1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from__________________to_________________
COMMISSION FILE NUMBER 1-9329
-------------------------------------
PULITZER PUBLISHING COMPANY
(Exact name of registrant as specified in its charter)
-------------------------------------
DELAWARE 430496290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
900 NORTH TUCKER BOULEVARD, ST. LOUIS, MISSOURI 63101
(Address of principal executive offices)
(314) 340-8000
(Registrant's telephone number, including area code)
-------------------------------------
Securities registered pursuant to Section 12(b) of the Act: Common Stock,
par value $.01 per share - New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
-------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES /X/ NO / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. /X/
- -------------------------------------------------------------------------------
2
The aggregate market value of the voting stock held by non-affiliates
of the registrant was approximately $152,330,063 as of the close of business on
March 14, 1995.
The number of shares of Common Stock, $.01 par value, outstanding as
of March 14, 1995 was 4,474,485.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive Proxy Statement to be used in
connection with its Annual Meeting of Stockholders to be held on April 20, 1995
are incorporated by reference into Part III of this Report.
The registrant's fiscal year ends on the last Sunday of December in
each year. For ease of presentation, the registrant has used December 31 as
the fiscal year-end in this Annual Report. Except as otherwise stated, the
information in this Report on Form 10-K is as of December 31, 1994.
2
3
PART I
ITEM 1. BUSINESS
GENERAL
The Company is engaged in newspaper publishing and television and
radio broadcasting. Its newspaper operations consist of two major metropolitan
dailies: the St. Louis Post-Dispatch (the "Post-Dispatch"), the only major
daily newspaper serving the St. Louis metropolitan area; and The Arizona Daily
Star (the "Star"), serving the Tucson metropolitan area. The Company's
broadcasting operations consist of nine network-affiliated television stations
located in Greenville, South Carolina; New Orleans, Louisiana; Lancaster,
Pennsylvania; Winston-Salem, North Carolina; Albuquerque, New Mexico;
Louisville, Kentucky; Omaha, Nebraska; Daytona Beach/Orlando, Florida and Des
Moines, Iowa; and two radio stations located in Phoenix, Arizona. The Daytona
Beach/Orlando and Des Moines television stations were acquired during 1993.
The Pulitzer Publishing Company was founded by the first Joseph
Pulitzer in 1878 to publish the original St. Louis Post-Dispatch and has
operated continuously since that time under the direction of the Pulitzer
family. Michael E. Pulitzer, a grandson of the founder, currently serves as
Chairman of the Board, President and Chief Executive Officer of the Company.
The following table sets forth certain historical financial
information regarding the Company's two business segments, publishing and
broadcasting, for the periods and at the dates indicated. The publishing
segment includes amounts from Pulitzer Community Newspapers ("PCN") prior to
its disposition on December 22, 1994. (See " -- Publishing -- Chicago
Publications.") The broadcasting segment includes amounts from WESH-TV and
KCCI-TV following their respective acquisitions on June 30, 1993 and September
9, 1993.
YEARS ENDED DECEMBER 31,
------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(IN THOUSANDS)
Operating revenues--net:
Publishing $304,779 $290,146 $285,004 $284,353 $287,241
Broadcasting 180,800 136,839 113,369 109,019 115,531
-------- -------- -------- -------- --------
Total $485,579 $426,985 $398,373 $393,372 $402,772
======== ======== ======== ======== ========
Operating income (loss):
Publishing $ 30,486 $ 23,702 $ 18,179 $ 9,041 $ 12,654
Broadcasting 47,963 27,947 23,311 17,793 21,550
Corporate (3,871) (3,692) (4,856) (3,424) (2,957)
-------- -------- -------- -------- --------
Total $ 74,578 $ 47,957 $ 36,634 $ 23,410 $ 31,247
======== ======== ======== ======== ========
Depreciation and
amortization:
Publishing $ 6,128 $ 6,938 $ 8,174 $ 12,322 $ 8,465
Broadcasting 24,358 16,854 10,695 11,451 13,036
-------- -------- -------- -------- --------
Total $ 30,486 $ 23,792 $ 18,869 $ 23,773 $ 21,501
======== ======== ======== ======== ========
Operating margins
(operating income to
revenues):
Publishing(1) 14.8% 11.8% 10.5% 5.7% 6.2%
Broadcasting 26.5% 20.4% 20.6% 16.3% 18.7%
- ---------------
(1) Operating margins for publishing are stated with St. Louis Agency
adjustment (which is recorded as an operating expense for financial
reporting purposes) added back to publishing operating income.
See " -- Publishing--Agency Agreements."
3
4
DECEMBER 31,
------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(IN THOUSANDS)
Assets:
Publishing $136,818 $156,398 $139,694 $101,842 $109,104
Broadcasting 254,410 270,250 120,380 121,629 125,249
Corporate 77,084 34,970 29,914 20,476 27,273
-------- -------- -------- -------- --------
Total $468,312 $461,618 $289,988 $243,947 $261,626
======== ======== ======== ======== ========
OPERATING STRATEGY
Pulitzer's long-term operating strategy for its media assets is to
maximize each property's growth and profitability through maintenance of
editorial excellence, leadership in locally-responsive news, and tight control
of costs. Management believes that editorial excellence and leadership in
local provision of news will, over the long-term, allow Pulitzer to maximize
its revenue share in each of its respective markets. Experienced local managers
implement the Company's strategy in each media market, with centralized
Pulitzer management providing oversight and guidance in all areas of planning
and operations.
In addition to internal growth, Pulitzer selectively acquires media
properties which the Company believes are consistent with its operating
strategy and present attractive investment opportunities. Management believes
that the Company's strong cash flow and conservative capital structure, among
other reasons, will enable the Company to pursue additional acquisitions as
opportunities arise, although no acquisitions are presently contemplated.
Pulitzer believes that cost controls are an important tool in the
management of media properties which are subject to significant fluctuations in
advertising volume. The Company believes that tight control of costs permits
it to respond quickly when positive operating conditions offer opportunities to
expand market share and profitability and, alternatively, when deteriorating
operating conditions require cost reductions to protect profitability.
The Company aggressively employs production technology in all of its
media operations in order to minimize production costs and produce the most
attractive and timely news product for its readers, viewers and listeners.
Pulitzer's media operations are geographically diverse, placing the
Company in the Midwest, Southwest, Southeast, and Northeast regions of the
United States. Due to the close relationship between economic activity and
advertising volume, the Company believes that geographic diversity provides the
Company with valuable protection from regional economic variances.
PUBLISHING
The Company intends to continue the tradition of reporting and
editorial excellence that has resulted in 17 Pulitzer Prizes* over the years.
While opportunities to increase revenues in publishing are limited, management
believes that with strict financial controls and cost reductions, newspaper
publishing can produce good financial returns. In addition, given the mature
nature of the newspaper industry, management is continuing to seek ways to
leverage its newspaper assets, such as developing electronic publishing.
Further, the Company is pursuing a number of other initiatives to augment
advertising revenues. These include voice services delivered by phone,
electronic dissemination of information and alternative newspaper delivery
systems to provide advertisers with either targeted or total market coverage.
*Pulitzer Prizes are awarded annually at Columbia University by the Pulitzer
Prize Board, an independent entity affiliated with the Columbia University
School of Journalism, founded by the first Joseph Pulitzer.
4
5
The Company publishes two major metropolitan daily newspapers, the
St. Louis Post-Dispatch and The Arizona Daily Star. Both daily newspapers have
weekly total market coverage sections to provide advertisers with market
saturation.
The Company's publishing revenues are derived primarily from
advertising and circulation, averaging approximately 86 percent of total
publishing revenue over the last five years. Advertising rates and rate
structures and resulting revenues vary among publications based, among other
things, on circulation, type of advertising, local market conditions and
competition. The following table provides a breakdown of the Company's
publishing revenues for the past five years.
YEARS ENDED DECEMBER 31,
------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(IN THOUSANDS)
Advertising:
Retail $ 88,450 $ 85,860 $ 86,846 $ 88,723 $ 89,932
General 7,830 7,154 9,476 9,534 9,754
Classified 84,738 75,670 73,692 75,149 81,968
-------- -------- -------- -------- --------
Total 181,018 168,684 170,014 173,406 181,654
Circulation 77,941 78,661 77,713 73,430 67,351
Other 45,820 42,801 37,277 37,517 38,236
-------- -------- -------- -------- --------
Total $304,779 $290,146 $285,004 $284,353 $287,241
======== ======== ======== ======== ========
- ---------------
Note Publishing revenues include amounts from Pulitzer Community Newspapers
("PCN") prior to its dispostion on December 22, 1994.
ST. LOUIS POST-DISPATCH
Founded in 1878 by the first Joseph Pulitzer, the Post-Dispatch has a
long history of reporting and editorial excellence and innovation in newspaper
publishing under the direction of the Pulitzer family. The Post-Dispatch is a
morning daily and Sunday newspaper serving primarily the greater St. Louis
metropolitan area. St. Louis is the sixteenth largest metropolitan statistical
area in the United States (Source: Sales and Marketing Management). Based on
Audit Bureau of Circulations ("ABC") Publisher's Statement and reports for the
six-month period ended September 30, 1994, the market penetration (i.e.,
percentage of households reached) of both the Post-Dispatch's daily and Sunday
editions is seventh in the United States among major metropolitan newspapers.
The newsstand price is $0.50 for the daily paper and $1.25 for the Sunday
edition.
The Post-Dispatch operates under an Agency Agreement between the
Company and The Herald Company, Inc. (the "Herald Company") pursuant to which
the Company performs all activities relating to the day-to-day operations of
the newspaper, but pursuant to which it must share one-half of the Agency's
operating income or one-half of the Agency's operating loss with the Herald
Company. The following table sets forth for the past five years certain
circulation and advertising information for the Post-Dispatch and operating
revenues for the St. Louis Agency, all of which are included in the Company's
consolidated financial statements. See " -- Publishing -- Agency Agreements."
YEARS ENDED DECEMBER 31,
------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Post-Dispatch
circulation(1):
Daily (including
Saturday) 339,348 341,797 341,855 364,935 374,267
Sunday 552,764 564,761 566,095 573,237 561,773
5
6
YEARS ENDED DECEMBER 31,
------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Advertising linage
(in thousands of
inches):
Full run (all zones)
Retail 912 913 873 878 888
General 75 62 87 91 92
Classified 1,039 977 921 963 1,179
-------- -------- -------- -------- --------
Total 2,026 1,952 1,881 1,932 2,159
Part run 591 481 313 350 426
-------- -------- -------- -------- --------
Total inches 2,617 2,433 2,194 2,282 2,585
========= ======== ======== ======== ========
Operating revenues
(in thousands):
Advertising $125,704 $116,951 $115,206 $115,266 $117,844
Circulation 61,207 62,345 61,371 57,522 52,221
Other(2) 23,490 22,387 20,754 19,829 18,673
-------- -------- -------- -------- --------
Total $210,401 $201,683 $197,331 $192,617 $188,738
======== ======== ======== ======== ========
- ---------------
(1) Amounts for 1994 based on Company records for the twelve-month period
ended September 30, 1994. All other years based on ABC Publisher's
Statement for the twelve-month period ended September 30.
(2) Primarily revenues from preprinted inserts.
The Post-Dispatch's reporting and editorial excellence is evidenced by
the 17 times it and its staff members have been awarded the Pulitzer Prize for
outstanding accomplishments in journalism and by a number of other journalistic
awards received by members of its staff in recent years.
The Post-Dispatch has consistently been a leader in technological
innovation in the newspaper industry. It was the first major metropolitan
newspaper in the United States to be printed by the offset process. Currently,
sophisticated computer systems are used for writing, editing, composing and
producing the printing plates used in each edition. In the preparation of news
and advertising sections, the Post-Dispatch utilizes a Scitex color graphics
system which automates the processing of film and color separations. This
system is part of an ongoing project intended to give the Post-Dispatch the
capability of full-page pagination. At presstime, a microwave link allows the
Post-Dispatch to send full-page images and then print newspapers simultaneously
in its downtown and suburban plants, thereby allowing it to deliver newspapers
to suburban readers earlier in the morning. In the distribution process,
certain sections of the newspaper as well as advertising supplements are
handled using a sophisticated palletized inserting operation. This allows the
Post-Dispatch to efficiently distribute into selected geographic areas as
necessary. The Company's commitment to the ongoing enhancement of its
operating systems has enabled the Post-Dispatch to offer a continually
improving product to both readers and advertisers while also realizing
substantial savings in labor cost. The Company believes the Post-Dispatch has
adequate facilities to sustain up to a 30 percent increase in daily circulation
without incurring significant capital expenditures.
The Post-Dispatch is distributed primarily through independent home
delivery carriers and single copy dealers. Home delivery accounted for
approximately 76 percent of circulation for the daily Post-Dispatch and 60
percent of circulation for the Sunday edition during 1994.
THE ARIZONA DAILY STAR
Founded in 1877, the Star is published in Tucson, Arizona, by the
Company's wholly-owned subsidiary, Star Publishing Company. The Star, a morning
and Sunday newspaper, and the Tucson Citizen (the "Citizen"), an afternoon
newspaper owned by Gannett Co., Inc. ("Gannett"), are southern Arizona's
6
7
leading dailies. The Star and the Citizen are published through an agency
operation (the "Tucson Agency") and have a combined weekday circulation of
approximately 146,000. Tucson is currently the 74th largest metropolitan
statistical area in the country with a population of approximately 722,600
(Source: Sales and Marketing Management).
The Tucson Agency operates through TNI Partners, an agency partnership
which is owned half by the Company and half by Gannett. TNI Partners is
responsible for all aspects of the business of the two newspapers other than
editorial opinion and gathering and reporting news. Revenues and expenses are
generally shared equally by the Star and the Citizen. Unlike the St. Louis
Agency, the Company's consolidated financial statements include only its share
of the combined operating revenues and operating expenses of the two
newspapers. See "-- Publishing -- Agency Agreements."
As a result of the Tucson Agency, the financial performance of the
Company's Star Publishing Company subsidiary is directly affected by the
operations and performance of both the Star and the Citizen. The following
table sets forth certain information concerning circulation and combined
advertising linage of the Star and the Citizen and the Company's share of the
operating revenues of the Star and the Citizen for the past five years.
YEARS ENDED DECEMBER 31,
------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Circulation(1):
Star daily 98,060 96,926 94,496 91,661 88,413
Citizen daily 48,279 49,560 50,146 50,475 50,654
Star Sunday 179,748 175,321 170,500 166,657 165,951
Combined advertising
linage (in thousands
of inches):
Full run (all zones)
Retail 1,565 1,675 1,750 1,616 1,775
General 50 45 42 60 90
Classified 1,608 1,462 1,362 1,222 1,112
------- ------- ------- ------- -------
Total 3,223 3,182 3,154 2,898 2,977
Part run 116 98 157 150 100
------- ------- ------- ------- -------
Total inches 3,339 3,280 3,311 3,048 3,077
======= ======= ======= ======= =======
Operating revenues
(in thousands):
Advertising $28,459 $25,562 $24,202 $23,569 $24,570
Circulation 11,434 11,065 10,757 10,061 9,381
Other(2) 5,833 5,298 4,582 4,976 5,515
------- ------- ------- ------- -------
Total $45,726 $41,925 $39,541 $38,606 $39,466
======= ======= ======= ======= =======
- ---------------
(1) Amounts for 1994 based on Company records for the 52 week period ended
December 31. All other years based on ABC Publisher's Statement for
the 52 week period ended December 31.
(2) Primarily revenues from preprinted inserts.
In 1994, the Star's daily edition accounted for approximately 67
percent of the combined daily circulation of the Tucson Agency publications.
The Star's daily and Sunday editions accounted for approximately 60 percent of
the agency's total advertising linage.
The Star and the Citizen are printed at TNI Partners' modern,
computerized facility equipped with two, eight-unit Metro offset presses.
Present inserter equipment enables all home delivery supplements to be inserted
on line at press speeds. In addition, the writing, editing and composing
functions have been computerized, increasing efficiency and reducing workforce
requirements.
7
8
The newsstand prices of the daily editions of the Star and the Citizen
are $0.50 and $0.35, respectively, and the newsstand price of the Sunday
edition of the Star is $1.50. The Star and the Citizen are distributed by
independent contractors.
CHICAGO PUBLICATIONS
On December 22, 1994, the Company sold Pulitzer Community Newspapers,
Inc., a wholly-owned subsidiary with operations in the Chicago area. Since
1986, PCN's primary operations consisted of the publication of a daily suburban
newspaper, the Daily Southtown, and commercial printing services for several
national and local newspapers. The sale of PCN completes the Company's exit of
the Chicago area after having closed down and partially sold its weekly
community newspaper business, Lerner Newspapers, in October 1992.
The Company's 1994 consolidated and publishing segment operating
results include substantially a full year of PCN operations. During 1994,
advertising, preprints, circulation and contract printing accounted for
approximately 55 percent, 4 percent, 11 percent and 28 percent, respectively,
of PCN's total operating revenues of $48,652,000. The sale of PCN is not
expected to have a significant impact on the Company's future earnings results.
AGENCY AGREEMENTS
Newspapers in approximately 18 cities operate under joint operating or
agency agreements. Agency agreements generally provide for newspapers
servicing the same market to share certain printing and other facilities and to
pool certain revenues and expenses in order to decrease aggregate expenses and
thereby allow the continuing operation of multiple newspapers serving the same
market. The Newspaper Preservation Act of 1970 permits joint operating
agreements between newspapers under certain circumstances without violation of
the Federal antitrust laws.
