<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended December 31, 1995
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 Office) (Zip Code)
Registrant's telephone number, including area code: (312) 321-2299
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
------------------- ------------------------------
<S> <C>
Class A Common Stock par value $.01 per share New York Stock Exchange
9 1/4% Senior Subordinated Notes due 2006 New York Stock Exchange
</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 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 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. [ ]
The aggregate market value of Class A Common Stock held by non-affiliates
as of March 15, 1996, was approximately $96,082,500. As of such date,
non-affiliates held no shares of Class B Common Stock. There is no active
market for the Class B Common Stock.
The number of outstanding shares of each class of the registrant's common
stock as of March 15, 1996, was as follows: 58,065,754 shares of Class A Common
Stock and 14,990,000 shares of Class B Common Stock.
<PAGE> 2
The following Form 10-K/A amends Part IV Item 14 of the Form 10-K of Hollinger
International Inc. for the year ended December 31, 1995.
INDEX
HOLLINGER INTERNATIONAL INC.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Financial Statements filed pursuant to Rule 3-09 of Regulation S-X
John Fairfax Holdings Limited
Auditors Report
Consolidated Balance Sheet
Consolidated Profit and Loss Account
Consolidated Statement of Cash Flows
Notes to the Accounts as of June 30, 1996
(b) Exhibits
23.1 Consent of Ernst & Young
<PAGE> 3
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors of
JOHN FAIRFAX HOLDINGS LIMITED
We have audited the accompanying consolidated balance sheets of John Fairfax
Holdings Limited and its subsidiary companies ("the Group") as of June 30, 1995
and June 30, 1996, and the related consolidated statements of profit and loss
and cash flows for the three years ended June 30, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audit in accordance with generally accepted auditing standards
in the United States. 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, the consolidated financial statements referred to above,
present fairly, in all material respects, the financial position of John
Fairfax Holdings Limited and its subsidiary companies at June 30, 1995 and 1996
and the results of their operations and their cash flows for the years ended
June 30, 1994, 1995 and 1996 in conformity with Australian Accounting
Standards.
Accounting principles generally accepted in Australia vary in certain
significant respects from accounting principles generally accepted in the
United States. The application of the generally accepted accounting principles
in the United States would have affected the determination of consolidated
operating profit for the years ended June 30, 1994, 1995 and 1996 and the
determination of the consolidated shareholders equity at June 30, 1994, 1995
and 1996 to the extent summarized in Note 31 to the financial statements.
ERNST & YOUNG
Chartered Accountants
Sydney, Australia
September 6, 1996
<PAGE> 4
JOHN FAIRFAX HOLDINGS LIMITED
- -------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30,
- -------------------------------------------------------------------------------------------------------------
1996 1995
Notes A $000 A $000
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT ASSETS
Cash 5,341 310
Receivables 9 153,582 135,842
Inventories 10 36,095 26,308
-----------------------------
TOTAL CURRENT ASSETS 195,018 162,460
-----------------------------
NON-CURRENT ASSETS
Receivables 9 2,224 3,310
Investments 11 44,831 25,964
Property, plant and equipment 12 607,942 507,432
Intangibles 13 1,258,167 1,256,949
Other 14 114,935 128,124
-----------------------------
TOTAL NON-CURRENT ASSETS 2,028,099 1,921,779
-----------------------------
TOTAL ASSETS 2,223,117 2,084,239
-----------------------------
CURRENT LIABILITIES
Creditors and borrowings 15 255,455 100,010
Provisions 16 81,880 110,166
-----------------------------
TOTAL CURRENT LIABILITIES 337,335 210,176
-----------------------------
NON-CURRENT LIABILITIES
Creditors and borrowings 15 & 23 728,971 750,000
Provisions 16 70,764 50,377
-----------------------------
TOTAL NON-CURRENT LIABILITIES 799,735 800,377
-----------------------------
TOTAL LIABILITIES 1,137,070 1,010,553
-----------------------------
NET ASSETS 1,086,047 1,073,686
-----------------------------
SHAREHOLDERS' EQUITY
Issued capital 17 416,865 422,638
Reserves 18 423,358 416,099
Retained profits 245,751 234,078
-----------------------------
SHAREHOLDERS' EQUITY
ATTRIBUTABLE TO MEMBERS OF
THE CHIEF ENTITY 1,085,974 1,072,815
Outside equity interests in
controlled entities 19 73 871
-----------------------------
TOTAL SHAREHOLDERS' EQUITY 1,086,047 1,073,686
=============================
</TABLE>
The balance sheet should be read in conjunction with the accompanying notes.
<PAGE> 5
JOHN FAIRFAX HOLDINGS LIMITED
- -------------------------------------------------------------------------------
CONSOLIDATED PROFIT AND LOSS ACCOUNT
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended June 30,
- -----------------------------------------------------------------------------------------------------
1996 1995 1994
Notes A $000 A $000 A $000
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenue 2 1,006,148 948,433 846,592
Operating expenses 3 (854,537) (731,942) (678,019)
---------------------------------------
OPERATING PROFIT BEFORE ABNORMAL ITEMS AND
INCOME TAX 151,611 216,491 168,573
Abnormal items before income tax 4 (21,934) (10,867) (4,171)
---------------------------------------
OPERATING PROFIT BEFORE INCOME TAX 129,677 205,624 164,402
Income tax attributable to operating profit 5 (42,201) (68,007) (53,660)
---------------------------------------
OPERATING PROFIT BEFORE ABNORMAL TAX BENEFITS 87,476 137,617 110,742
Abnormal income tax benefits 5 - 9,707 75,168
---------------------------------------
OPERATING PROFIT AFTER INCOME TAX 87,476 147,324 185,910
Outside equity interests in operating profit after
income tax (47) (246) (238)
---------------------------------------
OPERATING PROFIT AFTER INCOME TAX ATTRIBUTABLE
TO MEMBERS OF THE CHIEF ENTITY 6 87,429 147,078 185,672
Retained profits at the beginning of the
financial year 234,078 173,493 47,980
Adjustment resulting from the adoption of
a new accounting standard - (10,853) -
---------------------------------------
TOTAL AVAILABLE FOR APPROPRIATION 321,507 309,718 233,652
Dividends provided for or paid 7 (75,756) (75,640) (60,159)
---------------------------------------
RETAINED PROFITS AT THE END OF THE
FINANCIAL YEAR 245,751 234,078 173,493
=======================================
</TABLE>
The profit and loss account should be read in conjunction with the accompanying
notes.
<PAGE> 6
JOHN FAIRFAX HOLDINGS LIMITED
- -------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended June 30,
- ----------------------------------------------------------------------------------------------------------
1996 1995 1994
Notes A $000 A $000 A $000
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 972,621 938,077 829,214
Payments to suppliers and employees (764,194) (656,256) (607,173)
Redundancy payments (46,298) (10,024) (17,488)
Dividends and unit trust income received 854 662 555
Interest received 986 459 779
Interest paid (45,175) (35,263) (32,273)
Income taxes paid (2,378) (244) (134)
-------------------------------------------
Net cash flows from (used in) operating activities 26 116,416 237,411 173,480
-------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant & equipment (108,704) (228,231) (191,831)
Proceeds from the sale of property, plant & equipment 9,245 19,879 3,200
Interest paid (22,455) (14,654) (3,273)
Additional costs of acquiring the economic entity - (4,580) (2,337)
Recovery of costs of acquiring the economic entity - 2,500 -
Acquisition of investments (18,874) (9,575) (3,537)
Proceeds from the sale of investments - 799 -
Acquisition of a division - (1,064) -
Acquisition of controlled entities/minority interests (2,012) (36,866) -
Proceeds from the sale of controlled entities - 650 -
Transfers from related bodies corporate - - -
Settlement of commitments entered into
during the acquisition of the economic entity - - (60,000)
-------------------------------------------
Net cash used in investing activities (142,800) (271,142) (257,778)
-------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of shares and debentures 1,757 5,390 118,200
Dividends paid (75,578) (67,345) (55,333)
Proceeds from borrowings 223,971 130,000 665,000
Repayment of borrowings (120,000) (32,774) (644,736)
Loans and deposits issued - - -
Loans and deposits repaid 1,329 - 2,896
Borrowing costs (64) (1,646) (1,687)
-------------------------------------------
Net cash provided by (used in) financing activities 31,415 33,625 84,340
-------------------------------------------
NET INCREASE (DECREASE) IN CASH HELD 5,031 (106) 42
Cash at beginning of financial year 310 416 374
-------------------------------------------
Cash at end of financial year 26 5,341 310 416
===========================================
</TABLE>
The statement of cash flows should be read in conjunction with the accompanying
notes.
