primarily with other local media, including other television
stations, radio stations, newspapers, and direct mail. Competition
for advertising revenues is based upon audience size and demographics,
price, and effectiveness. Television stations compete for consumers'
discretionary time with all other information and entertainment media.
Continuing technological advances will improve the capability of
alternative service providers such as traditional cable, "wireless"
cable, and direct broadcast satellite television to offer video
services in competition with terrestrial broadcasting. The degree of
competition from such service providers and from local telephone
companies which are pursuing efforts to enter this market is expected
to increase. Scripps intends to undertake upgrades in its services as
may be permitted by the Federal Communications Commission ("FCC")
to maintain its competitive posture, and such facility upgrades may
require large capital investments. Technological advances in interactive
media services will increase these competitive pressures.
Network Affiliation and Programming - Scripps' television stations are
affiliated with national television networks. The networks offer a
variety of programs to affiliated stations, which have the right of
first refusal before such programming may be offered to other
television stations in the same market. Networks compensate
affiliated stations for carrying network programming.
In addition to network programs, Scripps' television stations
broadcast locally produced programs, syndicated programs, sports
events, movies, and public service programs. News is the focus of
Scripps' locally produced programming. Advertising during local news
programs accounts for more than 30% of a station's revenues.
Federal Regulation of Broadcasting - Television broadcasting is
subject to the jurisdiction of the FCC pursuant to the Communications
Act of 1934, as amended ("Communications Act"). The Communications Act
prohibits the operation of television broadcasting stations except in
accordance with a license issued by the FCC and empowers the FCC to revoke,
modify, and renew broadcasting licenses, approve the transfer of
control of any corporation holding such licenses, determine the
location of stations, regulate the equipment used by stations, and
adopt and enforce necessary regulations. The Telecommunications Act
of 1996 (the "1996 Act"), effective February 8, 1996, significantly
relaxes the regulatory environment applicable to broadcasters.
Under the new legislation, television broadcast licenses may be
granted for a term of eight years, rather than five, and they remain
renewable upon request. While there can be no assurance regarding
the renewal of Scripps' television broadcast licenses, Scripps
has never had a license revoked, has never been denied a renewal, and
all previous renewals have been for the maximum term. In January 1996
the FCC's staff granted the application for renewal of the license for
Scripps' Phoenix station that had been filed in 1993. The staff denied
a petition to deny that license filed by the League of United Latin
American Citizens ("LULAC").
FCC regulations govern the multiple ownership of television stations
and other media. Under the multiple ownership rule, a license for a
television station will generally not be granted or renewed if (i) the
applicant already owns, operates, or controls a television station
serving substantially the same area, or (ii) the grant of the license
would result in the applicant's owning, operating, controlling, or
having an interest in, more than twelve television stations or in
television stations whose total national audience reach exceeds 25% of
all television households. The 1996 Act eliminates the twelve-station
national cap and raises the national household-percentage reach cap to
35%. The legislation also directs the FCC to promptly reconsider its
local multiple ownership limits for television. The FCC rules also
generally prohibit "cross-ownership" of a television station and daily
newspaper or cable television system in the same service area.
Scripps' television station and daily newspaper in Cincinnati were
owned by Scripps at the time the cross-ownership rules were enacted
and enjoy "grandfathered" status. These properties would become
subject to the cross-ownership rules upon their sale. The FCC has
also announced that it will consider during 1996 whether to amend its
newspaper/broadcast cross-ownership prohibition.
Under the Cable Television Consumer Protection and Competition Act of
1992 ("1992 Act"), each television broadcast station gained "must-
carry" rights on any cable system defined as "local" with respect to
that station. Stations may waive their must-carry rights and instead
negotiate retransmission consent agreements with local cable
companies. Scripps' stations have generally elected to negotiate
retransmission consent agreements with cable companies.
Management believes Scripps is in substantial compliance with all
applicable regulatory requirements.
Entertainment
General - Scripps' Entertainment segment includes United Media, a
licensor and syndicator of news features and comics, Home & Garden
Television ("HGTV"), Scripps Howard Productions ("SHP"), Cinetel
Productions ("Cinetel"), an independent producer of cable television
programming, and Scripps' equity interests in The Television Food
Network and SportSouth, both cable television networks.
HGTV was launched on December 30, 1994. Cinetel was acquired on March
31, 1994. SHP began operations in 1993 and began selling programs in
1995.
Revenues - The composition of Scripps' entertainment revenues for the
five years ended December 31, 1995 is as follows:
( in thousands )
1995 1994 1993 1992 1991
Licensing $ 49,366 $ 49,236 $ 55,083 $ 57,136 $ 62,167
Newspaper feature distribution 18,915 17,998 18,814 19,013 19,827
Film and television production 13,789 5,725 10,757 11,060 9,617
Other 12,682 514 87
Total entertainment operating revenues $ 94,752 $ 73,473 $ 84,741 $ 87,209 $ 91,611
Scripps, under the trade name United Media, is a leading distributor
of news columns, comics, and other features for the newspaper
industry. Included among these features is "Peanuts", one of the most
successful strips in the history of comic art. United Media sold its
worldwide "Garfield" and "U.S. Acres" copyrights in 1994. Film and
television production revenues prior to 1994 were primarily related to
"Garfield" television programming.
United Media owns and licenses worldwide copyrights relating to
"Peanuts" and other character properties for use on numerous products,
including plush toys, greeting cards, and apparel, for promotional
purposes, and for exhibit on television, video cassettes, and other
media. Merchandise, literary, and exhibition licensing revenues are
generally a negotiated percentage of the licensee's sales. Scripps
generally receives a fixed fee for the use of its copyrights for
promotional and advertising purposes. More than half of the licensing
revenues are from markets outside the United States. Scripps
generally pays a percentage of gross syndication and licensing
royalties to the creators of these properties.
HGTV features 24 hours of daily programming focusing on home repair
and remodeling, gardening, decorating, and other activities associated
with the home. Scripps expects to invest an additional $35,000,000 in
HGTV in the next two years, including capital expenditures and pre-tax
operating losses.
HGTV revenues are derived from the sale of advertising time and from
program license fees received from cable television and other
distribution systems that carry the network. Such license fees are
generally based on the number of subscribers who receive HGTV.
HGTV programming is transmitted via satellite to cable television
systems. The HGTV audience includes satellite dish owners, who can
view HGTV programming without paying a fee. HGTV will begin to
scramble its signal in 1996.
SHP acquires, creates, develops, and produces programming product for
domestic and international television. Cinetel produces programs for
cable television, such as Club Dance at the Whitehorse Cafe and
Shadetree Mechanic.
Scripps' film and television program production revenues are derived
from the licensing of programming to broadcast and cable television
networks, the fees for which are negotiated with the networks. The
success of Scripps' programs is dependent upon public taste, which is
unpredictable and subject to change. Consequently, operating revenues
are subject to substantial fluctuations.
Programs are developed and produced internally and in collaboration
with a number of independent writers, producers and creative teams
under production arrangements. SHP licenses a program prior to
commencing production. To date the initial license fees have
approximated the production costs of each program. SHP retains the
distribution rights for foreign, syndicated television, cable
television, and home video markets.
Competition - Scripps' newspaper feature distribution operations
compete for a limited amount of newspaper space with other
distributors of news columns, comics, and other features. Competition
is primarily based on price and popularity of the features.
Popularity of licensed characters is a primary factor in obtaining and
renewing merchandise and promotional licenses.
Scripps' program and production operations compete with all forms of
entertainment. In addition to competing for market share with other
entertainment companies, Scripps competes to obtain creative talents,
story properties, advertiser support and broadcast rights. A
significant number of other companies produce and/or distribute
programs and provide programming to cable television and other system
operators. Competition is primarily based on price, quality of the
programming, and public taste.
Employees
As of December 31, 1995 Scripps had approximately 6,700 full-time
employees, of whom approximately 4,800 were engaged in newspapers,
1,500 in broadcasting, and 350 in entertainment. Various labor unions
represent approximately 1,900 employees, primarily in newspapers.
Collective bargaining agreements covering approximately 50% of union-
represented employees are being negotiated currently or will be
negotiated in 1996. Except for work stoppages at The Pittsburgh
Press, which was sold in 1992, Scripps has not experienced any work
stoppages since March 1985. Scripps considers its relationship with
employees to be generally satisfactory.
ITEM 2. PROPERTIES
The properties used in Scripps' newspaper operations generally include
business and editorial offices and printing plants.
Scripps' television operations require offices and studios and other
real property for towers upon which broadcasting transmitters and
antenna equipment are located. Increased capital expenditures in 1994
and 1995 are associated with more local news programming, primarily,
in Kansas City, Phoenix, and Tampa. Ongoing advances in the
technology for delivering video signals to the home, such as "high
definition television," may, in the future, require a high level of
capital expenditures in order to maintain competitive position.
Scripps' entertainment operations require offices and studios and
other real and personal property to deliver programming product. HGTV
and Cinetel operate from an 80,000 square-foot production facility in
Knoxville.
Management believes Scripps' present facilities are generally well-
maintained and are sufficient to serve its present needs.
ITEM 3. LEGAL PROCEEDINGS
Scripps is involved in litigation arising in the ordinary course of
business, such as defamation actions and various governmental and
administrative proceedings primarily relating to renewal of broadcast
licenses, none of which is expected to result in material loss.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of securities holders in the
quarter ended December 31, 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Shares of Scripps Class A Common Stock are traded on the New York
Stock Exchange ("NYSE") under the symbol "SSP". There are
approximately 4,900 owners of Scripps' Class A Common Stock, based on
security position listings, and 27 owners of Scripps' Common Voting
Stock (which does not have a public market). Scripps has declared
cash dividends in every year since its incorporation in 1922.
The range of market prices of Scripps' Class A Common Stock, which
represents the high and low sales prices for each full quarterly
period, and quarterly cash dividends, are as follows:
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
1995
Market price of common stock:
High $32.750 $32.375 $34.625 $40.625
Low 26.750 28.000 30.625 33.500
Cash dividends per share of common stock $ .11 $ .13 $ .13 $ .13 $ .50
1994
Market price of common stock:
High $29.250 $29.500 $30.500 $31.000
Low 24.875 23.000 27.875 27.500
Cash dividends per share of common stock $ .11 $ .11 $ .11 $ .11 $ .44
Upon completion of the Transactions the separate existence of Scripps
will cease. New Scripps' Class A Common Shares issued in the Spin-Off
are expected to be listed on the NYSE and to trade under the symbol
"SSP". Management of New Scripps intends to maintain the same
quarterly dividend per share as Scripps. Future dividends will,
however, be subject to New Scripps' earnings, financial condition, and
capital requirements.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is filed as part of this Form 10-
K. See Index to Consolidated Financial Statement Information at page
F-1 of this Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information required by this item is filed as part of this Form 10-
K. See Index to Consolidated Financial Statement Information at page
F-1 of this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is filed as part of this Form 10-
K. See Index to Consolidated Financial Statement Information at page
F-1 of this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Executive Officers
The executive officers of Scripps and New Scripps are as follows.
Executive officers serve at the pleasure of the Boards of Directors.
Certain information about such officers appears in the table below.
Name Age Position
Lawrence A. Leser 60 Chairman of the Board of
Directors (since August 1994); Chief
Executive Officer (since 1985);
Director (since 1977); President (1985
to August 1994)
William R. Burleigh 60 President (since August 1994);
Chief Operating Officer (since May
1994); Director (since 1990);
Executive Vice President (1990 to
August 1994); Senior Vice
President/Newspapers and Publishing
(1986 to 1990)
Daniel J. Castellini 56 Senior Vice President/Finance and
Administration (since 1986)
F. Steven Crawford 47 Senior Vice President/Cable
(since September 1992); Vice
President, Cable (1990 to September
1992); General Manager, TeleScripps
Cable Company (1983 to 1990)
Paul F. (Frank) Gardner 53 Senior Vice President/Broadcasting
(since April 1993); Senior Vice President,
News Programming, Fox Broadcasting Company
(1991 to 1993); Vice President and
General Manager, WCPO Television,
Cincinnati (1988 to 1991)
Alan M. Horton 52 Senior Vice President/Newspapers
(since May 1994); Vice
President/Operations, Newspapers (1992
to May 1994); Editor, Naples Daily
News (1987 to 1992)
Craig C. Standen 53 Senior Vice President/Corporate
Development (since August 1994); Vice
President/Marketing-Advertising,
Newspapers (1990 to August 1994)
J. Robert Routt 41 Vice President and Controller
(since 1985)
E. John Wolfzorn 50 Treasurer (since 1979)
M. Denise Kuprionis 39 Corporate Secretary (since 1987)
Gregory L. Ebel 40 Vice President/Human Resources
(since 1994); Senior Vice President,
PNC Bank Ohio (1990 to 1994)
Richard A. Boehne 39 Vice President/Corporate
Communications and Investor Relations
(since 1995); Director of Corporate
Communications and Investor Relations
(1989 to 1994)
Directors
The directors of Scripps and New Scripps are as follows. Each
director serves until the next succeeding annual meeting of
stockholders and until his successor is elected and qualified.
Certain information about such directors appears in the table below.
Principal Occupation or
Director Occupation/Business
Name Age Since Experience for Past Five Years
Daniel J. Meyer(1) 59 1988 Chairman since January 1,
1991, Chief Executive Officer since
April 24, 1990, President and Chief
Operating Officer from November 1987
through April 1990, of Cincinnati
Milacron Inc. (a manufacturer of metal
working and plastics processing
machinery and systems).
Nicholas B. Paumgarten 50 1988 Managing Director of J.P.
Morgan & Co. Inc. since February 10,
1992 (an investment banking firm);
Managing Director of Dillon, Read &
Co. Inc. from March 19, 1991 through
February 9, 1992 (an investment
banking firm); Managing Director from
1981 through March 18, 1991 of The
First Boston Corporation (an
investment banking firm).
David R. Huhn 58 1991 Retired; President of
McAlpin's, Inc., a subsidiary of
Mercantile Stores Co., Inc. from
October 16, 1991 through February 3,
1994; Chairman and Chief Executive
Officer from September 1989 through
October 15, 1991, of Mercantile Stores
Co., Inc.
John H. Burlingame(2) 62 1988 Executive Partner since 1982
of Baker & Hostetler (law firm).
William R. Burleigh 60 1990 President of Scripps since
August 1994; Chief Operating Officer
since May 1994, Executive Vice
President from March 1990 through
August 1994.
Lawrence A. Leser(3) 60 1977 Chairman of Scripps
since August 1994, Chief Executive
Officer since July 1985, President
from July 1985 through August 1994.
Charles E. Scripps(4) 76 1946 Chairman of the Executive
Committee of Scripps since August
1994; Chairman of the Board of
Directors of Scripps from 1953 to
August 1994.
Paul K. Scripps(5) 50 1986 Chairman since December 1989
of John P. Scripps Newspapers, a
subsidiary of Scripps.
Robert P. Scripps(6) 78 1949 A Director of Scripps since 1949.
(1) Mr. Meyer is a director of Cincinnati Milacron Inc., Star Bank
Corporation (bank holding company) and Hubbell Incorporated
(manufacturer of wiring and lighting devices).
(2) Mr. Burlingame is a Trustee of The Edward W. Scripps Trust
("Scripps Trust"). See Item 12 "Security Ownership of Certain
Beneficial Owners and Management."
(3) Mr. Leser is a director of Union Central Life Insurance Company
and AK Steel Holding Corporation (steel manufacturer).
(4) Mr. Charles E. Scripps is the brother of Robert P. Scripps and
Chairman of the Board of Trustees of the Scripps Trust.
(5) Mr. Paul K. Scripps serves as a director pursuant to an
agreement between the Scripps Trust and John P. Scripps.
See Item 13 "Certain Relationships and Related Transactions--John
P. Scripps Newspapers."
(6) Mr. Robert P. Scripps is a Trustee of the Scripps Trust and the
brother of Charles E. Scripps.
Committees. The Scripps Board has, and after the Spin-Off the New
Scripps Board will have, an Executive Committee, an Audit Committee
and a Compensation Committee. The functions of each of these
committees are described and the members of each are listed below.
Charles E. Scripps, Lawrence A. Leser and John H. Burlingame are the
members of the Executive Committee. The Executive Committee exercises
all of the powers of the Board in the management of corporate business
and affairs between Board meetings, except the power to fill vacancies
on the Board or its committees.
Daniel J. Meyer, Nicholas B. Paumgarten and David R. Huhn are the
members of the Audit Committee, which nominates the independent
auditors each year, reviews the audit plans of both the internal and
independent auditors, evaluates the adequacy of and monitors
compliance with corporate accounting policies, and reviews the annual
financial statements. The internal and independent auditors have
unrestricted access to the Audit Committee.
Charles E. Scripps, Daniel J. Meyer and David R. Huhn are the members
of the Compensation Committee, which establishes overall compensation
policy, determines compensation of senior management and administers
the Scripps Incentive Plan.
Meetings. The Scripps Board held 4 regularly scheduled and 5 special
meetings during 1995. Each director of Scripps attended at least 75%
of all meetings of the Scripps Board and committees of the Scripps
Board on which he serves.
Compensation of Directors. Each director elected by the holders of
Scripps Class A Common Stock receives an annual fee of $22,000, and an
additional $2,000 for each meeting that he attends of the Scripps
Board or a committee thereof on which he serves. Additionally, for
each committee of which he is chairman, such director receives an
annual fee of $3,000. Directors elected by the holders of Scripps
Common Voting Stock, with the exception of Charles E. Scripps, do not
receive any compensation for services as directors or committee
members. Charles E. Scripps receives a fee for such services at the
annual rate of $50,000, but does not receive any additional fees for
his attendance at Scripps Board or Committee meetings. It is expected
that New Scripps will compensate directors following the Spin-Off
substantially in accordance with the foregoing practices.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
Prior to the Spin-Off, Scripps executive officers will not have
received any compensation from New Scripps for serving as executive
officers thereof. It is expected that New Scripps will compensate its
executive officers following the Spin-Off substantially in accordance
with the compensation practices of Scripps.
The following table sets forth certain information regarding the
compensation earned by and paid and awarded to the Chief Executive
Officer of Scripps and each of the four other most highly compensated
executive officers of Scripps, during each of the last three fiscal
years.
Long-Term Compensation
Awards Payouts All
Restricted Securities Other
Annual Compensation Stock Underlying LTIP Compen-
Award(s) Options/ Payouts sation
Principal Position Year Salary Bonus (1) SARs (#) (2) (3)
Lawrence A. Leser 1995 $ 675,000 $ 540,000 $ 0 0 $ 0 $ 4,500
Chairman and Chief 1994 650,000 520,000 0 40,000 0 4,500
Executive Officer 1993 630,000 250,000 0 140,000 76,000 7,075
William R. Burleigh 1995 $ 455,000 $ 227,500 $ 0 0 $ 0 $ 4,500
President and Chief 1994 423,333 211,667 180,780 30,000 0 4,500
Operating Officer 1993 400,000 100,000 0 75,000 21,600 7,075
Paul F. (Frank) Gardner 1995 $ 380,000 $ 106,400 $ 0 0 $ 0 $ 4,500
Senior Vice President/ 1994 330,000 132,000 376,625 25,000 0 4,500
Broadcasting (4) 1993 225,000 120,000 413,925 56,500 0 6,000
Daniel J. Castellini 1995 $ 335,000 $ 134,000 $ 0 0 $ 0 $ 4,500
Senior Vice President/ 1994 325,000 130,000 0 20,000 0 4,500
Finance and 1993 325,000 85,000 0 48,000 26,208 7,075
Administration
Craig C. Standen 1995 $ 325,000 $ 130,000 $ 0 0 $ 0 $ 4,500
Senior Vice President/ 1994 310,000 103,833 210,975 20,000 0 4,500
Corporate Development (5)
Alan M. Horton 1995 $ 325,000 $ 130,000 $ 0 0 $ 0 $ 4,500
Senior Vice President/ 1994 255,938 92,813 210,975 20,000 14,323 4,500
Newspapers (6)
(1) The aggregate number and value of restricted stock holdings
("Restricted Stock Awards") for each named executive officer as
of the end of 1995 were as follows: Mr. Burleigh held 6,000
shares with a value of $239,250; Mr. Gardner held 24,500 shares
with a value of $976,938; Mr. Standen and Mr. Horton each held
7,500 shares, with a value of $299,063 each. Dividends were paid
during 1995 on the shares of restricted stock held by each named
executive officer at a rate of thirteen cents per share per
quarter, except for the first quarter when the dividend rate was
eleven cents. Messrs. Leser and Castellini did not hold any
restricted stock at December 31, 1995. All restricted shares are
shares of Scripps Class A Common Stock. New Scripps will assume
the Restricted Stock Awards and the Scripps Incentive Plan
pursuant to the Spin-Off.
