SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 14, 1997
KNIGHT-RIDDER, INC.
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(Exact name of registrant as specified in its charter)
Florida 1-7553 38-0723657
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification No.)
One Herald Plaza, Miami, Florida 33132
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 376-3800
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Not Applicable
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(Former name or former address, if changed since last report)
Page 1 of 7 Pages
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Item 2. Disposition of Assets.
On November 14, 1997, Knight-Ridder Business Information Services, Inc. (KRBIS),
a wholly-owned subsidiary of Knight-Ridder, Inc. (KRI), completed the sale of
all of the outstanding stock of Knight-Ridder Information, Inc. (KRII) and
Knight-Ridder Information AG (KRIAG), both of which are indirect wholly-owned
subsidiaries of KRI, to M.A.I.D. plc for $420 million in cash, subject to a
working capital purchase price adjustment which, at the closing, was estimated
to require an additional $15 million payment to KRI. In addition, KRI has
guaranteed the obligations of KRBIS under the Stock Purchase Agreement.
Item 7. Financials and Exhibits.
b. Pro Forma Financial Information
KRII and KRIAG were previously included in the Business Information Services
(BIS) segment, which was discontinued in April 1997. Once that decision was
made, related results of operations (including all revenue, expense and
related taxes) were reclassified and reported "net" under discontinued
operations captions in the consolidated statements of income.
Because there are a limited number of pro forma adjustments which affect the
condensed consolidated statements of income, a narrative description of their
effects is furnished in lieu of pro forma condensed consolidated statements of
income. The narrative below outlines the effects of the sale as if it had
occurred at the beginning of each period. Tabular pro forma condensed
consolidated balance sheets, along with accompanying notes, are presented as if
the sale had occurred at the end of the periods presented. The pro forma effects
and adjustments were determined based on available information and based on
certain allocations that KRI believes are reasonable. The pro forma financial
information does not purport to represent what KRI's actual results of
operations would have been had the sale occurred at the beginning of the periods
presented and may not be indicative of KRI's financial position or operating
results for any future date or period.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Had the sale occurred as of the beginning of fiscal 1996 or fiscal 1997, net
income/(loss) from discontinued BIS operations, net of applicable income taxes,
would not have materially changed in 1996 and the entire reported net loss for
the three quarters ended September 28, 1997 of $0.7 million would have been
eliminated. Also, net income for the year ended December 29, 1996 would have
increased by $33.6 million from $267.9 million to $301.5 million, while net
income for the three quarters ended September 28, 1997 would have increased by
$27.1 million from $310.0 million to $337.1 million. The effect on net income
represents the pro forma after tax effects of eliminating the losses from the
discontinued KRII and KRIAG operations, the estimated gain on the sale of that
business ($22.2 million in 1996 and $17.4 million in 1997) and a reduction of
interest expense ($11.4 million for 1996 and $9.0 million for 1997) resulting
from applying the after tax net cash proceeds of the sale of KRII and KRIAG
towards the reduction of debt.
Page 2 of 7 Pages
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<TABLE>
<CAPTION>
KNIGHT-RIDDER, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(IN THOUSANDS OF DOLLARS)
KNIGHT-RIDDER
INC.
SEPTEMBER 28, PRO FORMA ADJUSTED
1997 ADJUSTMENTS PRO FORMA
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ASSETS
<S> <C> <C> <C>
Cash, including short-term cash investments $ 35,849 $ (14,718)A $ 21,131
Accounts receivable 414,323 (59,863)A 354,460
Inventories 59,029 (406)A 58,623
Prepaid expense 29,906 (10,016)A 19,890
Other current assets 46,268 (1,070)A 45,198
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Total Current Assets 585,375 (86,073) 499,302
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Investments and other assets 371,157 371,157
Net assets of discontinued BIS operations 321,155 (321,155)A
Property, plant and equipment, net 1,038,942 1,038,942
Goodwill and other intangible assets, net 2,327,394 2,327,394
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Total $ 4,644,023 $ (407,228) $ 4,236,795
================ ============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities 605,269 (59,395)A 615,266
30,579 B
38,813 B
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Total Current Liabilities 605,269 9,997 615,266
Noncurrent liabilities 2,343,432 (434,626)C 1,908,806
Minority interests in consolidated subsidiaries 2,002 2,002
Shareholders' Equity
Preferred stock 1,755 1,755
Common stock 1,789 1,789
Additional capital 927,638 927,638
Retained earnings 762,138 17,401 D 779,539
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Total Shareholders' Equity 1,693,320 17,401 1,710,721
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Total $ 4,644,023 $ (407,228) $ 4,236,795
================ ============== =============
</TABLE>
See accompanying notes.
