<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT of 1934
------------
Date of Report (Date of earliest event reported): February 26, 1997
Hollinger International Inc.
(Exact name of registrant as specified in charter)
Delaware 0-24004 95-3518892
------------------------ ------------ ----------------
(State or other (Commission (IRS employer
jurisdiction of incorp.) file number) identification no.)
401 North Wabash Avenue,
Chicago, Illinois 60611
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including
area code: (312) 321-2299
<PAGE> 2
ITEM 5. OTHER EVENTS.
On February 26, 1997, Hollinger International Inc. (the "Company")
announced its results of operations for the fourth quarter and year ended
December 31, 1996. A copy of the press release announcing the Company's results
is attached hereto as Exhibit 99.1 and incorporated by reference herein in its
entirety.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired. Not applicable.
(b) Pro forma financial information. Not applicable.
(c) Exhibits.
99.1 Press Release Dated February 26, 1997.
<PAGE> 3
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.
By: /s/ KENNETH L. SEROTA
---------------------
Kenneth L. Serota
Title: Vice President --
Law and Finance
Date: February 28, 1997
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
No. Document Page No.
- ------- -------- ----------
<S> <C> <C>
99.1 Press Release Dated February 26, 1997
</TABLE>
<PAGE> 1
HOLLINGER INTERNATIONAL INC.
PRESS RELEASE
FOR IMMEDIATE RELEASE
Contact:
Paul B. Healy, Vice President Jack A. Boultbee, Vice President and
Corporate Development and Chief Financial Officer
Investor Relations Hollinger International Inc.
Hollinger International Inc. (800) 288-1141
(212) 586-5666 (416) 363-8721
HOLLINGER INTERNATIONAL REPORTS
FOURTH QUARTER AND FULL YEAR RESULTS
FULL YEAR EBITDA INCREASED 97.9% TO $220.7 MILLION;
SOUTHAM CONTRIBUTED $98.1 MILLION TO FULL YEAR EBITDA;
EXCLUDING A SPECIAL CHARGE AT THE TELEGRAPH, THE COMPANY'S FULL YEAR
1996 EBITDA WOULD HAVE BEEN $262.3 MILLION;
CHICAGO, FEBRUARY 26, 1997 - HOLLINGER INTERNATIONAL INC. (NYSE: HLR)
today announced fourth quarter 1996 earnings of $25.8 million, or 25 cents per
share. This compares with a loss of $7.3 million, or 13 cents per share, in
1995. Net earnings for the year ended December 31, 1996 were $31.7 million, or
37 cents per share compared with $6.2 million, or 11 cents per share in 1995.
Full year earnings before extraordinary items in 1996 were $33.8 million, or 40
cents per share. This compares
- MORE -
<PAGE> 2
HOLLINGER INTERNATIONAL
ADD -1-
with $6.2 million, or 11 cents per share in the 1995 comparable period, which
includes a $12.0 million gain on the sale of an investment and an $8.0 million
charge for reorganization costs. Earnings for the fourth quarter and full year
1996 include a gain on sale of Fairfax of $53.5 million, a charge of $32.3
million for costs related to a unique direct subscription campaign at the
Telegraph and a $9.2 million charge for severances at Southam.
EBITDA for the fourth quarter increased 89.0% to $61.8 million from $32.7
million in 1995; $39.0 million of the fourth quarter EBITDA is attributable to
the consolidation of Southam. For the year ended December 31, 1996 EBITDA
increased 97.9% to $220.7 million from $111.5 million in 1995. EBITDA
attributable to Southam for the year ended December 31, 1996 was $98.1 million.
Without the special charge for in 1996 and reorganization expenses in 1995,
EBITDA for the fourth quarter and full year 1996 would have been $103.4 million
and $262.3 million, respectively, compared to $40.7 million and $119.5 million,
respectively, in 1995.
Operating income for the United States Newspaper Group for the fourth
quarter improved to $21.2 million from $1.7 million in 1995. Operating income
in 1995 without the fourth quarter charge for reorganization expenses would
have been $9.7 million.
- MORE -
<PAGE> 3
HOLLINGER INTERNATIONAL
ADD -2-
Results in the 1996 fourth quarter improved due to a decrease in newsprint
expenses, continued cost controls, and the contribution from acquisitions of
community newspapers during the past twelve months.
