<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to __________________
Commission File Number 1-13492
----------------
THE TIMES MIRROR COMPANY
<TABLE>
<S> <C>
STATE OF INCORPORATION: DELAWARE I.R.S. EMPLOYER ID. NO. 95-4481525
</TABLE>
----------------
TIMES MIRROR SQUARE
Los Angeles, California 90053
Telephone: (213) 237-3700
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [_]
Number of shares of Series A Common Stock outstanding at August 8, 1996:
73,707,197
Number of shares of Series C Common Stock outstanding at August 8, 1996:
27,443,286
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<PAGE>
THE TIMES MIRROR COMPANY
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Financial information herein, and management's discussion thereof, include
consolidated data for The Times Mirror Company ("Registrant" or "Times
Mirror") and its subsidiaries. Registrant and its subsidiaries are sometimes
herein referred to collectively as the "Company".
2
<PAGE>
THE TIMES MIRROR COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
SECOND QUARTER ENDED YEAR TO DATE ENDED
JUNE 30 JUNE 30
---------------------- ----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES....................... $ 837,295 $ 843,078 $1,644,054 $1,616,748
COSTS AND EXPENSES:
Cost of sales................. 434,746 458,419 881,022 880,619
Selling, general and
administrative expenses...... 318,260 329,533 628,515 651,522
Restructuring charge.......... 3,223
---------- ---------- ---------- ----------
753,006 787,952 1,509,537 1,535,364
OPERATING PROFIT............... 84,289 55,126 134,517 81,384
Interest expense............... (8,583) (5,007) (15,990) (13,739)
Interest income................ 1,175 8,490 3,131 14,882
Other, net..................... 2,594 (2,648) 5,888 4,886
---------- ---------- ---------- ----------
Income from continuing
operations before income
taxes......................... 79,475 55,961 127,546 87,413
Income taxes................... 33,452 26,750 55,486 41,852
---------- ---------- ---------- ----------
Income from continuing
operations.................... 46,023 29,211 72,060 45,561
Discontinued operations........ (3,165) 1,634,477
Cumulative effect of changes in
accounting principles,
net of income tax benefit of
$8,817........................ (12,724)
---------- ---------- ---------- ----------
NET INCOME..................... $ 46,023 $ 26,046 $ 72,060 $1,667,314
========== ========== ========== ==========
Preferred dividend
requirements.................. $ 10,911 $ 13,836 $ 21,822 $ 18,566
========== ========== ========== ==========
Earnings available to common
shareholders.................. $ 35,112 $ 12,210 $ 50,238 $1,648,748
========== ========== ========== ==========
Primary earnings per share:
Continuing operations......... $ .33 $ .14 $ .47 $ .23
Discontinued operations....... (.03) 13.81
Cumulative effect of
accounting changes, net...... (.11)
---------- ---------- ---------- ----------
Primary earnings per share..... $ .33 $ .11 $ .47 $ 13.93
========== ========== ========== ==========
Fully diluted earnings per
share......................... $ * $ * $ * $ 12.71
========== ========== ========== ==========
</TABLE>
- --------
* Per share amount on a fully diluted basis has been omitted as the amount is
antidilutive in relation to the primary per share amount.
See notes to condensed consolidated financial statements
3
<PAGE>
THE TIMES MIRROR COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents............................ $ 64,573 $ 182,901
Marketable securities................................ 10,205 72,806
Accounts receivable, less allowance for doubtful
accounts and returns of $65,730 and $79,536......... 477,963 561,828
Inventories.......................................... 167,072 173,568
Deferred income taxes................................ 91,789 134,395
Other current assets................................. 93,176 122,539
---------- ----------
Total Current Assets................................ 904,778 1,248,037
Property, plant and equipment, at cost less
accumulated depreciation of $940,788 and $903,608.... 1,174,991 1,174,831
Goodwill.............................................. 644,943 651,745
Other intangibles..................................... 82,226 84,186
Deferred charges...................................... 220,772 199,188
Other assets.......................................... 501,152 459,172
---------- ----------
$3,528,862 $3,817,159
========== ==========
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE>
THE TIMES MIRROR COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable..................................... $ 317,584 $ 395,292
Employees' compensation.............................. 95,191 118,111
Unearned income...................................... 225,674 222,893
Other current liabilities............................ 188,578 298,894
---------- ----------
Total Current Liabilities........................... 827,027 1,035,190
Long-term debt........................................ 318,492 247,934
Deferred income taxes................................. 115,979 140,087
Other liabilities..................................... 582,910 587,712
---------- ----------
Total Liabilities................................... 1,844,408 2,010,923
Common stock subject to put options................... 23,965
Commitments and contingencies
Shareholders' Equity
Series A preferred stock, $1 par value; 900,000
shares authorized; 824,000 shares issued; stated at
liquidation value................................... 411,784 411,784
Series B preferred stock, $1 par value; 25,000,000
shares authorized; 7,789,000 shares issued; stated
at liquidation value................................ 164,595 164,595
Preferred stock, $1 par value; 7,100,000 shares
authorized; no shares issued
Common stock
Series A, $1 par value; 500,000,000 shares
authorized; 75,148,000 and 77,765,000 shares
issued............................................. 75,148 77,765
Series B, $1 par value; 100,000,000 shares
authorized; no shares issued
Series C, convertible, $1 par value; 300,000,000
shares authorized; 27,479,000 and 27,933,000 shares
issued............................................. 27,479 27,933
Additional paid-in capital........................... 201,835 192,266
Retained earnings.................................... 724,986 875,981
Net unrealized gain on securities.................... 54,662 55,912
---------- ----------
Total Shareholders' Equity.......................... 1,660,489 1,806,236
---------- ----------
$3,528,862 $3,817,159
========== ==========
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE>
THE TIMES MIRROR COMPANY
STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR TO DATE ENDED
JUNE 30
---------------------
1996 1995
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by continuing operating activities... $ 142,380 $ 62,206
Net cash provided by (used in) discontinued operating
activities............................................ (12,671) 1,263
--------- ----------
Net cash provided by operating activities............. 129,709 63,469
CASH FLOWS FROM INVESTING ACTIVITIES
Changes in marketable and long-term securities......... 57,485 (368,195)
Capital expenditures................................... (56,698) (56,678)
Capitalization of product costs........................ (36,544) (39,943)
Acquisitions, net of cash acquired..................... (5,913) (58,413)
Proceeds from disposal of cable television operations.. 1,225,013
Proceeds from sales of assets.......................... 5,428
Other, net............................................. (1,806) (10,238)
--------- ----------
Net cash provided by (used in) investing activities of
continuing operations................................. (43,476) 696,974
Net cash used in investing activities of discontinued
operations............................................ (22,044)
--------- ----------
Net cash provided by (used in) investing activities... (43,476) 674,930
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchases of common and preferred stock.............. (273,418)
Proceeds from issuance of premium equity participating
securities............................................ 51,221
Dividends paid......................................... (38,517) (57,482)
Proceeds from exercise of stock options................ 22,547
Principal repayments of other debt..................... (126) (100,360)
Net proceeds (repayment) of commercial paper and short-
term borrowings....................................... 33,000 (488,010)
Other, net............................................. 732 1,528
--------- ----------
Net cash used in financing activities................. (204,561) (644,324)
--------- ----------
Increase (decrease) in cash and cash equivalents........ (118,328) 94,075
Cash and cash equivalents at beginning of year.......... 182,901 81,944
--------- ----------
Cash and cash equivalents at end of period.............. $ 64,573 $ 176,019
========= ==========
</TABLE>
See notes to condensed consolidated financial statements
6
<PAGE>
THE TIMES MIRROR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- BASIS OF PREPARATION
The accompanying condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. The results of operations for interim periods are not necessarily
indicative of the results that may be expected for the fiscal year. For
further information, refer to the consolidated financial statements and
accompanying notes included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
Certain amounts in previously issued financial statements have been
reclassified to conform to the second quarter 1996 presentation. Financial
information in the Notes to Condensed Consolidated Financial Statements
excludes discontinued operations, except where noted.
