<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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 No. 0-24004
HOLLINGER INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3518892
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
401 North Wabash Avenue, Suite 740, Chicago, Illinois 60611
----------------------------------------------------------------
(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 321-2299
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 the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at May 14, 1997
------------------------ ----------------------------
<S> <C>
Class A Common Stock
par value $.01 per share 69,565,754 shares
Class B Common Stock
par value $.01 per share 14,990,000 shares
</TABLE>
<PAGE> 2
INDEX
HOLLINGER INTERNATIONAL INC.
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements 1
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations.
6
PART II OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K. 15
Signatures 16
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
----------------------------
1997 1996
---------- ----------
<S> <C> <C>
OPERATING REVENUES
Advertising $ 356,758 $ 310,211
Circulation 130,416 134,071
Job printing 18,372 19,054
Other 8,697 21,563
---------- ----------
Total operating revenues 514,243 484,899
---------- ----------
OPERATING COSTS AND EXPENSES
Newsprint 71,021 89,988
Compensation costs 177,860 180,074
Other operating costs 173,524 172,046
Direct subscription campaign costs, net 8,345 -
Depreciation and amortization 28,365 23,181
---------- ----------
Total operating costs and expenses 459,115 465,289
---------- ----------
Operating income 55,128 19,610
---------- ----------
Other income (expense)
Interest expense (28,382) (16,567)
Amortization of debt issue costs (3,698) (107)
Equity in earnings of affiliates 242 2,497
Interest and dividend income 2,946 2,710
Other income, net 67,693 728
---------- ----------
Total other income (expense) 38,801 (10,739)
---------- ----------
Earnings before income taxes, minority
interest and extraordinary item 93,929 8,871
Provision for income taxes 28,022 3,175
---------- ----------
Earnings before minority interest and
extraordinary item 65,907 5,696
Minority interest 10,481 8,086
---------- ----------
Earnings before extraordinary item 55,426 (2,390)
Extraordinary loss on debt extinguishments - (2,150)
---------- ----------
Net earnings $ 55,426 $ (4,540)
========== ==========
Earnings per common share
Earnings before extraordinary item $ 0.49 $ (0.03)
Extraordinary loss on debt extinguishments - (0.03)
---------- ----------
Net earnings per common share $ 0.49 $ (0.06)
========== ==========
Weighted Average Shares Outstanding 111,807 75,993
========== ==========
</TABLE>
1
<PAGE> 4
HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1997 AND DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 182,730 $ 148,550
Cash-restricted 118,345 -
Accounts receivable, net 310,657 321,586
Inventories 29,335 30,056
Other current assets 23,258 23,494
-------------- -----------------
Total current assets 664,325 523,686
Property, plant and equipment, net of
accumulated depreciation 563,827 560,742
Investments in affiliates 17,512 198,461
Other investments, at cost 482,479 487,582
Intangible assets, net of accumulated amortization 1,607,417 1,642,361
Other assets 35,581 12,599
-------------- -----------------
$3,371,141 $ 3,425,431
============== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 36,599 $ 35,920
Bank loans - 503,364
Accounts payable 75,720 116,402
Accrued expenses 178,947 171,975
Deferred revenue 78,704 79,182
Income taxes payable 21,298 38,896
Due to Hollinger Inc. 266,212 237,596
-------------- -----------------
Total current liabilities 657,480 1,183,335
Long-term debt 1,144,264 675,428
Other long-term liabilities 112,954 100,357
-------------- -----------------
Total liabilities 1,914,698 1,959,120
Minority interest 119,108 109,943
Redeemable preferred stock 603,705 605,579
Stockholders' equity:
Convertible preferred stock 195,104 195,104
Class A common stock 726 726
Class B common stock 150 150
Additional paid-in capital 382,755 394,490
Cumulative translation adjustment (21,286) 22,995
Retained earnings 176,181 137,324
-------------- -----------------
Total stockholders' equity 733,630 750,789
-------------- -----------------
$3,371,141 $ 3,425,431
============== =================
</TABLE>
2
<PAGE> 5
HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $ 55,426 $ (4,540)
Items not Involving Cash:
Depreciation and Amortization 28,365 23,181
Amortization of debt issue costs 3,698 107
Equity in Net Earnings of Affiliates, Net (559) (3,331)
Minority Interest 10,481 8,086
Gain on Sale of Investment (66,026) -
Other Non-cash Items 33,721 6,753
Changes in Working Capital Net (64,875) (24,574)
--------- ---------
Cash Provided by Operating Activities 231 5,682
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (24,374) (16,841)
Proceeds from Sales of Assets 956 15,748
Acquisitions, Net (1,293) (68,938)
Proceeds on disposal of investments 233,082 -
Collections on Long-term Receivables 2,971 2,568
Other Investing Activities (4,699) 2,637
--------- ---------
Cash Provided by (Used in) Investing Activities 206,643 (64,826)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Long-term Debt 550,000 258,339
Repayments of Long-term Debt (77,743) (185,718)
Proceeds from Short-term Debt - -
Repayments of Short-term Debt (495,478) (138,421)
Changes in Due to Affiliated Companies 22,739 12,012
Proceeds from Common Stock - 141,511
Dividends to Minority Interests (4,119) (5,982)
Cash Dividends Paid (13,643) (7,852)
Acquisition paid for by Hollinger Inc. - 68,324
Payments of debt issue costs (23,986) (8,164)
Other Financing Activities 3,634 2,632
--------- ---------
Cash Provided by (Used in) Financing Activities (38,596) 136,681
--------- ---------
Effect of Exchange Rate Changes on Cash (15,753) (515)
--------- ---------
Net Increase in Cash 152,525 77,022
Cash at Beginning of Period 148,550 23,810
--------- ---------
Cash at End of Period $ 301,075 $100,832
========= =========
</TABLE>
3
<PAGE> 6
HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - UNAUDITED FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. It is presumed that the reader has already
read the Company's Annual Report on Form 10-K for the year ended December 31,
1996.