The results of the 1996 fourth quarter were negatively affected by a
special direct prepaid subscription plan in the United Kingdom. For the first
time, in that country, the Telegraph has offered prepaid subscriptions to
newspaper readers. In the past, newspaper readers dealt directly with
independent news agents for the purchase of newspapers. Starting in the late
summer, the Telegraph began soliciting prepaid, seven-day-a-week subscriptions
through direct mail promotions. By year end, the plan had added about 100,000
new daily and 200,000 new Sunday sales. In order to gain significant
acceptance, the subscriptions are initially being sold at a loss but prices
will be increased to ensure that this becomes a profit before the end of 1997.
The net costs of the plan, including an amount for losses that will be incurred
in 1997 on subscriptions that were outstanding at December 31, 1996, have been
provided in the accounts. The result of this is that gains in advertising
revenues of $5.1 million in the International Group in the fourth quarter have
been partly offset by circulation revenue declines and there is a special
charge included in Reorganization Expenses and Infrequent Items of $32.3
million in the fourth quarter of 1996. In the fourth quarter of 1995 there was
a charge of $8 million for reorganization expenses.
- MORE -
<PAGE> 4
HOLLINGER INTERNATIONAL
ADD -3-
Absolute control of Southam was acquired in December of 1996. Prior to that it
was accounted for as an equity investment. Commencing with the fourth quarter
of 1996 we have consolidated the results of Southam retroactive to January 1,
1996. As partly described above, this has had the effect of increasing EBITDA,
Operating Income, Interest Expense, and Income Taxes and reducing Equity in
Earnings of Affiliates compared to previously reported amounts for the first
three quarters of 1996. The change has had no effect on reported Net Earnings.
CONSOLIDATED FOURTH QUARTER RESULTS
Total revenues for the Company's 1996 fourth quarter increased $232.7
million to $502.9 million from $270.2 million, of which $218.4 million relates
to revenues as a result of the consolidation of Southam. In addition to the
revenues contributed by Southam, growth in advertising revenues both at the US
Newspaper Group and International Newspaper Group and revenue contributed by
community newspapers that were acquired during the year contributed to the
increase in revenues from prior year.
- MORE -
<PAGE> 5
HOLLINGER INTERNATIONAL
ADD -4-
Revenues for 1996 were $1,862.7 million, compared to $964.3 million in 1995.
Revenues for Southam for the full year were $803.4 million.
Interest expense increased $29.9 million in the fourth quarter as compared
with fourth quarter 1995 primarily as a result of increased borrowings that
related to the purchase of the additional interest in Southam in May and
December, the buyout of The Telegraph minority and other acquisitions of
community newspapers. Interest expense includes $12.7 million and $20.2
million of deferred financing fees amortized in the fourth quarter and full
year of 1996.
The Company's share of equity in earnings of affiliates increased in the
fourth quarter from a loss of $6.1 million in 1995 to a profit of $6.4 million
in 1996. In December 1996, the Company announced the sale of its interest in
Fairfax in three tranches. The first tranche was sold in December 1996
resulting in proceeds of $202.3 million and a gain recognized of $53.5
million. Proceeds of $150.3 million from the second tranche were received in
January 1997. The remaining 37,844,044 million shares were also sold in January
1997 but receipt of cash proceeds from this sale will be delayed until the
buyer, a merchant bank, realized on the shares or alternate arrangements can be
made. We anticipate receiving the remaining proceeds (in excess of $80 million)
over the next month or two. The gains on these 1997 sales will be included in
1997 earnings.
- MORE _
<PAGE> 6
HOLLINGER INTERNATIONAL
ADD -5-
The 1996 equity earnings include only Fairfax, up to the date of sale, and
Chicago joint ventures since the results of Southam are now consolidated for
the year ended December 31, 1996. The 1995 results include the Company's share
of equity in earnings for Southam, Fairfax and joint venture. Equity earnings
in the fourth quarter of 1995 without Southam would have been $24.7 million.
FOURTH QUARTER SEGMENT RESULTS
UNITED STATES NEWSPAPER GROUP
Revenues for the United States Newspaper Group were $161.8 million in the
fourth quarter of 1996, an increase of 5.1% over the same period in 1995. The
Chicago Group's operating revenues of $88.4 million increased by 4.8% from
$84.4 million in 1995. American Publishing Company (the Community Group)
reported operating revenues of $73.4 million, an increase of 5.6% over the 1995
period. Acquisitions added $8.1 million to 1996 fourth quarter revenues.
