-----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, N1Aq/aht6orx1mYhSgBeiQ6iLROpP0CIsRPNfz9AHOKjws96T2NuD90q0Y4x/hQW HlVqtmKUHW3TMNRfFarwzg== 0000950150-99-001232.txt : 19991115 0000950150-99-001232.hdr.sgml : 19991115 ACCESSION NUMBER: 0000950150-99-001232 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 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: SEC FILE NUMBER: 001-13492 FILM NUMBER: 99750993 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 FOR THE PERIOD ENDED 9/30/1999 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 SEPTEMBER 30, 1999 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 DELAWARE 95-4481525 STATE OF INCORPORATION I.R.S. EMPLOYER I.D. NO.
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 November 5, 1999: 41,727,514, excluding 18,237,864 shares held by subsidiaries of the Registrant, 4,001,067 shares held by TMCT, LLC representing 80% of the shares held by TMCT, LLC, 12,432,973 shares held by TMCT II, LLC representing 80% of the shares held by TMCT II, LLC, 14,813,426 shares held by Eagle New Media Investments, LLC and 2,646,384 shares held as treasury shares. Number of shares of Series C common stock outstanding at November 5, 1999: 18,261,136. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 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 3 THE TIMES MIRROR COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THIRD QUARTER ENDED YEAR TO DATE ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------- ------------------------ 1999 1998 1999 1998 -------- ---------- ---------- ---------- REVENUES................................... $739,730 $ 677,128 $2,192,688 $2,033,902 COSTS AND EXPENSES: Cost of sales............................ 393,432 368,140 1,202,228 1,104,074 Selling, general and administrative expenses.............................. 238,157 216,303 656,509 629,904 Restructuring and one-time charges....... -- 46,262 -- 81,112 -------- ---------- ---------- ---------- 631,589 630,705 1,858,737 1,815,090 -------- ---------- ---------- ---------- OPERATING PROFIT........................... 108,141 46,423 333,951 218,812 Interest expense........................... (22,370) (18,792) (62,908) (48,193) Interest income............................ 8,460 13,784 32,269 21,353 Other, net................................. 2,070 9,173 24,088 16,497 -------- ---------- ---------- ---------- Income from continuing operations before income tax provision..................... 96,301 50,588 327,400 208,469 Income tax provision....................... 39,366 31,293 135,857 95,136 -------- ---------- ---------- ---------- Income from continuing operations.......... 56,935 19,295 191,543 113,333 Discontinued operations: Income (loss) from discontinued operations, net of taxes.............. 130 (26,882) (351) (26,458) Net gain on disposal, net of taxes....... -- 1,084,136 -- 1,084,136 -------- ---------- ---------- ---------- NET INCOME................................. 57,065 1,076,549 191,192 1,171,011 Preferred stock dividends.................. 5,424 5,424 16,272 16,272 -------- ---------- ---------- ---------- Earnings applicable to common shareholders............................. $ 51,641 $1,071,125 $ 174,920 $1,154,739 ======== ========== ========== ========== Basic earnings (loss) per common share: Continuing operations.................... $ .76 $ .16 $ 2.47 $ 1.12 Discontinued operations.................. -- 12.55 (.01) 12.18 -------- ---------- ---------- ---------- Basic earnings per share................... $ .76 $ 12.71 $ 2.46 $ 13.30 ======== ========== ========== ========== Diluted earnings (loss) per common share: Continuing operations.................... $ .73 $ .16 $ 2.38 $ 1.09 Discontinued operations.................. -- 12.26 (.01) 11.87 -------- ---------- ---------- ---------- Diluted earnings per share................. $ .73 $ 12.42 $ 2.37 $ 12.96 ======== ========== ========== ========== Weighted average shares: Basic.................................... 68,177 84,262 71,057 86,799 ======== ========== ========== ========== Diluted.................................. 73,032 86,231 75,643 89,068 ======== ========== ========== ========== Dividends declared per common share........ $ .20 $ .18 $ .60 $ .54 ======== ========== ========== ==========
See notes to condensed consolidated financial statements. 3 4 THE TIMES MIRROR COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31, 1999 1998 ------------- ------------ (UNAUDITED) ASSETS Current assets: Cash and cash equivalents................................. $ 180,156 $1,052,999 Marketable securities..................................... -- 49,438 Accounts receivable, less allowance for doubtful accounts and returns of $37,383 and $37,389..................... 345,837 311,913 Inventories............................................... 33,551 28,438 Deferred income taxes..................................... 29,711 32,279 Prepaid expenses.......................................... 33,140 30,141 Net assets of discontinued operations..................... 181,039 189,628 Other current assets...................................... 14,356 38,278 ---------- ---------- Total current assets.............................. 817,790 1,733,114 Property, plant and equipment, net of accumulated depreciation and amortization of $1,019,366 and $966,153.................................................. 936,156 903,483 Goodwill, net of accumulated amortization of $121,709 and $105,976.................................................. 606,264 501,463 Other intangibles, net of accumulated amortization of $71,397 and $61,657....................................... 198,108 100,373 Investments................................................. 554,065 270,818 Prepaid pension costs....................................... 438,568 419,471 Other assets................................................ 252,999 229,207 ---------- ---------- Total assets...................................... $3,803,950 $4,157,929 ========== ==========
See notes to condensed consolidated financial statements. 4 5 THE TIMES MIRROR COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
SEPTEMBER 30, DECEMBER 31, 1999 1998 ------------- ------------ (UNAUDITED) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $ 170,674 $ 179,415 Short-term debt........................................... 385,879 312,610 Other current liabilities................................. 382,405 429,477 ----------- ----------- Total current liabilities......................... 938,958 921,502 Long-term debt.............................................. 1,492,571 941,423 Deferred income taxes....................................... 434,147 373,623 Postretirement benefits..................................... 222,479 226,018 Other liabilities........................................... 361,601 330,350 ----------- ----------- Total liabilities................................. 3,449,756 2,792,916 Common stock subject to put options......................... 6,806 22,560 Commitments and contingencies SHAREHOLDERS' EQUITY: Preferred stock, $1 par value; stated at liquidation value; convertible to Series A common stock: Series A: 900,000 shares authorized; 824,000 shares issued and outstanding.............................. 411,784 411,784 Series B: 8,439,000 shares authorized; no shares issued or outstanding Series C-1: 381,000 shares authorized, issued and outstanding......................................... 190,486 190,486 Series C-2: 245,000 shares authorized, issued and outstanding......................................... 122,550 122,550 Preferred stock, $1 par value; 23,035,000 shares authorized; no shares issued or outstanding Common stock, $1 par value: Series A: 500,000,000 shares authorized; 93,822,000 and 86,831,000 shares issued and outstanding........ 93,822 86,831 Series B: 100,000,000 shares authorized; no shares issued or outstanding Series C: Convertible to Series A common stock; 300,000,000 shares authorized; 18,298,000 and 25,258,000 shares issued and outstanding............ 18,298 25,258 Additional paid-in capital................................ 1,297,757 1,278,916 Retained earnings......................................... 1,740,810 1,653,736 Accumulated other comprehensive income.................... 1,876 26,491 Less treasury stock at cost: Series A common stock: 52,401,000 and 38,708,000 shares, Series A preferred stock: 735,000 shares, Series C-1 preferred stock: 305,000 and no shares and Series C-2 preferred stock: 196,000 and no shares..... (3,529,995) (2,453,599) ----------- ----------- Total shareholders' equity........................ 347,388 1,342,453 ----------- ----------- Total liabilities and shareholders' equity........ $ 3,803,950 $ 4,157,929 =========== ===========
See notes to condensed consolidated financial statements. 5 6 THE TIMES MIRROR COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