In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. The results of operations for interim periods are not necessarily
indicative of the results that may be expected for the fiscal year. For
further information, refer to the consolidated financial statements and
accompanying notes included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
NOTE 2 - PRINCIPLES OF CONSOLIDATION AND PRESENTATION
The Company is a subsidiary of Hollinger Inc., a Canadian corporation,
which owns approximately 51.2% of the combined equity ownership interest and
approximately 77.8% of the combined voting power of the outstanding Common
Stock of the Company, without giving effect to the future issuance of Class A
Common Stock in connection with the Company's Preferred Redeemable Increased
Dividend Equity Securities ("PRIDES") or upon conversion of the Company's
Series A Convertible Redeemable Preferred Stock ("Series A Preferred Stock"),
or the proposed issuance to Hollinger Inc. of Preferred Stock and Class A
Common Stock in connection with the Hollinger Inc. Transaction.
On January 7, 1997, the Boards of Directors of the Company and Hollinger
Inc. announced that they had reached an agreement for the transfer
by Hollinger Inc. of certain of its owned Canadian publishing interest directly
or indirectly to Hollinger Canadian Publishing Inc. (the "Hollinger Inc.
Transaction"), including (i) certain newspaper assets located mainly in
Ontario; (ii) certain newspaper assets located mainly in Saskatchewan; (iii)
certain newspaper assets located mainly in British Columbia; and (iv) UniMedia,
Inc. (collectively the "Canadian Newspapers") for an aggregate consideration of
approximately $382.0 million (Cdn.$523.0 million), subject to working capital
adjustments and currency exchange adjustments. The purchase price, all of
which is payable to Hollinger Inc., will be satisfied in cash in the amount of
$250.0 million, and by the issuance of preferred stock of the Company, which
upon approval of the stockholders, will be convertible into (i) a new series of
mandatorily convertible preferred stock of the Company similar to the PRIDES is
sued by the Company in August 1996 having a face value of approximately
$90.0 million and (ii) shares of Class A Common Stock of the Company having a
nominal agreed value of approximately $42.0 million, subject to adjustment as
described above.
The initial payment of the $250.0 million in cash and the issuance of the
preferred stock in respect of the Hollinger Inc. Transaction was made on April
18, 1997. Interest on the cash portion of the purchase price has been accrued
since January 1, 1997. The transfer was effective retroactive to January 1,
1997. The Hollinger Inc. transaction represents a combination of entities
under common control and has been accounted for on an "as-if" pooling of
interests basis, with the accompanying financial statements restated for prior
periods presented.
4
<PAGE> 7
HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
All significant intercompany balances and transactions have been
eliminated. Certain reclassifications have been made in the 1996 financial
statements to conform to the 1997 presentation.
NOTE 3 - SALE OF SUBORDINATED NOTES
On March 4, 1997, Publishing filed both a Preliminary Prospectus and a
Preliminary Prospectus Supplement offering $200 million of Senior Notes due
2005 (the "Senior Notes") and $200 million of Senior Subordinated Notes due
2007 (the "Senior Subordinated Notes") pursuant to its universal shelf
registration statements. On March 12, 1997, Publishing increased the size of
the offerings to a total of $550.0 million, which closed on March 18, 1997.
Both the Senior Notes and the Senior Subordinated Notes are guaranteed by the
Company.
The Senior Notes are unsecured senior obligations of Publishing and
rank pari-passu with all other senior indebtedness of Publishing including
Publishing's bank credit facilities, mature on March 15, 2005 and bear interest
at 8.625% per annum. The Senior Subordinated Notes are unsecured senior
subordinated obligations of Publishing and rank pari-passu with all other
senior subordinated indebtedness of Publishing including its existing 9.25%
Senior Subordinated Notes due 2006. The Senior Subordinated Notes mature on
March 15, 2007 and bear interest payable semi-annually at a rate of 9.25% per
annum. The Indentures relating to the Senior Notes and the Senior Subordinated
Notes contain financial covenants and negative covenants that limit
Publishing's ability to, among other things, incur indebtedness, pay dividends
or make other distributions on its capital stock.
Publishing and its restricted subsidiaries utilized the proceeds of these
offerings to repay substantially all of its outstanding bank indebtedness,
to deposit an amount in escrow to prepay the redeemable preference shares of
DTH and FDTH and for general working capital purposes.
NOTE 4 - SUBSEQUENT EVENTS
On April 30, 1997 Hollinger Canadian Publishing Holdings Inc. ("Hollinger
Canadian") and its affiliates, Hollinger Inc. and Hollinger International Inc.
announced that, Hollinger Canadian, a Canadian company in the Hollinger
International consolidated group of companies, intends to make an offer to
shareholders of Southam Inc. to acquire all of the common shares of Southam not
presently controlled by the Hollinger group for a consideration valued by the
offeror at Cdn. $23.50 per share payable as to Cdn. $13.50 in cash and as
to Cdn. $10 by the issue of a Hollinger Canadian Non-Voting Special Share.
5
<PAGE> 8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
OVERVIEW
The Company's business is concentrated in the publishing, printing and
distribution of newspapers and includes the United States Newspaper Group, the
U.K. Newspaper Group and the Canadian Newspaper Group. The United States
Newspaper Group consists of the Chicago Group, which includes the Chicago
Sun-Times and suburban newspapers in the Chicago metropolitan area, and the
Community Group, which includes the Company's community newspapers, operating
in 28 states, and for reporting and administrative purposes, Jerusalem Post.
The U.K. Newspaper Group includes the operating results of the Telegraph and
the Canadian Newspaper Group includes results of Southam Inc. ("Southam") and
the Canadian Newspapers acquired from Hollinger Inc.
