-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CXz541pXbiA0Vl6EtZYfaY4O8kDEcCYLeG8DjhhQ6t1Pl3zRuDNizAQ5VltYiM0i BLp3yXvUnWP7Rtp3ktguTg== 0000950144-96-005203.txt : 19960813 0000950144-96-005203.hdr.sgml : 19960813 ACCESSION NUMBER: 0000950144-96-005203 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960812 SROS: BSE SROS: CSE SROS: CSX SROS: NYSE SROS: PHLX FILER: COMPANY DATA: COMPANY CONFORMED NAME: KNIGHT RIDDER INC CENTRAL INDEX KEY: 0000205520 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 380723657 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07553 FILM NUMBER: 96608878 BUSINESS ADDRESS: STREET 1: ONE HERALD PLZ CITY: MIAMI STATE: FL ZIP: 33132 BUSINESS PHONE: 3053763800 MAIL ADDRESS: STREET 1: ONE HERALD PLZ CITY: MIAMI STATE: FL ZIP: 33132 FORMER COMPANY: FORMER CONFORMED NAME: KNIGHT RIDDER NEWSPAPERS INC /FL/ DATE OF NAME CHANGE: 19860707 10-Q 1 KNIGHT-RIDDER, INC. 10-Q 06/30/96 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED: June 30, 1996 ------------- COMMISSION FILE NUMBER: 1-7553 ------ KNIGHT-RIDDER, INC. ------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) FLORIDA 38-0723657 ------------------------------------------------------------------------- (State of Incorporation) (I.R.S. Employer Identification No.) ONE HERALD PLAZA, MIAMI, FLORIDA 33132 ------------------------------------------------------------------------- (Address of principal executive offices) (305) 376-3800 ------------------------------------------------------------------------- Registrant's telephone number, including area code) NOT APPLICABLE ------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Common Stock, $.02 1/12 Par Value - 95,843,630 shares as of August 4, 1996. -1- 2 Table of Contents for Form 10-Q
Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Statement of Income 3 Consolidated Balance Sheet 4 Consolidated Statement of Cash Flows 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-10 PART II. OTHER INFORMATION Item 1. Legal Proceedings 11 Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURE Exhibit 27 Financial Data Schedule (for SEC use only) 12-13 Exhibit 99 Additional Exhibits 14
2 3 PART I- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF INCOME (UNAUDITED, IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
QUARTER ENDED TWO QUARTERS ENDED FOUR QUARTERS ENDED -------------------- -------------------------- -------------------------- JUNE 30 JUNE 25 JUNE 30 JUNE 25 JUNE 30 JUNE 25 1996 1995 1996 1995 1996 1995 -------- -------- ---------- ---------- ---------- ---------- OPERATING REVENUE Newspapers Advertising Retail................................. $200,651 $200,091 $ 382,702 $ 381,876 $ 808,584 $ 805,486 General................................ 51,101 46,951 97,337 94,322 185,531 186,257 Classified............................. 197,687 175,390 393,253 342,489 733,460 647,834 -------- -------- ---------- ---------- ---------- ---------- Total................................ 449,439 422,432 873,292 818,687 1,727,575 1,639,577 Circulation.............................. 125,837 123,046 252,691 245,638 502,368 487,904 Other.................................... 20,305 20,248 40,354 38,534 83,717 74,300 -------- -------- ---------- ---------- ---------- ---------- Total Newspapers..................... 595,581 565,726 1,166,337 1,102,859 2,313,660 2,201,781 Business Information Services.............. 121,401 121,729 248,306 259,195 490,763 516,821 -------- -------- ---------- ---------- ---------- ---------- Total Operating Revenue.............. 716,982 687,455 1,414,643 1,362,054 2,804,423 2,718,602 -------- -------- ---------- ---------- ---------- ---------- OPERATING COSTS Labor and employee benefits................ 278,959 274,485 562,274 554,079 1,136,174 1,107,117 Newsprint, ink and supplements............. 127,643 107,953 254,163 202,782 498,222 379,372 Other operating costs...................... 187,103 183,155 381,440 374,712 791,846 755,501 Depreciation and amortization.............. 42,827 37,148 85,704 74,760 162,556 149,726 -------- -------- ---------- ---------- ---------- ---------- Total Operating Costs................ 