E. W. Scripps Company - 10-Q quarterly report FY

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of April 30, 2002 there were 60,754,505 of the Registrant’s Class A Common Shares outstanding and 19,096,913 of the Registrant’s Common Voting Shares outstanding.

The information required by this item is filed as part of this Form 10-Q. See Index to Financial Information at page F-1 of this Form 10–Q.

The information required by this item is filed as part of this Form 10-Q. See Index to Financial Information at page F-1 of this Form 10–Q.

The information required by this item is filed as part of this Form 10-Q. See Index to Financial Information at page F-1 of this Form 10–Q.

The Company is involved in litigation arising in the ordinary course of business, such as defamation actions and various governmental and administrative proceedings relating to renewal of broadcast licenses, none of which is expected to result in material loss.

There were no changes in the rights of security holders during the quarter for which this report is filed.

There were no defaults upon senior securities during the quarter for which this report is filed.

There were no matters submitted to a vote of security holders during the quarter for which this report is filed.

None.

The information required by this item is filed as part of this Form 10-Q. See Index to Exhibits at page E-1 of this Form 10-Q.

No reports on Form 8-K were filed during the quarter for which this report is filed.

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: May 13, 2002

Basis of Presentation—The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10–Q and Rule 10–01 of Regulation S–X. The information disclosed in the notes to consolidated financial statements included in the Company’s Annual Report on Form 10–K for the year ended December 31, 2001, has not changed materially unless otherwise disclosed herein. Financial information as of December 31, 2001, included in these financial statements has been derived from the audited consolidated financial statements included in that report. In management’s opinion all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the interim periods have been made.

Results of operations are not necessarily indicative of the results that may be expected for future interim periods or for the full year.

Use of Estimates—Preparation of the financial statements requires the use of estimates. The Company’s financial statements include estimates for such items as self-insured risks and income taxes payable. The Company self-insures for employees’ medical and disability income benefits, workers’ compensation and general liability. The recorded liability for self-insured risks is calculated using actuarial methods and is not discounted. The recorded liability for self-insured risks totaled $21.9 million at March 31, 2002. Management does not believe it is likely that its estimates for self-insured risks will change materially in the near term.

The Company reached an agreement with the Internal Revenue Service (“IRS”) to settle the audit of its 1992 through 1995 consolidated federal income tax returns. As a result, the Company expects to reduce its estimated liability for prior year income taxes by approximately $8 million in the second quarter. The Company’s 1996 through 2000 consolidated federal income tax returns are currently under examination by the IRS. Management believes that adequate provision has been made for all open years.

Joint Operating Agencies—The joint operating agency (“JOA”) between the Company’s Denver Rocky Mountain News (“RMN”) and MediaNews Group Inc.’s Denver Post was approved by the U.S. Attorney General in January 2001. The 50-year agreement created a new entity called the Denver Newspaper Agency L.L.C., which is 50% owned by each partner. Both partners contributed certain assets used in the operations of their newspapers to the new entity. In addition, the Company paid $60 million to MediaNews Group Inc. The JOA commenced operations on January 22, 2001.

Net Income Per Share—The following table presents additional information about basic and diluted weighted-average shares outstanding:

Goodwill and Other Intangible Assets—The Company adopted Financial Accounting Standard (“FAS”) No. 142 – Goodwill and Other Intangible Assets effective January 1, 2002. Recorded goodwill and intangible assets with indefinite lives are no longer amortized, but instead are tested for impairment at least annually. Other intangible assets are reviewed for impairment in accordance with FAS No. 144. The Company must complete a transitional evaluation of whether goodwill is impaired prior to June 30, 2002. To complete the transitional impairment evaluation, the Company must (i) identify reporting units, (ii) determine the carrying value of each reporting unit by assigning the assets and liabilities, including existing goodwill and other intangible assets, to those reporting units, and (iii) determine whether the carrying value of each reporting unit exceeds its fair value. If the carrying value of any reporting unit exceeds its fair value, then detailed fair values for each of the assigned assets (excluding goodwill) and liabilities will be determined to calculate the amount of goodwill impairment, if any. This second step is required to be completed as soon as possible, but no later than December 31, 2002. Any transitional impairment loss will be recorded as the cumulative effect of a change in accounting principle.

If the non-amortization provisions of FAS No. 142 had been effective in 2001, reported results of operations would have been as follows:

Reclassifications—For comparative purposes, certain 2001 amounts have been reclassified to conform to 2002 classifications.

The acquisitions have been accounted for as purchases. The purchase prices were allocated entirely to goodwill.

Investment results include (i) recognized investment gains and losses and (ii) adjustments to accrued incentive compensation related to changes in the net gains (realized and unrealized) on the Scripps Ventures I portfolio. The incentive compensation for Scripps Ventures I will be paid in 2003 based on the portfolio return through December 2002.

