-----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, Hg2m2qkbfxc3MA2CunmjuGiiO8rru7UNdR4D5qaE3zHNtA21Kly989PlSxAbRTx3 JqtrMeCaXMhW/CqdUnjvdg== 0000898430-96-003853.txt : 19960816 0000898430-96-003853.hdr.sgml : 19960816 ACCESSION NUMBER: 0000898430-96-003853 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIMES MIRROR CO /NEW/ CENTRAL INDEX KEY: 0000925260 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 954481525 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13492 FILM NUMBER: 96614024 BUSINESS ADDRESS: STREET 1: TIMES MIRROR SQUARE STREET 2: 220 WEST FIRST STREET CITY: LOS ANGELES STATE: CA ZIP: 90053 BUSINESS PHONE: 2132373700 MAIL ADDRESS: STREET 1: TIMES MIRROR SQUARE STREET 2: 202 WEST 1ST ST CITY: LOS ANGELES STATE: CA ZIP: 90053 FORMER COMPANY: FORMER CONFORMED NAME: NEW TMC INC DATE OF NAME CHANGE: 19940613 10-Q 1 FORM 10-Q DATED JUNE 30, 1996 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996 OR [] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to __________________ Commission File Number 1-13492 ---------------- THE TIMES MIRROR COMPANY STATE OF INCORPORATION: DELAWARE I.R.S. EMPLOYER ID. NO. 95-4481525
---------------- TIMES MIRROR SQUARE Los Angeles, California 90053 Telephone: (213) 237-3700 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Number of shares of Series A Common Stock outstanding at August 8, 1996: 73,707,197 Number of shares of Series C Common Stock outstanding at August 8, 1996: 27,443,286 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- THE TIMES MIRROR COMPANY PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Financial information herein, and management's discussion thereof, include consolidated data for The Times Mirror Company ("Registrant" or "Times Mirror") and its subsidiaries. Registrant and its subsidiaries are sometimes herein referred to collectively as the "Company". 2 THE TIMES MIRROR COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
SECOND QUARTER ENDED YEAR TO DATE ENDED JUNE 30 JUNE 30 ---------------------- ---------------------- 1996 1995 1996 1995 ---------- ---------- ---------- ---------- REVENUES....................... $ 837,295 $ 843,078 $1,644,054 $1,616,748 COSTS AND EXPENSES: Cost of sales................. 434,746 458,419 881,022 880,619 Selling, general and administrative expenses...... 318,260 329,533 628,515 651,522 Restructuring charge.......... 3,223 ---------- ---------- ---------- ---------- 753,006 787,952 1,509,537 1,535,364 OPERATING PROFIT............... 84,289 55,126 134,517 81,384 Interest expense............... (8,583) (5,007) (15,990) (13,739) Interest income................ 1,175 8,490 3,131 14,882 Other, net..................... 2,594 (2,648) 5,888 4,886 ---------- ---------- ---------- ---------- Income from continuing operations before income taxes......................... 79,475 55,961 127,546 87,413 Income taxes................... 33,452 26,750 55,486 41,852 ---------- ---------- ---------- ---------- Income from continuing operations.................... 46,023 29,211 72,060 45,561 Discontinued operations........ (3,165) 1,634,477 Cumulative effect of changes in accounting principles, net of income tax benefit of $8,817........................ (12,724) ---------- ---------- ---------- ---------- NET INCOME..................... $ 46,023 $ 26,046 $ 72,060 $1,667,314 ========== ========== ========== ========== Preferred dividend requirements.................. $ 10,911 $ 13,836 $ 21,822 $ 18,566 ========== ========== ========== ========== Earnings available to common shareholders.................. $ 35,112 $ 12,210 $ 50,238 $1,648,748 ========== ========== ========== ========== Primary earnings per share: Continuing operations......... $ .33 $ .14 $ .47 $ .23 Discontinued operations....... (.03) 13.81 Cumulative effect of accounting changes, net...... (.11) ---------- ---------- ---------- ---------- Primary earnings per share..... $ .33 $ .11 $ .47 $ 13.93 ========== ========== ========== ========== Fully diluted earnings per share......................... $ * $ * $ * $ 12.71 ========== ========== ========== ==========
- -------- * Per share amount on a fully diluted basis has been omitted as the amount is antidilutive in relation to the primary per share amount. See notes to condensed consolidated financial statements 3 THE TIMES MIRROR COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
JUNE 30, DECEMBER 31, 1996 1995 ---------- ------------ (UNAUDITED) ASSETS Current Assets Cash and cash equivalents............................ $ 64,573 $ 182,901 Marketable securities................................ 10,205 72,806 Accounts receivable, less allowance for doubtful accounts and returns of $65,730 and $79,536......... 477,963 561,828 Inventories.......................................... 167,072 173,568 Deferred income taxes................................ 91,789 134,395 Other current assets................................. 93,176 122,539 ---------- ---------- Total Current Assets................................ 904,778 1,248,037 Property, plant and equipment, at cost less accumulated depreciation of $940,788 and $903,608.... 1,174,991 1,174,831 Goodwill.............................................. 644,943 651,745 Other intangibles..................................... 82,226 84,186 Deferred charges...................................... 220,772 199,188 Other assets.......................................... 501,152 459,172 ---------- ---------- $3,528,862 $3,817,159 ========== ==========
See notes to condensed consolidated financial statements 4 THE TIMES MIRROR COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
JUNE 30, DECEMBER 31, 1996 1995 ---------- ------------ (UNAUDITED) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable..................................... $ 317,584 $ 395,292 Employees' compensation.............................. 95,191 118,111 Unearned income...................................... 225,674 222,893 Other current liabilities............................ 188,578 298,894 ---------- ---------- Total Current Liabilities........................... 827,027 1,035,190 Long-term debt........................................ 318,492 247,934 Deferred income taxes................................. 115,979 140,087 Other liabilities..................................... 582,910 587,712 ---------- ---------- Total Liabilities................................... 1,844,408 2,010,923 Common stock subject to put options................... 23,965 Commitments and contingencies Shareholders' Equity Series A preferred stock, $1 par value; 900,000 shares authorized; 824,000 shares issued; stated at liquidation value................................... 411,784 411,784 Series B preferred stock, $1 par value; 25,000,000 shares authorized; 7,789,000 shares issued; stated at liquidation value................................ 164,595 164,595 Preferred stock, $1 par value; 7,100,000 shares authorized; no shares issued Common stock Series A, $1 par value; 500,000,000 shares authorized; 75,148,000 and 77,765,000 shares issued............................................. 75,148 77,765 Series B, $1 par value; 100,000,000 shares authorized; no shares issued Series C, convertible, $1 par value; 300,000,000 shares authorized; 27,479,000 and 27,933,000 shares issued............................................. 27,479 27,933 Additional paid-in capital........................... 201,835 192,266 Retained earnings.................................... 724,986 875,981 Net unrealized gain on securities.................... 54,662 55,912 ---------- ---------- Total Shareholders' Equity.......................... 1,660,489 1,806,236 ---------- ---------- $3,528,862 $3,817,159 ========== ==========
