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 the quarterly period ended: JUNE 27, 1999
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Commission file number: 1-7553
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.)
50 W. SAN FERNANDO ST. SUITE 1500, SAN JOSE, CA 95113
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(Address of principal executive offices)
(408) 938-7700
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(Registrant's telephone number, including area code)
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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 [ ]
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
81,023,095 shares as of July 30, 1999.
<PAGE>
Table of Contents for Form 10-Q
Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheet 3-4
Consolidated Statement of Income 5
Consolidated Statement of Cash Flows 6-7
Notes to Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11-16
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of Security Holders 17-18
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURE 19
EXHIBIT 20
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
(UNAUDITED IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
June 27, December 27, June 28,
1999 1998 1998
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Current Assets
Cash, including short-term cash investments of $4,047 in June 1999,
$4,159 in December 1998, and $75,237 in June 1998 $ 28,813 $ 26,836 $ 96,554
Accounts receivable, net of allowances of $16,508 in June 1999,
$15,738 in December 1998, and $16,124 in June 1998 380,920 386,455 340,210
Inventories 47,494 59,109 62,725
Prepaid expense 4,903 14,078 7,829
Other current assets 37,587 39,213 36,959
------------- ------------- -------------
Total Current Assets 499,717 525,691 544,277
------------- ------------- -------------
Investments and Other Assets
Equity in unconsolidated companies and joint ventures 202,890 201,120 195,058
Other 199,726 243,586 226,071
------------- ------------- -------------
Total Investments and Other Assets 402,616 444,706 421,129
------------- ------------- -------------
Property, Plant and Equipment
Land and improvements 94,083 93,781 93,762
Buildings and improvements 486,057 484,367 439,657
Equipment 1,190,948 1,175,044 1,153,546
Construction and equipment installations in progress 111,292 84,559 136,534
------------- ------------- -------------
1,882,380 1,837,751 1,823,499
Less accumulated depreciation (812,004) (764,750) (756,242)
------------- ------------- -------------
Net Property, Plant and Equipment 1,070,376 1,073,001 1,067,257
Excess of Cost Over Net Assets Acquired and Other Intangibles
Less accumulated amortization of $297,562 in June 1999
$264,001 in December 1998, and $230,487 in June 1998 2,204,186 2,213,699 2,238,822
------------- ------------- -------------
Total $ 4,176,895 $ 4,257,097 $ 4,271,485
============= ============= =============
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET (CONT.)
(UNAUDITED IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
June 27, December 27, June 28,
1999 1998 1998
------------- ------------- -------------
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 117,963 $ 164,558 $ 194,021
Accrued expenses and other liabilities 125,772 111,088 111,328
Accrued compensation and amounts withheld from employees 105,378 112,827 97,069
Federal and state income taxes 9,494 75,486
Deferred revenue 70,862 67,006 67,021
Short-term borrowings and current portion of long-term debt 99,591 198,277 289,429
------------- ------------- -------------
Total Current Liabilities 529,060 653,756 834,354
------------- ------------- -------------
Noncurrent Liabilities
Long-term debt 1,245,499 1,329,001 1,247,559
Deferred federal and state income taxes 291,583 293,015 291,883
Postretirement benefits other than pensions 149,888 147,118 152,522
Employment benefits and other noncurrent liabilities 156,102 168,974 161,756
------------- ------------- -------------
Total Noncurrent Liabilities 1,843,072 1,938,108 1,853,720
------------- ------------- -------------
Minority Interests in Consolidated Subsidiaries 4,560 2,502 2,377
Commitments and Contingencies (Note 6)
Shareholders' Equity
Preferred stock, $1.00 par value; shares authorized- 2,000,000;
shares issued - 1,654,930 in June 1999, 1,754,930 in
December 1998 and June 1998 1,655 1,755 1,755
Common stock, $.02 1/12 par value; shares authorized -
250,000,000; shares issued - 80,047,987 in June 1999,
78,374,195 in December 1998 and 78,843,842 in June 1998 1,668 1,633 1,643
Additional capital 935,185 908,078 911,251
Retained earnings 843,223 735,132 658,922
Accumulated other comprehensive income 20,950 18,738 10,211
Treasury stock, at cost, 44,382 shares in June 1999,
46,667 in December 1998, and 48,973 in June 1998 (2,478) (2,605) (2,748)
------------- ------------- -------------
Total Shareholders' Equity 1,800,203 1,662,731 1,581,034
------------- ------------- -------------
$ 4,176,895 $ 4,257,097 $ 4,271,485
============= ============= =============
See "Notes to Consolidated Financial Statements."
</TABLE>
4
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED, IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Quarter Ended Two Quarters Ended Four Quarters Ended
------------------------ ------------------------- -----------------------
June 27, June 28, June 27, June 28, June 27, June 28,
1999 1998 1999 1998 1999 1998
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUE
Advertising
Retail $ 266,146 $ 267,382 $ 514,732 $ 507,927 $ 1,096,078 $ 1,083,314
General 81,100 65,353 155,957 129,037 288,751 262,225
Classified 271,720 263,122 533,624 523,877 1,021,502 1,017,569
----------- ----------- ----------- ----------- ----------- -----------
Total 618,966 595,857 1,204,313 1,160,841 2,406,331 2,363,108
Circulation 145,183 147,647 291,940 296,244 583,225 597,530
Other 45,517 35,788 84,212 66,090 159,653 126,836
----------- ----------- ----------- ----------- ----------- -----------
Total Operating Revenue 809,666 779,292 1,580,465 1,523,175 3,149,209 3,087,474
OPERATING COSTS
Labor and employee benefits 308,493 302,582 613,592 594,499 1,220,074 1,198,138
Newsprint, ink and supplements 121,945 133,973 248,815 264,607 513,362 527,363
Other operating costs 175,244 168,910 341,259 331,278 679,095 670,982
Depreciation and amortization 48,499 46,702 95,652 92,479 191,225 179,797
----------- ----------- ----------- ----------- ----------- -----------
Total Operating Costs 654,181 652,167 1,299,318 1,282,863 2,603,756 2,576,280
----------- ----------- ----------- ----------- ----------- -----------
OPERATING INCOME 155,485 127,125 281,147 240,312 545,453 511,194
----------- ----------- ----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest expense (24,038) (26,875) (48,802) (54,836) (99,902) (118,841)
Interest expense capitalized 1,006 1,251 3,323 2,401 5,438 4,628
Interest income 1,110 1,265 1,540 2,883 2,073 5,602
Equity in earnings of unconsolidated
companies and joint ventures 3,960 8,496 8,828 12,835 19,302 19,862
Minority interests in earnings of
consolidated subsidiaries (2,860) (2,549) (5,459) (5,030) (11,178) (11,136)
Other, net 9,810 4,407 8,910 86,160 11,492 152,014
----------- ----------- ----------- ----------- ----------- -----------
Total (11,012) (14,005) (31,660) 44,413 (72,775) 52,129
----------- ----------- ----------- ----------- ----------- -----------
Income before income taxes 144,473 113,120 249,487 284,725 472,678 563,323
Income taxes 57,887 46,195 100,034 116,363 185,956 234,865
----------- ----------- ----------- ----------- ----------- -----------
Income from continuing operations 86,586 66,925 149,453 168,362 286,722 328,458
Gain on sales of discontinued BIS operations,
net of applicable income taxes of $43,752
for the quarter and two quarters ended 1998
and applicable income taxes of $52,117 for the
four quarters ended 1998 60,042 60,042 75,303
Income/(loss) from discontinued BIS operations,
net of applicable income taxes/(benefits)
of $133 for the two quarters ended 1998
and $1,483 for the four quarters ended 1998 184 1,810
----------- ----------- ----------- ----------- ----------- -----------
Net income $ 86,586 $ 126,967 $ 149,453 $ 228,588 $ 286,722 $ 405,571
=========== =========== =========== =========== =========== ===========
EARNINGS PER SHARE
Basic:
Income from continuing operations attributable
to common stock (Note 5) $ 1.04 $ 0.81 $ 1.80 $ 2.04 $ 3.46 $ 3.82
Net gain on sale of discontinued
BIS operations 0.76 0.76 0.92
Income from discontinued BIS operations, net 0.02
----------- ----------- ----------- ----------- ----------- -----------
Net income attributable
to common stock (Note 5) $ 1.04 $ 1.57 $ 1.80 $ 2.80 $ 3.46 $ 4.76
=========== =========== =========== =========== =========== ===========
Diluted:
Income from continuing operations $ 0.88 $ 0.68 $ 1.53 $ 1.70 $ 2.94 $ 3.22
Net gain on sale of discontinued
BIS operations 0.61 0.61 0.74
Income from discontinued BIS operations, net 0.02
----------- ----------- ----------- ----------- ----------- -----------
Net income $ 0.88 $ 1.29 $ 1.53 $ 2.31 $ 2.94 $ 3.98
=========== =========== =========== =========== =========== ===========
DIVIDENDS DECLARED PER COMMON SHARE $ 0.23 $ 0.20 $ 0.43 $ 0.40 $ 0.83 $ 0.80
=========== =========== =========== =========== =========== ===========
AVERAGE SHARES OUTSTANDING (000s)
Basic 79,000 78,600 78,713 79,275 78,601 82,253
=========== =========== =========== =========== =========== ===========
Diluted 97,847 98,159 97,583 98,859 97,538 101,879
=========== =========== =========== =========== =========== ===========
</TABLE>
See "Notes to Consolidated Financial Statements."
