==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of August, 1999
HOLLINGER INC.
(Translation of registrant's name into English)
10 Toronto Street
Toronto, Ontario M5C 2B7
CANADA
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F Form 40-F x
----- -----
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934.)
Yes No x
----- -----
<PAGE>
EXHIBIT LIST
Sequential
Exhibit Description Page Number
99.1 Interim Report of Hollinger Inc. 4
for the six months ended
June 30, 1999
<PAGE>
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 INC.
Date: August 30, 1999 By: /s/ Charles G. Cowan, Q.C.
----------------------------
Name: Charles G. Cowan, Q.C.
Title: Vice President and
Secretary
<PAGE>
2 Interim Report
6 Months Ended June 30, 1999
HOLLINGER INC.
<PAGE>
CONSOLIDATED FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED JUNE 30 1999 1998
(millions of dollars)
Total revenue.............................. 1,635.9 1,634.2
Net earnings............................... 156.1 82.8
Cash flow provided by operations (note).... 162.9 211.8
(dollars)
Net earnings per retractable common share.. 4.75 2.48
Cash flow provided by operations per
retractable common share (note).......... 4.95 6.35
NOTE
Cash flow provided by operations is before any increase or decrease in
non-cash operating working capital, the cash used for discontinued operations,
other costs and foreign currency translation adjustment.
Throughout this report, Hollinger Inc. is referred to as "Hollinger" or the
"Company", Hollinger International Inc. is referred to as "Hollinger
International Inc." or "Hollinger International" and Hollinger Canadian
Publishing Holdings Inc. is referred to as "HCPH". The word "company" refers
to one or other of Hollinger Inc.'s subsidiary companies, depending on the
context.
Reference to "dollars" and "$" are to Canadian dollars, "U.S. $" are to United
States dollars and "pounds sterling" and "L." are to lawful currency of the
United Kingdom.
"EBITDA" means earnings before interest, taxes, depreciation and amortization.
<PAGE>
T O T H E S H A R E H O L D E R S
SECOND QUARTER EARNINGS
Net earnings for the second quarter of 1999 were $46.7 million or $1.42 per
share compared with $8.8 million or $0.26 per share in 1998. Excluding the net
effect of unusual items, a net loss of $0.4 million or a loss of $0.01 per
share was incurred in the second quarter of 1999 compared with net earnings of
$9.7 million or $0.30 per share for 1998.
Reported earnings for the quarter compared to last year have been affected by
a few significant items.
The start-up in October of 1998 of the National Post has resulted in an
EBITDA loss from the National Post for the quarter of $17.5 million. This
loss is greater than initially expected because circulation has been
higher than expected without, yet, delivering the inevitable advertising
revenues. The sale of four newspapers as part of the purchase of the
Financial Post has also reduced EBITDA quarter-over-quarter by $7.4
million.
With the acquisition of the remainder of Southam Inc. completed in early
1999, all of the earnings of Southam Inc. are now attributable to the
Company compared with the second quarter of 1998, when a substantial
minority still existed. The costs of increasing our ownership has
resulted in higher depreciation and amortization in this quarter compared
to the second quarter of 1998. The minority interest in Hollinger
International has increased, offsetting some of the Southam impact on
minority interest. In addition, the additional debt related to the 1999
acquisition of Southam shares has resulted in increased interest cost.
Unusual items in the second quarter of 1999 consisted primarily of a gain
on sale of community newspapers by Hollinger International Inc. and an
accounting gain on the issue of the limited partnership units offset by
the write off of finance costs related to the early retirement of debt
and acquisition costs. Unusual items in the second quarter of 1998
consisted principally of the gains at Southam on the sale of American
Trucker and Medicine Hat News. Virtually all of these 1998 second quarter
unusual items net of taxes related to the minority shareholders in
Southam since the book values of Hollinger's share of the assets sold
<PAGE>
were adjusted to market value when the Southam shares were purchased. As
a result, the effect of unusual items on second quarter 1998 net income
was largely eliminated by the related minority interest charge.