NOTE 2 -- CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1995, the Company changed its method of accounting for
certain contract-related revenues from the licensing and sale of training
programs and related materials. The Company believes that this provides for
consistent accounting treatment among its professional training companies. The
Company recorded a cumulative charge of $7,372,000 ($4,511,000 net of taxes,
or $.04 per share) as of January 1, 1995. The effect of this change on second
quarter and first half 1995 net income before cumulative effect of changes in
accounting principles was not significant.
Effective January 1, 1995, the Company adopted the Financial Accounting
Standards Board's Practice Bulletin 13, "Direct-Response Advertising and
Probable Future Benefits," which clarified the accounting for direct-response
advertising costs. The Company recorded a cumulative charge of $14,169,000
($8,213,000 net of taxes, or $.06 per share) as of January 1, 1995. The effect
of this change on second quarter and first half 1995 net income before
cumulative effect of changes in accounting principles was not significant.
NOTE 3 -- REORGANIZATION
On February 1, 1995, the Company completed the merger of its cable
television operations with Cox Communications, Inc. (Cox) and related
transactions. The transactions involved in the reorganization included the
merger of the cable television operations with Cox, the retirement of
approximately 75% of total debt outstanding at December 31, 1994, the issuance
of two new series of preferred stock, and a partial redemption of certain
shareholder interests through the distribution of Cox common stock. See Note 2
to the Consolidated Financial Statements in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995 for a detailed discussion of
these transactions.
NOTE 4 -- DISCONTINUED OPERATIONS
Discontinued operations include cable programming, consumer multimedia, an
electronic shopping joint venture and cable television. The cable programming
business, consumer multimedia business and the joint venture were discontinued
during the third quarter of 1995. The cable television operations were
disposed of on February 1, 1995 in connection with the reorganization
described in Note 3, for a nontaxable gain of $1.634 billion, or $13.80 per
share.
7
<PAGE>
THE TIMES MIRROR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The combined results of operations of these businesses have been reported as
discontinued operations. The income (loss) from discontinued operations is as
follows (in thousands):
<TABLE>
<CAPTION>
SECOND QUARTER YEAR TO DATE
ENDED ENDED
JUNE 30, 1995 JUNE 30, 1995
-------------- -------------
<S> <C> <C>
Revenues........................................... $ 215 $ 42,475
------- ----------
Income (loss) before income taxes.................. (5,389) 2,090
Income tax provision (benefit)..................... (2,224) 1,907
------- ----------
Net income (loss).................................. (3,165) 183
Net gain on disposal............................... 1,634,294
------- ----------
Total discontinued operations...................... $(3,165) $1,634,477
======= ==========
</TABLE>
NOTE 5 -- RESTRUCTURING
At June 30, 1996, the Company had restructuring liabilities of $183,075,000,
of which $89,130,000 is included in "Other current liabilities" and
$93,945,000 is included in "Other liabilities" in the condensed consolidated
balance sheet.
Cash spent for restructuring program actions was $74,674,000 during the year
to date ended June 30, 1996, of which $33,220,000 was for severance payments.
As of June 30, 1996, approximately 2,400 full-time equivalent employees had
terminated employment under the 1995 restructuring program. The remaining
liability for severance costs at June 30, 1996 aggregated $30,856,000.
NOTE 6 -- SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments during the year to date ended June 30, 1996 and 1995 included
interest, net of amounts capitalized, of $11,569,000 and $15,834,000 and
income taxes of $22,243,000 and $38,890,000, respectively.
The reorganization described in Note 3 resulted in the following non-cash
transactions during the year to date ended June 30, 1995 (in thousands):
<TABLE>
<S> <C>
Fair value of Cox Class A common stock issued to noncontrolling
shareholders and accounted for as a partial redemption of certain
shareholder interests................................................ $932,000
Transfer of debt, related interest and other liabilities to Cox....... 133,257
Exchange of debentures................................................ 246,965
Issuance of Series A preferred stock.................................. 411,784
Exchange of common stock for Series B preferred stock................. 349,954
Retirement of treasury stock.......................................... 61,543
</TABLE>
NOTE 7 -- OTHER, NET
Other, Net in 1995 includes a first quarter gain of $7,163,000, or
$4,500,000 ($.04 per share) after taxes, and a second quarter loss of
$3,645,000, or $2,149,000 ($.02 per share) after taxes, on asset sales.
