e10vk
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K
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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
December 31, 2009
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from to
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Commission File Number 0-16914
THE E. W. SCRIPPS
COMPANY
(Exact name of registrant as
specified in its charter)
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Ohio
(State or other jurisdiction
of
incorporation or organization)
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31-1223339
(IRS Employer
Identification Number)
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312 Walnut Street
Cincinnati, Ohio
(Address of principal
executive offices)
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45202
(Zip Code)
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Registrants telephone number, including area code:
(513) 977-3000
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Title of Each Class
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Name of Each Exchange on Which Registered
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Securities registered pursuant to Section 12(b) of the Act:
Class A Common shares, $.01 par value
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the
Act:
Not applicable
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o No þ
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 of Section 15(d) of the
Act. Yes o No þ
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 þ No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such
files). o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained to the best
of the registrants 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. þ
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o
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Smaller reporting company o
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the
Act). Yes o No þ
The aggregate market value of Class A Common shares of the
registrant held by non-affiliates of the registrant, based on
the $2.09 per share closing price for such stock on
June 30, 2009, was approximately $66,872,000. All
Class A Common shares beneficially held by executives and
directors of the registrant and The Edward W. Scripps Trust have
been deemed, solely for the purpose of the foregoing
calculation, to be held by affiliates of the registrant. There
is no active market for our common voting shares.
As of February 28, 2010, there were 42,891,969 of the
registrants Class A Common shares, $.01 par
value per share, outstanding and 11,932,735 of the
registrants Common Voting Shares, $.01 par value per
share, outstanding.
Certain information required for Part III of this report is
incorporated herein by reference to the proxy statement for the
2010 annual meeting of shareholders.
Index to
The E. W. Scripps Company Annual Report
on
Form 10-K
for the Year Ended December 31, 2009
2
As used in this Annual Report on
Form 10-K,
the terms Scripps, we, our
or us may, depending on the context, refer to The E.
W. Scripps Company, to one or more of its consolidated
subsidiary companies, or to all of them taken as a whole.
Additional
Information
Our Company Web site is www.scripps.com. Copies of all of our
SEC filings filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 are available free
of charge on this Web site as soon as reasonably practicable
after we electronically file the material with, or furnish it
to, the SEC. Our Web site also includes copies of the charters
for our Compensation, Nominating & Governance and
Audit Committees, our Corporate Governance Principles, our
Insider Trading Policy, our Ethics Policy and our Code of Ethics
for the CEO and Senior Financial Officers. All of these
documents are also available to shareholders in print upon
request or by request via
E-Mail to
secretaries@scripps.com.
Forward-Looking
Statements
Our Annual Report on
Form 10-K
contains certain forward-looking statements related to our
businesses. We base our forward-looking statements on our
current expectations. Forward-looking statements are subject to
certain risks, trends and uncertainties that could cause actual
results to differ materially from the expectations expressed in
the forward-looking statements. Such risks, trends and
uncertainties, which in most instances are beyond our control,
include changes in advertising demand and other economic
conditions; consumers tastes; newsprint prices; program
costs; labor relations; technological developments; competitive
pressures; interest rates; regulatory rulings; and reliance on
third-party vendors for various products and services. The words
believe, expect, anticipate,
estimate, intend and similar expressions
identify forward-looking statements. You should evaluate our
forward-looking statements, which are as of the date of this
filing, with the understanding of their inherent uncertainty. We
undertake no obligation to update any forward-looking statements
to reflect events or circumstances after the date of the
statement.
3
PART I
We are a diverse,
131-year-old
media enterprise with interests in television stations,
newspapers, local news and information Web sites, and licensing
and syndication. Our portfolio of locally focused media
properties includes: 10 TV stations (six ABC affiliates, three
NBC affiliates and one independent); daily and community
newspapers in 13 markets and the Washington, D.C.-based
Scripps Media Center, home of the Scripps Howard News Service;
and United Media, the licensor and syndicator of Peanuts,
Dilbert and approximately 150 other features and comics. For a
full listing of our media companies and their associated Web
sites, visit
http://www.scripps.com.
In February 2010, we announced that we are exploring strategic
options for United Media Licensing, the character licensing
operation of United Media. Among the possible outcomes of the
exploratory process are a sale or joint venture involving all or
part of United Media Licensing. Another option is to keep
operating the business if the exploratory process leads
management to determine that more long-term value can be created
for company shareholders by retaining the property.
After an unsuccessful search for a buyer, we closed the Rocky
Mountain News after it published its final edition on
February 27, 2009. Our Rocky Mountain News and MediaNews
Group, Inc.s (MNG) Denver Post were partners in The Denver
Newspaper Agency (the Denver JOA), a limited
liability partnership, which operated the sales, production and
business operations of the Rocky Mountain News prior to its
closure. Each newspaper owned 50% of the Denver JOA and received
a 50% share of the profits. Each newspaper provided the Denver
JOA with the independent editorial content published in its
newspaper. Under the terms of an agreement with MNG, we
transferred our interests in the Denver JOA to MNG in the third
quarter of 2009. We recorded no gain or loss on the transfer of
our interest in the Denver JOA to MNG.
On July 1, 2008, we completed the spin-off of Scripps
Networks Interactive, Inc. (SNI) through the
distribution of a tax-free dividend to our shareholders. The
shareholders of record received one SNI Class A Common
Share for every Scripps Class A Common Share held as of the
Record Date and one SNI Common Voting Share for every Scripps
Common Voting Share held as of the Record Date. For more
information regarding the spin-off of SNI, refer to
Managements Discussion & Analysis (MD&A) in
Item 7 and Note 4 of the Notes to Consolidated
Financial Statements of this
Form 10-K
report (Report). In connection with the closure of the Rocky
Mountain News, we also transferred our 50% interest in Prairie
Mountain Publishing (PMP) to MNG in the third
quarter of 2009.
The Albuquerque Tribune ceased publication on February 23,
2008 and we ceased publication of our Cincinnati newspapers on
December 31, 2007.
Financial information for each of our business segments can be
found under Managements Discussion and Analysis of
Financial Condition and Results of Operations and
Note 17 of the Notes to the Consolidated Financial
Statements of this
Form 10-K.
Newspapers
We operate daily and community newspapers in 13 markets in the
United States. All of our newspapers subscribe to the wire
service. Our newspapers contributed approximately 57% of our
companys total operating revenues both in 2009 and in 2008.
4
The markets and circulation in which we publish daily newspapers
is as follows:
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Newspaper
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2009
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2008
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2007
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2006
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2005
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(In thousands)(1)
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Abilene (TX) Reporter-News
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27
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28
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30
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31
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30
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Anderson (SC) Independent-Mail
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26
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29
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34
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35
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36
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Corpus Christi (TX) Caller-Times
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47
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52
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52
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52
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50
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Evansville (IN) Courier & Press
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57
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64
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66
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66
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66
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Henderson (KY) Gleaner
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10
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10
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10
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10
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10
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Kitsap (WA) Sun
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23
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28
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29
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30
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30
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Knoxville (TN) News Sentinel
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101
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113
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117
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116
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118
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Memphis (TN) Commercial Appeal
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136
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144
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152
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156
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165
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Naples (FL) Daily News
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53
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54
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56
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58
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58
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Redding (CA) Record-Searchlight
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25
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31
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32
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34
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35
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San Angelo (TX) Standard-Times
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21
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24
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25
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25
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25
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Treasure Coast (FL) News/Press/Tribune
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87
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99
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102
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102
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100
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Ventura County (CA) Star
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67
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83
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85
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86
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89
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Wichita Falls (TX) Times Record News
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25
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27
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29
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30
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30
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Total Daily Circulation
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705
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786
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819
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831
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842
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Circulation information for the Sunday edition of our newspapers
is as follows:
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Newspaper
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2009
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2008
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2007
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2006
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2005
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(In thousands)(1)
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Abilene (TX) Reporter-News
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35
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37
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39
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39
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40
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Anderson (SC) Independent-Mail
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30
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32
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38
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40
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41
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Corpus Christi (TX) Caller-Times
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65
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72
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71
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71
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71
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Evansville (IN) Courier & Press
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77
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83
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87
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88
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89
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Henderson (KY) Gleaner
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11
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11
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12
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12
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11
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Kitsap (WA) Sun
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26
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31
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32
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33
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33
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Knoxville (TN) News Sentinel
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126
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138
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145
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147
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150
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Memphis (TN) Commercial Appeal
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172
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177
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193
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204
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216
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Naples (FL) Daily News
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61
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62
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63
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67
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70
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Redding (CA) Record-Searchlight
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28
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33
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35
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37
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39
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San Angelo (TX) Standard-Times
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24
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28
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29
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30
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30
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Treasure Coast (FL) News/Press/Tribune(2)
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105
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112
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112
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113
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112
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Ventura County (CA) Star
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82
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94
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95
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99
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100
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Wichita Falls (TX) Times Record News
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28
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30
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33
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34
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34
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Total Sunday Circulation
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870
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940
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984
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1,014
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1,036
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(1) |
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Based on Audit Bureau of Circulation Publishers Statements
(Statements) for the six-month periods ended
September 30, except figures for the Naples Daily News and
the Treasure Coast News/Press/Tribune, which are from the
Statements for the twelve-month periods ended September 30. |
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Represents the combined Sunday circulation of the Stuart News,
the Vero Beach Press Journal and the Ft. Pierce Tribune. |
Our newspaper publishing strategy seeks to create local media
franchises that distribute news and information across a variety
of platforms, anchored by the markets principal daily
newspaper. We believe each of our newspapers has an excellent
reputation for journalistic quality and content and that our
newspapers are the leading source of local news and information
in their markets. We believe the keys to maintaining that
position are to serve as a community watchdog and to understand
and engage our audiences.
We continue to drive innovation across the newspaper division,
creating new digital and print offerings that complement our
daily and community newspapers or enable us to reach new markets
and advertisers.
5
Over the years we have supplemented our daily newspapers with an
array of niche products, including direct-mail advertising,
total market coverage publications, zoned editions, specialty
publications, and event-based publications. These product
offerings allow existing advertisers to reach their target
audience in multiple ways, while also giving us an attractive
portfolio of products with which to acquire new clients,
particularly small and mid-sized advertisers. While we strive to
make such publications profitable in their own right, they also
help retain advertising in the daily newspaper.
Our newspapers also operate Internet sites, offering users
information, comprehensive news, user-generated content,
advertising,
e-commerce
and other services. We continue to apply new digital tools with
many of our journalists commonly using social media such as
Facebook, YouTube or Twitter. We expect to continue to expand
the platforms on which our news and information is distributed,
including mobile and
e-reader
devices.
Together with the mass reach of the daily newspaper, our digital
platforms and niche publications enable us to maintain our
position as a leading media outlet in each of our newspaper
markets. Our focus is to achieve maximum reach and coverage in
our markets and to serve our advertisers.
In 2009, we began a restructuring of the management of our
newspaper division which is known as Scripps 3.0. Where we had
previously managed each of our newspapers as independent
businesses within their markets, we are now managing our
newspaper business vertically by function. One of the primary
benefits of this reorganization is to implement successful
products and strategies currently developed in some markets
across all markets with greater speed and efficiency.
The new management structure also enables us to standardize and
centralize functions that do not require a physical presence in
the markets. We expect these efforts to produce cost
efficiencies and to focus local management in each market on
news coverage and revenue-producing activities.
We announced the first elements of Scripps 3.0 in August 2009
with the naming of executives to new roles in the division. The
division-wide implementation started in early 2010 as the
newspapers plan to merge their advertising and circulation
software platforms onto a single system.
Advertising provided approximately 71% of newspaper segment
operating revenues in 2009. Newspaper advertising includes
Run-of-Press
(ROP) advertising, preprinted inserts, advertising
on our Internet sites, advertising in niche publications, and
direct mail. ROP advertisements, located throughout the
newspaper, include local, classified and national advertising.
Local ROP refers to any advertising purchased by in-market
advertisers that is not included in the papers classified
section. Classified ROP includes all auto, real estate and
help-wanted advertising and other ads listed together in
sequence by the nature of the ads. National ROP refers to any
advertising purchased by businesses outside our local market.
National advertisers typically procure advertising from numerous
newspapers using advertising agency services. Preprinted inserts
are stand-alone, multi-page fliers inserted into and distributed
with the daily newspaper.
We also sell advertising across all of our digital platforms. We
have pursued strategic partnerships to garner larger shares of
local ad dollars that are spent online. Scripps was an initial
member of a consortium of newspapers that joined Yahoo! in a
revenue-sharing partnership that increases newspapers
access to Web-focused marketing dollars. A similar relationship
with zillow.com brings new online real estate ads to the
Companys newspapers. In addition to these and other
potential partnerships, we continue expanding and enhancing our
online services, through such features as streaming video and
audio, to deliver our news and information content.
Our range of products and audience reach gives us the ability to
deliver the specific audiences desired by our advertisers. While
many advertisers want the broad reach delivered by our daily
newspaper, others want to target their message by demographics,
geography, buying habits or customer behavior. We develop
advertising campaigns that combine products within our portfolio
that best reach the advertisers targeted audience with the
appropriate frequency.
We sell advertising based upon audience size, demographics,
price and effectiveness. Advertising rates and revenues vary
among our newspapers depending on circulation, type of
advertising, local market conditions and competition. Each of
our newspapers operates in highly competitive local media
marketplaces,
6
where advertisers and media consumers can choose from a wide
range of alternatives, including other newspapers, radio,
broadcast and cable television, magazines, Internet sites,
outdoor advertising, directories and direct-mail products.
Advertising rates and volume are typically higher on Sundays
because it generates the largest circulation and readership. Due
to increased demand in the spring and holiday seasons, the
second and fourth quarters have higher advertising revenues than
the first and third quarters.
Circulation provided approximately 25% of newspaper segment
operating revenues in 2009. Circulation revenues are from
selling home-delivery subscriptions of our newspapers and
single-copy sales sold at retail outlets and vending machines.
Our newspapers seek to provide quality, relevant local news and
information to their readers. We compete with other news and
information sources, such as television stations, radio stations
and other print and Internet publications as a provider of local
news and information.
Employee costs accounted for approximately 52% of segment costs
and expenses in 2009. Our workforce is comprised of a
combination of non-union and union employees. See
Employees.
We consumed approximately 63,000 metric tons of newsprint in
2009. Newsprint is a basic commodity and its price is sensitive
to changes in the balance of worldwide supply and demand. Mill
closures and industry consolidation have decreased overall
newsprint production capacity and increased the likelihood of
future price increases. We purchase newsprint from various
suppliers, may of which are Canadian. Based on our expected
newsprint consumption, we believe that our supply sources are
sufficient.
Television
Our television station group includes six ABC-affiliated
stations, three NBC-affiliated stations and one independent
station. Our television stations reach approximately 10% of the
nations television households.
Our television stations provided approximately 32% of our total
operating revenues in 2009, and 33% in 2008.
Information concerning our television stations, their network
affiliations and the markets in which they operate is as follows:
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Percentage
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Network
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Affiliation
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FCC
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of U.S.
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Affiliation/
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Expires in/
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License
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Rank
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Stations
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Station
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Television
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Average
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DTV
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DTV Service
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Expires
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|
|
of
|
|
|
in
|
|
|
Rank in
|
|
|
Households
|
|
|
Audience
|
|
Station
|
|
Market
|
|
Channel
|
|
Commenced
|
|
|
in
|
|
|
Mkt(1)
|
|
|
Mkt(2)
|
|
|
Mkt(3)
|
|
|
in Mkt(4)
|
|
|
Share (5)
|
|
|
WXYZ-TV
|
|
Detroit, Ch. 7
|
|
|
ABC
|
|
|
|
2010
|
|
|
|
2005
|
(6)
|
|
|
11
|
|
|
|
7
|
|
|
|
1
|
|
|
|
1.6
|
%
|
|
|
12
|
|
|
|
Digital Service Status
|
|
|
41
|
|
|
|
1998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KNXV-TV
|
|
Phoenix, Ch. 15
|
|
|
ABC
|
|
|
|
2010
|
|
|
|
2006
|
(6)
|
|
|
12
|
|
|
|
6
|
|
|
|
4
|
|
|
|
1.6
|
%
|
|
|
6
|
|
|
|
Digital Service Status
|
|
|
15
|
|
|
|
2000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WFTS-TV
|
|
Tampa, Ch. 28
|
|
|
ABC
|
|
|
|
2010
|
|
|
|
2013
|
|
|
|
14
|
|
|
|
6
|
|
|
|
4
|
|
|
|
1.6
|
%
|
|
|
6
|
|
|
|
Digital Service Status
|
|
|
29
|
|
|
|
1999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEWS-TV
|
|
Cleveland, Ch. 5
|
|
|
ABC
|
|
|
|
2010
|
|
|
|
2005
|
(6)
|
|
|
18
|
|
|
|
6
|
|
|
|
1
|
|
|
|
1.3
|
%
|
|
|
11
|
|
|
|
Digital Service Status
|
|
|
15
|
|
|
|
1999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WMAR-TV
|
|
Baltimore, Ch. 2
|
|
|
ABC
|
|
|
|
2010
|
|
|
|
2012
|
|
|
|
27
|
|
|
|
6
|
|
|
|
3
|
|
|
|
1.0
|
%
|
|
|
5
|
|
|
|
Digital Service Status
|
|
|
38
|
|
|
|
1999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KSHB-TV
|
|
Kansas City, Ch. 41
|
|
|
NBC
|
|
|
|
2010
|
|
|
|
2006
|
(6)
|
|
|
32
|
|
|
|
7
|
|
|
|
4
|
|
|
|
0.8
|
%
|
|
|
6
|
|
|
|
Digital Service Status
|
|
|
42
|
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KMCI-TV
|
|
Lawrence, Ch. 38
|
|
|
Ind.
|
|
|
|
N/A
|
|
|
|
2014
|
|
|
|
32
|
|
|
|
7
|
|
|
|
7
|
|
|
|
0.8
|
%
|
|
|
2
|
|
|
|
Digital Service Status
|
|
|
41
|
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WCPO-TV
|
|
Cincinnati, Ch. 9
|
|
|
ABC
|
|
|
|
2010
|
|
|
|
2005
|
(6)
|
|
|
33
|
|
|
|
6
|
|
|
|
2
|
|
|
|
0.8
|
%
|
|
|
13
|
|
|
|
Digital Service Status
|
|
|
10
|
|
|
|
1998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WPTV-TV
|
|
W. Palm Beach, Ch. 5
|
|
|
NBC
|
|
|
|
2010
|
|
|
|
2005
|
(6)
|
|
|
38
|
|
|
|
6
|
|
|
|
1
|
|
|
|
0.7
|
%
|
|
|
12
|
|
|
|
Digital Service Status
|
|
|
12
|
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KJRH-TV
|
|
Tulsa, Ch. 2
|
|
|
NBC
|
|
|
|
2010
|
|
|
|
2006
|
(6)
|
|
|
61
|
|
|
|
6
|
|
|
|
3
|
|
|
|
0.5
|
%
|
|
|
8
|
|
|
|
Digital Service Status
|
|
|
8
|
|
|
|
2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
All market and audience data is based on the November Nielsen
survey.
|
|
|
(1) |
|
Rank of Market represents the relative size of the television
market in the United States. |
|
(2) |
|
Stations in Market does not include public broadcasting
stations, satellite stations, lower-power stations, or
translators which rebroadcast signals from distant stations. |
|
(3) |
|
Station Rank in Market is based on Average Audience Share as
described in (5). |
|
(4) |
|
Represents the number of U.S. television households in
Designated Market Area as a percentage of total U.S. television
households. |
|
(5) |
|
Represents the number of television households tuned to a
specific station from 6 a.m. to 2 a.m. each day, as a
percentage of total viewing households in the Designated Market
Area. |
|
(6) |
|
Renewal application pending. Under FCC rules, a license
automatically is extended pending FCC processing and granting of
the renewal application. |
Historically, we have been successful in renewing our expiring
FCC licenses.
Our television strategy is to optimize the ratings, revenue and
profit potential of each of our stations. Strong local news
content and compelling network and syndicated programs are the
primary drivers of the ratings, revenue and profitability of our
stations.
To extend our brand and position, we operate Internet sites in
each of our television markets. Our Internet sites provide news,
weather, and entertainment content. We believe the opportunities
afforded by digital media, such as digital multi-casting,
streaming video,
video-on-demand
of local news and information programs are important to our
future success. We also believe that there is demand for
real-time news, and information, delivered to mobile devices
such as cell phones, laptops and in-vehicle entertainment
systems. We devote substantial energy and resources to
integrating such media into our business.
We have centralized functions that do not require a presence in
the local markets at company-owned hubs, enabling each of our
stations to increase resources devoted to creation of content
and revenue-producing activities. The addition of multi-media
journalists and the creation of local news-sharing partnerships
allow our stations to implement a hyper-local
strategy by putting more journalists on the street to cover
local news in our markets. On the revenue side, we have been
able to increase our focus on the development of new advertisers
targeted for specific platforms and local niche products.
Nine of our television stations are affiliated with national
television networks.
National television networks offer programming to stations in
local markets through an exclusive affiliation agreement and
sell most of the advertising within the programs. Those stations
have a limited right of first refusal upon contract expiration,
before that markets affiliation may be offered to another
television station in the same market. The network affiliation
agreements for our nine affiliated stations expire in 2010. We
are currently negotiating the renewal of our affiliation
agreement with ABC and will begin negotiating the renewal of our
affiliation agreement with NBC later in 2010. These networks are
seeking arrangements to have affiliates share in funding network
programming costs and to eliminate network compensation
historically paid to such affiliates. We cannot at this time
predict the outcome of our negotiations with ABC or NBC or the
impact that terms of renewed affiliation agreements will have on
our operations.
In addition to network programming, our television stations
produce their own programming and air programming licensed from
a number of different independent program producers and
syndicators. News is the primary focus of our locally produced
programming. To differentiate our programming from that of
national networks available on cable and satellite television
and other entertainment media, our stations have emphasized and
increased hours dedicated to local news and entertainment.
The sale of local, national and political commercial spots
accounted for 90% of television segment operating revenues in
2009. In addition to advertising time, we also offer additional
marketing opportunities, including sponsorships, community
events, and advertising on our digital and Internet platforms.
8
Cyclical factors also influence our advertising revenues,
particularly the political cycle. Advertising revenues
dramatically increase during even-numbered years, when
congressional and presidential elections occur. Advertising
revenues also are affected by whether our stations are
affiliated with the national networks broadcasting major events,
such as the Olympics or the Super Bowl. Due to increased demand
in the spring and holiday seasons, the second and fourth
quarters normally have higher advertising revenues than the
first and third quarters.
Our television stations compete for advertising revenues with
other local media, including other local television stations,
radio stations, cable television systems, newspapers, other
Internet sites and direct mail. Competition for advertising
revenue is based upon audience size and share, demographics,
price and effectiveness.
The price of syndicated programming is directly correlated to
the programming demands of other television stations within our
markets. Syndicated programming costs were 22% of total segment
costs and expenses in 2009.
Our television stations require studios to produce local
programming and traffic systems to schedule programs and to
insert advertisements within programs. Our stations also require
towers upon which broadcasting transmitters and antenna
equipment are located.
Employee costs accounted for 53% of segment costs and expenses
in 2009.
Federal Regulation of Broadcasting Broadcast
television is subject to the jurisdiction of the FCC pursuant to
the Communications Act of 1934, as amended (Communications
Act). The Communications Act prohibits the operation of
broadcast television stations except in accordance with a
license issued by the FCC and empowers the FCC to revoke, modify
and renew broadcast television licenses, approve the transfer of
control of any entity holding such licenses, determine the
location of stations, regulate the equipment used by stations
and adopt and enforce necessary regulations. The FCC also
exercises limited authority over broadcast programming by, among
other things, requiring certain childrens programming and
limiting commercial content therein, regulating the sale of
political advertising, and restricting indecent programming.
Broadcast television licenses are granted for a term of up to
eight years and are renewable upon request, subject to FCC
review of the licensees performance. Currently, seven of
our stations applications for license renewal are pending.
While there can be no assurance regarding the renewal of our
broadcast television licenses, we have never had a license
revoked, have never been denied a renewal, and all previous
renewals have been for the maximum term.
FCC regulations govern the multiple ownership of television
stations and other media. Under the FCCs current rules (as
modified by Congress with respect to national audience reach), a
license for a television station will generally not be granted
or renewed if the grant of the license would result in
(i) the applicant owning more than one television station,
or in some markets under certain conditions, more than two
television stations in the same market, or (ii) the grant
of the license would result in the applicants owning,
operating, controlling, or having an interest in television
stations whose total national audience reach exceeds 39% of all
television households. The FCC also has generally prohibited
cross ownership of a television station and a daily
newspaper in the same community, but the FCC in 2007 completed a
Congressionally mandated periodic review of its ownership rules
and determined to relax this cross ownership ban in the largest
television markets. This decision is under appeal. The FCC is
currently initiating another review of the ownership rules, and
it has asked the appellate court to maintain a stay of the
effectiveness of the 2007 rule changes during this review.
The Company successfully completed the transition to all-digital
broadcasting on June 12, 2009, in accordance with the
revised deadline adopted by Congress. A significant number of
technical, regulatory and market-related issues remain
unresolved regarding digital television service. These issues
include whether the FCC will propose further reductions in the
amount of spectrum allocated to
over-the-air
broadcasting and, if so, how such reductions might be
implemented; whether Congress or the FCC will further address
cable and satellite carriage of broadcast programming, including
possibly restricting broadcasters discretion in
negotiating fees for permitting such carriage; protecting
broadcasters digital signal coverage, including protecting
9
broadcast signals from harmful interference from newly
authorized, and possibly unlicensed, users of former broadcast
spectrum; protecting digital broadcast signals from illegal
copying and distribution; and uncertainty over the level of
consumer demand for new digital services, such as multi-channel
programming and mobile television. We cannot predict the effect
of these uncertainties on our offering of digital television
service or our business.
Broadcast television stations generally enjoy
must-carry rights on any cable television system
defined as local with respect to the station.
Stations may waive their must-carry rights and instead negotiate
retransmission consent agreements with local cable companies.
Similarly, satellite carriers, upon request, are required to
carry the signal of those television stations that request
carriage and that are located in markets in which the satellite
carrier chooses to retransmit at least one local station, and
satellite carriers cannot carry a broadcast station without its
consent. The Company has elected to negotiate retransmission
consent agreements with the major cable operators and satellite
carriers for our network-affiliated stations.
During recent years, the FCC has substantially increased its
scrutiny of broadcasters programming practices. In
particular, it has heightened enforcement of the restrictions on
indecent programming. Congress decision to greatly
increase the financial penalty for airing such programming has
at the same time increased the threat to broadcasters from such
enforcement. Litigation continues over the scope of the
FCCs authority to regulate indecency, and substantial
uncertainty remains concerning FCC indecency enforcement. In
addition, the FCC in 2008 adopted new regulations requiring
broadcasters to maintain more detailed records of their public
service programming and to make such information more accessible
to the public via their web sites. Implementation of these new
FCC regulations continues to be delayed while the FCC considers
imposing more specific obligations with respect to
broadcasters programming service to their local
communities. In 2009, the FCC initiated a new proceeding to
explore how the evolution of digital media is affecting
children, including whether commercial television broadcasters
are adequately addressing childrens educational needs and
whether steps should be taken to better protect children from
exposure to potentially harmful media content, including harmful
advertising messages. In 2010, the FCC initiated a broad
examination of modern media that includes questioning whether
broadcasters public interest programming obligations
should be revised. We cannot predict the outcome of these
proceedings or their possible impact on the Company.
Licensing
and Other Media
Licensing and other media primarily include syndication and
licensing of news features and comics. Under the trade name
United Media, we distribute news columns, comics and other
features for the newspaper industry. Newspapers typically pay a
weekly fee for their use of the features. Included among these
features is Peanuts, one of the most successful
strips in the history of comic art.
United Media owns and licenses worldwide copyrights relating to
Peanuts, and other properties for use on numerous
products, including apparel and greeting cards, for promotional
purposes and for exhibit on television and other media. Charles
Schulz, the creator of Peanuts, died in 2000. We
continue syndication of previously published Peanuts
strips and retain the rights to license the characters.
Peanuts provides approximately 95% of our licensing
revenues. Licensing of comic characters in Japan provides
approximately 48% of our international licensing revenues, which
are approximately $48 million annually.
Merchandise, literary and exhibition licensing revenues are
generally a negotiated percentage of the licensees sales.
We generally negotiate a fixed fee for the use of our
copyrighted characters for promotional and advertising purposes.
We generally pay a percentage of gross syndication and licensing
royalties to the creators of these properties.
We also represent the owners of other copyrights and trademarks,
including Dilbert, Fancy Nancy and Raggedy Ann, in the
U.S. and international markets. Services offered include
negotiation and enforcement of licensing agreements and
collection of royalties. We typically retain a percentage of the
licensing royalties.
10
Employees
As of December 31, 2009, we had approximately
5,000 full-time equivalent employees, of whom approximately
3,300 were with newspapers, 1,400 with television, and 100 with
licensing and other media. Various labor unions represent
approximately 800 employees, primarily in newspapers. We
have not experienced any work stoppages at our current
operations since 1985. We consider our relationships with our
employees to be generally satisfactory.
For an enterprise as large and complex as ours, a wide range of
factors could materially affect future developments and
performance. In addition to the factors affecting specific
business operations, identified elsewhere in this report, the
most significant factors affecting our operations include the
following:
We
derive the majority of our revenues from marketing and
advertising spending by businesses, which is affected by
numerous factors. Declines in advertising revenues will
adversely affect the profitability of our
business.
Approximately 71% and 76% of our revenues in 2009 and 2008,
respectively, were derived from marketing and advertising
spending by businesses operating in the United States.
The demand for advertising in our newspapers or on our
television stations is sensitive to a number of factors, both
nationally and locally, including the following:
|
|
|
|
|
The advertising and marketing spending by our customers can be
subject to seasonal and cyclical variations.
|
|
|
|
Television advertising revenues in even-numbered years benefit
from political advertising.
|
|
|
|
General economic conditions in the United States and the local
economies in which we operate our local media franchises. Three
of the states that have been hardest hit by the current
recession are Michigan (the location of our largest television
station), Ohio (location of two of our television stations) and
Florida (from which we derive significant newspaper and
television revenues and operating profits).
|
|
|
|
The size and demographics of the audience reached by
advertisers. Continued declines in our newspaper circulation
could have an effect on the rate and volume of advertising,
which are dependent on the size and demographics of the audience
we provide to our advertisers. Television audiences have also
fragmented in recent years as the broad distribution of cable
and satellite television has greatly increased the options
available to the viewing public. In addition, technological
advancements in the video, telecommunications and data services
industry are occurring rapidly. Advances in technologies such as
digital video recorders,
video-on-demand
and streaming video on broadband Internet connections enable
viewers to time-shift programming or to skip commercial messages.
|
|
|
|
Increasingly intense competition with digital media platforms.
The popularity of the Internet and low barriers to entry have
led to a wide variety of alternatives available to advertisers
and consumers.
|
|
|
|
Internet sites dedicated to help-wanted, real estate and
automotive have become significant competitors for classified
advertising. Entities with a large Internet presence are
entering the classified market, heightening the risk of
continued erosion.
|
|
|
|
Our television stations have significant exposure to automotive
advertising. In 2009, 15% and in 2008, 18% of our total
advertising in our television segment was from the automotive
category.
|
If we are unable to respond to any or all these factors our
advertising revenues could decline which would affect our
profitability.
11
We are
undergoing a strategic transformation in our newspaper business
that if unsuccessful could have a material adverse financial
impact.
