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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR FISCAL YEAR ENDED DECEMBER 31, 1994 COMMISSION FILE NUMBER 1-13492
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THE TIMES MIRROR COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
DELAWARE 95-4481525
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
TIMES MIRROR SQUARE
LOS ANGELES, CALIFORNIA 90053
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (213) 237-3700
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Series A Common Stock New York Stock Exchange and Pacific Stock Exchange
Conversion Preferred Stock, Series B New York Stock Exchange
</TABLE>
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Series C Common Stock
(Title of Class)
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No X
--- ---
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. X
---
The aggregate market value of the voting stock of the Registrant held by
non-affiliates of the Registrant on March 6, 1995 was approximately $1.5
billion. (For purposes of this calculation, the market value of a share of
Series C Common Stock was assumed to be the same as a share of Series A Common
Stock, into which it is convertible.)
Number of shares of the Registrant's Series A Common Stock outstanding at March
6, 1995: 98,248,709
Number of shares of the Registrant's Series C Common Stock outstanding at March
6, 1995: 30,555,457
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference: In Part III,
portions of the Registrant's definitive Proxy Statement dated March 24, 1995.
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PART I
ITEM 1. BUSINESS.
GENERAL
The Company is engaged principally in the newspaper publishing,
professional information and consumer media businesses. The Company publishes
the Los Angeles Times, Newsday and New York Newsday, The Baltimore Sun
newspapers, The Hartford Courant, The Morning Call, The Advocate and the
Greenwich Times. In addition, the Company publishes several smaller newspapers.
Prior to the consummation of the Merger (as defined below) and the other
transactions described below (collectively, the "Transactions"), these
businesses (the "Publishing Business") were conducted by Old Times Mirror (as
defined below), which was also engaged in the ownership and operation of cable
television systems. The Company was incorporated in the State of Delaware in
June 1994 for the purpose of owning and operating the Publishing Business after
the consummation of the Transactions.
On February 1, 1995, the predecessor ("Old Times Mirror") to The Times
Mirror Company (the "Company" or "New Times Mirror") merged (the "Merger") with
and into Cox Communications, Inc. ("Cox"), resulting in the acquisition of Old
Times Mirror's cable business by Cox. All references herein to "Times Mirror"
shall mean Old Times Mirror and the Company, collectively. Old Times Mirror was
incorporated in 1884 in the State of California and was reincorporated in the
State of Delaware in 1986. The Company was originally incorporated under the
name "New TMC Inc." but changed its name to "The Times Mirror Company"
immediately after the Merger.
NEWSPAPER PUBLISHING
Times Mirror publishes the Los Angeles Times, Newsday and New York Newsday,
the Baltimore Sun newspapers, The Hartford Courant, The Morning Call, The
Advocate and the Greenwich Time. In addition, Times Mirror publishes several
weekly newspapers. Each daily newspaper operates independently in order to meet
most effectively the needs of the area it serves. Editorial policies and
business practices are established by local management. Each daily newspaper is
a member of Associated Press. The Los Angeles Times, Newsday and New York
Newsday also subscribe to other supplementary news services. Production of Times
Mirror's newspapers is performed on presses owned by Times Mirror.
The primary raw material used by the newspapers is newsprint. Times Mirror
centrally purchases newsprint for all of its newspapers in order to achieve
advantageous terms from its vendors. Most of the newsprint requirements for the
Los Angeles Times are met by a company in which Times Mirror owns a 20%
interest. The remaining requirements for the Los Angeles Times and the other
Times Mirror newspapers are obtained from United States and Canadian sources
unaffiliated with Times Mirror.
LOS ANGELES TIMES
The Los Angeles Times has been published continuously since 1881. It is
published every morning, and in 1994 ranked as the second largest metropolitan
newspaper in the United States in weekday circulation based on five-day
averages, and the second largest in Sunday circulation. In 1994, its annual
average unaudited circulation was 1,077,277 for Monday through Friday, 1,002,603
for Saturday and 1,468,865 for Sunday, compared with 1,104,317, 1,025,368, and
1,504,115, respectively, in 1993. Approximately 78% of the Monday through
Saturday circulation was home-delivered in 1994.
In 1994, the Los Angeles Times recorded full-run billed advertising volume
of 3,446,246 standard advertising unit inches (hereafter "inches"), part-run
volume of 4,073,410 inches, and preprinted inserts of 909.0 million pieces,
compared with 3,356,776 inches, 3,429,684 inches and 978.9 million pieces,
respectively, in 1993. In addition, the Los Angeles Times derived revenue from
advertising supplements distributed to non-subscribers equivalent to 684.7
million pieces in 1994, compared with 695.4 million pieces in 1993.
Net revenues of the Los Angeles Times were $1,033,486,000 in 1994,
$991,997,000 in 1993 and $1,016,744,000 in 1992, representing 30.8%, 30.6%, and
32.2% of the revenues of the Publishing Business for such years.
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The Los Angeles Times serves a five-county region in Southern California
that includes Los Angeles, Orange, Riverside, San Bernardino, and Ventura
counties. In addition to the daily edition covering the Los Angeles metropolitan
area, the Los Angeles Times publishes daily Orange County, San Fernando Valley
and Ventura County editions, and six weekly or twice-weekly regional news
sections directed to specific areas. The Los Angeles Times also publishes an
edition which is distributed Monday through Friday in the Washington, D.C. and
New York City areas.
In its primary markets of Los Angeles and Orange counties, the Los Angeles
Times competes with 12 local daily newspapers, which range in size up to
approximately 351,000 total average daily circulation, and three daily regional
editions of national newspapers. In addition, there are over 300 weekly,
semi-weekly and free distribution newspapers.
In conjunction with the Washington Post, the Los Angeles Times operates a
supplementary news service sold to newspapers in the United States and foreign
countries. The Los Angeles Times also sells syndicated features to other
newspapers throughout the world.
NEWSDAY AND NEW YORK NEWSDAY
Newsday, which is published daily, circulates primarily in Nassau and
Suffolk counties on Long Island, New York, while New York Newsday circulates in
New York City. In 1994, Newsday and New York Newsday combined ranked as the
fifth largest local daily newspaper in the country for Monday through Friday
circulation, and as the tenth largest for Sunday circulation. In 1994, Newsday's
annual average unaudited circulation, which includes New York Newsday, was
683,109 for Monday through Friday, 576,770 for Saturday, and 771,068 for Sunday,
compared with 740,171, 624,707 and 823,595, respectively, in 1993. In 1994, New
York Newsday's annual average unaudited circulation was 223,004 for Monday
through Friday, 148,578 for Saturday, and 209,905 for Sunday, compared with
260,110, 179,491, and 248,736, respectively, in 1993.
In 1994, Newsday and New York Newsday recorded full-run billed advertising
volume of 1,554,494 inches, part-run volume of 1,190,941 inches, and preprinted
inserts of 785.4 million pieces, compared with 1,495,752 inches, 1,165,002
inches, and 739.1 million pieces, respectively, in 1993. In addition, Newsday
and New York Newsday, together with its alternate distribution company, derived
revenue from advertising supplements distributed to non-subscribers equivalent
to 937.1 million pieces in 1994, compared with 748.5 million pieces in 1993.
Newsday and New York Newsday compete with three major metropolitan
newspapers, numerous daily and local newspapers, and daily regional editions of
national newspapers.
BALTIMORE SUN NEWSPAPERS
The Baltimore Sun newspapers primarily serve the Baltimore-Annapolis
metropolitan area, including Anne Arundel, Baltimore, Carroll, Harford and
Howard counties. The Baltimore Sun publishes several editions, including The
Sun, a morning newspaper published Monday through Saturday; The Evening Sun, an
afternoon paper published Monday through Friday; and The Sunday Sun, published
Sunday mornings. In 1994, The Sun had an annual average unaudited circulation of
252,094 for Monday through Friday, and 370,971 for Saturday, compared with
238,822 and 364,125, respectively, in 1993. In 1994, the Evening Sun had an
annual average unaudited circulation of 91,451 for Monday through Friday,
compared with 101,341 in 1993. In 1994, The Sunday Sun had an annual average
unaudited circulation of 489,283 compared with 484,250 in 1993.
In 1994, The Baltimore Sun newspapers recorded full-run billed advertising
volume of 2,688,451 inches, part-run volume of 465,290 inches, and preprinted
inserts of 521.9 million pieces, compared with 2,694,149 inches, 401,520 inches
and 499.7 million pieces, respectively in 1993. In addition, The Baltimore Sun
newspapers derived revenues from advertising supplements delivered to
non-subscribers equivalent to 776,079 inches in 1994 compared with 705,000
inches in 1993.
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Weekly newspapers are also published by The Baltimore Sun, including The
Aegis and the Record which are distributed in Harford County, and four other
weeklies that serve the Aberdeen Proving Ground and certain zip codes in Harford
County. The Baltimore Sun newspapers compete with the Washington Post in Carroll
and Howard counties, and with the Annapolis Capital in Anne Arundel County. In
addition, there are other weekly and local daily newspapers in the distribution
area.
THE HARTFORD COURANT
The Hartford Courant, a morning daily and Sunday newspaper that was first
published in 1764, is the oldest continuously-published newspaper in the United
States. It is published in Hartford, Connecticut, and serves the state's
northern and central regions. The Hartford Courant publishes seven regional
editions on a daily basis, which provide local news and advertising. In 1994,
the annual average unaudited circulation was 228,807 for Monday through
Saturday, and 317,123 for Sunday, compared with 231,899 and 322,811,
respectively, in 1993.
In 1994, The Hartford Courant recorded full-run billed advertising volume
of 1,371,717 inches, part-run volume of 696,355 inches, and preprinted inserts
of 438.9 million pieces, compared with 1,230,264 inches, 750,292 inches and
418.1 million pieces, respectively, in 1993. In addition, The Hartford Courant
derived revenue from advertising supplements distributed to non-subscribers
equivalent to 1,203,634 inches in 1994, compared with 1,339,031 inches in 1993.
The Hartford Courant competes with several small daily and weekly
newspapers in communities adjacent or relatively close to Hartford, and with a
number of larger daily papers in metropolitan areas on the periphery of its
trade area.
THE MORNING CALL
The Morning Call in Allentown, Pennsylvania is published daily, and
primarily services Lehigh and Northampton counties in eastern Pennsylvania. In
1994, annual average unaudited circulation was 134,449 for Monday through
Friday, 147,356 for Saturday, and 188,489 for Sunday, compared with 135,794,
147,816 and 188,127, respectively, in 1993.
In 1994, The Morning Call recorded full-run billed advertising volume of
1,431,148 inches, part-run volume of 379,742 inches, and preprinted inserts of
214.3 million pieces, compared with 1,477,923 inches, 464,065 inches and 204.8
million pieces, respectively, in 1993. In addition, The Morning Call derived
revenues from advertising supplements distributed to non-subscribers equivalent
to 107,488 inches in 1994, compared with 227,009 inches in 1993.
THE ADVOCATE AND THE GREENWICH TIME
The Advocate and the Greenwich Time are published every morning, and serve
the southern part of Fairfield County, Connecticut. The Advocate circulates
primarily in Stamford, Connecticut and the Greenwich Time circulates in
Greenwich, Connecticut. In 1994, The Advocate had an annual average unaudited
circulation of 29,314 for Monday through Saturday, and 40,354 for Sunday,
compared with 29,712 and 40,305, respectively, in 1993. In 1994, the Greenwich
Time had an annual average unaudited circulation of 13,054 for Monday through
Saturday, and 14,391 for Sunday, compared with 13,146 and 14,265, respectively,
in 1993.
In 1994, The Advocate recorded full-run billed advertising volume of
773,311 inches, and preprinted inserts of 35.9 million pieces, compared with
798,920 inches and 34.6 million pieces in 1993. In 1994, the Greenwich Time
recorded full-run billed advertising volume of 718,093 inches and preprinted
inserts of 12.2 million pieces, compared with 729,103 inches and 12.6 million
pieces in 1993. In addition, the newspapers derived revenues from advertising
supplements distributed to non-subscribers equivalent to 155,621 inches in 1994
compared with 99,504 inches in 1993.
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ELECTRONIC PUBLISHING
During 1994, the Los Angeles Times, Newsday and New York Newsday introduced
regional on-line interactive information services through the Prodigy network in
Los Angeles and New York. Times Mirror also announced in 1994 that regional
on-line interactive information services will be available through the Prodigy
network in Baltimore and Southern Connecticut in 1995. The Baltimore Sun
newspapers, The Advocate and the Greenwich Time will be sources of information
available to subscribers for these services.
On January 12, 1994, Times Mirror announced that the Los Angeles Times and
Pacific Telesis Electronic Publishing Services, a wholly-owned subsidiary of
Pacific Telesis Group, have formed a joint venture that will offer electronic
shopping information and transaction services. Times Mirror expects that these
services will initially be offered in Southern California, but the joint venture
plans to seek partnership with other information providers and offer its
services throughout California. In addition, in 1994 Times Mirror announced that
Newsday and New York Newsday have entered into a joint venture with Nynex to
offer electronic shopping information and services in New York.
PROFESSIONAL INFORMATION
Times Mirror publishes a variety of books and other media through its
subsidiaries in the areas of legal publishing, flight information, health
information services, higher education publishing, technical and scientific
publishing and professional training. Books, journals and other materials
published by Times Mirror, many of which are distributed worldwide, are sold
through a variety of means, including the use of Times Mirror sales forces,
wholesalers, retailers, jobbers, direct-to-the-customer selling and direct mail.
Printing and binding are performed primarily by outside suppliers in the United
States and abroad. In accordance with publishing industry practice, softcover
and hardcover books are generally sold on a returnable basis.
LEGAL PUBLISHING
Matthew Bender & Company, Incorporated, a legal publishing company, offers
an array of legal publications, including treatises in the areas of bankruptcy,
real estate, federal practice and environmental law. In addition, Matthew Bender
offers its core products in CD-ROM format and has begun developing electronic
practice tools for lawyers. Matthew Bender provides its publications to
approximately 150,000 legal accounts, including each of the 100 largest law
firms in the United States.
FLIGHT INFORMATION
Times Mirror publishes aeronautical charts, flight information, pilot
training material and navigational aids worldwide through Jeppesen Sanderson,
Inc. and its European sister company, Jeppesen & Co. GmbH, as well as
computerized flight plans and weather briefings through Jeppesen DataPlan, Inc.,
a subsidiary of Jeppesen Sanderson, Inc. In 1994 Jeppesen Sanderson, Inc.
introduced on-line, on-demand weather information and electronic data
flight-planning services for its customers and launched a new venture to provide
aircraft maintenance information through a computer work station. The Jeppesen
Sanderson companies serve all U.S. domestic airlines and approximately 90
percent of all airlines worldwide.
HEALTH INFORMATION SERVICES
Mosby-Year Book, Inc. and its subsidiaries publish medical, dental, nursing
and allied health books and college textbooks. In addition, Mosby-Year Book,
Inc. and its subsidiaries provide consumer health and wellness information,
on-line health information for professionals and medical cost-containment
information. In connection with its electronic publishing efforts, in 1994
Mosby-Year Book, Inc. published a multimedia catalogue of more than 250
products. In addition, Mosby-Year Book, Inc. acquired Great Performance, a
publisher of consumer health care materials, in 1994 and, in early 1995,
acquired Madison Publishing Corporation and StayWell Health Management Systems
in order to broaden its publishing operations by targeting employers rather than
consumers directly.
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TIMES MIRROR HIGHER EDUCATION GROUP
The Times Mirror Higher Education Group, which Times Mirror formed in 1994,
includes Richard D. Irwin, Inc., publisher of business and economics textbooks
and college textbooks; Wm. C. Brown Publishers, publisher of science, social
science and mathematics textbooks; and Brown & Benchmark, publisher of college
textbooks in social sciences and humanities. Both Richard D. Irwin, Inc. and Wm.
C. Brown Publishers continued in 1994 to expand their lines of electronic
products. Richard D. Irwin, which established Irwin New Media in 1993 to provide
information in alternative formats, began introducing products in CD-ROM format
in 1994. Its CD-ROM for small business owners, "Multimedia MBA: Small Business
Edition," was listed among the "100 Best" for 1994 in CD-ROM World magazine.
TECHNICAL AND SCIENTIFIC PUBLISHING
CRC Press, Inc. publishes reference books and other information for
scientists and engineers in industry, government and academia. In 1994 CRC
Press, Inc. released the 75th edition of its first product, The CRC Handbook of
Chemistry and Physics, and updated its CD-ROM database, "Properties of Organic
Compounds."
TIMES MIRROR TRAINING GROUP
Times Mirror provides sales and management training programs for
professionals in business and industry through its subsidiaries, Zenger-Miller,
Inc., Learning International, Inc. and Kaset, Inc. These companies serve a
market of primarily Fortune 500 companies and their counterparts overseas. In
1994 Zenger-Miller, Inc.'s Team Effectiveness program was chosen among the top
10 training products of 1994 by Human Resources Executive magazine. Also in
1994, Learning International, Inc. launched the fourth edition of Professional
Selling Skills, a system used by more than two million sales professionals
world-wide. Finally, in 1994, Times Mirror acquired Allen Communications, Inc.,
a multimedia company that produces interactive software and develops titles and
courses specifically for the training and education markets.
CONSUMER MEDIA
Times Mirror publishes a number of special interest and trade magazines
through its subsidiary, Times Mirror Magazines, Inc., as well as art books
through its subsidiary, Harry N. Abrams, Incorporated. The six-month average
unaudited circulation figures per issue for the magazines, for the year ended
December 31, 1994, were 2,005,383 for Field & Stream; 1,810,992 for Popular
Science; 1,504,325 for Outdoor Life; 1,019,729 for Home Mechanix (published 10
times a year); 1,276,115 for Golf Magazine; 443,265 for Ski Magazine (published
8 times a year); 441,496 for Skiing (published 7 times a year); 104,000 for
Transworld SNOWboarding (published 8 times a year); 132,661 for Yachting; and
145,973 for Salt Water Sportsman. Each of these magazines is published monthly
unless otherwise noted. Advertisers that increase their aggregate advertising
pages in these magazines may purchase advertising in other of these magazines at
special rates.
In addition, Times Mirror publishes The Sporting News, a national sports
weekly; National Journal, a weekly magazine on politics and government;
Government Executive, a controlled-circulation trade magazine for government
business; Skiing Trade News and Transworld SNOWboarding Business,
controlled-circulation business magazines; The Sporting Goods DEALER, a monthly
controlled-circulation trade magazine; and other related publications. These
magazines are primarily intended for specialized markets.
In 1994 Times Mirror formed Times Mirror Multimedia, Inc. to develop and
direct the marketing of consumer multimedia software, including CD-ROM products
and electronic services. Initially, the Company is targeting the outdoor sports
and recreation, consumer health and children's "edutainment" markets. During
1994, Times Mirror acquired Ehrlich Multimedia and made investments in Digital
Pictures, Inc. and Rocket Science Games, Inc.
In addition, in 1994 Times Mirror created Times Mirror Programming, Inc. to
develop television programming from Times Mirror's editorial franchises and to
invest in new programming ventures in the U.S.
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and overseas. The Company has entered into a partnership with Cox to develop and
invest in cable programming. The Outdoor Life Channel, the first joint venture
of the partnership, is scheduled to launch in 1995. In 1994, Times Mirror also
invested in The Golf Channel. The Company's Golf Magazine is the official
publication of the channel. Significant expenditures for product and market
development are planned in 1995 in the areas of consumer multimedia software and
television programming.
COMPETITION
Besides competing vigorously with similar media in their respective
markets, the Company's newspapers and magazines compete with other local and
national advertising and sales promotion media. The Company encounters keen
competition in all phases of its professional information and consumer media
operations.
EMPLOYEES
At December 31, 1994, Times Mirror's Publishing Business had 24,315
employees, 17,967 of whom were full-time employees. Approximately 3,768
employees were represented by collective bargaining agents. The Company believes
that its employee relations are good. Employees receive supplemental benefits
ranging from various forms of group insurance coverage to retirement income
programs.
RECENT DEVELOPMENTS
Old Times Mirror, New Times Mirror, Cox and Cox Enterprises, Inc. are
parties to that certain Agreement and Plan of Merger dated as of June 5, 1994,
as amended (the "Merger Agreement"), pursuant to which Cox acquired Old Times
Mirror's cable television business and the Company became the successor to Old
Times Mirror. This was accomplished through the Transactions, which consisted
of, among other things, (i) the contribution of the Publishing Business by Old
Times Mirror to the Company, (ii) the assumption by the Company of all the
liabilities of Old Times Mirror other than those related to Old Times Mirror's
cable television business and certain other liabilities, (iii) the exchange (the
"Chandler Exchange") by Old Times Mirror's controlling stockholders, Chandler
Trust No. 1, Chandler Trust No. 2 and Chandis Securities Company (collectively,
the "Chandler Trusts"), in which the Chandler Trusts exchanged all of their Old
Times Mirror Series A Common Stock, par value $1.00 per share ("Old Times Mirror
Series A Common Stock") and Old Times Mirror Series C Common Stock, par value
$1.00 per share ("Old Times Mirror Series C Common Stock" and together with the
Old Times Mirror Series A Common Stock, the "Old Times Mirror Common Stock"),
for the same number of shares of the Company's Series A Common Stock, par value
$1.00 per share ("Series A Common Stock") and Series C Common Stock, par value
$1.00 per share ("Series C Common Stock and together with the Series A Common
Stock, the "Common Stock") and the commitment by the Company to issue to the
Chandler Trusts shares of the Company's Cumulative Redeemable Preferred Stock,
Series A, par value $1.00 per share (the "Series A Preferred Stock") and, under
certain circumstances, additional shares of Series A Common Stock (such shares
of Series A Preferred Stock and additional shares of Series A Common Stock, if
any, are hereinafter referred to as the "Additional Chandler Shares"), and (iv)
the Merger, in which Old Times Mirror (then consisting only of its cable
television business) was merged with and into Cox. Upon the effectiveness of the
Merger on February 1, 1995, each share of Old Times Mirror Series A Common Stock
outstanding immediately prior to the Merger was converted into one share of
Series A Common Stock and a portion of a share of Cox's Class A Common Stock,
par value $1.00 per share ("Cox Class A Common Stock"), and each share of Old
Times Mirror Series C Common Stock outstanding immediately prior to the Merger
was converted into one share of Series C Common Stock and a portion of a share
of Cox Class A Common Stock. As a result of the Chandler Exchange, the Chandler
Trusts were not stockholders of Old Times Mirror at the time the Merger was
consummated and therefore did not receive any of the securities issued in the
Merger. In fulfillment of its commitment to the Chandler Trusts, and subsequent
to the issuance of the financial statements, the Company issued shares of Series
A Preferred Stock to the Chandler Trusts on March 24, 1995.
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STOCKHOLDERS' LITIGATION
Following Times Mirror's announcement of the Transactions, a series of
lawsuits were filed in Delaware Chancery Court, California Superior Court and
United States Federal District Court (the "Stockholders' Litigation")
challenging the terms of the Transactions and alleging that the defendants in
such lawsuits had engaged in certain improper conduct. The plaintiff class in
the consolidated Delaware actions consisted of all stockholders of Old Times
Mirror (other than the defendants in such actions and their affiliates) who
owned shares of Old Times Mirror Common Stock between June 3, 1994 and the date
upon which a judgment in such actions as to certain matters was to be entered
and become final. The California litigation purported to be a stockholders'
derivative action on behalf of Old Times Mirror and a class action on behalf of
the same class as in the consolidated Delaware actions.
