<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 SEPTEMBER 25, 1994
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 1-4914
THE TIMES MIRROR COMPANY
State of Incorporation: Delaware I.R.S. Employer Id. No. 95-1298980
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 November 1, 1994:
97,460,123
Number of shares of Series C Common Stock outstanding at November 1, 1994:
31,153,609
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<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
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 AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRD QUARTER ENDED YEAR-TO-DATE ENDED
---------------------------- ----------------------------
SEPTEMBER 25, SEPTEMBER 26, SEPTEMBER 25, SEPTEMBER 26,
1994 1993 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES................................ $ 858,726 $ 806,882 $ 2,400,068 $ 2,346,683
------------- ------------- ------------- -------------
COSTS AND EXPENSES
Cost of sales......................... 454,214 464,997 1,291,433 1,292,607
Selling, general and administrative
expenses............................ 315,985 279,532 921,880 886,566
Restructuring charges................. 3,750 3,750
------------- ------------- ------------- -------------
770,199 748,279 2,213,313 2,182,923
OPERATING PROFIT........................ 88,527 58,603 186,755 163,760
Interest expense...................... (17,445) (21,057) (51,757) (64,777)
Nonrecurring gains.................... 11,872 22,099
Other, net............................ 90 (1,211) 2,062 2,282
------------- ------------- ------------- -------------
Income from continuing operations before
income taxes.......................... 83,044 36,335 159,159 101,265
Income taxes........................ 43,250 21,086 79,774 53,959
------------- ------------- ------------- -------------
Income from continuing operations....... 39,794 15,249 79,385 47,306
Income from discontinued operations, net
of income taxes....................... 12,505 62,458 41,009 108,047
------------- ------------- ------------- -------------
NET INCOME.............................. $ 52,299 $ 77,707 $ 120,394 $ 155,353
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Earnings per share:
Continuing operations................. $ .31 $ .12 $ .61 $ .37
Discontinued operations............... .10 .48 .32 .84
------------- ------------- ------------- -------------
Earnings per share...................... $ .41 $ .60 $ .93 $ 1.21
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 25, DECEMBER 31,
1994 1993
- ------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents................................. $ 92,242 $ 46,756
Accounts receivable, less allowance for doubtful accounts
and returns of $77,305 and $70,866...................... 524,549 511,347
Note and other receivables................................ 296,458
Inventories............................................... 148,472 161,251
Deferred income taxes..................................... 31,635 40,965
Net assets of discontinued cable television operations.... 626,091
Prepaid and other......................................... 117,291 160,097
------------- -------------
Total Current Assets.................................... 1,540,280 1,216,874
Property, plant and equipment, at cost less accumulated
depreciation of $813,857 and $760,609..................... 1,294,005 1,308,628
Goodwill.................................................... 711,947 714,357
Net assets of discontinued cable television operations...... 606,678
Other intangibles........................................... 122,652 132,690
Deferred charges and other assets........................... 543,956 520,670
------------- -------------
$ 4,212,840 $ 4,499,897
------------- -------------
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable.......................................... $ 359,680 $ 380,005
Accrued liabilities....................................... 45,768 94,436
Short-term debt........................................... 128,044 336,356
Income taxes.............................................. 20,713 1,232
Other current liabilities................................. 336,421 331,137
------------- -------------
Total Current Liabilities............................... 890,626 1,143,166
Long-term debt.............................................. 749,044 795,454
Deferred income taxes....................................... 197,407 196,869
Other liabilities and deferrals............................. 456,770 465,133
------------- -------------
Total Liabilities....................................... 2,293,847 2,600,622
------------- -------------
Shareholders' Equity
Common stock
Series A, $1 par value; 300,000,000 authorized;
98,700,000 and 97,588,000 issued...................... 98,700 97,588
Series B, $1 par value; 100,000,000 authorized; no
shares issued
Series C, convertible, $1 par value; 150,000,000
authorized; 31,259,000 and 32,366,000 issued.......... 31,259 32,366
Preferred stock, $1 par value; 4,500,000 shares
authorized; no shares issued
Additional paid-in capital................................ 167,331 167,490
Retained earnings......................................... 1,707,446 1,687,574
------------- -------------
2,004,736 1,985,018
------------- -------------
Less treasury stock, at cost; 1,345,000 Series A shares... 61,543 61,543
------------- -------------
1,943,193 1,923,475
Less guaranteed debt of ESOP.............................. 24,200 24,200
------------- -------------
Total Shareholders' Equity.............................. 1,918,993 1,899,275