We are undergoing a significant transformation in our Newspaper
business. This transformation includes, among other things, the
standardization and centralization of systems and process, the
outsourcing of certain financial processes and the
implementation of new software for our circulation, advertising
and editorial systems. As a result, we are in a transformational
period in which we have made and will continue to make changes
that if unsuccessful could have a material adverse financial
impact.
The
model for profitably operating a newspaper may change more
rapidly than our ability to adjust.
The profile of our newspaper audience has shifted dramatically
in recent years. While slow and steady declines in print
readership have been offset by a consistently growing online
viewership, online advertising rates traditionally have been
much lower than print rates on a
cost-per-thousand
basis. This audience shift results in lower profit margins.
Online advertising that is not tied to print classified ads is
growing rapidly but is currently a very small percentage of our
newspapers total revenue. If print advertising continues
the downward trend of recent years and the audiences on digital
platforms cannot be quickly monetized at higher levels, we may
not be able to profitably support the level of journalism
expected by readers.
A
significant portion of our operating cost for the newspaper
segment is newsprint, so an increase in price may adversely
affect our operating results.
Newsprint is a significant component of the operating cost of
our newspaper operations, comprising 10% of costs in 2009. The
price of newsprint has historically been volatile, and increases
in the price of newsprint could materially reduce our operating
results.
Increased
programming costs could adversely affect our operating
results.
Television programming is one of the most significant costs for
our television segment, comprising 22% of costs in 2009. We may
have to incur increased programming costs in the future, which
would affect our operating results. In addition, television
networks have been seeking arrangements with their affiliates to
share in funding the networks programming costs and to
eliminate network compensation historically paid to broadcast
affiliates. We cannot predict the nature or scope of any future
compensation arrangements or their impact on our operations.
The
loss of affiliation agreements could adversely affect our
television stations operating results.
We own and operate ten television stations. Six of our stations
have affiliations with the ABC television network and three have
affiliations with the NBC television network. These television
networks produce and distribute programming in exchange for each
of our stations commitment to air the programming at
specified times and for commercial announcement time during the
programming.
The non-renewal or termination of any of our network affiliation
agreements, all of which expire in 2010, would prevent us from
being able to carry programming of the relevant network. This
loss of programming would require us to obtain replacement
programming, which may involve higher costs and which may not be
as attractive to our target audiences, resulting in lower
revenues.
Our
television stations may be at a competitive disadvantage if we
fail to secure or maintain carriage of our stations
signals over cable and/or direct broadcast satellite
systems.
Pursuant to the FCC rules, local television stations must elect
every three years to either (1) require cable
and/or
direct broadcast satellite operators to carry the stations
over the air signals or (2) enter into retransmission
consent negotiations for carriage. At present all of our
stations except KMCI (which elects mandatory carriage), have
retransmission consent agreements with the majority of cable
operators and with both satellite providers. If our
retransmission consent agreements are terminated or not renewed,
or if our
12
broadcast signals are distributed on less-favorable terms than
our competitors, our ability to compete effectively may be
adversely affected.
If we
cannot renew our FCC broadcast licenses, our broadcast
operations will be impaired.
Our television business depends upon maintaining our broadcast
licenses from the FCC, which has the authority to revoke
licenses, not renew them, or renew them only with significant
qualifications, including renewals for less than a full term.
Although we expect to renew all our FCC licenses, we cannot
assure that our pending or future renewal applications will be
approved, or that the renewals will not include conditions or
qualifications that could adversely affect our operations. If
the FCC fails to renew any of our licenses, it could prevent us
from operating the affected stations. If the FCC renews a
license with substantial conditions or modifications (including
renewing the license for a term of fewer than eight years), it
could have a material adverse effect on the affected
stations revenue-generation potential.
Revised
government regulations could adversely affect our operating
results.
The FCC and other government agencies are considering various
proposals intended to promote consumer interests, including
proposals to encourage locally-focused television programming,
to restrict certain types of advertising to children, and to
repurpose some of the broadcast spectrum. New government
regulations affecting the television industry could raise
programming costs, restrict broadcasters operating
flexibility, reduce advertising revenues, raise the costs of
delivering broadcast signals, or otherwise affect our operating
results. We cannot predict the nature or scope of future
government regulation or its impact on our operations.
Macro
economic factors may impede access to or increase the cost of
financing our operations.
Changes in U.S. and global financial markets, including
market disruptions and significant interest rate fluctuations,
may make it more difficult for us to obtain financing for our
operations or increase the cost of obtaining financing.
Sustained
increases in costs of employee health and welfare benefits may
reduce our profitability and our pension plan obligations are
currently unfunded, and we may have to make significant cash
contributions to our plans, which could reduce the cash
available for our business.
Employee compensation and benefits account for approximately 49%
of our total operating expenses. In recent years, we have
experienced significant increases in these costs because of
economic factors beyond our control, including increases in
health care costs. At least some of these factors may continue
to put upward pressure on the cost of providing medical
benefits. Although we have actively sought to control increases
in these costs, there can be no assurance that we will succeed
in limiting cost increases, and continued upward pressure could
reduce the profitability of our businesses.
Our pension plans are underfunded (accumulated benefit
obligation) by $115 million at December 31, 2009. Our
pension plans invest in a variety of equity and debt securities,
many of which were affected by the disruption in the credit and
capital markets in 2008. Future volatility and disruption in the
stock markets could cause further declines in the asset values
of our pension plans. In addition, a decrease in the discount
rate used to determine minimum funding requirements could result
in increased future contributions. If either occurs, we may need
to make additional pension contributions above what is currently
estimated, which could reduce the cash available for our
businesses.
The
Edward W. Scripps Trust principally holds our Common Voting
shares; such ownership could inhibit potential changes of
control.
We have two classes of stock: Common Voting shares and
Class A Common shares. Holders of Class A Common
shares are entitled to elect one-third of the Board of
Directors, but are not permitted to vote on any other matters
except as required by Ohio law. Holders of Common Voting shares
are entitled to elect the remainder of the Board and to vote on
all other matters. Our Common Voting shares are principally held
by The Edward W. Scripps Trust, which holds 90% of the Common
Voting shares. As a result, the trust has the
13
ability to elect two-thirds of the Board of Directors and to
direct the outcome of any matter that does not require a vote of
the Class A Common shares. Because this concentrated
control could discourage others from initiating any potential
merger, takeover or other change of control transaction that may
otherwise be beneficial to our businesses, the market price of
our Class A Common shares could be adversely affected.
|
|
Item 1B.
|
Unresolved
Staff Comments
|
None.
We own substantially all of the facilities and equipment used in
our newspaper operations.
We own substantially all of the facilities and equipment used by
our television stations. We own, or co-own with other broadcast
television stations, the towers used to transmit our television
signals.
|
|
Item 3.
|
Legal
Proceedings
|
We are involved in litigation arising in the ordinary course of
business, such as defamation actions, and governmental
proceedings primarily relating to renewal of broadcast licenses,
none of which is expected to result in material loss.
|
|
Item 4.
|
Submission
of Matters to a Vote of Security Holders
|
No matters were submitted to a vote of security holders during
the fourth quarter of 2009.
Executive Officers of the Company Executive
officers serve at the pleasure of the Board of Directors.
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Richard A. Boehne
|
|
53
|
|
President, Chief Executive Officer and Director (since July
2008); Executive Vice President (1999-2008) and Chief Operating
Officer (2006-2008)
|
Timothy E. Stautberg
|
|
47
|
|
Senior Vice President and Chief Financial Officer (since July
2008); Vice President /Corporate Communications and Investor
Relations (1999 to 2008)
|
William Appleton
|
|
61
|
|
Senior Vice President and General Counsel (since July 2008);
Managing Partner Cincinnati office, Baker & Hostetler, LLP
(2003 to 2008)
|
Mark G. Contreras
|
|
48
|
|
Senior Vice President /Newspapers (since March 2006); Vice
President/Newspaper Operations (2005 to 2006); Senior Vice
President, Pulitzer, Inc. (1999 to 2004)
|
Lisa A. Knutson
|
|
44
|
|
Senior Vice President/Human Resources (since July 2008); Vice
President of Human Resource Operations (2005 to 2008)
|
Brian G. Lawlor
|
|
43
|
|
Senior Vice President/Television (since January 2009); Vice
President/General Manager of WPTV (2004-2008)
|
Douglas F. Lyons
|
|
53
|
|
Vice President/Controller (since July 2008); Vice President
Finance/Administration (2006-2008), Director Financial Reporting
(1997-2006)
|
14
PART II
|
|
Item 5.
|
Market
for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
|
Our Class A Common shares are traded on the New York Stock
Exchange (NYSE) under the symbol SSP. As
of December 31, 2009, there were approximately 8,000 owners
of our Class A Common shares, based on security position
listings, and 19 owners of our Common Voting shares (which do
not have a public market). Due to current economic conditions
and their effect on our operating results, in the fourth quarter
of 2008 we suspended our cash dividends.
The range of market prices of our Class A Common shares,
which represents the high and low sales prices for each full
quarterly period, and quarterly cash dividends are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
|
|
|
|
1st
|
|
|
2nd
|
|
|
3rd
|
|
|
4th
|
|
|
Total
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market price of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
$
|
2.34
|
|
|
$
|
2.50
|
|
|
$
|
8.83
|
|
|
$
|
8.43
|
|
|
|
|
|
|
|
|
|
Low
|
|
|
0.72
|
|
|
|
1.60
|
|
|
|
1.88
|
|
|
|
6.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per share of common stock
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market price of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
$
|
130.92
|
|
|
$
|
146.04
|
|
|
$
|
10.17
|
|
|
$
|
7.23
|
|
|
|
|
|
|
|
|
|
Low
|
|
|
116.73
|
|
|
|
123.60
|
|
|
|
6.56
|
|
|
|
1.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per share of common stock
|
|
$
|
0.42
|
|
|
$
|
0.42
|
|
|
$
|
0.15
|
|
|
$
|
0.00
|
|
|
$
|
0.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On July 1, 2008, we completed the spin-off of SNI to an
independent, publicly traded company to our shareholders. Market
prices presented in the tables above are unadjusted and include
the value of SNI until the date of the spin-off. On
July 15, 2008, we completed a
1-for-3
reverse stock split of our common stock. The market prices in
the table above are adjusted to reflect the split.
There were no sales of unregistered equity securities during the
quarter for which this report is filed.
15
Performance Graph − Set forth below is a line
graph comparing the cumulative return on the Companys
Class A Common shares, assuming an initial investment of
$100 as of January 1, 2005, and based on the market prices
at the end of each year and assuming dividend reinvestment, with
the cumulative return of the Standard & Poors
Composite-500 Stock Index and an Index based on a peer group of
media companies. The spin-off of SNI at July 1, 2008 is
treated as a reinvestment of a special dividend pursuant to SEC
rules.
COMPARISON
OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG THE E.W. SCRIPPS COMPANY, S&P 500 INDEX AND PEER
GROUP INDEX
16
The following graph compares the return on the Companys
Class A Common shares with that of the indices noted above
for the period of July 1, 2008 (date of spin-off) through
December 31, 2009. The graph assumes an investment of $100
in our Class A Common shares, the S&P 500 Index, and
our peer group index on July 1, 2008 and that all dividends
were reinvested.
COMPARISON
OF CUMULATIVE TOTAL RETURN
AMONG THE E.W. SCRIPPS COMPANY, S&P 500 INDEX AND PEER
GROUP INDEX
We continually evaluate and revise our peer group index as
necessary so that it is reflective of our Companys
portfolio of businesses. The companies that comprise our current
peer group are Belo Corporation, Gannett Company, Gray
Television, Inc., Journal Communications, Inc., Lee Enterprises,
Inc., LIN TV Corporation, McClatchy Company, Media General,
Meredith Corporation, New York Times Company, Sinclair Broadcast
GP, and Washington Post. The peer group index is weighted based
on market capitalization.
17
|
|
Item 6.
|
Selected
Financial Data
|
The Selected Financial Data required by this item is filed as
part of this
Form 10-K.
See Index to Consolidated Financial Statement Information at
page F-1
of this
Form 10-K.
|
|
Item 7.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
Managements Discussion and Analysis of Financial Condition
and Results of Operations required by this item is filed as part
of this
Form 10-K.
See Index to Consolidated Financial Statement Information at
page F-1
of this
Form 10-K.
|
|
Item 7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
The market risk information required by this item is filed as
part of this
Form 10-K.
See Index to Consolidated Financial Statement Information at
page F-1
of this
Form 10-K.
|
|
Item 8.
|
Financial
Statements and Supplementary Data
|
The Financial Statements and Supplementary Data required by this
item are filed as part of this
Form 10-K.
See Index to Consolidated Financial Statement Information at
page F-1
of this
Form 10-K.
|
|
Item 9.
|
Changes
in and Disagreements With Accountants on Accounting and
Financial Disclosure
|
None.
|
|
Item 9A.
|
Controls
and Procedures
|
The Controls and Procedures required by this item are filed as
part of this
Form 10-K.
See Index to Consolidated Financial Statement Information at
page F-1
of this
Form 10-K.
|
|
Item 9B.
|
Other
Information
|
None.
PART III
|
|
Item 10.
|
Directors,
Executive Officers and Corporate Governance
|
Information regarding executive officers is included in
Part I of this
Form 10-K
as permitted by General Instruction G(3).
Information required by Item 10 of
Form 10-K
relating to directors is incorporated by reference to the
material captioned Election of Directors in our
definitive proxy statement for the Annual Meeting of
Shareholders (Proxy Statement). Information
regarding Section 16(a) compliance is incorporated by
reference to the material captioned Report on
Section 16(a) Beneficial Ownership Compliance in the
Proxy Statement.
We have adopted a code of ethics that applies to all employees,
officers and directors of Scripps. We also have a code of ethics
for the CEO and Senior Financial Officers. This code of ethics
meets the requirements defined by Item 406 of
Regulation S-K
and the requirement of a code of business conduct and ethics
under NYSE listing standards. Copies of our codes of ethics are
posted on our Web site at www.scripps.com.
Information regarding our audit committee financial expert is
incorporated by reference to the material captioned
Corporate Governance in the Proxy Statement.
The Proxy Statement will be filed with the Securities and
Exchange Commission in connection with our 2010 Annual Meeting
of Stockholders.
18
|
|
Item 11.
|
Executive
Compensation
|
The information required by Item 11 of
Form 10-K
is incorporated by reference to the material captioned
Compensation Discussion and Analysis and
Compensation Tables in the Proxy Statement.
|
|
Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
The information required by Item 12 of
Form 10-K
is incorporated by reference to the material captioned
Report on the Security Ownership of Certain Beneficial
Owners, Report on the Security Ownership of
Management and Equity Compensation Plan
Information in the Proxy Statement.
|
|
Item 13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
The information required by Item 13 of
Form 10-K
is incorporated by reference to the materials captioned
Corporate Governance and Report on Related
Party Transactions in the Proxy Statement.
|
|
Item 14.
|
Principal
Accounting Fees and Services
|
The information required by Item 14 of
Form 10-K
is incorporated by reference to the material captioned
Report of the Audit Committee of the Board of
Directors in the Proxy Statement.
PART IV
|
|
Item 15.
|
Exhibits
and Financial Statement Schedules
|
Financial Statements and Supplemental Schedule
(a) The consolidated financial statements of Scripps are
filed as part of this
Form 10-K.
See Index to Consolidated Financial Statement Information at
page F-1.
The reports of Deloitte & Touche LLP, an Independent
Registered Public Accounting Firm, dated March 5, 2010, are
filed as part of this
Form 10-K.
See Index to Consolidated Financial Statement Information at
page F-1.
(b) The Companys consolidated supplemental schedules
are filed as part of this
Form 10-K.
See Index to Consolidated Financial Statement Schedules at
page S-1.
Exhibits
The information required by this item appears at
page E-1
of this
Form 10-K.
19
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THE E. W. SCRIPPS COMPANY
|
|
|
|
By:
|
/s/ Richard
A. Boehne
|
Richard A. Boehne
President and Chief Executive Officer
Dated: March 5, 2010
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant in the capacities indicated, on
March 5, 2010.
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
|
/s/ Richard
A. Boehne
Richard
A. Boehne
|
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
|
|
|
/s/ Timothy
E. Stautberg
Timothy
E. Stautberg
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
/s/ Douglas
F. Lyons
Douglas
F. Lyons
|
|
Vice President and Controller (Principal Accounting Officer)
|
|
|
|
/s/ Nackey
E. Scagliotti
Nackey
E. Scagliotti
|
|
Chairwoman of the Board of Directors
|
|
|
|
/s/ John
H. Burlingame
John
H. Burlingame
|
|
Director
|
|
|
|
/s/ John
W. Hayden
John
W. Hayden
|
|
Director
|
|
|
|
/s/ Roger
L. Ogden
Roger
L. Ogden
|
|
Director
|
|
|
|
/s/ Mary
McCabe Peirce
Mary
McCabe Peirce
|
|
Director
|
|
|
|
/s/ J.
Marvin Quin
J.
Marvin Quin
|
|
Director
|
|
|
|
/s/ Paul
Scripps
Paul
Scripps
|
|
Director
|
|
|
|
/s/ Kim
Williams
Kim
Williams
|
|
Director
|
20
The E. W.
Scripps Company
Index to
Consolidated Financial Statement Information
F-1
Selected
Financial Data
Five-Year
Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009(1)
|
|
|
2008(1)
|
|
|
2007(1)
|
|
|
2006(1)
|
|
|
2005(1)
|
|
|
|
(In millions, except per share data)
|
|
|
Summary of Operations (7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Newspapers
|
|
$
|
455
|
|
|
$
|
569
|
|
|
$
|
658
|
|
|
$
|
716
|
|
|
$
|
701
|
|
Boulder prior to formation of Colorado
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
newspaper partnership(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
28
|
|
Television
|
|
|
255
|
|
|
|
327
|
|
|
|
326
|
|
|
|
364
|
|
|
|
318
|
|
Licensing and other
|
|
|
92
|
|
|
|
103
|
|
|
|
94
|
|
|
|
97
|
|
|
|
105
|
|
Corporate and shared services
|
|
|
|
|
|
|
3
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
$
|
802
|
|
|
$
|
1,002
|
|
|
$
|
1,079
|
|
|
$
|
1,180
|
|
|
$
|
1,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Newspapers
|
|
|
49
|
|
|
|
71
|
|
|
|
136
|
|
|
|
189
|
|
|
|
204
|
|
JOA and newspaper partnerships
|
|
|
|
|
|
|
(1
|
)
|
|
|
3
|
|
|
|
4
|
|
|
|
8
|
|
Boulder prior to formation of Colorado
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
newspaper partnership(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
Television
|
|
|
20
|
|
|
|
81
|
|
|
|
84
|
|
|
|
121
|
|
|
|
88
|
|
Licensing and other
|
|
|
11
|
|
|
|
10
|
|
|
|
9
|
|
|
|
12
|
|
|
|
19
|
|
Corporate and shared services
|
|
|
(27
|
)
|
|
|
(42
|
)
|
|
|
(59
|
)
|
|
|
(58
|
)
|
|
|
(42
|
)
|
Depreciation
|
|
|
(43
|
)
|
|
|
(44
|
)
|
|
|
(42
|
)
|
|
|
(41
|
)
|
|
|
(43
|
)
|
Amortization of intangible assets
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
(2
|
)
|
Impairment of goodwill, indefinite and long-lived assets(3)
|
|
|
(216
|
)
|
|
|
(810
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-down of investment in newspaper
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
partnership(4)
|
|
|
|
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on formation of Colorado newspaper
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
partnership(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
Equity earnings in newspaper partnership
|
|
|
2
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains (losses), net on disposals of property,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plant and equipment
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
Interest expense
|
|
|
(3
|
)
|
|
|
(11
|
)
|
|
|
(36
|
)
|
|
|
(55
|
)
|
|
|
(35
|
)
|
Separation and restructuring costs
|
|
|
(10
|
)
|
|
|
(34
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses on repurchases of debt
|
|
|
|
|
|
|
(26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous, net(5)
|
|
|
|
|
|
|
8
|
|
|
|
16
|
|
|
|
9
|
|
|
|
5
|
|
Income taxes
|
|
|
27
|
|
|
|
261
|
|
|
|
(36
|
)
|
|
|
(77
|
)
|
|
|
(84
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(192
|
)
|
|
$
|
(551
|
)
|
|
$
|
72
|
|
|
$
|
104
|
|
|
$
|
121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(3.56
|
)
|
|
$
|
(10.19
|
)
|
|
$
|
1.31
|
|
|
$
|
1.87
|
|
|
$
|
2.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
|
|
|
.00
|
|
|
|
.99
|
|
|
|
1.62
|
|
|
|
1.41
|
|
|
|
1.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Value of Common Shares at December 31(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
|
|
$
|
6.96
|
|
|
$
|
2.21
|
|
|
$
|
135.03
|
|
|
$
|
149.82
|
|
|
$
|
144.06
|
|
Total
|
|
|
381
|
|
|
|
119
|
|
|
|
7,336
|
|
|
|
8,167
|
|
|
|
7,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
786
|
|
|
$
|
1,089
|
|
|
$
|
4,005
|
|
|
$
|
4,344
|
|
|
$
|
4,033
|
|
Long-term debt (including current portion)
|
|
|
36
|
|
|
|
61
|
|
|
|
505
|
|
|
|
766
|
|
|
|
826
|
|
Equity
|
|
|
433
|
|
|
|
595
|
|
|
|
2,592
|
|
|
|
2,704
|
|
|
|
2,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain amounts may not foot since each is rounded independently.
As a result of the
one-for-three
reverse stock split in the third quarter 2008, all share and per
share amounts have been retroactively adjusted to reflect the
stock split for all periods presented.
F-2
Notes to
Selected Financial Data
Notes to
Selected Financial Data
As used herein and in Managements Discussion and Analysis
of Financial Condition and Results of Operations, the terms
Scripps, we, our, or
us may, depending on the context, refer to The E. W.
Scripps Company, to one or more of its consolidated subsidiary
companies, or to all of them taken as a whole.
The statement of operations and cash flow data for the five
years ended December 31, 2009, and the balance sheet data
as of the same dates have been derived from our audited
consolidated financial statements. All per-share amounts are
presented on a diluted basis. The five-year financial data
should be read in conjunction with Managements
Discussion and Analysis of Financial Condition and Results of
Operations and the consolidated financial statements and
notes thereto included elsewhere herein.
Operating revenues and segment profit (loss) represent the
revenues and the profitability measures used to evaluate the
operating performance of our business segments in accordance
with GAAP.
(1) In the periods presented we acquired the
following:
2007 Newspaper publications in Tennessee.
2006 Additional 4% interest in our Memphis
newspaper and 2% interest in our Evansville newspaper. Newspaper
publications in Texas and Florida.
2005 Newspapers and other publications in
Tennessee, California and Colorado.
(2) In February 2006, we formed a partnership with
MediaNews Group, Inc. (MediaNews) that operates
certain of both companies newspapers in Colorado. We
contributed the assets of our Boulder Daily Camera, Colorado
Daily, and Bloomfield newspapers for a 50% interest in the
partnership. Our share of the operating profit (loss) of the
partnership is recorded as Equity in earnings of JOAs and
other joint ventures in our financial statements. To
enhance comparability of
year-over-year
operating results, the operating revenues and segment results of
the contributed publications prior to the formation of the
partnership are reported separately.
(3) 2009 A non-cash charge of
$216.4 million was recorded to reduce the carrying value of
our Television segments goodwill and indefinite-lived
assets.
2008 A non-cash charge of $809.9 million
was recorded to reduce the carrying value of our Newspaper
segments goodwill and, indefinite-lived intangible and
long-lived assets in our Television segment.
(4) 2008 A non-cash charge of
$20.9 million was recorded to reduce the carrying value of
our investment in the Colorado newspaper partnership.
(5) 2008 Miscellaneous, net includes
realized gains of $7.6 million from the sale of certain
investments.
2007 Miscellaneous, net includes realized
gains of $9.2 million from the sale of certain investments.
(6) The five-year summary of operations excludes the
operating results of the following entities and the gains
(losses) on their divestiture as they are accounted for as
discontinued operations:
2009 Closed the Rocky Mountain News after it
published its final edition on February 27, 2009. Under the
terms of an agreement with MNG, we transferred our interests in
the Denver JOA to MNG in the third quarter of 2009. We recorded
no gain or loss on the transfer of our interest in the Denver
JOA to MNG.
2008 On July 1, 2008 we completed the
spin-off of Scripps Network Interactive to the shareholders of
the Company. In January the Cincinnati joint operating agreement
was terminated and we ceased operation of our Cincinnati Post
and Kentucky Post newspapers.
F-3
2006 Divested our Shop At Home television
network. We received cash consideration of approximately
$17 million for the sale of certain assets to Jewelry
Television. Jewelry Television also assumed a number of Shop At
Homes television affiliation agreements. We also reached
agreement on the sale of the five Shop At Home-affiliated
broadcast television stations for cash consideration of
$170 million. Shop At Homes results in 2006 include
$30.1 million of costs associated with employee termination
benefits, the termination of long-term agreements and charges to
write-down assets. Shop At Homes results also include
$10.4 million in net losses from the sale of property and
other assets to Jewelry Television, and the completed sale of
three of the Shop At Home affiliated television stations.
2005 Terminated our Birmingham joint
operating agreement and ceased operation of our Birmingham
Post-Herald newspaper
(7) On July 1, 2008 we completed the spin-off
of SNI as an independent, publicly traded company to our
shareholders. Market prices presented in the tables above are
unadjusted and include the value of SNI until the date of the
spin-off. On July 15, 2008 we completed a
one-for-three
reverse stock split of our common stock. The market prices in
the table above have been adjusted to reflect the split.
F-4
Managements
Discussion and Analysis of
Financial Condition and Results of Operations
The consolidated financial statements and notes to the
consolidated financial statements are the basis for our
discussion and analysis of financial condition and results of
operations. You should read this discussion in conjunction with
those financial statements.
Forward-Looking
Statements
Certain forward-looking statements related to our businesses are
included in this discussion. Those forward-looking statements
reflect our current expectations. Forward-looking statements are
subject to certain risks, trends and uncertainties that could
cause actual results to differ materially from the expectations
expressed in the forward-looking statements. Such risks, trends
and uncertainties, which in most instances are beyond our
control, include changes in advertising demand and other
economic conditions; consumers tastes; newsprint prices;
program costs; labor relations; technological developments;
competitive pressures; interest rates; regulatory rulings; and
reliance on third-party vendors for various products and
services. The words believe, expect,
anticipate, estimate, intend
and similar expressions identify forward-looking statements. You
should evaluate our forward-looking statements, which are as of
the date of this filing, with the understanding of their
inherent uncertainty. We undertake no obligation to update any
forward-looking statements to reflect events or circumstances
after the date the statement is made.
Executive
Overview
The E. W. Scripps Company (Scripps) is a diverse
media company with interests in newspaper publishing, television
stations, and licensing and syndication. The companys
portfolio of media properties includes: daily and community
newspapers in 13 markets and the Washington-based Scripps Media
Center, home to the Scripps Howard News Service; 10 television
stations, including six ABC-affiliated stations, three NBC
affiliates and one independent station; and United Media, a
worldwide licensing and syndication company that is the home of
PEANUTS, DILBERT and approximately 150 other features and comics.
We ceased operations of the Rocky Mountain News after
publication of its final edition on February 27, 2009,
after an unsuccessful search for a buyer. Under the terms of an
agreement with MediaNews Group (MNG), we transferred
to MNG our interests in the Denver Newspaper Agency
(DNA) and Prairie Mountain Publishing
(PMP) in August 2009.
On July 1, 2008, we distributed all of the shares of
Scripps Networks Interactive, Inc. (SNI) to the
shareholders of record as of the close of business on
June 16, 2008 (the Record Date). SNI included
the assets and liabilities of the Scripps Networks and
Interactive Media businesses. The separation into two
independent publicly traded companies allows management of each
company to focus on the respective opportunities of each company
and pursue specific strategies based on the distinct
characteristics of the two companies local and national
media businesses.
Our local media businesses derive the majority of their revenues
from advertising. Operating results have been significantly
affected by the economic recession and by the secular declines
in classified advertising as many traditional newspaper
advertising products migrate to the Internet. We have undertaken
a number of initiatives to reduce the operating costs of our
local media businesses, including reductions in the number of
employees and reductions in employee compensation and benefits.
Among other things in 2009, we have reduced base pay, suspended
our match of employees contributions to the Companys
defined contribution savings and retirement plans effective
April 2009, eliminated for 2009 substantially all bonuses and
froze the accrual of service credits under defined benefit
pension plans covering a majority of employees. Our focus is to
align the cost structure of our local media businesses with the
revenue opportunities in their local markets, and to improve the
share of the local advertising dollars in those markets.
In 2009, we began a restructuring of the management of our
newspaper division. Where we had previously managed each of our
newspapers as independent businesses within their markets, we
are now managing our newspaper business vertically by function.
We expect these efforts to focus local management in
F-5
each market on news coverage and revenue-producing activities.
One of the primary benefits of this reorganization is to
implement successful products and revenue-producing strategies
across all markets with greater speed and efficiency. The new
structure also enables us to standardize and centralize
functions that do not require a physical presence in the
markets, producing significant cost efficiencies. Implementing
the restructuring plan, known as Scripps 3.0, will
be a major focus of the newspaper division in 2010 and may
include reductions in-force and the deployment of new software
systems.
In our television division, we have centralized functions that
do not require a presence in the local markets at company-owned
hubs, enabling each of our stations to increase resources
devoted to creation of content and revenue-producing activities.
As consumers increasingly turn to portable devices for news, our
television stations have aggressively transitioned their
infrastructure to support content distribution on multiple
platforms. We devote substantial energy and resources to
integrating such media into our business.
On August 5, 2009, we entered into an Amended and Restated
Revolving Credit Agreement (2009 Agreement), which expires
June 30, 2013. This Agreement amended and restated the
Companys existing $200 million Revolver and reduced
the maximum amount of availability under the facility to
$150 million. The amended agreement is secured by certain
of our assets and removes the earnings-based leverage covenant.
Details of the 2009 Agreement are included in Note 11 to
our Consolidated Financial Statements. At December 31,
2009, we had additional borrowing capacity of $105 million
under our Revolver.
Outstanding borrowings under our revolving credit facility
totaled $34.9 million as of December 31, 2009. Cash
and short-term investments were $26.6 million. We believe
our low level of debt and level of cash and short-term
investments provides us with the ability to position our local
media businesses for growth on the other side of the current
recession.
In February 2010 we announced that we are exploring strategic
options for United Media Licensing, the character licensing
operation of United Media. Among the possible outcomes of the
exploratory process are a sale or joint venture involving all or
part of United Media Licensing. Another option is to keep
operating the business if the exploratory process leads
management to determine that more long-term value can be created
for company shareholders by retaining the property.
Critical
Accounting Policies and Estimates
The preparation of financial statements in accordance with
accounting principles generally accepted in the United States of
America (GAAP) requires us to make a variety of
decisions which affect reported amounts and related disclosures,
including the selection of appropriate accounting principles and
the assumptions on which to base accounting estimates. In
reaching such decisions, we apply judgment based on our
understanding and analysis of the relevant circumstances,
including our historical experience, actuarial studies and other
assumptions. We are committed to incorporating accounting
principles, assumptions and estimates that promote the
representational faithfulness, verifiability, neutrality and
transparency of the accounting information included in the
financial statements.
Note 1 to the Consolidated Financial Statements describes
the significant accounting policies we have selected for use in
the preparation of our financial statements and related
disclosures. We believe the following to be the most critical
accounting policies, estimates and assumptions affecting our
reported amounts and related disclosures.
Goodwill and Other Indefinite-Lived Intangible
Assets We test goodwill for impairment for each
of our reporting units on an annual basis or when events occur
or circumstances change that would indicate the fair value of a
reporting unit is below its carrying value. For purposes of
performing the impairment test for goodwill, our reporting units
are newspapers and television. If the fair value of the
reporting unit is less than its carrying value, an impairment
loss is recorded to the extent that the implied fair value of
the goodwill for the reporting unit is less than its carrying
value.
We must also compare the fair value of each indefinite-lived
intangible asset to its carrying amount. If the carrying amount
of an indefinite-lived intangible asset exceeds its fair value,
an impairment loss is recognized.
F-6
To determine the fair value of our reporting units and
indefinite-lived intangible assets, we generally use market
data, appraised values and discounted cash flow analyses. The
use of a discounted cash flow analysis requires significant
judgment to estimate the future cash flows derived from the
asset or business and the period of time over which those cash
flows will occur and to determine an appropriate discount rate.
While we believe the estimates and judgments used in determining
the fair values of our reporting units and indefinite-lived
intangible assets were appropriate, different assumptions with
respect to future cash flows, long-term growth rates and
discount rates could produce a different estimate of fair value.
Income Taxes The accounting for uncertain tax
positions and the application of income tax law is inherently
complex. As such, we are required to make many assumptions and
judgments regarding our income tax positions and the likelihood
whether such tax positions would be sustained if challenged.
Interpretations and guidance surrounding income tax laws and
regulations change over time. As such, changes in our
assumptions and judgments can materially affect amounts
recognized in the consolidated financial statements.
We have a significant deferred tax asset balance included in our
consolidated balance sheet. We are required to assess the
likelihood that our deferred tax assets, which include our net
operating loss carryforwards and temporary differences that are
expected to be deductible in future years, will be recoverable
from the carryback to prior years, future taxable income or
other prudent and feasible tax planning strategies. If recovery
is not likely, we have to provide a valuation allowance based on
our estimates of future taxable income in the various taxing
jurisdictions, and the amount of deferred taxes that are
ultimately realizable. The provision for current and deferred
taxes involves evaluations and judgments of uncertainties in the
interpretation of complex tax regulations by various taxing
authorities. Actual results could differ from our estimates and
if we determine the deferred tax asset we would realize would be
greater or less than the net amount recorded, an adjustment
would be made to the tax provision in that period.
Pension Plans We sponsor various
noncontributory defined benefit pension plans covering
substantially all full-time employees, including a SERP, which
covers certain executive employees. Pension expense for
continuing operations for those plans was $28.6 million in
2009, $20.5 million in 2008, and $18.6 million in 2007.
The measurement of our pension obligation and related expense is
dependent on a variety of estimates, including: discount rates;
expected long-term rate of return on plan assets; expected
increase in compensation levels; and employee turnover,
mortality and retirement ages. We review these assumptions on an
annual basis and make modifications to the assumptions based on
current rates and trends when appropriate. In accordance with
accounting principles generally accepted in the United States of
America, we record the effects of these modifications currently
or amortize them over future periods. We consider the most
critical of our pension estimates to be our discount rate and
the expected long-term rate of return on plan assets.
The discount rate used to determine our future pension
obligations is based upon a dedicated bond portfolio approach
that includes securities rated Aa or better with maturities
matching our expected benefit payments from the plans. The rate
is determined each year at the plan measurement date and affects
the succeeding years pension cost. The weighted average
discount rate was 5.97% and 6.25% at December 31, 2009 and
2008, respectively. Discount rates can change from year to year
based on economic conditions that impact corporate bond yields.
A decrease in the discount rate increases pension expense. A
0.5% change in the discount rate as of December 31, 2009,
to either 5.47% or 6.47%, would increase or decrease our
projected pension obligations as of December 31, 2009, by
approximately $30 million and increase or decrease 2010
pension expense up to $0.8 million.
The expected long-term rate of return on plan assets is based
primarily upon the target asset allocation for plan assets and
capital markets forecasts for each asset class employed. Our
expected rate of return on plan assets also considers our
historical compound rate of return on plan assets for 10 and
15 year periods. At December 31, 2009, the expected
long-term rate of return on plan assets was 7.5%. A decrease in
the expected rate of return on plan assets increases pension
expense. A 0.5% change in the expected long-term rate of return
on plan assets, to either 7.0% or 8.0%, would increase or
decrease our 2010 pension expense by approximately
$1.6 million.
F-7
We had cumulative unrecognized actuarial losses for our pension
plans of $146 million at December 31, 2009. Unrealized
actuarial gains and losses result from deferred recognition of
differences between our actuarial assumptions and actual
results. In 2009, we had an actuarial gain of $42 million.
The cumulative unrecognized net loss is primarily due to
declines in corporate bond yields and the unfavorable
performance of the equity markets between 2000 and 2002, and in
2008. Amortization of unrecognized actuarial losses may result
in an increase in our pension expense in future periods. Based
on our current assumptions, we anticipate that 2010 pension
expense will include $4 million in amortization of
unrecognized actuarial losses.
New
Accounting Pronouncements
In December 2007, the FASB issued a new accounting guidance
which established accounting and reporting standards for the
noncontrolling interest in a subsidiary, the deconsolidation of
a subsidiary, and accounting for noncontrolling interests as
equity in the consolidated financial statements at fair value.
We adopted this standard as of January 1, 2009. Upon
adoption of this standard, we reclassified our noncontrolling
interest in subsidiary companies to a separate component of
equity and changed the presentation of our statement of
operations and statement of cash flows. We have retroactively
reclassified all periods presented.
In December 2007, the FASB issued a new accounting guidance,
which provided guidance relating to recognition of assets
acquired and liabilities assumed in a business combination. This
standard also established expanded disclosure requirements for
business combinations. We adopted this standard effective
January 1, 2009, prospectively for all business
combinations subsequent to the effective date. The adoption of
this standard had no impact on our financial statements.
In March 2008, the FASB issued new accounting guidance, which
amended and expanded the disclosure requirements for derivatives
to provide a better understanding of how and why an entity uses
derivative instruments, how derivative instruments and related
hedged items are accounted for, and their effect on an
entitys financial position, financial performance, and
cash flows. We adopted this standard effective January 1,
2009. The adoption of this standard had no impact on our
financial statements.
In April 2009, the FASB issued a staff position which changes
the method for determining whether an
other-than-temporary
impairment exists for debt securities and the amount of the
impairment to be recorded in earnings. The guidance is effective
for interim and annual periods ending after June 15, 2009.
The implementation of this standard did not have a material
impact on our consolidated financial position and results of
operations.
In June 2009, the FASB issued new accounting guidance which
amended the consolidation guidance applicable to variable
interest entities and is effective for us on January 1,
2010. We do not expect this standard to have a material impact
on our financial condition or results of operations.
In October 2009, the FASB issued amendments to the accounting
and disclosure guidance for revenue recognition. These
amendments, effective for fiscal years beginning on or after
June 15, 2010 (early adoption is permitted), modify the
criteria for recognizing revenue in multiple element
arrangements and the scope of what constitutes a non-software
deliverable. The Company is currently assessing the impact on
its consolidated financial position and results of operations.
F-8
Results
of Operations
The trends and underlying economic conditions affecting the
operating performance and future prospects differ for each of
our business segments. Accordingly, you should read the
following discussion of our consolidated results of operations
in conjunction with the discussion of the operating performance
of our business segments that follows.
Consolidated Results of Operations
Consolidated results of operations were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
Change
|
|
|
2008
|
|
|
Change
|
|
|
2007
|
|
|
|
(In thousands, except per share data)
|
|
|
Operating revenues
|
|
$
|
802,360
|
|
|
|
(19.9
|
)%
|
|
$
|
1,001,663
|
|
|
|
(7.2
|
)%
|
|
$
|
1,079,420
|
|
Costs and expenses less separation and restructuring costs
|
|
|
(749,029
|
)
|
|
|
(15.1
|
)%
|
|
|
(882,198
|
)
|
|
|
(3.6
|
)%
|
|
|
(915,030
|
)
|
Separation and restructuring costs
|
|
|
(9,935
|
)
|
|
|
|
|
|
|
(33,506
|
)
|
|
|
|
|
|
|
(257
|
)
|
Depreciation and amortization of intangibles
|
|
|
(45,172
|
)
|
|
|
(3.7
|
)%
|
|
|
(46,901
|
)
|
|
|
5.1
|
%
|
|
|
(44,631
|
)
|
Impairment of goodwill, indefinite and long-lived assets
|
|
|
(216,413
|
)
|
|
|
|
|
|
|
(809,936
|
)
|
|
|
|
|
|
|
|
|
Gains (losses), net on disposal of property, plant and equipment
|
|
|
444
|
|
|
|
|
|
|
|
5,809
|
|
|
|
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(217,745
|
)
|
|
|
|
|
|
|
(765,069
|
)
|
|
|
|
|
|
|
119,529
|
|
Interest expense
|
|
|
(2,554
|
)
|
|
|
(76.2
|
)%
|
|
|
(10,740
|
)
|
|
|
(69.9
|
)%
|
|
|
(35,730
|
)
|
Equity in earnings of JOAs and other joint ventures
|
|
|
1,745
|
|
|
|
(59.1
|
)%
|
|
|
4,265
|
|
|
|
(48.4
|
)%
|
|
|
8,262
|
|
Write-down of investment in newspaper partnership
|
|
|
|
|
|
|
|
|
|
|
(20,876
|
)
|
|
|
|
|
|
|
|
|
Losses on repurchases of debt
|
|
|
|
|
|
|
|
|
|
|
(26,380
|
)
|
|
|
|
|
|
|
|
|
Miscellaneous, net
|
|
|
(673
|
)
|
|
|
|
|
|
|
6,731
|
|
|
|
|
|
|
|
15,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(219,227
|
)
|
|
|
|
|
|
|
(812,069
|
)
|
|
|
|
|
|
|
107,818
|
|
Benefit (provision) for income taxes
|
|
|
27,172
|
|
|
|
|
|
|
|
260,718
|
|
|
|
|
|
|
|
(35,885
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
(192,055
|
)
|
|
|
|
|
|
|
(551,351
|
)
|
|
|
|
|
|
|
71,933
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
(17,592
|
)
|
|
|
|
|
|
|
121,451
|
|
|
|
|
|
|
|
9,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(209,647
|
)
|
|
|
|
|
|
|
(429,900
|
)
|
|
|
|
|
|
|
81,360
|
|
Net income (loss) attributable to noncontrolling interests
|
|
|
(42
|
)
|
|
|
|
|
|
|
46,690
|
|
|
|
|
|
|
|
82,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to the shareholders of The E.W. Scripps
Company
|
|
$
|
(209,605
|
)
|
|
|
|
|
|
$
|
(476,590
|
)
|
|
|
|
|
|
$
|
(1,621
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per diluted share of common stock attributable
to the shareholders of The E.W. Scripps Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(3.56
|
)
|
|
|
|
|
|
$
|
(10.19
|
)
|
|
|
|
|
|
$
|
1.31
|
|
Income (loss) from discontinued operations
|
|
|
(.33
|
)
|
|
|
|
|
|
|
1.38
|
|
|
|
|
|
|
|
(1.34
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per diluted share of common stock
|
|
$
|
(3.89
|
)
|
|
|
|
|
|
$
|
(8.81
|
)
|
|
|
|
|
|
$
|
(.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share amounts may not foot since each is
calculated independently.
F-9
Continuing
Operations
2009
compared with 2008
Operating results include a number of items that affect the
comparisons of 2009 to 2008. The most significant of these items
are as follows:
|
|
|
|
|
In 2009, we recorded $216 million in impairment charges to
write-down the value of our Television goodwill and certain FCC
licenses. In 2008, we recorded a $779 million charge to
reduce the carrying value of goodwill, an $11.4 million
charge to reduce the carrying value of one of our FCC licenses
and a $19.6 million charge to write-down the carrying value
of long-lived assets, primarily a network affiliation agreement.
We also recorded a charge of $20.9 million to reduce the
carrying value of our investment in our Colorado newspaper
partnership.
|
|
|
|
In 2009, we incurred $9.9 million of separation and
restructuring cost which were to restructure our operations.
Separation costs of $33.5 million were incurred in 2008
which were to complete the distribution of SNI to shareholders,
and to separate and install separate information systems after
the distribution. The 2008 costs include a $19.6 million
non-cash charge for the impact of the modification of
share-based compensation awards.
|
|
|
|
In 2008 we redeemed our outstanding notes prior to the
distribution of SNI to shareholders, incurring a
$26.4 million loss.
|
|
|
|
In 2008 we realized $7.6 million in gains upon the sale of
certain investments.
|
The U.S. economic recession continued to affect operating
revenues in 2009, leading to lower advertising volumes and rate
weakness in all of our local markets. Our local media businesses
derive much of their advertising revenues from the retail, real
estate, employment and automotive categories, sectors that have
been particularly weak during this recession.
Excluding $3.1 million in costs associated with freezing
the accrual of pension benefits, costs and expenses declined by
$136.3 million in the year. We have reduced the number of
employees in our newspaper and television divisions by
approximately 18% compared to last year. The reduction is due to
both attrition and the 2008 fourth quarter reduction in force at
our newspaper division. We have also taken actions to reduce
employee pay and benefits in 2009. The combined effects of the
reduction in the number of employees and reductions in pay and
benefits led to a $70.3 million decrease in employee
compensation and benefits. Compensation decreases include
reductions for virtually all exempt employees in 2009. Newsprint
costs declined by $23.5 million in 2009 as consumption
decreased by 31% and the average price per ton decreased by 12%.
Lower borrowings following the distribution of SNI led to the
decline in interest expense. We ceased capitalization of
interest upon completion of the construction of our Naples,
Fla., newspaper facility in the third quarter of 2009.
The effective income tax rate was 12.4% and 32.0% for 2009 and
2008, respectfully. Non-deductible charges related to the
distribution of SNI and non-deductible goodwill impairment
charges are the primary factors in the changes in the effective
income tax rate and for the difference in the expected Federal
rate of 35% compared to the actual effective rates.
2008
compared with 2007
Operating results include a number of items that affect
comparisons of 2008 to 2007. The most significant of these items
are as follows:
|
|
|
|
|
In 2008 we recorded a $779 million, non-cash charge to
reduce the carrying value of goodwill, an $11.4 million
charge to reduce the carrying value of one of our FCC licenses
and a $19.6 million charge to write-down the carrying value
of long-lived assets, primarily a network affiliation agreement.
We also recorded a non-cash charge of $20.9 million to
reduce the carrying value of our investment in our Colorado
newspaper partnership to our share of the estimated fair value
of its net assets.
|
F-10
|
|
|
|
|
Costs incurred to complete the distribution of SNI to
shareholders, and to separate and install separate information
systems after the distribution, were $33.5 million in 2008,
which includes a $19.6 million non-cash charge for the
impact of the modification of share-based compensation awards.
|
|
|
|
In 2008 we redeemed our outstanding notes prior to the
distribution of SNI to shareholders, incurring a
$26.4 million loss.
|
|
|
|
In 2008 and 2007, we realized $7.6 million and
$9.2 million, respectfully, in gains upon the sale of
certain investments.
|
Revenues were lower at our newspapers and flat for our
television stations. The decline in revenues at our newspapers
was attributable to lower local and classified advertising,
including particularly weak real estate, automotive and
employment advertising in all of our markets. Revenues at our
television stations were flat with increased political
advertising in the third and fourth quarter offset by lower
advertising in other categories.
Costs and expenses in 2008 were primarily affected by the 2008
and 2007 workforce reductions at our newspapers offset by
severance costs. In addition, insurance cost decreased by
approximately $10 million and bad debt expense increased by
$3 million.
Interest incurred on our outstanding borrowings decreased in
2008 due to lower average debt levels. The balance of our
borrowings was $60 million subsequent to the spin-off of
SNI while the average borrowing was $649 million at an
average rate of 5.0% in 2007. In addition, in 2008 we
capitalized $1.9 million of interest in connection with the
construction of our Naples production facility.
The effective tax rate was 32.0% in 2008 and 32.9% in 2007. The
difference in the actual effective rate in 2008 compared to the
Federal expected rate of 35% was due primarily to non-deductable
charges related to the distribution of SNI and non-deductible
goodwill impairment charges. In 2007, our effective rate was
positively impacted by changes in state tax rates.
Business Segment Results As discussed in
Note 17 to the Consolidated Financial Statements, our chief
operating decision maker evaluates the operating performance of
our business segments using a measure called segment profit.
Segment profit excludes interest, income taxes, depreciation and
amortization, impairment charges, divested operating units,
restructuring activities, investment results and certain other
items that are included in net income (loss) determined in
accordance with accounting principles generally accepted in the
United States of America.
Items excluded from segment profit generally result from
decisions made in prior periods or from decisions made by
corporate executives rather than the managers of the business
segments. Depreciation and amortization charges are the result
of decisions made in prior periods regarding the allocation of
resources and are therefore excluded from the measure. Generally
our corporate executives make financing, tax structure and
divestiture decisions. Excluding these items from measurement of
our business segment performance enables us to evaluate business
segment operating performance based upon current economic
conditions and decisions made by the managers of those business
segments in the current period.
F-11
Information regarding the operating performance of our business
segments and a reconciliation of such information to the
consolidated financial statements is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
Change
|
|
|
2008
|
|
|
Change
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Segment operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Newspapers
|
|
$
|
455,166
|
|
|
|
(20.0
|
)%
|
|
$
|
568,667
|
|
|
|
(13.6
|
)%
|
|
$
|
658,327
|
|
JOA and newspaper partnerships
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
99
|
|
Television
|
|
|
255,220
|
|
|
|
(21.9
|
)%
|
|
|
326,860
|
|
|
|
0.3
|
%
|
|
|
325,841
|
|
Licensing and other
|
|
|
91,974
|
|
|
|
(10.3
|
)%
|
|
|
102,538
|
|
|
|
9.5
|
%
|
|
|
93,633
|
|
Corporate and shared services
|
|
|
|
|
|
|
|
|
|
|
3,594
|
|
|
|
|
|
|
|
1,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
$
|
802,360
|
|
|
|
(19.9
|
)%
|
|
$
|
1,001,663
|
|
|
|
(7.2
|
)%
|
|
$
|
1,079,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Newspapers
|
|
$
|
49,249
|
|
|
|
(31.1
|
)%
|
|
$
|
71,475
|
|
|
|
(47.4
|
)%
|
|
$
|
135,870
|
|
JOA and newspaper partnerships
|
|
|
(211
|
)
|
|
|
|
|
|
|
(707
|
)
|
|
|
|
|
|
|
3,419
|
|
Television
|
|
|
20,168
|
|
|
|
(75.0
|
)%
|
|
|
80,589
|
|
|
|
(3.9
|
)%
|
|
|
83,860
|
|
Licensing and other
|
|
|
11,225
|
|
|
|
7.6
|
%
|
|
|
10,437
|
|
|
|
16.2
|
%
|
|
|
8,982
|
|
Corporate and shared services
|
|
|
(27,313
|
)
|
|
|
(35.3
|
)%
|
|
|
(42,207
|
)
|
|
|
(29.0
|
)%
|
|
|
(59,479
|
)
|
Depreciation and amortization of intangibles
|
|
|
(45,172
|
)
|
|
|
(3.7
|
)%
|
|
|
(46,901
|
)
|
|
|
5.1
|
%
|
|
|
(44,631
|
)
|
Impairment of goodwill, indefinite and long-lived assets
|
|
|
(216,413
|
)
|
|
|
|
|
|
|
(809,936
|
)
|
|
|
|
|
|
|
|
|
Equity earnings in newspaper partnership
|
|
|
1,958
|
|
|
|
|
|
|
|
4,143
|
|
|
|
|
|
|
|
|
|
Gains (losses), net on disposal of property, plant and equipment
|
|
|
444
|
|
|
|
|
|
|
|
5,809
|
|
|
|
|
|
|
|
27
|
|
Interest expense
|
|
|
(2,554
|
)
|
|
|
(76.2
|
)%
|
|
|
(10,740
|
)
|
|
|
(69.9
|
)%
|
|
|
(35,730
|
)
|
Separation and restructuring costs
|
|
|
(9,935
|
)
|
|
|
|
|
|
|
(33,506
|
)
|
|
|
|
|
|
|
(257
|
)
|
Write-down of investment in newspaper partnership
|
|
|
|
|
|
|
|
|
|
|
(20,876
|
)
|
|
|
|
|
|
|
-
|
|
Loss on repurchases of debt
|
|
|
|
|
|
|
|
|
|
|
(26,380
|
)
|
|
|
|
|
|
|
-
|
|
Miscellaneous, net
|
|
|
(673
|
)
|
|
|
|
|
|
|
6,731
|
|
|
|
|
|
|
|
15,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income taxes
|
|
$
|
(219,227
|
)
|
|
|
|
|
|
$
|
(812,069
|
)
|
|
|
|
|
|
$
|
107,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-12
Certain items required to reconcile segment profitability to
consolidated results of operations determined in accordance with
accounting principles generally accepted in the United States of
America are attributed to particular business segments.
Significant reconciling items attributable to each business
segment are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
Newspapers
|
|
$
|
24,860
|
|
|
$
|
23,993
|
|
|
$
|
24,234
|
|
JOA and newspaper partnerships
|
|
|
|
|
|
|
1,219
|
|
|
|
1,246
|
|
Television
|
|
|
18,172
|
|
|
|
20,189
|
|
|
|
18,068
|
|
Licensing and other
|
|
|
1,404
|
|
|
|
787
|
|
|
|
475
|
|
Corporate and shared services
|
|
|
736
|
|
|
|
713
|
|
|
|
608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
45,172
|
|
|
$
|
46,901
|
|
|
$
|
44,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains (losses) on disposal of property, plant and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Newspapers
|
|
|
(237
|
)
|
|
|
(91
|
)
|
|
|
(145
|
)
|
JOA and newspaper partnerships
|
|
|
|
|
|
|
(32
|
)
|
|
|
2
|
|
Television
|
|
|
1,004
|
|
|
|
6,088
|
|
|
|
225
|
|
Licensing and other
|
|
|
(24
|
)
|
|
|
|
|
|
|
|
|
Corporate and shared services
|
|
|
(299
|
)
|
|
|
(156
|
)
|
|
|
(55
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains (losses) on disposal of property, plant and equipment:
|
|
$
|
444
|
|
|
$
|
5,809
|
|
|
$
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill, indefinite and long-lived assets
|
|
$
|
216,413
|
|
|
$
|
809,936
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-down of investment in newspaper partnership
|
|
$
|
|
|
|
$
|
20,876
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Newspapers We operate daily and
community newspapers in 13 markets in the U.S. Our
newspapers earn revenue primarily from the sale of advertising
to local and national advertisers and from the sale of
newspapers to readers. Our newspapers operate in mid-size
markets, focusing on news coverage within their local markets.
Advertising and circulation revenues provide substantially all
of each newspapers operating revenues, and employee,
distribution and newsprint costs are the primary expenses at
each newspaper. Local and national economic conditions,
particularly within the retail, labor, housing and automotive
markets, affect our newspaper operating performance.
F-13
Operating results for our newspaper business were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
Change
|
|
|
2008
|
|
|
Change
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Segment operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Local
|
|
$
|
97,394
|
|
|
|
(25.6
|
)%
|
|
$
|
130,876
|
|
|
|
(8.1
|
)%
|
|
$
|
142,431
|
|
Classified
|
|
|
94,183
|
|
|
|
(35.3
|
)%
|
|
|
145,610
|
|
|
|
(22.3
|
)%
|
|
|
187,475
|
|
National
|
|
|
21,546
|
|
|
|
(23.8
|
)%
|
|
|
28,287
|
|
|
|
(19.0
|
)%
|
|
|
34,927
|
|
Online
|
|
|
29,465
|
|
|
|
(19.9
|
)%
|
|
|
36,769
|
|
|
|
(8.3
|
)%
|
|
|
40,085
|
|
Preprint and other
|
|
|
79,243
|
|
|
|
(17.4
|
)%
|
|
|
95,949
|
|
|
|
(17.7
|
)%
|
|
|
116,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Newspaper advertising
|
|
|
321,831
|
|
|
|
(26.4
|
)%
|
|
|
437,491
|
|
|
|
(16.1
|
)%
|
|
|
521,565
|
|
Circulation
|
|
|
115,872
|
|
|
|
2.2
|
%
|
|
|
113,398
|
|
|
|
(4.5
|
)%
|
|
|
118,696
|
|
Other
|
|
|
17,463
|
|
|
|
(1.8
|
)%
|
|
|
17,778
|
|
|
|
(1.6
|
)%
|
|
|
18,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
|
455,166
|
|
|
|
(20.0
|
)%
|
|
|
568,667
|
|
|
|
(13.6
|
)%
|
|
|
658,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits
|
|
|
210,124
|
|
|
|
(16.9
|
)%
|
|
|
252,933
|
|
|
|
(5.6
|
)%
|
|
|
268,052
|
|
Production and distribution
|
|
|
114,958
|
|
|
|
(22.6
|
)%
|
|
|
148,593
|
|
|
|
(4.7
|
)%
|
|
|
155,910
|
|
Other segment costs and expenses
|
|
|
80,835
|
|
|
|
(15.5
|
)%
|
|
|
95,666
|
|
|
|
(2.9
|
)%
|
|
|
98,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses
|
|
|
405,917
|
|
|
|
(18.4
|
)%
|
|
|
497,192
|
|
|
|
(4.8
|
)%
|
|
|
522,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to segment profit
|
|
$
|
49,249
|
|
|
|
(31.1
|
)%
|
|
$
|
71,475
|
|
|
|
(47.4
|
)%
|
|
$
|
135,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
The U.S. economic recession affected operating revenues in
2009 and 2008, leading to lower advertising volumes and rate
weakness in all of our local markets. Our newspaper business
derives much of its advertising revenues from the retail, real
estate, employment and automotive categories, sectors that have
been particularly weak during this recession. The decline in
online ad revenue is attributable to the weakness in print
classified advertising, to which most of the online advertising
is tied. Revenue from pure-play advertisers, who purchase ads
only on the Companys newspaper Web sites, rose 26% in the
year. We have pursued strategic partnerships with Yahoo! and
zillow.com to garner larger shares of local online advertising.
In 2009, circulation revenue increased by approximately
$5 million due to the change in certain markets in the
business model which we operate with our distributors. Under
this model, we recognize revenue at retail rates with a
corresponding charge to distribution expense. This increase was
offset by declines in circulation volumes. In 2008 circulation
revenues declined compared to 2007 due to lower circulation
volumes for both daily and Sunday copies.
The decline in preprint and other revenues in 2009 and 2008, is
due to the overall economic conditions. Preprint products
include niche publications such as community newspapers,
lifestyle magazines, publications focused on the classified
advertising categories of real estate, employment and auto, and
other publications aimed at younger readers.
Other operating revenues represent revenue earned on ancillary
services offered by our newspapers.
Costs and
expenses
Changes in pension costs affect
year-over-year
comparisons of employee compensation and benefits. Pension costs
increased by $7.7 million in 2009. Pension costs in 2009
include $2.4 million in curtailment charges related to the
benefit accrual freeze in plans covering a majority of our
newspaper employees. Excluding pension costs, employee
compensation and benefits decreased by 21% in 2009. Attrition
and the
reduction-in-force
implemented in the fourth quarter of 2008 resulted in an
approximate 21% decrease in employees in 2009,
year-over-year.
In addition, during 2009, we eliminated bonuses and reduced
employee pay.
F-14
Employee compensation and benefit costs in 2008 include a
$5.0 million charge for employee severance in the fourth
quarter related to workforce reductions. Charges for voluntary
separation offers were $8.9 million in 2007. Employee
compensation and benefit costs decreased in 2008 as the impact
of voluntary separations in 2007 reduced ongoing cost
Production and distribution costs are primarily affected by
fluctuations in newsprint and ink costs. Newsprint costs in 2009
declined by $23.5 million due to a 31% decline in
consumption and a 12% decrease in newsprint prices. In 2008, the
year-over-year
price of newsprint increased 41% while our consumption decreased
by 29%.
Capital expenditures include costs of $31 and $51 million
in 2009 and in 2008, respectively for the construction of a new
production facility at our Naples, Florida newspaper.
Newspapers operated under Joint Operating Agreements and
partnerships The only newspaper included is
the Albuquerque Tribune newspaper for periods prior to the first
quarter of 2008, when we ceased publication of the newspaper.
Under an amended agreement with the Journal Publishing Company
(JPC) we continue to own a 40% interest in the
Albuquerque Publishing Company G.P. We no longer include the
equity earnings from this investment in segment profit after we
ceased publication of our newspaper.
Our share of the operating profit (loss) of our JOA and our
newspaper partnership is reported as Equity in earnings of
JOAs and other joint ventures in our financial statements.
Television Television includes six
ABC-affiliated stations, three NBC-affiliated stations and one
independent station. Our television stations reach approximately
10% of the nations households. Our television stations
earn revenue primarily from the sale of advertising time to
local and national advertisers.
National television networks offer affiliates a variety of
programs and sell the majority of advertising within those
programs. Through 2009, we received compensation from the
networks for carrying their programming. We are currently
negotiating the renewal of our affiliation agreement with ABC
and will begin negotiating the renewal of our affiliation
agreement with NBC later in 2010. These networks are seeking
arrangements to have affiliates share in funding network
programming costs and to eliminate network compensation
historically paid to such affiliates. We cannot at this time
predict the outcome of our negotiations with ABC or NBC or the
impact that terms of renewed affiliation agreements will have on
our operations. In addition to network programs, we broadcast
locally produced programs, syndicated programs, sporting events,
and other programs of interest in each stations market.
News is the primary focus of our locally produced programming.
The operating performance of our television group is most
affected by the health of the national and local economies,
particularly conditions within the services, automotive and
retail categories, and by the volume of advertising time
purchased by campaigns for elective office and political issues.
The demand for political advertising is significantly higher in
even-numbered years.
F-15
Operating results for television were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
Change
|
|
|
2008
|
|
|
Change
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Segment operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Local
|
|
$
|
151,665
|
|
|
|
(15.8
|
)%
|
|
$
|
180,065
|
|
|
|
(12.1
|
)%
|
|
$
|
204,791
|
|
National
|
|
|
73,575
|
|
|
|
(14.7
|
)%
|
|
|
86,252
|
|
|
|
(14.6
|
)%
|
|
|
101,002
|
|
Political
|
|
|
5,063
|
|
|
|
(87.7
|
)%
|
|
|
41,012
|
|
|
|
|
|
|
|
2,735
|
|
Network compensation
|
|
|
7,464
|
|
|
|
(4.2
|
)%
|
|
|
7,792
|
|
|
|
4.9
|
%
|
|
|
7,431
|
|
Other
|
|
|
17,453
|
|
|
|
48.7
|
%
|
|
|
11,739
|
|
|
|
18.8
|
%
|
|
|
9,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment operating revenues
|
|
|
255,220
|
|
|
|
(21.9
|
)%
|
|
|
326,860
|
|
|
|
0.3
|
%
|
|
|
325,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits
|
|
|
124,755
|
|
|
|
(5.1
|
)%
|
|
|
131,444
|
|
|
|
2.2
|
%
|
|
|
128,647
|
|
Programs and program licenses
|
|
|
52,530
|
|
|
|
8.8
|
%
|
|
|
48,290
|
|
|
|
2.2
|
%
|
|
|
47,231
|
|
Production and distribution
|
|
|
13,927
|
|
|
|
(19.2
|
)%
|
|
|
17,245
|
|
|
|
(1.2
|
)%
|
|
|
17,461
|
|
Other segment costs and expenses
|
|
|
43,840
|
|
|
|
(11.1
|
)%
|
|
|
49,292
|
|
|
|
1.3
|
%
|
|
|
48,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment costs and expenses
|
|
|
235,052
|
|
|
|
(4.6
|
)%
|
|
|
246,271
|
|
|
|
1.8
|
%
|
|
|
241,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit
|
|
$
|
20,168
|
|
|
|
(75.0
|
)%
|
|
$
|
80,589
|
|
|
|
(3.9
|
)%
|
|
$
|
83,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
The decrease in the local and national revenues in 2009 was
largely attributable to reduced spending by advertisers in the
automotive, financial services and retail categories. There was
only minor political spending in 2009, compared to 2008.