YEAR TO DATE ENDED SEPTEMBER 30, ------------------------- 1999 1998 ----------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net cash provided by operating activities of continuing operations............................................. $ 217,888 $ 150,550 Net cash provided by operating activities of discontinued operations............................................. 18,076 62,237 ----------- ---------- Net cash provided by operating activities......... 235,964 212,787 ----------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions, net of cash acquired........................ (169,671) (198,276) Capital expenditures...................................... (109,541) (90,268) Purchases of investments.................................. (74,974) (29,337) Sale (purchase) of marketable securities, net............. 49,438 (49,509) Proceeds from sales of assets............................. 30,700 23,218 Decreases (increases) in notes receivable................. 10,500 (69,120) Proceeds from reorganization.............................. -- 1,616,948 Other, net................................................ -- (11,272) ----------- ---------- Net cash provided by (used in) investing activities of continuing operations................................. (263,548) 1,192,384 Net cash used in investing activities of discontinued operations............................................ (7,263) (24,039) ----------- ---------- Net cash provided by (used in) investing activities...................................... (270,811) 1,168,345 ----------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Contribution to TMCT II, LLC.............................. (1,235,252) -- Purchases of Times Mirror common stock.................... (152,689) (516,065) Dividends paid............................................ (59,541) (63,585) Principal repayments of debt.............................. (42,606) (56,147) Exercise of put options, net of premiums received......... (16,621) (5,800) Net proceeds from short-term and other borrowings......... 623,479 154,478 Proceeds from exercise of stock options................... 54,309 51,376 Other, net................................................ (9,075) 1,634 ----------- ---------- Net cash used in financing activities............. (837,996) (434,109) ----------- ---------- Increase (decrease) in cash and cash equivalents............ (872,843) 947,023 Cash and cash equivalents at beginning of year.............. 1,052,999 44,794 ----------- ---------- Cash and cash equivalents at end of period.................. $ 180,156 $ 991,817 =========== ========== NONCASH INVESTING AND FINANCING ACTIVITIES Liabilities assumed in connection with acquisitions....... $ 53,972 $ 11,466 Stock and notes receivable received from divestiture...... 31,503 --
See notes to condensed consolidated financial statements. 6 7 THE TIMES MIRROR COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 -- BASIS OF PREPARATION 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. For financial reporting purposes, the condensed consolidated financial statements include the accounts of the Company's affiliated limited liability companies, Eagle New Media Investments, LLC (Eagle New Media) and Eagle Publishing Investments, LLC (Eagle Publishing). 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. The balance sheet at December 31, 1998 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and accompanying notes included in the current report on Form 8-K dated September 3, 1999 and filed with the Securities and Exchange Commission on September 29, 1999 which restates certain information for the year ended December 31, 1998. Certain amounts in previously issued financial statements have been reclassified to conform to the 1999 presentation. Financial information in the accompanying notes to the Condensed Consolidated Financial Statements exclude discontinued operations, except where noted. NOTE 2 -- COMPREHENSIVE INCOME Total comprehensive income amounted to $49,279,000 and $1,071,598,000 for the third quarters of 1999 and 1998, respectively, and $166,577,000 and $1,164,955,000 for the year to date periods ended September 30, 1999 and 1998, respectively. Comprehensive income differs from net income primarily due to the timing of recognizing realized and unrealized gains or losses. NOTE 3 -- DISCONTINUED OPERATIONS On September 3, 1999, Times Mirror announced its decision to sell AchieveGlobal, Inc., a professional training company; Allen Communication, an interactive software and training courseware developer; and The StayWell Company, a health improvement information company. The Company decided to sell these businesses in order to concentrate on its core strengths in newspaper publishing, flight information and magazine publishing. These dispositions are anticipated to be completed by the first quarter of 2000. The accompanying financial information reflect these businesses as discontinued operations for all periods presented. 7 8 THE TIMES MIRROR COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) During 1998, the Company completed the divestitures of Matthew Bender & Company, Incorporated, its 50% interest in the Shepard's joint venture and Mosby, Inc. Additionally, the Company determined that Apartment Search, Inc. would be treated as discontinued operations in 1998 and subsequently completed the sale of the business in March 1999. Results for discontinued operations include AchieveGlobal, Allen Communication, StayWell, Apartment Search, Inc., Matthew Bender, Mosby, and the Shepard's joint venture. Income from discontinued operations is summarized as follows (in thousands):
THIRD QUARTER ENDED YEAR TO DATE ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------- ------------------- 1999 1998 1999 1998 -------- --------- -------- -------- Revenues....................................... $45,996 $140,614 $140,353 $443,601 ------- -------- -------- -------- Loss before income taxes....................... (160) (31,296) (851) (26,420) Income taxes................................... (290) (4,414) (500) 38 ------- -------- -------- -------- Income (loss) from discontinued operations..... $ 130 $(26,882) $ (351) $(26,458) ======= ======== ======== ========
The assets and liabilities of discontinued operations have been classified in the Condensed Consolidated Balance Sheets as net assets of discontinued operations and consist of the following (in thousands):
SEPTEMBER 30, DECEMBER 31, 1999 1998 ------------- ------------ Accounts receivable, net................................... $ 34,904 $ 58,256 Other current assets....................................... 25,576 49,310 Goodwill, net.............................................. 57,878 62,861 Other intangibles, net..................................... 65,862 68,256 Other assets............................................... 32,553 36,824 -------- -------- Total assets............................................. 216,773 275,507 Current liabilities........................................ 29,919 77,164 Non-current liabilities.................................... 5,815 8,715 -------- -------- Total liabilities........................................ 35,734 85,879 -------- -------- Net assets of discontinued operations................. $181,039 $189,628 ======== ========
The major components of cash flow for discontinued operations are as follows (in thousands):
YEAR TO DATE ENDED SEPTEMBER 30, ------------------- 1999 1998 ------- -------- Loss from discontinued operations........................... $ (351) $(26,458) Depreciation and amortization............................... 7,196 22,375 Amortization of product costs............................... 3,660 15,562 Restructuring charges and other asset write-offs............ -- 44,854 Other, net.................................................. 7,571 5,904 ------- -------- Net cash provided by operating activities of discontinued operations............................................. $18,076 $ 62,237 ======= ======== Capitalization of product costs............................. $(5,201) $(15,180) Capital expenditures........................................ (2,077) (7,291) Other, net.................................................. 15 (1,568) ------- -------- Net cash used in investing activities of discontinued operations............................................. $(7,263) $(24,039) ======= ========
8 9 THE TIMES MIRROR COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) NOTE 4 -- 1999 RECAPITALIZATION In September 1999, the Company completed a transaction (1999 recapitalization) involving agreements with its largest shareholders, Chandler Trust No. 1 and Chandler Trust No. 2 (Chandler Trusts). The 1999 recapitalization resulted in the formation of a new limited liability company, TMCT II, LLC (TMCT II). Pursuant to the TMCT II contribution agreement, the Company, Eagle New Media and Eagle Publishing (Eagle Companies) and the Chandler Trusts made the following capital contributions to TMCT II: 1. the Company contributed preferred units issued by the operating partnerships of 8 unrelated real estate investment trusts (OP REIT Interests) with an aggregate purchase price of $600,000,000 and $2,000,000 in cash; 2. the Eagle Companies contributed a total of $633,252,000 in cash or cash equivalents; and 3. the Chandler Trusts contributed 9,306,000 shares of the Company's Series A common stock, 6,236,000 shares of the Company's Series C common stock, 381,000 shares of the Company's Series C-1 preferred stock and 245,000 shares of the Company's Series C-2 preferred stock (TMCT II Contributed Shares). The Company's purchase of the OP REIT Interests was funded with the proceeds of a $550,000,000 short-term line of credit provided by Citicorp and its commercial paper line. The Company refinanced this line of credit in October 1999 (see Note 6). The cash contributed by the Company and the Eagle Companies was used by TMCT II to purchase a portfolio of securities (TMCT II Portfolio). The Company, the Eagle Companies and the Chandler Trusts share in the cash flow of the various assets held by TMCT II. The cash flow from the OP REIT Interests and the TMCT II Portfolio is largely allocated to the Chandler Trusts with the remaining portion of the cash flow from the OP REIT Interests and the TMCT II Portfolio primarily allocated to the Eagle Companies. The cash flow from the TMCT II Contributed Shares is largely allocated to the Company with the remaining portion of the cash flow from the TMCT II Contributed Shares primarily allocated to the Chandler Trusts. Due to the allocations of the economic benefits