Long-term debt consisted of the following:

The Company has a Competitive Advance and Revolving Credit Facility Agreement, which expires in September 2002 and permits aggregate borrowings up to $675 million (the “Variable Rate Credit Facilities”). Borrowings are available on a committed revolving credit basis at the Company’s choice of three short-term rates or through an auction procedure at the time of each borrowing. The Variable Rate Credit Facilities are also used by the Company in whole or in part, in lieu of direct borrowings, as credit support for its commercial paper. The weighted-average interest rates on the Variable Rate Credit Facilities were 1.8% at March 31, 2002, 2.0% at December 31, 2001, and 5.4% at March 31, 2001.

The Variable Rate Credit Facilities are expected to be replaced with a similar facility prior to expiration.

Investments consisted of the following:

Investments available for sale represent securities in publicly traded companies. Investments available for sale are recorded at fair value. Fair value is based upon the closing price of the security on the reporting date.

Other equity investments include securities that do not trade in public markets, so they do not have readily determinable fair values. Management estimates the fair value of these securities is approximately $49 million. However, many of the investees have not issued new equity in the past two years and there can be no assurance that the Company would realize the carrying value of these securities upon their sale.

The Company’s Scripps Ventures Funds I and II invest in new businesses focusing primarily on new media technology. Scripps Ventures I invested $54 million. The managers’ compensation includes a share of the portfolio’s cumulative net gain through December 2002 if a specified minimum return is achieved. The incentive compensation accrual was zero at March 31, 2002, and will be subject to change as the net gain changes through December 2002. Scripps Ventures II is authorized to invest up to $100 million, of which $45 million was invested as of March 31, 2002. The managers have a minority equity interest in the return on Scripps Ventures II’s investments if a specified minimum return is achieved.

The Company’s reportable segments are strategic businesses that offer different products and services. The Company evaluates the operating performance of its segments based primarily on earnings before interest, income taxes, depreciation and amortization (“EBITDA”), excluding unusual items (see Note 3) and all amounts classified as other credits (charges) in the Consolidated Statements of Income. No single customer provides more than 10% of the Company’s revenue. International revenues are primarily derived from licensing comic characters and HGTV and Food Network programming in international markets. Licensing of comic characters in Japan provides more than 60% of the Company’s international revenues, which are less than $50 million annually.

Financial information for the Company’s business segments is as follows:

Other additions to long-lived assets include investments and launch incentives capitalized. Corporate assets are primarily cash, cash equivalent and other short-term investments, and refundable and deferred income taxes.

The Company operates in three reportable segments: newspapers, cable television networks (referred to as “Scripps Networks”), and broadcast television.

This discussion and the information contained in the notes to the consolidated financial statements contain certain forward–looking statements that are based on management’s 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 the Company’s control, include changes in advertising demand and other economic conditions; consumers’ taste; 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. All forward-looking statements, which are as of the date of this filing, should be evaluated with the understanding of their inherent uncertainty.

Management excludes certain unusual items from its evaluation of the Company’s operating performance because management believes the items are unlikely to recur or they otherwise impede analysis of the Company’s on-going operations. Earnings from core operations represents net income as defined under generally accepted accounting principles (“GAAP”) excluding these unusual items.

In addition, management evaluates the operating performance of the Company’s operating segments based primarily on earnings before interest, income taxes, depreciation and amortization (“EBITDA”). Management evaluates the operating performance of the Company’s operating segments based on EBITDA because:

Earnings from core operations and EBITDA should not, however, be construed as alternative measures of the amount of the Company’s net income or cash flows from operating activities as defined under GAAP.

Acquisitions and divestitures can affect the comparability of year-over-year reported results. The accompanying tables include the results of operations for acquired operations from the dates of acquisition. Divested operating units are removed from segment operating results and reported separately because management believes they impede analysis of the Company’s on-going operations.

See Note 2 to the Consolidated Financial Statements on page F-8 regarding acquisitions and divestitures.

The application for a 50-year Joint Operating Agency (“JOA”) between the Company’s Denver Rocky Mountain News (“RMN”) and MediaNews Group Inc.’s (“MediaNews”) Denver Post was approved in January 2001 by the U.S. Department of Justice. The JOA commenced operations on January 22, 2001. The Denver Publishing Company, a wholly owned subsidiary of the Company, received a 50% interest in the JOA in exchange for the contribution of most of its assets to the JOA and the payment of $60 million to MediaNews.

The Company’s 50% share of the operating profit (loss) of the Denver JOA is reported as “Share of Joint Operating Agency Profits” in its financial statements. Editorial costs associated with the RMN are included in operating expenses. The Company’s financial statements do not include advertising and other revenue of the JOA, nor the costs to produce, distribute and market the newspapers, nor related depreciation. The Company reports the RMN separately in Management’s Discussion and Analysis.

Consolidated results of operations were as follows: