UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 26, 1993 Commission file number 1-7553
KNIGHT-RIDDER, INC.
(Exact name of registrant as specified in its charter)
A Florida corporation NO. 38-0723657
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Herald Plaza Miami, Florida 33132
(Address of principal executive offices)
Registrant's telephone number, including area code (305) 376-3800
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $.02 1/12 Par Value New York Stock Exchange
Tokyo Stock Exchange
Frankfurt Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
none
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
--- ----
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. (The aggregate market value is computed by reference to
the price at which the stock was sold as of February 27, 1994):
$2,700,820,758
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date: February 27, 1994 -
54,740,386 one class Common Stock, $.02 1/12 Par Value
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of definitive Proxy Statement dated March 23, 1994, in
connection with the Annual Meeting of Shareholders to be held on May 4, 1994,
are incorporated into Part III.
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Table of Contents for 1993 10-K
Page
PART I
Item 1. Business 6-32
Item 2. Properties 6-32
Item 3. Legal Proceedings 33
Item 4. Submission of Matters to a Vote
of Security Holders 33
PART II
Item 5. Market for Registrant's Common Stock
and Related Stockholder Matters 33-36
Item 6. Selected Financial Data 36-41
Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations 41-63
Item 8. Financial Statements and Supplementary Data 35-36,64-92
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 92
PART III
Item 10. Directors and Executive Officers of the Registrant 93-99
Item 11. Executive Compensation 99
Item 12. Security Ownership of Certain Beneficial Owners and
Management 99
Item 13. Certain Relationships and Related Transactions 99
PART IV
Item 14. Exhibits, Financial Schedules and Reports on Form 8-K 100-102
SIGNATURES 103-107
SCHEDULES 108-116
EXHIBITS 116-161
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PART I
ITEM 1 & 2: Business/Properties
<PAGE>
<TABLE>
<CAPTION>
Business Segment Information
(In thousands)
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
OPERATING REVENUE
Newspapers.......................... $2,012,823 $1,944,090 $1,903,817
Business Information Services....... 438,525 385,439 354,361
---------- ---------- ----------
$2,451,348 $2,329,529 $2,258,178
========== ========== ==========
OPERATING INCOME
Newspapers.......................... $ 298,767 $ 290,522 $ 259,584
Business Information Services....... 23,405 22,069 20,199
Corporate........................... (37,315) (34,080) (36,510)
----------- --------- ----------
$ 284,857 $ 278,511 $ 243,273
=========== ========== ==========
IDENTIFIABLE ASSETS
Newspapers.......................... $1,578,935 $1,602,373 $1,574,257
Business Information Services....... 548,266 466,456 462,669
Corporate........................... 304,231 389,230 295,825
---------- ---------- ----------
$2,431,432 $2,458,059 $2,332,751
========== ========== ==========
DEPRECIATION AND AMORTIZATION
Newspapers.......................... $ 94,600 $ 88,033 $ 85,134
Business Information Services....... 45,525 38,556 37,159
Corporate........................... 1,633 1,632 1,762
---------- ---------- ----------
$ 141,758 $ 128,221 $ 124,055
========== ========== ==========
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CAPITAL EXPENDITURES
Newspapers.......................... $ 27,971 $ 74,213 $ 131,893
Business Information Services....... 40,329 25,991 33,309
Corporate........................... 1,241 789 1,629
---------- ---------- ----------
$ 69,541 $ 100,993 $ 166,831
========== ========= ==========
</TABLE>
- -----------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Source Of Knight-Ridder Operating Revenue 1993 1992 1991
- ----------------------------------------- ---- ---- ----
<S> <C> <C> <C>
The Philadelphia Inquirer and
Philadelphia Daily News................... 18% 18% 18%
The Miami Herald............................... 13 12 12
San Jose Mercury News.......................... 9 9 9
Detroit Free Press*............................ 9 9 9
The Charlotte Observer......................... 5 5 5
Saint Paul Pioneer Press....................... 4 4 4
Akron Beacon Journal........................... 3 3 3
(Long Beach) Press-Telegram.................... 2 3 3
The (Columbia) State........................... 2 3 3
The Wichita Eagle.............................. 2 3 3
All other newspapers........................... 15 15 15
Business Information Services.................. 18 16 16
---- ---- ----
100% 100% 100%
==== ==== ====
*Knight-Ridder portion of the Detroit Newspaper Agency
</TABLE>
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Newspapers
Knight-Ridder's Newspaper Division had 28 daily newspapers and three
non-daily newspapers at the end of 1993. The Journal of Commerce, the
company's 29th daily, is part of the Business Information Services Division.
Newspaper operating revenue is derived primarily from the sale of
newspaper advertising. Due to seasonal factors, such as heavier retail selling
during the winter and spring holiday seasons, advertising income fluctuates
significantly throughout the year. Consecutive quarterly results are not
uniform or comparable and are not indicative of the results over an entire
year.
Each of Knight-Ridder's newspapers is operated on a substantially
autonomous basis by local management appointed by corporate headquarters in
Miami. Each newspaper is free to manage its own news coverage, set its own
editorial policies and establish most business practices. Basic business
policies, however, are set by the corporate staff in Miami. Editorial and
quality control resources also are provided by the corporate staff.
Each newspaper is served by the company-owned news bureau in Washington,
D.C. A supplemental news service provided by KRT Information Services, a
partnership between Knight-Ridder and Tribune Co., distributes editorial
material produced by all Knight-Ridder newspapers and by 19 foreign
correspondents. The service also distributes editorial computer graphics via
the Knight-Ridder-owned PressLink electronic network and provides a deadline
photo service to hundreds of newspapers around the world as a commercial
venture.
All of the company's newspapers compete for advertising and readers' time
and attention with broadcast and cable television, radio, magazines,
non-daily suburban newspapers, free shoppers, billboards and direct mail. In
many cases, the newspapers also compete with other newspapers published in
nearby cities and towns. With the exception of papers published in Detroit,
Fort Wayne and St. Paul, company-owned newspapers are the only daily and
Sunday papers of general circulation published in their communities.
The table at the bottom of the preceding page presents the relative
percentage contributions by individual papers to the company's overall
operating revenue for the three years ended Dec. 26, 1993. The percentage
contributions of each newspaper to operating revenue are not indicative of
contributions to operating profit.
NEWSPRINT: Newsprint is the primary raw material used in publishing
newspapers, and in 1993, Knight-Ridder was one of the largest consumers in
the United States. Approximately 13.0% of the company's total operating
expenses during the year were for newsprint. Purchases are made under
long-term contracts with a wide variety of newsprint producers. Knight-Ridder
-8-
purchases approximately 70% of its annual consumption from United States
mills, with the remainder purchased from Canada. In the opinion of
management, sources are adequate to meet current demands.
Approximately 76% of the newsprint consumed by the company contained some
recycled fiber; the average content was 46% recycled fiber.
Both eastern and western list prices remained stable at $685 and $630 per
metric tonne, respectively, during 1993. The company's actual cost per tonne
is substantially lower. A small oversupply situation is anticipated for 1994
and the foreseeable future. This excess capacity will moderate price
increases for 1994.
Knight-Ridder is a one-third partner with Cox Enterprises, Inc., and Media
General, Inc., in Southeast Paper Manufacturing Co., a newsprint mill in
Dublin, Ga. The mill's full capacity exceeds 430,000 metric tonnes of
newsprint annually, using recycled newsprint as the principal raw material
and coal as the primary energy source. Because of the soft market and as part
of an agreement among the partners, Knight-Ridder purchased approximately
120,000 metric tonnes in 1993. The partnership commitment is to purchase a
major share of any unsold surplus up to a maximum annual total of 90,000
metric tonnes.
In addition, Knight-Ridder owns a 13.5% equity share of Ponderay Newsprint
Co. in Usk, Wash., which produces approximately 210,000 metric tonnes
annually. Knight-Ridder purchases approximately 28,500 metric tonnes annually
from Ponderay for its western newspapers.
PROPERTIES: The company has daily newspaper printing and publishing
facilities in 26 cities located in 16 states. These production facilities
vary in size from 7,300 square feet at the Florida Keys Keynoter operation in
Marathon, Fla., to 2.0 million square feet in Philadelphia. In total, the
company's newspaper facilities occupy about 8 million square feet.
Approximately 1.5 million of the total square feet is leased from others.
Virtually all the owned property is owned in fee. The company owns
substantially all of its production equipment, although certain office
equipment is leased. The company also owns land for future expansion in
Columbus and Macon, Ga., Detroit and San Jose.
The company's properties are maintained in excellent operating condition
and are suitable for present and foreseeable publishing operations. During
the three years ended Dec. 26, 1993, the company spent approximately $234
million for capital additions and improvements to its existing properties.
TECHNOLOGY: Knight-Ridder moved aggressively this year on a number of
technology initiatives in an ongoing effort to improve the quality of
products and services.
The company made significant investments in replacing outdated publishing
systems with new technology. New front-end classified systems were installed
-9-
in Lexington, St. Paul and Tallahassee. Long Beach began installation of a
new classified, editorial and pagination system. The new systems will enable
these newspapers to more efficiently and reliably produce the daily product,
while providing greater flexibility in page design and deadlines.
The use of computerized desktop color systems and electronic page layout
continued to expand, making for more colorful and easy-to-read newspapers
while reducing production costs. San Jose installed a high-end Scitex color
system to enhance prepress capability, allowing full use of press color
capacity in meeting the needs of advertisers and the newsroom.
The use of electronic text libraries was expanded to every Knight-Ridder
newspaper. Nine newspapers were given funding to install Vu/text SAVE
systems.
PressLink began to develop a way to archive electronic pictures and
graphics. A prototype should be ready for testing by early 1994.
Business systems operations continued to improve. Three newspapers
replaced business computers with state-of-the-art RISC (Reduced Instruction
Set Computing) technology processors, and four others plan to do so in 1994.
Newspapers in Miami, Philadelphia, Charlotte and Columbia began conversions
from traditional mainframe systems to cost-effective minicomputer networks.
Programming was completed on the first phase of a project to enhance
Collier-Jackson's circulation software. Planned for completion in 1994, the
project will provide more than 100 new features, including greatly enhanced
customer service functionality. The software will be distributed to all
Knight-Ridder newspapers.
The CYBORG Human Resources Management System was installed at corporate to
support the implementation of flexible employee benefits across the entire
company. The system will be installed at the properties during 1994.
In June, Philadelphia Newspapers completed the transition to the new
Schuylkill Printing Plant. The newspapers now provide readers and advertisers
improved deadlines, more color, more zoned editions and higher-quality offset
reproduction.
In February, the Detroit Newspaper Agency completed the expansion of the
Sterling Heights inserting facility. By July, all four high-speed inserters
were fully operational.
The Charlotte Observer received approval for a $35 million press
replacement and upgrade project. Two new flexo presses with expanded color
capability will replace three flexo/letterpress presses. Two existing flexo
presses will be upgraded with additional color capacity. This will give
Charlotte four 100% flexo presses and provide readers more vibrant color
reproduction with no ink rub-off.
-10-
The Grand Forks Herald moved into expanded facilities with a new newsroom
in the fall. The $1.3 million project involved the purchase and renovation of
two buildings now connected to the original building by a skywalk.
Newspapers First
Newspapers First was established in 1990 as the primary sales
representative for all Knight-Ridder newspapers, the Detroit Newspaper
Agency, Times Mirror newspapers and leading independent newspapers. Included
are The Arizona Republic, (Atlanta) Journal/Constitution, The (Baltimore)
Sun, The Boston Globe, The Denver Post, The Hartford Courant, Houston
Chronicle, The Indianapolis Star, Los Angeles Times, The Milwaukee Journal,
The (Allentown, Pa.) Morning Call, Newsday and The Seattle Times/Seattle Post
Intelligencer.
The organization represents newspapers accounting for 25% of the United
States' daily newspaper readership. With one contact, a customer can place an
ad in a combination of newspapers owned by different companies, rather than
dealing with each one separately.
Newspapers First is the first sales organization to market a significant
breakthrough product directed at two low-use newspaper categories: beer and
over-the-counter remedies. This new product embraces a one-order, one-bill
facility and network pricing across most Newspapers First members, as well as
other unaffiliated newspapers. It is designed to address the specific needs
and wishes of advertisers.
Newspapers First is headquartered in New York and has sales offices in
Atlanta, Chicago, Dallas, Detroit, Los Angeles, Miami, Minneapolis and San
Francisco. It is a full-service representative responsible for national,
retail and classified sales functions.
The Miami Herald
The Miami Herald, the only metropolitan morning newspaper published in
Dade County, has the largest circulation of any daily newspaper in the
southeastern United States. Circulated primarily in Dade County (Miami
Metropolitan Statistical Area) and in adjacent Broward and Monroe counties,
The Herald also has considerable circulation elsewhere in Florida.
In 1993, The Herald produced six daily and eight Sunday editions. The
newspaper also carried eight zoned Neighbors editions and three zoned
Hometown Herald editions twice weekly, and four local zoned news sections
serving Dade, Broward and Palm Beach counties. The Herald's International
edition was distributed daily in 30 cities throughout Latin America and the
Caribbean.
-11-
El Nuevo Herald, The Herald's Spanish-language publication, marked its
sixth anniversary with continued circulation growth. Since its inception in
1987, El Nuevo Herald's circulation has grown to 101,389 daily and 126,614
Sunday. It is available on request for Herald home-delivery customers for a
10-cent daily delivery charge and in special racks in nearby counties.
The impact of Hurricane Andrew, which devastated South Dade County in
August 1992, continued to fuel retail and classified revenue growth. The loss
of property helped the economy in terms of jobs, retail sales and,
specifically, durables and services. Many businesses reopened. New retailers
who opened or plan to open stores in South Florida include Rooms To Go,
Burdines Furniture Store, Bloomingdales, Computer City and Incredible
Universe.
In recognition of its superb coverage of Hurricane Andrew, The Miami
Herald received a Pulitzer Gold Medal for meritorious public service.
Columnist Liz Balmaseda also received a Pulitzer for commentary.
Health Beat, a new quarterly publication, was launched in April. Hometown
Herald, a bi-weekly community news section, plans five editions by the end of
1994.
September marked the launch of CubaNews, a monthly newsletter reporting
on economic, political and commercial trends in Cuba. The Herald's
International Advertising Department introduced Florida Marketplace,
distributed monthly with newspapers in Brazil, Colombia and Venezuela and
with The Herald's International Edition.
The Herald signaled its commitment to developing new, nontraditional
revenue sources. Book publishing and event marketing are two major
initiatives.
The International Women's Show, a major consumer event, marked The
Herald's entrance into event marketing. The expo attracted more than 250
vendors and 18,000 visitors. El Nuevo Herald sponsored Copa Latina, an
amateur soccer tournament that drew nearly 20,000 people.
Population in Dade and Broward counties grew 2.38% from 1990 to 1992, the
latest year for which statistics are available. The area's population is
expected to grow 49.7% between 1993 and 2015, compared with the U.S. average
of 33.6%.
In Dade County, The Herald's daily circulation household penetration rate
in 1993 was 37%; Sunday circulation penetration was 48%. Daily coverage of
Broward households was 18%; Sunday coverage was 22%. Home-delivered
newspapers accounted for 73% of total daily circulation and 64% of total
Sunday circulation.
-12-
Cox Newspapers and the Miami Herald Publishing Co. are parties to a joint
operating agreement that runs until the year 2021, covering the publication
of The Herald and The Miami News, which ceased publication Dec. 31, 1988.
This table presents average audited circulation for The Miami Herald and
El Nuevo Herald for the years ending June 30, 1993, 1992 and 1991.
Advertising linage, preprints inserted and revenue amounts are for the fiscal
years.
<PAGE>
<TABLE>
<CAPTION>
THE MIAMI HERALD
1993 1992 1991
---------- ---------- ---------
<S> <C> <C> <C>
Average Circulation
Daily........................................ 401,733 405,779 425,304
Sunday....................................... 526,231 527,658 532,158
Average Linage (in 000s of six-column inches)
ROP Full-Run
Retail...................................... 1,100.7 1,022.6 1,046.4
General..................................... 225.4 257.7 261.8
Classified.................................. 999.7 914.1 868.2
---------- ---------- ----------
Total...................................... 2,325.8 2,194.4 2,176.4
========== ========== ==========
ROP Factored
Part-Run.................................... 675.3 566.4 517.6
Preprints- Full-Run......................... 667.7 669.7 592.7
Part-Run......................... 1,265.3 987.6 984.9
Total Preprints Inserted (in 000s)............. 571,914 520,200 457,549
Advertising Revenue (in 000s)
Retail....................................... $ 112,878 $ 110,665 $ 109,519
General...................................... 38,911 43,154 39,945
Classified................................... 97,483 85,618 80,298
---------- ---------- ----------
Total........................................ $ 249,272 $ 239,437 $ 229,762
========== ========== ==========
Circulation Revenue (in 000s).................. $ 48,603 $ 48,473 $ 49,071
========== ========== ==========
</TABLE>
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San Jose Mercury News
The San Jose Mercury News provides information in a variety of forms to
the diverse communities of the Bay Area from Monterey to the northernmost
reaches of Silicon Valley. Located in California's third-largest city, the
Mercury News has experienced a year of tremendous growth in its outlying
markets, particularly on the San Francisco Peninsula.
Following the closure of a newspaper in Palo Alto, the Mercury News
expanded its coverage of mid-Peninsula issues and added racks and delivery
routes. The result was a daily circulation increase of more than 11,000 in
this area.
The Mercury News also grew in Alameda County, bringing the paper's overall
daily and Sunday circulation to all-time highs - during a period when most
Bay Area dailies showed circulation decreases.
A difficult economic climate and uneven recovery from the recession made
for a difficult retail year, although classified turned up at year end.
The San Jose Metropolitan Statistical Area (MSA), which includes only
Santa Clara County, had a population of 1.5 million. The area's population is
expected to grow 44.8% between 1993 and 2015, compared with the U.S. average
of 33.6%.
In April 1993, the company launched Mercury Center. Its online information
service provides access to the complete text of the day's paper, as well as
archived stories back to 1985. News Call, an audiotext information system,
allows users to receive faxed article reprints, graphics and even copies of
stories that did not run in the paper.
While delivery mechanisms changed a great deal this year, the content of
the paper maintained the same level of excellence for which it is widely
noted. A groundbreaking series of stories on the state's unusual forfeiture
law resulted in that law's repeal.
For the 22nd consecutive year, advertisers placed the Mercury News among
the top five newspapers in the nation in total full-run advertising linage.
Daily circulation increased by 8,945, or 3.3%, and Sunday circulation
increased 7,439 or 2.2% compared with the previous year.
Daily household penetration was 44.3% and Sunday penetration was 53.0% in
the MSA.
The following table presents average unaudited circulation for the year
ended Sept. 30, 1993, and average audited circulation for San Jose for the
two years ended Sept. 30, 1992 and 1991. Advertising linage, preprints
inserted and revenue amounts are for the fiscal years.
-14-
<TABLE>
<CAPTION>
San Jose Mercury News
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Average Circulation
Daily............................................. 278,231 * 269,286 275,652
Sunday............................................ 339,519 * 332,080 334,598
Average Linage (In 000s of six-column inches)
ROP Full-Run
Retail....................................... 1,144.3 1,183.0 1,084.8
General...................................... 252.1 255.5 264.2
Classified................................... 1,315.3 1,299.1 1,357.3
--------- ---------- ----------
Total.................................... 2,711.7 2,737.6 2,706.3
========= ========== ==========
ROP Factored
Part-Run..................................... 50.9 49.3 53.4
Preprints - Full-Run......................... 1,561.8 1,664.8 1,754.8
Part-Run......................... 602.2 1,583.8 1,736.8
Total Preprints Inserted (In 000s).................... 434,877 471,794 492,963
Advertising Revenue (In 000s)
Retail............................................ $ 70,490 $ 73,047 $ 73,181
General........................................... 21,406 20,622 20,505
Classified........................................ 88,083 82,556 84,518
========== ========== ==========
Total........................................ $ 179,979 $ 176,225 $ 178,204
========== ========== ==========
Circulation Revenue (In 000s)......................... $ 30,502 $ 29,566 $ 28,993
========== ========== ==========
*unaudited
</TABLE>
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The Philadelphia Inquirer and Philadelphia Daily News
Philadelphia Newspapers, Inc. (PNI), publisher of The Philadelphia
Inquirer and Philadelphia Daily News, continued to gather momentum with the
complete transition to its $299.5 million color offset printing and
distribution plant in mid-1993.
The Inquirer, building on its successful introduction of the South Jersey
daily zoned section in 1992, added a second daily zoned section, for suburban
readers and advertisers in the Main Line/Delaware County area in 1993. This
is part of a plan to replace eight twice-weekly Neighbors sections with five
daily sections.
Although customers began receiving benefits from the new plant within
weeks of its limited opening in June 1992, fuller use of the plant's
capabilities began in 1993, with more to come in 1994.
Also in 1993, PNI successfully negotiated four-year contracts with 10
unions representing about 3,000 employees. These new contracts, settled
without a work stoppage, reflect technological improvements and operational
changes that have occurred within PNI and should provide important business
efficiencies in the years ahead.
Of particular note is a provision for a new commission-only advertising
sales staff. The commission-only sales staff will primarily focus on
developing new business for The Inquirer and Daily News. The new staff will
enhance the efforts of the existing, salaried sales staff and is not designed
to replace it.
With relative assurance of four years of labor stability and completion of
the transition to the new plant in Upper Merion Township, PNI now looks ahead
to a period of maximized benefit from its location in the nation's fourth
largest market of almost 5 million people.
It will accomplish this by continued improvement of its core products, The
Inquirer and the Daily News, while at the same time expanding its presence in
the market via augmentation of the newspapers and development of new
products.
For example, the company successfully sponsored a home decor consumer show
and began planning its first International Women's Show, a major exhibition
to be staged in 1994, as the company moves solidly into event marketing as
one of its strategic initiatives.
PNI's book publishing operations introduced seven new titles in 1993,
including a 704-page regional almanac. PNI publishes under its own imprint
and through its contractual relationship with an outside publishing concern.
Additional book titles and other projects based on the work of Inquirer and
Daily News staffers will be developed in 1994 by PNI's New Ventures
department.
-16-
The Inquirer had average daily circulation of 502,445, up 309 from 1992.
Sunday circulation was 964,913, down 11,310 from 1992, according to unaudited
ABC reports. The Daily News had 195,337 circulation, compared with 196,715 in
1992.
The Inquirer had a 25.4% household penetration and the Daily News had
10.2% penetration in the nine-county Metropolitan Statistical Area. Sunday
penetration was 48.0%.
The following table presents the average unaudited circulation for The
Philadelphia Inquirer and Philadelphia Daily News for the year ended March
31, 1993, and average audited circulation for the years ended March 31, 1992
and 1991. Advertising linage, preprints inserted and revenue amounts are for
the fiscal years.
<TABLE>
<CAPTION>
The Philadelphia Inquirer and Philadelphia Daily News
1993 1992 1991
---------------------------- ---------------------------- ------------------------
Inquirer Daily News Inquirer Daily News Inquirer Daily News
-------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average Circulation
Daily.................................... 502,445 * 195,337 * 502,136 196,715 517,860 223,633
Sunday................................... 964,913 * 976,223 982,663
Average Linage (In 000s of six-column inches)
ROP Full-Run
Retail.............................. 1,056.0 368.3 1,029.8 348.4 1,035.6 312.1
General............................. 203.9 44.5 210.2 46.1 221.8 51.5
Classified.......................... 760.7 311.4 788.8 315.9 799.1 291.5
-------- -------- -------- -------- -------- --------
Total........................... 2,020.6 724.2 2,028.8 710.4 2,056.5 655.1
======== ======== ======== ======== ======== ========
ROP Factored
Part-Run............................ 93.1 79.0 66.6
Preprints - Full-Run................ 287.1 41.0 327.1 59.3 347.7 76.8
Part-Run................ 1,932.7 51.0 1,630.2 111.2 1,129.4 94.4
-17-
Combined Combined Combined
---------- ---------- ----------
Total Preprints Inserted (In 000s)........... 752,429 787,440 719,592
Advertising Revenue (In 000s)
Retail................................... $148,082 $145,485 $144,082
General.................................. 49,119 50,845 51,001
Classified............................... 101,284 98,687 95,076
--------- ---------- ----------
Total........................... $298,485 $295,017 $290,159
========= ========== ==========
Circulation Revenue (In 000s)................ $128,801 $126,738 $115,491
========= ========== ==========
* unaudited
</TABLE>
Detroit Free Press
The Detroit Free Press filled reader needs in 1993 by trying to help make
its community a better place to live and by widening the paper's already
broad array of products.
In the most highly visible public service campaign in Free Press history,
Children First, the Free Press published more than 400 articles, a special
fund-raising section, progress reports and a parenting guide and sponsored a
violence-prevention seminar.
Free Press Plus, a phone, fax and computer extension of the newspaper,
served almost a half-million callers on its pay and toll-free lines. Free
Press Plus entered a one-year agreement making Free Press stories available
to nearly 1.5 million CompuServe members.
A new health/science weekly tabloid debuted. The Business section almost
doubled its listings of mutual funds. Coverage of national and foreign news
was expanded, and the Tuesday paper was enlarged to provide section fronts
for Local News and Business every weekday.
Single-copy prices for the Free Press rose a dime in March in the
six-county Metropolitan Statistical Area (MSA) to 35 cents daily; daily home
delivery prices remained at 25 cents. Sunday home delivery prices increased
in October from $1 to $1.25 for weekend-only subscribers.
The Detroit Free Press is the ninth-largest daily newspaper in the country
and the largest in Michigan. Seventy-eight percent of its daily circulation
is in the six-county Detroit metropolitan area, which contains 46% of the
population of Michigan. Sales and Marketing Management magazine ranks the
Detroit area as the nation's sixth-largest market, with a population of
nearly 5 million.
-18-
On Nov. 27, 1989, business operations of the Free Press and The Detroit
News, owned by Gannett Co., were transferred to the Detroit Newspaper Agency,
now called Detroit Newspapers - a partnership owned equally by the Detroit
Free Press and The Detroit News under the terms of a joint operating
agreement (JOA) between Knight-Ridder and Gannett. Under the agreement, the
Free Press publishes in the morning, Monday through Friday. The News,
formerly an all-day paper, publishes on an afternoon cycle. On weekends, the
newspapers publish combined morning editions under the name The Detroit News
and Free Press. On Saturdays, the Free Press provides news, sports and
business and The News provides features. On Sundays, those roles reverse.
Knight-Ridder received 45% of any profit of the agency through the first
three years, with Gannett receiving 55%. In the fourth year, Knight-Ridder
received 47% of the DNA profit and, beginning Dec. 27, 1993, received 49%.
Beginning Dec. 26, 1994, profits will be split equally through the end of the
100-year JOA.
Household penetration for the combined Detroit News and Free Press in the
MSA was 50.3% daily and 60.5% Sunday. Average audited circulation of just
under 1.2 million ranked the Sunday News-Free Press third in the nation.
The following table shows average audited circulation for the years ended
March 31, 1993, 1992 and 1991. Advertising and revenue amounts are for the
fiscal years.
<PAGE>
<TABLE>
<CAPTION>
Detroit Free Press
1993 1992 1991
--------------------------- --------------------------- --------------------------
DNA/ DNA DNA DNA DNA DNA
Free Press News Free Press News Free Press News
---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average Circulation
Morning................................... 576,359 592,502 623,408
Evening................................... 391,768 434,181 489,311
Combined editions: ...........................