in TMCT II, for financial reporting purposes, 80% of the TMCT II Contributed Shares are included in treasury stock, 80% of the preferred stock dividends on the Series C-1 and C-2 preferred stock are excluded from preferred stock dividends and 80% of the dividends on the common stock are effectively eliminated. The Company and the Eagle Companies account for their investment in TMCT II under the equity method. This net investment was $248,333,000 at September 30, 1999 and is included in "Investments" in the Condensed Consolidated Balance Sheet. In connection with the 1999 recapitalization, the Company agreed to use its reasonable best efforts to replace the outstanding Series C-1 and C-2 preferred stocks (which are now owned by TMCT II) with new Series D-1 and D-2 preferred stocks. The new Series D-1 and D-2 preferred stocks (which would be owned by TMCT II) will be identical to the existing Series C-1 and C-2 preferred stocks except that the increases in the dividend rate on the new Series D-1 and D-2 preferred stocks will be pursuant to a fixed and certain schedule. As a result of the 1999 recapitalization, for financial reporting purposes, the following number of shares have been included as treasury stock and excluded from earnings per share calculations: 1. Series A and C common stocks -- 12,433,000; 2. Series C-1 preferred stock -- 305,000; 3. Series C-2 preferred stock -- 196,000. The annual net preferred stock dividends will be reduced to $8,055,000 beginning in 2000 assuming the replacement of the Series C-1 and C-2 preferred stocks with the new Series D-1 and D-2 preferred stocks is completed. 9 10 THE TIMES MIRROR COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) NOTE 5 -- RESTRUCTURING LIABILITY A summary of the activity in the restructuring liabilities is as follows (in thousands):
1998 1995 RESTRUCTURING RESTRUCTURING TOTAL ------------- ------------- -------- Balance at December 31, 1998........................ $ 89,999 $22,905 $112,904 Cash payments....................................... (58,991) (9,016) (68,007) -------- ------- -------- Balance at September 30, 1999....................... $ 31,008 $13,889 $ 44,897 ======== ======= ========
During the year to date period ended September 30, 1999, cash spent on restructuring efforts included severance payments of $35,190,000, contract termination costs of $21,203,000, and lease payments of $10,051,000. At September 30, 1999, the remaining liability for severance costs aggregated $17,666,000. The balance sheet classification of restructuring liabilities is as follows (in thousands):
SEPTEMBER 30, DECEMBER 31, 1999 1998 ------------- ------------ Other current liabilities: 1995 Restructuring....................................... $ 9,302 $ 15,722 1998 Restructuring....................................... 19,526 76,181 Other liabilities: 1995 Restructuring....................................... 4,587 7,183 1998 Restructuring....................................... 11,482 13,818 ------- -------- $44,897 $112,904 ======= ========
The current portion of restructuring is comprised primarily of severance and lease payments while the non-current portion is comprised primarily of contract termination and extended payout of severance arrangements, as well as lease payments which will be paid over lease periods extending to 2010. The Company periodically assesses the adequacy of its remaining restructuring liabilities and makes adjustments, if required. The net change in the restructuring liabilities as a result of these reviews was not significant. 10 11 THE TIMES MIRROR COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) NOTE 6 -- DEBT Debt consists of the following (dollars in thousands):
SEPTEMBER 30, DECEMBER 31, 1999 1998 ------------- ------------ Short-term debt: Commercial paper at weighted average interest rates of 5.7% and 5.3%.......................................... $ 347,074 $298,603 Short-term borrowings at a weighted average interest rate of 5.4%................................................ 25,000 -- Current maturities of long-term debt...................... 7,230 7,440 Other notes payable at interest rates of 5.6% and 5.4%.... 6,575 6,567 ---------- -------- Total short-term debt.................................. $ 385,879 $312,610 ========== ======== Long-term debt: 6.61% Debentures due September 15, 2027, net of unamortized discount of $96 and $98.................... $ 249,904 $249,902 4.75% Liquid Yield Option Notes due April 15, 2017, net of unamortized discount of $280,546 and $288,129.......... 219,454 211,871 7 1/4% Debentures due March 1, 2013....................... 148,215 148,215 7 1/4% Debentures due November 15, 2096, net of unamortized discount of $555 and $559.................. 147,445 147,441 7 1/2% Debentures due July 1, 2023........................ 98,750 98,750 Property financing obligation expiring on August 8, 2009, net of unamortized discount of $152,056 and $158,080, with an effective interest rate of 4.3%................ 41,485 47,088 4 1/4% PEPS due March 15, 2001; 512,050 and 863,100 securities stated at fair value........................ 44,548 45,596 Short-term borrowings refinanced to long-term debt........ 550,000 -- ---------- -------- 1,499,801 948,863 Less current maturities................................... (7,230) (7,440) ---------- -------- Total long-term debt................................... $1,492,571 $941,423 ========== ========
Interest rate swaps converted the weighted average interest rate on the 7 1/4% Debentures due March 1, 2013, 7 1/4% Debentures due November 15, 2096, the 6.61% Debentures, the 7 1/2% Debentures and the Liquid Yield Option Notes (LYONs(TM)) from 6.5% to 5.6% for the year to date period ended September 30, 1999. The 4 1/4% Premium Equity Participating Securities (PEPS) hedge the Company's investment in the common stock of America Online, Inc. (AOL) which acquired Netscape Communications Corporation (Netscape) in the first quarter of 1999. As a result of that acquisition, each share of Netscape common stock was converted into 0.9 of a share of AOL common stock. The amount payable at maturity with respect to each PEPS will equal 90% of the average market price of one share of AOL common stock for the ten trading days ending on the second business day prior to the maturity date, subject to adjustment as a result of certain dilution events involving AOL. Holders of the PEPS bear the full risk of a decline in the value of AOL. The Company is not obligated to hold the AOL stock for any period or sell the AOL stock prior to the PEPS maturity or redemption date. The PEPS are redeemable at the option of the Company, in whole or in part, at any time after December 15, 2000. The redemption value of each PEPS is the product of (a) the redemption ratio, as defined below, (b) 90% and (c) the average market price of one share of AOL common stock for the ten trading days ending on the second business day prior to the redemption date, plus cash in an amount equal to 11 12 THE TIMES MIRROR COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) all unpaid interest, whether or not accrued, that would have been payable on the PEPS through the maturity date. The redemption ratio will equal (a) 100%, if the market value of one share of AOL common stock is less than $43.61, or (b) a fraction, the numerator of which is $43.61 and the denominator of which is the market value of AOL common stock, if such market value is equal to or exceeds $43.61 but less than or equal to $50.16, or (c) 86.96%, if the market value of AOL common stock exceeds $50.16. The PEPS are recorded at fair market value as determined in the open market and will generally move in tandem with changes in the fair market value of AOL common stock. The net unrealized loss on the PEPS at September 30, 1999 and December 31, 1998 is $14,487,000 and $6,928,000, respectively, net of applicable income taxes, and is included in accumulated other comprehensive income. During the year to date period ended September 30, 1999, the Company sold approximately 316,000 shares of AOL stock and purchased a proportionate share of its PEPS in the open market for a total pretax gain of $16,855,000. In September 1999, the Company entered into an agreement with Citicorp for a $550,000,000 short-term line of credit in connection with the 1999 recapitalization. At September 30, 1999, borrowings of $550,000,000 under this line of credit were classified as long-term debt based on the Company's intent and ability to refinance as evidenced by the October 1999 issuance of $200,000,000 of 6.65% two-year notes maturing on October 15, 2001 and $400,000,000 of 7.45% ten-year notes maturing on October 15, 2009. The Company also entered into a two-year interest rate swap agreement for a notional amount of $200,000,000 expiring in October 2001. The swap agreement effectively converts the Company's $200,000,000 fixed rate debt at 6.65% to a variable rate obligation based on LIBOR. NOTE 7 -- EARNINGS PER SHARE The following table sets forth the calculation of basic and diluted earnings per share from continuing operations (in thousands, except per share amounts):
