Note 4: Long-Term Debt and Other Financial Instruments

Long-term debt at December 26, 1999, and December 27, 1998, was as follows:

In December 1996, the Company entered into a seven-year revolving credit facility committing a syndicate of banks to lend the Company up to $1.2 billion. This facility has mandatory commitment reductions of 25% at the end of 2001 and 2002. Interest rates under the facility are typically based on the London Interbank Offered Rate (LIBOR) plus a margin ranging from .225% to .75%, based on the Company’s debt to cash flow ratio (leverage ratio), as defined. Under this facility, the Company pays commitment fees (.10% at December 26, 1999) on the unused portion of the facility at a rate based on its leverage ratio. In October 1999, the Company used proceeds from the sale of its cable operations (see Note 2) to repay all amounts outstanding under its revolving credit agreements. The associated interest rate swap agreements covering $725 million of that debt, representing all of the Company’s swap agreements, were terminated as well, resulting in an extraordinary charge of $1.3 million ($0.05 per share, both basic and assuming dilution), net of a $.8 million tax benefit.

In 1992, the Company issued $20 million of New Jersey Economic Development Authority tax-exempt revenue bonds. The bonds are secured by a letter of credit, under which the Company pays an annual fee equal to .125% plus a margin (.30% at December 26, 1999) based on the Company’s leverage ratio. The bonds contain certain optional and mandatory redemption provisions, and the bond proceeds were restricted for capital expenditures related to the Company’s Garden State Paper newsprint operations in New Jersey.

The Company’s debt covenants contain a minimum net worth requirement ($405.5 million at December 26, 1999), and require the maintenance of an interest coverage ratio and a leverage ratio, as defined. Long-term debt maturities during the five years subsequent to December 26, 1999, aggregating $39.8 million, are as follows: 2000 — $13 million; 2001 — $13.3 million; 2002 — $13.2 million; 2003 — $.2 million; 2004 — $.1 million.

At December 27, 1998, the Company had borrowings of $5 million from bank lines and $13 million of senior notes due within one year classified as long-term debt in accordance with the Company’s intention and ability to refinance these obligations on a long-term basis under existing facilities. The interest rate on the bank lines was 5.04% at December 27, 1998.

In June 1998 Statement of Financial Accounting Standard (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, was issued; it is effective for fiscal years beginning after June 15, 2000, under the provisions of its amendment, SFAS No. 137, Deferral of the Effective Date of FASB Statement No. 133. When adopted by the Company, any derivatives that the Company then had would be recognized on the balance sheet at fair value. Derivatives that were not hedges would be adjusted to fair value through income. If a derivative was a hedge, depending upon the nature of the hedge, a change in its fair value would either be offset against the change in the fair value of the hedged assets, liabilities, or firm commitments through earnings, or recognized in other comprehensive income until the hedged item was recognized in earnings.

The table below includes information about the carrying values and estimated fair values of the Company’s financial instruments:

In 1998, the fair value of the Company’s investment in Denver Preferred Stock, which was not publicly traded, was estimated by discounting expected future cash flows using a current market rate applicable to the yield, credit quality and maturity of the investment. In July 1999, Hoover’s sold stock to the public and began trading on the NASDAQ stock exchange resulting in a readily determinable value of its stock. Under the provisions of SFAS No. 115, Accounting For Certain Investments in Debt and Equity Securities, the Company’s investment in Hoover’s was classified as available-for-sale and carried at fair value, with unrealized gains, net of tax, reported as a separate component of stockholders’ equity. In 1998, the fair value of the Company’s investment in Hoover’s, which was not publicly traded at that time, was based on prices recently paid for shares of the company. The Company’s investment in ReacTV approximates its fair value. In 1998, the fair values of the interest rate swaps were based on the estimated amounts the Company would have received or paid to terminate the swaps. Fair values of the Company’s long-term debt were estimated, in both years, using discounted cash flow analyses based on the Company’s incremental borrowing rates for similar types of borrowings. In 1998, the borrowings under the Company’s revolving credit facility and bank lines approximated their fair value.

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