Saturday.................................. 869,613 897,762 952,151
Sunday.................................... 1,180,505 1,195,497 1,220,143
-19-
Average Linage (in 000s of six-column inches)*
ROP Full-Run
Retail............................... 623.3 596.1 633.7
General.............................. 79.4 88.2 84.4
Classified........................... 420.0 407.4 426.5
------- ------- -------
Total............................ 1,122.7 1,091.7 1,144.6
======= ======= =======
ROP Factored
Part-Run.................................. 73.0 62.6 49.5
Preprints - Full-Run..................... 347.8 280.4 245.4
Part-Run..................... 522.2 496.0 493.8
Total Preprints Inserted* (in 000s)........... 495,338 448,665 437,460
Advertising Revenue* (in 000s)
Retail.................................... $ 93,241 $ 87,458 $ 88,049
General................................... 18,897 20,568 19,217
Classified................................ 45,181 41,174 37,647
--------- ---------- ----------
Total............................ $ 157,319 $ 149,200 $ 144,913
========= ========== ==========
Circulation Revenue* (in 000s)................ $ 55,694 $ 53,626 $ 52,666
========= ========== ==========
*Under the joint operating agreement, Knight-Ridder reports 50 percent of total linage, preprints inserted and
revenue for Free Press and Detroit News advertising , which is handled by the Detroit Newspaper Agency.
</TABLE>
The Newspapers
The following table presents for each of the daily newspapers the average
daily circulation for the 1993 audit year, the advertising linage, preprints
inserted and household coverage through Dec. 26, 1993, and the percentage
population growth for each area from 1990 through 1992.
<TABLE>
<CAPTION>
-20-
Advertising Volume
-------------------------------
(in 000s of Six-Column Inches)
-------------------------------
Run-of-Press
-------------------------------
Average Full-Run Total Preprints Daily ABC City 1990 to 1992
Daily --------------------------- Factored Inserted Zone Household % Change
Publication Circulation* Retail General Classified Part-Run (In 000s) Coverage in Population
- ------------------------- ------------ ------ ------- ---------- -------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aberdeen American News-AM 18,844 282.1 5.7 149.9 17.7 9,534 78.1% 0.0 (a)
Akron Beacon Journal-AM 159,586 584.2 44.6 608.1 29.0 208,997 59.8% 1.8
Biloxi Sun Herald-AM 49,666 # 454.1 17.4 422.9 4.6 54,819 55.1% 2.7
Boca Raton News-AM 24,382 (b) 685.7 80.2 479.2 54.4 16,511 35.2% 5.8 (a)
- ----------------------------------------------------------------------------------------------------------------------------------
Boulder Daily Camera-AM 34,620 # 578.4 14.5 502.0 19.9 44,928 56.9% 5.3
Bradenton Herald-AM 41,104 # 513.7 8.3 377.6 5.4 65,451 42.5% 3.9
Charlotte Observer-AM 232,294 770.1 66.4 616.1 230.2 247,702 57.8% 3.8
Columbia State-AM 136,609 653.9 46.3 536.5 13.8 183,088 55.7% 1.8
- ----------------------------------------------------------------------------------------------------------------------------------
Columbus Ledger-Enquirer-AM 53,759 401.2 12.3 325.0 18.7 66,130 48.7% 3.1
Detroit Free Press-AM 576,359 623.3 79.4 420.0 73.0 495,338 25.6% 0.7
Duluth News-Tribune-AM 57,889 323.6 13.4 341.9 29.7 75,066 63.9% (0.2)
Fort Wayne News-Sentinel-PM (c) 54,117 # 754.9 39.3 669.6 75.1 172,410 38.0% 2.3
- ----------------------------------------------------------------------------------------------------------------------------------
Gary Post-Tribune-AM 73,515 476.2 18.8 433.1 75.0 120,481 49.8% 2.1 (a)
Grand Forks Herald-AM 40,205 289.4 13.1 240.4 6.7 35,575 70.7% 0.3 (a)
Lexington Herald-Leader-AM 125,373 # 628.1 15.8 367.2 16.7 156,205 56.7% 3.9
Long Beach Press-Telegram-AM 124,260 529.4 75.7 549.8 158.4 137,056 32.9% 2.6 (a)
- ----------------------------------------------------------------------------------------------------------------------------------
Macon Telegraph-AM 74,483 348.8 15.3 272.6 27.0 89,432 54.0% 1.7
Miami Herald-AM 401,733 # 1,100.7 225.4 999.7 675.3 571,914 36.8% 2.4 (a)
Milledgeville Union-Recorder-AM 8,452 (b) 135.2 3.3 65.8 52.3 7,394 57.0% 1.0 (a)
Myrtle Beach Sun News-AM 37,677 # 533.7 11.3 502.8 14.7 33,960 68.4% 7.0 (a)
- ----------------------------------------------------------------------------------------------------------------------------------
Philadelphia Inquirer-AM 502,445 # 1,056.0 203.9 760.7 93.1 752,429 (d) 25.4% 0.9
Philadelphia Daily News-AM 195,337 # 368.3 44.5 311.4 0.0 0 (d) 10.2% 0.9
Saint Paul Pioneer Press-AM 211,406 587.3 61.0 473.2 13.6 317,522 43.2% 3.8 (a)
San Jose Mercury News-AD 278,231 # 1,144.3 252.1 1,315.3 50.9 434,877 44.3% 1.7
- ----------------------------------------------------------------------------------------------------------------------------------
-21-
State College Centre Daily Times-AM 26,113 # 454.0 5.8 263.8 13.6 26,471 51.2% 1.9
Tallahassee Democrat-AM 57,960 691.6 17.4 578.4 52.9 97,760 54.3% 3.8
Wichita Eagle-AM 117,344 # 488.1 18.3 508.0 68.2 185,887 49.9% 3.0
- ----------------------------------------------------------------------------------------------------------------------------------
U.S.A. Average = +2.4%
*On the average, 71.5% was home-delivered in 1993.
#Unaudited.
(a) Company definition of newspaper market because this community is not a separate Metropolitan Statistical Area.
(b) Company circulation data.
(c) In addition to the circulation of the News-Sentinel, the joint agency partner (The Journal-Gazette) had an average daily
circulation of 62,435. Linage statistics include both newspapers.
(d) Philadelphia reports preprints inserted on a combined basis.
</TABLE>
Business Information Services
Business Information Services (BIS) produces, distributes and facilitates
the use of financial, general business, scientific, technological,
transportation and other information by global business and professional
users. BIS represented 17.9% of total Knight-Ridder operating revenue in
1993. Since its 1983 inception, it has been the fastest-growing Knight-Ridder
division. BIS revenue has grown at a compound annual rate of 22.4% over the
past 10 years on the strength of acquisitions, new product development and
global market expansion.
During 1993, BIS consisted of three operations: Dialog, Knight-Ridder
Financial and the Journal of Commerce. In January 1994, BIS acquired the
business assets of Technimetrics, a leading publisher of investor relations
information and business executive and investment professional lists.
Dialog: Dialog, including Data-Star acquired in 1993, is the leading
online source for global business and professional information. Dialog
distributed archival business and professional information to more than
155,000 subscribers in over 100 countries during 1993.
Principal products are the Dialog and Data-Star online services and the
Dialog OnDisc CD-ROM product series. Dialog also provides online and on-site
library services to the United States and Latin American newspaper
industries. The Dialog online service and on-site products provide access to
more than 450 online databases and 50 CD-ROM products, including abstracts
-22-
and the full text of leading publications covering science and technology,
general business (products and markets, people, company fundamentals), legal
issues and news. In addition, users can retrieve patent and chemical
substructure information from the Dialog online service. The Data-Star online
service provides access to 250 medical, business, pharmaceutical and European
directory databases.
Dialog subscribers are business and professional information specialists
and end-users interested in scientific research, competitive intelligence,
technology, industry and market developments and general business and
financial information. Subscribers for these services include business
executives, research chemists, engineers, lawyers, doctors and educators.
During 1993, Dialog increased the amount of information available on its
online service by 21%, providing access to more than two terabytes (the
equivalent of more than 500 million typed pages) of information from
thousands of publications. The databases include information from other
Knight-Ridder companies, including KRF (MoneyCenter), the Journal of Commerce
(PIERS) and 12 Knight-Ridder newspapers. Dialog also published an additional
six CD-ROM titles during 1993, bringing the total to 50.
During 1993, Dialog enhanced the Data-Star online service by adding 45
databases focusing on European business and global scientific and technology
issues. Dialog also worked on a Dialog/Data-Star gateway, which will be made
available early in 1994.
Several companies compete with Dialog, including Mead Data Corp. and
Scientific and Technical Information Network (STN), offered by the American
Chemical Society.
Knight-Ridder Financial (KRF): KRF provides real-time and historical news
and price information to the global financial community and operates in over
30 countries. In addition, KRF delivers print and CD-ROM-based historical
price information and market commentary to more than 16,000 subscribers in
100 countries.
KRF offers real-time and historical access to market-moving news, cash
market and exchange prices, expert third-party market analyses and technical
analysis features developed by KRF and others. Subscribers to KRF information
include traders, brokers and analysts in leading financial institutions,
agricultural companies and industry throughout the world. KRF customers have
access to real-time and historical price and other pertinent information for
more than 65,000 instruments.
In December 1993, KRF acquired Equinet Pty. Ltd. and the Dataline
Asia-Pacific Database.
-23-
KRF provides information products to subscribers on the following
platforms:
* Digital Datafeed and Digital Page Server, providing full access to KRF
information on systems currently in use at most leading financial
institutions around the world.
* MoneyCenter for Windows (MCW), delivering KRF information and functionality
on industry standard Local Area Networks and offering real-time links to
electronic spreadsheets and graphics software. In 1993, the MoneyCenter for
Windows platform was significantly expanded through the introduction of
MoneyCenter for Windows Release 2.1. This product gave MCW customers the
capacity to retrieve the entire KRF information real-time and archival
database, previously available only on the TradeCenter platform.
* TradeCenter II and ProfitCenter, providing sophisticated technical analysis
tools for real-time decision support, including highly flexible software to
view and analyze time series information ranging from trade-to-trade to over
20 years of historical data. TradeCenter II operates in the Unix environment.
* CommodityCenter, addressing the needs of the low-end, U.S.-based
commodities markets and responding to market demand for advanced, low-end
products. CommodityCenter allows KRF to deliver on a cost-effective platform
selected real-time information products, the Global Weather Service
information product and sophisticated national weather radar map imagery to
the agricultural commodities customer.
* Equinet, currently providing access to real-time and historic Australian
and New Zealand equities and option price information and related analytic
features. Equinet operates in a Windows environment and is interactive.
KRF also operates the world's largest futures-oriented print chart and
market analysis information service, with principal products of Commodity
Perspective and Commodity Research Bureau (CRB). KRF also publishes KR-CRB
Infotech, a CD-ROM product that offers access to more than 50 years of CRB
market commentary and price information.
KRF competes with a number of financial information services including
Bloomberg, Dow Jones/Telerate and Reuters.
Journal of Commerce: The Journal of Commerce (JoC) provides print and
electronic products geared to businesses and individuals involved in
international trade and transportation. The 167-year-old daily Journal of
Commerce, with over 21,000 circulation, is the primary print product. The JoC
also publishes a monthly International Edition delivered to more than 15,000
subscribers on a controlled basis. In addition, it produces editorial copy
and places advertising in special monthly editions that appear in leading
Russian, Chinese, Polish and Latin American newspapers. The Journal of
-24-
Commerce also publishes Traffic World and Florida Shipper, two leading
transportation weekly magazines.
The JoC offers a series of electronic products, including PIERS (Port
Import/Export Reporting Service), RATES (Rapid Access Tariff Expediting
Service), Shiprate and Traderate. PIERS provides access to a comprehensive
database containing information on all products entering or leaving United
States ports. The RATES database provides steamship tariff information in
page and data format. Shiprate provides steamship companies the ability to
maintain and access tariff databases essential to their operations. Meeting
the new requirements of the Federal Maritime Commission, the Traderate
database provides the same information as does Shiprate, in a more functional
digital format.
PROPERTIES: BIS maintains production, news and sales facilities throughout
the world. Of the 612,600 square feet of office and production capacity
currently utilized, approximately 81% is leased under operating leases that
expire between 1994 and 2007. During the three years ended Dec. 26, 1993, BIS
spent approximately $100 million for capital additions and improvements to
its existing properties.
TECHNOLOGY: BIS operations utilize industry standard data processing and
communications equipment. BIS uses internal staff resources to develop data
storage, access and display applications, but operates with a preference for
open-architecture systems, which facilitate the broadest possible use of BIS
information.
During 1993, BIS enhanced products by expanding data offerings and
improving subscriber access and analysis. Some of these enhancements are:
Dialog
Dialog introduced Target, a non-Boolean search interface that identifies
the most relevant articles on a subject and presents them in order of
relevance to the subscriber-defined search terms.
DialogLink for Windows, released in December 1993, provides an enhanced
communications and search interface package that enables the use of the
Windows graphical user interface to construct search terms.
Dialog introduced Dialog SourceOne, a new fax-based document delivery
service for U.S. patent articles and UMI's Abi/Inform articles and images.
Dialog now offers Menu Alert (SM), a new menu-based interface for the
Dialog Alert product line that also permits document delivery via fax or
e-mail.
Knight-Ridder Financial
KRF increased its real-time and historical price information database to
include more than 65,000 instruments, with a further upgrade to 256,000
instruments to follow in 1994.
-25-
KRF introduced MoneyCenter for Windows Release 2.1, which provides
interactive real-time and CD-ROM access to the extensive KRF historical price
databases, as well as access to all KRF news and price information.
With the late 1993 acquisition of Equinet, KRF added a Windows-based,
equity and options information and analytic service focused on the Asian
markets.
Journal of Commerce
During 1993, the JoC converted its electronic PIERS and Transax product
lines to an enhanced mainframe computer environment that provides more user
functionality.
The JoC released a series of Transax shipping tariff filing and retrieval
products that are compatible with the new format prescribed by the Federal
Maritime Commission.
INVESTMENTS: Dialog made a minority investment in Personal Library
Software, Inc., (PLS), an acknowledged leader in the information industry for
text and image-based search and retrieval software. This allows the two
companies to share technology and explore product and market synergies.
Dialog is represented on the PLS board of directors.
Dialog also made a minority investment in Individual, Inc., a company that
specializes in information products for the corporate alerts market and has
led in the delivery of customized electronic newsletters to business end
users. Dialog is represented on Individual's board of directors.
Partially Owned Companies
Knight-Ridder owns 49.5% of the voting common stock and 65% of the non-
voting common stock of the Seattle Times Co., which publishes The Seattle
Times in Seattle, Wash., the Walla Walla Union-Bulletin in Walla Walla,
Wash., and the Yakima Herald-Republic in Yakima, Wash.
Knight-Ridder is an equal partner with Media General and Cox Enterprises
in Southeast Paper Manufacturing Co., which operates a newsprint mill in
Dublin, Ga.
Knight-Ridder is a 13.5% owner, with eight partners, of Ponderay Newsprint
Co., a 210,000-metric tonne newsprint mill in Usk, Wash. The managing
partner, with 40% ownership, is Lake Superior Forest Products, Inc.
TKR Cable Co., jointly owned with Liberty Media Corp., currently operates
cable television systems in New York and New Jersey. In December 1992,
Knight-Ridder exchanged its 7.5% interest in SCI Holdings, Inc., the holding
company for all Storer Cable systems, for a 15% interest in the stock of
certain of those systems. This reorganization included a refinancing of much
of the original Storer acquisition debt.
-26-
In 1989, business operations of the Detroit Free Press were merged with
those of The Detroit News to form the Detroit Newspaper Agency, a joint
venture between Knight-Ridder and Gannett Co., Inc. The news and editorial
functions of the two newspapers are separate and independent.
Knight-Ridder owns 33.33% of the voting stock of Newspapers First; the
balance is owned by Times Mirror and a group of major-market independents.
Newspapers First is responsible for the sale and service of general, retail
and national classified advertising accounts for a number of newspapers.
Dialog has formed a small corporate joint venture called Article Express
International, Inc., (AEI) that offers copies of original journal articles.
Dialog owns 33.78% of the voting stock and 100% of the nonvoting stock. The
balance of the voting stock is owned by Engineering Information, an unrelated
not-for-profit corporation that manages AEI.
Training, Management Development and Employee Relations
Recognizing that Knight-Ridder's greatest asset is its people, the company
places a premium on human resources development. Knight-Ridder is dedicated
to helping employees realize their full potential while sharpening their
focus on serving our internal and external customers.
Contributing strongly to employee professionalism is the Knight-Ridder
Institute of Training (KRIT). KRIT strives to be a premier provider of
organizational development, strategic change and executive development
resources. KRIT:
* has launched initiatives throughout the company for corporate awareness
through workshops that foster pluralism, diversity and customer service.
* has delivered Miami-based, regional and on-site skill-building seminars for
more than a thousand executives and employees. Professionals from outside
firms paid thousands of dollars in tuition to attend KRIT programs.
* supports local company efforts to accelerate individual and organizational
development. To that end, a Matching Funds program adds $3 to every dollar
spent at the local level toward leading change and strengthening human
potential.
* is one of the industry's few training and executive development centers
that carries the American Council on Education's recommendation for college
credit in its five-day skill-building seminars.
* funded and delivered market-specific sales and sales management training
for every newspaper company.
* with Dialog Information Services, held an international sales conference
for 110 Dialog participants.
-27-
* with Knight-Ridder Financial, supported management development through a
high-level Strategic Leadership program in Miami, and supported sales in
Southeast Asia through co-facilitation of a Tokyo conference for salespeople,
sales management and customers.
KRIT is bolstering executive bench strength at all levels, working with
corporate and local human resources professionals to provide the tools for
managing change, growing high-potential executives and supporting the
developmental needs of a diverse work force. Management development reviews
and succession-planning programs strongly foster executive excellence. Each
year, reviews are conducted at the local level for key managers, and plans
are made for their development and promotion.
Management development programs provide a reservoir of talent for filling
key positions throughout the company. The new Marketing Leadership
Development program identifies a dozen advertising and circulation managers
with strong experience and high potential to become division executives.
Candidates work with local and corporate executives to design 24- to 30-month
career plans to qualify them for promotion to significant additional
responsibilities.
An intensive, five-day General Executive Development Program provides
other high-potential midcareer executives with specifically tailored
experiences and corporate sponsorship to prepare them for key leadership
roles.
The Executive Leadership Program, targeted to key executives, is a 25-day
educational experience conducted over the course of one year. This extended
commitment to leadership development is unique in American corporate
executive education.
During 1993, Knight-Ridder provided facilitators to a third of its
companies for executive management and interdepartmental team building. Other
programs offer assistance with employee involvement, managing organizational
change and customer service leadership training.
Knight-Ridder continues a long-standing commitment to increasing the role
of women and minorities in its businesses, reflecting the diversity of the
communities it serves. Each company maintains a five-year plan that details
its strategies for achieving a more diverse work force. Managers are
evaluated on the progress they make toward significantly increasing the pool
of women and minority members who are qualified to fill key positions.
In the past five years, thousands of employees at all Knight-Ridder
companies have participated in discrimination awareness efforts. In 1994,
KRIT will roll out a companywide "Diversity is the Competitive Edge" workshop
for every employee and marketplace.
-28-
Knight-Ridder is an equal opportunity employer. The Minority Hiring
Program actively recruits and hires minority group members into management
offices and newsrooms. The program assists managers and editors in the
overall development of minorities.
Knight-Ridder is committed to positive, productive employee relations.
Approximately 42% of the 20,000 full-time employees are represented by nearly
100 local unions under collective bargaining agreements that expire and are
renegotiated at varying times every few years. These agreements conform with
the pattern of labor agreements in the American newspaper industry.
Other
The company's business is such that the dollar amount of the backlog of
orders would not be of any significance to the understanding of its
operations.
The company does not anticipate that compliance with the federal, state or
local provisions regulating the discharge of materials into the environment
will have a material effect upon its capital expenditures, earnings or
competitive position.
Sources of Information
Population and household figures for 1990 are from the U.S. Bureau of the
Census, while estimates for Dec. 31, 1992, are from the Sales & Marketing
Management Survey of Buying Power, Aug. 30, 1993. Metropolitan Statistical
Areas, as defined by the U.S. Office of Management and Budget, are used for
newspaper markets unless otherwise indicated. Population estimates for 2015
are from the National Planning Association Data Services, Inc. (92-R-1 & 2).
Newspaper households and circulation data for 1993 are from the latest
available annual audit reports from the Audit Bureau of Circulations.
Advertising linage is from company records. Where necessary, certain
previously reported statistics have been restated to be consistent with
measurement guidelines currently used.
The Company
Knight-Ridder, Inc., was formed in 1974 by a merger between Knight News-
papers and Ridder Publications, Inc.
In 1903, Charles Landon Knight purchased the Akron Beacon Journal.
Knight Newspapers was founded by John S. Knight, who inherited the Beacon
Journal from his father in 1933. Ridder Publications was begun in 1892 when
Herman Ridder acquired the German-language Staats-Zei-tung in New York.
Both groups flourished, each taking its stock public in 1969. The merger
created a company with operations coast to coast.
-29-
The Business Information Services Division was formally established in
1983, although Knight-Ridder owned the Journal of Commerce and Commodity News
Services prior to that time. Dialog Information Services, Inc., was acquired
in 1988.
Knight-Ridder, Inc., was incorporated in Ohio in 1974. Headquartered in
Miami, the company was reincorporated in Florida in 1976.
<PAGE>
<TABLE>
<CAPTION>
Newsprint Consumption
(In thousands of metric tonnes)
Year Amount
------ -------
<C> <C>
1983 597
1984 635
1985 612
1986 642
1987 685
1988 687
1989 693
1990 667
1991 619
1992 618
1993 639
Knight-Ridder's newsprint consumption increased 3.4% over 1992
as a result of increased linage.
</TABLE>
-30-
<PAGE>
<TABLE>
<CAPTION>
Average Daily Circulation For Knight-Ridder Newspapers
(in thousands of copies)
Year Amount
------ -------
<C> <C>
1983 3,789
1984 3,827
1985 3,749
1986 3,731
1987 3,978
1988 3,945
1989 3,955
1990 3,872
1991 3,745
1992 3,678
1993 3,654
Total circulation of Knight-Ridder's daily newspapers decreased 0.6%.
</TABLE>
-31-
<PAGE>
<TABLE>
<CAPTION>
Average Sunday Circulation For Knight-Ridder Newspapers
(In thousands of copies)
Year Amount
------ --------
<C> <C>
1983 4,514
1984 4,593
1985 4,545
1986 4,556
1987 4,817
1988 4,844
1989 4,919
1990 4,808
1991 4,782
1992 4,774
1993 4,760
Total circulation of Knight-Ridder's Sunday newspapers decreased 0.3%.
</TABLE>
-32-
ITEM 3. Legal Proceedings
In 1990, a verdict was rendered against the company's subsidiary,
Philadelphia Newspapers, Inc., (PNI), publisher of The Philadelphia Inquirer
and Philadelphia Daily News, in a libel action entitled Sprague v.
Philadelphia Newspapers, Inc., for $2.5 million in compensatory damages and
$31.5 million in punitive damages. Following entry of the judgment on Sept.
15, 1992, PNI, as required by statute, posted a bond equal to 120% of the
amount of the verdict and appealed the judgment to the Pennsylvania Superior
Court. PNI believes that substantial grounds exist for a decision by an
appellate court to reverse the trial court and remand the case for a new
trial.
The Comprehensive Environmental Response, Compensation and Liability Act
(Superfund) establishes a fund to clean up deposits and spills of hazardous
substances. The Company has been identified by certain regulatory agencies
as one of several potentially responsible parties in connection with the
generation of allegedly hazardous substances which may have been disposed of
or reclaimed by third-party contractors at sites in New Jersey, Maryland,
South Carolina, North Carolina, Pennsylvania, and Kansas. The Company,
certain other potentially responsible parties and the United States
Environmental Protection Agency (EPA) have entered into consent orders
relating to the sites in New Jersey, South Carolina and North Carolina
providing for remedial investigations and feasibility studies or remediation
to be performed.
The Company does not anticipate that any liability arising from ultimate
relief secured by regulatory agencies or other persons will have a material
effect on the Company's business or financial condition. The Company is
cooperating with the appropriate regulatory agencies with respect to compliance
with environmental laws.
ITEM 4. Submission of matters to a vote of security holders
None.
PART II
ITEM 5. Market for registrant's common stock and related stockholder matters
--------------------------------------------------------------------
KRI STOCK
Knight-Ridder common stock is listed on the New York Stock Exchange and the
Frankfurt Stock Exchange under the symbol KRI and on the Tokyo Stock Exchange
with the designation 9491. The stock also is traded on exchanges in Philadel-
phia, Chicago, Boston, San Francisco, Los Angeles and Cincinnati, as well as
through the Intermarket Trading System. Options are traded in the Philadel-
phia Exchange.
-33-
<TABLE>
<CAPTION>
Market Price of Common Stock
The last closing price of the company's common stock prior to the preparation of this report
was $57 3/4 on Jan. 28, 1994. The number of shareholders of record at Dec. 26, 1993 was
10,672. The following market data is as reported by Knight-Ridder Financial Services:
1993 1992 1991
-------------------- ------------------ --------------------
Quarter High Low High Low High Low
--------- ------ ----- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
1st............ 65 56 1/2 60 7/8 50 3/4 52 7/8 44 1/8
2nd............ 58 3/4 51 1/8 64 1/8 55 57 1/2 48 1/4
3rd............ 55 1/2 50 5/8 63 1/4 57 1/8 55 5/8 48 3/4
4th............ 61 3/4 52 61 3/4 54 7/8 51 43 3/4
</TABLE>
<TABLE>
<CAPTION>
Treasury Stock Purchases
The table below is a summary of treasury stock purchases since 1985:
Shares Cost
Purchased (000s)
---------- --------
<S> <C> <C>
1993....................... 750,000 $ 40,693
1992....................... - -
1991....................... - -
1990....................... 2,662,700 129,909
1989....................... 2,761,100 131,885
1988....................... 4,549,600 198,279
1987....................... 1,000,000 38,728
1986....................... - -
1985....................... 9,500,000 332,308
</TABLE>
-34-
<TABLE>
<CAPTION>
QUARTERLY OPERATIONS
The company's largest source of revenue, retail advertising, is seasonal and tends to fluctuate with retail sales in
markets served. Historically, retail advertising is higher in the second and fourth quarters. General advertising,
while not as seasonal as retail, is lower during the summer. Classified advertising revenue has in the past been
a reflection of the overall economy and has not been significantly affected by seasonal trends.
The following table summarizes the company's unaudited quarterly results of operations (in thousands, except per share data):
QUARTER
--------------------------------------------------
First Second Third Fourth
--------- -------- -------- ---------
<S> <C> <C> <C> <C>
Description
1993
Operating revenue................................. $583,894 $621,682 $593,124 $652,648
Operating income.................................. 53,680 76,245 58,314 96,618
Net income........................................ 23,136 42,497 31,251 51,205
Net income per common and common
equivalent share (1)........................... 0.42 0.77 0.57 0.93
Dividends declared per common share............... 0.35 0.35 0.35 0.35
1992
Operating revenue................................. $555,438 $590,531 $564,854 $618,706
Operating income.................................. 50,360 79,049 61,058 88,044
Income before cumulative effect of
changes in accounting principles............... 25,006 46,090 31,392 43,598
Cumulative effect of changes in
accounting principles for:
Income taxes................................ 25,800
Postretirement benefits other than pensions. (131,000)
Net income (loss)................................. (80,194) 46,090 31,392 43,598
Net income (loss) per common and common
equivalent share (1):
Income before cumulative effect
of changes in accounting principles...... 0.46 0.84 0.57 0.79
Cumulative effect of changes
in accounting principles................. (1.93)
Net income (loss)........................... (1.47) 0.84 0.57 0.79
Dividends declared per common share............... 0.35 0.35 0.35 0.35
-35-
1991
Operating revenue................................ $545,441 $574,842 $544,446 $593,449
Operating income................................. 39,520 75,474 51,721 76,558
Net income....................................... 15,830 41,573 28,300 46,365
Net income per common and common
equivalent share (1)........................... 0.32 0.82 0.54 0.86
Dividends declared per common share.............. 0.35 0.35 0.35 0.35
(1) Amounts do not total to the annual earnings per share because each quarter and the year are calculated
separately based on average outstanding shares during that period.