See notes to condensed consolidated financial statements 5 THE TIMES MIRROR COMPANY STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS (IN THOUSANDS) (UNAUDITED)
YEAR TO DATE ENDED JUNE 30 --------------------- 1996 1995 --------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net cash provided by continuing operating activities... $ 142,380 $ 62,206 Net cash provided by (used in) discontinued operating activities............................................ (12,671) 1,263 --------- ---------- Net cash provided by operating activities............. 129,709 63,469 CASH FLOWS FROM INVESTING ACTIVITIES Changes in marketable and long-term securities......... 57,485 (368,195) Capital expenditures................................... (56,698) (56,678) Capitalization of product costs........................ (36,544) (39,943) Acquisitions, net of cash acquired..................... (5,913) (58,413) Proceeds from disposal of cable television operations.. 1,225,013 Proceeds from sales of assets.......................... 5,428 Other, net............................................. (1,806) (10,238) --------- ---------- Net cash provided by (used in) investing activities of continuing operations................................. (43,476) 696,974 Net cash used in investing activities of discontinued operations............................................ (22,044) --------- ---------- Net cash provided by (used in) investing activities... (43,476) 674,930 CASH FLOWS FROM FINANCING ACTIVITIES Repurchases of common and preferred stock.............. (273,418) Proceeds from issuance of premium equity participating securities............................................ 51,221 Dividends paid......................................... (38,517) (57,482) Proceeds from exercise of stock options................ 22,547 Principal repayments of other debt..................... (126) (100,360) Net proceeds (repayment) of commercial paper and short- term borrowings....................................... 33,000 (488,010) Other, net............................................. 732 1,528 --------- ---------- Net cash used in financing activities................. (204,561) (644,324) --------- ---------- Increase (decrease) in cash and cash equivalents........ (118,328) 94,075 Cash and cash equivalents at beginning of year.......... 182,901 81,944 --------- ---------- Cash and cash equivalents at end of period.............. $ 64,573 $ 176,019 ========= ==========
See notes to condensed consolidated financial statements 6 THE TIMES MIRROR COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 -- BASIS OF PREPARATION The accompanying 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 Rule 10-01 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 adjustments) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the fiscal year. For further information, refer to the consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. Certain amounts in previously issued financial statements have been reclassified to conform to the second quarter 1996 presentation. Financial information in the Notes to Condensed Consolidated Financial Statements excludes discontinued operations, except where noted. NOTE 2 -- CHANGES IN ACCOUNTING PRINCIPLES Effective January 1, 1995, the Company changed its method of accounting for certain contract-related revenues from the licensing and sale of training programs and related materials. The Company believes that this provides for consistent accounting treatment among its professional training companies. The Company recorded a cumulative charge of $7,372,000 ($4,511,000 net of taxes, or $.04 per share) as of January 1, 1995. The effect of this change on second quarter and first half 1995 net income before cumulative effect of changes in accounting principles was not significant. Effective January 1, 1995, the Company adopted the Financial Accounting Standards Board's Practice Bulletin 13, "Direct-Response Advertising and Probable Future Benefits," which clarified the accounting for direct-response advertising costs. The Company recorded a cumulative charge of $14,169,000 ($8,213,000 net of taxes, or $.06 per share) as of January 1, 1995. The effect of this change on second quarter and first half 1995 net income before cumulative effect of changes in accounting principles was not significant. NOTE 3 -- REORGANIZATION On February 1, 1995, the Company completed the merger of its cable television operations with Cox Communications, Inc. (Cox) and related transactions. The transactions involved in the reorganization included the merger of the cable television operations with Cox, the retirement of approximately 75% of total debt outstanding at December 31, 1994, the issuance of two new series of preferred stock, and a partial redemption of certain shareholder interests through the distribution of Cox common stock. See Note 2 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 1995 for a detailed discussion of these transactions. NOTE 4 -- DISCONTINUED OPERATIONS Discontinued operations include cable programming, consumer multimedia, an electronic shopping joint venture and cable television. The cable programming business, consumer multimedia business and the joint venture were discontinued during the third quarter of 1995. The cable television operations were disposed of on February 1, 1995 in connection with the reorganization described in Note 3, for a nontaxable gain of $1.634 billion, or $13.80 per share. 7 THE TIMES MIRROR COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) The combined results of operations of these businesses have been reported as discontinued operations. The income (loss) from discontinued operations is as follows (in thousands):
SECOND QUARTER YEAR TO DATE ENDED ENDED JUNE 30, 1995 JUNE 30, 1995 -------------- ------------- Revenues........................................... $ 215 $ 42,475 ------- ---------- Income (loss) before income taxes.................. (5,389) 2,090 Income tax provision (benefit)..................... (2,224) 1,907 ------- ---------- Net income (loss).................................. (3,165) 183 Net gain on disposal............................... 1,634,294 ------- ---------- Total discontinued operations...................... $(3,165) $1,634,477 ======= ==========
NOTE 5 -- RESTRUCTURING At June 30, 1996, the Company had restructuring liabilities of $183,075,000, of which $89,130,000 is included in "Other current liabilities" and $93,945,000 is included in "Other liabilities" in the condensed consolidated balance sheet. Cash spent for restructuring program actions was $74,674,000 during the year to date ended June 30, 1996, of which $33,220,000 was for severance payments. As of June 30, 1996, approximately 2,400 full-time equivalent employees had terminated employment under the 1995 restructuring program. The remaining liability for severance costs at June 30, 1996 aggregated $30,856,000. NOTE 6 -- SUPPLEMENTAL CASH FLOW INFORMATION Cash payments during the year to date ended June 30, 1996 and 1995 included interest, net of amounts capitalized, of $11,569,000 and $15,834,000 and income taxes of $22,243,000 and $38,890,000, respectively. The reorganization described in Note 3 resulted in the following non-cash transactions during the year to date ended June 30, 1995 (in thousands): Fair value of Cox Class A common stock issued to noncontrolling shareholders and accounted for as a partial redemption of certain shareholder interests................................................ $932,000 Transfer of debt, related interest and other liabilities to Cox....... 133,257 Exchange of debentures................................................ 246,965 Issuance of Series A preferred stock.................................. 411,784 Exchange of common stock for Series B preferred stock................. 349,954 Retirement of treasury stock.......................................... 61,543