<PAGE> 7
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 1 STATEMENT OF ACCOUNTING POLICIES
The financial report is a general purpose financial report which has been
prepared in accordance with applicable Accounting Standards and other mandatory
professional reporting requirements (Urgent Issues Group Consensus Views) and
the Corporations Law, including the disclosure requirements of Schedule 5 of
the Corporations Regulations. The accounts have also been prepared on the basis
of the historical cost accounting convention.
The accounting policies are consistent with those of the previous year. Certain
comparative figures have been re-classified to conform with changes in
presentation for the current year.
The changes are not material.
(a) Principles of Consolidation
The consolidated accounts are those of the economic entity comprising
the chief entity, John Fairfax Holdings Limited, and all its
controlled entities.
The consolidated accounts include the information contained in the
accounts of John Fairfax Holdings Limited and each of its controlled
entities as from the date the chief entity obtains control until such
time as control ceases.
The accounts of controlled entities are prepared for the same
reporting period as the chief entity, using consistent accounting
policies.
All inter-entity balances and transactions, and unrealised profits
arising from intra economic entity transactions, have been eliminated
in full.
(b) Debentures
Debentures have been included as equity as the rights attaching to
them are in all material respects comparable to those attaching to
the ordinary shares. Such debentures are unsecured non-voting
securities that have interest entitlements equivalent to the dividend
entitlements attaching to the ordinary voting shares and rank equally
with such shares on any liquidation or winding up. These interest
entitlements are treated as dividends.
The debentures are convertible into shares on a one for one basis at
the option of the holder provided that conversion will not result in
a breach of any of the following:
(i) any provision of the Foreign Acquisitions and Takeovers
Act 1975;
(ii) any undertaking given by the chief entity to the Foreign
Investment Review Board or at the request of the Foreign
Investment Review Board from time to time; or
(iii) any other applicable law including, without limitation, the
Broadcasting Act 1942.
<PAGE> 8
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 1 STATEMENT OF ACCOUNTING POLICIES (continued)
(c) Property, Plant and Equipment
Land and buildings
Freehold and leasehold properties are initially capitalised at cost
and thereafter are periodically revalued to an amount not exceeding
their recoverable amount estimated on the basis of undiscounted cash
flows.
Other Fixed Assets
Other fixed assets are carried at the lower of cost or recoverable
amount. The carrying amount is reviewed annually by directors to
ensure it is not in excess of the recoverable amount estimated on the
basis of undiscounted cash flows. Profits and losses on disposal of
fixed assets in the ordinary course of business are taken into account
in determining the operating profit for the period.
Capitalisation
Costs arising from the acquisition or construction of plant and
equipment are capitalised. Such costs may include internal labour and
interest. Interest relating to the financing of the Chullora printing
plant was capitalised up to the date of commissioning and will be
subsequently amortised over its useful life.
Leasing
Leases of fixed assets where substantially all the risks and benefits
incidental to ownership of the asset are transferred to the economic
entity are classified as finance leases. Finance leases are
capitalised and recorded as an asset and liability equal to the
present value of the minimum lease payments, including any guaranteed
residual values. Lease payments are allocated between the reduction of
the lease liability and the lease interest for the period.
Operating leases, where the lessor effectively retains all the risk
and benefits of ownership of the leased asset, are not capitalised.
Rental payments are charged as an expense in the periods to which they
relate.
Depreciation and Amortisation
Depreciation is determined using the straight-line method of
calculation. It is calculated on the cost recorded for buildings,
plant and equipment so as to write off the asset over its estimated
useful life. In the case of land no provision for depreciation has
been made.
Leased assets are amortised over the life of the relevant lease, or
where it is likely that the company will obtain ownership of the
asset, over the useful life of the asset.
<PAGE> 9
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- --------------------------------------------------------------------------------
NOTE 1 STATEMENT OF ACCOUNTING POLICIES (continued)
(d) Investments
Investments are carried at the lower of cost or recoverable amount.
The carrying amount is reviewed annually by directors to ensure it is
not in excess of the recoverable amount. The recoverable amount is
represented by a directors valuation based on undiscounted cashflows
or the underlying net assets of the particular entities. Dividends are
brought to account as they are received.
(e) Mastheads and tradenames
Mastheads and tradenames are carried at cost and are not amortised as
they are considered to be assets which are unlikely to diminish in
value over time. In accordance with AASB 1021, no amortisation is
provided against the carrying value of these assets because the
Directors believe that the life of these assets is of such duration
and the residual value would be such that the amortisation charge, if
any, would not be material. The carrying amount is reviewed annually
by Directors to ensure it is not in excess of the recoverable amount.
The recoverable amount is represented by a directors valuation based
on undiscounted cashflows.
(f) Inventories
Inventories including work in progress are valued at the lower of cost
and estimated net realisable value. The methods used to determine cost
for the main items of inventory are:
- Raw materials (comprising mainly newsprint and paper on hand)
are assessed at average cost and newsprint and paper in transit
by specific identification cost.
- Work in progress and finished goods are valued at direct
material and labour costs, together with a proportion of
indirect labour costs and manufacturing overheads where
appropriate.
- In the case of other inventories, cost is assigned by the
weighted average cost method.
A provision for diminution in value of inventories exists to cover a
decline in value which might arise from the effects of storage
hazards.
(g) Debtors
Bad debts are written off by a charge against the provision for
doubtful debts during the period in which they are identified as bad.
Provision is made for doubtful debts and is based on an inspection and
assessment of all debts outstanding.
Adjustments are made for any outstanding returns, commissions and
allowances in arriving at the trade debtors balance.
<PAGE> 10
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- --------------------------------------------------------------------------------
NOTE 1 STATEMENT OF ACCOUNTING POLICIES (continued)
(h) Employee Entitlements
Provision has been made for salaries and wages, holiday pay, long
service leave and other entitlements payable to employees under
statutory and contractual requirements. The provision has been
allocated into current and non-current proportions. The current
proportion relates to the amount of the provision which is expected to
be payable in the ensuing twelve months and is measured in nominal
value. The non-current proportion relates to entitlements, other than
annual leave and sick leave, which are expected to be payable after
twelve months from balance date and are measured at the present value
of the expected future cash outflows. In determining the present value
of future cash outflows, the interest rates attaching to government
guaranteed securities which have terms to maturity approximating the
terms of the related liability are used.
(i) Income Tax
Income tax has been accounted for using the liability method of tax
effect accounting whereby income tax expense is based upon the
accounting profit adjusted for permanent differences.
Future income tax benefits attributable to income tax losses, capital
losses and timing differences are brought to account when realisation
of the benefit is considered to be virtually certain and will only be
obtained if:
(i) the economic entity derives future assessable income of a nature
and of an amount sufficient to enable the benefit to be realised;
(ii) the economic entity has complied and continues to comply with
the conditions for deductibility imposed by tax legislation; and
(iii) no changes in tax legislation adversely affect the economic
entity in realising the benefit from the deductions for the loss.
(j) Foreign Currency
Foreign currency transactions are initially converted to Australian
currency at the rate of exchange ruling on the date of the transaction
or, where appropriate, at rates specified under forward exchange
contracts. Amounts payable and receivable at balance date are
translated at rates applicable at that date.
Except for certain specific hedges and hedges of foreign currency
operations, all resulting exchange differences arising on settlement
or re-statement are brought to account in determining the profit and
loss for the financial year. Transaction costs, premiums and discounts
on forward currency contracts are deferred and amortised over the life
of the contract.
<PAGE> 11
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- --------------------------------------------------------------------------------
NOTE 1 STATEMENT OF ACCOUNTING POLICIES (continued)
Where a purchase or sale is specifically hedged, exchange gains or
losses on the hedging transaction arising up to the date of purchase
or sale and costs, premiums and discounts relative to the hedging
transaction are included with the purchase or sale. Exchange gains
and losses arising on the hedge transaction after that date are taken
to the profit and loss account.