(2) Represents compensation paid pursuant to the Scripps Medium Term
Bonus Plan. This plan terminated in 1991. The final vesting
period, with respect to contingent awards outstanding under this
plan, was December 1993.
(3) Represents compensation paid pursuant to the Scripps Retirement
and Investment Plan.
(4) Mr. Gardner was elected to the position of Senior Vice
President/Broadcasting on April 1, 1993. The compensation
reported for 1993 reflects his actual 1993 earnings.
(5) Mr. Standen was elected an executive officer of Scripps in August
1994. Prior to this appointment he was a Vice President of a
subsidiary of Scripps. The compensation reported for 1994
reflects his actual 1994 earnings.
(6) Mr. Horton was elected an executive officer of Scripps in May
1994. Prior to this appointment he was a Vice President of a
subsidiary of Scripps. The compensation reported for 1994
reflects his actual 1994 earnings.
Option/SAR Grants in 1995
Scripps maintains the Scripps Incentive Plan and the Scripps Non-
employee Directors' Stock Option Plan. New Scripps will assume these
plans and the options and awards outstanding under them. Accordingly,
upon consummation of the Spin-Off, all references in such plans,
options and awards to Scripps and Scripps Class A Common Stock will be
deemed to refer to New Scripps and New Scripps Class A Common Shares.
There were no option grants to the named executives in 1995.
Aggregated Option/SAR Exercises in 1995 and FY-End Option/SAR Values
The following table sets forth certain information regarding the
number and value of options for shares of Scripps Class A Common Stock
held by the named executives at December 31, 1995. One executive
exercised an option during 1995. These options will be assumed by New
Scripps pursuant to the Spin-Off.
Value of
Number of Securities Unexercised
Underlying Unexercised In-the-Money Options/
Shares Acquired Value Options/SARs at12/31/95 SARs at 12/31/95 ($)
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
Lawrence A. Leser 325,500 / 12,000 $4,641,988 / 263,940
William R. Burleigh 195,000 / 10,000 $2,806,225 / 219,950
Paul F. (Frank) Gardner 22,000 $294,945 59,500 / 0 $555,938 /0
Daniel J. Castellini 129,000 / 5,000 $1,865,525 / 109,975
Craig C. Standen 60,275 / 6,000 $934,807 /131,970
Alan M. Horton 56,050 / 1,500 $781,061 /32,993
Scripps Stock Plans to be Assumed by New Scripps
Scripps maintains the following stock plans: (i) the 1987 Long-Term
Incentive Plan ("Scripps Incentive Plan") and (ii) the 1994 Non-
Employee Directors' Stock Option Plan ("Scripps Directors' Plan," and
collectively, the "Scripps Stock Plans"). In connection with the
Merger and related transactions, New Scripps will assume the Scripps
Stock Plans and the options and awards outstanding thereunder. All
references in such plans to Scripps and Scripps Class A Common Stock
will be deemed to refer to New Scripps and New Scripps Class A Common
Shares. Approval of the Merger by the holders of Scripps Common
Voting Stock will constitute approval of New Scripps' assumption of
the Scripps Stock Plans for purposes of the stockholder approval
requirements of Rule 16b-3 under the Exchange Act.
Scripps Incentive Plan. Upon consummation of the Spin-Off, New
Scripps will assume the Scripps Incentive Plan and all options and
awards outstanding thereunder. All such options and awards will be
adjusted in accordance with the plan by the Compensation Committee so
as to prevent enlargement or dilution of the rights represented by
such options and awards. No amendments will be made to the Scripps
Incentive Plan as a result of the Spin-Off. All information appearing
below about the Scripps Incentive Plan will continue to apply to the
plan after assumption thereof by New Scripps.
The purpose of the Scripps Incentive Plan is to promote the long-term
growth and profitability of Scripps by enabling it to attract and
retain the best available persons for positions of substantial
responsibility. Grants of incentive or nonqualified stock options,
stock appreciation rights (in tandem with or independent of options)
("SARs"), restricted or nonrestricted share awards, performance units,
or any combination thereof, may be made under the Scripps Incentive
Plan. Participation is limited to officers and other key employees of
Scripps selected by the Compensation Committee. Directors who are not
officers of Scripps are not eligible to participate in the Scripps
Incentive Plan. Scripps has reserved 3,250,000 shares of Class A
Common Stock for issuance under the plan. The maximum number of
shares of Scripps Class A Common Stock with respect to which options,
SARs, restricted stock or performance units, or any combination
thereof, may be granted under the Scripps Incentive Plan to any
employee in any one calendar year is limited to 500,000 shares.
Stock Options and SARs. The exercise price of stock options granted
under the Scripps Incentive Plan shall not be less than 100% of the
fair market value of the shares on the date the option is granted.
The Compensation Committee may grant incentive or nonqualified
options. Options may be exercised upon payment of the exercise price
in cash, in shares previously acquired by the optionee, or a
combination of cash and such shares. Options may also be exercised in
accordance with a "cashless" exercise procedure that permits the
optionee to sell all or a portion of the shares underlying the option
or obtain a margin loan from a broker sufficient to enable payment in
either case of the exercise price of the option. The Compensation
Committee shall determine the date or dates on which each option shall
become exercisable. The Compensation Committee may accelerate the
vesting of any option or SAR held by an employee who retires or whose
employment is otherwise terminated for any reason other than cause.
"Cause" means, generally, conviction of a felony, conduct that could
cause demonstrable and serious injury to Scripps, or gross dereliction
of duty or other grave misconduct. Retired employees have a period of
five years following retirement to exercise their options and SARs.
Upon a change in control of Scripps there will be an automatic
acceleration of the vesting of any outstanding option or SAR as of the
date of such change in control.
The Compensation Committee is authorized to grant SARs under the
Scripps Incentive Plan independently of or in tandem with stock
options. The exercise of an option shall result in an immediate
forfeiture of its corresponding tandem SAR, and the exercise of a
tandem SAR shall cause an immediate forfeiture of its corresponding
option. A tandem SAR shall expire at the same time as and shall be
transferable only when and under the same conditions as the related
option. Tandem SARs shall be exercised only when, to the extent and
on the conditions that the related option is exercisable. Upon
exercise, the optionee shall be entitled to distribution of an amount
equal to the difference between the fair market value of a share of
Scripps Class A Common Stock on the date of exercise and the exercise
price of the option to which the SAR corresponds. The Compensation
Committee shall decide whether such distribution shall be in cash, in
shares, or in a combination thereof. All tandem SARs will be
exercised automatically on the last day prior to the expiration date
of the related option. An independent SAR will entitle an employee to
receive, with respect to each share of Class A Common Stock as to
which the SAR is exercised, the excess of the fair market value of one
share of such stock on the date of exercise over its fair market value
on the date such SAR was granted. As defined in the Scripps Incentive
Plan, "fair market value" means the average of the highest and lowest
selling prices of the Scripps Class A Common Stock as reported on the
New York Stock Exchange on the date in question. Independent SARs may
become exercisable at such time or times, and on such conditions as
the Compensation Committee may specify, except that no such SAR will
become exercisable during the first six months following the date on
which it was granted. The Scripps Incentive Plan provides that each
independent SAR will be exercised automatically on the last day prior
to its expiration date. Payments of the amount to which an employee
is entitled upon the exercise of an independent SAR shall be made in
cash or shares of Scripps Class A Common Stock, or in any combination
thereof, as the Compensation Committee shall determine. To the extent
that the payment is made in shares, the shares will be valued at their
fair market value on the day of exercise of such SAR.
No option, SAR or performance unit shall be transferable by an
employee otherwise than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order. The
Scripps Incentive Plan provides that the Compensation Committee shall
make adjustments as it deems appropriate in the number and kind of
shares reserved for issuance under the Plan, and the number and kind
of shares covered by grants made under the plan and in the exercise
price of outstanding options, in certain events, such as
reorganization, recapitalization, stock split or merger. The
Compensation Committee may also authorize cash awards to any
participant in order to assist him or her in meeting tax obligations
with respect to shares received under the plan.
Share Awards. The Compensation Committee may award shares of Scripps
Class A Common Stock under the Scripps Incentive Plan and place
restrictions on transfer of such shares. Each award shall specify the
applicable restrictions, if any, on such shares, the duration of such
restrictions, and the time at which such restrictions shall lapse.
Participants will be required to deposit shares with Scripps during
the period of any restriction on transfer.
Performance Units. The Compensation Committee may grant performance
units to participants under the Scripps Incentive Plan. Each unit
shall have a dollar value determined at the time of grant. The value
of each unit may be fixed or it may fluctuate based on a performance
factor (e.g., return on equity) selected by the Compensation
Committee. The Compensation Committee shall establish performance
goals that, depending on the extent to which they are met, will
determine the final value of the performance units or the final number
of units actually earned by participants, or both. Performance units
that are earned by a participant may be paid in restricted or
nonrestricted shares, in cash, or in a combination of both at the
Compensation Committee's discretion.
Miscellaneous. The Scripps Incentive Plan provides for vesting,
exercise or forfeiture of rights granted under the Scripps Incentive
Plan on retirement, death, disability, termination of employment or a
change of control. The Board of Directors may modify, suspend or
terminate the Scripps Incentive Plan as long as it does not impair the
rights of any participant thereunder. The holders of Scripps Common
Voting Stock must approve any increase in the maximum number of shares
reserved for issuance under the plan, any change in the classes of
employees eligible to participate in the plan and any material
increase in the benefits accruing to participants. The Scripps
Incentive Plan was approved by the holders of Scripps Common Voting
Stock in December 1987 and shall terminate in December 1997 except
with respect to awards or options then outstanding.
Scripps Directors' Plan. Upon consummation of the Spin-Off, New
Scripps will assume the Scripps Directors' Plan and all options
outstanding thereunder. All such options will be adjusted in
accordance with the plan by the Compensation Committee so as to
prevent enlargement or dilution of the rights represented by such
options. No amendments will be made to this plan as a result of the
Spin-Off. All information appearing below about the Scripps
Directors' Plan will continue to apply to the plan after assumption
thereof by New Scripps.
The purpose of the plan is to strengthen the alignment of interests
between non-employee directors and the stockholders of Scripps through
the increased ownership by such directors of shares of Scripps Class A
Common Stock. The total number of shares of Class A Common Stock of
Scripps that may be made subject to options awarded under the Plan is
50,000. Participation is limited to non-employee directors of Scripps
elected by the holders of Class A Common Stock.
Under the plan, each qualified director shall receive a one-time non-
qualified stock option for 5,000 shares of Class A Common Stock at the
time of initial election. On December 9, 1994, each of the three non-
employee directors currently in office received an option for 5,000
shares of Class A Common Stock. The plan was subsequently approved by
the holders of the Common Voting Stock.
The exercise price of each option granted under the plan shall be
equal to the fair market value of a share of Scripps Class A Common
Stock on the date that the option is granted. Options may be
exercised in whole or in part upon payment of the exercise price in
cash or in shares of Scripps Class A Common Stock previously acquired
or a combination of cash and such shares. The plan also provides for
"cashless exercise" of options pursuant to which a participant pays
the exercise price of his options by selling all or part of the
underlying common shares.
The stock options granted under the plan to the current non-employee
directors of Scripps are exercisable and shall expire on December
9, 2004. All other stock options granted under the plan shall be
exercisable on the first anniversary of the recipient's election as a
director by the holders of Scripps Class A Common Stock and shall have
terms of ten years from the date of grant.
Options granted under the plan are not transferable except as
permitted by applicable law. The plan provides for appropriate
adjustments in the number and kind of shares reserved for issuance
under the plan or covered by options granted under the Plan and in the
exercise price of outstanding options in the event of a
reorganization, stock split, merger, or similar event. The plan will
continue in effect until its expiration on December 9, 2004, and
options then outstanding will continue in effect until the expiration
of their terms.
Rule 16b-3. Pursuant to Section 16(b) of the Exchange Act, directors,
certain officers and 10% stockholders of Scripps are generally liable
to Scripps for repayment of any "short-swing" profits realized from
any non-exempt purchase and sale of Scripps Common Stock occurring
within a six-month period. Rule 16b-3, promulgated under the Exchange
Act, provides an exemption from Section 16(b) liability for certain
transactions by an officer or director pursuant to an employee benefit
plan that complies with such rule. Specifically, the grant of an
option under an employee benefit plan that complies with Rule 16b-3
will not be deemed the purchase of a security and the actual or deemed
sale of shares in connection with certain option exercises will not be
deemed a sale for Section 16(b) purposes. The Scripps Stock Plans are
designed to comply with Rule 16b-3.
Federal Income Tax Consequences of the Scripps Stock Plans. The
following is a summary of the federal income tax consequences of
transactions under the Scripps Stock Plans.
Incentive Stock Options. No taxable income is realized by the
optionee upon the grant or exercise of an incentive stock option. If
Class A Common Stock is issued to an optionee pursuant to the exercise
of an incentive stock option, and if no disqualifying disposition of
such stock is made by such optionee within two years after the date of
grant or within one year after the transfer of such shares to such
optionee, then (a) upon the sale of such stock a long-term capital
gain or loss will be realized in an amount equal to the difference
between the option price and the amount realized by the optionee and
(b) no deduction will be allowed to Scripps for federal income tax
purposes. The excess (if any) of the fair market value of the shares
on the date of exercise over the option price, however, is includable
in alternative minimum taxable income unless the shares are disposed
of in the taxable year the option is exercised.
If Class A Common Stock acquired upon the exercise of an incentive
stock option is disposed of prior to the expiration of either holding
period described above, generally (i) the optionee realizes ordinary
income in the year of disposition in an amount equal to the excess (if
any) of the fair market value of the shares on the date of exercise
(or, if less, the amount realized on the disposition of the shares)
over the option price paid for such shares and (ii) Scripps will be
entitled to deduct the amount realized as ordinary income by the
optionee if Scripps satisfies applicable federal withholding or
reporting requirements. Any further gain (or loss) realized by the
participant will be taxed as short-term or long-term capital gain (or
loss), as the case may be, and will not result in any deduction for
Scripps.
With respect to the exercise of an incentive stock option and the
payment of the option price by the delivery of shares of Class A
Common Stock, to the extent that the number of shares received does
not exceed the number of shares surrendered, no taxable income will be
realized by the optionee at that time, the tax basis of the shares
received will be the same as the tax basis of the shares surrendered,
and the holding period (except for purposes of the one-year period
referred to above) of the optionee in shares received will include his
holding period in the shares surrendered. To the extent that the
number of shares received exceeds the number of shares surrendered, no
taxable income will be realized by the optionee at that time; such
excess shares will be considered incentive stock option stock with a
zero basis; and the holding period of the optionee in such shares will
begin on the date such shares are transferred to the optionee. If the
shares surrendered were acquired as the result of the exercise of an
incentive stock option and the surrender takes place within two years
from the date the option relating to the surrendered shares was
granted or within one year from the date of such exercise, the
surrender will result in a disqualifying disposition and the optionee
will realize ordinary income at that time in the amount of the excess,
if any, of the fair market value at the time of exercise of the shares
surrendered over the basis of the such shares. If any of the shares
received are disposed of in a disqualifying disposition, the optionee
will be will be treated as first disposing of the shares with a zero
basis.
Non-Qualified Stock Options. With respect to non-qualified stock
options generally, (a) no income is realized by the optionee at the
time the option is granted, (b) upon exercise of the option, the
optionee realizes ordinary income in an amount equal to the excess, if
any, of the fair market value of the shares of Class A Common Stock on
the date of exercise over the option price paid for the shares, and
Scripps is entitled to a tax deduction in the amount of ordinary
income realized (provided that applicable withholding or reporting
requirements are satisfied), and (c) upon disposition of the Class A
Common Stock received upon the exercise of the option, the optionee
receives, as either short-term or long-term capital gain (or loss),
depending upon the length of time that the optionee has held the
shares, income (or loss) equal to the difference between the amount
realized and the fair market value of the shares on the date of
exercise.
With respect to the exercise of a non-qualified stock option and the
payment of the option price by the delivery of shares of Class A
Common Stock, to the extent that the number of shares received does
not exceed the number of shares surrendered, no taxable income will be
realized by the optionee at that time, the tax basis of the shares
received will be the same as the tax basis of the shares surrendered,
and the holding period of the optionee in the shares received will
include his holding period in the shares surrendered. To the extent
that the number of shares received exceeds the number of shares
surrendered, ordinary income will be realized by the optionee at that
time in the amount of the fair market value of such excess shares, the
tax basis of such excess shares will be such fair market value, and
the holding period of the optionee in such shares will begin on the
date such shares are transferred to the optionee.
Stock Appreciation Rights. No income will be realized by an optionee
in connection with the grant of a stock appreciation right under the
Scripps Incentive Plan. When the right is exercised, the optionee
will generally be required to recognize as ordinary income in the year
of exercise an amount equal to the sum of the amount of cash and the
fair market value of any shares received. Scripps will be entitled to
a deduction equal to the amount included in such optionee's ordinary
income by reason of the exercise if Scripps satisfies applicable
federal withholding or reporting requirements. If the optionee
received Class A Common Stock upon the exercise of a stock
appreciation right, the post-exercise appreciation (or depreciation)
will be treated in the same manner as discussed above under "Non-
Qualified Stock Options."
Restricted Stock Awards. A recipient of a restricted stock award
generally will recognize ordinary income equal to the difference
between the fair market value of the restricted stock at the time the
stock is transferable or not subject to a substantial risk of
forfeiture and the consideration, if any, paid for the stock. A
recipient may elect, however, within 30 days of the date of grant, to
recognize taxable ordinary income on the date of grant equal to the
excess of the fair market value of the shares of restricted stock on
such date (determined without regard to any restrictions other than
restrictions which will never lapse) over the consideration, if any,
paid for such restricted stock. Scripps generally will be entitled to
a deduction equal to the amount that is taxable as ordinary income to
the recipient if Scripps satisfies applicable federal withholding or
reporting requirements.
Performance Units. A recipient of performance units will recognize
ordinary income when the objectives for a performance unit are
satisfied. The time at which a recipient of a performance unit will
recognize ordinary income will generally depend upon whether the
recipient receives restricted or nonrestricted stock, cash or a
combination thereof. Scripps generally will be entitled to a
deduction equal to the amount that is taxable as ordinary income to
the recipient if Scripps satisfies certain withholding requirements.
Capital Gains. Under current law, capital gains are subject to the
same tax rates that apply to ordinary income, except the rate on long-
term capital gains may not exceed 28%. Capital losses may be utilized
to offset capital gains to the extent of capital gains, and $3,000 of
capital losses in excess of capital gains ($1,500 in the case of a
married individual filing a separate return) is deductible against
other income.
To receive long-term capital gain (loss) treatment with respect to any
appreciation (depreciation) in the value of Class A Common Stock
acquired pursuant to the Scripps Stock Plans, the participant must
hold such shares for more than one year. Shares held for one year or
less will receive short-term capital gain or loss treatment.
Dividends and Dividend Equivalents. Dividends paid on restricted
stock generally will be treated as compensation that is taxable as
ordinary income to the participant and may be deductible by Scripps.
If, however, the participant makes a Section 83(b) election, the
dividends will be taxable as ordinary income to the participants, but
will not be deductible by Scripps.
$1,000,000 Deduction Limitation. Scripps is not entitled to deduct
annual remuneration in excess of $1 million (the "Deduction
Limitation") paid to certain of its employees unless such remuneration
satisfies an exception to the Deduction Limitation, including an
exception for performance-based compensation. Thus, unless options,
rights or awards granted under the Scripps Incentive Plan satisfy an
exception to the Deduction Limitation, Scripps' deduction with respect
to such options, rights or awards will be subject to the Deduction
Limitation.