Revenues increased slightly in 2008 compared with 2007. While
political revenues were up compared with 2007, national and
local revenues were negatively affected by weakness in
automotive and retail advertising.
Cost and
expenses
Changes in pension costs affect 2009 to
2008 year-over-year
comparisons of employee compensation and benefits. Pension costs
increased by $0.7 million for the year. Pension costs for
2009 include $1.1 million in curtailment charges related to
the benefit accrual freeze in plans covering a majority of our
television employees. Excluding pension costs, employee
compensation and benefits decreased by 6% in 2009. During 2009,
we eliminated bonuses and reduced employee pay, including
temporary pay reductions for certain exempt employees of up to
5% during the second and third quarters.
The cost of programs and program licenses increased due
primarily to higher costs for syndicated programs in certain of
our markets under the terms of long-term licensing arrangements.
Cost and expenses in 2008 and 2007 were substantially the same.
Licensing and Other Licensing and
other primarily includes syndication and licensing of news
features and comics. Under the trade name United Media, we
distribute news and opinion columns, comics and other features
for the newspaper industry.
United Media owns or represents and licenses worldwide
copyrights relating to Peanuts, Dilbert
and other properties for use on numerous products, including
plush toys, greeting cards and apparel, for promotional purposes
and for exhibit on television and other media. We continue
syndication of previously published Peanuts strips
and retain the rights to license the characters.
Peanuts provides approximately 95% of our licensing
revenues.
F-16
Merchandise, literary and exhibition licensing revenues are
generally a negotiated percentage of the licensees sales.
We generally negotiate a fixed fee for the use of our
copyrighted characters for promotional and advertising purposes.
We generally pay a percentage of gross syndication and licensing
royalties to the creators of these properties.
We also represent the owners of other copyrights and trademarks
in the U.S. and international markets. Services offered
include negotiation and enforcement of licensing agreements and
collection of royalties. We typically retain a percentage of the
licensing royalties.
Operating results for licensing and other were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
Change
|
|
|
2008
|
|
|
Change
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Segment operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licensing
|
|
$
|
69,870
|
|
|
|
(8.6
|
)%
|
|
$
|
76,452
|
|
|
|
6.3
|
%
|
|
$
|
71,901
|
|
Feature syndication
|
|
|
16,241
|
|
|
|
(8.7
|
)%
|
|
|
17,792
|
|
|
|
(1.1
|
)%
|
|
|
17,985
|
|
Other
|
|
|
5,863
|
|
|
|
(29.3
|
)%
|
|
|
8,294
|
|
|
|
|
|
|
|
3,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment operating revenues
|
|
|
91,974
|
|
|
|
(10.3
|
)%
|
|
|
102,538
|
|
|
|
9.5
|
%
|
|
|
93,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits
|
|
|
18,060
|
|
|
|
(9.6
|
)%
|
|
|
19,983
|
|
|
|
12.0
|
%
|
|
|
17,841
|
|
Author royalties and agent commissions
|
|
|
46,725
|
|
|
|
(12.4
|
)%
|
|
|
53,314
|
|
|
|
7.3
|
%
|
|
|
49,701
|
|
Other segment costs and expenses
|
|
|
15,964
|
|
|
|
(15.1
|
)%
|
|
|
18,804
|
|
|
|
9.9
|
%
|
|
|
17,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment costs and expenses
|
|
|
80,749
|
|
|
|
(12.3
|
)%
|
|
|
92,101
|
|
|
|
8.8
|
%
|
|
|
84,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit
|
|
$
|
11,225
|
|
|
|
7.6
|
%
|
|
$
|
10,437
|
|
|
|
16.2
|
%
|
|
$
|
8,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
Worldwide economic conditions continued to affect our operating
revenues in 2009, as reduced consumer spending has resulted in
lower sales of licensed European apparel. Economic conditions
within the newspaper industry have resulted in reduced sales of
syndicated features.
Licensing revenues in 2008 were higher than 2007 primarily due
to increases in
film-and-promotion-related
license fees and additional revenue we received in 2008 from a
contract amendment from one of our licensees.
Costs and
expenses
Employee compensation and benefits decreased due to the
implementation of salary and bonus reductions for management
employees in 2009. The decline in other costs was due primarily
to lower marketing expenditures during the year.
Discontinued Operations Discontinued
operations include SNI, DNA and our newspaper operations in
Cincinnati (See Note 4 to the Consolidated Financial
Statements). The results of businesses held for sale or that
have ceased operations are presented as discontinued operations.
F-17
Operating results for our discontinued operations were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Operating revenues
|
|
$
|
50
|
|
|
$
|
804,565
|
|
|
$
|
1,440,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of JOAs and other joint ventures
|
|
$
|
|
|
|
$
|
18,682
|
|
|
$
|
54,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, before tax
|
|
$
|
(23,372
|
)
|
|
$
|
184,624
|
|
|
$
|
147,975
|
|
Loss on divestitures, net
|
|
|
|
|
|
|
|
|
|
|
(255
|
)
|
Income tax (expense) benefit
|
|
|
5,780
|
|
|
|
(63,173
|
)
|
|
|
(138,293
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations
|
|
$
|
(17,592
|
)
|
|
$
|
121,451
|
|
|
$
|
9,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity
and Capital Resources
Our primary source of liquidity is our cash flow from operating
activities. We finance our investments in and expand our
portfolio of local media businesses and repay debt primarily
from our cash flow from operating activities.
To improve the companys financial flexibility we suspended
our quarterly dividend in 2008 and have undertaken a variety of
cost-saving measures, including elimination of bonuses, pay
reductions, suspension of our matching contributions to our
defined contribution retirement and savings plan, and freezing
the accrual of benefits under our defined benefit pension plans.
Cash flow from continuing operating activities increased in 2009
by $4 million compared to 2008 despite the declines in our
revenues, primarily due to refunds of taxes paid during 2008. We
received $16 million from SNI for the reimbursement of
taxes we paid in 2008 on income attributable to SNI for periods
prior to the spin-off and received $28 million of refunds
of Federal taxes paid in 2008.
We have met our funding requirements for our defined benefit
pension plans under the provisions of the Pension Funding Equity
Act of 2004 and the Pension Protection Act of 2006. In 2009, we
made a $20 million voluntary contribution. We expect to
contribute $2.1 million to the plans in 2010 for SERP
benefits. The 2010 minimum funding requirements for our
qualified defined benefit pension plans require us to make
contributions of $4.2 million. We may make voluntary
contributions estimated at $20 million, or possibly more in
2010.
Capital expenditures in 2009 were $40 million, down from
$84 million in the prior year. Capital expenditures in 2009
related to the Naples, Fla., newspaper facility totaled
approximately $31 million. We completed the construction of
this facility in the third quarter of 2009. Capital expenditures
in 2010 are expected to be approximately $18 million.
On August 5, 2009, we entered into an Amended and Restated
Revolving Credit Agreement (2009 Agreement), which expires
June 30, 2013. This Agreement amended and restated the
Companys $200 million Revolver and reduced the
maximum amount of availability under the facility to
$150 million. The amended agreement is secured by certain
of our assets and removes the earnings-based leverage covenant
in our prior agreement. Details of the 2009 Agreement are
included in Note 11 to our Consolidated Financial
Statements. At December 31, 2009, we had additional
borrowing capacity of $105 million under our Revolver.
We believe that our low debt level is a competitive advantage
during these difficult financial times. At December 31,
2009, we had drawn $35 million under our Revolving Credit
Agreement, and had cash and short-term investments of
$27 million. During 2009, we paid down $25 million
under our credit facilities.
We expect our cash flow from operating activities, including
refunds of taxes through carryback claims, and available
borrowings under our amended credit agreement will be sufficient
to meet our operating, pension funding and capital needs over
the next twelve months. We will carry back losses incurred in
2009 against taxes paid in prior years when we file our 2009 tax
return and expect to receive refunds of at least
$45 million.
F-18
Also included in miscellaneous current assets at
December 31, 2009, is a $6 million receivable from SNI
for the balance due for their portion of taxes for the
2008 year.
Off-Balance
Sheet Arrangements and Contractual Obligations
Off-Balance
Sheet Arrangements
Off-balance sheet arrangements include the following four
categories: obligations under certain guarantees or contracts;
retained or contingent interests in assets transferred to an
unconsolidated entity or similar arrangements; obligations under
certain derivative arrangements; and obligations under material
variable interests.
We may use derivative financial instruments to manage exposure
to newsprint prices, interest rate and foreign exchange rate
fluctuations. In October 2008, we entered into a
2-year
$30 million notional interest rate swap expiring in October
2010. Under this agreement we receive payments based on
3-month
LIBOR rate and make payments based on a fixed rate of 3.2%. We
held no newsprint or foreign currency derivative financial
instruments at December 31, 2009.
We have not entered into any material arrangements which would
fall under any of these four categories and which would be
reasonably likely to have a current or future material effect on
our results of operations, liquidity or financial condition,
other than the interest swap previously discussed.
As of December 31, 2009 and 2008, we had outstanding
letters of credit totaling $9.7 million and
$8.3 million, respectively.
Contractual
Obligations
A summary of our contractual cash commitments, as of
December 31, 2009, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than
|
|
|
Years
|
|
|
Years
|
|
|
Over
|
|
|
|
|
|
|
1 Year
|
|
|
2 & 3
|
|
|
4 & 5
|
|
|
5 Years
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal amounts
|
|
$
|
166
|
|
|
$
|
384
|
|
|
$
|
35,366
|
|
|
$
|
|
|
|
$
|
35,916
|
|
Interest on note
|
|
|
1,138
|
|
|
|
2,225
|
|
|
|
575
|
|
|
|
|
|
|
|
3,938
|
|
Programming:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for broadcast
|
|
|
1,708
|
|
|
|
1,359
|
|
|
|
|
|
|
|
|
|
|
|
3,067
|
|
Not yet available for broadcast
|
|
|
47,270
|
|
|
|
58,273
|
|
|
|
6,649
|
|
|
|
582
|
|
|
|
112,774
|
|
Employee compensation and benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred compensation and benefits
|
|
|
4,800
|
|
|
|
10,806
|
|
|
|
6,998
|
|
|
|
|
|
|
|
22,604
|
|
Employment and talent contracts
|
|
|
23,270
|
|
|
|
19,269
|
|
|
|
4,130
|
|
|
|
2,651
|
|
|
|
49,320
|
|
Operating leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncancelable
|
|
|
5,492
|
|
|
|
9,146
|
|
|
|
7,497
|
|
|
|
6,913
|
|
|
|
29,048
|
|
Cancelable
|
|
|
682
|
|
|
|
974
|
|
|
|
588
|
|
|
|
112
|
|
|
|
2,356
|
|
Pension obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum pension funding
|
|
|
6,338
|
|
|
|
50,371
|
|
|
|
41,951
|
|
|
|
28,152
|
|
|
|
126,812
|
|
Other commitments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncancelable purchase and service commitments
|
|
|
11,228
|
|
|
|
6,450
|
|
|
|
2,845
|
|
|
|
13,710
|
|
|
|
34,233
|
|
Capital expenditures
|
|
|
497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
497
|
|
Other purchase and service commitments
|
|
|
15,845
|
|
|
|
12,572
|
|
|
|
4,139
|
|
|
|
9
|
|
|
|
32,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual cash obligations
|
|
$
|
118,434
|
|
|
$
|
171,829
|
|
|
$
|
110,738
|
|
|
$
|
52,129
|
|
|
$
|
453,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-19
In the ordinary course of business we enter into long-term
contracts to license or produce programming, to secure on-air
talent, to lease office space and equipment, and to purchase
other goods and services.
Long-Term Debt Principal payments is the
repayment of our outstanding variable rate credit facility
assuming repayment will occur upon the expiration of the
facility in June 2013.
Interest payments on our variable-rate credit facility assume
that the outstanding balance on the facility and the related
variable interest rates remain unchanged until the expiration of
the facility in June 2013.
Programming Program licenses generally
require payments over the terms of the licenses. Licensed
programming includes both programs that have been delivered and
are available for telecast and programs that have not yet been
produced. If the programs are not produced, our commitments
would generally expire without obligation.
We expect to enter into additional program licenses and
production contracts to meet our future programming needs.
Talent Contracts We secure on-air talent for
our television stations through multi-year talent agreements.
Certain agreements may be terminated under certain circumstances
or at certain dates prior to expiration. We expect our
employment and talent contracts will be renewed or replaced with
similar agreements upon their expiration. Amounts due under the
contracts, assuming the contracts are not terminated prior to
their expiration, are included in the contractual commitments
table. Also included in the table are contracts with columnists
and artists whose work is syndicated by United Media. Columnists
and artists may receive fixed minimum payments plus amounts
based upon a percentage of net syndication and licensing
revenues resulting from the exploitation of their work.
Contingent amounts based upon net revenues are not included in
the table of contractual commitments.
Operating Leases We obtain certain office
space under multi-year lease agreements. Leases for office space
are generally not cancelable prior to their expiration.
Leases for operating and office equipment are generally
cancelable by either party on 30 to 90 day notice. However,
we expect such contracts will remain in force throughout the
terms of the leases. The amounts included in the table above
represent the amounts due under the agreements assuming the
agreements are not canceled prior to their expiration.
We expect our operating leases will be renewed or replaced with
similar agreements upon their expiration.
Pension Funding We sponsor qualified defined
benefit pension plans that cover substantially all non-union and
certain union-represented employees. We also have a
non-qualified Supplemental Executive Retirement Plan
(SERP).
Contractual commitments summarized in the contractual
obligations table include payments to meet minimum funding
requirements of our defined benefit pension plans and estimated
benefit payments for our unfunded SERP. Estimated payments for
the SERP plan have been estimated over a ten-year period.
Accordingly, the amounts in the over 5 years
column include estimated payments for the periods of
2015-2019.
While benefit payments under these plans are expected to
continue beyond 2019, we believe it is not practicable to
estimate payments beyond this period.
Income Tax Obligations The Contractual
Obligations table does not include any reserves for income taxes
recognized because we are unable to reasonably predict the
ultimate amount or timing of settlement of our reserves for
income taxes. As of December 31, 2009, our reserves for
income taxes totaled $25.5 million, which is reflected as a
long-term liability in our consolidated balance sheet.
Purchase Commitments We obtain audience
ratings, market research and certain other services under
multi-year agreements. These agreements are generally not
cancelable prior to expiration of the service agreement. We
expect such agreements will be renewed or replaced with similar
agreements upon their expiration.
F-20
We may also enter into contracts with certain vendors and
suppliers, including most of our newsprint vendors. These
contracts typically do not require the purchase of fixed or
minimum quantities and generally may be terminated at any time
without penalty. Included in the table of contractual
commitments are purchase orders placed as of December 31,
2009. Purchase orders placed with vendors, including those with
whom we maintain contractual relationships, are generally
cancelable prior to shipment. While these vendor agreements do
not require us to purchase a minimum quantity of goods or
services, and we may generally cancel orders prior to shipment,
we expect expenditures for goods and services in future periods
will approximate those in prior years.
Quantitative
and Qualitative Disclosures about Market Risk
Earnings and cash flow can be affected by, among other things,
economic conditions, interest rate changes, foreign currency
fluctuations and changes in the price of newsprint. We are also
exposed to changes in the market value of our investments.
Our objectives in managing interest rate risk are to limit the
impact of interest rate changes on our earnings and cash flows,
and to reduce overall borrowing costs. We manage interest rate
risk primarily by maintaining a mix of fixed-rate and
variable-rate debt.
Our primary exposure to foreign currencies is the exchange rates
between the U.S. dollar and the Japanese yen, British pound
and the Euro. Reported earnings and assets may be reduced in
periods in which the U.S. dollar increases in value
relative to those currencies.
Our objective in managing exposure to foreign currency
fluctuations is to reduce volatility of earnings and cash flow.
Accordingly, we may enter into foreign currency derivative
instruments that change in value as foreign exchange rates
change, such as foreign currency forward contracts or foreign
currency options. We held no foreign currency derivative
financial instruments at December 31, 2009.
We also may use forward contracts to reduce the risk of changes
in the price of newsprint on anticipated newsprint purchases. We
held no newsprint derivative financial instruments at
December 31, 2009.
The following table presents additional information about
market-risk-sensitive financial instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
As of December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
Cost
|
|
|
Fair
|
|
|
Cost
|
|
|
Fair
|
|
|
|
Basis
|
|
|
Value
|
|
|
Basis
|
|
|
Value
|
|
|
|
(In thousands, except share data)
|
|
|
Financial instruments subject to interest rate risk:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable rate credit facilities
|
|
$
|
34,900
|
|
|
$
|
34,900
|
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
Other notes
|
|
|
1,016
|
|
|
|
1,016
|
|
|
|
1,166
|
|
|
|
1,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt including current portion
|
|
$
|
35,916
|
|
|
$
|
35,916
|
|
|
$
|
61,166
|
|
|
$
|
61,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial instruments subject to market value risk:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other equity securities
|
|
|
10,405
|
|
|
|
(a
|
)
|
|
|
7,070
|
|
|
|
(a
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Includes securities that do not trade in public markets so the
securities do not have readily determinable fair values. We
estimate the fair value of these securities approximates their
carrying value. There can be no assurance that we would realize
the carrying value upon sale of the securities. |
In October 2008, we entered into a
2-year
$30 million notional interest rate swap expiring in October
2010. Under this agreement we receive payments based on the
3-month
LIBOR and make payments based on a fixed rate of 3.2%. This swap
has not been designated as a hedge in accordance with generally
accepted accounting standards and changes in fair value are
recorded in
miscellaneous-net
with a corresponding adjustment to other long-term liabilities.
The fair value at December 31, 2009 and 2008 was a
liability of $0.8 million, which is included in other
liabilities.
F-21
Controls
and Procedures
Evaluation
of Disclosure Controls and Procedures
The effectiveness of the design and operation of our disclosure
controls and procedures (as defined in
Rule 13a-15(e)
under the Securities Exchange Act of 1934) was evaluated as
of the date of the financial statements. This evaluation was
carried out under the supervision of and with the participation
of management, including the Chief Executive Officer and the
Chief Financial Officer. Based upon that evaluation, the Chief
Executive Officer and the Chief Financial Officer concluded that
the design and operation of these disclosure controls and
procedures are effective. There were no changes to the
Companys internal controls over financial reporting (as
defined in Exchange Act
Rule 13a-15(f))
during the period covered by this report that have materially
affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.
F-22
Managements
Report on Internal Control Over Financial Reporting
Scripps management is responsible for establishing and
maintaining adequate internal controls designed to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for
external purposes in accordance with accounting principles
generally accepted in the United States of America
(GAAP).
The companys internal control over financial reporting
includes those policies and procedures that:
1. pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company;
2. provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial
statements in accordance with GAAP and that receipts and
expenditures of the company are being made only in accordance
with authorizations of management and the directors of the
company; and
3. provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition
of the companys assets that could have a material effect
on the financial statements.
All internal control systems, no matter how well designed, have
inherent limitations, including the possibility of human error,
collusion and the improper overriding of controls by management.
Accordingly, even effective internal control can only provide
reasonable but not absolute assurance with respect to financial
statement preparation. Further, because of changes in
conditions, the effectiveness of internal control may vary over
time.
As required by Section 404 of the Sarbanes Oxley Act of
2002, management assessed the effectiveness of The E. W. Scripps
Company and subsidiaries (the Company) internal
control over financial reporting as of December 31, 2009.
Managements assessment is based on the criteria
established in the Internal Control Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based upon our assessment, management
believes that the Company maintained effective internal control
over financial reporting as of December 31, 2009.
The companys independent registered public accounting firm
has issued an attestation report on our internal control over
financial reporting as of December 31, 2009. This report
appears on
page F-24.
|
|
|
|
BY:
|
/s/ Richard
A. Boehne
|
Richard A. Boehne
President and Chief Executive Officer
Timothy E. Stautberg
Senior Vice President and Chief Financial Officer
Date: March 5, 2010
F-23
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders,
The E.W. Scripps Company
We have audited the internal control over financial reporting of
The E.W. Scripps Company and subsidiaries (the
Company) as of December 31, 2009, based on
criteria established in Internal Control
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. The Companys
management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting,
included in the accompanying Managements Report on
Internal Control Over Financial Reporting. Our responsibility is
to express an opinion on the Companys internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a
process designed by, or under the supervision of, the
companys principal executive and principal financial
officers, or persons performing similar functions, and effected
by the companys board of directors, management, and other
personnel to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of the inherent limitations of internal control over
financial reporting, including the possibility of collusion or
improper management override of controls, material misstatements
due to error or fraud may not be prevented or detected on a
timely basis. Also, projections of any evaluation of the
effectiveness of the internal control over financial reporting
to future periods are subject to the risk that the controls may
become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may
deteriorate.
In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as
of December 31, 2009, based on the criteria established in
Internal Control Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated financial statements and financial statement
schedule as of and for the year ended December 31, 2009, of
the Company and our report dated March 5, 2010 expressed an
unqualified opinion on those financial statements and the
financial statement schedule.
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
March 5, 2010
F-24
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders,
The E.W. Scripps Company
We have audited the accompanying consolidated balance sheets of
The E.W. Scripps Company and subsidiaries (the
Company) as of December 31, 2009 and 2008, and
the related consolidated statements of operations, cash flows
and equity for each of the three years in the period ended
December 31, 2009. Our audits also included the financial
statement schedule listed in the Index at Item 15. These
financial statements and financial statement schedule are the
responsibility of the Companys management. Our
responsibility is to express an opinion on the financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of The
E.W. Scripps Company and subsidiaries as of December 31,
2009 and 2008, and the results of their operations and their
cash flows for each of the three years in the period ended
December 31, 2009, in conformity with accounting principles
generally accepted in the United States of America. Also, in our
opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the
information set forth therein.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
Companys internal control over financial reporting as of
December 31, 2009, based on the criteria established in
Internal Control Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated March 5, 2010 expressed an
unqualified opinion on the Companys internal control over
financial reporting.
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
March 5, 2010
F-25
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands, except share data)
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
14,405
|
|
|
$
|
5,376
|
|
Short-term investments
|
|
|
12,180
|
|
|
|
21,130
|
|
Accounts and notes receivable (less allowances 2009,
$4,344; 2008, $7,763)
|
|
|
130,010
|
|
|
|
169,010
|
|
Inventory
|
|
|
6,989
|
|
|
|
11,952
|
|
Deferred income taxes
|
|
|
16,614
|
|
|
|
33,911
|
|
Income taxes receivable
|
|
|
62,559
|
|
|
|
12,363
|
|
Miscellaneous
|
|
|
15,418
|
|
|
|
31,794
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
258,175
|
|
|
|
285,536
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
10,660
|
|
|
|
12,720
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
423,570
|
|
|
|
426,671
|
|
|
|
|
|
|
|
|
|
|
Goodwill and other intangible assets:
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
|
|
|
215,432
|
|
Other intangible assets
|
|
|
23,635
|
|
|
|
26,464
|
|
|
|
|
|
|
|
|
|
|
Total goodwill and other intangible assets
|
|
|
23,635
|
|
|
|
241,896
|
|
|
|
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
57,132
|
|
|
|
80,600
|
|
Miscellaneous
|
|
|
13,176
|
|
|
|
9,281
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
|
70,308
|
|
|
|
89,881
|
|
|
|
|
|
|
|
|
|
|
Assets of discontinued operations noncurrent
|
|
|
|
|
|
|
32,272
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
786,348
|
|
|
$
|
1,088,976
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
27,049
|
|
|
$
|
55,889
|
|
Customer deposits and unearned revenue
|
|
|
33,191
|
|
|
|
38,817
|
|
Accrued liabilities:
|
|
|
|
|
|
|
|
|
Employee compensation and benefits
|
|
|
30,515
|
|
|
|
36,273
|
|
Accrued talent payable
|
|
|
13,524
|
|
|
|
15,981
|
|
Miscellaneous
|
|
|
22,616
|
|
|
|
23,651
|
|
Liabilities of discontinued operations current
|
|
|
|
|
|
|
2,225
|
|
Other current liabilities
|
|
|
8,365
|
|
|
|
14,748
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
135,260
|
|
|
|
187,584
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
35,916
|
|
|
|
61,166
|
|
|
|
|
|
|
|
|
|
|
Other liabilities (less current portion)
|
|
|
181,921
|
|
|
|
245,259
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 19)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
Preferred stock, $.01 par authorized:
25,000,000 shares; none outstanding
|
|
|
|
|
|
|
|
|
Common stock, $.01 par:
|
|
|
|
|
|
|
|
|
Class A authorized: 240,000,000 shares;
issued and outstanding: 2009 42,742,190 shares;
2008 41,884,187 shares
|
|
|
427
|
|
|
|
419
|
|
Voting authorized: 60,000,000 shares; issued
and outstanding: 2009 11,932,735 shares;
2008 11,933,401 shares
|
|
|
119
|
|
|
|
119
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
546
|
|
|
|
538
|
|
Additional paid-in capital
|
|
|
531,754
|
|
|
|
523,859
|
|
Retained earnings (accumulated deficit)
|
|
|
(10,946
|
)
|
|
|
200,827
|
|
Accumulated other comprehensive income (loss), net of income
taxes:
|
|
|
|
|
|
|
|
|
Pension liability adjustments
|
|
|
(92,049
|
)
|
|
|
(134,293
|
)
|
Foreign currency translation adjustment
|
|
|
590
|
|
|
|
638
|
|
|
|
|
|
|
|
|
|
|
Total The E.W. Scripps Company shareholders equity
|
|
|
429,895
|
|
|
|
591,569
|
|
Noncontrolling interest
|
|
|
3,356
|
|
|
|
3,398
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
433,251
|
|
|
|
594,967
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity
|
|
$
|
786,348
|
|
|
$
|
1,088,976
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
F-26
Consolidated
Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands, except per share data)
|
|
|
Operating Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
$
|
565,708
|
|
|
$
|
758,393
|
|
|
$
|
841,422
|
|
Circulation
|
|
|
115,873
|
|
|
|
113,398
|
|
|
|
118,696
|
|
Licensing
|
|
|
69,876
|
|
|
|
76,452
|
|
|
|
71,902
|
|
Other
|
|
|
50,903
|
|
|
|
53,420
|
|
|
|
47,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
|
802,360
|
|
|
|
1,001,663
|
|
|
|
1,079,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits
|
|
|
376,466
|
|
|
|
446,775
|
|
|
|
463,240
|
|
Production and distribution
|
|
|
177,081
|
|
|
|
222,434
|
|
|
|
225,641
|
|
Programs and program licenses
|
|
|
52,531
|
|
|
|
48,290
|
|
|
|
47,231
|
|
Other costs and expenses
|
|
|
142,951
|
|
|
|
164,699
|
|
|
|
178,918
|
|
Separation and restructuring costs
|
|
|
9,935
|
|
|
|
33,506
|
|
|
|
257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses
|
|
|
758,964
|
|
|
|
915,704
|
|
|
|
915,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, Amortization, and (Gains) Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
43,342
|
|
|
|
43,681
|
|
|
|
41,541
|
|
Amortization of intangible assets
|
|
|
1,830
|
|
|
|
3,220
|
|
|
|
3,090
|
|
Impairment of goodwill, indefinite and long-lived assets
|
|
|
216,413
|
|
|
|
809,936
|
|
|
|
|
|
(Gains) losses, net on disposal of property, plant and equipment
|
|
|
(444
|
)
|
|
|
(5,809
|
)
|
|
|
(27
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net depreciation, amortization, and (gains) losses
|
|
|
261,141
|
|
|
|
851,028
|
|
|
|
44,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(217,745
|
)
|
|
|
(765,069
|
)
|
|
|
119,529
|
|
Interest expense
|
|
|
(2,554
|
)
|
|
|
(10,740
|
)
|
|
|
(35,730
|
)
|
Equity in earnings of JOAs and other joint ventures
|
|
|
1,745
|
|
|
|
4,265
|
|
|
|
8,262
|
|
Write-down of investment in newspaper partnership
|
|
|
|
|
|
|
(20,876
|
)
|
|
|
|
|
Losses on repurchases of debt
|
|
|
|
|
|
|
(26,380
|
)
|
|
|
|
|
Miscellaneous, net
|
|
|
(673
|
)
|
|
|
6,731
|
|
|
|
15,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(219,227
|
)
|
|
|
(812,069
|
)
|
|
|
107,818
|
|
Provision (benefit) for income taxes
|
|
|
(27,172
|
)
|
|
|
(260,718
|
)
|
|
|
35,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations, net of tax
|
|
|
(192,055
|
)
|
|
|
(551,351
|
)
|
|
|
71,933
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
(17,592
|
)
|
|
|
121,451
|
|
|
|
9,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(209,647
|
)
|
|
|
(429,900
|
)
|
|
|
81,360
|
|
Net income (loss) attributable to noncontrolling interests
|
|
|
(42
|
)
|
|
|
46,690
|
|
|
|
82,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to the shareholders of The E.W. Scripps
Company
|
|
$
|
(209,605
|
)
|
|
$
|
(476,590
|
)
|
|
$
|
(1,621
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per basic share of common stock attributable
to the shareholders of The E.W. Scripps Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(3.56
|
)
|
|
$
|
(10.19
|
)
|
|
$
|
1.32
|
|
Income (loss) from discontinued operations
|
|
|
(.33
|
)
|
|
|
1.38
|
|
|
|
(1.35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per basic share of common stock
|
|
$
|
(3.89
|
)
|
|
$
|
(8.81
|
)
|
|
$
|
(.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per diluted share of common stock attributable
to the shareholders of The E.W. Scripps Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(3.56
|
)
|
|
$
|
(10.19
|
)
|
|
$
|
1.31
|
|
Income (loss) from discontinued operations
|
|
|
(.33
|
)
|
|
|
1.38
|
|
|
|
(1.34
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per diluted share of common stock
|
|
$
|
(3.89
|
)
|
|
$
|
(8.81
|
)
|
|
$
|
(.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
53,902
|
|
|
|
54,100
|
|
|
|
54,338
|
|
Diluted
|
|
|
53,902
|
|
|
|
54,100
|
|
|
|
54,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share amounts may not foot since each is
calculated independently.
See notes to consolidated financial statements.
