<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
------------------------
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER 1-9824
MCCLATCHY NEWSPAPERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
DELAWARE 940666175
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2100 "Q" STREET, SACRAMENTO, CA. 95816
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (916)
321-1846
</TABLE>
------------------------
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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<S> <C>
Class A Common Stock, par value New York Stock Exchange
$.01 per share
</TABLE>
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K .
Aggregate market value of the Company's voting stock held by non-affiliates
on February 15, 1994, based on the closing price for the Company's Class A
Common Stock on the New York Stock Exchange on such date: approximately
$319,186,420. For purposes of the foregoing calculation only, required by Form
10-K, the Registrant has included in the shares owned by affiliates the
beneficial ownership of Common Stock of officers and directors of the Registrant
and members of their families, and such inclusion shall not be construed as an
admission that any such person is an affiliate for any purpose.
SHARES OUTSTANDING AT FEBRUARY 15, 1994:
Class A Common Stock -- 5,082,706 shares
Class B Common Stock -- 23,751,789 shares
DOCUMENTS INCORPORATED BY REFERENCE:
Definitive Proxy Statement for the Company's May 18, 1994 Annual Meeting of
Stockholders to be filed pursuant to Regulation 14A under the Securities
Exchange Act of 1934 (incorporated in Part III to the extent provided in Items
10, 11, 12 and 13 hereof).
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<PAGE> 2
INDEX TO MCCLATCHY NEWSPAPERS, INC.
1993 FORM 10-K
<TABLE>
<CAPTION>
ITEM
NO. PAGE
- ---- -----
<S> <C>
PART I
1. Business......................................................................... 1
Overview......................................................................... 1
The Sacramento Bee............................................................... 1
The Fresno Bee................................................................... 2
The Modesto Bee.................................................................. 2
The News Tribune................................................................. 3
Anchorage Daily News............................................................. 3
Tri-City Herald.................................................................. 4
The (Rock Hill) Herald........................................................... 4
Other Newspapers................................................................. 4
Raw Materials.................................................................... 5
Competition...................................................................... 5
Employees -- Labor............................................................... 5
2. Properties....................................................................... 6
3. Legal Proceedings................................................................ 6
4. Submission of Matters to a Vote of Security Holders.............................. 6
PART II
5. Market for the Registrant's Common Stock and Related Stockholder Matters......... 7
6. Selected Financial Data.......................................................... 8
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations....................................................................... 8
8. Financial Statements and Supplementary Data...................................... 12
9. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure....................................................................... 28
PART III
10. Directors and Executive Officers of the Registrant............................... 28
11. Executive Compensation........................................................... 28
12. Security Ownership of Certain Beneficial Owners and Management................... 28
13. Certain Relationships and Related Transactions................................... 28
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.................. 29
</TABLE>
<PAGE> 3
PART I
ITEM 1. BUSINESS
OVERVIEW
McClatchy Newspapers, Inc. and subsidiaries (the Company), originally
incorporated in California in 1930 and reincorporated in Delaware on August 7,
1987, owns and publishes 20 newspapers in California, Washington, Alaska and
South Carolina, ranging from large daily newspapers serving metropolitan areas
to non-daily newspapers serving small communities. For the year ended December
31, 1993 the Company had average paid daily circulation of 815,000, Sunday
962,100 and nondaily circulation 31,700.
Each of the Company's newspapers is semiautonomous in its business and
editorial operations so as to meet most effectively the needs of the communities
it serves. Publishers, editors and general managers of the newspapers make the
day-to-day decisions and within limits are responsible for their own budgeting
and planning. Policies on such matters as the amount and type of capital
expenditures, key personnel changes, and strategic planning and operating
budgets including wage and pricing matters, are approved or established by the
Company's senior management or Board of Directors.
The Company's overall strategy is to concentrate on developing its
newspapers and smaller related businesses. Each of its seven major daily
newspapers has the largest circulation of any newspaper servicing its particular
metropolitan area. The Company believes that this circulation advantage is of
primary importance in attracting advertising, the principal source of revenues
for the Company. Advertising revenues approximated 78% of consolidated revenues
in both 1993 and 1992. Circulation revenues approximated 19% of consolidated
revenues in 1993 and 18% in 1992.
The northern California economy, home to three of the Company's larger
newspapers, slowed in 1991 and continues to be affected by the economic
downturn, albeit not as severely as the downturn in the southern half of the
state. The decline in the Company's combined linage was offset by increases in
advertising rates resulting in advertising revenue growth of 1.3%. The Company
continued to show growth in average paid circulation in 1993. See the following
discussion of individual newspapers and Part II, Item 7 for further elaboration
of the impact of these trends on the Company's business.
The Company's newspaper business is somewhat seasonal, with peak revenues
and profits generally occurring in the second and fourth quarters of each year
as a result of increased advertising activity during the Easter holiday and
spring advertising season, and Thanksgiving and Christmas periods. The first
quarter is historically the weakest quarter for revenues and profits.
Other businesses owned by the Company include Legi-Tech, an on-line
computer service which provides information to clients on legislative activity
in the California and New York state legislatures and in the United States
Congress and McClatchy Printing Co., a commercial printing operation, located in
Clovis, California. In 1993 the Company expanded Big Valley, a previously West
Coast based distributor of preprinted advertising inserts, to a national
operation under a newly formed subsidiary, The Newspaper Network, Inc. Revenues,
operating income and assets for each of these businesses are less than 10% of
total consolidated revenues, operating income and assets of the Company. In
addition, the Company is a partner (13.5% interest) in Ponderay Newsprint
Company, a general partnership that constructed and now operates a newsprint
mill in Washington state.
The Company also distributes information by electronic technology. The
Company believes that individual newspapers, as primary information providers in
their respective markets, will play a pivotal role in the potential growth of
this segment in the industry.
THE SACRAMENTO BEE
The Sacramento Bee, the Company's largest newspaper, is a morning newspaper
serving the California state capital and its metropolitan area. Based on the
Company's records, The Sacramento Bee's average paid circulation was
approximately 271,700 daily and 341,000 Sunday in 1993 compared to 266,900 daily
and 337,900 Sunday in 1992.
1
<PAGE> 4
Until October 1993 The Sacramento Bee's principal direct newspaper
competitor was the Sacramento Union, a morning daily and Sunday newspaper. In
October 1993 the Union became a thrice-weekly newspaper and in January 1994
ceased publications.
The suggested home delivery price for The Sacramento Bee is $10.75 per
month. The newsstand price is $0.50 for the daily paper and $1.25 for the Sunday
paper. As of December 31, 1993, approximately 86% of the daily and 79% of the
Sunday circulation was home delivered.
The Sacramento Bee's advertising linage for the years ended December 31,
1993 and 1992 is set forth in the following table.
<TABLE>
<CAPTION>
1993 1992
----- -----
<S> <C> <C>
Advertising Linage (in thousands of six-column
inches):
Full Run........................................ 2,408 2,530
Part Run........................................ 328 345
Total Market Coverage........................... 158 159
</TABLE>
Net revenues of The Sacramento Bee were $165,322,000 in 1993 and
$168,486,000 in 1992.
THE FRESNO BEE
The Fresno Bee is a morning newspaper serving the Fresno, California
metropolitan area. Based on the Company's records, The Fresno Bee's average paid
circulation was approximately 149,900 daily and 186,800 Sunday compared to
146,800 daily and 183,100 Sunday in 1992.
Among the small newspapers which compete with The Fresno Bee is the Clovis
Independent, a Company-owned weekly newspaper with about 4,000 circulation. As
of December 31, 1993, approximately 89% of The Fresno Bee's daily and 85% of the
Sunday circulation was home delivered. The suggested home delivery price is
$10.50 per month. The newsstand price is $0.50 for the daily paper and $1.25 for
the Sunday paper.
The Fresno Bee's advertising linage for the years ended December 31, 1993
and 1992 is set forth in the following table.
<TABLE>
<CAPTION>
1993 1992
----- -----
<S> <C> <C>
Advertising Linage (in thousands of six-column
inches):
Full Run........................................... 1,483 1,415
Part Run........................................... 159 184
Total Market Coverage.............................. 170 167
</TABLE>
Net revenues of The Fresno Bee were $79,072,000 in 1993 and $77,153,000 in
1992.
THE MODESTO BEE
The Modesto Bee is a morning newspaper serving the Modesto, California
metropolitan area. Based on the Company's records, The Modesto Bee's average
paid circulation was approximately 83,000 daily and 91,900 Sunday in 1993
compared to 82,500 daily and 91,700 Sunday in 1992.
The Modesto Bee competes with small daily and weekly newspapers in its
market area. The suggested home delivery price is $10.50 per month. The
newsstand price is $0.50 for the daily paper and $1.25 for the Sunday paper. As
of December 31, 1993, approximately 89% of the daily and 86% of the Sunday
circulation was home delivered.
2
<PAGE> 5
The Modesto Bee's advertising linage for the years ended December 31, 1993
and 1992 is set forth in the following table.
<TABLE>
<CAPTION>
1993 1992
----- -----
<S> <C> <C>
Advertising Linage (in thousands of six-column
inches):
Full Run........................................... 1,237 1,269
Part Run........................................... 99 108
Total Market Coverage.............................. 567 402
</TABLE>
Net revenues of The Modesto Bee were $42,925,000 in 1993 and $43,662,000 in
1992.
THE NEWS TRIBUNE
The News Tribune, a morning newspaper, primarily serves the Tacoma,
Washington metropolitan area. Based on the Company's records, the average paid
circulation of the News Tribune was approximately 128,600 daily and 147,800
Sunday in 1993 compared to 126,900 daily and 144,500 Sunday in 1992.
Tacoma is approximately 30 miles south of Seattle. The News Tribune
competes in the northern most fringes of its market with the major Seattle daily
newspapers. Among the small newspapers which compete with The News Tribune is
the Pierce County Herald a Company-owned twice-weekly newspaper with about 8,800
circulation. The suggested home delivery price of The News Tribune is $10.00 per
month. The newsstand price of The News Tribune is $0.35 for the daily paper and
$1.25 for the Sunday paper. As of December 31, 1993 approximately 83% of the
daily and 81% of the Sunday circulation was home delivered.
The News Tribune's advertising linage for the years ended December 31, 1993
and 1992 is set forth in the following table.
<TABLE>
<CAPTION>
1993 1992
----- -----
<S> <C> <C>
Advertising Linage (in thousands of six-column
inches):
Full Run........................................... 1,291 1,292
Part Run........................................... 28 20
Total Market Coverage.............................. 31 22
</TABLE>
Net revenues of The News Tribune were $64,324,000 in 1993 and $61,647,000
in 1992.
ANCHORAGE DAILY NEWS
The Anchorage Daily News, a morning newspaper, is Alaska's largest
newspaper. The Anchorage Daily News circulates throughout the state of Alaska
but its primary circulation is concentrated in the south central region of the
state comprised of metropolitan Anchorage, the Kenai Peninsula and the
Matanuska-Susitna Valley.
The suggested home delivery price of the Anchorage Daily News is $9.50 per
month for city delivery. The newsstand price of the Anchorage Daily News is
$0.50 for the daily paper and $1.00 for the Sunday paper. As of December 31,
1993 approximately 72% of the daily and 63% of the Sunday circulation was home
delivered.
The Anchorage Daily News' principal direct competitor was the Anchorage
Times. In June 1992, the Anchorage Times ceased publication and the Company
purchased certain of its operating assets. Based on the Company's records, the
Daily News' average paid circulation was approximately 73,400 daily and 97,100
Sunday in 1993 compared to 72,000 daily and 94,900 Sunday in 1992.
Comparative amounts of linage for the years ended December 31, 1993 and
1992 are set forth in the following table.
<TABLE>
<CAPTION>
1993 1992
----- -----
<S> <C> <C>
Advertising Linage (in thousands of six-column
inches):
Full Run........................................... 1,053 1,390
Total Market Coverage.............................. 30 43
</TABLE>
3
<PAGE> 6
Net revenues of the Anchorage Daily News were $41,923,000 in 1993 and
$36,648,000 in 1992.