St. Louis Agency. An agency operation between the Company and the
Herald Company is conducted under the provisions of an Agency Agreement, dated
March 1, 1961, as amended. For many years, the Post-Dispatch was the afternoon
and Sunday newspaper serving St. Louis, and the Globe-Democrat was the morning
paper and also published a weekend edition. Although separately owned, from
1961 through February 1984, the publication of both the Post-Dispatch and the
Globe-Democrat was governed by the St. Louis Agency Agreement. From 1961 to
1979, the two newspapers controlled their own news, editorial, advertising,
circulation, accounting and promotion departments and Pulitzer managed the
production and printing of both newspapers. In 1979, Pulitzer assumed full
responsibility for advertising, circulation, accounting and promotion for both
newspapers. In February 1984, after a number of years of unfavorable financial
results at the St. Louis Agency, the Globe-Democrat was sold by the Herald
Company and the St. Louis Agency Agreement was revised to eliminate any
continuing relationship between the two newspapers and to permit the
repositioning of the daily Post-Dispatch as a morning newspaper.
Following the renegotiation of the St. Louis Agency Agreement at the
time of the sale of the Globe-Democrat, the Herald Company retained the
contractual right to half the profits or losses (as defined) of the operations
of the St. Louis Agency, which from February 1984 forward consisted solely of
the publication of the Post-Dispatch. The St. Louis Agency Agreement provides
for the Herald Company to share half the cost of, and to share in a portion of
the proceeds from the sale of, capital assets used in the production of the
Post-Dispatch. Under the St. Louis Agency Agreement, Pulitzer supervises,
manages and performs all activities relating to the day-to-day publication of
the Post-Dispatch and is solely responsible for the news and editorial policies
of the newspaper.
The consolidated financial statements of the Company include all the
operating revenues and expenses of the St. Louis Agency. An agency adjustment
is provided as an operating expense which reflects that portion of the
operating income of the St. Louis Agency allocated to the Herald Company.
Under the
8
9
St. Louis Agency Agreement, for fiscal 1994, 1993, 1992, 1991, and 1990, the
Company paid the Herald Company $14,706,000, $10,660,000, $11,690,000,
$7,290,000, and $5,253,000, respectively, in respect of the Herald Company's
share of the operating income of the St. Louis Agency. As a result of such
agency adjustment, the Company is, and during the term of the St. Louis Agency
will continue to be, entitled to only half the profits (as defined) from the
operations of the St. Louis Agency, the amount of which cannot be determined
until the end of each fiscal year.
The current term of the St. Louis Agency Agreement runs through
December 31, 2034, following which either party may elect to renew the
agreement for successive periods of 30 years each.
Tucson Agency. The Tucson Agency Agreement has, since 1940, governed
the joint operations of the Star and Citizen. For financial reporting purposes
the operations of the Tucson Agency are reflected in the Company's consolidated
financial statements differently from the operations of the St. Louis Agency.
The consolidated financial statements of the Company include only the Company's
share of the combined revenues, operating expenses and income of the Star and
Citizen. TNI Partners, as agent for the Company and Gannett, is responsible for
advertising and circulation, printing and delivery and collection of all
revenues of the Star and the Citizen. The Board of Directors of TNI Partners
presently consists of three directors chosen by the Company and three chosen by
Gannett. Budgetary, personnel and other non-news and editorial policy matters,
such as advertising and circulation policies and rates or prices, are
determined by the Board of Directors of TNI Partners. Each newspaper is
responsible for its own news and editorial content. Revenues and expenses are
recorded by TNI Partners, and the resulting profit is split 50-50 between
Pulitzer and Gannett. Both partners have certain administrative costs which
are borne separately. As a result of the Tucson Agency, the Star and the
Citizen benefit from increases and can be adversely affected by decreases in
each other's circulation.
The Tucson Agency Agreement runs through June 1, 2015, and contains
renewal provisions for successive periods of 25 years each.
COMPETITION
The Company's publications compete for readership and advertising
revenues in varying degrees with other metropolitan, suburban, neighborhood and
national newspapers and other publications as well as with television, radio,
direct mail and other news and advertising media. Competition for advertising
is based upon circulation levels, readership demographics, price and advertiser
results, while competition for circulation is generally based upon the content,
journalistic quality and price of the publication. In St. Louis and its
surrounding suburban communities, the Post-Dispatch's competition for
circulation and advertising revenues includes paid suburban daily newspapers as
well as a chain of community newspapers and shoppers. These community
newspapers and shoppers target selected geographic markets throughout the St.
Louis metropolitan area.
Due to the agency relationship existing in Tucson, the Star and the
Citizen cannot be viewed as competitors for advertising or circulation
revenues. The Star and the Citizen compete primarily against other media and
against Phoenix-area and suburban, neighborhood and national newspapers and
publications.
EMPLOYEE RELATIONS
The Company has contracts with substantially all of its production
unions related to the Post-Dispatch, with expiration dates ranging from
February 1999 through September 2002. In addition, the Company signed a new
eight-year contract with the St. Louis Newspaper Guild in December 1994. All
of the Post-Dispatch labor contracts contain no strike provisions.
TNI Partners has a one-year contract, expiring December 31, 1995, with
Tucson Graphic Communications Union Local No. 212, covering certain pressroom
employees.
9
10
RAW MATERIALS
The publishing segment's results are significantly impacted by the
cost of newsprint which accounted for approximately 19 percent of the segment's
total 1994 operating expenses. During 1994, the Company used approximately
109,900 metric tons of newsprint in its production process. The Company's
recurring newsprint cost and metric tons of consumption for 1994, after giving
effect to the St. Louis Agency adjustment and excluding PCN, were approximately
$22,800,000 and 50,600 metric tons, respectively. In the last five years, the
Company's average cost per ton of newsprint has varied from a low of $402 per
ton in 1992 to a high of $495 per ton in 1990. After declining during the
first half of 1994, newsprint prices have since been on an upward trend through
early 1995. For the first quarter of 1995, the Company expects its average
cost per metric ton to increase to approximately $555. Based upon notification
from the Company's newsprint vendors of an increase scheduled for May 1995, the
Company's average cost per metric ton for the second quarter and the balance of
the year (assuming no further increases) are estimated to be approximately $625
and $680, respectively. These estimated higher newsprint prices for fiscal
year 1995 are expected to have a significant effect on the performance of the
publishing segment. No assurance, however, can be given that the estimated
newsprint average cost increases for fiscal 1995 will be as projected, and
actual average cost increases may be higher or lower.
The Post-Dispatch obtains the newsprint necessary for its operations
from six separate suppliers, three of which are Canadian. The Post-Dispatch has
guaranteed the future supply of certain volume levels through long-term
agreements with three of these newsprint suppliers. The Company believes that
the absence of long-term agreements with the remaining three newsprint
suppliers will not limit the Company's ability to obtain newsprint at
competitive prices.
TNI Partners obtains the newsprint necessary for the Tucson Agency's
operations pursuant to an arrangement with Gannett, the owner of the Citizen.
Gannett purchases newsprint on behalf of TNI Partners under various contractual
arrangements and agreements. Newsprint is also purchased on the spot market.
BROADCASTING
The Company's broadcasting operations currently consist of the
ownership and operation of eight network-affiliated VHF television stations,
one network-affiliated UHF television station, two satellite network television
stations and one AM and one FM radio station. Pulitzer Broadcasting has
traditionally focused on mid-sized television markets. The Company has
diversified its revenues by purchasing properties in different geographic
regions of the United States, thus insulating itself, somewhat, from regional
economic downturns. The local management of each of the Company's broadcasting
properties are partially compensated based on the cash flow performance of
their respective stations. Senior management believes that the success of a
local television station is driven by strong local news programming, and that
the Company has developed a particular strength in local news programming. As
is the case with all Company operations, there is major emphasis on cost
control in the broadcasting segment.
10
11
TELEVISION
The following table sets forth certain information concerning the
television stations which the Company owns and the markets in which they
operate.
COMMERCIAL
DMA-TV STATIONS EXPIRATION
HOUSEHOLDS DMA LOCAL OPERATING DATE OF
CALL NETWORK IN NATIONAL MARKET IN DATE FCC
STATION AND MARKET LETTERS AFFILIATION MARKET (1) RANK (2) RANK (3) MARKET (3) ACQUIRED LICENSE
- ------------------ ------- ----------- ---------- -------- -------- ---------- -------- -------
VHF STATIONS (5):
Greenville/Spartanburg/
Asheville, SC/NC WYFF NBC 672,070 35 1 6 2/28/83 12/01/96
New Orleans, LA WDSU NBC 615,180 41 2 6 12/14/89 6/01/92(4)
Harrisburg/Lancaster/
Lebanon/York, PA WGAL NBC 577,980 44 1 7 8/13/79 8/01/99
Greensboro/Winston-Salem/
High Point, NC WXII NBC 548,460 48 3 7 2/28/83 12/01/96
Daytona Beach/Orlando/
Melbourne, FL WESH NBC 983,410 22 2 10 6/30/93 2/01/97
Albuquerque, NM (6) KOAT ABC 540,970 49 1 11 6/1/69 10/01/98
Omaha, NE KETV ABC 361,280 74 1 4 4/15/76 6/01/98
Des Moines, IA KCCI CBS 364,980 73 1 4 9/9/93 2/01/98
UHF STATIONS (5):
Louisville, KY WLKY CBS 538,640 50 3 6 6/23/83 8/01/97
- ---------------
(1) Based upon the Designated Market Area ("DMA") for the station as reported
in the November, 1994 Nielsen Station Index ("NSI"). DMA is a
geographic area defined as all counties in which the local stations
receive a preponderance of total viewing hours. DMA data is a primary
factor in determining television advertising rates. NOTE: Previous
years' schedules include market data from the Arbitron Company which
ceased to provide local television market reports in 1994.
(2) National DMA rank for each market as reported in the November, 1994 NSI.
(3) Based on November, 1994 NSI audience estimates, 7:00am-1:00am,
Sunday-Saturday. The number of commercial stations operating in market
does not include public broadcasting stations, satellite stations or
translators which rebroadcast signals from distant stations.
(4) See " -- Federal Regulation of Broadcasting -- Broadcast Licenses."
(5) VHF (very high frequency) stations transmit on channels 2 through 13, and
UHF (ultra high frequency) stations transmit on channels 14
through 69. Technical factors, such as station power, antenna location
and height and topography of the area served, determine geographic market
served by a television station. In general, a UHF station requires
greater power or antenna height to cover the same area as a VHF station.
(6) The Company is also the licensee of KOVT, a satellite TV station licensed
to Silver City, New Mexico and the holder of a construction
permit to build a satellite TV station, KOFT, in Gallup, New Mexico.
Pulitzer has filed a Petition for Rule Making with the FCC requesting
that the community of license of KOFT be changed from Gallup to
Farmington, New Mexico. In 1993, the Company purchased the operating
assets of KVIO, a satellite TV station licensed to Carlsbad, New Mexico.
The call letters of KVIO were subsequently changed to KOCT.
11
12
Average audience share, market rank and the number of stations serving
the market for each television station which the Company currently owns for the
past five years are shown in the following table.
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
--------------------- --------------------- ---------------------- --------------------- ---------------------
Stations Stations Stations Stations Stations
Serving Serving Serving Serving Serving
Market/ Market/ Market/ Market/ Market/
Average Local Average Local Average Local Average Local Average Local
Audience Market Audience Market Audience Market Audience Market Audience Market
Station Share(1) Rank(2) Share(1) Rank(2) Share(1) Rank(2) Share(1) Rank(2) Share(1) Rank(2)
- ------- -------- ------- -------- ------- -------- ------- -------- ------- -------- -------
WYFF 27% 6/1 29% 6/2 30% 6/2 31% 6/1 32% 6/1
WDSU 20 6/2 21 5/2 23 5/2 24 5/2 23 5/2
WGAL 36 7/1 36 7/1 35 6/1 36 6/1 37 6/1
WXII 23 7/3 26 7/3 25 7/3 27 7/3 27 8/2
WESH(3) 21 10/2 23 9/2 25 7/2 25 8/2 27 7/2
KOAT 30 11/1 32 10/1 33 10/1 32 12/1 32 10/1
KETV 27 4/1 29 4/1 29 4/1 31 4/1 31 4/1
KCCI(4) 41 4/1 35 4/1 35 4/1 33 4/1 37 4/1
WLKY(5) 28 6/3 29 5/1 28 5/1 26 5/3 22 5/3
- ---------------
(1) Represents the number of television households tuned to a specific
station 9:00am-Midnight, Sunday-Saturday, as a percentage of Station
Total Households. Source: 1994 data from February, May and November
Nielsen Station Index ("NSI"). Schedules for 1990-1993 include both NSI
and Arbitron Ratings Audience Estimates information. NOTE: The Arbitron
Company ceased to provide local television market reports in 1994.
(2) Stations serving market and local market rank data for 1994 based on
November, 1994 NSI. Schedules for 1990-1993 include both NSI and
Arbitron Ratings Audience Estimates information.
(3) Acquired June 30, 1993.
(4) Acquired September 9, 1993.
(5) Switched affiliations from ABC to CBS in September, 1990.
12
13
The Company's television stations are affiliated with national
television networks under ten-year contracts which are automatically renewed
for successive five-year terms unless the Company or network exercises its
right to cancel. Prior to executing new contracts in early 1995, the stations'
old network affiliation agreements were for two year periods with automatic
renewal provisions.
The ratings of the Company's television stations are affected by
fluctuations in the national ratings of its affiliated networks. The Company
believes that such network rating fluctuations are normal for the broadcasting
industry and in the past has not sought to change its network affiliations
based on the decline of the national ratings of an affiliated network.
ADVERTISING REVENUES
The principal source of broadcasting revenues for the Company is the
sale of time to advertisers. The Company derives television broadcasting
revenues from local and national spot advertising and network compensation.
Local advertising consists of short announcements and sponsored programs on
behalf of advertisers in the immediate area served by the station. National
spot advertising generally consists of short announcements and sponsored
programs on behalf of national and regional advertisers. Network revenue is
based upon a contractual agreement with a network and is dependent upon the
network programs broadcast by the stations. The following table sets forth the
television broadcasting revenues received by the Company from each of these
types of advertising during the past five years.
YEARS ENDED DECEMBER 31,
------------------------
1994 1993(1) 1992 1991 1990
---- ------- ---- ---- ----
(IN THOUSANDS)
Local $82,463 $63,565 $49,670 $46,969 $49,199
National spot 76,925 52,869 44,594 41,252 43,926
Network 6,557 5,840 5,210 5,988 6,565
Other 1,832 1,665 1,575 1,837 1,671
-------- -------- -------- ------- --------
Total $167,777 $123,939 $101,049 $96,046 $101,361
======== ======== ======== ======= ========
- ---------------
(1) The Company acquired television stations WESH and KCCI on June 30,
1993 and September 9, 1993, respectively.
The Company believes that its stations are particularly strong in
local news programming, an important revenue source for network-affiliated
stations. Local news programs generate approximately a quarter of each
station's revenues.
Local time spots are sold by the Company's sales personnel at each
broadcast station. Company sales departments make extensive use of computers
to track and schedule all commercial spots sold, to maintain the broadcast
station operating schedule, to determine time spot availability and to record
accounts receivable. National spots are sold by the Company's three national
sales representative firms.
Advertising rates are based primarily on audience size, audience
share, demographics and time availability. The Company's ability to maximize
advertising revenues is dependent upon, among other things, its management of
the inventory of advertising time available for sale.
PROGRAMMING
The national television networks with which the Company's stations are
affiliated offer a variety of sponsored and unsponsored programs to affiliated
stations. The affiliated stations have the right of first refusal before the
programs may be offered to any other television station in the same city.
13
14
When not broadcasting network programs, the Company's stations
broadcast local news programs, movies, syndicated programs acquired from
independent sources and public service programs. Movies and syndicated
programs have frequently been shown previously on network or cable television.
Syndicated programs are programs that are licensed to individual stations for
one or more showings in a particular market as distinguished from programs
licensed for national distribution through one of the major networks.
The Company's stations make programming decisions on the basis of a
number of factors, including program popularity and cost. On occasion, the
Company has not renewed a popular program when syndication costs exceeded the
level the Company believed appropriate compared to the potential advertising
revenues to be derived from the program.
RADIO
The Company owns two radio stations serving the Phoenix, Arizona
market: KTAR (AM) and KKLT (FM). Phoenix is the 20th largest Metro Market in
the United States, and the Phoenix Radio Metro Area is served by thirteen AM
and seventeen FM radio stations. KTAR (AM) ranks fourth in the Phoenix market
and KKLT (FM) ranks ninth, with 5.8 percent and 4.3 percent average quarter
hour market shares, respectively (source: Arbitron Radio Ratings Summary-Fall
1994). KTAR (AM) operates as a news/talk/sports radio station while KKLT (FM)
has an adult contemporary music format. The FCC licenses for KTAR (AM) and
KKLT (FM) expire on June 1, 1997.
Advertising rates charged by a radio station are based primarily upon
the number of homes in the station's primary market, the number of persons
using radio in the area and the number of persons listening to the station.
Advertising is sold by a national sales representative and by the stations'
advertising sales personnel, consisting of approximately twenty-one
salespersons and three sales managers. The Company's radio stations manage
their inventory of available advertising time in much the same manner as the
television stations. Radio broadcasting net revenues during each of the past
five years were as follows: 1994 - $13,023,000; 1993 - $12,900,000; 1992 -
$12,320,000; 1991 - $12,973,000; and 1990 - $14,170,000.