NOTE 7 -- OTHER, NET Other, Net in 1995 includes a first quarter gain of $7,163,000, or $4,500,000 ($.04 per share) after taxes, and a second quarter loss of $3,645,000, or $2,149,000 ($.02 per share) after taxes, on asset sales. 8 THE TIMES MIRROR COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) NOTE 8 -- DEBT Short-term debt consisted of the following (in thousands):
JUNE 30, DECEMBER 31, 1996 1995 -------- ------------ Commercial paper at a weighted average interest rate of 5.5% .................................................. $ 33,000 Current maturities of long-term debt ................... 250 $ 253 -------- -------- $ 33,250 $ 253 ======== ======== Long-term debt is summarized as follows (in thousands): JUNE 30, DECEMBER 31, 1996 1995 -------- ------------ 7 1/4% Debentures due March 1, 2013..................... $148,215 $148,215 7 1/2% Debentures due July 1, 2023...................... 98,750 98,750 4 1/4% PEPS due March 15, 2001; 1,305,000 securities stated at the current maturity value of approximately $54.13 per security.................................... 70,643 Others at various interest rates, maturing through 2001. 1,134 1,222 -------- -------- 318,742 248,187 Less current maturities................................. (250) (253) -------- -------- Long-term debt.......................................... $318,492 $247,934 ======== ========
In March 1996, the Company issued 1,305,000 securities, designated as "4 1/4% Premium Equity Participating Securities (PEPS)" for gross proceeds of $39.25 per security. This obligation hedges a significant portion of the Company's investment in common stock of Netscape Communications Corporation (Netscape). The amount payable at maturity is determined by reference to the fair market value of the Netscape stock. As a result, the maturity value will generally move in tandem with changes in the fair market value of the Netscape stock. The PEPS obligation is recorded (a) at its maturity value or (b) at the issuance price of $39.25 if the fair market value of Netscape common stock is between $39.25 and $45.14. At June 30, 1996, the fair market value of Netscape common stock was $62.25 per share and the maturity value at that date, which is determined by a formula, is 86.96% of the fair market value. In early May 1996, the Company terminated an interest rate swap as well as its two forward swap agreements. The net cash payment related to the termination of these agreements was not significant. At the completion of these transactions, the Company had one interest rate swap outstanding for a notional amount of $100,000,000, expiring in 2023, which exchanges payments to the Company at a fixed rate of 7 3/8% for payments by the Company at a variable rate based generally on LIBOR. NOTE 9 -- EARNINGS AND DIVIDENDS PER SHARE Primary earnings per share is computed by dividing net income, less preferred dividend requirements, by the weighted average number of shares of common stock and common stock equivalents outstanding during the period. The weighted average number of shares used for primary earnings per share totaled 107,415,000 and 113,192,000 for the quarters ended June 30, 1996 and 1995, respectively, and 107,561,000 and 118,386,000 for the year to date ended June 30, 1996 and 1995, respectively. Fully diluted earnings per share is computed by dividing net income, less preferred dividend requirements for Series A preferred stock, by the weighted average number of shares of common stock and common stock equivalents outstanding, assuming that the Series B preferred stock outstanding at the end of the 1996 and 1995 9 THE TIMES MIRROR COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) second quarters was converted to common stock on a one-for-one basis on January 1, 1996 and March 1, 1995, respectively. The weighted average number of shares for fully diluted earnings per share is 115,343,000 and 130,320,000 for the quarters ended June 30, 1996 and 1995, respectively, and 115,994,000 and 130,282,000 for the year to date ended June 30, 1996 and 1995, respectively. Cash dividends of $.10 and $.06 per share of common stock were declared in the quarters ended June 30, 1996 and 1995, respectively. NOTE 10 -- FAIR VALUE OF FINANCIAL INSTRUMENTS Financial instruments consist of the following (in thousands):
JUNE 30, 1996 DECEMBER 31, 1995 -------------------- ------------------- CARRYING CARRYING VALUE FAIR VALUE VALUE FAIR VALUE --------- ---------- -------- ---------- Assets: Investments.......................... $ 120,499 $120,499 $102,663 $102,663 Liabilities: Long-term debt....................... 318,492 315,234 247,934 273,582 Off Balance Sheet: Unrealized net gain on interest rate swaps............................... -- 7,350 -- 19,478
Investments are comprised of investments in equity securities, which are classified as available-for-sale, and are carried at fair value in the condensed consolidated balance sheets. Fair value is based on estimated or quoted market prices. The cost of these investments was $7,937,000 at June 30, 1996 and December 31, 1995. The unrealized gain is reported as a separate component of shareholders' equity, net of applicable income taxes. The fair value of short-term debt approximates carrying value due to its short-term nature. NOTE 11 -- STOCK REPURCHASE PROGRAM The Company's stock repurchase program, which includes the issuance of put options from time to time, is described in Note 13 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. The Company repurchased 4,611,000 shares of common stock during the first half of 1996 for an aggregate cost of $182,796,000. In connection with 1,500,000 of the shares repurchased during the second quarter of 1996, the Company entered into a series of put and call transactions which will average the cost of these repurchases over the remainder of the year. The strike prices are approximately $40.83 for puts and approximately $42.92 for calls. The fair value of these instruments was not significant at June 30, 1996. During the first half of 1996, the Company issued 700,000 put options with an average strike price of $39.49. The cash received from the sale of these put options was not significant. The put options, which have various 1996 expiration dates, entitle the holder to sell shares of Times Mirror common stock to the Company at the strike price on the expiration date of the put option. The potential obligation under the 600,000 put options outstanding at June 30, 1996 has been transferred from shareholders' equity to "Common stock subject to put options." NOTE 12 -- STOCK OPTIONS The Company granted each eligible employee 100 stock options on January 31, 1996. This grant is expected to result in the issuance of approximately 1,400,000 stock options at a price of $30.8125. These options will vest 100 percent on January 31, 1999 for employees still employed by the Company at that date. NOTE 13 -- INCOME TAXES The Company's effective tax rate for continuing operations exceeds the federal statutory income tax rate due principally to state taxes and permanent state and federal tax differences related to the non-deductible amortization of goodwill. 