5
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flows
(Unaudited, in thousands of dollars)
Quarter Ended Two Quarters Ended Four Quarters Ended
------------------- ----------------------- -----------------------
June 27, June 28, June 27, June 28, June 27, June 28,
1999 1998 1999 1998 1999 1998
--------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CASH PROVIDED BY (REQUIRED FOR) OPERATING ACTIVITIES
Net income $ 86,586 $ 126,967 $ 149,453 $ 228,588 $ 286,722 $ 405,571
Noncash items deducted from (included in) income:
Gains on sale of investee/subsidiaries (75,251) (136,576)
Net gain on sale of discontinued
BIS operations (60,042) (60,042) (75,303)
Depreciation 28,671 27,114 56,464 53,041 105,373 102,228
Amortization of excess of cost over
net assets acquired 16,854 16,157 33,561 32,521 67,075 63,512
Amortization of other assets 2,974 3,431 5,627 6,917 18,777 14,057
Deferred tax benefit (2,187) (1,538) (3,856) (2,779) (9,521) (17,943)
Provision for bad debt 6,389 4,905 11,830 10,124 22,560 24,334
Earnings from investees in excess of distributions (3,258) (9,047) (7,375) (12,544) (16,687) (23,053)
Minority interests in earnings of
consolidated subsidiaries 2,860 2,549 5,459 5,030 11,178 11,136
Other items, net (518) 3,849 5,231 7,247 16,560 34,478
Change in certain assets and liabilities:
Accounts receivable (33,651) (10,594) (3,331) 15,466 (58,724) (29,172)
Inventories 9,523 2,731 11,748 (12,974) 15,324 (3,593)
Other current assets 3,712 4,362 6,474 10,001 (231) (444)
Accounts payable (8,565) 10,588 (44,259) 13,335 (77,893) 21,929
Federal and state income taxes (23,377) (53,703) 15,640 12,733 (49,327) (36,894)
Other liabilities 66 (6,271) 7,915 (35,486) 20,619 13,496
--------- --------- ----------- ----------- ----------- -----------
Net Cash Provided by Operating Activities 86,079 61,458 250,581 195,927 351,805 367,763
--------- --------- ----------- ----------- ----------- -----------
CASH PROVIDED BY (REQUIRED FOR) INVESTING ACTIVITIES
Proceeds from sales of businesses 58,125 108,616
Proceeds from sale of discontinued BIS operations 125,000 125,000 541,983
Change in net noncurrent assets of discontinued
BIS operations 520 (3,353)
Acquisition of businesses (2,303) (32,741) (1,250) (32,766) (3,350)
Acquisition of other investments (10,052) (3,251) (22,653) (4,240) (55,284) (20,798)
Proceeds from sales of securities available for sale 21,942 2,511 30,760 2,511 32,568 113,426
Proceeds from sale of other investments 43,316 43,316 43,316
Additions to property, plant and equipment (24,264) (46,839) (49,422) (77,533) (103,914) (123,486)
Other items, net 8,059 4,040 7,183 2,277 7,410 15,637
--------- --------- ----------- ----------- ----------- -----------
Net Cash Provided by (Required for)
Investing Activities 36,698 81,461 (23,557) 105,410 (108,670) 628,675
--------- --------- ----------- ----------- ----------- -----------
CASH PROVIDED BY (REQUIRED FOR) FINANCING ACTIVITIES
Proceeds from sale of commercial paper,
notes payable and senior notes payable 388,066 885,060 1,338,921 885,060 1,368,787 1,391,944
Payment of total debt (785,497) (989,947) (1,539,872) (1,017,325) (1,579,733) (1,684,947)
--------- --------- ----------- ----------- ----------- -----------
Net Change in Total Debt (397,431) (104,887) (200,951) (132,265) (210,946) (293,003)
Payment of common and preferred cash dividends (22,176) (19,204) (41,362) (38,718) (79,796) (80,077)
Sale of common stock to employees 13,874 9,168 23,063 22,475 44,999 51,242
Purchase of treasury stock (7,904) (207,529) (48,004) (587,178)
Other items, net (15,046) (3,792) (5,797) (9,037) (17,129) (19,426)
--------- --------- ----------- ----------- ----------- -----------
Net Cash (Required for)
Financing Activities (420,779) (126,619) (225,047) (365,074) (310,876) (928,442)
--------- --------- ----------- ----------- ----------- -----------
Net Increase (Decrease) in Cash (298,002) 16,300 1,977 (63,737) (67,741) 67,996
Cash and short-term cash
investments at beginning of the period 326,815 80,254 26,836 160,291 96,554 28,558
--------- --------- ----------- ----------- ----------- -----------
Cash and short-term cash
investments at end of the period $ 28,813 $ 96,554 $ 28,813 $ 96,554 $ 28,813 $ 96,554
========= ========= =========== =========== =========== ===========
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flows (CONT.)
(Unaudited, in thousands of dollars)
Quarter Ended Two Quarters Ended Four Quarters Ended
------------------- ----------------------- -----------------------
June 27, June 28, June 27, June 28, June 27, June 28,
1999 1998 1999 1998 1999 1998
--------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
Non cash investing activities
Securities received as proceeds on the sale of investee $ 37,678 $ 37,678
Non cash financing activities
Conversion of preferred stock held by Disney
to common stock
Preferred Stock $ (100) $ (100) $ (100)
Additional Capital (37,508) (37,508) (37,508)
Issuance of common stock upon conversion
of preferred stock
Common Stock 21 21 21
Additional Capital 37,587 37,587 37,587
7
</TABLE>
<PAGE>
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 quarter, two quarters and four quarters
ended June 27, 1999 are not necessarily indicative of the results that may be
expected for the year ending December 26, 1999. 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 27, 1998.
Certain amounts in 1998 have been reclassified to conform to the 1999
presentation.
NOTE 2 - COMPREHENSIVE INCOME
The following table sets forth the computation of comprehensive income (in
thousands):
<TABLE>
<CAPTION>
Quarter Ended Two Quarters Ended Four Quarters Ended
---------------------- ---------------------- ----------------------
June 27, June 28, June 27, June 28, June 27, June 28,
1999 1998 1999 1998 1999 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net income $ 86,586 $ 126,967 $ 149,453 $ 228,588 $ 286,722 $ 405,571
Unrealized gains(losses) on securities available for sale:
Change in unrealized gains, net of related taxes (1,351) 7,302 11,394 10,954 13,660 10,379
Less: reclassification adjustment for gains
realized in net income (6,911) (743) (9,182) (743) (2,921) (3,678)
--------- --------- --------- --------- --------- ---------
Other comprehensive income (8,262) 6,559 2,212 10,211 10,739 6,701
--------- --------- --------- --------- --------- ---------
Total comprehensive income $ 78,324 $ 133,526 $ 151,665 $ 238,799 $ 297,461 $ 412,272
========= ========= ========= ========= ========= =========
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
NOTE 3 - DEBT
(In Thousands of Dollars)
Effective
Interest Balance At
Rate At ---------------------------------------------------
June 27, June 27, December 27, June 28,
1999 1999 1998 1998
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Commercial paper, net of discount (a) 5.1% $ 438,179 $ 917,533 $ 887,667
Debentures, net of discount (b) 10.0% 198,381 198,299 198,216
Debentures, net of discount (c) 7.6% 94,483 94,386 94,288
Debentures, net of discount (d) 7.0% 296,743
Notes payable, net of discount (e) 8.5% 119,857 119,777 159,697
Notes payable, net of discount (f) 6.8% 98,092 97,978 97,865
Senior notes, net of discount (g) 6.3% 99,355 99,305 99,255
----------- ----------- -----------
Total Debt (h) 6.9% 1,345,090 1,527,278 1,536,988
Less amounts classified as current 99,591 198,277 289,429
----------- ----------- -----------
Total long-term debt 6.9% $ 1,245,499 $ 1,329,001 $ 1,247,559
=========== =========== ===========
</TABLE>
(a) Commercial paper is supported by $900 million of revolving credit and
term loan agreements, $500 million of which matures on June 22, 2003
and $400 million of which matures June 22, 2000.
(b) Represents $200 million of a 20-year 9 7/8% debenture due in 2009.
(c) Represents $100 million of a 7.15% debenture due in 2027.
(d) Represents $300 million of a 6.875% debenture due in 2029.
