UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED June 25, 1995
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COMMISSION FILE NUMBER 1-7553
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KNIGHT-RIDDER, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 38-0723657
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(State of Incorporation) (I.R.S. Employer Identification No.)
ONE HERALD PLAZA, MIAMI, FLORIDA 33132
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(Address of principal executive offices)
(305) 376-3800
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date. Common Stock, $.02 1/12 Par
Value - 49,119,305 shares as of July 30, 1995.
-2-<PAGE>
Table of Contents for 10-Q
Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Income 4-5
Consolidated Balance Sheet 6-7
Consolidated Statements of Cash Flows 8-9
Notes to Consolidated Financial Statements 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-14
PART II. OTHER INFORMATION
Item 6 - Exhibits and Reports on 8-K 15
SIGNATURE 15
Exhibit 11 Statement Re: Computation of Per Share Earnings 16-17
Exhibit 27 Financial Data Schedule 18
Exhibit 99 Additional Exhibits 19-22
-3-<PAGE>
<TABLE>
Consolidated Statement Of Income (Unaudited, in thousands of dollars, except per share data)
<CAPTION>
Quarter Ended Two Quarters Ended Four Quarters Ended
--------------------- ---------------------- ---------------------
June 25 June 26 June 25 June 26 June 25 June 26
1995 1994 1995 1994 1995 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUE
Newspapers
Advertising
Retail $ 200,091 $ 194,840 $ 381,876 $ 368,866 $ 805,486 $ 774,110
General 46,951 45,453 94,322 92,534 186,257 173,786
Classified 175,390 155,671 342,489 301,083 647,834 570,902
--------- --------- --------- --------- --------- ---------
Total 422,432 395,964 818,687 762,483 1,639,577 1,518,798
Circulation 123,046 121,591 245,638 242,315 487,904 480,902
Other 20,248 16,575 38,534 31,202 74,300 60,623
--------- --------- --------- --------- --------- ---------
Total Newspapers 565,726 534,130 1,102,859 1,036,000 2,201,781 2,060,323
Business Information Services 121,729 127,420 259,195 256,413 516,821 477,862
--------- --------- --------- --------- --------- ---------
Total Operating Revenue 687,455 661,550 1,362,054 1,292,413 2,718,602 2,538,185
--------- --------- --------- --------- --------- ---------
OPERATING COSTS
Labor and employee benefits 274,485 267,984 554,079 536,379 1,107,117 1,051,861
Newsprint, ink and supplements 107,953 79,918 202,782 159,312 379,372 329,381
Other operating costs 183,155 181,147 374,712 362,265 755,501 696,044
Depreciation and amortization 37,148 37,215 74,760 74,361 149,726 145,871
--------- --------- --------- --------- --------- ---------
Total Operating Costs 602,741 566,264 1,206,333 1,132,317 2,391,716 2,223,157
--------- --------- --------- --------- --------- ---------
OPERATING INCOME 84,714 95,286 155,721 160,096 326,886 315,028
--------- --------- --------- -------- --------- ---------
OTHER INCOME (EXPENSE)
Interest expense (12,612) (11,662) (25,013) (22,184) (47,414) (41,659)
Interest expense capitalized 366 7 611 63 1,022 165
Interest income 2,270 1,350 4,403 2,615 7,858 5,147
Equity in earnings of unconsolidated
companies and joint ventures 7,393 2,314 8,344 192 15,564 6,013
Minority interests in earnings of
consolidated subsidiaries (2,369) (2,876) (3,983) (5,103) (8,530) (5,103)
Other, net 82,778 843 84,104 1,245 81,947 (3,247)
--------- --------- -------- --------- --------- ---------
Total 77,826 (10,024) 68,466 (23,172) 50,447 (38,684)
--------- --------- --------- --------- --------- ---------
Income before income taxes 162,540 85,262 224,187 136,924 377,333 276,344
Income taxes 68,420 35,141 94,394 56,431 157,133 113,395
--------- --------- --------- --------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 94,120 50,121 $ 129,793 $ 80,493 220,200 162,949
Cumulative effect of change in accounting principle
for contributions (7,320) (7,320)
--------- --------- --------- --------- --------- ---------
Net income $ 94,120 $ 50,121 $ 122,473 $ 80,493 $ 212,880 $ 162,949
========= ========= ========= ========= ========= =========
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EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE
Income before cumulative effect of
change in accounting principle $ 1.88 $ 0.92 $ 2.54 $ 1.47 $ 4.21 $ 2.96
Cumulative effect of change in accounting principle (0.14) (0.14)
--------- --------- --------- --------- --------- ---------
Net income $ 1.88 $ 0.92 $ 2.40 $ 1.47 $ 4.07 $ 2.96
========= ========= ========= ========= ========= =========
DIVIDENDS DECLARED
PER COMMON SHARE $ 0.37 $ 0.37* $ 0.74 $ 0.72 $ 1.48 $ 1.42
========= ========= ========= ========= ========= =========
AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING (000S) 50,061 54,548 50,972 54,890 52,316 54,971
========= ========= ========= ========= ========= =========
* The second quarter ended June 26, 1994. These dividends were declared June 28, 1994 and recorded in the
third quarter.