636,532 602,741 1,283,581 1,206,333 2,588,798 2,391,716 -------- -------- ---------- ---------- ---------- ---------- OPERATING INCOME............................. 80,450 84,714 131,062 155,721 215,625 326,886 -------- -------- ---------- ---------- ---------- ---------- OTHER INCOME (EXPENSE) Interest expense........................... (19,175) (12,612) (38,802) (25,013) (73,361) (47,414) Interest expense capitalized............... 1,384 366 2,579 611 3,857 1,022 Interest income............................ 2,094 2,270 4,675 4,403 9,414 7,858 Equity in earnings of unconsolidated companies and joint ventures............. 8,815 7,393 16,570 8,344 28,887 15,564 Minority interests in earnings of consolidated subsidiaries................ (2,567) (2,369) (4,150) (3,983) (8,515) (8,530) Other, net................................. 343 82,778 246 84,104 (118) 81,947 -------- -------- ---------- ---------- ---------- ---------- Total................................ (9,106) 77,826 (18,882) 68,466 (39,836) 50,447 -------- -------- ---------- ---------- ---------- ---------- Income before income taxes................... 71,344 162,540 112,180 224,187 175,789 377,333 Income taxes................................. 28,992 68,420 46,310 94,394 72,330 157,133 -------- -------- ---------- ---------- ---------- ---------- INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE............. 42,352 94,120 65,870 129,793 103,459 220,200 Cumulative effect of change in accounting principle for contributions... (7,320) (7,320) -------- -------- ---------- ---------- ---------- ---------- Net income........................... $ 42,352 $ 94,120 $ 65,870 $ 122,473 $ 103,459 $ 212,880 ======== ======== ========== ========== ========== ========== EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE Income before cumulative effect of change in accounting principle (1)...... $ 0.43 $ 0.94 $ .67 $ 1.27 $ 1.05 $ 2.10 Cumulative effect of change in accounting principle (1)............. (0.07) (0.07) -------- -------- ---------- ---------- ---------- ---------- Net income (1)...................... $ 0.43 $ 0.94 $ .67 $ 1.20 $ 1.05 $ 2.03 ======== ======== ========== ========== ========== ========== DIVIDENDS DECLARED PER COMMON SHARE (1)..... $ 0.20 $ 0.18 1/2 $ 0.38 1/2 $ 0.37 $ 0.75 1/2 $ 0.74 ======== ======== ========== ========== ========== ========== AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (OOOs)(1)..... 99,014 100,123 98,980 101,945 98,714 104,633 ======== ======== ========== ========== ========== ==========
(1) Amounts have been restated to reflect a two-for-one stock split in the form of a 100% common stock dividend, effective July 31, 1996. See "Notes to Consolidated Financial Statements" on page 6. 3 4 CONSOLIDATED BALANCE SHEET (UNAUDITED, IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
JUNE 30 DECEMBER 31 JUNE 25 1996 1995 1995 ---------- ----------- ---------- ASSETS - ------ CURRENT ASSETS Cash, including short-term cash invest- ments of $50 in 1996, $50 in December 1995, and $5,824 in June 1995................... $ 31,230 $ 26,012 $ 23,055 Accounts receivable, net of allowances of $14,875 in 1996, $14,348 in December 1995 and $13,990 in June 1995....................................... 356,409 339,264 311,861 Inventories....................................... 76,717 73,349 51,747 Other current assets.............................. 87,258 64,297 76,826 ---------- ----------- ---------- Total Current Assets.......................... 551,614 502,922 463,489 ---------- ----------- ---------- INVESTMENTS AND OTHER ASSETS Equity in unconsolidated companies and joint ventures.............................. 340,987 321,658 312,721 Other............................................. 221,375 285,666 201,006 ---------- ----------- ---------- Total Investments and Other Assets........... 562,362 607,324 513,727 ---------- ----------- ---------- PROPERTY, PLANT AND EQUIPMENT Land and improvements............................. 80,597 80,616 66,891 Buildings and improvements........................ 