(e) Represents $120 million of 8 1/2% notes payable at June 1999 and
December 1998, and $160 million at June 1998. These notes are subject
to mandatory annual repayments, commencing in 1998 through maturity in
2001. Annual maturities are represented under current liabilities.
(f) Represents $100 million of a 6.625% note due in 2007.
(g) Represents $100 million of 10 year 6.3% senior notes due in 2005.
(h) Interest payments for the six months ended June 1999 and June 1998 were
$43.3 million and $69.0 million, respectively.
NOTE 4 - INCOME TAX PAYMENTS
Income tax payments for the two quarters ended June 27, 1999 and June 28, 1998,
were $90.0 million and $112.6 million, respectively. Payments in 1998 include
the tax impact resulting from one-time gains on the sale of the balance of the
company's jointly owned cable systems and its newspaper in Gary, Indiana.
9
<PAGE>
NOTE 5 - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share from continuing operations (in thousands, except per share data):
<TABLE>
<CAPTION>
Quarter Ended Two Quarters Ended Four Quarters Ended
------------------- ------------------- -------------------
June 27, June 28, June 27, June 28, June 27, June 28,
1999 1998 1999 1998 1999 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations $ 86,586 $ 66,925 $149,453 $168,362 $286,722 $328,458
Less dividends on preferred stock 4,036 3,510 7,546 7,020 14,566 14,039
-------- -------- -------- -------- -------- --------
Income from continuing operations attributable to common stock $ 82,550 $ 63,415 $141,907 $161,342 $272,156 $314,419
======== ======== ======== ======== ======== ========
Average shares outstanding (basic) 79,000 78,600 78,713 79,275 78,601 82,253
-------- -------- -------- -------- -------- --------
Effect of dilutive securities:
Convertible preferred stock 17,383 17,549 17,465 17,549 17,507 17,549
Stock options 1,464 2,010 1,405 2,035 1,430 2,077
-------- -------- -------- -------- -------- --------
Average shares outstanding (diluted) 97,847 98,159 97,583 98,859 97,538 101,879
-------- -------- -------- -------- -------- --------
Earnings per share from continuing operations (basic) $ 1.04 $ 0.81 $ 1.80 $ 2.04 $ 3.46 $ 3.82
======== ======== ======== ======== ======== ========
Earnings per share from continuing operations (diluted) $ 0.88 $ 0.68 $ 1.53 $ 1.70 $ 2.94 $ 3.22
======== ======== ======== ======== ======== ========
</TABLE>
Income from continuing operations attributable to common stock for the two
quarters and the four quarters ended June 28, 1998 and the quarter ended March
28, 1999 have been restated to separately identify dividends on preferred stock.
Related amounts were previously included with dividends on common stock.
The Walt Disney Company received 1.75 million shares of series B convertible
preferred stock in payment for the newspapers the company purchased from them on
May 9, 1997. During June 1999, Walt Disney Company converted 100,000 of these
shares into 1.0 million common shares. In July 1999, Walt Disney Company
converted an additional 100,000 shares of series B convertible preferred stock
into common stock.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
On July 13, 1995, six unions struck the Detroit Free Press, The Detroit News and
the Detroit Newspaper Agency, which operates both newspapers. Subsequently, the
unions filed numerous unfair labor practice charges against the newspapers and
the Agency. In June 1997, after a lengthy trial, a National Labor Relations
Board (NLRB) administrative judge ruled that the strike was caused by the unfair
labor practices of the Agency and The Detroit News and ordered that the Agency
and the newspapers reinstate all strikers, displacing permanent replacements if
necessary. The Agency and the newspapers appealed the decision to the NLRB.
On August 27, 1998, the NLRB affirmed certain unfair labor practice findings
against The Detroit News and the Agency, and reversed certain findings of unfair
labor practices against the Agency. The Agency and the newspapers filed a motion
to reconsider with the NLRB, which was denied on March 4, 1999. The Agency, the
newspapers and the unions filed appeals to the U.S. Court of Appeals for the
District of Columbia Circuit. The case is pending in the U.S. Court of Appeals.
There is no briefing schedule yet, nor has a hearing date been set for oral
argument.
Various libel actions and 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 all legal proceedings, including
Detroit, will not be material to its financial position or results of
operations, on a consolidated basis.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SECOND QUARTER
SECOND QUARTER 1999 COMPARED WITH SECOND QUARTER 1998 AND THE YEAR TO DATE
RESULTS ENDED JUNE 27, 1999 COMPARED WITH THE YEAR TO DATE RESULTS ENDED JUNE
28, 1998.
Diluted earnings per share from continuing operations was $.88, up $.20, or
29.4%, from the $.68 reported last year. Excluding one-time gains on
investments, relocation and severance costs and other non-recurring items in
both 1999 and 1998, earnings per share from continuing operations for the second
quarter of 1999 was $.83, up $.10, or 13.7% from $.73 per diluted share in 1998.
Non-recurring items for the second quarter of 1999 included investment gains
totaling $.07 per share on the sale of Zip2 Corp. and AT&T stock, net of
adjustments to the carrying value of certain investments and severance costs of
$.02 per share. Non-recurring items in 1998 included corporate relocation costs
of $.07 per share and settlements on 1997 newspaper sales of $.02 per share.
Diluted earnings per share from continuing operations for the first two quarters
of 1999 was $1.53, down $.17, or 10.0%, from $1.70 for the first two quarters of
1998. Excluding non-recurring items, earnings per share from continuing
operations was $1.49, up $.19, or 14.6%, from $1.30 for the first two quarters
of 1998. Non-recurring items for the first two quarters of 1999 included
investment gains totaling $.07 per share and severance costs of $.03 per share.
For 1998, non-recurring items consisted of investment gains of $0.45 per share
on the sale of the balance of the company's cable investment and its newspaper
business in Gary, Indiana, corporate relocation costs of $.07 per share and
settlements on 1997 newspaper sales of $.02 per share.
Net income from continuing operations in the second quarter was $86.6 million,
up $19.7 million, or 29.4%, from the same period last year. Excluding
non-recurring items, net income from continuing operations for the second
quarter was $81.3 million, up 13.0% from 1998, and for the year to date, was
$145.5 million, down $17.1 million, or 13.3%.
OPERATING REVENUE
Advertising revenue increased $23.1 million, or 3.9% from the second quarter
last year and $43.5 million, or 3.7%, year to date. This reflected improvements
in the general and classified categories for the quarter and all advertising
revenue categories year to date.
General advertising revenue was up $15.7 million, or 24.1%, from the second
quarter last year. General revenue improved in most markets with strong gains in
Philadelphia, San Jose, Miami, Fort Worth, and Saint Paul, up $4.3 million, $2.7
million, $2.2 million, $1.5 million and $1.3 million, respectively. Year to date
general advertising revenue was up $26.9 million, or 20.9%. National automotive,
telecommunications, Internet, and travel advertising contributed to the growth.
11
<PAGE>
Classified advertising revenue improved $8.6 million, or 3.3%, from the second
quarter last year and $9.7 million, or 1.9% year to date. All classified revenue
categories were above the prior year, with the exception of help wanted, which
was down 0.2% for the quarter and 1.6% year to date.
Retail advertising revenue decreased by $1.2 million, or 0.5%, from second
quarter 1998, but increased $6.8 million, or 1.3%, from year to date 1998. The
largest declines for the quarter were in Miami and Detroit, down $1.6 million
and $1.1 million respectively. Retail advertising results were mixed for the
first two quarters of the year with the strongest gains in Fort Worth, Contra
Costa, and Charlotte, up $2.5 million, $2.0 million and $1.8 million,
respectively. The largest declines year to date were in Kansas City and Miami,
down $1.7 and $1.3 million, respectively.
Circulation revenue for the second quarter was down $2.5 million, or 1.7%, from
1998, and decreased $4.3 million, or 1.5%, for the year to date. For the
quarter, there was a 2.3% decrease in seven-day circulation, offset by a 0.7 %
increase in average rate. For the year to date, there was a 2.3% decrease in
seven-day circulation, offset by a 0.9% increase in average rate.
Other revenue increased by $9.7 million, or 27.2%, from the prior year quarter
and $18.1 million, or 27.4%, from year to date 1998. The improvement for the
second quarter and year to date was due to greater specialized publication and
on-line revenue. The increase in specialized publication revenues was a result
of Philadelphia's acquisition of ProMedia in the first quarter of 1999.
OPERATING COSTS
Labor and employee benefit costs increased $5.9 million, or 2.0%, from the
second quarter 1998 and $19.1 million, or 3.2%, for the year to date. Excluding
1999 severance costs and 1998 corporate relocation costs, labor and employee
benefit costs increased $14.7 million, or 5.0% from second quarter 1998. The
average wage rate increased 2.4% compared to the second quarter of 1998 while
the workforce remained flat compared to the prior year. The remainder of the
increase was due to increases in employee benefit expense and bonuses. On this
same basis, year to date labor and employee benefit costs were up $25.6 million,
or 4.4%, higher than 1998, on a 2.5% increase in the average wage rate and a
0.2% decrease in the workforce.