In December 1996, the Company acquired control of Southam by increasing its
ownership interest to 50.7%. The results of Southam are reported on a
consolidated basis and were consolidated retroactive to January 1, 1996 for the
year ended December 31, 1996. The non-owned percentage of Southam is reflected
as minority interest.
On April 18, 1997, certain Canadian newspaper interests owned and controlled by
Hollinger, Inc. were purchased by Hollinger Canadian Publishing Holdings Inc.
("HCPH") from Hollinger Inc. (the "Canadian Newspaper Transaction"), effective
as of January 1, 1997, for an aggregate consideration of approximately
Cdn.$523.0 million (U.S.$373.5 million (using exchange rates in effect on April
18, 1997)) pursuant to (i) the UniMedia Class A Stock Purchase Agreement dated
as of April 18, 1997 among Hollinger Inc., UniMedia Holding Company, a
subsidiary of Hollinger Inc. ("UniMedia Holding") and the Company (the
"UniMedia Class A Stock Purchase Agreement"), (ii) the UniMedia Class B Stock
Purchase Agreement dated as of April 18, 1997 among Hollinger Inc., UniMedia
Holding and the Company (the "UniMedia Class B Stock Purchase Agreement"), and
(iii) the Sterling Purchase Agreement dated as of April 18, 1997 between
Hollinger Inc. and HCPH (the "Sterling Purchase Agreement"). (The UniMedia
Class A Stock Purchase Agreement, the UniMedia Class B Stock Purchase Agreement
and the Sterling Purchase Agreement are collectively referred to as the
"Purchase Agreements.") The Canadian newspaper interests transferred to HCPH
consist of the Sterling Newspaper Group and UniMedia Inc. (collectively, the
"Canadian Newspapers"). Pursuant to the UniMedia Class A Stock Purchase
Agreement, the Company paid UniMedia Holding consideration consisting of
Cdn.$19.373 million in cash and 149,658 shares of newly issued Series 2
Non-voting Preferred Stock, par value $.01 per share, of the Company ("Series 2
Preferred Stock") with a stated issue price of Cdn. $149.658 million. Pursuant
to the UniMedia Class B Stock Purchase Agreement, the Company paid UniMedia
Holding consideration consisting of Cdn.$100,000 in cash and 23,267 shares of
newly issued Series 1 Non-voting Preferred Stock, par value $.01 per share, of
the Company ("Series 1 Preferred Stock") with a stated issue price of
Cdn.$23.267 million. Pursuant to the Sterling Purchase Agreement, HCPH paid
Hollinger Inc. consideration consisting of Cdn.$330.602 million in cash.
As a condition to the closing of the Purchase Agreements, the Company,
Hollinger Inc. and UniMedia Holding entered into an Exchange Agreement dated as
of April 18, 1997 (the "Exchange Agreement") pursuant to which the Company
agreed to exchange all of the shares of Series 1 Preferred Stock and Series 2
Preferred Stock issued to UniMedia Holding as consideration under the Purchase
Agreements for shares of Class A Common Stock and shares of Series C Convertible
Preferred Stock, par value $.01 per share of the Company ("Series C Preferred
Stock") (each in an amount to be determined pursuant to the terms of the
Exchange Agreement), subject to receiving the requisite approval of the
stockholders of the Company (the "First Exchange"). In addition, the Company,
Hollinger Inc., UniMedia Holding and 1159670 Ontario Limited, a wholly owned
subsidiary of Hollinger Inc., entered into a Second Exchange Agreement (the
"Second Exchange Agreement") pursuant to which the Company agreed to issue
shares of Class A Common Stock to UniMedia Holding (and/or another designated
subsidiary of Hollinger Inc.) in exchange for the Series C Preferred Stock
issued in the First Exchange and to issue shares of Series C Preferred Stock to
1159670 Ontario Limited (and/or another designated subsidiary of Hollinger
Inc.) in exchange for shares of outstanding Class A Common Stock owned by
1159670 Ontario Limited (the "Second Exchange"). The exchanges contemplated by
the Second Exchange Agreement would occur immediately following the First
Exchange, subject to receiving the requisite approval of the stockholders of
the Company. In accordance with the rules of the NYSE, on which the Company's
Class A Common Stock and Preferred Redeemable Increased Dividend Equity
Securities ("PRIDES") are listed, the Company is required to obtain stockholder
approval for the First Exchange and the Second Exchange. The Company expects
that the stockholder meeting to approve such issuances and exchanges will be
held in June 1997.
Upon consummation of the Purchase Agreements, Hollinger Inc. continues to own a
majority of the equity interest and voting control of the Company, the Company
continues to own all of the outstanding capital stock of Publishing, Hollinger
Inc. and Publishing each hold interests in Hollinger Canadian Publishing such
that (i) Publishing and its subsidiaries own 100% of the non-voting equity
shares and non-voting preference shares and (ii) each of Publishing and
Hollinger Inc. (through each of their wholly-owned subsidiaries) own 50% of the
voting preference shares which have only nominal equity value.
CONSOLIDATED RESULTS OF OPERATIONS
First quarter 1997 net earnings were $55.4 million, or 49 cents per share.
This compares with a loss of $4.5 million, or a loss of 6 cents per share, in
1996. Earnings before extraordinary items in 1997 were $55.4 million, or 49
cents per share compared with a loss of $2.4 million, or a loss of 3 cents per
share in 1996. The 1997 first quarter earnings include a $65.0 million gain
($48.8 million after tax or 43 cents per share) on the sale of the interest in
Fairfax.