Following a series of negotiations between representatives of Old Times
Mirror and counsel for the plaintiffs in the Stockholders' Litigation, on
October 10, 1994, the parties entered into a stipulation (the "Stipulation")
with respect to the Stockholders' Litigation. As part of the settlement of the
Stockholders' Litigation, New Times Mirror agreed to conduct an exchange offer
(the "Exchange Offer") pursuant to which its stockholders would be given the
opportunity to exchange shares of the Company's Series A Common Stock and Series
C Common Stock for shares of the Company's Conversion Preferred Stock, Series B,
par value $1.00 per share (the "Series B Preferred Stock"). The Exchange Offer
commenced on February 16, 1995 and expired on March 16, 1995. The Chandler
Trusts agreed that they would not participate in the Exchange Offer.
Additionally, as part of the settlement of the Stockholders' Litigation, the
Board of Directors of the Company adopted an initial dividend policy for New
Times Mirror (the "Initial New Times Mirror Dividend Policy") that provides that
the annual dividend on the Common Stock, beginning in June 1995 and continuing
for a period of three years, will be set at no less than $.24 per share. The
Initial New Times Mirror Dividend Policy is subject to the exercise by the
Company's Board of Directors of its fiduciary obligations and the exercise of
the Board's business judgment in connection with, among other things, the
declaration of future dividends, as well as to any and all requirements of
Delaware law or any other applicable law, and to any and all covenants,
restrictions or limitations in connection with any financing. Following the
expiration of the Initial New Times Mirror Dividend Policy, any policy of the
Company regarding the payment of common dividends will depend on the Company's
future earnings, capital requirements, financial condition and other factors.
The Stipulation was approved by the Delaware Chancery Court and the California
Superior Court. The litigation in the United States Federal District Court was
dismissed.
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ITEM 2. PROPERTIES.
The general character, location, terms of occupancy and approximate size of
Times Mirror's materially important physical properties at December 31, 1994,
are listed below.
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APPROXIMATE AREA IN
SQUARE FEET
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GENERAL CHARACTER OF PROPERTY OWNED LEASED(1)
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NEWSPAPER PUBLISHING
Printing plants, business and editorial offices, garages and
warehouse space located in:
Los Angeles, California.......................................... 2,096,000 578,000
Hartford, Connecticut............................................ 1,048,000 122,000
Baltimore, Maryland.............................................. 844,000
Melville, New York............................................... 700,000
Other locations.................................................. 1,071,000 1,986,000
PROFESSIONAL INFORMATION
Business and editorial offices and warehouses in California,
Colorado,
Illinois, Missouri, New York, Iowa and other locations........... 1,451,000 1,346,000
CONSUMER MEDIA
Business and editorial offices and warehouses in New York, Missouri,
Massachusetts, California, Washington D.C. and other locations... 45,000 311,000
CORPORATE
Corporate offices and garages located in California, New York, New
Jersey, and Washington, D.C...................................... 496,000 80,000
</TABLE>
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(1) The Company's material lease agreements expire at various dates through
2012.
ITEM 3. LEGAL PROCEEDINGS.
Times Mirror and its subsidiaries are defendants in actions for libel and
other matters arising out of their Publishing Business operations. In addition,
from time to time, Times Mirror and its subsidiaries are involved as parties in
various governmental and administrative proceedings, including environmental
matters, relating to the Publishing Business. Times Mirror does not believe that
any such proceedings currently pending will have a material adverse effect on
its business or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of 1994. Subsequent to that quarter, at a special meeting of
shareholders on January 19, 1995, the Company's shareholders approved (i) the
contribution of the Publishing Business by Old Times Mirror to the Company and
(ii) the Merger Agreement.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of New Times Mirror are identical to the executive
officers of Old Times Mirror prior to the Transactions except that Mr. Larry W.
Wangberg, who was Senior Vice President of Old Times Mirror and President and
Chief Executive Officer of Times Mirror Cable Television, Inc., is not an
executive officer of New Times Mirror. The executive officers of New Times
Mirror are listed below. Executive officers are elected to serve until they
resign or are removed, or are otherwise disqualified to serve, or until their
successors are elected and qualified. Except as indicated below, all such
officers were employed by Old Times Mirror for more than five years.
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<CAPTION>
OFFICER
NAME AGE POSITIONS AND OFFICES WITH TIMES MIRROR SINCE(1)
-------------------------- --- ------------------------------------------------ --------
<S> <C> <C> <C>
Robert F. Erburu 64 Chairman of the Board, President and 1961
Chief Executive Officer
Curtis A. Hessler 51 Executive Vice President 1991(2)
Richard T. Schlosberg III 50 Executive Vice President 1990
Edward E. Johnson 51 Senior Vice President 1984
Donald F. Wright 60 Senior Vice President 1988
Ann E. Dilworth 48 Senior Vice President 1992(3)
Thomas Unterman 50 Senior Vice President and General Counsel 1992(4)
Patrick A. Clifford 53 Group Vice President 1990
John H. Zenger 63 Group Vice President 1992(5)
James F. Guthrie 50 Vice President and Chief Financial Officer 1993(6)
James R. Simpson 54 Vice President, Human Resources 1983
Efrem Zimbalist III 47 Vice President, Strategic Development 1993(7)
Debra A. Gastler 42 Vice President, Taxes 1994(8)
Michael N. Liebhold 50 Vice President, Technology 1994(9)
Stephen C. Meier 44 Vice President, Administration and Community 1989
Affairs
Thanos Triant 49 Vice President, Information Systems 1994(10)
Stuart K. Coppens 46 Controller and Chief Accounting Officer 1994(11)
Alan L. Ross 50 Treasurer 1981
O. Jean Williams 46 Secretary and Associate General Counsel 1989
</TABLE>
---------------
(1) The date indicated relates to the date on which such person first became an
officer of Old Times Mirror. All of the executive officers of New Times
Mirror, other than Robert F. Erburu, Curtis A. Hessler, Thomas Unterman,
James F. Guthrie and O. Jean Williams, were elected to their respective
positions effective January 30, 1995. Messrs. Erburu, Hessler, Unterman and
Guthrie and Ms. Williams were elected to their respective positions
effective June 3, 1994.
(2) Curtis A. Hessler was elected as an executive officer of Old Times Mirror
effective February 15, 1991. Mr. Hessler was an executive of UNISYS
Corporation from June 1984 to February 1991, serving as vice chairman upon
his departure.
(3) Ann E. Dilworth was elected as an executive officer of Old Times Mirror
effective August 3, 1992. She was president of Addison-Wesley General and
International Publishing Company from 1988 to 1991.
(4) Thomas Unterman was elected as an executive officer of Old Times Mirror
effective October 1, 1992. Prior thereto, he had been a partner at Morrison
& Foerster since 1986.
(5) John H. Zenger was elected as an executive officer of Old Times Mirror
effective March 26, 1992. Prior thereto, he had been chairman and chief
executive officer of Zenger-Miller, Inc. since 1977.
(6) James F. Guthrie was elected as an executive officer of Old Times Mirror
effective March 4, 1993. Prior thereto, he had been senior vice president
and chief financial officer of Times Mirror Cable Television, Inc. since
1982.
9
<PAGE> 11
(7) Efrem Zimbalist III was elected as an executive officer of Old Times Mirror
effective March 4, 1993. Mr. Zimbalist was chairman and chief executive
officer of Correia Art Glass, Inc. from 1978 until he joined the Company in
July 1992.
(8) Debra A. Gastler was elected as an executive officer of Old Times Mirror
effective January 3, 1994. Prior thereto, she had been Vice President, Tax
of Pacific Enterprises since 1990 and director of taxes of Pacific
Enterprises since 1987.
(9) Michael Liebhold was elected as an executive officer of Old Times Mirror
effective March 3, 1994. Prior thereto, he was lead research scientist and
manager at Apple Computer, Inc. in the area of advanced media systems since
1984, and was senior scientist, Media Architecture Research, Advanced
Technology Group at the time of his departure.
(10) Thanos Triant was elected as an executive officer of Old Times Mirror
effective March 3, 1994. He was director, systems architecture, of Sun
Microsystems since 1992 and director of management systems of Sun
Microsystems since 1990. Prior thereto, he was senior vice president,
Business Development and Technology of McGraw Hill Financial Services since
1989.
(11) Stuart K. Coppens was elected as an executive officer of Old Times Mirror
effective May 3, 1994. Prior thereto, he had been Vice President, Finance
at Richard D. Irwin since 1991. He was Director of Accounting at Times
Mirror Cable Television, Inc. from 1983 to 1991. Richard D. Irwin is a
wholly-owned subsidiary of the Company.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS.
Prior to the consummation of the Transactions, Old Times Mirror Series A
Common Stock was traded principally on the NYSE and was also listed on the
Pacific Stock Exchange. The Company's Series A Common Stock is traded
principally on the NYSE and is also listed on the Pacific Stock Exchange. Old
Times Mirror Series C Common Stock was not traded but was convertible into Times
Mirror Series A Common Stock. Likewise, the Company's Series C Common Stock is
not traded but is convertible into the Company's Series A Common Stock. At March
6, 1995, there were approximately 4,620 record holders of Series A Common Stock
and 3,053 holders of Series C Common Stock. The price ranges for Old Times
Mirror Series A Common Stock and the quarterly cash dividend paid on all Old
Times Mirror Common Stock in 1993 and 1994 are listed below.
<TABLE>
<CAPTION>
STOCK PRICE CASH DIVIDEND
------------- -----------------
HIGH LOW DECLARED PAID
---- ---- -------- ----
<S> <C> <C> <C> <C>
1993
First Quarter................................... $35 $30 1/8 $.27 $.27
Second Quarter.................................. 33 1/2 30 5/8 .27 .27
Third Quarter................................... 32 5/8 28 1/4 .27 .27
Fourth Quarter.................................. 35 1/8 28 1/2 .27 .27
1994
First Quarter................................... $37 1/8 $32 5/8 $.27 $.27
Second Quarter.................................. 36 1/8 29 1/2 .27 .27
Third Quarter................................... 33 1/4 28 3/4 .27 .27
Fourth Quarter.................................. 33 3/8 29 7/8 .27 .27
</TABLE>
The Company declared a dividend on the Common Stock of $.27 per share
payable on March 10, 1995 to stockholders of record as of February 22, 1995.
Following the payment of this dividend, it is anticipated that New Times Mirror
will pay quarterly dividends on its Common Stock at a rate below the rate
previously paid with respect to Old Times Mirror Common Stock. Management's
review of factors being considered in
10
<PAGE> 12
recommending a new dividend level would suggest that it would be appropriate to
reduce the dividend level by between 66 2/3% and 80% from that paid on Old Times
Mirror Common Stock. This would result in an annual dividend of between $.22 and
$.36 per share compared to the $1.08 previously paid. The dividend reduction is
intended to bring the dividend policy more in line with the policy of other
publicly traded publishing companies and to provide additional funds for
investment in new business opportunities.
As part of the settlement of the Stockholders' Litigation, the Board of
Directors of the Company adopted the Initial New Times Mirror Dividend Policy,
which provides that the annual dividend on New Times Mirror Common Stock,
beginning in June 1995 and continuing for a period of three years, will be no
less than $.24 per share. The Initial New Times Mirror Dividend Policy is
subject to the exercise by the New Times Mirror Board of Directors of its
fiduciary obligations and the exercise of the Board's business judgment in
connection with, among other things, the declaration of future dividends, as
well as to any and all requirements of Delaware law or any other applicable law,
and to any and all covenants, restrictions or limitations in connection with any
financing, now or in the future. Following the expiration of the Initial New
Times Mirror Dividend Policy, any policy of New Times Mirror regarding the
payment of dividends on the New Times Mirror Common Stock will depend on New
Times Mirror's future earnings, capital requirements, financial condition and
other factors.
11
<PAGE> 13
ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data has been derived from the
Consolidated Financial Statements that have been audited by Ernst & Young LLP,
independent auditors. The information set forth below is not necessarily
indicative of results of future operations, and should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and related notes thereto
included elsewhere in this Form 10-K.
SELECTED CONSOLIDATED FINANCIAL DATA AND OTHER INFORMATION
<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS EXCEPT PER
COMMON SHARE,
FINANCIAL RATIOS AND OTHER) 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Revenues............................... $3,357,450 $3,243,749 $3,155,430 $3,117,174 $3,146,319
Restructuring charges.................. 80,164 202,700 42,300
Operating profit....................... 294,340 189,042 63,759 208,672 268,138
Interest expense....................... 69,459 84,054 74,281 76,724 74,817
Income (loss) from continuing
operations before income taxes(1)... 247,747 109,785 (7,102) 55,348 204,399
Income (loss) from continuing
operations(1)....................... 126,238 51,669 (18,369) 14,320 112,179
Net income (loss)(1)................... 173,117 317,159 (66,601) 81,954 180,477
PER COMMON SHARE
Income (loss) from continuing
operations(1)....................... $ .98 $ .40 $ (.14) $ .11 $ .87
Earnings (loss) per share(1)........... 1.35 2.46 (.52) .64 1.40
Dividends declared..................... 1.08 1.08 1.08 1.08 1.08
Dividends paid......................... 1.08 1.08 1.08 1.08 1.08
FINANCIAL DATA
Current assets(2)...................... $ 890,903 $1,216,874 $ 988,032 $ 845,572 $ 880,488
Property, plant and equipment -- net... 1,311,130 1,308,628 1,345,320 1,332,597 1,320,219
Total assets........................... 4,265,301 4,499,897 4,233,345 4,006,139 4,120,081
Long-term debt......................... 246,462 795,454 1,114,367 978,351 1,065,662
Shareholders' equity................... 1,957,043 1,899,275 1,700,646 1,884,008 1,917,413
Additions to property, plant and
equipment(3)........................ 128,431 102,093 110,110 140,923 261,255
Operating profit margin(4)............. 8.8% 8.3% 8.4% 8.1% 8.5%
Total debt as a % of adjusted
capitalization...................... 31.3% 37.3% 41.7% 36.7% 39.0%
Long-term debt as a % of shareholders'
equity.............................. 12.6% 41.9% 65.5% 51.9% 55.6%
Dividends paid as a % of net
income(5)........................... 80.0% 43.9% 245.4% 168.8% 77.1%
Shareholders' equity per common
share............................... $ 15.06 $ 14.76 $ 13.23 $ 14.66 $ 14.92
OTHER
Price range of common stock............ $37 1/8 to $35 1/8 to $38 3/8 to $32 5/8 to $39 3/8 to
28 3/4 28 1/4 28 1/2 25 1/2 21 1/4
Number of shareholders at end of
year................................ 4,849 5,098 5,257 5,365 5,547
Number of employees at end of year..... 26,902 26,936 28,313 27,732 29,121
Weighted average common and common
equivalent shares................... 128,807,156 128,740,904 128,818,449 128,626,366 128,706,017
</TABLE>
---------------
This summary should be read in conjunction with the consolidated financial
statements and notes thereto.
(1) Included in income (loss) from continuing operations before income taxes,
income (loss) from continuing operations and net income (loss) are
nonrecurring gains (charges) as follows (in thousands): 1994 - $22,099 and
$10,646 ($.08 per share); 1991 - $(85,614) and $(52,985) ($.42 loss per
share).
(2) Excludes the net assets of the discontinued cable television operations in
1994.
(3) Excludes capital assets acquired in business combinations accounted for as
purchases and capital assets acquired by the discontinued cable television
and broadcast television operations.
(4) Excludes restructuring charges.
(5) Excludes the cumulative effect of changes in accounting principles in 1992.
12
<PAGE> 14
THE TIMES MIRROR COMPANY
FIVE-YEAR SUMMARY OF BUSINESS SEGMENT INFORMATION
<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS) 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenues
Newspaper Publishing............... $2,062,954 $1,980,717 $1,943,229 $1,974,351 $2,066,872
Professional Information........... 1,005,335 992,220 935,448 851,633 757,882
Consumer Media..................... 289,858 271,176 277,757 292,157 311,328
Corporate and Other................ 391 11,412
Intersegment Revenues.............. (697) (364) (1,004) (1,358) (1,175)
---------- ---------- ---------- ---------- ----------
$3,357,450 $3,243,749 $3,155,430 $3,117,174 $3,146,319
========= ========== ========== ========== ==========
Operating Profit (Loss)(1)
Newspaper Publishing............... $ 194,772 $ 107,346 $ 19,126 $ 93,094 $ 171,257
Professional Information........... 173,951 174,855 114,348 193,161 165,741
Consumer Media..................... (4,889) (3,785) (3,527) (7,775) (9,496)
Corporate and Other................ (69,494) (89,374) (66,188) (69,808) (59,364)
---------- ---------- ---------- ---------- ----------
$ 294,340 $ 189,042 $ 63,759 $ 208,672 $ 268,138
========= ========== ========== ========== ==========
Identifiable Assets
Newspaper Publishing............... $1,987,752 $2,012,623 $2,036,453 $2,023,275 $2,044,545
Professional Information........... 1,018,357 1,030,586 971,833 788,260 753,184
Consumer Media..................... 360,861 288,805 338,895 338,046 412,505
Corporate and Other................ 255,954 563,686 317,423 341,493 383,616
Discontinued Operations
Cable Television................ 642,377 606,678 495,036 509,942 484,611
Broadcast Television............ 285 123,439 120,649 125,109
Eliminations....................... (2,766) (49,734) (115,526) (83,489)
---------- ---------- ---------- ---------- ----------
$4,265,301 $4,499,897 $4,233,345 $4,006,139 $4,120,081
========= ========== ========== ========== ==========
Depreciation and Amortization
Newspaper Publishing............... $ 114,115 $ 113,877 $ 105,939 $ 110,946 $ 100,458
Professional Information........... 42,928 44,490 40,092 41,640 42,701
Consumer Media..................... 11,283 10,816 10,705 14,656 23,730
Corporate and Other................ 1,684 1,795 1,753 2,664 2,588
---------- ---------- ---------- ---------- ----------
$ 170,010 $ 170,978 $ 158,489 $ 169,906 $ 169,477
========= ========== ========== ========== ==========
Capital Expenditures
Newspaper Publishing............... $ 79,397 $ 66,429 $ 88,226 $ 119,963 $ 231,493
Professional Information........... 43,910 33,006 19,984 19,324 26,080
Consumer Media..................... 1,870 1,718 1,579 1,142 2,744
Corporate and Other................ 3,254 940 321 494 938
---------- ---------- ---------- ---------- ----------
128,431 102,093 110,110 140,923 261,255
---------- ---------- ---------- ---------- ----------
Discontinued Operations
Cable Television................ 118,948 116,914 82,333 60,426 66,641
Broadcast Television............ 3,464 3,141 6,803
---------- ---------- ---------- ---------- ----------
$ 247,379 $ 219,007 $ 195,907 $ 204,490 $ 334,699
========= ========== ========== ========== ==========
</TABLE>
---------------
(1) Includes restructuring charges as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
------- -------- -------
<S> <C> <C> <C>
Newspaper Publishing..................... $33,080 $106,700 $39,690
Professional Information................. 25,300 96,000 1,160
Corporate and Other...................... 21,784 1,450
------- -------- -------
$80,164 $202,700 $42,300
======= ======== =======
</TABLE>
13
<PAGE> 15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
CABLE MERGER
On February 1, 1995, Times Mirror completed the Transactions related to the
merger of its cable television operations with Cox. See Note 18 to the
Consolidated Financial Statements for a detailed discussion of these
Transactions. The Transactions are expected to have the following impact in
1995:
o A gain of approximately $1.6 billion on the cable television transaction
will be recorded in the first quarter of 1995;
o On a pretax basis, net interest income in 1995 is expected to be $10-20
million as compared to net interest expense of $67 million in 1994; and
o Earnings per common share in 1995 will be negatively affected as a result
of approximately $50 million of preferred dividends on the Series A
Preferred Stock and Series B Preferred Stock. This amount represents 10
months of dividends on these securities.
OUTLOOK FOR 1995
Times Mirror believes that there are a variety of factors to consider
relating to its outlook for 1995. Assuming continued economic growth, the
Company expects total revenues to grow faster in 1995 than in 1994, due to a
continuing recovery in its newspaper markets and sales expansion in its
international professional information businesses. However, much of this revenue
growth will be offset by sharply higher newsprint prices and increased paper and
postage costs overall.
The first quarter of the fiscal year is generally Times Mirror's most
volatile and least profitable quarter. Although the Company will report the
approximately $1.6 billion gain on the cable transaction in the first quarter,
it expects continuing operations may show a decline from 1994's low levels due
to deeper seasonal losses in the expanded higher education companies, cost
pressure in the newspaper group, and startup costs associated with new
initiatives.
In addition, the Company has begun to develop new businesses and products
at a more rapid pace. A significant portion of these efforts is expected to be
reflected in operating results in 1995. These programs, and other initiatives
designed to reduce ongoing operating and administrative processing costs, are
expected to reduce net income by as much as $40 million in 1995.
NEWSPAPER PUBLISHING OUTLOOK
Newspaper Publishing results are expected to be impacted by two critical
factors: the timing and extent of economic recovery in Times Mirror's newspaper
markets, particularly Southern California, and the sharp increases in newsprint
prices anticipated throughout the industry. In 1994, newsprint expense
represented approximately 15 percent of total segment operating costs. The
average newsprint price per ton is expected to rise sharply in 1995. Rising
newsprint consumption due to advertising volume growth, coupled with significant
price increases, could impede profitability improvement in 1995. In addition,
advertising revenue growth over the long term may be restrained by structural
shifts in the retail marketplace, including retailer consolidations, changing
consumer buying habits, and growth in discount stores, which use little
newspaper advertising. In addition, the 1995 startup losses related to
electronic on-line services of the Los Angeles Times and Newsday/New York
Newsday and electronic advertising and shopping joint ventures with Pacific
Telesis and Nynex are expected to impact net income by approximately $7 million.
PROFESSIONAL INFORMATION OUTLOOK
The 1995 results are expected to reflect revenue strength in most of the
businesses, tempered, however, by costs associated with investments in new
product lines and business ventures throughout the segment and containing volume
losses at Matthew Bender. Net income in 1995 may be reduced by as much as $6
million from developing new electronic business activities in health information
services and legal publishing.
14
<PAGE> 16
CONSUMER MEDIA OUTLOOK
Times Mirror's magazines have historically represented the majority of the
revenues of this segment. Operating results in 1994 for the magazines have
improved due to strength in advertising, reflecting an industry-wide trend.
Although magazine advertising revenues are expected to show continued
improvement in 1995, anticipated increases in postage rates and paper prices
will impede profit growth. In addition, significant expenditures for product and
market development are planned in 1995 in the new areas of consumer multimedia
software and television programming, with a net income impact of as much as $18
million.
COST REDUCTION AND RESTRUCTURING EFFORTS
Over the past several years, Times Mirror has provided restructuring
reserves in order to streamline the operational and administrative functions of
its businesses. The Company is continuing to pursue cost reduction and process
re-engineering opportunities. As much as a $9 million reduction in 1995 net
income is possible from developing and installing a network to link product,
marketing and administrative databases across the Company. The network is also
designed to reduce certain operating and administrative processing costs over
time. Other opportunities to reduce costs could lead to additional restructuring
or other charges in 1995 and future periods.
CONSOLIDATED RESULTS OF OPERATIONS
The following table summarizes Times Mirror's financial results (dollars in
millions, except per share amounts):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Revenues..................................................... $3,357.5 $3,243.7 $3,155.4
Restructuring charges........................................ 80.2 202.7
Operating profit............................................. 294.3 189.0 63.8
Interest expense............................................. 69.5 84.1 74.3
Nonrecurring gains........................................... 22.1
Income (loss) from continuing operations..................... 126.2 51.7 (18.4)
Income from discontinued operations, net of tax.............. 59.1 133.8 75.1
Gain on sale of discontinued operations, net of tax.......... 131.7
Extraordinary loss, net of tax............................... (12.2)
Cumulative effect of changes in accounting principles, net of
tax........................................................ (123.4)
Net income (loss)............................................ 173.1 317.2 (66.6)
Earnings (loss) per share from continuing operations......... $ .98 $ .40 $ (.14)
Effective tax rate for continuing operations................. 49.0% 52.9% N/A
</TABLE>
1994 COMPARED WITH 1993
Times Mirror's consolidated revenues rose 3.5 percent in 1994 compared with
the prior year, reflecting improvements in each of the Company's business
segments, particularly Newspaper Publishing. The emerging economic recovery in
Southern California, the Company's largest newspaper market, and core business
growth in the health information services and higher education markets, coupled
with acquisitions in the professional information segment in 1993 and 1994,
contributed to the revenue growth.