Newsprint, ink and supplement costs decreased $12.0 million, or 9.0% from second
quarter on a 9.7% decrease in the average newsprint price, offset in part by a
0.2% increase in newsprint consumption. Year to date costs were down $15.8
million, or 6.0%, on a 5.7% decrease in the average newsprint price and a 0.4%
decrease in newsprint consumption.
Other operating costs increased $6.3 million, or 3.8%, from second quarter 1998
and $10.0 million, or 3.0%, year to date. These increases were primarily
attributable to new event marketing, special publication, and circulation
initiatives in Philadelphia.
Depreciation and amortization increased $1.8 million, or 3.9%, from second
quarter 1998 and $3.2 million, or 3.4%, year to date 1998. The increase was due
to the accelerated writedown of equipment in Miami related to the installation
of new presses.
12
<PAGE>
NON-OPERATING ITEMS
Interest expense, net of interest income and capitalized interest, decreased
$2.4 million, or 10.0%, from second quarter 1998, and decreased $5.6 million, or
11.3%, for the year to date. The quarter's decrease was due to decreased debt
levels and lower interest rates resulting from the second quarter 1998 debt
refinancing. The average debt balance for the quarter decreased $23.7 million,
or 1.6%, from the second quarter of last year and $126.1 million, or 8.0%, from
year to date 1998.
Equity in earnings of unconsolidated companies and joint ventures was down $4.5
million in the second quarter and down $4.0 million year to date. The quarter's
decrease was due to lower earnings from the company's newsprint mill
investments, down $1.5 million, lower earnings from The Seattle Times, down $1.3
million, and a $1.8 million decline in earnings from Infinet. The newsprint mill
investments were affected by lower newsprint prices in 1999.
The "Other, net" line of the non-operating section reflects an increase of $5.4
million from the second quarter of 1998. The increase included 1999 net gains on
the sale of investments of $11.2 million, offset by a $3.1 million settlement
recorded in 1998. Excluding these items from 1999 and 1998, "Other, net"
declined $2.7 million for the second quarter 1999. Year to date, "Other, net"
was down $77.3 million. The decline was primarily due to the investment gains of
$75.3 million on the sale of the balance of the company's cable investment and
its newspaper in Gary, Indiana.
The effective tax rate on continuing operations was 40.1% in the quarter ended
June 27, 1999 compared to 40.8% for the comparable quarter in 1998. The
effective tax rate on continuing operations for the year to date was 40.1% in
1999 compared to 40.9% in 1998. Excluding one-time gains in 1998, the effective
tax rate was 41.1%.
OTHER
The company did not repurchase any common stock during the first and second
quarters of 1999. The company has authorization to repurchase approximately 3.2
million shares and will consider market opportunities for share repurchases.
During June 1999, The Walt Disney Company (Disney) converted 100,000 shares of
the company's series B convertible preferred stock into common stock, which
Disney subsequently sold. Disney received 1,754,930 shares of the company's
series B convertible preferred stock pursuant to the company's acquisition of
four newspapers from Disney on May 9, 1997.
LIQUIDITY
Net cash provided by operating activities increased by $24.6 million in the
second quarter of 1999 from $61.5 million in the second quarter of 1998. The
increase was attributed to higher earnings, excluding the gain on the sale of
discontinued operations in 1998. Net cash provided by investing activities
decreased by $44.8 million from the second quarter of 1998, largely due to
proceeds from the 1998 sale of Technimetrics, Inc. Cash and short term cash
investments were down $67.7 million from June 28, 1998, but up $2.0 million from
year-end 1998. Total debt decreased $182.2 million from December 27, 1998 and
declined $191.9 million from June 28, 1998.
Total-debt-to-total-capital ratio was 42.8% compared to 47.9% at year end and
49.3% in June 1998. Approximately $460.0 million in aggregate unused credit
lines remained at the end of the quarter. The ratio of current assets to current
liabilities was 0.9:1 at June 27, 1999, 0.8:1 at December 27, 1998, and 0.7:1 at
June 28, 1998.
13
<PAGE>
YEAR 2000 READINESS DISCLOSURE
All Year 2000 statements in this Form 10-Q are Year 2000 Readiness Disclosures
under the Year 2000 Information and Readiness Disclosure Act (the "Act").
The Year 2000 ("Y2K") issue results from computer programs using two digits
rather than four to define the applicable year. Computer programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure, disruption of
operations, and/or a temporary inability to conduct normal business activities.
In the spring of 1997, the company initiated a comprehensive project to address
Y2K issues. The Y2K project has been divided into five phases: Scope Definition,
Impact Assessment, Conversion, Testing and Implementation.
To implement this project, the company established a Y2K Project Management
Office ("PMO") to act as a central point of coordination for Y2K activity,
chaired by the vice president and chief information officer, who reports
directly to the chief executive officer. The PMO team includes executive
management and employees with expertise from various disciplines. At each
business unit, a Y2K coordinator has been appointed to direct all local Y2K
activities. The Y2K coordinator works closely with the PMO team and local
executive management and employees. Organization-wide support is also provided
through special forums for Y2K coordinators. The company also engaged experts to
assist in developing work plans and cost estimates to complete remediation
activities. The company's Internal Audit Department also reviews periodically
the project status at the business units.
The Scope Definition Phase, completed in June 1997, determined that the Y2K
project would encompass both Information Technology ("IT") and non-IT assets
(embedded chips), including: software, microprocessor-based hardware (including
embedded chips found in facilities and production environments) and significant
suppliers, customers and other relevant third parties.
The Impact Assessment Phase included a comprehensive inventory of both
internally developed software and vendor products, as well as
microprocessor-based hardware. These inventoried systems were evaluated for Y2K
issues, if any, and a preliminary assessment on replacement or remediation was
developed to make these systems Y2K capable, as necessary. The company also
developed a central database repository that contains each Y2K project
prioritized on the basis of perceived business risk. This phase was completed in
November 1997.
Conversion, Testing and Implementation Phases have been ongoing since mid 1997.
Software, hardware, third-party interfaces and related items for all critical
systems are being tested to determine Y2K capability under various
circumstances. A majority of the software used by the company's business units
is vendor-packaged. Y2K testing will be performed for all critical
14
<PAGE>
systems prior to implementation. When possible, previously created test cases
are run and results are compared to the baseline results.
For systems developed in-house, regression and other Y2K data testing is done as
appropriate after Y2K remediation is complete. Results of regression testing are
documented and compared to previous baseline results. Upon successful completion
of the Testing Phase, the systems will be implemented in the live production
environment (Implementation Phase). As of June 30, 1999 the Conversion, Testing
and Implementation Phases were 80% complete, and the company expects that the
balance will be completed no later than September 30, 1999.
All significant suppliers, customers and other relevant third parties have been
contacted to determine the extent to which interfaces with company systems are
vulnerable if these third parties fail to remediate their own Y2K issues. There
can be no assurance that these third-party systems will be converted on a timely
basis. The failure of any critical third-party systems could have a material
adverse impact on operations. However, the company is monitoring vendor
compliance and will consider alternatives if vendors cannot meet the company's
Y2K requirements.
Generally, the company's business units are not dependent on a single source for
any products or services, except for products or services supplied by public
utilities. In the event a significant supplier or other vendor is unable to
provide products or services to the company due to a Y2K failure, the company
believes there are adequate alternative sources for such products or services.
There is no guarantee, however, that such alternative products or services would
be available on the same terms and conditions, or that the company's business
units would not experience some adverse effects as a result of switching to
alternative sources.
The total cost of the Y2K project currently is estimated to range from $55
million to $65 million and is being funded with operating cash flows.
Approximately 65% of the total will relate to purchased hardware and software,
which will be capitalized. The remainder will be expensed as incurred.
Expenditures through June 27, 1999 totaled $47.4 million, of which approximately
65% has been capitalized. In certain cases, an expedited system replacement
schedule will also bring enhanced functionality and should serve to reduce
future capital requirements. The company believes that the acceleration of
certain projects has not resulted in the deferral of other IT projects, which
would have a material impact on the financial condition and results of
operation.
At this time there can be no assurance that these cost estimates will not be
exceeded, and actual costs may differ significantly from those projected. Some
factors that may cause actual expenditures to differ include the availability
and cost of trained personnel, and the ability to locate and correct all
relevant computer problems.
As part of normal business practices, the company maintains site-specific
emergency publication plans to be followed during emergency circumstances.
Emergency publication plans are being reviewed and updated with Y2K contingency
considerations in mind. This effort, plus additional contingency planning
activities to minimize potential disruption to operations, especially from
externally interfaced systems over which the company has limited or no control,
will be completed before year end 1999.