404,305 401,093 380,128 Equipment......................................... 1,228,033 1,223,838 1,182,106 Construction and equipment installations in progress....................... 103,554 57,644 28,594 ---------- ----------- ---------- 1,816,489 1,763,191 1,657,719 Less accumulated depreciation..................... 860,163 831,544 843,404 ---------- ----------- ---------- Net Property, Plant and Equipment............. 956,326 931,647 814,315 ---------- ----------- ---------- EXCESS OF COST OVER NET ASSETS ACQUIRED Less accumulated amortization of $221,079 in 1996, $205,608 in December 1995 and $193,495 in June 1995.................... 943,782 963,817 691,128 ---------- ----------- ---------- Total......................................... $3,014,084 $ 3,005,710 $2,482,659 ========== =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES Accounts payable.................................. $ 134,073 $ 127,532 $ 136,453 Accrued expenses and other liabilities............ 112,408 105,317 90,742 Accrued compensation and amounts withheld from employees......................... 90,219 101,357 84,061 Federal and state income taxes 195 37,833 Deferred revenue.................................. 72,816 72,134 64,620 Dividends payable................................. 19,315 17,978 18,216 Short-term borrowings and current portion of long-term debt....................... 49,922 13,129 ---------- ----------- ---------- Total Current Liabilities..................... 478,753 437,642 431,925 ---------- ----------- ---------- NONCURRENT LIABILITIES Long-term debt.................................... 1,004,134 1,000,721 534,209 Deferred federal and state income taxes........... 150,298 165,045 138,607 Postretirement benefits other than pensions....... 170,928 169,672 166,060 Employment benefits and other noncurrent liabilities.......................... 112,886 120,817 97,790 ---------- ----------- ---------- Total Noncurrent Liabilities.................. 1,438,246 1,456,255 936,666 ---------- ----------- ---------- MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES........................... 1,275 843 1,282 ---------- ----------- ---------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Common stock, $.02 1/12 par value; shares authorized - 250,000,000; shares issued - 96,756,312 in 1996, 97,196,308 in December 1995 and 98,570,960 in June 1995................ 1,008 1,012 1,027 Common stock dividend distributable............... 1,008 Additional capital................................ 330,490 295,360 301,855 Retained earnings................................. 736,816 771,656 809,904 Unrealized gains on investments................... 26,488 42,942 ---------- ----------- ---------- Total Shareholders' Equity...................... 1,095,810 1,110,970 1,112,786 ---------- ----------- ---------- Total......................................... $3,014,084 $ 3,005,710 $2,482,659 ========== =========== ==========
See "Notes to Consolidated Financial Statements" on page 6. 4 5 CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited, in thousands of dollars)
QUARTER ENDED TWO QUARTERS ENDED FOUR QUARTERS ENDED ---------------------- ---------------------- ------------------------ JUNE 30 JUNE 25 JUNE 30 JUNE 25 JUNE 30 JUNE 25 1996 1995 1996 1995 1996 1995 --------- --------- --------- --------- ---------- --------- CASH PROVIDED BY (REQUIRED FOR) OPERATING ACTIVITIES Net income.............................. $ 42,352 $ 94,120 $ 65,870 $ 122,473 $ 103,459 $ 212,880 Noncash items included in income: Cumulative effect of change in accounting principle................ 7,320 7,320 Depreciation.......................... 27,749 26,260 56,444 52,815 108,415 105,368 Amortization of excess of cost over net assets acquired............ 7,818 5,506 15,471 11,093 28,086 22,095 Amortization of other assets.......... 7,260 5,382 13,789 10,852 26,055 22,263 Provision for noncurrent deferred taxes............................... (2,849) (4) (2,844) (4) 1,664 (7,457) Distributions from investees in excess of (less than) earnings...... (9,391) 2,293 (13,442) 2,881 (32,573) (5,361) Gain on sale of subsidiary............ (92,698) (92,698) (92,698) Other items, net...................... 7,048 10,235 13,484 19,752 39,696 45,811 Change in certain assets and liabilities: Accounts receivable................... (7,439) (16,193) (4,732) (4,549) (18,803) (31,020) Inventories........................... 16,826 (3,506) (3,102) (12,305) (23,089) (12,341) Other current assets.................. (25,618) 15,687 (20,486) (24,751) (5,266) (25,388) Accounts payable...................... 15,000 (6,000) 6,525 (4,387) (8,323) (206) Federal and state income taxes........ 15,130 (195) 36,465 (52,805) 22,861 Other current liabilities............. 17,046 (3,073) (6,153) (21,632) 18,485 16,438 --------- --------- --------- --------- ---------- --------- Net cash provided by operating activities............ 95,802 53,139 120,629 103,325 185,001 280,565 --------- --------- --------- --------- ---------- --------- CASH PROVIDED BY(REQUIRED FOR) INVESTING ACTIVITIES Acquisition of Contra Costa Newspapers, Inc. ..................... (335,755) Additions to property, plant and equipment................... (33,668) (19,382) (78,179) (37,333) (161,871) (74,401) Other items, net........................ 21,024 81,173 11,507 72,334 (13,424) 52,199 --------- --------- --------- --------- ---------- --------- Net cash provided by (required for) investing activities..................... (12,644) 61,791 (66,672) 35,001 (511,050) (22,202) --------- --------- --------- --------- ---------- --------- CASH PROVIDED BY (REQUIRED FOR) FINANCING ACTIVITIES Proceeds from sale of commercial paper and senior notes payable......... 171,084 137,323 333,623 359,579 1,066,664 527,474 Reduction of total debt................. (171,202) (168,680) (293,417) (236,874) (546,817) (450,679) --------- --------- --------- --------- ---------- --------- Net change in total debt.......... (118) (31,357) 40,206 122,705 519,847 76,795 Payment of cash dividends............... (18,155) (18,575) (36,133) (38,168) (72,342) (77,806) Sale of common stock to employees....... 14,035 9,812 47,270 17,592 105,115 27,772 Purchase of treasury stock.............. (67,309) (62,911) (74,376) (215,142) (178,597) (266,259) Other items, net........................ (19,456) (5,103) (25,706) (11,511) (39,799) (18,646) --------- --------- --------- --------- ---------- --------- Net cash provided by (required for) financing activities...... (91,003) (108,134) (48,739) (124,524) 334,224 (258,144) --------- --------- --------- --------- ---------- --------- Net increase (decrease) in Cash... (7,845) 6,796 5,218 13,802 8,175 219 Cash and short-term cash investments at beginning of the period........ 39,075 16,259 26,012 9,253 23,055 22,836 --------- --------- --------- --------- ---------- --------- Cash and short-term cash investments at end of the period.............. $ 31,230 $ 23,055 $ 31,230 $ 23,055 $ 31,230 $ 23,055 ========= ========= ========= ========= ========== ========= Working capital at end of the period...... $ 72,861 $ 31,564 $ 72,861 $ 31,564 $ 72,861 $ 31,564 ========= ========= ========= ========= ========== =========
See "Notes to Consolidated Financial Statements" on page 6. 5 6 Notes to Consolidated Financial Statements (Unaudited) NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the quarter, two quarters and four quarters ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ending December 29, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Registrant Company and Subsidiaries' annual report on Form 10-K for the year ended December 31, 1995. NOTE 2 - DEBT
(IN THOUSANDS OF DOLLARS) EFFECTIVE INTEREST BALANCE AT RATE AT --------------------------------------- JUNE 30 JUNE 30 DECEMBER 31 JUNE 25 1996 1996 1995 1995 ---- ---------- ---------- -------- Commercial paper, net of discount...... 5.5% $ 597,780 $ 557,698 $177,308 Notes payable, net of discount (a)..... 8.5 159,359 159,274 159,188 Debentures, net of discount (b)........ 10.0 197,864 197,789 197,713 Senior notes, net of discount (c)...... 6.4 99,053 99,089 ---------- ---------- -------- Total debt (d)................. 6.9 1,054,056 1,013,850 534,209 Less amounts classified as current..... 5.5 49,922 13,129 ---------- ---------- -------- Total long-term debt........... 7.0% $1,004,134 $1,000,721 $534,209 ========== ========== ========