THIRD QUARTER ENDED YEAR TO DATE ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------- -------------------- 1999 1998 1999 1998 -------- -------- -------- -------- Earnings: Income from continuing operations....... $56,935 $19,295 $191,543 $113,333 Preferred stock dividends............... (5,424) (5,424) (16,272) (16,272) ------- ------- -------- -------- Earnings applicable to common shareholders for basic earnings per share................................ 51,511 13,871 175,271 97,061 LYONs interest expense, net of tax...... 1,511 -- 4,492 -- ------- ------- -------- -------- Earnings applicable to common shareholders for diluted earnings per share................................ $53,022 $13,871 $179,763 $ 97,061 ======= ======= ======== ======== Shares: Weighted average shares for basic earnings per share................... 68,177 84,262 71,057 86,799 Effect of dilutive securities: Stock options........................ 1,941 1,969 1,672 2,269 LYONs convertible debt............... 2,914 -- 2,914 -- ------- ------- -------- -------- Adjusted weighted average shares for diluted earnings per share........... 73,032 86,231 75,643 89,068 ======= ======= ======== ======== Basic earnings per share from continuing operations........................... $ .76 $ .16 $ 2.47 $ 1.12 ======= ======= ======== ======== Diluted earnings per share from continuing operations................ $ .73 $ .16 $ 2.38 $ 1.09 ======= ======= ======== ========
12 13 THE TIMES MIRROR COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) The Company has certain other convertible securities, which are not included in the calculation of diluted earnings per share, because the effects are antidilutive. NOTE 8 -- ISSUANCE AND PURCHASE OF SHARES During the year to date period ended September 30, 1999, share purchases of the Company's Series A common shares were accomplished through a combination of a forward purchase agreement, put options and open market purchases by Eagle New Media. The Company and Eagle New Media purchased 2,877,000 shares of Series A common stock during the year to date period ended September 30, 1999, which more than offset 1,612,000 shares issued as a result of the exercise of stock options. At September 30, 1999, the Company had 115,000 put options outstanding with an average strike price of approximately $59.18. The put options, which have expiration dates in the fourth quarter of 1999, 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 these put options has been transferred from shareholders' equity to "Common stock subject to put options." NOTE 9 -- 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) an increase in the use of alternate media such as the Internet for classified and other advertising; (e) an increase in expenses related to new initiatives and product improvement efforts in the flight information operating unit; (f) unfavorable foreign currency fluctuations; (g) material changes in tax liability due to unfavorable reviews by taxing authorities; (h) the inability of the Company, its vendors, suppliers or other third parties with which the Company interacts to resolve the Year 2000 issue in a timely manner; and (i) a general economic downturn resulting in decreased consumer and corporate spending on discretionary items such as magazines or newspapers. NOTE 10 -- CONTINGENT LIABILITIES The Company and its subsidiaries are defendants in various 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 11 -- FUTURE ACCOUNTING REQUIREMENT In June 1998, the Financial Accounting Standards Board (FASB) issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," (SFAS 133). Subsequently, the FASB issued Statement No. 137, "Accounting for Derivative Instruments and Hedging Activities -- Deferral of the Effective Date of FASB Statement No. 133" which deferred the effective date of SFAS 133 for one year. This 13 14 THE TIMES MIRROR COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) standard is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. Management does not anticipate that the adoption of this standard will have a significant effect on earnings or the financial position of the Company. NOTE 12 -- ACQUISITIONS AND DISPOSITIONS In February 1999, Eagle New Media acquired Newport Media, Inc., a publisher of shopper publications in the Long Island and New Jersey areas, for approximately $132,000,000. In April 1999, the Company acquired New Mass Media, Inc., a publisher of five alternative weekly newspapers in Connecticut, Massachusetts and New York, for approximately $17,500,000. These acquisitions were accounted for by the purchase method with the results of operations included in the Company's financial statements from the dates of acquisition. The purchase price of these acquisitions has been allocated primarily to goodwill and other intangible assets based on preliminary valuations. Pro forma results for the year to date periods ended September 30, 1999 and 1998, assuming the acquisitions occurred on January 1 of the respective year, would not be materially different from the results reported. In May 1999, the Company completed an agreement to merge Hollywood Online, Inc., and its Web site, hollywood.com, into Big Entertainment, Inc., in exchange for newly issued restricted stock of Big Entertainment, Inc. and a note with a then combined current value of approximately $31,500,000. The Company recorded a pretax gain of $17,200,000 ($10,700,000 after applicable taxes), related to this disposition. Additionally, the Company completed the sale of Apartment Search, Inc. in March 1999. The estimated loss on sale of Apartment Search, including a provision for operating losses through the date of disposal, was recorded in the third quarter of 1998. In September 1999, the Company announced its decision to sell the properties of The Sporting News, a sports related magazine, including sportingnews.com. Additionally, the Company announced its decision to sell AchieveGlobal, Allen Communication and StayWell which are classified as discontinued operations as further described in Note 3 to the Condensed Consolidated Financial Statements. These dispositions are anticipated to be completed by the first quarter of 2000. 14 15 THE TIMES MIRROR COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) NOTE 13 -- SEGMENT INFORMATION Financial data for the Company's segments is as follows (in thousands):
THIRD QUARTER ENDED YEAR TO DATE ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------- ------------------------ 1999 1998 1999 1998 -------- -------- ---------- ---------- REVENUES Newspaper Publishing............... $606,623 $556,604 $1,813,238 $1,685,256 Professional Information........... 61,745 54,407 174,400 156,850 Magazine Publishing................ 71,352 65,828 204,412 191,096 -------- -------- ---------- ---------- Total reportable segments................. 739,720 676,839 2,192,050 2,033,202 Corporate and Other................ 10 289 638 700 -------- -------- ---------- ---------- $739,730 $677,128 $2,192,688 $2,033,902 ======== ======== ========== ========== OPERATING PROFIT (LOSS)(1) Newspaper Publishing............... $102,255 $ 80,511 $ 320,468 $ 255,924 Professional Information........... 18,297 8,715 50,205 35,167 Magazine Publishing................ 7,507 (21,233) 9,990 (19,503) -------- -------- ---------- ---------- Total reportable segments................. 128,059 67,993 380,663 271,588 Corporate and Other................ (19,918) (21,570) (46,712) (52,776) -------- -------- ---------- ---------- $108,141 $ 46,423 $ 333,951 $ 218,812 ======== ======== ========== ========== DEPRECIATION AND AMORTIZATION Newspaper Publishing............... $ 31,927 $ 29,426 $ 97,526 $ 88,008 Professional Information........... 1,984 1,331 5,424 4,825 Magazine Publishing................ 2,233 1,883 6,329 5,846 -------- -------- ---------- ---------- Total reportable segments................. 36,144 32,640 109,279 98,679 Corporate and Other................ 909 664 3,072 2,965 -------- -------- ---------- ---------- $ 37,053 $ 33,304 $ 112,351 $ 101,644 ======== ======== ========== ========== CAPITAL EXPENDITURES Newspaper Publishing............... $ 26,780 $ 31,187 $ 93,760 $ 74,292 Professional Information........... 2,618 3,383 8,053 10,138 Magazine Publishing................ 853 625 3,463 1,471 -------- -------- ---------- ---------- Total reportable segments................. 30,251 35,195 105,276 85,901 Corporate and Other................ 252 1,056 4,265 4,367 -------- -------- ---------- ---------- $ 30,503 $ 36,251 $ 109,541 $ 90,268 ======== ======== ========== ==========
- --------------- (1) Includes restructuring and one-time charges as follows: Newspaper Publishing................. -- $ 4,725 -- $ 39,575 Professional Information............. -- 6,468 -- 6,468 Magazine Publishing.................. -- 29,072 -- 29,072 Corporate and Other.................. -- 5,997 -- 5,997 -------- -------- ---------- ---------- -- $ 46,262 -- $ 81,112 ======== ======== ========== ==========
A reconciliation of operating profit to income from continuing operations before income tax provision is set forth in the Company's Condensed Consolidated Statements of Income on page 3. 15 16 THE TIMES MIRROR COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) Identifiable assets of the Company's segments are as follows (in thousands):
SEPTEMBER 30, DECEMBER 31, 1999 1998 ------------- ------------ Newspaper Publishing....................................... $2,287,711 $1,999,880 Professional Information................................... 113,383 96,765 Magazine Publishing........................................ 283,099 271,457 ---------- ---------- Total reportable segments........................ 2,684,193 2,368,102 Corporate and Other........................................ 938,718 1,600,199 Discontinued Operations.................................... 181,039 189,628 ---------- ---------- $3,803,950 $4,157,929 ========== ==========