15
<PAGE>
Based on a recent assessment of its internal operations, those over which the
company has direct control, the company believes that with modifications to
existing software and conversions to new software, the Y2K issue will not pose
significant operational problems. The remediation or replacement of these
systems is well under way. Furthermore, the contingency plan will outline
alternative solutions in the event that they are required. However, if such
modifications and conversions are not made or are not completed timely, the Y2K
issue could have a material adverse impact on the operations of the company.
OUTLOOK FOR THE REMAINDER OF THE YEAR
Looking ahead to the third quarter and the full year, the company anticipates
advertising growth will be moderately above 1998. The cost of newsprint is lower
than originally anticipated as the expected price increases look to be smaller
and are occurring later than previously thought.
Certain statements contained herein are forward-looking statements. These
forward-looking statements are subject to certain risks and uncertainties, that
could cause actual results and events to differ materially from those
anticipated.
Potential risks and uncertainties that could adversely affect the company's
ability to obtain these results include, without limitations, the following
factors: (a) increased consolidation among major retailers or other events that
may adversely affect business operations of major customers and depress the
level of local and national advertising; (b) an economic downturn in some or all
of the company's principal newspaper markets that may lead to decreased
circulation or decreased local or national advertising; (c) a decline in general
newspaper readership patterns as a result of competitive alternative media or
other factors; (d) an increase in newsprint costs over the levels anticipated;
(e) labor disputes which may cause revenue declines or increased labor costs;
(f) acquisitions of new businesses or dispositions of existing businesses; (g)
increases in interest or financing costs; and (h) rapid technological changes
and frequent new product introductions prevalent in electronic publishing,
including the evolution of the Internet.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The company has no material changes to the disclosure made on this matter in the
company's annual report on Form 10-K for the year ended December 27, 1998.
16
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Refer to Part 1, Item 1, Note 6, incorporated herein by reference, for a
discussion of legal proceedings relating to the Detroit Free Press.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company's Annual Meeting of Shareholders was held on May 12, 1999.
The results of the voting with respect to matters presented at the
Annual Meeting were as follows:
Common Stock Voted
----------------------------
For Against Withheld
--- ------- --------
(b) Election of Directors
For a three- year term ending 2002:
James I. Cash, Jr. 71,284,121 0 1,082,122
P. Anthony Ridder 71,164,379 0 1,201,864
Randall L. Tobias 71,289,063 0 1,077,180
Continuing Directors:
Joan Ridder Challinor
Alvah H. Chapman, Jr.
Gonzalo F. Valdes-Fauli
Kathleen Foley Feldstein
Thomas P. Gerrity
Barbara Barnes Hauptfuhrer
M. Kenneth Oshman
John L. Weinberg
17
<PAGE>
(c) Ratification of the appointment of Ernst & Young LLP as independent
auditors of the company for the year 1999:
Common Stock Voted
-----------------------------------------------------------
For Against Abstained Broker Non-votes
--- ------- --------- ----------------
71,850,006 294,612 221,625 None
Approval of an amendment of the Employees Stock Option Plan to increase
the number of shares of Common Stock available for grant:
Common Stock Voted
-----------------------------------------------------------
For Against Abstained Broker Non-votes
--- ------- --------- ----------------
55,227,214 14,725,915 339,239 2,073,875
Approval of an amendment of the Employees Stock Purchase Plan to
increase the number of shares of Common Stock available for purchase:
Common Stock Voted
-----------------------------------------------------------
For Against Abstained Broker Non-votes
--- ------- --------- ----------------
68,662,170 1,334,366 295,832 2,073,875
Vote on shareholder proposal concerning executive compensation:
Common Stock Voted
-----------------------------------------------------------
For Against Abstained Broker Non-votes
--- ------- --------- ----------------
12,463,209 56,951,992 877,167 2,073,875
Item 6. Exhibits and Reports of Form 8-K
(a) Exhibits Filed
No. 3 (ii) By-Laws (As Amended through May 12, 1999)
No. 27 - Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter
ended June 27, 1999.
18
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KNIGHT-RIDDER, INC.
(Registrant)
Date: August 11, 1999
/s/ GARY R. EFFREN
-----------------------------------
Gary R. Effren
Vice President/Controller
(Chief Accounting Officer and Duly
Authorized Officer of Registrant)
19
Exhibit 3(ii)
BYLAWS
OF
KNIGHT-RIDDER, INC.
-------------------
(As Amended Through May 12, 1999)
ARTICLE I
Shareholders
------------
SECTION 1 - ANNUAL MEETING: The annual meeting of the shareholders of
the Company for the election of directors and for the transaction of such other
business as may properly come before the meeting, shall be held at the principal
office of the Company or at such other place as may be designated by the Board
of Directors and specified in the notice of such meeting, at such time and upon
such date during the months of April or May in each year as the Board of
Directors may determine.
SECTION 2 - SPECIAL MEETING: Special meetings of the shareholders of
the Company may be held on any business day, when called by the Chairman of the
Board, the Vice Chairman of the Board, the President, or a Vice President, or by
the Board acting at a meeting, or by a majority of the directors acting without
a meeting, or by persons who hold ten percent (10%) of all shares outstanding
and entitled to vote thereat. Upon request in writing, delivered either in
person or by registered mail to the Chairman of the Board, the Vice Chairman of
the Board, the President, or the Secretary, by any persons entitled to call a
meeting of shareholders, which request shall state the objects for which the
meeting is to be called, and the business considered and transacted at any such
meeting called on the request of shareholders shall be confined to the objects
stated in such request, such officer shall forthwith cause to be given to the
shareholders entitled thereto notice of a meeting to be held on a date not less
than ten (10) nor more than sixty (60) days after the receipt of such request,
as such officer may fix. If such notice is not given within fifteen (15) days
after the delivery or mailing of such request, the persons calling the meeting
may fix the time of the meeting and give notice thereof in the manner provided
by law or as provided in these Bylaws, or cause such notice to be given by any
designated representative. Each special meeting shall be called to convene
between 9:00 o'clock A.M. and 4:00 o'clock P.M. and shall be at the principal
office of the Company in San Jose, California, unless the same is called by the
directors, acting with or without a meeting, in which case such meeting may be
<PAGE>
2
held at any place either within or without the State of Florida designated by
the directors and specified in the notice of such meeting.
SECTION 3 - NOTICE OF MEETINGS: Not less than ten (10) nor more than
sixty (60) days before the date fixed for a meeting of shareholders, written
notice stating the time, place and purposes of such meeting shall be given by or
at the direction of the Secretary or an Assistant Secretary, or any other person
or persons required or permitted by law to give such notice. The notice shall be
given by personal delivery or by first-class mail to each shareholder entitled
to notice of the meeting who is of record as of the day preceding the day on
which notice is given or, if a record date therefor is duly fixed, of record as
of said date, if mailed, the notice shall be addressed to the shareholders at
their respective addresses as they appear on the records of the Company. Notice
of the time, place and purpose of any meeting of shareholders may be waived in
writing, either before or after the holding of such meeting by any shareholder,
which writing shall be filed with or entered upon the records of the meeting.
SECTION 4 - QUORUM: ADJOURNMENT: Except as may be otherwise provided by
law or by the Articles of Incorporation, at any meeting of the shareholders, the
holders of shares entitling them to exercise a majority of the voting power of
the Company present in person or by proxy shall constitute a quorum for such
meeting; provided, however, that no action required by law, the Articles, or
these Bylaws to be authorized or taken by a designated proportion of the shares
of the Company may be authorized or taken by a lesser proportion; and, provided
further, that the holders of a majority of the voting shares represented
thereat, whether or not a quorum is present, may adjourn such meeting from time
to time; if any meeting is adjourned, notice of such adjournment need not be
given if the time and place which is adjourned are fixed and announced at such
meeting unless a new record date is established, in which event a new notice for
the adjourned meeting shall be given in accordance with Section 3 of this
Article.
SECTION 5 - PROXIES: Any shareholder entitled to vote or express his
consent or dissent at a meeting of the shareholders may do so in person or may
be represented by proxy, appointed by an instrument in writing, signed by the
shareholder or by his duly authorized attorney-in-fact.
SECTION 6 - APPROVAL AND RATIFICATION OF ACTS OF OFFICERS AND BOARD:
Except as otherwise provided by the Articles of Incorporation or by law, any
<PAGE>
3
contract, act, or transaction, prospective or past, of the Company, or of the
Board, or of the officers may be approved or ratified by the affirmative vote at
a meeting of the shareholders of the holders of shares entitling them to
exercise a majority of the voting power of the Company, and such approval or
ratification shall be as valid and binding as though affirmatively voted for by
every shareholder of the Company."