10 THE TIMES MIRROR COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) NOTE 14 -- USE OF ESTIMATES AND OTHER UNCERTAINTIES Financial statements prepared in accordance with generally accepted accounting principles require management to make estimates and judgments that affect amounts and disclosures reported in the financial statements. Actual results could differ from those estimates, although management does not believe that any differences would materially affect its financial position or reported results. The Company's future results could be adversely affected by a number of factors, including (a) an increase in paper, printing and distribution costs over the levels anticipated; (b) increased consolidation among major retailers or other events depressing the level of display advertising; (c) an economic downturn in the Company's principal newspaper markets or other occurrences leading to decreased circulation and diminished revenues from both display and classified advertising; (d) competitive pressures arising from increased consolidation in the legal information industry and the college textbook publishing industry; (e) an increase in expenses related to new initiatives and product improvement efforts in the legal information, flight information and health information operating units; (f) unfavorable foreign currency fluctuations; and (g) a general economic downturn resulting in decreased professional or corporate spending on discretionary items such as information or training and in decreased consumer spending on discretionary items such as magazines or newspapers. NOTE 15 -- CONTINGENT LIABILITIES The Company and its subsidiaries are defendants in actions for libel and other matters arising out of their business operations. In addition, from time to time, the Company and its subsidiaries are involved as parties in various governmental and administrative proceedings, including environmental matters. The Company does not believe that any such proceedings currently pending will have a material adverse effect on its consolidated financial position, although an adverse resolution in any reporting period of one or more of these matters could have a material impact on results of operations for that period. NOTE 16 -- SUBSEQUENT EVENTS On July 3, 1996, the Company and Mosby-Year Book, Inc. (Mosby), a wholly- owned subsidiary of the Company, entered into an Exchange Agreement pursuant to which The McGraw-Hill Companies, Inc. agreed to sell all of the outstanding shares of the capital stock of its subsidiary, Shepard's/McGraw-Hill, Inc. (Shepard's), to the Company in exchange for (i) the stock of Times Mirror Higher Education Group, Inc., (ii) the assets and related liabilities of Mosby relating to Mosby's college-level life and physical science text business, (iii) certain assets and liabilities of Times Mirror International Publishers-- U.S., Inc. and affiliated entities relating to the Company's college text business and (iv) a cash payment. Revenues of these businesses represented approximately 5 percent and 7 percent of consolidated revenues of the Company for the six months ended June 30, 1996 and the year ended December 31, 1995, respectively. This transaction is subject to approval pursuant to the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as amended, and to other closing conditions. It is anticipated that the transaction will close during the third quarter of 1996, at which point, Shepard's is expected to be contributed to a new 50/50 partnership between the Company and Reed Elsevier Inc., as part of a broader strategic alliance between Matthew Bender, Times Mirror's legal publisher, and Lexis-Nexis, a Reed Elsevier subsidiary and provider of full-text online information services in the legal, news, business and government areas. 11 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW GENERAL Strong gains in operating results for the second quarter of 1996 were primarily due to significant reductions in operating expenses achieved through the Company's 1995 restructuring and other cost reduction programs, as well as a decline in newsprint expense. In the second half of 1996, a slower rate of year over year improvement in operating results is expected compared to the first half of 1996, because the restructuring program began in the third quarter of 1995 and expense reductions will have a smaller impact on the Company's seasonally larger third and fourth quarters. As further discussed under the Professional Information Outlook, operating results for the second half of 1996 will also be affected by various actions being contemplated primarily due to the expected sale of the Company's college publishing businesses. NEWSPAPER PUBLISHING OUTLOOK In the second quarter of 1996, the operating performance of the Newspaper Publishing segment improved significantly as lower advertising revenues were more than offset by the decline in operating expenses resulting from last year's restructuring and other cost reduction programs. Also, beginning in March 1996, newsprint prices have fallen steadily after rising by more than 80 percent since the first quarter of 1994. Further newsprint price reductions were announced by newsprint suppliers in July 1996 and, based on these new prices, third quarter 1996 average prices are expected to be lower than the average prices in the third quarter of 1995. Such price reductions, combined with anticipated lower newsprint consumption, is expected to decrease newsprint expense in the third quarter of 1996 compared to the third quarter of 1995. This trend is expected to continue for the remainder of the year and coupled with lower consumption due to five fewer days in the fourth quarter of 1996, newsprint expense could experience a double-digit decline in the fourth quarter of 1996. Newspaper Publishing revenues in the second quarter of 1996 reflected lower local advertising revenues, primarily due to grocery and department store consolidations in Southern California as well as softening of local advertising in Baltimore. This trend is expected to continue for the remainder of 1996. Circulation revenues, which rose marginally in the first half of 1996, may be lower year over year as price reductions may not be offset by the higher circulation levels expected to be generated from promotional campaigns. A major promotional campaign to increase circulation at the Los Angeles Times, including a reduced single copy price in certain markets, will temper circulation revenue growth although the lower price has increased single copy sales in the promotional areas by more than 20 percent. Overall, the Newspaper Publishing segment is expected to experience year over year profit margin expansion given the outlook for more favorable newsprint pricing and the 1995 restructuring and other expense reductions. PROFESSIONAL INFORMATION OUTLOOK In July 1996, Times Mirror signed a definitive agreement with The McGraw- Hill Companies, Inc. to acquire