</TABLE>
ITEM 6. Selected Financial Data
-----------------------
<PAGE>
<TABLE>
<CAPTION>
11-Year Financial Highlights (In thousands, except per share data and ratios)
The following data were compiled from the consolidated financial statements of Knight-Ridder, Inc., and subsidiaries.
The consolidated financial statements and related notes and discussions for the year ended Dec. 26, 1993,
(Items 7 & 8) also should be read in order to obtain a better understanding of this data.
Compound Growth
Rate
------------------ Dec. 26 Dec. 27 Dec. 29 Dec. 30 Dec. 31
5-Year 10-Year 1993 1992 1991 1990 1989
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations
Operating Revenue
Newspapers
Advertising............................ (0.5)% 3.7 % $ 1,481,631 $ 1,444,144 $ 1,429,661 $ 1,556,932 $ 1,577,449
Circulation............................ 5.0 5.1 474,420 460,014 439,029 403,188 385,214
Other.................................. 13.8 9.8 56,772 39,932 35,127 31,981 32,212
--------- --------- --------- --------- ---------
Total Newspapers................... 0.9 4.1 2,012,823 1,944,090 1,903,817 1,992,101 1,994,875
Business Information Services............. 22.4 22.4 438,525 385,439 354,361 332,628 289,585
Other.....................................
--------- --------- --------- --------- ---------
Total Operating Revenue............ 3.3 5.6 2,451,348 2,329,529 2,258,178 2,324,729 2,284,460
--------- --------- --------- --------- ---------
-36-
Operating Costs
Depreciation.............................. 5.0 9.4 104,314 93,838 91,147 90,739 89,669
Amortization of the excess of cost
over net assets acquired............... 8.2 17.7 19,754 18,892 18,885 18,831 18,622
Other operating costs..................... 3.5 5.6 2,042,423 1,938,288 1,904,873 1,914,533 1,854,175
--------- --------- --------- --------- ---------
Total Operating Costs............ 3.6 5.8 2,166,491 2,051,018 2,014,905 2,024,103 1,962,466
--------- --------- --------- --------- ---------
Operating Income............................. 1.0 3.8 284,857 278,511 243,273 300,626 321,994
Interest expense......................... (6.3) 23.7 (45,112) (52,375) (68,843) (71,803) (84,622)
Other, net............................... (32.7) (11.9) 3,656 13,580 35,940 17,119 57,381
Income taxes, net........................ 1.6 0.3 (95,312) (93,630) (78,302) (96,897) (114,917)
--------- --------- --------- --------- ---------
Net income from continuing operations....... 0.2 2.8 148,089 146,086 132,068 149,045 179,836
Discontinued broadcast operations (1)....... 67,366
Cumulative effect of changes
in accounting principles (5)............ (105,200)
--------- --------- --------- --------- ---------
Net income.................................. (1.1) 2.2 $ 148,089 $ 40,886 $ 132,068 $ 149,045 $ 247,202
========= ========= ========= ========= =========
Operating Income Percentage (Profit margin). 11.6% 12.0% 10.8% 12.9% 14.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Share Data
Average number of common and
common equivalent shares outstanding... 55,332 55,178 51,797 50,683 52,439
Income per common and
common equivalent share................
Continuing operations................ 0.7 4.8 $ 2.68 $ 2.65 $ 2.55 $ 2.94 $ 3.43
Discontinued broadcast operations (1) 1.28
Cumulative effect of changes
in accounting principles (5)..... (1.91)
Net income.......................... 2.68 0.74 2.55 2.94 4.71
Cash dividends per common share............. 4.1 9.2 1.40 1.40 1.40 1.34 1.24 1/2
Common stock price (2)
High.................................... 65 64 1/8 57 1/2 58 58 3/8
Low..................................... 50 5/8 50 3/4 43 3/4 37 42 7/8
Close................................... 59 3/8 58 1/8 50 3/4 45 7/8 58 3/8
Shareholders' equity per common share....... 7.9 6.1 $ 22.67 $ 21.50 $ 21.44 $ 18.09 $ 17.83
Price/Earnings Ratio (3).................... 22.2:1 21.9:1 19.9:1 15.6:1 20.4:1
-37-
- ----------------------------------------------------------------------------------------------------------------------------------
Other Financial Data
Net change in total debt.................... $ (109,170)$ (46,595)$ (217,118)$ 111,018 $ (324,135)
Common stock acquired....................... 40,693 129,909 131,885
Payment of cash dividends................... 76,787 75,992 71,087 66,422 63,260
Ratio of Earnings to Fixed Charges (4)...... 4.5:1 3.9:1 2.9:1 3.4:1 3.6:1
At Year End
Total assets........................... 2,431,432 2,458,059 2,332,751 2,270,459 2,134,626
Working capital........................ (5,180) 55,669 34,023 75,396 70,269
Long-term debt......................... 410,388 495,941 556,797 803,914 660,900
Total debt............................. 451,075 560,245 606,840 823,958 712,940
Shareholders' Equity................... 1,243,169 1,181,812 1,148,620 894,913 917,145
Current ratio.......................... 1.0:1 1.1:1 1.1:1 1.2:1 1.2:1
Total debt/total capital ratio......... 26.6% 32.2% 34.6% 47.9% 43.7%
Long-term debt/equity ratio............ 33.0% 42.0% 48.5% 89.8% 72.1%
See Notes on Pages 40-41.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
-38-
11-Year Financial Highlights (In thousands, except per share data and ratios)
The following data were compiled from the consolidated financial statements of Knight-Ridder, Inc., and subsidiaries.
The consolidated financial statements and related notes and discussions for the year ended Dec. 26, 1993,
(Items 7 & 8) also should be read in order to obtain a better understanding of this data.
Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31
1988 1987 1986 1985 1984 1983
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
Operating Revenue
Newspapers
Advertising............................ $ 1,523,030 $ 1,464,447 $ 1,332,820 $ 1,220,534 $ 1,186,559 $ 1,034,774
Circulation............................ 370,898 357,553 334,670 312,988 302,281 289,522
Other.................................. 29,743 28,578 25,362 25,873 24,235 22,321
--------- --------- --------- --------- --------- ---------
Total Newspapers................... 1,923,671 1,850,578 1,692,852 1,559,395 1,513,075 1,346,617
--------- --------- --------- --------- --------- ---------
Business Information Services.............. 159,659 99,260 88,904 80,095 66,961 58,280
Other...................................... 18,344 26,338 24,871 21,938 20,011
--------- --------- --------- --------- --------- ---------
Total Operating Revenue............ 2,083,330 1,968,182 1,808,094 1,664,361 1,601,974 1,424,908
--------- --------- --------- --------- --------- ---------
Operating Costs
Depreciation.............................. 81,725 73,706 64,814 56,758 47,387 42,472
Amortization of the excess of cost
over net assets acquired............... 13,340 11,072 4,190 4,587 3,757 3,888
Other operating costs..................... 1,717,502 1,588,311 1,480,440 1,382,247 1,314,693 1,181,585
--------- --------- --------- --------- --------- ---------
Total Operating Costs............ 1,812,567 1,673,089 1,549,444 1,443,592 1,365,837 1,227,945
--------- --------- --------- --------- --------- ---------
Operating Income............................. 270,763 295,093 258,650 220,769 236,137 196,963
Interest expense......................... (62,465) (49,583) (33,248) (21,624) (9,723) (5,383)
Other, net............................... 26,515 20,061 20,172 21,866 15,718 12,999
Income taxes, net........................ (88,038) (116,837) (113,000) (96,577) (110,741) (92,693)
--------- --------- --------- --------- --------- ---------
Net income from continuing operations....... 146,775 148,734 132,574 124,434 131,391 111,886
Discontinued broadcast operations (1)....... 9,608 6,429 7,465 8,290 9,419 7,549
Cumulative effect of changes
in accounting principles (5)............
--------- --------- --------- --------- --------- ---------
Net income................................. $ 156,383 $ 155,163 $ 140,039 $ 132,724 $ 140,810 $ 119,435
========= ========= ========= ========= ========= =========
-39-
Operating Income Percentage (Profit margin). 13.0% 15.0% 14.3% 13.3% 14.7% 13.8%
- ----------------------------------------------------------------------------------------------------------------------------------
Share Data
Average number of common and
common equivalent shares outstanding... 56,703 58,646 58,202 60,732 65,578 66,498
Income per common and
common equivalent share................
Continuing operations................ $ 2.59 $ 2.54 $ 2.28 $ 2.05 $ 2.00 $ 1.68
Discontinued broadcast operations (1) 0.17 0.11 0.13 0.14 0.15 0.12
Cumulative effect of changes
in accounting principles (5).....
Net income........................... 2.76 2.65 2.41 2.19 2.15 1.80
Cash dividends per common share............. 1.14 1/2 1.03 0.91 0.79 0.67 0.58
Common stock price (2)
High.................................... 47 3/4 61 1/4 57 7/8 41 3/8 31 30 1/2
Low..................................... 35 3/4 33 1/4 37 1/2 28 21 1/4 22 1/8
Close................................... 45 3/8 40 1/8 46 7/8 39 7/8 29 1/4 26 1/2
Shareholders' equity per common share....... $ 15.47 $ 15.85 $ 14.28 $ 12.38 $ 14.17 $ 12.59
Price/Earnings Ratio (3).................... 17.5:1 15.1:1 19.5:1 18.2:1 13.6:1 14.7:1
- ----------------------------------------------------------------------------------------------------------------------------------
Other Financial Data
Net change in total debt.................... $ 483,840 $ (115,026)$ 360,041 $ 240,597 $ (1,883)$ 30,188
Common stock acquired....................... 198,279 38,728 332,308 55,497
Payment of cash dividends................... 62,990 57,426 49,877 46,077 41,344 35,080
Ratio of Earnings to Fixed Charges (4)...... 3.7:1 5.1:1 6.4:1 8.6:1 16.6:1 23.1:1
At Year End
Total assets........................... 2,357,040 1,919,875 1,906,459 1,355,480 1,312,804 1,149,955
Working capital........................ 83,695 48,835 74,429 90,019 133,585 60,229
Long-term debt......................... 727,043 508,203 620,389 263,058 67,612 65,301
Total debt............................. 1,037,075 553,235 668,261 308,220 67,623 69,506
Shareholders' Equity................... 821,625 901,498 815,982 696,576 921,569 807,979
Current ratio.......................... 1.1:1 1.2:1 1.2:1 1.3:1 1.6:1 1.3:1
Total debt/total capital ratio......... 55.8% 38.0% 45.0% 30.7% 6.9% 8.0%
Long-term debt/equity ratio............ 88.5% 56.4% 76.0% 37.8% 7.3% 8.1%
NOTES
(1) Results of operations of the company's Broadcast Division (sold in 1989) and the gain on the sale of broadcast assets
are presented as "Discontinued broadcast operations."
(2) Common stock prices as quoted by Knight-Ridder Financial Services.
(3) Price/Earnings Ratio is computed by dividing closing market price by earnings for the trailing 12-month period. 1992 earnings
exclude the effects of changes in accounting principles. For 1989 and 1988, the earnings represent continuing operations.
1989 earnings also exclude the gain on the sale of the Pasadena Star-News.
-40-
(4) The ratio of earnings to fixed charges is computed by dividing earnings (as adjusted for fixed charges and undistributed
equity income from unconsolidated subsidiaries) by fixed charges for the period. Fixed charges include interest on debt
(before capitalized interest), interest component of rental expense, the proportionate share of interest expense on guaranteed
debt of certain equity-method investees and on debt of 50%-owned companies.
(5) For 1992, the cumulative effect of changes in accounting principles represents adjustments from the implementation of FAS 109
-Accounting for Income Taxes and FAS 106-Accounting for Postretirement Benefits Other Than Pensions.
</TABLE>
ITEM 7. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations
-------------------------
Knight-Ridder is an international information and communications company
engaged in newspaper publishing, business news and information services,
electronic retrieval services and news, graphics and photo services.
In 1993, the gross revenue from these businesses was almost $2.5 billion.
The company also is involved in other newspaper businesses, cable television
and newsprint manufacturing through business arrangements, including joint
ventures and partnerships.
The charts at the end of this section illustrate the approximate relative
percentages of the components of operating revenue and of operating costs as
a percentage of revenue.
Glossary of Newspaper Advertising Terms
The following definitions may be helpful when reading the
Discussion and Analysis of Operations.
RETAIL - display advertising from local merchants, such as department and
grocery stores, selling goods and services to the public.
GENERAL - display advertising by national advertisers who promote products
or brand names on a nationwide basis.
CLASSIFIED - small, locally placed ads listed together and organized by
category, such as real estate sales, employment opportunities and automobile
sales and display-type advertisements in these categories.
FULL-RUN - advertising appearing in all editions of a newspaper.
PART-RUN - advertising appearing in select editions or zones of a
newspaper's market. Part-run advertising is translated into full-run
equivalent linage (referred to as factored) based on the ratio of the
circulation in a particular zone to the total circulation of a newspaper.
RUN-OF-PRESS (ROP) - all advertising printed on Knight-Ridder presses and
appearing within a newspaper.
PREPRINT - advertising supplements prepared by advertisers and inserted
into a newspaper.
-41-
NEWSPAPER revenue is derived principally from advertising and newspaper
copy sales. Newspaper advertising currently accounts for 60% of consolidated
revenue. This revenue comes from the three basic categories of advertising -
retail, general and classified - discussed above.
Newspaper advertising volume is categorized as either run-of-press (ROP)
or preprint. Volume for ROP advertising is measured in terms of either
full-run or part-run advertising linage and reported in six-column inches. A
six-column inch consists of one inch of advertising in one column of a
newspaper page when that page is divided into six columns of equal size. By
using part-run advertising, advertisers can direct their messages to selected
market segments.
Circulation revenue results from the sale of newspapers.
Circulation of daily and Sunday newspapers currently accounts for 19% of
consolidated revenue. It is reported at the net wholesale price for
newspapers delivered or sold by independent contractors and at the retail
price for newspapers delivered or sold by employees.
Other newspaper revenue comes from alternate delivery systems, commercial
job printing, newsprint scrap sales, newspaper trucking services, book
publishing, niche publications and other miscellaneous sources.
BUSINESS INFORMATION SERVICES (BIS) revenue includes operations of Dialog,
Knight-Ridder Financial and the Journal of Commerce.
Dialog includes Dialog Information Services and Data-Star, a 1993
acquisition with Europe-based online operations. Dialog and Data-Star have
more than 155,000 customers in over 100 countries and offer more than 450
databases. Subscribers are charged according to the amount of time they spend
online and which databases they access.
Knight-Ridder Financial products include real-time and archival
information services focusing on global sovereign debt, foreign exchange,
money markets and futures instruments. Information displayed on these
products consists of news, quotations, charts and a variety of other
analytical services. The group generates revenue from subscribers in more
than 30 countries.
The Journal of Commerce publishes The Journal of Commerce, a
business daily newspaper that focuses on global trade and transportation
issues, and several more-targeted periodicals. It also provides access to
electronic databases on imports, exports and steamship tariffs.
SUMMARY OF OPERATIONS: A summary of the company's operations,
certain share data and other financial data for the past 11 years is provided
in Item 6. Compound growth rates for the past five- and 10-year periods are
also included, if applicable. A review of this summary and of the
-42-
Supplemental Information section (Items 1 & 2) will provide a better
understanding of the following discussion and analysis of operating results
and of the financial statements as a whole. The Supplemental Information
section contains financial data for the company's operations by line of
business and includes discussions of the company's largest newspapers and
information regarding the company's properties, technology and the raw
materials used in operations.
RESULTS OF OPERATIONS: 1993 vs. 1992 - Knight-Ridder, Inc.,
earnings per share was $2.68, up $.03, or 1.1%, from $2.65 per share before
the cumulative effect of changes in accounting principles in 1992.
Operating income increased 2.3% on a 5.2% increase in revenue in
1993. Operating income as a percentage of revenue was 11.6% compared with
12.0% in 1992.
A 20.7% increase in net interest expense resulted from a reduction in
capitalization of interest related to the Philadelphia plant. This was
partially offset by higher earnings from our cable investment.
NEWSPAPERS: The Newspaper Division's operating income increased $8.2
million, or 2.8%, to $298.8 million. The increase resulted from improved
revenues that more than offset a 3.4% increase in the average price of
newsprint, and increased costs due to the transition to the new plant in
Philadelphia.
Overall, newspaper advertising revenue increased by $37.5 million,
or 2.6%, in 1993 on a full-run ROP linage increase of 1.3%. The following
table summarizes the percentage change in revenue and full-run ROP linage
from 1992.
Percent
Percent Gain
Gain (Decline)
(Decline) in Full-Run
Advertising Category in Revenue ROP Linage
- -------------------- ---------- ----------
Retail 1.0 (1.0)
General (3.4) (7.8)
Classified 7.0 5.3
Total 2.6 1.3
Retail advertising revenue improved $7.6 million, or 1.0%. A 1.9% increase
in full-run average rates and an increase in part-run ROP revenue was
partially offset by a 1.0% decrease in full-run ROP linage.
-43-
General advertising revenue declined by $6.0 million, or 3.4%, from 1992
on a 7.8% decline in full-run ROP general linage, partially offset by an
increase in preprint revenue. General advertising revenue did show
year-over-year improvement in the fourth quarter of 1993.
Classified revenue improved by $35.9 million, or 7.0%, on a 5.3% increase
in full-run ROP volume.
Circulation revenue increased $14.4 million, or 3.1%, despite a decline in
average number of copies. Morning circulation declined 11,300 copies, or
0.4%, and afternoon circulation declined 11,800 copies, or 2.5%. Sunday
circulation declined 14,300 copies, or 0.3%.
Other newspaper revenue increased $16.8 million, or 42.2%, during 1993,
primarily due to efforts to augment the revenue of our core newspaper
business.
BUSINESS INFORMATION SERVICES: In 1993, BIS contributed 17.9% of
consolidated revenue, compared with 16.5% in 1992. Operating income was $23.4
million, up $1.3 million, or 6.1%, from 1992 on a 13.8% increase in revenue.
About half of the revenue growth was due to the first-quarter acquisition of
Data-Star. Excluding Data-Star revenue, BIS revenue was up 6.5% from the
prior year.
The graph at the end of this section illustrates the 22.4% compound growth
rate for BIS revenue from 1983.
EXPENSES: Labor and employee benefit costs were up $33.9 million,
or 3.4%, with 141, or 0.7%, more employees resulting from expansion and
acquisitions in the BIS division. The average wage per employee increased
3.9%. Included in 1992 results were $10.5 million in severance and buyout
costs related to a Detroit joint operating agreement (JOA) labor settlement.
Newsprint, ink and supplements cost increased by $18.2 million, or 5.8%,
due to a 3.4% increase in both consumption and average newsprint prices from
the prior year.
Depreciation and amortization expense increased 10.6%, or $13.5 million,
due to the completion of the new Philadelphia printing plant and BIS
expansion.
Other operating costs increased 8.1% from 1992 due partially to a $21.7
million increase in volume-related BIS royalty and exchange fee expenses.
NON-OPERATING ITEMS: Net interest expense increased $6.7 million,
or 20.7%, from 1992 as a result of the $14.6 million reduction in capitalized
interest. This was partially offset by a reduction of interest expense
reserves related to prior year tax audits and the call of $100.0 million of
8.0% notes, replaced by lower-rate commercial paper. Average interest rates
on commercial paper decreased from 4.3% in 1992 to 3.2% in 1993.
-44-
Other non-operating items improved to a $2.2 million loss, a $4.1 million
improvement from 1992. Most of the improvement came from our cable
investment, which this year contributed an additional $3.5 million to our
pretax income.
INCOME TAXES: The effective income tax rate for 1993 was 39.2%, up 0.1%
from 39.1% in 1992. Income tax expense included the $5.1 million unfavorable
effect of the retroactive and current impact of the tax rate change in the
Omnibus Budget Reconciliation Act of 1993. It was mostly offset by favorable
adjustments of tax reserves and deferred tax assets resulting from settlement
of IRS audits of prior years and resolution of other state tax issues.
RESULTS OF OPERATIONS: 1992 vs. 1991 - Knight-Ridder, Inc.,
earnings per share before the cumulative effect of changes in accounting
principles was $2.65, up $.10, or 3.9%, from $2.55 per share in 1991. The
company recorded a non-recurring net charge of $105.2 million ($1.91 per
share) related to the adoption of Financial Accounting Standards (FAS) 106
(Postretirement Benefits Other Than Pensions) and FAS 109 (Accounting For
Income Taxes).
The cumulative effect of adoption of FAS 106, relating to postretirement
benefits other than pensions, was an after-tax reduction in earnings of
$131.0 million, or $2.37 per share. This represents the unrecognized net
obligation based on plans in place at the beginning of 1992. The company
chose to recognize this "transition" amount immediately, rather than
prospectively. In the second quarter, the company announced medical plan
changes effective Jan. 1, 1993, that placed a maximum annual dollar cap for
medical premiums that the company would pay for most future non-union
retirees. Additionally, coverage after the age of 65 was eliminated for most
future non-union retirees. The result of this announced plan change was a
reduction in the prior service cost, which will be amortized over future
years. The full-year operating profit reduction resulting from the recurring
additional costs related to FAS 106 was $6.6 million, or an after-tax $.07
reduction in earnings per share.
The adoption of FAS 109, which relates to accounting for deferred income
taxes, resulted in an increase to 1992 net income of $25.8 million, or almost
$.47 per share.
Operating income increased 14.5% on a 3.2% increase in revenue in 1992.
Operating income as a percentage of revenue improved to 12.0% from 10.8% in
1991. Revenue gains and a decline in the cost of newsprint contributed
positively to operating income.
A decline in net interest expense and higher earnings from our cable
investment helped to offset the decline in earnings from our newsprint
manufacturing investments.
-45-
NEWSPAPERS: The Newspaper Division's operating income increased $30.9
million, or 11.9%, to $290.5 million. The increase resulted from improved
revenue and a decline in the cost of newsprint. Newspaper Division operating
costs increased $9.3 million.
Overall, newspaper advertising revenue increased by $14.5 million, or
1.0%, in 1992 on a full-run ROP linage decline of 1.5%. The following table
summarizes the percentage change in revenue and full-run ROP linage from
1991.
Percent
Percent Gain
Gain (Decline)
(Decline) in Full-Run
Advertising Category in Revenue ROP Linage
- -------------------- ---------- -----------
Retail (0.1) (2.8)
General 1.0 (7.9)
Classified 2.7 1.1
Total 1.0 (1.5)
Retail advertising revenue was down $520,000, or 0.1%. A 2.8%
decline in volume was partially offset by a 1.5% increase in full-run average
rates and an increase in preprint and part-run revenue.
General advertising revenue increased by $1.8 million, or 1.0%,
from 1991 on the strength of an 8.2% increase in rates and an increase in
preprint and part-run revenue. General full-run ROP linage declined 7.9% from
1991.
Classified revenue improved by $13.2 million, or 2.7%, on a 1.1% increase
in full-run ROP volume and a 1.7% increase in full-run average rates.
Circulation revenue increased $21.0 million, or 4.8%, due to a 6.4%
increase in average rates. Morning circulation declined 26,400 copies, or
0.8%, and afternoon circulation declined 40,900 copies, or 7.9%. Sunday
circulation declined 7,200 copies, or 0.2%.
BUSINESS INFORMATION SERVICES: In 1992, BIS contributed 16.5% of
consolidated revenue, compared with 15.7% in 1991. Operating income was $22.1
million, up $1.9 million, or 9.3%, from 1991 on an 8.8% increase in revenue.
EXPENSES: Labor and employee benefit costs were up $47.9 million,
or 5.1%, with 83, or 0.4%, fewer employees. The average wage per employee
increased 5.2%. Included in 1992 results were $10.5 million in severance and
buyout costs related to a Detroit JOA labor settlement in the first half of
the year.
-46-
Newsprint, ink and supplements cost declined by $63.0 million, or 16.6%,
due to a 17.8% decrease in average newsprint prices from the prior year.
Newsprint consumption was 0.1% less than 1991 as a result of shifting the
printing of the Journal of Commerce to an outside company. Supplements cost
decreased by $4.8 million, or 10.6%.
Depreciation and amortization expense increased 3.4%, or $4.2
million, due to the start-up of the new Philadelphia printing plant and BIS
expansion.
Other operating costs increased 8.3% from 1991 due partially to an $11.8
million increase in volume-related BIS royalty and exchange fee expenses, and
increased circulation promotion costs. Additionally, Knight-Ridder increased
its level of contributions to help with the aftermath of Hurricane Andrew.
NON-OPERATING ITEMS: Net interest expense declined $7.7 million, or 19.2%,
from 1991 as a result of lower average debt balances and lower interest
rates. Average interest rates on commercial paper decreased from 6.4% in 1991
to 4.3% in 1992.
Other non-operating items decreased to a $6.2 million loss, a $13.6
million decline from 1991. The major reason for the decline was unfavorable
results from our investments in newsprint manufacturing, which suffered from
soft newsprint prices in 1992. Our cable investments performed well, but this
was not enough to offset other non-operating losses.
INCOME TAXES: The effective income tax rate for 1992 was 39.1%, up 1.9%
from 1991's 37.2% as a result of the resolution of prior year tax issues.
RESULTS OF OPERATIONS: 1991 vs. 1990 - Knight-Ridder, Inc.,
earnings per share from continuing operations for 1991 of $2.55 was down
$.39, or 13.3%, from $2.94 per share in 1990. The serious impact of the
recession and the effects of the war in the Middle East early in the year
resulted in our first down year after 15 consecutive years of earnings per
share growth, excluding the impact of gains from major asset sales.
Operating income from continuing operations decreased 19.1% on a
2.9% decrease in revenue in 1991. Operating income as a percentage of revenue
was 10.8%, compared with 12.9% in 1990. Gains in the Business Information
Services Division and a decline in total newsprint expense contributed
positively to operating income, but were not enough to offset the softness in
advertising revenue.
A decline in net interest expense and higher earnings from
investments in cable and newsprint manufacturing also helped offset the
decline in operating income.
NEWSPAPERS: The Newspaper Division's operating income decreased
$64.2 million, or 19.8%, to $259.6 million. The decrease resulted from the
-47-
cyclical weakness in advertising revenue being experienced throughout the
newspaper industry and other advertising media. Newspaper Division operating
costs decreased 1.4%.
Overall, newspaper advertising revenue declined by $127.3 million, or
8.2%, in 1991 on a full-run ROP linage decline of 9.4%. The following table
summarizes the percentage changes in revenue and full-run ROP linage from
1990.
Percent
Percent Decline
Decline in Full-Run
Advertising Category in Revenue ROP Linage
- -------------------- ---------- -----------
Retail (4.1) (8.6)
General (6.8) (12.5)
Classified (14.1) (10.0)
Total (8.2) (9.4)
Retail advertising revenue was down $32.8 million, or 4.1%. An 8.6%
decline in volume was partially offset by a 2.7% increase in full-run average
rates and an increase in preprint revenue. The retail linage decline
reflected the weakened condition of the retail industry and the economy in
general.
General advertising revenue declined $12.6 million, or 6.8%, from 1990.
The volume decrease of 12.5% was slightly offset by a 3.9% increase in
full-run average rates and greater volume in preprints. The continued decline
in full-run ROP volume reflected softness in airline, food and factory
automotive advertising.
Classified revenue declined $81.9 million, or 14.1%, on a 10.0%
drop in full-run ROP volume and a 4.8% decrease in full-run average rates.