The accounts of overseas subsidiaries are translated using the current
rate method and any exchange differences are taken directly to the
foreign currency translation reserve.
(k) Industry and Geographical Segments
The economic entity operates predominantly within the media industry
and predominantly within Australia.
NOTE 2 OPERATING REVENUE
<TABLE>
<CAPTION>
Year ended June 30,
-------------------------------------------
1996 1995 1994
A $000 A $000 A $000
-------------------------------------------
<S> <C> <C> <C>
TRADING REVENUE
Newspapers 809,519 798,041 716,265
Magazines 89,170 80,534 76,661
Other 96,367 65,939 48,857
-------------------------------------------
995,056 944,514 841,783
-------------------------------------------
OTHER REVENUE
Proceeds from sale of non-current assets 9,245 2,671 3,200
Dividends received or receivable from:
Wholly owned controlled entities - - -
Other corporations 662 372 435
Distributions from unit trusts 192 290 120
Interest received or receivable from:
Wholly owned controlled entities - - -
Other persons/corporations 986 459 780
Foreign currency exchange gains - 100 122
Other 7 27 152
-------------------------------------------
11,092 3,919 4,809
-------------------------------------------
TOTAL OPERATING REVENUE 1,006,148 948,433 846,592
===========================================
</TABLE>
<PAGE> 12
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 3 OPERATING EXPENSES
<TABLE>
<CAPTION>
Year ended June 30,
-----------------------------------------
1996 1995 1994
A $000 A $000 A $000
-----------------------------------------
<S> <C> <C> <C>
Salaries and wages 236,913 231,234 218,928
Newsprint 155,252 125,275 114,632
Provisions
Doubtful debts 4,855 2,617 5,489
Depreciation - freehold property, plant and equipment 41,218 26,102 22,193
Amortisation - leased property, plant and equipment 320 51 140
Diminution in value of inventories 203 (9) (29)
Employee benefits 12,336 11,440 8,535
Rentals - operating leases 14,259 9,264 6,900
Book value of non-current assets sold 8,614 1,840 1,787
Foreign currency exchange losses 166 - -
Interest paid or payable to:
Wholly owned controlled entities - - -
Other persons/corporations 43,287 36,952 37,624
Finance charges on capitalised leases 1,694 96 188
Other costs 335,420 287,080 261,632
-----------------------------------------
TOTAL OPERATING EXPENSES 854,537 731,942 678,019
=========================================
</TABLE>
Interest paid or payable excludes $22,455,292 (1995: $14,653,869 1994:
3,273,000), attributable to debt arising from capital works in progress, which
has been capitalised.
<PAGE> 13
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 4 ABNORMAL ITEMS
<TABLE>
<CAPTION>
Year ended June 30,
----------------------------------------
1996 1995 1994
A $000 A $000 A $000
----------------------------------------
<S> <C> <C> <C>
INCOME
Capital profit on sale of freehold property
(income tax expense not applicable) - - 3,007
EXPENSE
Depreciation adjustment arising from a reassessment
of the estimated useful life of office furnishings (income
tax benefit not applicable - - (2,152)
Employee redundancy and executive severance costs (21,934) (10,867) (5,026)
----------------------------------------
Net abnormal items before income tax (21,934) (10,867) (4,171)
Income tax benefit applicable 7,238 3,586 1,622
----------------------------------------
NET ABNORMAL ITEMS AFTER INCOME TAX (14,696) (7,281) (2,549)
----------------------------------------
</TABLE>
NOTE 5 INCOME TAX EXPENSE
The prima facie tax on operating profit is reconciled to
the income tax provided in the accounts as follows:
<TABLE>
<CAPTION>
Year ended June 30,
----------------------------------------
1996 1995 1994
A $000 A $000 A $000
----------------------------------------
<S> <C> <C> <C>
PRIMA FACIE TAX ON OPERATING PROFIT 46,684 67,856 54,253
Tax effect of permanent differences:
Fringe benefits tax - - 550
Depreciation of buildings (63) 204 412
Investment allowance (5,251) (1,302) (421)
Rebatable dividends (238) (123) (144)
Other 1,286 1,491 (616)
(Over)/under provision in prior year (217) (119) (374)
----------------------------------------
Income tax attributable to operating profit 42,201 68,007 53,660
Adjustment to future income tax benefit arising
from the change in the corporate tax rate - (9,707) -
Recognition of prior year tax losses not previously
brought to account - - (75,168)
----------------------------------------
Abnormal income tax benefits - (9,707) (75,168)
----------------------------------------
Net total income tax (benefit)/expense 42,201 58,300 (21,508)
----------------------------------------
INCOME TAX PROVIDED COMPRISES:
Provision attributable to current year 262 573 144
(Increase)/decrease in future income tax benefits:
Timing differences 3,964 (2,716) 3,600
Tax losses 20,778 58,837 49,916
Increase in deferred income tax liability 17,197 11,313 -
Abnormal income tax benefits - (9,707) (75,168)
----------------------------------------
42,201 58,300 (21,508)
----------------------------------------
</TABLE>
<PAGE> 14
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 6 CONTRIBUTIONS OF CONTROLLED ENTITIES
<TABLE>
<CAPTION>
NOTES INTEREST PLACE OF AMOUNT OF CONTRIBUTION TO
INCORP. INVESTMENT CONSOLIDATED PROFIT
----------------------------------------------------------------------------------------------
June 30, Year ended June 30,
------------------- ------------------------
1996 1995 1996 1995 1994
$000 $000 $000 $000 $000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CHIEF ENTITY
John Fairfax Holdings Limited (a) ACT 1,442 981 1,958
CONTROLLED ENTITIES
Associated Newspapers Limited (a) 100% NSW 5,000 5,000 - - -
AAV Australia Pty Limited (a) 100% Vic. 398 398 3,549 3,442 2,854
AAV New Zealand Limited (e) 95% NZ 10 10 271 220 170
Ausinet Pty Limited (a) 100% ACT - - (404) 9 -
Australian Geographic Pty
Limited (a) 100% NSW 37,834 37,834 4,170 566 -
David Syme & Co Limited (a) 100% Vic. 365,577 365,577 39,534 62,239 47,696
Dysford Pty Limited (a) 100% ACT - - - - -
Fairfax CD Rom Pty Limited (a) 100% ACT - - (74) (154) -
Fairfax Community Newspapers
Pty Limited (a) 100% NSW 27,655 27,655 3,198 3,708 3,284
Fairfax Corporation Pty Limited (a) 100% NSW 30,000 30,000 (7) (749) 16
Fairfax Ian Limited (e) 100% UK - - - - -
Fairfax Multimedia Holdings Pty
Limited (a),(f) 100% ACT - - (2,584) (182) -
Fairfax Printers Pty Limited (a),(d),(f) 100% ACT - - (6,953) - -
Fairfax Print Holdings Pty
Limited (a),(f),(g) 100% ACT - - 7,400 (949) -
Gold Coast Community Press Pty
Limited (a) 100% ACT - - - (33) (1,041)
Homes Pictorial Publications
Pty Limited (b) 100% NSW - - - - -
Homes Pictorial Unit Trust (a),(b) 100% 5,012 3,000 810 937 918
Illawarra Newspapers Holdings
Pty Limited (a) 100% NSW 16,612 16,612 1,627 1,474 1,229
Intercity Hire Pty Limited (a) 100% Vic. - - - - -
John Fairfax Publications Pty
Limited (a),(f) 100% NSW 134,462 134,462 30,748 65,030 88,507
John Fairfax Group Finance Pty
Limited (a) 100% ACT - - 614 8,435 36,822
John Fairfax Limited (a) 100% ACT 458,454 458,454 - - -
John Fairfax & Sons Limited (a) 100% NSW 400,200 400,200 - - -
John Fairfax (NZ) Limited (c) 100% NZ - 1,954 - 3 (3)
John Fairfax (UK) Limited (e) 100% UK 1,175 1,175 78 (1) 138
John Fairfax (US) Limited (e) 100% USA 1,864 1,864 (10) (7) (6)
Morisset Newspapers Pty Limited (a) 100% NSW - - - - -
Morisset Courier Unit Trust 100% 15 15 - - (6)
Newcastle Newspapers Pty Limited (a) 100% NSW 32,542 32,542 3,802 2,416 2,502
Rozelle Terminal Handling
Company Pty Limited (c) - - - - - - 30
Rydge Publications Pty Limited (a) 100% NSW 1,967 1,967 - - -
Rydge Publications (Australia)
Pty Limited (a) 100% NSW 3,239 3,239 - - -
South Australian Real Estate
Press Pty Limited (a) 100% ACT - - (107) (87) -
S. Richardson (Newspapers) Pty
Limited (a) 100% NSW 62 62 - - -
Suburban Investments Pty Limited (a) 100% ACT 175 175 - - -
Syme New Century Media Pty
Limited (a),(d) 100% Vic. - - (255) - -
The Warrnambool Standard Pty
Limited (a) 100% Vic. 162 162 643 193 472
The Rockwood Pastoral Company
Pty Limited (a) 100% NSW 68,568 68,568 - - -
Wattle Street Properties Pty
Limited (a) 100% ACT - - (63) (413) 132
----------------------------
87,429 147,078 185,672
============================
</TABLE>
<PAGE> 15
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 6 CONTRIBUTIONS OF CONTROLLED ENTITIES CONTINUED
(a) The chief entity and the controlled entities incorporated within Australia
are party to a class order and have entered into a group cross indemnity
agreement. Under the class order exemption has been granted these controlled
entities from the requirements of the Corporations Law with regard to the
preparation, and publication of accounts. In relation to these entities the
aggregate assets total $2,213 million, the aggregate liabilities total $1,088
million and the aggregate profit totals $86.3 million.