TRI-CITY HERALD
The Tri-City Herald is a morning newspaper serving the Tri-Cities of
Richland, Kennewick and Pasco in southeastern Washington. Efforts to diversify
the economic base of the area, which has depended in the past on energy
development and agriculture, are having a positive impact in the Tri-Cities.
The Tri-Cities economy benefitted in 1993 by the Department of Energy's efforts
to clean up nuclear waste at nearby Hanford Nuclear reservation. Over the last
several years the clean-up activity has contributed to revenue growth at the
Tri-City Herald.
Based on the Company's records, the Tri-City Herald's average paid
circulation was approximately 38,600 daily and 41,900 Sunday in 1993 compared to
37,300 daily and 40,400 Sunday in 1992.
The suggested home delivery price of the Tri-City Herald is $9.50 per month
while the newsstand price for its daily paper is $0.50 and the newsstand price
for its Sunday paper is $1.25. As of December 31, 1993, approximately 92% of the
daily and 90% of the Sunday circulation was home delivered.
The Tri-City Herald's advertising linage for the years ended December 31,
1993 and 1992 is set forth in the following table.
<TABLE>
<CAPTION>
1993 1992
--- ---
<S> <C> <C>
Advertising Linage (in thousands of six-column inches):
Full Run.............................................. 721 656
Total Market Coverage................................. 20 25
</TABLE>
Net revenues of the Tri-City Herald were $15,626,000 in 1993 and
$14,089,000 in 1992.
THE (ROCK HILL) HERALD
The Herald is a morning newspaper serving Rock Hill and surrounding
communities in York County, South Carolina. Rock Hill is a community
approximately 25 miles southwest of Charlotte, North Carolina. The Herald's
average paid circulation as reported by the Company was 31,000 daily and 30,700
Sunday in 1993 compared to 30,400 daily and 29,800 Sunday in 1992.
The Herald's main competitor is a zoned edition of the Charlotte Observer,
whose circulation in the Herald's primary circulation area as reported by ABC
was 10,752 daily and 13,894 Sunday as of March 31, 1993 compared to 11,049 daily
and 13,955 Sunday as of March 31, 1992. The Herald also competes with the
Yorkville Enquirer and the Clover Herald, weekly newspapers, and the Lake Wylie
Magazine, a monthly magazine, all company-owned publications. The newsstand
prices for the Herald are $0.25 daily and $0.75 Sunday and the suggested home
delivery price is $7.50 per month. As of December 31, 1993, approximately 81% of
the daily and 82% of the Sunday circulation was home delivered.
According to the Herald's records, advertising linage for the years ended
December 31, 1993 and 1992 were as follows:
<TABLE>
<CAPTION>
1993 1992
--- ---
<S> <C> <C>
Advertising Linage (in thousands of six-column inches):
Full Run.............................................. 725 642
Total Market Coverage................................. 60 56
</TABLE>
Net revenues of the Herald were $9,514,000 in 1993 and $8,723,000 in 1992.
OTHER NEWSPAPERS
During 1993 the Company published five small daily and eight nondaily
community newspapers (including the previously mentioned weekly newspapers).
4
<PAGE> 7
The (Ellensburg) Daily Record in Central Washington, was purchased in
September 1992. The Daily Record is an evening newspaper, published Monday
through Saturday, with about 5,500 paid circulation.
The other four daily newspapers include two in South Carolina, the Island
Packet on Hilton Head Island and the Beaufort Gazette in Beaufort; and two in
California, The Dispatch in Gilroy and the Free Lance in Hollister. Combined
average daily circulation for these four newspapers according to Company records
was 33,200 in 1993 compared to 32,300 in 1992. Average Sunday circulation at the
two South Carolina newspapers was 24,900 in 1993 compared to 23,600 in 1992.
The eight nondaily newspapers are generally published weekly or
twice-weekly. Four of the newspapers are located in California, three in South
Carolina and one in Washington state. Combined average circulation for this
group according to Company records was 31,700 at December 31, 1993.
RAW MATERIALS
In 1993 the Company consumed approximately 137,000 metric tons of newsprint
compared to 138,000 metric tons in 1992. The Company currently obtains its
supply of newsprint from a number of suppliers, both foreign and domestic, under
long-term contracts.
Newsprint costs accounted for approximately 15.1% of operating expenses in
1993. Management believes its newsprint sources of supply under existing
arrangements are adequate for its anticipated needs. Weak demand for newsprint
resulting from lower newspaper advertising caused a weakening in newsprint
prices in 1992 which persisted in 1993. A substantial increase in the price of
newsprint would adversely affect the operating results of the Company to the
extent that it was not offset by advertising and circulation volume and/or rate
increases.
The Company, through a wholly-owned subsidiary, Newsprint Ventures, Inc.
and four other publishers and a Canadian newsprint manufacturer are partners in
Ponderay Newsprint Company, a general partnership formed to construct and
operate a newsprint mill located sixty miles northeast of Spokane, Washington.
The mill became operational in late 1989 and has a production capacity in excess
of 200,000 metric tons annually. The publisher partners have committed to take
126,000 metric tons of this anticipated production on a "take-if-tendered" basis
with the balance to be sold on the open market. The Company's annual commitment
is 28,400 metric tons. See Part II, Items 7 and 8 for further discussion of the
impact of this investment on the Company's business.
COMPETITION
The Company faces competition for advertising revenues from television,
radio and direct mail programs, suburban neighborhood and national newspapers
and other publications. The Company's daily newspaper competitor in Sacramento,
California, the Sacramento Union, ceased publication in January 1994. The
Company's primary competitor in Anchorage, the Anchorage Times, ceased
operations in June 1992. Competition for advertising is based upon circulation
levels, readership demographics, price and advertiser results, while competition
for circulation is generally based upon the content, journalistic quality and
price of the newspaper. The Company's major daily newspapers are well ahead of
their newspaper competitors in both advertising linage and general circulation
in all of their markets.
EMPLOYEES -- LABOR
As of December 31, 1993, the Company had 6,304 employees, of whom
approximately 13% were represented by unions. Following the expiration of
contracts with certain unions at The Sacramento Bee, The Fresno Bee and The
Modesto Bee, negotiations between the newspapers and the affected unions (which
represent approximately 10% of these newspapers' employees) reached an impasse.
In early 1987, final offers were "posted" to the unions at the Sacramento and
Fresno Bees. In 1990, a final offer to the union at The Modesto Bee was posted.
It is under these posted conditions that such union employees have been working.
Negotiations have been resumed with the unions at the Sacramento and Fresno
Bees. At The News Tribune
5
<PAGE> 8
in Tacoma, Washington negotiations between the newspaper and one union
representing about 6% of The News Tribune's employees reached an impasse and
these employees are working under posted conditions.
While the Company's newspapers have not had a strike since 1978 and they do
not currently anticipate a strike occurring, the Company cannot preclude the
possibility that a strike may occur at one or more of its newspapers. The
Company believes that, in the event of a newspaper strike, the affected
newspaper would be able to continue to publish and deliver to subscribers, a
capability which is critical to retaining revenues from advertising and
circulation.
ITEM 2. PROPERTIES
The corporate headquarters of the Company are located at 2100 "Q" Street,
Sacramento, California. The general character, location and approximate size of
the principal physical properties used by the Company at December 31, 1993, are
set forth below.
<TABLE>
<CAPTION>
APPROXIMATE AREA
IN SQUARE FEET
-------------------
OWNED LEASED
------- -------
<S> <C> <C>
Printing plants, business and editorial offices and warehouse
space located in:
Sacramento, California......................................... 659,914 125,040
Fresno, California............................................. 386,000 9,057
Tacoma, Washington............................................. 180,827 5,544
Modesto, California............................................ 163,166 5,602
Anchorage, Alaska.............................................. 143,526 1,540
Kennewick, Washington.......................................... 98,081
Rock Hill, South Carolina...................................... 49,000
Gilroy, California............................................. 27,400
Clovis, California............................................. 27,100
Ellensburg, Washington......................................... 24,000
Jackson, California............................................ 12,853
Beaufort, South Carolina....................................... 12,500 450
Hilton Head, South Carolina.................................... 9,700
Puyallup, Washington........................................... 6,500
Morgan Hill, California........................................ 4,500
Hollister, California.......................................... 8,280
Federal Way, Washington........................................ 4,420
York, South Carolina........................................... 3,310
Other.......................................................... 49,904
</TABLE>
The Company believes that its current facilities are adequate to meet the
present and immediately foreseeable needs of its newspapers.
ITEM 3. LEGAL PROCEEDINGS
The Company becomes involved from time to time in claims and lawsuits
incidental to the ordinary course of its business, including such matters as
libel, invasion of privacy and wrongful termination actions, and complaints
alleging discrimination. In addition, the Company is involved from time to time
in governmental and administrative proceedings concerning labor, environmental
and other claims. Management believes that the outcome of pending claims or
proceedings will not have a material adverse effect upon the Company's
consolidated results of operations or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
6
<PAGE> 9
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS
McClatchy Newspapers, Inc. Class A Common Stock is listed on the New York
Stock Exchange (NYSE symbol -- MNI). Class A stock is also traded on the Midwest
Stock Exchange and the Pacific Stock Exchange. The Company's Class B stock is
not publicly traded. The following table lists dividends paid on Common Stock
and the prices of the Company's Class A Common Stock as reported by these
exchanges for 1993 and 1992:
<TABLE>
<CAPTION>
1993 1992
------------------------- -------------------------
HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
---- --- -------- ---- --- --------
<S> <C> <C> <C> <C> <C> <C>
1st Quarter.................... 23 18 1/2 $.0625 22 3/8 17 $ .05
2nd Quarter.................... 23 20 3/8 $.0625 22 3/4 19 1/4 $ .05
3rd Quarter.................... 20 7/8 18 1/8 $.0725 22 3/8 19 1/4 $.0575
4th Quarter.................... 25 5/8 20 1/8 $.0725 21 18 $.0575
</TABLE>
The Board of Directors does not anticipate reducing the present level of
quarterly dividend payments. However, the payment and amount of future dividends
remain within the discretion of the Company's Board of Directors and will depend
upon the Company's future earnings, financial condition and requirements, and
other factors considered relevant by the Board of Directors.
The number of record holders of Class A and Class B Common Stock at
February 8, 1994 was approximately 1,337 and 24, respectively.
7
<PAGE> 10
ITEM 6. SELECTED FINANCIAL DATA
FIVE-YEAR FINANCIAL SUMMARY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATE:
REVENUES -- NET:
Advertising........................................... $350,046 $345,574 $337,372 $335,663 $303,003
Circulation........................................... 83,729 80,318 74,770 70,266 63,126
Other................................................. 15,340 14,355 14,686 15,482 14,634
-------- -------- -------- -------- --------
TOTAL................................................. 449,115 440,247 426,828 421,411 380,763
OPERATING EXPENSES:
Depreciation and amortization......................... 35,583 33,560 29,929 30,316 25,583
Other costs and expenses.............................. 348,428 344,764 347,692 335,693 299,657
-------- -------- -------- -------- --------
TOTAL................................................. 384,011 378,324 377,621 366,009 325,240
-------- -------- -------- -------- --------
OPERATING INCOME...................................... 65,104 61,923 49,207 55,402 55,523
Partnership losses.................................... 6,171 6,674 4,193 6,366 935
Other nonoperating expenses (income).................. 17 991 2,847 2,860 (815)
-------- -------- -------- -------- --------
INCOME BEFORE INCOME TAX PROVISION AND CUMULATIVE
EFFECTS OF ACCOUNTING CHANGES....................... 58,916 54,258 42,167 46,176 55,403
INCOME TAX PROVISION.................................. 27,118 24,087 18,438 19,731 21,513
-------- -------- -------- -------- --------
INCOME BEFORE CUMULATIVE EFFECTS OF ACCOUNTING
CHANGES............................................. 31,798 30,171 23,729 26,445 33,890
CUMULATIVE EFFECTS OF ACCOUNTING CHANGES.............. (341)
-------- -------- -------- -------- --------
NET INCOME............................................ $ 31,798 $ 29,830 $ 23,729 $ 26,445 $ 33,890
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
EARNINGS PER COMMON SHARE:
Income before cumulative effects of accounting
changes............................................. $ 1.10 $ 1.05 $ .83 $ .93 $ 1.19
Cumulative effects of accounting changes.............. (.01)
-------- -------- -------- -------- --------
NET INCOME............................................ $ 1.10 $ 1.04 $ .83 $ .93 $ 1.19
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
DIVIDENDS PER COMMON SHARE............................ $ .27 $ .215 $ .20 $ .16 $ .11
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
CONSOLIDATED BALANCE SHEET DATA:
Total assets.......................................... $525,163 $491,151 $477,076 $467,950 $440,326
Long-term obligations................................. 14,213 23,901 38,618 55,196 63,316
Stockholders' equity.................................. 383,523 358,299 333,372 314,186 291,517
</TABLE>
Results for 1992 include a $2.6 million pre-tax change related to an early
retirement program. This summary should be read in conjunction with the
consolidated financial statements and notes thereto.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RECENT EVENTS
The recessionary economy of Northern California continued in 1993,
resulting in a slowdown in advertising revenues at The Sacramento Bee and The
Modesto Bee. Stronger revenue performances at The Fresno Bee, the Anchorage
Daily News and newspapers in Washington state and South Carolina offset the
lower revenues in Sacramento and Modesto. Net income also benefitted from
continued low newsprint prices and cost controls.