Under Treasury Regulations, compensation attributable to a stock
option, stock appreciation right, restricted stock or performance unit
is deemed to satisfy the performance based compensation exception if:
"the grant or award ... is made by the
compensation committee; the plan under which the
option or right ... is granted states the maximum
number of shares with respect to which options or
rights ... may be granted during a specified
period to any employee; and, under the terms of
the option or right ... the amount of compensation
the employee could receive is based solely on an
increase in the value of the stock after the date
of the grant or award . . ."
If a compensation committee comprised solely of two or more "outside
directors" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986 (the "Code") makes grants, Scripps' deduction
with respect to options granted under the Scripps Incentive Plan will
not be subject to the Deduction Limitation.
Compensation Committee Interlocks and Insider Participation
Daniel J. Meyer, Charles E. Scripps and David R. Huhn are the members
of Scripps' Compensation Committee. Following consummation of the
Spin-Off, it is expected that they will continue to serve on New
Scripps' Compensation Committee.
Mr. Charles E. Scripps and Mr. Robert P. Scripps, directors of Scripps
and New Scripps, are general partners in Jefferson Building
Partnership (the "Jefferson Partnership"), which was formed in 1984.
The Albuquerque Publishing Company, a subsidiary of Scripps that
is a 50% owned partnership that operates The Albuquerque Tribune under
a joint operating agreement, leases the facilities for The Albuquerque
Tribune from a partnership controlled in part by the Jefferson
Partnership. This lease terminates in 2004. Total rent under the
lease for 1995 was approximately $1,851,790. The Albuquerque
Publishing Company has an option to purchase the property that is
exercisable until 2034. The purchase price will be equal to 7.7 times
the basis rent for the lease year in which the property is purchased.
The parties to the Albuquerque joint operating agreement lease the
land on which the Albuquerque facilities are situated to the Jefferson
Partnership under a lease terminating in 2034 and providing for rent
of $150,000 per year, subject to certain adjustments for inflation.
The lease income for 1995 was $168,000. The Jefferson Partnership has
subleased the land to the Albuquerque Publishing Company as part of
the facilities lease arrangement described above.
Mr. Charles E. Scripps is a Trustee of the Scripps Trust. Mr. Scripps
is expected to continue to serve as a Trustee of the Scripps Trust in
1996. As a Trustee, Mr. Scripps shares the power, together with the
other two Trustees, to vote and dispose of the 32,610,000 shares of
Scripps Class A Common Stock and 16,040,000 shares of Scripps Common
Voting Stock held by the Scripps Trust. Following the Spin-off, the
Scripps Trust will hold 32,610,000 New Scripps Class A Common Shares
and 16,040,000 New Scripps Common Voting Shares. Mr. Scripps has a
life income interest in the Scripps Trust.
Pension Plan
Executive officers and substantially all other non-union employees of
Scripps and New Scripps are participants in a non-contributory defined
benefit pension plan (the "Pension Plan"). Contributions to the
Pension Plan are based on separate actuarial computations for each
business unit and are made by the business unit compensating the
particular individual. Following the Spin-Off, New Scripps will
continue the Pension Plan.
Years of Service
Remuneration 15 Years 20 Years 25 Years 30 Years 35 Years
$ 300,000 $ 55,000 $ 74,000 $ 92,000 $ 111,000 $ 129,000
400,000 74,000 99,000 123,000 148,000 173,000
500,000 93,000 124,000 155,000 186,000 216,000
600,000 112,000 149,000 186,000 223,000 260,000
700,000 130,000 174,000 217,000 261,000 304,000
800,000 149,000 199,000 248,000 298,000 348,000
900,000 168,000 224,000 280,000 336,000 391,000
1,000,000 187,000 249,000 311,000 373,000 435,000
1,500,000 280,000 374,000 467,000 561,000 654,000
The above table shows the annual normal retirement benefits which,
absent the maximum benefit limitations (the "Benefit Limitations")
imposed by Section 415(b) of the Code would be payable pursuant to the
Pension Plan upon retirement at age 65 (based upon the 1996 social
security integration level under the Pension Plan), pursuant to a
straight life annuity option, for employees in the compensation ranges
specified and under various assumptions with respect to average final
annual compensation and years of credited services.
In general, the Benefit Limitations limit the annual retirement
benefits that may be paid pursuant to the Pension Plan to $120,000
(subject to further cost-of-living increases promulgated by the United
States Secretary of the Treasury). Payments under the Pension Plan
are supplemented with direct pension payments equal to the amount, if
any, by which the benefits that otherwise would be payable under the
Pension Plan exceed the benefits that are permitted to be paid under
the Benefit Limitations. Annual normal retirement benefits are
computed at the rate of 1% of average final annual compensation up to
the applicable social security integration level plus 1.25% of average
final annual compensation in excess of the social security integration
level, multiplied by the employee's years of credited service. An
employee's benefits are actuarially adjusted if paid in a form other
than a life annuity.
An employee's average final compensation is the average annual amount
of his pensionable compensation (generally salary and bonus, excluding
any compensation pursuant to the Medium Term Bonus Plan, the Scripps
Retirement and Investment Plan and any other annual or long-term
compensation reflected in the Summary Compensation Table) for service
during the five consecutive years within the last ten years of his
employment for which his total compensation was greatest. The
employee's years of credited service equal the number of years of his
employment with Scripps (subject to certain limitations). As of
December 31, 1995, the years of credited service of the individuals
named in the cash compensation table are as follows: Mr. Leser-28; Mr.
Burleigh-39; Mr. Castellini-25; Mr. Standen-5; Mr. Gardner-11; Mr.
Horton-25.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information with respect to
persons known to Scripps to be the beneficial owners of more than five
percent of Scripps Class A Common Stock or Scripps Common Voting
Stock. Unless otherwise indicated, all information is as of January
31, 1996, and the persons named in the table have sole voting and
investment power with respect to all shares shown therein as being
beneficially owned by them. Assuming that the Spin-Off had occurred
as of the aforesaid date, the information in the table below would
also reflect the number of Class A Common Shares and Common Voting
Shares of New Scripps, and the respective percentages thereof,
beneficially owned by the persons named in such table.
Common
Name and Address Class A Voting
of Beneficial Owner Common Stock Percent Stock Percent
The Edward W. Scripps Trust(1) 32,610,000 54.0% 16,040,000 81.0%
312 Walnut Street
Cincinnati, Ohio
Jack R. Howard(2) 3,659,198 6.1% 170,000 0.9%
c/o Scripps Howard, Inc.
Attn: Corporate Secretary
312 Walnut Street
Cincinnati, Ohio
Paul K. Scripps and 189,097 0.3% 1,616,113 8.2%
John P. Scripps Trust(3)
525 C Street, Suite 306
San Diego, California
The Capital Group Companies, Inc.(4) 4,226,400 7.0% -0- -0-
333 South Hope Street
Los Angeles, California
Chemical Bank, Trustee(5) --- --- 1,242,000 6.3%
270 Park Avenue
New York, New York
(1) Under the Trust Agreement establishing the Scripps Trust, the
Scripps Trust must retain voting stock sufficient to ensure
control of Scripps (and following the Spin-Off, New Scripps)
until the final distribution of the Scripps Trust estate unless
earlier stock dispositions are necessary for the purpose of
preventing loss or damage to such estate. The Scripps Trust will
terminate upon the death of the last to survive of four persons
specified in the Scripps Trust, the youngest of whom is 72 years
of age. Upon the termination of the Scripps Trust, substantially
all of its assets (including all shares of capital stock of
Scripps or, following the Spin-Off, New Scripps, held by the
Scripps Trust) will be distributed to the grandchildren of Robert
Paine Scripps (a son of Edward W. Scripps), of whom there are 28.
Certain of these grandchildren have entered into an agreement
among themselves, other cousins and Scripps which will restrict
transfer and govern voting of shares of Scripps Common Voting
Stock (and, following the Spin-Off, New Scripps Common Voting
Shares) to be held by them upon termination of the Scripps Trust
and distribution of the Scripps Trust estate. This agreement
will apply to the New Scripps Common Voting Shares following the
Spin-Off. See "Certain Relationships and Related Transactions--
Scripps Family Agreement."
(2) The shares listed for Mr. Howard consist of 3,327,385 shares of
Scripps Class A Common Stock and 170,000 shares of Scripps Common
Voting Stock held in an irrevocable trust established for the
benefit of Mr. Howard and his wife and of which Mr. Howard and
his wife are the sole trustees; and 331,813 shares of Scripps
Class A Common Stock owned by Mr. Howard's wife. Mr. Howard
disclaims any beneficial interest in the shares held by his wife.
(3) The shares listed for Mr. Paul K. Scripps include 119,520 shares
of Scripps Common Voting Stock and 400 shares of Scripps Class A
Common Stock held in various trusts for the benefit of certain
relatives of Paul K. Scripps and 100 shares of Scripps Class A
Common Stock owned by his wife. Mr. Scripps is a trustee of the
aforesaid trusts. Mr. Scripps disclaims beneficial ownership of
the shares held in such trusts and the shares owned by his wife.
The shares listed also include 1,445,453 shares of Scripps Common
Voting Stock and 188,497 shares of Scripps Class A Common Stock
held by five trusts of which Mr. Scripps is a trustee. Mr.
Scripps is the sole beneficiary of one of such trusts, holding
349,018 shares of Scripps Common Voting Stock and 47,124 shares
of Scripps Class A Common Stock. He disclaims beneficial
ownership of the shares held in the other four trusts.
(4) The Capital Group Companies, Inc. ("Capital"), the parent company
of six investment management companies, has filed a Schedule 13G
with the Securities and Exchange Commission with respect to the
Scripps Class A Common Stock. According to the Schedule 13G for
the year ended December 31, 1995, Capital Guardian Trust Company
and Capital Research Management Company, operating subsidiaries
of Capital, exercised as of December 29, 1995 investment
discretion with respect to 1,111,400 and 3,115,000 shares,
respectively, or a combined total of 7.0% of the outstanding
Class A Common Stock, which was owned by various institutional
investors.
(5) Based on information provided by Chemical Bank, the 1,242,000
shares of Common Voting Stock are held in two trusts of which
Chemical Bank is the sole trustee. These trusts were established
by Jack R. Howard's parents for the benefit of his sister.
Security Ownership of Management
The following information is set forth with respect to Scripps Class A
Common Stock and Scripps Common Voting Stock beneficially owned as of
January 31, 1996, by each director, each named executive officer, and
by all directors and executive officers of Scripps as a group. Unless
otherwise indicated, the persons named in the table have sole voting
and investment power with respect to all shares shown therein as being
beneficially owned by them. Assuming that the Spin-Off had occurred
as of the aforesaid date, the information in the table below would
also reflect the number of New Scripps Class A Common Shares and New
Scripps Common Voting Shares, and the respective percentages thereof,
beneficially owned by the persons named in the table.
Name of Individual Common
or Number of Persons Class A Voting
in Group Common Stock Percent Stock Percent
William R. Burleigh(1) 32,515 * --- ---
John H. Burlingame(2) 0 --- --- ---
David R. Huhn(3) 500 * --- ---
Lawrence A. Leser(4) 50,000 * --- ---
Daniel J. Meyer 300 * --- ---
Nicholas B. Paumgarten(5) 3,250 * --- ---
Charles E. Scripps(2)(6) 36,480 * --- ---
Paul K. Scripps(7) 189,097 * 1,616,113 8.2%
Robert P. Scripps(2) 0 --- --- ---
Daniel J. Castellini(8) 24,735 * --- ---
Paul F. (Frank) Gardner(9) 26,448 * --- ---
Craig C. Standen(10) 11,355 * --- ---
Alan M. Horton(11) 9,749 * --- ---
All directors and executive
officers as a group
(19 persons) (12) 33,019,560 54.7% 17,656,113 89.1%
* Shares owned represent less than
one percent of the outstanding shares
of such class of stock.
(1) The shares listed for Mr. Burleigh do not include 205,000
shares of Scripps Class A Common Stock underlying exercisable
options held by him.
(2) This person is a Trustee of the Scripps Trust and has the
power, together with the other Trustees, to vote and dispose of
the 32,610,000 shares of Scripps Class A Common Stock and the
16,040,000 shares of Scripps Common Voting Stock held by the
Scripps Trust. Messrs. Charles E. Scripps and Robert P. Scripps
have a life income interest in the Scripps Trust. Mr. Burlingame
disclaims any beneficial interest in the shares held by the
Scripps Trust.
(3) The shares listed for Mr. Huhn are held jointly with his
wife.
(4) The shares listed for Mr. Leser include 5,500 shares of
Scripps Class A Common Stock owned by his wife. Mr. Leser
disclaims any beneficial interest in these shares. The shares
listed do not include 321,100 shares of Scripps Class A Common
Stock underlying exercisable options held by Mr. Leser.
(5) The shares listed for Mr. Paumgarten include 2,000 shares of
Scripps Class A Common Stock held in trusts for the benefit of
Mr. Paumgarten's sons, and 850 shares of Scripps Class A Common
Stock owned by his wife. Mr. Paumgarten is the sole trustee of
the aforesaid trusts. Mr. Paumgarten disclaims beneficial
ownership of the shares held in such trusts and the shares owned
by his wife.
(6) The shares listed for Mr. Charles E. Scripps include 300
shares of Scripps Class A Common Stock owned by his wife. Mr.
Scripps disclaims any beneficial interest in these shares.
(7) The shares listed for Mr. Paul K. Scripps include 119,520
shares of Scripps Common Voting Stock and 400 shares of Scripps
Class A Common Stock held in various trusts for the benefit of
certain relatives of Paul K. Scripps and 100 shares of Scripps
Class A Common Stock owned by his wife. Mr. Scripps is a trustee
of the aforesaid trusts. Mr. Scripps disclaims beneficial
ownership of the shares held in such trusts and the shares owned
by his wife. The shares listed also include 1,445,453 shares of
Scripps Common Voting Stock and 188,497 shares of Scripps Class A
Common Stock held by five trusts of which Mr. Scripps is a
trustee. Mr. Scripps is the sole beneficiary of one of such
trusts, holding 349,018 shares of Scripps Common Voting Stock and
47,124 shares of Scripps Class A Common Stock. He disclaims
beneficial ownership of the shares held in the other four trusts.
(8) The shares listed for Mr. Castellini include 1,000 shares of
Scripps Class A Common Stock owned by his wife. Mr. Castellini
disclaims any beneficial interest in these shares. The shares
listed for Mr. Castellini do not include 134,000 shares of
Scripps Class A Common Stock underlying exercisable options held
by him.
(9) The shares listed for Mr. Gardner do not include 59,500
shares of Scripps Class A Common Stock underlying exercisable
options held by him.
(10) The shares listed for Mr. Standen include 180 shares of
Scripps Class A Common Stock held by Mr. Standen as custodian for
the benefit of his children. Mr. Standen disclaims any
beneficial interest in these shares. The shares listed for Mr.
Standen do not include 66,275 shares of Scripps Class A Common
Stock underlying exercisable options held by him.
(11) The shares listed for Mr. Horton include 100 shares which
are held jointly with his wife. The shares listed for Mr. Horton
do not include 57,550 shares of Class A Common Stock underlying
exercisable options held by him.
(12) The shares listed include the 32,610,000 shares of Scripps
Class A Common Stock and the 16,040,000 shares of Scripps Common
Voting Stock owned by the Scripps Trust.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Scripps Family Agreement. Scripps and certain persons and trusts are
parties to an agreement (the "Scripps Family Agreement") restricting
the transfer and governing the voting of shares of Scripps Common
Voting Stock that such persons and trusts may acquire or own at or
after the termination of the Scripps Trust. Such persons and trusts
(the "Signatories") consist of certain grandchildren of Robert Paine
Scripps who are beneficiaries of the Scripps Trust, the descendants of
John P. Scripps, and certain trusts of which descendants of John P.
Scripps are trustees and beneficiaries. Robert Paine Scripps and John
P. Scripps were sons of the founder of Scripps.
If the Scripps Trust were to have terminated as of January 31, 1996,
the Signatories would have held in the aggregate approximately 87% of
the outstanding shares of Scripps Common Voting Stock as of such date.
Once effective, the provisions restricting transfer of shares of
Scripps Common Voting Stock under the Scripps Family Agreement will
continue until twenty-one years after the death of the last survivor
of the descendants of Robert Paine Scripps and John P. Scripps alive
when the Scripps Trust terminates. The provisions of the Scripps
Family Agreement governing the voting of Scripps Common Voting Stock
will be effective for a ten year period after termination of the
Scripps Trust and may be renewed for additional ten year periods
pursuant to certain provisions set forth in the Agreement.
No Signatory will be able to dispose of any shares of Scripps Common
Voting Stock (except as otherwise summarized below) without first
giving other Signatories and Scripps the opportunity to purchase such
stock. Signatories will not be able to convert shares of Scripps
Common Voting Stock into shares of Scripps Class A Common Stock except
for a limited period of time after giving other Signatories and
Scripps the aforesaid opportunity to purchase and except in certain
other limited circumstances.
Signatories will be permitted to transfer shares of Scripps Common
Voting Stock to their lineal descendants or trusts for the benefit of
such descendants, or to any trust for the benefit of such a
descendant, or to any trust for the benefit of the spouse of such
descendant or any other person or entity. Descendants to whom such
shares are sold or transferred outright, and trustees of trusts into
which such shares are transferred, must become parties to the Scripps
Family Agreement or such shares shall be deemed to be offered for sale
pursuant to the Scripps Family Agreement. Signatories will also be
permitted to transfer shares of Scripps Common Voting Stock by
testamentary transfer to their spouses provided such shares are
converted to Scripps Class A Common Stock and to pledge such shares as
collateral security provided that the pledgee agrees to be bound by
the terms of the Scripps Family Agreement. If title to any such
shares subject to any trust is transferred to anyone other than a
descendant of Robert Paine Scripps or John P. Scripps, or if a person
who is a descendant of Robert Paine Scripps or John P. Scripps
acquires outright any such shares held in trust but is not or does not
become a party to the Scripps Family Agreement, such shares shall be
deemed to be offered for sale pursuant to the Scripps Family
Agreement. Any valid transfer of shares of Scripps Common Voting
Stock made by Signatories without compliance with the Scripps Family
Agreement will result in automatic conversion of such shares to Class
A Common Shares.
The Scripps Family Agreement provides that Scripps will call a meeting
of the Signatories prior to each annual or special meeting of the
stockholders of Scripps held after termination of the Scripps Trust
(each such meeting hereinafter referred to as a "Required Meeting").
At each Required Meeting, Scripps will submit for decision by the
Signatories each matter, including election of directors, that Scripps
will submit to its stockholders at the annual meeting or special
meeting with respect to which the Required Meeting has been called.
Each Signatory will be entitled, either in person or by proxy, to cast
one vote for each share of Scripps Common Voting Stock owned of record
or beneficially by him on each matter brought before the meeting.
Each Signatory will be bound by the decision reached with respect to
each matter brought before such meeting, and, at the related meeting
of the stockholders of Scripps, will vote his shares of Scripps Common
Voting Stock in accordance with decisions reached at the meeting of
the Signatories.
Following the Spin-Off, the Scripps Family Agreement will apply to the
New Scripps Common Voting Shares and the New Scripps Class A Common
Shares held by the Signatories after termination of the Scripps Trust.
John P. Scripps Newspapers. In connection with the merger in 1986 of
the John P. Scripps Newspaper Group ("JPSN") into a wholly owned
subsidiary of Scripps (the "JPSN Merger"), Scripps and the Scripps
Trust entered into certain agreements discussed below. All of these
agreements will apply to New Scripps, the New Scripps Class A Common
Shares and the New Scripps Common Voting Shares following the Spin-
Off.
JPSN Board Representation Agreement. The Scripps Trust and John P.
Scripps entered into a Board Representation Agreement dated March 14,
1986 in connection with the JPSN Merger. Under this agreement, the
surviving adult children of Mr. Scripps who are stockholders of
Scripps have the right to designate one person to serve on the Scripps
Board so long as they continue to own in the aggregate 25% of the sum
of (i) the shares issued to them in the JPSN Merger and (ii) the
shares received by them from John P. Scripps' estate. In this regard,
the Scripps Trust has agreed to vote its Scripps Common Voting Stock
in favor of the person designated by John P. Scripps's children.