RIGHTS OFFERING
In May, 1999, Hollinger announced a retractable common share rights offering
to its shareholders to raise up to approximately $115 million. Holders of
record of retractable common shares at the close of business on June 17, 1999
were entitled to one right for each share held. Five rights entitled the
holder to purchase one retractable common share at a subscription price of
$17.50, for an aggregate of up to 6,578,300 retractable common shares. A
circular in respect of the rights offering was mailed to holders of record on
June 17, 1999.
At the expiry of the rights on July 9, 1999, holders subscribed for a total of
4,282,043 retractable common shares, for gross proceeds of approximately
$75,000,000. The Ravelston Corporation Limited exercised the rights controlled
by it to subscribe for 4,160,260 retractable common shares for gross proceeds
of $72,804,550. After giving effect to the exercise of rights, there were
issued and outstanding approximately 37,173,427 retractable common shares, of
which approximately 67% are held by entities controlled by the Hon. Conrad M.
Black. The net proceeds of the rights offering was used to repay bank
indebtedness.
HOLLINGER CANADIAN NEWSPAPERS, LIMITED PARTNERSHIP
Hollinger Canadian Newspapers, Limited Partnership ("Hollinger L.P.") is a
leading Canadian publisher of daily and weekly newspapers, magazines and
specialty publications. The partnership's publications include 47 daily
community newspapers, 179 non-daily newspapers and shopping guides (comprised
of 25 paid and 154 unpaid publications) and 106 magazines and specialty
publications. These newspapers, magazines and specialty publications were
acquired on April 29, 1999 from HCPH and its affiliates (principally Southam
Inc., UniMedia Inc. and Sterling Newspapers Company) for notes and partnership
units together valued at approximately $1.8 billion.
<PAGE>
In mid-July, 1999, the Hollinger L.P. filed a final prospectus to qualify a
public offering of $40 million (4 million units at $10 per unit). The offering
was completed at the end of July, and all units of the Hollinger L.P.,
including the 20 million units issued pursuant to a prospectus which qualified
units purchased through its private placement completed on April 30, 1999, are
now listed on The Toronto Stock Exchange (stock symbol (TSE:HCN.UN). The
offering was underwritten by a syndicate led by CIBC World Markets Inc. and
Salman Partners Inc. The underwriters have an over allotment option for up to
an additional $6,000,000 (or 600,000 units) which is exercisable in whole or
in part on or before September 27, 1999. Currently the Hollinger L.P. has
issued 159,945,972 units of which 85% are owned by HCPH.
These recent offerings established a $240 million public float for the
Hollinger L.P. thereby accomplishing Hollinger's objective of creating a
liquid public investment vehicle to allow investors to participate directly in
cash flow generated from its Canadian community newspapers. Hollinger's 85%
interest in the Hollinger L.P. would be valued at approximately $1.36 billion
using the public offering price of $10 per unit. The net proceeds of the
offerings have been applied to reduce bank debt within the Hollinger group.
HOLLINGER INTERNATIONAL INC.
Hollinger International's operations are composed of the U.S. Newspapers Group
consisting of the Chicago Group (including the Chicago Sun-Times) and the
Community Group (American Publishing Company and The Jerusalem Post), the U.K.
Newspaper Group, consisting of the Telegraph Group Limited, and the Canadian
Newspaper Group (held through HCPH) consisting of the interest in Southam
Inc., Sterling Newspapers Company, UniMedia Inc., and the Hollinger L.P.
During the second quarter of 1999, Hollinger International continued to
repurchase shares of its Class A Common Stock with 4,896,900 shares
repurchased year-to-date.
<PAGE>
TELEGRAPH GROUP LIMITED
The company's EBITDA for the six months ended June 30, 1999 was L.27.5 million
compared to L.27.2 million during the corresponding period in 1998, an
increase of 1.1%.
Overall advertising revenue in the second quarter increased despite the
continuing slowdown in recruitment advertising year-on-year. Display
advertising was particularly strong during the second quarter, as was the
separate Travel and recently launched Property sections.
The ABC net circulation figure for The Daily Telegraph for the period January
1999 to June 1999 was 1,044,740, some 300,000 copies ahead of its nearest
competitor. The ABC net circulation figure for The Sunday Telegraph for the
period January to June 1999 was 816,653 and The Sunday Telegraph sold an
average of 822,414 copies during June 1999.