In June 1992 the Anchorage Daily News became the sole metropolitan daily
newspaper in Anchorage when the competing newspaper (the Anchorage Times)
closed. As a result, revenues increased from $31.1 million in 1991 to $36.6
million in 1992, and $41.9 million in 1993, allowing the Daily News to become
profitable for the first time under Company ownership in 1993.
8
<PAGE> 11
On August 2, 1993 new federal tax laws raised the corporate income tax rate
from 34% to 35% retroactive to January 1, 1993, and made other changes to the
deductibility of certain expenses. The liability method of income tax accounting
required that the Company revalue accumulated deferred taxes, and taxes on
earnings through the first half of 1993 to reflect the higher rate. Accordingly,
the Company increased its tax provision by $1,088,000 or four cents per share in
the third quarter of 1993 for these retroactive adjustments.
RESULTS OF OPERATIONS
1993 COMPARED TO 1992
Net income increased 6.6% to $31.8 million as strong performances at The
Fresno Bee and newspapers in Washington and South Carolina offset weaker results
at the Sacramento and Modesto Bees. Income also benefitted from improved
operating results at the Anchorage Daily News since the closure of the Anchorage
Times, stringent cost controls at all of the Company's newspapers and a second
year of low newsprint prices.
Net revenues increased 2.0% to $449.1 million compared to $440.2 million in
1992. Advertising rate increases at most of the Company's newspapers offset the
impact of lower volumes resulting in a 1.3% increase in consolidated advertising
revenues. While overall advertising volumes were down, gains were reported at
The Fresno Bee, the Tri-City Herald and The (Rock Hill) Herald. In general,
higher retail advertising linage was offset by declines in national and
classified linage.
At the Company's seven largest daily newspapers, full run "run-of-press"
(ROP) linage, which is found in the body of the newspaper and accounts for the
majority of advertising revenues, declined 3.1%. Part-run ROP linage, found in
zoned editions of the newspaper which are targeted to specific areas of a
community, declined 4.6%. These declines were partially offset by gains in
advertising in total market coverage products (delivered to nonsubscribers of
the newspapers) of 18.5% and a 5.9% increase in the number of preprinted
advertisements inserted into the daily newspapers. Advertising volume in
McClatchy's 13 other newspapers increased 3.3%.
Circulation revenue increased 4.2% as the combined number of
daily and Sunday subscribers increased 1.9% and 1.8%, respectively (average
paid circulation). With a slower economy impacting many of the Company's
newspaper readers, most of McClatchy's metropolitan newspapers opted to forego
circulation rate increases in 1993. The Anchorage Daily News and The (Rock
Hill) Herald increased home-delivery rates modestly in April and September,
respectively.
Other revenues increased $985,000 or 6.9% due principally to an increase in
commercial printing at McClatchy Printing Company in Clovis, California.
Operating expenses were held to a 1.5% increase over 1992 and were up 2.2%
after excluding a $2.6 million charge in 1992 for the early retirement program
at the Sacramento and Modesto Bees. Excluding the early retirement charge,
compensation costs increased 1.5% reflecting a 2.1% increase in salaries and a
nominal decline in the cost of employee benefits. The increase in salaries
generally reflects wage rate increases of 2% to 3%, partially offset by lower
headcounts. Newsprint and supplements and other operating expenses increased
2.2%, and reflect low newsprint prices, generally low inflation and the impact
of cost control programs at all of the Company's newspapers. Depreciation and
amortization was up 6.0% due primarily to the installation of new mailroom
equipment at The Sacramento Bee and presses at The (Tacoma) News Tribune.
Nonoperating expense declined $1.5 million primarily due to lower interest
expense as the Company repaid its bank debt, and higher investment income on
cash equivalents.
The Company's tax rate was 46.0% compared to 44.4% in 1992. The increase in
this rate primarily relates to new federal tax legislation which raised the
corporate tax rate from 34% to 35%, retroactive to January 1, 1993.
9
<PAGE> 12
1992 COMPARED TO 1991
Improved operating results at the Anchorage Daily News and The News
Tribune, lower newsprint prices and company-wide cost controls were the major
contributors to a 25.7% increase in net income. The Daily News and The News
Tribune led the Company in both revenue and operating income growth.
Net revenues increased 3.1% to $440.2 million compared to $426.8 million in
1991. This growth reflects circulation and advertising rate increases, and, to a
lesser extent, a rebound in subscriber and advertising volumes in the second
half of 1992.
Advertising revenues were up 2.4% to $345.6 million. Advertising rates were
increased at a number of the larger metropolitan dailies in the first quarter of
1992. The Anchorage Daily News implemented an additional advertising rate
increase in August 1992 because of its significant growth in circulation after
the Anchorage Times' closure.
Advertising volumes were generally flat for the year. Lower advertising
linage in the California markets was offset by gains at other newspapers. At the
Company's seven largest newspapers, full run ROP linage was even with 1991
levels. Gains in retail linage were offset by losses in classified and national
advertising. Part run ROP linage grew 0.2% while linage in TMC products declined
11.1% at these newspapers. The number of preprinted inserts delivered in the
seven largest newspapers grew 3.8%. Linage at McClatchy's 13 other newspapers
declined 0.7%.
The Anchorage Daily News also led the Company in subscriber and circulation
revenue growth. The Daily News' average daily paid circulation for the year
ended December 31, 1992 grew to approximately 72,000 from 60,800 in 1991 and
Sunday was 94,900 versus 81,600.
Company-wide, the number of subscribers grew 2.1% for average daily paid
circulation (1.4% excluding The (Ellensburg) Daily Record purchased in 1992) and
1.8% on Sunday. Nondaily subscribers increased 3.1%. This growth in subscribers,
coupled with selective home delivery and single-copy rate increases, resulted in
a 7.4% gain in circulation revenues to $80.3 million.
Operating expenses were held to a 0.2% increase over 1991 despite the
recognition of a $2.6 million charge for an early retirement program. Excluding
the early retirement charge, compensation costs were up 4.2%, reflecting a 3.6%
increase in salaries and a 6.6% increase in fringe benefits. These increases
reflect wage increases of 2% to 4% and higher retirement and other fringe
benefits. Newsprint and supplements costs declined $15.1 million or 20.2% due
mostly to lower newsprint prices precipitated by a lack of advertising demand.
Depreciation and amortization was up 12.1% reflecting primarily a full year of
depreciation on The Fresno Bee's expanded plant and new presses and amortization
of intangibles purchased during the year. Other operating expenses were held to
a 1.9% increase through company-wide cost control programs.
While the Ponderay Newsprint Company continues to be one of the more
efficient and low cost producers of newsprint, the Company's share of losses
from this joint venture increased due to lower newsprint prices. Other
nonoperating expenses declined because 1991 included an adjustment related to
the destruction of a rental property.
The effective tax rate increased to 44.4% from 43.7% in 1991. A
reconciliation of the effective tax rates is included in note 5 to the
consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES
The Company generated $90.7 million of cash from operations in 1993 and has
generated $228.5 million over the last three years. The principal uses of cash
have been to repay bank debt incurred to purchase the South Carolina based
newspapers and to invest in capital expenditures. Cash has also been used to
fund its Ponderay newsprint mill investment and to pay dividends. With all bank
debt now repaid, the Company has invested its excess cash in high quality
commercial paper and government securities. At year end cash and cash
equivalents totalled $42.3 million.
10
<PAGE> 13
With the ongoing recession in Northern California, the Company deferred
some of its planned capital expenditures in 1992 and 1993. Nonetheless, a total
of $35.9 million was expended in 1993 for projects and equipment to improve
productivity and keep pace with circulation growth. Capital expenditures over
the last three years have totalled $106.9 million and planned expenditures in
1994 are estimated to be $38.3 million.
The Company has a 13.5% interest in the Ponderay Newsprint Company, a
general partnership formed to construct and operate a newsprint mill near
Spokane, Washington. The mill began operating in December 1989. The Company's
share of the mill's operating losses over the last three years equaled $17.0
million. The Company contributed $12.4 million to fund its share of the mill's
cash needs over this period. Ponderay is expected to incur losses over the next
several years assuming newsprint prices remain depressed and the Company
presently intends when necessary, to, contribute funds to help finance its share
of these losses. See note 3 to the consolidated financial statements.
During 1993 the Company terminated its bank line of credit and now has only
an outstanding letter of credit for $5.9 million. Management is of the opinion
that operating cash flow is adequate to meet the liquidity needs of the Company,
including currently planned capital expenditures and other investments.
11
<PAGE> 14
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1993 1992
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents....................................... $ 42,326 $ 8,658
Trade receivables (less allowances of $1,757 in 1993 and $2,100
in 1992)....................................................... 47,859 46,862
Other receivables............................................... 1,456 1,108
Newsprint, ink and other inventories............................ 10,033 10,130
Deferred income taxes........................................... 9,672 8,143
Other current assets............................................ 1,843 2,512
--------- ---------
TOTAL CURRENT ASSETS....................................... 113,189 77,413
PROPERTY, PLANT AND EQUIPMENT:
Land............................................................ 18,057 17,670
Buildings and improvements...................................... 120,753 119,111
Equipment....................................................... 282,082 265,662
Construction in progress........................................ 15,893 7,977
--------- ---------
Total...................................................... 436,785 410,420
Accumulated depreciation............................................. (166,460) (149,272)
--------- ---------
NET PROPERTY, PLANT AND EQUIPMENT.................................... 270,325 261,148
INTANGIBLES -- NET................................................... 124,662 133,977
INVESTMENT IN NEWSPRINT MILL PARTNERSHIP............................. 3,977 5,437
OTHER ASSETS......................................................... 13,010 13,176
--------- ---------
TOTAL ASSETS............................................... $ 525,163 $ 491,151
--------- ---------
--------- ---------
</TABLE>
See notes to consolidated financial statements.