Page 3 of 7
<PAGE>
<TABLE>
<CAPTION>
KNIGHT-RIDDER, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(IN THOUSANDS OF DOLLARS)
KNIGHT-RIDDER
INC.
DECEMBER 29, PRO FORMA ADJUSTED
1996 ADJUSTMENTS PRO FORMA
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ASSETS
<S> <C> <C> <C>
Cash, including short-term cash investments $ 22,880 $ (8,800)A $ 14,080
Accounts receivable 356,079 (56,083)A 299,996
Inventories 42,941 (579)A 42,362
Prepaid expense 90,314 (8,122)A 82,192
Other current assets 53,513 (1,020)A 52,493
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Total Current Assets 565,727 (74,604) 491,123
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Investments and other assets 465,676 465,676
Net assets of discontinued BIS operations 325,319 (325,319)A
Property, plant and equipment, net 870,187 870,187
Goodwill and other intangible assets, net 636,882 636,882
----------------- -------------- ----------------
Total $ 2,863,791 $ (399,923) $ 2,463,868
================= ============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities 544,570 (51,655)A 557,027
30,579 B
33,533 B
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Total Current Liabilities 544,570 12,457 557,027
Noncurrent liabilities 1,185,666 (434,626)C 751,040
Minority interests in consolidated subsidiaries 2,047 2,047
Shareholders' Equity
Common stock 1,945 1,945
Additional capital 308,320 308,320
Retained earnings 819,572 22,246 D 841,818
Unrealized gains on investments 1,671 1,671
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Total Shareholders' Equity 1,131,508 22,246 1,153,754
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Total $ 2,863,791 $ (399,923) $ 2,463,868
================= ============== ================
</TABLE>
See accompanying notes.
Page 4 of 7
<PAGE>
KNIGHT-RIDDER, INC.
NOTES TO PRO FORMA BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS OF DOLLARS)
NOTE A - PRO FORMA ADJUSTMENTS
CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 28, 1997
A. To eliminate the carrying value of KRII and KRIAG.
B. To record $30.6 million of liabilities incurred or assumed and income taxes
payable of $38.8 million relating to the sale of KRII and KRIAG.
C. To record the use of proceeds to reduce long term borrowings by $434.6
million. These proceeds will be temporarily invested until such time that
related debt can be reduced.
D. To record the after-tax gain on the sale of KRII and KRIAG.
CONDENSED CONSOLIDATED BALANCE SHEET AT DECEMBER 29, 1996
A. To eliminate the carrying value of KRII and KRIAG.
B. To record $30.6 million of liabilities incurred or assumed and income taxes
payable of $33.5 million relating to the sale of KRII and KRIAG.
C. To record the use of proceeds to reduce long term borrowings by $434.6
million. These proceeds will be temporarily invested until such time that
related debt can be reduced.
D. To record the after-tax gain on the sale of KRII and KRIAG.
NOTE B - HISTORICAL FINANCIAL STATEMENTS
As of September 28, 1997, approximately $8 million of deferred income taxes were
reclassified to net assets of discontinued BIS operations since they relate to
operations that were discontinued.
Page 5 of 7 Pages
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Item 7. (Continued)
c. Exhibits
The Stock Purchase Agreement between Knight-Ridder Business Information
Services, Inc. and M.A.I.D. plc dated as of October 1, 1997 was filed
with the Securities and Exchange Commission as an exhibit to KRI's Form
10-Q dated September 28, 1997. It is incorporated herein by reference.
Page 6 of 7 Pages
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
Dated: November 26, 1997
KNIGHT-RIDDER, INC.
(Registrant)
By: /s/ Gary R. Effren
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Gary R. Effren
Vice President/Controller
(Chief Accounting Officer and Duly
Authorized Officer of Registrant)
Page 7 of 7 Pages