16 17 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The Company's 1999 third quarter earnings per share from continuing operations increased 26% to $.73 per share on a diluted basis compared to $.58 per share in the prior year quarter, excluding 1998 restructuring and one-time charges. The Newspaper Publishing and Professional Information segments both achieved a 20% gain in operating profit, reflecting outstanding performance, particularly at the Los Angeles Times, Newsday, Baltimore Sun and Jeppesen. In addition, the 1999 third quarter earnings per share benefited from the effective retirement of shares previously held by the public and the Company's largest shareholders, the Chandler Trusts. Revenues rose over 9% in the 1999 third quarter compared to the prior year, including the effects of acquisitions, with growth at all of the Company's business segments. DISPOSITIONS In September 1999, Times Mirror announced its decision to sell AchieveGlobal, Inc., a professional training company; Allen Communication, an interactive software and training courseware developer; The StayWell Company, a health improvement information company, and The Sporting News, a sports magazine. While the Company will continue to operate these businesses until the completion of the sales, the accompanying financial information reflect AchieveGlobal, Allen Communication and StayWell as discontinued operations for all periods presented. The proposed sale of The Sporting News does not qualify for discontinued operations treatment and continues to be reported in the Magazine Publishing segment. These dispositions are anticipated to be completed by the first quarter of 2000. 1999 RECAPITALIZATION In September 1999, the Company completed a recapitalization transaction with the Chandler Trusts. The 1999 recapitalization resulted in a net effective reduction, for financial reporting purposes, in the number of shares of the Series A and C common stocks by 12.4 million shares and in Series C-1 and C-2 preferred stocks by .5 million shares. Also, in connection with this recapitalization, the Company agreed to use its reasonable best efforts to replace the Series C-1 and C-2 preferred stocks with new Series D-1 and D-2 preferred stocks. The new Series D-1 and D-2 preferred stocks will be identical to the existing Series C-1 and C-2 preferred stocks except that the increases in the dividend rate on the new Series D-1 and D-2 preferred stocks will be pursuant to a fixed and certain schedule. As a result of the effective reduction of preferred stock and the intended replacement of the preferred stock, preferred stock dividends will be reduced to $8.1 million annually. In connection with the recapitalization, the Company entered into a $550.0 million short-term line of credit that was subsequently refinanced in October 1999 with the net proceeds from the sale of $200.0 million of 6.65% two-year notes due October 15, 2001 and $400.0 million of 7.45% ten-year notes due October 15, 2009 (see Note 4 to the Condensed Consolidated Financial Statements for further information on the 1999 recapitalization). 17 18 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) CONSOLIDATED RESULTS OF OPERATIONS The following table summarizes the Company's consolidated financial results (in thousands, except per share amounts):
THIRD QUARTER ENDED YEAR TO DATE ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------- ------------------------ 1999 1998 1999 1998 -------- ---------- ---------- ---------- Revenues........................... $739,730 $ 677,128 $2,192,688 $2,033,902 Restructuring and one-time charges.......................... -- 46,262 -- 81,112 Operating profit................... 108,141 46,423 333,951 218,812 Interest expense, net.............. (13,910) (5,008) (30,639) (26,840) Other, net......................... 2,070 9,173 24,088 16,497 Income from continuing operations....................... 56,935 19,295 191,543 113,333 Discontinued operations: Income (loss) from discontinued operations, net of taxes...... 130 (26,882) (351) (26,458) Net gain on disposal, net of taxes......................... -- 1,084,136 -- 1,084,136 Net income......................... 57,065 1,076,549 191,192 1,171,011 Preferred stock dividends.......... 5,424 5,424 16,272 16,272 Earnings applicable to common shareholders..................... 51,641 1,071,125 174,920 1,154,739 Basic earnings (loss) per common share: Continuing operations............ $ .76 $ .16 $ 2.47 $ 1.12 Discontinued operations.......... -- 12.55 (.01) 12.18 -------- ---------- ---------- ---------- Basic earnings per share........... $ .76 $ 12.71 $ 2.46 $ 13.30 ======== ========== ========== ========== Diluted earnings (loss) per common share: Continuing operations............ $ .73 $ .16 $ 2.38 $ 1.09 Discontinued operations.......... -- 12.26 (.01) 11.87 -------- ---------- ---------- ---------- Diluted earnings per share......... $ .73 $ 12.42 $ 2.37 $ 12.96 ======== ========== ========== ========== Weighted average shares: Basic............................ 68,177 84,262 71,057 86,799 ======== ========== ========== ========== Diluted.......................... 73,032 86,231 75,643 89,068 ======== ========== ========== ==========
Revenues for the third quarter and year to date period ended September 30, 1999 rose 9.2% and 7.8%, respectively, compared to the prior year periods due to higher revenues in all of the Company's business segments, including the effects of acquisitions (See further discussion of segment results under the caption "Analysis by Segment"). Operating profit for the third quarter and year to date period ended September 30, 1999 increased 16.7% and 11.3%, respectively, compared to the prior year periods, excluding the 1998 pretax restructuring and one-time charges. The increases were due primarily to improvements in the Newspaper Publishing and Professional Information segments. For the third quarter and year to date period ended September 30, 1999, operating profit was affected by lower pension income due to reduced amortization of the transition asset of $4.3 million and $12.3 million, respectively. For the third quarter and year to date period ended September 30, 18 19 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) 1998, pretax restructuring and one-time charges were $46.3 million ($35.9 million after applicable taxes) and $81.1 million ($57.6 million after applicable taxes), respectively. For the 1999 third quarter, income from continuing operations was $56.9 million, or $.73 per share, compared with $55.2 million, or $.58 per share, in the prior year quarter, excluding the 1998 restructuring and one-time charges. Income from continuing operations for the year to date period ended September 30, 1999 was $180.9 million, or $2.24 per share, compared to $171.0 million, or $1.74 per share, in the prior year period, excluding a 1999 pretax gain on the sale of Hollywood Online, Inc. of $17.2 million ($10.7 million after applicable taxes) and the 1998 restructuring and one-time charges. Earnings per share for 1999 increased compared to 1998 due to the lower weighted average number of shares and higher earnings. Net interest expense for the 1999 third quarter increased compared to the prior year quarter due primarily to lower interest income and higher debt levels resulting from the 1999 recapitalization, as well as share purchase activity in prior quarters. For the year to date period ended September 30, 1999, net interest expense increased due primarily to share purchases. ANALYSIS BY SEGMENT Unless specifically stated otherwise, the following sections discuss the revenues and operating profit of the Company's principal lines of businesses, excluding 1998 restructuring and one-time charges. All comments, except where noted, apply to both the third quarter and the year to date period ended September 30, 1999 compared to the prior year periods. NEWSPAPER PUBLISHING Newspaper Publishing revenues and operating profit were as follows (dollars in thousands):
THIRD QUARTER ENDED SEPTEMBER 30, YEAR TO DATE ENDED SEPTEMBER 30, ---------------------------------- -------------------------------- 1999 1998 CHANGE 1999 1998 CHANGE ---------- ---------- -------- ---------- ---------- ------ Revenues: Advertising.......... $486,710 $435,217 11.8% $1,454,601 $1,322,498 10.0% Circulation.......... 107,096 108,675 (1.5) 320,149 325,520 (1.6) Other................ 12,817 12,712 .8 38,488 37,238 3.4 -------- -------- ---------- ---------- $606,623 $556,604 9.0% $1,813,238 $1,685,256 7.6% ======== ======== ========== ========== Operating profit....... $102,255 $ 80,511 27.0% $ 320,468 $ 255,924 25.2% ======== ======== ========== ========== Operating profit, excluding restructuring and one-time charges..... $102,255 $ 85,236 20.0% $ 320,468 $ 295,499 8.4% ======== ======== ========== ==========