Almost every market was affected, with the biggest losses coming in the
employment category. Employment revenue was down 24.4% on a 30.7% volume
decrease, with the biggest losses in San Jose and Philadelphia. Real estate
revenue dropped 13.8% on a 12.9% decline in linage. Automotive revenue was
down 6.3% on a 0.3% decrease in volume.
Circulation revenue increased $35.8 million, or 8.9%, due to a
12.0% increase in average rates. Morning circulation declined 12,000 copies,
or 0.4%. Afternoon circulation declined 115,000 copies, or 18.2%. Sunday
circulation declined 26,000 copies, about the same percentage reduction
experienced in weekday morning circulation.
-48-
BUSINESS INFORMATION SERVICES: In 1991, BIS contributed 15.7% of
consolidated revenue, compared with 14.3% in 1990. While the company
reinvested significant profits in the development of this division, operating
income was $20.2 million, up $3.0 million, or 17.3%, from 1990 on a 6.5%
increase in revenue. Dialog and MoneyCenter accounted for most of the revenue
increases as a result of increases in the number of customers served.
EXPENSES: Labor and employee benefit costs were up $12.5 million,
or 1.3%, with 3.5% fewer employees. The average wage per employee increased
3.5%. Additionally, 1991 includes $14.3 million of severance and early
retirement costs incurred in the second half of the year by several
newspapers, designed to streamline operations and further reduce costs in
future years. Excluding these buyout costs from 1990 and 1991, total labor
costs were almost flat and employee benefits increased $6.7 million, or 3.8%.
Newsprint, ink and supplements cost decreased $22.4 million, or
5.6%, due to a 7.3% decrease in consumption partially offset by a 1.5%
increase in average newsprint prices. The reduced consumption reflected the
lower volume in advertising linage and circulation. Supplements cost
decreased by $2.8 million, or 5.9%.
Other operating costs decreased 0.2% from 1990 due to strong
efforts to control costs.
NON-OPERATING ITEMS: Net interest expense was $40.3 million in
1991, down $13.8 million, or 25.6%, from 1990. The decline was primarily a
result of higher capitalized interest, which increased by $12.0 million as a
result of the construction of the Philadelphia production plant. Lower
average debt balances and lower interest rates also helped. In the last half
of 1991, the proceeds from the sale of 3 million shares of new common stock
were used to reduce debt. Average interest rates on commercial paper
decreased from 8.3% in 1990 to 6.4% in 1991.
Other non-operating income increased to $7.4 million from a
$579,000 loss in 1990. This resulted from significant improvement in the
earnings of our cable investments and reduced royalties paid to joint
operating agreement participants in Miami and Fort Wayne.
INCOME TAXES: The effective income tax rate for 1991 was 37.2%,
down 2.2% from 1990's 39.4%, mostly as a result of the favorable resolution
of several outstanding tax issues.
Earlier Years
1990 was the first full year of operations after entering the joint
operating agreement between the Detroit Free Press and The Detroit News
(owned by Gannett Co., Inc.) creating the Detroit Newspaper Agency (DNA), now
-49-
doing business as Detroit Newspapers. DNA performs the newspaper's
production, sales and distribution functions, while the two papers maintain
separate and independent newsrooms. This resulted in significantly improved
bottom-line results from our Detroit operation.
In October 1989, Knight-Ridder completed the sale of its eight television
stations for an after-tax gain of $66.9 million, or $1.07 per share. In
November 1989, the DNA was formed.
Knight-Ridder purchased Dialog Information Services in mid-year
1988 for approximately $353.0 million, and an effective 7-1/2% interest in
SCI Holdings, Inc. (parent of Storer Communication) in November 1988. Despite
the $.13 per share dilutive impact of these acquisitions, the company's
earnings per share from continuing operations increased 2.0% over 1987.
In 1987, the company's newspaper operations received a boost from strong
classified advertising and a full year of operations from the State-Record
Company acquisition. The acquisition, however, cost the company approximately
$.15 in earnings per share dilution. Excluding the State-Record newspapers,
newspaper advertising revenue increased 4.9% on a 0.4% decline in full-run
ROP linage.
In 1986, Knight-Ridder acquired six daily newspapers in South Carolina and
Mississippi. The company closed its Viewdata operation and sold the assets of
TelAir Network, Inc. Newspaper advertising revenue increased 9.2% on a 0.5%
gain in full-run ROP linage. Excluding the impact of a 46-day strike in
Philadelphia in 1985, linage declined 1.2%. The volume decline was due to
softness in Miami and various airline mergers.
Consistent with the company's experience, newspaper advertising,
particularly retail and classified, mirrored the general state of the economy
from 1983 through 1985. In 1985, newspaper advertising revenue increased 2.9%
on a 2.4% decline in full-run ROP linage. The linage decline resulted from
the strike in Philadelphia and softness in Miami. Fueled by a strengthening
economy in 1984, full-run advertising revenue was up 14.7% on a 4.6% increase
in full-run linage.
A Look Ahead
The outlook for 1994 is more positive than it has been going into
the last few years. Signs indicate a slow but steady improvement in the
economy, and the company is well positioned to benefit from the economic
upturn.
-50-
The Newspaper Division is expected to have moderate revenue growth, with
fairly stable newsprint pricing. We will benefit from a reduction in
operating costs related to the transition to the new Philadelphia printing
facility. The BIS Division, strengthened by recent acquisitions, is expected
to continue its strong double-digit revenue growth and will continue its
global expansion efforts.
We expect to continue to benefit from lower interest rates, as higher-rate
notes are called and mature, and are replaced by lower-rate commercial paper.
At this time, we don't expect significant changes in our 1994
share of investee earnings from our equity investments.
In early 1994, the company made several strategic moves that should
strengthen our position in the future. The company acquired the assets of
Technimetrics, which publishes information documenting the equity holdings of
major global investment professionals. The company formed a joint venture
with the Canadian electronic publishing operations of Southam, Inc., to
produce a more efficient and focused operation for the Canadian marketplace.
The company announced an agreement with Bell Atlantic Video Services to
explore ways to deliver news, information and advertising for Bell Atlantic's
Stargazer service.
Recent Acquisitions/Investments
1993 - In March, the company purchased all of the outstanding stock of
Data-Star, Europe's leading online information service.
In December, the company purchased all of the outstanding shares of
Equinet Pty. Ltd. and EFECOM. Equinet is an Australia-based provider of
online business real-time and archival equity, option price and analytical
information services. EFECOM is a Spanish financial news service now known as
KRF/Iberia.
The company also made strategic minority investments in Individual, Inc.,
and Personal Library Software, Inc.
In December, the company acquired a 6.0% interest in US Order,
which provides a network of interactive electronic services to consumers
utilizing screen-based telephones and other front-end devices.
Capital Spending Program
The company's capital spending program includes normal replacements,
productivity improvements, capacity increases, building construction,
expansion and printing press equipment. Over the past three years,
expenditures have totaled $337.4 million for these items.
Construction of the 693,000-square-foot production facility in
Philadelphia began in 1989. The $299.5 million plant became fully operational
in 1993.
-51-
Also included in capital expenditures is the San Jose press project
completed during 1992 for $38.6 million and the Dialog mainframe computer
equipment enhancements for $20.3 million.
Financial Position and Liquidity
1993 vs. 1992 - During 1993 net cash provided by operating
activities decreased 2.5% from 1992 to $330.0 million.
Cash and short-term cash investments were $23.0 million at year end, down
$74.1 million from the prior year. The decrease in cash and short-term cash
investments was primarily due to the acquisition of Data-Star and Equinet,
the repurchase of treasury shares and the prepayment of debt.
During 1993, the company acquired 750,000 shares of its common
stock in the open market for an aggregate price of $40.7 million.
Approximately $100.0 million in notes payable, bearing 8.0%
interest and maturing in 1996, were early retired in April 1993. Total debt
at year-end 1993 was $109.2 million less than at year-end 1992. This resulted
in an improved long-term-debt-to-equity ratio of 33.0% from 42.0% at the end
of 1992 and an improved total-debt-to-total-capital ratio of 26.6% from
32.2%. Standard & Poor's and Moody's rate the company's commercial paper A1+
and P1 and long-term bonds AA- and A1, respectively.
Average outstanding commercial paper during the year was $97.4
million with an average effective interest rate of 3.2%. At the end of 1993,
commercial paper outstanding was $54.0 million and aggregate unused credit
lines were approximately $446.0 million.
Various libel actions, environmental and other legal proceedings
that have arisen in the ordinary course of business are pending against the
company and its subsidiaries. In the opinion of management, the ultimate
liability to the company and its subsidiaries as a result of these actions
and proceedings will not be material.
1992 vs. 1991 - During 1992, net cash provided by continuing
operations was $338.5 million, an increase of $32.5 million from 1991 due to
investee distributions being less than investee earnings and net changes in
working capital. Cash and short-term cash investments of $97.1 million were
$70.9 million more than the prior year.
Net cash required for investing activities decreased $9.9 million,
or 5.1%, from 1991 levels, due to completion of the Philadelphia plant.
Total debt declined $46.6 million from 1991 levels. This resulted
in an improved long-term-debt-to-equity ratio from 48.5% to 42.0% and
total-debt-to-total-capital ratio from 34.6% to 32.2%. These ratios improved
despite the FAS 106 and FAS 109 net cumulative charge of $105.2 million.
Average outstanding commercial paper during the year was $54.6
million with an average effective interest rate of 4.3%. At the end of 1992,
commercial paper outstanding was $62.3 million.
-52-
1991 vs. 1990 - During 1991, net cash provided by continuing operations
was $305.9 million, a decline of $19.0 million from 1990. The 5.9% decrease
was primarily due to a lower level of operating income. Cash and short-term
cash investments of $26.2 million were flat with 1990.
Net cash required for investing activities of $192.9 million was
$85.3 million, or 30.7% less, due to reduced capital requirements for the new
Philadelphia plant as it approached completion.
Total debt declined $217.1 million from 1990 levels, due largely to the
use of proceeds of approximately $147.0 million from the company's sale of 3
million shares of common stock in August. No treasury stock was purchased in
1991. This resulted in an improved long-term-debt-to-equity ratio from 89.8%
to 48.5% and total-debt-to-total-capital ratio from 47.9% to 34.6%. During
1991 the company redeemed $160.0 million of 7-1/4% notes due in 1992 and
$100.0 million of 7-7/8% notes due in 1993, and issued $160.0 million of new
8-1/2% notes, maturing in 25% increments from 1998 through 2001.
Average outstanding commercial paper during the year was $250.0 million
with an average effective interest rate of 6.4%. Commercial paper outstanding
at the end of 1991 was $111.3 million.
Effect of Changing Prices
The Consumer Price Index, a widely used measure of the impact of changing
prices, has increased only moderately in recent years, up between 3% and 6%
each year since 1983. Historically, when inflation was at higher levels, the
impact on the company's operating costs was not significant. Historical cost
depreciation charges may not accurately reflect the economic cost of
replacing capital assets, but depreciation expense represents less than 5% of
total operating costs. Newsprint expense represents a significant percentage
of total costs, but it is a relatively current cost as inventory levels
normally fluctuate between a 30- and 45-day supply. Labor and other operating
costs are, by their very nature, current costs.
The principal effect of inflation on the company's operating results is to
increase reported costs. Historically, the company has demonstrated the
ability to raise sales prices to offset these cost increases.
-53-
<PAGE>
<TABLE>
<CAPTION>
Operating Revenue
Type Percent
- ----- ----------
<S> <C>
Newspaper Retail 31 %
Newspaper General 7 %
Newspaper Classified 22 %
Newspaper Circulation 19 %
Newspaper Other 3 %
BIS 18 %
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Operating Costs
( as a percentage of operating revenue)
Components Percent
- ----------- ---------
<S> <C>
Labor and Employee Benefits 42 %
Newsprint, Ink and Supplements 13 %
Other Operating Costs 27 %
Depreciation and Amortization 6 %
Operating Income 12 %
</TABLE>
-54-
<PAGE>
<TABLE>
<CAPTION>
Newspaper Advertising Revenue
(In millions of dollars)
Year General Classified Retail Total
------- ------- ---------- ------- -------
<C> <C> <C> <C> <C>
1983 153 313 569 1,035
1984 170 390 627 1,187
1985 170 412 639 1,221
1986 182 454 697 1,333
1987 186 527 751 1,464
1988 179 579 765 1,523
1989 187 594 796 1,577
1990 185 580 792 1,557
1991 173 498 759 1,430
1992 175 511 758 1,444
1993 169 547 766 1,482
Classified advertising revenue increased 7.0%, reflecting a healthier
economy.
</TABLE>
-55-
<PAGE>
<TABLE>
<CAPTION>
Business Information Services Revenue
(In millions of dollars)
Year Amount
------ -------
<C> <C>
1983 58
1984 67
1985 80
1986 89
1987 99
1988 160
1989 290
1990 333
1991 354
1992 385
1993 439
BIS revenue increased 13.8% over 1992, partially due to the March 1993
acquisition of Data-Star.
</TABLE>
-56-
<PAGE>
<TABLE>
<CAPTION>
Circulation Revenue
(In millions of dollars)
Year Amount
------ --------
<C> <C>
1983 290
1984 302
1985 313
1986 335
1987 358
1988 371
1989 385
1990 403
1991 439
1992 460
1993 474
Circulaton revenue increased by 3.1% over 1992, primarily as a result of
price increases.
</TABLE>
-57-
<PAGE>
<TABLE>
<CAPTION>
Total Debt
( In millions of dollars)
Year Amount
----- -------
<C> <C>
1983 70
1984 68
1985 308
1986 668
1987 553
1988 1,037
1989 713
1990 824
1991 607
1992 560
1993 451
Total debt was reduced by $109.2 million as a result of strong internal cash
flow.
</TABLE>
-58-
<PAGE>
<TABLE>
<CAPTION>
Stock Trading Volume
Year Amount
------ ------------
<C> <C>
1983 10,437,700
1984 15,790,900
1985 18,547,800
1986 25,206,600
1987 35,042,800
1988 27,201,300
1989 23,269,400
1990 18,186,000
1991 24,749,100
1992 24,915,500
1993 29,768,600
Knight-Ridder stock trading volume rose 19.5% in 1993.
</TABLE>
-59-
<PAGE>
<TABLE>
<CAPTION>
Stock Price History
Stock Price
------------------------------
Year Low Close High
------ --------- -------- ------
<C> <C> <C> <C>
1983 $ 22 1/8 $ 26 1/2 $ 30 1/2
1984 21 1/4 29 1/4 31
1985 28 39 7/8 41 3/8
1986 37 1/2 46 7/8 57 7/8
1987 33 1/4 40 1/8 61 1/4
1988 35 3/4 45 3/8 47 3/4
1989 42 7/8 58 3/8 58 3/8
1990 37 45 7/8 58
1991 43 3/4 50 3/4 57 1/2
1992 50 3/4 58 1/8 64 1/8
1993 50 5/8 59 3/8 65
Knight-Ridder's stock price reached an all-time high of $65 during 1993.
</TABLE>
-60-
<PAGE>
<TABLE>
<CAPTION>
Net Cash Provided By Operating Activities
(In millions of dollars)
Year Amount
----- -------
<C> <C>
1983 198
1984 194
1985 204
1986 265
1987 269
1988 230
1989 280
1990 325
1991 306
1992 338
1993 330
Net cash provided by operating activities decreased 2.5% from 1992 due
primarily to changes in working capital.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shareholders' Equity
(In millions of dollars)
Year Amount
------ -------
<C> <C>
1983 808
1984 922
1985 697
1986 816
-61-
1987 901
1988 822
1989 917
1990 895
1991 1,149
1992 1,182
1993 1,243
Strong earnings led to an increase in shareholders' equity of 5.2% over 1992.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Common Shareholders' Equity Per Share
Year Amount
------ -------
<C> <C>
1983 $12.59
1984 $14.17
1985 $12.38
1986 $14.28
1987 $15.85
1988 $15.47
1989 $17.83
1990 $18.09
1991 $21.44
1992 $21.50
1993 $22.67
Shareholders' equity per share increased by 5.4% over 1992.
</TABLE>
-62-
<PAGE>
<TABLE>
<CAPTION>
% Earned On Invested Capital
( Return on Average Shareholders' Equity)
( 1992 excludes the cumulative effect of changes in accounting principles)
Continuing Discontinued
Year Operations Operations
------ ---------- -------------
<C> <C> <C>
1983 14.2 % 15.2 %
1984 15.2 % 16.3 %
1985 15.4 % 16.4 %
1986 17.5 % 18.5 %
1987 17.3 % 18.1 %
1988 17.0 % 18.2 %
1989 20.7 % 28.4 %
1990 16.5 % 16.5 %
1991 12.9 % 12.9 %
1992 12.5 % 12.5 %
1993 12.2 % 12.2 %
Return on average shareholders' equity was 12.2% in 1993.
</TABLE>
-63-
ITEM 8. Financial statements and supplementary data
-------------------------------------------
See Quarterly Operations in Item 5.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheet (In thousands of dollars, except share data)
Dec. 26 Dec. 27 Dec. 29
1993 1992 1991
--------- ---------- ----------
<S> <C> <C> <C>
Assets
CURRENT ASSETS
Cash, including short-term cash investments of $7,638
in 1993, $87,758 in 1992 and $9,409 in 1991............................ $ 23,012 $ 97,104 $ 26,244
Accounts receivable, net of allowances of $14,554 in
1993, $14,450 in 1992 and $12,305 in 1991............................... 274,391 262,541 247,593
Inventories...................................................................... 41,422 37,474 42,557
Other current assets........................................................... 62,491 63,654 53,851
---------- ---------- ----------
Total Current Assets....................................................... 401,316 460,773 370,245
---------- ---------- ----------
INVESTMENTS AND OTHER ASSETS
Equity in unconsolidated companies and joint ventures ..................... 289,986 277,193 288,673
Other............................................................................ 175,058 145,008 91,185
---------- ---------- ----------
Total Investments and Other Assets....................................... 465,044 422,201 379,858
---------- ---------- ----------
PROPERTY, PLANT AND EQUIPMENT
Land and improvements.......................................................... 66,885 62,638 51,167
Buildings and improvements..................................................... 379,556 372,021 275,815
Equipment........................................................................ 1,168,054 1,053,364 902,148
Construction and equipment installations in progress........................ 13,100 91,225 287,215
---------- ---------- ----------
1,627,595 1,579,248 1,516,345
Less accumulated depreciation................................................ 766,474 697,507 645,188
---------- ---------- ----------
Net Property, Plant and Equipment........................................ 861,121 881,741 871,157
---------- ---------- ----------
-64-
EXCESS OF COST OVER NET ASSETS ACQUIRED
Less accumulated amortization of $160,545 in 1993,
$140,791 in 1992 and $121,899 in 1991.................................... 703,951 693,344 711,491
---------- ---------- ----------
TOTAL........................................................................ $2,431,432 $2,458,059 $2,332,751
========== ========== ==========
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable................................................................ $ 124,620 $ 109,317 $ 73,171
Accrued expenses and other liabilities....................................... 82,149 75,563 71,603
Accrued compensation and amounts withheld from employees................... 79,736 80,297 67,753
Federal and state income taxes............................................... 10 1,286 956
Deferred revenue................................................................ 60,095 55,099 53,946
Dividends payable............................................................... 19,199 19,238 18,750
Short-term borrowings and current portion of long-term debt............... 40,687 64,304 50,043
---------- ---------- ----------
Total Current Liabilities.................................................. 406,496 405,104 336,222
---------- ---------- ----------
NON-CURRENT LIABILITIES
Long-term debt................................................................. 410,388 495,941 556,797
Deferred federal and state income taxes........................................ 135,979 114,199 199,801
Postretirement benefits other than pensions.................................... 174,331 172,763
Employment benefits and other non-current liabilities.......................... 57,816 85,395 88,879
---------- ---------- ----------
Total Non-Current Liabilities.............................................. 778,514 868,298 845,477
---------- ---------- ----------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY....................................... 3,253 2,845 2,432
---------- ---------- ----------
COMMITMENTS AND CONTINGENCIES - (Note J)
SHAREHOLDERS' EQUITY
Common Stock, $.02 1/12 par value; shares authorized -
250,000,000; shares issued - 54,847,486 in 1993,
54,965,671 in 1992 and 53,571,282 in 1991..................................... 1,143 1,145 1,116
Additional capital............................................................. 342,201 321,034 252,278
Retained earnings.............................................................. 899,825 859,633 895,226
---------- ---------- ----------
Total Shareholders' Equity................................................. 1,243,169 1,181,812 1,148,620
---------- ---------- ----------
TOTAL...................................................................... $2,431,432 $2,458,059 $2,332,751
========== ========== ==========
See "Notes to Consolidated Financial Statements".
</TABLE> -65-
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statement Of Income (In thousands of dollars, except per share data)
Year Ended
------------------------------------------
Dec. 26 Dec. 27 Dec. 29
1993 1992 1991
------------- ------------- ------------
<S> <C> <C> <C>
OPERATING REVENUE
Newspapers
Advertising
Retail.................................................. $ 766,105 $ 758,496 $ 759,016
General................................................. 168,773 174,750 172,958
Classified.............................................. 546,753 510,898 497,687
------------- ------------- ------------
Total................................................. 1,481,631 1,444,144 1,429,661
Circulation............................................... 474,420 460,014 439,029
Other..................................................... 56,772 39,932 35,127
------------- ------------- ------------
Total Newspapers..................................... 2,012,823 1,944,090 1,903,817
Business Information Services............................. 438,525 385,439 354,361
------------- ------------- ------------
Total Operating Revenue............................. 2,451,348 2,329,529 2,258,178
------------- ------------- ------------
OPERATING COSTS
Labor and employee benefits.............................. 1,024,181 990,254 942,350
Newsprint, ink and supplements........................... 335,043 316,814 379,814
Other operating costs..................................... 665,509 615,729 568,686
Depreciation and amortization............................. 141,758 128,221 124,055
------------- ------------- ------------
Total Operating Costs............................... 2,166,491 2,051,018 2,014,905
------------- ------------- ------------
OPERATING INCOME............................................. 284,857 278,511 243,273
------------- ------------- ------------
-66-
OTHER INCOME (EXPENSE)
Interest expense........................................... (45,112) (52,375) (68,843)
Interest expense capitalized.............................. 120 14,746 22,142
Interest income............................................ 5,712 5,078 6,433
Other, net................................................. (2,176) (6,244) 7,365
------------- ------------- ------------
Total................................................. (41,456) (38,795) (32,903)
------------- ------------- ------------
Income before income taxes................................. 243,401 239,716 210,370
Income taxes................................................. 95,312 93,630 78,302
------------- ------------- ------------
INCOME BEFORE CUMULATIVE EFFECT
OF CHANGES IN ACCOUNTING PRINCIPLES....................... 148,089 146,086 132,068
Cumulative effect of changes in accounting principles for:
Income taxes............................................ 25,800
Postretirement benefits other than pension.............. (131,000)
------------- ------------- -------------
Net income.............................................. $ 148,089 $ 40,886 $ 132,068
============= ============= =============
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE
Income before cumulative effect of changes
in accounting principles........................... $ 2.68 $ 2.65 $ 2.55
Cumulative effect of changes in
accounting principles.............................. (1.91)
------------- ------------- ------------
Net income.............................................. $ 2.68 $ 0.74 $ 2.55
============= ============= ============
AVERAGE COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING (in 000s)............................... 55,332 55,178 51,797
============= ============= ============
-67-
PROFORMA AMOUNTS ASSUMING THE NEW ACCOUNTING
METHODS ARE APPLIED RETROACTIVELY:
Net income.............................................. $ 148,089 $ 146,086 $ 123,670
============= ============= =============
Net income per common and common
equivalent share..................................... $ 2.68 $ 2.65 $ 2.39
============= ============= =============
See "Notes to Consolidated Financial Statements".
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flows
(In thousands of dollars)
Year Ended
-----------------------------------
Dec. 26 Dec. 27 Dec. 29
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
CASH PROVIDED BY (REQUIRED FOR) OPERATING ACTIVITIES
Net income.................................................... $ 148,089 $ 40,886 $ 132,068
Non-cash items included in income
Cumulative effect of changes in accounting principles..... 105,200
Depreciation.............................................. 104,314 93,838 91,147
Amortization of excess of cost over net assets acquired... 19,754 18,892 18,885
Amortization of other assets.............................. 17,690 15,491 14,023
Provision for non-current deferred taxes.................. 21,780 20,498 15,215
Earnings of investees in excess of distributions.......... (22,802) (13,996) (6,521)
Other items, net.......................................... 29,584 26,708 30,276
Change in certain assets and liabilities:
Accounts receivable....................................... (3,377) (15,323) 14,410
Inventories............................................... (3,801) 5,065 7,017
Other current assets...................................... 3,086 (13,082) (2,484)
Accounts payable.......................................... 7,197 36,546 (18,060)
Federal and state income taxes............................ 3,542 195 (3,239)
Other current liabilities................................. 4,947 17,541 13,180
---------- ---------- ----------
Net cash provided by operating activities......... 330,003 338,459 305,917
---------- ---------- ----------
-68-
CASH REQUIRED FOR INVESTING ACTIVITIES
Additions to property, plant and equipment.................... (69,541) (100,993) (166,831)
Other items, net.............................................. (81,046) (82,010) (26,074)
---------- ---------- ----------
Net cash required for investing activities........ (150,587) (183,003) (192,905)
---------- ---------- ----------
CASH PROVIDED BY (REQUIRED FOR) FINANCING ACTIVITIES
Proceeds from sale of commercial paper and bank borrowings.... 307,983 157,900 310,584
Issuance of long-term notes................................... 158,600
Reduction of total debt....................................... (417,153) (204,495) (686,302)
---------- ---------- ----------
Net change in total debt.......................... (109,170) (46,595) (217,118)
Payment of cash dividends..................................... (76,787) (75,992) (71,087)
Sale of common stock to employees............................. 30,709 68,785 47,187
Sale of common stock.......................................... 146,975
Purchase of treasury stock.................................... (40,693)
Other items, net.............................................. (57,567) (30,794) (18,891)
---------- ---------- ----------
Net cash required for financing activities........ (253,508) (84,596) (112,934)
---------- ---------- ----------
Net Increase (Decrease) in Cash............... (74,092) 70,860 78
Cash and short-term cash investments at beginning of the year..... 97,104 26,244 26,166
---------- ---------- ----------
Cash and short-term cash investments at end of the year........... $ 23,012 $ 97,104 $ 26,244
========== ========== ==========
Working capital at end of the year................................ $ (5,180) $ 55,669 $ 34,023
========== ========== ==========
See "Notes to Consolidated Financial Statements."