In April, The Daily Telegraph launched a new Saturday section, T2, aimed at
the under 16's. T2 is also available online.
Electronic Telegraph (ET) continues to enjoy the largest readership of any
online UK newspaper. Advertising revenues continue to grow and new revenue
streams were achieved during the second quarter by forming electronic commerce
partnerships for retailing in the book and travel sectors.
THE CHICAGO GROUP
The Chicago Group reported second quarter 1999 operating revenue increased 3%
over the second quarter of 1998, due to continued growth in advertising
revenue. Classified advertising continued to show the largest increases.
Second quarter 1999 EBITDA increased 8% primarily due to the increase in
revenue and lower newsprint costs.
<PAGE>
THE COMMUNITY GROUP
In February 1999, the Community Group sold the operations of approximately 45
newspapers with a total paid daily circulation of approximately 296,000. This
resulted in an overall decrease in Community Group operating revenue, EBITDA
and operating income. On a "same store" basis, the Community Group reported
second quarter 1999 operating revenue increased 2% from 1998 and second
quarter 1999 EBITDA increased 10% from 1998.
CANADIAN NEWSPAPER GROUP
1998 results included the operations of Hamilton, Kitchener, Guelph,
Cambridge, American Trucker and Medicine Hat which were all disposed of
subsequent to June 1998. 1999 includes the results of the Victoria
Times-Columnist and several Vancouver Island weekly newspapers acquired in
1998 and the National Post which commenced operations in 1998.
On a same newspaper basis, total operating revenue and EBITDA increased 3.4%
and 8.3% respectively in 1999 over 1998, and the gross profit percentage
increased from 22% to 23%. The increase in EBITDA results primarily from
increased revenue and lower newsprint costs.
YEAR 2000 COMPUTER CONCERNS
The Company is on schedule for its review of potential year 2000 computer
problems. All important applications have been identified, reviewed and found
to be compliant or have been replaced or corrected or remediation plans are in
process. The project was completed by the end of 1998 with a few exceptions.
For those exceptions remediation work will be completed in 1999. As stated in
the 1998 Management Discussion and Analysis there will be no special charges
and the program will have no material effect on the Company's financial
condition or reported results.
<PAGE>
RETRACTION PRICE OF RETRACTABLE COMMON SHARES
The retraction price of the outstanding retractable common shares of the
Company as of July 14, 1999 was $13.50 per share. As at June 30, 1999 there
were 32,891,384 retractable common shares outstanding, which increased to
37,173,427 following completion of the rights offering mentioned above.
DIVIDENDS
A regular quarterly dividend of 15c. per retractable common share has been
declared payable on September 10, 1999 to shareholders of record on August 26,
1999.
August 20, 1999 /s/ Conrad M. Black
Conrad M. Black
Chairman of the Board and
Chief Executive Officer
<PAGE>
MARKET VALUE INFORMATION
BALANCE SHEET
(in thousands of dollars except where noted)
<TABLE>
<CAPTION>
JUNE 30 December 31
1999 1998
----------- -----------
(not audited)
<S> <C> <C>
ASSETS
Investment in Hollinger International............ $ 903,110 $ 1,152,124
Other investments................................ 14,488 19,311
Other assets..................................... 33,767 83,517
----------- ------------
951,365 $ 1,254,952
----------- ------------
LIABILITIES
Exchangeable shares.............................. $ 338,904 $ 547,804