12
<PAGE> 15
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1993 1992
-------- --------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable.................................................. $ 14,043 $ 10,474
Accrued compensation.............................................. 26,324 22,902
Income taxes...................................................... 1,117 30
Unearned revenue.................................................. 10,560 9,833
Carrier deposits.................................................. 3,055 3,006
Other accrued liabilities......................................... 8,281 7,352
-------- --------
TOTAL CURRENT LIABILITIES.................................... 63,380 53,597
LONG-TERM OBLIGATIONS.................................................. 14,213 23,901
DEFERRED INCOME TAXES.................................................. 64,047 55,354
COMMITMENTS AND CONTINGENCIES (NOTE 9)
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value:
Class A -- authorized 50,000,000 shares, issued 5,100,450 in
1993 and 4,585,370 in 1992..................................... 51 46
Class B -- authorized 30,000,000 shares, issued 24,503,789 in
1993 and 24,946,789 in 1992.................................... 238 242
Additional paid-in capital........................................ 39,472 38,272
Retained earnings................................................. 344,133 320,110
Treasury stock, 20,000 Class A shares, and 750,000 Class B........ (371) (371)
-------- --------
TOTAL STOCKHOLDERS' EQUITY................................... 383,523 358,299
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................... $525,163 $491,151
-------- --------
-------- --------
</TABLE>
13
<PAGE> 16
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
REVENUES -- NET:
Advertising........................................... $350,046 $345,574 $337,372
Circulation........................................... 83,729 80,318 74,770
Other................................................. 15,340 14,355 14,686
-------- -------- --------
TOTAL............................................ 449,115 440,247 426,828
-------- -------- --------
OPERATING EXPENSES:
Compensation.......................................... 199,743 199,295 188,791
Newsprint and supplements............................. 60,639 59,501 74,562
Depreciation and amortization......................... 35,583 33,560 29,929
Other operating expenses.............................. 88,046 85,968 84,339
-------- -------- --------
TOTAL............................................ 384,011 378,324 377,621
-------- -------- --------
OPERATING INCOME........................................... 65,104 61,923 49,207
NONOPERATING EXPENSES (INCOME):
Interest expense...................................... 118 920 1,157
Partnership losses.................................... 6,171 6,674 4,193
Other -- net.......................................... (101) 71 1,690
-------- -------- --------
TOTAL............................................ 6,188 7,665 7,040
-------- -------- --------
INCOME BEFORE INCOME TAX PROVISION AND CUMULATIVE EFFECTS
OF ACCOUNTING CHANGES.................................... 58,916 54,258 42,167
Income tax provision....................................... 27,118 24,087 18,438
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECTS OF ACCOUNTING CHANGES..... 31,798 30,171 23,729
Cumulative effects of accounting changes................... -- (341) --
-------- -------- --------
NET INCOME................................................. $ 31,798 $ 29,830 $ 23,729
-------- -------- --------
-------- -------- --------
EARNINGS PER COMMON SHARE:
Income before cumulative effects of accounting
changes............................................. $ 1.10 $ 1.05 $ .83
Cumulative effects of accounting changes.............. -- (.01) --
-------- -------- --------
NET INCOME PER COMMON SHARE........................... $ 1.10 $ 1.04 $ .83
-------- -------- --------
-------- -------- --------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES................... 28,879 28,754 28,664
</TABLE>
See notes to consolidated financial statements.
14
<PAGE> 17
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Net income............................................... $ 31,798 $ 29,830 $ 23,729
Reconciliation to net cash provided:
Depreciation and amortization....................... 35,778 33,751 30,180
Deferred income taxes............................... 7,164 5,940 5,819
Partnership losses.................................. 6,171 6,674 4,193
Cumulative effect of changes in accounting:
Postretirement benefit......................... -- 4,627 --
Income taxes................................... -- (4,286) --
Changes in certain current assets and
liabilities -- net............................... 9,204 4,365 (1,938)
Other............................................... 599 (4,923) (208)
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES.................. 90,714 75,978 61,775
CASH PROVIDED (USED) BY INVESTING ACTIVITIES:
Purchase of property, plant and equipment................ (35,851) (29,476) (41,574)
Investment in newsprint mill partnership................. (4,711) (3,780) (3,882)
Acquisition of newspaper operations...................... -- (3,755) (47)
Other -- net............................................. 188 (4,486) 617
-------- -------- --------
NET CASH USED BY INVESTING ACTIVITIES...................... (40,374) (41,497) (44,886)
CASH PROVIDED (USED) BY FINANCING ACTIVITIES:
Repayment of long-term debt.............................. (10,072) (25,092) (15,792)
Payment of cash dividends................................ (7,775) (6,182) (5,736)
Other.................................................... 1,175 1,249 1,193
-------- -------- --------
Net cash used by financing activities.................... (16,672) (30,025) (20,335)
-------- -------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS.................... 33,668 4,456 (3,446)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR............... 8,658 4,202 7,648
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR..................... $ 42,326 $ 8,658 $ 4,202
-------- -------- --------
-------- -------- --------
OTHER CASH FLOW INFORMATION:
Cash paid during the year for:
Interest (net of amount capitalized)..................... $ 118 $ 1,086 $ 1,225
Income taxes (net of refunds)............................ 18,448 20,625 13,587
</TABLE>
See notes to consolidated financial statements.
15
<PAGE> 18
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PAR VALUE ADDITIONAL TREASURY
----------------- PAID-IN RETAINED STOCK
CLASS A CLASS B CAPITAL EARNINGS AT COST TOTAL
------- ------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, DECEMBER 31, 1990.................. $44 $ 243 $ 35,801 $ 278,469 $(371) $314,186
Net income................................... 23,729 23,729
Dividends paid ($.20 per share).............. (5,736) (5,736)
Conversion of 22,000 Class B shares to Class
A.......................................... -- --
Issuance of 80,408 Class A shares under
employee stock plans....................... 1 1,192 1,193
------- ------- ---------- --------- --------- --------
BALANCES, DECEMBER 31, 1991.................. 45 243 36,993 296,462 (371) 333,372
Net income................................... 29,830 29,830
Dividends paid ($.215 per share)............. (6,182) (6,182)
Conversion of 26,000 Class B shares to Class
A.......................................... 1 (1)
Issuance of 78,391 Class A shares under
employee stock plans....................... 1,279 1,279
Receipt of 750,000 Class B treasury shares
from trust................................. -- --
------- ------- ---------- --------- --------- --------
BALANCES, DECEMBER 31, 1992.................. 46 242 38,272 320,110 (371) 358,299
Net income................................... 31,798 31,798
Dividends paid ($.27 per share).............. (7,775) (7,775)
Conversion of 443,000 Class B shares to Class
A.......................................... 4 (4)
Issuance of 72,080 Class A shares under
employee stock plans....................... 1 1,200 1,201
------- ------- ---------- --------- --------- --------
BALANCES, DECEMBER 31, 1993.................. $51 $ 238 $ 39,472 $ 344,133 $(371) $383,523
------- ------- ---------- --------- --------- --------
------- ------- ---------- --------- --------- --------
</TABLE>
See notes to consolidated financial statements.
16
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
McClatchy Newspapers, Inc. and its subsidiaries ("the Company") are engaged
primarily in the publication of newspapers.
The consolidated financial statements include the accounts of the Company
and its subsidiaries. Significant intercompany items and transactions have been
eliminated.
Revenue recognition -- Advertising revenues are recorded when the
advertisement is placed in the newspaper and circulation revenues are recorded
as newspapers are delivered over the subscription term. Unearned revenues
represent prepaid circulation subscriptions.
Cash equivalents are highly liquid investments with maturities of three
months or less when acquired.
Concentrations of credit risks -- Financial instruments which potentially
subject the Company to concentrations of credit risks are principally cash and
cash equivalents and trade accounts receivables. Cash and cash equivalents are
placed with various high-credit-quality institutions and are currently invested
in the highest rated commercial paper and government securities. Accounts
receivable are with customers located primarily in the immediate area of each
city of publication. The Company routinely assesses the financial strength of
significant customers and this assessment, combined with the large number and
geographic diversity of its customers, limits the Company's concentration of
risk with respect to trade accounts receivable.
Inventories are stated at the lower of cost (based principally on the
last-in, first-out method) or current market value. If the first-in, first-out
method of inventory accounting had been used, inventories would have increased
by $1,460,000 at December 31, 1993 and $1,124,000 at December 31, 1992.
Property, plant and equipment are stated at cost. Major renewals and
betterments, as well as interest incurred during construction, are capitalized.
Such interest aggregated $5,000 in 1993, $376,000 in 1992 and $2,715,000 in
1991.
Depreciation is computed generally on a straight-line basis over estimated
useful lives of:
- 10 to 60 years for buildings
- 9 to 20 years for presses
- 3 to 10 years for other equipment
Intangibles consist of the unamortized excess of the cost of acquiring
newspaper operations over the fair market values of the newspapers' tangible
assets at the date of purchase. Identifiable intangible assets, consisting
primarily of lists of advertisers and subscribers, covenants not to compete and
commercial printing contracts, are amortized over periods ranging from three to
twenty-five years. The excess of purchase prices over identifiable assets is
amortized over forty years. Management periodically evaluates the recoverability
of intangible assets by reviewing the current and projected profitability of its
newspaper operations.
Deferred income taxes result from temporary differences between amounts
reported for financial and income tax reporting purposes. See note 2.
Earnings per share are based upon the weighted average number of
outstanding shares of common stock and common stock equivalents (stock
options -- see note 10). Prior to 1992 shares issued excluded 750,000 Class B
shares which were held in a trust in which the Company had a vested income and
remainder interest. Upon the dissolution of the trust in 1992 the shares were
returned to the Company and included in treasury stock at no cost. These shares
have been excluded from weighted average shares outstanding for all periods.
2. CUMULATIVE EFFECTS OF ACCOUNTING CHANGES
Effective January 1, 1992, the Company adopted the provisions of Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes".
Under SFAS 109, deferred income tax assets and liabilities reflect the future
tax consequences, based on enacted tax laws, of temporary differences between
17
<PAGE> 20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
financial and tax reporting existing at the balance sheet date. The actual
effects of tax law changes are recognized when enacted. Prior to SFAS 109,
deferred income taxes were determined using tax rates in effect when differences
relating to revenues and expenses arose between financial and tax reporting. The
cumulative effect of this change reduced deferred tax liabilities and increased
1992 net income by $4,286,000 or $.15 per share. This change had no significant
effect on the income tax provision for 1992, and when considered with the other
change described below, did not have a material impact on net earnings in 1992.
The Company also adopted the provisions of SFAS No. 106 "Employers'
Accounting for Postretirement Benefits Other Than Pensions" effective January 1,
1992. The Statement requires the accrual of postretirement health care and life
insurance benefits over employees' service periods rather than expensing these
costs on a pay-as-you-go basis. The cumulative effect of this change increased
long-term obligations by $7,592,000, decreased deferred income tax liabilities
by $2,965,000 and reduced 1992 net income by $4,627,000 or $.16 per share.
3. INVESTMENT IN NEWSPRINT MILL PARTNERSHIP
A wholly-owned subsidiary of the Company owns a 13.5% interest in Ponderay
Newsprint Company ("Ponderay"), a general partnership formed to construct and
operate a newsprint mill in the State of Washington. The Company guarantees
$16,875,000 of bank debt provided by a consortium of 11 foreign and domestic
banks to construct the mill.
At December 31, 1993, Ponderay borrowings bore interest at rates averaging
7.27%. The debt is due in quarterly installments through March 1, 2001 and is
collateralized by the assets of Ponderay. The debt is subject to certain
restrictive covenants regarding contractual obligations of Ponderay and its
partners. The Company has committed to take 28,400 metric tons of annual
production on a "take-if-tendered" basis until the debt is repaid. The Company
purchased $12,079,000, $12,700,000 and $16,526,000 of newsprint from Ponderay in
1993, 1992 and 1991, respectively.
Summarized financial data for the years ended December 31, 1993, 1992 and
1991 for Ponderay's operations are as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
FINANCIAL POSITION:
Current assets................................... $ 19,624 $ 18,361 $ 19,249
Property, plant and equipment.................... 304,315 321,065 336,343
Other assets..................................... 5,690 10,075 15,326
-------- -------- --------
TOTAL ASSETS............................. $329,629 $349,501 $370,918
-------- -------- --------
-------- -------- --------
Current liabilities.............................. $ 33,761 $ 27,516 $ 17,416
Long-term liabilities............................ 267,331 282,636 292,717
Partners' capital................................ 28,537 39,349 60,785
-------- -------- --------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL................................ $329,629 $349,501 $370,918
-------- -------- --------
-------- -------- --------
RESULTS OF OPERATIONS:
Revenues...................................... $ 94,375 $ 89,807 $112,295
Net loss...................................... 45,713 49,435 31,058
</TABLE>
18
<PAGE> 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. LONG-TERM OBLIGATIONS
Long-term obligations consist of (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1993 1992
------- -------
<S> <C> <C>
Long-term debt:
Bank credit agreement.................................. $10,000
Other debt............................................. $ 60 164
------- -------
Total.................................................. 60 10,164
Less current portion................................... 60 92
------- -------
Total long-term debt................................... -- 10,072
Postretirement benefits obligation....................... 9,142 8,808
Other long-term obligations.............................. 5,071 5,021
------- -------
Total long-term obligations.............................. $14,213 $23,901
------- -------
------- -------
</TABLE>
Long-term obligations mature as follows (in thousands):
<TABLE>
<S> <C>
1995............................... $ 1,068
1996............................... 1,004
1997............................... 636
1998............................... 406
Thereafter......................... 11,099
-------
Total.............................. $14,213
-------
-------
</TABLE>
The Company's cash reserves and expected cash flows are sufficient for its
near term needs. Accordingly, the Company terminated its bank credit agreement
at the end of 1993. The Company has an outstanding letter of credit for
$5,860,000.