Shepard's/McGraw-Hill, Inc. (Shepard's), a legal citation service business, in exchange for Times Mirror's college publishing businesses and additional consideration. In addition, Times Mirror and Reed Elsevier Inc. announced that Shepard's would be contributed to a new 50/50 partnership between the Company and Reed Elsevier, as part of a broader strategic alliance between Matthew Bender, Times Mirror's legal publisher, and Lexis-Nexis, a Reed Elsevier subsidiary and provider of full-text online information services in the legal, news, business and government areas. Times Mirror's college publishing businesses are comprised of business and economics publisher Richard D. Irwin; business professional publisher IPRO; life and physical science publisher Wm. C. Brown Publishers; social science and humanities publisher Brown & Benchmark Publishers; and the related college life and physical science publications of Mosby-Year Book, Inc. 12 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) In connection with these transactions, Times Mirror expects to report a gain in the third quarter of 1996, the amount of which will be determined by an independent third party appraisal of the value of the exchanged companies. This gain is expected to be largely offset by significant nonrecurring expenses (a) at Mosby-Year Book, Inc. as a result of the disposition of its college publishing business, (b) for the realignment of the scope and scale of the remaining international sales, marketing and book distribution operations and (c) for certain other aspects of the segment's operations. The Company's divestiture of these college publishing businesses will have a material impact on the results of this segment in 1996, not only in reduced revenue in the third and fourth quarters of 1996, but also in the international revenues and expenses of the ongoing health science publishing businesses of Mosby-Year Book, Inc. The 1996 outlook for other businesses in this segment remains favorable, with growth expected at Jeppesen Sanderson, the Company's flight information business; improved results in the training group; and continued stabilization of operating performance at Matthew Bender, the Company's legal publisher. CONSUMER MEDIA OUTLOOK Advertising revenues, excluding special publications in both years, are expected to be flat year over year, continuing the trend of the first and second quarters of 1996. While newsstand sales of special interest magazines have increased during the first half of 1996, subscription revenues have declined. These circulation trends are expected to continue for the remainder of 1996. The anticipated decline in subscriptions, reflecting lower rate bases for two magazines as well as new subscription response rates that continue to lag the prior year's, is expected to more than offset any improvement in newsstand sales. CONSOLIDATED RESULTS OF OPERATIONS The following table summarizes Times Mirror's financial results (dollars in thousands, except per share amounts):
SECOND QUARTER YEAR TO DATE ------------------ ---------------------- 1996 1995 1996 1995 -------- -------- ---------- ---------- Revenues........................... $837,295 $843,078 $1,644,054 $1,616,748 Operating profit................... 84,289 55,126 134,517 81,384 Interest expense................... (8,583) (5,007) (15,990) (13,739) Interest income.................... 1,175 8,490 3,131 14,882 Income from continuing operations.. 46,023 29,211 72,060 45,561 Net income (loss) from discontinued operations........................ (3,165) 183 Net gain on disposal of cable television........................ 1,634,294 Cumulative effect of changes in accounting principles........................ (12,724) Net income......................... 46,023 26,046 72,060 1,667,314 Preferred dividend requirements.... 10,911 13,836 21,822 18,566 Earnings available to common shareholders...................... 35,112 12,210 50,238 1,648,748 Primary earnings per share from continuing operations........................ $ .33 $ .14 $ .47 $ .23 Primary earnings per share......... $ .33 $ .11 $ .47 $ 13.93
Consolidated revenues for the second quarter of 1996 declined by less than 1 percent compared to the second quarter of 1995 while revenues for the first half of 1996 increased 1.7 percent compared to the same prior year period. Advertising revenue at the newspapers and magazines declined during the second quarter of 1996 while most of the Professional Information companies achieved higher revenues in 1996. 13 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Consolidated operating profit in the second quarter and first half of 1996 increased 52.9 percent and 65.3 percent, respectively, from the prior year periods, primarily reflecting the improvement in the Newspaper Publishing segment. Operating results improved in all business segments, due principally to greater than expected cost savings resulting from the 1995 restructuring and other cost reduction programs. Income from continuing operations in the second quarter of 1996 increased 57.6 percent, as compared to the second quarter of 1995, which included an after-tax loss on an asset sale of $2.1 million or $.02 per share. Excluding the 1995 loss on asset sale, income from continuing operations in the second quarter of 1996 would have increased 46.8 percent. Higher operating profit for the second quarter and the first half of 1996 was partially offset by an increase in interest expense and lower interest income, reflecting higher debt levels and reductions in interest earning investments compared to 1995. These investments were substantially reduced, beginning in the latter part of 1995, due to the cash requirements of the restructuring program and share repurchases. Net income in the 1996 second quarter was $46.0 million, or $.33 per share, compared with $26.0 million, or $.11 per share, in the second quarter of 1995. The 1995 second quarter included a loss of $3.2 million, or $.03 per share, from the Company's discontinued multimedia operations. Net income for the first half of 1995 included a gain of $1.634 billion, or $13.80 per share, on the first quarter 1995 disposition of the Company's discontinued cable television operations as well as an after-tax charge of $12.7 million, or $.11 per share, for accounting changes. ANALYSIS BY SEGMENT The following sections discuss the revenues and operating results of the Company's principal lines of business. All comments, except as noted, apply to both the second quarter and first half of 1996 compared to the same prior year periods. NEWSPAPER PUBLISHING Newspaper Publishing revenues and operating profit were as follows (dollars in thousands):
SECOND QUARTER YEAR TO DATE ------------------------- ---------------------------- 1996 CHANGE 1995 1996 CHANGE 1995 -------- ------ -------- ---------- ------ ---------- Revenues Advertising............ $391,346 (2.6)% $401,737 $ 761,270 .3% $ 758,698 Circulation............ 113,235 (.7) 114,072 226,486 1.1 223,975 Other.................. 12,519 16.2 10,778 24,280 21.0 20,066 -------- -------- ---------- ---------- $517,100 (1.8) $526,587 $1,012,036 .9 $1,002,739 ======== ======== ========== ========== Operating profit........ $ 75,965 43.1 $ 53,093 $ 126,960 43.6 $ 88,438 Operating profit excluding restructuring charge................. $ 75,965 43.1 $ 53,093 $ 126,960 38.5 $ 91,661