The significant improvement in operating profit in 1994 largely reflected
the absence of restructuring charges, which totaled $80.2 million in 1993.
Excluding the 1993 restructuring charges, operating profit would have improved
9.3 percent over 1993, principally due to gains at each of the Company's
newspapers, particularly the Los Angeles Times, Newsday and The Baltimore Sun.
With 1994 newsprint expense up only slightly over the prior year, declines in
full-time staffing levels and tight control of other costs, Newspaper Publishing
reported improved operating margins for the second consecutive year. In the
Professional Information segment, improvements at most of the book companies,
particularly in higher education and
15
<PAGE> 17
international publishing, were more than offset by declines at Matthew Bender
and at the training companies, resulting in limited revenue growth and a drop in
operating profit for the segment. In Consumer Media, start-up losses associated
with the new consumer multimedia and television programming businesses also
negatively impacted consolidated operating profit in 1994.
Income from continuing operations in 1994 included nonrecurring gains of
$22.1 million (8 cents per share after taxes), and 1994 net income included an
extraordinary loss of $12.2 million net of taxes (9 cents loss per share) from
the early retirement of debt. Also included in net income were the results of
discontinued operations, comprised of the cable television operations in both
years and, in 1993, the broadcast television operations. The cable television
transaction was completed on February 1, 1995, and the resulting gain will be
recorded in the first quarter of 1995. The sale of the broadcast television
operations resulted in an after-tax gain of $131.7 million ($1.02 per share) in
1993.
Interest expense in 1994 declined to $69.5 million from $84.1 million in
the prior year, as debt levels were reduced early in the year using proceeds
received from the sale of the broadcast television operations.
FOURTH-QUARTER 1994 COMPARED WITH 1993
Consolidated revenues of $957.4 million for the fourth quarter of 1994 were
6.7 percent higher than the prior-year quarter. Operating profit rose
significantly in the last quarter of 1994, due primarily to restructuring
charges of $76.4 million (35 cents per share after taxes) in 1993's fourth
quarter. Excluding the restructuring charges, operating profit would have been
slightly higher than last year, due largely to strength in the newspaper
publishing businesses. Fourth-quarter 1994 income from continuing operations
rose to $46.9 million, or 36 cents per share, compared with $4.4 million, or 4
cents per share, in 1993, including the prior-year restructuring charges. Net
income in the fourth quarter of 1994 was $52.7 million, or 41 cents per share,
compared with $161.8 million, or $1.26 per share, in the prior-year quarter. The
1993 fourth-quarter net income included the after-tax gain on the sale of the
broadcast television operations of $131.7 million.
Newspaper Publishing's fourth-quarter 1994 revenues of $581.3 million rose
5.8 percent over the prior year, as advertising gains at each of the major
newspapers resulted in an overall 5.5 percent increase in advertising revenues.
Circulation revenues were essentially flat, as favorable pricing adjustments
offset the impact of declines in daily circulation levels at most of the major
newspapers. In 1993, the newspaper segment recorded restructuring charges in the
fourth quarter totaling $29.3 million for voluntary separation programs at The
Times, Newsday and The Baltimore Sun. Excluding these charges, operating profit
in 1994's fourth quarter of $72.8 million would have exceeded the prior year by
24.4 percent. Despite increased newsprint expense, reflecting rising newsprint
prices during the fourth quarter of 1994, the operating profit margin expanded
to 12.5 percent, the highest level for a single quarter since 1989.
Professional Information revenues rose 7.5 percent over the prior-year
fourth quarter to $296.0 million, reflecting solid growth in higher education
and international publishing. The segment's fourth-quarter operating profit rose
to $60.2 million -- a 67.4 percent increase over the prior-year quarter, which
included $25.3 million of restructuring charges for streamlining certain
operations. Excluding these charges, operating profit for the segment would have
been level with 1993, as improvements at each of the book publishing companies
were offset by depressed results at the training companies.
Consumer Media revenues rose 11.0 percent for the fourth quarter to $80.3
million, reflecting improvements at the Company's magazines and art book
publishing companies. The segment reported an operating loss in the quarter of
$3.6 million, compared with operating profit of $1.5 million in 1993, as
start-up losses associated with the new television programming and consumer
multimedia operations more than offset improvements at the other businesses.
The Corporate and Other segment's deficit in the fourth quarter of 1994
decreased to $21.8 million from $41.3 million in the prior year, which included
$21.8 million of restructuring charges for costs associated with the planned
re-engineering and consolidation of certain financial processes across all Times
Mirror companies.
16
<PAGE> 18
1993 COMPARED WITH 1992
Revenues grew 2.8 percent between years, with acquisitions in late 1992 and
in 1993 contributing to the overall growth. Operating profit nearly tripled in
1993, reflecting the impact of significantly lower restructuring charges. As
previously noted, 1993 results were reduced by restructuring charges of $80.2
million. Restructuring charges in 1992 were $202.7 million, related to voluntary
early retirement and separation programs at the Los Angeles Times and Newsday,
costs for the shutdown of a regional edition of The Times, and costs related to
a restructuring program at Matthew Bender. These charges resulted in a loss from
continuing operations in 1992. Excluding the restructuring charges, operating
profit would have been up only slightly between years, as the economic weakness
in Southern California, Times Mirror's largest newspaper market, and the
restructuring efforts at Matthew Bender limited growth in the Company's two
largest business segments.
Income from continuing operations, excluding the restructuring charges,
would have been down 28.5 percent from the prior year, reflecting increased
interest expense and a higher effective tax rate in 1993. The rise in interest
expense in 1993 was due to higher average daily debt levels as compared with
1992, the impact of which was partly offset by lower interest rates between
years. Also contributing to the rise in interest expense during 1993 was a $3.6
million decline in capitalized interest and interest related to subleases. The
1993 effective tax rate reflected new federal income tax rates enacted in the
third quarter of 1993.
Net income included the results of the discontinued cable and broadcast
television segments in both years and, in 1993, the after-tax gain on the sale
of broadcast television of $131.7 million. The 1992 net loss arose primarily as
a result of the cumulative adjustment from the adoption of the new accounting
standard for postretirement benefits.
ANALYSIS BY SEGMENT
NEWSPAPER PUBLISHING
Newspaper Publishing revenues and operating profit were as follows (in
millions):
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Revenues
Advertising........................................ $1,564.1 $1,488.7 $1,480.9
Circulation........................................ 450.3 453.0 428.4
Other.............................................. 48.6 39.0 33.9
-------- -------- --------
$2,063.0 $1,980.7 $1,943.2
======== ======== ========
Operating Profit..................................... $ 194.8 $ 107.3 $ 19.1
======== ======== ========
</TABLE>
1994 Results
Newspaper Publishing revenues increased 4.2 percent in 1994, surpassing the
$2 billion revenue mark for the first time in four years, as total advertising
revenues rose 5.1 percent over the prior year. The emerging economic recovery in
Southern California helped to stimulate volume expansion in all advertising
categories at The Times, which posted a total revenue increase of 4.2 percent in
1994 to over $1 billion, following three consecutive years of declines.
Advertising revenues at The Times rose 4.9 percent to $820.3 million, up from
$781.7 million in 1993, spurred by double-digit volume gains in classified
help-wanted advertising, an important indicator of economic recovery. Each of
the Eastern newspapers reported solid revenue gains, with particular strength at
The Baltimore Sun and The Hartford Courant. Advertising revenues at the Eastern
newspapers rose 5.2 percent to $743.8 million in 1994.
Circulation revenues for the segment declined slightly in 1994, as daily
circulation averages declined at all major newspapers except The Baltimore Sun.
Circulation pricing increases, as well as the planned curtailment of circulation
outside primary market areas, contributed to the circulation declines.
The segment's operating profit for 1994 rose significantly as compared with
the prior year, due in part to restructuring charges in 1993 of $33.1 million
for voluntary separation programs at The Times, Newsday and
17
<PAGE> 19
The Baltimore Sun. Excluding these charges, each of the newspapers would have
shown solid operating profit improvements in 1994. Operating costs rose less
than 2.0 percent, as newsprint expense remained relatively flat compared to
1993, full-time equivalent staff levels declined and other costs remained
tightly controlled. The segment's operating margin improved again in 1994,
increasing to 9.4 percent compared with 7.1 percent in 1993, excluding the
prior-year restructuring charges.
1993 Results
Revenues for the segment rose 1.9 percent in 1993 due primarily to an
increase in circulation revenues related to a change to dealer distribution
systems at Newsday and The Hartford Courant in 1992. Advertising revenues of
$1.49 billion in 1993 were up slightly over the prior year, as growth at the
Eastern newspapers was largely offset by declines at The Times. In 1993,
advertising revenues at The Times declined 2.5 percent to $781.7 million,
compared with $802.1 million in 1992. Times Mirror's Eastern newspapers, led by
a strong performance at Newsday, reported advertising revenues of $707.0 million
for 1993, compared to $678.8 million in 1992.
Circulation revenues rose 5.7 percent in 1993, primarily reflecting the
previously-mentioned dealer distribution systems change and modest circulation
price increases in some markets. Excluding the impact of the dealer distribution
change, circulation revenues would have declined 2.0 percent in 1993 as a result
of expected circulation volume declines with the elimination of The Times' San
Diego Edition in late 1992, the reduction of duplicate morning and evening
circulation at The Baltimore Sun newspapers, and lower single copy sales.
Newspaper Publishing's operating profit for 1993 was reduced by the
previously mentioned restructuring charges of $33.1 million, while 1992
operating profit was reduced by restructuring charges of $106.7 million for
voluntary separation programs at The Times and Newsday, as well as the costs of
closing the San Diego Edition of The Times. Excluding restructuring charges in
both years, operating profit in 1993 would have increased 11.6 percent to $140.4
million, from $125.8 million in 1992. Operating costs rose slightly in 1993, due
to the change in dealer distribution systems. Excluding the change and
restructuring charges, operating costs would have declined on a year-over-year
basis. Newsprint expense was virtually flat, as lower consumption offset a one
percent average price increase. The operating profit margin for the segment,
excluding restructuring charges, would have been 7.1 percent in 1993 versus 6.5
percent in 1992.
PROFESSIONAL INFORMATION
Professional Information revenues and operating profit were as follows (in
millions):
<TABLE>
<CAPTION>
1994 1993 1992
-------- ------ ------
<S> <C> <C> <C>
Revenues........................................ $1,005.3 $992.2 $935.4
======== ====== ======
Operating Profit................................ $ 174.0 $174.9 $114.3
======== ====== ======
</TABLE>
1994 Results
Professional Information revenues rose 1.3 percent in 1994, as strong
growth in higher education, health information services and international
publishing was largely offset by declines at Matthew Bender. Excluding Matthew
Bender, where declines in the first half of 1994 significantly depressed its
full-year results, revenues for the rest of the segment rose 8.7 percent as
compared with 1993. Revenue growth also reflected several small acquisitions in
the segment during 1994. In higher education publishing, comprised of Wm. C.
Brown Publishers, Brown & Benchmark and Richard D. Irwin, revenues grew more
than 10 percent, considerably ahead of the industry average, due to growth in
custom publishing sales and market share gains in some textbook disciplines.
The revenue decline at Matthew Bender is the result of the major
restructuring program initiated in 1992 to enhance future operations by
transforming product lines, re-engineering work processes, reducing staff by
more than 40 percent and sharply reducing facilities and related expenses. By
marketing combined practice
18
<PAGE> 20
sets in core areas, instituting service fee annual subscription pricing and
holding prices in key areas to 1992 levels, Bender was able to substantially
reduce subscriber attrition rates in key product lines.
Operating profit for the segment was slightly below the prior year, which
included restructuring charges of $25.3 million for programs to streamline and
consolidate certain administrative functions within the training, higher
education, health information services and technical publishing operations.
Excluding these charges, 1994 operating profit would have dropped 13.1 percent
from the prior year, due primarily to the declines at Matthew Bender, and the
operating profit margin would have declined to 17.3 percent in 1994 from 20.2
percent in the prior year.
1993 Results
Professional Information revenues increased 6.1 percent in 1993. Revenue
gains from several small acquisitions in health information services in 1993 and
the fourth-quarter 1992 acquisition of Wm. C. Brown more than offset an
approximately 15 percent decline in revenue at Matthew Bender. Segment revenues
also benefited from the continued growth of the Red Cross product line at
Mosby-Year Book and market share gains within higher education publishing.
Operating profit for the segment included the previously mentioned
restructuring charges in 1993 of $25.3 million and, in 1992, a $96 million
charge for restructuring at Matthew Bender. Excluding these charges in both
years, the segment's operating profit would have been $200.2 million in 1993,
down 4.8 percent from $210.3 million in 1992. The operating profit margin for
the segment, excluding the restructuring charges, would have been 20.2 percent
in 1993 versus 22.5 percent in 1992.
CONSUMER MEDIA
Consumer Media revenues and operating losses were as follows (in millions):
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Revenues......................................... $289.9 $271.2 $277.8
====== ====== ======
Operating Loss................................... $ (4.9) $ (3.8) $ (3.5)
====== ====== ======
</TABLE>
1994 Results
Consumer Media revenues were up 6.9 percent in 1994 due to solid gains at
the magazines. The magazines benefited from higher advertising volume,
reflecting an industry-wide trend in 1994. Operating profit improvements in
these businesses were more than offset, however, by start-up losses associated
with the new consumer multimedia and television programming operations.
1993 Results
Revenue declines in 1993 were primarily attributable to art book
publishing, reflecting a drop in institutional sales. Revenues at the magazines
also declined slightly as advertising revenues remained weak nationally. A
revenue-driven decline in operating profit at art book publishing was largely
offset by improvements at the magazines stemming from cost containment efforts.
LIQUIDITY AND CAPITAL RESOURCES
During 1994, Times Mirror generated $315.4 million in net cash from
continuing operations, compared with $302.5 million in 1993, as sharply reduced
cash outlays for restructuring activities and interest payments in 1994 were
largely offset by higher cash payments for income taxes due to an increase in
taxable income. The higher taxable income in 1994 was due primarily to the drop
in restructuring-related cash payments and a significant reduction in benefit
costs, related to a substantially lower prefunding for the Company's VEBA as
compared to the prior year.
19
<PAGE> 21
Net cash provided by investing activities of continuing operations during
1994 totaled $78.9 million, compared with a net use of cash in 1993 of $195.3
million. Higher proceeds from asset sales in 1994, due to the receipt of
approximately $300 million from last year's sale of the broadcast television
stations, were slightly offset by a modest rise in capital and product
development spending as compared to the prior year. Capital spending in 1995 by
the Company's continuing operations may exceed 1994 levels by more than 20
percent as a result of the planned investment in a company-wide digital network
and other new initiatives throughout the Company's business segments.
Net cash used in financing activities rose to $398.0 million in 1994 from
$218.6 million in the prior year, primarily reflecting a reduction in debt using
proceeds from the sale of the broadcast television stations. Total debt at
December 31, 1994 of $892.3 million was down $239.5 million from the 1993
year-end level, and the debt-to-adjusted-capitalization ratio dropped to 31.3
percent from 37.3 percent at the prior year-end. Times Mirror paid dividends to
shareholders of $138.9 million in both 1994 and 1993.
POST-MERGER CASH, FINANCINGS AND CAPITAL RESOURCES
In connection with the cable transaction as described in Note 18 to the
Consolidated Financial Statements, Times Mirror borrowed approximately $1.306
billion immediately prior to the completion of the transaction on February 1,
1995. This debt, along with $57.3 million of fixed rate debt which was not
previously tendered or exchanged, was assumed by Cox in the merger. About
one-third of the proceeds from the $1.306 billion borrowing were used to retire
the short-term borrowings issued to finance the debt tender offer and to redeem
the $100 million 8 7/8% Notes which were called on February 1, 1995.
Approximately $125 million of the proceeds are being used to retire all
commercial paper borrowings. As of February 1, 1995, Times Mirror had total debt
of approximately $281.2 million, $34.7 million of commercial paper and $246.5
million of long-term debt. Cash of approximately $659 million as of February 1,
1995, primarily representing the cash remaining after the aforementioned debt
payouts, is invested in short-term money market instruments with a weighted
average interest rate of 5.8%.
On February 1, 1995, Times Mirror's commercial paper program and shelf
registration statements were terminated as a result of the merger, since those
arrangements were established by Times Mirror which was merged with Cox.
Effective February 9, 1995, Times Mirror terminated its $480 million of
unsecured domestic revolving lines of credit. Replacement domestic lines of
credit are expected to be available in the future if the need arises. Times
Mirror terminated its $150 million in foreign unsecured revolving lines of
credit effective March 17, 1995.
Cash flow from continuing operations in 1995 is expected to contribute to
the Company's financial resources. Cash flow in 1995 and future years is
expected to benefit from lower interest expense, interest earned on cash
invested, and significantly reduced dividend and capital expenditure
requirements. As previously discussed, Times Mirror expects to use its cash
resources, including cash flow from continuing operations, for a number of
purposes, including developing its existing businesses and investing in new
information franchises such as television programming, multimedia software and
electronic advertising and shopping services. In addition, Times Mirror is
investing in a company-wide digital network of product, marketing and
administrative databases.
At the time of the execution of the merger agreement to merge its cable
operations with those of Cox, Times Mirror committed up to $200 million to a
partnership with Cox. The partnership is expected to develop and purchase
substantial investment interests in theme-based cable television programming
operations. The $200 million is expected to be contributed as capital calls are
made.
POST-MERGER DIVIDEND POLICY
In connection with the cable transaction, Times Mirror expects to issue
approximately $412 million in face amount of Series A Preferred Stock to the
Chandler Trusts. This series of Preferred Stock will have a perpetual fixed-rate
dividend which will be established within 90 days after completion of the
transaction. Also in connection with the cable transaction, the Company launched
an Exchange Offer on February 16, 1995, pursuant to which shareholders, other
than the Chandler Trusts, were given the opportunity to exchange
20
<PAGE> 22
shares of Series A Common Stock and Series C Common Stock for shares of Series B
Preferred Stock. The Exchange Offer expires on March 16, 1995, and upon
completion the Company expects to have approximately $350 million of Series B
Preferred Stock. The Series B Preferred Stock will convert into Series A Common
Stock in early 1998. The Series B Preferred Stock may, however, be called for
redemption earlier under certain circumstances, with the redemption price
payable in shares of Series A Common Stock. Earnings per common share will be
negatively affected as a result of the dividends on the Series A Preferred Stock
and Series B Preferred Stock. Subsequent to the issuance of the financial
statements, the annual dividend rate on the Series A Preferred Stock was
established at 8%. The total dividends on preferred shares are expected to be
approximately $47 million in 1995, $56 million in 1996 and 1997, $39 million in
1998 and $33 million thereafter as long as the Series A Preferred Stock is
outstanding. Beginning in June 1995 and continuing for a period of three years,
the Company has agreed to pay an annual dividend to common shareholders of no
less than 24 cents per share, subject to the fiduciary duties of its board of
directors. Thereafter, the payment of dividends on common stock will depend on
future earnings, capital requirements, financial condition and other factors.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors..................................... 22
Consolidated Statements of Operations -- Years Ended December 31, 1994, 1993 and
1992................................................................................ 23
Consolidated Balance Sheets -- December 31, 1994 and December 31, 1993................ 24
Consolidated Statements of Shareholders' Equity -- Years Ended December 31, 1994, 1993
and 1992............................................................................ 25
Consolidated Statements of Cash Flows -- Years Ended December 31, 1994, 1993 and
1992................................................................................ 26
Notes to Consolidated Financial Statements............................................ 27
Financial Statement Schedules:
Schedule VIII -- Valuation and Qualifying Accounts and Reserves..................... 45
</TABLE>
All other schedules are omitted because they are not required by the
regulations or related instructions or are not applicable.
21
<PAGE> 23
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders and Board of Directors
The Times Mirror Company
We have audited the accompanying consolidated balance sheets of The Times Mirror
Company as of December 31, 1994 and 1993, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1994. Our audits also included the
financial statement schedule listed in the Index to Financial Statements and
Financial Statement Schedules. These financial statements and schedule are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The Times Mirror
Company at December 31, 1994 and 1993, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
As discussed in Notes 9 and 13 to the consolidated financial statements, in 1992
the company changed its method of accounting for income taxes and postretirement
benefits other than pensions.
ERNST & YOUNG LLP
Los Angeles, California
February 1, 1995
22
<PAGE> 24
THE TIMES MIRROR COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS) 1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Revenues................................................... $3,357,450 $3,243,749 $3,155,430
---------- ---------- ----------
Costs and Expenses
Cost of sales............................................ 1,778,892 1,759,052 1,716,971
Selling, general and administrative expenses............. 1,284,218 1,215,491 1,172,000
Restructuring charges.................................... 80,164 202,700
---------- ---------- ----------
3,063,110 3,054,707 3,091,671
---------- ---------- ----------
Operating Profit........................................... 294,340 189,042 63,759
Interest expense......................................... (69,459) (84,054) (74,281)
Nonrecurring gains....................................... 22,099
Other, net............................................... 767 4,797 3,420
---------- ---------- ----------
Income (loss) from continuing operations before income
taxes................................................. 247,747 109,785 (7,102)
Income taxes............................................. 121,509 58,116 11,267
---------- ---------- ----------
Income (loss) from continuing operations................. 126,238 51,669 (18,369)
Discontinued operations:
Income from discontinued operations, net of income
taxes............................................... 59,111 133,788 75,144
Gain on sale of discontinued operations, net of income
taxes............................................... 131,702
Extraordinary loss on early retirement of debt, net of
income tax benefit of $8,517.......................... (12,232)
Cumulative effect of changes in accounting principles:
Postretirement benefits, net of income tax benefit of
$84,931............................................. (133,376)
Income taxes.......................................... 10,000
---------- ---------- ----------
Net Income (Loss).......................................... $ 173,117 $ 317,159 $ (66,601)
========== ========== ==========
Earnings (loss) per share:
Continuing operations.................................... $ .98 $ .40 $ (.14)
Discontinued operations:
Income from operations................................ .46 1.04 .58
Gain on sale.......................................... 1.02
Extraordinary loss....................................... (.09)
Cumulative effect of changes in accounting principles:
Postretirement benefits............................... (1.04)
Income taxes.......................................... .08
---------- ---------- ----------
Earnings (loss) per share.................................. $ 1.35 $ 2.46 $ (.52)
========== ========== ==========
</TABLE>
See notes to consolidated financial statements
23
<PAGE> 25
THE TIMES MIRROR COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
(IN THOUSANDS OF DOLLARS) 1994 1993
---------- ----------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents......................................... $ 81,944 $ 46,756
Accounts receivable, less allowances for doubtful accounts and
returns of $72,317 and $70,866................................. 535,982 511,347
Note and other receivables........................................ 296,458
Inventories....................................................... 153,017 161,251
Deferred income taxes............................................. 40,965
Net assets of discontinued cable television operations............ 642,377
Prepaid expenses.................................................. 119,960 160,097
---------- ----------
Total current assets...................................... 1,533,280 1,216,874
Net property, plant and equipment................................... 1,311,130 1,308,628
Goodwill............................................................ 732,293 714,357
Net assets of discontinued cable television operations.............. 606,678
Other intangibles................................................... 124,082 132,690
Deferred charges.................................................... 154,989 156,957
Other assets........................................................ 409,527 363,713
---------- ----------
$4,265,301 $4,499,897
========== ==========
LIABILITIES
Current Liabilities
Accounts payable.................................................. $ 362,139 $ 380,005
Short-term debt................................................... 645,870 336,356
Accrued liabilities............................................... 43,741 94,436
Employees' compensation........................................... 108,673 97,226
Deferred income taxes............................................. 36,681
Unearned income................................................... 201,162 177,738
Other current liabilities......................................... 88,091 57,405
---------- ----------
Total current liabilities................................. 1,486,357 1,143,166
Long-term debt...................................................... 246,462 795,454
Deferred income taxes............................................... 131,163 196,869
Postretirement benefits............................................. 249,200 250,894
Other liabilities................................................... 195,076 214,239
---------- ----------
2,308,258 2,600,622
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common stock
Series A, $1 par value; 300,000,000 shares authorized;
99,024,000 and 97,588,000 issued............................... 99,024 97,588
Series B, $1 par value; 100,000,000 shares authorized; no shares
issued.........................................................