Other long-term obligations consist primarily of deferred compensation and
supplemental retirement benefits.
5. INCOME TAX PROVISIONS
On January 1, 1992 the Company adopted SFAS 109. The impact of this change
is discussed in note 2.
Income tax provisions consist of (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Current:
Federal............................................. $16,212 $14,692 $11,168
State............................................... 3,742 3,455 1,451
Deferred:
Federal............................................. 6,663 5,963 5,552
State............................................... 501 (23) 267
------- ------- -------
Income tax provision.................................. $27,118 $24,087 $18,438
------- ------- -------
------- ------- -------
</TABLE>
19
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Deferred income tax provisions result from (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1993 1992 1991
------- ------- ------
<S> <C> <C> <C>
Depreciation and amortization.......................... $ 5,441 $ 3,982 $2,613
Newsprint mill partnership............................. 2,445 2,191 2,183
Deductible deposits.................................... -- 2,205 --
State taxes............................................ (10) (295) 696
Deferred compensation.................................. (1,617) (1,979) (719)
Other.................................................. 905 (164) 1,046
------- ------- ------
Total.................................................. $ 7,164 $ 5,940 $5,819
------- ------- ------
------- ------- ------
</TABLE>
The effective tax rate and the statutory federal income tax rate are
reconciled as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Statutory rate.......................................... 35% 34% 34%
State taxes, net of federal benefit..................... 5 4 3
Amortization of intangibles............................. 4 4 5
Impact of retroactive tax rate adjustments.............. 1 -- --
Other................................................... 1 2 2
---- ---- ----
Effective rate.......................................... 46% 44% 44%
---- ---- ----
---- ---- ----
</TABLE>
On August 2, 1993 new federal tax legislation was enacted which, among
other things, increased the federal corporate tax rate to 35% from 34%,
retroactive to January 1, 1993. The liability method of accounting for taxes
requires that the effect of this rate increase on current and cumulative
deferred taxes be reflected in the period in which the law was enacted.
Accordingly, the Company recorded an adjustment of $1,088,000 in the third
quarter. Of this amount, $239,000 related to higher taxes on earnings through
June 30, 1993 and $849,000 was required to revalue deferred taxes at January 1,
1993.
The components of deferred tax liabilities (benefits) recorded in the
Company's Consolidated Balance Sheet on December 31, 1993 and 1992 are (in
thousands):
<TABLE>
<CAPTION>
1993 1992
-------- -------
<S> <C> <C>
Depreciation and amortization........................... $ 45,517 $40,076
Partnership losses...................................... 10,971 8,526
Deductible deposits..................................... 3,954 3,954
State taxes............................................. 1,689 1,699
Deferred compensation................................... (11,321) (9,704)
Other................................................... 3,565 2,660
-------- -------
Deferred tax liability (net of $9,672 in 1993 and $8,143
in 1992 reported as current assets)................... $ 54,375 $47,211
-------- -------
-------- -------
</TABLE>
The tax asset above for deferred compensation includes $2,965,000 in 1992
which was allocated to the cumulative effect of adopting a change in the method
of accounting for postretirement benefits as discussed in note 2.
See note 9 for a discussion of tax assessments.
20
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. INTANGIBLES
Intangibles consist of (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1993 1992
-------- --------
<S> <C> <C>
Identifiable intangible assets, primarily customer
lists................................................ $132,881 $133,403
Excess purchase prices over identifiable assets........ 64,560 64,560
-------- --------
Total.................................................. 197,441 197,963
Less accumulated amortization.......................... 72,779 63,986
-------- --------
Intangibles -- net..................................... $124,662 $133,977
-------- --------
-------- --------
</TABLE>
7. EMPLOYEE BENEFITS
Early retirement charge:
In September 1992, the Sacramento and Modesto Bees made available an early
retirement program to certain employees. The program ended in October 1992 with
66 employees accepting early retirement. Accordingly, the Company recorded a
pretax charge of $2,593,000 in the fourth quarter of 1992.
Retirement plans:
The Company has a defined benefit pension plan (the "retirement plan") for
a majority of its employees. Benefits are based on years of service and
compensation. Contributions to the plan are made by the Company in amounts
deemed necessary to provide benefits. Plan assets consist primarily of
investments in marketable securities including common stocks, bonds and U.S.
government obligations, and other interest bearing accounts.
The Company also has a supplemental retirement plan to provide key
employees with additional retirement benefits. The terms of the plan are
generally the same as those of the retirement plan, except that the supplemental
retirement plan is limited to key employees and benefits under it are reduced by
benefits received under the retirement plan. The accrued pension obligation for
the supplemental retirement plan is included in other long-term obligations.
The elements of pension costs are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Cost of benefits earned during the year............... $ 5,393 $ 5,282 $ 5,123
Interest on projected benefit obligation.............. 6,447 5,922 6,788
Return on plan assets -- (gain)....................... (10,231) (7,253) (13,135)
Deferred gain -- return on plan assets greater than
assumed............................................. 3,787 1,098 5,637
Net amortization and other deferrals.................. 2 (384) (521)
------- ------- -------
Net pension cost...................................... $ 5,398 $ 4,665 $ 3,892
------- ------- -------
------- ------- -------
</TABLE>
Assumptions used for accounting for defined benefit plans were:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Discount rate in determining benefit
obligation................................... 7.3% 8.5% 8.5%
Expected long-term rate of return on assets.... 8.5% 9.0% 9.0%
Rates of compensation increase................. 4.5%-5.5% 5.5%-6.0% 5.5%-6.0%
</TABLE>
21
<PAGE> 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The plans' funded status and amounts recognized in the Company's
Consolidated Balance Sheet at December 31, 1993 and 1992 are as follows (in
thousands):
<TABLE>
<CAPTION>
1993 1992
------------------------- -------------------------
SUPPLEMENTAL SUPPLEMENTAL
RETIREMENT RETIREMENT RETIREMENT RETIREMENT
PLAN PLAN PLAN PLAN
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation....................... $ 67,081 $ 2,834 $ 51,629 $ 2,688
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Accumulated benefit obligation.................. $ 72,609 $ 2,834 $ 55,757 $ 2,688
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Plan assets at fair value......................... $ 89,219 $ 79,540
Projected benefit obligation...................... (94,378) $ (3,780) (78,684) $ (3,461)
---------- ------------ ---------- ------------
Projected benefit (over) under plan assets........ (5,159) (3,780) 856 (3,461)
Unrecognized net (gains) losses................... 982 (427) (2,043) (576)
Unrecognized prior service cost................... 3,274 1,628 3,667 1,790
Unrecognized net pension transition asset,
amortized over 15 years......................... (4,378) -- (4,925) --
Adjustment required to recognize minimum
liability....................................... -- (255) -- (441)
---------- ------------ ---------- ------------
Accrued pension obligation........................ $ (5,281) $ (2,834) $ (2,445) $ (2,688)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
In 1992, the Company settled pension obligations for future benefits due to
employees who retired prior to January 1, 1989 by converting pension assets
totalling approximately $22,300,000 to purchased annuities. The Company
recognized a pretax gain of $794,000 on the settlement of these obligations.
The Company has a Deferred Compensation and Investment Plan (401(k) plan)
which enables qualified employees to voluntarily defer compensation. Company
contributions to the 401(k) plan were $3,751,000 in 1993, $3,455,000 in 1992 and
$2,987,000 in 1991.
POSTRETIREMENT BENEFITS:
The Company also provides or subsidizes certain retiree health care and
life insurance benefits. On January 1, 1992 the Company began accruing the cost
of these benefits over employee's service periods instead of recording them on a
pay-as-you-go basis. The impact of this change is discussed in note 2.
The elements of postretirement expenses are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1993 1992
---- ------
<S> <C> <C>
Service costs............................................... $230 $ 233
Interest costs.............................................. 649 645
Transition obligation....................................... -- 7,592
---- ------
Total postretirement benefits costs......................... $879 $8,470
---- ------
---- ------
</TABLE>
Assumptions used for accounting for postretirement benefits were:
<TABLE>
<S> <C> <C>
Discount rate in determining benefit obligation....... 7.3% 8.5%
Medical care cost trend rate.......................... 9.5%-13.25% 14.0%
</TABLE>
22
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The plan's funded status and amounts recognized in the Company's
Consolidated Balance Sheet at December 31, 1993 and 1992 are as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1993 1992
------ ------
<S> <C> <C>
Accumulated postretirement benefit obligation (APBO):
Retirees................................................... $5,250 $5,525
Active eligible employees.................................. 789 721
Active ineligible employees................................ 3,343 2,721
------ ------
Total APBO................................................. 9,382 8,967
Unrecognized gain.......................................... (80) --
------ ------
Net postretirement benefit liability....................... $9,302 $8,967
------ ------
------ ------
</TABLE>
The medical care cost trend rates are expected to decline to about 5.8% by
the year 2003. A 1.0% increase in the assumed health care cost trend rate would
have increased the APBO by 3.0%, the annual service cost by 13.0% and the annual
interest cost by 4.0%.
8. CASH FLOW INFORMATION
Cash provided or used by operations was affected by changes in certain
current assets and liabilities, net of the effects of acquired newspaper
operations, as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1993 1992 1991
------ ------- -------
<S> <C> <C> <C>
Increase (decrease) in assets:
Receivables....................................... $1,345 $ (142) $ 290
Inventories....................................... (97) 1,221 (627)
Other current assets.............................. (669) (1,795) 2,714
------ ------- -------
Total........................................ 579 (716) 2,377
Increase (decrease) in liabilities:
Accounts payable.................................. 3,569 2,103 (4,844)
Accrued compensation.............................. 3,422 1,109 594
Income taxes...................................... 1,087 (2,112) 1,455
Other current liabilities......................... 1,705 2,549 3,234
------ ------- -------
Total........................................ 9,783 3,649 439
------ ------- -------
Net cash increase (decrease) from changes in
current assets and liabilities....................... $9,204 $ 4,365 $(1,938)
------ ------- -------
------ ------- -------
</TABLE>
23
<PAGE> 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. COMMITMENTS AND CONTINGENCIES
See note 3 for a discussion of the Company's commitments to Ponderay
Newsprint Company.
The Company and its subsidiaries rent certain facilities and equipment
under operating leases expiring at various dates through December 31, 1999.
Total rental expense amounted to $1,618,000 in 1993, $1,596,000 in 1992 and
$1,649,000 in 1991. Minimum rental commitments under operating leases with
noncancelable terms in excess of one year are (in thousands):
<TABLE>
<S> <C>
1994................................ $1,869
1995................................ 1,460
1996................................ 1,128
1997................................ 865
1998................................ 617
Thereafter.......................... 207
------
Total............................... $6,146
------
------
</TABLE>
State and federal taxing authorities have audited the Company's tax returns
for 1982-1987, and have made assessments or proposed adjustments primarily
related to the deduction of certain intangible assets and deductions related to
discontinued and other non-newspaper operations. The total amount of the
proposed adjustments, including interest thereon, is approximately $25,000,000
at December 31, 1993. The Company is protesting the adjustments through the
appropriate authorities. While this process is expected to extend over several
years and additional assessments for like issues are expected to be forthcoming,
the Company believes these adjustments will be reduced in the appeals processes.