F-27
Consolidated
Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(209,647
|
)
|
|
$
|
(429,900
|
)
|
|
$
|
81,360
|
|
Loss (income) from discontinued operations
|
|
|
17,592
|
|
|
|
(121,451
|
)
|
|
|
(9,427
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
(192,055
|
)
|
|
|
(551,351
|
)
|
|
|
71,933
|
|
Adjustments to reconcile income (loss) from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
to net cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
45,172
|
|
|
|
46,901
|
|
|
|
44,631
|
|
Impairment of goodwill, indefinite and long-lived assets
|
|
|
216,413
|
|
|
|
830,812
|
|
|
|
|
|
(Gains)/losses on sale of property, plant and equipment
|
|
|
(444
|
)
|
|
|
(5,809
|
)
|
|
|
(1,111
|
)
|
(Gain)/loss on sale of investments
|
|
|
(752
|
)
|
|
|
(7,572
|
)
|
|
|
(10,023
|
)
|
Equity in earnings of JOAs and other joint ventures
|
|
|
(1,745
|
)
|
|
|
(4,265
|
)
|
|
|
(8,262
|
)
|
Deferred income taxes
|
|
|
45,271
|
|
|
|
(278,923
|
)
|
|
|
4,835
|
|
Excess tax benefits from stock compensation plans
|
|
|
(372
|
)
|
|
|
(3,829
|
)
|
|
|
1,461
|
|
Stock and deferred compensation plans
|
|
|
7,131
|
|
|
|
34,634
|
|
|
|
20,764
|
|
Dividends received from JOAs and other joint ventures
|
|
|
2,500
|
|
|
|
6,195
|
|
|
|
11,505
|
|
Losses on repurchases of debt
|
|
|
|
|
|
|
26,380
|
|
|
|
|
|
Pension expense, net of payments
|
|
|
1,253
|
|
|
|
5,606
|
|
|
|
(9,322
|
)
|
Other changes in certain working capital accounts, net
|
|
|
(28,411
|
)
|
|
|
(6,800
|
)
|
|
|
(14,464
|
)
|
Miscellaneous, net
|
|
|
4,047
|
|
|
|
1,762
|
|
|
|
26,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by continuing operating activities
|
|
|
98,008
|
|
|
|
93,741
|
|
|
|
138,565
|
|
Net cash (used in) provided by discontinued operating activities
|
|
|
(19,350
|
)
|
|
|
238,810
|
|
|
|
456,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating activities
|
|
|
78,658
|
|
|
|
332,551
|
|
|
|
595,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of subsidiary companies and noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
(2,096
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
101
|
|
|
|
169
|
|
|
|
5,799
|
|
Additions to property, plant and equipment
|
|
|
(39,750
|
)
|
|
|
(84,011
|
)
|
|
|
(53,465
|
)
|
Decrease (increase) in short-term investments
|
|
|
8,950
|
|
|
|
23,701
|
|
|
|
(41,959
|
)
|
Proceeds from sale of long-term investments
|
|
|
472
|
|
|
|
37,184
|
|
|
|
10,594
|
|
Purchase of investments
|
|
|
(3,366
|
)
|
|
|
(688
|
)
|
|
|
(1,350
|
)
|
Miscellaneous, net
|
|
|
|
|
|
|
|
|
|
|
(84
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in continuing investing activities
|
|
|
(33,593
|
)
|
|
|
(23,645
|
)
|
|
|
(82,561
|
)
|
Net cash used in discontinued investing activities
|
|
|
|
|
|
|
(38,889
|
)
|
|
|
(41,906
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investing activities
|
|
|
(33,593
|
)
|
|
|
(62,534
|
)
|
|
|
(124,467
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in long-term debt
|
|
|
|
|
|
|
100,500
|
|
|
|
|
|
Payments on long-term debt
|
|
|
(25,250
|
)
|
|
|
(544,820
|
)
|
|
|
(261,406
|
)
|
Bond redemption premium payment
|
|
|
|
|
|
|
(22,517
|
)
|
|
|
|
|
Payments of financing costs
|
|
|
(3,062
|
)
|
|
|
|
|
|
|
|
|
Dividends paid
|
|
|
|
|
|
|
(53,957
|
)
|
|
|
(88,205
|
)
|
Dividends paid to noncontrolling interests
|
|
|
|
|
|
|
(24
|
)
|
|
|
(512
|
)
|
Repurchase Class A Common shares
|
|
|
|
|
|
|
(19,031
|
)
|
|
|
(57,515
|
)
|
Proceeds from employee stock options
|
|
|
2,876
|
|
|
|
15,097
|
|
|
|
15,903
|
|
Excess tax benefits from stock compensation plans
|
|
|
372
|
|
|
|
3,829
|
|
|
|
2,375
|
|
Miscellaneous, net
|
|
|
(10,972
|
)
|
|
|
2,605
|
|
|
|
(3,008
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in continuing financing activities
|
|
|
(36,036
|
)
|
|
|
(518,318
|
)
|
|
|
(392,368
|
)
|
Net cash provided by (used in) discontinued financing activities
|
|
|
|
|
|
|
257,920
|
|
|
|
(76,872
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net financing activities
|
|
|
(36,036
|
)
|
|
|
(260,398
|
)
|
|
|
(469,240
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
|
|
|
(75
|
)
|
|
|
(522
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in cash discontinued operations
|
|
|
|
|
|
|
(23,268
|
)
|
|
|
6,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
9,029
|
|
|
|
(13,724
|
)
|
|
|
7,611
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
|
5,376
|
|
|
|
19,100
|
|
|
|
11,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of year
|
|
$
|
14,405
|
|
|
$
|
5,376
|
|
|
$
|
19,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
F-28
Consolidated
Statements of Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Earnings
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Paid-in
|
|
|
(Accumulated
|
|
|
Comprehensive
|
|
|
Noncontrolling
|
|
|
Total
|
|
|
|
Stock
|
|
|
Capital
|
|
|
Deficit)
|
|
|
Income (Loss)
|
|
|
Interests
|
|
|
Equity
|
|
|
|
(In thousands, except share data)
|
|
|
As of December 31, 2006
|
|
$
|
545
|
|
|
$
|
432,523
|
|
|
$
|
2,145,875
|
|
|
$
|
2,492
|
|
|
$
|
122,429
|
|
|
$
|
2,703,864
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
(1,621
|
)
|
|
|
|
|
|
|
82,981
|
|
|
|
81,360
|
|
Unrealized gains (losses) on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,218
|
)
|
|
|
|
|
|
|
(6,218
|
)
|
Adjustment for losses (gains) in income on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(35
|
)
|
|
|
|
|
|
|
(35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gains (losses) on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,253
|
)
|
|
|
|
|
|
|
(6,253
|
)
|
Changes in defined pension plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,188
|
)
|
|
|
|
|
|
|
(7,188
|
)
|
Equity in investees adjustments for pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,378
|
|
|
|
|
|
|
|
4,378
|
|
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,399
|
|
|
|
|
|
|
|
8,399
|
|
Adoption of new tax accounting guidance
|
|
|
|
|
|
|
|
|
|
|
(30,869
|
)
|
|
|
|
|
|
|
|
|
|
|
(30,869
|
)
|
Dividends: declared and paid $1.62 per share
|
|
|
|
|
|
|
|
|
|
|
(88,205
|
)
|
|
|
|
|
|
|
|
|
|
|
(88,205
|
)
|
Dividends: Noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(63,480
|
)
|
|
|
(63,480
|
)
|
Repurchase 433,333 Class A Common shares
|
|
|
(4
|
)
|
|
|
(4,179
|
)
|
|
|
(53,332
|
)
|
|
|
|
|
|
|
|
|
|
|
(57,515
|
)
|
Compensation plans, net: 248,855 net shares issued
|
|
|
2
|
|
|
|
43,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,964
|
|
Excess tax benefits of compensation plans
|
|
|
|
|
|
|
3,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2007
|
|
|
543
|
|
|
|
476,142
|
|
|
|
1,971,848
|
|
|
|
1,828
|
|
|
|
141,930
|
|
|
|
2,592,291
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
(476,590
|
)
|
|
|
|
|
|
|
46,690
|
|
|
|
(429,900
|
)
|
Unrealized gains (losses) on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(682
|
)
|
|
|
|
|
|
|
(682
|
)
|
Adjustment for losses (gains) in income on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,655
|
)
|
|
|
|
|
|
|
(3,655
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gains (losses) on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,337
|
)
|
|
|
|
|
|
|
(4,337
|
)
|
Changes in defined pension plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(90,639
|
)
|
|
|
|
|
|
|
(90,639
|
)
|
Equity in investees adjustments for pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100
|
)
|
|
|
|
|
|
|
(100
|
)
|
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
195
|
|
|
|
|
|
|
|
195
|
|
Dividends: declared and paid $.99 per share
|
|
|
|
|
|
|
|
|
|
|
(53,957
|
)
|
|
|
|
|
|
|
|
|
|
|
(53,957
|
)
|
Dividends: Noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(56,207
|
)
|
|
|
(56,207
|
)
|
Spin-off of SNI
|
|
|
|
|
|
|
|
|
|
|
(1,234,701
|
)
|
|
|
(40,602
|
)
|
|
|
(129,015
|
)
|
|
|
(1,404,318
|
)
|
Repurchase 1,213,333 Class A Common shares
|
|
|
(12
|
)
|
|
|
(13,246
|
)
|
|
|
(5,773
|
)
|
|
|
|
|
|
|
|
|
|
|
(19,031
|
)
|
Compensation plans: 695,965 net shares issued
|
|
|
7
|
|
|
|
37,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,552
|
|
Stock modification charge
|
|
|
|
|
|
|
19,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,589
|
|
Excess tax benefits of compensation plans
|
|
|
|
|
|
|
3,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2008
|
|
|
538
|
|
|
|
523,859
|
|
|
|
200,827
|
|
|
|
(133,655
|
)
|
|
|
3,398
|
|
|
|
594,967
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
(209,605
|
)
|
|
|
|
|
|
|
(42
|
)
|
|
|
(209,647
|
)
|
Spin-off of SNI
|
|
|
|
|
|
|
|
|
|
|
(2,168
|
)
|
|
|
1,536
|
|
|
|
|
|
|
|
(632
|
)
|
Changes in defined pension plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,633
|
|
|
|
|
|
|
|
39,633
|
|
Equity in investees adjustments for pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,324
|
|
|
|
|
|
|
|
1,324
|
|
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(48
|
)
|
|
|
|
|
|
|
(48
|
)
|
Compensation plans: 857,953 net shares issued
|
|
|
8
|
|
|
|
12,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,556
|
|
Excess tax expense of compensation plans
|
|
|
|
|
|
|
(4,653
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,653
|
)
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(249
|
)
|
|
|
|
|
|
|
(249
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2009
|
|
$
|
546
|
|
|
$
|
531,754
|
|
|
$
|
(10,946
|
)
|
|
$
|
(91,459
|
)
|
|
$
|
3,356
|
|
|
$
|
433,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
F-29
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
|
|
1.
|
Summary
of Significant Accounting Policies
|
As used in the Notes to Consolidated Financial Statements, the
terms we, our, us or
Scripps may, depending on the context, refer to The
E. W. Scripps Company, to one or more of its consolidated
subsidiary companies or to all of them taken as a whole.
Subsequent Events We have evaluated all
subsequent events through the issuance of these financial
statements.
Nature of Operations We are a diverse media
concern with interests in newspaper publishing, television, and
licensing and syndication. All of our media businesses provide
content and advertising services via the Internet. Our media
businesses are organized into the following reportable business
segments: Newspapers, JOAs and newspaper partnerships,
Television, and Licensing and other. Note 17 provides
additional information regarding our business segments.
Concentration Risks We have geographically
dispersed operations and a diverse customer base. We believe bad
debt losses resulting from default by a single customer, or
defaults by customers in any depressed region or business
sector, would not have a material effect on our financial
position, results of operations or cash flows.
We derive approximately 71% of our operating revenues from
marketing services, including advertising. Changes in the demand
for such services both nationally and in individual markets can
affect operating results.
In order to reduce our price of newsprint and to manage delivery
and supply of newsprint, we purchase and arrange delivery of
newsprint for other newspaper companies. Newsprint vendors
retain the credit risk for newsprint shipped to other newspaper
companies beginning in 2009. Prior to 2009, we retained credit
risk for newspaper shipments to other newspaper companies.
Use of Estimates The preparation of financial
statements in accordance with accounting principles generally
accepted in the United States of America requires us to make a
variety of decisions that affect the reported amounts and the
related disclosures. Such decisions include the selection of
accounting principles that reflect the economic substance of the
underlying transactions and the assumptions on which to base
accounting estimates. In reaching such decisions, we apply
judgment based on our understanding and analysis of the relevant
circumstances, including our historical experience, actuarial
studies and other assumptions.
Our financial statements include estimates and assumptions used
in accounting for our defined benefit pension plans; licensing
revenues; the periods over which long-lived assets are
depreciated or amortized; the fair value of long-lived assets
and goodwill; the liability for uncertain tax positions and
valuation allowances against deferred income tax assets; and
self-insured risks.
While we re-evaluate our estimates and assumptions on an ongoing
basis, actual results could differ from those estimated at the
time of preparation of the financial statements.
Consolidation The consolidated financial
statements include the accounts of The E. W. Scripps Company and
its majority-owned subsidiary companies. Investments in
20%-to-50%-owned companies and in all 50%-or-less-owned
partnerships are accounted for using the equity method. We do
not hold any interests in variable interest entities. All
significant intercompany transactions have been eliminated.
Income (loss) attributable to noncontrolling interests in
subsidiary companies are included in net income (loss)
attributable to noncontrolling interest in the Consolidated
Statements of Operations.
Newspaper Joint Operating Agreements
(JOA) We include our share of JOA
earnings in Equity in earnings of JOAs and other joint
ventures in our Consolidated Statements of Operations. The
related editorial costs and expenses are included within costs
and expenses in our Consolidated Statements of Operations.
Foreign Currency Translation All of our
international subsidiaries use the local currency of their
respective country as their functional currency. Assets and
liabilities are translated using
end-of-period
F-30
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
exchange rates while results of operations are translated based
on the average exchange rates throughout the year. Equity is
translated at historical exchange rates, with the resulting
cumulative translation adjustment included as a component of
accumulated other comprehensive income (loss) in equity, net of
applicable income taxes.
Monetary assets and liabilities denominated in currencies other
than the functional currency are remeasured into the functional
currency using
end-of-period
exchange rates. Gains or losses resulting from such
remeasurement are recorded in earnings. Foreign exchange gains
and losses are included in Miscellaneous, net in the
Consolidated Statements of Operations. Foreign exchange net
gains (losses) were ($0.5) million in 2009,
$0.6 million in 2008 and $0.4 million in 2007.
Revenue Recognition We recognize revenue when
persuasive evidence of a sales arrangement exists, delivery
occurs or services are rendered, the sales price is fixed or
determinable and collectability is reasonably assured. When a
sales arrangement contains multiple elements, such as the sale
of advertising and other services, we allocate revenue to each
element based upon its relative fair value. Revenue recognition
may be ceased on delinquent accounts depending upon a number of
factors, including the customers credit history, number of
days past due, and the terms of any agreements with the
customer. Revenue recognition on such accounts resumes when the
customer has taken actions to remove their accounts from
delinquent status, at which time we recognize any associated
deferred revenues. We report revenue net of sales and other
taxes collected from our customers.
Our primary sources of revenue are from:
|
|
|
|
|
The sale of print, broadcast and Internet advertising.
|
|
|
|
The sale of newspapers.
|
|
|
|
Licensing royalties.
|
Revenue recognition policies for each source of revenue are as
follows.
Advertising. Print and broadcast
advertising revenue is recognized, net of agency commissions,
when the advertisements are displayed. Internet advertising
includes fixed duration campaigns whereby a banner, text or
other advertisement appears for a specified period of time for a
fee, impression-based campaigns where the fee is based upon the
number of times the advertisement appears in Web pages viewed by
a user, and click-through based campaigns where the fee is based
upon the number of users who click on an advertisement and are
directed to the advertisers Web site. Advertising revenue
from fixed duration campaigns are recognized over the period in
which the advertising appears. Internet advertising that is
based upon the number of impressions delivered or the number of
click-throughs is recognized as impressions are delivered or
click-throughs occur.
Advertising contracts, which generally have a term of one year
or less, may provide rebates, discounts and bonus advertisements
based upon the volume of advertising purchased during the terms
of the contracts. This requires us to make certain estimates
regarding future advertising volumes. We base our estimates on
various factors including our historical experience and
advertising sales trends. Estimated rebates, discounts and bonus
advertisements are recorded as a reduction of revenue in the
period the advertisement is displayed. We revise our estimates
as necessary based on actual volume realized.
Broadcast advertising contracts may guarantee the advertiser a
minimum audience for the programs in which their advertisements
are broadcast over the contract term. We provide the advertiser
with additional advertising time if we do not deliver the
guaranteed audience size. The amount of additional advertising
time is generally based upon the percentage shortfall in
audience size. If we determine we have not delivered the
guaranteed audience, we record an accrual for
make-good advertisements as a reduction of revenue.
The estimated make-good accrual is adjusted throughout the term
of the advertising contracts.
F-31
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Television stations may receive compensation for airing network
programming under the term of network affiliation agreements.
Network affiliation agreements generally provide for the payment
of pre-determined fees, but may provide compensation based upon
other factors. Pre-determined fees are recognized as revenue on
a straight-line basis over the term of the network affiliation
agreements. Compensation dependent upon other factors, which may
vary over the terms of the affiliation agreements, is recognized
when such amounts are earned.
Newspaper Subscriptions. Newspaper
subscription revenue is recognized based upon the publication
date of the newspaper. Revenues from prepaid newspaper
subscriptions are deferred and are included in circulation
revenue on a pro-rata basis over the term of the subscription.
Circulation revenue for newspapers sold directly to subscribers
is based upon the retail rate. Circulation revenue for
newspapers sold to independent newspaper distributors, which are
subject to returns, is based upon the wholesale rate. Estimated
returns are recognized as a reduction in circulation revenue at
the time the newspaper is published. Returns are estimated based
upon historical return rates and are adjusted based on the
actual returns.
Licensing. Royalties from merchandise
licensing are recognized as the licensee sells products. Amounts
due to us are commonly reported to us by the licensee. Such
information is generally not received until after the close of a
reporting period. Therefore, reported licensing revenue is based
upon estimates of licensed product sales. We subsequently adjust
these estimated amounts based upon the actual amounts of
licensed product sales.
Royalties from promotional licensing are recognized on a
straight-line basis over the terms of the licensing agreements.
Cash Equivalents and Short-term Investments
Cash-equivalents represent highly liquid investments with an
original maturity of less than three months. Short-term
investments represent excess cash invested in securities not
meeting the criteria to be classified as cash equivalents.
Short-term investments are carried at cost plus accrued income,
which approximates fair value.
Inventories Inventories are stated at the
lower of cost or market. The cost of inventories are determined
using the first in, first out (FIFO) method.
Trade Receivables We extend credit to
customers based upon our assessment of the customers
financial condition. Collateral is generally not required from
customers. Allowances for credit losses are generally based upon
trends, economic conditions, review of aging categories,
specific identification of customers at risk of default and
historical experience.
Investments We may have investments in both
public and private companies. Investment securities can be
impacted by various market risks, including interest rate risk,
credit risk and overall market volatility. Due to the level of
risk associated with certain investment securities, it is
reasonably possible that changes in the values of investment
securities will occur in the near term. Such changes could
materially affect the amounts reported in our financial
statements.
Investments in private companies are recorded at cost, net of
impairment write-downs, because no readily determinable market
price is available. All other securities, except those accounted
for under the equity method, are classified as available for
sale and are carried at fair value. Fair value is determined
using quoted market prices. The difference between cost basis
and fair value, net of related tax effects, is recorded in the
accumulated other comprehensive income (loss) component of
equity.
We regularly review our investments to determine if there has
been any
other-than-temporary
decline in value. These reviews require management judgments
that often include estimating the outcome of future events and
determining whether factors exist that indicate impairment has
occurred. We evaluate, among other factors, the extent to which
cost exceeds fair value; the duration of the decline in fair
value below cost; and the current cash position, earnings and
cash forecasts and near term prospects of the investee. The cost
basis is
F-32
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
reduced when a decline in fair value below cost is determined to
be other than temporary, with the resulting adjustment charged
against earnings.
The cost of securities sold is determined by specific
identification.
Property, Plant and Equipment Property, plant
and equipment, which includes internal use software, is carried
at cost less depreciation. Costs incurred in the preliminary
project stage to develop or acquire internal use software or
Internet sites are expensed as incurred. Upon completion of the
preliminary project stage and upon management authorization of
the project, costs to acquire or develop internal use software,
which primarily include coding, designing system interfaces, and
installation and testing, are capitalized if it is probable the
project will be completed and the software will be used for its
intended function. Costs incurred after implementation, such as
maintenance and training, are expensed as incurred.
Depreciation is computed using the straight-line method over
estimated useful lives as follows:
|
|
|
Buildings and improvements
|
|
35 years
|
Leasehold improvements
|
|
Shorter of term of
lease or useful life
|
Printing presses
|
|
20 to 30 years
|
Other newspaper production equipment
|
|
5 to 15 years
|
Television transmission towers and related equipment
|
|
15 years
|
Other television and program production equipment
|
|
3 to 15 years
|
Computer hardware and software
|
|
3 to 5 years
|
Office and other equipment
|
|
3 to 10 years
|
Programs and Program Licenses Programming is
either produced by us or for us by independent production
companies, or is licensed under agreements with independent
producers.
Costs of programs produced by us or for us include capitalizable
direct costs, production overhead, development costs and
acquired production costs. Costs to produce live programming
that is not expected to be rebroadcast are expensed as incurred.
Production costs for programs produced by us or for us are
capitalized. Production costs for television series are charged
to expense over estimated useful lives based upon expected
future cash flows. We periodically review revenue estimates and
planned usage and revise our assumptions if necessary. If actual
demand or market conditions are less favorable than projected, a
write-down to fair value may be required. Development costs for
programs that we have determined will not be produced are
written off.
Program licenses generally have fixed terms, limit the number of
times we can air the programs and require payments over the
terms of the licenses. Licensed program assets and liabilities
are recorded when the programs become available for broadcast.
Program licenses are not discounted for imputed interest.
Program licenses are amortized based upon expected cash flows
over the term of the license agreement.
The net realizable value of programs and program licenses is
reviewed for impairment using a day-part methodology, whereby
programs broadcast during a particular time period (such as
prime time) are evaluated on an aggregate basis.
The portion of the unamortized balance expected to be amortized
within one year is classified as a current asset.
Program rights liabilities payable within the next twelve months
are included in accounts payable. Noncurrent program rights
liabilities are included in other noncurrent liabilities.
Goodwill and Other Indefinite-Lived Intangible
Assets Goodwill represents the cost of
acquisitions in excess of the acquired businesses tangible
assets and identifiable intangible assets.
F-33
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
FCC licenses represent the value assigned to the broadcast
licenses of acquired broadcast television stations. Broadcast
television stations are subject to the jurisdiction of the
Federal Communications Commission (FCC) which
prohibits the operation of stations except in accordance with an
FCC license. FCC licenses stipulate each stations
operating parameters as defined by channels, effective radiated
power and antenna height. FCC licenses are granted for a term of
up to eight years, and are renewable upon request. We have never
had a renewal request denied, and all previous renewals have
been for the maximum term.
Goodwill and other indefinite-lived intangible assets are not
amortized, but are reviewed for impairment at least annually. We
perform our annual impairment review during the fourth quarter
of each year in conjunction with our annual planning cycle. We
also assess, at least annually, whether assets classified as
indefinite-lived intangible assets continue to have indefinite
lives.
We review goodwill for impairment based upon reporting units,
which are defined as operating segments or groupings of
businesses one level below the operating segment level.
Reporting units with similar economic characteristics are
aggregated into a single unit when testing goodwill for
impairment. Our reporting units are newspapers and television.
Amortizable Intangible Assets Television
network affiliation represents the value assigned to an acquired
broadcast television stations relationship with a national
television network. Television stations affiliated with national
television networks typically have greater profit margins than
independent television stations, primarily due to audience
recognition of the television station as a network affiliate.
These network affiliation relationships are amortized on a
straight-line basis over estimated useful lives of 20 to
25 years.
Customer lists and other intangible assets are amortized in
relation to their expected future cash flows over estimated
useful lives of up to 20 years.
Impairment of Long-Lived Assets We review
long-lived assets (primarily property, plant and equipment and
amortizable intangible assets) for impairment whenever events or
circumstances indicate the carrying amounts of the assets may
not be recoverable. Recoverability is determined by comparing
the forecasted undiscounted cash flows of the operation to which
the assets relate to the carrying amount of the assets. If the
undiscounted cash flow is less than the carrying amount of the
assets, then amortizable intangible assets are written down
first, followed by other long-lived assets, to fair value. Fair
value is determined based on discounted cash flows or
appraisals. Long-lived assets to be disposed of are reported at
the lower of carrying amount or fair value less costs to sell.
Self-Insured Risks We are self-insured for
general and automobile liability, employee health, disability
and workers compensation claims and certain other risks.
Estimated liabilities for unpaid claims, of $20.5 million
and $20.2 million at December 31, 2009 and 2008,
respectively are based on our historical claims experience and
are developed from actuarial valuations. While we re-evaluate
our assumptions and review our claims experience on an ongoing
basis, actual claims paid could vary significantly from
estimated claims, which would require adjustments to expense.
Income Taxes We recognize deferred income
taxes for temporary differences between the tax basis and
reported amounts of assets and liabilities that will result in
taxable or deductible amounts in future years. Our temporary
differences primarily result from accelerated depreciation and
amortization for tax purposes, investment gains and losses not
yet recognized for tax purposes and accrued expenses not
deductible for tax purposes until paid. We establish a valuation
allowance if we believe that if it is more likely than not that
some or all of the deferred tax assets will not be realized.
We record a liability for unrecognized tax benefits resulting
from uncertain tax positions taken or expected to be taken in a
tax return. Interest and penalties associated with such tax
positions are included in the tax provision. The liability for
additional taxes and interest is included in Other Liabilities.
F-34
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Production and Distribution Production and
distribution costs include costs incurred to produce and
distribute our newspapers and other publications to readers, and
other costs incurred to provide our products and services to
consumers. These costs are expensed as incurred.
Marketing and Advertising Costs Marketing and
advertising costs include costs incurred to promote our
businesses and to attract traffic to our Internet sites.
Advertising production costs are deferred and expensed the first
time the advertisement is shown. Other marketing and advertising
costs are expensed as incurred.
Risk Management Contracts We do not hold
derivative financial instruments for trading or speculative
purposes and we do not hold leveraged contracts. From time to
time we may use derivative financial instruments to limit the
impact of newsprint and interest rate fluctuations on our
earnings and cash flows.
Stock-Based Compensation We have a Long-Term
Incentive Plan (the Plan) which is described more
fully in Note 20. The Plan provides for the award of
incentive and nonqualified stock options, stock appreciation
rights, restricted stock units, restricted and unrestricted
Class A Common shares and performance units to key
employees and non-employee directors.
We recognize compensation cost based on the grant-date fair
value of the award. We determine the fair value of awards that
grant the employee the right to the appreciation of the
underlying shares, such as stock options, using a binomial
lattice model. The fair value of awards that grant the employee
the underlying shares is measured by the fair value of a
Class A Common share.
Certain awards of Class A Common shares have performance
conditions under which the number of shares granted is
determined by the extent to which such performance conditions
are met (Performance Shares). Compensation costs for
such awards are measured by the grant-date fair value of a
Class A Common share and the number of shares earned. In
periods prior to completion of the performance period,
compensation costs are based upon estimates of the number of
shares that will be earned.
Compensation costs, net of estimated forfeitures due to
termination of employment or failure to meet performance
targets, are recognized on a straight-line basis over the
requisite service period of the award. The requisite service
period is generally the vesting period stated in the award.
However, because stock compensation grants vest upon the
retirement of the employee, grants to retirement-eligible
employees are expensed immediately and grants to employees who
will become retirement eligible prior to the end of the stated
vesting period are expensed over such shorter period. The
vesting of certain awards is also accelerated if performance
measures are met. If it is expected those performance measures
will be met, compensation costs are expensed over the
accelerated vesting period.
Earnings Per Share (EPS) Unvested
awards of share-based payments with rights to receive dividends
or dividend equivalents, such as our restricted stock and
restricted stock units (RSUs), are considered participating
securities for purposes of calculating EPS. Under the two-class
method, we allocate a portion of net income to these
participating securities and therefore exclude that income from
the calculation of EPS allocated to common stock. We do not
allocate losses to the participating securities. When we adopted
this treatment in 2009 due to the adaption of new accounting
guidance, we adjusted all prior period earnings per share data
to conform to these provisions. This adoption did not result in
a change to the previously reported basic and diluted EPS for
2008 or 2007.
F-35
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table presents information about basic and diluted
weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Numerator (for both basic and diluted earnings per share)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to the shareholders of The E.W. Scripps
Company
|
|
$
|
(209,605
|
)
|
|
$
|
(476,590
|
)
|
|
$
|
(1,621
|
)
|
Less income allocated to unvested restricted stock and RSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for basic and diluted earnings per share
|
|
$
|
(209,605
|
)
|
|
$
|
(476,590
|
)
|
|
$
|
(1,621
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average shares outstanding
|
|
|
53,902
|
|
|
|
54,100
|
|
|
|
54,338
|
|
Effective of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested restricted shares and RSUs held by employees
|
|
|
|
|
|
|
|
|
|
|
77
|
|
Stock options held by employees and directors
|
|
|
|
|
|
|
|
|
|
|
341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted-average shares outstanding
|
|
|
53,902
|
|
|
|
54,100
|
|
|
|
54,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-dilutive securities(1)
|
|
|
21,033
|
|
|
|
12,896
|
|
|
|
2,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amount outstanding at Balance Sheet date, before application of
the treasury stock method and not weighted for period
outstanding. |
For 2009 and 2008, we incurred a net loss and the inclusion of
unvested restricted stock, RSUs and stock options held by
employees and directors were anti-dilutive, and accordingly the
diluted EPS calculation excludes those common share equivalents.
|
|
2.
|
Accounting
Changes and Recently Issued Accounting Standards
|
Accounting
Changes
On January 1, 2007, we adopted a new accounting standard,
which clarified the accounting for tax positions recognized in
the financial statements. The new accounting guidance provides
guidance on the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return.
It also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods,
disclosures, and transition.
In accordance with the new accounting guidance, the benefits of
tax positions will not be recorded unless it is more likely than
not that the tax position would be sustained upon challenge by
the appropriate tax authorities. Tax benefits that are more
likely than not to be sustained are measured at the largest
amount of benefit that is cumulatively greater than a
50%-likelihood of being realized. See Note 6 to the
Consolidated Financial Statements.
In September 2006, the Financial Accounting Standards Board
(FASB) issued new accounting guidance, which defined
fair value, established a framework for measuring fair value,
and expanded disclosures about fair value measurements. In
February 2008, the FASB delayed the effective date of this
standard for non-financial assets and liabilities, except for
those that are recognized or disclosed at fair value in the
financial statements on a recurring basis, until January 1,
2009. In September 2009, the FASB issued additional guidance on
measuring the fair value of liabilities effective for the first
reporting period (including interim periods) beginning after
issuance. The adoption of this standard did not have a material
impact on our financial statements.
F-36
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In December 2007, the FASB issued new accounting guidance which
established accounting and reporting standards for the
noncontrolling interest in a subsidiary, the deconsolidation of
a subsidiary, and accounting for noncontrolling interests as
equity in the consolidated financial statements at fair value.
We adopted this standard as of January 1, 2009. Upon
adoption of this standard, we reclassified our noncontrolling
interest in subsidiary companies to a separate component of
equity and changed the presentation of our statement of
operations and statement of cash flows. We have retroactively
reclassified all periods presented.
In December 2007, the FASB issued new accounting guidance, which
provided guidance relating to recognition of assets acquired and
liabilities assumed in a business combination. This standard
also established expanded disclosure requirements for business
combinations. We adopted this standard effective January 1,
2009, prospectively for all business combinations subsequent to
the effective date. The adoption of this standard had no impact
on our financial statements.
In March 2008, the FASB issued new accounting guidance, which
amended and expanded the disclosure requirements for derivatives
to provide a better understanding of how and why an entity uses
derivative instruments, how derivative instruments and related
hedged items are accounted for, and their effect on an
entitys financial position, financial performance, and
cash flows. We adopted this standard effective January 1,
2009. The adoption of this standard had no impact on our
financial statements.
In December 2008, the FASB issued new accounting guidance on
disclosures about plan assets of our defined benefit plans. We
adopted this standard on December 31, 2009.