See "Notes to Consolidated Financial Statements" and statistical data on pages 9, 10, and 20.
</TABLE>
-5-<PAGE>
<TABLE>
Consolidated Balance Sheet (Unaudited, in thousands of dollars, except share data)
<CAPTION>
June 25 December 25 June 26
1995 1994 1994
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash, including short-term cash investments of $5,824
in 1995, $150 in December 1994 and $7,493
in June 1994 $ 23,055 $ 9,253 $ 22,836
Accounts receivable, net of allowances of $13,990 in
1995, $13,728 in December 1994 and $14,760
in June 1994 311,861 317,687 291,237
Inventories 51,747 39,555 39,519
Other current assets 76,826 56,309 58,436
--------- --------- ---------
Total Current Assets 463,489 422,804 412,028
--------- --------- ---------
INVESTMENTS AND OTHER ASSETS
Equity in unconsolidated companies and joint ventures 312,721 293,205 287,174
Other 201,006 190,515 180,335
--------- --------- ---------
Total Investments and Other Assets 513,727 483,720 467,509
--------- --------- ---------
PROPERTY, PLANT AND EQUIPMENT
Land and improvements 66,891 66,950 66,880
Buildings and improvements 380,128 383,696 378,803
Equipment 1,182,106 1,209,360 1,193,804
Construction and equipment installations in progress 28,594 17,099 9,871
--------- --------- ---------
1,657,719 1,677,105 1,649,358
Less accumulated depreciation 843,404 844,593 806,827
--------- --------- ---------
Net Property, Plant and Equipment 814,315 832,512 842,531
--------- --------- ---------
EXCESS OF COST OVER NET ASSETS ACQUIRED
Less accumulated amortization of $193,495 in 1995,
$182,402 in December 1994 and $171,400 in June 1994 691,128 708,153 717,954
--------- --------- ---------
Total $ 2,482,659 $ 2,447,189 $ 2,440,022
========= ========= =========
-6-<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 136,453 $ 136,817 $ 131,857
Accrued expenses and other liabilities 90,742 98,993 82,563
Accrued compensation and amounts withheld from employees 84,061 96,917 78,463
Federal and state income taxes 37,833 1,368 14,972
Deferred revenue 64,620 66,953 59,770
Dividends payable 18,216 19,593
Short-term borrowings and current portion of long-term 40,000
debt
--------- --------- ---------
Total Current Liabilities 431,925 420,641 407,625
--------- --------- ---------
NONCURRENT LIABILITIES
Long-term debt 534,209 411,504 417,414
Deferred federal and state income taxes 138,607 138,611 146,064
Postretirement benefits other than pensions 166,060 166,682 169,306
Employment benefits and other noncurrent liabilities 97,790 84,264 62,374
--------- --------- ---------
Total Noncurrent Liabilities 936,666 801,061 795,158
--------- --------- ---------
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES 1,282 833 2,825
--------- --------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock, $.02 1/12 par value; shares authorized -
250,000,000; shares issued - 49,285,480 in 1995,
52,892,720 in December 1994 and 53,675,913 in June 1994 1,027 1,102 1,118
Additional capital 301,855 326,392 333,159
Retained earnings 809,904 897,160 900,137
--------- --------- ---------
Total Shareholders' Equity 1,112,786 1,224,654 1,234,414
--------- --------- ---------
Total $ 2,482,659 $ 2,447,189 $ 2,440,022
========= ========= =========
See "Notes to Consolidated Financial Statements" and statistical data on pages 9, 10, and 20.