Pending final resolution of these matters, the Company has deposited, with the
applicable tax authorities, a total of $12,592,000 to stop interest accrual on a
portion of the adjustments and included this amount in other assets at December
31, 1993. In the opinion of management, adequate provision has been made for any
taxes and interest resulting from these assessments and the ultimate outcome of
these matters will not have a material adverse effect on the Company's
consolidated results of operation or financial position.
There are libel and other legal actions that have arisen in the ordinary
course of business and are pending against the Company. Management believes,
after reviewing such actions with counsel, that the outcome of pending actions
will not have a material adverse effect on the Company's consolidated results of
operations or financial position.
10. COMMON STOCK AND STOCK PLANS
The Company's Class A and Class B common stock participate equally in
dividends. Holders of Class B common stock are entitled to one vote per share
and to elect as a class 75% of the Board of Directors, rounded down to the
nearest whole number. Holders of Class A common stock are entitled to one-tenth
of a vote per share and to elect as a class 25% of the Board of Directors,
rounded up to the nearest whole number. Class B common stock is convertible at
the option of the holder into Class A common stock on a share-for-share basis.
Prior to 1992, shares issued excluded 750,000 Class B shares which were
held in a trust in which the Company had a vested income and remainder interest.
Upon dissolution of the trust in 1992, the shares were returned to the Company
and included in treasury stock.
The Company's Amended Employee Stock Purchase Plan (the "Purchase Plan")
reserved 1,500,000 shares of Class A common stock for issuance to employees.
Eligible employees may purchase shares at 85% of "fair market value" (as
defined) through payroll deductions. The Purchase Plan can be automatically
terminated by the Company at any time. As of December 31, 1993, 385,518 shares
of Class A common stock have been issued under the Purchase Plan.
24
<PAGE> 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company's 1987 Stock Option Plan (the "Employee Plan"), as amended,
reserved 600,000 shares of Class A common stock for issuance to key employees.
Options are granted at the market price of the Class A common stock on the date
of the grant. The options vest in installments over four years, and once vested
are exercisable up to ten years from the date of award. Although the Plan
permits the Company, at its sole discretion, to settle unexercised options by
granting stock appreciation rights (SARS), the Company does not intend to avail
itself of this alternative except in limited circumstances.
In July 1990, the Company adopted a stock option plan for outside
(nonemployee) directors (the "Directors' Plan") providing for the issuance of up
to 150,000 shares of Class A common stock. Under the Directors' Plan each
outside director is granted an option at fair market value at the conclusion of
each regular annual meeting of stockholders for 1,500 shares. Terms of the
Directors' Plan are similar to the terms of the Employee Plan. Outstanding
options are summarized as follows:
<TABLE>
<CAPTION>
EMPLOYEE PLAN DIRECTORS' PLAN
------------------- -------------------
AVERAGE AVERAGE
OPTIONS PRICE OPTIONS PRICE
------- ------- ------- -------
<S> <C> <C> <C> <C>
Outstanding, December 31, 1990......................... 284,800 $ 17.43 10,500 $ 18.25
Granted................................................ 110,400 15.88 10,500 21.50
------- -------
Outstanding, December 31, 1991......................... 395,200 16.99 21,000 19.88
Granted................................................ 108,600 19.50 10,500 20.75
Exercised.............................................. (1,025) 16.00 -- --
Surrendered for SARS................................... (23,500) 15.66 -- --
Forfeited.............................................. (9,975) 22.66 -- --
------- -------
Outstanding, December 31, 1992......................... 469,300 17.52 31,500 20.17
Granted................................................ -- -- 10,500 22.38
Exercised.............................................. (4,425) 15.26 -- --
Forfeited.............................................. (3,575) 17.78 -- --
------- -------
Outstanding, December 31, 1993......................... 461,300 17.54 42,000 20.72
------- -------
------- -------
</TABLE>
In the Employee Plan, there are 220,925 options exercisable as of December
31, 1993. In January 1994, the Company granted 104,500 options to employees
using substantially all shares reserved in the plan. In the Directors' Plan
15,750 shares were exercisable at December 31, 1993 and 108,000 available for
future awards.
On January 26, 1994 the Board of Directors adopted the 1994 Employee Stock
Option Plan, subject to stockholder approval, reserving 650,000 Class A shares
for issuance to key employees. The terms of this plan are substantially the same
as the terms of the Employee Plan and no shares have been granted under the new
plan.
25
<PAGE> 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The Company's business is somewhat seasonal, with peak revenues and profits
generally occurring in the second and fourth quarters of each year as a result
of increased advertising activity during the spring holiday and Christmas
periods. The first quarter is historically the weakest quarter for revenues and
profits. The Company's quarterly results are summarized as follows (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1993:
Revenues -- net................................. $105,282 $113,458 $111,282 $119,093
Operating income................................ 10,546 16,962 16,396 21,200
Net income...................................... 4,768 8,514 7,341 11,175
Net income per common share..................... .17 .30 .25 .39
1992:
Revenues -- net................................. $101,292 $111,169 $110,503 $117,283
Operating income................................ 9,881 16,246 16,856 18,940
Income before cumulative effects of
accounting changes............................ 4,488 7,831 8,699 9,153
Net income...................................... 4,147 7,831 8,699 9,153
Income per common share before cumulative
effects of accounting changes................. .15 .27 .30 .32
Net income per common share..................... .14 .27 .30 .32
1991:
Revenues -- net................................. $ 99,469 $109,399 $106,451 $111,507
Operating income................................ 6,525 13,999 12,904 15,779
Net income...................................... 2,974 6,263 6,563 7,929
Net income per common share..................... .10 .22 .23 .28
</TABLE>
See notes 5 and 7 for discussions of charges recorded in the third quarter
of 1993 and fourth quarter of 1992 for tax and early retirement expenses,
respectively.
26
<PAGE> 29
INDEPENDENT AUDITOR'S REPORT
McClatchy Newspapers, Inc.:
We have audited the accompanying consolidated balance sheets of McClatchy
Newspapers, Inc. and its subsidiaries as of December 31, 1993 and 1992, and the
related consolidated statements of income, cash flows and stockholders' equity
for each of the three years in the period ended December 31, 1993. Our audits
also included the financial statement schedules listed in the Index at Item
14(a)(2). These financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of McClatchy Newspapers, Inc. and
its subsidiaries at December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1993 in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
As discussed in note 2 to the consolidated financial statements, in 1992
the Company changed its method of accounting for income taxes to conform to
Statement of Financial Accounting Standards (SFAS) No. 109 and changed its
method of accounting for postretirement health care and life insurance benefits
to conform to SFAS No. 106.
Sacramento, California
February 1, 1994
27
<PAGE> 30
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Biographical information for Class A Directors, Class B Directors and
executive officers contained under the captions "Nominees for Class A
Directors", "Nominees for Class B Directors" and "Other Executive Officers"
under the heading "Election of Directors" in the definitive Proxy Statement for
the Company's 1994 Annual Meeting of Stockholders is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
The information contained under the heading "Compensation" in the
definitive Proxy Statement for the Company's 1994 Annual Meeting of Stockholders
is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained under the heading "Stock Ownership" in the
definitive Proxy Statement for the Company's 1994 Annual Meeting of Stockholders
is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
28
<PAGE> 31
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial statements and independent auditor's report on pages 12
through 27.
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Cash Flows
Consolidated Statement of Stockholders' Equity
Notes to Consolidated Financial Statements
Independent Auditor's Report
(2) Financial statement schedules for the years ended December 31,
1993, 1992 and 1991 on pages 33 through 36. All schedules, other
than those listed below, are omitted as not applicable under the
rules of Regulation S-X:
Schedule V, Property, plant and equipment
Schedule VI, Accumulated depreciation of property, plant and
equipment
Schedule VIII, Valuation and qualifying accounts
Schedule X, Supplementary income statement information
(3) Exhibits
<TABLE>
<S> <C>
3.1 The Company's Restated Certificate of Incorporation included in Exhibit
3.1 to the Company's 1988 Report on Form 10-K filed with the Securities
and Exchange Commission (the "Commission") on March 29, 1989
(incorporated herein by reference).
3.2 The Company's By-laws included in Exhibit 6.2 to the Company's
Registration Statement on Form 8-A filed with the Commission on
November 28, 1988 (incorporated herein by reference).
10.1 Credit Agreement and Amendments Nos. 1 and 2 thereto included in
Exhibit 10.11 to the Company's Registration Statement No. 33-17270 on
Form S-1 originally filed with the Commission on September 16, 1987,
Amendments No. 3 and 4 thereto included in Exhibit 10.1 to the
Company's 1988 Report on Form 10-K, Amendment No. 5 thereto included in
Exhibit 10.2 to the Company's 1989 Report on Form 10-K filed with the
Commission on March 28, 1990, Amendment No. 6 thereto included in
Exhibit 10.2 to the Company's 1990 Report on Form 10-K filed with the
commission on March 27, 1991 and Amendment No. 7 thereto included in
item 10.1 to the Company's Report on Form 10-K filed with the
Commission on March 26, 1993 (incorporated herein by reference).
10.2 Ponderay Newsprint Company Partnership Agreement dated as of September
12, 1985 between Lake Superior Forest Products, Inc., Central Newsprint
Company, Inc., Bradley Paper Company, Copley Northwest, Inc., Puller
Paper Company, Newsprint Ventures, Inc., Wingate Paper Company, Tribune
Newsprint Company and Nimitz Paper Company included in Exhibit 10.10 to
the Company's Registration Statement No. 33-17370 on Form S-1
(incorporated herein by reference).
10.3 The Company's Management by Objective Plan Description included in
Exhibit 10.1 to the Company's Registration Statement No. 33-17270 on
Form S-1 (incorporated by reference).
10.4 The Company's Supplemental Executive Retirement Plan included in
Exhibit 10.7 to the Company's 1988 Report on Form 10-K (incorporated
herein by reference).
</TABLE>
29
<PAGE> 32
<TABLE>
<S> <C>
10.5 The Company's 1987 Stock Option Plan included in Exhibit 10.8 to the
Company's 1988 Report on Form 10-K and Amendment to the Plan included
in Exhibit 10.15 to the Company's 1990 Report on Form 10-K (incorporated
herein by reference).
10.6 The Company's Group Executive Life Insurance Plan included in Exhibit
10.9 to the Company's Registration Statement No. 33-17270 on Form S-1
(incorporated herein by reference).
10.7 The Company's Group Executive Long Term Disability Insurance Plan
included in Exhibit 10.8 to the Company's Registration Statement No.
33-17270 on Form S-1 (incorporated herein by reference).
10.8 Asset Purchase Agreement between The News and Observer Publishing
Company and the Company dated September 25, 1989 included in Exhibit
2.1 to the Company's Report on Form 8-K filed with the Commission on
January 23, 1990 (incorporated herein by reference).
10.9 Employment Agreement between the Company and Erwin Potts dated October
17, 1989 filed with the Commission in Exhibit 10.12 to the Company's
1989 Report on Form 10-K (incorporated by reference).
10.10 The Company's Executive Performance Plan adopted by the Board of
Directors on January 1, 1990 filed with the Commission in Exhibit 10.13
to the Company's 1989 Report on Form 10-K (incorporated by reference).
10.11 The Company's 1990 Directors' Stock Option Plan executed on July 25,
1990 included in Exhibit 10.14 to the Company's 1990 Report on Form
10-K (incorporated by reference).
21 Subsidiaries of the Company.
23 Consent of Deloitte & Touche.
24.1 Power of Attorney on behalf of James B. McClatchy.
24.2 Power of Attorney on behalf of Erwin Potts.
24.3 Power of Attorney on behalf of James P. Smith.
24.4 Power of Attorney on behalf of Robert W. Berger.
24.5 Power of Attorney on behalf of Booth Gardner.
24.6 Power of Attorney on behalf of William K. Coblentz.
24.7 Power of Attorney on behalf of William L. Honeysett.
24.8 Power of Attorney on behalf of Joan F. Lane.
24.9 Power of Attorney on behalf of Betty Lou Maloney.
24.10 Power of Attorney on behalf of William Ellery McClatchy.
24.11 Power of Attorney on behalf of S. Donley Ritchey, Jr.
24.12 Power of Attorney on behalf of William M. Roth.
24.13 Power of Attorney on behalf of Frederick R. Ruiz.
24.14 Power of Attorney on behalf of H. Roger Tatarian.
</TABLE>
(b) Reports on Form 8-K
Not applicable.