In May 2009, the FASB issued new accounting guidance which
provided guidance on managements assessment of subsequent
events and incorporates this guidance into accounting
literature. This new standard is effective prospectively for
interim and annual periods ending after June 15, 2009. The
implementation of this standard did not have a material impact
on our consolidated financial position or our results of
operations.
In April 2009, the FASB issued a staff position which changes
the method for determining whether an
other-than-temporary
impairment exists for debt securities and the amount of the
impairment to be recorded in earnings. The guidance is effective
for interim and annual periods ending after June 15, 2009.
The implementation of this guidance did not have a material
impact on our consolidated financial position and results of
operations.
In April 2009, the FASB issued a staff position requiring fair
value disclosures in both interim as well as annual financial
statements in order to provide more timely information about the
effects of current market conditions on financial instruments.
The guidance is effective for interim and annual periods ending
after June 15, 2009. The implementation of this guidance
did not have a material impact on our consolidated financial
position and results of operations.
In June 2009, the FASB Accounting Standards
Codificationtm
and the Hierarchy of Generally Accepted Accounting Principles
was issued. The Codification is the source of authoritative
U.S. generally accepted accounting principles
(U.S. GAAP). The Codification, which changes the
referencing of financial standards but does not modify US GAAP,
became effective for us on July 1, 2009.
New Accounting Pronouncements In June 2009,
the FASB issued new accounting guidance which amended the
consolidation guidance applicable to variable interest entities
and is effective for us on January 1, 2010. We do not
expect this standard to have a material impact on our financial
condition or results of operations.
In October 2009, the FASB issued amendments to the accounting
and disclosure for revenue recognition. These amendments,
effective for fiscal years beginning on or after June 15,
2010 (early adoption is permitted), modify the criteria for
recognizing revenue in multiple element arrangements and the
scope of what constitutes a non-software deliverable. The
Company is currently assessing the impact on its consolidated
financial position and results of operations.
F-37
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In the second quarter of 2007, we acquired newspaper
publications in areas contiguous to our existing newspaper
markets for total consideration of $2.0 million. We have
not presented pro forma results for the 2007 acquisitions
because the combined results of operations would not be
significantly different from reported amounts.
|
|
4.
|
Discontinued
Operations
|
Spin-Off
of Scripps Networks Interactive
On October 16, 2007, the Company announced that its Board
of Directors had authorized management to pursue a plan to
separate E. W. Scripps (Scripps or EWS)
into two independent, publicly-traded companies (the
Separation) through the spin-off of Scripps Networks
Interactive, Inc. (SNI) to the Scripps shareholders.
To effect the Separation, SNI was formed on October 23,
2007, as a wholly owned subsidiary of Scripps and the assets and
liabilities of the Scripps Networks and Interactive Media
businesses of Scripps were transferred to SNI.
The distribution of all of the shares of SNI was made on
July 1, 2008 to the shareholders of record as of the close
of business on June 16, 2008 (the Record Date).
The shareholders of record received one SNI Class A Common
Share for every Scripps Class A Common Share held as the
Record Date and one SNI Common Voting Share for every Scripps
Common Voting Share held as of the Record Date.
The following table presents summary information of the net
assets distributed on July 1, 2008.
|
|
|
|
|
|
|
(In thousands)
|
|
|
Assets:
|
|
|
|
|
Total current assets
|
|
$
|
429,824
|
|
Property, plant and equipment, net
|
|
|
182,122
|
|
Goodwill and intangible assets
|
|
|
783,626
|
|
Other assets
|
|
|
658,641
|
|
|
|
|
|
|
Total assets distributed
|
|
$
|
2,054,213
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
Total current liabilities
|
|
$
|
134,876
|
|
Deferred income taxes
|
|
|
142,468
|
|
Long-term debt
|
|
|
325,000
|
|
Other liabilities
|
|
|
47,551
|
|
Minority interest
|
|
|
129,015
|
|
|
|
|
|
|
Total liabilities distributed
|
|
|
778,910
|
|
|
|
|
|
|
Net assets distributed
|
|
$
|
1,275,303
|
|
|
|
|
|
|
During 2009, the Company made adjustments of $0.6 million
to the net assets distributed. These adjustments resulted from
the settlement of activity primarily related to income taxes for
2008 and employee benefit plans.
The spin-off of SNI is presented as discontinued operations in
our financial statements for all periods presented.
In connection with the Separation, the following agreements
between Scripps and SNI became effective:
|
|
|
|
|
Separation and Distribution Agreement
|
|
|
|
Transition Services Agreement
|
F-38
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
Employee Matters Agreement
|
|
|
|
Tax Allocation Agreement
|
Separation
and Distribution Agreement
The Separation and Distribution Agreement contains the key
provisions relating to the separation of SNI from EWS and the
distribution of SNI common shares to EWS shareholders. The
agreement also identifies the assets to be transferred to and
the liabilities and contracts to be assumed by SNI or retained
by EWS in the distribution and when and how the transfers will
occur. The agreement also provides that liability for, and
control of, future litigation claims against either company for
events that took place prior to the separation will be assumed
by the company operating the business to which the claim
relates. In the case of businesses which were sold or
discontinued prior to the date of the separation, the agreement
identifies which company has assumed those liabilities.
The agreement provides for indemnification of the other company
and the other companys officers, directors and employees
for losses arising out of:
|
|
|
|
|
Its failure to perform or discharge any of the liabilities it
assumes pursuant to the Separation and Distribution Agreement.
|
|
|
|
Its businesses as conducted as of the date of the separation and
distribution.
|
|
|
|
Its breaches of the Separation and Distribution agreement, any
of the ancillary agreements pursuant to which EWS or SNI are
co-parties or share benefits and burdens.
|
|
|
|
Its untrue statement or alleged untrue statement of a material
fact, or omission or alleged omission to state a material fact,
required to be stated or necessary to make statements therein
not misleading in the portions of the following documents for
which it has assumed responsibility for: Form 10
Registration Statement of SNI, the definitive proxy statement
sent to the EWS shareholders soliciting their vote on the
separation transaction and its other public filings made by EWS
after the distribution date.
|
Transition
Services Agreement
The Transition Services Agreement provides for EWS and SNI to
provide services to each other on a compensated basis for a
period of up to two years. Compensation will be on an
arms-length basis. EWS will provide services or support to SNI,
including information technology, human resources, accounting
and finance, and facilities. SNI will provide information
technology support and services. We were paid $2.9 million
and $2.8 million from SNI and we paid SNI $0.5 million
and $1.6 million under these agreements in 2009 and 2008,
respectively.
Employee
Matters Agreement
The Employee Matters Agreement provides for the allocation of
the liabilities and responsibilities relating to employee
compensation and benefit plans and programs, including the
treatment of outstanding incentive awards, deferred compensation
obligations and retirement and welfare benefit obligations
between EWS and SNI. The agreement provides that EWS and SNI
will each be responsible for all employment and benefit related
obligations and liabilities for employees that work for the
respective companies. The agreement also provides that SNI
employees will continue to participate in certain of the EWS
benefit plans during a transition period through
December 31, 2008. After the transition period, the account
balances or actuarially determined values of assets and
liabilities of SNI employees will be transferred to the benefit
plans of SNI. The agreement also governs the treatment of
outstanding EWS share-based equity awards.
F-39
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Tax
Allocation Agreement
The Tax Allocation Agreement sets forth the allocations and
responsibilities of EWS and SNI with respect to liabilities for
federal, state, local and foreign income taxes for periods
before and after the spin-off, tax deductions related to
compensation arrangements, preparation of income tax returns,
disputes with taxing authorities and indemnification of income
taxes that would become due if the spin-off were taxable.
Generally EWS and SNI will be responsible for income taxes for
periods before the spin-off for their respective businesses. In
2009, SNI reimbursed us $16 million for its share of
estimated taxes prior to the Separation under the Tax Allocation
Agreement. At December 31, 2009, we have an additional
$6.5 million receivable from SNI for their portion of taxes
for prior years, which is included in other current assets.
Other
Agreements
EWS and SNI have also entered into various other agreements that
have been negotiated on an arms length basis and that
individually or in the aggregate do not constitute material
agreements.
Closure
of Rocky Mountain News
After an unsuccessful search for a buyer, we closed the Rocky
Mountain News after it published its final edition on
February 27, 2009.
Our Rocky Mountain News and Media News Group, Inc.s (MNG)
Denver Post were partners in The Denver Newspaper Agency (the
Denver JOA), a limited liability partnership, which
operated the sales, production and business operations of the
Rocky Mountain News prior to its closure. Each newspaper owned
50% of the Denver JOA and received a 50% share of the profits.
Each newspaper provided the Denver JOA with the independent
editorial content published in its newspaper.
Under the terms of an agreement with MNG, we transferred our
interests in the Denver JOA to MNG in the third quarter of 2009.
We recorded no gain or loss on the transfer of our interest in
the Denver JOA to MNG.
The results of the operations of the Rocky Mountain News and the
earnings from our interest in the Denver JOA are presented as
discontinued operations in our financial statements for all
periods.
Due primarily to the negative effects of the economy on the
advertising revenues of the Denver JOA we determined that
indications of impairment of our investment existed in 2008 and
we recorded a non-cash charge of $110 million to reduce the
carrying value of our investment to zero, our share of the
estimated fair value of their net assets.
Other
Discontinued Operations
Our Cincinnati JOA with Gannett Co. Inc. was not renewed when
the agreement terminated on December 31, 2007. In
connection with the termination of the JOA, we ceased
publication of our Cincinnati Post and Kentucky Post newspapers
that participated in the Cincinnati JOA.
The results of businesses held for sale, that were spun off, or
that have ceased operations are presented as discontinued
operations within our results of operations. The results of
operations of these businesses are excluded from segment results
for all periods presented.
F-40
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Operating results of our discontinued operations were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Operating revenues
|
|
$
|
50
|
|
|
$
|
804,565
|
|
|
$
|
1,440,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of JOAs and other joint ventures
|
|
$
|
|
|
|
$
|
18,682
|
|
|
$
|
54,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, before tax
|
|
$
|
(23,372
|
)
|
|
$
|
184,624
|
|
|
$
|
147,975
|
|
Loss on divestitures, net
|
|
|
|
|
|
|
|
|
|
|
(255
|
)
|
Income tax (expense) benefit
|
|
|
5,780
|
|
|
|
(63,173
|
)
|
|
|
(138,293
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations
|
|
$
|
(17,592
|
)
|
|
$
|
121,451
|
|
|
$
|
9,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company incurred certain non-recurring costs directly
related to the spin-off of SNI of $48.2 million in 2008.
Investment banking fees, legal, accounting and other
professional and consulting fees of $14.7 million were
allocated to discontinued operations in the Consolidated
Statements of Operations. All remaining amounts
($33.5 million) are recorded in continuing operations.
A $3.4 million tax benefit was recognized in 2007 related
to differences that were identified between our prior year
provision and tax returns for our Shop At Home businesses which
is included in discontinued operations.
|
|
5.
|
Asset
Write-Downs and Other Charges and Credits
|
Income (loss) from continuing operations was affected by the
following:
2009 Separation and restructuring costs
include the costs to restructure our operations and to install
separate information systems. These costs increased loss from
continuing operations before taxes by $9.9 million.
In the first quarter we recorded a $215 million, non-cash
charge to reduce the carrying value of our goodwill for our
Television division.
We also recorded a $1 million non-cash charge to reduce the
carrying value of the FCC license for our Lawrence, Kansas,
television station.
2008 Separation costs increased the loss from
continuing operations by $33.5 million for the year.
During the year we recorded a $779 million, non-cash charge
to reduce the carrying value of goodwill, an $11.4 million
charge to reduce the carrying value of our FCC license and a
$19.6 million charge to write-down the carrying value of
long-lived assets, primarily a network affiliation agreement. We
also recorded a non-cash charge of $20.9 million to reduce
the carrying value of our investment in the Prairie Mountain
Publishing newspaper partnership to our share of the estimated
fair value of their net assets. The impairment charges increased
loss from continuing operations by $830.9 million in the
year.
In the second quarter of 2008, we redeemed the remaining
balances of our outstanding notes and recorded a
$26.4 million loss on the extinguishment of debt.
Investment
results
Investment results, reported in the caption Miscellaneous,
net in our Consolidated Statements of Operations, include
realized gains from the sale of certain investments of
$7.6 million in 2008.
F-41
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Involuntary
separation agreements
In the fourth quarter of 2008 we initiated an involuntary plan
to reduce the workforce by 350 employees at substantially
all of our newspapers. We incurred $5.0 million for
severance-related costs, which was substantially paid in the
fourth quarter.
2007
Voluntary separation agreements
A majority of our newspapers offered voluntary separation plans
to eligible employees during 2007. In connection with the
acceptance of the offer by 137 employees, we accrued
severance-related costs of $8.9 million in 2007. Cash
expenditures related to these separation plans were
$7.2 million through 2007.
We file a consolidated federal income tax return, consolidated
unitary returns in certain states, and other separate state
income tax returns for certain of our subsidiary companies.
The provision for income taxes consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
(71,213
|
)
|
|
$
|
6,228
|
|
|
$
|
25,531
|
|
State and local
|
|
|
5,574
|
|
|
|
5,949
|
|
|
|
9,220
|
|
Foreign
|
|
|
1,492
|
|
|
|
1,398
|
|
|
|
354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(64,147
|
)
|
|
|
13,575
|
|
|
|
35,105
|
|
Tax benefits of compensation plans allocated to additional
paid-in capital
|
|
|
(4,653
|
)
|
|
|
3,604
|
|
|
|
3,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current income tax provision
|
|
|
(68,800
|
)
|
|
|
17,179
|
|
|
|
38,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
68,096
|
|
|
|
(317,876
|
)
|
|
|
2,374
|
|
Other
|
|
|
(2,526
|
)
|
|
|
(18,380
|
)
|
|
|
(8,743
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
65,570
|
|
|
|
(336,256
|
)
|
|
|
(6,369
|
)
|
Deferred tax allocated to other comprehensive income
|
|
|
(23,942
|
)
|
|
|
58,359
|
|
|
|
3,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred income tax provision
|
|
|
41,628
|
|
|
|
(277,897
|
)
|
|
|
(3,040
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
$
|
(27,172
|
)
|
|
$
|
(260,718
|
)
|
|
$
|
35,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-42
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The difference between the statutory rate for federal income tax
and the effective income tax rate was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Statutory rate
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
Effect of:
|
|
|
|
|
|
|
|
|
|
|
|
|
State and local income taxes, net of federal income tax benefit
|
|
|
1.9
|
|
|
|
2.0
|
|
|
|
4.9
|
|
Permanent item Goodwill Impairment
|
|
|
(23.7
|
)
|
|
|
(4.5
|
)
|
|
|
|
|
International rate differential
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
0.1
|
|
Miscellaneous
|
|
|
(0.4
|
)
|
|
|
(0.5
|
)
|
|
|
(7.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective income tax rate
|
|
|
12.4
|
%
|
|
|
32.0
|
%
|
|
|
32.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We believe adequate provision has been made for all open tax
years.
The approximate effect of the temporary differences giving rise
to deferred income tax (liabilities) assets were as follows:
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Temporary differences:
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
$
|
(60,141
|
)
|
|
$
|
(41,856
|
)
|
Goodwill and other intangible assets
|
|
|
51,977
|
|
|
|
39,247
|
|
Investments, primarily gains and losses not yet recognized for
tax purposes
|
|
|
2,878
|
|
|
|
934
|
|
Accrued expenses not deductible until paid
|
|
|
6,591
|
|
|
|
6,760
|
|
Deferred compensation and retiree benefits not deductible until
paid
|
|
|
62,179
|
|
|
|
104,623
|
|
Other temporary differences, net
|
|
|
3,045
|
|
|
|
4,935
|
|
|
|
|
|
|
|
|
|
|
Total temporary differences
|
|
|
66,529
|
|
|
|
114,643
|
|
State and foreign net operating loss carryforwards
|
|
|
8,414
|
|
|
|
11,654
|
|
Valuation allowance for state deferred tax assets
|
|
|
(1,197
|
)
|
|
|
(11,786
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset (liability)
|
|
$
|
73,746
|
|
|
$
|
114,511
|
|
|
|
|
|
|
|
|
|
|
Total state operating loss carryforwards were $250 million
at December 31, 2009. Our state tax loss carryforwards
expire between 2010 and 2027. Because separate state income tax
returns are filed for certain of our subsidiary companies, we
are not able to use state tax losses of a subsidiary company to
offset state taxable income of another subsidiary company.
Deferred tax assets totaled $73.7 million at
December 31, 2009. Approximately $37 million of our
deferred tax assets reverse in 2010. We can use any tax losses
resulting from the deferred tax assets reversing in 2010 to
claim refunds of taxes paid in prior periods. Management
believes that it is more likely than not that we will realize
the benefits of our Federal deferred tax assets and therefore
has not recorded a valuation allowance for our deferred tax
assets. If current economic conditions persist or worsen, future
estimates of taxable income could be lower than our current
estimates, which may require valuation allowances to be recorded
in future reporting periods.
State carryforwards are recognized as deferred tax assets,
subject to valuation allowances. At each balance sheet date, we
estimate the amount of carryforwards that are not expected to be
used prior to expiration of the carryforward period. The tax
effect of the carryforwards that are not expected to be used
prior to their expiration is included in the valuation allowance.
F-43
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Effective January 1, 2007, we adopted new accounting
guidance for accounting for uncertain income taxes. In adopting
this new guidance, we recognized a $30.9 million increase
in our liability for unrecognized tax benefits, interest, and
penalties with a corresponding decrease to the January 1,
2007 balance of retained earnings.
A reconciliation of the beginning and ending balances of the
total amounts of gross unrecognized tax benefits is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
(In thousands)
|
|
|
Gross unrecognized tax benefits at beginning of year
|
|
$
|
22,710
|
|
|
$
|
68,400
|
|
|
$
|
66,200
|
|
Increases in tax positions for prior years
|
|
|
7,100
|
|
|
|
30
|
|
|
|
500
|
|
Decreases in tax positions for prior years
|
|
|
(2,100
|
)
|
|
|
(1,700
|
)
|
|
|
(5,100
|
)
|
Increases in tax positions for current year
|
|
|
1,400
|
|
|
|
5,800
|
|
|
|
14,900
|
|
Settlements
|
|
|
(1,200
|
)
|
|
|
(1,400
|
)
|
|
|
|
|
Lapse in statute of limitations
|
|
|
|
|
|
|
(220
|
)
|
|
|
(8,100
|
)
|
Transfer of gross unrecognized tax benefits due to spin-off of
SNI
|
|
|
|
|
|
|
(48,200
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross unrecognized tax benefits at end of year
|
|
$
|
27,910
|
|
|
$
|
22,710
|
|
|
$
|
68,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The total amount of net unrecognized tax benefits that, if
recognized, would affect the effective tax rate was
$20 million at December 31, 2009 and
$16.8 million at December 31, 2008. We accrue interest
and penalties related to unrecognized tax benefits in our
provision for income taxes. At December 31, 2009 and 2008,
we had accrued interest related to unrecognized tax benefits of
$8.5 million and $4.4 million, respectively.
Under the Tax Allocation Agreement between Scripps and SNI, SNI
is responsible for its own pre-spin-off tax obligations. However
due to regulations governing the U.S. federal consolidated
tax return and certain combined state tax returns, we remain
severally liable for SNIs pre-spin-off federal taxes as
well as certain state taxes. The December 31, 2009
liability for uncertain tax positions includes $13 million
of which the majority is indemnified by SNI.
We file income tax returns in the U.S. and in various
state, local and foreign jurisdictions. We are routinely
examined by tax authorities in these jurisdictions. We reached
an agreement with the Internal Revenue Service in the second
quarter of 2009 to settle the examinations of our 2005 and 2006
federal income tax returns. We reversed unrecognized tax
benefits of $0.9 million upon the settlement, increasing
our tax benefit for 2009.
In addition, a number of state and local examinations are
currently ongoing. It is possible that these examinations may be
resolved within twelve months. Due to the potential for
resolution of Federal, state and foreign examinations, and the
expiration of various statutes of limitation, it is reasonably
possible that our gross unrecognized tax benefits balance may
change within the next twelve months by a range of zero to
$5.0 million.
|
|
7.
|
Joint
Operating Agreements and Partnerships
|
In connection with the closure of the Rocky Mountain News, we
also transferred our 50% interest in Prairie Mountain Publishing
(PMP) a newspaper partnership with a subsidiary of
MNG that operated certain of both companies other
newspapers in Colorado, to MNG. Under the terms of the agreement
we received a $5 million secured promissory note from MNG,
which we have recorded at $4.4 million, the carrying value
of the assets we gave up. We recorded no gain or loss on the
transfer of our interest. In 2008, we recorded a non-cash charge
of $20.9 million to reduce the carrying value in PMP to its
estimated fair value.
F-44
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In the first quarter of 2008, we ceased publication of our
Albuquerque Tribune newspaper. At the same time, we also reached
an agreement with the Journal Publishing Company
(JPC), the publisher of the Albuquerque Journal
(Journal), to terminate the Albuquerque joint
operating agreement between the Journal and our Albuquerque
Tribune newspaper. Under an amended agreement with the JPC, we
own an approximate 40% interest in the Albuquerque Publishing
Company, G.P. (the Partnership) and we pay JPC an
amount equal to a portion of the editorial savings realized from
ceasing publication of our newspaper. The Partnership directs
and manages the operations of the continuing Journal newspaper.
Investments consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Colorado newspaper partnership
|
|
$
|
|
|
|
$
|
5,000
|
|
Joint ventures
|
|
|
255
|
|
|
|
650
|
|
Other equity securities
|
|
|
10,405
|
|
|
|
7,070
|
|
|
|
|
|
|
|
|
|
|
Total investments
|
|
$
|
10,660
|
|
|
$
|
12,720
|
|
|
|
|
|
|
|
|
|
|
Other equity securities are securities that do not trade in
public markets, so they do not have readily determinable fair
values. We estimate the fair values of the other securities
approximate their carrying values at December 31, 2009 and
2008. There can be no assurance we would realize the carrying
values of these securities upon their sale.
In 2008, we recorded a $1.6 million non-cash charge to
write-down our other equity securities.
|
|
9.
|
Property,
Plant and Equipment
|
Property, plant and equipment consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Land and improvements
|
|
$
|
68,310
|
|
|
$
|
68,410
|
|
Buildings and improvements
|
|
|
233,913
|
|
|
|
233,959
|
|
Equipment
|
|
|
530,156
|
|
|
|
533,492
|
|
Computer software
|
|
|
44,989
|
|
|
|
47,628
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
877,368
|
|
|
|
883,489
|
|
Accumulated depreciation
|
|
|
453,798
|
|
|
|
456,818
|
|
|
|
|
|
|
|
|
|
|
Net property, plant and equipment
|
|
$
|
423,570
|
|
|
$
|
426,671
|
|
|
|
|
|
|
|
|
|
|
In 2009 and 2008, $0.5 million and $1.9 million,
respectively, of interest was capitalized for a long-term
construction project.
F-45
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
10.
|
Goodwill
and Other Intangible Assets
|
Goodwill and other intangible assets consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Goodwill
|
|
$
|
|
|
|
$
|
215,432
|
|
|
|
|
|
|
|
|
|
|
Other intangible assets:
|
|
|
|
|
|
|
|
|
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
Carrying amount:
|
|
|
|
|
|
|
|
|
Television network affiliation relationships
|
|
|
5,641
|
|
|
|
5,641
|
|
Customer lists
|
|
|
12,469
|
|
|
|
12,794
|
|
Other
|
|
|
6,092
|
|
|
|
6,193
|
|
|
|
|
|
|
|
|
|
|
Total carrying amount
|
|
|
24,202
|
|
|
|
24,628
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization:
|
|
|
|
|
|
|
|
|
Television network affiliation relationships
|
|
|
( 1,617
|
)
|
|
|
( 1,310
|
)
|
Customer lists
|
|
|
( 7,831
|
)
|
|
|
( 6,919
|
)
|
Other
|
|
|
( 4,314
|
)
|
|
|
( 4,130
|
)
|
|
|
|
|
|
|
|
|
|
Total accumulated amortization
|
|
|
( 13,762
|
)
|
|
|
( 12,359
|
)
|
|
|
|
|
|
|
|
|
|
Net amortizable intangible assets
|
|
|
10,440
|
|
|
|
12,269
|
|
|
|
|
|
|
|
|
|
|
Other indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
FCC licenses
|
|
|
13,195
|
|
|
|
14,195
|
|
|
|
|
|
|
|
|
|
|
Total other intangible assets
|
|
|
23,635
|
|
|
|
26,464
|
|
|
|
|
|
|
|
|
|
|
Total goodwill and other intangible assets
|
|
$
|
23,635
|
|
|
$
|
241,896
|
|
|
|
|
|
|
|
|
|
|
Goodwill and other indefinite-lived assets are tested for
impairment annually and if an event or conditions change that
would more likely than not reduce the fair value of a reporting
unit below its carrying value. Such indicators of impairment
include, but are not limited to, changes in business climate and
operating or cash flow losses related to such assets. The
testing for impairment is a two-step process. The first step is
the estimation of the fair value of each of the reporting units,
which is then compared to their carrying value. If the fair
value is less than the carrying value of the reporting unit then
an impairment of goodwill possibly exists. Step two is then
performed to determine the amount of impairment.
Due primarily to increases in the cost of capital for local
media businesses and declines in our stock price and that of
other publicly traded television companies during the first
quarter of 2009, we determined that indications of impairment
existed for our Television goodwill as of March 31, 2009.
We concluded the fair value of our television reporting unit did
not exceed the carrying value of our television net assets as of
March 31, 2009, and we recorded a $215 million,
non-cash charge in the first quarter of 2009, to reduce the
carrying value of goodwill. We also recorded a $1 million
non-cash charge to reduce the carrying value of the FCC license
for our Lawrence, Kansas, television station to its estimated
fair value in the first quarter of 2009.
In 2008, due primarily to the continuing negative effects of the
economy on our advertising revenues and those of other
publishing companies, and the difference between our stock price
following the spin-off of SNI to shareholders and the per share
carrying value of our remaining net assets, we determined that
indications of impairment existed as of June 30, 2008. We
concluded the fair value of our newspaper reporting unit did not
exceed the carrying value of our newspaper net assets as of
June 30, 2008. We recorded a $779 million, non-cash
charge in the quarter ended June 30, 2008.
F-46
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In connection with our 2008 annual impairment test for
indefinite lived assets we determined that the carrying value of
the FCC license for our Lawrence, Kansas, television station
exceeded its fair value. We recorded an $11.4 million
non-cash charge to write-down the FCC license to fair value.
We also determined that we had indicators of impairment in the
fourth quarter of 2008 for the long-lived assets of our
Baltimore television station and recorded an $18 million
charge to write-down the carrying value of the network
affiliation agreement to fair value.
Management must make significant judgments to determine fair
values, including the valuation methodology and the underlying
financial information used in the valuation. These judgments
include, but are not limited to, long-term projections of future
financial performance and the selection of appropriate discount
rates used to determine the present value of future cash flows.
Changes in such estimates or the application of alternative
assumptions could produce significantly different results.
Activity related to goodwill by business segment was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licensing
|
|
|
|
|
|
|
Newspapers
|
|
|
Television
|
|
|
and Other
|
|
|
Total
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
Balance as of December 31, 2007
|
|
$
|
785,621
|
|
|
$
|
215,414
|
|
|
$
|
18
|
|
|
$
|
1,001,053
|
|
Impairment of goodwill
|
|
|
(778,900
|
)
|
|
|
|
|
|
|
|
|
|
|
(778,900
|
)
|
Other adjustments
|
|
|
(6,721
|
)
|
|
|
|
|
|
|
|
|
|
|
(6,721
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2008
|
|
|
|
|
|
|
215,414
|
|
|
|
18
|
|
|
|
215,432
|
|
Impairment of goodwill
|
|
|
|
|
|
|
(215,414
|
)
|
|
|
|
|
|
|
(215,414
|
)
|
Other adjustments
|
|
|
|
|
|
|
|
|
|
|
(18
|
)
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2009
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licensing
|
|
|
|
|
|
|
Newspapers
|
|
|
Television
|
|
|
and Other
|
|
|
Total
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
Balance as of December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
$
|
778,900
|
|
|
$
|
215,414
|
|
|
$
|
|
|
|
$
|
994,314
|
|
Accumulated impairment losses
|
|
|
(778,900
|
)
|
|
|
|
|
|
|
|
|
|
|
(778,900
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2008
|
|
$
|
|
|
|
$
|
215,414
|
|
|
$
|
|
|
|
$
|
215,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
$
|
778,900
|
|
|
$
|
215,414
|
|
|
$
|
|
|
|
$
|
994,314
|
|
Accumulated impairment losses
|
|
|
(778,900
|
)
|
|
|
(215,414
|
)
|
|
|
|
|
|
|
(994,314
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2009
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated amortization expense of intangible assets for each of
the next five years is $1.3 million in 2010,
$1.2 million in 2011, $0.9 million in 2012,
$0.8 million in 2013, $0.7 million in 2014 and
$5.5 million in later years.
11. Long-Term
Debt
Long-term debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Variable-rate credit facilities
|
|
$
|
34,900
|
|
|
$
|
60,000
|
|
Other notes
|
|
|
1,016
|
|
|
|
1,166
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
$
|
35,916
|
|
|
$
|
61,166
|
|
|
|
|
|
|
|
|
|
|
Fair value of long-term debt*
|
|
$
|
35,916
|
|
|
$
|
61,166
|
|
|
|
|
|
|
|
|
|
|
F-47
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
* |
|
Fair value was estimated based on current rates available to the
Company for debt of the same remaining maturity. |
On August 5, 2009, we entered into an Amended and Restated
Revolving Credit Agreement (2009 Agreement), which expires
June 30, 2013. This Agreement amended and restated the
Companys existing $200 million Revolver and reduced
the maximum amount of availability under the facility to
$150 million. Borrowings under the 2009 Agreement are
limited to a borrowing base, as follows:
a) 100% of cash maintained in a blocked account (up to
$20 million),
b) 85% of eligible accounts receivable,
c) 40% of eligible newsprint inventory, and
d) 50% of the fair market value of eligible real property
(limited to $60 million).
At December 31, 2009, we had additional borrowing capacity
of $105 million under our Revolver.
Under the terms of the 2009 Agreement we granted the lenders
mortgages on certain of the Companys real property,
pledges of the Companys equity interests in its
subsidiaries and security interests in substantially all other
personal property, including cash, accounts receivables,
inventories and equipment. If at any time, the amount of excess
availability (defined as the amount by which the borrowing base
exceeds the aggregate borrowings and letters of credit under the
2009 Agreement) is equal to or less than $22.5 million, we
must then maintain a fixed charge coverage ratio (as defined
therein) of at least 1.1 to 1.0.
Borrowings under the 2009 Agreement bear interest at variable
interest rates based on either LIBOR or a base rate, in either
case plus an applicable margin that varies depending upon
average excess availability. The margin for LIBOR based loans
ranges from 2.75% to 3.25% per annum. The margin for base rate
loans ranges from 1.75% to 2.25% per annum. The weighted-average
interest rate on borrowings under the Revolver was 3.0% and 1.7%
at December 31, 2009, and 2008, respectively.
Commitment fees ranging from 0.50% to 0.75% per annum (depending
on utilization) of the total unused commitment are payable under
the credit facility.
The scheduled $40 million principal payment on our
3.75% notes was made in the first quarter of 2008. In June
2008, we redeemed the remaining balance of the 4.25% notes,
the 4.3% notes, and the 5.75% notes prior to maturity
resulting in a loss on extinguishment of $26 million.