Series C, convertible, $1 par value, 150,000,000 shares
authorized;
30,939,000 and 32,366,000 issued............................... 30,939 32,366
Preferred stock, $1 par value; 4,500,000 shares authorized; no
shares issued.....................................................
Additional paid-in capital.......................................... 167,898 167,490
Retained earnings................................................... 1,720,725 1,687,574
---------- ----------
2,018,586 1,985,018
Less treasury stock, at cost; 1,345,000 Series A shares............. 61,543 61,543
Less guaranteed debt of ESOP........................................ 24,200
---------- ----------
1,957,043 1,899,275
---------- ----------
$4,265,301 $4,499,897
========== ==========
</TABLE>
See notes to consolidated financial statements
24
<PAGE> 26
THE TIMES MIRROR COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
THREE YEARS ENDED DECEMBER 31, 1994
---------------------------------------------------------------------------------
COMMON STOCK ADDITIONAL
------------------- PAID-IN RETAINED TREASURY GUARANTEED
(IN THOUSANDS OF DOLLARS) SERIES A SERIES C CAPITAL EARNINGS STOCK ESOP DEBT TOTAL
-------- -------- ---------- ---------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1991..... $ 95,067 $ 34,797 $ 157,553 $1,722,734 $(61,543) $(64,600 ) $1,884,008
Conversion of Series C shares
to Series A shares.......... 1,438 (1,438)
Transactions related to stock
option and restricted stock
plans....................... 29 23 6,343 6,395
Dividends on common stock;
$1.08 per share............. (138,861) (138,861)
Net loss....................... (66,601) (66,601)
Reduction of guaranteed ESOP
debt........................ 19,000 19,000
Translation losses and other... (3,295) (3,295)
-------- -------- ---------- ---------- -------- --------- ----------
Balance at December 31, 1992..... 96,534 33,382 163,896 1,513,977 (61,543) (45,600 ) 1,700,646
Conversion of Series C shares
to Series A shares.......... 1,034 (1,034)
Transactions related to stock
option and restricted stock
plans....................... 20 18 3,594 3,632
Dividends on common stock;
$1.08 per share............. (138,887) (138,887)
Net income..................... 317,159 317,159
Reduction of guaranteed ESOP
debt........................ 21,400 21,400
Translation losses............. (4,675) (4,675)
-------- -------- ---------- ---------- -------- --------- ----------
Balance at December 31, 1993..... 97,588 32,366 167,490 1,687,574 (61,543) (24,200 ) 1,899,275
Conversion of Series C shares
to Series A shares.......... 1,442 (1,442)
Transactions related to stock
option and restricted stock
plans....................... (6) 15 408 417
Dividends on common stock;
$1.08 per share............. (138,904) (138,904)
Net income..................... 173,117 173,117
Reduction of guaranteed ESOP
debt........................ 24,200 24,200
Translation gains and other.... (1,062) (1,062)
-------- -------- ---------- ---------- -------- --------- ----------
Balance at December 31, 1994..... $ 99,024 $ 30,939 $ 167,898 $1,720,725 $(61,543) $1,957,043
======== ======== ========= ========== ======== ========= ==========
</TABLE>
See notes to consolidated financial statements
25
<PAGE> 27
THE TIMES MIRROR COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------
(IN THOUSANDS OF DOLLARS) 1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income (loss) from continuing operations.............. $ 126,238 $ 51,669 $ (18,369)
Adjustments to derive cash flows from continuing
operating activities:
Depreciation and amortization...................... 170,010 170,978 158,489
Net change in restructuring liability.............. (64,492) (35,523) 169,063
Amortization of product development costs.......... 59,574 55,876 51,948
Nonrecurring gains................................. (22,099)
Provision for doubtful accounts.................... 20,548 23,105 38,523
Provision (benefit) for deferred income taxes...... 14,378 (1,851) (32,593)
Changes in assets and liabilities:
Trade accounts receivable........................ (44,652) (34,771) (33,254)
Inventories...................................... 6,005 5,618 (265)
Accounts payable................................. (159) 15,184 11,664
Income taxes..................................... 5,243 75,761 (27,942)
Other, net......................................... 44,781 (23,587) (13,232)
--------- --------- ---------
Net cash provided by continuing operating
activities....................................... 315,375 302,459 304,032
Income from discontinued operations................... 59,111 133,788 75,144
Adjustment to derive cash flows from discontinued
operating activities:
Change in net operating assets..................... 111,530 (1,454) 104,741
--------- --------- ---------
Net cash provided by discontinued operating
activities....................................... 170,641 132,334 179,885
--------- --------- ---------
Net cash provided by operating activities.......... 486,016 434,793 483,917
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of assets......................... 340,035 33,546 46,842
Capital expenditures.................................. (128,431) (111,703) (115,740)
Additions to product development costs................ (66,817) (61,722) (62,002)
Acquisitions, net of cash acquired.................... (47,229) (54,318) (155,130)
Other, net............................................ (18,698) (1,091) 3,989
--------- --------- ---------
Net cash provided by (used in) investing activities
of continuing operations......................... 78,860 (195,288) (282,041)
Net cash used in investing activities of
discontinued cable operations.................... (131,677) (32,033) (178,857)
--------- --------- ---------
Net cash used in investing activities.............. (52,817) (227,321) (460,898)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance (repayment) of commercial paper, net......... (233,901) (10,120) 243,209
Principal repayments of long-term debt................ (344,357) (301,228) (101,722)
Proceeds from issuance of long-term debt and
short-term borrowings.............................. 363,680 249,397 254
Dividends paid........................................ (138,901) (138,878) (138,846)
Repayment of guaranteed ESOP debt..................... (24,200) (21,400) (19,000)
Other, net............................................ (20,332) 3,632 6,395
--------- --------- ---------
Net cash used in financing activities.............. (398,011) (218,597) (9,710)
--------- --------- ---------
Increase (decrease) in cash and cash equivalents...... 35,188 (11,125) 13,309
Cash and cash equivalents at beginning of year........ 46,756 57,881 44,572
--------- --------- ---------
Cash and cash equivalents at end of year.............. $ 81,944 $ 46,756 $ 57,881
========= ========= =========
</TABLE>
See notes to consolidated financial statements
26
<PAGE> 28
THE TIMES MIRROR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation. The consolidated financial statements include
the accounts of the company and its subsidiaries after elimination of all
significant intercompany transactions and balances. Affiliated companies in
which the company owns a 20 percent to 50 percent interest are accounted for by
the equity method.
Reclassifications and Restatements. Certain amounts in previously issued
financial statements have been reclassified to conform to the 1994 presentation.
Financial information in the Notes to Consolidated Financial Statements has been
restated to exclude discontinued operations, except where noted.
Changes in Accounting Principle. Effective January 1, 1992, the company
adopted new accounting principles for income taxes and postretirement benefits.
These changes in accounting are described in Note 9 and Note 13, respectively.
Cash and Cash Equivalents. Cash equivalents consist of investments that are
readily convertible into cash and generally have original maturities of three
months or less. Cash equivalents of $39,813,000 and $20,418,000 at December 31,
1994 and 1993, respectively, were primarily commercial paper and repurchase
agreements.
Under the company's cash management system, the bank notifies the company
daily of checks presented for payment against its primary disbursing accounts.
The company transfers funds from other sources such as short-term investments or
commercial paper issuance to cover the checks presented for payment. This
program results in a book cash overdraft in the primary disbursing accounts as a
result of checks outstanding. The book overdraft, which was reclassified to
accounts payable, was $54,263,000 and $41,733,000 at December 31, 1994 and 1993,
respectively.
Inventories. Inventories are carried at the lower of cost or market and are
determined under the first-in, first-out method for books and certain finished
products, and under the last-in, first-out method for newsprint, paper and
certain other inventories.
Property, Plant and Equipment. Property, plant and equipment are carried on
the basis of cost. Maintenance and repairs are charged to expense as incurred.
Additions, improvements and replacements are capitalized.
Depreciation is provided on a straight-line basis over the estimated useful
lives as follows:
<TABLE>
<S> <C>
Buildings.................... 10-55 years
Machinery and equipment...... 2-20 years
Leasehold improvements....... Lesser of useful life or lease term
</TABLE>
Goodwill and Other Intangibles. Goodwill recognized in business
combinations accounted for as purchases subsequent to October 31, 1970
($718,840,000 at December 31, 1994, and $700,904,000 at December 31, 1993 net of
accumulated amortization of $168,904,000 and $145,295,000, respectively) is
being amortized primarily over a period of 40 years. Goodwill arising from
business combinations consummated prior to November 1, 1970 is not being
amortized because, in the opinion of management, it has not diminished in value.
Goodwill amortization expense amounted to $23,973,000 for 1994, $20,327,000 for
1993 and $18,538,000 for 1992.
Other intangibles arising in connection with acquisitions are being
amortized on a straight-line basis over their estimated useful lives ranging
from 3 to 21 years. Accumulated amortization was $100,747,000 and $98,597,000 at
December 31, 1994 and 1993, respectively.
The company assesses on an ongoing basis the recoverability of intangible
assets, including goodwill, based on estimates of future undiscounted cash flows
for the applicable business compared to net book value.
27
<PAGE> 29
THE TIMES MIRROR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
If the future undiscounted cash flow estimate were less than net book value, net
book value would then be reduced to the undiscounted cash flow estimate. The
company also evaluates the amortization periods of assets, including goodwill
and other intangible assets, to determine whether events or circumstances
warrant revised estimates of useful lives.
Deferred Charges. Deferred charges for book design and teaching aids and
training material preparation and duplicating costs are written off over the
estimated product life as the products are sold. Magazine subscription selling
expenses are charged to expense over the same period as the related revenue is
earned.
Revenue Recognition. Revenues from certain products sold with the right of
return, principally books, are recognized net of a provision for estimated
returns. Revenues from newspaper and magazine subscriptions and professional
service fee annual subscriptions are deferred as unearned income at the time of
the sale. A pro rata share of the newspaper and magazine subscription price is
included in revenue as products are delivered to subscribers. Professional
service fee annual subscription revenues are recognized on a straight-line basis
over the life of the subscription service.
Earnings Per Share. Earnings per share computations are based upon the
weighted average number of shares of common stock and dilutive common stock
equivalents outstanding during the year. Fully diluted earnings per share are
the same as the earnings per share indicated.
Retirement Plans and Postretirement Benefits. The company has defined
benefit pension plans and various other contributory and noncontributory
retirement plans covering substantially all employees. In general, benefits
under the defined benefit plans are based on years of service and the employee's
compensation during the last five years of employment. In determining net
periodic pension expense (income), prior service costs are amortized on a
straight-line basis over 10 years. The defined benefit plans are generally
funded on a current basis in accordance with the Employee Retirement Income
Security Act of 1974. An Employee Stock Ownership Plan (ESOP) provides benefits
in conjunction with certain defined benefits, and the fair value of ESOP assets
is recognized as an offset to required funding. The majority of the company's
employees are covered by one defined benefit plan. Funding is not expected to be
required for this plan in the near future as this plan is overfunded.
Postretirement health care benefits provided by the company are unfunded
and cover employees hired before January 1, 1993, or approximately half of the
company's current employees. The various plans have significantly different
provisions for lifetime maximums, retiree cost-sharing, health care providers,
prescription drug coverage and other benefits. Postretirement life insurance
benefits are generally insured by life insurance policies and cover employees
who retired on or before December 31, 1993. Life insurance benefits vary by
plan, ranging from $1,000 to $250,000. Certain employees become eligible for the
postretirement health care benefits if they meet minimum age and service
requirements and retire from full-time, active service.
Voluntary Employee Beneficiary Association. The company maintains a
Voluntary Employee Beneficiary Association (VEBA) trust to fund certain health
care benefits. At December 31, 1994 and 1993, the VEBA trust balance of
$20,112,000 and $53,949,000, respectively, is included in "Prepaid expenses."
NOTE 2 -- CAPITAL STOCK
Shares of Series A and Series C common stock are identical, except with
respect to voting rights, restrictions on transfer of Series C shares and the
right to convert Series C shares into Series A shares. Series A shares are
entitled to one vote per share and Series C shares are entitled to ten votes per
share. Series C shares are subject to mandatory conversion into Series A shares
upon transfer to any person other than a "Permitted Transferee" as defined in
the company's Certificate of Incorporation or upon the occurrence of certain
regulatory events. Series B common stock is entitled to one-tenth vote per share
and is available for
28
<PAGE> 30
THE TIMES MIRROR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
common stock issuance transactions, such as underwritten public offerings and
acquisitions. The preferred stock is issuable in series under such terms and
conditions as the board of directors may determine. See Note 18 for information
on the company's new capital structure.
NOTE 3 -- ACQUISITION
On October 30, 1992, the company acquired Wm. C. Brown Communications,
Inc., a leading publisher of college textbooks. This acquisition was accounted
for by the purchase method and resulted in a non-cash transaction of $30,112,000
for liabilities assumed. The operations of this company are reflected in the
company's financial statements from the date of acquisition. This acquisition
resulted in goodwill of $66,653,000, which is being amortized over 40 years. Pro
forma results for 1992, assuming this acquisition occurred on January 1, are not
materially different from the results reported.
NOTE 4 -- RESTRUCTURING CHARGES
The company charged the estimated costs related to restructuring actions
against operations in 1992 and 1993. Remaining liabilities of $38,368,000
related to these restructuring charges are included in the consolidated balance
sheet at December 31, 1994, and primarily represent severance costs as well as
lease payments which will be paid over lease periods extending to 2002.
During 1993, the company recorded restructuring charges of $80,164,000
($47,724,000 after taxes, or 37 cents per share). More than half of this amount
was for severance or pay-related actions and approximately forty percent related
to leased facilities, product line changes and other costs necessary to
implement the company's plans. The remainder included various asset write-offs.
During 1992, the company recorded restructuring charges of $202,700,000
($123,248,000 after taxes, or 96 cents per share). Nearly two-thirds of this
amount was for severance or pay-related actions. Approximately fifteen percent
was for leased facilities, while the remainder related to product line changes
and other costs necessary to implement the restructuring plan at Matthew Bender.
NOTE 5 -- NONRECURRING GAINS
During 1994, the company recognized a gain of $11,872,000, or $4,215,000 (3
cents per share) after applicable income taxes, on the divestiture of a small
elementary-high school book publishing operation. The company also sold
preferred stock and common stock warrants, obtained as part of the 1992
settlement of a note receivable related to the 1987 sale of the Denver Post, for
a gain of $10,227,000, or $6,431,000 (5 cents per share) after applicable income
taxes.
NOTE 6 -- INTEREST
For the years ended December 31, 1994, 1993 and 1992, interest expense of
$70,601,000, $84,445,000 and $78,244,000, respectively, was incurred;
$1,142,000, $391,000 and $3,963,000 of which was capitalized. Interest paid, net
of amounts capitalized, was $71,654,000 in 1994, $87,951,000 in 1993 and
$80,195,000 in 1992.
29
<PAGE> 31
THE TIMES MIRROR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1994 1993
-------- --------
<S> <C> <C>
Newsprint, paper and other raw materials............... $ 33,789 $ 39,066
Books and other finished products...................... 94,290 94,675
Work-in-progress....................................... 24,938 27,510
-------- --------
$153,017 $161,251
======== ========
</TABLE>
Inventories determined on the last-in, first-out method were $21,946,000
and $26,994,000 at December 31, 1994 and 1993, respectively, and would have been
higher by $9,825,000 in 1994 and $8,232,000 in 1993 had the first-in, first-out
method (which approximates current cost) been used exclusively.
NOTE 8 -- NET PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1994 1993
---------- ----------
<S> <C> <C>
Land................................................ $ 95,483 $ 96,213
Buildings........................................... 599,611 583,472
Machinery and equipment............................. 1,355,211 1,320,220
Leasehold improvements.............................. 34,597 33,089
Construction-in-progress............................ 54,939 36,243
---------- ----------
2,139,841 2,069,237
Less accumulated depreciation and amortization...... 828,711 760,609
---------- ----------
$1,311,130 $1,308,628
========== ==========
</TABLE>
NOTE 9 -- INCOME TAXES
Income tax expense (benefit) from continuing operations consists of the
following (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
-------- ------- --------
<S> <C> <C> <C>
Current
Federal................................... $ 71,920 $34,561 $ 10,789
State..................................... 22,950 14,715 19,997
Foreign................................... 12,261 10,691 13,074
Deferred
Federal................................... 5,932 (4,333) (22,627)
State..................................... 8,446 2,482 (9,966)
-------- ------- --------
$121,509 $58,116 $ 11,267
======== ======= ========
</TABLE>
Income taxes paid were $105,328,000 in 1994, $6,593,000 in 1993 and
$74,239,000 in 1992.
The company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," and recorded a cumulative adjustment increasing
net income by $10,000,000 (8 cents per share) as of January 1, 1992. There was
no other effect on earnings for 1992.
30
<PAGE> 32
THE TIMES MIRROR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The difference between actual income tax expense and the U.S. Federal
statutory income tax expense for continuing operations is reconciled as follows
(in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Income (loss) from continuing operations
before income taxes:
United States............................ $221,532 $ 88,803 $(28,278)
Foreign.................................. 26,215 20,982 21,176
-------- -------- --------
$247,747 $109,785 $ (7,102)
======== ======== ========
Federal statutory income tax rate.......... 35% 35% 34%
Federal statutory income tax expense
(benefit)................................ $ 86,711 $ 38,425 $ (2,415)
Increase (decrease) in income taxes
resulting from:
State and local income taxes,
net of Federal effect................. 20,407 11,179 6,620
Goodwill amortization not deductible
for tax purposes...................... 7,569 7,120 6,462
Book donations value in excess of cost... (1,618) (2,194) (1,881)
Foreign tax differentials................ 416 1,154 1,428
Other.................................... 8,024 2,432 1,053
-------- -------- --------
$121,509 $ 58,116 $ 11,267
======== ======== ========
</TABLE>
The tax effect of temporary differences results in deferred income tax
assets (liabilities) and balance sheet classifications as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
TEMPORARY DIFFERENCES 1994 1993
--------------------- --------- ---------
<S> <C> <C>
Depreciation and other property, plant and
equipment differences.............................. $(199,727) $(183,781)
Retirement and health benefits....................... (118,746) (137,361)
Postretirement benefits.............................. 112,028 109,215
Valuation and other reserves......................... 81,751 84,986
Deferred gain on sale of assets...................... (84,901) (84,901)
Other employee benefits.............................. 43,473 37,533
State and local income taxes......................... 19,444 19,400
Restructuring charges................................ 15,424 21,785
Intangible asset differences......................... (36,711) (26,498)
Other deferred tax assets............................ 32,991 31,306
Other deferred tax liabilities....................... (32,870) (27,588)
--------- ---------
$(167,844) $(155,904)
========= =========
BALANCE SHEET CLASSIFICATION
----------------------------
Current deferred tax assets.......................... $ 40,965
Current deferred tax liabilities..................... $ (36,681)
Noncurrent deferred tax liabilities.................. (131,163) (196,869)
--------- ---------
$(167,844) $(155,904)
========= =========
</TABLE>
31
<PAGE> 33
THE TIMES MIRROR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 -- DEBT
Short-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1994 1993
-------- --------
<S> <C> <C>
Commercial paper....................................... $124,330 $312,000
Short-term borrowings.................................. 363,680
8 7/8% Notes due February 1, 1998, called on February
1, 1995.............................................. 100,000
Debt to be assumed by Cox Communications, Inc.......... 57,349
Current maturities of long-term debt................... 511 24,356
-------- --------
Total short-term debt.................................. $645,870 $336,356
======== ========
</TABLE>
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1994 1993
-------- --------
<S> <C> <C>
Commercial paper....................................... $ 46,231
7 1/8% Debentures due March 1, 2013.................... $148,215 150,000
7 3/8% Debentures due July 1, 2023..................... 98,750 100,000
8 7/8% Notes due March 1, 2001......................... 100,000
8.70% Notes due June 15, 1999.......................... 100,000
8.55% Notes due June 1, 2000........................... 99,500
8 7/8% Notes due February 1, 1998...................... 100,000
Medium-Term Notes due from March 20, 1997 to
April 3, 2000, with an average interest rate of
8.63%................................................ 100,000
Guaranteed debt of ESOP maturing through
December 15, 1994.................................... 24,200
Others at various interest rates, maturing through
2001................................................. 1,539 1,761
-------- --------
248,504 821,692
Unamortized discount................................... (1,531) (1,882)
Current maturities..................................... (511) (24,356)
-------- --------
Total long-term debt................................... $246,462 $795,454
======== ========
</TABLE>
Commercial paper borrowings of $124,330,000 and $358,231,000 at December
31, 1994 and 1993, respectively, carried a weighted average interest rate of
6.1% in 1994 and 3.3% in 1993. Short-term borrowings of $363,680,000 at December
31, 1994 carried a weighted average interest rate of 6.1%. The company has
agreements with several domestic and foreign banks for unsecured revolving lines
of credit which support its commercial paper and short-term borrowings. The
domestic agreements, which were canceled on February 9, 1995, provided for
borrowings up to $480,000,000 at the banks' base rates. The commitment fee was
3/20 of one percent per annum. The foreign agreements, which were terminated
effective March 17, 1995, provide for borrowings up to $150,000,000 at interest
rates based on, at the company's option, London Interbank Offered Rates (LIBOR),
certificate of deposit rates or the bank's base rate. The commitment fee was
1/16 of one percent per annum. As of December 31, 1994, the company had not
borrowed under these agreements. In addition, the company has $49,037,000 of
unused standby letters of credit at December 31, 1994.
The company completed a tender offer in December 1994 and an exchange offer
in January 1995. The tender offer for its Medium-Term Notes and its three other
Notes due 1999 thru 2001 resulted in the tender of $345,179,000. The premium and
related costs of the tender, aggregating $20,749,000, or $12,232,000 after
taxes, were recorded as an extraordinary loss. The exchange offer resulted in
the exchange of $246,965,000 of
32
<PAGE> 34
THE TIMES MIRROR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
the 7 1/8% and 7 3/8% Debentures for similar debentures bearing interest rates
of 7 1/4% and 7 1/2%. The $57,349,000 of debt that was not tendered or exchanged
is being assumed by Cox Communications, Inc. (Cox) as part of the reorganization
described in Note 18. This debt was transferred to Cox on February 1, 1995.
The 8 7/8% Notes due on February 1, 1998 were called and repaid on February
1, 1995.