(a) Represents $160 million of 8 1/2% Notes subject to mandatory pro rata amortization of 25% annually commencing 1998 through maturity in 2001. (b) Represents $200 million of 20-year 9 7/8% debentures due in 2009. (c) Represents $100 million of 10-year 6.3% senior notes due in 2005. (d) At June 30, 1996, and June 25, 1995, interest payments of $37.7 million and $21.8 million had been made for the year-to-date, respectively. NOTE 3 - INCOME TAX PAYMENTS Income tax payments for the two quarters ended June 30, 1996, and June 25, 1995, were $42.7 million and $55.6 million, respectively. NOTE 4 - COMMON STOCK AND DIVIDENDS DECLARED On June 21, 1996, the Board of Directors of the company declared a two-for-one stock split in the form of a 100% common stock dividend effective July 31, 1996. All share and per share data, except as otherwise indicated, have been restated giving retroactive effect to the stock split. Dividends declared per common share have been restated giving retroactive effect to the two-for-one stock split effective July 31, 1996. 6 7 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SECOND QUARTER SECOND QUARTER 1996 COMPARED WITH SECOND QUARTER 1995 Earnings per share for the second quarter of 1996 were $.43, up $.03 per share, or 7.5%, from the $.40 per share earned in 1995, after restatement for the two-for-one stock split declared on June 21st. The 1995 results are before a $.54 gain on the sale of the Journal of Commerce (JoC), but after a $.06 charge for the adjustment of the carrying value of certain investments. Earnings per share for the first two quarters of 1996 were $.67, down $.06, or 8.2%, from the $.73 earned in 1995, excluding the gain on the sale of the JoC and the cumulative effect of the change in accounting principle. Net income in the second quarter of 1996 was $42.4 million, up $2.0 million, or 4.9%, from the same period last year, exclusive of the gain on the sale of the JoC, on a 4.3% operating revenue increase from second quarter 1995. For the year-to-date, net income was $65.9 million, down $10.2 million, or 13.4% from 1995, exclusive of the gain on the sale of the JoC, on an operating revenue increase of 3.9%. OPERATING REVENUE Certain comparisons exclude Detroit from both years, due to the distortive impact of the strike which began on July 13, 1995, and reflect Contra Costa Newspapers (acquired from Lesher Communications on Oct. 31, 1995) as if we owned them during the same period last year (pro forma basis). Newspaper advertising revenue increased 6.4% over the second quarter last year, on a full-run ROP linage increase of 12.6%. Excluding Detroit, but including the operations of Contra Costa Newspapers (CCN) as if owned in the second quarter of 1995, newspaper advertising revenue increased 4.0% from 1995, on a full-run ROP linage decrease of 0.4%. Year-to-date, on this same basis, newspaper advertising revenue increased 4.7% from 1995, on a full-run ROP linage decrease of 0.5%. Classified advertising revenue increased 12.7% over second quarter last year, on a 16.8% full-run ROP linage increase. This is the 16th consecutive quarter of year-over-year classified revenue growth. The employment category showed the largest gain, posting a 24.8% revenue improvement, with linage up 17.0% from 1995. Classified revenue growth remains strong, even though employment advertising is no longer reflecting the exceptional year-over-year increases that it did during the last two quarters. On a pro forma basis for CCN, but excluding Detroit, classified advertising revenue increased 9.9% from 1995. On this same basis, year-to-date classified advertising revenue increased 12.8% from 1995. For the quarter, retail advertising revenue improved by $560,000, or 0.3%, over last year. On a pro forma basis for CCN, but excluding Detroit, retail revenue was down 2.6% from the prior year. Retail results were soft in most of our major markets, due partly to a number of out of business and customer bankruptcy situations. On a pro forma basis for CCN, but excluding Detroit, year-to-date retail revenue was down 2.3% from 1995. 