Other liabilities................................ 383,338 343,491
----------- ------------
722,242 891,295
----------- ------------
NET ASSETS REPRESENTING SHAREHOLDERS' EQUITY
Capital stock.................................... 240,072 240,434
Net unrealized appreciation of investments....... 215,725 419,667
Net unrealized decrease (increase) in liabilities 31,932 (16,175)
Deficit.......................................... (258,606) (280,269)
----------- ------------
229,123 363,657
----------- ------------
$ 951,365 $ 1,254,952
----------- ------------
RETRACTABLE COMMON SHARES OUTSTANDING............ 32,891,384 32,941,072
----------- ------------
NET ASSET VALUE PER RETRACTABLE COMMON SHARE..... $ 6.97 $ 11.04
----------- ------------
</TABLE>
STATEMENT OF INCOME AND EXPENSES
(not audited)
(in thousands of dollars)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
----------------
1999 1998
---- ----
INCOME
<S> <C> <C>
Dividends........................................ $ 25,043 $ 21,792
Interest and other............................... 4,003 984
Net management fees.............................. 3,820 8,761
---------- ----------
32,866 31,537
---------- ----------
EXPENSES
Administrative and other expenses................ 9,147 4,635
Interest expense................................. 26,749 33,985
---------- ----------
35,896 38,620
---------- ----------
Loss before the undernoted....................... (3,030) (7,083)
Unusual items.................................... 20,954 (1,763)
Income tax expense............................... (1,297) (1,579)
---------- ----------
Net income (loss) for the period................. $ 16,627 $ (10,425)
---------- ----------
EARNINGS (LOSS) PER RETRACTABLE COMMON SHARE..... $ 0.51 $ (0.32)
---------- ----------
</TABLE>
<PAGE>
SCHEDULE OF SEGMENTED EARNINGS
(not audited)
(in thousands of dollars)
<TABLE>
<CAPTION>
U.K. CANADIAN CORPORATE
CHICAGO COMMUNITY NEWSPAPER NEWSPAPER AND CONSOLIDATED
GROUP GROUP GROUP GROUP OTHER TOTAL
------- --------- --------- --------- --------- ------------
THREE MONTHS ENDED JUNE 30, 1999
--------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales revenue......... $ 149,921 $ 32,215 $ 212,922 $ 423,284 $ 643 $ 818,985
Cost of sales
and expenses........ 119,179 24,488 163,566 343,284 8,751 659,268
---------- --------- ---------- ---------- ---------- ----------
Income before
interest, taxes,
depreciation and
amortization........ 30,742 7,727 49,356 80,000 (8,108) 159,717
Depreciation and
amortization........ 8,307 2,517 15,103 28,684 1,978 56,589
---------- --------- ---------- ---------- ---------- ----------
Operating income
(loss).............. $ 22,435 $ 5,210 $ 34,253 $ 51,316 $ (10,086) $ 103,128
---------- --------- ---------- ---------- ---------- ----------
THREE MONTHS ENDED JUNE 30, 1998
--------------------------------
Sales revenue......... $ 142,962 $ 74,437 $ 212,942 $ 406,821 $ 6,076 $ 843,238
Cost of sales
and expenses........ 115,081 50,466 164,595 308,692 10,840 649,674
---------- -------- ---------- ---------- ---------- ----------
Income before
interest, taxes,
depreciation and
amortization........ 27,881 23,971 48,347 98,129 (4,764) 193,564
Depreciation and
amortization........ 7,636 2,453 15,090 20,201 1,600 46,980
---------- --------- ---------- ---------- ---------- ----------
Operating income
(loss).............. $ 20,245 $ 21,518 $ 33,257 $ 77,928 $ (6,364) $ 146,584
---------- --------- ---------- ---------- ---------- ----------
</TABLE>
NOTE 1. Corporate and Other revenue includes revenues of miscellaneous
newspaper operations.