Newspaper Publishing revenues in the second quarter of 1996 declined slightly over the second quarter of 1995, reflecting lower advertising revenues due to the closure of the New York City edition of Newsday in mid- July 1995, reduced advertising linage at the Los Angeles Times resulting from consolidation of department stores and supermarket chains in Southern California, and weakness in local advertising in Baltimore. For the first half of 1996, advertising revenues were flat although six additional weekdays were included in 1996. Second 14 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) quarter 1996 circulation revenues decreased from the prior year due principally to the closure of New York Newsday. Circulation revenues for the first half of 1996 improved from the same period in 1995, as price increases for home deliveries at most newspapers and the six additional weekdays included in 1996 more than offset the decline in revenues resulting from the closure of New York Newsday. Operating profit for the Newspaper Publishing segment rose substantially in the 1996 second quarter, led by strong results at The Times and Newsday, the Company's two largest newspapers. The operating profit margin in the second quarter of 1996 expanded to 14.7 percent from 10.1 percent in the prior year. Newsprint expense, accounting for more than 20 percent of the operating costs of this segment in the second quarter and first half of both years, declined slightly in the second quarter of 1996 as higher average per-ton prices were offset by lower consumption levels. Other costs decreased by approximately 8 percent in the second quarter of 1996 compared to the second quarter of 1995 as a result of various cost reduction measures. Excluding a restructuring charge in 1995, operating profit for the first half of 1996 increased 38.5 percent, reflecting the overall reduction in the cost base. PROFESSIONAL INFORMATION Professional Information revenues and operating profit were as follows (dollars in thousands):
SECOND QUARTER YEAR TO DATE -------------------------- -------------------------- 1996 CHANGE 1995 1996 CHANGE 1995 -------- ------ -------- -------- ------ -------- Revenues............... $256,949 2.7% $250,101 $494,023 4.3% $473,439 Operating profit....... $ 27,244 18.6 $ 22,981 $ 40,405 27.4 $ 31,719 Professional Information revenue growth continued, but at a slower pace in 1996. For the first half of 1996, revenues increased due principally to higher revenues at Mosby-Year Book, Inc., the Company's health science publisher, which benefited from 1995 acquisitions; and Jeppesen Sanderson, the Company's flight information business; and the training companies. Segment operating profit in the second quarter of 1996 improved over the second quarter of 1995 reflecting strong performances by the business lines of this segment. CONSUMER MEDIA Consumer Media revenues and operating losses were as follows (dollars in thousands): SECOND QUARTER YEAR TO DATE -------------------------- -------------------------- 1996 CHANGE 1995 1996 CHANGE 1995 -------- ------ -------- -------- ------ -------- Revenues............... $ 63,365 (5.0)% $ 66,693 $138,122 (2.1)% $141,062 Operating loss......... $ (1,857) 31.6 $ (2,713) $ (559) 89.9 $ (5,533)
Consumer Media revenues declined modestly in the second quarter of 1996, as lower advertising and subscription revenues at Times Mirror Magazines depressed results. The lower advertising revenue at the magazines was due to the absence of special publications, such as Ocean Planet, which benefited 1995 results. Excluding the special publications in both years, advertising revenue for the 1996 second quarter and year to date was flat with the prior year periods. Despite lower revenues, the 1996 second quarter operating loss was lower than the second quarter of 1995 largely as a result of the 1995 restructuring and other cost reduction programs. 15 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES Capital expenditures in 1996 are expected to total approximately $140 million for the full year, compared to $128.6 million spent in 1995. Approximately $25 million of the expected 1996 capital expenditures are related to relocations that follow the 1995 restructuring program. Total debt of $351.7 million at June 30, 1996 increased approximately $100 million from the year end 1995 level due to the issuance of commercial paper and Premium Equity Participating Securities (PEPS). As described in Note 8 to the Condensed Consolidated Financial Statements, the PEPS hedge a significant portion of the Company's investment in Netscape Communications Corporation common stock. In December 1995, the Board of Directors authorized the repurchase of 12 million shares of common stock over the next three years. Repurchases are expected to be made from time to time in the open market or in private transactions, depending on market conditions, and may be discontinued at any time. The common shares purchased are intended, in part, to offset dilution from shares of common stock issued under the Company's stock-based employee compensation and benefit programs. In connection with this program, the Company may from time to time sell put options on its common stock. During the first half of 1996, the Company repurchased 4.6 million shares of common stock for an aggregate cost of $182.8 million and issued short-term put options for proceeds of approximately $732,000. The Company's cash requirements are funded primarily by its operating activities. The Company also obtains external financing through the issuance of commercial paper and fixed rate debt and has unsecured long-term revolving bank lines of credit with commitments totaling $400 million at June 30, 1996. In addition to loans, these lines of credit may be used to support a commercial paper program. At June 30, 1996, $33 million of commercial paper was outstanding. Future commercial paper issuances or other debt drawdowns are available to be used for short-term or other periodic cash requirements. YEAR TO DATE CASH FLOWS Operating cash flow of $142.4 million generated from continuing operations in the first half of 1996 was more than double the $62.2 million of net cash from continuing operations reported in the same period in 1995. While the 1996 period benefited from an over 60 percent increase in operating profit as well as a significant decline in accounts receivable and taxes paid, the 1995 first half was impacted by substantial expenditures for newsprint, as higher inventory levels were built to mitigate continuing price increases. Cash spent on restructuring-related actions was $74.7 million in the first half of 1996. Net cash used by investing activities of continuing operations during the first half of 1996 was $43.5 million, while net cash provided by investing activities from continuing operations was $697.0 million in the first half of 1995. The 1995 period included proceeds from the disposition of the cable television operations. Capital expenditures of $56.7 million in the first half of 1996 were the same as the spending for the first half of 1995. Approximately $5.9 million in cash was utilized for acquisitions in the first half of 1996, significantly lower than the $58.4 million spent in the prior year period. Capitalized product costs in the first half of 1996 of $36.5 million were slightly less than the $39.9 million capitalized in the prior year period. Proceeds of $57.5 million from a reduction in marketable securities benefited the first half of 1996 while $368.2 million