Newspaper Publishing revenues rose in the 1999 third quarter compared to the prior year quarter including the addition of Newport Media, Inc., which was acquired in February 1999. Excluding Newport Media, 1999 third quarter revenues rose 6.1%, with the Los Angeles Times up 4.9% and the Eastern newspapers up 7.2% compared to the prior year quarter. Advertising revenue gains were achieved at each of the Company's newspapers with particular strength at the Eastern newspapers. Excluding Newport Media, advertising revenues in the 1999 third quarter rose 8.1%, with The Times up 7.2% and the Eastern newspapers up 9.1% compared to the prior year quarter. For the year to date period ended September 30, 1999, Newspaper Publishing revenues, excluding Newport Media and Recycler, acquired in April 1998, rose 4.2%, with The Times up 3.0% and the Eastern newspapers up 5.3% compared to the prior year period. Excluding acquisitions, 19 20 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) advertising revenues for the year to date period ended September 30, 1999 rose 5.9%, with The Times up 4.8% and the Eastern newspapers up 7.0% compared to the prior year period. Circulation revenues declined slightly as marketing strategies, largely at The Times, involving pricing and promotional discounts to stimulate circulation volume resulted in lower overall circulation revenues. Excluding acquisitions, circulation revenues for the Newspaper Publishing segment declined 1.5% and 2.5% for the third quarter and year to date period ended September 30, 1999, respectively, compared to the prior year periods. Segment operating profit for 1999 increased largely due to strong gains in national advertising and declines in newsprint expense. The 1999 third quarter improvement in operating profit was aided by a reduction in newsprint expense of 8.6% on a 9.3% decline in average newsprint prices. Newsprint expense was only partially affected by newsprint price declines due to the Company's use of newsprint hedging contracts. Excluding newsprint and the impact of acquisitions, other expenses rose 6.5% in the 1999 third quarter compared to the prior year quarter due primarily to ongoing growth initiatives. Newsprint expense for the year to date period ended September 30, 1999 decreased 5.9% on a 6.5% decline in average newsprint prices. Non-newsprint costs rose 5.9% for the year to date period ended September 30, 1999 compared to the prior year period, excluding the effects of acquisitions. Newspaper Publishing segment's operating profit for the third quarter and year to date period ended September 30, 1998 included restructuring and one-time charges of $4.7 million and $39.6 million, respectively, for charges related primarily to contract termination costs, termination benefits and asset write- offs. PROFESSIONAL INFORMATION Professional Information revenues and operating profit were as follows (dollars in thousands):
THIRD QUARTER ENDED SEPTEMBER 30, YEAR TO DATE ENDED SEPTEMBER 30, --------------------------------- --------------------------------- 1999 1998 CHANGE 1999 1998 CHANGE --------- --------- ------- --------- --------- ------- Revenues................ $61,745 $54,407 13.5% $174,400 $156,850 11.2% ======= ======= ======== ======== Operating profit........ $18,297 $ 8,715 100.0+% $ 50,205 $ 35,167 42.8% ======= ======= ======== ======== Operating profit, excluding restructuring and one- time charges.......... $18,297 $15,183 20.5% $ 50,205 $ 41,635 20.6% ======= ======= ======== ========
The operating results for the Professional Information segment consist entirely of Jeppesen, the Company's flight information provider, after reflecting AchieveGlobal, Allen Communication, and StayWell as discontinued operations. Jeppesen demonstrated outstanding performance so far in 1999 as revenues and operating profit rose resulting from strong product demand and growth in the commercial aviation market, as well as higher flight planning revenues. Jeppesen's operating profit for both the third quarter and year to date period ended September 30, 1998 included restructuring and one-time charges of $6.5 million for charges related primarily to termination benefits, lease termination and other costs. 20 21 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) MAGAZINE PUBLISHING Magazine Publishing revenues and operating profit were as follows (dollars in thousands):
THIRD QUARTER ENDED SEPTEMBER 30, YEAR TO DATE ENDED SEPTEMBER 30, --------------------------------- ---------------------------------- 1999 1998 CHANGE 1999 1998 CHANGE --------- ---------- -------- ---------- ---------- -------- Revenues: Advertising............ $48,895 $ 43,854 11.5% $136,804 $125,653 8.9% Circulation............ 19,383 19,395 (.1) 56,987 56,832 .3 Other.................. 3,074 2,579 19.2 10,621 8,611 23.3 ------- -------- -------- -------- $71,352 $ 65,828 8.4% $204,412 $191,096 7.0% ======= ======== ======== ======== Operating profit......... $ 7,507 $(21,233) (100.0)+% $ 9,990 $(19,503) (100.0)+% ======= ======== ======== ======== Operating profit, excluding restructuring and one-time charges... $ 7,507 $ 7,839 (4.2)% $ 9,990 $ 9,569 4.4% ======= ======== ======== ========
Magazine Publishing achieved advertising revenue gains at most of the magazines in 1999 compared to the prior year periods. The acquisition of Senior Golfer in October 1998 also contributed to higher revenues. Circulation revenues remained essentially even with the prior year periods. The 1999 operating profit was affected by ongoing investments in the launch of TransWorld SURF and Outdoor Explorer as well as higher expenses resulting from the acquisition of Senior Golfer. Excluding The Sporting News, revenues in the 1999 third quarter were $61.3 million, and operating profit was $8.6 million. For the year to date period ended September 30, 1999, operating profit was higher due to a reduction in accumulated reserves to fund certain employee benefits of $1.1 million. Magazine Publishing segment's operating profit for both the third quarter and year to date period ended September 30, 1998 included restructuring and one-time charges of $29.1 million primarily for impairment charges related to goodwill associated with two of the Company's magazine titles. CORPORATE AND OTHER Corporate and Other revenues and operating loss were as follows (dollars in thousands):
THIRD QUARTER ENDED SEPTEMBER 30, YEAR TO DATE ENDED SEPTEMBER 30, ---------------------------------- ---------------------------------- 1999 1998 CHANGE 1999 1998 CHANGE ---------- ---------- -------- ---------- ---------- -------- Revenues.................. $ 10 $ 289 (96.5)% $ 638 $ 700 (8.9)% ======== ======== ======== ======== Operating loss............ $(19,918) $(21,570) (7.7)% $(46,712) $(52,776) (11.5)% ======== ======== ======== ======== Operating loss, excluding restructuring and one-time charges........ $(19,918) $(15,573) 27.9% $(46,712) $(46,779) (.1)% ======== ======== ======== ========
Operating loss increased in the 1999 third quarter compared to the prior year due primarily to higher expenses for systems implementations to consolidate financial and human resource applications at a central processing site. For the year to date period ended September 30, 1999, operating loss was lower due to a reduction in accumulated reserves to fund certain employee benefits of $3.1 million. Corporate and Other's operating loss for both the third quarter and year to date period ended September 30, 1998 included restructuring and one-time charges of $6.0 million primarily for lease termination costs. 21 22 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) OTHER INCOME The 1999 and 1998 third quarter results include pretax gains on the sale of America Online (AOL) shares, along with the purchase of a proportionate share of the related PEPS, of $6.5 million ($3.9 million after applicable taxes), or $.05 per share, as compared to $7.7 million ($4.6 million after applicable taxes), or $.05 per share, in the prior year. Additionally, in the 1999 third quarter, the Company reduced the carrying value of certain of its investments. For the year to date period ended September 30, 1999, the pretax gain on the sale of AOL shares was $16.9 million ($10.0 million after applicable taxes), or $.13 per share. The Company also had a pretax gain on the sale of Hollywood Online, Inc. of $17.2 million ($10.7 million after applicable taxes), or $.14 per share, for the year to date period ended September 30, 1999. RESTRUCTURING LIABILITY A summary of the activity in restructuring liabilities is as follows (in thousands):
DECEMBER 31, 1999 CASH SEPTEMBER 30, DESCRIPTION 1998 PAYMENTS 1999 ----------- ------------ --------- ------------- 1998 Restructuring: Termination benefits......................... $51,169 $(34,939) $16,230 Contract terminations........................ 31,264 (21,203) 10,061 Lease termination costs...................... 6,203 (2,321) 3,882 Technology asset costs....................... 640 (470) 170 Other costs.................................. 723 (58) 665 ------- -------- ------- Total................................ $89,999 $(58,991) $31,008 ======= ======== ======= 1995 Restructuring............................. $22,905 $ (9,016) $13,889 ======= ======== =======
Annual expense reductions resulting from the 1998 restructuring program are in line with management's expectations. The remaining 1995 restructuring liability relates primarily to lease payments on unoccupied properties. The Company believes that cash flows from operations will be adequate to cover future cash outflows under the restructuring programs. LIQUIDITY AND CAPITAL RESOURCES The Company's operating cash requirements are funded principally by its operations. Proceeds from borrowings have been used primarily to fund share purchases and the 1999 recapitalization. At September 30, 1999, the Company had a $400.0 million long-term revolving line of credit through a group of domestic and international banks. This line of credit is used to support a commercial paper program that is available for short-term cash requirements. The Company had $347.1 million and $264.0 million of commercial paper outstanding at September 30, 1999 and November 5, 1999, respectively. In connection with the 1999 recapitalization, the Company entered into a $550.0 million short-term line of credit of which borrowings of $550.0 million were outstanding at September 30, 1999. This line of credit was refinanced in October 1999 with the net proceeds from the sale of $200.0 million of 6.65% two-year notes due October 15, 2001 and $400.0 million of 7.45% ten-year notes due October 15, 2009. At November 5, 1999, the Company had $400.0 million remaining under shelf registration statements that had not been utilized. There is no assurance that the Company will be able to utilize the remaining shelf registration on terms acceptable to the Company. 