COMPETITION
Competition for television and radio audiences is based primarily on
programming content. Programming content for the Company's television stations
is significantly affected by network affiliation and by local programming
activities. Competition for advertising is based on audience size, audience
share, audience demographics, time availability and price. The Company's
television stations compete for audience and advertising with other television
stations and with radio stations, cable television and other news, advertising
and entertainment media serving the same markets. In addition, the Company's
television stations compete for audience and, to a lesser extent, advertising,
with other forms of home entertainment such as home video recorders and direct
broadcast satellite service. Cable systems, which operate generally on a
subscriber payment basis, compete by carrying television signals from outside
the broadcast market and by distributing signals from outside the broadcast
market and by distributing programming that is originated exclusively for cable
systems. The Company's television stations are also affected by local
competitive conditions, including the number of stations serving a particular
area and the programming content of those stations.
The Company believes that the competitive position of its radio and
television properties is enhanced by the Company's policy of operating its
broadcasting properties with a view to long-term growth. Strong local news
programming is an important factor for the competitive position of the
Company's television stations. The Company's system for managing advertising
inventory of its television and radio stations is also an important factor in
its ability to compete effectively for advertising revenues.
The Company's radio stations compete for audience and advertising with
other radio and television stations in the Phoenix area and with other print,
advertising and entertainment media. The Company's radio stations compete for
audience primarily on the basis of their broadcasting format.
14
15
FEDERAL REGULATION OF BROADCASTING
Television and radio broadcasting are subject to the jurisdiction of
the Federal Communications Commission ("FCC") pursuant to the Communications
Act of 1934, as amended (the "Communications Act"). The Communications Act
prohibits the public dissemination of radio and television broadcasts except in
accordance with a license issued by the FCC and empowers the FCC to issue,
revoke, modify and renew broadcasting licenses and adopt such regulations as
may be necessary to carry out the provisions of the Communication Act.
BROADCAST LICENSES
Broadcasting licenses are granted for a maximum period of seven years
in the case of radio stations and five years in the case of television stations
and are renewable upon application. During the period when a renewal
application is pending, competing applicants may file for the frequency being
used by the renewal applicant. Petitions to deny license renewals and other
applications may also be filed against licensees and applicants. Such petitions
can be used by interested parties, including members of the public, to raise
issues before the FCC.
An application to renew the license of WDSU, New Orleans, was filed by
the Company with the FCC on January 19, 1992; the National Black Media
Coalition has filed with the FCC a petition to deny the grant of the
application based on alleged violations of the FCC's equal employment
opportunity rules. The Company has filed an opposition to the aforementioned
petition and is confident of a favorable outcome.
MULTIPLE OWNERSHIP
FCC regulations govern the multiple, common and cross ownership of
broadcast stations. Under the FCC's current multiple ownership rules, a
license for an AM radio or FM radio or television station will not be granted
if (i) the applicant already owns, operates or controls or has an interest in
another television station of the same type which provides service to
substantially the same area as the television station owned, operated or
controlled by the applicant, or (ii) the grant of the license would result in
the applicant's owning, operating or controlling or having an interest in more
than 20 AM stations, more than 20 FM stations or more than 12 television
stations, except in special situations. With respect to television stations,
there is an additional ownership limit based on audience reach. Under the
audience reach limitation, an entity may acquire cognizable ownership interests
in up to 12 markets, if the households reached by the television stations do
not exceed 25% of the national television household audience as determined by
the Arbitron ADI market rankings.
The common ownership rules generally prohibit ownership of a VHF
television station and either an AM or FM radio station in the same market, and
the AM-FM radio ownership rules prohibit granting a license to operate an AM or
FM radio station or television station to an applicant who already owns,
operates or controls or has an interest in a daily newspaper in the community
in which the broadcast license is requested. Further, the cross ownership
rules prohibit a cable television system from carrying the signal of a
television broadcast station if such system owns, operates, controls or has an
interest in a broadcast television station which serves substantially the same
area that the cable television system is serving. The FCC and the Congress are
currently considering the elimination or liberalization of various national and
local restrictions on the ownership of television stations.
RECENTLY ADOPTED AND PROPOSED FCC RULE CHANGES
There are currently pending before Congress bills which would allow
ownership of cable systems by the Bell Operating Companies located outside of
their service areas. There is pending before the courts an appeal of a
decision of the FCC which authorizes telephone companies to offer a type of
cable service, known as "video dialtone," by furnishing transmission facilities
on a common carrier basis to customers who desire to distribute video
programming.
15
16
It is the current policy of the FCC to rely increasingly upon the
interplay of marketplace forces in lieu of direct government regulation and to
encourage increasing competition among different electronic communication
media. The FCC has granted several applications proposing to establish direct
broadcast satellite systems ("DBS"). Several other new technologies are in
their developmental stages, such as High Definition Television capable of
transmitting television pictures with higher resolution, truer color and wider
aspect ratios, and Digital Audio Broadcasting capable of transmitting radio
signals on a terrestrial basis and by space satellites. The potential impact
of these technologies on the Company's business cannot be predicted.
A controversy exists among television broadcasters, cable companies
and program producers relating to rules requiring cable television systems
("cable systems") to carry the signals of local television stations. On
March 11, 1993, the FCC adopted rules concerning the mandatory signal carriage
("must carry") rights of commercial and noncommercial television stations that
are local to the area serviced by a cable system and the requirement
prohibiting cable operators and other multichannel video programming providers
from carrying television stations without obtaining their consent
("retransmission consent") in certain circumstances. Later that year, a
three-judge panel of the United States District Court found that the FCC rules
governing must carry and retransmission consent are constitutional. On appeal,
the United States Supreme Court vacated the District Court decision and
remanded the case back to the three-judge panel for further proceedings. While
the case is pending, the must-carry provisions of the 1992 Cable Act remain in
effect, as do the Commission's must-carry rules and retransmission consent
requirements.
LIMITATIONS ON OWNERSHIP OF THE COMPANY'S STOCK
The Communications Act prohibits the assignment or transfer of
broadcasting licenses, including the transfer of control of any corporation
holding such licenses, without the prior approval of the FCC. The
Communications Act would prohibit the Company from continuing to control
broadcast licenses if, in the absence of FCC approval, any officer of the
Company or more than one-fourth of its directors were aliens, or if more than
one-fourth of the Company's capital stock were acquired or voted directly or
indirectly by alien individuals, corporations, or governments, or if it
otherwise fell under alien influence or control in a manner determined by the
FCC to be contrary to the public interest.
Because of the multiple, common and cross ownership rules, if a holder
of the Company's common stock or Class B common stock acquired an attributable
interest in the Company and had an attributable interest in other broadcast
stations, a cable television operation or a daily newspaper, there could be a
violation of FCC regulations depending upon the number and location of the
other broadcasting stations, cable television operations or daily newspapers
attributable to such holder.
The information contained under this heading does not purport to be a
complete summary of all the provisions of the Communications Act and the rules
and regulations of the FCC thereunder or of pending proposals for other
regulation of broadcasting and related activities. For a complete statement of
such provisions, reference is made to the Communications Act, to such rules and
regulations and to such pending proposals.
JOINT VENTURE INVESTMENT
On January 1, 1994, the Company acquired a one-third interest in RXL
Communications ("RXL") for $5,000,000. The joint venture, originally formed
by affiliates of Morgan-Murphy Broadcasting and The Rocky Company in 1988,
produces and broadcasts interactive educational programming as a curriculum
supplement to school systems across the United States. In addition, RXL
produces training, seminar and conference broadcasts and videos for a variety
of corporate, governmental and trade organizations. The joint venture, with
operating facilities in the states of Washington and Missouri, was renamed RXL
Pulitzer as of January 1, 1994.
16
17
EMPLOYEES
At December 31, 1994, the Company had approximately 2,400 full-time
employees, of whom approximately 1,300 were engaged in publishing and 1,100 in
broadcasting. In St. Louis, a majority of the approximately 1,100 full-time
employees engaged in publishing are represented by unions. In addition,
certain employees of the broadcasting segment and TNI Partners are represented
by unions. The Company considers its labor relations with its employees to be
good.
17
18
ITEM 2. PROPERTIES
The corporate headquarters of the Company is located at 900 North
Tucker Boulevard, Saint Louis, Missouri. The general character, location and
approximate size of the principal physical properties used by the Company at
December 31, 1994, are set forth below. Leases on the properties indicated as
leased by the Company expire at various dates through July 2012.
The Company believes that all of its owned and leased properties are
in good condition, well maintained and adequate for its current and immediately
foreseeable operating needs. The Company currently has two building projects
in process to address the long-term operating requirements of its New Orleans
televison station and Phoenix radio stations.
GENERAL CHARACTER APPROXIMATE AREA
OF PROPERTY IN SQUARE FEET
----------- --------------
OWNED LEASED
----- ------
Publishing:
Printing plants, business and editorial
offices, and warehouse space located in:
St. Louis, Missouri* 536,000 109,700
Tucson, Arizona ** 265,000 21,100
Washington, D.C. - 2,250
Broadcasting:
Business offices, studios, garages and
transmitters located in:
St. Louis, Missouri - 5,300
Albuquerque, New Mexico 39,700 7,500
Omaha, Nebraska 37,900 600
Lancaster, Pennsylvania 55,200 2,200
Winston-Salem, North Carolina 41,100 800
Greenville, South Carolina 52,000 3,600
Louisville, Kentucky 20,800 -
New Orleans, Louisiana 27,500 14,500
Phoenix, Arizona 1,450 10,450
Orlando, Florida 61,300 2,900
Daytona Beach, Florida 28,100 -
Des Moines, Iowa 53,400 -
- ---------------
* Property is subject to the provisions of the St. Louis Agency Agreement.
** The 265,000 square foot facility in Tucson, Arizona, is used in the
production of the Star and the Citizen and is jointly owned with
Gannett pursuant to the Tucson Agency. Approximately 900 square feet
of the leased properties in Tucson, Arizona, are leased by the Company
for use as a bureau office for the Star. The remaining leased
facilities are leased by TNI Partners pursuant to the Tucson Agency.
18
19
ITEM 3. LITIGATION
The Company becomes involved from time to time in various claims and
lawsuits incidental to the ordinary course of its business, including such
matters as libel, slander and defamation actions and complaints alleging
discrimination. In addition, the Company is involved from time to time in
various governmental and administrative proceedings relating, among other
things, to renewal of broadcast licenses. While the results of litigation
cannot be predicted, management believes the ultimate outcome of such
litigation will not have a material adverse effect on the consolidated
financial statements of the Company and its subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
19
20
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is listed and traded on the New York Stock
Exchange under the symbol "PTZ."
At March 14, 1995, there were approximately 454 record holders of the
Company's common stock and one record holder of its Class B common stock.
The following table sets forth the range of high and low sales prices
and dividends paid for each quarterly period in the past two years:
High Low Dividend*
---- --- --------
1993**
----
First Quarter $31.80 $24.40 $0.1075
Second Quarter 29.60 22.80 0.1075
Third Quarter 27.40 22.80 0.1075
Fourth Quarter 29.40 25.10 0.1075
High Low Dividend*
---- --- --------
1994**
----
First Quarter $30.60 $27.90 $0.1150
Second Quarter 29.90 27.70 0.1150
Third Quarter 31.00 27.80 0.1150
Fourth Quarter 31.20 26.40 0.1150
- ---------------
* In 1994 and 1993, the Company paid cash dividends of $0.46 and $0.43,
respectively, per share of common stock and Class B common stock (see
Note 5 of Notes to Consolidated Financial Statements for restrictions
on dividends).
** The high and low sales prices and dividends per share have been adjusted to
reflect the impact of a five-for-four stock split, effected in the form
of a 25 percent common and Class B common stock dividend, declared by
the Company's Board of Directors on January 4, 1995.
20
21
ITEM 6. SELECTED FINANCIAL DATA
Years Ended December 31,
OPERATING RESULTS 1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(In thousands, except per share amounts)
Operating Revenues -- net $485,579 $426,985 $398,373 $393,372 $402,772
-------- -------- -------- -------- --------
Operating Expenses
Operations 191,570 180,998 170,307 184,784 198,317
Selling, general and administrative 174,239 163,578 160,873 154,115 146,454
St. Louis Agency adjustment 14,706 10,660 11,690 7,290 5,253
Depreciation and amortization 30,486 23,792 18,869 23,773 21,501
-------- -------- -------- -------- --------
Total operating expenses 411,001 379,028 361,739 369,962 371,525
-------- -------- -------- -------- --------
Operating income 74,578 47,957 36,634 23,410 31,247
Interest income 1,971 1,090 1,156 1,618 2,041
Interest expense (12,009) (9,823) (7,801) (9,443) (10,920)
Gain on sale of publishing property 2,791
Net other expense (1,461) (1,011) (756) (661) (519)
-------- -------- -------- -------- --------
Income before provision for income taxes
and cumulative effects of changes in
accounting principles 65,870 38,213 29,233 14,924 21,849
Provision for income taxes 25,960 15,260 5,331 4,365 9,325
-------- -------- -------- -------- --------
Income before cumulative effects
of changes in accounting principles 39,910 22,953 23,902 10,559 12,524
Cumulative effects of changes in
accounting principles, net of
applicable income taxes (719) 360 (25,147)
-------- -------- -------- -------- --------
Net income (loss) $39,191 $23,313 ($1,245) $10,559 $12,524
======== ======== ======== ======== ========
Earnings (loss) per share of stock (common
and Class B common): (1)
Income before cumulative effects of changes
in accounting principles $2.45 $1.51 $1.65 $0.73 $0.87
Cumulative effects of changes in
accounting principles (0.04) 0.02 (1.74)
-------- -------- -------- -------- --------
Earnings (loss) per share $2.41 $1.53 ($0.09) $0.73 $0.87
======== ======== ======== ======== ========
Dividends per share of common and
Class B common stock (1) $0.46 $0.43 $0.39 $0.38 $0.36
======== ======== ======== ======== ========
Weighted average number of shares
(common and Class B common stock)
outstanding (1) 16,241 15,278 14,424 14,404 14,404
======== ======== ======== ======== ========
21
22
ITEM 6. SELECTED FINANCIAL DATA - CONTINUED
December 31,
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(In thousands)
OTHER DATA
Working capital $ 96,729 $ 60,688 $ 45,989 $ 32,044 $ 34,863
Total assets (2) 468,312 461,618 289,988 243,947 261,626
Long-term debt, less current maturities(3) 128,750 161,920 57,661 74,372 90,975
Stockholders' equity (4) 155,019 122,143 67,074 72,851 67,610
- ---------------
(1) In 1994, shares outstanding, dividends per share and earnings per share
were adjusted for 1994 and restated for 1993 - 1990 to reflect
the impact of a five-for-four stock split, effected in the form of a
25 percent common and Class B common stock dividend, declared by
the Company's Board of Directors on January 4, 1995. In 1992, shares
outstanding, dividends per share and earnings per share were adjusted
for 1992 and restated for 1991 - 1990 to reflect the impact of 10
percent common and Class B common stock dividend declared by the
Company's Board of Directors on January 4, 1993.
(2) During 1993 the Company acquired television stations WESH and KCCI for
approximately $164.7 million.
(3) As of December 31, 1993, approximately $118.6 million of new long-term
debt financing was outstanding related to the acquisition of WESH
and KCCI.
(4) On July 9, 1993, the Company sold 1.35 million shares of common stock in a
public offering. The $37 million in net proceeds from the offering
was used to partially finance the acquisition of WESH and KCCI in 1993.
22
23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's operating revenues are significantly influenced by a
number of factors, including overall advertising expenditures, the appeal of
newspapers, television and radio in comparison to other forms of advertising,
the performance of the Company in comparison to its competitors in specific
markets, the strength of the national economy and general economic conditions
and population growth in the markets served by the Company.
The Company's business tends to be seasonal, with peak revenues and
profits generally occurring in the fourth and, to a lesser extent, second
quarters of each year as a result of increased advertising activity during the
Christmas and spring holiday periods. The first quarter is historically the
weakest quarter for revenues and profits.
1994 COMPARED WITH 1993
CONSOLIDATED
Operating revenues for the year ended December 31, 1994 increased 13.7
percent to $485.6 million from $427 million in 1993. The revenue comparison
was affected by the acquisitions of television stations WESH and KCCI on June
30, 1993 and September 9, 1993, respectively. The Company's 1994 results
included full periods for WESH and KCCI while the prior year included the
results of the two television stations only after their respective acquisition
dates. Excluding WESH (first six months only) and KCCI (first nine months
only) from the comparison, consolidated revenues would have increased 7.9
percent. These increases reflected gains in both broadcasting and publishing
revenues.
Operating expenses, excluding the St. Louis Agency adjustment, were
$396.3 million compared to $368.4 million in 1993, an increase of 7.6 percent.
Excluding WESH (first six months only) and KCCI (first nine months only) from
the comparison, consolidated operating expenses would have increased 1.5
percent. Major increases in comparable expenses included overall personnel
costs ($3.2 million), circulation delivery expense ($1.1 million), national
advertising representative commissions ($783,000) and newsprint expense
($396,000). Expense increases were partially offset by a decline in
programming rights expense ($2.9 million) and the reversal of an accrual due to
the settlement of a sales tax issue ($437,000).
Operating income for fiscal 1994 increased 55.5 percent to $74.6
million from $48 million in 1993. Excluding WESH (first six months only) and
KCCI (first nine months) from the comparison, operating income would have
increased 50.7 percent. The increase reflected improvements in operating
income in both the publishing and broadcasting segments due to a combination of
increased revenues and cost control.