</TABLE>
-69-
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statement of Shareholders' Equity
(In thousands of dollars, except share data)
Common
Shares Common Additional Retained Treasury
Outstanding Stock Capital Earnings Stock
------------ ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
BALANCES AT DEC. 30, 1990........................... 49,462,243 $ 1,031 $ 58,201 $ 835,681 $ -
Issuance of common shares under
stock option plans......................... 842,201 17 30,450
Issuance of common shares under
stock purchase plan........................ 266,330 5 11,451
Issuance of common shares net
of underwriting fees....................... 3,000,508 63 147,387
Expenses related to capital transactions....... (475)
Tax benefits arising from employee stock plans. 5,264
Net income..................................... 132,068
Cash dividends declared on
common stock - $1.40 per share............. (72,523)
----------- ----------- ----------- ----------- ----------
BALANCES AT DEC. 29, 1991........................... 53,571,282 $ 1,116 $ 252,278 $ 895,226 $ -
Issuance of common shares under
stock option plans......................... 1,155,062 24 49,503
Issuance of common shares under
stock purchase plan........................ 240,022 5 12,154
Tender of shares as payment
for options excercised..................... (695) (40)
Tax benefits arising from employee stock plans. 7,139
Net income..................................... 40,886
Cash dividends declared on
common stock - $1.40 per share............. (76,479)
------------ ----------- ----------- ----------- ----------
BALANCES AT DEC. 27, 1992........................... 54,965,671 $ 1,145 $ 321,034 $ 859,633 $ -
Issuance of common shares under
stock option plans......................... 323,894 7 12,883
Issuance of treasury shares under
stock option plans......................... 29,670 (525) (1,612)
-70-
Issuance of common shares under
stock purchase plan........................ 207,223 4 10,078
Issuance of treasury shares under
stock purchase plan........................ 71,028 (596) (4,007)
Purchase of treasury shares ................... (750,000) 40,693
Retirement of 649,302 treasury shares ......... (13) (3,912) (31,148) (35,074)
Tax benefits arising from employee stock plans. 3,239
Net income..................................... 148,089
Cash dividend declared on
common stock - $1.40 per share............. (76,749)
------------ ----------- ----------- ----------- ----------
BALANCES AT DEC. 26, 1993........................... 54,847,486 $ 1,143 $ 342,201 $ 899,825 $ -
============ =========== =========== =========== ==========
See "Notes to Consolidated Financial Statements."
</TABLE>
Notes to Consolidated Financial Statements
Summary of Significant Accounting Policies
Note A
A description of the company's business and the nature and scope of its
operations are set forth on Items 1 & 2. Reading this information is
recommended for a more complete understanding of the financial statements.
The company reports on a fiscal year, ending the last Sunday in the
calendar year. Results for 1993, 1992 and 1991 are for the 52 weeks ended
Dec. 26, Dec. 27 and Dec. 29, respectively.
The basis of consolidation is to include in the consolidated financial
statements all the accounts of Knight-Ridder, Inc., and its
more-than-50%-owned subsidiaries. All significant intercompany transactions
and account balances have been eliminated in consolidation.
The joint operating agency of Fort Wayne Newspapers, Inc., is the only
subsidiary with a minority interest. The minority shareholder's interest in
the net income of this subsidiary has been provided for as an expense ($5.2
million in 1993, $5.1 million in 1992 and $5.2 million in 1991) in the
Consolidated Statement of Income in the caption "Other, net."
The company is a 50% partner in the Detroit Newspaper Agency (DNA), a
joint operating agency between Detroit Free Press, Inc., a wholly owned
-71-
subsidiary of Knight-Ridder, Inc., and The Detroit News, Inc., a wholly owned
subsidiary of Gannett Co., Inc. The Consolidated Statement of Income includes
on a line-by-line basis the company's pro rata share of the revenue and
expense generated by the operation of the agency.
Investments in companies in which Knight-Ridder, Inc., has an equity
interest of at least 20% but not more than 50% are accounted for under the
equity method. Under this method, the company records its share of earnings
as income and increases the investment by the equivalent amount. Dividends
are recorded as a reduction in the investment. All other investments are
recorded at the lower of cost or net realizable value, and the company
recognizes income from such investments upon receipt of a dividend.
The investment caption "Equity in unconsolidated companies and joint
ventures" in the Consolidated Balance Sheet represents the company's equity
in the net assets of the Detroit Newspaper Agency, the Seattle Times Company
and subsidiaries, a company responsible for the sales and services of
general, retail and classified advertising accounts for a group of
newspapers, two newsprint mill partnerships, a cable television joint venture
and a joint venture that offers full-service copies of original journal
articles. The company owns 49-1/2% of the voting common stock and 65% of the
non-voting common stock of the Seattle Times Company, owns 33-1/3% of the
voting stock of Newspapers First, is a one-third partner in the Southeast
Paper Manufacturing Co., owns a 13-1/2% equity share of Ponderay Newsprint
Company, and jointly owns TKR Cable Company and TKR Cable Partners. Effective
December 1992, after a restructuring, the company has a 15% interest in
TCI/TKR Limited Partnership through TKR Cable Partners. Prior to December
1992, the company held a 7-1/2% interest in SCI Holdings, Inc., the holding
company for Storer Communications, Inc. Dialog, a Knight-Ridder subsidiary,
owns 33.78% of the voting stock and 100% of the non-voting stock of Article
Express International, Inc. The investment amount at Dec. 26, 1993, includes
$64.1 million representing the company's share of undistributed earnings
(excluding the DNA) accumulated since the investment dates. The company's
share of the earnings of the unconsolidated companies (except for the DNA) of
$7.3 million in 1993, $3.9 million in 1992 and $14.5 million in 1991 is
included in the caption "Other, net" in the Consolidated Statement of Income.
The company also recorded its share of Ponderay Newsprint Company's operating
losses ($7.4 million in 1993 and $6.5 million in 1992) in this caption.
Dividends and cash distributions received from the unconsolidated companies
and joint ventures (excluding the DNA) were $3.0 million in 1993, $2.8
million in 1992 and $8.1 million in 1991 and offset against the investment
account.
-72-
"Cash and short-term cash investments" includes currency and checks on
hand, demand deposits at commercial banks, overnight repurchase agreements of
government securities and investment-grade commercial paper with maturities
of fewer than 90 days. Cash and short-term investments are recorded at cost.
Due to the short-term nature of marketable securities, cost approximates
market value. In 1994, the company will adopt Statement of Financial
Accounting Standards (FAS) 115, Accounting for Certain Investments in Debt
and Equity Securities, the impact of which is immaterial.
"Inventories" are priced at the lower of cost ( first-in, first-out FIFO
method), or market. Most of the inventory is newsprint, ink and other
supplies used in printing newspapers.
"Property, plant and equipment" is recorded at cost and the provision for
depreciation for financial statement purposes is computed principally by the
straight-line method over the estimated useful lives of the assets. The
company capitalizes interest expense as part of the cost of major
construction projects.
"Excess of cost over net assets acquired" arises from the purchase of
at least a 50% interest in a company for a price higher the fair market value
of the net tangible assets. Intangible assets of this type arising from
acquisitions accounted for as purchases and occurring subsequent to Oct. 31,
1970, totaled approximately $773.0 million at Dec. 26,1993. They are
generally being amortized over a 40-year period on a straight-line basis,
unless management has concluded a shorter term is more appropriate. If,
in the opinion of management, an impairment in value occurs, based on the
undiscounted cash flow method, any necessary additional write-downs will
be charged to expense.
"Deferred revenue" arises as a normal part of business from advance
subscription payments for newspapers and business information services.
Revenue is recognized in the period in which it is earned.
"Short-term borrowings" represents the carrying amounts of commercial
paper and other short-term borrowings that approximate fair value. "Long-term
debt" represents the carrying amounts of debentures and notes payable. Fair
values, disclosed in Note C, are estimated using discounted cash flow
analyses based on the company's current incremental borrowing rates for
similar types of borrowing arrangements.
In 1992, the company adopted the FAS 106, Accounting For Postretirement
Benefits Other Than Pensions, and FAS 109, Accounting For Income Taxes. The
effects of adoption are described in Notes H and B, respectively. In 1994,
the company will adopt FAS 112, Employers' Accounting for Postemployment
Benefits. The impact on the consolidated financial statements will not be
material.
-73-
Earnings per share is computed by dividing net income by the weighted
average number of common and common equivalent shares outstanding. Quarterly
earnings per share may not add to the total for the year, since each quarter
and the year are calculated separately based on average outstanding shares
during the period.
Certain amounts in 1992 and 1991 have been reclassified to conform to the
1993 presentation.
Income Taxes
Note B
The company's income tax expense is determined under the provisions of
Statement of Financial Accounting Standards 109, Accounting for Income
Taxes, which was adopted in 1992. This accounting standard requires the use
of the liability method in adjusting previously deferred taxes for changes in
tax rates. The company chose to reflect the cumulative effect of adopting
this standard as a change in accounting principle as of the beginning of
1992. The adoption resulted in a credit to earnings of $25.8 million. Prior
years' financial statements were not restated.
Substantially all of the company's earnings are subject to domestic
taxation. With the exception of immaterial amounts of taxes withheld on
trans-border receipts, no foreign income taxes have been imposed on reported
earnings.
<PAGE>
<TABLE>
<CAPTION>
Federal, state and local income taxes before cumulative effect of changes in accounting principles consist of the following
(in thousands):
Liability Method Deferred
---------------------------------------------- ---------------------
1993 1992 1991
--------------------- -------------------- ---------------------
Current Deferred Current Deferred Current Deferred
-------- -------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes................ $53,422 $38,231 $65,968 $11,725 $59,811 $10,231
State and local income taxes........ 11,702 (8,043) 12,936 3,001 6,664 1,596
------- ------- ------- ------- ------- -------
Total.......................... $65,124 $30,188 $78,904 $14,726 $66,475 $11,827
======= ======= ======= ======= ======= =======
</TABLE>
-74-
In 1991, deferred tax expense resulted principally from the excess of tax
depreciation over financial statement depreciation (including depreciation on
assets of partnerships in which the company participates), the tax effect of
which amounted to $8.8 million.
Cash payments of income taxes for the years 1993, 1992 and 1991 were
$82.7 million $60.2 million and $61.4 million, respectively. Payments in
1993 include the payment and settlement of prior year state and federal
income tax examinations.
<PAGE>
<TABLE>
<CAPTION>
Effective Income Tax Rates
The differences between income tax expense shown in the financial statements and the amounts determined by applying the federal
statutory rate of 35% in 1993 and 34% in 1992 and 1991 are as follows (in thousands):
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Federal statutory income tax $85,190 $81,505 $71,525
State and local income taxes, net of federal benefit 10,913 10,518 5,452
Statutory rate applied to nondeductible amortization
of the excess of cost over net assets acquired 6,914 6,418 6,420
Change in deferred tax asset valuation allowance (6,695)
Resolution of prior year tax issues (2,964) (1,734) (2,095)
Effect of rate change in enacted federal tax
on deferred tax liability 2,463
Other items, net (509) (3,077) (3,000)
------- ------- -------
Total $95,312 $93,630 $78,302
======= ======= =======
</TABLE>
At the end of fiscal years 1993 and 1992, the company's deferred tax
assets totaled $135.8 million and $120.7 million, respectively, of which the
most significant component was postretirement benefit plans, $87.2 million
and $83.0 million, respectively (including amounts relating to partnerships
in which the company participates). Other material components were: compens-
ation and benefits accruals of $11.2 million in 1993 and $19.2 million in 1992,
-75-
and state net operating loss carryovers, net of allowance, of $7.0 million in
1993. Management is satisfied that a substantial portion of the state net
operating loss carryovers will be realized within the applicable carryover
periods. Accordingly, the related valuation allowance was reduced to $4.0
million in 1993.
At the end of fiscal years 1993 and 1992, deferred tax liabilities totaled
$249.3 million and $204.1 million, respectively, of which the most
significant component was depreciation and amortization (including
depreciation and amortization deductions claimed by partnerships in which the
company has an interest).
The components of deferred taxes included in the Consolidated Balance
Sheet are as follows (in thousands):
<PAGE>
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Current asset....................... $ 22,410 $ 30,818
Non-current liability............... (135,979) (114,199)
-------- --------
Net deferred tax liability.......... $(113,569) $ (83,381)
======== ========
</TABLE>
-76-
Debt
Note C
Debt consisted of the following (in thousands):
<PAGE>
<TABLE>
<CAPTION>
Dec. 26 Dec. 27 Dec. 29
1993 1992 1991
-------- -------- ---------
<S> <C> <C> <C>
Commercial paper due at various dates through January 21, 1994
at an effective interest rate of 3.168% at Dec. 26, 1993.
Amounts are net of unamortized discounts of $15 in 1993,
$74 in 1992 and $712 in 1991 (a)......................................... $ 53,985 $ 62,326 $ 111,288
Debentures due on April 15, 2009, bearing interest at 9 7/8%,
net of unamortized discount of $2,528 in 1993, $2,693 in 1992,
and $2,859 in 1991....................................................... 197,472 197,307 197,141
Notes payable on April 15, 1996, bearing interest at 8%,
retired in April 1993, net of unamortized discount of $338
in 1992, $441 in 1991 ................................................... 99,662 99,559
Notes payable on Jan 15, 1994, bearing interest at 9.05%,
puttable after Jan. 15, 1992, net of unamortized discount
of $1 in 1993, $35 in 1992 and $69 in 1991............................... 39,999 39,965 39,931
Notes payable, bearing interest at 8 1/2%, subject to
mandatory pro rata amortization of 25% annually commencing Sept. 1, 1998
through maturity on Sept. 1, 2001, net of unamortized discount of $1,069
in 1993, $1,240 in 1992 and $1,408 in 1991............................... 158,931 158,760 158,592
Other indebtedness.......................................................... 688 2,225 329
-------- -------- ---------
451,075 560,245 606,840
Less amounts payable in one year (b)........................................ 40,687 64,304 50,043
-------- -------- ---------
Total Long-Term Debt................................................... $ 410,388 $ 495,941 $ 556,797
======== ======== =========
(a) Commercial paper is backed by $500.0 million of revolving credit agreements, which require no principal payments
until maturity on April 9, 1998.
(b) The instruments backing commercial paper are "long-term" in that no principal repayments are required during the
next 12 months. As such, approximately $54.0 million of commercial paper is classified as "non-current" since the
company intends to maintain total outstanding commercial paper of at least this amount during the next 12 months.
-77-
Interest payments during 1993, 1992 and 1991 were $41.2 million, $52.7 million and $65.6 million, respectively.
</TABLE>
The following table presents (in thousands) the approximate annual
maturities of long-term debt for the five years after 1993:
<TABLE>
<S> <C>
1994 $ 40,687
1995 -
1996 -
1997 -
1998 93,718
1999 and thereafter 316,670
--------
Total $451,075
========
</TABLE>
The carrying amounts and fair values of debt as of Dec. 26, 1993, are
as follows (in thousands):
<TABLE>
<CAPTION>
Carrying Fair
Amount Value
-------- --------
<S> <C> <C>
Commercial paper $ 53,985 $ 53,985
9 7/8% Debentures 197,472 245,880
9.05% Notes payable 39,999 40,024
8 1/2% Notes payable 158,931 181,840
Other indebtedness 688 688
------- --------
$451,075 $522,417
======== ========
</TABLE>
-78-
Unconsolidated Companies and Joint Ventures
Note D
<PAGE>
<TABLE>
<CAPTION>
Summary financial information for the company's unconsolidated companies and joint ventures that are accounted
for by the equity method is as follows (in thousands):
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Current assets................................................. $ 202,397 $ 191,966 $ 194,565
Property, plant and equipment and other assets................. 1,647,083 1,656,851 1,306,755
Current liabilities............................................ 180,891 148,060 120,728
Long-term debt and other non-current liabilities............... 961,488 1,016,957 771,405
Net sales...................................................... 656,311 638,328 557,887
Gross profit................................................... 118,050 185,554 215,923
Net income (loss).............................................. (22,096) (29,909) 32,188
Company's share of:
Net assets................................................. 289,986 277,193 288,673
Net income................................................. $ 7,254 $ 3,940 $ 14,457
</TABLE>
Beginning in 1992, the company's investment in Ponderay Newsprint Company
is reported in "Equity in unconsolidated companies and joint ventures" in the
Consolidated Balance Sheet, and related amounts are included in the above
table.
In 1989, the Detroit Free Press and The Detroit News began operating under
a joint operating agreement as the Detroit Newspaper Agency (DNA). Balance
sheet amounts for the DNA at Dec. 26, 1993, Dec. 27, 1992, and Dec. 29, 1991,
are included above and the net assets contributed to the DNA are included in
"Equity in unconsolidated companies and joint ventures" in the Consolidated
Balance Sheet.
-79-
Capital Stock
Note E
In 1991, shareholders authorized 20.0 million shares of preferred stock
for future issuance. Common stock authorized for issuance is 250.0 million
shares at par value $.02-1/12 per share.
The Employees Stock Purchase Plan provides for the sale of common stock to
employees of the company and its subsidiaries at a price equal to 85% of the
market value at the end of each purchase period. Participants under the plan
received 278,251 shares in 1993, 240,022 shares in 1992 and 266,330 shares in
1991. The purchase price of shares issued in 1993 under this plan ranged
between $46.59 and $50.89, and the market value on the purchase dates of such
shares ranged from $54.81 to $59.88.
The Employee Stock Option Plan provides for the issuance of non-qualified
stock options and incentive stock options. Options are issued at prices not
less than market value at date of grant and are exercisable when issued.
There is no expiration date for the granting of options, but options must
expire no later than 10 years from the date of grant. The option plan
provides for the discretionary grant of stock appreciation rights (SARs) in
tandem with previously granted options, which allow a holder to receive in
cash, stock or combinations thereof the difference between the exercise price
and the fair market value of the stock at date of exercise. The value of
stock appreciation rights is charged to compensation expense. When options
and stock appreciation rights are granted in tandem, the exercise of one
cancels the exercise right of the other.
Proceeds from the issuance of shares under these plans are included in
shareholders' equity and do not affect income.
-80-
<PAGE>
<TABLE>
<CAPTION>
Transactions under the Employee Stock Option Plan are summarized as follows:
Number Average
of Price
Shares Per Share
---------- ---------
<S> <C> <C>
Outstanding
Dec. 30, 1990......................................... 4,060,385 $42.56
Exercised......................................... (842,201) 36.17
Canceled.......................................... (39,625) 51.39
Granted........................................... 754,970 46.56
---------
Outstanding
Dec. 29, 1991......................................... 3,933,529 44.61
Exercised......................................... (1,155,062) 42.74
Canceled.......................................... (11,800) 48.49
Granted........................................... 714,295 58.60
----------
Outstanding
Dec. 27, 1992......................................... 3,480,962 48.09
Exercised......................................... (353,564) 39.47
Canceled.......................................... (900) 58.63
Granted........................................... 739,925 58.88
----------
Outstanding
Dec. 26, 1993......................................... 3,866,423 $50.94
==========
</TABLE>
The exercise price of the shares issued upon exercise of stock options in
1993 ranged between $24.63 and $58.63.
In 1993, shareholders voted in favor of a proposal amending the Employee
Stock Option Plan to make an additional 3.5 million shares of the company's
common stock available for options. In addition, shareholders voted in favor
of an amendment to make 1.5 million shares of common stock available for
purchase under the Employees Stock Purchase Plan.
-81-
At Dec. 26, 1993, shares of the company's authorized but unissued common
stock were reserved for issuance as follows:
Shares
---------
Employee stock option plans 3,569,818
Employees stock purchase plan 1,741,089
---------
Total 5,310,907
=========
Since 1985, the company has purchased 21.2 million shares of its own
stock for approximately $872.0 million. See Treasury Stock Purchases in Item
5.
Each holder of a common share has been granted a right, under certain
conditions, to purchase from the company one common share at a price of $200,
subject to adjustment. The rights provide that in the event the company is a
surviving corporation in a merger, each holder of a right will be entitled to
receive common shares having a value equal to two times the exercise price of
the right. In the event the company engages in a merger or other business
combination transaction in which the company is not the surviving
corporation, the rights agreement provides that proper provision shall be
made so that each holder of a right will be entitled to receive common stock
of the acquiring company having a value equal to two times the exercise price
of the right. The rights agreement also provides that in the event any person
acquires 20% or more of the company's outstanding common stock (other than
pursuant to an offer for all outstanding stock that the board determines is
fair and in the best interests of the company and stockholders), each right
(other than rights held by the person who has acquired such 20% or larger
block) will entitle its holder to purchase common stock of the company having
a value equal to twice the exercise price of the right. No rights
certificates will be distributed until 10 days following a public
announcement that a person or group has acquired beneficial ownership of 20%
or more of the company's outstanding common stock, or 10 days following the
commencement of a tender offer or exchange offer for 20% or more of the
company's outstanding stock. Until such time, the rights are evidenced by the
common share certificates of the company. The rights are not exercisable
until distributed and will expire on July 10, 1996, unless earlier redeemed.
The company has the option to redeem the rights in whole, but not in part, at
a price of $.05 per right.
-82-
Retirement Plans
Note F
The company and its subsidiaries have several company-administered
non-contributory defined benefit plans covering most non-union employees.
These plans provide benefits that are based on the employees' compensation
during various times before retirement. The funding policy for these plans is
to contribute annually an amount that is intended to provide the projected
benefit earned during the year for the covered employees. The company also
contributes to certain union-administered, company-administered and jointly
administered negotiated plans covering union employees. The funding policy
for these plans is to make annual contributions in accordance with applicable
agreements.
The company also sponsors certain defined contribution plans established
pursuant to Section 401(k) of the Internal Revenue Code. Subject to certain
dollar limits, employees may contribute a percentage of their salaries to
these plans, and the company will match a portion of the employees'
contributions.
A summary of the components of net periodic pension cost for the defined
benefit plans (both company-administered non-negotiated and single-employer
negotiated plans) is presented here, along with the total amounts charged to
pension expense for multi-employer union plans, defined contribution plans
and other agreements (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Defined Benefit Plans:
Service cost............. $ 18,961 $ 18,162 $ 17,782
Interest cost............ 45,961 42,638 38,669
Actual return on
plan assets........... (78,805) (43,699) (112,926)
Net amortization
and deferral.......... 25,632 (7,133) 72,335
-------- -------- --------
Net................ 11,749 9,968 15,860
-83-
Multi-employer
union plans.............. 12,713 12,226 11,381
Defined contribution
plans.................... 9,139 7,617 6,945
Other.................... 2,454 2,300 2,890
-------- -------- --------
Net periodic
pension cost... $ 36,055 $ 32,111 $ 37,076
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Assumptions used each year in accounting for defined benefit plans were:
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Discount rate as of
year end.................... 5.75-7.5 % 7.5-8.5 % 7.5-8.5 %
Expected long-term rate
of return on assets
assumed in determining
pension expense............. 8.0-8.5 8.5 8.5
Rate of increase in
compensation levels
as of year end.............. 3.5-4.5 4.0-7.0 4.0-7.0
</TABLE>
The following table sets forth the funded status and amounts recognized in the
Consolidated Balance Sheet for the defined benefit plans (in thousands):
<PAGE>
<TABLE>
<CAPTION>
-84-
Dec. 26, 1993 Dec. 27, 1992 Dec. 29, 1991
------------------------------ ---------------------------- ---------------------------
Plans Whose Plans Whose Plans Whose Plans Whose Plans Whose Plans Whose
Assets Exceed Accumulated Assets Exceed Accumulated Assets Exceed Assets Exceed
Accumulated Benefits Accumulated Benefits Accumulated Accumulated
Benefits Exceed Assets Benefits Exceed Assets Benefits Benefits
(17 plans) (9 plans) (21 plans) (5 plans) (20 plans) (6 Plans)
---------- -------------- ------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefit obligations....... $(485,172) $ (51,583) $(378,523) $ (38,848) $(373,275) $ (16,488)
========= =========== ============ ========== =========== ==========
Accumulated benefit obligations.. $(495,682) $ (54,205) $(386,238) $ (40,668) $(382,557) $ (17,971)
========= =========== ============ ========== =========== ==========
Projected benefit obligation.............$(579,162) $ (64,329) $(488,852) $ (44,709) $(464,623) $ (20,007)
Plan assets at fair value................ 648,468 36,955 571,477 29,247 562,093 8,359
Projected benefit obligation --------- ----------- ----------- ---------- ----------- ----------
less than (in excess of) plan assets.. 69,306 (27,374) 82,625 (15,462) 97,470 (11,648)
Unrecognized net (gain) loss............. (31,764) 5,464 (54,642) 826 (82,463) 1,588
Prior service cost not yet recognized
in net periodic pension cost............ 30,305 13,054 36,561 6,383 36,058 1,992
Unrecognized net (asset)
obligation at the date FAS 87
was adopted, net of amortization...... (33,511) 2,962 (38,600) 3,166 (42,692) 2,402
Adjustment required to recognize
minimum liability..................... (11,357) (6,333) (3,946)
--------- ----------- ------------ ------------ ----------- -----------
Net pension asset (liability) recognized
in the Consolidated Balance Sheet.....$ 34,336 $ (17,251) $ 25,944 $ (11,420) $ 8,373 $ (9,612)
========= =========== ============= =========== =========== ===========
Net pension assets are included in "Other" non-current assets and net pension liabilities are included in "Employment benefits and
other non-current liabilities." Substantially all of the assets of the company-administered plans are invested in listed stocks and
bonds.
</TABLE>
-85-
Segment Information
Note G
The company is a diversified information and communications
company with two principal business segments: Newspapers and Business
Information Services. Financial data regarding the company's business
segments are presented in Items 1 & 2 in the supplemental information.
Operating revenue by industry segment includes sales to un-
affiliated customers, as reported in the company's consolidated income
statement.
Operating income is operating revenue less operating expenses, including
depreciation expense and amortization of intangibles. General corporate
expenses are not allocated to the Newspaper or Business Information Services
divisions. Equity in net income of unconsolidated companies and joint
ventures, interest income, net interest expense, other non-operating income
and expense items, as well as income taxes, have not been included in the
amounts reflected as operating income by segment.
Identifiable assets by segment are all assets employed in the individual
operations of each business segment and excess of cost over net assets
acquired associated with acquisitions in each segment. General corporate
assets include cash and equivalents, other investments, net assets of
unconsolidated companies and joint ventures (other than the Detroit Newspaper
Agency, which is included in Newspaper Division assets), and property, plant
and equipment used primarily for corporate purposes. Investments in
unconsolidated companies and joint ventures are discussed in Notes A and D.
Postretirement Benefits Other Than Pensions
Note H
The company and its subsidiaries have defined postretirement benefit plans
that provide medical and life insurance for retirees and eligible dependents.
Effective with the beginning of fiscal year 1992, the company implemented, on
the immediate recognition basis, Statement of Financial Accounting Standards
(FAS) 106, Accounting for Postretirement Benefits Other Than Pensions. This
statement requires that the cost of these benefits, which are primarily for
health care and life insurance, be recognized in the financial statements
throughout the employees' active working careers. The company's previous
practice was to expense these costs on a cash basis, principally after
retirement.
The cumulative effect of adopting FAS 106 on the immediate recognition
basis, as of the beginning of 1992, was to reduce net income by $131.0
-86-
million (net of income taxes of $80.3 million), or $2.37 per share. The 1992
after-tax impact of FAS 106 (excluding the cumulative effect of adoption) was
to reduce earnings by $4.0 million, or $.07 per share.
This charge includes a previously unrecognized accumulated postretirement
benefit obligation of $211.3 million, including $47.2 million related to the
company's share of the Detroit Newspaper Agency (DNA). This obligation was
based on plans in place at the beginning of 1992. The company valued the
accumulated postretirement benefit obligation as of Dec. 26, 1993, and Dec.
27, 1992, using the following actuarial assumptions:
Discount rate: 7.5% in 1993 and 8.5% in 1992
Return on plan assets: 8.5% in 1993 and 1992
Annual rate of increase in salaries: 4.5% in 1993 and 5.0% in 1992
Medical trend rate: 12.0% for 1994, reducing to 5.5% in 2001 and
thereafter and 14.0% for 1993, reducing to 6.5% in 2001 and thereafter.
In 1992, the company announced several changes to its retiree non-union
benefit plans that established a maximum annual dollar cap for medical
premiums the company would pay and eliminated coverage for future retirees
after the age of 65. During 1993, many of the company's unions adopted
similar changes to their retiree benefit plans. Most current retirees will
keep their current plans.
Proforma amounts for 1991 show that net income would have been reduced by
approximately $8.4 million (approximately $.16 per share). The impact on 1992
and 1993 is substantially less due to the effect of the plan amendments
described above. These plan amendments resulted in an unrecognized reduction
in prior service cost, which is being amortized over future years. 1993
reflects a full year of amortization for the reduction in prior service cost.