22 23 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) The Company is the sole manager of Eagle New Media Investments, LLC (Eagle New Media) and Eagle Publishing Investments, LLC (Eagle Publishing). A substantial portion of the assets of Eagle New Media and Eagle Publishing were utilized in connection with the 1999 recapitalization (see Note 4). At September 30, 1999, Eagle New Media and Eagle Publishing had cash and cash equivalents of $122.8 million. The Company intends to deploy the cash and cash equivalents of these companies to finance acquisitions and investments, including purchases of the Company's common stock, and does not intend to use these funds for the Company's general working capital purposes. For financial reporting purposes, Eagle New Media and Eagle Publishing are consolidated with the financial results of the Company. ACQUISITIONS AND DISPOSITIONS In February 1999, Eagle New Media acquired Newport Media, Inc., a publisher of shopper publications in the Long Island and New Jersey areas for approximately $132.0 million. In April 1999, the Company acquired New Mass Media, Inc., a publisher of five alternative weekly newspapers in Connecticut, Massachusetts and New York, for approximately $17.5 million. In May 1999, the Company completed an agreement to merge Hollywood Online, Inc., and its Web site, hollywood.com, into Big Entertainment, Inc., in exchange for newly-issued restricted stock of Big Entertainment, Inc. and a note with a then combined current value of approximately $31.5 million. Additionally, the Company completed the sale of Apartment Search, Inc. in March 1999. The estimated loss on sale of Apartment Search, including a provision for operating losses through the date of disposal, was recorded in the third quarter of 1998. COMMON SHARE PURCHASES During the year to date period ended September 30, 1999, share purchases of the Company's Series A common shares were accomplished through a combination of a forward purchase agreement, put options and open market purchases by Eagle New Media. The Company and Eagle New Media purchased 2.9 million shares of its Series A common stock during the year to date period ended September 30, 1999, which more than offset 1.6 million shares issued as a result of the exercise of stock options. The Company believes that the purchase of shares of its common stock is an attractive investment for Eagle New Media which will also enhance Times Mirror shareholder value as well as offset dilution from shares of common stock issued under the Company's stock-based employee compensation and benefit programs. Purchases by the Company and its affiliates are expected to be made during the next two years in the open market or in private transactions, depending on market conditions, and may be discontinued at any time. In connection with this program, the Company from time to time sells put options on its common stock. As of September 30, 1999, the Company and its affiliates are authorized to purchase 4.2 million shares of Series A common stock. 23 24 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) CASH FLOW The following table sets forth certain items from the Condensed Consolidated Statements of Cash Flows (in thousands):
YEAR TO DATE ENDED SEPTEMBER 30, ------------------------ 1999 1998 ----------- --------- Net cash provided by operating activities of continuing operations............................................... $ 217,888 $ 150,550 Acquisitions, net of cash acquired......................... (169,671) (198,276) Capital expenditures....................................... (109,541) (90,268) Contribution to TMCT II, LLC............................... (1,235,252) -- Purchase of Times Mirror common stock, including exercise of put options, net of premiums received................. (169,310) (521,865) Net proceeds from short-term and other borrowings.......... 623,479 154,478
Cash generated by operating activities of continuing operations for the year to date period ended September 30, 1999 was higher compared to the prior year primarily due to higher earnings. During the year to date period ended September 30, 1999, Eagle New Media acquired Newport Media, Inc. for approximately $132.0 million. In April 1999, the Company acquired New Mass Media, Inc. for approximately $17.5 million. Capital expenditures for the year to date period ended September 30, 1999 were higher compared to the same period in 1998 primarily due to the Company's continuing investments for future growth which included facility renovations within the Newspaper Publishing segment and the ongoing conversion to a 50-inch web at The Times. Additionally, the Company increased capital spending related to information technology projects, including Year 2000 requirements. Capital expenditures are currently expected to approximate $180.0 million for 1999. In September 1999, the Company and its affiliates contributed $1.24 billion in assets to TMCT II, LLC (see Note 4). Total debt at September 30, 1999 rose to $1.88 billion from $1.25 billion at December 31, 1998 primarily due to borrowings to finance the 1999 recapitalization. IMPACT OF YEAR 2000 The Company is preparing for the impact of the arrival of the Year 2000 on its business, as well as on the businesses of its customers, suppliers and business partners. The "Year 2000 Issue" is the result of computer programs written using two digits rather than four to define the applicable year. The Company's computer equipment and software and devices with embedded technology that are time-sensitive may recognize a date using "00" as the year 1900 rather than the year 2000 or process dates prior to or after the year 2000 in error. This could result in a system failure or miscalculations causing disruptions of operations including, among other things, a temporary inability to receive and process advertising orders, prepare editorial content, operate press facilities, prepare and distribute products, issue invoices, or engage in similar normal business activities. 24 25 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) STATE OF READINESS The Company has instituted a comprehensive program to address potential Year 2000 impacts for information technology and non-information technology systems. This program involves the following phases: Inventory -- This phase entails a comprehensive inventory of all items that may be affected by the Year 2000 issue. These items include hardware and software (e.g., business and operational applications, operating systems and third-party products), production facilities that may be at risk, and key third-party services whose Year 2000 failures may significantly impact the Company. This phase was substantially complete in March 1999. Assessment/Planning -- Items identified in the inventory phase are assessed based on criticality to the Company's business operations and potential impact of failure. This phase was substantially complete in March 1999. Remediation -- This phase involves reprogramming or replacing inventoried items to ensure they are Year 2000 ready in accordance with the plans identified during the Assessment/Planning phase. This phase was substantially complete in June 1999. Testing -- This phase includes defining test plans, establishing a test environment, developing test cases, performing testing (with third parties if necessary), and certifying and documenting the results. The certification process entails having subject matter experts (users) review test results, including computer screens and printouts against pre-established criteria to ensure system compliance. Testing and production implementation was substantially complete in September 1999. Contingency Planning -- This phase focuses on reducing the risk of Year 2000-induced business disruptions to help ensure the Company's ability to produce a minimum acceptable level of products and services in the event of internal or external critical systems failures. The Company has developed and will continue to refine contingency plans aimed at ensuring the continuity of critical business functions before and after December 31, 1999. The plans include increasing levels of consumable inventory, such as newsprint, ink and printing plates, as well as preparing alternate procedures for critical internal processes and identifying alternate external resources. Except as discussed below, contingency planning was substantially complete in September 1999. To minimize the impact of disruptions in electrical power that may occur around midnight December 31, 1999, the Company is planning to print most sections of its newspapers prior to midnight. In addition, the Company's four largest newspapers either have or will have electrical generators available to print sections with late-breaking news. Testing of electrical generators used to operate the presses is expected to be completed in November and early December 1999. The Company's other newspaper properties, having a combined daily circulation of less than 250,000, will rely on reciprocal printing agreements. If there is a disruption in electrical power and the Company is unable to successfully use these arrangements, these properties may not be able to produce a daily newspaper until electrical power is restored. The Company's Professional Information and Magazine Publishing business segments currently have electrical generators to support critical systems and the Company does not expect these businesses to be materially impacted by a temporary disruption in electrical power. 25 26 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) The Company believes that its Year 2000 project is on schedule. The table below lists the percentage complete for each project phase as of September 30, 1999. The Company expects to complete all of these project phases by year end 1999. The project has been designated as the highest priority of the Company's information technology departments.