------------- -------------
$ 4,212,840 $ 4,499,897
------------- -------------
------------- -------------
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR-TO-DATE ENDED
----------------------------
SEPTEMBER 25, SEPTEMBER 26,
1994 1993
- ------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by continuing operating activities...... $ 234,556 $ 212,029
Net cash provided by discontinued operating activities.... 108,765 115,325
------------- -------------
Net cash provided by operating activities............... 343,321 327,354
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of operating assets................... 334,760 35,541
Capital expenditures...................................... (81,221) (72,823)
Acquisitions, net of cash acquired........................ (39,737) (22,300)
Additions to product development costs.................... (48,443) (39,146)
Other, net................................................ (1,217) (26)
------------- -------------
Net cash provided by (used in) continuing investing
activities.............................................. 164,142 (98,754)
Net cash used in investing activities from discontinued
cable operations........................................ (103,626) (2,556)
------------- -------------
Net cash provided by (used in) investing activities..... 60,516 (101,310)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of debt......................................... (408,719) (358,717)
Proceeds from issuance of debt............................ 154,697 248,563
Dividends paid............................................ (104,175) (104,152)
Other, net................................................ (154) 2,515
------------- -------------
Net cash used in financing activities................... (358,351) (211,791)
------------- -------------
Increase in cash and cash equivalents....................... 45,486 14,253
Cash and cash equivalents at beginning of year.............. 46,756 57,881
------------- -------------
Cash and cash equivalents at end of period.................. $ 92,242 $ 72,134
------------- -------------
------------- -------------
Cash paid during the period for:
Interest (net of amounts capitalized)..................... $ 53,957 $ 71,815
Income taxes.............................................. 67,780 44,586
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A -- 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 incorporated in the Company's Annual Report on Form 10-K for the year
ended December 31, 1993.
Certain amounts have been reclassified to conform to the third quarter 1994
presentation.
NOTE B -- PROPOSED REORGANIZATION
In June 1994, the Company signed an agreement to merge its cable television
operations with Cox Cable Communications, Inc. (Cox Cable). It is contemplated
that prior to the merger the Company will borrow approximately $1.36 billion.
The Company will then transfer all of its non-cable operations, including the
$1.36 billion in cash, into a newly formed entity, New Times Mirror, as part of
a tax-free reorganization. Old Times Mirror, then owning the Company's cable
television operations and obligated to pay the newly incurred debt, will be
merged into Cox Cable. Each share of the Company's Series A and Series C common
stock outstanding prior to the merger will be converted into one share of New
Times Mirror Series A or Series C common stock, respectively. As a result,
voting interests in New Times Mirror will remain the same as voting interests in
Old Times Mirror. In addition, all non-Chandler Trust shareholders will receive
common stock of Cox Cable with 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 in New Times Mirror. The fair
value of the preferred stock received by the Chandler Trusts will be
substantially equivalent to the fair value of the Cox Cable common stock
received by the other shareholders, after giving effect to their respective
proportionate interest in Old Times Mirror. The Company expects this transaction
will increase shareholders' equity by approximately $670,000,000 and result in a
gain of about $1.62 billion. This transaction is expected to be consummated
within the next three to six months and is subject to certain conditions,
including the receipt of various regulatory approvals.
In connection with the settlement of reorganization-related litigation,
subsequent to the reorganization, shareholders will to be offered the
opportunity to exchange shares of Series A or Series C common stock for shares
of Series B cumulative preferred stock on a one-for-one basis. The Series B
preferred stock will have one vote per share.
At September 25, 1994, the Company had approximately $750,000,000 of
publicly-held notes outstanding. In early November, the Company commenced a
tender offer for $399,500,000 aggregate principal amount of its fixed-rate debt
and expects to file a registration statement with respect to long-term debt
securities that it intends to offer to exchange for $250,000,000 of its
outstanding long-term debt (See Note F).
As previously reported, a number of lawsuits were filed in Delaware and
California seeking to enjoin the proposed reorganization (See Note J for further
information regarding these proceedings). The resolution of these lawsuits is
not expected to have a material adverse effect on the Company's financial
position or results of operations.
NOTE C -- DISCONTINUED OPERATIONS
As a result of the proposed reorganization described in Note B, the
Company's cable television operations are reported as discontinued operations.