Net income excluding the effect of the gain on the sale of Fairfax shares
amounted to $6.7 million or 6 cents per share in the first quarter of 1997
compared to a net loss, excluding the extraordinary loss and redundancy charges
at Fairfax, of $1.3 million or a loss of 2 cents per share in the first quarter
of 1996. All divisions, other than the U.K. Newspaper Group, reported improved
operating income for the quarter compared to the first quarter of 1996. The
U.K. Group's operating income was reduced in 1997 by the costs of the direct
prepaid subscription campaign that was commenced in the second half of 1996.
Excluding the net direct costs of this campaign, operating income of the U.K.
Newspaper Group was $16.3 million compared to $10.6 million in 1996. A major
contributor to the U.K. Group's improvement is improved advertising results
that are due, in part, to the circulation increases generated by the campaign.
Operations in the Community Group and in Southam were affected by acquisitions
and disposals. On a "same store" basis the Community Group revenue and EBITDA
were $50.6 million and $14.0 million respectively in 1997 compared to
$51.2 million and $12.5 million in 1996. The decrease in "same store" revenue
was primarily attributable to job printing. For Southam, on a "same store"
basis, revenue and EBITDA were $172.3 million and $28.5 million respectively in
1997 compared to $162.4 million and $12.7 million in 1996.
EBITDA for the first quarter increased 95.1% to $83.5 million from $42.8
million in 1996. Operating income increased $35.5 million to $55.1 million in
the first quarter of 1997 from $19.6 million for the same period in 1996.
6
<PAGE> 9
The solid increases in EBITDA and operating income reflect the strong business
fundamentals of the Company. Results in the quarter improved primarily due to
lower newsprint prices and the contribution from 1996 acquisitions at the
Community Group and Southam.
Operating revenues for the first quarter of 1997 increased 6.0% to $514.2
million from $484.9 million in 1996. The increase in revenues was largely due
company wide improvements in advertising revenues and the 1996 acquisitions.
Operating income in the first quarter of 1997 increased 181.1% as compared to
the same period in the prior year. The first quarter 1997 benefited from the
effect of declining newsprint prices. Total newsprint expense (including $3.6
million of newsprint costs associated with the direct subscription campaign)
decreased by 17.0% in the first quarter of 1997 as compared to the same period
in the prior year. After seeing significant increases in newsprint prices in
1995 and peak price levels in the beginning of 1996, newsprint prices began a
declining trend in the second quarter of 1996 in the United States and in the
fourth quarter of 1996 in the United Kingdom. Compensation costs as a
percentage of sales were 34.6% for the first quarter of 1997 and 37.1% for the
first quarter of 1996. Other operating costs, including allocable expenses
from Hollinger Inc., were 33.7% and 35.5% as a percentage of sales for the
first quarter of 1997 and 1996, respectively.
Depreciation and amortization increased $5.2 million for the first quarter 1997
from the comparable period in the prior year. Increased depreciation and
amortization resulted from the acquisition of community newspapers and by
Southam and the increased intangible assets as a result of the buyout of the
minority interest of The Telegraph in August 1996 and increased ownership
interest in Southam acquired in May and December 1996.
Interest expense, increased $11.8 to $28.4 million for the first quarter of
1997 from $16.6 million in 1996. The Company increased its borrowings in 1996
to fund the purchase of the additional interests in Southam, the buyout of The
Telegraph minority and acquisitions of community newspapers offset in part by
proceeds received on the sale of the Fairfax investment.
Amortization of debt issue costs of $3.7 million in 1997 represents debt issue
costs on the Senior Subordinated Notes issued in February 1996 which are being
amortized over the term of the Notes and debt issue costs on the Publishing
Credit Facility.
Equity in net earnings of affiliates decreased from $2.5 million in the first
quarter of 1996 to $0.2 million in 1997. The decrease is due to the sale of
the Fairfax interest announced in the fourth quarter of 1996. In December 1996,
the Company announced the sale in three tranches of its interest in Fairfax.
The first tranche was sold in December 1996. Proceeds of $239.0 million from
the sale of the second and third tranches were received in the first quarter of
1997. A pre-tax gain of $65.0 million was recognized on the sale of the second
and third tranches.
Other income of $67.7 million includes the $65.0 million pre-tax gain on the
sale of the Fairfax investment.
7
<PAGE> 10
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
-------- --------
Amount Amount
-------- --------
(dollar amounts in thousands)
<S> <C> <C>
Operating revenues:
United States Newspaper Group $146,277 $142,347
U.K. Newspaper Group 122,316 111,546
Canadian Newspaper Group 245,650 231,006
---------- ----------
Total operating revenue $514,243 $484,899
========== ==========
Operating income:
United States Newspaper Group $16,877 $3,242
U.K. Newspaper Group 7,997 10,609
Canadian Newspaper Group 30,254 5,759
---------- ----------
Total operating income $55,128 $19,610
========== ==========
EBITDA: (2)
United States Newspaper Group $27,222 $13,641
U.K. Newspaper Group 12,639 13,051
Canadian Newspaper Group 43,632 16,099
---------- ----------
Total EBITDA $83,493 $42,791
========== ==========
Operating revenues:
United States Newspaper Group 28.4% 29.4%
U.K. Newspaper Group 23.8% 23.0%
Canadian Newspaper Group 47.8% 47.6%
---------- ----------
Total operating revenue 100.0% 100.0%
========== ==========
Operating income:
United States Newspaper Group 30.6% 16.5%
U.K. Newspaper Group 14.5% 54.1%