(b) Controlled entities acquired.
On October 19, 1995 the economic entity increased its interest in the issued
capital of Homes Pictorial Publications Pty Limited and Homes Pictorial Unit
Trust from 80% to 100%. The additional equity was acquired for $2,012,000
representing fair value of the net assets.
(c) Controlled entity liquidated.
On July 7, 1995 John Fairfax (NZ) Limited was liquidated.
(d) Controlled entity incorporated during the year.
(e) All controlled entities incorporated in a foreign country conduct business
in the country of incorporation. These entities are audited by other members
of Ernst & Young International.
(f) Denotes entities controlled directly by the chief entity. Refer note 11.
(g) On October 4, 1995 the name of the controlled entity Sydney Printers Pty
Limited changed to Fairfax Holdings Pty Limited.
<PAGE> 16
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 7 DIVIDENDS PAID AND PROPOSED
<TABLE>
<CAPTION>
Year ended June 30,
----------------------------
1996 1995
A $000 A $000
----------------------------
<S> <C> <C>
Interim dividend of 3.5 cents (1995 3.5 cents)
per ordinary share and debenture (unfranked) paid
May 31, 1996 27,856 27,820
Proposed final dividend of 6.0 cents (1995
6.0 cents) per share and debenture (unfranked) 47,900 47,820
----------------------------
75,756 75,640
----------------------------
</TABLE>
The chief entity has no retained franking credits
against which franked dividends could be paid.
NOTE 8 EARNINGS PER SHARE
<TABLE>
<CAPTION>
Year ended June 30,
-------------------------------------------
1996 1995 1994
-------------------------------------------
<S> <C> <C> <C>
cents cents cents
Basic earnings per share (cents per share) 10.99 18.59 24.29
-------------------------------------------
Diluted earnings per share (cents per share) 10.96 18.38 23.26
-------------------------------------------
Reconciliation of earnings used in the $000 $000
calculation of earnings per share
Operating profit after income tax expense
attributable to members of the chief entity 87,429 147,078 185,672
Add: Imputed earnings after income tax on
funds receivable on exercise of options
outstanding during the year 1,523 1,538 1,820
-------------------------------------------
Diluted earnings 88,952 148,616 187,492
-------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Reconciliation of weighted average numbers of Number of Number of Number of
ordinary shares and debentures used in the shares shares shares
calculation of earnings per share
<S> <C> <C> <C>
Weighted average number of ordinary shares
and debentures used in the calculation of the
basic earnings per share 795,453,633 791,317,014 764,482,599
Add: Weighted average number of potential
ordinary shares relating to options outstanding
during the year 15,893,014 17,392,975 38,173,745
-----------------------------------------------
Weighted average number of potential ordinary
shares and debentures used in the calculation of
the diluted earnings per share 811,346,647 808,709,989 802,656,344
===============================================
</TABLE>
<PAGE> 17
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 9 RECEIVABLES
<TABLE>
<CAPTION>
June 30,
-----------------------------------
1996 1995
Notes A $000 A $000
-----------------------------------
<S> <C> <C> <C>
CURRENT
Trade debtors 138,765 132,422
Provision for doubtful debts (9,515) (7,718)
-----------------------------------
129,250 124,704
-----------------------------------
Loans and deposits 689 940
Provision for doubtful receivables (23) (376)
-----------------------------------
666 564
-----------------------------------
Loans to directors 30 14 6
Other debtors and prepayments 23,652 10,568
-----------------------------------
153,582 135,842
-----------------------------------
Australian dollar equivalents of current foreign
currency receivables not effectively hedged.
United States dollars 210 78
United Kingdom pounds 103 79
New Zealand dollars 714 204
-----------------------------------
1,027 361
-----------------------------------
NON-CURRENT
Amounts receivable from wholly owned
controlled entities - -
Loans and deposits 2,045 2,043
Loans to directors 30 179 1,267
-----------------------------------
2,224 3,310
-----------------------------------
</TABLE>
NOTE 10 INVENTORIES
<TABLE>
<CAPTION>
June 30,
----------------------------------
1996 1995
A $000 A $000
----------------------------------
<S> <C> <C>
CURRENT
Raw materials and stores, at cost 28,467 19,875
Provision for diminution in value (747) (544)
-----------------------------------
27,720 19,331
Work in progress, at cost 45 60
Finished goods, at cost 8,330 6,917
-----------------------------------
36,095 26,308
-----------------------------------
</TABLE>
<PAGE> 18
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 11 INVESTMENTS
<TABLE>
<CAPTION>
June 30,
------------------------------
1996 1995
A $000 A $000
-------------------------------
<S> <C> <C>
Shares in corporations not listed on a prescribed
stock exchange, at June 1996 directors' valuation
(1995 at cost) 44,184 25,317
Shares in controlled entities not listed on a
prescribed stock exchange, at cost - -
Interests in unit trusts, at June 1996 directors'
valuation (1995 at cost) 647 647
-----------------------------
44,831 25,964
-----------------------------
</TABLE>
NOTE 12 PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
June 30,
-----------------------------
1996 1995
A $1000 A $000
-----------------------------
<S> <C> <C>
Freehold land and buildings
At cost 59,246 61,199
Provision for depreciation (2,784) (2,071)
-----------------------------
56,462 59,128
-----------------------------
Leasehold buildings
At cost 49,767 1,210
Provision for amortisation (495) (180)
-----------------------------
49,272 1,030
-----------------------------
Plant and equipment
At cost 567,687 171,617
Provision for depreciation (97,782) (57,449)
-----------------------------
469,905 114,168
-----------------------------
Capital works in progress, at cost 32,303 333,106
-----------------------------
607,942 507,432
-----------------------------
</TABLE>
Land and buildings were independently valued as at March 1994 by M S Smallhorn
FVLE of JLW Advisory. In aggregate the valuations exceeded the book value, but
not materially.
<PAGE> 19
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 13 INTANGIBLES
<TABLE>
<CAPTION>
June 30,
-----------------------------------
1996 1995
Notes A $000 A $000
------------------------------------
<S> <C> <C> <C>
Mastheads and tradenames, at cost 1(e) 1,258,167 1,256,949
-----------------------------------
</TABLE>
NOTE 14 OTHER ASSETS
<TABLE>
<CAPTION>
June 30,
------------------------------------
1996 1995
A $000 A $000
------------------------------------
<S> <C> <C>
NON-CURRENT
Future income tax benefits 114,935 128,124
-----------------------------------
The future income tax benefit comprises the
estimated future benefit at current
income tax rates of the following :
Tax losses 89,171 98,396
Timing differences 25,764 29,728
-----------------------------------
114,935 128,124
-----------------------------------
Future income tax benefits arising from capital
losses of a controlled entity not brought to
account at balance date as realisation of the
benefits is not regarded as virtually certain : 25,000 25,000
-----------------------------------
The benefits will only be realised if the conditions
for deductibility set out in Note 1 (i) occur.