was used to purchase marketable securities in the first half of 1995. Financing activities in the first half of 1996 and 1995 required cash of $204.6 million and $644.3 million, respectively, as the Company bought back shares in 1996 and paid down debt in the 1995 period. Cash of 16 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) $273.4 million used for first half 1996 share repurchases, including the settlement of year end 1995 repurchases, was partly offset by proceeds from the issuance of debt securities, including commercial paper, as well as cash received from the exercise of stock options. The first half of 1996 also benefited from a $24.9 million reduction in dividends paid to common shareholders, which declined compared with the prior year period, primarily due to lower dividend rates and a lower level of shares outstanding as a result of the share repurchase program which began in the third quarter of 1995. During the first half of 1995, the Company repaid $588.4 million of its debt using proceeds from the cable transaction and paid $57.5 million of dividends to shareholders. DIVIDENDS On May 9, 1996, the Board of Directors approved an increase in the quarterly dividend to $.10 per share on its common stock, beginning with the June 10, 1996 payment date. Dividend requirements on Series A preferred stock were $16.5 million and $11.0 million in the first half of 1996 and 1995, respectively, while dividend requirements on Series B preferred stock were $5.3 million and $7.6 million, respectively. Both series of preferred stock accrued dividends beginning March 1, 1995. In addition, the Company repurchased nearly 8.8 million shares of Series B preferred stock during the last part of 1995. The Series B preferred stock will be converted into Series A common stock on April 1, 1998, unless previously redeemed by the Company. FORWARD-LOOKING STATEMENTS The forward-looking statements set forth above and elsewhere in this Quarterly Report on Form 10-Q are subject to uncertainty and could be adversely affected by a number of factors. Some of these factors are described in Note 14 to the Condensed Consolidated Financial Statements. 17 THE TIMES MIRROR COMPANY BUSINESS SEGMENT INFORMATION (IN THOUSANDS) (UNAUDITED)
SECOND QUARTER ENDED YEAR TO DATE ENDED JUNE 30 JUNE 30 -------------------- ---------------------- 1996 1995 1996 1995 -------- -------- ---------- ---------- REVENUES Newspaper Publishing............... $517,100 $526,587 $1,012,036 $1,002,739 Professional Information........... 256,949 250,101 494,023 473,439 Consumer Media..................... 63,365 66,693 138,122 141,062 Intersegment Revenues.............. (119) (303) (127) (492) -------- -------- ---------- ---------- $837,295 $843,078 $1,644,054 $1,616,748 ======== ======== ========== ========== OPERATING PROFIT (LOSS) Newspaper Publishing............... $ 75,965 $ 53,093 $ 126,960 $ 88,438 Professional Information........... 27,244 22,981 40,405 31,719 Consumer Media..................... (1,857) (2,713) (559) (5,533) Corporate and Other................ (17,063) (18,235) (32,289) (33,240) -------- -------- ---------- ---------- $ 84,289 $ 55,126 $ 134,517 $ 81,384 ======== ======== ========== ========== DEPRECIATION AND AMORTIZATION Newspaper Publishing............... $ 27,202 $ 28,145 $ 53,837 $ 56,321 Professional Information........... 11,570 13,019 23,704 24,850 Consumer Media..................... 1,871 2,314 3,672 4,981 Corporate and Other................ 298 445 592 932 -------- -------- ---------- ---------- $ 40,941 $ 43,923 $ 81,805 $ 87,084 ======== ======== ========== ========== CAPITAL EXPENDITURES Newspaper Publishing............... $ 12,269 $ 17,382 $ 26,906 $ 27,833 Professional Information........... 11,853 9,277 23,294 24,332 Consumer Media..................... 4,481 476 4,812 630 Corporate and Other................ 1,184 2,364 1,686 3,883 -------- -------- ---------- ---------- $ 29,787 $ 29,499 $ 56,698 $ 56,678 ======== ======== ========== ==========
JUNE 30, JUNE 30, 1996 1995 ---------- ---------- IDENTIFIABLE ASSETS Newspaper Publishing.................................... $1,839,242 $2,011,612 Professional Information................................ 1,096,076 1,108,817 Consumer Media.......................................... 292,718 392,383 Corporate and Other..................................... 300,826 740,796 ---------- ---------- $3,528,862 $4,253,608 ========== ==========
18 THE TIMES MIRROR COMPANY PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS No material legal proceedings are pending. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS (a) The Company's Annual Meeting of Shareholders was held on May 9, 1996. (c) At the Annual Meeting of Shareholders, the following matters were voted upon: the election of six persons to Class I of the Board of Directors of the Company, the ratification of the appointment of Ernst & Young LLP, as independent auditors for the Company and its subsidiaries for the year ending December 31, 1996, the approval of The Times Mirror Company 1996 Management Incentive Plan, and the approval of The Times Mirror Company Non-Employee Directors Stock Plan. The result of the voting on matters presented at the Corporation's Annual Meeting of Shareholders were as follows:
VOTES DESCRIPTION VOTES FOR WITHHELD ----------- ----------- --------- Election of Directors C. Michael Armstrong.................................. 329,184,531 5,311,180 Gwendolyn Garland Babcock............................. 329,153,116 5,342,595 Donald R. Beall....................................... 329,203,480 5,292,231 Joan A. Payden........................................ 329,198,555 5,297,156 Richard T. Schlosberg III............................. 329,020,682 5,475,029 Warren B. Williamson.................................. 329,158,490 5,337,221
There were no abstentions or broker non-votes on the elections of Directors.
VOTES BROKER DESCRIPTION VOTES FOR AGAINST ABSTENTIONS NON-VOTES - ----------- ----------- ---------- ----------- ---------- Ratification of the appointment of Ernst & Young LLP............ 329,410,673 169,206 4,915,832 0 Approval of the 1996 Management Incentive Plan.................. 293,265,335 25,130,679 5,967,187 10,132,510 Approval of the Non-Employee Directors Stock Plan............ 314,265,394 3,927,727 6,170,078 10,132,512
ITEM 5. OTHER INFORMATION On July 3, 1996, the Company and Mosby-Year Book, Inc. (Mosby), a wholly- owned subsidiary of the Company, entered into an Exchange Agreement pursuant to which The McGraw-Hill Companies, Inc. agreed to sell all of the outstanding shares of the capital stock of its subsidiary, Shepard's/McGraw-Hill, Inc. (Shepard's), to the Company in exchange for (i) the stock of Times Mirror Higher Education Group, Inc., (ii) the assets and related liabilities of Mosby relating to Mosby's college-level life and physical science text business, (iii) certain assets and liabilities of Times Mirror International Publishers--U.S., Inc. and affiliated entities relating to the Company's college text business and (iv) a cash payment. Revenues of these businesses represented approximately 5 percent and 7 percent of consolidated revenues of the Company for the six months ended June 30, 1996 and the year ended December 31, 1995, respectively. This transaction is subject to approval pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and to other closing conditions. It is anticipated that the transaction will close during the third quarter of 1996, at which point, Shepard's is expected to be contributed to a new 50/50 partnership between the Company and Reed Elsevier Inc. as part of a broader strategic alliance between Matthew Bender, Times Mirror's legal publisher, and Lexis-Nexis, a Reed Elsevier subsidiary and provider of full-text online information services in the legal, news, business and government areas. 19 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 11. Computation of Earnings Per Share. 12. Ratio of Earnings to Fixed Charges and Ratio of Earnings to Fixed Charges and Preferred Stock Dividends. 27. Financial Data Schedule (b) No reports on Form 8-K were filed for the quarter ended June 30, 1996. 20 EX-11 2 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 PAGE 1 OF 2 THE TIMES MIRROR COMPANY COMPUTATION OF EARNINGS PER SHARE (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