EBITDA for the fourth quarter increased $20.8 million to $34.2 million in
1996. Operating income for the United States Newspaper Group increased $19.5
million from $1.7 million in 1995 to $21.2 million. EBITDA and operating income
in fourth quarter 1995 included a charge of $8.0 million for reorganization
expenses. Without the charge, EBITDA and operating income in fourth quarter
1995 would have been $21.4 million and $9.7 million, respectively.
- MORE -
<PAGE> 7
HOLLINGER INTERNATIONAL
ADD -6-
INTERNATIONAL NEWSPAPER GROUP
Operating revenues for the International Newspaper Group were $122.7
million in the fourth quarter of 1996, an increase of 5.5% over 1995. The
increase in operating revenue in pounds sterling was 3.4%, but an increase in
the value of the British pound compared to the US dollar raised the reported
U.S. dollar increase. The 6.9% increase in advertising revenues was partially
offset by the decline in circulation revenues described earlier.
The International Newspaper Group's fourth quarter operating income
decreased by $32.9 million. The fourth quarter charge for Telegraph promotional
and direct subscription expenses represented $32.3 million of the decrease.
Additional amortization of intangible assets primarily as a result of the
acquisition of The Telegraph minority reduced operating income by $2.0 million.
The effects of declining newsprint prices were offset by increased usage due to
a significant increase in circulation at The Telegraph.
- MORE -
<PAGE> 8
HOLLINGER INTERNATIONAL
ADD -7-
OTHER
Hollinger International Inc., through subsidiaries and affiliated
companies, is a leading publisher of English-language newspapers in the United
States, the United Kingdom, Canada, and Israel. Included among the 142 paid
daily newspapers that the Company owns are the CHICAGO SUN-TIMES and THE DAILY
TELEGRAPH. These 142 newspapers have a world-wide daily combined circulation of
3,953,000. In addition, the Company owns or has an interest in 362 non-daily
newspapers, as well as magazines and other publications.
FOR MORE INFORMATION ON HOLLINGER INTERNATIONAL INC., FREE OF CHARGE,
SIMPLY DIAL 1-800-PRO-INFO AND ENTER THE COMPANY CODE "HLR."
FINANCIAL TABLES FOLLOW...
<PAGE> 9
HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
December 31 December 31
---------------------------------------
1996 1995
---- ----
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 148,550 $ 23,810
Accounts receivable, net of allowance for doubtful accounts of $15,213
and $12,588 respectively 290,170 134,511
Due from affiliates -- --
Inventories 26,147 25,684
Prepaid expenses and other current assets 22,693 13,562
---------------------------------------
Total current assets 487,560 197,567
Marketable securities, at market value 50 --
Investments in affiliates, at equity 198,461 463,527
Other investments, at cost 487,547 178,337
Property, plant, and equipment, net of accumulated depreciation 505,902 193,407
Intangible assets, net of accumulated amortization of $196,169 and
$155,195, respectively. 1,497,019 529,694
Deferred financing costs and other assets 12,549 7,573
---------------------------------------
$3,189,088 $1,570,105
=======================================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current installments of long-term debt $ 35,285 $ 27,552
Bank loans/short term debt 503,364 147,866
Accounts payable 104,994 38,646
Accrued expenses 168,297 50,874
Income taxes payable 38,888 12,390
Deferred revenue 69,080 22,902
Due to Hollinger Inc. 63 21,512
---------------------------------------
Total current liabilities 919,971 321,742
Long term debt, less current installments 675,263 446,234
Deferred income taxes 70,705 72,290
Accrued pension 8,724 10,519
Other liabilities 45,064 20,326
---------------------------------------
Total liabilities 1,719,727 871,111
---------------------------------------
Minority interest 109,943 97,298
Redeemable preferred stock 605,579 306,452
Stockholders' equity:
Class A common stock, $0.01 par value. Authorized 250,000,000
shares: issued and outstanding 69,565,754 shares 696 420
Class B common stock, $0.01 par value, Authorized 50,000,000 shares;