<PAGE>
<TABLE>
<CAPTION>
The following tables present the funded status of the company's benefit plans (excluding liabilities of the DNA that are reported in
the Consolidated Balance Sheet under the investment caption "Equity in unconsolidated companies and joint ventures") and the
components of 1993 and 1992 periodic expense (in thousands):
-87-
1993 1992
------------------------------- ---------------------------------
Life Insurance Life Insurance
Medical and Other Medical and Other
Plans Plans Plans Plans
-------- --------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees..................... $ 71,550 $13,619 $ 54,504 $ 13,375
Fully eligible active
plan participants......... 12,375 5,267 22,293 3,030
Other active plan
participants.............. 19,667 17,679 26,411 18,558
--------- ------- --------- --------
Total........................ 103,592 36,565 103,208 34,963
Fair value of assets............... - - - -
Accumulated benefit
obligation in excess
of plan assets.................. 103,592 36,565 103,208 34,963
Unrecognized net
reduction (increase) in prior
service costs................... 34,331 (169) 34,592 -
Unrecognized net
gain (loss)..................... (2,900) 2,912 - -
--------- ------- --------- --------
Accrued liability recognized
in the balance sheet............ $ 135,023 $39,308 $ 137,800 $ 34,963
========= ======= ========= =========
Net periodic postretirement
benefit cost includes
the following components:
Service cost................. $ 3,911 $ 4,647
Interest cost................ 13,184 13,434
Amortization................. (3,558) (1,947)
Net periodic
postretirement ------- ---------
benefit cost.............. $13,537 $ 16,134
======= =========
Impact of one percent increase
in medical trend rate:
-88-
Aggregate impact on 1993
service cost and
interest cost................ $ 1,750
Increase in Dec. 26, 1993, =======
accumulated
postretirement
benefit obligation.............. $ 9,900
=======
</TABLE>
Acquisitions
Note I
On March 1, 1993, the company (through its wholly owned subsidiaries
Knight-Ridder Business Information Services, Inc., and Dialog Information
Services, Inc.) acquired all of the outstanding shares of Data-Star
(composed of Radio Suisse and Data-Star Marketing) from Motor-Columbus and
Peter Martin, respectively. Data-Star is Europe's leading online information
service.
On Dec. 2, 1993, the company acquired all of the outstanding shares of
Equinet Pty. Ltd. Equinet is an Australia-based provider of online business
real-time and archival equity, option price and analytical information
services. The acquisitions were accounted for as purchases and, accordingly,
the accompanying financial statements include their operations from the
acquisition dates. The cost of acquisitions is included in the caption "Other
items, net" in the "Cash Required For Investing Activities" section of the
Consolidated Statement of Cash Flows. The effect on operations and proforma
results of operations was not material.
Commitments and Contingencies
Note J
At Dec. 26, 1993, the company had lease commitments currently estimated
to aggregate approximately $84.1 million that expire from 1994 through 2051
as follows (in thousands):
<PAGE>
<TABLE>
-89-
<C> <C>
1994 $21,082
1995 15,654
1996 12,339
1997 10,070
1998 7,797
1999 and thereafter 17,174
-------
TOTAL $84,116
=======
</TABLE>
Payments under the lease contracts were $25.4 million in 1993, $25.2
million in 1992 and $24.1 million in 1991.
Various libel actions, environmental and other legal proceedings that
have arisen in the ordinary course of business are pending against the
company and its subsidiaries.
In 1990, a verdict was rendered against the company's subsidiary,
Philadelphia Newspapers, Inc., (PNI), publisher of The Philadelphia Inquirer
and Philadelphia Daily News, in a libel action entitled Sprague v.
Philadelphia Newspapers, Inc., for $2.5 million in compensatory damages and
$31.5 million in punitive damages. Following entry of the judgment on Sept.
15, 1992, PNI, as required by statute, posted a bond equal to 120% of the
amount of the verdict and appealed the judgment to the Pennsylvania Superior
Court. PNI believes that substantial grounds exist for a decision by an
appellate court to reverse the trial court and remand the case for a new
trial.
In the opinion of management, the ultimate liability to the company and
its subsidiaries as a result of this and other legal proceedings will not be
material.
Management's Responsibility for Financial Statements
Shareholders:
The consolidated financial statements and other financial information were
prepared by management in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods. The manner
of presentation, the selection of accounting policies and the integrity of
the financial information are the responsibility of management. Some of the
amounts included in the financial statements are estimates based on
management's best judgment of current conditions and circumstances.
To fulfill its responsibilities, management has developed and continues to
maintain a system of internal accounting controls. We believe the controls in
use are adequate to provide reasonable assurance that assets are safeguarded
-90-
from loss or unauthorized use, and that the financial records are reliable
for preparing the financial statements and maintaining accountability for
assets. These systems are augmented by written policies, organizational
structures providing for division of responsibilities, qualified financial
officers at each operating unit, careful selection and training of financial
personnel and a program of internal audits. There are, however, inherent
limitations in any control system, in that the cost of maintaining a control
system should not exceed the benefits to be derived.
The Audit Committee of the Board of Directors is composed of outside
directors and meets periodically with management, internal auditors and
independent auditors, both separately and together, to review and discuss the
auditors' findings and other financial and accounting matters. Both the
independent and internal auditors have free access to the committee.
The consolidated financial statements have been audited by the company's
independent auditors and their report is presented below. The independent
auditors are elected each year at the annual shareholders meeting based on a
recommendation by the Audit Committee and the Board of Directors.
James K. Batten
- --------------------
James K. Batten
Chairman and
Chief Executive Officer
Ross Jones
- --------------------
Ross Jones
Senior Vice President/Finance
and Chief Financial Officer
Report of Independent Certified Public Accountants
Shareholders
Knight-Ridder, Inc.
We have audited the consolidated balance sheet of Knight-Ridder, Inc.,
and subsidiaries as of Dec. 26, 1993, Dec. 27, 1992, and Dec. 29, 1991, and
the related consolidated statements of income, cash flows and shareholders'
equity for each of the three years then ended. Our audits also included
the financial statement schedules listed in the Index at Item 14 (a).
These financial statements and schedules are the responsibility of
the company's management. Our responsibility is to express an opinion on
these financial statements and schedules based on our audits.
-91-
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Knight-Ridder, Inc., and subsidiaries at Dec. 26, 1993, Dec. 27, 1992, and
Dec. 29, 1991, and the consolidated results of their operations and their
cash flows for the years then ended, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements
taken as a whole, present fairly in all material respects the information
set forth therein.
As discussed in Notes B and H the consolidtaed financial statements,
in 1992 the Company changed its method of accounting for income taxes and
postretirement benefits other than pensions.
ERNST & YOUNG
Miami, Fla.
Feb. 1, 1994
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure.
---------------------
Not Applicable
-92-
PART III
ITEM
10. Directors and Executive Officers of the Registrant
--------------------------------------------------
1994 Proxy Statement page 2, "Election of Directors"; page 3, "Nominees
for Election as Directors for Terms Ending 1997"; page 4, "Nominees for
Election as Directors for Terms Ending 1995"; "Nominees for Election as
Directors for Terms Ending 1996"; page 15, "Certain Transactions,
Relationships and Reports of Certain Stock Transactions."
Knight-Ridder's Executive Committee:
James K. Batten, 58, chairman since 1989 and chief executive officer
since 1988. Served as president 1982 to 1989; senior vice president 1980 to
1982; vice president/news 1975 to 1980; Charlotte Observer executive editor
1972 to 1975. Advanced Management Program, Harvard Business School, 1981;
M.P.A., public affairs, Princeton University, 1962; B.S., chemistry/ biology,
Davidson College, 1957.
Alvah H. Chapman Jr., 72, chairman of the Executive Committee since
1984. Served as chairman of the board 1982 to 1989; chief executive officer
1976 to 1988; president 1973 to 1982; executive vice president 1967 to 1973;
vice president 1966 to 1967; Miami Herald general manager 1962 to 1969. B.S.,
business administration, The Citadel, 1942.
Mary Jean Connors, 41, vice president/human resources since 1989. Served
as Philadelphia Newspapers, Inc., vice president/human resources 1988 to
1989; assistant to the senior vice president/ news for Knight-Ridder 1988;
The Miami Herald assistant managing editor/ personnel 1985 to 1988; held
various editing positions at The Miami Herald 1980 to 1985. B.A., English,
Miami University in Oxford, Ohio, 1973.
John C. Fontaine, 62, executive vice president since January 1994;
senior vice president 1987 to 1993; general counsel 1980 to 1993. Formerly a
partner with Hughes Hubbard & Reed. LL.B., Harvard Law School, 1956; B.A.,
political science, University of Michigan, 1953.
-93-
Ross Jones, 51, senior vice president and chief financial officer since
October 1993; vice president/finance since March 1993. Served as vice
president and treasurer of Reader's Digest Association, Inc., 1985 to 1993 and
in other positions there 1977 to 1985. Served as manager at Brown Brothers
Harriman & Co. 1970 to 1977. M.B.A., finance, Columbia University Business
School, 1970; B.A. in classics, Brown University, 1965.
Bernard H. Ridder Jr., 77, former chairman of the board 1979 to 1982;
former chairman of the Executive Committee 1976 to 1984; former vice chairman
of the board 1974 to 1979. Served as president and chief executive officer of
Ridder Publications, Inc., 1969 to 1974. B.A., history, Princeton University,
1938.
P. Anthony Ridder, 53, president since 1989; president of Newspaper
Division since 1986; chairman of the Operating Committee since 1985; board
member since 1987. Served as publisher of the San Jose Mercury News 1977 to
1986; general manager 1975 to 1977; business manager 1969 to 1975. B.A.,
economics, University of Michigan, 1962.
Other Officers:
Marty Claus, 45, vice president/ news since 1993. Served as Detroit Free
Press managing editor/business and features from 1987 to 1992; held various
editing positions at the Free Press 1977 to 1987. Held various writing and
editing positions at the San Bernardino (Calif.) Sun-Telegram 1970 to 1977.
B.A., journalism, Michigan State University Honors College, 1970.
Stephen D. Dempsey, 41, assistant vice president/information systems
since February 1994. Served as director of information systems from 1990 to
1994; San Jose Mercury News information systems director from 1984 to 1990;
various technical positions 1979 to 1984; Boulder Daily Camera, various
programming and circulation positions, 1969 to 1979. B.A., history,
University of Colorado, 1975.
Gary R. Effren, 37, assistant vice president/assistant treasurer since
December 1993. Served as assistant to the vice president/ finance and
treasurer 1989 to 1993; director of corporate accounting 1986 to 1989;
business manager of Viewdata Corp. of America 1984 to 1986; manager of
financial reporting 1983 to 1984. M.B.A., University of Miami, 1989; B.S.,
accounting, Rider College, 1978.
-94-
Virginia Dodge Fielder, 45, vice president/research since 1989. Served
as vice president/news and circulation research 1986 to 1989. Served as
director/news and circulation research 1981 to 1985; editorial research
manager, Chicago Sun-Times 1979 to 1981; held various positions at Lexington
Herald-Leader 1976 to 1979. Ph.D., mass communications, Indiana University,
1976; M.A., journalism, Indiana University, 1974; B.A., psychology,
Transylvania University, 1970.
Douglas C. Harris, 54, vice president and secretary since 1986. Served
as vice president/personnel 1977 to 1985; director/personnel 1972 to 1977.
Formerly with Peat, Marwick, Mitchell and Co. as director of college and
special recruiting. Advanced Management Program, Harvard Business School,
1987; Ed.D., counseling and guidance, Indiana University, 1968; M.S., student
personnel, Indiana University, 1964; B.S., business administration, Murray
State University, 1961.
W. H. (Gus) Harwell Jr., 64, senior vice president/operations since
1989. Served as group vice president/operations 1981 to 1989. Served as
Tallahassee Democrat president and publisher 1978 to 1981; general manager
1973 to 1978; Boca Raton News publisher 1968 to 1973. B.J., community
journalism, University of Missouri, 1951.
Clark Hoyt, 51, vice president/news since August 1993. Served as chief
of the Knight-Ridder Washington Bureau 1987 to 1993; news editor 1985 to
1987; managing editor, The Wichita Eagle, 1981 to 1985; various editing
positions, Detroit Free Press, 1977 to 1981; various reporting positions, the
Detroit Free Press and Washington Bureau. B.A., English literature, Columbia
College, 1964.
Ivan A. Jones, 51, assistant vice president/personnel research and
development since 1986. Served as director/ personnel research and
development 1977 to 1986; personnel consultant 1975 to 1977. Formerly with
the consulting firm of Byron Harless, Reid & Associates 1973 to 1975. Ph.D.,
industrial psychology, Baylor University, 1969; M.A., psychology, Baylor
University, 1967; B.A., psychology, University of Arizona, 1964.
Polk Laffoon IV, 48, vice president/ corporate relations since March
1994. Served as assistant to the president 1992 to 1994; assistant
circulation director/distribution, The Miami Herald, 1991 to 1992; executive
assistant to the vice president/marketing 1989 to 1991; Living Today editor,
1987 to 1989. Served as director and vice president/ investor relations, Taft
-95-
Broadcasting Co., 1982 to 1987. Held various writing and editing positions at
the Detroit Free Press 1978 to 1982. M.B.A., marketing, Wharton School, 1970;
B.A., English, Yale, 1967.
Tally C. Liu, 43, vice president/finance and controller since October
1993; vice president and controller 1990 to 1993. Served as San Jose Mercury
News vice president and chief financial officer 1987 to 1990; chief financial
officer 1986 to 1987; controller 1983 to 1986; Boca Raton News controller
1980 to 1983; assistant controller 1978 to 1980. M.B.A., Florida Atlantic
University, 1977; B.S., business administration, National Chen-Chi
University, 1973; CPA.
Mario R. Lopez, 54, assistant vice president/internal audit since July
1993. Served as partner at Deloitte & Touche 1978 to 1993 and in other
positions there from 1964 to 1978. B.S., business administration, Saint
Joseph's University, 1962, CPA.
Larry D. Marbert, 40, vice president/ technology since February 1994.
Served as Philadelphia Newspapers, Inc., senior vice president/operations
1991 to 1994; vice president/operations research and planning 1988 to 1991;
vice president/production 1986 to 1988; Knight-Ridder director of
production/Newspaper Division 1981 to 1986; various production positions, The
Miami Herald, 1977 to 1981. M.S., management science, Auburn University,
1977; B.S., University of North Carolina, business administration, 1976.
Jerry M. Marshall, 55, assistant vice president/financial services since
1986. Served as director of accounting administration 1984 to 1985; director
of corporate accounting 1977 to 1984; manager of corporate accounting 1972 to
1977; internal auditor 1969 to 1972. B.S., accounting, Kent State University,
1963.
Cristina Lagueruela Mendoza, 47, vice president/general counsel since
1993; vice president/associate general counsel 1992 to 1993; associate
general counsel since 1990. Served as a partner in the Miami law firm of
Murai, Wald, Biondo, Moreno & Mendoza, P.A., 1988 to 1990; associate 1984 to
1988. J.D., University of Miami Law School, 1982; M.A., political science,
University of Miami, 1967; B.A., political science, Chatham College, 1966.
Laurence D. Olmstead, 36, assistant vice president/ human resources/
diversity since December 1993. Served as special projects editor/metro staff
of The New York Times 1993; city editor of the Detroit Free Press 1991 to
1993; held various editing and reporting positions 1980 to 1991. Attended
George Washington University.
-96-
Peter E. Pitz, 52, vice president/operations since February 1994. Served
as vice president/technology 1989 to 1994; San Jose Mercury News vice
president/operations 1987 to 1989; Detroit Free Press director of operations
1983 to 1987; Denver Post operations manager 1974 to 1983. M.B.A., Denver
University, 1979; B.S., business administration, Northern Illinois
University, 1963.
David K. Ray, 52, president of Business Information Services Division
since 1983; Knight-Ridder vice president since 1980. Formerly a vice
president, LIN Broadcasting Co. M.B.A., University of Chicago, 1965; B.A.,
liberal arts, Colgate University, 1963.
Stephen H. Sheriff, 47, assistant vice president/taxation since 1989.
Served as director of taxation 1987 to 1989. Formerly with Federal Express as
director of taxation. J.D., University of Miami School of Law, 1992; B.B.A.,
accounting, University of Georgia, 1971; CPA.
Homer E. Taylor, 51, vice president/supply since 1987. Formerly vice
president/manufacturing and supply with Scripps Howard. B.S., business, West
Virginia Institute of Technology, 1973; A.S., electrical engineering, West
Virginia Institute of Technology, 1970.
Jerome S. Tilis, 51, vice president/marketing since 1987. Served as
president of the Detroit Free Press 1985 to 1989; senior vice president of
Philadelphia Newspapers, Inc., 1980 to 1985; vice president of advertising
sales and marketing 1979 to 1980; advertising director 1977 to 1979. Advanced
Management Program, Harvard Business School, 1984; B.S., chemistry, Hunter
College, 1964.
Knight-Ridder Board:
The Knight-Ridder Board of Directors is composed of members who represent a
wide cross-section of American business and journalism. The group includes
highly experienced investment and commercial bankers, leaders of top American
corporations, senior executives and retired executives of the company and
members of the Knight and Ridder families. The group is the central governing
body of the company.
Eric Ridder, 75, publisher emeritus of The Journal of Commerce, a director
since 1983; attended Harvard University.
-97-
Jesse Hill Jr., 67, chairman and chief executive officer of Atlanta Life
Insurance Co., a director since 1980; M.B.A., actuarial science, University
of Michigan, 1949; B.S., mathematics and physics, Lincoln University, 1947.
Barbara Knight Toomey, 56, experienced in management consulting, data
retrieval and storage, resort management and library science, a director
since 1989; B.A., geography and zoology, Boston University, 1959.
James K. Batten, 58, chairman and chief executive officer, a director since
1981; Advanced Management Program, Harvard Business School, 1981; M.P.A.,
public affairs, Princeton University, 1962; B.S., chemistry/biology, Davidson
College, 1957.
Ben R. Morris, 71, former president of The State-Record Company, a director
since 1986; B.S., textile engineering, North Carolina State University, 1948.
Peter C. Goldmark Jr., 53, president of The Rockefeller Foundation, a
director since 1990; B.A., government, Harvard College, 1962.
Bernard H. Ridder Jr., 77, former chairman of the board and of the Executive
Committee, a director since 1946; B.A., history, Princeton University, 1938.
P. Anthony Ridder, 53, president of Knight-Ridder and of the Newspaper
Division, a director since 1987; B.A., economics, University of Michigan,
1962.
C. Peter McColough, 71, former chairman and CEO of Xerox Corp., a director
since 1982; LL.B., law, Dalhousie University (Nova Scotia), 1947; M.B.A.,
Harvard University, 1949.
Joan Ridder Challinor, 66, research associate at the National Museum of
American History, Smithsonian Institution, a director since 1989; Ph.D., U.S.
history, The American University in Washington, D.C., 1982; M.A., U.S.
history/ancient history, The American University, 1974; B.A., history, The
American University, 1971.
Thomas L. Phillips, 69, retired chairman and chief executive officer of
Raytheon Co., a director since 1983; M.S., electrical engineering, Virginia
Polytechnic Institute, 1948; B.S., electrical engineering, Virginia
Polytechnic, 1947.
-98-
Barbara Barnes Hauptfuhrer, 65, director of several public companies, a
Knight-Ridder director since 1979; B.A., sociology and economics, Wellesley
College, 1949.
William S. Lee, 64, chairman and president of Duke Power, a director since
1990; B.S., civil engineering, Princeton University, 1951.
John L. Weinberg, 69, senior chairman of Goldman, Sachs & Co., a director
since 1969; M.B.A., business administration, Harvard University, 1950; B.A.,
economics, Princeton University, 1948.
Gonzalo F. Valdes-Fauli, 47, regional chief executive: Latin America of
Barclays Bank PLC, a director since 1992; master's in international finance,
Thunderbird Graduate School for International Management, 1970; B.S.,
economics, Spring Hill College, 1968.
Alvah H. Chapman Jr., 72, chairman of the Executive Committee and former
chairman of the board and chief executive officer, a director since 1962;
B.S., business administration, The Citadel, 1942.
11. Executive Compensation
----------------------
1994 Proxy Statement, pages 7 and 8, "Compensation Committee Interlocks
and Insider Participation"; pages 8 through 10, "Executive Compensation;"
page 11, "Senior Executive Compensation;" page 12, "Stock Options
Granted;" pages 12 and 13, "Stock Options Exercised;" page 13, "Pension
Benefits;" and page 15, "Compensation of Directors"
12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
1994 Proxy Statement page 1, "Common Stock Outstanding and Principal
Holders" and page 6, "Security Ownership of Management"
See Note E in Item 8.
13. Certain Relationships and Related Transactions
----------------------------------------------
1994 Proxy Statement page 15, "Certain Transactions, Relationships and
Reports of Certain Stock Transactions"
-99-
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form
------------------------------------------------------------
8-K.
----
(a)
1. The following consolidated financial statements of Knight-Ridder, Inc.
and subsidiaries, included in the annual report of the registrant to
its shareholders for the year ended December 26, 1993, are included in
Item 8:
Consolidated Balance Sheet - December 26, 1993, December 27, 1992 and
December 29, 1991
Consolidated Statement of Income - Years ended December 26, 1993,
December 27, 1992 and December 29, 1991
Consolidated Statement of Cash Flows - Years ended December 26, 1993,
December 27, 1992 and December 29, 1991
Consolidated Statement of Shareholders' Equity - Years ended
December 26, 1993, December 27, 1992 and December 29, 1991
Notes to consolidated financial statements - December 26, 1993
2. The following consolidated financial statement schedules of Knight-Ridder,
Inc. and subsidiaries are submitted as a separate section of this report.
Schedule V - Property, plant and equipment
Schedule VI - Accumulated depreciation, depletion and amortization of
property, plant and equipment
Schedule VIII - Valuation and qualifying accounts
Schedule IX - Short-term borrowings
Schedule X - Supplementary income statement information
-100-
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions, or are inapplicable, or have been shown in the
consolidated financial statements or notes thereto, and therefore have been
omitted from this section.
3. Exhibits Filed
No. 3 - Articles of Incorporation and Bylaws are incorporated by reference to
the Company's Form 10K, filed in March, 1981.
No. 4 - Indenture, dated as of April 6, 1989, is incorporated by reference to
the Company's Registration Statement on Form S-3, effective
April 7, 1989. (No. 33-28010)
No. 10 - 1993 Executive MBO Plan description is incorporated herein on pages
116 to 121.
- Amendment to the Employee Stock Option Plan originally filed on May 6,
1980 is incorporated herein on pages 121-129
- Director's Pension Plan dated January 1, 1994 is filed herein on pages
129-131
- Executive Officer's Retirement Agreement dated July 19, 1993 is
incorporated herein on pages 131-133
No. 11 - Statement re Computation of Per Share Earnings is filed herein on
pages 133-135.
No. 12 - Statement re Computation of Earnings to Fixed Charges Ratio From
Continuing Operations is filed herein on page 135-136.
No. 19 - Executive Officer's Consulting/Retirement Agreement dated September
20, 1989 is incorporated herein on pages 136-138
- Executive Officer's Retirement Agreement dated December 19, 1991 is
incorporated herein on pages 139-142.
No. 22 - Subsidiaries of the registrant is filed herein on pages 142-144.
-101-
No. 24 - "Consent of Independent Certified Public Accountants" is filed
herewith on page 145.
No. 25 - "Powers of Attorney" for all members of the Board of Directors, are
filed herein on pages 146-161.
(b) Reports on Form 8-K
None were filed during the fourth quarter of 1993.
(c) Exhibits
The response to this portion of Item 14 is submitted as a separate
section of this report.
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a separate
section of this report.
-102-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
KNIGHT-RIDDER, INC.
Dated March 22, 1994 By James K. Batten
- -------------------- -------------------------------
James K. Batten
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
-103-
Dated March 22, 1994 James K. Batten
- ---------------------- -------------------------------
James K. Batten
Chairman of the Board and
Chief Executive Officer
Dated March 22, 1994 Ross Jones
- ---------------------- -------------------------------
Ross Jones
Chief Financial Officer and
Senior Vice President/Finance
Dated March 22, 1994 Tally C. Liu
- ---------------------- -------------------------------
Tally C. Liu
Vice President/Finance and
Controller
(Chief Accounting Officer)
/s/ James K. Batten*
--------------------------------
James K. Batten
Director
-104-
/s/ Alvah H. Chapman, Jr.*
--------------------------------
Alvah H. Chapman, Jr.
Director
/s/ Joan Ridder Challinor *
-------------------------------
Joan Ridder Challinor
Director
/s/ Peter C. Goldmark, Jr.*
-------------------------------
Peter C. Goldmark, Jr.
Director
/s/ Barbara Barnes Hauptfuhrer*
-------------------------------
Barbara Barnes Hauptfuhrer
Director
/s/ Jesse Hill, Jr.*
-------------------------------
Jesse Hill, Jr.
Director
/s/ William S. Lee*
-------------------------------
William S. Lee
Director
-105-
/s/ C. Peter McColough*
-------------------------------
C. Peter McColough
Director
/s/ Ben R. Morris*
-------------------------------
Ben R. Morris
Director
/s/ Thomas L. Phillips*
-------------------------------
Thomas L. Phillips
Director
/s/ P. Anthony Ridder*
-------------------------------
P. Anthony Ridder
Director
/s/ Bernard H. Ridder, Jr.*
-------------------------------
Bernard H. Ridder, Jr.
Director
/s/ Eric Ridder*
-------------------------------
Eric Ridder
Director
-106-
/s/ Barbara Knight Toomey *
-------------------------------
Barbara Knight Toomey
Director
/s/ John L. Weinberg*
-------------------------------
John L. Weinberg
Director
/s/Gonzalo F. Valdes-Fauli*
-------------------------------
Gonzalo F. Valdes-Fauli
Director
Dated March 22, 1994 *By Ross Jones
- ---------------------- ----------------------------
Ross Jones
Attorney-in-fact
-107-
ANNUAL REPORT ON FORM 10-K
ITEM 14 (a) (2), (c) and (d)
SUPPLEMENTARY DATA
CERTAIN EXHIBITS
YEAR ENDED DECEMBER 26, 1993
KNIGHT-RIDDER, INC.
AND SUBSIDIARIES
MIAMI, FLORIDA
-108-
<PAGE> SCHEDULE V
<TABLE> -----------
<CAPTION>
PROPERTY, PLANT AND EQUIPMENT
KNIGHT-RIDDER, INC. AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ---------- --------- --------- --------- --------- ---------
BALANCE AT OTHER BALANCE
BEGINNING CHANGES AT
OF ADDITIONS ADD END OF
CLASSIFICATION PERIOD AT COST (2) RETIREMENTS (DEDUCT) PERIOD
- -------------- ---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 26, 1993 :
LAND AND IMPROVEMENTS $ 62,638 $ 3,251 $ 36 $ 1,032 (1)$ 66,885
BUILDINGS AND IMPROVEMENTS 372,021 9,022 1,778 291 (1) 379,556
EQUIPMENT 1,053,364 34,409 28,784 100,642 (1) 1,168,054
8,423 (3)
----------- ----------- ---------- ---------- -----------
1,488,023 46,682 30,598 110,388 1,614,495
CONSTRUCTION AND EQUIPMENT
INSTALLATIONS IN PROCESS 91,225 24,028 0 (102,153)(1) 13,100
----------- ----------- ---------- ---------- -----------
$ 1,579,248 $ 70,710 $ 30,598 $ 8,235 $ 1,627,595
=========== =========== ========== ========== ===========
YEAR ENDED DECEMBER 27, 1992 :
LAND AND IMPROVEMENTS $ 51,167 $ 278 $ 124 $ 11,317 (1)$ 62,638
BUILDINGS AND IMPROVEMENTS 275,815 1,062 1,700 96,844 (1) 372,021
-109-
EQUIPMENT 902,148 29,610 36,864 158,470 (1) 1,053,364
----------- ----------- ---------- ---------- -----------
1,229,130 30,950 38,688 266,631 1,488,023
CONSTRUCTION AND EQUIPMENT
INSTALLATIONS IN PROCESS 287,215 70,994 0 (266,984)(1) 91,225
----------- ----------- ---------- ---------- -----------
$ 1,516,345 $ 101,944 $ 38,688 $ (353) $ 1,579,248
=========== =========== ========== ========== ===========
YEAR ENDED DECEMBER 29, 1991 :
LAND AND IMPROVEMENTS $ 49,401 $ 734 $ 48 $ 1,080 (1)$ 51,167
BUILDINGS AND IMPROVEMENTS 269,950 1,258 521 5,128 (1) 275,815
EQUIPMENT 827,604 38,777 20,532 56,299 (1) 902,148
----------- ----------- ---------- ---------- -----------
1,146,955 40,769 21,101 62,507 1,229,130
CONSTRUCTION AND EQUIPMENT
INSTALLATIONS IN PROCESS 221,570 128,349 48 (62,656)(1) 287,215
----------- ----------- ---------- ---------- -----------
$ 1,368,525 $ 169,118 $ 21,149 $ (149) $ 1,516,345
=========== =========== ========== ========== ===========
(1) Reclassifications, transfers and adjustments.