The company's agreements with banks contain restrictive provisions relating
primarily to levels of indebtedness and maintenance of net worth. Under the most
restrictive of these agreements, consolidated debt may not exceed 135% of
consolidated net worth, and consolidated net worth must be at least
$1,250,000,000. Upon termination of the unsecured revolving lines of credit in
the first quarter of 1995, the company's most restrictive debt covenant limits
secured debt issuances and guarantees to ten percent of shareholders' equity.
At December 31, 1994, the aggregate principal maturities of the company's
debt for the five subsequent years are as follows (in thousands):
<TABLE>
<S> <C>
1995...................................... $645,870
1996...................................... 273
1997...................................... 230
1998...................................... 74
1999...................................... 60
</TABLE>
NOTE 11 -- FAIR VALUE OF FINANCIAL INSTRUMENTS
The company has two interest rate swap agreements, one for $150,000,000
expiring in 2010 and one for $100,000,000 expiring in 2023. These agreements
exchange payments to the company at fixed rates of 7 1/8% and 7 3/8%,
respectively, for payments by the company at a variable rate based generally on
LIBOR, beginning in 1995. These payments will be recognized as an adjustment to
interest expense related to the debt. The fair value of these swaps is the
amount at which they could be settled, based on estimates of mark-to-market
rates. At December 31, 1994, the company would pay $13,000,000 to terminate its
interest rate swap agreements. This amount is not recognized in the financial
statements.
The fair value of long-term debt at December 31, 1994, based primarily on
the company's current refinancing rates for publicly issued fixed rate debt with
comparable maturities, was $214,774,000, compared with a carrying value of
$246,462,000. The carrying value of short-term debt at December 31, 1994
approximates fair value due to the short maturity periods for these instruments.
NOTE 12 -- STOCK OPTION AND AWARD PLANS
The company has various stock option plans and a Key Employee Long-Term
Incentive Plan (Incentive Plan) under which options may be granted to purchase
shares of Series A common stock at a price equal to the fair market value at the
date of grant. Options granted prior to December 27, 1991 had a purchase price
equal to 75 percent of the fair market value at the date of grant. The Incentive
Plan allows for the granting of incentive stock options, nonqualified stock
options and deferred cash incentive awards. Options that are not exercised
expire ten years from the date of grant. Options generally vest over a four-year
period. Certain stock options vest nine years and nine months from the date of
grant, and accelerated vesting for these options is
33
<PAGE> 35
THE TIMES MIRROR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
available based on performance goals determined by the Board of Directors over a
three-year performance period. The following table sets forth information
relative to the plans:
<TABLE>
<CAPTION>
NUMBER OF OPTION
SHARES PRICE PER SHARE
--------- -------------------
<S> <C> <C> <C> <C>
Options Outstanding January 1, 1992............ 1,609,720 $18.66 to $37.93
Granted...................................... 456,550 30.13 to 36.94
Exercised.................................... (116,027) 18.66 to 28.36
Canceled..................................... (55,025) 19.46 to 36.94
--------- -------------------
Options Outstanding December 31, 1992.......... 1,895,218 18.66 to 37.93
Granted...................................... 2,425,960 31.25 to 32.13
Exercised.................................... (138,721) 18.66 to 30.71
Canceled..................................... (170,909) 18.66 to 36.94
--------- -------------------
Options Outstanding December 31, 1993.......... 4,011,548 18.66 to 37.93
Granted...................................... 961,255 30.81 to 34.38
Exercised.................................... (134,135) 19.46 to 32.13
Canceled..................................... (306,011) 18.66 to 36.94
--------- -------------------
Options Outstanding December 31, 1994.......... 4,532,657 $19.46 to $37.93
========= ===================
Options Exercisable December 31, 1994.......... 1,199,259 $19.46 to $37.93
========= ===================
</TABLE>
At December 31, 1994, there were 402,997 options outstanding with purchase
prices equal to 75 percent of the fair market value at the date of grant. At
December 31, 1994 and 1993, there were 1,018,710 shares and 1,508,824 shares,
respectively, reserved for future grants under the various plans.
In connection with the reorganization described in Note 18, the number of
options and the option price will be adjusted based on the average market price
for a short period before and after the reorganization is completed. The
adjustment will increase the number of options outstanding and will decrease the
option exercise price in order to preserve the economic value of the outstanding
options.
The company also has a restricted stock plan that provides for the sale of
1,600,000 shares of the company's common stock to key employees, including
officers, at a price equal to par value. The Incentive Plan generally replaced
the restricted stock sales. At December 31, 1994 and 1993, there were 1,203,925
shares of Series A common stock reserved for future sales. The company expects
that future sales will not be significant.
NOTE 13 -- RETIREMENT PLANS AND POSTRETIREMENT BENEFITS
Net periodic pension expense (income) for the defined benefit plans is as
follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Service cost -- benefits earned during period.............. $ 45,777 $ 51,138 $ 44,571
Interest cost on projected benefit obligation.............. 58,613 54,197 52,366
Return on plan assets...................................... (98,223) (90,888) (91,820)
Net amortization and deferral.............................. (14,480) (8,151) (13,626)
-------- -------- --------
Net periodic pension expense (income)...................... $ (8,313) $ 6,296 $ (8,509)
======== ======== ========
</TABLE>
34
<PAGE> 36
THE TIMES MIRROR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Assumptions used in the actuarial computations were as follows:
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1994 1993 1992
---- ---- -----
<S> <C> <C> <C>
Discount rate......................................... 8.25% 7.5 % 7.0 %
Rate of increase in compensation levels............... 6.0 % 6.25% 6.25%
Expected long-term rate of return on assets........... 9.5 % 9.75% 10.0 %
</TABLE>
The following table sets forth the plans' funded status and amounts
recognized in the consolidated balance sheets (in thousands):
<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
DECEMBER 31, 1994 BENEFITS EXCEED ASSETS
------------------------------------------------ ------------- -------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested........................................ $ 560,640 $ 29,801
Nonvested..................................... 4,865 436
----------- ---------
Accumulated benefit obligations................. $ 565,505 $ 30,237
=========== =========
Projected benefit obligations................... $ 739,069 $ 36,882
Plan assets at fair value....................... 1,003,034 8,055
----------- ---------
Plan assets greater (less) than projected
benefit obligations........................... 263,965 (28,827)
Unrecognized net loss from past experience
different from that assumed................... 122,759 6,563
Prior service cost not yet recognized........... 3,576 7,376
Unrecognized net transition (asset) liability... (90,915) 77
Adjustment to recognize additional minimum
liability..................................... (6,979)
----------- ---------
Prepaid pension cost (liability)................ $ 299,385 $ (21,790)
=========== =========
</TABLE>
<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
DECEMBER 31, 1993 BENEFITS EXCEED ASSETS
------------------------------------------------ ------------- -------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested........................................ $ 572,881 $ 9,224
Nonvested..................................... 8,033 447
----------- -------
Accumulated benefit obligations................. $ 580,914 $ 9,671
=========== =======
Projected benefit obligations................... $ 797,153 $ 9,833
Plan assets at fair value....................... 1,045,987 8,794
----------- -------
Plan assets greater (less) than projected
benefit obligations........................... 248,834 (1,039)
Unrecognized net loss from past experience
different from that assumed................... 121,006 5,163
Prior service cost not yet recognized........... 4,427 7
Unrecognized net transition asset............... (112,224)
Adjustment to recognize additional minimum
liability..................................... (5,008)
----------- -------
Prepaid pension cost (liability)................ $ 262,043 $ (877)
=========== =======
</TABLE>
Prepaid pension cost is included in "Other assets" except for approximately
$9,394,000 and $8,572,000 which is included in net assets of discontinued cable
television operations as of December 31, 1994 and 1993,
35
<PAGE> 37
THE TIMES MIRROR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
respectively. Projected benefit obligations decreased by approximately
$112,406,000 at December 31, 1994 primarily as a result of the change in the
discount rate.
Plan assets include the company's common stock, other listed stocks, and
corporate and government fixed-income securities. The fair value of plan assets
attributable to the company's common stock at December 31, 1994 and 1993 was
$197,400,000 and $192,085,000, respectively, of which $169,113,000 and
$161,995,000, respectively, relate to the ESOP. Benefits provided by the ESOP
are coordinated with certain pension benefits. At December 31, 1994, the ESOP
held 3,089,548 shares of Series A common stock and 2,292,265 shares of Series C
common stock. The ESOP currently covers approximately two-thirds of the
company's employees.
Substantially all employees over age 21 with one year of service are
eligible to participate in the company's Savings Plus Plan. Eligible employees
may contribute from 1 percent to 13 percent of their basic compensation. The
company makes matching contributions equal to 50 percent of employee before-tax
contributions from 1 percent to 6 percent. Employees may choose among five
investment options, including a company common stock fund, for investing their
contributions and the company's matching contribution. Defined contribution plan
expense, primarily related to the Savings Plus Plan, was $21,553,000 for 1994,
$23,776,000 for 1993 and $22,676,000 for 1992.
Net periodic postretirement benefit expense is as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Service cost -- benefits earned during
period...................................... $ 3,307 $ 3,457 $10,903
Interest cost on accumulated projected benefit
obligation.................................. 12,431 11,110 15,947
Net amortization.............................. (7,712) (8,155)
------- ------- -------
Net periodic postretirement expense........... $ 8,026 $ 6,412 $26,850
======= ======= =======
</TABLE>
Assumptions used in the actuarial computations were as follows:
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1994 1993 1992
----- ---- ----
<S> <C> <C> <C>
Discount rate......................................... 8.25% 7.5% 7.0%
Health care cost trend rate........................... 11.0 % 12.0% 13.0%
</TABLE>
At December 31, 1994, the health care cost trend rate of 11 percent was
assumed to ratably decline to 6.25 percent by 2008 and remain at that level.
The following table sets forth the plans' unfunded obligations and amounts
recognized in the consolidated balance sheet (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1994 1993
-------- --------
<S> <C> <C>
Actuarial present value of benefit obligations:
Retirees............................................. $119,445 $126,334
Other fully eligible participants.................... 10,958 8,232
Other active participants............................ 34,230 31,323
-------- --------
Accumulated postretirement benefit obligations......... 164,633 165,889
Unrecognized net decrease in prior service cost........ 94,200 102,614
Unrecognized net loss from past experience different
from that assumed.................................... (9,633) (17,609)
-------- --------
Postretirement benefit liability....................... $249,200 $250,894
======== ========
</TABLE>
36
<PAGE> 38
THE TIMES MIRROR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The assumed health care cost trend rate can significantly affect
postretirement expense and liabilities. An increase of 1 percent in the health
care cost trend rate would increase 1994 net periodic postretirement expense by
$1,467,000 and increase the accumulated postretirement benefit obligations as of
December 31, 1994 by $14,368,000.
The company adopted Statement of Financial Accounting Standards No. 106
(SFAS 106) "Employers' Accounting for Postretirement Benefits Other Than
Pensions," and recorded a cumulative charge of $218,307,000 ($133,376,000 net of
taxes, or $1.04 per share) as of January 1, 1992. SFAS 106 requires that
postretirement health care and life insurance be charged to expense over the
period the benefits are earned. The effect of this change in accounting
principle was to increase postretirement expense in 1992 by $20,221,000
($12,133,000 net of taxes, or 9 cents per share).
NOTE 14 -- LEASES
Rental expense under operating leases was $61,440,000, $63,021,000 and
$65,571,000 for the years ended December 31, 1994, 1993 and 1992, respectively.
Capital leases and contingent rentals are not significant. The future minimum
lease payments as of December 31, 1994 for all noncancelable operating leases
are as follows (in thousands):
<TABLE>
<S> <C>
1995.............................................................. $ 56,812
1996.............................................................. 48,324
1997.............................................................. 45,501
1998.............................................................. 40,885
1999.............................................................. 38,898
Later years....................................................... 153,490
--------
Total............................................................. $383,910
========
</TABLE>
NOTE 15 -- BUSINESS SEGMENTS
Financial data for the company's three business segments, Newspaper
Publishing, Professional Information and Consumer Media, presented on page 22 of
this report, are incorporated herein by reference. The Newspaper Publishing
segment publishes daily metropolitan newspapers in the east coast and west coast
regions of the United States, as well as several weekly newspapers. The
Professional Information segment publishes various books and other media,
including legal and health information services publications, higher education
textbooks, aeronautical charts and flight information, and sales and management
training programs. The Consumer Media segment publishes or develops a variety of
media, including special interest and trade magazines, art books, consumer
multimedia software and television programming. Total revenue by industry
segment includes sales to unaffiliated customers and intersegment sales, which
are accounted for at market price.
37
<PAGE> 39
THE TIMES MIRROR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16 -- QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
A summary of the unaudited quarterly results of operations follows (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
1994 QUARTERS ENDED MAR. 27(1) JUNE 26 SEPT. 25 DEC. 31
------------------- ---------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues............................................. $733,706 $807,636 $858,726 $957,382
---------- -------- -------- --------
Costs and expenses
Cost of sales...................................... 404,874 432,345 454,214 487,459
Selling, general and administrative expenses....... 295,903 309,992 315,985 362,338
---------- -------- -------- --------
700,777 742,337 770,199 849,797
---------- -------- -------- --------
Operating profit..................................... 32,929 65,299 88,527 107,585
Interest expense................................... (17,709) (16,603) (17,445) (17,702)
Nonrecurring gains................................. 10,227 11,872
Other, net......................................... 1,478 494 90 (1,295)
---------- -------- -------- --------
Income from continuing operations before income
taxes.............................................. 16,698 59,417 83,044 88,588
Income taxes......................................... 9,197 27,327 43,250 41,735
---------- -------- -------- --------
Income from continuing operations.................... 7,501 32,090 39,794 46,853
Income from discontinued operations, net of income
taxes.............................................. 15,225 13,279 12,505 18,102
Extraordinary loss on early retirement of debt, net
of income taxes.................................... (12,232)
---------- -------- -------- --------
Net income........................................... $ 22,726 $ 45,369 $ 52,299 $ 52,723
======== ======== ======== ========
Earnings per share:
Continuing operations.............................. $ .06 $ .25 $ .31 $ .36
Discontinued operations............................ .12 .10 .10 .14
Extraordinary loss................................. (.09)
---------- -------- -------- --------
Earnings per share................................... $ .18 $ .35 $ .41 $ .41
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
1993 QUARTERS ENDED MAR. 28 JUNE 27 SEPT. 26 DEC. 31
------------------- ---------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues............................................. $755,169 $784,632 $806,882 $897,066
Restructuring charges................................ 3,750 76,414
Operating profit..................................... 44,259 60,898 58,603 25,282
Income from continuing operations.................... 11,656 20,401 15,249 4,363
Income from discontinued operations, net of income
taxes.............................................. 18,128 27,461 62,458 25,741
Gain on sale of discontinued operations, net of
income taxes....................................... 131,702
Net income........................................... 29,784 47,862 77,707 161,806
Earnings per share:
Continuing operations.............................. .09 .16 .12 .04
Discontinued operations:
Income from operations.......................... .14 .21 .48 .20
Gain on sale.................................... 1.02
Earnings per share................................... $ .23 $ .37 $ .60 $ 1.26
</TABLE>
---------------
(1) Restated to reflect the cable television operations as discontinued
operations.
38
<PAGE> 40
THE TIMES MIRROR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 17 -- DISCONTINUED OPERATIONS
As a result of the reorganization described in Note 18, the company's cable
television operations are reported as discontinued operations for all years
presented. The reorganization was completed on February 1, 1995.
During 1993, the company sold its four broadcast television stations to
Argyle Television Holdings, Inc. (Argyle). The sale of KTVI-TV, an ABC affiliate
in St. Louis, Missouri, and WVTM-TV, an NBC affiliate in Birmingham, Alabama,
was completed in July. The sale of its remaining two stations, KDFW-TV in
Dallas, Texas, and KTBC-TV in Austin, Texas, both CBS affiliates, was completed
near the end of the year. The sale of the four stations resulted in an after-tax
gain of $131,702,000, net of income tax expense of $76,928,000, or $1.02 per
share. The broadcast television operations are reported as discontinued
operations for all years presented.
The combined operating results of the discontinued cable and broadcast
television operations are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Revenues............................................ $498,086 $565,242 $546,543
-------- -------- --------
Income before income taxes(1)....................... 106,744 227,267 126,675
Income taxes........................................ 47,633 93,479 51,531
-------- -------- --------
Net income(1)(2).................................... $ 59,111 $133,788 $ 75,144
======== ======== ========
</TABLE>
---------------
(1) Included in income before income taxes and net income were nonrecurring
gains at cable television as follows: 1993 - gains on the sale of QVC
Network, Inc. common stock and on the sale of a small cable system totaling
$86,799,000 ($50,364,000 after taxes, or 39 cents per share); 1992 - gain on
the sale of two Texas cable television systems totaling $8,673,000
($5,026,000 after taxes, or 4 cents per share).
(2) In July 1992, the company acquired 20 percent of Community Cablevision
Company, which operates systems serving approximately 42,000 subscribers in
Orange County, California. The remaining 80 percent was acquired on October
1, 1992. This acquisition was accounted for by the purchase method. The
operations of Community Cablevision are reflected from the date of
acquisition.
Summarized balance sheet data for the discontinued cable television
operations are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1994 1993
-------- --------
<S> <C> <C>
Property, plant and equipment, net...................... $485,384 $447,659
Intangible assets, net.................................. 229,477 240,523
Other assets............................................ 91,292 69,890
Amount due from the parent.............................. 43,968 24,352
Deferred income tax liabilities......................... 96,776 76,763
Other liabilities....................................... 110,968 98,983
Shareholder's equity.................................... 642,377 606,678
</TABLE>
Balance sheet data for the discontinued broadcast television operations
were not significant and are not segregated in the consolidated balance sheets.
39
<PAGE> 41
THE TIMES MIRROR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The major components of cash flow for discontinued operations are as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Income from discontinued operations...................... $ 59,111 $ 133,788 $ 75,144
Depreciation and amortization............................ 97,192 100,013 84,326
Nonrecurring gains....................................... (86,799) (8,673)
Other, net............................................... 14,338 (14,668) 29,088
--------- --------- ---------
Net cash provided by discontinued operating
activities.......................................... $ 170,641 $ 132,334 $ 179,885
========= ========= =========
Capital expenditures..................................... $(118,948) $(116,914) $ (82,333)
Proceeds from disposal of assets......................... 91,665 14,952
Acquisitions, net of cash acquired....................... (447) (1,413) (110,910)
Other, net............................................... (12,282) (5,371) (566)
--------- --------- ---------
Net cash used in investing activities of discontinued
cable operations.................................... $(131,677) $ (32,033) $(178,857)
========= ========= =========
</TABLE>
NOTE 18 -- REORGANIZATION
On February 1, 1995, the company completed the merger of its cable
television operations with Cox Communications, Inc. (Cox) and completed the
transfer of all its non-cable operations into a newly formed entity, New TMC,
Inc., as part of a tax-free reorganization. New TMC, Inc. was then renamed The
Times Mirror Company. The company expects to record a gain of approximately $1.6
billion on the cable television transaction during the first quarter of 1995.
The company borrowed $1.306 billion shortly before the merger. The $1.306
billion of debt, as well as $57.3 million of the company's publicly held notes
which were not repurchased or exchanged prior to the merger, was assumed by Cox
on February 1, 1995. The company retained the cash proceeds from the debt
issuance. About one-third of the proceeds were used to retire the short-term
borrowings issued to finance the debt tender offer and to redeem the company's
$100 million 8 7/8% Notes which were called on February 1, 1995. Approximately
$125 million of the proceeds are being used to retire commercial paper
borrowings, which are being paid off as they mature, through March 1995. As of
February 1, 1995, the company had total debt of approximately $281.2 million,
including $34.7 million of commercial paper and $246.5 million of long-term
debt. Cash of approximately $659 million as of February 1, 1995, primarily
representing the cash remaining after the aforementioned debt payouts, is
invested in short-term money market instruments with a weighted average interest
rate of 5.8%.
On February 1, 1995, the company's commercial paper program was terminated
as a result of the merger, since those arrangements were established by the
predecessor to the company, which was merged with Cox.
In addition to assuming debt and accrued interest of approximately $1.364
billion, Cox will issue between 48,806,033 shares and 59,651,818 shares of their
Class A common stock to the non-controlling shareholders of the company, which
excludes all Chandler Trust shareholders. This stock has an estimated aggregate
fair value of $932,000,000. Due to certain constraints imposed by the terms of
the Chandler Trusts, in lieu of common stock of Cox Cable, the Chandler Trusts
will receive non-voting, Series A cumulative preferred stock with an aggregate
stated value of approximately $412,000,000 with a dividend rate of approximately
9 percent. This preferred stock is expected to be issued between March 17, 1995
and May 3, 1995, but earns dividends from March 1, 1995. In connection with the
settlement of reorganization-related litigation, all non-controlling
shareholders are being offered the opportunity to exchange shares of Series A or
Series C common stock for shares of Series B cumulative preferred stock. This
offering commenced on February 16, 1995. The Series B preferred stock will have
a dividend rate of 6.5% and will earn dividends from March 1, 1995. The
following shows the pro forma capital accounts of the company assuming that the
transactions had occurred on
40
<PAGE> 42
THE TIMES MIRROR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1994, after giving effect to the $932 million partial redemption of
certain shareholder interests, the retirement of treasury stock, the issuance of
preferred stocks and the anticipated $1.6 billion gain (in thousands):
<TABLE>
<CAPTION>
PRO FORMA
(UNAUDITED)
-----------
<S> <C>
Common Stock, Pro Forma:
Series A, $1.00 par value, 500,000,000 shares authorized,
81,116,000 shares issued and outstanding.................... $ 81,116
Series B, $1.00 par value, 100,000,000 shares authorized, no
shares outstanding.......................................... --
Series C, $1.00 par value, 300,000,000 shares authorized,
30,939,000 shares issued and outstanding.................... 30,939
Preferred Stock, Pro Forma:
Preferred stock, $1.00 par value, 7,100,000 shares authorized,
no shares outstanding....................................... --
Series A preferred stock, $1.00 par value, 900,000 shares
authorized, 824,000 shares issued and outstanding, stated at
liquidation value........................................... 412,000
Series B preferred stock, $1.00 par value, 25,000,000 shares
authorized, 16,563,000 shares issued and outstanding, stated
at liquidation value........................................ 350,000
Additional paid-in capital....................................... 167,898
Retained earnings................................................ 1,583,090
=========
</TABLE>
The following shows pro forma income statement data for the year ended
December 31, 1994 assuming that the transactions had occurred on January 1,
1994, that all commercial paper and $500 million of debt was retired on January
1, 1994 and that preferred dividends aggregated $59.8 million in 1994 (in
thousands, except per share amount):
<TABLE>
<CAPTION>
PRO FORMA
(UNAUDITED)
-----------
<S> <C>
Income from continuing operations................................ $ 153,484
Earnings per common share for income from continuing
operations..................................................... $ .83
=========
</TABLE>
NOTE 19 -- COMMITMENTS AND CONTINGENCIES
The company and its subsidiaries are defendants in actions for libel and
other matters arising out of their business operations. In addition, from time
to time, the company and its subsidiaries are involved as parties in various
governmental and administrative proceedings, including environmental matters.
The company does not believe that any such proceedings currently pending will
have a material adverse effect on its consolidated financial position, although
an adverse resolution in any reporting period of one or more of these matters
could have a material impact on results of operations for that period.
The company committed up to $200 million to a partnership with Cox. The
partnership, which was formed on February 1, 1995, is expected to develop and
purchase substantial investment interests in theme-based cable television
programming operations. The $200 million is expected to be contributed as
capital calls are made.