issued and outstanding 14,990,000 150 150
Preferred stock 195,104
Additional paid-in capital 408,147 162,610
Cumulative foreign currency translation adjustment 24,257 (3,987)
Retained earnings 125,485 136,051
---------------------------------------
Total stockholders' equity 753,839 295,244
---------------------------------------
3,189,088 1,570,105
=======================================
</TABLE>
<PAGE> 10
HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
----------------------------------- ----------------------------------
Dec 31, 1996 Dec 31, 1995 Dec 31, 1996 Dec 31, 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Advertising $341,268 $177,504 $1,233,036 $635,560
Circulation 121,566 75,426 474,079 262,670
Job printing 11,251 13,190 50,623 49,198
Other 28,787 4,070 104,976 16,823
-------- -------- --------- --------
Total operating revenues 502,872 270,190 1,862,714 964,251
-------- -------- --------- --------
OPERATING COSTS AND EXPENSES:
Newsprint 70,182 53,427 316,192 189,396
Compensation costs 167,171 69,606 648,402 271,535
Other operating costs 162,108 106,433 635,867 383,807
Reorganization expenses and infrequent items 41,567 8,000 41,567 8,000
Depreciation and amortization 27,962 14,272 92,853 52,388
-------- -------- --------- --------
Total operating costs and expenses 468,990 251,738 1,734,881 905,126
-------- -------- --------- --------
Operating income 33,882 18,452 127,833 59,125
Other income (expense):
Interest expense (41,424) (11,506) (98,875) (43,189)
Equity in earnings of affiliates 6,394 (6,114) 12,037 14,410
Interest and dividend income 2,889 1,298 12,460 4,590
Other income, net 29,734 2,045 58,379 13,609
-------- -------- --------- --------
Total other income (2,407) (14,277) (15,999) (10,580)
-------- -------- --------- --------
Earnings before income taxes, minority interest and
extraordinary item 31,475 4,175 111,834 48,545
Income taxes 14,884 5,919 44,883 19,706
-------- -------- --------- --------
Earnings before minority interest and extraordinary item 16,591 (1,744) 66,951 28,839
Minority interest (9,255) 5,589 33,138 22,637
-------- -------- --------- --------
Earnings before extraordinary item 25,846 (7,333) 33,813 6,202
Extraordinary item - - (2,150) -
-------- -------- --------- --------
Net Earnings $ 25,846 $ (7,335) $ 31,663 $ 6,202
======== ========= ========= ========
Earnings per Common Share:
Earnings before Extraordinary Item $ 0.25 $ (0.13) $ 0.40 $ 0.11
Earnings loss on Debt Extinguishments - - (0.03) -
-------- -------- --------- --------
Net Earnings per Common Share $ 0.25 $ (0.13) $ 0.37 $ 0.11
======== ========= ========= ========
Weighted Average Shares Outstanding 102,024 56,956 82,799 56,956
======== ========= ========= ========
</TABLE>
<PAGE> 11
HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES
GROUP OPERATING INFORMAITON
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
UNITED
AMERICAN STATES INTERNATIONAL
CHICAGO PUBLISHING NEWSPAPER NEWSPAPER CONSOLIDATED
THREE MONTHS ENDED DECEMBER 31, 1996 GROUP COMPANY GROUP GROUP SOUTHAM TOTAL
- -------------------------------------------- ---------- ------------ ----------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Advertising $ 63,103 $ 49,318 $112,421 $ 78,932 $149,915 $ 341,268
Circulation 19,375 17,498 36,873 38,325 46,368 121,566
Job Printing and Other 5,953 6,560 12,513 5,428 22,097 40,038
---------- ------------ ----------- ------------- ---------- ------------
Total Operating Revenues 88,431 73,376 161,807 122,685 218,380 502,872
Operating Expenses
Newsprint 15,791 7,340 23,131 21,306 25,745 70,182
Compensation Costs 31,974 25,146 57,120 21,231 88,820 167,171
Other 25,591 21,797 47,388 59,186 55,534 162,108
---------- ------------ ----------- ------------- ---------- ------------
Income Before Interest, Taxes
Depreciation and Amortization 15,075 19,093 34,168 20,962 48,281 103,411
Depreciation and Amortization 6,309 6,681 12,990 4,833 10,139 27,962
---------- ------------ ----------- ------------- ---------- ------------
$ 8,766 $ 12,412 21,178 16,129 38,142 75,449
========== ============