Interest expense increased $2.2 million in 1994 compared to 1993, due
to higher debt levels in 1994. The Company's average debt level for 1994
increased to $160.1 million from $119.7 million in the prior year, due to
borrowings related to the 1993 acquisitions of WESH and KCCI. Lower rates on
the WESH and KCCI borrowings reduced the Company's average interest rate for
1994 to 7.5 percent from 7.8 percent in the prior year. Interest expense also
included a declining interest factor related to annual payments (1990-1994)
under a non-competition agreement entered into in connection with the 1989
acquisition of television station WDSU
23
24
in New Orleans. Interest income for the year increased $881,000, due to both
higher average balances of invested funds and higher interest rates.
The effective income tax rate for 1994 decreased to 39.4 percent from
39.9 percent in the prior year. The rates in both 1994 and 1993 were affected
by non-recurring items. The 1994 rate included the effect of approximately
$1.8 million in tax expense related to the gain on the sale of Pulitzer
Community Newspapers, Inc. In addition, 1994 income tax expense was reduced by
a $500,000 positive adjustment related to the fourth-quarter settlement of the
1992 federal tax examination. The 1993 effective tax rate was lowered by a
$225,000 adjustment to the tax provision, reflecting a change in the Company's
deferred income tax rates as a result of the Revenue Reconciliation Act of
1993. Excluding these non-recurring items from both years, the effective
income tax rates for 1994 and 1993 would have been 39.2 percent and 40.5
percent, respectively. The lower 1994 rate reflected the Company's reduced
exposure to further tax adjustments for open tax years, following the
settlement of the 1990-1992 federal tax examinations during 1994, and the
impact of 1993 tax law changes in the deductibility of the amortization of
intangibles. The effective tax rates in both years also reflected the effect
of approximately $500,000 of non-deductible goodwill amortization expense. The
Company expects the estimated tax rate for 1995 will be in the 39 percent
range, approximately the same as the effective rate for 1994.
Effective January 1, 1994, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 112, Employers' Accounting for
Postemployment Benefits ("SFAS 112") and recorded its initial liability
thereunder, resulting in a one-time after-tax charge of $719,000 (see Note 10
of the Notes to Consolidated Financial Statements). After recording the
one-time charge, the Company's 1994 expense under SFAS 112 did not differ
significantly from the prior year pay-as-you-go amount.
On December 22, 1994, the Company sold its Chicago publishing
subsidiary, Pulitzer Community Newspapers, Inc. ("PCN"), for approximately
$33.7 million. The gain on the sale of PCN added approximately $1 million
($2.8 million less income taxes of $1.8 million), or $0.06 per share, to 1994
net income. The sale of PCN is not expected to have a significant impact on
the Company's future earnings results.
For the year ended December 31, 1994, the Company reported net income
of $39.2 million, or $2.41 per share, compared with net income of $23.3
million, or $1.53 per share, in the prior year. Net income for 1994 included
the non-recurring SFAS 112 charge of $719,000, or $0.04 per share. In 1993,
the Company adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes, resulting in a positive adjustment to income of
$360,000, or $0.02 per share.
Excluding the cumulative effects of accounting changes from both years
and the 1994 one-time gain from the sale of PCN, 1994 net income increased to
$38.9 million, or $2.39 per share, from $23 million, or $1.51 per share, for
the prior year. The 1994 gain in net income reflected improvements in
operating profits in both the publishing and broadcasting segments due to a
combination of increased revenues and cost control. The Company's earnings per
share comparison for the year-to-date period was affected by the larger average
number of shares outstanding in 1994 as a result of the public offering of 1.35
million shares in July 1993.
PUBLISHING
Operating revenues from the Company's publishing segment for 1994
increased 5 percent to $304.8 million from $290.1 million in 1993, primarily
reflecting increased revenues from advertising, particularly classified, at all
three newspaper locations.
24
25
Newspaper advertising revenues increased $12.3 million, or 7.3
percent, in 1994. The 1994 increase resulted from higher advertising volume
which contributed $9.3 million and higher average rates which contributed $3
million. In January 1994, all publishing properties increased rates for
certain advertising categories, ranging from 3 percent to 6.5 percent. In the
first quarter of 1995, both the St. Louis Post-Dispatch ("Post-Dispatch") and
The Arizona Daily Star ("Star") implemented rate increases for most advertising
categories, ranging from 4 percent to 6 percent and 6 percent to 8 percent,
respectively.
Circulation revenues decreased $720,000, or 0.9 percent, in 1994. The
slight revenue decline for 1994 resulted from average circulation decreases at
the Post-Dispatch while average circulation rates were virtually unchanged
from the prior year. Average daily and Sunday circulation of the Post-Dispatch
for the fourth quarter of 1994 was 331,676 and 552,647 compared to 342,687 and
561,744, respectively, for the corresponding 1993 period. Effective February
5, 1995, the home-delivered price of the Sunday Post-Dispatch was increased
$1.00 per month. In addition, the home-delivered price of the daily Star will
be increased $0.80 per month, effective March 27, 1995.
Operating expenses (including selling, general and administrative
expenses and depreciation and amortization) for the publishing segment,
excluding the St. Louis Agency adjustment, increased to $259.6 million in 1994
from $255.8 million in 1993, an increase of 1.5 percent. The increase was
principally attributable to higher circulation delivery expense ($1.1 million),
increases in overall personnel costs ($746,000) and an increase in newsprint
expense ($396,000), due to higher newsprint consumption.
Operating income from the Company's publishing activities increased
28.6 percent to $30.5 million from $23.7 million in 1993, reflecting a
combination of increased revenues and cost control.
The publishing segment's 1994 results were favorably impacted by a
downward trend in newsprint prices during the first half of 1994. However,
during the second half of 1994, newsprint prices began to increase and have
continued to rise in early 1995. The Company's recurring newsprint cost and
metric tons of consumption for 1994, after giving effect to the St. Louis
Agency adjustment and excluding PCN, were approximately $22.8 million and
50,600 metric tons, respectively. For the first quarter of 1995, the Company
expects its average cost per metric ton to increase to approximately $555.
Based upon notification from the Company's newsprint vendors of an increase
scheduled for May 1995, the Company's average cost per metric ton for the
second quarter and the balance of the year (assuming no further price
increases) are estimated to be approximately $625 and $680, respectively.
These estimated higher newsprint prices for fiscal year 1995 are expected to
have a significant effect on the performance of the publishing segment. No
assurance, however, can be given that the estimated newsprint average cost
increases for fiscal 1995 will be as projected, and actual average cost
increases may be higher or lower.
BROADCASTING
Broadcasting operating revenues for 1994 increased 32.1 percent to
$180.8 million from $136.8 million in 1993. The revenue comparison was
affected by the Company's acquisition of television stations WESH and KCCI on
June 30, 1993 and September 9, 1993, respectively. Excluding WESH (first six
months only) and KCCI (first nine months only) from the comparison,
broadcasting revenues would have increased 14.1 percent in 1994. On a
comparable basis, local spot advertising would have increased 9.2 percent;
national spot advertising would have increased 23 percent; and network
compensation would have declined 4 percent. Political advertising, including
WESH and KCCI, increased $8.1 million in 1994.
Broadcasting operating expenses (including selling, general and
administrative expenses and depreciation and amortization) increased 22 percent
to $132.8 million in 1994 from $108.9 million in 1993. Excluding WESH (first
six months only) and KCCI (first nine months only) from the comparisons,
operating
25
26
expenses would have increased 1.4 percent in 1994. Major increases in
comparable expenses were overall personnel costs ($2.4 million), national
advertising representative commissions ($783,000) and promotion expense
($395,000). Partially offsetting these increases were a decline in programming
rights expense ($2.9 million) and the reversal of an accrual due to the
settlement of a sales tax issue ($437,000).
Operating income from broadcasting operations in 1994 increased 71.6
percent to $48 million from $27.9 million in the prior year. Excluding WESH
(first six months only) and KCCI (first nine months only), broadcasting
operating income would have increased 63.2 percent in 1994, due to a
combination of increased advertising revenues and cost control.
Early in 1995, the Company executed a new 10-year network affiliation
agreement for each of its nine television stations. None of these new
agreements represents a change in affiliation from the prior year. On an
annual basis, beginning in 1995, the new agreements with ABC, CBS and NBC will
add approximately $10.5 million to the Company's annual network compensation
revenue. The Company anticipates, however, that approximately $2 million of
this revenue increase will be invested back into its stations to strengthen
their local news operations. These costs will be reflected in the ongoing
annual expenses of the broadcasting operations.
1993 COMPARED WITH 1992
CONSOLIDATED
Operating revenues for the year ended December 31, 1993 increased 7.2
percent to $427 million from $398.4 million in 1992. Revenue comparisons were
affected by the acquisitions of television stations WESH and KCCI on June 30,
1993 and September 9, 1993, respectively, and the closedown and partial sale of
certain assets of Pulitzer's Lerner Newspapers operation in Chicago on October
13, 1992. Revenues for the year ended December 31, 1993 included the
operations of the two television stations following their acquisitions. Prior
year revenues included Lerner's operations for the first nine months while no
amounts for Lerner are included in 1993. Excluding WESH and KCCI's 1993
revenues and Lerner's 1992 revenues from the comparisons, consolidated revenues
would have increased 3.5 percent. These increases reflected gains in both
broadcasting and publishing revenues.
Operating expenses, excluding the St. Louis Agency adjustment, were
$368.4 million compared to $350.1 million in 1992, an increase of $18.3
million, or 5.2 percent. Expense comparisons were also affected by the
television acquisitions, Lerner and two non-recurring charges in 1992 (a $3
million lawsuit settlement at the Post-Dispatch and a $1.5 million corporate
charge for a feature film write-off). Excluding WESH and KCCI's 1993 expenses
and 1992 items affecting comparability, consolidated operating expenses would
have increased $12.3 million or 3.7 percent. This 3.7 percent increase was
primarily attributable to increased overall personnel costs ($8.7 million) and
increased newsprint expense ($4.4 million). Expense increases were partially
offset by decreased depreciation and amortization ($1.5 million); decreased
purchased supplements in publishing ($1.1 million); and decreased programming
rights ($1 million).
Operating income for fiscal 1993 increased 30.9 percent, to $48
million from $36.6 million in 1992. Excluding the effects of WESH and KCCI
from 1993, and Lerner, the lawsuit settlement and the film write-off from
1992, operating income would have increased 9.7 percent for 1993. The 1993
increase reflected improvements in operating income in both the publishing and
broadcasting segments, primarily as a result of increased revenues.
Interest expense increased $2 million in 1993 compared to 1992, due to
higher debt levels in the second half of 1993. Interest expense on new
long-term borrowings related to the WESH and KCCI acquistions amounted to $3.8
million in 1993. The Company's average debt level for 1993 increased to $119.7
million from $80.6 million in the prior year. Lower rates on the new long
term borrowings reduced the Company's average interest rate for 1993 to 7.8
percent from 8.9 percent in the prior year. Interest expense
26
27
also included a declining interest factor related to annual payments
(1990-1994) under a non-competition agreement entered into in connection with
the 1989 acquisition of television station WDSU in New Orleans. Interest
income for the year declined marginally as the benefit from higher average
invested funds was more than offset by lower interest rates.
The effective income tax rate for 1993 increased to 39.9 percent from
18.2 percent for 1992. The lower rate in 1992 resulted from two non-recurring
items; 1) an approximate $1.7 million tax benefit associated with the closedown
and partial sale of Lerner Newspapers, principally due to a tax deduction for
intangible assets, and 2) positive adjustments to the tax reserve in the 1992
second and fourth quarters amounting to $3.4 million and $2.5 million,
respectively, following the favorable settlement of federal tax examinations
for 1985 through 1989. Without giving effect to these non-recurring items,
the effective tax rate for 1992 would have been 42 percent. The effective tax
rates in 1993 and 1992 also reflected the effects of approximately $500,000 and
$1.4 million, respectively, of non-deductible goodwill amortization expense.
Effective January 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109") (see Note 11 of the Notes to Consolidated Financial
Statements). Adoption of SFAS 109 resulted in an increase in net income of
$360,000, or $0.02 per share, in 1993 to record deferred tax liabilities at the
current (lower) tax rate than when originally recorded. As of December 31,
1993, the Company had a net deferred tax asset of $10.9 million. The deferred
tax asset was recorded based upon management's belief that realization of the
deferred tax asset was likely considering the Company's sufficient taxable
income in prior carryback years (1993, 1992 and 1991) and anticipated
sufficient future levels of taxable income.
For the year ended December 31, 1993, the Company reported net income
of $23.3 million, or $1.53 per share, compared with a net loss of $1.2 million,
or $0.09 per share loss, in the prior year. Net income for 1993 included a
non-recurring positive adjustment to income of $360,000, or $0.02 per share, in
connection with the adoption of SFAS 109 effective January 1, 1993. The 1992
net loss resulted from the Company's adoption of Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" ("SFAS 106") and the related one-time after-tax
charge of $25.1 million, or $1.74 per share loss.
Excluding the cumulative effects of accounting changes, other
non-recurring items and WESH and KCCI, net income for 1993 would have been
$24.3 million, or $1.59 per share, compared with $20.3 million, or $1.41 per
share (see summary below). The gain in net income, on a comparable basis,
reflected improvements in operating profits in both the publishing and
broadcasting segments, primarily as a result of increased revenues. The
earnings per share comparison was impacted by the increase in shares
outstanding due to the public offering of 1.35 million shares in July 1993.
Years Ended December 31,
-------------------------------------------------------------
1993 1992
-------------------------- --------------------------
Net Income EPS Net Income EPS
---------- --- ---------- ---
WESH/KCCI Acquisition Effect ($1,328) ($.08)
Lawsuit Settlement ($900) ($.07)
Lerner Closedown/Sale 147 .01
Lerner Exclusive of Closedown/Sale (628) (.04)
Film Write-Off (883) (.06)
Tax Settlement 1985/86/87 3,400 .23
Tax Settlement 1988/89 2,500 .17
SFAS 109 One-Time Credit 360 .02
SFAS 106 One-Time Charge (25,147) (1.74)
------- ----- ------- -----
Subtotal (968) (.06) (21,511) (1.50)
Net Income Excluding Non-recurring
items and Effect of TV Acquisitions 24,281 1.59 20,266 1.41
------- ----- ------ -----
Net Income (Loss) $23,313 $1.53 ($1,245) ($.09)
======= ===== ======= =====
Shares Outstanding 15,278 14,424
====== ======
27
28
During the third quarter of 1993, the Company completed the purchase
of two television stations, WESH in Daytona Beach/Orlando, Florida and KCCI in
Des Moines, Iowa. For the year ended December 31, 1992, these stations had
combined operating revenues of $44.8 million and combined operating expenses,
excluding depreciation and amortization, of $27.2 million. The Company closed
the WESH acquisition on June 30, 1993, paying a purchase price of $136.2
million plus $6.4 million for net receivables. The Company closed the KCCI
acquisition on September 9, 1993, paying a purchase price of $20.8 million plus
$1.3 million for net receivables. Substantially all of the purchase price for
the acquisitions was allocated to amortizable and depreciable property. The
depreciation, amortization and, to a lesser extent, the increased interest
expense resulting from the acquisitions, had a negative impact on the Company's
1993 net income of $0.08 per share.
PUBLISHING
Operating revenues from the Company's publishing operations for 1993
increased to $290.1 million from $285 million in 1992, an increase of 1.8
percent. Excluding Lerner's 1992 revenues, publishing revenues would have
increased 3.6 percent, reflecting increased revenues from advertising,
circulation and commercial printing.
Excluding Lerner's 1992 revenues from the comparison, newspaper
advertising revenues increased $3.1 million (1.9 percent) in 1993. A $9
million increase generated by increased advertising volumes was partially
offset by the price effect, totalling $5.9 million, of lower average rates.
Advertising rate increases of 5 percent to 6 percent were implemented at the
Tucson Agency in January 1993. Essentially no 1993 advertising rate increases
were put into effect at the Company's St. Louis or Chicago newspaper
operations. Average rates for the newspaper segment were lower for 1993 due to
the mix of advertising, frequency discounts and competitive pricing pressures.
Effective January 1994, advertising rates were increased at all publishing
properties in varying percentages among certain categories ranging from 3
percent to 6.5 percent.
Circulation revenues increased $900,000 (1.2 percent) for 1993. The
increase reflected the combination of circulation price increases, principally
at the St. Louis Post-Dispatch ("Post-Dispatch") and The Arizona Daily Star
("Star"), amounting to $1.3 million and of partially offsetting average
circulation decreases amounting to $400,000. The effect of the
closedown/partial sale of Lerner on circulation revenues was not material.
The home-delivered price of the daily Post-Dispatch was increased
$1.04 per month, effective March 2, 1992, and an additional $0.52 per month,
effective March 1, 1993. Average daily and Sunday circulation of the
Post-Dispatch for the fourth quarter of 1993 was 342,687 and 561,744 compared
to 347,971 and 570,983, respectively, for the corresponding 1992 period.
The single copy price of the daily Star was increased to $0.50 from
$0.35 as of October 4, 1993.