</TABLE>
<PAGE> 20
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 15 CREDITORS AND BORROWINGS
<TABLE>
<CAPTION>
June 30,
-----------------------------------
1996 1995
Notes A $000 A $000
-----------------------------------
<S> <C> <C> <C>
CURRENT
Unsecured Liabilities:
Trade and other creditors 108,956 78,317
Bank borrowings 138,000 13,000
Accrued interest on bank borrowings 24 8,499 8,693
-----------------------------------
255,455 100,010
Secured Liabilities:
Lease liability 20(a) - -
-----------------------------------
255,455 100,010
-----------------------------------
Australian dollar equivalents of current foreign
currency payables not effectively hedged.
United States dollars 3,057 6,435
United Kingdom pounds 221 421
Japanese yen 405 610
-----------------------------------
3,683 7,466
-----------------------------------
NON-CURRENT
Unsecured Liabilities:
Bank borrowings 24 600,000 750,000
Other borrowings 79,728 -
Lease liability 49,243 -
-----------------------------------
728,971 750,000
-----------------------------------
</TABLE>
NOTE 16 PROVISIONS
<TABLE>
<CAPTION>
June 30,
------------------------------------
1996 1995
Notes A $000 A $000
------------------------------------
<S> <C> <C> <C>
CURRENT
Employee entitlements 22 27,117 53,640
Dividends 7 47,998 47,820
Income tax 1,331 3,397
Other 5,434 5,309
-----------------------------------
81,880 110,166
-----------------------------------
NON-CURRENT
Employee entitlements 22 32,680 34,359
Deferred income tax liability 28,595 11,398
Other 9,489 4,620
-----------------------------------
70,764 50,377
-----------------------------------
</TABLE>
<PAGE> 21
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 17 ISSUED CAPITAL
<TABLE>
<CAPTION>
June 30,
------------------------------------
1996 1995
A $000 A $000
------------------------------------
<S> <C> <C>
AUTHORISED CAPITAL
2,000,000,000 ordinary shares of 50 cents each 1,000,000 1,000,000
-----------------------------------
ISSUED CAPITAL
SHARES
758,230,945 (1995 : 744,775,045) ordinary shares
of 50 cents each, fully paid 379,115 372,388
-----------------------------------
DEBENTURES
37,750,281 (1995 : 50,250,281) debentures of $1
each, fully paid 37,750 50,250
-----------------------------------
TOTAL ISSUED CAPITAL 416,865 422,638
-----------------------------------
</TABLE>
MOVEMENTS IN ISSUED CAPITAL
SHARES
During the year the holders of 12,500,000 (1995: 32,316,409) debentures and the
holders of 955,900 (1995: 4,526,850) options exercised their right to convert
those holdings into ordinary shares. The proceeds from the shares issued on the
conversion of options amounted to $1,280,370 and was employed for working
capital purposes.
Number
BALANCE ON ISSUE AT JUNE 30, 1994 707,931,786
Converted from debentures 32,316,409
Converted from options 4,526,850
-------------
BALANCE ON ISSUE AT JUNE 30, 1995 744,775,045
Converted from debentures 12,500,000
Converted from options 955,900
-------------
BALANCE ON ISSUE AT JUNE 30, 1996 758,230,945
-------------
DEBENTURES
During the year the holders of 12,500,000 (1995: 32,316,409) debentures
exercised their right to convert those debentures into ordinary shares.
Number
BALANCE ON ISSUE AT JUNE 30, 1994 82,566,690
Converted to shares (32,316,409)
--------------
BALANCE ON ISSUE AT JUNE 30, 1995 50,250,281
Issued during the year -
Converted to shares (12,500,000)
--------------
BALANCE ON ISSUE AT JUNE 30, 1996 37,750,281
--------------
<PAGE> 22
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 17 ISSUED CAPITAL continued
OPTIONS TO ACQUIRE SHARES
During the year the chief entity granted 8,997,500 options to acquire shares on
a one for one basis to employees and executives. The exercise price of the
options is equivalent to the chief entity's share price, as quoted on the
Australian Stock Exchange, at the date the options were issued. At balance date
the chief entity's share price was $2.62. The number, exercise date and
exercise price of the options issued during the year, together with options
issued in previous years, are shown below.
On and after two years from the date of issue 40% of the options will become
conditionally exercisable. On and after the passing of each subsequent year a
further 20% of the options will become conditionally exercisable. Options not
exercised within five years of issue will lapse.
<TABLE>
<CAPTION>
Number
<S> <C> <C>
BALANCE ON ISSUE AT JUNE 30, 1995 13,668,750
Granted during the year 8,997,500
Forfeited during the year (135,000)
Exercised and converted to shares (955,900)
--------------
BALANCE ON ISSUE AT JUNE 30, 1996 21,575,350
--------------
BALANCE COMPRISED OF:
Date of grant Exercise price Number
March 15, 1993 $1.84 11,127,850
May 15, 1993 $2.07 100,000
March 1, 1994 $2.99 350,000
April 5, 1994 $2.76 50,000
June 24, 1994 $2.52 500,000
September 12, 1994 $2.69 75,000
November 23, 1994 $2.60 100,000
April 5, 1995 $2.78 275,000
July 14, 1995 $2.62 200,000
August 22, 1995 $2.64 100,000
November 24, 1995 $2.69 110,000
December 5, 1995 $2.82 3,500,000
January 24, 1996 $2.88 500,000
March 26, 1996 $2.82 50,000
June 6, 1996 $2.67 300,000
June 28, 1996 $2.67 4,237,500
--------------
21,575,350
--------------
</TABLE>
The maximum number of options which may be issued under the Employee Option
Incentive Scheme at any one time is 4% of the number of ordinary shares of the
chief entity on issue at that date. The number of options outstanding, which
were issued under the Employee Option Incentive Scheme, is equivalent to 2.8%
of the ordinary shares on issue at June 30, 1996.