Pursuant to this agreement, Paul K. Scripps currently serves on
Scripps Board. The Board Representation Agreement terminates upon the
earlier of the termination of the Scripps Trust or the completion of a
public offering by Scripps of its Common Voting Stock.
Stockholder Agreement. The former stockholders of the John P. Scripps
Newspaper Group, including John P. Scripps and Paul K. Scripps,
entered into a Stockholder Agreement with Scripps in connection with
the JPSN Merger. This agreement restricts to certain transferees the
transfer of Scripps Common Voting Stock received by such stockholders
pursuant to the JPSN Merger. These restrictions on transfer will
terminate on the earlier of the termination of the Scripps Trust or
completion of a public offering of Scripps Common Voting Stock. Under
the agreement, if a stockholder has received a written offer to
purchase 25% or more of his shares of Scripps Common Voting Stock,
Scripps has a "right of first refusal" to purchase such shares on the
same terms as the offer. On the death of any of these stockholders,
Scripps is obligated to purchase from the stockholder's estate a
sufficient number of shares of the Scripps Common Stock to pay federal
and state estate taxes attributable to all shares included in such
estate. This obligation expires in 2006. Under certain other
circumstances, such as bankruptcy or insolvency of a stockholder,
Scripps has an option to buy all shares of Scripps Common Stock owned
by such stockholder. Under the agreement, stockholders owning 25% or
more of the outstanding shares of Scripps Common Voting Stock issued
pursuant to the JPSN Merger may require Scripps to register shares of
Scripps Common Voting Stock (subject to the right of first refusal
mentioned above) under the Securities Act for sale at the
stockholders' expense in a public offering. In addition, the former
stockholders of the John P. Scripps Newspaper Group will be entitled,
subject to certain conditions, to include shares of Scripps Common
Voting Stock (subject to the right of first refusal) that they own in
any registered public offering of shares of the same class by Scripps.
The registration rights expire three years from the date of a
registered public offering of shares of Scripps Common Voting Stock.
Other Transactions. Mr. Charles E. Scripps and Mr. Robert P. Scripps,
directors of Scripps and New Scripps, are general partners in
Jefferson Building Partnership (the "Jefferson Partnership"), which
was formed in 1984. The Albuquerque Publishing Company, a subsidiary
of Scripps that is a 50% owned partnership that operates The
Albuquerque Tribune under a joint operating agreement, leases the
facilities for The Albuquerque Tribune from a partnership controlled
in part by the Jefferson Partnership. This lease terminates in 2004.
Total rent under the lease for 1995 was approximately $1,851,790. The
Albuquerque Publishing Company has an option to purchase the property
that is exercisable until 2034. The purchase price will be equal to
7.7 times the basis rent for the lease year in which the property is
purchased. The parties to the Albuquerque joint operating agreement
lease the land on which the Albuquerque facilities are situated to the
Jefferson Partnership under a lease terminating in 2034 and providing
for rent of $150,000 per year, subject to certain adjustments for
inflation. Lease income in 1995 was $168,000. The Jefferson
Partnership has subleased the land to the Albuquerque Publishing
Company as part of the facilities lease arrangement described above.
Mr. Charles E. Scripps is a Trustee of the Scripps Trust. Mr. Scripps
is expected to continue to serve as a Trustee of the Scripps Trust in
1996. As a Trustee, Mr. Scripps shares the power, together with the
other two Trustees, to vote and dispose of the 32,610,000 shares of
Scripps Class A Common Stock and 16,040,000 shares of Scripps Common
Voting Stock held by the Scripps Trust. Following the Spin-Off, the
Scripps Trust will hold 32,610,000 New Scripps Class A Common Shares
and 16,040,000 New Scripps Common Voting Shares. Mr. Scripps has a
life income interest in the Scripps Trust.
Mr. John H. Burlingame, a director of Scripps and a Trustee of the
Scripps Trust, is the Executive Partner of Baker & Hostetler, which is
general counsel to Scripps and the Scripps Trust. Baker & Hostetler
performed legal services for Scripps and the Scripps Trust in 1995 and
is expected to perform such services in 1996. In 1995, Scripps and
the Scripps Trust paid approximately $7,000,000 in legal fees to Baker
& Hostetler.
Mr. Nicholas B. Paumgarten, a director of Scripps, is a Managing
Partner of J.P. Morgan & Co. Incorporated ("J.P. Morgan"). Morgan
Guaranty Trust Company of New York (an affiliate of J.P. Morgan) is a
lender to Scripps under a revolving credit agreement. Another
affiliate of J.P. Morgan, J.P. Morgan Securities Inc., has performed
investment banking services for Scripps in the past and may perform
such services in the future.
Mr. Lawrence A. Leser, Chairman and Chief Executive Officer, entered
into a loan agreement with Scripps Howard, Inc., a subsidiary of
Scripps, in January 1996 pursuant to the Employee Stock Purchase Loan
Program. This Plan is designed to assist key employees in exercising
stock options. Mr. Leser borrowed $450,000 at an interest rate of
6.02%, which was the applicable Federal rate in effect under Section
1274(d) of the Internal Revenue Code of 1986, as of the day on which
the loan was made. In accordance with the terms of the loan program,
Mr. Leser agreed to repay the loan within ten years.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Financial Statements and Supplementary Schedules
(a) The consolidated financial statements of Scripps are filed
as part of this Form 10-K. See Index to Consolidated Financial
Statement Information at page F-1.
The report of Deloitte & Touche LLP, Independent Auditors,
dated January 22, 1996 is filed as part of this Form 10-K. See
Index to Consolidated Financial Statement Information at page F-1.
(b) Required consolidated supplemental schedules of Scripps are
filed as part of this Form 10-K. See Index to Consolidated
Financial Statement Schedules at page S-1.
Exhibits
The information required by this item appears at page E-1 of this
Form 10-K.
Reports on Form 8-K
A Current Report on Form 8-K reporting the proposed Transactions
and to restate Scripps' financial statements to report cable
television operations as discontinued operations was filed on
December 29, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934 the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereby duly authorized,
on March 28, 1996.
THE E.W. SCRIPPS COMPANY
By /s/ Lawrence A. Leser
Lawrence A. Leser
Chairman of the Board 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 in the capacities indicated, on March 28, 1996.
Signature Title
/s/Lawrence A. Leser Chairman of the Board and Chief Executive
Lawrence A. Leser Officer (Principal Executive Officer)
/s/Daniel J. Castellini Senior Vice President/Finance and Administration
Daniel J. Castellini (Principal Financial and Accounting Officer)
/s/Charles E. Scripps Director
Charles E. Scripps
/s/William R. Burleigh President, Chief Operating Officer and Director
William R. Burleigh
/s/John H. Burlingame Director
John H. Burlingame
/s/Daniel J. Meyer Director
Daniel J. Meyer
/s/Nicholas B. Paumgarten Director
Nicholas B. Paumgarten
/s/Paul K. Scripps Director
Paul K. Scripps
/s/Robert P. Scrips Director
Robert P. Scripps
/s/David R. Huhn Director
David R. Huhn
THE E. W. SCRIPPS COMPANY
INDEX TO CONSOLIDATED FINANCIAL STATEMENT INFORMATION
Item No. Page
PART I
1. Selected Financial Data F-2
2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Consolidated Results of Continuing Operations F-4
Newspapers F-9
Broadcast Television F-10
Entertainment F-11
Liquidity and Capital Resources F-12
3. Independent Auditors' Report F-13
4. Consolidated Balance Sheets F-14
5. Consolidated Statements of Income F-16
6. Consolidated Statements of Cash Flows F-17
7 Consolidated Statements of Stockholders' Equity F-18
8. Notes to Consolidated Financial Statements F-19
SELECTED FINANCIAL DATA
( in millions, except share data )
1995 (1) 1994 (1) 1993 (1) 1992 (1) 1991 (1)
Summary of Operations
Operating Revenues:
Newspapers $ 640.1 $ 599.2 $ 548.2 $ 504.8 $ 485.3
Broadcast television 295.2 288.2 254.9 247.2 216.4
Entertainment 94.8 73.5 84.7 87.2 91.6
Total 1,030.1 960.9 887.9 839.3 793.3
Divested operating units (2) 0.3 3.7 57.4 178.1 281.0
Total operating revenues $ 1,030.4 $ 964.6 $ 945.2 $ 1,017.4 $ 1,074.3
Operating Income (Loss):
Newspapers $ 125.6 $ 119.8 $ 76.7 $ 88.7 $ 70.8
Broadcast television 86.9 94.5 69.1 61.6 49.6
Entertainment (14.5) (7.1) 3.2 7.7 9.6
Corporate (16.8) (15.5) (13.6) (15.0) (12.7)
Total 181.3 191.7 135.4 143.1 117.3
Divested operating units (2) (0.1) (0.2) 7.5 (14.6) 33.2
Unusual items (3) (7.9) (0.9)
Total operating income 181.2 183.6 142.0 128.5 150.4
Interest expense (11.2) (16.3) (26.4) (33.8) (38.4)
Net gains on divested operating units (1) 91.9 78.0
Gain on sale of Garfield copyrights (4) 31.6
Other unusual credits (charges) (5) (16.9) 2.5 (3.5)
Miscellaneous, net 1.5 (0.9) (2.4) (3.6) (0.5)
Income taxes (6) (74.5) (80.4) (86.4) (65.1) (48.4)
Minority interests (3.3) (7.8) (16.2) (9.1) (7.2)
Income from continuing operations $ 93.6 $ 92.8 $ 104.9 $ 91.4 $ 55.9
Share Data
Income from continuing operations (excluding
unusual items and net gains) $1.17 $1.25 $ .72 $ .80 $.75
Unusual items and net gains (losses) (1,3,4,5,6) (.04) .68 .42
Income from continuing operations $1.17 $1.22 $1.41 $1.22 $.75
Dividends $ .50 $ .44 $ .44 $ .40 $ .40
Other Financial Data
EBITDA(8) - excluding divested operating units(2) and unusual items(3):
Newspapers $ 162.1 $ 154.9 $ 114.1 $ 122.8 $ 100.8
Broadcast television 113.0 115.8 89.5 81.6 65.9
Entertainment (11.3) (5.3) 4.2 8.5 10.4
Corporate (15.9) (14.8) (13.0) (13.4) (11.7)
Total 247.9 250.6 194.7 199.6 165.5
Depreciation and amortization of intangible assets 66.6 58.9 60.8 64.3 56.2
Net cash provided by continuing operations 113.8 170.2 142.0 127.0 135.9
Investing activity :
Capital expenditures (57.3) (54.0) (36.8) (86.9) (114.2)
Other (investing)/divesting activity, net (30.9) 18.9 105.4 21.9 (127.9)
Total assets 1,349.7 1,286.7 1,255.1 1,286.6 1,296.3
Long-term debt (including current portion) (7) 80.9 110.4 247.9 441.9 491.8
Stockholders' equity (7) 1,191.4 1,083.5 859.6 733.1 676.6
Long-term debt % of total capitalization (7) 6% 9% 22% 38% 42%
Note: Certain amounts may not foot as each is rounded independently.
Notes to Selected Financial Data
The income statement and cash flow data for the five years ended
December 31, 1995 and the balance sheet data as of the same dates have
been derived from the audited consolidated financial statements of
Scripps. The data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and notes
thereto included elsewhere herein. Unless otherwise noted, the data
excludes the cable television segment which is reported as a
discontinued business operation. Scripps will retain no proceeds
from the divestiture of the cable television business.
(1) In the periods presented Scripps acquired and divested the following:
Acquisitions
1994 - The remaining 13.9% minority interest in Scripps Howard
Broadcasting Company ("SHB") in exchange for 4,952,659 shares
of Scripps Class A Common stock. Cinetel Productions (an
independent producer of programs for cable television).
1993 - Remaining 2.7% minority interest in the Knoxville News-
Sentinel. 5.7% of the outstanding shares of SHB.
1992 - Three daily newspapers in California (including The
Monterey County Herald in connection with the sale of The
Pittsburgh Press).
1991 - Baltimore television station WMAR.
Divestitures
1995 - Watsonville, California, daily newspaper. No gain or loss
was realized as proceeds equaled the book value of net assets
sold.
1993 - Book publishing; newspapers in Tulare, California, and San
Juan; Memphis television station; radio stations. The
divestitures resulted in net pre-tax gains of $91.9 million,
increasing income from continuing operations $46.8 million,
$.63 per share.
1992 - The Pittsburgh Press; TV Data; certain other investments.
The divestitures resulted in net pre-tax gains of $78.0
million, increasing income from continuing operations $45.6
million, $.61 per share.
1991 - George R. Hall Company (contracting firm specializing in
the installation, relocation, and rebuilding of newspaper presses).
No gain or loss was realized as the proceeds equalled the book value
of net assets sold.
(2) Non-cable television operating units sold prior to December 31, 1995.
(3) Total operating income included the following:
1994 - $7.9 million loss on program rights expected be sold as a
result of changes in television network affiliations. The loss
reduced income from continuing operations $4.9 million, $.07
per share.
1993 - Change in estimate of disputed music license fees
increased operating income $4.3 million; gain on the sale of
certain publishing equipment increased operating income $1.1
million; a charge for workforce reductions at 1) Scripps'
Denver newspaper and 2) the newspaper feature distribution and
the licensing operations of United Media decreased operating
income $6.3 million. The planned workforce reductions were
fully implemented in 1994. These items totaled $0.9 million
and reduced income from continuing operations $0.6 million,
$.01 per share.
1992 - Operating losses of $32.7 million during the Pittsburgh
Press strike (reported in divested operating units) reduced
income from continuing operations $20.2 million, $.27 per
share.
(4) In 1994 Scripps sold its worldwide Garfield and U.S. Acres
copyrights. The sale resulted in a pre-tax gain of $31.6 million,
$17.4 million after-tax, $.23 per share.
(5) Other unusual credits (charges) included the following:
1994 - An estimated $2.8 million loss on sale of real estate
associated with changes in television network affiliations;
$8.0 million special contribution to a charitable foundation;
and $6.1 million accrual for lawsuits associated with a
divested operating unit. These items totaled $16.9 million and
reduced income from continuing operations $9.8 million, $.13
per share.
1993 - A $2.5 million fee received in connection with the change
in ownership of the Ogden, Utah, newspaper. Income from
continuing operations was increased $1.6 million, $.02 per
share.
1992 - Write-downs of real estate and investments totaling $3.5
million. Income from continuing operations was reduced $2.3
million, $.03 per share.
(6) The provision for income taxes is affected by the following
unusual items:
1994 - Change in estimated tax liability for prior years
increased the tax provision, reducing income from continuing
operations $5.3 million, $.07 per share.
1993 - Change in estimated tax liability for prior years
decreased the tax provision, increasing income from continuing
operations $5.4 million, $.07 per share; effect of the increase
in the federal income tax rate to 35% from 34% on the beginning
of the year deferred tax liabilities increased the tax
provision, reducing income from continuing operations $2.3
million, $.03 per share.
1992 - Change in estimated tax liability for prior years
decreased the tax provision, increasing income from continuing
operations $8.4 million, $.11 per share.
(7) Includes effect of discontinued cable television operations.
(8) Earnings before interest, income taxes, depreciation, and
amortization ("EBITDA") is included in the discussion of segment
results because:
Changes in depreciation and amortization are often unrelated to
current performance. Management believes the year-over-year
change in EBITDA is a more useful measure of year-over-year
performance than the change in operating income because, combined
with information on capital spending plans, it is a more reliable
indicator of results that may be expected in future periods.
However, management's belief that EBITDA is a more useful measure
of year-over-year performance is not shared by the accounting
profession.
Banks and other lenders use EBITDA to determine Scripps'
borrowing capacity.
Financial analysts use EBITDA to value communications media
companies.
Acquisitions of communications media businesses are based on
multiples of EBITDA.
EBITDA should not, however, be construed as an alternative measure
of the amount of Scripps' income or cash flows from operating
activities as EBITDA excludes significant costs of doing business.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
On October 28, 1995 The E.W. Scripps Company ("Scripps") and Comcast
Corporation ("Comcast") reached an agreement pursuant to which Scripps
will contribute all of its non-cable television assets to Scripps
Howard, Inc. ("SHI" - a wholly-owned subsidiary of Scripps and the
direct or indirect parent of all of Scripps' operations) and SHI's
cable television system subsidiaries ("Scripps Cable") will be
transferred to and held directly by Scripps. Scripps Cable will be
acquired by Comcast through a tax-free merger (the "Merger") with
Scripps. The remaining SHI business will continue as "New Scripps",
which will be distributed in a tax-free "spin-off" to Scripps
shareholders (the "Spin-Off") prior to the Merger and thereafter
renamed The E.W. Scripps Company. The Merger and the Spin-Off are
collectively referred to as the "Transactions."
The closing date of the Transactions is expected to be in the third
quarter of 1996, subject to regulatory approvals and certain other
conditions. Controlling shareholders in Scripps and Comcast have
agreed to vote in favor of the Merger, and as a result completion of
the Transactions is assured so long as such conditions are satisfied
and such regulatory approvals (including approval of the Spin-Off as a
tax-free transaction by the Internal Revenue Service and approval of
the Merger by the Federal Communications Commission and certain
franchise authorities) are received. While there can be no assurances
regarding such approvals, management believes all such approvals will
be obtained. Additional information related to Scripps Cable may be
found in Amendment Number 2 (filed on March 28, 1996) to Scripps
Current Report on Form 8-K filed on December 29, 1995.
Because Scripps Cable represents an entire business segment that will
be divested, its results are reported as "discontinued operations" in
Scripps' consolidated financial statements. Results of the remaining
business segments, including results for divested operating units
within these segments through their dates of sale, are reported as
"continuing operations." Scripps Cable is excluded from Management's
Discussion and Analysis of Financial Condition and Results of
Operations because management believes its results are not relevant to
understanding Scripps' continuing operations.
Consolidated results of continuing operations were as follows:
( in thousands, except per share data )
For the years ended December 31,
1995 Change 1994 Change 1993
Operating revenues:
Newspapers $ 640,104 6.8 % $ 599,222 9.3 % $ 548,180
Broadcast television 295,228 2.4 % 288,184 13.0 % 254,944
Entertainment 94,752 29.0 % 73,473 (13.3)% 84,741
Total 1,030,084 7.2 % 960,879 8.2 % 887,865
Divested operating units 294 3,716 57,350
Total operating revenues $ 1,030,378 6.8 % $ 964,595 2.1 % $ 945,215
Operating income:
Newspapers $ 125,614 4.9 % $ 119,759 56.1 % $ 76,701
Broadcast television 86,927 (8.1)% 94,540 36.9 % 69,071
Entertainment (14,483) (7,083) 3,239
Corporate (16,772) (8.4)% (15,471) (13.5)% (13,625)
Total 181,286 (5.5)% 191,745 41.6 % 135,386
Divested operating units (130) (220) 7,476
Unusual items (7,915) (900)
Total operating income 181,156 (1.3)% 183,610 29.3 % 141,962
Interest expense (11,223) (16,274) (26,397)
Net gains and unusual items 14,651 94,374
Miscellaneous, net 1,535 (917) (2,413)
Income taxes (74,532) (80,441) (86,387)
Minority interest (3,347) (7,833) (16,228)
Income from continuing operations $ 93,589 0.9 % $ 92,796 (11.5)% $ 104,911
Per share of common stock:
Income from continuing operations $ 1.17 (4.1)% $ 1.22 (13.5)% $ 1.41
Note Ref.
(i) Garfield gain ( .23)
(ii) Net gains on sales of divested operating units ( .63)
(iii) TV programs/property write-downs .09
(iv) Special charitable contribution .06
(v) Change in tax liability .07 ( .07)
(vi) Lawsuits re: divested operating units .05
(vii) ASCAP adjustment and other items .02
Adjusted income from continuing operations
(excluding unusual items and net gains) $ 1.17 (6.4)% $ 1.25 73.6 % $ .72
Note: The sum of the reported income per share from continuing
operations and the per share effect of unusual items and net
gains may not equal the adjusted income per share from
continuing operations as each is computed independently based
on the weighted average shares outstanding for the respective periods.