Operating expenses (including selling, general and administrative
expenses and depreciation and amortization) for the publishing segment,
excluding the St. Louis Agency adjustment, increased to $255.8 million in 1993
from $255.1 million in 1992, an increase of 0.3 percent. Excluding Lerner's
1992 expenses, the non-recurring Lerner sale/closedown charge of $1.6 million
and the $3 million lawsuit settlement from the comparison, publishing expenses
would have increased 4.6 percent. This 4.6 percent increase was principally
attributable to increased overall personnel costs ($5.9 million) and increased
newsprint expense ($4.4 million), due to both higher newsprint prices and
increased volume. Expense increases were partially offset by decreased
depreciation and amortization ($1.2 million) and decreased purchased
supplements ($1.1 million).
Operating income from the Company's publishing activities increased
30.4 percent to $23.7 million from $18.2 million in 1992. Excluding Lerner and
the lawsuit settlement from the prior year, publishing operating income for
1993 would have increased 6.2 percent due to increased revenues.
28
29
BROADCASTING
Broadcasting operating revenues for 1993 increased 20.7 percent to
$136.8 million from $113.4 million in 1992. Revenue comparisons were affected
by the acquisitions of television stations WESH and KCCI during the third
quarter of 1993. Excluding the revenues of WESH and KCCI, broadcasting
revenues would have increased 3.3 percent for 1993. Exclusive of WESH and
KCCI, local spot advertising increased 7.6 percent; national spot advertising
decreased 0.9 percent; and network compensation decreased 1 percent for 1993.
The revenue comparison was affected by strong revenue gains in the prior year
due to the Summer Olympics carried on the NBC television network and political
advertising.
Broadcasting operating expenses (including selling, general and
administrative expenses and depreciation and amortization) increased 20.9
percent to $108.9 million in 1993 from $90.1 million in 1992. Excluding WESH
and KCCI, operating expenses would have increased 0.8 percent. This increase,
on a comparable basis, was due primarily to increased overall personnel costs
($2.6 million) offset in part by decreases in programming rights expense ($1
million), depreciation and amortization ($316,000) and bad debt expense
($254,000).
Operating income from the broadcasting operations increased 19.9
percent to $27.9 million from $23.3 million due to increased advertising
revenues and a $1.6 million contribution to operating income from WESH and
KCCI. Excluding WESH and KCCI, broadcasting operating results would have
increased $3 million or 13.1 percent in 1993. See Note 3 of Notes to
Consolidated Fiancial Statements for pro forma information related to the WESH
and KCCI acquisition.
LIQUIDITY AND CAPITAL RESOURCES
Outstanding debt, inclusive of the short-term portion of long-term
debt, as of December 31, 1994, was $143 million, compared with $176.2 million
at December 31, 1993. The decrease since the prior year end reflected a
scheduled repayment of $14.3 million under the Company's Senior Note Agreement
maturing in 1997 and $18.6 million in prepayments of borrowings under its
credit agreement with Canadian Imperial Bank of Commerce as Agent ("CIBC"). In
1994 CIBC prepayments reduced the credit agreement borrowings to zero and, in
December 1994, the Company terminated the credit agreement.
As of December 31, 1994, the Company's long-term borrowings consisted
of $143 million of fixed-rate senior notes with The Prudential Insurance
Company of America.
The Company's Senior Note Agreements require it to maintain certain
financial ratios, place restrictions on the payment of dividends and prohibit
new borrowings, except as permitted thereunder.
As of December 31, 1994, commitments for capital expenditures were
approximately $12.6 million, relating to normal capital equipment replacements
and a portion of the costs for new facilities for television station WDSU in
New Orleans and the radio operations in Phoenix. Commitments for film
contracts and license fees as of December 31, 1994 were approximately $28.9
million. At December 31, 1994, the Company had working capital of $96.7
million and a current ratio of 2.55 to 1. This compares to working capital of
$60.7 million and a current ratio of 2.00 to 1 at December 31, 1993.
The Company generally expects to generate sufficient cash from
operations to cover ordinary capital expenditures, film contract and license
fees, working capital requirements, debt installments and dividend payments.
29
30
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of Pulitzer Publishing
Company and Subsidiaries are filed as part of this report. Supplementary
unaudited data with respect to the quarterly results of operations of the
Company are set forth in the Notes to Consolidated Financial Statements.
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
Independent Auditors' Report
Statements of Consolidated Income for each of the Three Years in the Period
Ended December 31, 1994
Statements of Consolidated Financial Position at December 31, 1994 and 1993
Statements of Consolidated Stockholders' Equity for each of the Three
Years in the Period Ended December 31, 1994
Statements of Consolidated Cash Flows for each of the Three Years in the
Period Ended December 31, 1994
Notes to Consolidated Financial Statements for the Three Years in the
Period Ended December 31, 1994
30
31
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Pulitzer Publishing Company:
We have audited the accompanying statements of consolidated financial position
of Pulitzer Publishing Company and subsidiaries as of December 31, 1994 and
1993, and the related consolidated statements of income, stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the companies at December
31, 1994 and 1993, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1994 in conformity
with generally accepted accounting principles.
As discussed in Note 10 to the consolidated financial statements, in 1994 the
Company changed its method of accounting for postemployment benefits to conform
with Statement of Financial Accounting Standards No. 112, Employers' Accounting
for Postemployment Benefits. As discussed in Note 11 to the consolidated
financial statements, in 1993 the Company changed its method of accounting for
income taxes to conform with Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes. As discussed in Note 10 to the consolidated
financial statements, in 1992 the Company changed its method of accounting for
postretirement benefits other than pensions to conform with Statement of
Financial Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions.
DELOITTE & TOUCHE LLP
Saint Louis, Missouri
February 3, 1995
31
32
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1994 1993 1992
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)
OPERATING REVENUES - NET:
Publishing:
Advertising $ 181,018 $ 168,684 $ 170,014
Circulation 77,941 78,661 77,713
Other 45,820 42,801 37,277
Broadcasting 180,800 136,839 113,369
--------- --------- ---------
Total operating revenues 485,579 426,985 398,373
--------- --------- ---------
OPERATING EXPENSES:
Publishing operations 130,219 128,220 124,415
Broadcasting operations 61,351 52,778 45,892
Selling, general and administrative 174,239 163,578 160,873
St. Louis Agency adjustment (Note 2) 14,706 10,660 11,690
Depreciation and amortization 30,486 23,792 18,869
--------- --------- ---------
Total operating expenses 411,001 379,028 361,739
--------- --------- ---------
OPERATING INCOME 74,578 47,957 36,634
Interest income 1,971 1,090 1,156
Interest expense (12,009) (9,823) (7,801)
Equity in net losses of joint venture investments (560)
Gain on sale of publishing property (Note 3) 2,791
Net other expense (901) (1,011) (756)
--------- --------- ---------
INCOME BEFORE PROVISION FOR INCOME
TAXES AND CUMULATIVE EFFECTS OF
CHANGES IN ACCOUNTING PRINCIPLES 65,870 38,213 29,233
PROVISION FOR INCOME TAXES (Note 11) 25,960 15,260 5,331
--------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECTS OF
CHANGES IN ACCOUNTING PRINCIPLES 39,910 22,953 23,902
CUMULATIVE EFFECTS OF CHANGES IN
ACCOUNTING PRINCIPLES, NET OF
APPLICABLE INCOME TAXES (Notes 10 and 11) (719) 360 (25,147)
--------- --------- ---------
NET INCOME (LOSS) $ 39,191 $ 23,313 $ (1,245)
========= ========= =========
(Continued)
-32-
33
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1994 1993 1992
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)
EARNINGS (LOSS) PER SHARE OF STOCK
(COMMON AND CLASS B COMMON):
Income before cumulative effects of changes
in accounting principles $ 2.45 $ 1.51 $ 1.65
Cumulative effects of changes in accounting
principles (0.04) 0.02 (1.74)
----------- ----------- -----------
Total $ 2.41 $ 1.53 $ (0.09)
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES (COMMON AND CLASS B
COMMON STOCK) OUTSTANDING
(Note 8) 16,241,013 15,278,211 14,423,953
=========== =========== ===========
See accompanying notes to consolidated financial statements. (Concluded)
-33-
34
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
DECEMBER 31,
------------------------------
1994 1993
(IN THOUSANDS)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 77,084 $ 34,970
Trade accounts receivable (less allowance for doubtful
accounts of $2,135 and $2,575) 62,943 61,953
Inventory 3,069 5,912
Prepaid expenses and other 6,783 6,959
Program rights 9,263 11,285
--------- ---------
Total current assets 159,142 121,079
--------- ---------
PROPERTIES:
Land 11,261 12,204
Buildings 58,795 69,315
Machinery and equipment 161,305 181,939
Construction in progress 4,444 2,937
--------- ---------
Total 235,805 266,395
Less accumulated depreciation 119,911 125,497
--------- ---------
Properties - net 115,894 140,898
--------- ---------
INTANGIBLE AND OTHER ASSETS:
Intangible assets - net of applicable amortization (Note 4) 125,415 144,140
Receivable from The Herald Company (Notes 2 and 10) 44,059 38,705
Program rights, long-term portion 1,997 4,305
Other 21,805 12,491
--------- ---------
Total intangible and other assets 193,276 199,641
--------- ---------
TOTAL $ 468,312 $ 461,618
========= =========
(Continued)
-34-
35
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
DECEMBER 31,
---------------------------------
1994 1993
(IN THOUSANDS)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 14,458 $ 11,807
Current portion of long-term debt (Note 5) 14,250 14,320
Salaries, wages and commissions 11,541 10,314
Income taxes payable 6,331 4,272
Program contracts payable (Note 6) 8,864 10,899
Interest payable 3,480 4,751
Pension obligations (Note 9) 2,827 588
Other 662 3,440
---------- ----------
Total current liabilities 62,413 60,391
---------- ----------
LONG-TERM DEBT (Note 5) 128,750 161,920
---------- ----------
PROGRAM CONTRACTS PAYABLE (Note 6) 2,109 4,234
---------- ----------
PENSION OBLIGATIONS (Note 9) 23,593 23,377
---------- ----------
POSTRETIREMENT AND POSTEMPLOYMENT BENEFIT
OBLIGATIONS (Note 10) 91,966 85,928
---------- ----------
OTHER LONG-TERM LIABILITIES 4,462 3,625
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' EQUITY (Note 8):
Preferred stock, $.01 par value; 25,000,000 shares authorized;
issued and outstanding - none
Common stock, $.01 par value; 100,000,000 shares authorized;
issued - 4,444,099 in 1994 and 3,511,674 in 1993 44 35
Class B common stock, convertible, $.01 par value; 50,000,000 shares
authorized; issued - 20,608,832 in 1994 and 16,488,076 in 1993 182 158
Additional paid-in capital 122,094 120,908
Retained earnings 220,322 188,665
---------- ----------
Total 342,642 309,766
Treasury stock - at cost: 11,462 shares in 1994 and 9,169 shares in 1993
of common stock and 8,775,638 shares in 1994 and 7,020,510 in 1993
of Class B common stock (187,623) (187,623)
---------- ----------
Total stockholders' equity 155,019 122,143
---------- ----------
TOTAL $ 468,312 $ 461,618
========== ==========
See accompanying notes to consolidated financial statements. (Concluded)
-35-
36
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
SHARES OF
SHARES OF CLASS B COMMON
COMMON STOCK STOCK
---------------------- -------------------------
HELD IN HELD IN
ISSUED TREASURY ISSUED TREASURY
(IN THOUSANDS)
BALANCES AT DECEMBER 31, 1991 1,882 (8) 14,989 (6,382)
Common stock options exercised 40
10% stock dividend (Note 8) 193 (1) 1,499 (639)
----- ----- ------ ------
BALANCES AT DECEMBER 31, 1992 2,115 (9) 16,488 (7,021)
Issuance of common stock grants 3
Common stock options exercised 44
Issuance of common stock 1,350
----- ----- ------ ------
BALANCES AT DECEMBER 31, 1993 3,512 (9) 16,488 (7,021)
Issuance of common stock grants 3
Common stock options exercised 40
Conversion of Class B common stock to common stock 1 (1)
Five-for-four stock split in the form of a 25
percent stock dividend (Note 8) 888 (2) 4,122 (1,755)
----- ----- ------ ------
BALANCES AT DECEMBER 31, 1994 4,444 (11) 20,609 (8,776)
===== ===== ====== ======
TOTAL
CLASS B ADDITIONAL STOCK-
COMMON COMMON PAID-IN RETAINED TREASURY HOLDERS'
STOCK STOCK CAPITAL EARNINGS STOCK EQUITY
(IN THOUSANDS)
BALANCES AT DECEMBER 31, 1991 $ 19 $ 150 $ 48,775 $ 211,526 $(187,619) $ 72,851
Common stock options exercised 1,007 1,007
Tax benefit from stock options execised 123 123
Net loss (1,245) (1,245)
Cash dividends declared and paid $.39 per share
of common stock and Class B common stock (5,662) (5,662)
10% stock dividend (Note 8) 2 8 32,629 (32,639)
--- ----- -------- -------- --------- ---------
BALANCES AT DECEMBER 31, 1992 21 158 82,534 171,980 (187,619) 67,074
Issuance of common stock grants 88 88
Common stock options exercised 1,007 1,007
Tax benefit from stock options exercised 210 210
Net income 23,313 23,313
Cash dividends declared and paid $.43 per share
of common stock and Class B common stock (6,628) (6,628)
Issuance of common stock 14 37,069 37,083
Purchase of treasury stock (4) (4)
--- ----- -------- -------- --------- ---------
BALANCES AT DECEMBER 31, 1993 35 158 120,908 188,665 (187,623) 122,143
Issuance of common stock grants 101 101
Common stock options exercised 898 898
Tax benefit from stock options exercised 220 220
Net income 39,191 39,191
Cash dividends declared and paid $.46 per share
of common stock and Class B common stock (7,534) (7,534)
Five-for-four stock split in the form of a 25
percent stock dividend (Note 8) 9 24 (33)
--- ----- -------- -------- --------- --------
BALANCES AT DECEMBER 31, 1994 $44 $ 182 $122,094 $220,322 $(187,623) $155,019
=== ===== ======== ======== ========= ========
See accompanying notes to consolidated financial statements.
-36-
37
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
YEARS ENDED DECEMBER 31,
------------------------------------------
1994 1993 1992
(IN THOUSANDS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 39,191 $ 23,313 $ (1,245)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Non-cash items:
Cumulative effects of changes in accounting principles,
net of applicable income taxes 719 (360) 25,147
Equity in net losses of joint venture investments 560
Depreciation 20,466 16,405 13,984
Amortization of intangibles 10,020 7,387 4,885
Incremental increase in postretirement and postemploy-
ment benefit obligations (496) 2,870 2,243
Deferred income taxes (4,617) (1,585) (1,903)
Gain on sale of publishing property (2,791)
Decrease (increase) in intangible assets related to
minimum pension liability 1,629 (1,283) 229
(Decrease) increase in pension obligation related to
minimum pension liability (1,629) 1,283 (229)
Changes in assets and liabilities (net of the effects of the
sale of publishing property and purchase of broadcast
properties) (Note 3) which provided (used) cash:
Trade accounts receivable (8,269) (1,959) 1,200
Inventory 1,540 62 361
Other assets 3,007 (3,481) 4,344
Trade accounts payable and other liabilities 8,490 3,532 (3,086)
Income taxes payable 2,059 2,536 (2,695)
Program rights - net of contracts payable 170 148 (648)
--------- --------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 70,049 48,868 42,587
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (13,313) (13,589) (9,259)
(Increase) decrease in notes receivable 18 116 (233)
Sale of publishing property, net of cash sold 30,486
Investment in joint venture (5,000)
Investment in limited partnership (593)
Purchase of broadcasting property assets (166,065)
--------- --------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES 11,598 (179,538) (9,492)
--------- --------- ---------
(Continued)
-37-
38
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1994 1993 1992
(IN THOUSANDS)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt $ - $160,000 $ -
Proceeds from sale of common stock 37,083
Repayments on long-term debt (32,897) (55,732) (19,002)
Dividends paid (7,534) (6,628) (5,662)
Proceeds from exercise of stock options 898 1,007 1,007
Purchase of treasury stock (4)
-------- -------- --------
NET CASH (USED IN) PROVIDED BY FINANCING
ACTIVITIES (39,533) 135,726 (23,657)
-------- -------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 42,114 5,056 9,438
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 34,970 29,914 20,476
-------- -------- --------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 77,084 $ 34,970 $ 29,914
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid (received) during the year for:
Interest $ 13,067 $ 6,495 $ 7,941
Income taxes 28,369 14,638 14,089
Income tax refunds (70) (330) (2,808)
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITY - See Note
10 for information regarding the noncash activity relating to the Company's
adoption of Statement of Financial Accounting Standards No. 112, Employers'
Accounting for Postemployment Benefits in 1994, and Statement of Financial
Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits
Other Than Pensions in 1993.
See accompanying notes to consolidated financial statements. (Concluded)
- 38 -
39
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation - The consolidated financial statements include the
accounts of Pulitzer Publishing Company (the "Company") and its subsidiary
companies. All significant intercompany transactions have been eliminated from
the consolidated financial statements.
Fiscal Year - The Company's fiscal year ends on the last Sunday prior to
December 31. For ease of presentation, the Company has used December 31 as the
year-end.
Cash Equivalents - For purposes of reporting cash flows, the Company considers
all highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.
Inventory Valuation - Inventory, which consists primarily of newsprint, is
stated at the lower of cost (determined primarily using the last-in, first-out
method) or market. The difference between inventory balances recorded under
the last-in, first-out method and the first-in, first- out method is not
significant. Ink and other miscellaneous supplies are expensed as purchased.