6
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE C -- DISCONTINUED OPERATIONS (CONTINUED)
In March 1993, the Company announced two agreements for the sale of its
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, 1993. The sale of the
Company's remaining two stations, KDFW-TV in Dallas, Texas and KTBC-TV in
Austin, Texas, both CBS affiliates, was completed near the end of 1993. The sale
of the four stations resulted in a gain of $131,702,000, net of income tax
expense of $76,928,000. Most of the $320,000,000 in proceeds was received in
January 1994 and was used to redeem commercial paper.
The results of operations of the Broadcast and Cable Television segments
have been reported separately as discontinued operations in the Statements of
Consolidated Income. Income from discontinued operations is summarized as
follows (in thousands):
<TABLE>
<CAPTION>
THIRD QUARTER ENDED YEAR-TO-DATE ENDED
---------------------------- ----------------------------
SEPTEMBER 25, SEPTEMBER 26, SEPTEMBER 25, SEPTEMBER 26,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
Revenues......................... $ 121,768 $ 134,585 $ 368,929 $ 422,104
------------- ------------- ------------- -------------
Income before income taxes....... 24,106 112,647 75,624 188,457
Income taxes..................... 11,601 50,189 34,615 80,410
------------- ------------- ------------- -------------
Net income....................... $ 12,505 $ 62,458 $ 41,009 $ 108,047
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
Income from discontinued operations for 1993 included gains on sales of
assets totaling $82,019,000 or $47,604,000 (37 cents per share) after applicable
income taxes for the third quarter, and $86,799,000 or $50,364,000 (39 cents per
share) net of income taxes for the year-to-date.
The net assets of the Cable Television operations which will be transferred
to Cox Cable, comprised principally of fixed assets, goodwill and other
intangibles, have been classified as net assets of discontinued operations for
all reported periods.
NOTE D -- NONRECURRING GAINS
In the third quarter of 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. In
addition, in May, 1994, the Company sold preferred stock and warrants to
purchase common stock obtained as part of the 1992 settlement of a note
receivable related to the 1987 sale of the Denver Post. This transaction
increased income before income taxes by $10,227,000, or $6,431,000 (5 cents per
share) after applicable income taxes.
NOTE E -- INVENTORIES
Inventories are summarized as follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 25, DECEMBER 31,
1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Newsprint, paper, and other raw materials....................... $ 35,898 $ 39,066
Books and other finished products............................... 88,245 94,675
Work-in-process................................................. 24,329 27,510
------------- ------------
$ 148,472 $ 161,251
------------- ------------
------------- ------------
</TABLE>
7
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE F -- DEBT
Short-term debt is summarized as follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 25, DECEMBER 31,
1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial paper................................................ $ 103,574 $ 312,000
Current maturities of long-term debt............................ 24,470 24,356
------------- ------------
$ 128,044 $ 336,356
------------- ------------
------------- ------------
</TABLE>
Long-term debt is summarized as follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 25, DECEMBER 31,
1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial paper................................................ $ 46,231
7 1/8% Debentures due March 1, 2013............................. $ 150,000 150,000
7 3/8% Debentures due July 1, 2023.............................. 100,000 100,000
8 7/8% Notes due March 1, 2001.................................. 100,000 100,000
8.70% Notes due June 15, 1999................................... 99,993 100,000
8.55% Notes due June 1, 2000.................................... 99,500 99,500
8 7/8% Ten-Year Notes due February 1, 1998...................... 100,000 100,000
Medium-Term Notes due from March 20, 1997 to April 3, 2000, with
an average interest rate of 8.63%............................. 100,000 100,000
Guaranteed debt of ESOP, maturing December 15, 1994............. 24,200 24,200
Others at various interest rates, maturing through 2003......... 1,596 1,761
------------- ------------
775,289 821,692
Unamortized discount............................................ (1,775) (1,882)
Less current maturities......................................... (24,470) (24,356)
------------- ------------
$ 749,044 $ 795,454
------------- ------------
------------- ------------
</TABLE>
Commercial paper borrowings of $103,574,000 at September 25, 1994 and
$358,231,000 at December 31, 1993, carried a weighted average interest rate of
4.9% and 3.3%, respectively. The Company has agreements with several domestic
and foreign banks for unsecured short-term revolving lines of credit which
support its commercial paper borrowings. The domestic agreements expire April
27, 1995 and provide for borrowings up to $240,000,000. The foreign agreements
expire May 25, 1995 and provide for borrowings up to $150,000,000. As of
September 25, 1994, the Company had not borrowed under these agreements. All of
the commercial paper borrowings are classified as short-term as of September 25,
1994.