Reorganization expenses and infrequent items -- 32,327 9,240 41,567
----------- ------------- ---------- ------------
Operating Income $ 21,178 $(16,198) $ 28,902 $ 33,882
=========== ============= ========== ============
THREE MONTHS ENDED DECEMBER 31, 1995
- --------------------------------------------
Operating Revenues
Advertising $ 58,667 $ 44,985 $103,652 $ 73,852 $ -- $ 177,504
Circulation 19,968 15,315 35,283 40,143 -- 75,426
Job Printing and Other 5,758 9,203 14,961 2,299 -- 17,260
---------- ------------ ----------- ------------- ---------- ------------
Total Operating Revenues 84,393 69,503 153,896 116,294 -- 270,190
Operating Expenses
Newsprint 18,652 9,711 28,363 25,064 -- 53,427
Compensation Costs 26,699 22,352 49,051 20,555 -- 69,606
Other 37,004 18,062 55,066 51,367 -- 106,433
---------- ------------ ----------- ------------- ---------- ------------
Income Before Interest, Taxes
Depreciation and Amortization 2,038 19,378 21,416 19,308 -- 40,724
Depreciation and Amortization 3,964 7,744 11,708 2,564 -- 14,272
---------- ------------ ----------- ------------- ---------- ------------
Operating Income $ (1,926) $ 11,634 9,708 16,744 -- 26,452
========== ============
Reorganization expenses and infrequent items 8,000 -- -- 8,000
----------- ------------- ---------- ------------
Operating Income $ 1,708 $ 16,744 $ -- $ 18,452
=========== ============= ========== ============
</TABLE>
<PAGE> 12
HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES
GROUP OPERATING INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
UNITED
AMERICAN STATES INTERNATIONAL
CHICAGO PUBLISHING NEWSPAPER NEWSPAPER CONSOLIDATED
YEAR ENDED DECEMBER 31, 1996 GROUP COMPANY GROUP GROUP SOUTHAM TOTAL
- -------------------------------------------- ---------- ------------ ----------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Advertising $228,676 $174,652 $403,328 $278,156 $551,552 $1,233,036
Circulation 80,693 64,575 145,268 158,220 170,591 474,079
Job Printing and Other 24,263 34,513 58,776 15,526 81,297 155,599
---------- ------------ ----------- ------------- ---------- ------------
Total Operating Revenues 333,632 273,740 607,372 451,902 803,440 1,862,714
Operating Expenses
Newsprint 76,027 33,018 109,045 101,259 105,888 316,192
Compensation Costs 126,620 92,212 218,832 76,892 352,678 648,402
Other 96,717 76,071 172,788 225,506 237,573 635,867
---------- ------------ ----------- ------------- ---------- ------------
Income Before Interest, Taxes
Depreciation and Amortization 34,268 72,439 106,707 48,245 107,301 262,253
Depreciation and Amortization 17,545 25,281 42,826 14,317 35,710 92,853
---------- ------------ ----------- ------------- ---------- ------------
$ 16,723 $ 47,158 63,881 33,928 71,591 169,400
========== ============
Reorganization expenses and infrequent items -- 32,327 9,240 41,567
----------- ------------- ---------- ------------
Operating Income $ 63,881 $ 1,601 $ 62,351 $ 127,833
=========== ============= ========== ============
YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------
Operating Revenues
Advertising $228,685 $143,912 $372,597 $262,963 -- $ 635,560
Circulation 78,518 51,167 129,685 132,985 -- 262,670
Job Printing and Other 23,419 33,512 56,931 9,090 -- 66,021
---------- ------------ ----------- ------------- ---------- ------------
Total Operating Revenues 330,622 228,591 559,213 405,038 -- 964,251
Operating Expenses
Newsprint 72,232 29,516 101,748 87,648 -- 189,396
Compensation Costs 121,220 76,099 197,319 74,216 -- 271,535
Other 113,829 64,178 178,007 205,800 -- 383,807
---------- ------------ ----------- ------------- ---------- ------------
Income Before Interest, Taxes
Depreciation and Amortization 23,341 58,798 82,139 37,374 -- 119,513
Depreciation and Amortization 15,001 27,013 42,014 10,374 52,388
---------- ------------ ----------- ------------- ---------- ------------
$ 8,340 $ 31,785 40,125 27,000 -- 67,125
========== ============
Reorganization expenses and infrequent items 8,000 -- -- 8,000
----------- ------------- ---------- ------------
Operating Income $32,125 $ 27,000 $ -- $ 59,125
=========== ============= ========== ============
</TABLE>