(2) Property, plant and equipment additions include accruals not requiring cash expenditures of
$1,169 in 1993, $950 in 1992 and $2,287 in 1991.
(3) Assets obtained though the acquisition of subsidiary.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
-110
SCHEDULE VI
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION ------------
OF PROPERTY, PLANT AND EQUIPMENT
KNIGHT-RIDDER, INC. AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------- ---------- ---------- ---------- ---------- ---------
ADDITIONS OTHER BALANCE
BALANCE AT CHARGED TO CHANGES AT
BEGINNING COSTS AND ADD END OF
DESCRIPTION OF PERIOD EXPENSES (1) RETIREMENTS (DEDUCT) PERIOD
- ------------ ----------- ------------ ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 26, 1993:
LAND AND IMPROVEMENTS $ 7,168 $ 1,339 $ 27 $ 92 (2)$ 8,544
(28)(3)
BUILDING AND IMPROVEMENTS 121,737 16,175 899 (347)(2) 136,029
(637)(3)
EQUIPMENT 568,602 86,800 28,825 122 (2) 621,901
(4,798)(3)
----------- ------------ ------------ --------- ---------
$ 697,507 $ 104,314 $ 29,751 $ (5,596) $ 766,474
=========== ============ ============ ========= =========
YEAR ENDED DECEMBER 27, 1992:
LAND AND IMPROVEMENTS $ 6,555 $ 643 $ 28 $ 26 (2)$ 7,168
(28)(3)
BUILDING AND IMPROVEMENTS 110,484 13,438 1,529 (7)(2) 121,737
(649)(3)
EQUIPMENT 528,149 79,757 35,684 (46)(2) 568,602
(3,574)(3)
----------- ------------ ------------ --------- ---------
$ 645,188 $ 93,838 $ 37,241 $ (4,278) $ 697,507
============ ============ ============ ========= =========
YEAR ENDED DECEMBER 29, 1991:
LAND AND IMPROVEMENTS $ 6,045 $ 514 $ 40 $ 69 (2)$ 6,555
(33)(3)
BUILDING AND IMPROVEMENTS 99,571 12,160 490 (72)(2) 110,484
-111-
(685)(3)
EQUIPMENT 473,573 78,473 20,310 (37)(2) 528,149
(3,550)(3)
----------- ------------ ------------ --------- ---------
$ 579,189 $ 91,147 $ 20,840 $ (4,308) $ 645,188
=========== ============ ============ ========= =========
(1) The annual provisions for depreciation have been computed principally in accordance with
depreciable lives.
Land and improvements 5-10 years
Buildings and improvements 10-40 years
Equipment 3-25 years
(2) Reclassifications and transfers.
(3) Transfer of additions to accumulated depreciation related to assets of The Detroit News
Agency which is included in the consolidated balance sheet under the caption "Equity in
unconsolidated companies and joint ventures."
</TABLE>
-112-
<PAGE> SCHEDULE VIII
<TABLE> --------------
<CAPTION>
VALUATION AND QUALIFYING ACCOUNTS
KNIGHT-RIDDER, INC. AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------- ----------- ---------- ---------- ----------
ADDITIONS
---------------------
BALANCE AT CHARGED CHARGED
BEGINNING TO COSTS TO BALANCE
OF AND OTHER AT END
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
- ------------ ----------- --------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 26, 1993:
RESERVES AND ALLOWANCES
DEDUCTED FROM ASSET ACCOUNT:
ACCOUNTS RECEIVABLE
ALLOWANCES $ 14,450 $ 18,519 $ 18,415(1) $ 14,554
VALUATION ALLOWANCE FOR
DEFERRED TAXES 10,980 - 6,995(2) 3,985
------------ ---------- --------- -----------
$ 25,430 $ 18,519 $ 25,410 $ 18,539
YEAR ENDED DECEMBER 27, 1992:
RESERVES AND ALLOWANCES
DEDUCTED FROM ASSET ACCOUNT:
ACCOUNTS RECEIVABLE
ALLOWANCES $ 12,305 $ 22,093 $ 19,948(1) $ 14,450
VALUATION ALLOWANCE FOR
DEFERRED TAXES - 10,980 - 10,980
------------ ---------- ---------- --------
$ 12,305 $ 33,073 $ 19,948 $ 25,430
-113-
YEAR ENDED DECEMBER 29, 1991:
RESERVES AND ALLOWANCES
DEDUCTED FROM ASSET ACCOUNT:
ACCOUNTS RECEIVABLE
ALLOWANCES $ 11,747 $ 20,556 $ 19,998(1) $ 12,305
(1) Represents uncollectible accounts written-off, net of recoveries.
(2) Represents net reduction in valuation allowance which is determined to
be no longer required.
</TABLE>
<PAGE> SCHEDULE IX
<TABLE> ------------
<CAPTION>
SHORT-TERM BORROWINGS
KNIGHT-RIDDER, INC. AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ----------------------- --------- --------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
CATEGORY OF BALANCE WEIGHTED MAX. AMOUNT AVG. AMOUNT WEIGHTED AVG.
AGGREGATE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF INTEREST DURING DURING THE DURING
BORROWINGS PERIOD RATE THE PERIOD PERIOD (2) THE PERIOD (3)
- -------------- --------- --------- ------------ ------------ --------------
YEAR ENDED DECEMBER 26, 1993:
COMMERCIAL PAPER (1) $53,985 3.2% $154,700 $97,379 3.2%
-114-
YEAR ENDED DECEMBER 27, 1992:
COMMERCIAL PAPER $62,326 3.4% $124,800 $53,172 4.3%
YEAR ENDED DECEMBER 29, 1991:
COMMERCIAL PAPER $111,288 5.9% $419,455 $250,031 6.4%
(1) Commercial paper generally matures in 30 to 90 days from the date of issue with no provisions for the
extension of its maturity. The commercial paper is backed by $500 million of revolving credit agreements
which requires no principal payments until maturity on April 9, 1998. The instruments backing the commercial paper
are " long term" in that no principal repayments are required during the next 12 months. As such, approximately $54 million
of the commercial paper is classified as "non current" since the company intends to maintain total commercial paper of at
least this amount during the next 12 months.
(2) The average amount outstanding during the period was computed by dividing the total of daily outstanding
principal balances throughout the year by 364.
(3) The weighted average interest rate during the period was computed by dividing the actual interest expense
by average short-term commercial paper outstanding.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
-115-
SCHEDULE X
------------
SUPPLEMENTARY INCOME STATEMENT INFORMATION
KNIGHT-RIDDER, INC. AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS)
COLUMN A COLUMN B
- ----------- ---------------------------------------------
ITEM CHARGED TO COSTS AND EXPENSES
- ----- ---------------------------------------------
FOR THE YEARS ENDED
----------------------------------------------
DECEMBER 26 DECEMBER 27 DECEMBER 29
1993 1992 1991(1)
------------ ------------ ------------
<S> <C> <C> <C>
Maintenance and repairs $ 31,946 $29,359 $27,325
Royalties $112,459 $94,438 $84,964
Advertising costs $ 27,653 $26,700 $20,964
(1) Certain amounts have been reclassified to conform to 1993 presentation.
Amounts for depreciation and amortization of intangible assets, and taxes, other than payroll
and income taxes, are not presented as such amounts are less than 1% of total sales
and revenues.
</TABLE>
EXHIBIT 10
----------
GENERAL DESCRIPTION
1993 EXECUTIVE MBO PLAN (DESCRIPTION)
I. Program Overview
Following is an outline of the KRI Executive MBO Program.
-116-
A. Basic Performance Criteria
This incentive MBO program is related directly to:
1. The growth of operating profit for the corporation or for individual
operating units.
2. The meeting of budgeted profit levels.
3. The attainment of individual performance goals that will contribute to the
long-range strength of KRI.
B. Factors Affecting Design of the Program.
1. Survey Data - Annual compensation studies by Towers Perrin and by others
provide up-to-date data on compensation levels. From these studies,
reliable competitive averages (as well as maximums and minimums) on most
of our major positions are established.
2. KRI Position Within Our Industry - We wish to achieve a position such that
an average KRI executive's total compensation will be competitive with
compensation of executives at comparable companies. This positioning is
necessary to continue to attract and retain the type of executive we want.
3.Rewards Increase With Responsibility - In general, the practice in American
industry is for higher award opportunities at the top of the organization,
since these executives have greater influence on profitability and should
have more at risk.
C. Program Regulations
1. Effective Starting Date - January 1, 1993, for this revised program.
2. Maximum Limit - It is usual practice to establish a limit to the amount that
can be paid out in an executive award program in a given year. An
appropriate limiting formula for the Category I and II participants will be
one half of one percent of beginning shareholder equity.
-117-
3. Eligibility - Participants in the KRI Executive MBO Program are in three
basic categories as follows: (The Chairman/CEO, President and
Executive Vice President are excluded from the program. Awards, if any,
for incumbents in these three offices are at the sole discretion of
the KRI Compensation Committee.)
*Category I - Included as participants are all corporate officers, and
certain director - level corporate employees.
*Category II - Included are newspaper publishers and other unit operating
heads who report directly to corporate officers. The President of Ft.
Wayne News-Sentinel, the Chief of the Washington Bureau and the Editor
of KRTN are included in this category.
*Category III - Includes top editors, general managers and all
division directors. (Any employee in this category not currently in the
program joined the program on January 1, 1989. Exceptions may be
negotiated with the Division Presidents in cases of inequity).
*Category IV - Employees not included in Categories I,II or III of the MBO
program who hold positions of sufficient scope and organizational impact
to be deemed by senior management as appropriately included in the KRI
Executive MBO program.
D. Goals
Individual performance goals are an integral part of the KRI Executive
Compensation Program.
1. Each participant in this program is or will be committed to written, defined
goals in a number of fields such as: editorial product improvement,
customer service, increased readership and/or product usage,
circulation improvement, advertising share, personnel development and
training, pluralism, leadership, etc.
2. The individual performance goals are the manager's program of how the
operating unit will be improved. They are then reviewed,
adjusted and finally accepted as meaningful and attainable by the senior
officer to ensure that the goals have a valid corporate purpose. In this
way, these goals are established from the "bottom up" rather than
imposed by top management.
-118-
3. Goals should not number more than 6 to 8 objectives. Each goal will be
given a weight, based on its relative importance, on a
scale of 1 to 100. The combined weight of all the goals must equal 100.
At the end of each year an individual is evaluated on the
percentage of each goal accomplished, with the total yielding an
individual's performance factor.
II Award Calculations
The award will be determined by these factors:
A. The salary of the individual participant. See Appendix A.
B. Operating profit - This factor measures operating profit for the current
year against the previous year on a scale running from
90% to 115 %. This represents 25% of the award potential.
C. Budgeted performance - This factor measures operating profit performance
against budgeted performance on a scale running from 90%
to 105%. This represents the other 75% of award potential.
D. Individual performance - This factor measures the individual performance
against pre-established goals.
<PAGE>
<TABLE>
<CAPTION>
Appendix A
Table 1
Base Salary Bracket Salary Range Target Award
<C> <C> <C> <C> <C> <C> <C> <C>
VII 250,000 - UP 50%
VI 175,000 to 250,000 45%
V 125,000 to 174,999 40%
IV 100,000 to 124,999 35%
-119-
III 70,000 to 99,999 32.5%
II 50,000 tp 69,999 30%
I 30,000 to 49,999 25%
Table 2
Current Year Vs. $175,000 - $125,000 - $100,000 - $70,000 - $50,000 - up to
Previous Year $250+ $249,999 $174,999 $124,999 $99,999 $69,999 $50,000
Operating Profit VII VI V IV III II I
115.00 55.00 50.00 45.00 40.00 37.50 35.00 30.00
114.00 54.00 49.00 44.00 39.00 36.50 34.00 29.00
113.00 53.00 48.00 43.00 38.00 35.50 33.00 28.00
112.00 52.00 47.00 42.00 37.00 34.50 32.00 27.00
111.00 51.00 46.00 41.00 36.00 33.50 31.00 26.00
110.00 50.00 45.00 40.00 35.00 32.50 30.00 25.00
109.00 47.50 43.00 38.00 33.00 31.00 28.50 24.00
108.00 45.00 41.00 36.00 32.00 29.00 27.00 23.00
107.00 42.50 38.00 34.00 30.00 28.00 25.50 21.00
106.00 40.00 36.00 32.00 28.00 26.00 24.00 20.00
105.00 37.50 34.00 30.00 26.00 24.00 22.50 19.00
104.00 35.00 32.00 28.00 25.00 23.00 21.00 18.00
103.00 32.50 29.00 26.00 23.00 21.00 19.50 16.00
102.00 30.00 27.00 24.00 21.00 20.00 18.00 15.00
101.00 27.50 25.00 22.00 19.00 18.00 16.50 14.00
100.00 25.00 23.00 20.00 17.50 16.00 15.00 13.00
99.00 22.50 20.50 18.00 16.00 15.00 13.50 11.00
98.00 20.00 18.00 16.00 14.00 13.00 12.00 10.00
97.00 17.50 16.00 14.00 12.00 11.00 10.50 9.00
96.00 15.00 14.00 12.00 11.00 10.00 9.00 8.00
95.00 12.50 11.00 10.00 9.00 8.00 7.50 6.00
94.00 10.00 9.00 8.00 7.00 7.00 6.00 5.00
93.00 7.50 7.00 6.00 5.00 5.00 4.50 4.00
92.00 5.00 5.00 4.00 4.00 3.00 3.00 3.00
91.00 2.50 2.00 2.00 2.00 2.00 1.50 1.00
90.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
-120-
Table 3
Actual
Versus $175,000 - $125,000 - $100,000 $70,000 - $50,000 - up to
Budget $250+ $249,999 $174,999 $124,999 $99,999 $69,999 $50,000
Profit VII VI V IV III II I
105.00 55.00 50.00 45.00 40.00 37.50 35.00 30.00
104.00 54.00 49.00 44.00 39.00 36.50 34.00 29.00
103.00 53.00 48.00 43.00 38.00 35.50 33.00 28.00
102.00 52.00 47.00 42.00 37.00 34.50 32.00 27.00
101.00 51.00 46.00 41.00 36.00 33.50 31.00 26.00
100.00 50.00 45.00 40.00 35.00 32.50 30.00 25.00
99.00 45.00 40.50 36.00 31.50 29.00 27.00 22.50
98.00 40.00 36.00 32.00 28.00 26.00 24.00 20.00
97.00 35.00 31.50 28.00 24.50 23.00 21.00 17.50
96.00 30.00 27.00 24.00 21.00 19.50 18.00 15.00
95.00 25.00 22.50 20.00 17.50 16.00 15.00 12.50
94.00 20.00 18.00 16.00 14.00 13.00 12.00 10.00
93.00 15.00 13.50 12.00 10.50 10.00 9.00 7.50
92.00 10.00 9.00 8.00 7.00 6.50 6.00 5.00
91.00 5.00 4.50 4.00 3.50 3.00 3.00 2.50
90.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
EXHIBIT 10
KNIGHT-RIDDER, INC. ----------
EMPLOYEE STOCK OPTION PLAN
(As amended through May 13, 1993)
1. PURPOSE
The purpose of this Stock Option Plan (hereinafter referred to as the
"Plan") is to attract and retain key employees of Knight-Ridder, Inc.
(hereinafter referred to as the "Company") and its subsidiaries, by the grant
of options and stock appreciation rights.
"Subsidiaries" as used herein shall mean corporations (other than Knight-
Ridder, Inc.) or partnerships in an unbroken chain of corporations and/or
partnerships beginning with Knight-Ridder, Inc. if, at the time the granting
of the option or stock appreciation right, each of the corporations and
-121-
partnerships other than the last corporation or partnership in the unbroken
chain owns stock possessing 50% or more of the total combined voting power of
all classes of stock in a corporation in such chain or at least a 50%
partnership in such chain.
Except as provided in Paragraph 7, a "stock appreciation right" shall mean
the right of a holder thereof to receive from the Company, upon surrender of
the related option, an amount equal to (A) the excess of the fair market
value of a share of common stock on the date the stock appreciation right is
exercised over the option price provided for in the related option,
multiplied by (B) the number of shares with respect to which such stock
appreciation right shall have been exercised.
The term "fair market value" of a share of common stock as of any date
shall be the mean between the highest and lowest sales price of a share of
common stock on the date in question as reported on the composite tape for
issues listed on the New York Stock Exchange. If no transaction was reported
on the composite tape in the common stock on such date, the prices used shall
be the prices reported on the nearest day preceding the date in question. If
the common stock is not then listed or admitted to trading on such Exchange,
"fair market value" shall be the mean between the closing bid and asked
prices on the date in question as furnished by any member firm of the New
York Stock Exchange selected from time to time for that purpose by the
Compensation Committee.
2. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a committee as appointed from time to
time by the Board of Directors of the Company, which committee shall consist
of not less than three (3) members of such Board of Directors, all of whom
shall be disinterested persons. Said committee shall be called the
"Compensation Committee."
In administering the Plan, the Compensation Committee may adopt rules and
regulations for carrying out the Plan. The interpretation and decision with
regard to any question arising under the Plan made by the Committee shall,
unless overruled or modified by the Board of Directors of the Company, be
final and conclusive on all employees of the Company and its subsidiaries
participating or eligible to participate in the Plan.
A Committee member shall be a "disinterested person" only if such person
is not, at the time such person exercises discretion in administering the
Plan, eligible and has not at any time within one year prior thereto been
eligible for selection as a person to whom stock may be allocated or to whom
stock options or stock appreciation rights may be granted pursuant to the
Plan or any other plan of the Company or any of its affiliates entitling the
-122-
participants therein to acquire stock, stock options or stock appreciation
rights of the Company or any of its affiliates.
3. STOCK
The stock which may be issued and sold pursuant to the exercise of options
or stock appreciation rights granted under the Plan may be authorized and
unissued common stock or shares of common stock reacquired by the Company and
held in treasury of a total number not exceeding 16,100,000 shares.
The shares deliverable under the Plan shall be fully paid and non-
assessable shares. Any shares, in respect of which an option is granted
under the Plan which shall have for any reason expired or terminated, may be
again allotted under the Plan. Any shares covered by options which have been
canceled by reason of the exercise of related stock appreciation rights as
provided in the immediately following paragraph or which are used to exercise
other options or to satisfy tax withholding obligations shall not be
available for other options under the Plan.
The exercise of options with respect to which stock appreciation rights
shall have been granted shall cause a corresponding cancellation of such
stock appreciation rights, and the exercise of stock appreciation rights
issued in respect of options shall cause a corresponding cancellation of such
options.
Each option and stock appreciation right granted under the Plan shall be
subject to the requirement and condition that if the Board of Directors shall
determine that the listing, registration or qualification upon any Securities
Exchange under any state or federal law, or the approval or consent of any
governmental body is necessary or desirable as a condition of granting such
option or stock appreciation right, or the issue or purchase of any shares
thereunder, then no such option or stock appreciation right may be exercised
in whole or in part unless or until such listing, registration, qualification
or approval has been obtained, free of any conditions which are not
acceptable to the Board of Directors of the Company.
4. ELIGIBILITY
Options and stock appreciation rights will be granted only to persons who
are employees of the Company and its subsidiaries (including officers and
directors except for persons acting as directors only). The Compensation
Committee of the Board of Directors of the Company shall determine in its
sole discretion the employees to be granted options, the number of shares
subject to each option, the employees to be granted stock appreciation rights
and the options with respect to which such stock appreciation rights shall be
granted.
-123-
5. PRICE
The purchase price under each option shall be determined by the
Compensation Committee subject to approval by the Board of Directors of the
Company, but such price shall not be less than one hundred percent (100%) of
the fair market value of the stock at the time such option is granted.
6. THE PERIOD OF THE OPTION AND THE EXERCISE OF THE SAME
Each option granted under the Plan shall expire no later than ten (10)
years from the date such option is granted, but the Compensation Committee
may prescribe a shorter period for any individual option or options.
The shares subject to the option may be purchased from time to time during
the option period, subject to any waiting period or vesting schedule the
Compensation Committee may specify for any individual option or options. In
order to exercise the option or any part thereof, the employee shall give
notice in writing to the Company of his intention to purchase all or part of
the shares subject to the option, and in said notice he shall set forth the
number of shares as to which he desires to exercise such option, and shall
pay for such shares at the time of exercise of such option. Such payment may
be made in cash, through the delivery to the Company of shares of common
stock of the Company with a value equal to the total option price, or through
a combination of cash and shares, and any shares so delivered shall be valued
at their fair market value on the date on which the option is exercised.
Such payment may also be made through the delivery to the Company of all or
part of the shares of common stock of the Company that are the subject of the
option; provided that such option is not an incentive stock option, and such
employee instructs Manufacturers Hanover Trust Company ("MHTC") to effect on
the date of such exercise or as early as practicable thereafter the sale of
such number of such shares "at the market" in a broker's transaction (within
the meaning of Section 4(4) of the Securities Act of 1933, as amended), the
proceeds of which shall be at least equal to the purchase price of such
option, plus the amount of income tax required to be withheld by the Company
plus transaction costs. In accordance with these instructions MHTC shall
sell such shares, deliver to the Company the portion of the proceeds of such
sale which equals the purchase price of such option plus the amount of income
tax required to be withheld by the Company and remit the remaining sale
proceeds (net of transaction costs) to such employee.
Said employee shall set forth in said notice, if in the opinion of Counsel
for the Company it is necessary or desirable, that it is his present
intention to acquire said shares being purchased for investment and not with
a view to, or for sale in connection with, any distribution thereof. Except
-124-
as specified in Paragraph 10 below, no option may be exercised except by the
Optionee personally while he is in the employ of the Company or its
subsidiaries and shall have been so employed continuously since the granting
of his option.
No Optionee or his legal representative, legatees or distributees, as the
case may be, shall be or have any of the rights and privileges of a
shareholder of the Company by reason of such option unless and until
certificates for shares are issued to him under the terms of the Plan.
7. THE PERIOD OF THE STOCK APPRECIATION RIGHT AND THE EXERCISE OF THE SAME
A stock appreciation right granted under the Plan shall be exercisable
during the period commencing on a date specified by the Compensation
Committee and ending on the date on which the related option expires unless
such option is earlier canceled or terminated, provided that such right may
be exercised by an officer (as that term is defined in the Securities
Exchange Act of 1934), a director or a beneficial owner of more than 10% of
any class of the Company's equity securities only during any period beginning
on the third business day following the release of a quarterly or annual
summary statement of the Company's sales and earnings and ending on the
twelfth business day following such date (a "ten-day window period").
Notwithstanding the preceding sentence, the Compensation Committee may
provide for the grant of a stock appreciation right the exercise of which may
occur outside of a ten-day window period but shall be limited to a sixty-day
period following certain events specified by the Compensation Committee in
the grant of such stock appreciation right. Moreover, notwithstanding the
third subparagraph of Paragraph 1 above, the Compensation Committee may
provide that such stock appreciation right shall be payable only in cash and
that, in addition to payment of the amount otherwise due upon exercise of
such stock appreciation right, the holder thereof shall receive (unless such
stock appreciation right is in tandem with an incentive stock option, as
defined in Section 422A(b) of the Internal Revenue Code of 1986, as amended),
an amount equal to the excess of the highest price paid for a share of common
stock in the open market or otherwise over the sixty-day period prior to
exercise over the fair market value of a share of common stock on the date
the stock appreciation right is exercised.
In order to exercise the stock appreciation right or any part thereof, the
employee shall give notice in writing to the Company of the intention to
exercise such right, and in said notice the employee shall set forth the
number of shares as to which such employee desires to exercise the stock
-125-
appreciation right, provided that such right may not be exercised with
respect to a number of shares in excess of the number for which such option
could then be exercised.
Except as specified in Paragraph 10 below, no stock appreciation right may
be exercised except by the holder thereof personally while such holder is in
the employ of the Company or its subsidiaries and shall have been so employed
continuously since the granting of the stock appreciation right.
No holder of a stock appreciation right or such holder's legal
representatives, legatees or distributees, as the case may be, shall be or
have any of the rights and privileges of a shareholder of the Company by
reason of such stock appreciation right unless and until certificates for
such shares are issued to such holder under the terms of the Plan.
8. NON-TRANSFERABILITY OF OPTION AND STOCK APPRECIATION RIGHT
No option or stock appreciation right granted under the Plan to an employee
shall be transferred by him otherwise than by Will or by the laws of Descent
and Distribution, and such option or stock appreciation right shall be
exercisable during his lifetime only by him.
9. TERMINATION OF EMPLOYMENT
If an Optionee shall cease to be employed by the Company or one of its
subsidiaries, as the case may be, for any reason other than death, disability
or retirement pursuant to a retirement plan of the Company or one of its sub-
sidiaries, any option and any stock appreciation right theretofore granted to
him which has not been exercised shall forthwith cease and terminate.
However, the Compensation Committee of the Board of Directors may provide in
the grant of any option or stock appreciation right or in an amendment of
such grant that in the event of any such termination of employment (except
termination for cause by the Company or one of its subsidiaries), any option
and any stock appreciation right theretofore granted to him which has not
been exercised shall be exercisable only within three months after his
termination, but in no event after the expiration of the stated term of said
option or any such stock appreciation right. The Company or any of its
subsidiaries shall have "cause" to terminate the Optionee's employment only
on the basis of the Optionee's having been guilty of fraud, misappropriation,
embezzlement or any other act or acts of dishonesty constituting a felony and
resulting or intended to result directly or indirectly in a substantial gain
or personal enrichment to the Optionee at the expense of the Company or any
of its subsidiaries. Notwithstanding the foregoing, the Optionee shall not
be deemed to have been terminated for cause unless and until there shall have
been delivered to the Optionee a copy of a resolution (i) duly adopted by
three-quarters (3/4) of the entire membership of the Compensation Committee
-126-
of the Board of Directors, or of the Board of directors of the Company, at a
meeting called and held for such purpose after reasonable notice to the
Optionee and an opportunity for the Optionee, together with the Optionee's
counsel, to be heard before such Committee or the Board of Directors of the
Company, as the case may be, and (ii) finding that in the good faith opinion
of such Committee or the Board of Directors of the Company, as the case may
be, the Optionee was guilty of conduct described in the preceding sentence of
this paragraph and specifying the particulars of such conduct in detail.