Program Rights - Program rights represent license agreements for the right to
broadcast programs over license periods which generally run from one to five
years. The total cost of each agreement is recorded as an asset and liability
when the license period begins and the program is available for broadcast.
Program rights covering periods greater than one year are amortized over the
license period using an accelerated method as the programs are broadcast. In
the event that a determination is made that programs will not be used prior to
the expiration of the license agreement, unamortized amounts are then charged
to operations. Payments are made in installments as provided for in the
license agreements. Program rights expected to be amortized in the succeeding
year and payments due within one year are classified as current assets and
current liabilities, respectively.
Payments made on license agreements prior to the availability of the program
for broadcast are classified as prepaid assets. When the license period begins
and the program is available for broadcast, these amounts are recorded as
program rights and the related obligations are recorded.
Property and Depreciation - Property is recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the
individual assets. Buildings are depreciated over 20 to 50 years and all other
property over lives ranging from 3 to 15 years.
Joint Venture Investments - The Company has a one-third interest in RXL
Pulitzer (see Note 3) and also participates in other joint ventures. These
investments are accounted for by the equity method.
Intangible Assets - Intangible assets are stated net of applicable
amortization. Intangibles in the amount of $1,520,000, related to acquisitions
prior to the effective date of Accounting Principles Board Opinion No. 17
("Opinion No. 17"), are not being amortized because, in the opinion of
management, their value is of undeterminable duration. In addition, the
intangible asset relating to the Company's additional minimum pension liability
under Statement of Financial Accounting Standards No. 87 is adjusted, as
necessary, when a new determination of the amount of the additional minimum
pension liability is made annually. Intangibles consisting of goodwill,
television licenses and network affiliations acquired
- 39 -
40
subsequent to the effective date of Opinion No. 17 are being amortized over 40
years while all other intangible assets are being amortized over 4 to 21 years
with the exception of all the intangible assets acquired in conjunction with
the 1993 acquisition of WESH and KCCI (see Note 3) which are all being
amortized over 15 years.
Management periodically evaluates the recoverability of the Company's
intangible assets based upon the undiscounted cash flow method. If a permanent
impairment in value is determined to exist, any necessary write-down will be
charged to operations.
Income Taxes - In 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes, which requires the recognition
of deferred tax assets and liabilities for the expected future tax consequences
of events that have been included in the financial statements or tax returns.
Under this asset and liability approach, deferred tax assets and liabilities
are determined based on temporary differences between the financial statement
and tax bases of assets and liabilities by applying enacted statutory tax rates
applicable to future years in which the differences are expected to reverse.
Prior to 1993, income taxes were determined under the deferred method in
accordance with Accounting Principles Board Opinion No. 11, Accounting for
Income Taxes.
Earnings Per Share of Stock - Earnings per share of stock is computed using the
weighted average number of Common and Class B shares outstanding during the
applicable period, adjusted for the stock split described in Note 8.
Benefit Plans - The Company accounts for its pension plans in accordance with
Statement of Financial Accounting Standards No. 87, Employers Accounting for
Pensions, (see Note 9). Effective January 1, 1992, the Company accounts for
its postretirement benefit plans in accordance with Statement of Financial
Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits
Other Than Pensions (see Note 10). Prior to January 1, 1992, the Company's
postretirement benefits were expensed as paid. Effective January 1, 1994, the
Company accounts for its postemployment benefit plans in accordance with
Statement of Financial Accounting Standards No. 112, Employers' Accounting for
Postemployment Benefits (see Note 10). Prior to January 1, 1994, the Company's
postemployment benefits were expensed as paid.
Reclassifications - Certain reclassifications have been made to the 1993 and
1992 consolidated financial statements to conform with the 1994 presentation.
2. AGENCY AGREEMENTS
An agency operation between the Company and The Herald Company is conducted
under the provisions of an Agency Agreement, dated March 1, 1961, as amended.
For many years, the Post-Dispatch (owned by the Company) was the afternoon and
Sunday newspaper serving St. Louis, and the Globe-Democrat (formerly owned by
The Herald Company) was the morning paper and also published a weekend edition.
Although separately owned, from 1961 through February 1984, the publication of
both the Post-Dispatch and the Globe-Democrat was governed by the St. Louis
Agency Agreement. From 1961 to 1979, the two newspapers controlled their own
news, editorial, advertising, circulation, accounting and promotion departments
and Pulitzer managed the production and printing of both newspapers. In 1979,
Pulitzer assumed full responsibility for advertising, circulation, accounting
and promotion for both newspapers. In February 1984, after a number of years
of unfavorable financial results at the St. Louis Agency, the Globe-Democrat
was sold by The Herald Company and the St. Louis Agency Agreement was revised
to eliminate any continuing relationship between the two newspapers and to
permit the repositioning of the daily Post-Dispatch as a morning newspaper.
Following the renegotiation of the St. Louis Agency Agreement at the time of
the sale of the Globe-Democrat, The Herald Company retained the contractual
-40-
41
right to receive one-half the profits (as defined), and the obligation to share
one-half the losses (as defined), of the operations of the St. Louis Agency,
which from February 1984 forward consisted solely of the publication of the
Post-Dispatch. The St. Louis Agency Agreement also provides for The Herald
Company to share one-half the cost of, and to share in a portion of the
proceeds from the sale of, capital assets used in the production of the
Post-Dispatch. Under the St. Louis Agency Agreement, Pulitzer supervises,
manages and performs all activities relating to the day-to-day publication of
the Post-Dispatch and is solely responsible for the news and editorial policies
of the newspaper. The consolidated financial statements of the Company include
all the operating revenues and expenses of the St. Louis Agency relating to the
Post-Dispatch.
In Tucson, Arizona, a separate partnership, TNI Partners, ("TNI"), acting as
agent for the Star (a newspaper owned by the Company) and the Citizen (a
newspaper owned by Gannett Co., Inc.), is responsible for printing, delivery,
advertising, and circulation of the Star and the Citizen. TNI collects all of
the receipts and income relating to the Star and the Citizen and pays all
operating expenses incident to the partnership's operations and publication of
the newspapers. Each newspaper is solely responsible for its own news and
editorial content. Net income or net loss of TNI is generally allocated
equally to the Star and the Citizen. The Company's consolidated financial
statements include its share of TNI's revenues and expenses.
3. ACQUISITION AND DISPOSITION OF PROPERTIES
On December 22, 1994, the Company sold its wholly-owned subsidiary, Pulitzer
Community Newspapers ("PCN"), Chicago, Illinois, for approximately $33,746,000.
The Company received approximately $31,862,000 when the transaction was
completed with an additional payment of approximately $1,884,000 expected in
the second quarter of 1995. The final proceeds from the sale of PCN are based
on net current assets reflected in its closing balance sheet. Any changes in
proceeds as a result of adjustments to the closing balance sheet are not
expected to be material. A gain of $2,791,000 ($1,051,000 after taxes or $0.06
per share) was recognized on this transaction. The Company's 1994 statement of
consolidated income includes substantially a full year of operating results for
PCN.
During 1993, the Company acquired in a purchase transaction substantially all
of the assets and operations of two television stations, WESH, Daytona
Beach/Orlando, Florida and KCCI, Des Moines, Iowa, for a purchase price of
$164,765,000, including approximately $7,765,000 in net receivables, plus
acquisition costs of approximately $1,300,000. The closing dates for WESH and
KCCI were June 30, 1993 and September 9, 1993, respectively. The results of
operations of WESH and KCCI are included in the Company's Statement of
Consolidated Income from their respective closing dates.
The cost of the acquisition (excluding acquisition costs) included goodwill of
$657,000, television licenses and network affiliations of $69,346,000 and other
intangibles of $23,660,000 all of which are being amortized over 15 years.
The following supplemental unaudited pro forma information shows the results of
operations of the Company for the years ended December 31, 1993 and 1992
adjusted for the acquisition of WESH and KCCI assuming such transaction and the
related debt and equity financing had been consummated at the beginning of each
year presented. The unaudited pro forma financial information is not
necessarily indicative either of results of operations that would have occurred
had the transaction occurred at the beginning of each year presented, or of
future results of operations.
41
42
YEARS ENDED DECEMBER 31,
-----------------------------------
1993 1992
(UNAUDITED)
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
Operating revenues - net $450,116 $442,023
Operating income $ 48,646 $ 40,115
Income before cumulative effects of changes in accounting principles $ 21,026 $ 21,299
Net income (loss) $ 21,386 $ (3,848)
Earnings per share of stock (common and Class B common):
Income before cumulative effects of changes in accounting principles $ 1.30 $ 1.32
Net income (loss) $ 1.32 $ (0.24)
Weighted average number of shares (common and Class B common)
outstanding 16,186 16,111
On January 1, 1994, the Company acquired for $5,000,000 a one-third interest in
RXL Communications (subsequently renamed RXL Pulitzer), a provider of
interactive educational programming. This joint venture investment is recorded
on the equity basis in the accompanying statement of consolidated financial
position.
During the third quarter of 1992, the Company recorded a pretax charge of
$1,535,000 in connection with the close-down and sale of certain assets of its
Lerner Newspapers ("Lerner") operation in Chicago. The charge, included in
publishing operations in the accompanying statements of consolidated income,
reflects the estimated loss from the disposition and abandonment of net assets,
anticipated operating losses from the respective measurement date through the
estimated date of disposal/close-down, and related contingencies. There were
associated tax benefits of $1,682,000, principally due to a tax deduction for
intangible assets, reflected in the current provision for income taxes.
4. INTANGIBLE ASSETS
Intangible assets consist of:
DECEMBER 31,
-----------------------------------
1994 1993
DESCRIPTION (IN THOUSANDS)
Television licenses and network affiliations $107,115 $106,873
Goodwill 12,393 21,617
Intangible pension asset (Note 9) 3,204 4,833
Other 42,491 55,260
-------- --------
Total 165,203 188,583
Less: Accumulated amortization 39,788 44,443
-------- --------
Total intangible assets - net $125,415 $144,140
======== ========
The declines in goodwill, other intangibles and accumulated amortization
balances at December 31, 1994 result from the sale of PCN on December 22, 1994
(see Note 3).
- 42 -
43
5. FINANCING ARRANGEMENTS
Long-term debt consists of:
DECEMBER 31,
-----------------------------
DESCRIPTION 1994 1993
(IN THOUSANDS)
Senior notes maturing in equal annual installments:
8.8% due through 1997 $ 43,000 $ 57,250
6.76% due 1998-2001 50,000 50,000
7.22% due 2002-2005 50,000 50,000
Credit Agreement:
Term portion 2,578
Revolving portion 16,000
Other 412
-------- --------
Total 143,000 176,240
Less: Current portion 14,250 14,320
-------- --------
Total long-term debt $128,750 $161,920
======== ========
On June 30, 1993, in connection with the acquisition of WESH, Daytona
Beach/Orlando, Florida, the Company issued to The Prudential Insurance Company
of America $50,000,000 principal amount of 6.76% Senior Notes due 2001 and
$50,000,000 principal amount of 7.22% Senior Notes due 2005 (collectively, the
"Notes"). The proceeds received by the Company from the issuance of the Notes
were used to partially finance the acquisition of WESH. In addition, to
partially finance the WESH acquisition, the Company borrowed $40,000,000 on
June 30, 1993 from The Canadian Imperial Bank of Commerce ("CIBC") pursuant to
a $60,000,000 five-year revolving and term credit facility ("Credit
Agreement"), which the Company entered into on June 30, 1993. On July 12,
1993, the Company repaid $37,422,000 of the CIBC borrowings with the proceeds
from the issuance of 1,350,000 shares of the Company's common stock on July 9,
1993. This repayment of the CIBC borrowing permanently reduced the original
$40,000,000 term portion of the credit facility by the repayment amount. On
December 22, 1994, the Company repaid the remaining balance of the CIBC term
borrowing and elected to terminate the Credit Agreement prior to its scheduled
maturity in 1998.
On September 9, 1993, in connection with the acquisition of KCCI, Des Moines,
Iowa, the Company borrowed $20,000,000 under the revolving credit portion of
the Credit Agreement. In December 1993, the Company made a $4,000,000 payment
on the revolving credit facility. Prior to the termination of the Credit
Agreement in December 1994, the Company made additional payments during 1994
sufficient to eliminate the revolving credit borrowings.
At December 31, 1993, the interest rates on the term and revolving credit
borrowings with CIBC were 3.875% and 4%, respectively.
The terms of the various senior note agreements contain certain covenants and
conditions including the maintenance of cash flow and various other financial
ratios, limitations on the incurrence of other debt and limitations on the
amount of restricted payments (which generally includes dividends, stock
purchases and redemptions).
-43-
44
Under the terms of the most restrictive borrowing covenants, in general, the
Company may pay annual dividends not to exceed the sum of $10,000,000, plus 75%
of consolidated net earnings commencing January 1, 1993, less the sum of all
dividends paid or declared and redemptions in excess of sales of Company stock
after December 31, 1992.
6. PROGRAM CONTRACTS PAYABLE
Program contracts payable represent amounts related to programs currently
available for broadcast. Maturities of program contracts payable over the
license periods are as follows (in thousands):
YEAR ENDING
DECEMBER 31,
1995 $ 8,864
1996 1,727
1997 306
1998 76
-------
TOTAL $10,973
=======
7. COMMITMENTS AND CONTINGENCIES
At December 31, 1994, the Company and its subsidiaries had construction and
equipment commitments of approximately $12,564,000 and commitments for program
contracts payable and license fees of approximately $28,867,000.
During December 1994, the Company entered into a limited partnership agreement
with a maximum capital contribution commitment of $5,000,000. This commitment
extends over a three year funding period ending January 2, 1998. As of
December 31, 1994, the Company had funded approximately $593,000 of the total
investment commitment.
The Company and its subsidiaries are defendants in a number of lawsuits, some
of which claim substantial amounts. While the results of litigation cannot be
predicted, management believes the ultimate outcome of such litigation will not
have a material adverse effect on the consolidated financial statements of the
Company and its subsidiaries.
In connection with the September 1986 purchase of the Company's Class B common
stock, the Company agreed to make an additional payment to the selling
stockholders in the event that prior to May 13, 2001, the stockholders receive
dividends or distributions in excess of specified amounts in connection with
the sale of more than 85% of the voting securities or equity of the Company, a
merger, or a complete or partial liquidation or similar corporate transaction.
Any payment pursuant to this requirement would be based upon a percentage of
the dividend or distribution per share in excess of $23.06 increased by 15%
compounded annually beginning May 12, 1986.
8. STOCKHOLDERS' EQUITY
Each share of the Company's common stock is entitled to one vote and each share
of Class B common stock is entitled to ten votes on all matters. Holders of
all outstanding shares of Class B common stock, which represents 96.4% of the
combined voting power of the Company, have deposited their shares in a voting
trust (the "Voting Trust").
- 44 -
45
The trustees generally hold all voting rights with respect to the shares of
Class B common stock subject to the Voting Trust; however, in connection with
certain matters, including any proposal for a merger, consolidation,
recapitalization or dissolution of the Company or disposition of all or
substantially all its assets, the calling of a special meeting of stockholders
and the removal of directors, the Trustees may not vote the shares deposited in
the Voting Trust except in accordance with written instructions from the
holders of the Voting Trust Certificates. The Voting Trust may be terminated
with the written consent of holders of two-thirds of all outstanding Voting
Trust Certificates. Unless extended or terminated by the parties thereto, the
Voting Trust expires on January 16, 2001.
On May 11, 1994, the Company's stockholders adopted the Pulitzer Publishing
Company 1994 Stock Option Plan (the "1994 Plan"), replacing the Pulitzer
Publishing Company 1986 Employee Stock Option Plan (the "1986 Plan"). The 1994
Plan provides for the issuance to key employees and non-employee directors of
incentive stock options to purchase up to a maximum of 1,875,000 shares of
common stock. Under the 1994 Plan, options to purchase 1,000 shares of common
stock will be automatically granted to non-employee directors on the date
following each annual meeting of the Company's stockholders and will vest on
the date of the next annual meeting of the Company's stockholders. Total
shares available for issue to non-employee directors under this automatic grant
feature are limited to a maximum of 125,000. The issuance of all other options
will be administered by the Compensation Committee of the Board of Directors,
subject to the 1994 Plan's terms and conditions. Specifically, the exercise
price per share may not be less than the fair market value of a share of common
stock at the date of grant. In addition, exercise periods may not exceed ten
years and the minimum vesting period is established at six months from the date
of grant. Option awards to an individual employee may not exceed 187,500
shares in a calendar year.
Prior to 1994, the Company issued incentive stock options to key employees
under the 1986 Plan. As provided by the 1986 Plan, certain option awards were
granted with tandem stock appreciation rights which allow the employee to elect
an alternative payment equal to the appreciation of the stock value instead of
exercising the option. Outstanding options issued under the 1986 Plan have an
exercise term of ten years from the date of grant and vest in equal
installments over a three-year period.
45
46
Stock option transactions during 1994, 1993 and 1992 are summarized as follows:
SHARES PRICE RANGE
Common Stock Options:
Outstanding, December 31, 1991 662,571 $12.36-$24.91
Cancelled (5,758) $12.36-$21.09
Exercised (55,600) $12.36-$21.09
-------
Outstanding, December 31, 1992 601,213 $12.36-$24.91
Granted 285,494 $24.00-$29.30
Cancelled (33,425) $12.36-$24.73
Exercised (55,536) $12.36-$24.91
-------
Outstanding, December 31, 1993 797,746 $12.36-$29.30
Granted 173,737 $28.70-$29.00
Cancelled (22,871) $15.64-$29.30
Exercised (49,834) $12.36-$24.73
-------
Outstanding, December 31, 1994 898,778 $12.36-$29.30
=======
Exercisable at:
December 31, 1993 473,509 $12.36-$24.91
=======
December 31, 1994 560,548 $12.36-$29.30
=======
At December 31, 1994, 1,701,263 shares remain available for grant under the
Stock Plan.