Canadian Newspaper Group 54.9% 29.4%
---------- ----------
Total operating income 100.0% 100.0%
========== ==========
EBITDA Margin: (2)
United States Newspaper Group 18.6% 9.6%
U.K. Newspaper Group 10.3% 11.7%
Canadian Newspaper Group 17.8% 7.00%
Total EBITDA Margin 16.2% 8.8%
EBITDA: (2)
United States Newspaper Group 32.6% 31.9%
U.K. Newspaper Group 15.1% 30.5%
Canadian Newspaper Group 52.3% 37.6%
---------- ----------
Total EBITDA 100.0% 100.0%
========== ==========
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------
1997 1996
---------- ----------
Amount Amount
<S> <C> <C>
United States Newspaper Group (dollar amounts in thousands)
Operating revenue
Advertising $ 96,905 $ 92,861
Circulation 37,214 34,771
Job printing 12,158 14,715
---------- ----------
Total operating revenue 146,277 142,347
---------- ----------
Operating costs
Newsprint 20,387 29,864
Compensation costs 55,542 54,389
Other operating costs 43,126 44,453
Depreciation and amortization 10,345 10,399
---------- ----------
Total operating costs 129,400 139,105
---------- ----------
Operating income $ 16,877 $ 3,242
========== ==========
U.K. Newspaper Group
Operating revenue
Advertising $ 84,954 $ 67,496
Circulation 33,217 41,278
Job Printing 4,145 2,772
---------- ----------
Total operating revenue 122,316 111,546
---------- ----------
Operating costs
Newsprint 22,527 26,427
Compensation costs 20,788 18,178
Other operating costs 58,017 53,890
Direct subscription campaign costs, net 8,345 -
Depreciation and amortization 4,642 2,442
---------- ----------
Total operating costs 114,319 100,937
---------- ----------
Operating income $ 7,997 $ 10,609
========== ==========
Canadian Newspaper Group
Operating revenue
Advertising $174,899 149,854
Circulation 59,985 58,022
Job Printing 10,766 23,130
---------- ----------
Total operating revenue 245,650 231,006
---------- ----------
Operating costs
Newsprint 28,107 33,697
Compensation costs 101,530 107,507
Other operating costs 72,381 73,703
Depreciation and amortization 13,378 10,340
---------- ----------
Total operating costs 215,396 225,247
---------- ----------
Operating income $ 30,254 $ 5,759
========== ==========
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------
1997 1996
---------- ----------
Percentage Percentage
---------- ----------
<S> <C> <C>
United States Newspaper Group
Operating revenue
Advertising 66.3% 65.3%
Circulation 25.4% 24.4%
Job printing 8.3% 10.3%
---------- ----------
Total operating revenue 100.0% 100.0%
---------- ----------
Operating costs
Newsprint 13.9% 21.0%
Compensation costs 38.0% 38.2%
Other operating costs 29.5% 31.2%
Depreciation and amortization 7.1% 7.3%
---------- ----------
Total operating costs 88.5% 97.7%
---------- ----------
Operating income 11.5% 2.3%
========== ==========
U.K. Newspaper Group
Operating revenue
Advertising 69.4% 60.5%
Circulation 27.2% 37.0%
Job Printing 3.4% 2.5%
---------- ----------
Total operating revenue 100.0% 100.0%
---------- ----------
Operating costs
Newsprint 18.4% 23.7%
Compensation costs 17.0% 16.3%
Other operating costs 47.4% 48.3%
Direct subscription campaign costs, net 6.9% 0.0%
Depreciation and amortization 3.8% 2.2%
---------- ----------
Total operating costs 93.5% 90.5%
---------- ----------
Operating income 6.5% 9.5%
========== ==========
Canadian Newspaper Group
Operating revenue
Advertising 71.2% 64.9%
Circulation 24.4% 25.1%
Job Printing 4.4% 10.0%
---------- ----------
Total operating revenue 100.0% 100.0%
---------- ----------
Operating costs
Newsprint 11.4% 14.6%
Compensation costs 41.3% 46.5%
Other operating costs 29.5% 31.9%
Depreciation and amortization 5.5% 4.5%
---------- ----------
Total operating costs 87.7% 97.5%
---------- ----------
Operating income 12.3% 2.5%
========== ==========
</TABLE>
10
<PAGE> 13
GROUP OPERATING RESULTS
UNITED STATES NEWSPAPER GROUP
United States Newspaper Group operating revenues increased 2.8% from the prior
year for the first quarter 1997, primarily as a result of increased advertising
revenues at both the Community Group and Chicago Group. Chicago Group
operating revenues increased 1.0% for the first quarter 1997 as compared to the
same period in the prior year. Gains in advertising revenues at the Chicago
Group were partially offset by a declines in circulation and job printing
revenues. The Community Group operating revenues increased 4.9% to $67.0
million for the first quarter 1997 from $63.9 million in 1996. Acquisitions
during 1996 the Community Group added $11.0 million to revenues for the first
quarter 1997.
Operations in the Community Group were affected by acquisitions and disposals.
On a "same store basis" the Community Group revenue and EBITDA were $50.6
million and $14.0 million, respectively, in 1997 compared to $51.2 million and
$12.5 million, respectively, in 1996. The decrease in "same store" revenue was
primarily attributable to job printing.
EBITDA for the first quarter 1997 increased 99.6% to $27.2 million from $13.6
million in 1996. Acquisitions in 1996 at the Community Group added $3.6 million
to EBITDA for the first quarter 1997.
First quarter operating income of the United States Newspaper Group increased
$13.7 million to $16.9 million in 1997 from $3.2 million in the prior year.
Newsprint expense for the first quarter of 1997 was $9.5 million less than
the same period in the prior year primarily as a result of lower newsprint
prices. Compensation costs as a percentage of sales remained fairly consistent
between years at approximately 38% of sales. While other operating costs, as a
percentage of sales, decreased to 29.5% for the first quarter of 1997 from
31.2% for the first quarter of 1996. Depreciation and amortization remained
fairly consistent between periods.
U.K. NEWSPAPER GROUP
First quarter operating revenues for the U.K. Newspaper Group increased 9.7%
to $122.3 million in 1997 from $111.5 million in 1996. Advertising revenues
increased 25.9% in the first quarter of 1997 from the comparable period in the
prior year.