8
<PAGE>
THE TIMES MIRROR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 8 -- DEBT
Short-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
-------- ------------
<S> <C> <C>
Commercial paper at a weighted average interest rate of
5.5% .................................................. $ 33,000
Current maturities of long-term debt ................... 250 $ 253
-------- --------
$ 33,250 $ 253
======== ========
Long-term debt is summarized as follows (in thousands):
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
-------- ------------
<S> <C> <C>
7 1/4% Debentures due March 1, 2013..................... $148,215 $148,215
7 1/2% Debentures due July 1, 2023...................... 98,750 98,750
4 1/4% PEPS due March 15, 2001; 1,305,000 securities
stated at the current maturity value of approximately
$54.13 per security.................................... 70,643
Others at various interest rates, maturing through 2001. 1,134 1,222
-------- --------
318,742 248,187
Less current maturities................................. (250) (253)
-------- --------
Long-term debt.......................................... $318,492 $247,934
======== ========
</TABLE>
In March 1996, the Company issued 1,305,000 securities, designated as "4
1/4% Premium Equity Participating Securities (PEPS)" for gross proceeds of
$39.25 per security. This obligation hedges a significant portion of the
Company's investment in common stock of Netscape Communications Corporation
(Netscape). The amount payable at maturity is determined by reference to the
fair market value of the Netscape stock. As a result, the maturity value will
generally move in tandem with changes in the fair market value of the Netscape
stock. The PEPS obligation is recorded (a) at its maturity value or (b) at the
issuance price of $39.25 if the fair market value of Netscape common stock is
between $39.25 and $45.14. At June 30, 1996, the fair market value of Netscape
common stock was $62.25 per share and the maturity value at that date, which
is determined by a formula, is 86.96% of the fair market value.
In early May 1996, the Company terminated an interest rate swap as well as
its two forward swap agreements. The net cash payment related to the
termination of these agreements was not significant. At the completion of
these transactions, the Company had one interest rate swap outstanding for a
notional amount of $100,000,000, expiring in 2023, which exchanges payments to
the Company at a fixed rate of 7 3/8% for payments by the Company at a
variable rate based generally on LIBOR.
NOTE 9 -- EARNINGS AND DIVIDENDS PER SHARE
Primary earnings per share is computed by dividing net income, less
preferred dividend requirements, by the weighted average number of shares of
common stock and common stock equivalents outstanding during the period. The
weighted average number of shares used for primary earnings per share totaled
107,415,000 and 113,192,000 for the quarters ended June 30, 1996 and 1995,
respectively, and 107,561,000 and 118,386,000 for the year to date ended June
30, 1996 and 1995, respectively.
Fully diluted earnings per share is computed by dividing net income, less
preferred dividend requirements for Series A preferred stock, by the weighted
average number of shares of common stock and common stock equivalents
outstanding, assuming that the Series B preferred stock outstanding at the end
of the 1996 and 1995
9
<PAGE>
THE TIMES MIRROR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
second quarters was converted to common stock on a one-for-one basis on
January 1, 1996 and March 1, 1995, respectively. The weighted average number
of shares for fully diluted earnings per share is 115,343,000 and 130,320,000
for the quarters ended June 30, 1996 and 1995, respectively, and 115,994,000
and 130,282,000 for the year to date ended June 30, 1996 and 1995,
respectively.
Cash dividends of $.10 and $.06 per share of common stock were declared in
the quarters ended June 30, 1996 and 1995, respectively.
NOTE 10 -- FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments consist of the following (in thousands):
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
-------------------- -------------------
CARRYING CARRYING
VALUE FAIR VALUE VALUE FAIR VALUE
--------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Assets:
Investments.......................... $ 120,499 $120,499 $102,663 $102,663
Liabilities:
Long-term debt....................... 318,492 315,234 247,934 273,582
Off Balance Sheet:
Unrealized net gain on interest rate
swaps............................... -- 7,350 -- 19,478
</TABLE>
Investments are comprised of investments in equity securities, which are
classified as available-for-sale, and are carried at fair value in the
condensed consolidated balance sheets. Fair value is based on estimated or
quoted market prices. The cost of these investments was $7,937,000 at June 30,
1996 and December 31, 1995. The unrealized gain is reported as a separate
component of shareholders' equity, net of applicable income taxes. The fair
value of short-term debt approximates carrying value due to its short-term
nature.
NOTE 11 -- STOCK REPURCHASE PROGRAM
The Company's stock repurchase program, which includes the issuance of put
options from time to time, is described in Note 13 to the Consolidated
Financial Statements in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995. The Company repurchased 4,611,000 shares of common
stock during the first half of 1996 for an aggregate cost of $182,796,000. In
connection with 1,500,000 of the shares repurchased during the second quarter
of 1996, the Company entered into a series of put and call transactions which
will average the cost of these repurchases over the remainder of the year. The
strike prices are approximately $40.83 for puts and approximately $42.92 for
calls. The fair value of these instruments was not significant at June 30,
1996.
During the first half of 1996, the Company issued 700,000 put options with
an average strike price of $39.49. The cash received from the sale of these
put options was not significant. The put options, which have various 1996
expiration dates, entitle the holder to sell shares of Times Mirror common
stock to the Company at the strike price on the expiration date of the put
option. The potential obligation under the 600,000 put options outstanding at
June 30, 1996 has been transferred from shareholders' equity to "Common stock
subject to put options."
NOTE 12 -- STOCK OPTIONS
The Company granted each eligible employee 100 stock options on January 31,
1996. This grant is expected to result in the issuance of approximately
1,400,000 stock options at a price of $30.8125. These options will vest 100
percent on January 31, 1999 for employees still employed by the Company at
that date.
NOTE 13 -- INCOME TAXES
The Company's effective tax rate for continuing operations exceeds the
federal statutory income tax rate due principally to state taxes and permanent
state and federal tax differences related to the non-deductible amortization
of goodwill.
10
<PAGE>
THE TIMES MIRROR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 14 -- USE OF ESTIMATES AND OTHER UNCERTAINTIES
Financial statements prepared in accordance with generally accepted
accounting principles require management to make estimates and judgments that
affect amounts and disclosures reported in the financial statements. Actual
results could differ from those estimates, although management does not believe
that any differences would materially affect its financial position or reported
results.
The Company's future results could be adversely affected by a number of
factors, including (a) an increase in paper, printing and distribution costs
over the levels anticipated; (b) increased consolidation among major retailers
or other events depressing the level of display advertising; (c) an economic
downturn in the Company's principal newspaper markets or other occurrences
leading to decreased circulation and diminished revenues from both display and
classified advertising; (d) competitive pressures arising from increased
consolidation in the legal information industry and the college textbook
publishing industry; (e) an increase in expenses related to new initiatives and
product improvement efforts in the legal information, flight information and
health information operating units; (f) unfavorable foreign currency
fluctuations; and (g) a general economic downturn resulting in decreased
professional or corporate spending on discretionary items such as information
or training and in decreased consumer spending on discretionary items such as
magazines or newspapers.