</TABLE>
-7-<PAGE>
<TABLE>
Consolidated Statement of Cash Flows ( Unaudited in thousands of dollars)
<CAPTION>
Quarter Ended Two Quarters Ended Four Quarters Ended
------------------- ------------------- -------------------
June 25 June 26 June 25 June 26 June 25 June 26
1995 1994 1995 1994 1995 1994
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CASH PROVIDED BY (REQUIRED FOR) OPERATING ACTIVITIES
Net income $94,120 $50,121 $122,473 $80,493 $212,880 $162,949
Noncash items included in income:
Cumulative effect of changes in accounting principles 7,320 7,320
Depreciation 26,260 26,599 52,815 53,223 105,368 105,667
Amortization of excess of cost over
net assets acquired 5,506 5,489 11,093 10,855 22,095 20,837
Amortization of other assets 5,382 5,127 10,852 10,283 22,263 19,367
Provision for noncurrent deferred taxes (4) 6,300 (4) 10,085 (7,457) 26,357
Distributions from investees in excess
of (less than) earnings 2,293 (2,360) 2,881 704 (5,361) (8,584)
Gain on sale of subsidiary (92,698) (92,698) (92,698)
Other items, net 10,235 9,403 19,752 18,638 45,811 30,380
Change in certain assets and liabilities:
Accounts receivable (16,193) (17,094) (4,549) (14,664) (31,020) (26,208)
Inventories (3,506) (1,477) (12,305) 1,903 (12,341) 11,226
Other current assets 15,687 14,405 (24,751) 2,741 (25,388) 24,705
Accounts payable (6,000) 9,378 (4,387) 6,918 (206) (2,309)
Federal and state income taxes 15,130 6,949 36,465 14,962 22,861 7,665
Other current liabilities (3,073) (3,923) (21,632) (4,267) 16,438 2,193
-------- -------- -------- -------- -------- --------
Net cash provided by operating activities 53,139 108,917 103,325 191,874 280,565 374,245
-------- -------- -------- -------- -------- --------
CASH PROVIDED BY (REQUIRED FOR) INVESTING ACTIVITIES
Additions to property, plant and equipment (19,382) (15,870) (37,333) (30,042) (74,401) (57,930)
Other items, net 81,173 (6,572) 72,334 (40,878) 52,199 (74,394)
-------- -------- -------- -------- -------- --------
Net cash provided by (required for)
investing activities 61,791 (22,442) 35,001 (70,920) (22,202) (132,324)
-------- -------- -------- -------- -------- --------
-8-<PAGE>
CASH PROVIDED BY (REQUIRED FOR) FINANCING ACTIVITIES
Proceeds from sale of commercial paper
and bank borrowings 137,323 76,455 359,579 207,413 527,474 329,541
Reduction of total debt (168,680) (75,731) (236,874) (201,074) (450,679) (370,401)
-------- -------- -------- -------- -------- --------
Net change in total debt (31,357) 724 122,705 6,339 76,795 (40,860)
Payment of cash dividends (18,575) (19,107) (38,168) (38,304) (77,806) (76,527)
Sale of common stock to employees 9,812 6,535 17,592 15,717 27,772 30,154
Purchase of treasury stock (62,911) (60,738) (215,142) (85,860) (266,259) (86,871)
Other items, net (5,103) (11,278) (11,511) (19,022) (18,646) (54,546)
-------- -------- -------- -------- -------- --------
Net cash required for
financing activities (108,134) (83,864) (124,524) (121,130) (258,144) (228,650)
-------- -------- -------- -------- -------- --------
Net Increase (Decrease) in Cash 6,796 2,611 13,802 (176) 219 13,271
Cash and short-term cash
investments at beginning of the period 16,259 20,225 9,253 23,012 22,836 9,565
-------- -------- -------- -------- -------- --------
Cash and short-term cash
investments at end of the period $23,055 $22,836 $23,055 $22,836 $23,055 $22,836
======== ======== ======== ======== ======== ========
Working capital at end of period $31,564 $4,403 $31,564 $4,403 $31,564 $4,403
======== ======== ======== ======== ======== ========
See "Notes to Consolidated Financial Statements" and statistical data on pages 9, 10, and 20.