The U.K. Newspaper Group's operating income for the first quarter 1997
decreased by $2.6 million from 1996. Costs, net of subscription revenue,
related to the direct subscription campaign of $8.3 million contributed to the
decrease in operating income but the decrease was offset in part by an increase
in advertising revenues. Newsprint costs were $26.1 million (including $3.6
million of newsprint costs associated with the direct subscription campaign)
compared with $26.4 million in 1996. The effect of lower newsprint prices was
almost entirely offset by increased consumption related to higher circulation
and a greater number of pages in the newspaper primarily as a result of
increased advertising. Also, contributing to the decrease in operating income
in the first quarter of 1997 was the additional amortization of intangible
assets primarily as a result of the acquisition of The Telegraph minority in
August of 1996.
11
<PAGE> 14
CANADIAN NEWSPAPER GROUP
First quarter operating revenues for the Canadian Newspaper Group increased
$14.7 million from $231.0 million in the first quarter of 1996 to $245.7
million for the comparable period in 1997, an increase of 6.3%. Advertising
revenues increased 16.7% in the first quarter of 1997 from the comparable
period in the prior year. Circulation revenues increased 3.4% in the first
quarter of 1997 from the prior year. Advertising revenues at Southam increased
18.1% for the first quarter in 1997 from the prior year. Circulation revenues
at Southam increased 3.5% from prior year. Acquisitions at Southam during 1996
added 20.8 million to operating revenues in the first quarter of 1997. Total
revenues at the Canadian newspapers increased 6.9% from the prior year.
Operations at Southam were affected by acquisitions and disposals. Revenue and
EBITDA, on a "same store" basis, were $172.3 million and $28.5 million,
respectively, in 1997 compared to $162.4 million and $12.7 million,
respectively, in 1996.
The Canadian Newspaper Group's operating income for the first quarter increased
by $24.5 million from first quarter 1996. Lower newsprint prices resulted
in a decrease in newsprint expense of $5.6 million in the first quarter of 1997
from the comparable period in the prior year. Compensation expense as a
percentage of sales decreased to 41.3% for the first quarter of 1997 as
compared to 46.5% for the first quarter of 1996. Depreciation and amortization
in 1997 was $13.4 million, an increase of $3.0 million from 1996. This relates
primarily to the increased intangible asset resulting from the greater
ownership of Southam.
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL
Working capital consists of current assets less current liabilities. Working
capital was $6.8 million at March 31, 1997 compared to a working capital
deficiency of $659.6 million at December 31, 1996. The improvement is the
result of the issue of notes during the first quarter of 1997, the proceeds of
which were used largely to repay short term debt. Current assets were $664.3
million at March 31, 1997 compared with $523.7 million at December 31, 1996.
Most of the increase was due to a $152.5 million increase in cash and cash
equivalents from the Senior and Senior Subordinated Notes that were issued in
the first quarter of 1997. Restricted cash of $118.3 million will be used to
redeem the preference shares at First DT Holdings Limited ("FDTH") and DT
Holdings Limited ("DTH") in the second quarter of 1997. Accounts receivable
decreased by $10.9 million, while inventories remained fairly constant.
Current liabilities, excluding debt obligations were $620.9 million at March
31, 1997, compared with $644.1 million at December 31, 1996.
DEBT
Current debt obligations, excluding the current portion of long term debt,
included in current liabilities were $503.4 million at December 31, 1996. The
proceeds from the issuance of the Senior and Senior Subordinated Notes in the
first quarter of 1997 were used to paydown the bank loans that were outstanding
at December 31, 1996. There were no bank loans outstanding as of March 31,
1997. Long-term debt, including the current portion, was $1.18 billion at
March 31, 1997 compared with $711.3 million at December 31, 1996. The increase
is primarily due to the issuance in March 1997 of $550.0 million of the Senior
Notes and Senior Subordinated Notes described below. Due to Hollinger Inc.
primarily reflects the unpaid portion of the cash component of the acquisition
price of the Canadian assets purchased from Hollinger Inc. adjusted to reflect
the accrued but unpaid interest from January 1, 1997.
1997 OFFERINGS
On March 4, 1997, Publishing filed both a Preliminary Prospectus and a
Preliminary Prospectus Supplement offering $200 million of Senior Notes due
2005 (the "Senior Notes") and $200 million of Senior Subordinated Notes due
2007 (the "Senior Subordinated Notes") pursuant to its universal shelf
registration statements. On March 12, 1997, Publishing increased the size of
the offerings to $550.0 million, closing on March 18, 1997. Both the Senior
Notes and the Senior Subordinated Notes will be guaranteed by the Company.
The Senior Notes are unsecured and senior obligations of Publishing and rank
pari-passu with all other senior indebtedness of Publishing including
Publishing's bank credit facilities, mature on March 15, 2005 and bear interest
at 8.625% per annum. The Senior Subordinated Notes are unsecured senior
subordinated obligations of Publishing and rank pari-passu with all other
senior subordinated indebtedness of Publishing including its existing 9 1/4%
Senior Subordinated Notes due 2006. The Senior Subordinated Notes mature on
March 15, 2007 and bear interest payable semi-annually at a rate of 9.25% per
annum. The Indentures relating to the Senior Notes and the Senior Subordinated
Notes contain financial covenants and negative covenants that limit
Publishing's ability to, among other things, incur indebtedness, pay dividends
or make other distributions on its capital stock.
Publishing and its restricted subsidiaries utilized the proceeds of these
offerings to repay indebtedness, to provide funds for the redemption of
redeemable preference shares of DTH and FDTH and for general working capital.
CONSENT SOLICITATION
On February 19, 1997, Publishing completed a solicitation of consents from the
holders of the 9 1/4% Notes with respect to certain amendments (the
"Amendments") to the Indenture governing the 9 1/4% Notes dated as of February
1, 1996 between Publishing and Fleet National Bank, as trustee (the "Trustee").