SECTION 7 - NOTIFICATION OF SHAREHOLDER BUSINESS: All business properly
brought before an annual meeting shall be transacted at such meeting. Business
shall be deemed properly brought only if it is (i) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (ii) otherwise properly brought before the meeting by or at the
direction of the Board of Directors or (iii) brought before the meeting by a
shareholder of record entitled to vote at such meeting if written notice of such
shareholder's intent to bring such business before such meeting is delivered to,
or mailed, postage prepaid, and received by, the Secretary of the Company at the
principal office of the Company in San Jose, California not later than one
hundred twenty (120) days prior to the anniversary date of the Company's proxy
statement relating to the immediately preceding annual meeting. Each notice
given by such shareholder shall set forth: (A) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting; (B) the name and address of the shareholder who
intends to propose such business; (C) a representation that the shareholder is a
holder of record of stock of the Company entitled to vote at such meeting (or if
the record date for such meeting is subsequent to the date required for such
shareholder notice, a representation that the shareholder is a holder of record
at the time of such notice and intends to be a holder of record on the record
date for such meeting), setting forth the number and class of shares so held,
and intends to appear in person or by proxy at such meeting to propose such
business; and (D) any material interest of the shareholder in such business. The
Chairman of the meeting shall, if the facts warrant, determine and declare to
the meeting that business was not properly brought before the meeting in
accordance with the provisions of this Section 7; and, if the Chairman should so
determine and declare, any such business not properly brought before the meeting
shall not be transacted.
ARTICLE II
Shares
------
SECTION 1 - FORM OF CERTIFICATES AND SIGNATURES: The shares of the
Company shall be represented by certificates unless the Board shall by
<PAGE>
4
resolution provide that some or all of any class or series of stock shall be
uncertified shares. Any such resolution shall not apply to shares represented by
a certificate until the certificate is surrendered to the company.
Notwithstanding the adoption of any resolution providing for uncertificated
shares, each holder of shares is entitled to one or more certificates, signed by
the Chairman of the Board, the Vice Chairman of the Board, the President or a
Vice President and by the Secretary or an Assistant Secretary of the Company,
which shall certify the number and class of shares held by him in the company,
but no certificate for shares shall be executed or delivered until such shares
are fully paid. When such a certificate is countersigned by an incorporated
transfer agent or registrar, the signature of any of said officers of the
Company may be facsimile, engraved, stamped or printed. In case any officer who
signed or whose facsimile signature has been placed upon such certificate shall
have ceased to be such officer before such certificate is issued, it may be
issued by the corporation with the same effect as if he were such officer at the
date of its issuance.
SECTION 2 - TRANSFER OF SHARES: Shares of the Company shall be
transferable upon the books of the Company by the holders thereof, in person, or
by a duly authorized attorney, and, where represented by certificates, upon
surrender and cancellation of certificates for a like number of shares of the
same class or series, with duly executed assignment and power of transfer
endorsed thereon or attached thereto, and with such proof of the authenticity of
the signatures to such assignment and power of transfer as the Company or its
agents may reasonably require.
SECTION 3 - LOST, STOLEN, OR DESTROYED CERTIFICATES: The Company may
issue a new certificate for shares in place of any certificate theretofore
issued by it and alleged to have been lost, stolen, or destroyed or claimed as
abandoned property by an appropriate governmental representative and the Board
may, in its discretion, require the owner or high legal representatives, to give
the Company a bond continuing such terms as the Board may require to protect the
Company or any person injured by the execution and delivery of a new
certificate.
SECTION 4 - TRANSFER AGENTS AND REGISTRARS: The Board may appoint, or
revoke the appointment of, transfer agents and registrars and may require all
certificates for shares to bear the signatures of such transfer agents and
registrars, or any of them. The Board shall have the authority to make all such
<PAGE>
5
rules and regulations as it may deem expedient concerning the issue, transfer,
and registration of certificates for shares of the Company.
SECTION 5 - FIXING A RECORD DATE: For any lawful purpose, including
without limitation, the determination of the shareholders who are entitled to:
(1) Receive notice of or to vote at a meeting of shareholders,
(2) Receive payment of any dividend or distribution,
(3) Receive or exercise rights of purchase of or subscription for,
or exchange or conversion of, shares or other securities,
subject to contract rights with respect thereto, or
(4) Participate in the execution of waivers or releases,
the Board may fix a record date which shall not be more than sixty (60) days
(nor less than ten (10) days in the case provided by the clause (1) above)
preceding the date of the meeting of shareholders or the date fixed for the
payment of any dividend or distribution, or the date fixed for the receipt or
the exercise of rights, as the case may be. The record date for the purpose of
the determination of the shareholders who are entitled to receive notice of or
to vote at a meeting of shareholders shall continue to be the record date for
all adjournments of such meetings, unless the Board or the persons who shall
have fixed the original record date shall, subject to the limitations set forth
in this Article, fix another date and, in case a new record date is so fixed,
notice thereof and of the date to which the meeting shall have been adjourned
shall be given to shareholders of record as of such date in accordance with the
same requirements as those applying to a meeting newly called.
SECTION 6 - CONTROL SHARE REDEMPTION: The Company is authorized to
redeem control shares acquired in a control-share acquisition to the fullest
extent permitted by Section 607.109 of the Florida General Corporation Act as
the same now exists or as it may be hereafter amended from time to time. Any
such redemption shall be made at the direction of, and in the manner prescribed
by, the Board of Directors. For purposes of this Section 6, the terms 'control
shares' and 'control-share acquisition' shall have the meanings ascribed to them
by Section 607.109 of the Florida General Corporation Act.
<PAGE>
6
ARTICLE III
Board of Directors
------------------
SECTION 1 - AUTHORITY: Except where the law, the Articles of
Incorporation, or these Bylaws require action to be authorized or taken by the
shareholders, all of the authority of the Company shall be exercised by the
directors.
SECTION 2 - NUMBER OF; QUALIFICATIONS: The Board of Directors of the
Company shall consist of such number of directors as may be determined from time
to time by resolution adopted by the Board of Directors, except that such number
shall not be less than (10) nor more than twenty (20); no reduction in the
number of directors shall of itself have the effect of shortening the term of an
incumbent member.
SECTION 3 - ELECTION OF DIRECTORS; VACANCIES: The directors shall be
elected at each annual meeting of shareholders or at a special meeting called
for the purpose of electing directors. At a meeting of shareholders, at which
directors are to be elected, only persons nominated as candidates shall be
eligible for election as directors, and the candidates receiving the greatest
number of votes shall be elected. In the event of the occurrence of any vacancy
or vacancies in the Board, however caused, the remaining directors, though less
than a majority of the whole authorized number of directors, may, by the vote of
a majority of their number, fill any such vacancy for the unexpired term.
SECTION 4 -_NOTIFICATION OF NOMINATIONS: Subject to the rights of the
holders of any one or more series of Preference Stock then outstanding,
nominations for the election of directors may be made by the Board of Directors
or by any shareholder entitled to vote for the election of directors. Any
shareholder entitled to vote for the election of directors at an annual meeting
or a special meeting called for the purpose of electing directors may nominate
persons for election as directors at such meeting only if written notice of such
shareholder's intent to make such nomination is delivered to, or mailed, postage
prepaid, and received by, the Secretary of the Company at the principal office
of the Company in San Jose, California not later than (i) in the case of an
annual meeting, one hundred twenty (120) days prior to the anniversary date of
the Company's proxy statement relating to the immediately preceding annual
meeting and (ii) in the case of a special meeting, the close of business on the
tenth day following the date on which the Company first makes public disclosure
of the date of the special meeting. Each notice given by such shareholder shall
set forth: (A) the name and address of the shareholder who intends to make the
<PAGE>
7
nomination and of the person or persons to be nominated; (B) a representation
that the shareholder is a holder of record of stock of the Company entitled to
vote at such meeting (or if the record date for such meeting is subsequent to
the date required for such shareholder notice, a representation that the
shareholder is a holder of record at the time of such notice and intends to be a
holder of record on the record date for such meeting), setting forth the number
and class of shares so held, and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice; (C) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (D) such other information regarding each nominee proposed by such
shareholder as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission had
each nominee been nominated, or intended to be nominated, by the Board of
Directors; and (E) the consent of each nominee to serve as a director of the
Company if so elected. The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the provisions of this Section 4; and, if the Chairman should so
determine and declare, the defective nomination shall be disregarded.
SECTION 5 - TERM OF OFFICE; RESIGNATIONS: Directors shall hold office
until the next annual meeting of shareholders and until their successors are
elected and qualified, or until their earlier resignation, removal from office,
or death. Any director may resign at any time, by oral statement to that effect
made at a meeting of the Board or in a writing to that effect delivered to the
Secretary, such resignation to take effect immediately or at such other time as
the director may specify.
SECTION 6 - MEETINGS: Immediately after each annual meeting of the
shareholders, the newly elected directors shall hold an organization meeting for
the purpose of electing officers and transacting any other business. Other
meetings of the Board may be held at any time within or without the State of
Florida in accordance with the resolutions or other action by the Board. The
Secretary shall give written notice of the time and place of all meetings of the
Board of Directors, other than the organization meetings, to each member of the
Board at least two (2) days before the meeting.