During 2007, we repurchased $37.1 million principal amount
of our 4.30% notes due in 2010 for $35.8 million and
repurchased $14.6 million principal amount of our
5.75% note due in 2012 for $14.5 million.
As of December 31, 2009 and 2008, we had outstanding
letters of credit totaling $9.7 million and
$8.3 million, respectively.
Capitalized interest was $0.5 million in 2009 and
$1.9 million in 2008.
In October 2008, we entered into a
2-year
$30 million notional interest rate swap expiring in October
2010. Under this agreement we receive payments based on the
3-month
LIBOR and make payments based on a fixed rate of 3.2%. This swap
has not been designated as a hedge in accordance with generally
accepted accounting principles and changes in fair value are
recorded in
miscellaneous-net
with a corresponding adjustment to other long-term liabilities.
The fair value at December 31, 2009 and 2008 was
$0.8 million liability. For the year ended
December 31, 2009, no gain or loss on this derivative was
recorded in other income (expense) while $0.8 million loss
was recorded for the year ended December 31, 2008.
F-48
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Other liabilities consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Employee compensation and benefits
|
|
$
|
17,805
|
|
|
$
|
22,412
|
|
Liability for pension benefits
|
|
|
124,412
|
|
|
|
183,631
|
|
Liabilities for uncertain tax positions
|
|
|
25,490
|
|
|
|
19,840
|
|
Other
|
|
|
14,214
|
|
|
|
19,376
|
|
|
|
|
|
|
|
|
|
|
Other liabilities (less current portion)
|
|
$
|
181,921
|
|
|
$
|
245,259
|
|
|
|
|
|
|
|
|
|
|
|
|
13.
|
Fair
Value Measurement
|
Fair value is determined as the price that would be received to
sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
The fair value hierarchy which prioritizes the inputs used in
measuring fair value, falls into three broad levels as follows:
|
|
|
|
|
Level 1 Quoted prices in active markets
for identical assets or liabilities.
|
|
|
|
Level 2 Inputs, other than quoted market
prices in active markets, that are observable either directly or
indirectly.
|
|
|
|
Level 3 Unobservable inputs based on our
own assumptions.
|
The following table sets forth our assets and liabilities that
are measured at fair value on a recurring basis at
December 31, 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
$
|
12,180
|
|
|
$
|
12,180
|
|
|
$
|
|
|
|
$
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap
|
|
$
|
844
|
|
|
$
|
|
|
|
$
|
844
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
(In thousands)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
$
|
21,130
|
|
|
$
|
21,130
|
|
|
$
|
|
|
|
$
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap
|
|
$
|
840
|
|
|
$
|
|
|
|
$
|
840
|
|
|
$
|
|
|
|
|
14.
|
Noncontrolling
Interests
|
Individuals and other entities own a 4% noncontrolling interest
in the capital stock of the subsidiary company that publishes
our Memphis newspaper and a 6% noncontrolling interest in the
capital stock of the subsidiary company that publishes our
Evansville newspaper. We are not required to redeem the
noncontrolling interests in these subsidiary companies.
Noncontrolling interest from discontinued operations included a
10% interest in Fine Living and a 30% interest in the Food
Network.
F-49
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
A summary of the components of net income (loss) attributable to
The E.W. Scripps Company shareholders is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Net income (loss) attributable to The E.W. Scripps Company
shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations, net of tax
|
|
$
|
(192,013
|
)
|
|
$
|
(551,341
|
)
|
|
$
|
71,486
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
(17,592
|
)
|
|
|
74,751
|
|
|
|
(73,107
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(209,605
|
)
|
|
$
|
(476,590
|
)
|
|
$
|
(1,621
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.
|
Supplemental
Cash Flow Information
|
The following table presents additional information about the
change in certain working capital accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Other changes in certain working capital accounts, net
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
37,218
|
|
|
$
|
28,095
|
|
|
$
|
5,346
|
|
Inventories
|
|
|
5,286
|
|
|
|
(3,506
|
)
|
|
|
411
|
|
Income taxes receivable
|
|
|
(54,849
|
)
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
(27,152
|
)
|
|
|
1,532
|
|
|
|
2,615
|
|
Accrued employee compensation and benefits
|
|
|
(6,894
|
)
|
|
|
(8,838
|
)
|
|
|
(167
|
)
|
Accrued interest
|
|
|
|
|
|
|
(5,715
|
)
|
|
|
(5,093
|
)
|
Other accrued liabilities
|
|
|
7,113
|
|
|
|
(26,125
|
)
|
|
|
(8,700
|
)
|
Other, net
|
|
|
10,867
|
|
|
|
7,757
|
|
|
|
(8,876
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(28,411
|
)
|
|
$
|
(6,800
|
)
|
|
$
|
(14,464
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information regarding supplemental cash flow disclosures is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Supplemental Cash Flow Disclosures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid, excluding amounts capitalized
|
|
$
|
2,802
|
|
|
$
|
18,319
|
|
|
$
|
39,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid continuing operations
|
|
$
|
2,620
|
|
|
$
|
102,393
|
|
|
$
|
164,393
|
|
Income taxes paid (refunds received) discontinued operations
|
|
|
|
|
|
|
(1,978
|
)
|
|
|
15,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income taxes paid
|
|
$
|
2,620
|
|
|
$
|
100,415
|
|
|
$
|
180,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.
|
Employee
Benefit Plans
|
We sponsor defined benefit pension plans that cover
substantially all non-union and certain union-represented
employees. Benefits earned by employees are generally based upon
employee compensation and years of service credits.
We also have a non-qualified Supplemental Executive Retirement
Plan (SERP). The SERP, which is unfunded, provides
defined pension benefits in addition to the defined benefit
pension plan to eligible participants based on average earnings,
years of service and age at retirement.
F-50
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Effective June 30, 2009, we froze the accrual of service
credits under certain of our defined benefit pension plans that
cover a majority of our employees, including our SERP. The
freeze resulted in the recognition of a curtailment loss of
$4.2 million in the first quarter of 2009 and a gain of
$1.1 million in the second quarter of 2009. We also
recognized a curtailment loss of $0.9 million in 2009
related to the closure of our Denver newspaper.
We sponsor a defined contribution plan covering substantially
all non-union and certain union employees. We historically
matched a portion of employees voluntary contributions to
this plan. We suspended our matching contributions in the second
quarter of 2009.
Other union-represented employees are covered by defined benefit
pension plans jointly sponsored by us and the union, or by
union-sponsored multi-employer plans.
We use a December 31 measurement date for our retirement plans.
Retirement plans expense is based on valuations as of the
beginning of each fiscal year. The components of the expense
consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Service cost
|
|
$
|
5,597
|
|
|
$
|
20,518
|
|
|
$
|
18,633
|
|
Interest cost
|
|
|
26,631
|
|
|
|
30,777
|
|
|
|
26,792
|
|
Expected return on plan assets, net of expenses
|
|
|
(20,432
|
)
|
|
|
(36,748
|
)
|
|
|
(35,355
|
)
|
Amortization of prior service cost
|
|
|
378
|
|
|
|
882
|
|
|
|
585
|
|
Amortization of actuarial (gain)/loss
|
|
|
8,692
|
|
|
|
1,765
|
|
|
|
470
|
|
Curtailment/Settlement losses
|
|
|
6,591
|
|
|
|
131
|
|
|
|
|
|
Special termination benefits
|
|
|
|
|
|
|
|
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total for defined benefit plans
|
|
|
27,457
|
|
|
|
17,325
|
|
|
|
11,169
|
|
Multi-employer plans
|
|
|
1,226
|
|
|
|
675
|
|
|
|
1,263
|
|
SERP
|
|
|
1,626
|
|
|
|
8,955
|
|
|
|
6,815
|
|
Defined contribution plans
|
|
|
1,317
|
|
|
|
7,386
|
|
|
|
8,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
|
31,626
|
|
|
|
34,341
|
|
|
|
27,617
|
|
Allocated to discontinued operations
|
|
|
(3,039
|
)
|
|
|
(7,889
|
)
|
|
|
(8,970
|
)
|
SNI employee participation, post-spin
|
|
|
|
|
|
|
(5,936
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost continuing operations
|
|
$
|
28,587
|
|
|
$
|
20,516
|
|
|
$
|
18,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pursuant to the Employees Matters Agreement, employees of SNI
continued to participate in our pension plans for the period
July 1, 2008 (spin-off) until December 31, 2008.
Pension expense for SNI for the first half of 2008 and all of
2007 is included in discontinued operations.
F-51
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Other changes in plan assets and benefit obligations recognized
in other comprehensive income (loss) were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Current year actuarial gain/(loss)
|
|
$
|
38,432
|
|
|
|
(151,414
|
)
|
|
|
(9,240
|
)
|
Curtailment effects
|
|
|
|
|
|
|
1,011
|
|
|
|
289
|
|
Amortization of actuarial (gain)/loss
|
|
|
20,305
|
|
|
|
(1,765
|
)
|
|
|
470
|
|
Current year prior service (credit)/cost
|
|
|
|
|
|
|
2,023
|
|
|
|
(510
|
)
|
Amortization of prior service (credit)/cost
|
|
|
4,597
|
|
|
|
(882
|
)
|
|
|
585
|
|
Acquisitions
|
|
|
(1,054
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
62,280
|
|
|
$
|
(151,027
|
)
|
|
|
(8,406
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In addition to the amounts summarized above, amortization on
actuarial losses of $0.5 million and $2.8 million were
recorded through other comprehensive income in 2009 and 2008 and
$1.2 and $0.3 million of estimated prior service credits
were recorded through other comprehensive income in 2009 and
2008, respectively, related to our SERP plan. A current year
actuarial gain of $3.2 and $7.8 million was recognized in
2009 and 2008, respectively, related to our SERP plan.
Assumptions used in determining the annual retirement plans
expense were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
2007
|
|
Used to determine annual expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
*6.25 and 7.00
|
%
|
|
|
6.25
|
%
|
|
|
6.00
|
%
|
Long-term rate of return on plan assets
|
|
|
7.50
|
%
|
|
|
7.50
|
%
|
|
|
8.25
|
%
|
Increase in compensation levels
|
|
|
3.34
|
%
|
|
|
4.80
|
%
|
|
|
5.00
|
%
|
|
|
|
(*) |
|
The discount rate was 6.25% for the period January 1 to
May 15. When we remeasured our plan liabilities due to the
freeze, the discount rate was increased to 7.0%. |
The discount rate used to determine our future pension
obligations is based on a dedicated bond portfolio approach that
includes securities rated Aa or better with maturities matching
our expected benefit payments from the plans. The increase in
compensation levels assumption is based on actual past
experience and the near-term outlook.
The expected long-term rate of return on plan assets is based
upon the weighted-average expected rate of return and capital
market forecasts for each asset class employed. Our expected
rate of return on plan assets also considers our historical
compounded return on plan assets for 10 and 15 year periods.
F-52
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Obligations and Funded Status Defined benefit
plans pension obligations and funded status is actuarially
valued as of the end of each fiscal year. The following table
presents information about our employee benefit plan assets and
obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
Defined Benefit Plans
|
|
|
SERP
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Accumulated benefit obligation
|
|
$
|
424,026
|
|
|
$
|
412,414
|
|
|
$
|
17,957
|
|
|
$
|
21,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in projected benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation at beginning of year
|
|
$
|
453,643
|
|
|
$
|
472,686
|
|
|
$
|
24,369
|
|
|
$
|
50,972
|
|
Service cost
|
|
|
5,597
|
|
|
|
20,518
|
|
|
|
202
|
|
|
|
3,016
|
|
Interest cost
|
|
|
26,631
|
|
|
|
30,777
|
|
|
|
1,278
|
|
|
|
3,420
|
|
Benefits paid
|
|
|
(23,813
|
)
|
|
|
(20,605
|
)
|
|
|
(2,206
|
)
|
|
|
(2,380
|
)
|
Actuarial losses (gains)
|
|
|
(14,939
|
)
|
|
|
(2,012
|
)
|
|
|
(2,441
|
)
|
|
|
(7,762
|
)
|
Plan amendments
|
|
|
|
|
|
|
2,023
|
|
|
|
|
|
|
|
|
|
Acquisitions/Divestitures
|
|
|
2,010
|
|
|
|
(48,744
|
)
|
|
|
|
|
|
|
(22,897
|
)
|
Curtailments/Settlements
|
|
|
(13,393
|
)
|
|
|
(1,000
|
)
|
|
|
(3,245
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation at end of year
|
|
|
435,736
|
|
|
|
453,643
|
|
|
|
17,957
|
|
|
|
24,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value at beginning of year
|
|
|
292,137
|
|
|
|
453,498
|
|
|
|
|
|
|
|
|
|
Actual return on plan assets
|
|
|
42,258
|
|
|
|
(116,679
|
)
|
|
|
|
|
|
|
|
|
Company contributions
|
|
|
20,294
|
|
|
|
263
|
|
|
|
6,367
|
|
|
|
2,380
|
|
Benefits paid
|
|
|
(23,813
|
)
|
|
|
(20,605
|
)
|
|
|
(2,206
|
)
|
|
|
(2,380
|
)
|
Settlements
|
|
|
(4,152
|
)
|
|
|
|
|
|
|
(4,161
|
)
|
|
|
|
|
Acquisitions/Divestitures
|
|
|
157
|
|
|
|
(24,340
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value at end of year
|
|
|
326,881
|
|
|
|
292,137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(108,855
|
)
|
|
$
|
(161,506
|
)
|
|
$
|
(17,957
|
)
|
|
$
|
(24,369
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts recognized in Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(2,400
|
)
|
|
$
|
(2,259
|
)
|
Noncurrent liabilities
|
|
|
(108,855
|
)
|
|
|
(161,506
|
)
|
|
|
(15,557
|
)
|
|
|
(22,110
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(108,855
|
)
|
|
$
|
(161,506
|
)
|
|
$
|
(17,957
|
)
|
|
$
|
(24,369
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts recognized in accumulated other comprehensive loss
consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized net actuarial loss
|
|
$
|
138,501
|
|
|
$
|
196,183
|
|
|
$
|
7,972
|
|
|
$
|
11,657
|
|
Unrecognized prior service cost (credit)
|
|
|
78
|
|
|
|
4,675
|
|
|
|
|
|
|
|
(1,243
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
138,579
|
|
|
$
|
200,858
|
|
|
$
|
7,972
|
|
|
$
|
10,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For our defined benefit pension plans, we expect to recognize
amortization from accumulated other comprehensive loss into net
periodic benefit costs of $4.2 million for the net
actuarial loss during 2010. The estimated actuarial loss for our
non-qualified SERP plan that will be amortized from accumulated
other comprehensive income into net period benefit costs during
2010 is $0.2 million.
F-53
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Information for pension plans with an accumulated benefit
obligation in excess of plan assets was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
Defined Benefit Plans
|
|
SERP
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
(In thousands)
|
|
Accumulated benefit obligation
|
|
$
|
424,026
|
|
|
$
|
393,968
|
|
|
$
|
17,957
|
|
|
$
|
21,825
|
|
Projected benefit obligation
|
|
|
435,736
|
|
|
|
435,072
|
|
|
|
17,957
|
|
|
|
24,369
|
|
Fair value of plan assets
|
|
|
326,881
|
|
|
|
273,550
|
|
|
|
|
|
|
|
|
|
Information for pension plans with a projected benefit
obligation in excess of plan assets was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
Defined Benefit Plans
|
|
SERP
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
(In thousands)
|
|
Projected benefit obligation
|
|
$
|
435,736
|
|
|
$
|
435,072
|
|
|
$
|
17,957
|
|
|
$
|
24,369
|
|
Fair value of plan assets
|
|
|
326,881
|
|
|
|
273,550
|
|
|
|
|
|
|
|
|
|
Assumptions used to determine the defined benefit plans benefit
obligations were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
2007
|
|
Weighted average discount rate
|
|
5.97%
|
|
|
6.25
|
%
|
|
|
6.25
|
%
|
Increase in compensation levels
|
|
0% for 2010
and 3.3%
thereafter
|
|
|
3.40
|
%
|
|
|
4.80
|
%
|
We expect to contribute $2.1 million to the plans in 2010
for SERP benefits. The minimum funding requirements for our
qualified defined benefit pension plans require us to make
contributions of $4.2 million in 2010 and we may make
voluntary contributions estimated at $20 million, or
possibly more.
Estimated future benefit payments expected to be paid for the
next ten years are $20.7 million in 2010, $21 million
in 2011, $21.7 million in 2012, $22.7 million in 2013,
$24 million in 2014 and a total of $139 million for
the five years ending 2019.
Plan
Assets and Investment Strategy
Our long-term investment strategy for pension assets is to earn
a rate of return over time that minimizes future contributions
to the plan while reducing the volatility of pension assets
relative to pension liabilities. The strategy reflects the fact
that we have frozen the accrual of service credits for certain
of our defined benefit plans covering the majority of employees.
Asset allocation target ranges for equity, fixed income and
other investments are evaluated annually with the assistance of
an independent investment consulting firm. Actual asset
allocations are monitored monthly and adjusted as necessary.
Risk is controlled through diversification among multiple asset
classes, managers and styles. Risk is further monitored both at
the manager and asset class level by evaluating performance
against appropriate benchmarks.
F-54
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Information related to our pension plan asset allocations by
asset category were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Plan
|
|
|
|
Target
|
|
|
Assets as of
|
|
|
|
Allocation
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
US equity securities
|
|
|
22
|
%
|
|
|
31
|
%
|
|
|
50
|
%
|
Non-US equity securities
|
|
|
18
|
|
|
|
18
|
|
|
|
12
|
|
Fixed-income securities
|
|
|
55
|
|
|
|
46
|
|
|
|
38
|
|
Other
|
|
|
5
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. equity securities include common stocks of large,
medium, and small capitalization companies, which are
predominantly U.S. based.
Non-U.S. equity
securities include companies domiciled outside the U.S. and
American depository receipts. Fixed-income securities include
securities issued or guaranteed by the U.S. government,
mortgage backed securities and corporate debt obligations. Other
investments include hedge funds and real estate.
The company initiated the process of transitioning the defined
benefit plan assets from a more traditional 65/35%
equity/fixed income allocation to a liability-driven
investing (LDI) approach. The rationale for this
change is to better align the returns and duration of plan
assets with the duration and behavior of plan liabilities. This
approach will ultimately reduce volatility in the funded status
of the plan. Volatility in the funded status is caused by
differences in the discount rate used to value plan liabilities
and returns on plan assets. We intend to institute this change
gradually based upon the funding level of plan assets relative
to ERISAs Funding Target (Funding Target Attainment
Percentage). At the end of the process, approximately 75%
of plan assets will be invested in long duration fixed income
products and 25% in return-seeking assets.
The following table presents our plan assets using the fair
value hierarchy as of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
(In thousands)
|
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common/collective trust funds
|
|
$
|
150,154
|
|
|
$
|
|
|
|
$
|
150,154
|
|
|
$
|
|
|
Other
|
|
|
11,402
|
|
|
|
11,402
|
|
|
|
|
|
|
|
|
|
Fixed income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common/collective trust funds
|
|
|
146,167
|
|
|
|
|
|
|
|
146,167
|
|
|
|
|
|
Other
|
|
|
7,511
|
|
|
|
7,511
|
|
|
|
|
|
|
|
|
|
Hedge fund
|
|
|
2,024
|
|
|
|
|
|
|
|
|
|
|
|
2,024
|
|
Real estate
|
|
|
8,315
|
|
|
|
|
|
|
|
|
|
|
|
8,315
|
|
Cash equivalents
|
|
|
1,308
|
|
|
|
1,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets
|
|
$
|
326,881
|
|
|
$
|
20,221
|
|
|
$
|
296,321
|
|
|
$
|
10,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities-common/collective trust funds and fixed
income-common/collective trust funds are comprised of shares or
units in commingled funds that are not publically traded. The
underlying assets in these funds (equity securities and fixed
income securities) are publically traded on exchanges and price
quotes for the assets held by these funds are readily available.
Real estate pertains to an investment in a real estate fund
which invests in limited partnerships, limited liability
corporations, real estate investment trusts, other funds and
insurance company group annuity contracts.
F-55
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The valuations for these holdings are based on property
appraisals using cash flow analysis and market transactions.
The hedge fund is a fund of funds which are comprised of
multiple, non-directional hedge funds. The investments in other
funds are valued at fair value, generally at an amount equal to
the net asset value of the Funds investment in the other
fund as determined by the underlying funds general partner
or manager.
The following table presents a reconciliation of Level 3
assets held during 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge
|
|
|
Real
|
|
|
|
|
|
|
Fund
|
|
|
Estate
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Beginning balance January 1, 2009
|
|
$
|
6,109
|
|
|
$
|
15,302
|
|
|
$
|
21,411
|
|
Realized gains/(losses)
|
|
|
(1,115
|
)
|
|
|
434
|
|
|
|
(681
|
)
|
Unrealized gains/(losses)
|
|
|
67
|
|
|
|
(4,543
|
)
|
|
|
(4,476
|
)
|
Sales
|
|
|
(3,037
|
)
|
|
|
(2,878
|
)
|
|
|
(5,915
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance December 31, 2009
|
|
$
|
2,024
|
|
|
$
|
8,315
|
|
|
$
|
10,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We determine our business segments based upon our management and
internal reporting structure. Our reportable segments are
strategic businesses that offer different products and services.
Our newspaper business segment includes daily and community
newspapers in 13 markets in the U.S. Newspapers earn
revenue primarily from the sale of advertising space to local
and national advertisers and from the sale of newspapers to
readers.
Prior to ceasing publication, our Albuquerque newspaper operated
pursuant to the terms of a joint operating agreement. The
newspaper maintained an independent editorial operation and
received a share of the operating profits of the combined
newspaper operations. We continue to maintain our ownership
interest in the Albuquerque partnership; however, we do not
include the equity earnings of the partnership in segment profit
after publication of the newspaper ceased in 2008.
Television includes six ABC-affiliated stations, three
NBC-affiliated stations and one independent station. Our
television stations reach approximately 10% of the nations
television households. Television stations earn revenue
primarily from the sale of advertising time to local and
national advertisers.
Licensing and other media primarily include licensing of
worldwide copyrights relating to Peanuts,
Dilbert and other properties for use on numerous
products, including plush toys, greeting cards and apparel, for
promotional purposes and for exhibit on television and other
media syndication of news features and comics and other features
for the newspaper industry.
We allocate a portion of certain corporate costs and expenses,
including information technology, pensions and other employee
benefits, and other shared services, to our business segments.
The allocations are generally amounts agreed upon by management,
which may differ from an arms-length amount. Corporate assets
are primarily cash, cash equivalents and other short-term
investments, property and equipment primarily used for corporate
purposes, and deferred income taxes.
Our chief operating decision maker evaluates the operating
performance of our business segments and makes decisions about
the allocation of resources to our business segments using a
measure called segment profit. Segment profit excludes interest,
income taxes, depreciation and amortization, divested operating
units, restructuring activities (including our proportionate
share of JOA restructuring activities), investment results and
certain other items that are included in net income (loss)
determined in accordance with accounting principles generally
accepted in the United States of America.
F-56
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Information regarding our business segments is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Segment operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Newspapers
|
|
$
|
455,166
|
|
|
$
|
568,667
|
|
|
$
|
658,327
|
|
JOA and newspaper partnerships
|
|
|
|
|
|
|
4
|
|
|
|
99
|
|
Television
|
|
|
255,220
|
|
|
|
326,860
|
|
|
|
325,841
|
|
Licensing and other
|
|
|
91,974
|
|
|
|
102,538
|
|
|
|
93,633
|
|
Corporate and shared services
|
|
|
|
|
|
|
3,594
|
|
|
|
1,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
$
|
802,360
|
|
|
$
|
1,001,663
|
|
|
$
|
1,079,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Newspapers
|
|
$
|
49,249
|
|
|
$
|
71,475
|
|
|
$
|
135,870
|
|
JOA and newspaper partnerships
|
|
|
(211
|
)
|
|
|
(707
|
)
|
|
|
3,419
|
|
Television
|
|
|
20,168
|
|
|
|
80,589
|
|
|
|
83,860
|
|
Licensing and other
|
|
|
11,225
|
|
|
|
10,437
|
|
|
|
8,982
|
|
Corporate and shared services
|
|
|
(27,313
|
)
|
|
|
(42,207
|
)
|
|
|
(59,479
|
)
|
Depreciation and amortization of intangibles
|
|
|
(45,172
|
)
|
|
|
(46,901
|
)
|
|
|
(44,631
|
)
|
Impairment of goodwill, indefinite and long-lived assets
|
|
|
(216,413
|
)
|
|
|
(809,936
|
)
|
|
|
|
|
Equity earnings in newspaper partnership
|
|
|
1,958
|
|
|
|
4,143
|
|
|
|
|
|
Gains (losses), net on disposal of property, plant and equipment
|
|
|
444
|
|
|
|
5,809
|
|
|
|
27
|
|
Interest expense
|
|
|
(2,554
|
)
|
|
|
(10,740
|
)
|
|
|
(35,730
|
)
|
Separation and restructuring costs
|
|
|
(9,935
|
)
|
|
|
(33,506
|
)
|
|
|
(257
|
)
|
Write-down of investment in newspaper partnership
|
|
|
|
|
|
|
(20,876
|
)
|
|
|
|
|
Losses on repurchases of debt
|
|
|
|
|
|
|
(26,380
|
)
|
|
|
|
|
Miscellaneous, net
|
|
|
(673
|
)
|
|
|
6,731
|
|
|
|
15,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
$
|
(219,227
|
)
|
|
$
|
(812,069
|
)
|
|
$
|
107,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Newspapers
|
|
$
|
23,365
|
|
|
$
|
21,905
|
|
|
$
|
22,273
|
|
JOA and newspaper partnerships
|
|
|
|
|
|
|
1,219
|
|
|
|
1,246
|
|
Television
|
|
|
17,837
|
|
|
|
19,057
|
|
|
|
16,939
|
|
Licensing and other
|
|
|
1,404
|
|
|
|
787
|
|
|
|
475
|
|
Corporate and shared services
|
|
|
736
|
|
|
|
713
|
|
|
|
608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total depreciation
|
|
$
|
43,342
|
|
|
$
|
43,681
|
|
|
$
|
41,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
|
Newspapers
|
|
$
|
1,495
|
|
|
$
|
2,088
|
|
|
$
|
1,961
|
|
Television
|
|
|
335
|
|
|
|
1,132
|
|
|
|
1,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amortization of intangibles
|
|
$
|
1,830
|
|
|
$
|
3,220
|
|
|
$
|
3,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-57
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Additions to property, plant and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Newspapers
|
|
$
|
34,254
|
|
|
$
|
59,075
|
|
|
$
|
27,609
|
|
JOA and newspaper partnerships
|
|
|
26
|
|
|
|
75
|
|
|
|
372
|
|
Television
|
|
|
6,844
|
|
|
|
27,841
|
|
|
|
19,147
|
|
Licensing and other
|
|
|
547
|
|
|
|
2,016
|
|
|
|
5,284
|
|
Corporate and shared services
|
|
|
485
|
|
|
|
1,506
|
|
|
|
5,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total additions to property, plant and equipment
|
|
$
|
42,156
|
|
|
$
|
90,513
|
|
|
$
|
57,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business acquisitions and other additions to long-lived assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Newspapers
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,995
|
|
JOA and newspaper partnerships
|
|
|
|
|
|
|
|
|
|
|
228
|
|
Corporate and shared services
|
|
|
|
|
|
|
|
|
|
|
1,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Newspapers
|
|
$
|
350,865
|
|
|
$
|
349,813
|
|
|
$
|
1,110,646
|
|
JOA and newspaper partnerships
|
|
|
4,447
|
|
|
|
14,483
|
|
|
|
38,913
|
|
Television
|
|
|
210,949
|
|
|
|
442,796
|
|
|
|
483,902
|
|
Licensing and other
|
|
|
37,283
|
|
|
|
36,015
|
|
|
|
33,120
|
|
Investments
|
|
|
10,330
|
|
|
|
8,570
|
|
|
|
44,227
|
|
Corporate and shared services
|
|
|
172,474
|
|
|
|
205,027
|
|
|
|
162,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets of continuing operations
|
|
|
786,348
|
|
|
|
1,056,704
|
|
|
|
1,873,627
|
|
Discontinued operations
|
|
|
|
|
|
|
32,272
|
|
|
|
2,131,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
786,348
|
|
|
$
|
1,088,976
|
|
|
$
|
4,005,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No single customer provides more than 10% of our revenue. We
earn international revenues from the licensing of comic
characters.
Other additions to long-lived assets include investments and
capitalized intangible assets.
F-58
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Comprehensive loss consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Net loss
|
|
$
|
(209,605
|
)
|
|
$
|
(476,590
|
)
|
|
$
|
(1,621
|
)
|
Unrealized gains (losses) on investments, net of tax of $79 and
$3,519
|
|
|
|
|
|
|
(682
|
)
|
|
|
(6,218
|
)
|
Adjustment for losses (gains) in income on investments, net of
tax of $1,968 and $19
|
|
|
|
|
|
|
(3,655
|
)
|
|
|
(35
|
)
|
Changes in defined pension plans, net of tax of $23,942, $58,808
and $2,662
|
|
|
39,633
|
|
|
|
(90,739
|
)
|
|
|
(7,188
|
)
|
Equity in investees adjustment for pension, net of tax of
$743 and $2,641
|
|
|
1,324
|
|
|
|
|
|
|
|
4,378
|
|
Currency translation adjustment, net of tax of $0, $307 and
$1,185
|
|
|
(48
|
)
|
|
|
195
|
|
|
|
8,399
|
|
Other, net of tax of $142
|
|
|
(249
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
$
|
(168,945
|
)
|
|
$
|
(571,471
|
)
|
|
$
|
(2,285
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no material items of other comprehensive loss for the
noncontrolling interest.
|
|
19.
|
Commitments
and Contingencies
|
We are involved in litigation arising in the ordinary course of
business, none of which is expected to result in material loss.
Minimum payments on noncancelable leases at December 31,
2009, were: 2010, $5.5 million; 2011, $4.7 million;
2012, $4.4 million; 2013, $4.0 million; 2014,
$3.5 million; and later years, $6.9 million. We expect
our operating leases will be replaced with leases for similar
facilities upon their expiration. Rental expense for cancelable
and noncancelable leases was $12.8 million in 2009,
$14.3 million in 2008 and $14.2 million in 2007.
In the ordinary course of business, we enter into long-term
contracts to obtain employment agreements or to obtain other
services. Liabilities for such commitments are recorded when the
related services are rendered. Minimum payments on such
contractual commitments at December 31, 2009, were: 2010,
$35 million; 2011, $17.2 million; 2012,
$8.5 million; 2013, $4.6 million; 2014,
$2.4 million; and later years, $16.4 million. We
expect these contracts will be replaced with similar contracts
upon their expiration.
|
|
20.
|
Capital
Stock and Share Based Compensation Plans
|
Capital Stock We have two classes of common
shares, Common Voting Shares and Class A Common shares. The
Class A Common shares are only entitled to vote on the
election of the greater of three or one-third of the directors
and other matter as required by Ohio law.
Incentive Plans Scripps Long-Term
Incentive Plan (the Plan) provides for the award of
incentive and nonqualified stock options, stock appreciation
rights, restricted and unrestricted Class A Common shares
and performance units to key employees and non-employee
directors. The Plan expires in 2014, except for options then
outstanding.
We satisfy stock option exercises and vested stock awards with
newly issued shares. As of December 31, 2009,
0.9 million shares were available for future stock
compensation grants.
F-59
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Stock Options Stock options grant the
recipient the right to purchase Class A Common shares at
not less than 100% of the fair market value on the date the
option is granted. Stock options granted to employees generally
vest over a three-year period, conditioned upon the
individuals continued employment through that period.