The primary purpose of the Amendments was to facilitate the inclusion of
certain international subsidiaries of the Company, principally Southam and The
Telegraph, as Restricted Subsidiaries of Publishing and to enhance its
corporate and financing flexibility.
On February 27, 1997, Publishing, the Company and the Trustee executed a
supplemental indenture to the 1997 Indenture to give effect to the Amendments.
As a result, the covenants relating to the 9 1/4% Notes are substantially the
same as the covenants relating to the Senior Subordinated Notes.
The Company designated Southam and The Telegraph (and certain related holding
companies and subsidiaries) as Restricted Subsidiaries under the 1996 Indenture
upon the consummation of the 1997 Offerings.
SUBSEQUENT EVENTS - Bank Credit Facility
On April 7, 1997, Publishing, HCPH, The Telegraph and certain financial
institutions entered into a new long-term bank credit facility (the "Bank
Credit Facility"). The purchase price of the Canadian Newspaper Group was
financed in part through a $175 million borrowing by HCPH under the Bank Credit
Facility. The Bank Credit Facility provides for up to $900 million in total
credit availability under four tranches with available borrowings by The
Telegraph limited to $150 million, available borrowings by HCPH limited to $250
million, and available borrowings by Publishing to $900 million, less amounts
outstanding under other tranches, with maximum borrowings in each case limited
by financial statement covenants. The Bank Credit Facility also provides the
Southam Facility. The Bank Credit Facility matures on March 15, 2004 with
required reductions in availability equal to 6.25% of the commitment per
calendar quarter commencing on June 30, 2000.
Loans under the Bank Credit Facility bear interest, at the option of the
respective borrower, at a rate per annum tied to specified floating rates or a
reserve adjusted Eurocurrency rate, in each case plus a specified margin
determined based on leverage ratios. The obligations of each borrower under
the Bank Credit Facility are guaranteed by the Company and by each U.S.
subsidiary (other than American Publishing (1991) Inc. ("AP-91"), which
provides a partial guaranty). The obligations of HCPH are guaranteed in whole
or part by each of its Canadian subsidiaries and by The Telegraph and its
subsidiaries. The obligations of The Telegraph are guaranteed in whole or part
by each English subsidiary and by HCPH and each of its Canadian subsidiaries.
The obligations of all borrowers under the Bank Credit Facility are secured by
a pledge by the Company of all stock of Publishing, the pledge by Publishing
and its restricted subsidiaries of the stock of their United States
subsidiaries (other than AP-91 and its subsidiaries), certain intercompany
notes and security agreements, and portions of the stock of certain Canadian
and English subsidiaries. The obligations of HCPH and the Canadian and English
subsidiaries which have guaranteed its debt are secured by all or part of the
pledge of the stock of the Canadian subsidiaries, including approximately 42%
of the stock of Southam, and all or part of the stock of The Telegraph and the
English subsidiaries. The obligations of The Telegraph and the Canadian and
English subsidiaries which have guaranteed it debt are secured by the pledge of
all or part of the stock of the English subsidiaries, and all or part of the
stock of The Telegraph and the Canadian subsidiaries.
The parties to the Bank Credit Facility have entered into a First Amendment
Agreement to the Bank Credit Facility (the "First Amendment"). The First
Amendment amends certain terms and conditions of the Bank Credit Facility to
permit HCPH to bid for the remaining shares of Southam not currently owned by
it. The First Amendment allows for the Southam offer as an "Approved
Acquisition" and modifies certain definitions, representations and covenants to
account for, among other things, the issuance of the HCPH Special Shares, the
operation of the Exchange Indenture, approval by the lenders of the bid
circular and related documentation, and the provision and timing of additional
security under the Bank Credit Facility. Under the Bank Credit Facility, as
amended, HCPH has covenanted to acquire 100% of the outstanding common shares
of Southern within 90 days of the date on which HCPH takes up and pays for
Southam Common Shares.
EBITDA
EBITDA, which represents the Company's earnings before interest expense,
amortization of debt issue costs, income taxes, depreciation and amortization,
minority interest, equity in earnings of affiliates and other income was $83.5
million for the first quarter of 1997 compared with $42.8 million for the first
quarter 1996. The Company believes that EBITDA is important to its ability to
fund current operations and to service debt. The significant number of
acquisitions made by the Company which have resulted in non-cash charges for
depreciation and amortization have reduced net earnings, but have not affected
EBITDA.
12
<PAGE> 15
CASH FLOWS
Cash flows from operating activities were $0.2 million in the first quarter of
1997, compared with $5.7 million in the first quarter of 1996. Excluding
changes in working capital (other than cash), cash provided by operating
activities was $65.1 million in 1997 and $30.3 million in 1996.
Cash flows related to investing activities were an inflow of $206.6 million in
1997, largely related to the sale of the interest in Fairfax and an outflow of
$64.8 million in 1996, due largely to acquisitions at the Canadian Newspaper
Group made by Hollinger Inc.
Cash flows related to financing activities were a net outflow of $38.6 million.
Net cash inflows of $136.7 million in 1996, primarily the result of the equity
and debt offering in February 1996.
CAPITAL EXPENDITURES AND ACQUISITION FINANCING
The United States Newspaper Group and the U.K. Newspaper Group have
funded their capital expenditures and acquisition and investment activities
out of cash provided by their respective operating activities, borrowings under
their bank credit facilities and, in the case of the United States Newspaper
Group, borrowings from institutional lenders, proceeds from the Company's
initial public offering in May 1994, concurrent debt and equity offerings in
February 1996, concurrent Equity Offerings in August 1996 and a debt offering
in March 1997.