7 8 General advertising revenue was up $4.2 million, or 8.8%, from second quarter 1995. On a pro forma basis for CCN, but excluding Detroit, general advertising revenue was up $4.0 million, or 9.3% from 1995. General advertising revenue was stronger than it had been in the last two quarters, principally as a result of airlines, telecommunications and factory automotive categories. On this same basis, for the first two quarters of 1996, general advertising revenue was up 3.1% from the prior year. Circulation revenue increased $2.8 million, or 2.3% from second quarter 1995. On a pro forma basis for CCN, but excluding Detroit, circulation revenue increased by $2.2 million, or 2.0%, on an average daily circulation decrease of 4.8% and average Sunday circulation decrease of 3.3%, offset by a 6.5% increase in the average rate. On a pro forma basis for CCN, but excluding Detroit, circulation revenue was up 2.7% so far this year. Other newspaper revenue increased by $57,000, or 0.3%, from 1995 for the quarter. On a pro forma basis for CCN, but excluding Detroit, other newspaper revenue decreased by $2.0 million in the second quarter and year-to-date, primarily due to reduced newsprint waste sale revenue caused by softening newsprint prices. BIS revenue in the second quarter of 1996 decreased $328,000, or 0.3%, reflecting a modest decline in Knight-Ridder Financial results. On a year-to-date basis, BIS revenue decreased $10.9 million, or 4.2%, reflecting the absence of the JoC. Excluding the impact of the JoC sale and acquisitions, BIS operating revenue decreased 1.4% from last year. OPERATING COSTS Labor and employee benefit costs rose $4.5 million, or 1.6%, above second quarter 1995. On a pro forma basis for CCN, but excluding Detroit, labor and employee benefits were $1.2 million, or 0.4%, below 1995. On this same basis, year-to-date labor and employee benefits were $3.1 million, or 0.6%, below 1995. Excluding CCN and Detroit, the work force decreased 4.0% in the quarter and 5.0% for the year-to-date, primarily as a result of last year's fourth quarter buyouts in a number of locations, including Miami, Philadelphia and San Jose. Newsprint, ink and supplement costs increased $19.7 million, or 18.2% from second quarter 1995, on a 27.5% increase in the average newsprint price and a 4.9% decrease in newsprint consumption. These costs were up $51.4 million, or 25.3%, for the year-to-date, on a 36.1% increase in the average newsprint price and a 4.7% decrease in consumption. Although there were no price increases in 1996, the quarter and year were impacted by the newsprint price increases imposed in 1995. Other operating costs rose $3.9 million, or 2.2% over second quarter 1995. On a pro forma basis for CCN, but excluding Detroit, other operating costs were $4.2 million, or 2.4%, below second quarter 1995 and $11.8 million, or 3.3%, below year-to-date 1995, due to good cost controls. Depreciation and amortization increased $5.7 million, or 15.3% over second quarter 1995 and $10.9 million, or 14,6%, for the year-to-date, primarily due to the acquisition of CCN. Excluding the impact of acquisitions, depreciation and amortization increased by 3.5% for the quarter and 3.2% for the year-to-date. 8 9 NON-OPERATING ITEMS Interest expense, net of interest income and interest expense capitalized, increased $5.7 million over second quarter 1995 and $11.5 million for the year-to-date, due to higher debt levels. The average debt balance increased $517.2 million from the second quarter of last year, due largely to the financing of the CCN acquisition and share repurchases. Equity in earnings of unconsolidated companies and joint ventures increased by $1.4 million for the quarter and $8.2 million for the year-to-date, due to earnings improvements from our newsprint mill investments, which are benefiting from the rise in newsprint prices over last