<PAGE>
SCHEDULE OF SEGMENTED EARNINGS
(not audited)
(in thousands of dollars)
<TABLE>
<CAPTION>
U.K. CANADIAN CORPORATE
CHICAGO COMMUNITY NEWSPAPER NEWSPAPER AND CONSOLIDATED
GROUP GROUP GROUP GROUP OTHER TOTAL
------- --------- ---------- --------- --------- ------------
SIX MONTHS ENDED JUNE 30, 1999
------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales revenue........... $ 287,378 $ 82,301 $ 440,928 $ 810,442 $ 1,943 $1,622,992
Cost of sales
and expenses.......... 235,090 65,497 331,750 676,361 14,903 1,323,601
---------- ---------- ---------- ---------- ---------- ----------
Income before
interest, taxes,
depreciation and
amortization.......... 52,288 16,804 109,178 134,081 (12,960) 299,391
Depreciation and
amortization.......... 16,952 6,892 30,799 56,813 3,792 115,248
---------- ---------- ---------- ---------- --------- ----------
Operating
income (loss)......... $ 35,336 $ 9,912 $ 78,379 $ 77,268 $ (16,752) $ 184,143
---------- ---------- ---------- ---------- ---------- ----------
Total assets............ $ 691,150 $ 373,231 $1,277,039 $3,090,279 $ 336,328 $5,768,027
---------- ---------- ---------- ---------- ---------- ----------
Expenditures on capital
assets................ $ 43,138 $ 5,691 $ 23,470 $ 67,657 $ 1,834 $ 141,790
---------- ---------- ---------- ---------- ---------- ----------
SIX MONTHS ENDED JUNE 30, 1998
------------------------------
Sales revenue........... $ 271,057 $ 141,991 $ 424,835 $ 780,170 $ 8,250 $1,626,303
Cost of sales
and expenses.......... 228,701 103,168 319,329 610,291 17,252 1,278,741
---------- ---------- ---------- --------- --------- ----------
Income before
interest, taxes,
depreciation and
amortization.......... 42,356 38,823 105,506 169,879 (9,002) 347,562
Depreciation and
amortization.......... 15,182 10,337 29,439 41,392 2,863 99,213
---------- ---------- ---------- ---------- ---------- ----------
Operating
income (loss)......... $ 27,174 $ 28,486 $ 76,067 $ 128,487 $ (11,865) $ 248,349
---------- ---------- ---------- ---------- ---------- ----------
Total assets............ $ 642,637 $ 569,066 $1,362,384 $2,091,380 $ 355,822 $5,021,289
---------- ---------- ---------- ---------- ---------- ----------
Expenditures on capital
assets................ $ 45,024 $ 7,346 $ 38,309 $ 31,473 $ 7,031 $ 129,183
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
NOTE
1. Corporate and Other revenue includes revenues of miscellaneous newspaper
operations.
<PAGE>
CONSOLIDATED BALANCE SHEET
(in thousands of dollars)
JUNE 30 December 31
1999 1998
---------- -----------
(not audited)
ASSETS
CURRENT ASSETS
Cash................................................. $ 120,979 $ 128,061
Accounts receivable.................................. 596,202 584,503
Inventory............................................ 48,373 56,294
---------- ----------
765,554 768,858
INVESTMENTS.......................................... 89,568 75,242
CAPITAL ASSETS....................................... 3,986,123 4,129,445
GOODWILL AND OTHER ASSETS............................ 926,782 730,956
---------- ----------
$5,768,027 $5,704,501
---------- ----------
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness.................................... $ 400,505 $ 232,128
Accounts payable and accrued expenses................ 581,158 792,669
Income taxes payable................................. 117,256 2,465
Current portion of long-term debt.................... 594,700 183,150
Exchangeable shares (note 1)......................... 228,109 496,766
---------- ----------
1,921,728 1,707,178
LONG-TERM DEBT....................................... 1,864,275 2,229,599
EXCHANGEABLE SHARES.................................. 155,311 51,038
---------- ----------
3,941,314 3,987,815
---------- ----------
MINORITY INTEREST AND DEFERRED CREDITS............... 1,777,494 1,783,854
SHAREHOLDERS' EQUITY
Capital stock........................................ 240,072 240,434
Deficit.............................................. (160,939) (306,181)
---------- ----------
79,133 (65,747)
Equity adjustment from foreign currency translation.. (29,914) (1,421)
---------- ----------
49,219 (67,168)
---------- ----------
$5,768,027 $5,704,501
---------- ----------
NOTE
1. As a result of setting the exchange number for the Series II preference
shares, these shares are now exchangeable into Class A common stock of
Hollinger International Inc. which had a market value of $183.6 million at
June 30, 1999.
The balance above includes a deferred unrealized gain of $44.5 million which
would be recognized to the extent of any future preference share retractions.