PERCENT COMPLETE AS OF PROJECT PHASE SEPTEMBER 30, 1999 ------------- ---------------------- Inventory................................................... 100% Assessment/Planning......................................... 100% Remediation................................................. 99% Testing..................................................... 96% Contingency Planning........................................ 95%
EXTERNAL RELATIONSHIPS The Company also faces the risk that one or more of its significant suppliers or other third-party businesses ("external relationships") will not be able to interact with the Company due to the third party's inability to resolve its own Year 2000 issues. Beginning in October 1998, compliance questionnaires were sent to all significant suppliers and other significant third parties such as financial institutions, utility companies and content providers. As of September 30, 1999, 90% of significant suppliers have responded, with 66% responding that they are compliant and 24% responding that they are in the process of becoming, and expect to be, Year 2000 compliant. Further follow-up efforts are being made for the 10% that have not replied and alternative Year 2000 compliant suppliers are being identified. The Company has received written statements from its major newsprint suppliers that they expect to be Year 2000 ready. Jeppesen Sanderson, Inc. has relationships with a large number of government regulatory agencies that supply the data Jeppesen uses to build its charts and navigation aids. Jeppesen has received limited information from these agencies with respect to their Year 2000 efforts. The Company believes that Jeppesen will be able to continue its operations even if these agencies are not Year 2000 compliant. As a result, the Company does not believe the inability of these agencies to become Year 2000 compliant will have a material adverse effect on the Company. Excluding these agencies and the Company's suppliers discussed above, 79% of third parties have responded to the Company's questionnaires with 55% responding that they are compliant and 24% responding that they are in the process of becoming, and expect to be, Year 2000 compliant. Additional follow-up efforts are being made for the 21% that have not replied and, where appropriate, contingency plans are in place. However, the Company has no means of ensuring that such suppliers or third parties will be Year 2000 ready. The inability of these parties to complete their Year 2000 resolution process in a timely fashion could have a material adverse effect on the Company. YEAR 2000 COSTS Internal and external resources have been utilized to perform all phases of the Year 2000 project. The Company has incurred costs of $33.8 million for the Year 2000 project, of which $26.2 million has been capitalized and $7.6 million has been expensed. These costs include year to date period ended September 30, 1999 capital expenditures of $10.4 million and expenses of $3.8 million. Total project costs are estimated to be $40.5 million. These costs do not include costs for employees working on the project. During 1999, an average of about 100 employees will have worked on the project with related costs estimated at $8.1 million. The above estimates are for both information technology and non-information technology systems, and include capital costs associated with planned replacements previously budgeted for business reasons, which 26 27 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) incidentally, include Year 2000 compliance. Year 2000 costs are funded through operating cash flows. Although priorities have been realigned, the Company has not deferred significant systems enhancements to become Year 2000 ready. YEAR 2000 RISKS Management believes that it has an effective program in place to address its Year 2000 issues in a timely manner and believes the necessary modifications, replacement and testing of critical systems to be substantially complete, subject to uncertainties as discussed below. As a result, the Year 2000 issue is not expected to pose significant operational or financial issues for the Company. The Company's expectations regarding its Year 2000 efforts are subject to various uncertainties that could cause the actual results to differ materially from the discussion above. These uncertainties include the success of the Company in identifying systems that are not Year 2000 ready and the related costs of remediating, if any; the impact of embedded microchips whose Year 2000 readiness could not be tested and the success of vendors, suppliers and other third parties with which the Company interacts in addressing the Year 2000 issue. If the Company, its vendors, suppliers or such other parties are unable to fully resolve the Year 2000 issue, the Company may not be able to prepare and distribute its publications and products as well as provide its services in a timely manner, which may have a material adverse effect on the Company's results of operations. DISCONTINUED BUSINESSES The above discussion of the Company's Year 2000 program does not include information with respect to AchieveGlobal, Allen Communication or StayWell, which are reflected as discontinued operations. The Company will operate these businesses until their respective dispositions and continues to implement the comprehensive program to address the Year 2000 issue that was instituted before its decision to sell these businesses. The Company believes that its Year 2000 program with respect to the discontinued businesses is on schedule and each project phase is substantially complete as of September 30, 1999 with full completion expected by year end 1999. The information provided above with respect to the Company's continuing businesses relating to external relationships, Year 2000 costs and related risks would not be materially different if it included information regarding the discontinued businesses. CERTAIN FACTORS AFFECTING FORWARD-LOOKING STATEMENTS In 1998, the Company divested Matthew Bender & Company, Incorporated and Mosby, Inc. While the Company believes that these divestitures were completed on a tax-free basis, this position may be subject to review by the Internal Revenue Service. The Company estimated deferred taxes of $176.6 million based on its assessment of the risks inherent in a contested challenge by the Internal Revenue Service. To the extent that the estimate of such deferred taxes is adjusted in the course of resolving such a challenge, the adjustment will be recorded within discontinued operations. If it is ultimately determined that these transactions were not completed on a tax-free basis, the Company's results of operations, financial position and cash flows may be materially adversely affected. Certain statements set forth above and elsewhere in this Quarterly Report on Form 10-Q are forward-looking in nature and related to trends and events that may affect the Company's future financial position and operating results. Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The term "expect," "anticipate," and "intend" and similar words or expressions are intended to identify forward-looking statements. These statements speak only as of the date of this report. These statements are based on current expectations, are inherently uncertain, are subject to risks, and should be viewed with caution. For example, there can be no assurances that the statements contained herein with respect to expected disposition of certain businesses, share purchases, capital expenditures, the 27 28 THE TIMES MIRROR COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Company's Year 2000 efforts or the satisfactory resolution of contingent liabilities will be achieved. Actual results and experience may differ materially from the forward-looking statements and could be adversely affected by a number of factors. Some of these factors are described above and in Note 9 to the Condensed Consolidated Financial Statements. It is not possible to foresee or identify all such factors. The Company makes no commitment to update any forward-looking statement or to disclose any facts, events, or circumstances after the date hereof that may affect the accuracy of any forward-looking statement. DISCUSSIONS EXCLUDING RESTRUCTURING AND ONE-TIME CHARGES Management's discussion and analysis of its results of operations presents information regarding operating profit as well as operating profit excluding the impact of restructuring and one-time charges. The Company believes that the financial information which excludes restructuring and one-time charges is necessary to an understanding of its operations and provides for a more comparable analysis of historical results as well as indications of future financial performance. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company enters into contractual agreements in the ordinary course of business to hedge its exposure to changes in interest rates, the value of foreign currencies relative to the U.S. dollar and newsprint prices. Counterparties to these agreements are major institutions. Such agreements are not entered into for trading purposes. The Company's debt portfolio is managed to maintain a balance of fixed and variable rate obligations. The Company utilizes interest rate swap agreements to help maintain the overall interest rate parameters set by management. As such, a hypothetical 10% change in interest rates would not have a material impact on the Company's results of operations or the fair values of its market risk sensitive financial instruments. The Company periodically enters into foreign exchange forward contracts or uses other hedging strategies to substantially limit its exposure to changes in foreign currency rates. As such, changes in currency rates would not have a material impact on the Company's results of operations. Newsprint expense represents a significant portion of the Company's operating costs. To manage the Company's exposure to newsprint price fluctuations, the Company periodically enters into newsprint hedging contracts not to exceed five years. These hedging arrangements have the effect of locking in for specified periods, the newsprint prices the Company will pay for the hedged volumes. As a result, while these hedging arrangements are structured to reduce the Company's exposure to increases in newsprint prices, they also limit the benefit the Company might otherwise have received from any newsprint price decreases. The Company's operating results could be adversely affected to the extent that such historically volatile newsprint prices increase materially. 28 29 THE TIMES MIRROR COMPANY PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS No material legal proceedings are pending. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 27. Financial Data Schedule.
(b) The Company filed a current report on Form 8-K on September 7, 1999 announcing its decision to sell AchieveGlobal, Inc., Allen Communication and The StayWell Company (Discontinued Businesses), as well as The Sporting News. In addition, the Company announced that it had completed a transaction with its largest shareholders, the Chandler Trusts. The Company filed a current report on Form 8-K on September 29, 1999 to restate its financial information and related disclosures to reflect the Discontinued Businesses as discontinued operations. 29 30 THE TIMES MIRROR COMPANY SIGNATURE 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. THE TIMES MIRROR COMPANY By: /s/ THOMAS UNTERMAN ------------------------------------ Thomas Unterman Executive Vice President and Chief Financial Officer Date: November 12, 1999 30 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEPTEMBER 30, 1999 QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 180,156 0 383,220 37,383 33,551 817,790 1,955,522 1,019,366 3,803,950 938,958 1,492,571 0 724,820 112,120 (489,552) 3,803,950 2,192,688 2,192,688 1,202,228 1,202,228 0 12,218 62,908 327,400 135,857 191,543 (351) 0 0 191,192 2.46 2.37
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