SECTION 7 - QUORUM; ADJOURNMENT: A quorum of the Board shall consist of
a majority of the directors then in office; provided that a majority of the
<PAGE>
8
directors present at a meeting duly held, whether or not a quorum is present,
may adjourn such meeting from time to time; if any meeting is adjourned, notice
of adjournment need not be given if the time and place to which it is adjourned
are fixed and announced at such meeting. At each meeting of the Board at which a
quorum is present, all questions and business shall be determined by a majority
vote of those present except as in these Bylaws otherwise expressly provided.
SECTION 8 - APPOINTMENT OF COMMITTEES: The Board of Directors may
appoint such committees, in addition to the Executive Committee, as it may
consider proper, and such committees shall exercise such powers and duties as
the Board from time to time may prescribe, subject to the Articles of
Incorporation, these Bylaws, and applicable law.
SECTION 9 - CONTRACTS: No contracts or other transaction between the
Company and one or more of its directors or any other corporation, firm,
association, or entity shall be made void or voidable by the fact that directors
of the Company are financially interested in, or are directors or officers of
such other corporation, firm, association, or entity if, at the meeting of the
Board, or of the committee of the Company making, authorizing, or confirming
such contract or transaction, the fact of such relationship or interest is
disclosed or known to the Board of Directors or committee which authorizes,
approves, or ratifies such contract or transaction by a vote or consent
sufficient for the purpose without counting the vote or consent of such
interested director; or, if the fact of such relationship or interest is
disclosed or known to shareholders entitled to vote and they authorize, approve,
or ratify such contract or transaction by vote; or, the contract or transaction
is fair and reasonable as to the Company at the time it is authorized by the
Board, committee, or the shareholders. The interested director or directors may
be counted in determining the presence of a quorum at a meeting of the Board of
Directors or committee thereof which authorizes, approves, or ratifies such
contract or transaction.
ARTICLE IV
Executive Committee
-------------------
SECTION 1 - MEMBERSHIP; APPOINTMENT: The Board may appoint not less
than three (3) directors, one of whom shall be the Chief Executive Officer, who
together shall constitute the Executive Committee. The directors may appoint one
or more directors as alternate members of the Committee, who may take the place
of any absent member or members at any meeting of the Committee. Vacancies in
the Executive Committee may be filled at any meeting of the Board.
<PAGE>
9
SECTION 2 - POWERS: DUTIES: The Executive Committee shall advise with
and aid the officers of the Company in all matters concerning its interests and
the management of its business. When the Board is not in session, the Executive
Committee shall have and may exercise all the powers of the Board, so far as
such may be delegated legally, with reference to the conduct of the business of
the Company, except that the Executive Committee shall not take any action to:
(a) Approve or recommend to shareholders actions or proposals
required by law to be approved by shareholders.
(b) Designate candidates for the office of director, for purposes
of proxy solicitation or otherwise.
(c) Fill vacancies on the Board of Directors or any committee
thereof.
(d) Amend the Bylaws.
(e) Authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the Board
of Directors.
(f) Authorize or approve the issuance or sale of, or any contract
to issue or sell, shares or designate the terms of a series of
a class of shares, except that the Board of Directors having
acted regarding general authorization for the issuance or sale
of shares, or any contract therefor, and, in the case of a
series, the designation thereof, may pursuant to a general
formula or method specified by the Board by resolution or by
adoption of a stock option or other plan, authorize the
Executive Committee to fix the terms of any contract for the
sale of the share and to fix the terms upon which such shares
may be issued or sold, including, without limitation, the
price, the rate or manner of payment of dividends, provisions
for redemption, sinking fund, conversion, and voting or
preferential rights, and provisions for other features of a
class of shares, or a series of a class of shares, with full
power in such committee to adopt any final resolution setting
forth all the terms thereof and to authorize the statement of
the terms of a series for filing with the Department of State
under the applicable law.
<PAGE>
10
SECTION 3 - MEETINGS: Regular meetings of the Executive Committee may
be held without call or notice at such times and places as the Executive
Committee from time to time may fix. Other meetings of the Executive Committee
may be called by any member thereof either by oral, telegraphic or written
notice not later than the day prior to the date set for such meeting. Such
notice shall state the time and place of the meeting and if by telegraph or in
writing shall be addressed to each member at his address as shown by the records
of the Secretary. Upon request by any member, the Secretary shall give the
required notice calling the meeting.
SECTION 4 - QUORUM: At any meeting of the Executive Committee, three
(3) members shall constitute a quorum. Any action of the Executive Committee to
be effective must be authorized by the affirmative vote of a majority of the
members thereof present and, in any event, shall require not less than three (3)
affirmative votes.
SECTION 5 - RECORD OF MEETINGS: The Executive Committee shall appoint
its Secretary who shall keep the minutes of the meetings of the Executive
Committee and cause them to be recorded in a book kept at his office for that
purpose. These minutes shall be presented to the Board from time to time for
their information.
ARTICLE V
Officers
--------
SECTION 1 - ELECTION AND DESIGNATION OF OFFICERS: The executive
officers of the Company shall be a Chairman of the Board, a Vice Chairman of the
Board, a President, one or more Vice Presidents, a Secretary, a Treasurer and
Controller, all of whom shall be elected by the Board at its annual meeting. The
Chairman of the Board, the Vice Chairman of the Board or the President shall be
the Chief Executive Officer of the Company as shall be determined by the Board
of Directors from time to time. There may also be one or more Assistant
Secretaries, Assistant Treasurers, Assistant Controllers, and such other
officers as may from time to time be elected by the Board. The Chairman of the
Board, the Vice Chairman of the Board and the President shall be directors, but
no one of the other officers need be a director. Any two (2) or more such
offices may be held by the same person, but no officer shall execute,
acknowledge, or verify any instrument in more than one capacity, if such
instrument is required to be executed, acknowledged, or verified by two (2) or
more officers.
<PAGE>
11
SECTION 2 - TERM OF OFFICE: VACANCIES: The officers of the Company
shall hold office until the next organization meeting of the Board and until
their successors are elected, except in case of resignation, death, or removal.
The Board, without prejudice to the contract rights of such officer, may remove
any officer at any time with or without cause by a two-thirds (2/3) vote of the
members of the Board then in office. The Board may fill any vacancy in any
office occurring from whatever reason, may delegate to one (1) or more officers
any of the duties of any officer or officers and prescribe the duties of any
officer.
SECTION 3 - CHIEF EXECUTIVE OFFICER - DUTIES: The Chief Executive
Officer of the Company shall have general charge of the business affairs, and
property of the Company and control over its officers, agents, and employees. He
shall, in general, perform all duties and have all powers incident to the
position of Chief Executive Officer and shall perform such other duties and have
such other powers as from time to time may be prescribed to him by these Bylaws
or by the Board of Directors.
SECTION 4 - CHAIRMAN OF THE BOARD - DUTIES: The Chairman of the Board
shall preside at all meetings of the shareholders and of the Board and shall
have such duties and powers as may be prescribed for him from time to time by
the Board of Directors.
SECTION 5 - VICE CHAIRMAN OF THE BOARD - DUTIES: The Vice Chairman of
the Board shall perform such duties as may be prescribed for him from time to
time by the Board of Directors or by the Chief Executive Officer of the Company.
SECTION 6 - PRESIDENT - DUTIES: The President shall perform such duties
as may be prescribed for him from time to time by the Board of Directors or by
the Chief Executive Officer of the Company.
SECTION 7 - VICE PRESIDENT - DUTIES: Each Vice President shall have the
powers and duties incident to that office and shall have such other duties as
may be prescribed from time to time by the Board of Directors or Chief Executive
Officer. In case of the absence or disability of the President, or when
circumstances prevent the President from acting, a Vice President of the Company
shall perform all the duties and possess all the authority of the President, and
shall have priority in the performance of such duties and exercise of such
authority in the order of their election by the Board. Each Vice President may
sign and execute on behalf and in the name of the Company bonds, contracts,
instruments and documents authorized by the Board.
<PAGE>
12
SECTION 8 - SECRETARY - DUTIES: The Secretary shall attend all meetings
of the shareholders and of the Board, and act as Secretary thereof and shall
keep the minutes thereof in books of the Company provided for that purpose, and
when required he shall perform like duties for the standing committees, if any,
elected or appointed by the Board; he shall see that proper notice, when
required, is given of all meetings of the shareholders and of the Board; he may
sign with the Chairman of the Board, Vice Chairman of the Board, the President
or any Vice President on behalf and in the name of the Company all contracts and
other instruments authorized by the Board or the Executive Committee; he may
sign or his facsimile signature may be used to sign certificates for shares of
the capital stock of the Company; he shall keep in safe custody the seal of the
Company and whenever authorized by the Board or the Executive Committee, shall
attest and affix the seal to any contract or other instrument requiring the
same; he shall keep in safe custody all contracts and such books, records and
other papers as the Board of the Executive Committee may direct, all of which
shall, at all reasonable times, be open to the examination of any director, upon
application at the office of the Company during business hours, and he shall in
general perform all the duties usually incident to the office of Secretary,
subject to the control of the Board and the Executive Committee.