30
<PAGE> 33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on March 1, 1994.
McCLATCHY NEWSPAPERS, INC.
By JAMES B. McCLATCHY*
--------------------------------
James B. McClatchy
Chairman of the Board
*By: JAMES P. SMITH
--------------------------------
(James P. Smith,
Attorney-in-Fact)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------- --------------
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICERS:
JAMES B. McCLATCHY* Publisher and Chairman March 1, 1994
--------------------------------- of the Board
(James B. McClatchy)
ERWIN POTTS* President, Chief March 1, 1994
--------------------------------- Executive Officer
(Erwin Potts) and Director
PRINCIPAL FINANCIAL OFFICER:
JAMES P. SMITH* Vice President, March 1, 1994
--------------------------------- Finance, Treasurer
(James P. Smith) and Director
PRINCIPAL ACCOUNTING OFFICER:
ROBERT W. BERGER* Controller March 1, 1994
---------------------------------
(Robert W. Berger)
DIRECTORS:
BOOTH GARDNER* Director March 1, 1994
---------------------------------
(Booth Gardner)
WILLIAM K. COBLENTZ* Director March 1, 1994
---------------------------------
(William K. Coblentz)
</TABLE>
31
<PAGE> 34
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------- --------------
<S> <C> <C>
WILLIAM L. HONEYSETT* Executive March 1, 1994
------------------------------ Vice President
(William L. Honeysett) and Director
JOAN F. LANE* Director March 1, 1994
------------------------------
(Joan F. Lane)
BETTY LOU MALONEY* Director March 1, 1994
------------------------------
(Betty Lou Maloney)
WILLIAM ELLERY McCLATCHY* Director March 1, 1994
------------------------------
(William Ellery McClatchy)
S. DONLEY RITCHEY, JR.* Director March 1, 1994
------------------------------
(S. Donley Ritchey, Jr.)
WILLIAM M. ROTH* Director March 1, 1994
------------------------------
(William M. Roth)
FREDERICK R. RUIZ* Director March 1, 1994
------------------------------
(Frederick R. Ruiz)
H. ROGER TATARIAN* Director March 1, 1994
------------------------------
(H. Roger Tatarian)
*By: JAMES P. SMITH
------------------------------
James P. Smith
(Attorney-in-Fact)
</TABLE>
32
<PAGE> 35
SCHEDULE V
MCCLATCHY NEWSPAPERS, INC. AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN E COLUMN F
-------- ---------- COLUMN C ------------ ----------
BALANCE -------- COLUMN D OTHER(1) BALANCE
BEGINNING ADDITIONS ----------- CHANGES- AT END
CLASSIFICATION OF PERIOD AT COST RETIREMENTS ADD (DEDUCT) OF PERIOD
-------------- ---------- -------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1991:
Land and improvements.................. $ 15,429 $ 879 $ (137) $ -- $ 16,171
Buildings and improvements............. 99,585 14,796 (2,463) -- 111,918
Equipment.............................. 199,309 52,245 (3,397) 30 248,187
Construction in progress............... 41,872 (26,346) -- -- 15,526
---------- -------- ----------- ------ ----------
Total.......................... $ 356,195 $41,574 $ (5,997) $ 30 $ 391,802
---------- -------- ----------- ------ ----------
---------- -------- ----------- ------ ----------
YEAR ENDED DECEMBER 31, 1992:
Land and improvements.................. $ 16,171 $ 1,354 $ (6) $151 $ 17,670
Buildings and improvements............. 111,918 6,970 (123) 346 119,111
Equipment.............................. 248,187 28,894 (11,644) 225 265,662
Construction in progress............... 15,526 (7,742) -- 193 7,977
---------- -------- ----------- ------ ----------
Total.......................... $ 391,802 $29,476 $ (11,773) $915 $ 410,420
---------- -------- ----------- ------ ----------
---------- -------- ----------- ------ ----------
YEAR ENDED DECEMBER 31, 1993:
Land and improvements.................. $ 17,670 $ 387 $ -- $ -- $ 18,057
Buildings and improvements............. 119,111 1,694 (52) -- 120,753
Equipment.............................. 265,662 25,854 (9,434) -- 282,082
Construction in progress............... 7,977 7,916 -- -- 15,893
---------- -------- ----------- ------ ----------
Total.......................... $ 410,420 $35,851 $ (9,486) $ -- $ 436,785
---------- -------- ----------- ------ ----------
---------- -------- ----------- ------ ----------
</TABLE>
- ---------------
(1) Additions attributable to acquisitions including The (Ellensburg)
Daily Record in September 1992.
33
<PAGE> 36
SCHEDULE VI
MCCLATCHY NEWSPAPERS, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- ---------- -------- ----------- ------------ -----------
BALANCE OTHER(1) BALANCE AT
BEGINNING ADDITIONS CHANGES -- END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS ADD (DEDUCT) PERIOD
-------------- ---------- -------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1991:
Land and improvements.............. $ 847 $ 133 $ (55) $ -- $ 925
Buildings and improvements......... 24,095 3,434 (452) -- 27,077
Equipment.......................... 93,862 18,014 (4,198) -- 107,678
---------- -------- ----------- ------------ -----------
Total...................... $ 118,804 $21,581 $ (4,705) $ -- $ 135,680
---------- -------- ----------- ------------ -----------
---------- -------- ----------- ------------ -----------
YEAR ENDED DECEMBER 31, 1992:
Land and improvements.............. $ 925 $ 196 $ (6) $ -- $ 1,115
Buildings and improvements......... 27,077 3,763 (79) -- 30,761
Equipment.......................... 107,678 20,849 (11,131) -- 117,396
---------- -------- ----------- ------------ -----------
Total...................... $ 135,680 $24,808 $ (11,216) $ -- $ 149,272
---------- -------- ----------- ------------ -----------
---------- -------- ----------- ------------ -----------
YEAR ENDED DECEMBER 31, 1993:
Land and improvements.............. $ 1,115 $ 192 $ -- $ -- $ 1,307
Buildings and improvements......... 30,761 3,930 (36) -- 34,655
Equipment.......................... 117,396 22,339 (9,237) -- 130,498
---------- -------- ----------- ------------ -----------
Total...................... $ 149,272 $26,461 $ (9,273) $ -- $ 166,460
---------- -------- ----------- ------------ -----------
---------- -------- ----------- ------------ -----------
</TABLE>
34
<PAGE> 37
SCHEDULE VIII
MCCLATCHY NEWSPAPERS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- ---------- ---------- ---------- ----------- -----------
DEDUCTIONS(1)
ADDITIONS FOR
----------------------- PURPOSES
BALANCE CHARGED TO CHARGED TO FOR WHICH BALANCE AT
BEGINNING COSTS AND OTHER ACCOUNTS END OF
CLASSIFICATIONS OF PERIOD EXPENSES ACCOUNTS WERE SET UP PERIOD
--------------- ---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1991:
Deducted from assets to which they apply:
Uncollectible accounts................ $ (2,275) $ (4,570) $ -- $ 4,346 $(2,499)
YEAR ENDED DECEMBER 31, 1992:
Deducted from assets to which they apply:
Uncollectible accounts................ $ (2,499) $ (3,509) $ -- $ 3,908 $(2,100)
YEAR ENDED DECEMBER 31, 1993:
Deducted from assets to which they apply:
Uncollectible accounts................ $ (2,100) $ (3,567) $ -- $ 3,910 $(1,757)
</TABLE>
- ---------------
(1) Amounts written off net of bad debt recoveries.
35
<PAGE> 38
SCHEDULE X
MCCLATCHY NEWSPAPERS, INC. AND SUBSIDIARIES
SUPPLEMENTAL INCOME STATEMENT INFORMATION
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN B
----------------
COLUMN A CHARGED TO COSTS
-------- AND EXPENSES
ITEM 1993 1992 1991
-------- ------ ---------------- ------
<S> <C> <C> <C>
Amortization of intangible assets.......................... $9,317 $8,943 $8,599
Maintenance and repairs.................................... 8,325 6,734 6,055
</TABLE>
36
<PAGE> 39
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
3.1* The Company's Restated Certificate of Incorporation included in
Exhibit 3.1 to the Company's 1988 Report on Form 10-K filed with the
Securities and Exchange Commission (the "Commission") on March 29,
1989
3.2* The Company's By-laws included in Exhibit 6.2 to the Company's
Registration Statement on Form 8-A filed with the Commission on
November 28, 1988
10.1* Credit Agreement included in Exhibit 10.11 to the Company's
Registration Statement No. 33-17270 on Form S-1 filed with the
Commission on September 16, 1987, as amended by Amendment No. 1
thereto filed with the Commission on January 26, 1988, by Amendment
No. 2 thereto filed with the Commission on February 3, 1988,
Amendments No. 3 and 4 thereto included in Exhibit 10.1 to the
Company's 1988 Report on Form 10-K, Amendment No. 5 thereto included
in Exhibit 10.2 to the Company's 1989 Report on Form 10-K filed with
the Commission on March 28, 1990 and Amendment No. 6 thereto included
in item 10.2 to the Company's 1990 Report on Form 10-K filed with the
Commission on March 27, 1991 and Amendment No. 7 thereto included in
item 10.1 to the Company's Form 10-K filed with the Commission on
March 26, 1993
10.2* Ponderay Newsprint Company Partnership Agreement dated as of
September 12, 1985 between Lake Superior Forest Products, Inc.,
Central Newsprint Company, Inc., Bradley Paper Company, Copley
Northwest, Inc., Puller Paper Company, Newsprint Ventures, Inc.,
Wingate Paper Company, Tribune Newsprint Company and Nimitz Paper
Company included in Exhibit 10.10 to the Company's Registration
Statement No. 33-17370 on Form S-1
10.3* The Company's Management by Objective Plan Description included in
Exhibit 10.1 to the Company's Registration Statement No. 33-17270 on
Form S-1
10.4* The Company's Supplemental Executive Retirement Plan included in
Exhibit 10.7 to the Company's 1988 Report on Form 10-K
10.5* The Company's 1987 Stock Option Plan included in Exhibit 10.8 to the
Company's 1988 Report on Form 10-K and Amendment to the Plan included
in Exhibit 10.15 to the Company's 1990 Report on Form 10-K
10.6* The Company's Group Executive Life Insurance Plan included in Exhibit
10.9 to the Company's Registration Statement No. 33-17270 on Form S-1
10.7* The Company's Group Executive Long Term Disability Insurance Plan
included in Exhibit 10.8 to the Company's Registration Statement No.
33-17270 on Form S-1
10.8* Asset Purchase Agreement between The News and Observer Publishing
Company and the Company dated September 25, 1989 included in Exhibit
2.1 to the Company's Report on Form 8-K filed with the Commission on
January 23, 1990
10.9* Employment Agreement between the Company and Erwin Potts dated
October 17, 1989 included in Exhibit 10.12 to the Company's 1989
Report on Form 10-K
10.10* The Company's Executive Performance Plan adopted by the Board of
Directors on January 1, 1990 included in Exhibit 10.13 to the
Company's 1989 Report on Form 10-K
10.11* The Company's 1990 Directors' Stock Option Plan included in Exhibit
10.14 to the Company's 1990 Report on Form 10-K
21 Subsidiaries of the Company
23 Consent of Deloitte & Touche
24.1 Power of Attorney on behalf of James B. McClatchy
</TABLE>
<PAGE> 40
<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
24.2 Power of Attorney on behalf of Erwin Potts
24.3 Power of Attorney on behalf of James P. Smith
24.4 Power of Attorney on behalf of Robert W. Berger
24.5 Power of Attorney on behalf of Booth Gardner
24.6 Power of Attorney on behalf of William K. Coblentz
24.7 Power of Attorney on behalf of William L. Honeysett
24.8 Power of Attorney on behalf of Joan F. Lane
24.9 Power of Attorney on behalf of Betty Lou Maloney
24.10 Power of Attorney on behalf of William Ellery McClatchy
24.11 Power of Attorney on behalf of S. Donley Ritchey, Jr.
24.12 Power of Attorney on behalf of William M. Roth
24.13 Power of Attorney on behalf of Frederick R. Ruiz
24.14 Power of Attorney on behalf of H. Roger Tatarian
</TABLE>
- ---------------
* Incorporated by reference
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF
McCLATCHY NEWSPAPERS, INC.