(/table)
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three month period and four quarters ended June 25, 1995 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1995. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Registrant Company
and Subsidiaries' annual report on Form 10-K for the year ended December 25,
1994.
In the first quarter of 1995, the Company adopted Financial Accounting
Standard (FAS) 116 - "Accounting For Contributions Received and Contributions
Made." The adoption of FAS 116 resulted in $7.3 million charge (net of tax)
to operations, or $.14 per share, and was recorded as a cumulative effect
adjustment.
-9- <PAGE>
</TABLE>
<TABLE>
Note 2 - Debt (Unaudited, in thousands of dollars)
<CAPTION>
Effective
Interest Balance at
Rate at ----------------------------------
June 25 June 25 December 25 June 26
1995 1995 1994 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Commercial paper, net of discount 6.1 % $177,308 $54,764 $100,849
Notes payable, net of discount (A) 8.5 159,188 159,103 159,017
Debentures, net of discount (B) 10.0 197,713 197,637 197,548
--------- --------- ---------
Total debt (C) 8.3 534,209 411,504 457,414
Less amounts classified as current 40,000
--------- --------- ---------
Total long-term debt 8.3 % $534,209 $411,504 $417,414
========= ========= =========
(A) Represents $160 million of 8 1/2% Notes subject to mandatory pro rata amortization of 25% annually commencing 1998
through maturity in 2001.
(B) Represents $200 million of 20-year 9 7/8% debentures due in 2009.
(C) At June 25, 1995 and June 26, 1994, interest payments of $21.8 million and $22.1 million had been made for
the year-to-date, respectively.
Note 3 - Income Tax Expense
Income tax payments for the quarters ended June 25, 1995, and June 26, 1994, were $52.0 million and $23.3 million,
respectively.
</TABLE>
-10-<PAGE>
Management's Discussion and Analysis of the Second Quarter
Second Quarter 1995 Compared With Second Quarter 1994
Earnings per share for second quarter 1995 were $1.88, a $.96 increase from
$.92 per share in 1994. The significant increase in earnings per share from
prior year was due to the April 3rd sale of the Journal of Commerce (JoC).
Excluding the gain on the sale of JoC, as well as reductions in the carrying
value of certain investments, the results of operations contributed $.93, up
$.01 from 1994. Earnings per share for the first two quarters of 1995 were
$2.40 after the cumulative effect of a change in accounting principle for
contributions, compared with $1.47 in 1994, a 63.3% improvement.
Net income in the second quarter was $94.1 million, up 87.8% from 1994.
Excluding the JoC after-tax gain of $53.8 million and a reduction in the
carrying value of certain investments ($6.0 million after tax), net income
would have been $46.4 million, down $3.8 million, or 7.5%, from the same
period last year. Earnings per share increased, despite the net income
decline, due to a 4.5 million reduction in average shares outstanding,
resulting from share repurchases.
Total operating revenue for the company rose 3.9% to $687.5 million.
Operating income declined 11.1% to $84.7 million as a result of higher
newsprint costs in 1995. For the year to date, total operating revenue for
the company rose 5.4% to $1.4 billion. Operating income declined 2.7% to
$155.7 million.
Operating Revenue
Newspaper advertising revenue increased 6.7% over the second quarter last
year on a full-run ROP linage decrease of 0.1%. Improved average rates in all
three advertising revenue categories and an increase in general and
classified linage more than offset a 4.1% decline in full-run ROP retail
linage. Year-to-date, newspaper advertising revenue increased 7.4% over 1994
on a full-run ROP linage increase of 0.8%.
Classified advertising revenue increased 12.7% over the second quarter last
year on a 3.7% full-run ROP linage increase. The employment category showed
the largest gain, posting a 26.0% improvement, with linage up 18.3%. This is
the twelfth consecutive quarter of classified revenue year-over-year
improvement and the fourth consecutive quarter of double-digit year-over-year
growth. For the first two quarters, classified revenue was up 13.8% on a 4.1%
full-run ROP linage improvement.