SECTION 9 - TREASURER - DUTIES: The Treasurer shall have the care and
custody of all funds and securities of the Company and deposit such funds in the
name of the Company in such bank or banks as the Board or the Executive
Committee may designate. The Treasurer is authorized to sign all checks, drafts,
notes, bills of exchange, orders for the payment of money and any negotiable
instruments of the Company, but no instruments shall be signed in blank. The
Treasurer shall disburse the funds of the Company as may be ordered by the
Board, the Executive Committee, or the Chief Executive Officer. The Treasurer
shall give such bonds for the faithful performance of his duties as the Board or
the Executive Committee or the Chief Executive Officer may determine, and shall
perform such other duties as may be incident to the office of Treasurer.
SECTION 10 - CONTROLLER - DUTIES: The Controller shall keep or cause to
be kept books, records and accounts, which, in reasonable detail, accurately and
fairly reflect the transactions and disposition of the assets of the Company in
conformity with accepted methods of recording economic events and in conformity
with generally accepted accounting principles. The Controller shall prescribe
policies and procedures necessary to devise and maintain adequate systems of
internal accounting controls. The Controller shall at all reasonable times
<PAGE>
13
exhibit the books and accounts to any director, and also, provided the Board or
Executive Committee or the Chief Executive Officer so orders, to any shareholder
of the Company upon application at the office of the Company by such shareholder
during business hours; and the Controller shall give such bond for the faithful
performance of his duties as the Board or the Executive Committee or the Chief
Executive Officer may determine, and shall perform such other duties as may be
incident to the office of the Controller.
SECTION 11 - OTHER OFFICERS - DUTIES: The Assistant Secretaries, the
Assistant Treasurers and Assistant Controllers, if any, in addition to such
authority and duties as the Board may determine shall have such authority and
perform such duties as may be directed by their respective principal officers.
ARTICLE VI
Compensation
------------
The Board, by the affirmative vote of a majority of the directors in
office, and irrespective of any personal interest of any of them, shall have
authority to establish reasonable compensation which may include pension,
disability and death benefits, for services to the Company by directors and
officers or to delegate such authority to one or more officers and directors.
ARTICLE VII
Indemnification
---------------
The Company shall indemnify any person who is made, or threatened to be
made, a party to, or is otherwise involved in, any action, suit or other type of
proceeding (whether civil, criminal, administrative or investigative, and
whether formal or informal) by reason of the fact that he is or was a director
or officer of the Company or, at the request of the Company, is or was serving
any other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise in any capacity, to the fullest extent permitted by the laws
of Florida as from time to time in effect. The Company may, if it so determines
in a specific case, indemnify other employees or agents of the Company in the
same manner and to the same extent.
Expenses (including counsel fees) incurred by an officer or director in
defending any pending, threatened, or completed action, suit or other type of
proceeding (whether civil, criminal, administrative or investigative, and
whether formal or informal) shall be paid by the Company in advance of the
determination of such officer's or director's entitlement to indemnification
<PAGE>
14
promptly upon receipt of an undertaking by or on behalf of such officer or
director to repay amounts so advanced in the event and to the extent that such
officer or director is ultimately found not to be entitled to indemnification by
the Company as authorized by this Article. Such amounts incurred by other
employees and agents may be so paid in advance upon such terms and conditions,
if any, as the Board of Directors deems appropriate. The Board of Directors may,
upon approval of such officer or director, authorize the Company's counsel to
represent such officer or director, in any action, suit or proceeding, whether
or not the Company is a party thereto.
All rights to indemnification and advances under this Article shall be
deemed to be a contract between the Company and each director, officer, employee
or agent of the Company who serves or served in such capacity at any time while
this Article is in effect. Any repeal or modification of this Article or any
repeal or modification of relevant provisions of the Florida General Corporation
Law or any other applicable laws shall not in any way diminish any rights to
indemnification and to such advances of such director, officer, employee or
agent or the obligations of the Company arising hereunder. The provisions of
this Article shall inure to the benefit of heirs, executors, administrators and
personal representatives of those entitled to indemnification and to such
advances and shall be binding upon any successor to the Company to the fullest
extent permitted by the laws of Florida as from time to time in effect. The
indemnification and advancement of expenses provided by this Article shall not
be deemed exclusive of any other rights to which those seeking indemnification
or advancement may be entitled under Florida law or any bylaw, agreement, vote
of shareholders or disinterested directors or otherwise.
Any indemnification or advance required by this Article VII shall be
made promptly, and in any event within 30 days, upon the written request of the
indemnified party. The right to indemnification or advances as granted by this
Article shall be enforceable by the indemnified party in any court of competent
jurisdiction if the Company denies such request, in whole or in part, or if no
disposition thereof is made within 30 days. The indemnified party's costs and
expenses incurred in connection with successfully establishing a right of
indemnification or advances, in whole or in part, in any such action shall also
be indemnified by the Company.
<PAGE>
15
ARTICLE VIII
Execution of Contracts,
Vouchers, and Negotiable Instruments
------------------------------------
The Board or the Executive Committee may authorize any of the officers
of the Company or any other person or persons, either singly or with another
such officer or person as said Board or Committee may direct, to sign, on behalf
and in the name of the Company, contracts, indentures, deeds, conveyances,
leases, declarations, communications and other instruments and documents, and
the Board or the Executive Committee may authorize any of the officers of the
Company or any other person or persons, either singly or with another such
officer or person as said Board or Committee may direct, to sign, on behalf and
in the name of the Company, manually or by facsimile signature, checks, drafts,
notes, bonds, debentures, bills of exchange and orders for the payment of money.
In case any of the officers of the Company who shall have signed, or whose
facsimile signature or signatures shall have been used, as aforesaid, upon any
such document, instrument or security shall cease to be such officer of the
Company before such document, instrument or security shall have been delivered
or issued, such document, instrument or security, upon due delivery or issuance
thereof, shall be valid and effective as though the person or persons who signed
or whose facsimile signature or signatures were used upon such document,
instrument, or security had not ceased to be such officer of the Company.
ARTICLE IX
Authority to Transfer and Vote Securities
-----------------------------------------
The Chairman of the Board, the Vice Chairman of the Board, the
President, and each Vice President of the Company are each authorized to sign
the name of the Company and to perform all acts necessary to effect a transfer
of any shares, bonds, other evidences of indebtedness or obligations,
subscription rights, warrants, and other securities of another corporation owned
by the Company and to issue the necessary powers of attorney for the same; and
each such officer is authorized, on behalf of the Company, to vote such
securities, to appoint proxies with respect thereto, and to execute consents,
waivers, and releases with respect thereto, or to cause any such action to be
taken.
<PAGE>
ARTICLE X
Amendments
----------
Except as otherwise provided by law, the Bylaws of the Company may be
adopted, altered, amended, or repealed by the Board of Directors, provided,
however, the shareholders may repeal, alter, or amend Bylaws adopted by the
Board of Directors, may adopt new Bylaws, and may prescribe that any Bylaw made
by them may not be altered, amended, or repealed by the Board of Directors.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME, THE CONSOLIDATED BALANCE SHEET, AND THE NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000205520
<NAME> Knight-Ridder, Inc.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-26-1999
<PERIOD-START> DEC-28-1999
<PERIOD-END> JUN-27-1999
<EXCHANGE-RATE> 1
<CASH> 24,766
<SECURITIES> 4,047
<RECEIVABLES> 397,428
<ALLOWANCES> 16,508
<INVENTORY> 47,494
<CURRENT-ASSETS> 499,717
<PP&E> 1,882,380
<DEPRECIATION> 812,004
<TOTAL-ASSETS> 4,176,895
<CURRENT-LIABILITIES> 529,060
<BONDS> 906,910
0
1,655
<COMMON> 1,668
<OTHER-SE> 1,796,880
<TOTAL-LIABILITY-AND-EQUITY> 4,176,895
<SALES> 1,580,465
<TOTAL-REVENUES> 1,580,465
<CGS> 248,815 <F1>
<TOTAL-COSTS> 1,299,318
<OTHER-EXPENSES> 31,660 <F2>
<LOSS-PROVISION> 11,830
<INTEREST-EXPENSE> 48,802
<INCOME-PRETAX> 249,487
<INCOME-TAX> 100,034
<INCOME-CONTINUING> 149,453
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 149,453
<EPS-BASIC> 1.80
<EPS-DILUTED> 1.53
<FN>
<F1> COST OF GOODS SOLD CONSISTS OF NEWSPRINT, INK, AND SUPPLEMENTS.
<F2> OTHER EXPENSES CONSISTS OF ALL NON-OPERATING INCOME AND COSTS, NET,
EXCLUDING INCOME TAXES. AMOUNT INCLUDES INTEREST EXPENSE, NET OF INTEREST INCOME
AND OTHER NON-OPERATING COSTS, NET OF NON-OPERATING INCOME
</FN>
</TABLE>