DIVIDENDS AND OTHER COMMITMENTS
The Company's sales of Class A Common Stock and PRIDES has significantly
increased its dividend obligations and the Company also has significant debt
service obligations, capital expenditures, management fees due to Hollinger
Inc. and dividends on its Series A Redeemable Preferred Stock. Furthermore,
the Company's wholly owned subsidiaries, DTH and FDTH, have obligations in
respect of their redeemable preferred stock ( the "DTH and FDTH Preference
Shares"). The Company has deposited an amount sufficient to redeem the DTH and
FDTH Preference Shares with a Canadian Bank.
The amount available for the payment of dividends and other obligation by the
Company at any time is a function of (i) restrictions in agreements binding the
Company limiting its ability to pay dividends, management fees and other
payments and (ii) restrictions in agreements binding the Company's subsidiaries
limiting their ability to pay dividends, management fees and other payments to
the Company. The Company is not a party to a debt agreement that restricts the
payment of dividends. However, certain agreements binding Publishing and other
subsidiaries of
13
<PAGE> 16
the Company contain such restrictive provisions. As of March 31, 1997,
the total amount of funds that would be unrestricted as to payment of
dividends, by Publishing under its debt instruments would, under the more
restrictive provisions, have been approximately $74.4 million. The foregoing
calculation is based on the sum of the following for the period January 1, 1997
to March 31, 1997: (i) 50% of the sum of (x) consolidated net income of
Publishing and its Restricted Subsidiaries or if it is a loss, reduced by 100%
of such loss, and (y) amortization expense of Publishing and its subsidiaries;
(ii) 50% of the cash dividends received by Publishing and its restricted
subsidiaries from any unrestricted subsidiaries, and (iii) $25 million. In
addition, the amount available for dividends is permitted to be increased,
among other provisions, by the amount of net cash proceeds from capital
contributions made to Publishing. The Company's subsidiary, American
Publishing (1991) Inc. also is party to an agreement that limits its ability
to pay dividends and make other payments to the Company.
The amount available for the payment of dividends and other obligations by the
Company at any time is limited by a number of binding agreements, but the
Company expects its internal cash flow and financing resources to be adequate
to meet is foreseeable requirements.
SUBSEQUENT EVENTS
HCPH and its affiliates, Hollinger Inc. and Hollinger International
Inc. announced that, HCPH, a Canadian company in the Hollinger International
consolidated group of companies, intends to make an offer to shareholders of
Southam Inc. to acquire all of the common shares of Southam not presently
controlled by the Hollinger group for a consideration valued by the offeror at
Cdn. $23.50 per share payable as to Cdn. $13.50 in cash and as to Cdn. $10 by
the issue of a Hollinger Canadian Non-Voting Special Share. Canadian
shareholders of Southam will be provided with the opportunity to receive
capital gains tax roll-over treatment with respect to the share portion of
the purchase price.
The Special Share will be automatically exchanged three years after issue into
shares of Class A common stock of Hollinger International on the basis of an
exchange ratio calculated by dividing Cdn. $12.31 by 95 percent of the then
weighted average trading price of the Class A Shares on the New York Stock
Exchange (expressed for these purposes in Canadian dollars). In the
alternative, Hollinger International will have the option to satisfy its
exchange obligation by the payment of Cdn. $12.31 cash per Special Share. It
is anticipated that the Special Shares will be listed on the Toronto Stock
Exchange and the Alberta Stock Exchange.
The offer to Southam shareholders will be made by way of a circular take-over
bid which will be subject to certain terms and conditions including the right
of Hollinger Canadian, at its option, not to take up and pay for any shares
deposited unless: (i) at least 66 2/3 percent of the shares sought under the
offer are deposited and not withdrawn at its expiry date; (ii) Hollinger
International shareholders have approved the issuance of the Class A Shares
underlying the Hollinger Canadian Special Shares if required by the New York
Stock Exchange (Hollinger has sufficient voting power to ensure approval of the
issuance of such Class A Shares); and (iii) Southam shareholders have
approved by a majority of the miniority vote the deletion from Southam's
articles of incorporation of the provisions entitled "Higher Vote for Certain
Business Combinations". Those provisions, like the related party transaction
provisions of Ontario Securities Commission Policy 9.1, would require a
majority of the minority vote in connection with a going private transaction
subsequent to the offer but, unlike the Policy 9.1 provisions, would not
permit Southam shareholders who accept the offer to be included in the
calculation of the level of minority approval of a subsequent going private
transaction.
If at least 90 percent of the Southam shares sought under the offer are
deposited under the offer and not withdrawn, HCPH intends to seek to
acquire the remaining shares pursuant to the compulsory acquisition provisions
of the Canada Business Corporations Act. If that acceptance level is not
attained (or the compulsory acquisition provisions are otherwise not available)
and HCPH takes up and pays for shares under the offer, HCPH intends to seek to
acquire the remaining Southam shares through a going private transaction by
way of an amalgamtion or plan of arrangement.
Under current going private securities policy requirements such a transaction
would require approval by a vote of two-thirds of the minority shareholders of
Southam with acceptances of the offer being counted as votes in favour of the
transaction.
OTHER
Certain of the statements in this Form 10-Q may be deemed to be "forward
looking" statements. Refer to the Company's Annual Report on the Form 10-K for
a discussion of factors that may affect such statements.
14
<PAGE> 17
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
The Company filed reports on Form 8-K under Item 5
on January 7, 1997, February 28, 1997 and March 18, 1997.
The Company amended its December 11, 1996 Form 8-K on
February 24, 1997, which reported an event under Items 2 and
7, and filed a report on April 18, 1997 for an event under
Item 2.
15
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HOLLINGER INTERNATIONAL INC.
Registrant
Date: May 15, 1997 By: /S/ J. A. Boultbee
-------------------------
J. A. Boultbee
Vice President, and
Chief Financial Officer
16
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