Retail advertising revenue improved by $5.3 million, or 2.7%, over last year
on a 4.1% decrease in full-run ROP linage. Improved average rates and an 8.0%
increase in preprints inserted more than offset the decline in full-run ROP
linage. Retail revenue was up 3.5% for the year to date on a 2.4% decrease in
full-run ROP linage.
-11-<PAGE>
General advertising revenue was $1.5 million, or 3.3%, over last year on a
4.3% increase in full-run ROP linage. For the year to date, general revenue
was up 1.9% on a 2.7% rise in full-run ROP linage.
Circulation revenue increased $1.5 million, or 1.2%, due to a 2.8% increase
in average rates, offset by a 1.7% decline in average seven-day circulation.
Revenue was up 1.4% so far this year.
Other newspaper revenue increased by $3.7 million, or 22.2%, due in part to
an increase in newsprint waste revenue that was driven by the rise in 1995
newsprint prices and in part to the growth in commercial print revenue. Other
revenue was up 23.5% for the year to date.
Business Information Services (BIS) operating revenue in the second quarter
declined 4.5% to $121.7 million, reflecting the loss of JoC revenue.
Excluding the impact of the JoC sale, operating revenue would have been up
8.6% from second quarter 1994. Knight-Ridder Financial contributed
significantly to the revenue growth, posting a $5.9 million, or 13.8%,
improvement over the prior year. BIS revenue was up 1.1% for the year to
date, again due to the loss of revenue from the JoC sale. Excluding the
impact of the JoC sale and acquisitions, operating revenue would have been up
6.8% for the year to date.
Operating Costs
Labor and employee benefit costs rose $6.5 million, or 2.4%, on a 1.6%
decline in the work force and a 3.0% increase in average wage. If not for the
recent sale of the JoC, the work force would have been up 1.6% due to BIS
expansion.
Newsprint, ink and supplement costs increased $28.0 million, or 35.1%, on a
0.5% increase in newsprint consumption and a 39.2% increase in the average
newsprint price. These costs were up 27.3% for the first two quarters on a
1.2% increase in newsprint consumption and a 28.9% increase in the average
newsprint price.
Other operating costs rose $2.0 million, or 1.1%, over second quarter 1994.
The increase resulted partly from volume related costs associated with
operations. Other operating costs rose 3.4% for the year to date, due
primarily to increased circulation promotion costs, increased distribution
costs resulting from an emphasis on alternate delivery and volume-related
costs associated with operations. Excluding the impact of the JoC sale, other
operating costs would have been up 4.4% in the second quarter and 5.1% for
the year to date.
-12-<PAGE>
Depreciation and amortization decreased 0.2% from second quarter 1994,
primarily due to the JoC sale. Excluding the impact of the JoC sale,
depreciation and amortization would have been up 2.1% from second quarter
1994.
Non-Operating Items And Income Taxes
Interest expense, net of interest income and interest expense capitalized,
decreased $329,000 from last year. This was primarily due to higher
capitalized interest expense from additional investment in our newsprint
presses.
Equity in earnings of unconsolidated companies and joint ventures increased
by $5.1 million for the quarter and $8.2 million year to date due to earnings
improvements from our newsprint mill investments, which are benefiting from
the rise in newsprint prices.
The "Other, Net" line of the non-operating section increased $81.9 million
over second quarter 1994 as a result of the gain on the sale of the JoC,
offset by the reduction in the carrying value of certain investments,
primarily Ponderay Newsprint Company.
The effective tax rate was 42.1% compared with 41.2% in the second quarter of
1994, primarily as a result of higher effective state tax rates.
Other
The sale of the Journal of Commerce to The Economist Group of London was
completed on April 3rd for $115 million. The gain from the sale of the JoC
was $53.8 million, after tax.
In June, we formed a joint venture partnership with Landmark Communications,
Inc., that will help newspapers into the Internet access and electronic
publishing business. The new company, known as InfiNet, will expand
Landmark's 18-month-old Internet venture. In May, we announced the merger of
Realtron Corp. with PRC Realty Systems, Inc., which is owned by News Holdings
Corporation, an affiliation of Knight-Ridder, Inc., Advance Publications, Cox
Newspapers, Inc., and Tribune Co.