NOTE 15 -- CONTINGENT LIABILITIES
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.
NOTE 16 -- SUBSEQUENT EVENTS
On July 3, 1996, the Company and Mosby-Year Book, Inc. (Mosby), a wholly-
owned subsidiary of the Company, entered into an Exchange Agreement pursuant to
which The McGraw-Hill Companies, Inc. agreed to sell all of the outstanding
shares of the capital stock of its subsidiary, Shepard's/McGraw-Hill, Inc.
(Shepard's), to the Company in exchange for (i) the stock of Times Mirror
Higher Education Group, Inc., (ii) the assets and related liabilities of Mosby
relating to Mosby's college-level life and physical science text business,
(iii) certain assets and liabilities of Times Mirror International Publishers--
U.S., Inc. and affiliated entities relating to the Company's college text
business and (iv) a cash payment. Revenues of these businesses represented
approximately 5 percent and 7 percent of consolidated revenues of the Company
for the six months ended June 30, 1996 and the year ended December 31, 1995,
respectively. This transaction is subject to approval pursuant to the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, and to other
closing conditions. It is anticipated that the transaction will close during
the third quarter of 1996, at which point, Shepard's is expected to be
contributed to a new 50/50 partnership between the Company and Reed Elsevier
Inc., as part of a broader strategic alliance between Matthew Bender, Times
Mirror's legal publisher, and Lexis-Nexis, a Reed Elsevier subsidiary and
provider of full-text online information services in the legal, news, business
and government areas.
11
<PAGE>
THE TIMES MIRROR COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
GENERAL
Strong gains in operating results for the second quarter of 1996 were
primarily due to significant reductions in operating expenses achieved through
the Company's 1995 restructuring and other cost reduction programs, as well as
a decline in newsprint expense. In the second half of 1996, a slower rate of
year over year improvement in operating results is expected compared to the
first half of 1996, because the restructuring program began in the third
quarter of 1995 and expense reductions will have a smaller impact on the
Company's seasonally larger third and fourth quarters. As further discussed
under the Professional Information Outlook, operating results for the second
half of 1996 will also be affected by various actions being contemplated
primarily due to the expected sale of the Company's college publishing
businesses.
NEWSPAPER PUBLISHING OUTLOOK
In the second quarter of 1996, the operating performance of the Newspaper
Publishing segment improved significantly as lower advertising revenues were
more than offset by the decline in operating expenses resulting from last
year's restructuring and other cost reduction programs. Also, beginning in
March 1996, newsprint prices have fallen steadily after rising by more than 80
percent since the first quarter of 1994. Further newsprint price reductions
were announced by newsprint suppliers in July 1996 and, based on these new
prices, third quarter 1996 average prices are expected to be lower than the
average prices in the third quarter of 1995. Such price reductions, combined
with anticipated lower newsprint consumption, is expected to decrease
newsprint expense in the third quarter of 1996 compared to the third quarter
of 1995. This trend is expected to continue for the remainder of the year and
coupled with lower consumption due to five fewer days in the fourth quarter of
1996, newsprint expense could experience a double-digit decline in the fourth
quarter of 1996.
Newspaper Publishing revenues in the second quarter of 1996 reflected lower
local advertising revenues, primarily due to grocery and department store
consolidations in Southern California as well as softening of local
advertising in Baltimore. This trend is expected to continue for the remainder
of 1996. Circulation revenues, which rose marginally in the first half of
1996, may be lower year over year as price reductions may not be offset by the
higher circulation levels expected to be generated from promotional campaigns.
A major promotional campaign to increase circulation at the Los Angeles Times,
including a reduced single copy price in certain markets, will temper
circulation revenue growth although the lower price has increased single copy
sales in the promotional areas by more than 20 percent.
Overall, the Newspaper Publishing segment is expected to experience year
over year profit margin expansion given the outlook for more favorable
newsprint pricing and the 1995 restructuring and other expense reductions.
PROFESSIONAL INFORMATION OUTLOOK
In July 1996, Times Mirror signed a definitive agreement with The McGraw-
Hill Companies, Inc. to acquire Shepard's/McGraw-Hill, Inc. (Shepard's), a
legal citation service business, in exchange for Times Mirror's college
publishing businesses and additional consideration. In addition, Times Mirror
and Reed Elsevier Inc. announced that Shepard's would be contributed to a new
50/50 partnership between the Company and Reed Elsevier, as part of a broader
strategic alliance between Matthew Bender, Times Mirror's legal publisher, and
Lexis-Nexis, a Reed Elsevier subsidiary and provider of full-text online
information services in the legal, news, business and government areas. Times
Mirror's college publishing businesses are comprised of business and economics
publisher Richard D. Irwin; business professional publisher IPRO; life and
physical science publisher Wm. C. Brown Publishers; social science and
humanities publisher Brown & Benchmark Publishers; and the related college
life and physical science publications of Mosby-Year Book, Inc.
12
<PAGE>
THE TIMES MIRROR COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
In connection with these transactions, Times Mirror expects to report a gain
in the third quarter of 1996, the amount of which will be determined by an
independent third party appraisal of the value of the exchanged companies.
This gain is expected to be largely offset by significant nonrecurring
expenses (a) at Mosby-Year Book, Inc. as a result of the disposition of its
college publishing business, (b) for the realignment of the scope and scale of
the remaining international sales, marketing and book distribution operations
and (c) for certain other aspects of the segment's operations. The Company's
divestiture of these college publishing businesses will have a material impact
on the results of this segment in 1996, not only in reduced revenue in the
third and fourth quarters of 1996, but also in the international revenues and
expenses of the ongoing health science publishing businesses of Mosby-Year
Book, Inc. The 1996 outlook for other businesses in this segment remains
favorable, with growth expected at Jeppesen Sanderson, the Company's flight
information business; improved results in the training group; and continued
stabilization of operating performance at Matthew Bender, the Company's legal
publisher.