( in thousands )
For the years ended December 31,
1995 Change 1994 Change 1993
Other Financial and Statistical Data - excluding divested
operating units and unusual items
Total advertising revenues $ 765,890 6.5 % $ 718,864 11.8 % $ 643,269
Advertising revenues as a percentage of total revenues 74.4 % 74.8 % 72.5 %
EBITDA:
Newspapers $ 162,084 4.6 % $ 154,917 35.8 % $ 114,061
Broadcast television 112,956 (2.5)% 115,829 29.5 % 89,477
Entertainment (11,279) (5,344) 4,156
Corporate (15,888) (7.2)% (14,820) (14.0)% (13,000)
Total $ 247,873 (1.1)% $ 250,582 28.7 % $ 194,694
Effective income tax rate 43.5 % 44.4 % 41.6 %
Weighted average shares outstanding 79,956 4.9 % 76,246 2.1 % 74,650
Total capital expenditures $ 57,300 6.2 % $ 53,951 49.6 % $ 36,073
Earnings before interest, income taxes, depreciation, and amortization
("EBITDA") is included in the discussion of segment results because:
Changes in depreciation and amortization are often unrelated to
current performance. Management believes the year-over-year
change in EBITDA is a more useful measure of year-over-year
performance than the change in operating income because, combined
with information on capital spending plans, it is a more reliable
indicator of results that may be expected in future periods.
However, management's belief that EBITDA is a more useful measure
of year-over-year performance is not shared by the accounting
profession.
Banks and other lenders use EBITDA to determine Scripps'
borrowing capacity.
Financial analysts use EBITDA to value communications media
companies.
Acquisitions of communications media businesses are based on
multiples of EBITDA.
EBITDA should not, however, be construed as an alternative measure of
the amount of Scripps' income or cash flows from operating activities
as EBITDA excludes significant costs of doing business.
Operating losses for HGTV totaled $17,400,000, $10,700,000 after-tax,
$.13 per share in 1995 and $7,700,000, $4,500,000 after-tax, $.06 per
share in 1994.
In 1994 Scripps acquired the remaining 13.9% minority interest in
Scripps Howard Broadcasting Company ("SHB") in exchange for 4,952,659
shares of Scripps Class A Common stock. In 1993 Scripps purchased
5.7% of the outstanding shares of SHB and the remaining 2.7% minority
interest in the Knoxville News-Sentinel.
The average balance of outstanding debt decreased $69,900,000 in 1995,
$202,000,000 in 1994 and $101,000,000 in 1993.
The effective income tax rate in 1994 and 1993 was affected by the
changes in estimate of the tax liability for prior years described in
(v) below. The effective income tax rate in 1996 is expected to be
approximately 43%.
Net gains and unusual items affecting the comparability of Scripps'
reported results of operations include the following:
(i) In 1994 Scripps sold its worldwide Garfield and U.S. Acres
copyrights. The sale resulted in a pre-tax gain of $31,600,000,
$17,400,000 after-tax, $.23 per share.
(ii) Scripps divested the following operations:
1995 - Newspaper in Watsonville, California (no gain or loss was
realized as proceeds equaled the book value of the net assets
sold).
1993 - Book publishing; newspapers in Tulare, California, and San
Juan; Memphis television station; radio stations.
The business units referred to above, and any related gains on
the sales of the business units, are hereinafter referred to as
the "Divested Operating Units."
The following items related to Divested Operating Units affected
the comparability of Scripps' reported results of operations:
( in thousands, except per share data )
1993
Net gains recognized (before minority
interests and income taxes) $ 91,900
Net gains recognized (after minority
interests and income taxes) 46,800
Net gains recognized per share (after minority
interests and income taxes) $ .63
(iii) In 1994 Scripps' three television stations that had
been Fox affiliates changed their network affiliation. In
connection with the change certain program rights were expected
to be sold at an estimated loss of $7,900,000. Two of the
stations are constructing new buildings to accommodate expanded
local news programming, and currently owned real estate will be
sold at an estimated loss of $2,800,000. These estimated losses
were recorded in 1994, reducing income from continuing operations
$6,600,000, $.09 per share.
(iv) In 1994 Scripps made a special contribution to a charitable
foundation that reduced pre-tax income by $8,000,000 and income
from continuing operations by $4,500,000, $.06 per share.
(v) In 1993 management changed its estimate of the tax basis and
lives of certain intangible assets. The resulting change in the
estimated tax liability for prior years increased income from
continuing operations in 1993 by $5,400,000, $.07 per share. In
1994 the Internal Revenue Service proposed adjustments related to
those intangible assets. Based upon the proposed adjustments
management again changed its estimate of the tax liability for
prior years, decreasing income from continuing operations in 1994
by $5,300,000, $.07 per share.
(vi) In 1994 Scripps accrued an estimate of the ultimate costs of
certain lawsuits associated with a Divested Operating Unit. The
accrual reduced income from continuing operations by $3,600,000,
$.05 per share.
(vii) Other unusual items in 1993 include the following:
Management changed the estimate of the additional amount of
music license fees Scripps would owe when a dispute between the
television industry and the American Society of Composers,
Authors and Publishers was resolved. The adjustment increased
operating income $4,300,000 and income from continuing operations
$2,300,000, $.03 per share.
Scripps realized a $1,100,000 gain on the sale of certain
publishing equipment and received a $2,500,000 fee in connection
with the change in ownership of the Ogden, Utah, newspaper,
increasing income from continuing operations $2,300,000, $.03 per
share.
Scripps recorded a $6,300,000 charge for workforce reductions 1)
in the circulation department of its Denver newspaper and 2) the
newspaper feature distribution and licensing operations of United
Media. The charge reduced income from continuing operations
$3,600,000, $.05 per share. The planned workforce reductions
were fully implemented in 1994.
The federal income tax rate was increased to 35% from 34%. The
effect on Scripps' beginning of the year deferred tax liabilities
reduced income from continuing operations $2,300,000, $.03 per
share.
Operating results, excluding the Divested Operating Units and unusual
items described above, for each of Scripps' business segments are
presented on the following pages. The effects of the foregoing unusual
items and the Divested Operating Units are excluded from the segment
operating results because management believes they are not relevant to
understanding Scripps' continuing operations.
NEWSPAPERS - Operating results for the newspaper segment, excluding
Divested Operating Units and unusual items, were as follows:
( in thousands )
For the years ended December 31,
1995 Change 1994 Change 1993
Operating revenues:
Local $ 197,235 3.7 % $ 190,147 7.4 % $ 177,028
Classified 179,694 11.0 % 161,835 14.0 % 141,994
National 16,354 4.9 % 15,595 30.0 % 11,999
Preprint 68,645 8.8 % 63,103 10.1 % 57,304
Newspaper advertising 461,928 7.3 % 430,680 10.9 % 388,325
Circulation 125,304 7.9 % 116,117 3.3 % 112,393
Joint operating agency distributions 43,863 (0.7)% 44,151 14.2 % 38,647
Other 9,009 8.9 % 8,274 (6.1)% 8,815
Total operating revenues 640,104 6.8 % 599,222 9.3 % 548,180
Operating expenses:
Employee compensation and benefits 219,811 0.9 % 217,806 (1.1)% 220,176
Newsprint and ink 123,554 31.7 % 93,815 9.5 % 85,671
Other 134,655 1.5 % 132,684 3.4 % 128,272
Depreciation and amortization 36,470 3.7 % 35,158 (5.9)% 37,360
Total operating expenses 514,490 7.3 % 479,463 1.7 % 471,479
Operating income $ 125,614 4.9 % $ 119,759 56.1 % $ 76,701
Other Financial and Statistical Data:
Earnings before interest, income taxes,
depreciation, and amortization ("EBITDA") $ 162,084 4.6 % $ 154,917 35.8 % $ 114,061
Percent of operating revenues:
Operating income 19.6 % 20.0 % 14.0 %
EBITDA 25.3 % 25.9 % 20.8 %
Capital expenditures $ 22,184 4.5 % $ 21,225 (12.5)% $ 24,250
Advertising inches:
Local 6,810 (1.9)% 6,941 4.9 % 6,618
Classified 6,704 1.9 % 6,576 8.2 % 6,080
National 338 6.0 % 319 12.7 % 283
Total full run ROP 13,852 0.1 % 13,836 6.6 % 12,981
Advertising revenue in 1995 increased primarily due to higher
advertising rates. In 1994 increased advertising volume and higher
rates led to increases in advertising revenues at all of Scripps'
newspapers. The 1995 increase in circulation revenues is due to price
increases at certain of Scripps' newspapers.
Because the supply of newsprint exceeded demand, its price generally
declined from 1988 through August 1992. Since the first quarter of
1994 prices have increased sharply. Newsprint consumption decreased
6% in 1995, however the average price of newsprint increased more than
40%. While the rate of increase in the price of newsprint is expected
to slow, the effects of anticipated increases in the price of
newsprint in 1996 and price increases which became effective in the
second half of 1995 are expected to result in a 20% increase in
newsprint and ink expense in 1996.
Capital expenditures in 1996 are expected to be approximately
$36,000,000 and depreciation and amortization is expected to increase
approximately 6%. See "Liquidity and Capital Resources".
BROADCAST TELEVISION - Operating results for the broadcast television
segment, excluding Divested Operating Units and unusual items, were as
follows:
( in thousands )
For the years ended December 31,
1995 Change 1994 Change 1993
Operating revenues:
Local $ 150,489 5.6 % $ 142,491 9.1 % $ 130,603
National 125,476 2.3 % 122,668 7.1 % 114,558
Political 3,207 14,291 1,344
Other 16,056 83.8 % 8,734 3.5 % 8,439
Total operating revenues 295,228 2.4 % 288,184 13.0 % 254,944
Operating expenses:
Employee compensation and benefits 89,570 17.0 % 76,535 9.0 % 70,213
Program rights 41,930 (14.0)% 48,759 (9.1)% 53,621
Other 50,772 7.9 % 47,061 13.0 % 41,633
Depreciation and amortization 26,029 22.3 % 21,289 4.3 % 20,406
Total operating expenses 208,301 7.6 % 193,644 4.2 % 185,873
Operating income $ 86,927 (8.1)% $ 94,540 36.9 % $ 69,071
Other Financial and Statistical Data:
Earnings before interest, income taxes,
depreciation, and amortization ("EBITDA") $ 112,956 (2.5)% $ 115,829 29.5 % $ 89,477
Percent of operating revenues:
Operating income 29.4 % 32.8 % 27.1 %
EBITDA 38.3 % 40.2 % 35.1 %
Capital expenditures $ 23,630 0.4 % $ 23,532 154.9 % $ 9,234
In 1995 Scripps agreed to change its Cincinnati television station's
network affiliation to ABC from CBS in 1996. Also in 1995 Scripps
changed its Baltimore station's affiliation to ABC from NBC. In 1994
Scripps negotiated 10-year affiliation agreements with ABC to replace
Fox affiliations at its Phoenix and Tampa stations and changed its
Kansas City station's affiliation from Fox to NBC.
Demand for local and national advertising moderated at Scripps'
television stations in 1995. In 1994 increased demand for advertising
time led to increased EBITDA at all the television stations.
The increase in other revenue in 1995 is primarily due to the new and
extended affiliation agreements with ABC. The increase in employee
costs, other operating expenses, depreciation and amortization, and
capital expenditures in 1995 and in 1994 is due primarily to Scripps'
expanded schedules of local news programs at the former Fox
affiliates. Depreciation and amortization also increased in 1995 as a
result of the acquisition of the remaining minority interest in SHB.
The decrease in program rights expense is due to the availability of
more network programming at the former Fox affiliates. Program rights
also decreased in 1994 because the Baltimore station no longer carried
Orioles baseball games.
Capital expenditures in 1996 are expected to be approximately
$32,000,000. See "Liquidity and Capital Resources". Depreciation and
amortization in 1996 is expected to decrease slightly as certain
intangible assets acquired in the 1991 purchase of the Baltimore
station become fully amortized.
ENTERTAINMENT - Operating results for the entertainment segment,
excluding unusual items, were as follows:
( in thousands )
For the years ended December 31,
1995 Change 1994 Change 1993
Operating revenues:
Licensing $ 49,366 0.3 % $ 49,236 (10.6)% $ 55,083
Newspaper feature distribution 18,915 5.1 % 17,998 (4.3)% 18,814
Film and television production 13,789 5,725 10,757
Other 12,682 514 87
Total operating revenues 94,752 29.0 % 73,473 (13.3)% 84,741
Operating expenses:
Employee compensation and benefits 20,071 43.0 % 14,040 1.4 % 13,849
Artists' royalties 33,708 (2.8)% 34,668 (5.3)% 36,592
Program rights and production costs 16,428 3,408 (57.4)% 7,993
Other 35,824 34.2 % 26,701 20.5 % 22,151
Depreciation and amortization 3,204 84.2 % 1,739 89.6 % 917
Total operating expenses 109,235 35.6 % 80,556 (1.2)% 81,502
Operating income (loss) $ (14,483) $ (7,083) $ 3,239
Other Financial and Statistical Data:
Earnings before interest,
income taxes, depreciation,
and amortization ("EBITDA") $ (11,279) $ (5,344) $ 4,156
Percent of operating revenues:
Operating income (loss) (15.3)% (9.6)% 3.8 %
EBITDA (11.9)% (7.3)% 4.9 %
Capital expenditures $ 9,574 19.8 % $ 7,989 $ 981
Other revenue primarily includes subscriber fees and advertising for
HGTV, a 24-hour cable television network launched on December 30,
1994. Scripps expects to invest an additional $35,000,000 in HGTV in
the next two years, including capital expenditures and pre-tax
operating losses. See "Liquidity and Capital Resources". Operating
losses for HGTV totaled $17,400,000 in 1995 and $7,700,000 in 1994.
Scripps acquired Cinetel Productions in Knoxville, Tennessee, on March
31, 1994 for $17.0 million in cash. Cinetel is one of the largest
independent producers of programs for cable television. Cinetel's
results of operations are included in the Entertainment segment from
the date of acquisition. The acquisition increased 1994 operating
revenues and EBITDA by 6.4% and 19%, respectively. SHP began
operations in 1993 and sold its first two programs in 1995.
In 1994 Scripps completed the sale of its Garfield and U.S. Acres
copyrights, resulting in the decrease in licensing and syndication
revenues. Film and television revenues prior to 1994 primarily relate
to Garfield. Excluding Garfield, U.S. licensing revenues increased
12% in 1995 and 7.6% in 1994. International licensing revenues
increased 14% in 1995 and were flat in 1994.
United Media distributes news columns, comics, and features, and
licenses copyrights to "Peanuts" and other character properties on a
worldwide basis. The Japanese market provides more than two-thirds of
United Media's (and Scripps') international revenues and approximately
45% of total licensing revenue. The impact of changes in the value of
the U.S. dollar in foreign exchange markets does not have a
significant effect on the recorded value of Scripps foreign currency
assets and liabilities, which are primarily related to uncollected
licensing royalties and payments due to creators of the properties.
However, comparison of year-over-year licensing revenues can be
significantly affected by changes in the exchange rate for the
Japanese yen. Japanese licensing revenues in local currency decreased
8% in 1995, 8% in 1994 and 12% in 1993. The change in the exchange
rate for the Japanese yen increased licensing revenues $1,700,000 in
1995, $1,600,000 in 1994 and $2,700,000 in 1993. The effect on
licensing revenues of changes in the exchange rate for other foreign
currencies is not significant.
From time-to-time Scripps uses foreign currency forward and option
contracts to hedge foreign currency revenues denominated in Japanese
yen. The purpose of the contracts is to reduce earnings volatility.
Scripps exposure to loss on the contracts is not material.
Capital expenditures in 1995 and 1994 primarily relate to the launch
of HGTV. The increase in depreciation and amortization in 1995 is
primarily due to the start-up of HGTV and the 1994 increase is due to
the Cinetel acquisition. Capital expenditures in 1996 are expected to
be approximately $5,000,000 and depreciation and amortization is
expected to increase approximately 25%.
LIQUIDITY AND CAPITAL RESOURCES
Scripps generates significant cash flow from operating activities.
There are no significant legal or other restrictions on the transfer
of funds from any of Scripps' business segments to any other segment.
Management expects total cash flow from continuing operating
activities in 1996 will exceed Scripps' expected total capital
expenditures, debt repayments, and dividend payments.
Cash flow provided by continuing operating activities was $114,000,000
in 1995 compared to $170,000,000 in 1994 and $142,000,000 in 1993.
Payment of income taxes related to the settlement with the Internal
Revenue Service of the audits of the 1985 through 1987 federal income
tax returns was the primary cause of the decrease in 1995. The 1994
increase was primarily due to improvement in EBITDA.
Net debt (borrowings less cash equivalent and other short-term
investments) decreased $63,800,000 to $40,900,000 at December 31, 1995
and decreased $131,000,000 in 1994. At December 31, 1995 net debt was
3% of total capitalization. Management believes Scripps' cash and
cash equivalents, short-term investments, and substantial borrowing
capacity, taken together, provide adequate resources to fund the
capital expenditures and future expansion of existing businesses and
the development or acquisition of new businesses. The ability of
Scripps' continuing operations to produce significant cash flow and
Scripps' significant borrowing capacity were primary factors in
structuring the divestiture of its cable television assets so as to
transfer the proceeds of the divestiture tax-free to shareholders.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders,
The E.W. Scripps Company:
We have audited the accompanying consolidated balance sheets of The
E.W. Scripps Company and subsidiary companies ("Company") as of
December 31, 1995 and 1994, and the related consolidated statements of
income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1995. Our audits also included
the financial statement schedule listed in the Index at Item S-1.
These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to
express an opinion on the financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of the Company at
December 31, 1995 and 1994, and the results of its operations and cash
flows for each of the three years in the period ended December 31,
1995 in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly in all material respects the
information set forth therein.
As discussed in Note 1 to the consolidated financial statements, as of
December 31, 1993 the Company changed its method of accounting for
certain investments to conform with Statement of Financial Accounting
Standards No. 115.