SECOND QUARTER ENDED YEAR TO DATE ENDED JUNE 30 JUNE 30 ------------------------- ------------------------- 1996 1995 1996 1995 ------------ ------------ ------------ ------------ PRIMARY Average shares outstanding............ 103,925,394 112,147,462 104,575,697 117,630,287 Dilutive stock options based on the treasury stock method using average market price... 3,489,907 1,044,532 2,985,507 755,638 ------------ ------------ ------------ ------------ Total................. 107,415,301 113,191,994 107,561,204 118,385,925 ============ ============ ============ ============ Income from continuing operations............. $ 46,023 $ 29,211 $ 72,060 $ 45,561 Discontinued operations. (3,165) 1,634,477 Cumulative effect of changes in accounting principles, net of income tax benefit of $8,817................. (12,724) ------------ ------------ ------------ ------------ Net income.............. $ 46,023 $ 26,046 $ 72,060 $ 1,667,314 ============ ============ ============ ============ Preferred dividend requirements........... $ 10,911 $ 13,836 $ 21,822 $ 18,566 ============ ============ ============ ============ Earnings available to common shareholders.... $ 35,112 $ 12,210 $ 50,238 $ 1,648,748 ============ ============ ============ ============ Primary earnings per common share: Continuing operations........... $ .33 $ .14 $ .47 $ .23 Discontinued operations........... (.03) 13.81 Cumulative effect of accounting changes, net......... (.11) ------------ ------------ ------------ ------------ Primary earnings per common share........... $ .33 $ .11 $ .47 $ 13.93 ============ ============ ============ ============
EXHIBIT 11 PAGE 2 OF 2 THE TIMES MIRROR COMPANY COMPUTATION OF EARNINGS PER SHARE (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
SECOND QUARTER ENDED YEAR TO DATE ENDED JUNE 30 JUNE 30 ------------------------- ------------------------- 1996 1995 1996 1995 ------------ ------------ ------------ ------------ FULLY DILUTED Average shares outstanding............ 103,925,394 112,147,462 104,575,697 117,630,287 Common shares assumed issued upon conversion of Series B preferred stock.................. 7,789,276 16,561,178 7,789,276 11,040,785 Dilutive stock options based on the treasury stock method using market price at the close of the period, if higher than average market price........... 3,628,698 1,610,969 3,628,698 1,610,969 ------------ ------------ ------------ ------------ Total................. 115,343,368 130,319,609 115,993,671 130,282,041 ============ ============ ============ ============ Income from continuing operations............. $ 46,023 $ 29,211 $ 72,060 $ 45,561 Discontinued operations. (3,165) 1,634,477 Cumulative effect of changes in accounting principles, net of income tax benefit of $8,817................. (12,724) ------------ ------------ ------------ ------------ Net income.............. $ 46,023 $ 26,046 $ 72,060 $ 1,667,314 ============ ============ ============ ============ Preferred dividend re- quirements............. $ 8,236 $ 8,236 $ 16,472 $ 10,981 ============ ============ ============ ============ Earnings available to common shareholders.... $ 37,787 $ 17,810 $ 55,588 $ 1,656,333 ============ ============ ============ ============ Fully diluted earnings per common share: Continuing operations. $ * $ * $ * $ .26 Discontinued opera- tions................ 12.55 Cumulative effect of accounting changes, net.................. (.10) ------------ ------------ ------------ ------------ Fully diluted earnings per common share....... $ * $ * $ * $ 12.71 ============ ============ ============ ============
- -------- * Antidilutive EX-12 3 RATIO OF EARNINGS EXHIBIT 12 PAGE 1 OF 2 THE TIMES MIRROR COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (IN THOUSAND OF DOLLARS, EXCEPT RATIO)
YEAR TO DATE ENDED JUNE 30, 1996 ------------------ Fixed Charges Interest expense........................................... $ 15,990 Portion of rents deemed to be interest..................... 9,887 Amortization of debt expense............................... 127 -------- Total Fixed Charges....................................... $ 26,004 ======== Earnings Income from continuing operations before income taxes...... $127,546 Fixed charges.............................................. 26,004 Amortization of capitalized interest....................... 2,113 Distributed income from less than 50% owned unconsolidated affiliates................................................ 252 Subtract: Equity income from less than 50% owned unconsolidated affiliates................................. (200) -------- Total Earnings............................................ $155,715 ======== Ratio of earnings to fixed charges.......................... 6.0x
EXHIBIT 12 PAGE 2 OF 2 THE TIMES MIRROR COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (IN THOUSAND OF DOLLARS, EXCEPT RATIO)
YEAR TO DATE ENDED JUNE 30, 1996 ------------------ Fixed Charges Interest expense........................................... $ 15,990 Portion of rents deemed to be interest..................... 9,887 Amortization of debt expense............................... 127 -------- Total Fixed Charges....................................... 26,004 Preferred Stock Dividend Requirements....................... 36,986 -------- Fixed Charges and Preferred Stock Dividends................ $ 62,990 ======== Earnings Earnings from continuing operations before income taxes.... $127,546 Fixed charges.............................................. 26,004 Amortization of capitalized interest....................... 2,113 Distributed income from less than 50% owned unconsolidated affiliates................................................ 252 Subtract: Equity income from less than 50% owned unconsolidated affiliates................................. (200) -------- Total Earnings............................................ $155,715 ======== Ratio of earnings to fixed charges and preferred stock divi- dends...................................................... 2.5x
EX-27 4 ARTICLE 5 - FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30, 1996 QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 64,573 10,205 543,693 65,730 167,072 904,778 2,115,779 940,788 3,528,862 827,027 318,492 0 576,379 102,627 981,483 3,528,862 1,644,054 1,644,054 881,022 881,022 0 12,356 15,990 127,546 55,486 72,060 0 0 0 72,060 0.47 0 PER SHARE AMOUNT ON A FULLY DILUTED BASIS HAS BEEN OMITTED AS THE AMOUNT IS ANTIDILUTIVE IN RELATION TO THE PRIMARY PER SHARE AMOUNT
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