<PAGE> 23
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 18 RESERVES
<TABLE>
<CAPTION>
June 30,
--------------------------------
1996 1995
A $000 A $000
--------------------------------
<S> <C> <C>
Share premium 423,583 416,053
Foreign currency translation (225) 46
-------------------------------
423,358 416,099
-------------------------------
MOVEMENTS IN RESERVES
SHARE PREMIUM RESERVE
Balance at the beginning of the financial year 416,053 396,768
Premium of 50 cents on 35,816,409 ordinary shares - 17,908
Premium of 134 cents on 1,026,850 ordinary shares - 1,377
Premium of 50 cents on 12,500,000 ordinary shares 6,250 -
Premium of 134 cents on 955,900 ordinary shares 1,280 -
-------------------------------
Balance at the end of the financial year 423,583 416,053
-------------------------------
FOREIGN CURRENCY TRANSLATION RESERVE
Balance at the beginning of the financial year 46 (183)
Net currency adjustment arising from the conversion
of controlled entities accounts (271) 229
-------------------------------
Balance at the end of the financial year (225) 46
-------------------------------
</TABLE>
<PAGE> 24
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 19 OUTSIDE EQUITY INTEREST
<TABLE>
<CAPTION>
June 30,
------------------------------
1996 1995
A $000 A $000
------------------------------
<S> <C> <C>
Outside equity interest comprises:
Issued capital and unitholders funds 1 601
Reserves 3 214
Retained earnings 69 56
------------------------------
73 871
------------------------------
Outside equity interests in the issued capital and
unitholders funds of controlled entities:
Homes Pictorial Unit Trust - 600
AAV New Zealand Limited 1 1
------------------------------
Interest in issued capital and unitholders funds 1 601
------------------------------
Outside equity interests in retained earnings of
controlled entities at the beginning of the year: 56 44
Interest in economic entity profits for the year 47 246
Unit trust distributions - (234)
Retained earnings of minority interests acquired (34) -
------------------------------
Interest in retained earnings 69 56
------------------------------
</TABLE>
NOTE 20 LEASING AND CAPITAL EXPENDITURE COMMITMENTS
<TABLE>
<CAPTION>
June 30,
------------------------------
1996 1995
Notes A $000 A $000
------------------------------
<S> <C> <C> <C>
a) FINANCE LEASE LIABILITIES
Payable -
not later than one year 5,670 -
later than one year but not later than two years 5,917 -
later than two years but not later than five years 19,345 -
later than five years 137,273 -
------------------------------
Minimum lease payments 168,205 -
Less future finance charges 118,962 -
------------------------------
Total lease liability 49,243 -
------------------------------
Classified as:
Current 15 - -
Non-current 15 49,243 -
------------------------------
49,243 0
------------------------------
</TABLE>
<PAGE> 25
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 20 LEASING AND CAPITAL EXPENDITURE COMMITMENTS (continued)
<TABLE>
<CAPTION>
June 30,
-------------------------------
1996 1995
A $000 A $000
-------------------------------
<S> <C> <C>
b) OPERATING LEASE COMMITMENTS
Payable -
not later than one year 7,449 8,166
later than one year but not later than two years 5,173 5,116
later than two years but not later than five years 23,236 15,578
later than five years 52,695 45,615
-------------------------------
Total operating lease commitments 88,553 74,475
-------------------------------
c) CAPITAL EXPENDITURE COMMITMENTS
Payable -
not later than one year 21,237 84,750
later than one year but not later than two years - 11,633
-------------------------------
Total capital expenditure commitments 21,237 96,383
-------------------------------
</TABLE>
<PAGE> 26
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 21 SUPERANNUATION COMMITMENTS
The economic entity participates in employer sponsored superannuation plans
which provide benefits for employees and their dependents on retirement,
disability or death. The plans operate on an accumulation basis with the
exception of the John Fairfax Retirement Fund which provides benefits on both
an accumulation and defined benefit basis. The defined benefits are based on
years of service and final average salary and are being funded on the basis of
biannual actuarial assessments such that the funds will be adequate to provide
the benefits payable to members on their retirement. Employees contribute
various percentages of their gross income and the economic entity also
contributes at generally twice the employees contributions.
At balance date the assets of each of the plans are sufficient to satisfy all
benefits that would have vested under the plans in the event of termination of
the plans and voluntary or compulsory termination of employment of each
employee. The economic entity maintains a provision for any deficiency that may
arise in the plans.
An actuarial assessment of the John Fairfax Retirement Fund as at July 1, 1994
was carried out by Mr D McNeil BEc BSc FIAA, Consultant & Actuary, AMP
Consulting & Superannuation Services, on December 23, 1994. The financial
position of the fund as at June 30, 1996 was:
<TABLE>
<CAPTION>
1996 1995
A $000 A $000
<S> <C> <C>
The estimated accrued benefits of the plan were 119,900 179,997
Net market value of the plans' assets were 118,800 181,637
------------------------------------
Surplus/(Deficiency) (1,100) 1,640
------------------------------------
Vested benefits (estimate) 117,700 173,350
------------------------------------
Economic entity contributions were 12,851 11,307
------------------------------------
</TABLE>
NOTE 22 EMPLOYEE ENTITLEMENTS
<TABLE>
<CAPTION>
June 30,
-----------------------------
1996 1995
Notes A $000 A $000
-----------------------------
<S> <C> <C> <C>
The aggregate employee entitlement liability
is comprised of:
Accrued wages, salaries and oncosts 11,440 11,035
Provisions (current) 16 27,117 53,640
Provisions (non-current) 16 32,680 34,359
-----------------------------
71,237 99,034
-----------------------------
</TABLE>
<PAGE> 27
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 23 CONTINGENT LIABILITIES
RELATED BODIES CORPORATE
Under the terms of an ASC Class Order the chief entity and certain controlled
entities, identified in Note 6, have guaranteed any deficiency of funds if any
party to the class order is wound up. No such deficiency exists.>
OTHER PERSONS
From time to time entities in the economic entity are sued for defamation and
similar matters in the ordinary course of business. The amount of contingency
for such actions cannot be determined with any accuracy.> However, on the basis
of professional advice, the accounts incorporate adequate provision to cover
material contingencies.
NOTE 24 FINANCING
The economic entity has two facilities agreements with a syndicate of banks
comprised of the National Australia Bank Limited, Toronto Dominion Australia
Limited and Societe Generale Australia Limited. The facilities are comprised of
$750 million amortising term facility and a $50 million working capital
facility. The facilities are unsecured and terminate on October 29, 1998.
The maximum amount to which the amortising term facility can be drawn :
To November 30, 1996 $750 million
To May 30, 1997 $700 million
To November 30, 1997 $650 million
To May 30, 1998 $600 million
To October 29, 1998 $550 million
The interest rate on these facilities is the aggregate of the bank bill rate
prevailing at the respective rollover date plus a margin.
NOTE 25 FINANCIAL INSTRUMENTS
In the ordinary course of business the economic entity is exposed to financial
risk in respect of interest rates and foreign exchange. The economic entity has
entered equipment contracts denominated in Swiss francs, Deutschmarks and Pounds
sterling and newsprint supply contracts denominated in US dollars. The foreign
exchange risks arising from these contracts is managed through the use of
currency swaps, options and forward exchange contracts taken out against these
specific risks. Net receipts or payments, which may arise in the future, will be
recognised as an adjustment to the cost of the equipment or newsprint acquired.
The bank facilities agreements, refer Note 24, expose the economic entity to
financial risk from adverse movements in bank bill rates. Interest rate risk is
managed through the use of interest rate swaps, options and forward rate
agreements. At balance date approximately 70% of the interest expense on
forecast fiscal 1997 debt and 50% of the interest expense on forecast fiscal
1998 debt has been hedged. These financial instruments are not recognised in
the accounts. Net receipts or payments, which may arise in the future, will be
recognised as an adjustment to interest expense.
The economic entity employs treasury policies approved by the Board. These
policies minimise counterparty credit risk and do not permit the use of
financial instruments for speculative trading.
<PAGE> 28
- -------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS AS AT JUNE 30, 1996
- -------------------------------------------------------------------------------
NOTE 26 STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended June 30,
-----------------------------------------------
1996 1995 1994
A $000 A $000 A $000
-----------------------------------------------
<S> <C> <C> <C>
(a) Reconciliation of cash
For the purposes of the statement of cash flows,
cash includes cash on hand and in banks, which
includes money market investments readily convertible
to cash. The economic entity has a working capital
facility available, the outstanding balance of which
has been excluded from the definition of cash (see Note 24).
Cash balance comprises:
Cash on hand 5,341 310 416
-----------------------------------------------
(b) Reconciliation of the operating profit after tax to
the net cash flows from operations.
Operating profit after tax 87,476 147,324 185,910
Costs attributable to financing activities - - 1,650
Depreciation 41,218 26,102 24,345
Amortisation 320 51 140
Provision for doubtful debts 1,802 (1,260) 1,227
Provision for diminution in value of inventories 203 (9) (29)
Provision for employee benefits (33,918) 4,225 (12,140)
Other provisions (677) (497) (866)
Proceeds from the sale of non-current assets (9,245) (2,671) (6,207)
Book value of non-current assets sold 8,614 1,840 1,787
Changes in assets and liabilities:
Trade debtors (6,343) (6,421) (12,197)
Other debtors and prepayments (13,044) 147 (526)
Future income tax benefits 39,823 58,056 (21,652)
Inventories (9,990) 374 1,599
Trade creditors 14,758 4,834 7,534
Sundry creditors (4,581) 5,316 2,905
-----------------------------------------------
Net cash flows from operating activities 116,416 237,411 173,480
-----------------------------------------------
(c) Non cash financing and investing activities. The economic entity did
not transact any material non cash financing or investing activities during
the year.
</TABLE>
<PAGE> 29
NOTE 26 STATEMENT OF CASH FLOWS (continued)
<TABLE>
<CAPTION>
1995
A $000
----------
<S> <C>
(d) Acquisition of controlled entity. There were
no controlled entities acquired during the year.
Last year 100% of the issued capital of Australian
Geographic Pty Limited was acquired.