CONSUMER MEDIA OUTLOOK
Advertising revenues, excluding special publications in both years, are
expected to be flat year over year, continuing the trend of the first and
second quarters of 1996. While newsstand sales of special interest magazines
have increased during the first half of 1996, subscription revenues have
declined. These circulation trends are expected to continue for the remainder
of 1996. The anticipated decline in subscriptions, reflecting lower rate bases
for two magazines as well as new subscription response rates that continue to
lag the prior year's, is expected to more than offset any improvement in
newsstand sales.
CONSOLIDATED RESULTS OF OPERATIONS
The following table summarizes Times Mirror's financial results (dollars in
thousands, except per share amounts):
<TABLE>
<CAPTION>
SECOND QUARTER YEAR TO DATE
------------------ ----------------------
1996 1995 1996 1995
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues........................... $837,295 $843,078 $1,644,054 $1,616,748
Operating profit................... 84,289 55,126 134,517 81,384
Interest expense................... (8,583) (5,007) (15,990) (13,739)
Interest income.................... 1,175 8,490 3,131 14,882
Income from continuing operations.. 46,023 29,211 72,060 45,561
Net income (loss) from discontinued
operations........................ (3,165) 183
Net gain on disposal of cable
television........................ 1,634,294
Cumulative effect of changes in
accounting
principles........................ (12,724)
Net income......................... 46,023 26,046 72,060 1,667,314
Preferred dividend requirements.... 10,911 13,836 21,822 18,566
Earnings available to common
shareholders...................... 35,112 12,210 50,238 1,648,748
Primary earnings per share from
continuing
operations........................ $ .33 $ .14 $ .47 $ .23
Primary earnings per share......... $ .33 $ .11 $ .47 $ 13.93
</TABLE>
Consolidated revenues for the second quarter of 1996 declined by less than 1
percent compared to the second quarter of 1995 while revenues for the first
half of 1996 increased 1.7 percent compared to the same prior year period.
Advertising revenue at the newspapers and magazines declined during the second
quarter of 1996 while most of the Professional Information companies achieved
higher revenues in 1996.
13
<PAGE>
THE TIMES MIRROR COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Consolidated operating profit in the second quarter and first half of 1996
increased 52.9 percent and 65.3 percent, respectively, from the prior year
periods, primarily reflecting the improvement in the Newspaper Publishing
segment. Operating results improved in all business segments, due principally
to greater than expected cost savings resulting from the 1995 restructuring
and other cost reduction programs.
Income from continuing operations in the second quarter of 1996 increased
57.6 percent, as compared to the second quarter of 1995, which included an
after-tax loss on an asset sale of $2.1 million or $.02 per share. Excluding
the 1995 loss on asset sale, income from continuing operations in the second
quarter of 1996 would have increased 46.8 percent. Higher operating profit for
the second quarter and the first half of 1996 was partially offset by an
increase in interest expense and lower interest income, reflecting higher debt
levels and reductions in interest earning investments compared to 1995. These
investments were substantially reduced, beginning in the latter part of 1995,
due to the cash requirements of the restructuring program and share
repurchases.
Net income in the 1996 second quarter was $46.0 million, or $.33 per share,
compared with $26.0 million, or $.11 per share, in the second quarter of 1995.
The 1995 second quarter included a loss of $3.2 million, or $.03 per share,
from the Company's discontinued multimedia operations. Net income for the
first half of 1995 included a gain of $1.634 billion, or $13.80 per share, on
the first quarter 1995 disposition of the Company's discontinued cable
television operations as well as an after-tax charge of $12.7 million, or $.11
per share, for accounting changes.
ANALYSIS BY SEGMENT
The following sections discuss the revenues and operating results of the
Company's principal lines of business. All comments, except as noted, apply to
both the second quarter and first half of 1996 compared to the same prior year
periods.
NEWSPAPER PUBLISHING
Newspaper Publishing revenues and operating profit were as follows (dollars
in thousands):
<TABLE>
<CAPTION>
SECOND QUARTER YEAR TO DATE
------------------------- ----------------------------
1996 CHANGE 1995 1996 CHANGE 1995
-------- ------ -------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Advertising............ $391,346 (2.6)% $401,737 $ 761,270 .3% $ 758,698
Circulation............ 113,235 (.7) 114,072 226,486 1.1 223,975
Other.................. 12,519 16.2 10,778 24,280 21.0 20,066
-------- -------- ---------- ----------
$517,100 (1.8) $526,587 $1,012,036 .9 $1,002,739
======== ======== ========== ==========
Operating profit........ $ 75,965 43.1 $ 53,093 $ 126,960 43.6 $ 88,438
Operating profit
excluding restructuring
charge................. $ 75,965 43.1 $ 53,093 $ 126,960 38.5 $ 91,661
</TABLE>
Newspaper Publishing revenues in the second quarter of 1996 declined
slightly over the second quarter of 1995, reflecting lower advertising
revenues due to the closure of the New York City edition of Newsday in mid-
July 1995, reduced advertising linage at the Los Angeles Times resulting from
consolidation of department stores and supermarket chains in Southern
California, and weakness in local advertising in Baltimore. For the first half
of 1996, advertising revenues were flat although six additional weekdays were
included in 1996. Second
14
<PAGE>
THE TIMES MIRROR COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
quarter 1996 circulation revenues decreased from the prior year due
principally to the closure of New York Newsday. Circulation revenues for the
first half of 1996 improved from the same period in 1995, as price increases
for home deliveries at most newspapers and the six additional weekdays
included in 1996 more than offset the decline in revenues resulting from the
closure of New York Newsday.
Operating profit for the Newspaper Publishing segment rose substantially in
the 1996 second quarter, led by strong results at The Times and Newsday, the
Company's two largest newspapers. The operating profit margin in the second
quarter of 1996 expanded to 14.7 percent from 10.1 percent in the prior year.
Newsprint expense, accounting for more than 20 percent of the operating costs
of this segment in the second quarter and first half of both years, declined
slightly in the second quarter of 1996 as higher average per-ton prices were
offset by lower consumption levels. Other costs decreased by approximately 8
percent in the second quarter of 1996 compared to the second quarter of 1995
as a result of various cost reduction measures. Excluding a restructuring
charge in 1995, operating profit for the first half of 1996 increased 38.5
percent, reflecting the overall reduction in the cost base.