DELOITTE & TOUCHE LLP
Cincinnati, Ohio
January 22, 1996
CONSOLIDATED BALANCE SHEETS
( in thousands )
As of December 31,
1995 1994
ASSETS
Current Assets:
Cash and cash equivalents $ 30,021 $ 16,609
Short-term investments 25,013
Accounts and notes receivable (less allowances - 1995, $3,447; 1994, $4,538) 166,867 146,003
Program rights and production costs 52,402 35,073
Refundable income taxes 7,828 25,214
Inventories 11,459 11,768
Deferred income taxes 21,694 16,606
Miscellaneous 18,961 16,821
Total current assets 334,245 268,094
Net assets of discontinued operations 305,838 322,737
Investments 53,186 34,879
Property, Plant, and Equipment 425,959 419,534
Goodwill and Other Intangible Assets 495,773 514,396
Other Assets:
Program rights and production costs (less current portion) 26,829 38,779
Miscellaneous 13,722 11,005
Total other assets 40,551 49,784
TOTAL ASSETS $ 1,655,552 $ 1,609,424
See notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
( in thousands, except share data )
As of December 31,
1995 1994
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 78,698
Accounts payable 78,538 $ 123,120
Customer deposits and unearned revenue 21,307 20,757
Accrued liabilities:
Employee compensation and benefits 32,901 31,372
Artist and author royalties 6,843 8,177
Interest 2,169 1,999
Income taxes 634 2,507
Commitments and contingencies 8,803 12,600
Miscellaneous 36,226 30,837
Total current liabilities 266,119 231,369
Deferred Income Taxes 82,229 67,876
Long-Term Debt (less current portion) 2,177 110,431
Other Long-Term Obligations and Minority Interests 113,601 116,280
Stockholders' Equity:
Preferred stock, $.01 par - authorized: 25,000,000 shares; none outstanding
Common stock, $.01 par:
Class A - authorized: 120,000,000 shares; issued and
outstanding: 1995 - 60,085,408 shares; 1994 - 59,671,242 shares; 601 597
Voting - authorized: 30,000,000 shares; issued and
outstanding: 1995 - 19,978,373 shares; 1994 - 20,174,833 shares 200 202
Total 801 799
Additional paid-in capital 254,063 248,098
Retained earnings 916,602 823,204
Unrealized gains on securities available for sale 20,720 12,518
Unvested restricted stock awards (1,573) (2,036)
Foreign currency translation adjustment 813 885
Total stockholders' equity 1,191,426 1,083,468
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,655,552 $ 1,609,424
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
( in thousands, except per share data )
For the years ended December 31,
1995 1994 1993
Operating Revenues:
Advertising $ 462,156 $ 433,551 $ 401,247
Circulation 125,354 116,684 116,413
Other newspaper revenue 52,888 52,703 50,394
Total newspapers 640,398 602,938 568,054
Broadcasting 295,228 288,184 284,294
Entertainment 94,752 73,473 84,741
Other 8,126
Total operating revenues 1,030,378 964,595 945,215
Operating Expenses:
Employee compensation and benefits 338,987 318,629 336,609
Newsprint and ink 123,579 94,160 89,062
Program rights and production costs 58,358 60,082 63,731
Other operating expenses 261,708 249,178 253,002
Depreciation 46,496 40,040 41,089
Amortization of intangible assets 20,094 18,896 19,760
Total operating expenses 849,222 780,985 803,253
Operating Income 181,156 183,610 141,962
Other Credits (Charges):
Interest expense (11,223) (16,274) (26,397)
Net gains and unusual items 14,651 94,374
Miscellaneous, net 1,535 (917) (2,413)
Net other credits (charges) (9,688) (2,540) 65,564
Income from Continuing Operations
Before Taxes and Minority Interests 171,468 181,070 207,526
Provision for Income Taxes 74,532 80,441 86,387
Income from Continuing Operations
Before Minority Interests 96,936 100,629 121,139
Minority Interests 3,347 7,833 16,228
Income From Continuing Operations 93,589 92,796 104,911
Income From Discontinued Operations 39,789 29,887 23,775
Net Income $ 133,378 $ 122,683 $ 128,686
Per Share of Common Stock:
Income from continuing operations $1.17 $1.22 $1.41
Income from discontinued operations .50 .39 .32
Net income $1.67 $1.61 $1.72
Note: The sum of the income per share amounts may not equal the
net income per share amount as each is computed
independently based on the weighted average shares outstanding.
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
( in thousands )
For the years ended December 31,
1995 1994 1993
Cash Flows from Operating Activities:
Income from continuing operations $ 93,589 $ 92,796 $ 104,911
Adjustments to reconcile income from continuing operations
to net cash flows from continuing operating activities:
Depreciation and amortization 66,590 58,936 60,849
Deferred income taxes 3,814 2,400 41,174
Minority interests in income of subsidiary companies 3,347 7,833 16,228
Net gains and unusual items (1,109) (91,878)
Settlement of 1985 - 1987 federal income tax audits (45,000)
Other changes in certain working capital accounts, net (13,979) 9,040 315
Miscellaneous, net 5,410 337 10,424
Net cash provided by continuing operating activities 113,771 170,233 142,023
Discontinued cable operations:
Income 39,789 29,887 23,775
Adjustment to derive cash flows from operating activities 62,290 48,737 59,754
Net cash provided 102,079 78,624 83,529
Net operating activities 215,850 248,857 225,552
Cash Flows from Investing Activities:
Additions to property, plant, and equipment (57,300) (53,952) (36,845)
Purchase of subsidiary companies and long-term investments (12,167) (32,389) (41,459)
Change in short-term investments, net (25,013)
Sale of subsidiary companies, copyrights, and long-term investments 2,729 47,592 140,538
Miscellaneous, net 3,598 3,659 6,398
Net cash used in investing activities of continuing operations (88,153) (35,090) 68,632
Net cash used in investing activities of discontinued cable operations (44,938) (40,496) (64,007)
Net investing activities (133,091) (75,586) 4,625
Cash Flows from Financing Activities:
Payments on long-term debt (29,703) (137,885) (194,015)
Dividends paid (39,980) (33,457) (32,847)
Dividends paid to minority interests (2,601) (3,817) (4,189)
Miscellaneous, net 5,437 1,649 1,998
Net cash used in financing activities of continuing operations (66,847) (173,510) (229,053)
Net cash used in financing activities of discontinued cable operations (2,500) (1,758) (1,494)
Net financing activities (69,347) (175,268) (230,547)
Increase (Decrease) in Cash and Cash Equivalents 13,412 (1,997) (370)
Cash and Cash Equivalents:
Beginning of year 16,609 18,606 18,976
End of year $ 30,021 $ 16,609 $ 18,606
Supplemental Cash Flow Disclosures:
Interest paid, excluding amounts capitalized $ 11,053 17,109 $ 32,123
Income taxes paid 55,176 127,009 44,962
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
( in thousands, except share data ) Unrealized
Gains on Unvested Foreign
Additional Securities Restricted Currency
Common Paid-in Retained Available Stock Translation
Stock Capital Earnings for Sale Awards Adjustment
As of December 31, 1992 $ 746 $ 94,366 $ 638,139 $ (516) $ 369
Net income 128,686
Dividends: declared and paid - $.44 per share (32,847)
Class A Common shares issued pursuant to
compensation plans, net:
165,775 shares issued, 4,270 shares forfeited,
and 17,071 shares repurchased 2 3,054 (817)
Tax benefits of compensation plans 525
Amortization of restricted stock awards 324
Foreign currency translation adjustment 223
Adoption of FAS No. 115, net of
deferred income tax of $14,744 $ 27,381
As of December 31, 1993 748 97,945 733,978 27,381 (1,009) 592
Net income 122,683
Dividends: declared and paid - $.44 per share (33,457)
Acquisition of minority interest in Scripps Howard
Broadcasting Company in exchange for
4,952,659 shares of Class A Common stock 49 146,675
Class A Common shares issued pursuant to
compensation plans, net:
140,025 shares issued, 2,810 shares forfeited,
and 5,127 shares repurchased 2 3,226 (1,527)
Tax benefits of compensation plans 252
Amortization of restricted stock awards 500
Foreign currency translation adjustment 293
Increase (decrease) in unrealized gains
on securities available for sale, net
of deferred income tax of $7,992 (14,863)
As of December 31, 1994 799 248,098 823,204 12,518 (2,036) 885
Net income 133,378
Dividends: declared and paid - $.50 per share (39,980)
Conversion of 196,460 Voting common shares
to 196,460 Class A common shares
Class A Common shares issued pursuant to
compensation plans, net:
238,850 shares issued, 1,250 shares forfeited,
and 19,894 shares repurchased 2 5,099 (538)
Tax benefits of compensation plans 866
Amortization of restricted stock awards 1,001
Foreign currency translation adjustment (72)
Increase in unrealized gains
on securities available for sale, net
of deferred income tax of $4,417 8,202
As of December 31, 1995 $ 801 $ 254,063 $ 916,602 $ 20,720 $ (1,573) $ 813
See notes to consolidated financial statements.
THE E.W. SCRIPPS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations - The E.W. Scripps Company ("Scripps") publishes
daily newspapers in fifteen markets, operates local television
stations in nine markets, operates cable television systems with
766,000 subscribers (at December 31, 1995) in nine geographic
clusters, and its entertainment division primarily produces television
programming and licenses comic characters.
On October 28, 1995, Scripps and Comcast Corporation ("Comcast")
reached an agreement pursuant to which Scripps will contribute all of
its non-cable television assets to Scripps Howard, Inc. ("SHI" - a
wholly-owned subsidiary of Scripps and the direct or indirect parent
of all of Scripps' operations) and SHI's cable television system
subsidiaries ("Scripps Cable") will be transferred to and held
directly by Scripps. Scripps Cable will be acquired by Comcast
through a tax-free merger (the "Merger") with Scripps. The remaining
SHI business will continue as "New Scripps", which will be distributed
in a tax-free "spin-off" to Scripps shareholders (the "Spin-Off")
prior to the Merger and thereafter renamed The E.W. Scripps Company.
As a condition of the Merger Scripps has agreed to retire or defease
its $32 million aggregate principal amount 7.375% notes due in 1998
("Defeasance"). The Merger, Spin-off and Defeasance are collectively
referred to as the "Transactions."
The closing date of the Transactions is expected to be in the third
quarter of 1996, subject to regulatory approvals and certain other
conditions. Controlling shareholders in Scripps and Comcast have
agreed to vote in favor of the Merger, and as a result completion of
the Transactions is assured so long as such conditions are satisfied
and such regulatory approvals (including approval of the Spin-Off as a
tax-free transaction by the Internal Revenue Service and approval of
the Merger by the Federal Communications Commission and certain
franchise authorities) are received. While there can be no assurances
regarding such approvals, management believes all such approvals will
be obtained.
Because Scripps Cable represents an entire business segment that will
be divested, its results are reported as "discontinued operations" for
all periods presented. See Note 14. Results of the remaining
business segments, including results for divested operating units
within these segments through their dates of sale, are reported as
"continuing operations." The relative importance of each line of
business to continuing operations is indicated in the Segment
Information presented in Note 11.
The newspaper and television operations are diversified geographically
and Scripps has a diverse customer base. Approximately 75% of
Scripps' operating revenues are derived from advertising, and as a
result operating results can be affected by changes in the demand for
advertising nationally and in Scripps' local markets.
Scripps grants credit to substantially all of its customers.
Management believes bad debt losses resulting from default by a single
customer, or defaults by customers in any depressed region or business
sector, would not have a material effect on Scripps' financial
position.
Use of Estimates - Preparation of the financial statements requires
the use of estimates. Scripps' financial statements include estimates
for such items as income taxes payable and self-insured risks. Self-
insured risks are primarily employee medical costs and disability
income, workers' compensation, and general liability. The recorded
liability for self-insured risks is calculated using actuarial methods
and is not discounted. The recorded liability for self-insured risks
totaled $19,200,000 at December 31, 1995. Management does not believe
it is likely that its estimates for such items will change materially
in the near term.
Consolidation - The consolidated financial statements include the
accounts of Scripps and its majority-owned subsidiary companies.
Revenue Recognition - Significant revenue recognition policies are as
follows:
Advertising revenues are recognized based on dates of publication or
broadcast.
Circulation revenue is recognized based on date of publication.
Royalties from merchandise licensing are recognized as products are
sold by the licensee. Royalties from promotional licensing are
recognized over the lives of the licensing agreements.
Program license fees are recognized when the program material is
available for broadcast and certain other conditions are met.
Payments received from customers prior to the time revenues are
recognized are recorded as unearned income.
Program Rights and Production Costs - Program rights are recorded at
the time such programs become available for broadcast. Amortization is
computed using the straight-line method based on the license period or
based on usage, whichever yields the greater accumulated amortization
for each program. The liability for program rights is not discounted
for imputed interest.
Production costs represent costs incurred in the production of
programming for distribution. Amortization of capitalized costs is
based on the percentage of current period revenues to anticipated
total revenues for each program.
Program and production costs are stated at the lower of unamortized
cost or fair value. The portion of the unamortized balance expected
to be amortized within one year is classified as a current asset.
Program rights liabilities payable within the next twelve months are
included in accounts payable. Non-current program rights liabilities
are included in other long-term obligations. Estimated fair values
(which are based on current rates available to Scripps for debt of the
same remaining maturity) and the carrying amounts of Scripps' program
rights liabilities were as follows:
( in thousands )
As of December 31,
1995 1994
Liabilities for programs available for broadcast:
Carrying amount $ 51,400 $ 48,300
Fair value 48,000 42,800
Goodwill and Other Intangible Assets - Goodwill and other intangible
assets are stated at the lower of unamortized cost or fair value.
Fair value is estimated based upon estimated future net cash flows.
An impairment loss is recognized when the unamortized cost of the
asset exceeds the undiscounted estimated future net cash flows.
Goodwill represents the cost of acquisitions in excess of tangible
assets and identifiable intangible assets received. Non-competition
agreements are amortized on a straight-line basis over the terms of
the agreements. Goodwill acquired after October 1970, customer lists,
and other intangible assets are amortized on a straight-line basis
over periods of up to 40 years. Goodwill acquired before November
1970 ($6,600,000) is not amortized.
The Financial Accounting Standards Board ("FASB") issued Financial
Accounting Standard ("FAS") No. 121 - Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of in March
1995. The standard requires that long-lived assets and certain
identifiable intangible assets be reviewed for impairment and that
long-lived assets to be disposed of be reported at the lower of
carrying amount or fair value less costs to sell. The standard, which
Scripps is required to adopt in 1996, is not expected to have any
immediate impact on Scripps' results of operations or financial
position.
Property, Plant, and Equipment - Depreciation is computed using the
straight-line method over estimated useful lives as follows:
Buildings and improvements 35 years
Printing presses 20 years
Other newspaper production equipment 5 to 10 years
Television transmission towers 15 years
Other television and program production equipment 5 to 15 years
Office and other equipment 5 to 10 years
Interest costs related to major capital projects are capitalized
and classified as property, plant, and equipment.
Income Taxes - Deferred income taxes are provided for temporary
differences between the tax basis and reported amounts of assets
and liabilities that will result in taxable or deductible amounts
in future years. Scripps' temporary differences primarily result
from accelerated depreciation and amortization for tax purposes and
accrued expenses not deductible for tax purposes until paid. Also,
Scripps received a tax certificate from the Federal Communications
Commission upon the 1993 sale of the Memphis television and radio
stations, enabling Scripps to defer payment of income taxes on the
$60,500,000 tax-basis gain. The deferred gain will reduce the tax
basis of certain cable television assets acquired on January 6,
1996.
Other Long-Term Obligations - Other long-term obligations include
non-current program rights liabilities, deferred compensation and
retiree benefits, non-current self-insured risks, and non-current
income taxes payable.
Investments - Scripps adopted FAS No. 115 - Accounting for Certain
Investments in Debt and Equity Securities on December 31, 1993,
increasing stockholders' equity $27,381,000. There was no effect
on income from continuing operations as a result of adopting the
new standard.
Investments in 20%- to 50%-controlled companies and in all joint
ventures are accounted for under the equity method. Investments in
other debt and equity securities are classified as available for
sale and are carried at fair value. Fair value is determined by
reference to quoted market prices for those or similar securities.
Unrealized gains or losses on those securities are recognized as a
separate component of stockholders' equity. The cost of securities
sold is determined by specific identification.
Newspaper Joint Operating Agencies - Scripps is currently a party to
newspaper joint operating agencies ("JOAs") in five markets. A JOA
combines all but the editorial operations of two competing newspapers
in a market. In each JOA the managing party distributes a portion of
JOA profits to the other party. Scripps manages the JOA in
Evansville. The JOAs in Albuquerque, Birmingham, Cincinnati, and El
Paso are managed by the other parties to the JOAs.
Scripps includes the full amount of company-managed JOA assets and
liabilities, and revenues earned and expenses incurred in the
operation of the JOA, in the consolidated financial statements.
Distributions of JOA operating profits to the non-managing party are
included in other operating expenses in the Consolidated Statements of
Income.
For JOAs managed by the other party, Scripps includes distributions of
JOA operating profits in operating revenues in the Consolidated
Statements of Income. Scripps does not include any assets or
liabilities of JOAs managed by other parties in its Consolidated
Balance Sheets as Scripps has no residual interest in the net assets
of the JOAs.
Inventories - Inventories are stated at the lower of cost or market.
The cost of newsprint included in inventory is computed using the last
in, first out ("LIFO") method. At December 31 newsprint inventories
were approximately 66% of total inventories in 1995 and 65% in 1994.
The cost of other inventories is computed using the first in, first
out ("FIFO") method. Inventories would have been $4,500,000 and
$1,200,000 higher at December 31, 1995 and 1994 if FIFO (which
approximates current cost) had been used to compute the cost of
newsprint.
Postemployment Benefits - Postretirement benefits are recognized
during the years that employees render service. Other postemployment
benefits, such as disability-related benefits and severance, are
recognized when the benefits become payable.
Stock-Based Compensation - The FASB issued FAS No. 123 - Accounting
for Stock-Based Compensation in October 1995. The standard defines a
fair-value-based method of accounting for stock-based compensation,
but permits compensation expense to continue to be measured using the
intrinsic-value-based method previously used. Scripps intends to
continue measuring compensation expense using the intrinsic-value-
based method and under the provisions of the standard, which must be
adopted in 1996, will be required to make pro forma disclosures of net
income and earnings per share as if the fair value method had been
used.
Cash and Cash Equivalents - Cash and cash equivalents represent cash
on hand, bank deposits, and highly liquid debt instruments with an
original maturity of up to three months. Cash equivalents are stated
at cost plus accrued interest, which approximates fair value.
Short-term Investments - Short-term investments represent excess cash
invested in securities not meeting the criteria to be classified as
cash equivalents. Short-term investments are carried at cost plus
accrued dividends, which approximates fair value.
Net Income Per Share - Net income per share computations are based
upon the weighted average common shares outstanding. Common stock
equivalents in the form of stock options are excluded from the
computations as they have no material effect on the per share amounts.
Weighted average shares outstanding were as follows:
( in thousands )
For the years ended December 31,
1995 1994 1993
Weighted average shares outstanding 79,956 76,246 74,650
2. ACQUISITIONS AND DIVESTITURES
Acquisitions
1995 - There were no acquisitions in 1995.
1994 - Scripps acquired the remaining 13.9% minority interest in
Scripps Howard Broadcasting Company ("SHB") in exchange for 4,952,659
shares of Class A Common stock. Scripps acquired Cinetel Productions
(an independent producer of programs for cable television) for
$17,000,000 in cash.
1993 - Scripps acquired the remaining 2.7% minority interest in the
Knoxville News-Sentinel for $2,800,000. Scripps purchased 5.7% of the
outstanding shares of SHB for $28,900,000.
The following table presents additional information about the
acquisitions:
( in thousands )
For the years ended December 31,
1994 1993
Goodwill and other intangible assets acquired $ 108,690 $ 19,486
Other assets acquired (primarily property and equipment and program costs) 14,596
Reduction in minority interests 45,958 12,287
Class A Common stock issued (146,724)
Liabilities assumed and notes issued (899)
Cash paid $ 21,621 $ 31,773
Goodwill and other intangible assets acquired includes the excess of
cost over book value of SHB allocated to Scripps Cable ($26,100,000 in
1994 and $6,900,000 in 1993).
The acquisitions have been accounted for as purchases. The acquired
operations have been included in the Consolidated Statements of Income
from the dates of acquisition. Pro forma results are not presented
because the combined results of operations would not be significantly
different from the reported amounts.
Divestitures
Scripps divested the following operating units:
1995 - Newspaper in Watsonville, California.
1993 - Book publishing; newspapers in Tulare, California, and San
Juan; Memphis television station; radio stations.
The following table presents additional information about the
divestitures:
( in thousands, except per share data )
For the years ended December 31,
1995 1993
Cash received $ 2,711 $ 140,509
Net assets disposed 2,711 48,635
Net gains recognized (before minority
interests and income taxes) $ 0 $ 91,874
Net gains recognized (after minority
interests and income taxes) $ 46,800
Net gains recognized per share (after minority
interests and income taxes) $ .63
Included in the consolidated financial statements are the following
results of divested operating units (excluding gains on sales):
( in thousands )
For the years ended December 31,
1995 1994 1993
Operating revenues $ 300 $ 3,700 $ 57,400
Operating income (loss) (100) (200) 7,500
3. UNUSUAL CREDITS AND CHARGES
1994 - Scripps sold its worldwide Garfield and U.S. Acres copyrights.
The sale resulted in a pre-tax gain of $31,600,000, $17,400,000 after
tax, $.23 per share.
Scripps' three television stations that had been Fox affiliates
changed their network affiliation. In connection with the change
certain program rights were expected to be sold at a loss of
$7,900,000 and certain real estate, due to space limitations, was
expected to be sold at a loss of $2,800,000. These estimated losses
were recorded in 1994, reducing income from continuing operations
$6,600,000, $.09 per share.
Scripps made a special contribution of 589,165 shares of Turner
Broadcasting Class B common stock to a charitable foundation. The
contribution reduced pre-tax income by $8,000,000 and income from
continuing operations by $4,500,000, $.06 per share.