Cash Consideration 37,834
----------
Cash 968
Property, plant and equipment 1,912
Mastheads and tradenames 35,089
Trade debtors 1,205
Sundry debtors 206
Inventories 6,264
----------
45,644
Trade creditors (5,734)
Taxation (1,792)
Provision for employee entitlements (284)
----------
Fair value of net assets 37,834
----------
Net cash effect -
Cash consideration 37,834
Cash included in net assets acquired (968)
Cash paid for the purchase of the controlled
entity as reflected in the accounts 36,866
----------
</TABLE>
<TABLE>
<CAPTION>
1995
A $100
----------
<S> <C>
(e) Disposal of controlled entity. There were no
controlled entities disposed of during the year.
Last year 100% of the issued capital of Rozelle
Terminal Handling Company Pty Limited was sold.
Cash consideration 650
----------
Property, plant and equipment 664
Trade debtors 18
----------
682
Trade creditors (6)
Taxation (65)
----------
Fair value of net assets 611
----------
</TABLE>
<PAGE> 30
NOTE 27 REMUNERATION OF DIRECTORS
The directors of John Fairfac Holdings Limited during the financial year were:
<TABLE>
<S> <C>
Sir Laurence Street D. J. Halley (resigned December 18, 1995)
C. M. Black M. J. Hoy (resigned February 29, 1996)
M. Burrows (appointed January 22, 1996) J. M. King (appointed July 17, 1995)
Sir Roderick Carnegie R. C. Mansfield (appointed November 27, 1995, resigned June 25, 1996)
W. Colson S. Mulholland
Sir Zelman Cowan A. Turnbull
D. M. Gonski D. Wills
</TABLE>
<TABLE>
<CAPTION>
ECONOMIC ENTITY CHIEF ENTITY
1996 1995 1994 1996 1995 1994
A $000 A $000 A $000 A $000 A $000 A $000
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(a) DIRECTORS' REMUNERATION
Income received or due and receivable by
the directors of the economic entity from
corporations of which they are directors
or related bodies corporate or entities
controlled by the chief entity. 14,142 8,730 8,147
---------------------------
Income received or due and receivable by the
directors of John Fairfax Holdings Limited from
that entity and related bodies corporate 8,447 3,194 3,771
--------------------------
</TABLE>
The number of directors of John Fairfax Holdings Limited whose remuneration
falls within the following bands:
<TABLE>
<CAPTION>
(in Australian dollars) 1996 1995 1994
No. of No. of No. of
directors directors directors
<S> <C> <C> <C>
$0 - $9,999 - - 1
$10,000 - $19,999 - - 1
$20,000 - $29,999 1 - -
$30,000 - $39,999 - 1 1
$40,000 - $49,999 - 5 4
$50,000 - $59,999 5 1 -
$60,000 - $69,999 2 1 -
$70,000 - $79,999 - - 1
$80,000 - $89,999 - 1 -
$90,000 - $99,999 1 - -
$100,000 - $109,999 - - 1
$120,000 - $129,999 1 - -
$490,000 - $499,999 - 1 -
$980,000 - $989,999 1 1 -
$1,130,000 - $1,139,999 1 - -
$1,260,000 - $1,269,999 - 1 -
$1,520,000 - $1,529,999 - - 1
$1,850,000 - $1,859,999 - - 1
$2,740,000 - $2,749,999 1 - -
$2,930,000 - $2,939,999 1 - -
</TABLE>
The directors have availed themselves of ASC class order 95/741 in the
disclosure of directors' remuneration and benefits.
<PAGE> 31
NOTE 28 REMUNERATION OF EXECUTIVES
<TABLE>
<CAPTION>
Year ended June 30,
---------------------------------------
1996 1995 1994
A $000 A $000 A $000
---------------------------------------
<S> <C> <C> <C>
Amounts received or due and receivable by executive
officers of the economic entity and the chief entity
whose remuneration is $100,000 or more, from entities
in the economic entity and related entities:
Remuneration 10,667 11,160 10,682
Termination Pay 6,753 1,332 2,901
---------------------------------------
17,420 12,492 13,583
---------------------------------------
</TABLE>
The number of executives of the economic entity and the chief
entity whose remuneration falls within the following bands:
<TABLE>
<CAPTION>
June 30,
---------------------------------------
1996 1995 1994
---------------------------------------
(in Australian dollars) No. of No. of No. of
executives executives executives
<S> <C> <C> <C>
$110,000 - $119,999 1 1 4
$120,000 - $129,999 - 4 2
$130,000 - $139,999 1 - 5
$140,000 - $149,999 - 3 1
$150,000 - $159,999 3 1 2
$160,000 - $169,999 1 2 2
$170,000 - $179,999 3 2 2
$180,000 - $189,999 3 1 2
$190,000 - $199,999 5 4 2
$200,000 - $209,999 2 3 1
$210,000 - $219,999 3 4 1
$220,000 - $229,999 2 - 2
$230,000 - $239,999 1 - -
$240,000 - $249,999 1 3 -
$250,000 - $259,999 4 - 3
$270,000 - $279,999 - 2 1
$290,000 - $299,999 1 - -
$320,000 - $329,999 1 3 2
$330,000 - $339,999 - 1 1
$360,000 - $369,999 - - 2
$380,000 - $389,999 1 - -
$410,000 - $419,999 1 - 1
$420,000 - $429,999 1 - -
$430,000 - $439,999 - 1 -
$450,000 - $459,999 - 1 1
$490,000 - $499,999 - 2 -
$580,000 - $589,999 1 - -
$640,000 - $649,999 - - 1
$870,000 - $879,999 - - 1
$910,000 - $919,999 - - 1
$980,000 - $989,999 1 1 -
$1,130,000 - $1,139,999 1 - -
$1,260,000 - $1,269,999 1 1 -
$1,490,000 - $1,499,999 - 1 -
$1,520,000 - $1,529,999 - - 1
$1,850,000 - $1,859,999 - - 1
$2,740,000 - $2,749,999 1 - -
$2,930,000 - $2,929,999 1 - -
</TABLE>
<PAGE> 32
NOTE 29 AUDITORS' REMUNERATION
<TABLE>
<CAPTION>
Year ended June 30,
-----------------------------------------
1996 1995 1994
A $000 A $000 A $000
------------------------------------------
<S> <C> <C> <C>
Amounts receivable or due and receivable by the auditors,
from entities in the economic entity or related entities for:
Auditing accounts 730 705 569
Other services 213 1,253 975
-----------------------------------------
943 1,958 1,544
-----------------------------------------
</TABLE>
Auditors' Other services include share registry and advice in relation to
litigation, taxation, refinancing and other services.
NOTE 30 RELATED PARTY TRANSACTIONS
The following related party transactions occurred during the financial year
TRANSACTIONS WITH THE DIRECTORS OF THE ECONOMIC ENTITY.
During the year, M. J. Hoy, an executive director of the chief entity, repsid an
outstanding loan of $1,000,000. The debt was interest-free and was secured by a
mortgage over a residential property. The loan was approved at the 1992 Annual
General Meeting.
As at June 30, 1996, two (1995: four) executives who are directors of
controlled entities, but who are not directors of the chief entity, had no
outstanding loans totalling $89,623 (1995: $273,044). Interest rates of 5% or
6% apply to the loans which are secured by mortgages over residential
properties. The interest benefit is included in the executives' remuneration
disclosed in Note 28. During the year, interest payments totalling $8,007 were
received, principal repayments totalling $92,794 were received and no new loans
were issued.
Repayments were received from E. Gregory, F. McMahon and S. Simson.
Two executives resigned as directors during the year.
TRANSACTIONS WITH ASSOCIATED ENTITIES.
Controlled entities have received commissions of $183,431 (1995: $211,697), in
respect of sales of The Weekly Telegraph from The Telegraph plc and have paid
$13,900 (1995: $17,336) to The Telegraph plc for the supply of news services.
The transactions are on commercial terms.
TRANSACTIONS WITH CONTROLLED ENTITIES.
John Fairfax Holdings Limited has undertaken transactions with its controlled
entities including the issue and receipt of loans (both at commercial interest
rates and interest free) and management fees. On consolidation, all such
transactions have been eliminated in full.