PROFESSIONAL INFORMATION
Professional Information revenues and operating profit were as follows
(dollars in thousands):
<TABLE>
<CAPTION>
SECOND QUARTER YEAR TO DATE
-------------------------- --------------------------
1996 CHANGE 1995 1996 CHANGE 1995
-------- ------ -------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Revenues............... $256,949 2.7% $250,101 $494,023 4.3% $473,439
Operating profit....... $ 27,244 18.6 $ 22,981 $ 40,405 27.4 $ 31,719
Professional Information revenue growth continued, but at a slower pace in
1996. For the first half of 1996, revenues increased due principally to higher
revenues at Mosby-Year Book, Inc., the Company's health science publisher,
which benefited from 1995 acquisitions; and Jeppesen Sanderson, the Company's
flight information business; and the training companies. Segment operating
profit in the second quarter of 1996 improved over the second quarter of 1995
reflecting strong performances by the business lines of this segment.
CONSUMER MEDIA
Consumer Media revenues and operating losses were as follows (dollars in
thousands):
<CAPTION>
SECOND QUARTER YEAR TO DATE
-------------------------- --------------------------
1996 CHANGE 1995 1996 CHANGE 1995
-------- ------ -------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Revenues............... $ 63,365 (5.0)% $ 66,693 $138,122 (2.1)% $141,062
Operating loss......... $ (1,857) 31.6 $ (2,713) $ (559) 89.9 $ (5,533)
</TABLE>
Consumer Media revenues declined modestly in the second quarter of 1996, as
lower advertising and subscription revenues at Times Mirror Magazines
depressed results. The lower advertising revenue at the magazines was due to
the absence of special publications, such as Ocean Planet, which benefited
1995 results. Excluding the special publications in both years, advertising
revenue for the 1996 second quarter and year to date was flat with the prior
year periods. Despite lower revenues, the 1996 second quarter operating loss
was lower than the second quarter of 1995 largely as a result of the 1995
restructuring and other cost reduction programs.
15
<PAGE>
THE TIMES MIRROR COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
Capital expenditures in 1996 are expected to total approximately $140
million for the full year, compared to $128.6 million spent in 1995.
Approximately $25 million of the expected 1996 capital expenditures are
related to relocations that follow the 1995 restructuring program.
Total debt of $351.7 million at June 30, 1996 increased approximately $100
million from the year end 1995 level due to the issuance of commercial paper
and Premium Equity Participating Securities (PEPS). As described in Note 8 to
the Condensed Consolidated Financial Statements, the PEPS hedge a significant
portion of the Company's investment in Netscape Communications Corporation
common stock.
In December 1995, the Board of Directors authorized the repurchase of 12
million shares of common stock over the next three years. Repurchases are
expected to be made from time to time in the open market or in private
transactions, depending on market conditions, and may be discontinued at any
time. The common shares purchased are intended, in part, to offset dilution
from shares of common stock issued under the Company's stock-based employee
compensation and benefit programs. In connection with this program, the
Company may from time to time sell put options on its common stock. During the
first half of 1996, the Company repurchased 4.6 million shares of common stock
for an aggregate cost of $182.8 million and issued short-term put options for
proceeds of approximately $732,000.
The Company's cash requirements are funded primarily by its operating
activities. The Company also obtains external financing through the issuance
of commercial paper and fixed rate debt and has unsecured long-term revolving
bank lines of credit with commitments totaling $400 million at June 30, 1996.
In addition to loans, these lines of credit may be used to support a
commercial paper program. At June 30, 1996, $33 million of commercial paper
was outstanding. Future commercial paper issuances or other debt drawdowns are
available to be used for short-term or other periodic cash requirements.
YEAR TO DATE CASH FLOWS
Operating cash flow of $142.4 million generated from continuing operations
in the first half of 1996 was more than double the $62.2 million of net cash
from continuing operations reported in the same period in 1995. While the 1996
period benefited from an over 60 percent increase in operating profit as well
as a significant decline in accounts receivable and taxes paid, the 1995 first
half was impacted by substantial expenditures for newsprint, as higher
inventory levels were built to mitigate continuing price increases. Cash spent
on restructuring-related actions was $74.7 million in the first half of 1996.
Net cash used by investing activities of continuing operations during the
first half of 1996 was $43.5 million, while net cash provided by investing
activities from continuing operations was $697.0 million in the first half of
1995. The 1995 period included proceeds from the disposition of the cable
television operations. Capital expenditures of $56.7 million in the first half
of 1996 were the same as the spending for the first half of 1995.
Approximately $5.9 million in cash was utilized for acquisitions in the first
half of 1996, significantly lower than the $58.4 million spent in the prior
year period. Capitalized product costs in the first half of 1996 of $36.5
million were slightly less than the $39.9 million capitalized in the prior
year period. Proceeds of $57.5 million from a reduction in marketable
securities benefited the first half of 1996 while $368.2 million was used to
purchase marketable securities in the first half of 1995.
Financing activities in the first half of 1996 and 1995 required cash of
$204.6 million and $644.3 million, respectively, as the Company bought back
shares in 1996 and paid down debt in the 1995 period. Cash of
16
<PAGE>
THE TIMES MIRROR COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
$273.4 million used for first half 1996 share repurchases, including the
settlement of year end 1995 repurchases, was partly offset by proceeds from
the issuance of debt securities, including commercial paper, as well as cash
received from the exercise of stock options. The first half of 1996 also
benefited from a $24.9 million reduction in dividends paid to common
shareholders, which declined compared with the prior year period, primarily
due to lower dividend rates and a lower level of shares outstanding as a
result of the share repurchase program which began in the third quarter of
1995. During the first half of 1995, the Company repaid $588.4 million of its
debt using proceeds from the cable transaction and paid $57.5 million of
dividends to shareholders.
DIVIDENDS
On May 9, 1996, the Board of Directors approved an increase in the quarterly
dividend to $.10 per share on its common stock, beginning with the June 10,
1996 payment date.
Dividend requirements on Series A preferred stock were $16.5 million and
$11.0 million in the first half of 1996 and 1995, respectively, while dividend
requirements on Series B preferred stock were $5.3 million and $7.6 million,
respectively. Both series of preferred stock accrued dividends beginning March
1, 1995. In addition, the Company repurchased nearly 8.8 million shares of
Series B preferred stock during the last part of 1995. The Series B preferred
stock will be converted into Series A common stock on April 1, 1998, unless
previously redeemed by the Company.
FORWARD-LOOKING STATEMENTS
The forward-looking statements set forth above and elsewhere in this
Quarterly Report on Form 10-Q are subject to uncertainty and could be
adversely affected by a number of factors. Some of these factors are described
in Note 14 to the Condensed Consolidated Financial Statements.