Management changed its estimate of the tax liability for prior years
as a result of an audit by the Internal Revenue Service ("IRS"). The
adjustment decreased income from continuing operations by $5,300,000,
$.07 per share (see Note 4).
Estimated costs to defend and settle lawsuits filed by certain former
employees and independent contractors of a divested operating unit
reduced income from continuing operations by $3,600,000, $.05 per
share (see Note 12).
1993 - Operating results include net pre-tax gains of $91,900,000,
$46,800,000 after-tax, $.63 per share (see Note 2).
Management changed the estimate of the additional amount of music
license fees Scripps would owe when a dispute between the television
industry and the American Society of Composers, Authors and Publishers
("ASCAP") was resolved. The adjustment increased operating income
$4,300,000 and income from continuing operations $2,300,000, $.03 per
share.
Scripps realized a $1,100,000 gain on sale of certain publishing
equipment and received a $2,500,000 fee in connection with the change
in ownership of the Ogden, Utah, newspaper, increasing income from
continuing operations $2,300,000, $.03 per share.
Scripps recorded a $6,300,000 charge related to workforce reductions
1) in the circulation department at its Denver newspaper and 2) the
newspaper feature distribution and licensing operations of United
Media. The charge reduced income from continuing operations
$3,600,000, $.05 per share. The planned headcount reductions were
fully implemented in 1994.
Management changed its estimate of the tax liability for prior years
(see Note 4). The adjustment increased income from continuing
operations $5,400,000, $.07 per share. The federal income tax rate
was increased to 35% from 34%. The effect on Scripps' beginning of
the year deferred tax liabilities reduced income from continuing
operations $2,300,000, $.03 per share.
4. INCOME TAXES
In 1993 management changed its estimate of the tax basis and lives of
certain intangible assets. The resulting change in the estimated tax
liability for prior years increased income from continuing operations
$5,400,000, $.07 per share. In 1994 the IRS proposed adjustments
related to those intangible assets. Based upon the proposed
adjustments management again changed its estimate of the tax liability
for prior years, decreasing income from continuing operations in 1994
$5,300,000, $.07 per share. In 1995 Scripps reached agreement with
the IRS to settle the audits of its 1985 through 1987 tax returns.
The settlement payment was charged to the estimated tax liability for
prior years. The liability was not adjusted as a result of the
settlement.
The IRS is currently examining Scripps' consolidated income tax
returns for the years 1988 through 1991. Pursuant to the terms of the
Merger New Scripps will indemnify Comcast against all tax liabilities
of Scripps Cable attributable to periods prior to completion of the Merger.
Management believes that adequate provision for income taxes has been
made for all open years.
The approximate effects of the temporary differences giving rise to
Scripps' deferred income tax liabilities (assets) are as follows:
( in thousands )
As of December 31,
1995 1994 1993
Accelerated depreciation and amortization $ 77,259 $ 60,087 $ 90,314
Deferred gain on sale of Memphis television and radio stations 23,599 23,599 23,126
Investments 10,654 4,927 12,900
Accrued expenses not deductible until paid (26,195) (27,745) (20,625)
Deferred compensation and retiree benefits (12,398) (12,470) (10,380)
Other temporary differences, net (9,099) 6,008 1,167
Total 63,820 54,406 96,502
State net operating loss carryforwards (9,186) (7,922) (7,258)
Foreign tax credits and other carryforwards (1,371)
Valuation allowance for state deferred tax assets and foreign tax credits 5,901 4,786 5,033
Net deferred tax liability $ 60,535 $ 51,270 $ 92,906
Scripps' state net operating loss carryforwards expire from 1996
through 2010. At each balance sheet date management estimates the
amount of state net operating loss carryforwards that are not expected
to be utilized prior to expiration of the carryforward period. The
tax effect of these unused state net operating loss carryforwards is
included in the valuation allowance. The increase in the valuation
allowance in 1995 is primarily due to additional state net operating
losses in 1995. The valuation allowance in 1994 decreased by
$1,371,000 as management determined the foreign tax credit
carryforwards would be utilized prior to expiration of the
carryforward period. This decrease was offset by an increase in the
allowance due to additional state net operating losses in 1994.
The provision for income taxes consists of the following:
( in thousands )
For the years ended December 31,
1995 1994 1993
Current:
Federal $ 60,044 $ 61,026 $ 33,114
State and local 5,027 12,351 7,829
Foreign 4,781 4,412 3,745
Total current 69,852 77,789 44,688
Deferred:
Federal 6,911 (6,787) 51,813
Other 1,320 1,195 4,105
Total deferred 8,231 (5,592) 55,918
Total income taxes 78,083 72,197 100,606
Income taxes allocated to stockholders' equity (3,551) 8,244 (14,219)
Provision for income taxes $ 74,532 $ 80,441 $ 86,387
The difference between the statutory rate for federal income tax and
the effective income tax rate is summarized as follows:
For the years ended December 31,
1995 1994 1993
Statutory rate 35.0 % 35.0 % 35.0 %
Effect of:
State and local income taxes 4.0 4.7 3.7
Amortization of goodwill 2.9 2.2 2.4
Increase in tax rate to 35% on deferred tax liabilities 1.1
Change in estimated tax basis and lives of certain assets 2.1 (2.5)
Miscellaneous 1.6 0.4 1.9
Effective income tax rate 43.5 % 44.4 % 41.6 %
5. LONG-TERM DEBT
Long-term debt consisted of the following:
( in thousands )
As of December 31,
1995 1994
7.375% notes, due in 1998 $ 31,658 $ 61,161
9.0% notes, due in 1996 47,000 47,000
Other notes 2,217 2,270
Total long-term debt 80,875 110,431
Current portion of long-term debt 78,698
Long-term debt (less current portion) $ 2,177 $ 110,431
Fair value of long-term debt * $ 83,100 $ 109,600
* Fair value is estimated based on current rates available to Scripps for
debt of the same remaining maturity.
Scripps has a Competitive Advance/Revolving Credit Agreement
("Variable Rate Credit Facility") which expires in September 1996 and
permits maximum borrowings up to $50,000,000. Maximum borrowings
under the Variable Rate Credit Facility are changed as Scripps'
anticipated needs change and are not indicative of Scripps' short-term
borrowing capacity. The Variable Rate Credit Facility may be extended
upon mutual agreement.
Certain long-term debt agreements contain maintenance requirements on
net worth and coverage of interest expense and restrictions on
dividends and incurrence of additional indebtedness. Scripps is in
compliance with all debt covenants.
Pursuant to the terms of the Merger, Scripps will retire or defease
its 7.375% notes due in 1998.
Interest costs capitalized were as follows:
( in thousands )
For the years ended December 31,
1995 1994 1993
Capitalized interest costs $ 400 $ 0 $ 100
6. INVESTMENTS
Investments consisted of the following:
( in thousands, except share data )
As of December 31,
1995 1994
Securities available for sale:
Short-term investments, primarily preferred stocks $ 25,013
Turner Broadcasting Class C preferred stock
(convertible into 1,309,092 shares of Class B common stock) 34,036 $ 21,436
Other 7,000 2,351
Total securities available for sale 66,049 23,787
Investments accounted for under the equity method 12,150 11,092
Total investments $ 78,199 $ 34,879
Unrealized gains on securities available for sale $ 31,890 $ 19,270
7. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment consisted of the following:
( in thousands )
As of December 31,
1995 1994
Land and improvements $ 39,774 $ 40,668
Buildings and improvements 180,180 176,769
Equipment 520,733 484,495
Total 740,687 701,932
Accumulated depreciation 314,728 282,398
Net property, plant, and equipment $ 425,959 $ 419,534
8. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets consisted of the following:
( in thousands )
As of December 31,
1995 1994
Goodwill $ 440,932 $ 439,462
Customer lists 133,329 133,334
Licenses and copyrights 28,221 28,221
Non-competition agreements 18,039 18,689
Other 32,263 32,247
Total 652,784 651,953
Accumulated amortization 157,011 137,557
Net goodwill and other intangible assets $ 495,773 $ 514,396
9. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information is as follows:
( in thousands )
For the years ended December 31,
1995 1994 1993
Other changes in certain working capital accounts, net:
Accounts receivable $ (20,864) $ (3,182) $ (9,320)
Inventories 270 (2,099) 2,324
Accounts payable (3,888) 6,486 (5,427)
Accrued income taxes 15,076 (1,241) 1,115
Accrued interest 170 (835) (5,726)
Other accrued liabilities (744) 5,525 8,385
Other, net (3,999) 4,386 8,964
Total $ (13,979) $ 9,040 $ 315
Program rights purchased $ 61,900 $ 30,700 $ 51,600
10. EMPLOYEE BENEFIT PLANS
Scripps sponsors defined benefit plans covering substantially all non-
union employees. Benefits are generally based on the employees'
compensation and years of service. Funding is based on the
requirements of the plans and applicable federal laws.
Scripps also sponsors defined contribution plans covering
substantially all non-union employees. Scripps matches a portion of
employees' voluntary contributions to these plans.
Union-represented employees are covered by retirement plans jointly
administered by subsidiaries of Scripps and the unions or by union-
administered, multi-employer plans. Funding is based upon negotiated
agreements.
Retirement plans expense consisted of the following:
( in thousands )
For the years ended December 31,
1995 1994 1993
Service cost $ 7,929 $ 8,729 $ 7,819
Interest cost 12,907 11,509 13,111
Actual return on plan assets (41,698) 1,637 (13,487)
Net amortization and deferral 27,203 (14,990) (2,619)
Defined benefit plans 6,341 6,885 4,824
Multi-employer plans 1,020 1,028 1,044
Defined contribution plans 3,612 3,573 3,570
Total 10,973 11,486 9,438
Curtailment losses included in gain
on the sales of subsidiary companies 253
Total retirement plans expense $ 10,973 $ 11,486 $ 9,691
Assumptions used in the accounting for the defined benefit plans were
as follows:
1995 1994 1993
Discount rate as of December 31 7.0% 8.5% 7.0%
Expected long-term rate of return on plan assets 8.0% 9.5% 8.0%
Rate of increase in compensation levels 3.5% 5.0% 3.5%
The plans' long-term rate of return on plan assets has been
approximately one percentage point greater than the discount rate.
Management believes the discount rate plus one percentage point is the
best estimate of the long-term return on plan assets at any point in
time. Therefore, when the discount rate changes, management's
expectation for the future long-term rate of return on plan assets
changes in tandem.
The funded status of the defined benefit plans at December 31 was as
follows:
( in thousands )
1995 1994 1993
Actuarial present value of vested benefits $ (158,953) $ (124,502) $ (136,719)
Actuarial present value of accumulated benefits $ (170,875) $ (133,472) $ (146,178)
Actuarial present value of projected benefits $ (206,324) $ (164,333) $ (180,843)
Plan assets at fair value 195,667 157,694 172,688
Projected benefits in excess of plan assets (10,657) (6,639) (8,155)
Unrecognized net loss 7,089 3,464 11,025
Unrecognized prior service cost 8,337 9,492 9,836
Unrecognized net asset at the date FAS No. 87 was
adopted, net of amortization (9,222) (10,669) (12,116)
Net pension asset (liability) recognized in the balance sheet $ (4,453) $ (4,352) $ 590
Plan assets consist of marketable equity and fixed-income securities.
Scripps has unfunded health and life insurance benefit plans that are
provided to certain retired employees. The combined number of 1)
active employees eligible for such benefits and 2) retired employees
receiving such benefits is approximately 5% of Scripps' current
workforce. The actuarial present value of the projected benefit
obligation at December 31 was $7,000,000 in 1995 and $6,900,000 in
1994. The cost of the plan was: 1995, $300,000; 1994, $500,000; and
1993, $600,000.
11. SEGMENT INFORMATION
The Other segment includes book publishing operations which were sold
in 1993.
Broadcasting operating income in 1994 was reduced by $7,900,000 as a
result of the program rights write-down and was increased in 1993 by
$4,300,000 as a result of the change in estimate of the additional
amount of copyright fees owed ASCAP (see Note 3).
Financial information relating to Scripps' business segments is as
follows:
( in thousands )
For the years ended December 31,
1995 1994 1993
OPERATING REVENUES
Newspapers $ 640,398 $ 602,938 $ 568,054
Broadcasting 295,228 288,184 284,294
Entertainment 94,752 73,473 84,741
Other 8,126
Total continuing operations $ 1,030,378 $ 964,595 $ 945,215
OPERATING INCOME
Newspapers $ 125,484 $ 119,539 $ 75,389
Broadcasting 86,927 86,625 81,958
Entertainment (14,483) (7,083) (1,561)
Other (199)
Corporate (16,772) (15,471) (13,625)
Total continuing operations $ 181,156 $ 183,610 $ 141,962
DEPRECIATION
Newspapers $ 30,206 $ 28,399 $ 30,070
Broadcasting 12,578 9,323 9,470
Entertainment 2,828 1,667 899
Other 25
Corporate 884 651 625
Total continuing operations $ 46,496 $ 40,040 $ 41,089
AMORTIZATION OF INTANGIBLE ASSETS
Newspapers $ 6,267 $ 6,858 $ 6,902
Broadcasting 13,451 11,966 12,212
Entertainment 376 72 18
Other 628
Total continuing operations $ 20,094 $ 18,896 $ 19,760
ASSETS
Newspapers $ 606,989 $ 621,008 $ 667,167
Broadcasting 520,308 515,617 465,622
Entertainment 124,178 84,816 82,538
Corporate 98,239 65,246 39,770
Total continuing operations $ 1,349,714 $ 1,286,687 $ 1,255,097
CAPITAL EXPENDITURES
Newspapers $ 22,184 $ 21,226 $ 24,523
Broadcasting 23,630 23,532 9,733
Entertainment 9,574 7,989 981
Corporate 1,912 1,205 1,608
Total continuing operations $ 57,300 $ 53,952 $ 36,845
Corporate assets are primarily cash, investments, and refundable and
deferred income taxes.
12. COMMITMENTS AND CONTINGENCIES
In 1994 Scripps accrued an estimate of the ultimate costs, including
attorneys' fees and settlements, of lawsuits filed by certain former
employees and independent contractors of a divested operating unit.
The lawsuits allege that the employees were due severance pay and that
certain contractual obligations were unfulfilled, respectively. The
accrual reduced income from continuing operations by $3,600,000, $.05
per share. Management believes the claims are without merit, however
a recent judgment with respect to one of the severance pay lawsuits
was not favorable to Scripps. This judgment has been appealed.
Management believes the possibility of incurring a loss greater than
the amount accrued is remote.
In 1994 Scripps Cable accrued an estimate of the ultimate costs,
including attorneys' fees and settlements, of certain lawsuits against
the Sacramento cable television system related primarily to employment
issues and to the timing and amount of late-payment fees assessed to
subscribers. The accrual reduced income from discontinued operations
$4,000,000. In 1995 Scripps Cable adjusted the accrual based upon a
reassessment of the probable costs of these and additional employment-
related lawsuits. The additional accrual reduced income from
discontinued operations $900,000. Management believes the possibility
of incurring a loss greater than the amount accrued is remote.
Pursuant to the terms of the Merger New Scripps will indemnify Comcast
against losses related to these lawsuits.
Scripps is also involved in other litigation arising in the ordinary
course of business, none of which is expected to result in material
loss.
Scripps purchased program rights totaling $61,900,000 in 1995,
$30,700,000 in 1994, and $51,600,000 in 1993, the payments for which
are generally made over the lives of the contracts. At December 31,
1995 Scripps was committed to purchase approximately $100,000,000 of
program rights that are not currently available for broadcast,
including programs not yet produced. If such programs are not
produced Scripps' commitment would expire without obligation.
Minimum payments on non-cancelable leases at December 31, 1995 were as
follows:
( in thousands )
1996 $ 9,000
1997 8,400
1998 8,400
1999 7,300
2000 6,400
Later years 30,700
Total $ 70,200
Rental expense for cancelable and non-cancelable leases was as
follows:
( in thousands )
For the years ended December 31,
1995 1994 1993
Rental expense, net of sublease income $ 13,300 $ 11,700 $ 9,700
13. CAPITAL STOCK AND INCENTIVE PLANS
The capital structure of Scripps includes Common Voting Stock and
Class A Common Stock. The articles of Scripps provide that the
holders of Class A Common Stock, who are not entitled to vote on any
other matters except as required by Delaware law, are entitled to
elect the greater of three or one-third of the directors.
In connection with the Transactions, New Scripps will be recapitalized
to include Common Voting Shares and Class A Common Shares and the
Articles of Incorporation of New Scripps will be further amended to
provide for substantially the same shareholder voting rights and other
terms as the Scripps Certificate of Incorporation currently provides
for. Prior to the Spin-Off New Scripps will issue to Scripps: (i) a
number of New Scripps Common Voting Shares equal to the number of
shares of Scripps Common Voting Stock then outstanding and (ii) a
number of New Scripps Class A Common Shares equal to the number of
shares of Scripps Class A Common Stock then outstanding. These shares
will then be distributed to Scripps' shareholders in the Spin-Off.
Pursuant to the Transactions, New Scripps will assume Scripps'
incentive plans. The 1987 Long-Term Incentive Plan ("1987 Plan")
provides for the awarding of stock options, stock appreciation rights,
performance units, and Class A Common Stock to key employees and the
1994 Non-Employee Directors' Stock Option Plan (collectively the
"Plans") provides for the awarding of stock options to non-employee
directors. The number of shares authorized for issuance under the
Plans is 3,300,000.
Stock options may be awarded to purchase Class A Common Stock at not
less than 100% of the fair market value on the date the option is
granted. Stock options will vest over an incentive period,
conditioned upon the individual's employment through that period. The
plan expires on December 9, 1997, except for options then outstanding.
In connection with the Transactions, the number of options and the
option price will be adjusted based on the average market price of
Scripps Class A Common Stock before the Transactions are completed,
and the average market price of New Scripps Class A Common Shares
after the Transactions are completed. The number of options
outstanding is expected to increase and the option exercise price is
expected to decrease in order to preserve the economic value and to
prevent any enlargement or dilution of outstanding options.
Information related to stock options is as follows:
Number Price
of Shares per Share
Outstanding at December 31, 1992 1,246,550 $16 - 27
Granted in 1993 667,500 24 - 34
Exercised in 1993 (133,775) 16 - 24
Forfeited in 1993 (40,775) 18 - 27
Outstanding at December 31, 1993 1,739,500 16 - 34
Granted in 1994 493,500 27 - 30
Exercised in 1994 (87,025) 18 - 26
Forfeited in 1994 (20,000) 18 - 26
Outstanding at December 31, 1994 2,125,975 16 - 34
Granted in 1995 25,000 29 - 34
Exercised in 1995 (221,350) 18 - 30
Forfeited in 1995 (10,000) 18 - 30
Outstanding at December 31, 1995 1,919,625 $16 - 34
Exercisable at December 31, 1995 1,739,125 $16 - 34
Options issued to employees of Scripps Cable totaled 207,150 at
December 31, 1995, of which 186,150 were exercisable. Options issued
to employees of Scripps Cable will vest and become exercisable upon
completion of the Transactions.
Awards of Class A Common Stock vest over an incentive period,
conditioned upon the individual's employment throughout that period.
During the vesting period shares issued are non-transferable, but the
shares are entitled to all the rights of an outstanding share. Upon
vesting, when the stock awards become taxable to the employees,
additional awards of cash may also be made. Information related to
awards of Class A Common Stock is as follows:
( in thousands, except share data )
For the years ended December 31,
1995 1994 1993
Shares of Class A Common stock:
Awarded 17,500 53,000 32,000
Forfeited 1,250 2,810 4,270
Compensation expense recognized:
Continuing operations $ 915 $ 435 $ 270
Scripps Cable 85 65 30
Unvested awards of Class A Common Stock issued to employees of Scripps
Cable will vest upon completion of the Transactions. There were 6,000
unvested shares issued to employees of Scripps Cable at December 31,
1995.