year. "Other, net" was $82.4 million below second quarter 1995 and $83.9 million below year-to-date 1995, due to the gain on the sale of the JoC recorded in the second quarter of 1995. OTHER On July 26, 1996, the company announced the completion of the sale of Knight-Ridder Financial to Global Financial Information for $275 million. The Board of Directors of the company declared a two-for-one stock split in the form of a 100% common stock dividend on June 21, 1996, payable on July 31, 1996, to shareholders of record, as of the close of business on July 10, 1996. The Board of Directors also approved an 8.1% increase in the company's quarterly dividend from $.18 1/2 to $.20 per share (after giving effect to the previously mentioned stock split). On June 10, 1996, the company announced that Technimetrics, Inc., had entered into an agreement to purchase Grabill-Bloom, Inc., a stock surveillance firm that helps companies track their shareholders on a real-time basis. In March 1996, the company announced that Tele-Communications, Inc. (TCI), had agreed to purchase all of Knight-Ridder's interests in the jointly owned cable properties for a price of $420 million in cash and TCI common stock. The two companies are equal owners of TKR Cable Company, which owns and operates systems in New Jersey and New York, as well as a 15% interest in another TCI Cable venture that operates cable systems in five Southern states. The sale is expected to close later this year. During the second quarter of 1996, the company purchased approximately 1.9 million shares (post-split) of Knight-Ridder common stock. The company has remaining authorization to repurchase 3.9 million shares (post-split) and plans to repurchase additional shares. A portion of the proceeds from the sale of both KRF and our cable investment will be used to repurchase stock. 9 10 LIQUIDITY Net cash provided by operating activities increased to $95.8 million from $53.1 million in the second quarter of 1995. The increase was attributed to the 1995 gain on the JoC sale, since the net cash from the sale was included in investing activities, rather than operating activities. Cash and short term cash investments were up $8.2 million from June 25, 1995, and up $5.2 million from year end. Total debt increased $519.8 million from second quarter 1995 and increased $40.2 million from Dec. 31, 1995, due to the CCN acquisition, the 11.5 million shares (post-split) repurchased in 1995 and the 2.1 million shares (post-split) repurchased in 1996. The total-debt-to-total-capital ratio was 49.0%, up from 47.7% at year end and 32.4% in June 1995. Management intends to use some portion of the proceeds from the sale of KRF and our cable investment to reduce debt before year end. Approximately $200.0 million in aggregate unused credit lines remained at the end of the quarter. The ratio of current assets to current liabilities was 1.2:1 at June 30, 1996, and 1.1:1 at June 25, 1995, and Dec. 31, 1995. OUTLOOK FOR THE REMAINDER OF THE YEAR As we look ahead to the second half of the year, we continue to anticipate a year of strong earnings growth. While we are concerned about the lackluster retail performance and Northern California's market, classified revenue continues to do well, albeit not as strong as in the first quarter. The continuing decline in newsprint prices and the cycling through of the Detroit strike will positively impact the second half of the year. 1995's newsprint increases will still cause year-over-year increases of between 10% and 15% in 1996, but this is significantly less than initially anticipated. 