17
<PAGE>
THE TIMES MIRROR COMPANY
BUSINESS SEGMENT INFORMATION
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SECOND QUARTER ENDED YEAR TO DATE ENDED
JUNE 30 JUNE 30
-------------------- ----------------------
1996 1995 1996 1995
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES
Newspaper Publishing............... $517,100 $526,587 $1,012,036 $1,002,739
Professional Information........... 256,949 250,101 494,023 473,439
Consumer Media..................... 63,365 66,693 138,122 141,062
Intersegment Revenues.............. (119) (303) (127) (492)
-------- -------- ---------- ----------
$837,295 $843,078 $1,644,054 $1,616,748
======== ======== ========== ==========
OPERATING PROFIT (LOSS)
Newspaper Publishing............... $ 75,965 $ 53,093 $ 126,960 $ 88,438
Professional Information........... 27,244 22,981 40,405 31,719
Consumer Media..................... (1,857) (2,713) (559) (5,533)
Corporate and Other................ (17,063) (18,235) (32,289) (33,240)
-------- -------- ---------- ----------
$ 84,289 $ 55,126 $ 134,517 $ 81,384
======== ======== ========== ==========
DEPRECIATION AND AMORTIZATION
Newspaper Publishing............... $ 27,202 $ 28,145 $ 53,837 $ 56,321
Professional Information........... 11,570 13,019 23,704 24,850
Consumer Media..................... 1,871 2,314 3,672 4,981
Corporate and Other................ 298 445 592 932
-------- -------- ---------- ----------
$ 40,941 $ 43,923 $ 81,805 $ 87,084
======== ======== ========== ==========
CAPITAL EXPENDITURES
Newspaper Publishing............... $ 12,269 $ 17,382 $ 26,906 $ 27,833
Professional Information........... 11,853 9,277 23,294 24,332
Consumer Media..................... 4,481 476 4,812 630
Corporate and Other................ 1,184 2,364 1,686 3,883
-------- -------- ---------- ----------
$ 29,787 $ 29,499 $ 56,698 $ 56,678
======== ======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1996 1995
---------- ----------
<S> <C> <C>
IDENTIFIABLE ASSETS
Newspaper Publishing.................................... $1,839,242 $2,011,612
Professional Information................................ 1,096,076 1,108,817
Consumer Media.......................................... 292,718 392,383
Corporate and Other..................................... 300,826 740,796
---------- ----------
$3,528,862 $4,253,608
========== ==========
</TABLE>
18
<PAGE>
THE TIMES MIRROR COMPANY
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No material legal proceedings are pending.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
(a) The Company's Annual Meeting of Shareholders was held on May 9, 1996.
(c) At the Annual Meeting of Shareholders, the following matters were voted
upon: the election of six persons to Class I of the Board of Directors of the
Company, the ratification of the appointment of Ernst & Young LLP, as
independent auditors for the Company and its subsidiaries for the year ending
December 31, 1996, the approval of The Times Mirror Company 1996 Management
Incentive Plan, and the approval of The Times Mirror Company Non-Employee
Directors Stock Plan.
The result of the voting on matters presented at the Corporation's Annual
Meeting of Shareholders were as follows:
<TABLE>
<CAPTION>
VOTES
DESCRIPTION VOTES FOR WITHHELD
----------- ----------- ---------
<S> <C> <C>
Election of Directors
C. Michael Armstrong.................................. 329,184,531 5,311,180
Gwendolyn Garland Babcock............................. 329,153,116 5,342,595
Donald R. Beall....................................... 329,203,480 5,292,231
Joan A. Payden........................................ 329,198,555 5,297,156
Richard T. Schlosberg III............................. 329,020,682 5,475,029
Warren B. Williamson.................................. 329,158,490 5,337,221
</TABLE>
There were no abstentions or broker non-votes on the elections of Directors.
<TABLE>
<CAPTION>
VOTES BROKER
DESCRIPTION VOTES FOR AGAINST ABSTENTIONS NON-VOTES
- ----------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Ratification of the appointment
of Ernst & Young LLP............ 329,410,673 169,206 4,915,832 0
Approval of the 1996 Management
Incentive Plan.................. 293,265,335 25,130,679 5,967,187 10,132,510
Approval of the Non-Employee
Directors Stock Plan............ 314,265,394 3,927,727 6,170,078 10,132,512
</TABLE>
ITEM 5. OTHER INFORMATION
On July 3, 1996, the Company and Mosby-Year Book, Inc. (Mosby), a wholly-
owned subsidiary of the Company, entered into an Exchange Agreement pursuant
to which The McGraw-Hill Companies, Inc. agreed to sell all of the outstanding
shares of the capital stock of its subsidiary, Shepard's/McGraw-Hill, Inc.
(Shepard's), to the Company in exchange for (i) the stock of Times Mirror
Higher Education Group, Inc., (ii) the assets and related liabilities of Mosby
relating to Mosby's college-level life and physical science text business,
(iii) certain assets and liabilities of Times Mirror International
Publishers--U.S., Inc. and affiliated entities relating to the Company's
college text business and (iv) a cash payment. Revenues of these businesses
represented approximately 5 percent and 7 percent of consolidated revenues of
the Company for the six months ended June 30, 1996 and the year ended December
31, 1995, respectively. This transaction is subject to approval pursuant to
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and to
other closing conditions. It is anticipated that the transaction will close
during the third quarter of 1996, at which point, Shepard's is expected to be
contributed to a new 50/50 partnership between the Company and Reed Elsevier
Inc. as part of a broader strategic alliance between Matthew Bender, Times
Mirror's legal publisher, and Lexis-Nexis, a Reed Elsevier subsidiary and
provider of full-text online information services in the legal, news, business
and government areas.
19
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11. Computation of Earnings Per Share.
12. Ratio of Earnings to Fixed Charges and Ratio of Earnings to Fixed
Charges and Preferred Stock Dividends.
27. Financial Data Schedule
(b) No reports on Form 8-K were filed for the quarter ended June 30, 1996.