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
(not audited)
(in thousands of dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------ ----------------
1999 1998 1999 1998
---- ----- ---- ----
REVENUE
<S> <C> <C> <C> <C>
Sales....................................... $ 818,985 $ 843,238 $ 1,622,992 $ 1,626,303
Investment and other income................. 5,222 3,179 12,936 7,921
----------- ---------- ------------ -----------
824,207 846,417 1,635,928 1,634,224
----------- ---------- ------------ -----------
EXPENSES
Cost of sales and expenses.................. 659,268 649,674 1,323,601 1,278,741
Depreciation and amortization............... 56,589 46,980 115,248 99,213
Interest expense............................ 62,566 56,370 124,885 112,279
----------- ---------- ------------ -----------
778,423 753,024 1,563,734 1,490,233
----------- ---------- ------------ -----------
NET EARNINGS (LOSS) IN EQUITY ACCOUNTED
COMPANIES................................. 1,128 (406) 905 (718)
NET FOREIGN CURRENCY GAINS.................. 5,111 502 3,872 1,886
----------- ---------- ------------ -----------
EARNINGS BEFORE THE UNDERNOTED.............. 52,023 93,489 76,971 145,159
Unusual items............................... 124,334 61,574 447,496 293,223
Income taxes................................ (71,495) (73,555) (207,264) (193,616)
Minority interest........................... (58,196) (72,724) (161,128) (161,983)
----------- ---------- ------------ -----------
NET EARNINGS................................ $ 46,666 $ 8,784 $ 156,075 $ 82,783
----------- ---------- ------------ -----------
(dollars) (dollars)
NET EARNINGS PER RETRACTABLE COMMON
SHARE (note 2)
Basic..................................... $1.42 $0.26 $4.75 $2.48
----- ----- ----- -----
Fully diluted............................. $1.20 $0.17 $4.07 $1.50
----- ----- ----- -----
CASH FLOW PROVIDED BY OPERATIONS
PER RETRACTABLE COMMON SHARE (note 1)
Basic..................................... $2.08 $3.47 $4.95 $6.35
----- ----- ----- -----
Fully diluted............................. $1.96 $3.47 $4.66 $3.70
----- ----- ----- -----
</TABLE>
NOTES TO THE CONSOLIDATED STATEMENT OF EARNINGS
1. Cash flow provided by operations per retractable common share is based on
cash flow provided by operations which is before any increase or decrease in
non-cash operating working capital, the cash used by discontinued operations,
prepaid subscription program and other costs and foreign currency translation
adjustment. 2. Earnings per retractable common share is based on earnings
applicable to retractable common shares reduced by an equity accretion in
respect of the equity-linked convertible securities.
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOW
(not audited)
(in thousands of dollars)
SIX MONTHS ENDED
JUNE 30
----------------
1999 1998
----- ----
CASH PROVIDED BY (USED FOR):
OPERATIONS
Net earnings......................... $ 156,075 $ 82,783
Unusual items........................ (447,496) (293,223)
Current income taxes related
to unusual items................. 156,159 143,904
Items not involving cash:
Depreciation and amortization...... 115,248 99,213
Deferred income taxes.............. 19,556 3,785
Net loss (earnings) in equity
accounted companies, net of
dividends received................ (537) 718
Minority interest.................. 161,128 161,983
Other.............................. 2,778 12,658
--------- ---------
CASH FLOW PROVIDED BY OPERATIONS .... 162,911 211,821
Change in non-cash
operating working capital.......... 85,270 (34,847)
Cash used for
discontinued operations............ (1,065) (2,302)
Other costs.......................... (41,812) (697)
Foreign currency translation
adjustment......................... 2,178 8,327
--------- ---------
207,482 182,302
FINANCING
Issue of capital stock............... - 11,763
Issue of exchangeable shares......... - 119,163
Redemption and cancellation of
capital stock...................... (821) (155,698)
Redemption and cancellation of
exchangeable shares................ (131,208) (105,975)
Capital stock of subsidiary purchased
for cancellation by subsidiary..... (100,272) (2,459)