NOTE 20 -- TRANSACTIONS WITH AN AFFILIATE
To assure a long-term supply of newsprint for the Los Angeles Times, the
company has an agreement to purchase specified quantities of newsprint from a
supplier in which the company has a 20 percent interest. The specified
quantities represent a majority of the Los Angeles Times' newsprint requirements
and are purchased at prevailing market prices.
41
<PAGE> 43
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Company's principal officers, including executive officers, are listed
in Part I hereof. The information under the heading "Election of Directors" in
the definitive Proxy Statement for the Company's 1995 Annual Meeting of
Shareholders is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information contained under the headings "Information Concerning the
Board of Directors" and "Executive Compensation" in the definitive Proxy
Statement for the Company's 1995 Annual Meeting of Shareholders is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information contained under the heading "Ownership of Common Stock" in
the definitive Proxy Statement for the Company's 1995 Annual Meeting of
Shareholders is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information contained under the heading "Executive Compensation" in the
definitive Proxy Statement for the Company's 1995 Annual Meeting of Shareholders
is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) and (2) Financial Statements and Financial Statement Schedules filed
as part of this report:
As listed in the Index to Financial Statements and Financial Statement
Schedules on page 21 hereof.
(a)(3) Exhibits filed as part of this report:
As listed in the Exhibit Index beginning on page 46 hereof.
(b) Reports on Form 8-K:
During the last quarter of 1994, Old Times Mirror filed current reports
on Form 8-K as follows:
(1) Current Report on Form 8-K dated September 30, 1994, relating
to the audited financial statements of Times Mirror Cable Television,
Inc. for the nine-month period ended September 30, 1994; and
(2) Current Report on Form 8-K dated November 10, 1994, relating to
the reclassification of Old Times Mirror's cable television business as
a discontinued operation.
In addition, on February 15, 1995, the Company filed a current
report on Form 8-K dated February 1, 1995, to announce the completion of
the Merger.
42
<PAGE> 44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE TIMES MIRROR COMPANY
By ROBERT F. ERBURU
------------------------------------
Robert F. Erburu
Chairman of the Board, President
and Chief Executive Officer
Dated: March 29, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant in
the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------------------------------------------- ------------------------ ---------------------
<S> <C> <C>
ROBERT F. ERBURU Chairman of the Board, March 29, 1995
--------------------------------------------- President, Chief
Robert F. Erburu Executive Officer and
Director (Principal
Executive Officer)
JAMES F. GUTHRIE Vice President and Chief March 29, 1995
--------------------------------------------- Financial Officer
James F. Guthrie (Principal Financial and
Accounting Officer)
C. MICHAEL ARMSTRONG Director March 29, 1995
---------------------------------------------
C. Michael Armstrong
GWENDOLYN GARLAND BABCOCK Director March 29, 1995
---------------------------------------------
Gwendolyn Garland Babcock
DONALD R. BEALL Director March 29, 1995
---------------------------------------------
Donald R. Beall
JOHN E. BRYSON Director March 29, 1995
---------------------------------------------
John E. Bryson
BRUCE CHANDLER Director March 29, 1995
---------------------------------------------
Bruce Chandler
OTIS CHANDLER Director March 29, 1995
---------------------------------------------
Otis Chandler
</TABLE>
43
<PAGE> 45
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------------------------------------------- ------------------------ ---------------------
<S> <C> <C>
CLAYTON W. FRYE, JR. Director March 29, 1995
---------------------------------------------
Clayton W. Frye, Jr.
DAVID LAVENTHOL Director March 29, 1995
---------------------------------------------
David Laventhol
ALFRED E. OSBORNE, JR. Director March 29, 1995
---------------------------------------------
Alfred E. Osborne, Jr.
JOAN A. PAYDEN Director March 29, 1995
---------------------------------------------
Joan A. Payden
WILLIAM STINEHART, JR. Director March 29, 1995
---------------------------------------------
William Stinehart, Jr.
HAROLD M. WILLIAMS Director March 29, 1995
---------------------------------------------
Harold M. Williams
WARREN B. WILLIAMSON Director March 29, 1995
---------------------------------------------
Warren B. Williamson
EDWARD ZAPANTA Director March 29, 1995
---------------------------------------------
Edward Zapanta
</TABLE>
44
<PAGE> 46
THE TIMES MIRROR COMPANY
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO DEDUCTIONS BALANCE AT
BEGINNING COSTS AND OTHER FROM END OF
OF PERIOD EXPENSES ACCOUNTS RESERVES PERIOD
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year ended 12/31/94
Allowance for doubtful accounts........... $ 29,666 $ 20,548 $ 700 $ 21,665 $ 29,249
Allowance for returns..................... 41,200 517 1,351 43,068
---------- ---------- ---------- ---------- ----------
$ 70,866 $ 21,065 $ 2,051 $ 21,665 $ 72,317
======== ======== ======== ======== ========
Year ended 12/31/93
Allowance for doubtful accounts........... $ 27,997 $ 23,105 $ 318 $ 21,754 $ 29,666
Allowance for returns..................... 38,250 4,373 (1,423) 41,200
---------- ---------- ---------- ---------- ----------
$ 66,247 $ 27,478 $ (1,105) $ 21,754 $ 70,866
======== ======== ======== ======== ========
Year ended 12/31/92
Allowance for doubtful accounts........... $ 26,675 $ 38,803 $ 454 $ 37,935 $ 27,997
Allowance for returns..................... 30,340 1,708 6,202 38,250
---------- ---------- ---------- ---------- ----------
$ 57,015 $ 40,511 $ 6,656 $ 37,935 $ 66,247
======== ======== ======== ======== ========
</TABLE>
45
<PAGE> 47
EXHIBIT INDEX
Exhibits marked with an asterisk (*) are incorporated by reference to
documents previously filed by the Registrant, or its predecessor Old Times
Mirror, with the Securities and Exchange Commission, as indicated. All other
documents listed are filed with this report, unless otherwise indicated.
<TABLE>
<CAPTION>
EXHIBIT
NO.
--------
<C> <S> <C>
*3.1 Restated Certificate of Incorporation of the Registrant, as filed
with the Secretary of State of the State of Delaware on January 23,
1995 (Exhibit to the Registrant's Registration Statement on Form
S-4 (File No. 33-87482))...........................................
*3.2 Certificate of Amendment to Certificate of Incorporation of the
Registrant, as filed with the Secretary of State of the State of
Delaware on February 1, 1995 (Exhibit to the Registrant's
Registration Statement on Form S-4 (File No. 33-87482))............
*3.3 Certificate of Designations of Series C Common Stock, as filed with
the Secretary of State of the State of Delaware on January 23, 1995
(Exhibit to the Registrant's Registration Statement on Form S-4
(File No. 33-87482))...............................................
*3.4 Bylaws of the Registrant (Exhibit to the Registrant's Registration
Statement on Form S-4 (File No. 33-87482)).........................
*3.5 Form of Certificate of Designations of Series A Preferred Stock
(Exhibit to the Registrant's Registration Statement on Form S-4
(File No. 33-80154))...............................................
*3.6 Form of Certificate of Designations of Series B Preferred Stock
(Exhibit to the Registrant's Registration Statement on Form S-4
(File No. 33-80154))...............................................
10.1 Deferred Compensation Plan for Executives..........................
*10.2 1987 Restricted Stock Plan (Exhibit II to Old Times Mirror's
definitive Proxy Statement, dated March 27, 1987)..................
*10.3 1984 Executive Stock Option Plan (Exhibit A to Old Times Mirror's
definitive Proxy Statement, dated April 23, 1984)..................
*10.4 1988 Executive Stock Option Plan (Exhibit A to Old Times Mirror's
Proxy Statement, dated March 30, 1988).............................
*10.5 Deferral Plan for Director's Fees (Exhibit 10.8 to Old Times
Mirror's 1981 Annual Report on Form 10-K)..........................
*10.6 The Times Mirror Pension Plan for Directors, as Amended and
Restated on March 5, 1987 (Exhibit 10.11 to Old Times Mirror's 1986
Annual Report on Form 10-K)........................................
10.7 Deferred Compensation Plan for Non-Employee Directors..............
*10.8 Non-Employee Director Stock Option Plan (Appendix A to Old Times
Mirror's definitive Proxy Statement, dated March 21, 1994).........
*10.9 Agreement dated April 29, 1985 between Old Times Mirror and Otis
Chandler (Exhibit 10.10 to Old Times Mirror's 1985 Annual Report on
Form 10-K).........................................................
*10.10 Agreements dated as of March 30, 1988 and entered into between Old
Times Mirror and Robert F. Erburu in March 1990 (Exhibit 10.14 to
Old Times Mirror's 1990 Annual Report on Form 10-K)................
*10.11 1992 Key Employee Long-Term Incentive Plan (Appendix A to Old Times
Mirror's Proxy Statement, dated March 20, 1992)....................
11 Computation of Earnings Per Share..................................
12 Computation of Ratio of Earnings to Fixed Charges..................
21 Subsidiaries of the Registrant.....................................
23 Consent of Ernst & Young LLP, Independent Auditors.................
</TABLE>
46
<PAGE> 1
EXHIBIT 10.1
THE TIMES MIRROR
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
THE TIMES MIRROR COMPANY, a Delaware corporation (the "Company"), hereby
establishes this Deferred Compensation Plan for Executives (the "Plan"),
effective April 1, 1994, to enable Company executives covered under the Plan to
enhance their retirement security by permitting them to enter into agreements
with the Company to defer compensation and receive benefits at retirement,
death, separation from service and as otherwise provided under the Plan.
ARTICLE I
DEFINITIONS
1.1 Annual Deferral: shall mean the amount of Base Compensation, Bonuses
and/or Deferred Cash Incentives which the Participant elects to defer under the
Deferral Commitment in each Plan Year of the Deferral Contribution Period
pursuant to paragraph 3.1 of the Plan.
1.2 Base Compensation: shall mean a Participant's full salary, wages,
regular commissions and shift differential, before reductions for any deferrals,
but does not include money paid for overtime, bonuses, incentive pay, incentive
commissions and other extra compensation.
1.3 Beneficiary: shall mean the person or persons or entity designated as
such in accordance with Article 12 of the Plan.
1.4 Benefits Committee: shall mean the administrators of the Plan
appointed by the Retirement Plan Committee of the Board of Directors of the
Company to administer the Plan pursuant to Article 11 of the Plan.
1.5 Bonuses: shall mean amounts earned by the Participant from the Company
in the form of an annual incentive bonus before reductions for any deferrals
under the Plan.
1.6 Change in Control: shall mean an occurrence of any of the following
events: (1) an acquisition (other than directly from the Company) of any voting
securities of the Company (the "Voting Securities") by any "person" or "group"
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934 (the "Exchange Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 under the Exchange Act)
of more than fifty percent (50%) of the combined voting power of the Company's
then outstanding voting securities; (2) the Board ceases for any reason to have
at least a majority of "unaffiliated directors" (defined as all members of the
Board except those who are or were proposed and accepted for nomination as a
member of the Board by, or are otherwise "affiliated" or "associated" (as those
terms are used for purposes of Rule 12b-2 under the Exchange Act) with a person
who has Beneficial Ownership of ten percent (10%) or more of the combined voting
power of the Company (except to the extent such person had such Beneficial
Ownership prior to the effective date of the Plan)); or (3) approval by the
shareholders of (a) a merger, consolidation or reorganization involving the
Company, unless either (i) the shareholders of the Company immediately before
such merger, consolidation or reorganization own, directly or indirectly
immediately following such merger, consolidation or reorganization, at least
seventy-five percent (75%) of the combined voting power of the company resulting
from such merger, consolidation or reorganization (the "Surviving Corporation")
in substantially the same proportion as their ownership immediately before such
merger, consolidation or reorganization, or (ii) at least a majority of the
members of the Board of Directors of the Surviving Corporation are unaffiliated
directors who were directors of the Company immediately prior to the execution
of the agreement providing for such merger, consolidation or reorganization, or
(b) a complete liquidation or dissolution of the Company. Notwithstanding
anything in this paragraph to the contrary, for the purposes of this Plan, any
Times Mirror Cable Television, Inc. transaction shall not be considered a Change
in Control.
1.7 Company: shall mean The Times Mirror Company and any successor in
interest.
1
<PAGE> 2
1.8 Crediting Rate: shall mean the annual rate of interest credited to
Participants' Deferral Accounts. One Crediting Rate is applied to all Deferral
Accounts for a Plan Year. The Crediting Rate is determined by the Benefits
Committee. The Benefits Committee, in its sole discretion, will establish
administrative rules for applying the Crediting Rate.
1.9 Deferral Account: shall mean the device used by the Company to measure
and determine the amounts to be paid to a Participant under the Plan for each
Deferral Unit. Separate Deferral Accounts will be established for amounts
deferred by a Participant under separate Deferral Units.
1.10 Deferral Commitment or Deferral Unit: shall mean a deferral
commitment made by a Participant to establish a Deferral Unit pursuant to
Articles 2 and 3 for which a Participation Agreement has been submitted by the
Participant.
1.11 Deferral Contribution Period: shall mean the period of one (1) Plan
Year, or such other period as the Benefits Committee may permit in its
discretion, over which the Participant has elected to defer Base Compensation,
Bonuses, and/or Deferred Cash Incentives pursuant to Article 3 of the Plan.
1.12 Deferred Cash Incentives: shall mean the cash amount earned under the
3-year rolling incentive cycles, commencing January 1, 1994, under the 1992 Key
Executive Long Term Incentive Plan.
1.13 Disability: shall mean a physical or mental condition that prevents a
Participant from performing his or her normal duties of employment. If a
Participant makes application for or is otherwise eligible for disability
benefits under a long-term disability program sponsored by his Employer and
qualifies for such benefits, the Participant shall be presumed to qualify as
disabled under the Plan. In the event that a Participant is not covered by an
Employersponsored long-term disability program, a Participant shall be presumed
to be disabled if the Benefits Committee so determines upon review of one or
more medical opinions acceptable to the Benefits Committee.
1.14 Eligible Executive: shall mean an employee of the Company or any of
its subsidiaries as designated by the Benefits Committee to be eligible to
participate in the Plan.
1.15 Employer: shall mean the Company or any of its subsidiaries or
divisions.
1.16 ERISA: shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.17 Financial Hardship: shall mean a Participant's unexpected need for
cash arising from an illness, casualty loss, sudden financial reversal, or other
such unforeseeable occurrence as determined by the Benefits Committee. Cash
needs arising from foreseeable events such as, for example, the purchase of a
residence or education expenses for children shall not, alone, be considered a
Financial Hardship.
1.18 In-Service Distribution: shall mean a distribution elected by the
Participant pursuant to Article 9 of the Plan.
1.19 Participant: shall mean an Eligible Executive who is participating in
the Plan as provided in Article 2, or a former Eligible Executive for whom a
Deferral Account is being maintained under the Plan.
1.20 Participation Agreement: shall mean a written agreement between the
Company and the Participant, entered into pursuant to paragraph 2.1 of the Plan,
by which the Participant elects to participate in the Plan and make a Deferral
Commitment.
1.21 Plan: shall mean this Deferred Compensation Plan for Executives as
set forth in this document and as the same may be amended, supplemented and/or
restated from time to time and any successor plan.
1.22 Plan Year: shall mean the calendar year. Notwithstanding the above,
the first Plan Year shall be a partial Plan Year, commencing on April 1, 1994.
1.23 Scheduled Withdrawal: shall mean a one-time distribution of all or a
portion of a Participant's Deferral Account at the date specified for such
distribution in accordance with the applicable provisions of Article 9 of this
Plan.
1.24 Special Payment: shall mean a one-time payment which is payable by
the Company to an Eligible Executive such as upon Termination of Employment or
otherwise, but which shall not include Base
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Compensation or Bonuses, and which deferral or partial deferral under this Plan
shall be at the sole discretion of the Benefits Committee and acknowledged to
the Eligible Executive in writing.
1.25 Termination of Employment: shall mean the date of the cessation of
the Participant's employment with all Employers for any reason whatsoever,
whether voluntary or involuntary, other than as a result of the Participant's
death or, to the extent provided in Article 7 of the Plan, the Participant's
Disability.
1.26 Unscheduled Withdrawal: shall mean a distribution of all or a portion
of the entire amount credited to the Participant's Deferral Accounts requested
by the Participant pursuant to the applicable provisions of Article 9 of the
Plan.
1.27 Valuation Date: shall mean the last day of each calendar quarter, or
such other dates as the Benefits Committee may determine in its discretion,
which may be either more or less frequent but at least annually, for the
valuation of Participants' Deferral Accounts.
ARTICLE 2
PARTICIPATION
2.1 Participation Agreement. Any Eligible Executive may elect to
participate in the Plan and to make a Deferral Commitment by submitting a
Participation Agreement to the Benefits Committee prior to the November 30th
immediately preceding the beginning of the Deferral Contribution Period, except
that Deferral Commitments to be effective in the Plan Year commencing April 1,
1994 may be made within thirty (30) days of the effective date of the Plan. The
Participant shall be required to submit a separate Participation Agreement for
each Annual Deferral and each subsequent Deferral Commitment. Except as
otherwise provided in this Plan, the Participant's Deferral Commitment shall be
irrevocable.
2.2 Continuation of Participation. An executive who has elected to
participate in the Plan by making a Deferral Commitment shall continue as a
Participant in the Plan for purposes of such Deferral Commitment even though in
any calendar year after such Deferral Commitment such executive elects not to
make a new Deferral Commitment or ceases to be an Eligible Executive. A
Participant shall not be eligible to make a new Deferral Commitment unless the
Participant is an Eligible Executive with respect to the Plan Year for which the
election is made.
ARTICLE 3
FORM OF DEFERRAL COMMITMENTS
3.1 Deferral Contribution Period. A Participant may elect, in the
Participation Agreement, Deferral Commitments during a Deferral Contribution
Period of either one (1) year or such other period as the Benefits Committee may
permit in its discretion, commencing with the Plan Year immediately following
such election.
3.2 Deferral Commitment. Subject to paragraph 3.3, a Participant may elect
in the Participation Agreement to defer in each year of the Deferral
Contribution Period an amount equal to a specified percentage or dollar amount
of Base Compensation so long as the amount of Base Compensation net of the
amount deferred does not fall below any applicable thresholds determined by the
Benefits Committee at its sole discretion. The Participant may also elect to
defer a specified dollar amount or a percentage of Bonuses or Deferred Cash
Incentives or a percentage of Bonus or Deferred Cash Incentives over a base
amount to be earned during the Deferral Contribution Period. Each deferral of a
portion of Base Compensation, each deferral of all or a portion of Bonuses and
each deferral of all or a portion of Deferred Cash Incentives in a Deferral
Contribution Period shall be considered as a separate deferral unit ("Deferral
Unit"). Separate deferral accounts shall be established and maintained for each
Deferral Unit in accordance with paragraph 4.1. For any Plan Year, the total
amount of a Participant's applicable Base Compensation, Bonuses, and Deferred
Cash Incentives, net of all Deferral Commitments applicable for the Plan Year,
may not fall below the old age, survivor and disability insurance wage base
under Social Security. The Benefits Committee, in its sole discretion, will
determine other rules regarding deferral of Base Compensation, Bonuses and
Deferred Cash Incentives, as necessary.
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3.3 Minimum Deferral Commitment. The Benefits Committee, in its sole
discretion, may establish minimum Deferral Commitment thresholds for the
purposes of minimizing administrative complexity or for any other reason deemed
necessary.
3.4 Incomplete Deferral Commitments. Notwithstanding anything contained
herein to the contrary, if the Participant has not or will not actually defer
the amount specified in such Participant's Participation Agreement, the
Participant shall, nevertheless, be permitted to continue participation in the
Plan.
3.5 Withholding. The Benefits Committee, in its sole discretion, will make
arrangements for satisfying any federal, state or local income tax withholding
requirements and Social Security or other employee tax requirements applicable
to deferral of compensation under the Plan.
ARTICLE 4
DEFERRAL ACCOUNTS
4.1 Deferral Accounts. A Deferral Account shall be established for each
Participant. Separate Deferral Accounts shall be maintained for each separate
Deferral Unit of Base Compensation, Bonuses, Deferred Cash Incentives, or
Special Payments. Each Deferral Account shall be credited with the applicable
portion of the Annual Deferral or Special Payment as of the Valuation Date
following the time such amounts would otherwise have been paid to the
Participant. Deferral Accounts shall, except as otherwise provided in the Plan,
be credited with interest at the Crediting Rate, in effect for each Plan Year,
from the date or approximate date such deferred Base Compensation, Bonus,
Deferred Cash Incentive or Special Payment would have been paid through the
earlier of the Participant's date of death or the Valuation Date preceding
payment. Notwithstanding anything in this paragraph to the contrary, the
Benefits Committee may, in its sole discretion, establish administrative rules
for the purpose of crediting interest to Deferral Accounts.
4.2 Statements of Account. The administrator shall provide periodically
(but no less frequently than annually) to each Participant a statement setting
forth the balance of each Deferral Account maintained for such Participant.
4.3 Vesting of Accounts. Each Participant shall be one hundred percent
(100%) vested at all times in the amounts credited to such Participant's
Deferral Accounts.
ARTICLE 5
PAYMENT OF BENEFITS
5.1 Deferral Accounts. Upon Termination of Employment the Company shall
pay to the Participant, for each Deferral Commitment, a benefit in the form
provided in paragraph 5.2 of the Plan, based on the balance of the Deferral
Account for such Deferral Commitment on Termination of Employment.
5.2 Form of Benefits. The benefit attributable to a particular Deferral
Commitment shall be paid in accordance with the Participant's direction as set
forth on an election form prescribed by the Benefits Committee for designation
of form of payment; such payment election shall be made at the time the Deferral
Commitment election is made, and is irrevocable. If no form of payment is
elected or in the case of Special Payments, the Benefits Committee, in its sole
discretion, may prescribe the form of payment at the time the Deferral
Commitment election is made.
The available forms of payment after Termination of Employment are as
follows:
(a) Lump Sum. A lump sum payment equal to the balance of the
applicable Deferral Accounts as of the Valuation Date preceding payment.
(b) Installment Payments. Annual installment payments over a payment
period of 5, 10, or 15 years, as elected by the Participant. Installment
payments shall be made in January of each year, commencing with the January
following the calendar year of Termination of Employment, or the January
following the calendar year of attainment of the age elected under
paragraph 5.3, if applicable, or the January elected as a Scheduled
Withdrawal. Interest will be credited to the unpaid balance in the
applicable Deferral Accounts at the Crediting Rate in effect for each Plan
Year. The Benefits
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Committee, in its sole discretion, may establish rules for making
installment payments and crediting interest to the unpaid balances in
Deferral Accounts.
5.3 Timing of Payments. A Participant may elect, on the election form for
designation of form of payment for any Deferral Unit, to have the lump sum or
installment payments paid 1) the later of the January following the calendar
year of Termination of Employment or the January following the calendar year in
which the Participant reaches age 55, 60, 65 or 70 or 2) the January following
the calendar year of Termination of Employment or 3) the January elected as a
Scheduled Withdrawal as described in Article 9.
5.4 Small Benefit Exception. Notwithstanding any of the foregoing, in the
event the sum of all benefits payable to the Participant is less than or equal
to five thousand dollars ($5,000), the Company may, in its sole discretion,
elect to pay such benefits in a single lump sum payable on the date such
benefits first become payable.
ARTICLE 6
SURVIVOR BENEFITS
6.1 Pre-Commencement Survivor Benefit. If a Participant dies prior to
commencing distributions, for each Deferral Commitment, the Company shall pay to
the Participant's Beneficiary a benefit equal to the balance of the
Participant's Deferral Accounts as of the Participant's date of death, payable
in accordance with the Participant's election under paragraph 5.2 starting in
the January following the date of death. Interest will be credited on unpaid
balances using the same rules established in paragraph 5.2.