(a Delaware corporation)
ALASKA
Anchorage Daily News, Inc.
CALIFORNIA
El Dorado Newspapers
Fifty-Five Plus, Inc.
Gavilan Newspapers, Inc.
Information Sources, Inc.
Legi-Tech
Newsprint Ventures, Inc.
The Newspaper Network, Inc.
DELAWARE
Wingate Paper Company
SOUTH CAROLINA
East Coast Newspapers, Inc.
WASHINGTON
Pierce-Herald, Inc.
Tacoma News, Inc.
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in Registration Statements No.
33-21704, No. 33-24096, No. 33-37300 and No. 33-65104 of McClatchy Newspapers,
Inc. on Form S-8 of our report dated February 1, 1994, appearing in this Annual
Report on Form 10-K of McClatchy Newspapers, Inc. for the year ended December
31, 1993.
DELOITTE & TOUCHE
Sacramento, California
March 1, 1994
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 24.1
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, McCLATCHY NEWSPAPERS, INC., a Delaware Corporation (the
"Company"), contemplates filing with the Securities and Exchange Commission at
Washington, D.C., under the provisions of the Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, an Annual Report on
Form 10-K.
WHEREAS, the undersigned is an officer or director, or both, of the
Company.
NOW, THEREFORE, the undersigned hereby constitutes and appoints ERWIN
POTTS, WILLIAM L. HONEYSETT and JAMES P. SMITH, or any of them, his
attorney-in-fact and agents, with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and
all capacities, to sign the aforementioned Annual Report on Form 10-K (and any
and all amendments thereto) and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents and
purposes he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do
and cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
15th day of February, 1994.
/s/ James B. McClatchy
---------------------------------------
James B. McClatchy
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 24.2
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, McCLATCHY NEWSPAPERS, INC., a Delaware Corporation (the
"Company"), contemplates filing with the Securities and Exchange Commission at
Washington, D.C., under the provisions of the Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, an Annual Report on
Form 10-K.
WHEREAS, the undersigned is an officer or director, or both, of the
Company.
NOW, THEREFORE, the undersigned hereby constitutes and appoints ERWIN
POTTS, WILLIAM L. HONEYSETT and JAMES P. SMITH, or any of them, his
attorney-in-fact and agents, with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and
all capacities, to sign the aforementioned Annual Report on Form 10-K (and any
and all amendments thereto) and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents and
purposes he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do
and cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
15th day of February, 1994.
/s/ Erwin Potts
--------------------------------------
Erwin Potts
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 24.3
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, McCLATCHY NEWSPAPERS, INC., a Delaware Corporation (the
"Company"), contemplates filing with the Securities and Exchange Commission at
Washington, D.C., under the provisions of the Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, an Annual Report on
Form 10-K.
WHEREAS, the undersigned is an officer or director, or both, of the
Company.
NOW, THEREFORE, the undersigned hereby constitutes and appoints ERWIN
POTTS, WILLIAM L. HONEYSETT and JAMES P. SMITH, or any of them, his
attorney-in-fact and agents, with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and
all capacities, to sign the aforementioned Annual Report on Form 10-K (and any
and all amendments thereto) and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents and
purposes he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do
and cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
15th day of February, 1994.
/s/ James P. Smith
--------------------------------------
James P. Smith
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 24.4
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, McCLATCHY NEWSPAPERS, INC., a Delaware Corporation (the
"Company"), contemplates filing with the Securities and Exchange Commission at
Washington, D.C., under the provisions of the Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, an Annual Report on
Form 10-K.
WHEREAS, the undersigned is an officer or director, or both, of the
Company.
NOW, THEREFORE, the undersigned hereby constitutes and appoints ERWIN
POTTS, WILLIAM L. HONEYSETT and JAMES P. SMITH, or any of them, his
attorney-in-fact and agents, with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and
all capacities, to sign the aforementioned Annual Report on Form 10-K (and any
and all amendments thereto) and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents and
purposes he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do
and cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
25th day of February, 1994.
/s/ Robert W. Berger
--------------------------------------
Robert W. Berger
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 24.5
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, McCLATCHY NEWSPAPERS, INC., a Delaware Corporation (the
"Company"), contemplates filing with the Securities and Exchange Commission at
Washington, D.C., under the provisions of the Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, an Annual Report on
Form 10-K.
WHEREAS, the undersigned is an officer or director, or both, of the
Company.
NOW, THEREFORE, the undersigned hereby constitutes and appoints ERWIN
POTTS, WILLIAM L. HONEYSETT and JAMES P. SMITH, or any of them, his
attorney-in-fact and agents, with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and
all capacities, to sign the aforementioned Annual Report on Form 10-K (and any
and all amendments thereto) and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents and
purposes he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do
and cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
16th day of February, 1994.
/s/ Booth Gardner
--------------------------------------
Booth Gardner
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 24.6
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, McCLATCHY NEWSPAPERS, INC., a Delaware Corporation (the
"Company"), contemplates filing with the Securities and Exchange Commission at
Washington, D.C., under the provisions of the Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, an Annual Report on
Form 10-K.
WHEREAS, the undersigned is an officer or director, or both, of the
Company.
NOW, THEREFORE, the undersigned hereby constitutes and appoints ERWIN
POTTS, WILLIAM L. HONEYSETT and JAMES P. SMITH, or any of them, his
attorney-in-fact and agents, with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and
all capacities, to sign the aforementioned Annual Report on Form 10-K (and any
and all amendments thereto) and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents and
purposes he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do
and cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
17th day of February, 1994.
/s/ William K. Coblentz
---------------------------------------
William K. Coblentz
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 24.7
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, McCLATCHY NEWSPAPERS, INC., a Delaware Corporation (the
"Company"), contemplates filing with the Securities and Exchange Commission at
Washington, D.C., under the provisions of the Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, an Annual Report on
Form 10-K.
WHEREAS, the undersigned is an officer or director, or both, of the
Company.
NOW, THEREFORE, the undersigned hereby constitutes and appoints ERWIN
POTTS, WILLIAM L. HONEYSETT and JAMES P. SMITH, or any of them, his
attorney-in-fact and agents, with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and
all capacities, to sign the aforementioned Annual Report on Form 10-K (and any
and all amendments thereto) and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents and
purposes he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do
and cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
23rd day of February, 1994.
/s/ William L. Honeysett
--------------------------------------
William L. Honeysett
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 24.8
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, McCLATCHY NEWSPAPERS, INC., a Delaware Corporation (the
"Company"), contemplates filing with the Securities and Exchange Commission at
Washington, D.C., under the provisions of the Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, an Annual Report on
Form 10-K.
WHEREAS, the undersigned is an officer or director, or both, of the
Company.
NOW, THEREFORE, the undersigned hereby constitutes and appoints ERWIN
POTTS, WILLIAM L. HONEYSETT and JAMES P. SMITH, or any of them, her
attorney-in-fact and agents, with full power of substitution and
resubstitution, for such person and in her name, place and stead, in any and
all capacities, to sign the aforementioned Annual Report on Form 10-K (and any
and all amendments thereto) and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents and
purposes she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do
and cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this
17th day of February, 1994.
/s/ Joan F. Lane
--------------------------------------
Joan F. Lane
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 24.9
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, McCLATCHY NEWSPAPERS, INC., a Delaware Corporation (the
"Company"), contemplates filing with the Securities and Exchange Commission at
Washington, D.C., under the provisions of the Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, an Annual Report on
Form 10-K.
WHEREAS, the undersigned is an officer or director, or both, of the
Company.
NOW, THEREFORE, the undersigned hereby constitutes and appoints ERWIN
POTTS, WILLIAM L. HONEYSETT and JAMES P. SMITH, or any of them, her
attorney-in-fact and agents, with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and
all capacities, to sign the aforementioned Annual Report on Form 10-K (and any
and all amendments thereto) and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents and
purposes she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do
and cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this
16th day of February, 1994.
/s/ Betty Lou Maloney
--------------------------------------
Betty Lou Maloney
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 24.10
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, McCLATCHY NEWSPAPERS, INC., a Delaware Corporation (the
"Company"), contemplates filing with the Securities and Exchange Commission at
Washington, D.C., under the provisions of the Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, an Annual Report on
Form 10-K.
WHEREAS, the undersigned is an officer or director, or both, of the
Company.
NOW, THEREFORE, the undersigned hereby constitutes and appoints ERWIN
POTTS, WILLIAM L. HONEYSETT and JAMES P. SMITH, or any of them, his
attorney-in-fact and agents, with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and
all capacities, to sign the aforementioned Annual Report on Form 10-K (and any
and all amendments thereto) and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents and
purposes he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do
and cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
15th day of February, 1994.
/s/ William Ellery McClatchy
---------------------------------------
William Ellery McClatchy
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 24.11
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, McCLATCHY NEWSPAPERS, INC., a Delaware Corporation (the
"Company"), contemplates filing with the Securities and Exchange Commission at
Washington, D.C., under the provisions of the Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, an Annual Report on
Form 10-K.
WHEREAS, the undersigned is an officer or director, or both, of the
Company.
NOW, THEREFORE, the undersigned hereby constitutes and appoints ERWIN
POTTS, WILLIAM L. HONEYSETT and JAMES P. SMITH, or any of them, his
attorney-in-fact and agents, with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and
all capacities, to sign the aforementioned Annual Report on Form 10-K (and any
and all amendments thereto) and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents and
purposes he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do
and cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
16th day of February, 1994.
/s/ S. Donley Ritchey
--------------------------------------
S. Donley Ritchey
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 24.12
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, McCLATCHY NEWSPAPERS, INC., a Delaware Corporation (the
"Company"), contemplates filing with the Securities and Exchange Commission at
Washington, D.C., under the provisions of the Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, an Annual Report on
Form 10-K.
WHEREAS, the undersigned is an officer or director, or both, of the
Company.
NOW, THEREFORE, the undersigned hereby constitutes and appoints ERWIN
POTTS, WILLIAM L. HONEYSETT and JAMES P. SMITH, or any of them, his
attorney-in-fact and agents, with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and
all capacities, to sign the aforementioned Annual Report on Form 10-K (and any
and all amendments thereto) and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents and
purposes he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do
and cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
18th day of February, 1994.
/s/ William M. Roth
--------------------------------------
William M. Roth
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 24.13
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, McCLATCHY NEWSPAPERS, INC., a Delaware Corporation (the
"Company"), contemplates filing with the Securities and Exchange Commission at
Washington, D.C., under the provisions of the Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, an Annual Report on
Form 10-K.
WHEREAS, the undersigned is an officer or director, or both, of the
Company.
NOW, THEREFORE, the undersigned hereby constitutes and appoints ERWIN
POTTS, WILLIAM L. HONEYSETT and JAMES P. SMITH, or any of them, his
attorney-in-fact and agents, with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and
all capacities, to sign the aforementioned Annual Report on Form 10-K (and any
and all amendments thereto) and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents and
purposes he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do
and cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
17th day of February, 1994.
/s/ Frederick R. Ruiz
---------------------------------------
Frederick R. Ruiz
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 24.14
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, McCLATCHY NEWSPAPERS, INC., a Delaware Corporation (the
"Company"), contemplates filing with the Securities and Exchange Commission at
Washington, D.C., under the provisions of the Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder, an Annual Report on
Form 10-K.
WHEREAS, the undersigned is an officer or director, or both, of the
Company.
NOW, THEREFORE, the undersigned hereby constitutes and appoints ERWIN
POTTS, WILLIAM L. HONEYSETT and JAMES P. SMITH, or any of them, his
attorney-in-fact and agents, with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and
all capacities, to sign the aforementioned Annual Report on Form 10-K (and any
and all amendments thereto) and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents and
purposes he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do
and cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
15th day of February, 1994.
/s/ H. Roger Tatarian
---------------------------------------
H. Roger Tatarian