10. RETIREMENT OR DEATH OF OPTIONEE OR HOLDER OF STOCK APPRECIATION RIGHT
In the event of the retirement of an Optionee pursuant to a retirement plan
of the Company or one of its subsidiaries, as the case may be, the option and
any stock appreciation right heretofore granted to him shall be exercisable
during such period of time, not to exceed one (1) year after the date of such
retirement with respect to incentive stock options, as defined in Section
422A(b) of the Internal Revenue Code of 1986, as amended, and not to exceed
three (3) years after the date of such retirement with respect to all other
stock options and stock appreciation rights, as the Compensation Committee
shall specify in the option grant either at the time of grant or by
amendment, but in no event after the expiration of the term of said option or
any such stock appreciation right.
In the event of the disability or death of an Optionee while in the employ
of the Company or one of its subsidiaries, or during the post employment
period referred to in the immediately preceding paragraph, the option hereto-
fore granted to him shall be exercisable any time prior to the expiration of
six (6) months after the date of such disability or death but in no event
after the expiration of the term of said option.
In the event of the disability or death of the holder of a stock
appreciation right while in the employ of the Company or one of its
subsidiaries, or during the post employment period referred to in the first
paragraph of this Section 10, the stock appreciation right heretofore granted
to him shall be exercisable any time prior to six (6) months after the date
of such disability or death, but in no event after the expiration of the term
of such stock appreciation right.
Such option or stock appreciation right may only be exercised by the
personal representative of such decedent or by the person or persons to whom
such employee's rights under the option or stock appreciation right shall
pass by such employee's Will or by the laws of Descent and Distribution of
the state of such employee's domicile at the time of death, and then only as
and to the extent that such employee was entitled to exercise the option or
stock appreciation right on the date of death.
-127-
11. WRITTEN AGREEMENT
Within a reasonable time after the date of grant of an option, an option
and stock appreciation right or a stock appreciation right related to a
previously granted option, a written agreement in a form approved by the
Compensation Committee shall be duly executed and delivered to the Optionee.
12. ADJUSTMENT BY REASON OF RECAPITALIZATION, STOCK SPLITS STOCK DIVIDENDS,
ETC.
If, after the effective date of this Plan, there shall be any changes in
the common stock structure of the Company by reason of the declaration of
stock dividends, recapitalization resulting in stock split-ups, or combina-
tions or exchanges of shares by reason of merger, consolidation, or by any
other means, then the number of shares available for options and stock
appreciation rights, the shares subject to any options and the number of
shares available for and subject to stock appreciation rights shall be
equitably and appropriately adjusted by the Board of Directors of the Company
as in its sole and uncontrolled discretion shall seem just and reasonable in
the light of all the circumstances pertaining thereto.
13. RIGHT TO TERMINATE EMPLOYMENT
The plan shall not confer upon any employee any right with respect to being
continued in the employ of the Company and its subsidiaries or interfere in
any way with the right of the Company and its subsidiaries to terminate his
employment at any time, nor shall it interfere in any way with the employee's
right to terminate his employment.
14. WITHHOLDING AND OTHER TAXES
The Company or one of its subsidiaries shall have the right to withhold
from salary or otherwise or to cause an Optionee (or the executor or
administrator of his estate or his distributee) to make payment of any
Federal, State, local or foreign taxes required to be withheld with respect
to any exercise of a stock option or a stock appreciation right. An Optionee
may irrevocably elect to have the withholding tax obligation or, if the
Compensation Committee so determines, any additional tax obligation with
respect to any exercise of a stock option satisfied by (a) having the Company
or one of its subsidiaries withhold shares otherwise deliverable to the
Optionee with respect to the exercise of the stock option, or (b) delivering
back to the Company shares received upon the exercise of the stock option or
delivering other shares of common stock; that any such election shall be made
either (i) during a "ten-day window period", or (ii) at least six months
prior to the date income is recognized with respect to the exercise of a
stock option.
-128-
15. AMENDMENT TO THE PLAN
The Board of Directors shall have the right to amend, suspend or terminate
the Plan at any time; provided, however, that no such action shall affect or
in any way impair the rights of the holder of any option or stock
appreciation right theretofore granted under the Plan; and provided further,
that unless first duly approved by the common shareholders of the Company
entitled to vote thereon at a meeting (which may be the annual meeting) duly
called and held for such purpose, no amendment or change shall be made in the
Plan (a) increasing the total number of shares which may be purchased or
transferred upon exercise of options or stock appreciation rights under the
Plan by all employees; (b) changing the minimum purchase price hereinbefore
specified for the optioned shares; (c) changing the maximum option period;
(d) increasing the amount that may be received upon exercise of a stock
appreciation right; or (e) allowing a stock appreciation right to be
exercised after the expiration date of the related option.
16. EFFECTIVE DATE OF THE PLAN
The Plan shall be effective as of February 24, 1971.
17. SAVINGS CLAUSE
Nothing included in this Plan by amendment shall revoke or alter the terms
and provisions of the Plan as in effect prior to such amendment with respect
to options granted under the Plan prior thereto.
EXHIBIT 10
----------
DIRECTOR'S PENSION PLAN
Plan Provisions
Effective Date
January 1, 1994
Normal Retirement Date
The first of the month following attainment of Age 65
Normal Annual Pension
100% of annual retainer fee (currently $26,000 per year)
-129-
Termination Benefits
After vesting an annuity payable for life starting at the later of age 65 or
termination from the Board.
Death Benefits
None
Preretirement Spouse's Death Benefits
None
Postretirement Spouse's Death Benefit
None
Disability Pension
50% of the Normal Annual Pension payable after 2 years of Credited Service.
Increases by 10% per year for years of Credited Service over 5 years
until it is 100% of the Normal Annual Pension. Credited Service does not
accrue while on Disability.
Early Retirement Benefit
An unreduced accrued benefit is available upon attainment of age 65 and 5 years
of Credited Service.
Eligibility
All Outside Members of the Board of Directors. An Outside Member is a board
member who has never been employed by the Company or an affiliate of the
Company.
Credited Service
One year of Credited Service is granted for each calender year in which a
Board member is on the Board for at least four months and attends at least
one Board Meeting.
-130-
Benefit Accrual
10% of the Normal Retirement Benefit for each year of Credited Service. A
maximum of 100% after 10 years.
Vesting
Vesting Service equals Credited Service. Benefits vest after 5 years of
Vesting Service.
Contributions
None
Forms of Payment
Life Annuity only
EXHIBIT 10
----------
EXECUTIVE OFFICER'S RETIREMENT AGREEMENT
July 19, 1993
Robert F. Singleton
8496 Old Cutler Road
Coral Gables, FL. 33143
Dear Bob:
This letter describes the conditions of your retirement agreement with
Knight-Ridder, Inc.
1. Your current job, compensation and benefit arrangements will
continue through September 30, 1993.
2. On September 30, 1993 you will retire as an officer and as a
member of the Board Of Directors of Knight-Ridder, Inc.
-131-
3. Upon retirement, you will be paid for any accrued, but unused
vacation time. You will also be paid a prorated bonus for 1993, based on the
potential bonus, if any, you would have received had you not retired until
the end of 1993. This bonus will be calculated on the basis of projected
1993 KRI performance computed on the basis of nine months actual, plus three
months budget.
4. For a one-year period beginning October 1, 1993, you will serve
as a consultant to the company, reporting to me, at an annual fee of $50,000.
You will be available to Ross Jones the new CFO, and other officers of the
company. You will continue to represent Knight-Ridder on the TKR Cable,
TCI/TKR LP and Southeast Paper Manufacturing Company Management Committees
during the period you serve Knight-Ridder as a consultant.
5. Effective October 1, 1993, you will receive an annual pension of
$200,000 in the form of a 66 2/3% joint and survivor annuity (66 2/3% CA
Option), comprising the following elements:
SENN Plan $ 88,082
BRP Plan 41,105
Special Retirement Agreement 70,813
--------
Total Annual Benefit $200,000
========
6 Upon your retirement, you and your dependents will be covered
under the Knight-Ridder medical and dental plans for retirees. Because you
originally intended to retire under the medical plan for retirees that was
effective prior to January 1, 1993, upon your retirement, you will be paid a
one-time bonus of $86,806 representing the difference in present value costs
to you of continuing coverage for you and your dependents under the new plan
versus the old plan.
7. All normal travel and out-of pocket expenses incurred in carrying
out your assignments for the company during the period October 1, 1993
through September 30, 1994, will be paid for by the company upon submission
of expenses.
8. Outside directorships not in conflict with Knight-Ridder, Inc.
will be cleared with me.
-132-
9. You may retain your personal computer and have free access to
Dialog, Moneycenter and other agreed-upon KRI electronic services until March
20, 1995.
Accepted by: Knight-Ridder, Inc.
Robert F. Singleton James K. Batten
- ----------------------- ---------------------
Robert F. Singleton James K. Batten
Date: July 19, 1993 Date: July 19, 1993
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11
-----------
COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Year Ended
------------------------------------
Dec. 26 Dec. 27 Dec. 29
1993 1992 1991
-------- -------- -------
<S> <C> <C> <C>
PRIMARY
- -------
Average shares outstanding 54,851 54,474 51,293
Net effect of dilutive
stock options-based on the
Treasury Stock method using
the average market price 481 704 504
-------- -------- --------
TOTAL 55,332 55,178 51,797
======== ======== ========
Income before cumulative effect of
changes in accounting principles $148,089 $146,086 $132,068
-133-
Cumulative effect of changes in
accounting principles
Income taxes 25,800
Postretirement benefits other than pensions (131,000)
-------- -------- --------
Net Income $148,089 $ 40,886 $132,068
======== ======== ========
Earnings per common and common equivalent share
Income before cumulative effect of
changes in accounting principles $ 2.68 $ 2.65 $ 2.55
Cumulative effect of changes in
accounting principles (1.91)
-------- -------- --------
Net Income $ 2.68 $ 0.74 $ 2.55
======== ======== ========
FULLY DILUTED
- -------------
Average shares outstanding 54,851 54,474 51,293
Net effect of dilutive
stock options-based on the
Treasury Stock method using
the higher of quarter-end or
average market price 511 806 574
-------- -------- --------
TOTAL 55,362 55,280 51,867
======== ======== ========
Income before cumulative effect of
changes in accounting principles $148,089 $146,086 $132,068
Cumulative effect of changes in
accounting principles
Income taxes 25,800
Postretirement benefits other than pensions (131,000)
-------- -------- --------
Net Income $148,089 $40,886 $132,068
======== ======== ========
-134-
Earnings per common and common equivalent share
Income before cumulative effect of
changes in accounting principles $ 2.67 $ 2.64 $ 2.55
Cumulative effect of changes in
accounting principles (1.90)
-------- -------- -------
Net Income $ 2.67 $ 0.74 $ 2.55
======== ======== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 12
-----------
COMPUTATION OF EARNINGS TO FIXED CHARGES RATIO
FROM CONTINUING OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT RATIO DATA)
YEAR ENDED
------------------------------------------------------------------
December 26 December 27 December 29 December 30 December 31
1993 1992 1991 1990 1989
----------- ------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
FIXED CHARGES COMPUTATION
- ---------------------------
INTEREST EXPENSE:
NET INTEREST EXPENSE $ 44,992 $ 37,629 $ 46,701 $ 61,672 $ 81,093
PLUS CAPITALIZED INTEREST 120 14,746 22,142 10,131 3,529
----------- ------------ ----------- ----------- ----------
GROSS INTEREST EXPENSE 45,112 52,375 68,843 71,803 84,622
PROPORTIONATE SHARE OF INTEREST
EXPENSE OF 50% OWNED PERSONS 13,608 15,546 15,296 17,599 18,879
-135-
INTEREST COMPONENT OF
RENT EXPENSE 9,888 9,826 9,698 9,939 9,218
----------- ------------ ----------- ----------- ---------
TOTAL FIXED CHARGES $ 68,608 $ 77,747 $ 93,837 $ 99,341 $ 112,719
=========== ============ =========== =========== =========
EARNINGS COMPUTATION
- ---------------------
PRETAX EARNINGS $ 243,401 $ 239,715 $ 210,370 $ 245,942 $ 294,753
ADD: FIXED CHARGES 68,608 77,747 93,837 99,341 112,719
LESS CAPITALIZED INTEREST (120) (14,746) (22,142) (10,131) (3,529)
LESS: DISTRIBUTIONS IN EXCESS
OF (LESS THAN)
EARNINGS OF INVESTEES (4,226) (1,216) (6,330) (1,000) (641)
----------- ----------- ----------- ----------- -----------
TOTAL EARNINGS AS ADJUSTED $ 307,663 $ 301,500 $ 275,735 $ 334,152 $ 403,302
=========== ========== =========== =========== ===========
RATIO OF EARNINGS
TO FIXED CHARGES 4.5:1 3.9:1 2.9:1 3.4:1 3.6:1
=========== =========== =========== =========== ==========
</TABLE>
EXECUTIVE OFFICER'S CONSULTING/RETIREMENT AGREEMENT
EXHIBIT 19
----------
September 20, 1989
Mr. Alvah H. Chapman, Jr.
4255 Lake Road
Miami, Florida 33137
Dear Alvah:
This letter sets forth our agreement with respect to your services to
Knight-Ridder following your retirement as an officer and employee of the
Company on October 1st.
-136-
You have agreed to continue to serve as a Director of the Company and as
Chairman of its Executive Committee. I am also pleased that you have agreed
to serve as a consultant to the company for the 12 months beginning October
1, 1989 and, thereafter, for such period as you, the Compensation Committee
and I may agree.
In consideration of your services as Chairman of the Executive Committee
and as a consultant, the Company will pay you $150,000 annually. This agree-
ment extends from October 1, 1989 through September 30, 1994*. And as
customary, you will be compensated as an outside director, including meeting
fees for the Board and Board Committees (including the Executive Committee
of the Company).
We have calculated that you will be entitled to an aggregate annual
pension benefit under the Knight-Ridder Retirement and Benefit Restoration
Plans of $328,670. In addition, in recognition of your contribution to the
Company and your future services to it, the Company has agreed to pay you an
additional retirement benefit of $100,000 per year for your life, in equal
monthly installments.
Although I hope to be able to take full advantage of your broad range of
experience and knowledge of the Company, it is understood between us that we
will make only reasonable demands upon your time and will seek to schedule
our requests for your counsel so as to accommodate your schedule of other
activities in retirement.
The specific matters on which we will need your help necessarily will
change from time to time. I anticipate that you and I will talk at least
quarterly about your then current list of consultative duties. At the outset
we look forward to your continued participation in (a) our Detroit JOA
undertaking and I hope you will be willing to serve on the DNA Management
Committee for at least a year following implementation; (b) our ongoing
shareholder relations projects (with particular attention to the founding
families); and (c) the Miami property development project. I know that there
will be a number of other key issues where your counsel will be invaluable.
Our consulting relationship will preclude you from accepting consulting
assignments and from other companies and from other profit-making activities,
provided your other assignments and activities do not constitute a conflict
of interest with Knight- Ridder.
-137-
The Company will reimburse you, in accordance with its usual policies and
procedures, for your travel and other out of pocket expenses incurred in
connection with your Knight-Ridder consulting activities, your attending ANPA
and other industry meetings as long as you are a Knight- Ridder director, and
your activities as Chairman of the FIU Foundation, Vice Chairman of The Miami
Coalition, and other civic activities which are of benefit to KRI over the
next several years.
In accordance with our historical practice, we will provide you as a
former CEO of the Company with an office and a secretary as long as you want
them.
I am happy we will continue to work together. If I have accurately
summarized our understanding, I'd appreciate your signing and returning the
enclosed copy of this letter to me for the Company's files.
Sincerely yours,
Knight- Ridder, Inc.
By: James K. Batten
-----------------
J.K. Batten
President & CEO
Agreed:
Alvah H. Chapman Jr.
- --------------------
Alvah H. Chapman, Jr.
(*The initial agreement was for one year and has been renewed annually through
September 30, 1994).
-138-
EXECUTIVE OFFICER'S RETIREMENT AGREEMENT EXHIBIT 19
(John C. Fontaine) ----------
AGREEMENT
THIS AGREEMENT made and entered into as of the 1st day of January, 1992, by
and between John C. Fontaine (hereinafter referred to as "Mr. Fontaine") and
Knight-Ridder, Inc. (hereinafter referred to as "KRI") WITNESSETH THAT:
WHEREAS Mr. Fontaine will work approximately nine-tenths (90%) of his time
for KRI, commencing January 1, 1992; and,
WHEREAS KRI desires to provide Mr. Fontaine with an adequate pension benefit
for his services;
1. KRI will pay to Mr. Fontaine an amount, payable in monthly installments,
under this Agreement which, together with benefits earned under the
Retirement Plan for Employees of Knight-Ridder, Inc. Corporate Division
(the "Plan") will equal $135,000 annually if Mr. Fontaine retires at age
62 or $200,000 annually if Mr. Fontaine retires at age 65. These amounts
are given on a life-only basis; they may be converted to any of the
optional forms of benefit available under the Plan using the same
conversion factors which would apply under the Plan.
2. In the event that the employment relationship ends prior to attainment of
age 62 by Mr. Fontaine other than (a) by reason of Mr. Fontaine's death or
disability or (b) following a change in the control of the company, a
pension benefit commencing at age 65 will be payable. The amount of the
benefit will be calculated by multiplying $200,000 by the ratio of years
and completed months of service since August 1, 1987 to 9 years 3 months.
In the event of retirement at or after age 62, a pension determined in the
same manner will be payable commencing immediately (except that the
benefit payable at age 62 will be $135,000). See Exhibits I and II.
Amounts payable under optional payment forms are shown in Exhibit III.
3. In the event Mr. Fontaine's employment terminates by reason of his
disability or following a change in the control of the company, he will be
100% vested immediately in the benefits provided under paragraph 2 above
for retirement at age 65. In the event of Mr. Fontaine's death while
-139-
employed by KRI, there shall be paid to his surviving spouse for her life
50% of the amount which would otherwise be payable to him under this
paragraph in the event of his disability; no beneficiary other than his
surviving spouse shall be entitled to any death benefit under this
Agreement. Benefit payments under this paragraph will commence on the
first of the month following the occurrence of any of the above-mentioned
circumstances. For purposes of this Agreement:
(a)
a "change in the control of the company" will be deemed to have occurred
if the company is a party to a merger in which it is not the surviving
entity or pursuant to which the company's common stock is converted into
other property or securities; or upon the approval of the liquidation or
dissolution of the company; or upon the sale of all or substantially all
the company's assets; or upon the acquisition by any person or group of
35% of the company's outstanding stock; or upon a change within any 13-
month period in the composition of a majority of the company's Board of
Directors; and
(b)
"disability" shall mean a physical or mental condition which prevents Mr.
Fontaine from fully performing the duties of Senior Vice President and
General Counsel as agreed to by him and the company for a period of 90
consecutive days.
4. This Agreement does not give Mr. Fontaine the right to be retained in
the employ of KRI. Effective January 1, 1992, this Agreement
supersedes the agreement between Mr. Fontaine and KRI concerning
pension benefits dated October 16, 1989.
5. This Agreement does not give Mr. Fontaine other rights or benefits
provided under the Plan except as set forth in paragraphs 1, 2 and 3
above.
6. Neither this Agreement nor any benefits that may be payable under this
Agreement are assignable by Mr. Fontaine. None of Mr. Fontaine's rights
under this Agreement shall be subject to any encumbrance or to the claims
of his creditors.
7. This Agreement shall be governed and construed in accordance with the laws
of the State of Florida.
-140-
8. Nothing contained in this Agreement shall be deemed to require KRI to make
any payment to Mr. Fontaine or to any other person contrary to applicable
law.
9. IN WITNESS WHEREOF, the parties hereto have hereunto set their hands to
duplicates this 19th day of December, 1991.
JOHN C. FONTAINE
John C. Fontaine
----------------
KNIGHT-RIDDER, INC.
By James K. Batten
------------------
James K. Batten
Chairman & CEO
<PAGE>
<TABLE>
<CAPTION>
Exhibit I
Illustration of Benefits Payable Upon Termination
<C> <C> <C> <C> <C> <C>
Accr.
Annl
Bft.
Service Attained Termination Service Date of Payable
Duration Age On at Age of First Pmt. Month
4.917 60 8/12 6/30/92 9.25 11/1/96 106,313
5.917 61 8/12 6/30/93 9.25 11/1/96 127,935
Exhibit II
-141-
Illustration of Benefits Upon Retirement at Age 62 Through 65
Accr.
Annl
Bft.
Service Attained Termination Service Payable
Duration Age On at Age of Month
6.25 62 0/12 11/1/93 9.25 135,000
6.917 62 8/12 07/1/94 9.25 149,557
7.917 63 8/12 07/1/95 9.25 171,178
8.917 64 8/12 07/1/96 9.25 192,800
9.25 65 0/12 11/1/96 9.25 200,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit III
Illustration of Benefits Available Upon Termination or Retirement at
Service Durations 4-9
Service Date of Date of Pensioner: SLA (1) 100% CA(2) 50% CA(2) 10 C&C(3)
Duration Retirement 1st Pmt. Spouse:
<C> <C> <C> <C> <C> <C> <C> <C>
6.25 10/31/93 11/1/93 135,000 113,130 123,120 125,955
6.917 06/30/94 07/1/94 149,557 124,731 135,947 138,938
7.917 06/30/95 07/1/95 171,178 141,735 155,087 157,655
8.917 06/30/96 07/1/96 192,800 158,482 173,906 176,219
9.25 10/31/96 11/1/96 200,000 164,200 180,400 182,200
</TABLE>
Exhibit 22
SUBSIDIARIES OF THE REGISTRANT ----------
State/Country of
Incorporation
---------------
KNIGHT-RIDDER, INC.
Aberdeen News Company Delaware
The Beacon Journal Publishing Company Ohio
-142-
Boca Raton News, Inc. Florida
Boulder Publishing, Inc. Colorado
The Bradenton Herald, Inc. Florida
Circom Corporation Pennsylvania
Detroit Free Press, Incorporated Michigan
Detroit Newspaper Agency Michigan(partnership)
Drinnon, Inc. Georgia
Grand Forks Herald, Incorporated Delaware
Journal of Commerce, Inc. Delaware
Keynoter Publishing Company, Inc. Florida
KR Newsprint Company Florida
Southeast Paper Manufacturing Co. Georgia (partnership)
Knight News Services, Inc. Michigan
Knight-Ridder Tribune News Services District of Columbia
(partnership)
The Knight Publishing Co. Delaware
Knight-Ridder Business Information Services, Inc. Delaware
Knight-Ridder Financial, Inc. Delaware
Commodity News Services (International), Inc. Delaware
Knight-Ridder Financial Holding AEA Company, Inc. Delaware
Knight-Ridder Financial AEA, Inc. Delaware
Knight-Ridder Financial JM, Inc. Delaware
Knight-Ridder Financial Japan, Inc. Delaware
Knight-Ridder Financial Iberica, S.A. Spain
Equinet Pty Ltd. Australia
Equinet Information (NZ), Ltd. New Zealand
Dialog Information Services, Inc. California
Dialog Information Europe, Inc. California
D-S Marketing UK, Ltd. United Kingdom
D-S Marketing, Inc. Pennsylvania
D-S Marketing, SARL France
D-S Marketing, GMBH Germany
Radio-Suisse Marketing AB Sweden
Knight-Ridder Nova AG Switzerland
Radio-Suisse Ltd. Switzerland
Knight-Ridder Cablevision, Inc. Florida
KRC Sub, Inc. Delaware
SCI Cable Partners Colorado
(partnership)
TKR Cable Company Colorado
(partnership)
-143-
Knight-Ridder Investment Company Delaware
Seattle Times Company Delaware
KR Video, Inc. Delaware
Lexington Herald-Leader Co. Kentucky
The Macon Telegraph Publishing Company Georgia
The Miami Herald Publishing Company -
News Publishing Company Indiana
Fort Wayne Newspapers, Inc. Indiana
Fort Wayne Newspaper Agency Indiana
(partnership)
Newspapers First Delaware
Nittany Printing and Publishing Company Pennsylvania
Northwest Publications, Inc. Delaware
Duluth News-Tribune -
Saint Paul Pioneer Press -
The Observer Transportation Company North Carolina
Philadelphia Newspapers, Inc. Pennsylvania
Portage Graphics Co. Ohio
Post-Tribune Publishing, Inc. Indiana
PressLink Corporation Delaware
The R.W. Page Corporation Georgia
Ridder Publications, Inc. Delaware
KR Land Holding Corporation Delaware
San Jose Mercury News, Inc. California
Silicon Valley D.A.T.A., Inc. California
The State-Record Holding Company Delaware
The State-Record Company, Inc. South Carolina
Gulf Publishing Company, Inc. Mississippi
Newberry Publishing Company, Inc. South Carolina
Sun Publishing Company, Inc. South Carolina
Tallahassee Democrat, Inc. Florida
Tribune Newsprint Company Utah
Ponderay Newsprint Company Washington
(partnership)
Twin Cities Newspaper Service, Inc. Minnesota
Twin Coast Newspapers, Inc. New York
Long Beach Press-Telegram -
P.T. Sales and Marketing, Inc. California
VU/TEXT Information Services, Inc. Florida
Wichita Eagle and Beacon Publishing Company, Inc. Kansas
-144-
Exhibit 24
----------
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in Registration Statement No.
33-11021 on Form S-3 dated December 22, 1986, in Registration Statement
No. 33-28010 on Form S-3 dated April 7, 1989, in Registration Statement
No. 33-31747 on Form S-8 dated October 30, 1989 and in Registration
Statement No. 33-69206 on Form S-8 dated May 18, 1993, and in the related
Prospectuses of our report dated February 1, 1994, with respect to the
consolidated financial statements and schedules of Knight-Ridder, Inc.
included in this Annual Report (Form 10-K) for the year ended December 26,
1993.
ERNST & YOUNG
March 22, 1994
-145-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Gonzalo F. Valdes- Fauli Date: March 22, 1994
- ---------------------------- --------------------
Gonzalo F. Valdes-Fauli
-146-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Bernard H. Ridder, Jr. Date: March 22, 1994
- --------------------------- --------------------
Bernard H. Ridder, Jr.
-147-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Barbara Barnes Hauptfuhrer Date: March 22, 1994
- ------------------------------- --------------------
Barbara Barnes Hauptfuhrer
-148-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Alvah H. Chapman, Jr. Date: March 22, 1994
- ------------------------ --------------------
Alvah H. Chapman, Jr.
-149-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Peter C. Goldmark, Jr. Date: March 22, 1994
- ------------------------- --------------------
Peter C. Goldmark, Jr.
-150-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
William S. Lee Date: March 22, 1994
- ------------------ --------------------
William S. Lee
-151-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
John L. Weinberg Date: March 22, 1994
- -------------------- --------------------
John L. Weinberg
-152-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Ben R. Morris Date: March 22, 1994
- ----------------- --------------------
Ben R. Morris
-153-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Eric Ridder Date: March 22, 1994
- --------------- --------------------
Eric Ridder
-154-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
James K. Batten Date: March 22, 1994
- ------------------- --------------------
James K. Batten
-155-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Joan Ridder Challinor Date: March 22, 1994
- ------------------------- --------------------
Joan Ridder Challinor
-156-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Jesse Hill, Jr. Date: March 22, 1993
- ------------------- --------------------
Jesse Hill, Jr.
-157-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
C. Peter McColough Date: March 22, 1994
- ---------------------- --------------------
C. Peter McColough
-158-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Thomas L. Phillips Date: March 22, 1994
- ----------------------- --------------------
Thomas L. Phillips
-159-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
P. Anthony Ridder Date: March 22, 1994
- --------------------- --------------------
P. Anthony Ridder
-160-
Exhibit 25
----------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of Knight-Ridder, Inc.
hereby constitutes and appoints John C. Fontaine, Ross Jones, and Tally C.
Liu and each of them severally, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all Reports
on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934)
and any amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Barbara Knight Toomey Date: March 22, 1994
- ------------------------- ---------------------
Barbara Knight Toomey
-161-