20
<PAGE>
EXHIBIT 11
PAGE 1 OF 2
THE TIMES MIRROR COMPANY
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
SECOND QUARTER ENDED YEAR TO DATE ENDED
JUNE 30 JUNE 30
------------------------- -------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
PRIMARY
Average shares
outstanding............ 103,925,394 112,147,462 104,575,697 117,630,287
Dilutive stock options
based on the treasury
stock method using
average market price... 3,489,907 1,044,532 2,985,507 755,638
------------ ------------ ------------ ------------
Total................. 107,415,301 113,191,994 107,561,204 118,385,925
============ ============ ============ ============
Income from continuing
operations............. $ 46,023 $ 29,211 $ 72,060 $ 45,561
Discontinued operations. (3,165) 1,634,477
Cumulative effect of
changes in accounting
principles, net of
income tax benefit of
$8,817................. (12,724)
------------ ------------ ------------ ------------
Net income.............. $ 46,023 $ 26,046 $ 72,060 $ 1,667,314
============ ============ ============ ============
Preferred dividend
requirements........... $ 10,911 $ 13,836 $ 21,822 $ 18,566
============ ============ ============ ============
Earnings available to
common shareholders.... $ 35,112 $ 12,210 $ 50,238 $ 1,648,748
============ ============ ============ ============
Primary earnings per
common share:
Continuing
operations........... $ .33 $ .14 $ .47 $ .23
Discontinued
operations........... (.03) 13.81
Cumulative effect of
accounting
changes, net......... (.11)
------------ ------------ ------------ ------------
Primary earnings per
common share........... $ .33 $ .11 $ .47 $ 13.93
============ ============ ============ ============
</TABLE>
<PAGE>
EXHIBIT 11
PAGE 2 OF 2
THE TIMES MIRROR COMPANY
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
SECOND QUARTER ENDED YEAR TO DATE ENDED
JUNE 30 JUNE 30
------------------------- -------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FULLY DILUTED
Average shares
outstanding............ 103,925,394 112,147,462 104,575,697 117,630,287
Common shares assumed
issued upon conversion
of Series B preferred
stock.................. 7,789,276 16,561,178 7,789,276 11,040,785
Dilutive stock options
based on the treasury
stock method using
market price at the
close of the period, if
higher than average
market price........... 3,628,698 1,610,969 3,628,698 1,610,969
------------ ------------ ------------ ------------
Total................. 115,343,368 130,319,609 115,993,671 130,282,041
============ ============ ============ ============
Income from continuing
operations............. $ 46,023 $ 29,211 $ 72,060 $ 45,561
Discontinued operations. (3,165) 1,634,477
Cumulative effect of
changes in accounting
principles, net of
income tax benefit of
$8,817................. (12,724)
------------ ------------ ------------ ------------
Net income.............. $ 46,023 $ 26,046 $ 72,060 $ 1,667,314
============ ============ ============ ============
Preferred dividend re-
quirements............. $ 8,236 $ 8,236 $ 16,472 $ 10,981
============ ============ ============ ============
Earnings available to
common shareholders.... $ 37,787 $ 17,810 $ 55,588 $ 1,656,333
============ ============ ============ ============
Fully diluted earnings
per common share:
Continuing operations. $ * $ * $ * $ .26
Discontinued opera-
tions................ 12.55
Cumulative effect of
accounting changes,
net.................. (.10)
------------ ------------ ------------ ------------
Fully diluted earnings
per common share....... $ * $ * $ * $ 12.71
============ ============ ============ ============
</TABLE>
- --------
* Antidilutive
<PAGE>
EXHIBIT 12
PAGE 1 OF 2
THE TIMES MIRROR COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSAND OF DOLLARS, EXCEPT RATIO)
<TABLE>
<CAPTION>
YEAR TO DATE ENDED
JUNE 30, 1996
------------------
<S> <C>
Fixed Charges
Interest expense........................................... $ 15,990
Portion of rents deemed to be interest..................... 9,887
Amortization of debt expense............................... 127
--------
Total Fixed Charges....................................... $ 26,004
========
Earnings
Income from continuing operations before income taxes...... $127,546
Fixed charges.............................................. 26,004
Amortization of capitalized interest....................... 2,113
Distributed income from less than 50% owned unconsolidated
affiliates................................................ 252
Subtract: Equity income from less than 50% owned
unconsolidated affiliates................................. (200)
--------
Total Earnings............................................ $155,715
========
Ratio of earnings to fixed charges.......................... 6.0x
</TABLE>
<PAGE>
EXHIBIT 12
PAGE 2 OF 2
THE TIMES MIRROR COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(IN THOUSAND OF DOLLARS, EXCEPT RATIO)
<TABLE>
<CAPTION>
YEAR TO DATE ENDED
JUNE 30, 1996
------------------
<S> <C>
Fixed Charges
Interest expense........................................... $ 15,990
Portion of rents deemed to be interest..................... 9,887
Amortization of debt expense............................... 127
--------
Total Fixed Charges....................................... 26,004
Preferred Stock Dividend Requirements....................... 36,986
--------
Fixed Charges and Preferred Stock Dividends................ $ 62,990
========
Earnings
Earnings from continuing operations before income taxes.... $127,546
Fixed charges.............................................. 26,004
Amortization of capitalized interest....................... 2,113
Distributed income from less than 50% owned unconsolidated
affiliates................................................ 252
Subtract: Equity income from less than 50% owned
unconsolidated affiliates................................. (200)
--------
Total Earnings............................................ $155,715
========
Ratio of earnings to fixed charges and preferred stock divi-
dends...................................................... 2.5x
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30,
1996 QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 64,573
<SECURITIES> 10,205
<RECEIVABLES> 543,693
<ALLOWANCES> 65,730
<INVENTORY> 167,072
<CURRENT-ASSETS> 904,778
<PP&E> 2,115,779
<DEPRECIATION> 940,788
<TOTAL-ASSETS> 3,528,862
<CURRENT-LIABILITIES> 827,027
<BONDS> 318,492
0
576,379
<COMMON> 102,627
<OTHER-SE> 981,483
<TOTAL-LIABILITY-AND-EQUITY> 3,528,862
<SALES> 1,644,054
<TOTAL-REVENUES> 1,644,054
<CGS> 881,022
<TOTAL-COSTS> 881,022
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 12,356
<INTEREST-EXPENSE> 15,990
<INCOME-PRETAX> 127,546
<INCOME-TAX> 55,486
<INCOME-CONTINUING> 72,060
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,060
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0<F1>
<FN>
<F1>PER SHARE AMOUNT ON A FULLY DILUTED BASIS HAS BEEN OMITTED AS THE AMOUNT IS
ANTIDILUTIVE IN RELATION TO THE PRIMARY PER SHARE AMOUNT
</FN>
</TABLE>