<PAGE> 33
NOTE 30 RELATED PARTY TRANSACTIONS CONTINUED
DIRECTORS' SHAREHOLDINGS
The interest of each Director in the issued capital of the chief entity as at
June 30, 1996 are:
<TABLE>
<CAPTION>
Fully Paid 50 cent Fully paid $1
Ordinary Shares Convertible Notes
<S> <C> <C>
C. M. Black - 500,000
Sir Roderick Carnegie 5,000 -
D. W. Colson - 750,000
Sir Zelman Cowen 10,000 -
D. M. Gonski 10,000 -
J. M. King 3,400 -
Sir Laurence Street 50,000 -
A. Turnbull 15,000 -
D. R. Wills 25,000 -
</TABLE>
In addition C. M. Black and D. W. Colson may be deemed to be interested in the
share and debenture holdings of The Telegraph plc by virtue of their
directorships in that entity. During the year J. M. King acquired 3,400 shares
and D. R. Wills acquired 25,000 share in the ordinary course of trading on the
stock exchange. There have been no other movements in directors' shareholdings
or option holdings since the end of the last financial year.
NOTE 31 RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (GAAP)
GENERAL
The following represents additional information to the 1994, 1995 and 1996
Audited Consolidated Financial Statements of the Company that were prepared in
accordance with Australian G.A.A.P.. Set out below are the material adjustments
(net of income taxes and minority interest adjustments where applicable) to
operating profit for the years ended June 30, 1994, 1995 and 1996, and
shareholders' equity at June 30, 1994, 1995 and 1996 in order to conform to
accounting principles generally accepted in the United States.
<TABLE>
<CAPTION>
OPERATING PROFIT Year ended 30 June
-----------------------------------------------
1994 1995 1996
$'000 $'000 $'000
-----------------------------------------------
<S> <C> <C> <C>
Operating profit per Australian G.A.A.P. after income tax
and abnormal items 185,910 147,324 87,476
less: Minority Interests (238) (246) (47)
----------- ----------- ----------
Operating Profit per Australian G.A.A.P. 185,672 147,078 87,429
Adjustments to reflect U.S. G.A.A.P. (refer table below) (109,412) (33,077) (41,620)
----------- ----------- ----------
Operating Profit per U.S. G.A.A.P. 76,260 114,001 45,809
=========== =========== ==========
Earnings per share - Primary and fully diluted per
U.S. G.A.A.P. 10.31 cents 14.74 cents 6.32 cents
=========== =========== ==========
Weighted average number of shares for Primary and
fully diluted EPS calculation (000) 802,656 808,710 811,347
=========== =========== ==========
ADJUSTMENTS TO OPERATING PROFIT TO REFLECT U.S. G.A.A.P.
(Less) Dividends paid on debentures reclassified as
interest paid (Note a) (6,489) (5,180) (3,919)
(Less) Amortisation of mastheads (Note d) (27,755) (27,897) (28,592)
(Less) Future Income Tax benefit attributable to tax
losses (Note e) (75,168) - -
(Less) Devaluation of investments (Note f) - - (9,109)
----------- ----------- ----------
(109,412) (33,077) (41,620)
=========== =========== ==========
SHAREHOLDERS EQUITY
Total Shareholders equity per Australian G.A.A.P. 1,007,458 1,073,686 1,086,047
(Less) debentures (Note a) (82,567) (50,250) (37,750)
Add dividends proposed (Note b) 39,525 47,820 47,900
(Less) dividends paid (Note b) (34,700) (39,525) (47,820)
(Less) Minority Interest (Note c) (847) (871) (73)
(Less) Accumulated amortisation of mastheads (Note d) (68,175) (96,072) (124,664)
(Less) Future Income Tax Benefit (Note e) (114,107) (114,107) (114,107)
(Less) Devaluation of investments (Note f) - - (9,109)
----------- ----------- ----------
Shareholders equity per U.S. G.A.A.P. 746,587 820,681 800,424
=========== =========== ==========
</TABLE>
<PAGE> 34
JOHN FAIRFAX HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
NOTES
(a) Classification of Debentures
John Fairfax Holdings Limited issued a number of convertible debentures
during 1992. The terms of these debentures are identical to issued stock, except
that the debentures are not listed and do not have voting rights attached. Under
Australian G.A.A.P. the debentures are treated as a form of equity. For U.S.
G.A.A.P. purposes the debentures are defined as convertible debt. The adjustment
reflected in the reconciliation of Shareholders' equity is made to exclude the
debentures from Shareholders' equity, consistent with U.S. G.A.A.P. treatment.
The adjustment reflected in the Profit and Loss Statement reflects the payment
of amounts, which under Australian G.A.A.P. were treated as dividends on the
debentures, as if those payments were interest paid.
(b) Proposed Dividends
In the June 30, 1994, 1995 and 1996 financial statements of John Fairfax
Holdings Limited, prepared under Australian G.A.A.P., provisions for dividends
were reflected. Although the dividends were to be paid out of the profits
earned in those fiscal years, the dividends were declared after the balance
date but before finalization of the financial statements. Under U.S. G.A.A.P.
such provisions for dividends should be provided in the year in which the
declaration was made. The adjustment reflects the postponement of the
provisions until the fiscal year in which the dividends were actually declared.
(c) Minority Interests
Minority interests are frequently included as part of Total Shareholders'
equity under Australian G.A.A.P. The financial statement adjustments have
excluded these from Shareholders' equity consistent with the U.S. G.A.A.P.
treatment.
(d) Mastheads
Mastheads acquired since December 31, 1991 are recorded in the accounts at
cost. No amortisation has been charged on these assets under Australian
G.A.A.P. as no event has occurred to cause a reduction in the values or limit
their useful lives. For U.S. G.A.A.P. purposes Mastheads are amortised over 40
years on a straight line basis.
(e) Income Taxes
Australian G.A.A.P. requires that future income tax benefits arising from
tax losses can only be recognized if they are regarded as virtually certain of
realization. For U.S. G.A.A.P. the requirement is that the benefit be more
likely than not to be realized. As such, certain tax losses which did not meet
the Australian G.A.A.P. guideline of being realized within the following three
years had not been accounted for under Australian G.A.A.P. as a benefit on
acquisition. However, under U.S. G.A.A.P. the benefit would have been
recognized on acquisition as the benefit was more likely than not to be
realized. Had the future income tax benefit been recognized on acquisition, the
value attributed to mastheads would have been less.
The adjustment in the Profit and Loss Statement reflects the reversal of
the income tax credits recorded under Australian G.A.A.P. for utilization of
tax losses previously not booked.
<PAGE> 35
JOHN FAIRFAX HOLDINGS LIMITED
NOTES TO THE ACCOUNTS (cont'd)
(f) Devaluation of Investments
John Fairfax Holdings Limited and its subsidiaries hold a number of
non-listed, non-current investments. Under Australian G.A.A.P. these investments
can be revalued as a class. In the June 30, 1996 financial statements, prepared
under Australian G.A.A.P., certain individual investments were revalued to
amounts not in excess of their recoverable amount. The decrements of individual
carrying values were offset by revaluation increases to other individual
investments.
Under U.S. G.A.A.P. revaluation increases are not permitted. If the value
of a non-current investment has been permanently diminished a valuation
allowance should be created which reduces the investment to its present value.
The adjustment in the profit and loss statement reflects the recording of
the write down under U.S. G.A.A.P.
<PAGE> 36
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this 10-K/A to be signed on its behalf by the
undersigned, thereunto duly authorized.
HOLLINGER INTERNATIONAL INC.
Registrant
Date: February 27, 1997 By: /s/ J. A. BOULTBEE
------------------
J. A. Boultbee
Vice President and
Chief Financial Officer
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration statements (No.
333-04697 and No. 333-1711) on Form S-3 and (No. 33-88810) on Form S-8 of
Hollinger International Inc. and the registration statement (No. 333-17113) of
Form S-3 of Hollinger International Publishing Inc. of our report dated
September 6, 1996 with respect to the consolidated financial statements of John
Fairfax Holdings Limited included in the Form 10K/A dated December 31, 1995 of
Hollinger International Inc. filed with the Securities and Exchange Commission.
ERNST & YOUNG
February 25, 1997
Sydney Australia