In connection with the proposed reorganization (See Note B), the Company has
commenced a tender offer for $399,500,000 aggregate principal amount of its
fixed-rate debt maturing from 1997 through 2001. The offer is scheduled to end
in mid-December 1994. Proceeds from private sales of short-term securities are
expected to fund the tender and these borrowings are expected to be repaid in
early 1995 when the cable merger is completed. In connection with the short-term
security issuances, the Company expects to increase its unsecured short-term
revolving bank lines of credit to an aggregate amount of $630,000,000. If the
entire $399,500,000 is tendered under the terms of the tender offer, the Company
expects to record an extraordinary loss of approximately $15,000,000 in the
fourth quarter of 1994. In connection with the tender, in September the Company
entered into interest rate swap agreements which commence in January 1995 and
exchange payments at fixed rates for payments at variable rates on an aggregate
principal amount of $200,000,000 of debt. These swaps are expected to be
redeemed upon the successful completion of the tender offer.
8
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE F -- DEBT (CONTINUED)
In early November, the Company will also file a registration statement with
the Securities and Exchange Commission with respect to long-term debt securities
that it intends to offer to exchange for $250,000,000 of its outstanding
long-term debt in connection with the cable television merger. With respect to
this debt, the Company entered into long-term interest rate swap agreements
commencing January 1995 which exchange payments at fixed rates for payments at
variable rates.
As contemplated by the cable merger agreement, the Company expects to borrow
up to approximately $1.36 billion prior to the merger and the related debt will
be assumed by Cox Cable. Part of the proceeds of these borrowings are expected
to be used to retire the short-term securities issued to finance the debt tender
and to redeem, when first callable on February 1, 1995, the $100,000,000 of
8 7/8% Notes due February 1, 1998.
NOTE G -- EARNINGS AND DIVIDENDS PER SHARE
Earnings per share computations were based upon the weighted average number
of shares of common stock and common stock equivalents outstanding of
128,722,000 and 128,718,000 for third quarters ended September 25, 1994 and
September 26, 1993, respectively. The weighted average number of shares were
128,798,000 and 128,739,000 for year-to-date ended September 25, 1994 and
September 26, 1993, respectively. Fully diluted earnings per share were the same
as the earnings per share indicated.
Cash dividends of 27 cents per share of common stock were declared in the
third quarters of both 1994 and 1993.
NOTE H -- CASH MANAGEMENT SYSTEM
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 the checks outstanding. The book overdraft, which was reclassified to
accounts payable, was approximately $44,845,000 and $41,733,000 at September 25,
1994 and December 31, 1993, respectively.
NOTE I -- 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 and other intangibles.
NOTE J -- 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.
A number of lawsuits were filed in Delaware and California in mid-1994
seeking to enjoin the proposed reorganization described in Note B. On October
11, 1994, the Company announced an agreement to settle all of the shareholder
litigation related to this proposed reorganization. Under the terms of the
settlement, upon completion of the transactions, the Company will offer
shareholders Series B preferred stock. The Chandler Trusts have agreed not to
participate in this exchange offer. In addition, the settlement calls for the
Company, subject to the exercise of the fiduciary duties of its Board of
Directors, to pay an annual dividend of at least 24 cents per share on its
common stock for the three years following the closing of the merger and to pay
up to $6 million for plaintiffs' attorney fees and expenses, subject to court
approval. The settlement of the litigation is subject to the approval of the
Delaware Chancery Court and the California Superior Court in hearings scheduled
before year-end, as well as to certain other conditions. The settlement of this
litigation will not have an adverse material impact on the Company's financial
position or results of operations.
9
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Beginning in the second quarter of 1994, Times Mirror redefined its business
segments to reflect the focus of its continuing operations. The Company's three
continuing business segments are now Newspaper Publishing, which remains
unchanged from past reporting periods; Professional Information, which consists
of the Company's professional publishing, college publishing and training
operations; and Consumer Multimedia, which includes magazines, consumer book
publishing and the Company's planned expansion into the consumer multimedia
software and television programming businesses.
OVERVIEW
Times Mirror's 1994 third-quarter operating profit rose substantially to
$88.5 million from $58.6 million in 1993, continuing the upward trend from the
second quarter and resulting in improved year-to-date results. Each of the
Company's business segments showed improved operating performance in the third
quarter, with particularly strong gains in Professional Information and
Newspaper Publishing. Within Professional Information, operating profit at
Matthew Bender and the training companies, which had trailed the prior year in
the first half of 1994, equaled or exceeded the prior-year third quarter. The
Newspaper Publishing segment reported continued growth in both revenues and
operating profit, driven by increased advertising volume at each of the
newspapers. This segment also benefited by comparison with modest results in the
1993 period, which included a $3.8 million charge for voluntary severance
programs at the LOS ANGELES TIMES.