6.2 Post-Commencement Survivor Benefit. If a Participant dies after
commencing distributions, the Company shall pay to the Participant's Beneficiary
the remaining benefits payable to the Participant under the Plan for the
remainder of the benefit period that such benefits would have been paid to the
Participant.
6.3 Small Benefit Exception. Notwithstanding any of the foregoing, in the
event the sum of all benefits payable to the Beneficiary is less than or equal
to five thousand dollars ($5,000), the Company may, in its sole discretion,
elect to pay such benefits in a single lump sum payable on the date such
benefits first become payable.
ARTICLE 7
DISABILITY
If a Participant is determined to have a Disability, the Participant shall,
effective as of the date such Participant is no longer paid his Base
Compensation by the Company, cease deferrals under the Plan except for any
Deferral Commitment regarding any Bonus or Deferred Cash Incentives which are
earned or payable subsequent to Disability. The Participant's Deferral Account
shall continue to be credited with interest at the Crediting Rate until such
time as the Participant's benefits under the Plan are distributed in accordance
with the Participant's election or as provided in paragraph 10.2.
ARTICLE 8
CHANGE IN CONTROL
8.1 Election. In the event of a Change in Control, the Participant (or
after the Participant's death the Participant's Beneficiary) may elect to
receive an immediate lump sum payment of the balance in each Deferral Account as
of the Valuation Date preceding payment, subject to paragraph 8.2.
8.2 Benefit Reduction on Withdrawal. If the Participant (or Beneficiary)
elects the withdrawal described in paragraph 8.1 herein, before such withdrawal
is paid, each applicable Deferral Account shall be reduced by an amount equal to
ten percent (10%) (or such other reduction deemed appropriate by the Benefits
Committee together with legal counsel for the Company) of the total balance of
such Deferral Accounts to be withdrawn. If a Participant elects to make such a
withdrawal, all Deferral Commitments which have been elected but not completed
shall be canceled. The Participant may not elect to make
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subsequent Deferral Commitments under the Plan until the second Plan Year
following the Plan Year in which such withdrawal was made.
ARTICLE 9
SCHEDULED AND UNSCHEDULED WITHDRAWALS
9.1 Election of Scheduled Withdrawal. If a Participant wishes to receive a
Scheduled Withdrawal, the Participant shall designate in the applicable
Participation Agreement the date for such Scheduled Withdrawal amount. The date
designated for such Scheduled Withdrawal must be at least seven (7) years from
the first day of the Plan Year for which such amounts are deferred under the
applicable Participation Agreement.
9.2 Payment of Scheduled Withdrawal. In the January of the year designated
in the applicable Participation Agreement for a Scheduled Withdrawal, the
Company shall pay to the Participant, in the form elected, the Participant's
Deferral Account attributable to the Participation Agreement for which such
designation was made.
9.3 Unscheduled Withdrawal. A Participant may request an Unscheduled
Withdrawal in the form of a lump sum payment of all or any portion of the entire
amount credited to a Deferral Account as of the Valuation Date preceding
payment. Such Unscheduled Withdrawal amount must be greater than five thousand
dollars ($5,000); if the Deferral Account is $5,500 or less, the Unscheduled
Withdrawal will be in amount such that, when combined with the Withdrawal
Penalty described in paragraph 9.4, the total Deferral Account is reduced to
zero.
9.4 Withdrawal Penalty. There shall be a penalty deducted from the
Deferral Account prior to an Unscheduled Withdrawal from such Deferral Account
equal to ten percent (10%) of the Unscheduled Withdrawal amount or such other
reduction deemed appropriate by the Benefits Committee, together with legal
counsel for the Company. Such Unscheduled Withdrawal will be reduced accordingly
if it is an amount such that, when added to the Withdrawal Penalty, the total
exceeds the amount of the Deferral Account. If a Participant elects to make an
Unscheduled Withdrawal, all Deferral Commitments which have been elected but not
completed shall be canceled. The Participant may not elect to make subsequent
Deferral Commitments under the Plan until the second Plan Year following the
Plan Year in which such withdrawal was made. The Benefits Committee, in its sole
discretion, may adopt the appropriate administrative rules regarding the
application of the Withdrawal Penalty.
ARTICLE 10
CONDITIONS RELATED TO BENEFITS
10.1 Nonassignability. The benefits provided under the Plan may not be
alienated, assigned, transferred, pledged or hypothecated by or to any person or
entity, at any time or in any manner whatsoever. These benefits shall be exempt
from the claims of creditors or other claimants of any Participant and from all
orders, decrees, levies, garnishment or executions against any Participant to
the fullest extent allowed by law.
10.2 Financial Hardship Distribution. Upon a finding that the Participant
or the Beneficiary has suffered a Financial Hardship, the Benefits Committee
may, in its sole discretion, and upon written petition of the Participant or
Beneficiary accelerate distributions of benefits under the Plan in the amount
reasonably necessary to alleviate such Financial Hardship or as requested by the
Participant or the Beneficiary. If a distribution is to be made to a Participant
on account of Financial Hardship, the Participant may not make subsequent
Deferral Commitments under the Plan until the third Plan Year following the Plan
Year in which a distribution based on Financial Hardship was made. All Deferral
Commitments in effect at the time such distribution is made under this section
shall be cancelled.
10.3 No Right to Company Assets. The benefits paid under the Plan shall be
paid from the general funds of the Company, and the Participant and any
Beneficiary shall be no more than unsecured general creditors of the Company
with no special or prior right to any assets of the Company for payment of any
obligations hereunder.
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10.4 Protective Provisions. The Participant shall cooperate with the
Company by furnishing any and all information requested by the Benefits
Committee in order to facilitate the payment of benefits hereunder, taking such
physical examinations as the Benefits Committee may deem necessary and taking
such other actions as may be requested by the Benefits Committee. If the
Participant refuses to cooperate or makes any material misstatement or
nondisclosure of information, then no benefits will be payable hereunder to such
Participant or his Beneficiary.
10.5 Withholding. The Participant or the Beneficiary shall make
appropriate arrangements with the Company for satisfaction of any federal, state
or local income tax withholding requirements and Social Security or other
employee tax requirements applicable to the payment of benefits under the Plan.
If no such arrangements are made, the Company may provide, at its discretion,
for such withholding and tax payments as may be required.
ARTICLE 11
ADMINISTRATION OF PLAN
The Benefits Committee shall administer the Plan and interpret, construe
and apply its provisions in accordance with its terms. The Benefits Committee
shall determine in its sole discretion those who are eligible to participate in
the Plan and shall have the right to set guidelines for participation under the
Plan including but not limited to the type, manner and level of Deferral
Commitments. The Benefits Committee shall further establish, adopt or revise
such other rules and regulations as it may deem necessary or advisable for the
administration of the Plan. All decisions of the Benefits Committee shall be
final and binding. The individuals serving on the Benefits Committee shall,
except as prohibited by law, be indemnified and held harmless by the Company
from any and all liabilities, costs, and expenses (including legal fees), to the
extent not covered by liability insurance, arising out of any action taken by
any member of the Benefits Committee with respect to the Plan, unless such
liability arises from the individual's own gross negligence or willful
misconduct.
ARTICLE 12
BENEFICIARY DESIGNATION
12.1 Beneficiary Designation. The Participant shall have the right, at any
time, to designate any person or persons as a Beneficiary (both primary and
contingent) to whom payment under the Plan shall be made in the event of the
Participant's death. The Beneficiary designation shall be effective when it is
submitted in writing and delivered to the Benefits Committee during the
Participant's lifetime on a form prescribed by the Benefits Committee. If,
however, the Participant is married, his spouse shall be required to join any
such designation, or change or revocation thereof, to name a Beneficiary other
than the spouse.
12.2 New Beneficiary Designation. The Participant shall have the right to
change or revoke any such designation from time to time by filing a new
designation or notice of revocation with the Company, and no notice to any
Beneficiary nor consent by any Beneficiary shall be required to effect any such
change or revocation. If, however, the Participant is married, his spouse shall
be required to join any such designation, or change or revocation thereof, to
name a Beneficiary other than the spouse.
12.3 Failure to Designate Beneficiary. If a Participant fails to designate
a Beneficiary before his death, or if no designated Beneficiary survives the
Participant, the Benefits Committee shall direct the Company to pay the balance
of the Participant's Accounts in a lump sum to the executor or administrator for
his estate; provided, however, if no executor or administrator shall have been
appointed, and actual notice of the death was given to the Benefits Committee
within sixty (60) days after the Participant's death, and if his Account
balances do not exceed ten thousand dollars ($10,000), the Benefits Committee
may direct the Company to pay the Account balances to such person or persons as
the Benefits Committee determines may be entitled to them, and the Benefits
Committee may require such proof of right and/or identity of such person or
persons as the Benefits Committee may deem appropriate or necessary.
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ARTICLE 13
AMENDMENT AND TERMINATION OF PLAN
13.1 Amendment of Plan. The Executive Personnel and Compensation Committee
of the Board of Directors of the Company may at any time amend the Plan in whole
or in part, provided, however, that such amendment (i) shall not decrease the
vested balance of the Participant's Deferral Accounts at the time of such
amendment and (ii) shall not retroactively decrease the applicable Crediting
Rates of the Plan prior to the time of such amendment. The Company or Benefits
Committee may amend the Crediting Rates of the Plan prospectively. If the
Company and/or the Benefits Committee changes the Crediting Rate under the Plan,
the Company or the Benefits Committee shall notify the Participant of such
amendment in writing within thirty (30) days of such amendment. Within thirty
(30) days of receipt of the notice of an amendment to the formula for
determining the applicable Crediting Rate, the Participant may elect by written
notice to the Benefits Committee to terminate an incomplete Deferral Commitment.
13.2 Termination of Plan. The Company may at any time terminate the Plan
as to all or any group of Participants. If the Company terminates the Plan as to
all or any group of Participants, the date of such termination shall be treated
as the date of Termination of Employment for the purpose of calculating Plan
benefits. The Company shall pay to the Participant the benefits the Participant
is entitled to receive under the Plan in annual installments over a three (3)
year period or such shorter period of time as the Company may determine in its
sole discretion. Interest at the Crediting Rate will be credited to the
Participant's Deferred Accounts until distribution under this paragraph is
completed, in accordance with the rules established under paragraph 5.2(b).
13.3 Constructive Receipt Termination. In the event the Benefits Committee
determines that amounts deferred under the Plan have been constructively
received by Participants and must be recognized as income for federal income tax
purposes, the Plan shall terminate and distributions shall be made to
Participants in accordance with the provisions of paragraph 13.2. The
determination of the Benefits Committee under this paragraph 13.3 shall be
binding and conclusive.
ARTICLE 14
MISCELLANEOUS
14.1 Successors of the Company. The rights and obligations of the Company
under the Plan shall inure to the benefit of, and shall be binding upon, the
successors and assigns of the Company.
14.2 ERISA Plan. The Plan is intended to be an unfunded plan maintained
primarily to provide deferred compensation benefits for "a select group of
management or highly compensated employees" within the meaning of Sections 201,
301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I
of ERISA. Notwithstanding any provisions of this Plan to the contrary, if any
Participant is determined not to be a "management or highly compensated
employee" within the meaning of ERISA or applicable regulations thereunder at
the time a Deferral Commitment is elected, such Participant will not be eligible
to complete such Deferral Commitment and shall receive an immediate lump sum
payment equal to the unpaid balance of the Deferral Accounts applicable to such
Deferral Commitments as of the most recent Valuation Date. Upon such payment, no
survivor benefit or other benefit shall thereafter be payable under this Plan
either to the Participant or any Beneficiary of the Participant, with respect to
such Deferral Accounts.
14.3 Trust. The Company shall be responsible for the payment of all
benefits under the Plan. At its discretion, the Company may establish one or
more grantor trusts for the purposes of providing for payment of benefits under
the Plan. Such trust or trusts may be irrevocable, but the assets thereof shall
be subject to the claims of the Company's creditors. Benefits paid to the
Participant from any such trust shall be considered paid by the Company for
purposes of meeting the obligations of the Company under the Plan.
14.4 Rollover Account. Effective April 1, 1994, for each Eligible
Executive, the Company will establish a Deferral Account in his or her name
equal to the total amount of his account balance under the Company's Deferred
Bonus-Incentive Plan. Such Eligible Executives will have no subsequent rights
under the Company's Deferred Bonus-Incentive Plan as in effect on or before
April 1, 1994.
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14.5 Employment Not Guaranteed. Nothing contained in the Plan nor any
action taken hereunder shall be construed as a contract of employment or as
giving any Participant any right to continued employment with the Company.
14.6 Gender, Singular and Plural. All pronouns and variations thereof
shall be deemed to refer to the masculine or feminine, as the identity of the
person or persons may require. As the context may require, the singular may be
read as the plural and the plural as the singular.
14.7 Captions. The captions of the articles and paragraphs of the Plan are
for convenience only and shall not control or affect the meaning or construction
of any of its provisions.
14.8 Validity. In the event any provision of the Plan is held invalid,
void or unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provisions of the Plan.
14.9 Waiver of Breach. The waiver by the Company of any breach of any
provision of the Plan by the Participant shall not operate or be construed as a
waiver of any subsequent breach by the Participant.
14.10 Applicable Law. The Plan shall be governed and construed in
accordance with the laws of the State of California except where the laws of the
State of California are preempted by ERISA.
14.11 Notice. Any notice or filing required or permitted to be given to
the Company under the Plan shall be sufficient if in writing or hand-delivered,
or sent by registered or certified mail, return receipt requested, to the
principal office of the Company, directed to the attention of the Benefits
Committee. Such notice shall be deemed given as of the date of delivery, or, if
delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification.
14.12 Arbitration. Any claim, dispute or other matter in question of any
kind relating to this Plan shall be settled by arbitration in accordance with
the Rules of the American Arbitration Association. Notice of demand for
arbitration shall be made in writing to the opposing party and to the American
Arbitration Association within a reasonable time after the claim, dispute or
other matter in question has arisen. In no event shall a demand for arbitration
be made after the date when the applicable statute of limitations would bar the
institution of a legal or equitable proceeding based on such claim, dispute or
other matter in question. The decision of the arbitrators shall be final and may
be enforced in any court of competent jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed and
effective as of the first day of April 1994.
THE TIMES MIRROR COMPANY
By:
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Title:
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By:
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Title:
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EXHIBIT 10.7
THE TIMES MIRROR
DEFERRED COMPENSATION PLAN FOR DIRECTORS
THE TIMES MIRROR COMPANY, a Delaware corporation (the "Company"), hereby
establishes this Deferred Compensation Plan for Directors (the "Plan"),
effective as of April 1, 1994, for the purpose of enabling directors of the
Company who become covered under the Plan to enhance their retirement security
by permitting them to enter into agreements with the Company to defer their fees
for services as a director and receive benefits at retirement, death, separation
from service and as otherwise provided under the Plan.
ARTICLE I
DEFINITIONS
1.1 Annual Deferral: shall mean the amount of Directors' Fees which a
Participant elects to defer under the Deferral Commitment in each Plan Year of
the Deferral Contribution Period pursuant to paragraph 3.1 of the Plan.
1.2 Beneficiary: shall mean the person, persons or entity designated as
such in accordance with Article 12 of the Plan.
1.3 Change in Control: shall mean an occurrence of any of the following
events: (1) an acquisition (other than directly from the Company) of any voting
securities of the Company (the "Voting Securities") by any "person" or "group"
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934 (the "Exchange Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 under the Exchange Act)
of more than fifty percent (50%) of the combined voting power of the Company's
then outstanding voting securities; (2) the Board ceases for any reason to have
at least a majority of "unaffiliated directors" (defined as all members of the
Board except those who are or were proposed and accepted for nomination as a
member of the Board by, or are otherwise "affiliated" or "associated" (as those
terms are used for purposes of Rule 12b-2 under the Exchange Act) with a person
who has Beneficial Ownership of ten percent (10%) or more of the combined voting
power of the Company (except to the extent such person had such Beneficial
Ownership prior to the effective date of the Plan)); or (3) approval by the
shareholders of (a) a merger, consolidation or reorganization involving the
Company, unless either (i) the shareholders of the Company immediately before
such merger, consolidation or reorganization own, directly or indirectly
immediately following such merger, consolidation or reorganization, at least
seventy-five percent (75%) of the combined voting power of the company resulting
from such merger, consolidation or reorganization (the "Surviving Corporation")
in substantially the same proportion as their ownership immediately before such
merger, consolidation or reorganization, or (ii) at least a majority of the
members of the Board of Directors of the Surviving Corporation are unaffiliated
directors who were directors of the Company immediately prior to the execution
of the agreement providing for such merger, consolidation or reorganization, or
(b) a complete liquidation or dissolution of the Company.
1.4 Company: shall mean The Times Mirror Company and any successor in
interest.
1.5 Crediting Rate: shall mean the annual rate of interest credited to
Participants' Deferral Accounts. One Crediting Rate is applied to all Deferral
Accounts for a Plan Year. The Crediting Rate is determined by the Executive
Personnel and Compensation Committee. The Executive Personnel and Compensation
Committee, in its sole discretion, will establish administrative rules for
applying the Crediting Rate.
1.6 Deferral Account: shall mean the device used by the Company to measure
and determine the amounts to be paid to a Participant under the Plan for each
Deferral Unit. Separate Deferral Accounts will be established for amounts
deferred by a Participant under separate Deferral Units.
1.7 Deferral Commitment or Deferral Unit: shall mean a deferral commitment
made by a Participant to establish a deferral unit pursuant to Articles 2 and 3
for which a Participation Agreement has been submitted by the Participant.
1
<PAGE> 2
1.8 Deferral Contribution Period: shall mean the period of one (1) or four
(4) Plan Years, or such other period as the Executive Personnel and Compensation
Committee may permit in its discretion, as selected by the Participant for a
particular Deferral Commitment, over which the Participant has elected to defer
in each Plan Year in the period Directors' Fees pursuant to Article 3 of the
Plan.
1.9 Directors' Fees: shall mean the annual retainer, committee fees and/or
meeting attendance fees payable to a director for services rendered as a
director of the Company.
1.10 Disability: shall mean a physical or mental condition that prevents a
Participant from performing the usual and customary duties of a director of the
Company. A Participant shall be presumed to be disabled if the Executive
Personnel and Compensation Committee so determines upon review of one or more
medical opinions acceptable to the Executive Personnel and Compensation
Committee.
1.11 Eligible Director: shall mean all non-employee directors of the
Company.
1.12 Executive Personnel and Compensation Committee: shall mean the
administrators of the Plan pursuant to Article 11 of the Plan.
1.13 Financial Hardship: shall mean an unexpected need for cash arising
from an illness, casualty loss, sudden financial reversal, or other such
unforeseeable occurrence as determined by the Executive Personnel and
Compensation Committee. Cash needs arising from foreseeable events such as, for
example, the purchase of a residence or education expenses for children shall
not, alone, be considered a Financial Hardship.
1.14 In-Service Distribution: shall mean a distribution elected by the
Participant pursuant to the applicable provisions of Article 9 of the Plan.
1.15 Participant: shall mean an Eligible Director who is participating in
the Plan as provided in Article 2.
1.16 Participation Agreement: shall mean a written agreement between the
Company and the Participant, entered into pursuant to Article 2 of the Plan, by
which the Participant elects to participate in the Plan and make a Deferral
Commitment.
1.17 Plan: shall mean this Deferred Compensation Plan for Directors as set
forth in this document and as the same may be amended, supplemented and/or
restated from time to time and any successor plan.
1.18 Plan Year: shall mean the calendar year. Notwithstanding the above,
the first Plan Year, which shall be a partial Plan Year, shall commence on April
1, 1994.
1.19 Scheduled Withdrawal: shall mean a one-time distribution of all or a
portion of a Participant's Deferral Account at the date specified for such
distribution in accordance with the applicable provisions of Article 9 of this
Plan.
1.20 Termination of Service: shall mean the date of the cessation of the
Participant's service as a director of the Company for any reason whatsoever,
whether voluntary or involuntary, other than as a result of the Participant's
death or to the extent provided in Article 7 of the Plan, the Participant's
Disability.
1.21 Unscheduled Withdrawal: shall mean a distribution of all or a portion
of the entire amount credited to the Participant's Deferral Accounts requested
by the Participant pursuant to the applicable provisions of Article 9 of the
Plan.
1.22 Valuation Date: shall mean the last day of each month, or such other
dates as the Executive Personnel and Compensation Committee may determine in its
discretion, which may be either more or less frequent, for the valuation of
Participants' Deferral Accounts.
2
<PAGE> 3
ARTICLE 2
PARTICIPATION
Participation Agreement. Any Eligible Director may elect to participate in
the Plan and to make a Deferral Commitment by submitting a Participation
Agreement to the Executive Personnel and Compensation Committee prior to the
November 30th immediately preceding the beginning of the Deferral Contribution
Period, except that Deferral Commitments to be effective in the Plan Year
commencing April 1, 1994 may be made within thirty (30) days of the effective
date of the Plan. The Participant shall be required to submit a separate
Participation Agreement for each subsequent Deferral Commitment. Except as
otherwise provided in this Plan, the Participant's Deferral Commitment shall be
irrevocable.
ARTICLE 3
FORM OF DEFERRAL COMMITMENTS
3.1 Deferral Contribution Period. A Participant may elect, in the
Participation Agreement, Deferral Commitments during a Deferral Contribution
Period of either one (1) or four (4) years, commencing with the Plan Year
immediately following such election.
3.2 Deferral Commitment. A Participant may elect in the Participation
Agreement to defer in each year of the Deferral Contribution Period an amount
equal to a specified percentage of Directors' Fees.
ARTICLE 4
DEFERRAL ACCOUNTS
4.1 Deferral Accounts. A Deferral Account shall be established for each
Participant. Separate Deferral Accounts shall be maintained for each separate
Deferral Unit of Directors' Fees. Each Deferral Account shall be credited with
an Annual Deferral at the time such amounts would otherwise have been paid to
the Participant. Deferral Accounts shall, except as otherwise provided in the
Plan, be credited with interest at the Crediting Rate, in effect for each Plan
Year, from the date of deferral through the earlier of the Participant's date of
death or the Valuation Date.
4.2 Statements of Account. The administrator shall provide periodically to
each Participant a statement setting forth the balance of each Deferral Account
maintained for such Participant.
4.3 Vesting of Accounts. Each Participant shall be one hundred percent
(100%) vested at all times in the amounts credited to such Participant's
Deferral Accounts.
ARTICLE 5
PAYMENT OF BENEFITS
5.1 Deferral Accounts. Upon Termination of Service the Company shall pay
to the Participant, for each Deferral Commitment, a benefit in the form provided
in paragraph 5.2 of the Plan, based on the balance of the Deferral Account for
such Deferral Commitment on Termination of Service.
5.2 Form of Benefits. The benefit attributable to a particular Deferral
Commitment shall be paid in accordance with the Participant's direction as set
forth on an election form prescribed by the Executive Personnel and Compensation
Committee for designation of form of payment; such payment election shall be
made at the time the Deferral Commitment election is made, and is irrevocable.
The available forms of payment after Termination of Service are as follows:
(a) Lump Sum. A lump sum payment equal to the balance of the
applicable Deferral Accounts as of the Valuation Date preceding payment.
(b) Installment Payments. Annual installment payments over a payment
period of 5, 10, or 15 years, as elected by the Participant. Installment
payments shall be made in January of each year, commencing with the January
following the calendar year of Termination of Service, or the January
following the calendar year of attainment of the age elected under
paragraph 5.3, if applicable or the
3
<PAGE> 4
January elected as a Scheduled Withdrawal. Interest will be credited to the
unpaid balance in the applicable Deferral Accounts at the Crediting Rate in
effect for each Plan Year. The Executive Personnel and Compensation
Committee, in its sole discretion, may establish rules for making
installment payments and crediting interest to the unpaid balances in
Deferral Accounts.