Awards vest immediately upon the retirement, death or disability
of the employee or upon a change in control of Scripps or in the
business in which the individual is employed. Unvested awards
are forfeited if employment is terminated for other reasons.
Options granted to employees prior to 2005 generally expire ten
years after grant, while options granted in 2005 and later
generally have eight-year terms. Stock options granted to
non-employee directors generally vest over a one-year period and
have a ten-year term.
Compensation costs of stock options are estimated on the date of
grant using a binomial lattice model. The weighted-average
assumptions used in the model are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
2009
|
|
2008
|
|
2007
|
|
Weighted-average fair value of stock options granted
|
|
|
N/A
|
|
|
$
|
27.54
|
|
|
$
|
37.74
|
|
Assumptions used to determine fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend yield
|
|
|
N/A
|
|
|
|
1.3
|
%
|
|
|
1.0
|
%
|
Risk-free rate of return
|
|
|
N/A
|
|
|
|
3.1
|
%
|
|
|
4.7
|
%
|
Expected life of options (years)
|
|
|
N/A
|
|
|
|
6.00
|
|
|
|
5.35
|
|
Expected volatility
|
|
|
N/A
|
|
|
|
19.3
|
%
|
|
|
20.6
|
%
|
Dividend yield considers our historical dividend yield paid and
expected dividend yield over the life of the options. The
risk-free rate is based on the U.S. Treasury yield curve in
effect at the time of grant. Expected life is an output of the
valuation model, and primarily considers historical exercise
patterns. Unexercised options for grants included in the
historical period are assumed to be exercised at the midpoint of
the current date and the full contractual term. Expected
volatility is based on a combination of historical stock price
volatility for a longer period and the implied volatility of
exchange-traded options on our Class A Common shares.
Effective as of the spin-off, each Company share option,
restricted share and restricted share unit held by individuals
who became employees of SNI was converted to a comparable award
covering SNI Class A common shares. The number of shares
covered by each award and the exercise price of each stock
option were adjusted to maintain the awards economic
value. All other terms of the awards, including the terms and
conditions relating to vesting, the post-termination exercise
period, and the applicable exercise and tax withholding methods,
remained the same. All Company stock options and restricted
shares held by individuals who remained employed by the Company
were adjusted as follows: (i) vested stock options were
split 80% 20% between SNI stock options and Company
stock options, (ii) unvested stock options remained
unvested Company stock options, and (iii) restricted shares
were split between Company restricted shares and SNI restricted
shares based on the 1-to-1 distribution ratio. In each case, the
number of shares covered by each award and the exercise price of
each stock option were adjusted to maintain the awards
economic value. All other terms of the awards, including the
terms and conditions relating to vesting, the post-termination
exercise period, and the applicable exercise and tax withholding
methods, remained the same.
F-60
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table summarizes information about stock option
transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Range of
|
|
|
|
Number
|
|
|
Average
|
|
|
Exercise
|
|
|
|
of Shares
|
|
|
Exercise Price
|
|
|
Prices
|
|
|
Outstanding at December 31, 2006
|
|
|
4,149,354
|
|
|
$
|
120.51
|
|
|
$
|
51 - 162
|
|
Granted in 2007
|
|
|
535,702
|
|
|
|
144.81
|
|
|
|
123 - 147
|
|
Exercised in 2007
|
|
|
(182,696
|
)
|
|
|
87.96
|
|
|
|
39 - 147
|
|
Forfeited in 2007
|
|
|
(93,175
|
)
|
|
|
134.91
|
|
|
|
39 - 156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2007
|
|
|
4,409,185
|
|
|
|
124.50
|
|
|
|
60 - 162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at December 31, 2007
|
|
|
3,356,829
|
|
|
$
|
118.32
|
|
|
$
|
60 - 162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2007
|
|
|
4,409,185
|
|
|
$
|
124.50
|
|
|
$
|
60 - 162
|
|
Granted in 2008
|
|
|
970,100
|
|
|
|
23.85
|
|
|
|
7 - 139
|
|
Exercised in 2008
|
|
|
(485,978
|
)
|
|
|
34.81
|
|
|
|
6 - 146
|
|
Forfeited in 2008
|
|
|
(197,399
|
)
|
|
|
45.84
|
|
|
|
9 - 154
|
|
Impact of spin-off of SNI
|
|
|
7,952,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2008
|
|
|
12,648,278
|
|
|
|
9.20
|
|
|
$
|
5 - 11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at December 31, 2008
|
|
|
5,797,660
|
|
|
$
|
8.79
|
|
|
$
|
5 - 11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2008
|
|
|
12,648,278
|
|
|
$
|
9.20
|
|
|
$
|
5 - 11
|
|
Exercised in 2009
|
|
|
(554,028
|
)
|
|
|
5.63
|
|
|
|
6 - 8
|
|
Forfeited in 2009
|
|
|
(377,269
|
)
|
|
|
8.43
|
|
|
|
5 - 11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2009
|
|
|
11,716,981
|
|
|
|
9.39
|
|
|
$
|
5 - 11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at December 31, 2009
|
|
|
9,126,716
|
|
|
$
|
9.36
|
|
|
$
|
5 - 11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents additional information about
exercises of stock options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
2009
|
|
2008
|
|
2007
|
|
|
(In thousands)
|
|
Cash received upon exercise
|
|
$
|
3,114
|
|
|
$
|
15,097
|
|
|
$
|
15,903
|
|
Intrinsic value (market value on date of exercise less exercise
price)
|
|
|
872
|
|
|
|
9,851
|
|
|
|
10,295
|
|
Tax benefits realized
|
|
|
327
|
|
|
|
3,694
|
|
|
|
3,861
|
|
F-61
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Information about options outstanding and options exercisable by
year of grant is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
|
Options Exercisable
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
Weighted
|
|
|
Aggregate
|
|
|
|
|
|
Weighted
|
|
|
Aggregate
|
|
|
|
Range of
|
|
|
Remaining
|
|
|
Options
|
|
|
Average
|
|
|
Intrinsic
|
|
|
Options
|
|
|
Average
|
|
|
Intrinsic
|
|
|
|
Exercise
|
|
|
Term
|
|
|
on Shares
|
|
|
Exercise
|
|
|
Value
|
|
|
on Shares
|
|
|
Exercise
|
|
|
Value
|
|
Year of Grant
|
|
Prices
|
|
|
(In years)
|
|
|
Outstanding
|
|
|
Price
|
|
|
(In millions)
|
|
|
Exercisable
|
|
|
Price
|
|
|
(In millions)
|
|
|
|
(Dollars in millions, except per share amounts)
|
|
|
2000 - expire in 2010
|
|
|
5 - 6
|
|
|
|
0.30
|
|
|
|
80,267
|
|
|
|
5.37
|
|
|
|
0.1
|
|
|
|
80,267
|
|
|
|
5.37
|
|
|
|
0.1
|
|
2001 - expire in 2011
|
|
|
6 - 7
|
|
|
|
1.11
|
|
|
|
497,704
|
|
|
|
6.87
|
|
|
|
|
|
|
|
497,704
|
|
|
|
6.87
|
|
|
|
|
|
2002 - expire in 2012
|
|
|
8
|
|
|
|
2.17
|
|
|
|
807,209
|
|
|
|
8.03
|
|
|
|
|
|
|
|
807,209
|
|
|
|
8.03
|
|
|
|
|
|
2003 - expire in 2013
|
|
|
8 - 10
|
|
|
|
3.19
|
|
|
|
799,796
|
|
|
|
8.55
|
|
|
|
|
|
|
|
799,796
|
|
|
|
8.55
|
|
|
|
|
|
2004 - expire in 2014
|
|
|
10 - 11
|
|
|
|
4.21
|
|
|
|
943,353
|
|
|
|
10.49
|
|
|
|
|
|
|
|
943,353
|
|
|
|
10.49
|
|
|
|
|
|
2005 - expire in 2013
|
|
|
10 - 11
|
|
|
|
3.16
|
|
|
|
840,305
|
|
|
|
9.99
|
|
|
|
|
|
|
|
840,305
|
|
|
|
9.99
|
|
|
|
|
|
2006 - expire in 2014
|
|
|
10 - 11
|
|
|
|
4.19
|
|
|
|
1,841,576
|
|
|
|
10.31
|
|
|
|
|
|
|
|
1,841,576
|
|
|
|
10.31
|
|
|
|
|
|
2007 - expire in 2015
|
|
|
9 - 10
|
|
|
|
5.15
|
|
|
|
2,145,118
|
|
|
|
10.37
|
|
|
|
|
|
|
|
1,361,802
|
|
|
|
10.36
|
|
|
|
|
|
2008 - expire in 2016
|
|
|
7 - 10
|
|
|
|
6.21
|
|
|
|
3,761,653
|
|
|
|
8.86
|
|
|
|
0.1
|
|
|
|
1,954,704
|
|
|
|
8.65
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5 - 11
|
|
|
|
4.58
|
|
|
|
11,716,981
|
|
|
$
|
9.39
|
|
|
$
|
0.20
|
|
|
|
9,126,716
|
|
|
$
|
9.36
|
|
|
$
|
0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Awards of Class A
Common shares (restricted stock) generally require
no payment by the employee. Restricted stock awards generally
vest over a three-year period, conditioned upon the
individuals continued employment through that period. The
vesting of certain awards may be accelerated if certain
performance targets are met. Awards vest immediately upon the
retirement, death or disability of the employee or upon a change
in control of Scripps or in the business in which the individual
is employed. Unvested awards are forfeited if employment is
terminated for other reasons. Awards are nontransferable during
the vesting period, but the shares are entitled to all the
rights of an outstanding share. There are no post-vesting
restrictions on shares granted to employees and non-employee
directors.
At the election of the employee, restricted stock awards may be
converted to restricted stock units (RSU) prior to
vesting. RSUs are convertible into equal number of Class A
Common shares at a specified time or times or upon the
occurrence of a specified event, such as upon retirement, at the
election of the employee.
For certain senior executives long-term incentive compensation
includes performance share awards. Performance share awards
represent the right to receive a grant of restricted shares if
certain performance measures are met. Each award specifies a
target number of shares to be issued and the specific
performance criteria that must be met. The number of shares that
an employee receives may be less or more than the target number
of shares depending on the extent to which the specified
performance measures are met or exceeded.
F-62
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Information and activity for our restricted stock and RSUs
is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date Fair Value
|
|
|
|
Number
|
|
|
Weighted
|
|
|
Range of
|
|
|
|
of Shares
|
|
|
Average
|
|
|
Prices
|
|
|
Unvested shares at December 31, 2006
|
|
|
76,595
|
|
|
$
|
138.93
|
|
|
$
|
117 - 159
|
|
Shares issued for performance share awards
|
|
|
43,139
|
|
|
|
143.25
|
|
|
|
135-147
|
|
Shares awarded in 2007
|
|
|
7,017
|
|
|
|
130.02
|
|
|
|
123-135
|
|
Shares vested in 2007
|
|
|
(51,120
|
)
|
|
|
137.28
|
|
|
|
117 - 159
|
|
Shares forfeited in 2007
|
|
|
(267
|
)
|
|
|
142.11
|
|
|
|
132-144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested shares at December 31, 2007
|
|
|
75,364
|
|
|
$
|
141.72
|
|
|
$
|
123-153
|
|
Shares issued for performance share awards
|
|
|
39,500
|
|
|
|
146.46
|
|
|
|
146
|
|
Shares awarded in 2008
|
|
|
266,426
|
|
|
|
36.96
|
|
|
|
7-141
|
|
Shares vested in 2008
|
|
|
(46,701
|
)
|
|
|
143.06
|
|
|
|
134-154
|
|
Shares forfeited in 2008
|
|
|
(2,264
|
)
|
|
|
145.98
|
|
|
|
133-147
|
|
Impact of spin-off of SNI
|
|
|
(84,547
|
)
|
|
|
136.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested shares and units at December 31, 2008
|
|
|
247,778
|
|
|
$
|
31.31
|
|
|
$
|
7-147
|
|
Shares and units awarded in 2009
|
|
|
9,493,347
|
|
|
|
0.90
|
|
|
|
1-7
|
|
Shares and units vested in 2009
|
|
|
(299,210
|
)
|
|
|
13.63
|
|
|
|
1-147
|
|
Shares and units forfeited in 2009
|
|
|
(125,751
|
)
|
|
|
0.91
|
|
|
|
1-133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested shares and units at December 31, 2009
|
|
|
9,316,164
|
|
|
$
|
1.28
|
|
|
$
|
1-146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We issued 9.4 million restricted share units (RSUs) with an
aggregate fair value of $8.1 million in 2009. We recognize
the fair value of the awards as the employees rights to
the awards vest. In the first quarter of 2010, approximately
2.7 million of the RSUs will vest and the holders will
receive approximately 1.8 million shares, net of tax
withholdings. Employees are not restricted from selling shares
received upon the vesting of their RSUs.
The following table presents additional information about
restricted stock and restricted stock unit vesting:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
2009
|
|
2008
|
|
2007
|
|
|
(In thousands)
|
|
Fair value of shares and units vested
|
|
$
|
739
|
|
|
$
|
5,948
|
|
|
$
|
7,133
|
|
Tax benefits realized on shares and units vested
|
|
|
277
|
|
|
|
2,231
|
|
|
|
1,473
|
|
Stock Compensation Costs Because of the
distribution of SNI to our shareholders, employees holding
share-based equity awards received modified awards in either
Scripps, SNI or both companies based on whether the awards were
vested or unvested at the time of the spin-off of SNI and
whether the employee is an Scripps or SNI employee. The
adjustments to the outstanding share-based equity awards are
modifications and accordingly we compared the fair value of the
awards immediately prior to the modifications to the fair value
of the awards immediately after the modifications to measure the
incremental share-based compensation. In 2008, we recorded a
one-time compensation charge of $19.6 million for the
vested options, which is included in Separation Costs in the
Consolidated Statements of Operations.
F-63
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands, except per share data)
|
|
|
Share-based compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
$
|
3,886
|
|
|
$
|
12,059
|
|
|
$
|
19,190
|
|
Restricted stock and RSUs
|
|
|
5,062
|
|
|
|
6,748
|
|
|
|
6,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock compensation
|
|
|
8,948
|
|
|
|
18,807
|
|
|
|
25,961
|
|
Included in discontinued operations
|
|
|
(31
|
)
|
|
|
(3,026
|
)
|
|
|
(5,614
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in continuing operations
|
|
$
|
8,917
|
|
|
$
|
15,781
|
|
|
$
|
20,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation, net of tax
|
|
$
|
5,573
|
|
|
$
|
9,863
|
|
|
$
|
12,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2009, $2.2 million of total
unrecognized compensation cost related to stock options is
expected to be recognized over a weighted-average period of
1.0 years and $6.6 million of total unrecognized
compensation cost related to restricted stock, RSUs and
performance shares is expected to be recognized over a
weighted-average period of 2.0 years.
F-64
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
21.
|
Summarized
Quarterly Financial Information (Unaudited)
|
Summarized financial information is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st
|
|
|
2nd
|
|
|
3rd
|
|
|
4th
|
|
|
|
|
2009
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Total
|
|
|
|
(In thousands, except per share data)
|
|
|
Operating revenues
|
|
$
|
205,349
|
|
|
$
|
193,177
|
|
|
$
|
186,401
|
|
|
$
|
217,433
|
|
|
$
|
802,360
|
|
Costs and expenses
|
|
|
(210,940
|
)
|
|
|
(178,670
|
)
|
|
|
(178,579
|
)
|
|
|
(190,775
|
)
|
|
|
(758,964
|
)
|
Depreciation and amortization of intangibles
|
|
|
(11,745
|
)
|
|
|
(10,763
|
)
|
|
|
(10,907
|
)
|
|
|
(11,757
|
)
|
|
|
(45,172
|
)
|
Impairment of goodwill and indefinite-lived assets
|
|
|
(216,413
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(216,413
|
)
|
Gains (losses), net on disposal of property, plant and equipment
|
|
|
(53
|
)
|
|
|
(304
|
)
|
|
|
130
|
|
|
|
671
|
|
|
|
444
|
|
Interest expense
|
|
|
(92
|
)
|
|
|
(317
|
)
|
|
|
(1,149
|
)
|
|
|
(996
|
)
|
|
|
(2,554
|
)
|
Equity in earnings of JOAs and other joint ventures
|
|
|
(419
|
)
|
|
|
631
|
|
|
|
586
|
|
|
|
947
|
|
|
|
1,745
|
|
Miscellaneous, net
|
|
|
(1,069
|
)
|
|
|
(189
|
)
|
|
|
270
|
|
|
|
315
|
|
|
|
(673
|
)
|
Benefit (provision) for income taxes
|
|
|
29,399
|
|
|
|
(220
|
)
|
|
|
(293
|
)
|
|
|
(1,714
|
)
|
|
|
27,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
(205,983
|
)
|
|
|
3,345
|
|
|
|
(3,541
|
)
|
|
|
14,124
|
|
|
|
(192,055
|
)
|
Income (loss) from discontinued operations, net of tax
|
|
|
(14,864
|
)
|
|
|
(1,092
|
)
|
|
|
280
|
|
|
|
(1,916
|
)
|
|
|
(17,592
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(220,847
|
)
|
|
|
2,253
|
|
|
|
(3,261
|
)
|
|
|
12,208
|
|
|
|
(209,647
|
)
|
Net income (loss) attributable to noncontrolling interests
|
|
|
(147
|
)
|
|
|
|
|
|
|
|
|
|
|
105
|
|
|
|
(42
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to the shareholders of The E.W.
Scripps Company
|
|
$
|
(220,700
|
)
|
|
$
|
2,253
|
|
|
$
|
(3,261
|
)
|
|
$
|
12,103
|
|
|
$
|
(209,605
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per basic share of common stock attributable
to the shareholders of The E.W. Scripps Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(3.84
|
)
|
|
$
|
.06
|
|
|
$
|
( .07
|
)
|
|
$
|
.22
|
|
|
$
|
(3.56
|
)
|
Income (loss) from discontinued operations
|
|
|
(.28
|
)
|
|
|
(.02
|
)
|
|
|
.01
|
|
|
|
(.03
|
)
|
|
|
(.33
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per basic share of common stock
|
|
$
|
(4.12
|
)
|
|
$
|
.04
|
|
|
$
|
( .06
|
)
|
|
$
|
.19
|
|
|
$
|
(3.89
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per diluted share of common stock attributable to the
shareholders of The E.W. Scripps Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(3.84
|
)
|
|
$
|
.06
|
|
|
$
|
( .07
|
)
|
|
$
|
.22
|
|
|
$
|
(3.56
|
)
|
Income (loss) from discontinued operations
|
|
|
(.28
|
)
|
|
|
(.02
|
)
|
|
|
.01
|
|
|
|
(.03
|
)
|
|
|
(.33
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per diluted share of common stock:
|
|
$
|
(4.12
|
)
|
|
$
|
.04
|
|
|
$
|
( .06
|
)
|
|
$
|
.19
|
|
|
$
|
(3.89
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
53,573
|
|
|
|
53,636
|
|
|
|
53,986
|
|
|
|
54,383
|
|
|
|
53,902
|
|
Diluted
|
|
|
53,573
|
|
|
|
53,636
|
|
|
|
53,986
|
|
|
|
54,383
|
|
|
|
53,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per share of common stock
|
|
$
|
.00
|
|
|
$
|
.00
|
|
|
$
|
.00
|
|
|
$
|
.00
|
|
|
$
|
.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-65
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st
|
|
|
2nd
|
|
|
3rd
|
|
|
4th
|
|
|
|
|
2008
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Total
|
|
|
Operating revenues
|
|
$
|
255,656
|
|
|
$
|
250,867
|
|
|
$
|
230,245
|
|
|
$
|
264,895
|
|
|
$
|
1,001,663
|
|
Costs and expenses
|
|
|
(229,751
|
)
|
|
|
(234,716
|
)
|
|
|
(225,991
|
)
|
|
|
(225,246
|
)
|
|
|
(915,704
|
)
|
Depreciation and amortization of intangibles
|
|
|
(11,068
|
)
|
|
|
(11,502
|
)
|
|
|
(11,947
|
)
|
|
|
(12,384
|
)
|
|
|
(46,901
|
)
|
Impairment of goodwill, indefinite and long-lived assets
|
|
|
|
|
|
|
(778,900
|
)
|
|
|
|
|
|
|
(31,036
|
)
|
|
|
(809,936
|
)
|
Gains (losses), net on disposal of property, plant and equipment
|
|
|
(103
|
)
|
|
|
2,364
|
|
|
|
(17
|
)
|
|
|
3,565
|
|
|
|
5,809
|
|
Interest expense
|
|
|
(6,269
|
)
|
|
|
(4,393
|
)
|
|
|
|
|
|
|
(78
|
)
|
|
|
(10,740
|
)
|
Equity in earnings of JOAs and other joint ventures
|
|
|
1,608
|
|
|
|
1,142
|
|
|
|
649
|
|
|
|
866
|
|
|
|
4,265
|
|
Write-down of investment in newspaper partnership
|
|
|
|
|
|
|
(10,000
|
)
|
|
|
|
|
|
|
(10,876
|
)
|
|
|
(20,876
|
)
|
Losses on repurchases of debt
|
|
|
|
|
|
|
(26,380
|
)
|
|
|
|
|
|
|
|
|
|
|
(26,380
|
)
|
Miscellaneous, net
|
|
|
1,067
|
|
|
|
6,692
|
|
|
|
(508
|
)
|
|
|
(520
|
)
|
|
|
6,731
|
|
Benefit (provision) for income taxes
|
|
|
(3,420
|
)
|
|
|
252,363
|
|
|
|
4,514
|
|
|
|
7,261
|
|
|
|
260,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
7,720
|
|
|
|
(552,463
|
)
|
|
|
(3,055
|
)
|
|
|
(3,553
|
)
|
|
|
(551,351
|
)
|
Income (loss) from discontinued operations, net of tax
|
|
|
98,641
|
|
|
|
45,663
|
|
|
|
(13,677
|
)
|
|
|
(9,176
|
)
|
|
|
121,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
106,361
|
|
|
|
(506,800
|
)
|
|
|
(16,732
|
)
|
|
|
(12,729
|
)
|
|
|
(429,900
|
)
|
Net income (loss) attributable to noncontrolling interests
|
|
|
22,293
|
|
|
|
24,441
|
|
|
|
67
|
|
|
|
(111
|
)
|
|
|
46,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to the shareholders of The E.W.
Scripps Company
|
|
$
|
84,068
|
|
|
$
|
(531,241
|
)
|
|
$
|
(16,799
|
)
|
|
$
|
(12,618
|
)
|
|
$
|
(476,590
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per basic share of common stock attributable
to the shareholders of The E.W. Scripps Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
.14
|
|
|
( $
|
10.17
|
)
|
|
$
|
( .06
|
)
|
|
$
|
( .06
|
)
|
|
( $
|
10.19
|
)
|
Income (loss) from discontinued operations
|
|
|
1.41
|
|
|
|
.39
|
|
|
|
(.25
|
)
|
|
|
(.17
|
)
|
|
|
1.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per basic share of common stock:
|
|
$
|
1.55
|
|
|
( $
|
9.78
|
)
|
|
$
|
( .31
|
)
|
|
$
|
( .24
|
)
|
|
( $
|
8.81
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per diluted share of common stock attributable to the
shareholders of The E.W. Scripps Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
.14
|
|
|
( $
|
10.17
|
)
|
|
$
|
( .06
|
)
|
|
$
|
( .06
|
)
|
|
( $
|
10.19
|
)
|
Income (loss) from discontinued operations
|
|
|
1.40
|
|
|
|
.39
|
|
|
|
(.25
|
)
|
|
|
(.17
|
)
|
|
|
1.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per diluted share of common stock:
|
|
$
|
1.54
|
|
|
( $
|
9.78
|
)
|
|
$
|
( .31
|
)
|
|
$
|
( .24
|
)
|
|
( $
|
8.81
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
54,218
|
|
|
|
54,305
|
|
|
|
54,182
|
|
|
|
53,625
|
|
|
|
54,100
|
|
Diluted
|
|
|
54,553
|
|
|
|
54,305
|
|
|
|
54,182
|
|
|
|
53,625
|
|
|
|
54,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per share of common stock
|
|
$
|
.42
|
|
|
$
|
.42
|
|
|
$
|
.15
|
|
|
$
|
.00
|
|
|
$
|
.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The sum of the quarterly net income per share amounts may not
equal the reported annual amount because each is computed
independently based upon the weighted-average number of shares
outstanding for the period.
F-66
The E. W.
Scripps Company
Index to
Consolidated Financial Statement Schedules
S-1
Schedule II
Valuation
and Qualifying Accounts
for the Years Ended December 31, 2009, 2008 and
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Column A
|
|
Column B
|
|
|
Column C
|
|
|
Column D
|
|
|
Column E
|
|
|
Column F
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
Deductions
|
|
|
(Decrease)
|
|
|
|
|
|
|
Balance
|
|
|
Charged to
|
|
|
Amounts
|
|
|
Recorded
|
|
|
Balance
|
|
|
|
Beginning
|
|
|
Revenues,
|
|
|
Charged
|
|
|
Acquisitions
|
|
|
End of
|
|
Classification
|
|
of Period
|
|
|
Costs, Expenses
|
|
|
Off-Net
|
|
|
(Divestitures)
|
|
|
Period
|
|
|
|
(In thousands)
|
|
|
Allowance for Doubtful Accounts Receivable Year Ended December
31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
$
|
7,763
|
|
|
$
|
3,889
|
|
|
$
|
7,308
|
|
|
|
|
|
|
$
|
4,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
4,469
|
|
|
|
7,652
|
|
|
|
4,358
|
|
|
|
|
|
|
|
7,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
5,033
|
|
|
|
4,296
|
|
|
|
4,860
|
|
|
|
|
|
|
|
4,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-2
The E. W.
Scripps Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Exhibit Description
|
|
Form
|
|
|
File Number
|
|
|
Exhibit
|
|
|
Report Date
|
|
|
|
2.01
|
|
|
Separation and Distribution Agreement by and between The E.W.
Scripps Company and Scripps Networks Interactive, Inc. dated as
of June 12, 2008
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
2.01
|
|
|
|
6/12/2008
|
|
|
3.01
|
|
|
Amended Articles of Incorporation
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
3(i
|
)
|
|
|
2/17/2009
|
|
|
3.02
|
|
|
Amended and Restated Code of Regulations
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
3.02
|
|
|
|
5/10/2007
|
|
|
4.01
|
|
|
Class A Common Share Certificate
|
|
|
10-K
|
|
|
|
000-16914
|
|
|
|
4
|
|
|
|
12/31/1990
|
|
|
10.01
|
|
|
Transition Services Agreement by and between The E.W. Scripps
Company and Scripps Networks Interactive, Inc. dated as of
July 1, 2008
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.01
|
|
|
|
6/30/2008
|
|
|
10.02
|
|
|
Employee Matters Agreement by and between The E.W. Scripps
Company and Scripps Networks Interactive, Inc. dated as of
July 1, 2008
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.02
|
|
|
|
6/30/2008
|
|
|
10.03
|
|
|
Tax Allocation Agreement by and between The E.W. Scripps Company
and Scripps Networks Interactive, Inc. dated as of July 1,
2008
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.03
|
|
|
|
6/30/2008
|
|
|
10.04
|
|
|
Amended and Restated Revolving Credit Agreement Dated
August 5, 2009
|
|
|
10-Q
|
|
|
|
000-16914
|
|
|
|
10.04
|
|
|
|
6/30/2009
|
|
|
10.08
|
|
|
Amended and Restated 1997 Long-Term Incentive Plan
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.01
|
|
|
|
5/8/2008
|
|
|
10.09
|
|
|
Form of Executive Officer Nonqualified Stock Option Agreement
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.03A
|
|
|
|
2/9/2005
|
|
|
10.10
|
|
|
Form of Independent Director Nonqualified Stock Option Agreement
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.03B
|
|
|
|
2/9/2005
|
|
|
10.11
|
|
|
Form of Performance-Based Restricted Share Agreement
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.03C
|
|
|
|
2/9/2005
|
|
|
10.12
|
|
|
Form of Restricted Share Agreement (Nonperformance Based)
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.02C
|
|
|
|
2/28/2006
|
|
|
10.12
|
|
|
Performance-Based Restricted Share Agreement between The E.W.
Scripps Company and Mark G. Contreras
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.03D
|
|
|
|
2/9/2006
|
|
|
10.13
|
|
|
Executive Bonus Plan, as amended April 14, 2005
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.04
|
|
|
|
2/9/2006
|
|
|
10.55
|
|
|
Board Representation Agreement, dated March 14, 1986,
between The Edward W. Scripps Trust and John P. Scripps
|
|
|
S-1
|
|
|
|
33-21714
|
|
|
|
10.44
|
|
|
|
3/14/1986
|
|
|
10.56
|
|
|
Shareholder Agreement, dated March 14, 1986, between the
Company and the Shareholders of John P. Scripps Newspapers
|
|
|
S-1
|
|
|
|
33-21714
|
|
|
|
10.45
|
|
|
|
3/14/1986
|
|
|
10.57
|
|
|
Scripps Family Agreement dated October 15, 1992
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
1
|
|
|
|
10/15/1992
|
|
|
10.57A
|
|
|
Amendments to the Scripps Family Agreement
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.57A
|
|
|
|
5/8/2008
|
|
|
10.59
|
|
|
Non-Employee Directors Stock Option Plan
|
|
|
S-8
|
|
|
|
333-27623
|
|
|
|
4A
|
|
|
|
|
|
|
10.61
|
|
|
1997 Deferred Compensation and Stock Plan for Directors, as
amended
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.61
|
|
|
|
5/8/2008
|
|
|
10.74
|
|
|
Amended and Restated Scripps Supplemental Executive Retirement
Plan
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.74
|
|
|
|
5/8/2008
|
|
|
10.65
|
|
|
Employment Agreement between the Company and Richard A. Boehne
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.65
|
|
|
|
8/6/2008
|
|
E-1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Exhibit Description
|
|
Form
|
|
|
File Number
|
|
|
Exhibit
|
|
|
Report Date
|
|
|
|
10.67
|
|
|
Employment Agreement between the Company and Mark G. Contreras
|
|
|
10-Q
|
|
|
|
000-16914
|
|
|
|
10.67
|
|
|
|
6/30/2006
|
|
|
10.75
|
|
|
Scripps Senior Executive Change in Control Plan
|
|
|
10-Q
|
|
|
|
000-16914
|
|
|
|
10.65
|
|
|
|
9/30/2004
|
|
|
10.76
|
|
|
Scripps Executive Deferred Compensation Plan, as amended
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.76
|
|
|
|
5/8/2008
|
|
|
10.77
|
|
|
Short-Term Incentive Plan
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
99.01
|
|
|
|
2/17/2009
|
|
|
10.78
|
|
|
Independent Director Restricted Stock Unit Agreement
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
99.02
|
|
|
|
2/17/2009
|
|
|
10.79
|
|
|
Employee Restricted Stock Unit Agreement
|
|
|
8-K
|
|
|
|
000-16914
|
|
|
|
10.79
|
|
|
|
3/5/2009
|
|
|
14
|
|
|
Code of Ethics for CEO and Senior Financial Officers
|
|
|
10-K
|
|
|
|
000-16914
|
|
|
|
14
|
|
|
|
12/31/2004
|
|
|
21
|
|
|
Subsidiaries of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
|
|
|
Consent of Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31(a
|
)
|
|
Section 302 Certifications
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31(b
|
)
|
|
Section 302 Certifications
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32(a
|
)
|
|
Section 906 Certifications
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32(b
|
)
|
|
Section 906 Certifications
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E-2