Issue of partnership units and
common shares of subsidiaries...... 197,593 3,291
Increase (decrease) in long-term debt
and deferred liabilities........... 53,707 (332,246)
Retirement of convertible debt....... (122) (16,110)
Decrease in capital lease
obligations........................ (1,533) (666)
Dividends, including special
dividend........................... (9,867) (10,585)
Dividends and distributions paid by
subsidiary operations to
minority interests................. (27,320) (27,485)
--------- ---------
(19,843) (517,007)
--------- ---------
INVESTMENT
Proceeds on disposal of
fixed assets....................... 11,402 24,821
Additions to fixed assets
and assets under capital leases.... (117,148) (96,984)
Additions to investments............. (11,605) (38,435)
Proceeds on disposal
of investments and marketable
securities......................... 2,999 2,737
Additions to circulation............. (24,642) (32,199)
Additions to goodwill and
other assets....................... (59,638) (10,086)
Investment in newspaper
operations......................... (607,442) (63,538)
Proceeds on disposal of newspaper
operations......................... 620,866 574,984
--------- --------
(185,208) 361,300
--------- --------
Effect of exchange rate
changes on cash.................... (9,513) 5,244
--------- --------
INCREASE (DECREASE) IN CASH POSITION. (7,082) 31,839
CASH AT BEGINNING OF PERIOD.......... 128,061 158,868
--------- --------
CASH AT END OF PERIOD................ $ 120,979 $ 190,707
--------- --------
NOTE
1. 1998 comparative amounts have been restated retroactively as required by
the Canadian Institute of Chartered Accounts with respect to new standards
issued regarding disclosure in the cash flow statement.
<PAGE>
RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP)
(not audited)
(in thousands of Canadian dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------ ----------------
1999 1998 1999 1998
---- ---- ---- ----
NET EARNINGS
NET EARNINGS FOR THE PERIOD
<S> <C> <C> <C> <C>
BASED ON CANADIAN GAAP................ $ 46,666 $ 8,784 $ 156,075 $ 82,783
Capitalization of betterments,
net of related amortization........... (1,697) (2,251) (4,931) (7,373)
Acquired tax losses..................... 165 208 338 332
Start-up costs, net of amortization
and write-offs........................ 43 (133) 81 427
Business combinations (note 4).......... 233 233 466 466
Foreign exchange (note 2)............... - (186) - (130)
Compensation to employees............... (444) (259) (547) (519)
Adjustment to tax provision............. 4,000 1,400 - 4,000
Financial instruments (note 3).......... 902 853 1,810 1,918
Settlement of convertible
securities (note 6)................... - 492 - 492
------------ --------- ------------- ----------
NET EARNINGS FOR THE
PERIOD BASED ON U.S. GAAP............. $ 49,868 $ 9,141 $ 153,292 $ 82,396
------------ --------- ------------- ----------
EARNINGS PER SHARE (dollars) (dollars)
NET EARNINGS PER RETRACTABLE COMMON
SHARE AND COMMON EQUIVALENT SHARE
Earnings from continuing
operations (notes 5 and 7).......... $1.75 $0.26 $4.89 $2.46
----- ----- ---- -----
Net earnings.......................... $1.52 $0.27 $4.66 $2.47
----- ----- ---- -----
NET EARNINGS PER RETRACTABLE
COMMON SHARE - ASSUMING FULL DILUTION
Earnings from continuing
operations (notes 5 and 7).......... $1.59 $0.17 $4.43 $1.73
----- ----- ---- -----
Net earnings.......................... $1.36 $0.19 $4.20 $1.74
----- ----- ---- -----
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NOTES TO THE RECONCILIATION TO UNITED STATES GAAP.
1. The above represents additional information to the Consolidated Statement
of Earnings of the Company which was prepared in accordance with Canadian
GAAP. Set out above are the material adjustments (net of deferred income
taxes, minority interest and foreign exchange rate adjustments where
applicable) to net earnings for the six months ended June 30, 1999 and June
30, 1998 and the three months ended June 30, 1999 and June 30, 1998 in order
to conform to accounting principles generally accepted in the United States.