During the second quarter of 1995, the company purchased approximately 1.1
million shares of Knight-Ridder common stock. The company has remaining
authorization to repurchase 4.8 million shares and plans to repurchase
additional shares should Knight-Ridder stock remain at an attractive price.
In the first quarter of 1995, the company adopted Financial Accounting
Standard (FAS) 116 - "Accounting For Contributions Received and Contributions
Made." The adoption of FAS 116 resulted in a $7.3 million charge to
operations, or $.14 per share cumulative effective adjustment (net of tax).
-13-<PAGE>
Liquidity
Net cash provided by operating activities decreased to $53.1 million from
$108.9 million in the second quarter of 1994. This was due largely to a
decrease in operating income, the gain on the JoC sale and the accelerated
timing of federal tax payments. The net cash generated from the sale of the
JoC is included in investing activities. Cash and short-term cash investments
were up $219,000 from June 26, 1994, and up $13.8 million from year end.
Total debt increased $76.8 million from second quarter 1994 and increased
$122.7 million from Dec. 25, 1994. Debt was up due to the repurchase of 1.1
million shares of the company's stock in the quarter and 5.0 million shares
during the 12 months.
The total-debt-to-total-capital ratio was 32.4%, up from 25.2% at year end
and 27.0% in June 1994. Approximately $322 million in aggregate unused credit
lines remained at the end of the quarter. The ratio of current assets to
current liabilities was 1.1:1 at June 25, 1995, and 1.0:1 at June 26, 1994
and Dec. 25, 1994.
Outlook for the Remainder of the Year
We were pleased by results for the second quarter of the year. As we look
ahead to the third quarter and the year end, we believe the advertising
strength we have seen thus far may not be sustained, but we expect 1995 to be
a year of earnings per share growth. The average price of newsprint increased
to about 40% above what was paid in 1994 in the second quarter and will be up
more in the third and fourth quarters, as the price increases work their way
through our inventory. For the full year, newsprint costs will be held to a
level about 40% above what was paid in 1994.
BIS Division results, over the balance of the year, will reflect the absence
of the Journal of Commerce, which was sold on April 3rd to The Economist
Group.
The current strike against the Detroit newspaper will cause adverse financial
impact, which is difficult to estimate at this time.
-14-<PAGE>
PART II. OTHER INFORMATION
OTHER INFORMATION
-----------------
Items 1, 2, 3, 4 and 5 are omitted as inapplicable, not required, or because
the information is included in the consolidated financial information.
Item 6 Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibits Filed
No. 11 - Statement Re: Computation of Per Share
Earnings
No. 27 - Financial Data Schedule
No. 99 - Additional Exhibits
b. Reports on Form 8-K
No reports were filed on Form 8-K during the
quarter ended June 25, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KNIGHT-RIDDER, INC.
(Registrant)
Date August 7, 1995
Ross Jones
Senior Vice President/Finance &
Chief Financial Officer
(Chief Accounting Officer and Duly
Authorized Officer of Registrant)
-15-<PAGE>
<TABLE>
COMPUTATION OF PER SHARE EARNINGS
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA) EXHIBIT 11
==========
<CAPTION>
Quarter Ended Two Quarters Ended
-------------------- -------------------
June 25 June 26 June 25 June 26
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
PRIMARY
Average shares outstanding 49,697 54,133 50,643 54,443
Net effect of dilutive
stock options-based on the
Treasury Stock method using the
average market price 364 415 329 447
------- ------- ------- -------
TOTAL 50,061 54,548 50,972 54,890
======= ======= ======= =======
Income before cumulative effect of
change in accounting principle $94,120 $50,121 $129,793 $80,493
Cumulative effect of change in
accounting principle for contributions (7,320)
------- ------- ------- -------
Net Income $94,120 $50,121 $122,473 $80,493
======= ======= ======= =======