10 11 PART II - OTHER INFORMATION Item 1. Legal Proceedings. As reported on Part I, Item 2, of the Company's Form 10-Q for the quarter ended March 31, 1996, on April 1, 1996 the Company announced that a libel suit filed by Richard A. Sprague against the Philadelphia Inquirer in 1973 had been settled. Item 6. Exhibits and Reports of Form 8-K (a) Exhibits No. 4 - Rights Agreement dated June 21, 1996, incorporated by reference to the Company's Form 8-A filed electronically July 10, 1996. No. 27 - Financial Data Schedule (for SEC use only). No. 99 - Additional Exhibits. (b) Reports on Form 8-K Form 8-K dated July 9, 1996. Item 5 - Other Events. Item 7 - Exhibits; no financial statements filed. SIGNATURES Pursuant to the requirements 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. KNIGHT-RIDDER, INC. (Registrant) Date: August 12, 1996 Ross Jones Senior Vice President and Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer of Registrant) 11 EX-27.1 2 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENT OF INCOME, THE CONSOLIDATED BALANCE SHEET, THE CONSOLIDATED STATEMENT OF CASH FLOWS AND THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 1,000 3-MOS DEC-29-1996 APR-01-1996 JUN-30-1996 31,230 0 371,284 14,875 76,717 551,614 1,816,489 860,163 3,014,084 478,753 456,276 0 0 1,008 1,094,802 3,014,084 716,982 716,982 127,643 636,532 9,106 4,521 19,175 71,344 28,992 42,352 0 0 0 42,352 .43 .43 COST OF GOODS SOLD CONSISTS OF NEWSPRINT, INK & SUPPLEMENTS. OTHER EXPENSES CONSIST OF ALL NON-OPERATING COSTS, NET, EXCLUDING INCOME TAXES. AMOUNT INCLUDES INTEREST EXPENSE, NET OF INTEREST INCOME AND OTHER NON-OPERATING COSTS, NET OF NON-OPERATING INCOME. 12
EX-27.2 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENT OF INCOME, THE CONSOLIDATED BALANCE SHEET, THE CONSOLIDATED STATEMENT OF CASH FLOWS, AND THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 1,000 6-MOS DEC-29-1996 JAN-01-1996 JUN-30-1996 31,230 0 371,284 14,875 76,717 551,614 1,816,489 860,163 3,014,084 478,753 456,276 0 0 1,008 1,094,802 3,014,084 1,414,643 1,414,643 254,163 1,283,581 18,882 10,166 38,802 112,180 46,310 65,870 0 0 0 65,870 .67 .67 COST OF GOODS SOLD CONSISTS OF NEWSPRINT, INK & SUPPLEMENTS. OTHER EXPENSES CONSIST OF ALL NON-OPERATING COSTS, NET EXCLUDING INCOME TAXES. AMOUNT INCLUDES INTEREST EXPENSE, NET OF INTEREST INCOME AND OTHER NON-OPERATING COSTS, NET OF NON-OPERATING INCOME. 13
EX-99 4 OTHER FINANCIAL INFORMATION 1 EXHIBIT 99 OTHER FINANCIAL INFORMATION (UNAUDITED) BUSINESS SEGMENT INFORMATION (IN THOUSANDS OF DOLLARS)
QUARTER ENDED TWO QUARTERS ENDED FOUR QUARTERS ENDED -------------------------------------------------------------------------- JUNE 30 JUNE 25 JUNE 30 JUNE 25 JUNE 30 JUNE 25 1996 1995 1996 1995 1996 1995 -------- -------- ---------- ---------- ---------- ---------- OPERATING REVENUE Newspapers................................ $595,581 $565,726 $1,166,337 $1,102,859 $2,313,660 $2,201,781 Business Information Services............. 121,401 121,729 248,306 259,195 490,763 516,821 -------- -------- ---------- ---------- ---------- ---------- $716,982 $687,455 $1,414,643 $1,362,054 $2,804,423 $2,718,602 ======== ======== ========== ========== ========== ========== OPERATING INCOME Newspapers................................ $ 89,497 $ 94,736 $ 150,743 $ 172,465 $ 259,424 $ 353,240 Business Information Services............. 1,803 3,072 2,776 9,756 5,042 20,297 Corporate................................. (10,850) (13,094) (22,457) (26,500) (48,841) (46,651) -------- -------- ---------- ---------- ---------- ---------- $ 80,450 $ 84,714 $ 131,062 $ 155,721 $ 215,625 $ 326,886 ======== ======== ========== ========== ========== ========== DEPRECIATION AND AMORTIZATION Newspapers................................ $ 28,291 $ 23,809 $ 56,567 $ 47,474 $ 105,144 $ 94,713 Business Information Services............. 13,567 12,785 27,231 26,200 53,902 53,137 Corporate................................. 969 554 1,906 1,086 3,510 1,876 -------- -------- ---------- ---------- ---------- ---------- $ 42,827 $ 37,148 $ 85,704 $ 74,760 $ 162,556 $ 149,726 ======== ======== ========== ========== ========== ==========
KNIGHT-RIDDER SHARE TRADING (AS QUOTED BY KNIGHT-RIDDER FINANCIAL SERVICES)
1996 SECOND QUARTER ** 1995 SECOND QUARTER ** - --------------------------------------------- ---------------------------------------------- VOLUME PER DAY HIGH LOW CLOSE VOLUME PER DAY HIGH LOW CLOSE 378,178 38 7/16 32 11/16 36 1/4 225,130 28 7/8 26 3/16 28 7/16
** Restated to reflect two-for-one stock split effective July 31, 1996. 14 -----END PRIVACY-ENHANCED MESSAGE-----