2. Under Canadian GAAP, the unrealized foreign exchange gain or loss on the
translation of the U.S. dollar Liquid Yield Option Notes (LYONs) into Canadian
dollars which was not considered a hedge against a U.S. dollar investment was
being deferred or amortized over the term of the notes. Under U.S. GAAP this
exchange gain or loss was expensed in the immediately. 3. Under the accounting
standards for financial instruments, a portion of certain of the Company's
convertible instruments are classified as equity rather than debt. Under U.S.
GAAP, no portion of the convertible instruments would be classified as equity
and the related interest expense on the equity component would be classified
as an interest expense rather than as a dividend equivalent. In addition,
Canadian GAAP requires the carrying value of the debt component of an
instrument be increased over time to its settlement amount on maturity,
through a charge to interest expense. Under U.S. GAAP, no portion of the
instrument would be classified as equity and accordingly this adjustment to
interest expense is not required. Canadian GAAP also requires the value
ascribed to certain subsidiary special shares be increased over the life of
the shares to the Company's optional cash settlement amount through a periodic
charge to earnings. Under U.S. GAAP the shares are recorded at their fair
value on the date of issue and such a charge to increase their carried amount
is not required. 4. U.S. GAAP requires that the transfer of the Canadian
Newspaper Group be accounted for at historical values using "as-if pooling of
interests" accounting, resulting in no gain on the sale of properties and no
additional amount being ascribed to circulation. 5. A loss on extinguishment
of debt can be classified as an extraordinary item under U.S. GAAP, but not
under Canadian GAAP. 6. Cash payments on conversion of the LYONS are treated
as capital transactions under Canadian GAAP. Under U.S. GAAP, the gain or loss
on cash settlement must be reflected in income. 7. A gain or loss on
settlement of convertible securities can be classified as an extraordinary
item under U.S. GAAP.
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TRANSFER AGENTS AND REGISTRARS SHARE INFORMATION
<S> <C>
Retractable Common Shares, Series II and III For information relating to Retractable Common
Preference Shares: Shares and Series II and III Preference Shares
holdings, dividends, lost share certificates, etc., please
Montreal Trust Company of Canada, Toronto, communicate with:
Montreal and Vancouver, Canada Montreal Trust Company of Canada,
The Bank of Nova Scotia Trust Company of New York Tel: (416) 981-9500 or 1-800-663-9097 (toll free in
New York, New York, U.S.A. Canada and U.S.) Fax: (416) 981-9800
Warrants to Purchase Retractable Common Shares of
Hollinger Inc.: MAJOR ELECTRONIC WEB SITES
Montreal Trust Company of Canada, Toronto Hollinger International http://www.hollinger.com
Telegraph http://www.telegraph.co.uk
STOCK EXCHANGE LISTINGS http://www.UKMax.com
The Retractable Common Shares are listed on the http://www.thebestofbritish.com
Toronto, Montreal, and Vancouver stock exchanges
(stock symbol HLG.C), and are also quoted on The Chicago Sun-Times http://www.suntimes.com
NASDAQ Stock Market (trading symbol HLGCF). Chicago Network http://www.chicago-news.com
The Series II and III Preference Shares are listed on Jerusalem Post http://jpost.co.il
the Toronto, Montreal and Vancouver stock Southam http://www.canada.com
exchanges (trading symbols HLG.PR.B and HLG.
PR.C, respectively). UniMedia http://www.lesoleil.com
http://www.ledroit.com
The Warrants to Purchase Retractable Common
Shares are not listed on any stock exchange. Star-Phoenix http://www.saskstar.sk.ca
INVESTOR INFORMATION Leader-Post http://www.leader-post.sk.ca
Holders of the Company's securities and other VERSION FRANCAISE
interested parties seeking information about Pour recevoir ce rapport en francais s'adresser a :
the Company should communicate with the Vice- Compagnie Montreal Trust du Canada, 151, rue
President, Strategic and Corporate Development, Front ouest, 8e etage, Toronto (Ontario) M5J 2N1.
at 10 Toronto Street, Toronto, Ontario M5C 2B7,
Tel (416) 363-8721, Fax (416) 364-0832.
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HOLLINGER INC.
10 Toronto Street, Toronto, Ontario, M5C 2B7
General Enquiries: Telephone (416) 363-8721
Fax: (416) 364-2088