Earnings per Common and Common Equivalent Share
Income before cumulative effect
of change in accounting principle $1.88 $0.92 $2.54 $1.47
Cumulative effect of change in
accounting principle (0.14)
------- ------- ------- -------
Per share amount from net income $1.88 $0.92 $2.40 $1.47
======= ======= ======= =======
FULLY DILUTED
Average shares outstanding 49,697 54,133 50,643 54,443
Net effect of dilutive
options - based upon Treasury
Stock method using the higher
of quarter-end or average
market price 433 371 421 472
------- ------- ------- -------
TOTAL 50,130 54,504 51,064 54,915
======= ======= ======= =======
Income before cumulative effect of
change in accounting principle $94,120 $50,121 $129,793 $80,493
Cumulative effect of change in
accounting principle for contributions (7,320)
------- ------- ------- -------
Net Income $94,120 $50,121 $122,473 $80,493
======= ======= ======= =======
-16- <PAGE>
Earnings per Common and Common Equivalent Share
Income before cumulative effect
of change in accounting principle $1.88 $0.92 $2.54 $1.47
Cumulative effect of change in
accounting principle (0.14)
------- ------- ------- -------
Per share amount from net income $1.88 $0.92 $2.40 $1.47
======= ======= ======= =======
-17-
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE CONSOLIDATED
STATEMENTS OF INCOME, THE CONSOLIDATED BALANCE SHEETS, THE CONSOLIDATED
STATEMENTS OF CASH FLOWS AND THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-END> JUN-25-1995 JUN-25-1995
<CASH> 23,055 23,055
<SECURITIES> 0 0
<RECEIVABLES> 325,851 325,851
<ALLOWANCES> 13,990 13,990
<INVENTORY> 51,747 51,747
<CURRENT-ASSETS> 463,489 463,489
<PP&E> 1,657,719 1,657,719
<DEPRECIATION> 843,404 843,404
<TOTAL-ASSETS> 2,482,659 2,482,659
<CURRENT-LIABILITIES> 431,925 431,925
<BONDS> 0 0
<COMMON> 1,027 1,027
0 0
0 0
<OTHER-SE> 1,111,759 1,111,759
<TOTAL-LIABILITY-AND-EQUITY> 2,482,659 2,482,659
<SALES> 687,455 1,362,054
<TOTAL-REVENUES> 687,455 1,362,054
<CGS> 107,953<F1> 202,782<F1>
<TOTAL-COSTS> 602,741 1,206,333
<OTHER-EXPENSES> (77,826)<F2> (68,466)<F2>
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 12,612 25,013
<INCOME-PRETAX> 162,540 224,187
<INCOME-TAX> 68,420 94,394
<INCOME-CONTINUING> 94,120 129,793
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 (7,320)
<NET-INCOME> 94,120 122,473
<EPS-PRIMARY> 1.88 2.40
<EPS-DILUTED> 1.88 2.40
<FN>
<F1>Cost of goods sold consists of newsprint, ink, and supplements.
<F2>Other-Expenses consists of all non-operating costs, excluding income taxes.
Amount includes interest expense net of interest income and other non-operating
income and expense (net).
</FN>
</TABLE>
<TABLE>
KNIGHT-RIDDER, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION EXHIBIT 99
(Unaudited, in thousands of dollars) ==========
<CAPTION>
Quarter Ended Two Quarters Ended Four Quarters Ended
----------------------- ---------------------- ---------------------
June 25 June 26 June 25 June 26 June 25 June 26
1995 1994 1995 1994 1995 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUE
Newspapers $565,726 $534,130 $1,102,859 $1,036,000 $2,201,781 $2,060,323
Business Information Services 121,729 127,420 259,195 256,413 516,821 477,862
--------- --------- --------- --------- --------- ---------
$687,455 $661,550 $1,362,054 $1,292,413 $2,718,602 $2,538,185
========= ========= ========= ========= ========= =========
OPERATING INCOME
Newspapers $94,736 $101,995 $172,465 $170,081 $353,240 $329,662
Business Information Services 3,072 5,032 9,756 12,569 20,297 26,261
Corporate (13,094) (11,741) (26,500) (22,554) (46,651) (40,895)
--------- --------- --------- --------- --------- ---------
$84,714 $95,286 $155,721 $160,096 $326,886 $315,028
========= ========= ========= ========= ========= =========
DEPRECIATION AND AMORTIZATION
Newspapers $23,809 $23,747 $47,474 $47,688 $94,713 $94,935
Business Information Services 12,785 12,995 26,200 25,777 53,137 49,204
Corporate 554 473 1,086 896 1,876 1,732
--------- --------- --------- --------- --------- ---------
$37,148 $37,215 $74,760 $74,361 $149,726 $145,871
========= ========= ========= ========= ========= =========
</TABLE>
-19-<PAGE>
Knight-Ridder, Inc.