14. DISCONTINUED CABLE TELEVISION OPERATIONS
Summarized operating results for the discontinued cable television
operations are as follows:
( in thousands )
For the years ended December 31,
1995 1994 1993
Operating revenues $ 279,482 $ 255,356 $ 251,792
Income before income taxes 65,247 33,526 44,811
Income taxes (25,458) (3,484) (20,363)
Minority interests (155) (673)
Income from discontinued cable operations $ 39,789 $ 29,887 $ 23,775
In 1994 customers of the Sacramento system were awarded special
rebates totaling $3,000,000 in connection with litigation
concerning the system's pricing in the late 1980s. The rebates
reduced income from discontinued operations $1,600,000. Also in
1994 Scripps Cable accrued $6,500,000 as an estimate of the
ultimate costs of certain lawsuits (see Note 12). The accrual
reduced income from discontinued operations $4,000,000. In 1995
the accrual was increased $1,400,000 based upon reassessment of the
probable costs of the lawsuits, reducing income from discontinued
operations $900,000. Also in 1994 the IRS proposed adjustments
related to certain intangible assets and a deduction related to the
redemption of a partnership interest in certain of its cable
television systems. Based upon the proposed adjustments management
changed its estimate of the tax liabilities for prior years. The
resulting change in the liability for prior year income taxes
increased 1994 income from discontinued operations $11,800,000.
Summarized balance sheet data for the discontinued cable television
operations are as follows:
( in thousands )
As of December 31,
1995 1994
Property, plant, and equipment $ 294,557 $ 294,229
Goodwill and other intangible assets 93,496 101,717
Other assets 26,014 34,926
Deferred income tax liabilities (76,210) (77,691)
Other liabilities (32,019) (30,444)
Net assets of discontinued cable television operations $ 305,838 $ 322,737
The major components of cash flow for discontinued operations are as
follows:
( in thousands )
For the years ended December 31,
1995 1994 1993
Income from discontinued operations $ 39,789 $ 29,887 $ 23,775
Depreciation and amortization 53,999 57,331 60,029
Other, net 8,291 (8,594) (275)
Net cash provided by discontinued cable operating activities $ 102,079 $ 78,624 $ 83,529
Capital expenditures $ (47,484) $ (41,616) $ (67,019)
Other, net 2,546 1,120 3,012
Net cash used in investing activities of discontinued cable $ (44,938) $ (40,496) $ (64,007)
operations
15. SUMMARIZED QUARTERLY FINANCIAL INFORMATION (Unaudited)
Summarized financial information is as follows:
( in thousands, except per share data )
1st 2nd 3rd 4th
1995 Quarter Quarter Quarter Quarter Total
Operating revenues:
Newspapers $ 151,607 $ 161,112 $ 155,913 $ 171,766 $ 640,398
Television 66,968 77,080 67,663 83,517 295,228
Entertainment 26,694 21,115 21,155 25,788 94,752
Total operating revenues 245,269 259,307 244,731 281,071 1,030,378
Operating expenses:
Employee compensation and benefits 83,820 84,233 84,861 86,073 338,987
Newsprint and ink 26,871 29,381 32,008 35,319 123,579
Program rights and production costs 15,546 12,523 14,081 16,208 58,358
Other operating expenses 62,732 65,191 63,299 70,486 261,708
Depreciation and amortization 16,063 16,429 17,140 16,958 66,590
Total operating expenses 205,032 207,757 211,389 225,044 849,222
Operating income 40,237 51,550 33,342 56,027 181,156
Interest expense (3,353) (2,829) (2,441) (2,600) (11,223)
Miscellaneous, net 782 394 1,427 (1,068) 1,535
Income taxes (16,971) (21,127) (14,187) (22,247) (74,532)
Minority interests (935) (868) (784) (760) (3,347)
Income from continuing operations 19,760 27,120 17,357 29,352 93,589
Income from discontinued operations (net of income taxes) 9,354 9,019 10,277 11,139 39,789
Net income $ 29,114 $ 36,139 $ 27,634 $ 40,491 $ 133,378
Per share of common stock:
Income from continuing operations $ .25 $ .34 $ .22 $ .37 $ 1.17
Income from discontinued operations .12 .11 .13 .14 .50
Net income $ .36 $ .45 $ .35 $ .51 $ 1.67
Weighted average shares outstanding 79,854 79,927 80,010 80,031 79,956
Cash dividends per share of common stock $ .11 $ .13 $ .13 $ .13 $ .50
The sum of the quarterly net income per share amounts may not equal
the reported annual amount and the sum of the income from continuing
operations per share and the income from discontinued operations per
share may not equal the net income per share amount because each is
computed independently based upon the weighted average number of
shares outstanding for that period.
( in thousands, except per share data )
1st 2nd 3rd 4th
1994 Quarter Quarter Quarter Quarter Total
Operating revenues:
Newspapers $ 142,037 $ 151,765 $ 147,145 $ 161,991 $ 602,938
Broadcasting 60,353 73,892 68,200 85,739 288,184
Entertainment 20,978 18,676 16,689 17,130 73,473
Total operating revenues 223,368 244,333 232,034 264,860 964,595
Operating expenses:
Employee compensation and benefits 77,574 79,577 77,337 84,141 318,629
Newsprint and ink 20,657 22,131 23,586 27,786 94,160
Program rights and production costs 12,285 14,473 13,557 19,767 60,082
Other operating expenses 56,150 57,543 59,870 75,615 249,178
Depreciation and amortization 14,283 14,903 14,548 15,202 58,936
Total operating expenses 180,949 188,627 188,898 222,511 780,985
Operating income 42,419 55,706 43,136 42,349 183,610
Interest expense (4,576) (4,529) (3,829) (3,340) (16,274)
Net gains and unusual items 31,621 (16,970) 14,651
Miscellaneous, net 172 (371) (188) (530) (917)
Income taxes (16,681) (35,685) (15,231) (12,844) (80,441)
Minority interests (1,917) (2,886) (2,265) (765) (7,833)
Income from continuing operations 19,417 43,856 21,623 7,900 92,796
Income from discontinued operations (net of income taxes) 5,680 3,968 4,482 15,757 29,887
Net income $ 25,097 $ 47,824 $ 26,105 $ 23,657 $ 122,683
Per share of common stock:
Income from continuing operations $ .26 $ .59 $ .29 $ .10 $ 1.22
Income from discontinued operations .08 .05 .06 .20 .39
Net income $ .34 $ .64 $ .35 $ .30 $ 1.61
Weighted average shares outstanding 74,762 74,776 75,638 79,808 76,246
Cash dividends per share of common stock $ .11 $ .11 $ .11 $ .11 $ .44
The sum of the quarterly net income per share amounts may not equal
the reported annual amount and the sum of the income from continuing
operations per share and the income from discontinued operations per
share may not equal the net income per share amount because each is
computed independently based upon the weighted average number of
shares outstanding for that period.
THE E.W. SCRIPPS COMPANY
Index to Consolidated Financial Statement Schedules
Valuation and Qualifying Accounts S-2
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993 SCHEDULE II
( in thousands )
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
INCREASE
ADDITIONS DEDUCTIONS (DECREASE)
BALANCE CHARGED TO AMOUNTS RECORDED BALANCE
BEGINNING COSTS AND CHARGED ACQUISITIONS END OF
CLASSIFICATION OF PERIOD EXPENSES OFF-NET (DIVESTITURES) PERIOD
YEAR ENDED DECEMBER 31, 1995:
Allowance for doubtful
accounts receivable $ 3,937 $ 5,385 $ 5,875 $ 3,447
Allowance for sales returns 601 601 0
Total receivable allowances $ 4,538 $ 5,385 $ 6,476 $ 3,447
YEAR ENDED DECEMBER 31, 1994:
Allowance for doubtful
accounts receivable $ 5,049 $ 3,317 $ 4,429 $ 3,937
Allowance for sales returns 679 78 601
Total receivable allowances $ 5,728 $ 3,317 $ 4,507 $ 4,538
YEAR ENDED DECEMBER 31, 1993:
Allowance for doubtful
accounts receivable $ 4,709 $ 5,116 $ 4,249 $ (527) $ 5,049
Allowance for sales returns 6,148 1,262 876 (5,855) 679
Total receivable allowances $ 10,857 $ 6,378 $ 5,125 $ (6,382) $ 5,728
THE E.W. SCRIPPS COMPANY
Index to Exhibits
Exhibit Exhibit No.
Number Description of Item Page Incorporated
3.01 Certificate of Incorporation of the Company (1) 3.01
3.02 By-laws of the Company (1) 3.02
4.01 Class A Common Stock Certificate (4) 4
4.02 Form of Indenture (2) 4.1
4.03 Form of Debt Securities (2) 4.2
4.04 Form of Guarantee (2) 4.3
10 Agreement and Plan of Merger by and among The E.W. Scripps Company,
Scripps Howard, Inc., and Comcast Corporation (11) 10.0
10.01 Amended and Restated Joint Operating Agreement, dated January 1, 1979, among
Journal Publishing Company, New Mexico State Tribune Company, and
Albuquerque Publishing Company, as amended (1) 10.01
10.02 Amended and Restated Joint Operating Agreement, dated February 29, 1988, among
Birmingham News Company and Birmingham Post Company (1) 10.02
10.03 Joint Operating Agreement, dated September 23, 1977, between the
Cincinnati Enquirer, Inc., and the Company, as amended (1) 10.03
10.04 Joint Operating Agreement, dated May 24, 1989, between the El Paso Times, Inc.
and the Company, as amended (8) 10.04
10.05 Amended and Restated Joint Operating Agreement, dated October 23, 1986, among
Evansville Press Company, Inc., Hartmann Publications, Inc., and Evansville
Printing Corporation (1) 10.05
10.06 Building Lease, dated April 25, 1984, among Albuquerque Publishing Company,
Number Seven, and Jefferson Building Partnership (1) 10.08A
10.06A Ground Lease, dated April 25, 1984, among Albuquerque Publishing Company,
New Mexico State Tribune Company, Number Seven, and Jefferson Building
Partnership (1) 10.08B
10.07 Agreement, dated August 17, 1989, between United Feature Syndicate, Inc. and
Charles M. Schulz and the Trustees of the Schulz Family Renewal Copyright
Trust, as amended (1) 10.11
10.20 Competitive Advance and Revolving Credit Facility Agreement, dated
September 30, 1988, among the Company, Scripps Howard, Inc., and
Chemical Bank, et.al. (3) 10.15
10.20A Consent and Agreement, dated September 22, 1989, among Scripps Howard, Inc.
and each of the banks party to the Competitive Advance and Revolving Credit
Facility Agreement, dated September 30, 1988 (5) 10.29D
10.20B First Amendment, dated June 30, 1990, to the Competitive Advance and Revolving
Credit Facility Agreement, dated September 30, 1988 (5) 10.29B
10.20C Consent and Second Amendment, dated September 23, 1990, among Scripps Howard, Inc.
and each of the banks party to the Competitive Advance and Revolving Credit
Facility Agreement, dated September 30, 1988 (5) 10.29A
10.20D Consent and Second Amendment, dated September 22, 1991, among
Scripps Howard, Inc. and each of the banks party to the Competitive Advance
and Revolving Credit Facility Agreement dated September 30, 1988 (5) 10.29C
10.20E Third Amendment Agreement dated December 6, 1991, amending the Competitive
Advance and Revolving Credit Facility Agreement dated September 30, 1988 (2) 10.03
10.20F Unconditional Guarantee dated December 6, 1991 by The E. W. Scripps Company
of the indebtedness of Scripps Howard, Inc., under the Competitive Advance and
Revolving Credit Agreement dated September 30, 1988 (2) 10.20
Exhibit Exhibit No.
Number Description of Item Page Incorporated
10.21 Master Note Agreement dated June 15, 1990 (5) 10.34
10.22 Short-Term/Medium-Term Note Facility (5) 10.33
10.22A First Amendment Agreement, dated December 9, 1991, amending Credit Agreement,
dated September 21, 1990, between Scripps Howard, Inc., the Lenders named
therein, and the Travelers Insurance Company, as agent for the Lenders (2) 10.09
10.22B Guaranty, dated December 9, 1991, by The E. W. Scripps Company of the indebtedness
of Scripps Howard, Inc. under the Credit Agreement, dated September 21, 1990,
between Scripps Howard, Inc., the Lenders named therein, and the Travelers
Insurance Company, as agent for the Lenders (2) 10.32
10.23 9.0% Senior Notes due February 15, 1996 (Various agreements totaling $50,000,000) (5) 10.32
10.25 Scripps Howard, Inc. Guaranteed Medium Term Notes, The E. W. Scripps Company
Guarantor Agency Agreement (7) 1
10.25A Scripps Howard, Inc. Medium Term Note, Series A, Fixed Rate (7) 4.1
10.25B Scripps Howard, Inc. Medium Term Note, Series A, Floating Rate (7) 4.2
10.40 Second Amended and Restated Partnership Agreement for Sacramento Cable
Television, dated January 17, 1985, between Scripps Howard Cable Company
and Sacramento and River City Cablevision, Inc. (1) 10.29
10.43A Asset Purchase Agreement Among Scripps Howard Broadcasting Company,
Ellis Communications, Inc., and Elcom of Memphis, Inc. (9) (C)
10.43B Asset Purchase Agreement Between Scripps Howard Broadcasting Company
and Capitol Broadcasting Company, Incorporated (9) (C)
10.43C Asset Purchase Agreement Among Scripps Howard Broadcasting Company,
Baycom Oregon L.P., and Baycom Partners, L.P. (9) (C)
10.44 Agreement and Plan Merger by and among Scripps Howard Broadcasting Company:
The E.W. Scripps Company, and SHB Merger Corporation (10) 10.58
10.52 Description of Annual and Medium Term Bonus Plan (1) 10.34
10.52A Description of Deferred Compensation Plan (1) 10.35A
10.52B Form of Election Agreement for Annual Bonus Plan Deferral (1) 10.35B
10.52C Form of Election Agreement for Medium Term Bonus Plan Deferral (1) 10.35C
10.53 1987 Long-Term Incentive Plan (1) 10.36
10.53A Form of Nonqualified Stock Option Agreement (1) 10.36A
10.53B Form of Restricted Share Award Agreement (1) 10.36B
10.54 Agreement, dated December 24, 1959, between the Company and Charles E. Scripps,
as amended (1) 10.39A
10.54A Assignment, Assumption, and Release Agreement, dated December 31, 1987,
between the Company, Scripps Howard, Inc., and Charles E. Scripps (1) 10.39B
10.54B Amendment, dated June 21, 1988 to December 24, 1959 Agreement between
the Company and Charles E. Scripps (1) 10.39C
Exhibit Exhibit No.
Number Description of Item Page Incorporated
10.55 Board Representation Agreement, dated March 14, 1986, between
The Edward W. Scripps Trust and John P. Scripps (1) 10.44
10.56 Shareholder Agreement, dated March 14, 1986, between the Company and the
Shareholders of John P. Scripps Newspapers (1) 10.45
10.57 Scripps Family Trust Agreement dated October 15, 1992 (6) 1
12 Computation of Ratio of Earnings to Fixed Charges E-4
22 Subsidiaries of the Company E-5
24 Consent of Deloitte & Touche LLP E-6
27 Financial Data Schedule E-7
(1) Incorporated by reference to Registration Statement on Form
S-1 (File No. 33-21714).
(2) Incorporated by reference to Registration Statement on Form
S-3 (File No. 33-43989).
(3) Incorporated by reference to The E.W. Scripps Company Annual
Report on Form 10-K for the year ended December 31, 1988.
(4) Incorporated by reference to The E.W. Scripps Company Annual
Report on Form 10-K for the year ended December 31, 1990.
(5) Incorporated by reference to Form 8 Amendment No. 1 to The
E.W. Scripps Company Annual Report on Form 10-K for the year
ended December 31, 1990.
(6) Incorporated by reference to The E.W. Scripps Company
Current Report on Form 8-K dated October 15, 1992.
(7) Incorporated by reference to The E.W. Scripps Company
Current Report on Form 8-K dated May 15, 1992.
(8) Incorporated by reference to The E.W. Scripps Company Annual
Report on Form 10-K for the year ended December 31, 1991.
(9) Incorporated by reference to Scripps Howard Broadcasting
Company Current Report on Form 8-K dated August 3, 1993.
(10) Incorporated by reference to Registration Statement on Form
S-4 (File No. 33-54591)
(11) Incorporated by reference to The E.W. Scripps Company
Current Report on Form 8-K dated December 28, 1995.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12
( in thousands )
Years ended December 31,
1995 1994 1993
EARNINGS AS DEFINED:
Earnings from operations before income taxes after eliminating
undistributed earnings of 20%- to 50%-owned affiliates $ 179,127 $ 185,611 $ 209,278
Fixed charges excluding capitalized interest and preferred stock
dividends of majority-owned subsidiary companies 15,652 20,966 30,240
Earnings as defined $ 194,779 $ 206,577 $ 239,518
FIXED CHARGES AS DEFINED:
Interest expense, including amortization of debt issue costs $ 11,223 $ 16,274 $ 26,397
Interest capitalized 447 66
Portion of rental expense representative of the interest factor 4,429 3,696 3,181
Preferred stock dividends of majority-owned subsidiary companies 80 80 82
Share of interest expense related to guaranteed debt
50%-owned affiliated company 996 662
Fixed charges as defined $ 16,179 $ 21,046 $ 30,388
RATIO OF EARNINGS TO FIXED CHARGES 12.04 9.82 7.88
THE E.W. SCRIPPS COMPANY EXHIBIT 22
Jurisidiction of
Name of Subsidiary Incorporated
Birmingham Post Company (Birmingham Post Herald) Alabama
Channel 7 of Detroit, Inc., (WXYZ) Michigan
Collier County Publishing Company (The Naples Daily News) Florida
Denver Publishing Company (Rocky Mountain News) Colorado
Evansville Courier Company, Inc., 91.5%-owned Indiana
EWS and LR Cable (Atlanta area, Rome, Ga., Elizabethtown, Ky., Chattanooga and
Knoxville, Tn., and Bluefield, WV. cable television) Colorado
Herald Post Publishing Company, 92.0%-owned (El Paso Herald Post) Texas
John P. Scripps Newspapers, Inc. (Bremerton Sun, Redding Record Searchlight,
San Luis Obispo Telegram-Tribune, Ventura County Newspapers,
Watsonville Register-Pajaronian) California
Knoxville News-Sentinel Company Tennessee
Memphis Publishing Company, 91.3%-owned (The Commercial Appeal) Delaware
New Mexico State Tribune Company (The Albuquerque Tribune) New Mexico
Monterey County Herald Company Pennsylvania
Scripps Howard Broadcasting Company, (WMAR, Baltimore;
WCPO, Cincinnati; WEWS, Cleveland; KSHB, Kansas City;
KNXV, Phoenix; KJRH, Tulsa; WPTV, West Palm Beach,
Home & Garden Television Network, Cinetel) Ohio
Scripps Howard Cable Company, (Lake County, Florida and Longmont,
Colorado cable television) Colorado
Scripps Howard Cable Company of Sacramento, 95%-owned Delaware
Scripps Howard, Inc. (The Cincinnati Post, The Kentucky Post) Ohio
Scripps Howard Productions, Inc. California
Stuart News Company (Stuart News, Jupiter Courier Journal) Florida
Tampa Bay Television, (WFTS) Delaware
United Feature Syndicate, Inc. (United Media, Newspaper Enterprise Association) New York
EXHIBIT 24
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statements Nos. 33-53953, 33-32740, 33-35525, 33-47828, 33-63398
and 33-59701 of The E.W. Scripps Company and subsidiary companies
on Form S-8 and Registration Statement No. 33-43989 of The E.W.
Scripps Company and subsidiary companies on Form S-3 of our report
dated January 22, 1996, appearing in this Annual Report on Form 10-
K of The E.W. Scripps Company and subsidiary companies for the year
ended December 31, 1995.
DELOITTE & TOUCHE LLP
Cincinnati, Ohio
March 28, 1996
5
1000
YEAR
DEC-31-1995
DEC-31-1995
30,021
25,013
170,314
3,447
11,459
334,245
740,687
314,728
1,655,552
266,119
2,177
0
0
801
1,190,625
1,655,552
0
1,030,378
0
0
843,088
6,134
11,223
171,468
74,532
93,589
39,789
0
0
133,378
$1.17
$1.17