SHARES PRICE
Common Stock Appreciation Rights:
Outstanding, December 31, 1991 55,000 $19.82
Cancelled (4,125) $19.82
-------
Outstanding, December 31, 1992 50,875 $19.82
Exercised (22,687) $19.82
-------
Outstanding, December 31, 1993 and 1994 28,188 $19.82
=======
Exercisable at December 31, 1993 and 1994 28,188 $19.82
=======
The Company recognizes compensation expense on stock appreciation rights as the
market value fluctuates above the $19.82 per share option price.
On May 11, 1994, the Company's stockholders adopted the Pulitzer Publishing
Company 1994 Key Employees' Restricted Stock Purchase Plan (the "1994 Stock
Plan") which replaced the Pulitzer Publishing Company 1986 Key Employees'
Restricted Stock Purchase Plan ("1986 Stock Plan"). The 1994 Stock Plan
provides that an employee may receive, at the discretion of the Compensation
Committee, a grant or right to purchase at a particular price, shares of common
stock subject to restrictions on transferability. A maximum of 312,500 shares
of common stock may be granted or purchased by employees. In addition, no more
than 62,500 shares of common stock may be issued to an employee in any calendar
year.
- 46 -
47
Prior to 1994, the Company granted stock awards under the 1986 Stock Plan. For
grants awarded under both the 1994 and 1986 Stock Plans, compensation expense
is recognized over the vesting period of the grants. Stock Purchase Plan
transactions for 1994, 1993 and 1992 are summarized as follows:
SHARES PRICE RANGE
Common stock grants:
Outstanding, December 31, 1991 8,250 $15.63
Vested (4,125) $15.63
------
Outstanding, December 31, 1992 4,125 $15.63
Granted 3,250 $26.99
Vested (7,375) $15.63-$26.99
------
Outstanding, December 31, 1993 -
Granted 3,632 $26.99-$28.53
Vested (455) $26.99
------
Outstanding, December 31, 1994 3,177 $26.99-$28.53
======
At December 31, 1994, 308,868 shares remain available for grant or purchase
under the 1994 Stock Plan.
On January 4, 1995, the Board of Directors declared a five-for-four stock split
of the Company's common and Class B common stock payable in the form of a 25%
stock dividend. The dividend was distributed on January 24, 1995 to
stockholders of record on January 13, 1995. Even though this stock split was
declared subsequent to December 31, 1994, the Company's capital balances and
share amounts have been adjusted in 1994 to reflect the split.
On January 4, 1993, the Board of Directors declared a 10% special stock
dividend on its common and Class B common stock payable on January 22, 1993 to
stockholders of record on January 14, 1993. Even though this stock dividend
was consummated subsequent to December 31, 1992, the fair value of the dividend
was charged to retained earnings and credited to common and Class B common
stock and additional paid-in capital during 1992.
9. PENSION PLANS
The Company and its subsidiaries have several noncontributory pension plans
covering substantially all of their employees. Benefits under the plans are
generally based on salary and years of service. Plan funding strategies are
influenced by tax regulations. Plan assets consist primarily of government and
equity securities.
-47-
48
The pension cost components for the pension plans in 1994, 1993 and 1992 were
as follows:
YEARS ENDED DECEMBER 31,
-------------------------------------------------------
1994 1993 1992
(in thousands)
Service cost (for benefits earned during the year) $ 4,463 $ 3,486 $ 3,135
Interest cost on projected benefit obligation 7,515 6,936 6,359
Actual loss (return) on plan assets 1,437 (7,038) (5,892)
Net amortization and deferral (7,779) 1,007 (656)
------- ------- -------
Net periodic pension cost $ 5,636 $ 4,391 $ 2,946
======= ======= =======
The funded status of the Company's pension plans at December 31, 1994 and 1993
is presented below (in thousands):
1994 1993
Actuarial present value of:
Vested benefit obligation $ 93,726 $ 93,652
======== ========
Accumulated benefit obligation $ 94,392 $ 94,636
======== ========
Projected benefit obligation $105,719 $104,383
Plan assets at fair value 75,276 80,450
-------- --------
Plan assets less than the projected benefit obligation (30,443) (23,933)
Unrecognized transition obligation, net 1,982 2,203
Unrecognized net loss 5,525 2,838
Unrecognized prior service cost (280) (240)
Additional minimum liability (3,204) (4,833)
-------- --------
Pension obligations $(26,420) $(23,965)
======== ========
The projected benefit obligation was determined using assumed discount rates of
8% and 7% at December 31, 1994 and 1993, respectively. The expected long-term
rate of return on plan assets was 8.5% for both 1994 and 1993. For those plans
that pay benefits based on final compensation levels, the actuarial assumptions
for overall annual rate of increase in future salary levels ranged from 6% to
6.5% and 5.5% to 6% for December 31, 1994 and 1993, respectively.
Certain of the Company's employees participate in multi-employer retirement
plans sponsored by their respective unions. Amounts charged to operations,
representing the Company's required contributions to these plans in 1994, 1993
and 1992 were approximately $715,000, $822,000 and $701,000, respectively.
The Company also sponsors an employee savings plan under Section 401(k) of the
Internal Revenue Code. This plan covers substantially all employees.
Contributions by the Company amounted to approximately $1,735,000, $1,582,000
and $1,459,000 for 1994, 1993 and 1992, respectively.
10. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
Effective January 1, 1992, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions ("SFAS 106"), which requires the
accrual of retiree benefits during the years an employee provides services.
- 48 -
49
These benefits, primarily medical and life insurance benefits at the
Post-Dispatch, were previously expensed as paid.
In applying this pronouncement, the Company immediately recognized the
Accumulated Postretirement Benefit Obligation of $40,625,000 (there are no
assets in the plans), net of the St. Louis Agency adjustment of $36,052,000, as
of January 1, 1992. On an after tax basis, this charge was $25,147,000 or
$1.74 per share. In addition to the one-time effect of the adjustment, the
application of SFAS No. 106 during 1992 decreased income before cumulative
effect of changes in accounting principles by $1,388,000 ($0.10 per share).
Net periodic postretirement benefit cost for 1994, 1993 and 1992 consists of
the following components:
YEARS ENDED DECEMBER 31,
------------------------------------------------
1994 1993 1992
Service cost - benefits earned during the period $1,462,000 $1,547,000 $1,258,000
Interest cost on accumulated postretirement
benefit obligation 5,898,000 6,802,000 6,388,000
Net total of other components 13,000 404,000
---------- ---------- ----------
Net periodic postretirement benefit expense $7,373,000 $8,753,000 $7,646,000
========== ========== ==========
The Company continues to fund its postretirement benefit obligation on a
pay-as-you-go basis, and, for 1994, 1993 and 1992 made payments of $3,484,000,
$3,561,000 and $3,587,000, respectively.
The accumulated postretirement benefit obligation included in the statements of
consolidated financial position as of December 31, 1994 and 1993 consists of
the following components:
1994 1993
Retirees and surviving beneficiaries $39,336,000 $ 52,786,000
Actives eligible to retire 16,396,000 21,522,000
Other actives 16,181,000 22,993,000
Unrecognized prior service gain 10,039,000
Unrecognized net gain (loss) 7,853,000 (11,373,000)
----------- ------------
Accumulated postretirement benefit obligation $89,805,000 $ 85,928,000
=========== ============
The preceding amounts for the December 31, 1994 and 1993 accumulated
postretirement benefit obligation and the 1994, 1993 and 1992 net periodic
postretirement benefit expense have not been reduced for The Herald Company's
share of the respective amounts. However, pursuant to the St. Louis Agency
Agreement (see Note 2), the Company has recorded a receivable for The Herald
Company's share of the accumulated postretirement benefit obligation as of
December 31, 1994 and 1993.
For 1994 measurement purposes, health care cost trend rates of 13%, 11% and 10%
were assumed for indemnity plans, PPO plans and HMO plans, respectively; these
rates were assumed to decrease gradually to 6%, through the year 2008 and
remain at that level thereafter. For 1993 measurement purposes, health care
cost trend rates of 16% and 13% were assumed for indemnity plans and HMO plans,
respectively; these rates were assumed to decrease gradually to 5% through the
year 2008 and remain at that level thereafter. The health care cost trend rate
assumptions have a significant effect on the amount of obligation and expense
reported. A 1% increase in these annual trend rates would have increased the
accumulated benefit obligation at December 31, 1994 by approximately
$11,766,000 and the 1994 annual
-49-
50
benefit expense by approximately $1,148,000. Administrative costs related to
indemnity plans were assumed to increase at a constant annual rate of 5% and 6%
for 1994 and 1993, respectively. The assumed discount rate used in estimating
the accumulated benefit obligation was 8% and 7% for 1994 and 1993,
respectively.
The changes in the December 31, 1994 reconciliation of the accumulated
postretirement benefit obligation compared to the prior year resulted primarily
from the modifications of certain interest rate and trend rate assumptions
(discussed above) and from current year changes in certain benefits under the
Company's postretirement plans.
Effective January 1, 1994, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 112, Employers' Accounting for
Postemployment Benefits ("SFAS 112"), to account for certain disability
benefits at the St. Louis Post-Dispatch. SFAS 112 requires that the cost of
these benefits provided to former employees prior to retirement be recognized
on the accrual basis of accounting. Previously, the Company recognized its
postemployment benefit costs when paid. The cumulative effect of adopting SFAS
112 was a reduction of 1994 net income of approximately $719,000 or $0.04 per
share. After recording the cumulative effect adjustment, the Company's
on-going expense under the new standard will not differ significantly from the
prior pay-as-you-go basis.
Under SFAS 112, the Company accrues the disability benefits when it becomes
probable that such benefits will be paid and when sufficient information exists
to make reasonable estimates of the amounts to be paid. As required by the
standard, prior year financial statements have not been restated to reflect the
change in accounting method.
11. INCOME TAXES
Effective January 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes ("SFAS
109"). This change in accounting method has been applied by recording a
positive cumulative effect adjustment of $360,000 or $0.02 per share in the
first quarter of 1993. The positive earnings impact of the cumulative effect
adjustment results principally from the recalculation of certain deferred
income taxes at the lower 34% federal statutory rate as opposed to the higher
tax rates which were in effect when certain of the deferred income taxes
originated. Prior years' consolidated financial statements have not been
restated to apply the provisions of SFAS 109.
Provisions for income taxes (benefits) consist of the following:
YEARS ENDED DECEMBER 31,
----------------------------------------------
1994 1993 1992
(IN THOUSANDS)
Current:
Federal $ 25,156 $ 14,666 $ 5,259
State and local 3,372 2,179 1,975
Deferred:
Federal (2,264) (1,419) (1,613)
State and local (304) (166) (290)
-------- -------- --------
Total $ 25,960 $ 15,260 $ 5,331
======== ======== ========
-50-
51
Under the Revenue Reconciliation Act of 1993, the marginal corporate tax rate
was increased from 34% to 35%. The deferred tax benefit for 1993 was increased
by approximately $225,000 to reflect this change.
Factors causing the effective tax rate to differ from the statutory Federal
income tax rate were:
YEARS ENDED DECEMBER 31,
--------------------------
1994 1993 1992
Statutory rate 35 % 35% 34 %
Favorable resolution of prior year federal and state tax issues (1) (19)
Amortization of intangibles 1 (2)
State and local income taxes, net of U.S. Federal income tax
benefit 3 4 4
Other - net 1 1 1
--- --- ---
Effective rate 39 % 40% 18 %
=== === ===
The Company's current and noncurrent deferred taxes, included net in other
assets in the statements of consolidated financial position as of December 31,
1994 and 1993, consisted of the following deferred tax assets and liabilities:
<Caption)
DECEMBER 31,
--------------------------
1994 1993
(IN THOUSANDS)
Deferred tax assets:
Pensions and employee benefits $ 8,240 $ 8,224
Post retirement benefit costs 19,144 17,884
Other 305 245
------- ------
Total 27,689 26,353
------- ------
Deferred tax liabilities:
Depreciation 9,295 11,125
Amortization 2,396 4,308
------ ------
Total 11,691 15,433
------- -------
Net deferred tax asset $15,998 $10,920
======= =======
During 1994, the Company settled federal tax examinations for 1990 through 1992
and paid additional taxes of approximately $2,048,000. This payment
represented an extension of the tax amortization period for certain prior year
acquisition intangibles. Accordingly, a deferred tax asset for the amount of
the payment was recorded during 1994.
The Company had no valuation allowance for deferred tax assets as of December
31, 1994, December 31, 1993 and January 1, 1993; therefore, there were no
changes in the valuation allowance for deferred tax assets for the years ended
December 31, 1994 and 1993.
-51-
52
For 1992, the deferred tax provision, computed in accordance with Accounting
Principles Board Opinion No. 11, represent the effects of timing differences
between financial and income tax reporting. The significant components giving
rise to the timing differences for 1992 were:
YEAR ENDED
DECEMBER 31,
------------
1992
Depreciation and amortization $ (494)
Pensions and postretirement benefits (17,284)
Other - net 397
--------
Total $(17,381)
========
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
As required by Statement of Financial Accounting Standards No. 107, Disclosures
About Fair Value of Financial Instruments, the Company has estimated the
following fair value amounts using available market information and appropriate
valuation methodologies. However, considerable judgment is necessarily
required in interpreting market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts that the Company could realize in a current market exchange. The
use of different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.
DECEMBER 31, 1994 DECEMBER 31, 1993
---------------------------- ---------------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
(IN THOUSANDS)
Assets:
Cash and cash equivalents $77,084 $77,084 $ 34,970 $ 34,970
Accounts receivable 62,943 62,943 61,953 61,953
Liabilities:
Accounts payable 14,458 14,458 11,807 11,807
Program contracts payable 10,973 10,292 15,133 14,298
Long-term debt 143,000 136,930 176,240 178,692
Cash and Cash Equivalents, Accounts Receivable, and Accounts Payable - The
carrying amounts of these items are a reasonable estimate of their fair value.
Program Contracts Payable - The estimated fair value is determined by
discounting the related future maturities (see Note 6) using the Company's
incremental borrowing rate.
Long-Term Debt - Interest rates that are currently available to the Company for
issuance of debt with similar terms and remaining maturities are used to
estimate fair value.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1994 and 1993. Although management
is not aware of any facts that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since that date, and current estimates of fair
value may differ from the amounts presented herein.
-52-
53
13. BUSINESS SEGMENTS
The Company's operations are divided into two business segments, publishing and
broadcasting. The following is a summary of operations, assets and other data.
AS OF AND FOR THE
YEARS ENDED DECEMBER 31,
---------------------------------
1994 1993 1992
(IN THOUSANDS)
OPERATING REVENUES:
Publishing $ 304,779 $ 290,146 $ 285,004
Broadcasting 180,800 136,839 113,369
--------- --------- ---------
Total $ 485,579 $ 426,985 $ 398,373
========= ========= =========
OPERATING INCOME (LOSS):
Publishing $ 30,486 $ 23,702 $ 18,179
Broadcasting 47,963 27,947 23,311
Corporate (3,871) (3,692) (4,856)
--------- --------- ---------
Total $ 74,578 $ 47,957 $ 36,634
========= ========= =========
TOTAL ASSETS:
Publishing $ 136,818 $ 156,398 $ 139,694
Broadcasting 254,410 270,250 120,380
Corporate 77,084 34,970 29,914
--------- --------- ---------
Total $ 468,312 $ 461,618 $ 289,988
========= ========= =========
CAPITAL EXPENDITURES:
Publishing $ 6,097 $ 6,198 $ 4,934
Broadcasting 7,216 7,391 4,325
--------- --------- ---------
Total $ 13,313 $ 13,589 $ 9,259
========= ========= =========
DEPRECIATION AND AMORTIZATION:
Publishing $ 6,128 $ 6,938 $ 8,174
Broadcasting 24,358 16,854 10,695
--------- --------- ---------
Total $ 30,486 $ 23,792 $ 18,869
========= ========= =========
OPERATING MARGINS (Operating income to
revenues):
Publishing* 14.8 % 11.8 % 10.5 %
Broadcasting 26.5 20.4 20.6
* Operating margins for publishing stated with St. Louis Agency adjustment
(which is recorded as an operating expense in the accompanying consolidated
financial statements) added back to publishing operating income.