5.3 Timing of Payments. A Participant may elect, on the election form for
designation of form of payment for any Deferral Unit, to have the lump sum or
installment payments paid (1) the later of the January following the calendar
year of Termination of Service or the January following the calendar year in
which the Participant reaches age 55, 60, 65 or 70 or (2) the January following
the calendar year of Termination of Service or (3) the January elected as a
Scheduled Withdrawal as described in Article 9.
5.4 Small Benefit Exception. Notwithstanding any of the foregoing, in the
event the sum of all benefits payable to the Participant is less than or equal
to five thousand dollars ($5,000), the Company may, in its sole discretion,
elect to pay such benefits in a single lump sum payable on the date such
benefits first become payable.
ARTICLE 6
SURVIVOR BENEFITS
6.1 Pre-Commencement Survivor Benefit. If a Participant dies prior to
commencing distributions, for each Deferral Commitment, the Company shall pay to
the Participant's Beneficiary a benefit equal to the balance of the
Participant's Deferral Accounts as of the Participant's date of death, payable
in accordance with the Participant's election under paragraph under paragraph
5.2 starting in the January following the date of death. Interest will be
credited on unpaid balances using the same rules established in paragraph 5.2.
6.2 Post-Commencement Survivor Benefit. If a Participant dies after
commencing distributions, the Company shall pay to the Participant's Beneficiary
the remaining benefits payable to the Participant under the Plan for the
remainder of the benefit period that such benefits would have been paid to the
Participant.
6.3 Small Benefit Exception. Notwithstanding any of the foregoing, in the
event the sum of all benefits payable to the Beneficiary is less than or equal
to five thousand dollars ($5,000), the Company may, in its sole discretion,
elect to pay such benefits in a single lump sum payable on the date such
benefits first become payable.
ARTICLE 7
DISABILITY
If a Participant incurs a Disability, the Participant shall, effective as
of the date such Participant is no longer paid Directors' Fees by the Company,
cease deferrals under the Plan. The Participant's Deferral Account shall
continue to be credited with interest at the Crediting Rate until such time as
the Participant's benefits under the Plan are distributed in accordance with the
Participant's election or as provided in paragraph 10.2.
ARTICLE 8
CHANGE IN CONTROL
8.1 Election. In the event of a Change in Control, the Participant (or
after the Participant's death the Participant's Beneficiary) may elect to
receive an immediate lump sum payment of the balance in each Deferral Account.
8.2 Benefit Reduction on Withdrawal. If the Participant (or Beneficiary)
elects the withdrawal described in paragraph 8.1 herein, the lump sum payment
shall be reduced by an amount equal to ten percent (10%) (or such other
reduction deemed appropriate by legal counsel for the Company) of the total
balance of such Deferral Accounts withdrawn. If a Participant elects such a
withdrawal, the Participant may not elect to participate in the Plan until the
first day of the second Plan Year following the Plan Year in which such
withdrawal was made.
4
<PAGE> 5
ARTICLE 9
SCHEDULED AND UNSCHEDULED WITHDRAWALS
9.1 Election of Scheduled Withdrawal. If a Participant wishes to receive a
Scheduled Withdrawal, the Participant shall designate in the applicable
Participation Agreement the date for such Scheduled Withdrawal. The date
designated for such Scheduled Withdrawal must be at least seven (7) years from
the first day of the Plan Year in which such amounts are deferred under the
applicable Participation Agreement.
9.2 Payment of Scheduled Withdrawal. In the January of the year designated
in the applicable Participation Agreement for a Scheduled Withdrawal, the
Company shall pay to the Participant, in the form elected, the requested portion
of the balance in the Participant's Deferral Account attributable to the
Participation Agreement for which such designation was made.
9.3 Unscheduled Withdrawal. A Participant may request an Unscheduled
Withdrawal in the form of a lump sum payment of all or any portion of the entire
amount credited to a Deferral Account as of the Valuation Date preceding
payment. Such Unscheduled Withdrawal amount must be greater than five thousand
dollars ($5,000); if the Deferral Account is $5,500 or less, the Unscheduled
Withdrawal will be in amount such that, when combined with the Withdrawal
Penalty described in paragraph 9.4, the total Deferral Account is reduced to
zero.
9.4 Withdrawal Penalty. There shall be a penalty deducted from the
Deferral Account prior to an Unscheduled Withdrawal from such Deferral Account
equal to ten percent (10%) of the Unscheduled Withdrawal amount or such other
reduction deemed appropriate by the Executive Personnel and Compensation
Committee, together with legal counsel for the Company. Such Unscheduled
Withdrawal will be reduced accordingly if it is an amount such that, when added
to the Withdrawal Penalty, the total exceeds the amount of the Deferral Account.
If a Participant elects to make an Unscheduled Withdrawal, all Deferral
Commitments which have been elected but not completed shall be canceled. The
Participant may not elect to make subsequent Deferral Commitments under the Plan
until the second Plan Year following the Plan Year in which such withdrawal was
made. The Executive Personnel and Compensation Committee, in its sole
discretion, may adopt the appropriate administrative rules regarding the
application of the Withdrawal Penalty.
ARTICLE 10
CONDITIONS RELATED TO BENEFITS
10.1 Nonassignability. The benefits provided under the Plan may not be
alienated, assigned, transferred, pledged or hypothecated by or to any person or
entity, at any time or in any manner whatsoever. These benefits shall be exempt
from the claims of creditors or other claimants of any Participant and from all
orders, decrees, levies, garnishment or executions against any Participant to
the fullest extent allowed by law.
10.2 Financial Hardship Distribution. Upon a finding that the Participant
or the Beneficiary has suffered a Financial Hardship, the Executive Personnel
and Compensation Committee may, in its sole discretion, and upon written
petition of the Participant or Beneficiary accelerate distributions of benefits
under the Plan in the amount reasonably necessary to alleviate such Financial
Hardship or as requested by the Participant or the Beneficiary. If a
distribution is to be made to a Participant on account of Financial Hardship,
the Participant may not make subsequent Deferral Commitments under the Plan
until the third Plan Year following the Plan Year in which a distribution based
on Financial Hardship was made. All Deferral Commitments in effect at the time
such distribution is made under this section shall be cancelled.
10.3 No Right to Company Assets. The benefits paid under the Plan shall be
paid from the general funds of the Company, and the Participant and any
Beneficiary shall be no more than unsecured general creditors of the Company
with no special or prior right to any assets of the Company for payment of any
obligations hereunder.
10.4 Protective Provisions. The Participant shall cooperate with the
Company by furnishing any and all information requested by the Executive
Personnel and Compensation Committee in order to facilitate the payment of
benefits hereunder, taking such physical examinations as the Executive Personnel
and Compensa-
5
<PAGE> 6
tion Committee may deem necessary and taking such other actions as may be
requested by the Executive Personnel and Compensation Committee. If the
Participant refuses to cooperate or makes any material misstatement or
nondisclosure of information, then no benefits will be payable hereunder to such
Participant or his Beneficiary.
ARTICLE 11
ADMINISTRATION OF PLAN
The Executive Personnel and Compensation Committee shall administer the
Plan and interpret, construe and apply its provisions in accordance with its
terms. The Executive Personnel and Compensation Committee shall further
establish, adopt or revise such rules and regulations as it may deem necessary
or advisable for the administration of the Plan. All decisions of the Executive
Personnel and Compensation Committee shall be final and binding. The individuals
serving on the Executive Personnel and Compensation Committee shall, except as
prohibited by law, be indemnified and held harmless by the Company from any and
all liabilities, costs, and expenses (including legal fees), to the extent not
covered by liability insurance, arising out of any action taken by any member of
the Executive Personnel and Compensation Committee with respect to the Plan,
unless such liability arises from the individual's own gross negligence or
willful misconduct.
ARTICLE 12
BENEFICIARY DESIGNATION
12.1 Beneficiary Designation. The Participant shall have the right, at any
time, to designate any person or persons as a Beneficiary (both primary and
contingent) to whom payment under the Plan shall be made in the event of the
Participant's death. The Beneficiary designation shall be effective when it is
submitted in writing and delivered to the Executive Personnel and Compensation
Committee during the Participant's lifetime on a form prescribed by the
Executive Personnel and Compensation Committee. If, however, the Participant is
married, his spouse shall be required to join any such designation, or change or
revocation thereof, to name a Beneficiary other than the spouse.
12.2 New Beneficiary Designation. The Participant shall have the right to
change or revoke any such designation from time to time by filing a new
designation or notice of revocation with the Company, and no notice to any
Beneficiary nor consent by any Beneficiary shall be required to effect any such
change or revocation. If, however, the Participant is married, his spouse shall
be required to join any such designation, or change or revocation thereof, to
name a Beneficiary other than the spouse.
12.3 Failure to Designate Beneficiary. If a Participant shall fail to
designate a Beneficiary before his demise, or if no designated Beneficiary
survives the Participant, the Executive Personnel and Compensation Committee
shall direct the Company to pay the balance in each of his Accounts in a lump
sum to the executor or administrator for his estate; provided, however, if no
executor or administrator shall have been appointed, and actual notice of said
death was given to the Executive Personnel and Compensation Committee within
sixty (60) days after his death, and if his Account balances do not exceed ten
thousand dollars ($10,000), the Executive Personnel and Compensation Committee
may direct the Company to pay his Account balances to such person or persons as
the Executive Personnel and Compensation Committee determines may be entitled
thereto, and the Executive Personnel and Compensation Committee may require such
proof of right and/or identity of such person or persons as the Executive
Personnel and Compensation Committee may deem appropriate or necessary.
ARTICLE 13
AMENDMENT AND TERMINATION OF PLAN
13.1 Amendment of Plan. The Executive Personnel and Compensation Committee
of the Board of Directors of the Company may at any time amend the Plan in whole
or in part, provided, however, that such amendment (i) shall not decrease the
vested balance of the Participant's Deferral Accounts at the time of such
amendment and (ii) shall not retroactively decrease the applicable Crediting
Rates of the Plan prior to
6
<PAGE> 7
the time of such amendment. The Company may amend the Crediting Rates of the
Plan prospectively. If the Company amends the formula for determining the
Crediting Rates under the Plan, the Company shall notify the Participant of such
amendment in writing within thirty (30) days of such amendment. Within thirty
(30) days of receipt of the notice of an amendment to the formula for
determining the applicable Crediting Rate, the Participant may elect by written
notice to the Executive Personnel and Compensation Committee to terminate an
incomplete Deferral Commitment.
13.2 Termination of Plan. The Company may at any time terminate the Plan
as to all or any group of Participants. If the Company terminates the Plan as to
all or any group of Participants, the date of such termination shall be treated
as the date of Termination of Service for the purpose of calculating Plan
benefits. The Company shall pay to the Participant the benefits the Participant
is entitled to receive under the Plan in monthly installments over a thirty-six
(36) month period or such shorter period as the Company may determine in its
sole discretion. Interest at the Crediting Rate will be credited to the
Participant's Deferred Accounts until distribution under this section is
completed.
13.3 Constructive Receipt Termination. In the event the Executive
Personnel and Compensation Committee determines that amounts deferred under the
Plan have been constructively received by Participants and must be recognized as
income for federal income tax purposes, the Plan shall terminate and
distributions shall be made to Participants in accordance with the provisions of
paragraph 13.2. The determination of the Executive Personnel and Compensation
Committee under this paragraph 13.3 shall be binding and conclusive.
ARTICLE 14
MISCELLANEOUS
14.1 Successors of the Company. The rights and obligations of the Company
under the Plan shall inure to the benefit of, and shall be binding upon, the
successors and assigns of the Company.
14.2 Trust. The Company shall be responsible for the payment of all
benefits under the Plan. At its discretion, the Company may establish one or
more grantor trusts for the purposes of providing for payment of benefits under
the Plan. Such trust or trusts may be irrevocable, but the assets thereof shall
be subject to the claims of the Company's creditors. Benefits paid to the
Participant from any such trust shall be considered paid by the Company for
purposes of meeting the obligations of the Company under the Plan.
14.3 Rollover Account. An Eligible Director, whether or not he would
otherwise be a Participant in the Plan, may make a Deferral Commitment by
completing a Participation Agreement within thirty (30) days of the effective
date of the Plan and by authorizing the Company to contribute to a Deferral
Account established hereunder, in his or her name, the total amount of his
account balance under the Company's Deferral Plan for Directors' Fees.
14.4 Gender, Singular and Plural. All pronouns and variations thereof
shall be deemed to refer to the masculine or feminine, as the identity of the
person or persons may require. As the context may require, the singular may be
read as the plural and the plural as the singular.
14.5 Captions. The captions of the articles and paragraphs of the Plan are
for convenience only and shall not control or affect the meaning or construction
of any of its provisions.
14.6 Validity. In the event any provision of the Plan is held invalid,
void or unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provisions of the Plan.
14.7 Waiver of Breach. The waiver by the Company of any breach of any
provision of the Plan by the Participant shall not operate or be construed as a
waiver of any subsequent breach by the Participant.
14.8 Applicable Law. The Plan shall be governed and construed in
accordance with the laws of the State of California.
14.9 Notice. Any notice or filing required or permitted to be given to the
Company under the Plan shall be sufficient if in writing or hand-delivered, or
sent by registered or certified mail, return receipt requested, to the principal
office of the Company, directed to the attention of the Executive Personnel and
Compensation
7
<PAGE> 8
Committee. Such notice shall be deemed given as of the date of delivery, or, if
delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification.
14.10 Arbitration. Any claim, dispute or other matter in question of any
kind relating to this Plan shall be settled by arbitration in accordance with
the Rules of the American Arbitration Association. Notice of demand for
arbitration shall be made in writing to the opposing party and to the American
Arbitration Association within a reasonable time after the claim, dispute or
other matter in question has arisen. In no event shall a demand for arbitration
be made after the date when the applicable statute of limitations would bar the
institution of a legal or equitable proceeding based on such claim, dispute or
other matter in question. The decision of the arbitrators shall be final and may
be enforced in any court of competent jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed and
effective as of the first day of April 1994.
THE TIMES MIRROR COMPANY
By:
-------------------------------
Typed or
Printed Name:
---------------------
By:
-------------------------------
Typed or
Printed Name:
---------------------
8
<PAGE> 1
EXHIBIT 11
PAGE 1 OF 2
THE TIMES MIRROR COMPANY
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
PRIMARY
Average shares outstanding.............................. 128,611,404 128,587,823 128,557,808
Dilutive stock options based on the treasury stock
method using average market price..................... 195,752 153,081 260,641
----------- ----------- -----------
128,807,156 128,740,904 128,818,449
=========== =========== ===========
Income (loss) from continuing operations................ $126,238 $ 51,669 $ (18,369)
Discontinued operations:
Income from discontinued operations, net of income
taxes.............................................. 59,111 133,788 75,144
Gain on sale of discontinued operations, net of income
taxes.............................................. 131,702
Extraordinary loss on early retirement of debt, net of
income taxes.......................................... (12,232)
Cumulative effect of changes in accounting principles:
Postretirement benefits............................... (133,376)
Income taxes.......................................... 10,000
----------- ----------- -----------
Net income (loss)....................................... $173,117 $317,159 $ (66,601)
=========== =========== ===========
Earnings (loss) per share:
Continuing operations................................. $ .98 $ .40 $ (.14)
Discontinued operations:
Income from operations............................. .46 1.04 .58
Gain on sale....................................... 1.02
Extraordinary loss.................................... (.09)
Cumulative effect of changes in accounting principles:
Postretirement benefits............................ (1.04)
Income taxes....................................... .08
----------- ----------- -----------
Earnings (loss) per share............................... $ 1.35 $ 2.46 $ (.52)
=========== =========== ===========
FULLY DILUTED
Average shares outstanding.............................. 128,611,404 128,587,823 128,557,808
Dilutive stock options based on the treasury stock
method using year-end market price, if higher than
average market price.................................. 195,752 258,897 172,182
----------- ----------- -----------
128,807,156 128,846,720 128,729,990
=========== =========== ===========
Income (loss) from continuing operations................ $126,238 $ 51,669 $ (18,369)
Discontinued operations:
Income from discontinued operations, net of income
taxes.............................................. 59,111 133,788 75,144
Gain on sale of discontinued operations, net of income
taxes.............................................. 131,702
Extraordinary loss on early retirement of debt, net of
income taxes.......................................... (12,232)
Cumulative effect of changes in accounting principles:
Postretirement benefits............................... (133,376)
Income taxes.......................................... 10,000
----------- ----------- -----------
Net income (loss)....................................... $173,117 $317,159 $ (66,601)
=========== =========== ===========
Earnings (loss) per share:
Continuing operations................................. $ .98 $ .40 $ (.14)
Discontinued operations:
Income from operations............................. .46 1.04 .58
Gain on sale....................................... 1.02
Extraordinary loss.................................... (.09)
Cumulative effect of changes in accounting principles:
Postretirement benefits............................ (1.04)
Income taxes....................................... .08
----------- ----------- -----------
Earnings (loss) per share............................... $ 1.35 $ 2.46 $ (.52)
=========== =========== ===========
</TABLE>
<PAGE> 2
EXHIBIT 11
PAGE 2 OF 2
THE TIMES MIRROR COMPANY
COMPUTATION OF EARNINGS PER SHARE (CONTINUED)
(IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
FOURTH QUARTER
ENDED DECEMBER 31
---------------------------
1994 1993
----------- -----------
<S> <C> <C>
PRIMARY
Average shares outstanding........................................ 128,615,548 128,601,111
Dilutive stock options based on the treasury method using
average market price............................................ 135,684 207,975
----------- -----------
128,751,232 128,809,086
=========== ===========
Income from continuing operations................................. $ 46,853 $ 4,363
Discontinued operations:
Income from discontinued operations, net of income taxes........ 18,102 25,741
Gain on sale of discontinued operations, net of income taxes.... 131,702
Extraordinary loss on early retirement of debt, net of income
taxes........................................................... (12,232)
----------- -----------
Net income........................................................ $ 52,723 $161,806
=========== ===========
Earnings per share:
Continuing operations........................................... $ .36 $ .04
Discontinued operations:
Income from operations....................................... .14 .20
Gain on sale................................................. 1.02
Extraordinary loss.............................................. (.09)
----------- -----------
Earnings per share................................................ $ .41 $ 1.26
=========== ===========
FULLY DILUTED
Average shares outstanding........................................ 128,615,548 128,601,111
Dilutive stock options based on the treasury stock method using
year-end market price, if higher than average market price...... 135,684 313,384
----------- -----------
128,751,232 128,914,495
=========== ===========
Income from continuing operations $ 46,853 $ 4,363
Discontinued operations:
Income from discontinued operations, net of income taxes........ 18,102 25,741
Gain on sale of discontinued operations, net of income taxes.... 131,702
Extraordinary loss on early retirement of debt, net of income
taxes........................................................... (12,232)
----------- -----------
Net income........................................................ $ 52,723 $161,806
=========== ===========
Earnings per share:
Continuing operations........................................... $ .36 $ .04
Discontinued operations:
Income from operations....................................... .14 .20
Gain on sale................................................. 1.02
Extraordinary loss.............................................. (.09)
----------- -----------
Earnings per share................................................ $ .41 $ 1.26
=========== ===========
</TABLE>
<PAGE> 1
EXHIBIT 12
THE TIMES MIRROR COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
YEAR-TO-DATE
DECEMBER 31, 1994
-----------------
<S> <C>
Fixed Charges
Interest expense........................................................ $ 69,459
Interest related to ESOP(1)............................................. 1,376
Capitalized interest.................................................... 1,142
Portion of rents deemed to be interest.................................. 20,480
Amortization of debt expense............................................ 339
---------
Total fixed charges................................................ $ 92,796
=========
Earnings
Income from continuing operations before income taxes................... $ 247,747
Fixed charges, less capitalized interest and interest related to ESOP... 90,278
Amortization of capitalized interest.................................... 4,229
Distributed income from less than 50% owned unconsolidated affiliates... 292
Subtract: Equity loss from less than 50% owned unconsolidated
affiliates............................................................. 1,158
---------
Total earnings..................................................... $ 343,704
=========
Ratio of earnings to fixed charges........................................... 3.7
</TABLE>
---------------
(1) The Company has guaranteed the repayment of debt of the Employee Stock
Ownership Plan and, accordingly, has included the related interest in fixed
charges. This debt was repaid on December 15, 1994.
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE TIMES MIRROR COMPANY
AS OF MARCH 1, 1995*
<TABLE>
<CAPTION>
STATE OF
NAME INCORPORATION
------------------------------------------------------------- -------------
<S> <C>
The Baltimore Sun Company.................................... Maryland
CRC Press, Inc............................................... Florida
Harry N. Abrams, Incorporated**.............................. New York
The Hartford Courant Company................................. Connecticut
Jeppesen & Co., GmbH**....................................... Germany
Jeppesen Sanderson, Inc...................................... Delaware
Kaset, Inc................................................... Florida
Learning International, Inc.**............................... Delaware
LOS ANGELES TIMES***.........................................
Matthew Bender & Company, Incorporated**..................... New York
The Morning Call, Inc........................................ Pennsylvania
Mosby-Year Book, Inc......................................... Missouri
National Journal, Inc........................................ Delaware
Newsday, Inc.**.............................................. New York
Times Mirror Higher Education Group, Inc..................... Delaware
Times Mirror Magazines, Inc.**............................... New York
Zenger-Miller, Inc........................................... California
</TABLE>
---------------
* The names of certain other subsidiaries have been omitted because,
considered in the aggregate as a single subsidiary, they would not
constitute a significant subsidiary.
** 100% owned by a wholly-owned subsidiary of the Registrant. (All other
subsidiaries listed above are wholly-owned by the Registrant.)
*** THE LOS ANGELES TIMES is an operating division of the Registrant, rather
than a separately incorporated subsidiary.
<PAGE> 1
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement No.
33-88618 on Form S-8 with respect to the consolidated financial statements and
financial statement schedule of The Times Mirror Company included in the Annual
Report (Form 10-K) for the year ended December 31, 1994.
ERNST & YOUNG LLP
Los Angeles, California
March 28, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from (a) the
Consolidated Financial Statements of the Company for the year ended December 31,
1994 and is qualified in its entirety by reference to such (b) Financial
Statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 81,944
<SECURITIES> 0
<RECEIVABLES> 608,299
<ALLOWANCES> 72,317
<INVENTORY> 153,017
<CURRENT-ASSETS> 1,533,280
<PP&E> 2,139,841
<DEPRECIATION> 828,711
<TOTAL-ASSETS> 4,265,301
<CURRENT-LIABILITIES> 1,486,357
<BONDS> 246,462
<COMMON> 129,963
0
0
<OTHER-SE> 1,888,623
<TOTAL-LIABILITY-AND-EQUITY> 4,265,301
<SALES> 3,357,450
<TOTAL-REVENUES> 3,357,450
<CGS> 1,778,892
<TOTAL-COSTS> 3,063,110
<OTHER-EXPENSES> (22,866)<F1>
<LOSS-PROVISION> 20,548
<INTEREST-EXPENSE> 69,459
<INCOME-PRETAX> 247,747
<INCOME-TAX> 121,509
<INCOME-CONTINUING> 126,238
<DISCONTINUED> 59,111
<EXTRAORDINARY> (12,232)<F2>
<CHANGES> 0
<NET-INCOME> 173,117
<EPS-PRIMARY> $1.35
<EPS-DILUTED> $1.35
<FN>
<F1>(a)Includes nonrecurring gains of $22,099,000
<F2>(b) loss on early retirement of debt.
</FN>
</TABLE>