Second Quarter Graphs (Unaudited)
================================
<TABLE>
<CAPTION>
SECOND QUARTER NET INCOME SECOND QUARTER EARNINGS PER SHARE
(From continuing operations, in $(000s) (From continuing operations)
<C> <C> <C> <C>
Year Amount Year Amount
-------- ------- -------- --------
1995 46,356 * 1995 $0.93 *
1994 50,121 1994 $0.92
1993 42,497 1993 $0.77
1992 46,090 1992 $0.84
1991 41,573 1991 $0.82
1990 44,609 1990 $0.88
* Excludes $53.8 million, or $1.07 per share, after-tax gain on the sale of the Journal of Commerce,
and a $6.0 million, or $0.12 per share after-tax adjustment of the carrying values of certain
investments.
SECOND QUARTER TOTAL OPERATING REVENUE SECOND QUARTER NEWSPAPER ADVERTISING REVENUE
(From continuing operations, in $000s) (In $000s)
<C> <C> <C> <C>
Year Amount Year Amount
------- ------- ------- ---------
1995 687,455 1995 422,432
1994 661,550 1994 395,964
1993 621,682 1993 377,483
1992 590,531 1992 370,252
1991 569,497 1991 369,030
1990 591,739 1990 405,641
</TABLE>
-20-<PAGE>
<TABLE>
Average Circulation - Note A
(Unaudited, in thousands of copies)
<CAPTION>
Quarter Ended Two Quarters Ended
------------------------------ -------------------------------
June 25 June 26 June 25 June 26
1995 1994 Change 1995 1994 Change
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Morning Circulation 3,094 3,155 (61) 3,123 3,176 (53)
Evening Circulation 450 450 447 450 (3)
------ ------ ------ ------ ------ ------
Daily Circulation 3,544 3,605 (61) 3,570 3,626 (56)
====== ====== ====== ====== ====== ======
Sunday Circulation 4,631 4,701 (70) 4,666 4,745 (79)
====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
Advertising Statistics (Unaudited) - Notes A & B
<CAPTION>
Quarter Ended Two Quarters Ended
------------------------------- --------------------------------
June 25 June 26 June 25 June 26
1995 1994 % Change 1995 1994 % Change
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
LINAGE (In thousands of
six-column inches)
Full-run ROP
Retail 3,654 3,809 (4.1) 7,109 7,287 (2.4)
General 412 395 4.3 789 768 2.7
Classified 3,724 3,590 3.7 7,145 6,864 4.1
--------- --------- --------- ---------
Total 7,790 7,794 (0.1) 15,043 14,919 0.8
========= ========= ========= =========
Factored Part-run ROP 553 447 23.7 1,018 848 20.0
========= ========= ========= =========
Full-run Preprint 4,302 4,163 3.3 7,972 7,854 1.5
========= ========= ========= =========
Part-run Preprint 4,913 4,328 13.5 8,630 7,682 12.3
========= ========= ========= =========
TOTAL PREPRINTS INSERTED (000s) 1,206,750 1,143,167 5.6 2,289,744 2,232,567 2.6
========= ========= ========= =========
Note A: Where necessary, certain previously reported statistics have been restated to be consistent with measurement
guidelines currently in use.
Note B: Factored part-run linage represents linage in zoned editions that is translated into full-run equivalent linage
based on the ratio of the circulation in a particular zone to the total circulation of the newspaper.
</TABLE>
-21-<PAGE>
<TABLE>
Knight-Ridder Share Trading
(As quoted by Knight-Ridder Financial Services)
<CAPTION>
1995 Second Quarter 1994 Second Quarter
---------------------------------- ----------------------------------
Volume High Low Close Volume High Low Close
--------- ------ ------ ------ --------- ------ ------ ------
<C> <C> <C> <C> <C> <C> <C> <C>
7,091,600 57 3/4 52 3/8 56 7/8 7,003,400 60 1/4 52 52
-22-
</TABLE>