- 53 -
54
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
Operating results for the years ended December 31, 1994 and 1993 by
quarters are as follows:
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER TOTAL
--------------------------------------------------------
(in thousands,except per share data)
1994
OPERATING REVENUES--NET $ 111,391 $ 122,730 $ 116,944 $ 134,514 $ 485,579
--------- --------- --------- --------- ---------
OPERATING EXPENSES:
Operations 46,697 46,638 46,870 51,365 191,570
Selling, general administrative 42,933 43,448 42,378 45,480 174,239
St. Louis Agency adjustment 2,719 4,233 3,452 4,302 14,706
Depreciation and amortization 7,562 7,580 7,604 7,740 30,486
--------- --------- --------- --------- ---------
Total 99,911 101,899 100,304 108,887 411,001
--------- --------- --------- --------- ---------
Operating income 11,480 20,831 16,640 25,627 74,578
Interest income 377 430 514 650 1,971
Interest expense (3,316) (3,084) (2,682) (2,927) (12,009)
Net other expense (248) (445) (347) 2,370 1,330
--------- --------- --------- --------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 8,293 17,732 14,125 25,720 65,870
Provision for income taxes 3,410 7,232 5,771 9,547 25,960
--------- --------- --------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 4,883 10,500 8,354 16,173 39,910
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
NET OF APPLICABLE INCOME TAXES (719) (719)
--------- --------- --------- --------- ---------
NET INCOME $ 4,164 $ 10,500 $ 8,354 $ 16,173 $ 39,191
========= ========= ========= ========= =========
EARNINGS PER SHARE OF STOCK (Common and Class B Common):
Income before cumulative effect of change in accounting
principle $ 0.30 $ 0.65 $ 0.51 $ 0.99 $ 2.45
Cumulative effect of change in accounting principle (.04) (0.04)
--------- --------- --------- --------- ---------
Total $ 0.26 $ 0.65 $ 0.51 $ 0.99 $ 2.41
========= ========= ========= ======== =========
WEIGHTED AVERAGE NUMBER OF SHARES (Common
and Class B Common) OUTSTANDING 16,221 16,238 16,249 16,261 16,241
========= ========= ========= ========= =========
1993
OPERATING REVENUES -- NET $ 93,591 $ 104,329 $ 106,833 $ 122,232 $ 426,985
--------- --------- --------- --------- ---------
OPERATING EXPENSES:
Operations 41,830 43,308 46,814 49,046 180,998
Selling, general and administrative 38,062 39,345 41,690 44,481 163,578
St. Louis Agency adjustment 2,202 2,835 2,145 3,478 10,660
Depreciation and amortization 4,303 4,328 7,394 7,767 23,792
--------- --------- --------- --------- ---------
Total 86,397 89,816 98,043 104,772 379,028
--------- --------- --------- --------- ---------
Operating income 7,194 14,513 8,790 17,460 47,957
Interest income 298 239 238 315 1,090
Interest expense (1,719) (1,501) (3,224) (3,379) (9,823)
Net other expense (224) (302) (293) (192) (1,011)
--------- --------- --------- --------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 5,549 12,949 5,511 14,204 38,213
Provision for income taxes 2,213 5,099 2,216 5,732 15,260
--------- --------- --------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 3,336 7,850 3,295 8,472 22,953
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
NET OF APPLICABLE INCOME TAXES 360 360
--------- --------- --------- --------- ---------
NET INCOME $ 3,696 $ 7,850 $ 3,295 $ 8,472 $ 23,313
========= ========= ========= ========= =========
EARNINGS PER SHARE OF STOCK (Common and Class B Common):
Income before cumulative effect of change in accounting
principle $ 0.24 $ 0.54 $ 0.20 $ 0.52 $ 1.51
Cumulative effect of change in accounting principle 0.02 0.02
--------- --------- --------- --------- ---------
Total $ 0.26 $ 0.54 $ 0.20 $ 0.52 $ 1.53
========= ========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF SHARES (Common
and Class B Common) OUTSTANDING 14,479 14,499 16,190 16,210 15,278
========= ========= ========= ========= =========
-54-
55
In the fourth quarter of 1994, a federal tax examination for 1992 was settled;
that settlement, together with the settlements earlier in the year of federal
tax examinations for 1990 and 1991, resulted in reduced income tax expense of
approximately $500,000, or $0.03 per share, in the 1994 fourth quarter. Due to
the Company's reduced exposure to further tax adjustments for open tax years,
and the impact of 1993 tax law changes in the deductibility of the amortization
of intangibles, the 1994 estimated tax rate was lowered from approximately 41
percent (estimated earlier in the year) to approximately 39 percent, resulting
in a gain of approximately $1,000,000, or $0.06 a share. The Company expects
to use the lower, approximately 39 percent, estimated tax rate in 1995.
* * * * * *
55
56
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the caption "Management" in the
Company's definitive Proxy Statement to be used in connection with the 1995
Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the caption "Executive Compensation"
in the Company's definitive Proxy Statement to be used in connection with the
1995 Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Principal Stockholders"
in the Company's definitive Proxy Statement to be used in connection with the
1995 Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Compensation Committee
Interlocks and Insider Participation" in the Company's definitive Proxy
Statement to be used in connection with the 1995 Annual Meeting of Stockholders
is incorporated herein by reference.
56
57
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) DOCUMENT LIST
1. Financial Statements
The following financial statements are set forth in Part II, Item 8 of
this report.
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES:
(i) Independent Auditors' Report.
(ii) Statements of Consolidated Income for each of the Three Years
in the Period Ended December 31, 1994.
(iii) Statements of Consolidated Financial Position at December 31,
1994 and 1993.
(iv) Statements of Consolidated Stockholders' Equity for each of
the Three Years in the Period Ended December 31, 1994.
(v) Statements of Consolidated Cash Flows for each of the Three
Years in the Period Ended December 31, 1994.
(vi) Notes to Consolidated Financial Statements for the Three Years
in the Period Ended December 31, 1994.
2. Supplementary Data and Financial Statement Schedules
(i) Supplementary unaudited data with respect to quarterly results of
operations is set forth in Part II, Item 8 of this Report.
(ii) The following financial statement schedule and opinion thereon
are filed as a part of this Report:
Sequential Page
---------------
Independent Auditors' Report 61
Schedule II - Valuation and Qualifying
Accounts and Reserves 62
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and, therefore have
been omitted.
57
58
3. Exhibits Required by Securities and Exchange Commission Regulation S-K
(a) The following exhibits are filed as part of this report:
Exhibit No. Sequential Page
- ----------- ---------------
10.8.1 Amendment, dated January 24, 1995, to
Pulitzer Retirement Savings Plan. 65
10.8.2 Amended and restated Pulitzer
Retirement Savings Plan. 68
10.9 Amended and restated Joseph Pulitzer
Pension Plan. 120
10.10 Amended and restated Pulitzer Publishing
Company Pension Plan. 169
10.14 Deferred Compensation Agreement, dated
December 16, 1994, between the Pulitzer
Publishing Company and Michael E. Pulitzer. 216
10.25 Stock Purchase Agreement dated as of
December 22, 1994 by and among Pulitzer
Publishing Company, American Publishing
Company and American Publishing Holdings, Inc. 220
21 Subsidiaries of Registrant 274
23 Independent Auditors' Consent 275
24 Power of Attorney 276
27 Financial Data Schedule 277
(b) The following exhibits are incorporated herein by reference:
3.1 - Restated Certificate of Incorporation of the Company.(iii)
3.2 - By-Laws of the Company restated as of June 23, 1993.(x)
4.1 - Form of Certificate for Common Stock.(iii)
9.1 - Voting Trust Agreement, dated January 17, 1991 between the
holders of voting trust certificates and Michael E. Pulitzer,
Emily Rauh Pulitzer, Ronald H. Ridgway, Nicholas G. Penniman IV,
Ken J. Elkins, William F. Woo and David Moore.(vi)
10.1 - Agreement, dated January 1, 1961, between the Pulitzer
Publishing Company, a Missouri corporation, and the Globe-
Democrat Publishing Company, as amended on September 4, 1975,
April 12, 1979 and December 22, 1983.(i)
10.2.1 - Amended and Restated Joint Operating Agreement, dated December
30, 1988 between Star Publishing Company and Citizen Publishing
Company.(v)
10.2.2 - Partnership Agreement, dated December 30, 1988 between Star
Publishing Company and Citizen Publishing Company.(v)
58
59
Exhibit No.
- -----------
10.3 - Agreement, dated as of May 12, 1986, among the Pulitzer
Publishing Company, Clement C. Moore, II, Gordon C. Weir,
William E. Weir, James R. Weir, Kenward G. Elmslie, Stephen E.
Nash and Manufacturers Hanover Trust Company, as Trustees and
Christopher Mayer.(i)
10.4 - Letter Agreement, dated September 29, 1986, among the Pulitzer
Publishing Company, Trust Under Agreement Made by David E. Moore,
David E. Moore, Frederick D. Pulitzer, Michael E. Pulitzer, Jr.,
Robert S. Pulitzer, Joseph Pulitzer, IV, Joseph Pulitzer, Jr.,
Michael E. Pulitzer, Stephen E. Nash and Manufacturers Hanover
Trust Company, as Trustees, Kenward G. Elmslie, Gordon C. Weir,
William E. Weir, James R. Weir, Peter W. Quesada, T. Ricardo
Quesada, Elinor P. Hempelmann, The Moore Foundation, Inc.,
Mariemont Corporation, Z Press Inc. and Clement C. Moore, II.(ii)
10.5 - Letter Agreement, dated May 12, 1986, among the Pulitzer
Publishing Company, Peter W. Quesada, T. Ricardo Quesada, Kate
Davis Pulitzer Quesada and Elinor P. Hempelmann.(i)
10.6 - Agreement, dated as of September 29, 1986, among the Pulitzer
Publishing Company, Peter W. Quesada, T. Ricardo Quesada, Kate
Davis Pulitzer Quesada and Elinor Hempelmann.(ii)
10.7.1 - Amendment, dated March 9, 1992, to the Pulitzer Publishing Annual
Incentive Plan.(vii)
10.7.2 - Annual Incentive Compensation Plan.(iii)
10.11 - Restated Supplemental Executive Benefit Pension Plan.(viii)
10.12 - Employment Agreement, dated October 1, 1986, between the Pulitzer
Publishing Company and Joseph Pulitzer, Jr.(i)
10.13 - Employment Agreement, dated January 2, 1986, between the Pulitzer
Publishing Company and Michael E. Pulitzer.(i)
10.15 - Consulting Agreement, dated May 1, 1993, between Pulitzer
Publishing Company and Glenn A. Christopher.(x)
10.16 - Supplemental Executive Retirement Pay Agreement dated June 5,
1984, between the Pulitzer Publishing Company and Glenn A.
Christopher.(i)
10.17 - Letter Agreement, dated October 26, 1984, between the Pulitzer
Publishing Company and Glenn A. Christopher.(i)
10.18 - Letter Agreement, dated October 21, 1986, between the Pulitzer
Publishing Company and David E. Moore.(i)
10.19 - Pulitzer Publishing Company 1994 Key Employees' Restricted Stock
Purchase Plan.(xi)
10.20 - Pulitzer Publishing Company 1994 Stock Option Plan.(xi)
59
60
Exhibit No.
- -----------
10.21 - Registration Rights Agreement.(i)
10.22 - Note Agreement, dated April 22, 1987, between the Pulitzer
Publishing Company and The Prudential Insurance Company of
America.(iv)
10.23 - Employment Agreement, dated May 10, 1955, between the Pulitzer
Publishing Company and Joseph Pulitzer, Jr.(ii)
10.24 - Note Agreement, dated June 30, 1993, between Pulitzer
Publishing Company and The Prudential Insurance Company of
America.(ix)
- ---------------
(i) Incorporated by reference to Registration Statement on Form S-1 (No.
33-9953) filed with the Securities and Exchange Commission on
November 4, 1986.
(ii) Incorporated by reference to Amendment No. 1 to Registration
Statement on Form S-1 (No. 33-9953) filed with the Securities and
Exchange Commission on December 9, 1986.
(iii) Incorporated by reference to Amendment No. 2 to Registration
Statement on Form S-1 (no. 33-9953) filed with the Securities
and Exchange Commission on December 11, 1986.
(iv) Incorporated by reference to Current Report on Form 8-K dated May 4,
1987.
(v) Incorporated by reference to Annual Report on Form 10-K for the
fiscal year ended December 31, 1988.
(vi) Incorporated by reference to Annual Report on Form 10-K for the
fiscal year ended December 31, 1990.
(vii) Incorporated by reference to Annual Report on Form 10-K for the
fiscal year ended December 31, 1991.
(viii) Incorporated by reference to Annual Report on Form 10-K for the
fiscal year ended December 31, 1992.
(ix) Incorporated by reference to Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1993.
(x) Incorporated by reference to Annual Report on Form 10-K for the
fiscal year ended December 31, 1993.
(xi) Incorporated by reference to the Company's definitive Proxy
Statement used in connection with the 1994 Annual Meeting of
Stockholders
(c) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the fourth
quarter of fiscal year 1994.
60
61
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of Pulitzer Publishing Company:
We have audited the consolidated financial statements of Pulitzer Publishing
Company and its subsidiaries as of December 31, 1994 and 1993, and for each of
the three years in the period ended December 31, 1994, and have issued our
report thereon dated February 3, 1995; such report is included elsewhere in
this Form 10-K. Our audits also included the consolidated financial statement
schedule of Pulitzer Publishing Company and its subsidiaries, listed in the
accompanying index at Item 14. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such consolidated 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.
DELOITTE & TOUCHE LLP
Saint Louis, Missouri
February 3, 1995
61
62
SCHEDULE II
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
SCHEDULE II - VALUATION & QUALIFYING ACCOUNTS & RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 & 1992
Balance At Charged to Charged to Balance
Beginning Costs & Other At End Of
Description Of Period Expenses Accounts Deductions Period
----------- --------- -------- -------- ---------- -----------
(In thousands)
Year Ended December 31, 1994
Valuation Accounts:
Allowance for Doubtful
Accounts $2,575 $2,010 $159 (a) $2,609 (b) $2,135
Reserves:
Accrued Medical Plan 526 6,070 0 5,807 (c) 789
Workers Compensation 1,765 2,023 0 1,461 2,327
Year Ended December 31, 1993
Valuation Accounts:
Allowance for Doubtful
Accounts $2,357 $1,935 $625 (a) $2,342 (b) $2,575
Reserves:
Accrued Medical Plan 2,000 3,850 0 5,324 (c) 526
Workers Compensation 1,100 1,922 0 1,257 1,765
Year Ended December 31, 1992
Valuation Accounts:
Allowance for Doubtful
Accounts $2,562 $2,908 $188 (a) $3,301 (b) $2,357
Reserves:
Accrued Medical Plan 219 7,752 0 5,971 (c) 2,000
Workers Compensation 475 1,770 0 1,145 1,100
(a) - Accounts reinstated, cash recoveries, etc.
(b) - Accounts written off, except 1994 which also includes $761 related to
sale of PCN.
(c) - Amount represents: 1994 1993 1992
---- ---- ----
Claims paid $5,383 $5,101 $5,577
Service fees 460 522 456
Cash refunds (36) (299) (62)
------ ------ ------
$5,807 $5,324 $5,971
====== ====== ======
62
63
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized, on the 14th day of March, 1995.
PULITZER PUBLISHING COMPANY
By: /s/ Michael E. Pulitzer
----------------------------------
Michael E. Pulitzer,
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed by the following persons on behalf of the
Registrant in the capacities indicated on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Michael E. Pulitzer Director; Chairman, President and March 14, 1995
----------------------- Chief Executive Officer
(Michael E. Pulitzer) (Principal Executive Officer)
/s/ Ronald H. Ridgway Director; Senior Vice President-Finance March 14, 1995
--------------------- (Principal Financial and Accounting Officer)
(Ronald H. Ridgway)
Ken J. Elkins* Director; Senior Vice President - March 14, 1995
-------------- Broadcasting Operations
(Ken J.Elkins)
David E. Moore* Director March 14, 1995
---------------
(David E. Moore)
Nicholas G. Penniman IV* Director; Senior Vice President - March 14, 1995
------------------------ Newspaper Operations
(Nicholas G. Penniman IV)
Peter J. Repetti * Director March 14, 1995
------------------
(Peter J. Repetti)
Emily Rauh Pulitzer* Director March 14, 1995
--------------------
(Emily Rauh Pulitzer)
Alice B. Hayes* Director March 14, 1995
---------------
(Alice B. Hayes)
James M. Snowden, Jr.* Director March 14, 1995
----------------------
(James M. Snowden, Jr.)
By: /s/ Ronald H. Ridgway
-----------------------------
Ronald H. Ridgway*
attorney-in-fact
63
64
PULITZER PUBLISHING COMPANY
Report on Form 10-K for the Fiscal Year Ended
December 31, 1994
EXHIBIT INDEX
Exhibit No. Sequential Page
- ----------- ---------------
10.8.1 Amendment, dated January 24, 1995, to Pulitzer
Retirement Savings Plan. 65
10.8.2 Amended and restated Pulitzer Retirement Savings
Plan. 68
10.9 Amended and restated Joseph Pulitzer Pension Plan. 120
10.10 Amended and restated Pulitzer Publishing Company
Pension Plan. 169
10.14 Deferred Compensation Agreement, dated December 16,
1994, between the Pulitzer Publishing Company and
Michael E. Pulitzer. 216
10.25 Stock Purchase Agreement dated as of December 22,
1994 by and among Pulitzer Publishing Company,
American Publishing Company and American
Publishing Holdings, Inc. 220
21 Subsidiaries of Registrant 274
23 Independent Auditors' Consent 275
24 Power of Attorney 276
27 Financial Data Schedule 277
64
65
AMENDMENT
OF
PULITZER RETIREMENT SAVINGS PLAN
Pursuant to resolutions adopted on January 24, 1995 by the Board of
Directors of Pulitzer Publishing Company, the Pulitzer Retirement Savings Plan
(the "Plan") is hereby amended as follows:
1. The monthly Employer Profit Sharing Contributions for participants
who are members of the St. Louis Newspaper Guild shall be $50 effective
February 1, 1995.
2. Schedule B annexed to the Plan is revised accordingly.
PULITZER PUBLISHING COMPANY
By: /s/ Ronald H. Ridgway
--------------------------------
Ronald H. Ridgway
Senior Vice President - Finance