For the first three quarters of 1994, operating profit rose 14 percent to
$186.8 million from $163.8 million in the prior year, reflecting improvements in
the Company's advertising-driven businesses. Year-to-date operating profit
declines in Professional Information, attributable largely to depressed
first-half results at Matthew Bender, somewhat offset these gains. The decline
at Matthew Bender was largely anticipated and was the result of a lower number
of subscriptions, year-over-year timing differences in product release schedules
and changes in its marketing and pricing strategies introduced in mid-1993.
These strategies aim to stabilize the number of subscriptions over the near term
and to provide a basis for unit volume growth over the long term.
Over the past several years, the Company 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, which could lead to additional restructuring or
other charges in future periods.
DISCONTINUED OPERATIONS
In June 1994, Times Mirror announced a definitive agreement to merge its
cable television operations with Cox Cable Communications, Inc. (Cox Cable) in a
tax-free transaction valued at approximately $2.3 billion. The merger, which
requires various regulatory approvals, is expected to be completed in the next
three to six months. For further details concerning this proposed transaction,
see Note B of the condensed consolidated financial statements. In March 1993,
the Company announced the sale of its four broadcast television stations, with
the divestiture being completed near year-end 1993 for $320 million in cash as
well as warrants in Argyle Television Holdings.
The financial results of the Cable Television segment for all periods and,
in 1993, the Broadcast Television segment, have been reported as discontinued
operations in the Statements of Consolidated Income. Income from discontinued
cable television operations was $41.0 million, or 32 cents per share, for the
first three quarters of 1994, compared with $108.0 million, or 84 cents per
share, in the prior year from both the cable and broadcast television
operations. The 1993 year-to-date period also included net gains from asset
sales at Cable Television of $50.4 million, or 39 cents per share. Additional
information on discontinued operations is included in Note C of the condensed
consolidated financial statements.
10
<PAGE>
SALES OF OTHER ASSETS
In the third quarter of 1994, a net gain of $4.2 million, or 3 cents per
share, was recognized on the divestiture of a small elementary-high school book
publishing operation. Results for the first three quarters of 1994 also included
the second quarter net gain of $6.4 million, or $.05 per share, recognized on
the sale of securities obtained as part of the 1992 settlement of a note
receivable related to the 1987 sale of the DENVER POST.
MATTHEW BENDER RESTRUCTURING
Over the past 21 months, Matthew Bender has been restructuring its marketing
and pricing strategies, product lines and business operations. Restructuring
efforts have included new pricing programs, operating productivity improvements
(including major workforce reductions), and new marketing and sales strategies
to reduce subscriber attrition, including conversion of the subscriber base to
annual service contracts. While Bender's third-quarter operating profit was
relatively level with the prior year, these efforts depressed results in the
first half of 1994 and are expected to result in a substantial full-year
operating profit decline as compared to 1993. Subscriber attrition rates
continued to decline in the third quarter and customer conversion to annual
service contracts exceeded expectations. Over the long term, the objective of
the restructuring program is to provide a basis for growth in unit volume,
revenues and profits, as well as to enhance and deepen customer relationships.
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 local
newspaper markets, particularly Southern California, and the sharp increases in
newsprint prices anticipated throughout the industry at least through 1995.
Newsprint expense, which is the largest single expense for the segment,
currently represents approximately 15 percent of total segment operating costs.
The average newsprint price per ton is expected to rise more than 20 percent in
1995. Modest newsprint price increases over the prior year began in the third
quarter of 1994 but are not expected to significantly impact fourth-quarter
results. Rising newsprint consumption due to advertising volume growth, coupled
with significant price increases, could restrain profitability improvement next
year. 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.
PROFESSIONAL INFORMATION OUTLOOK
For the full year 1994, operating profit for the segment is expected to
exceed 1993 levels despite a substantial year-over-year decline at Matthew
Bender, as 1993 results included restructuring charges totaling $25.3 million.
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.
CONSUMER MULTIMEDIA OUTLOOK
Times Mirror's magazines have historically represented the majority of the
revenues of this segment. This year's operating results 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 next year, anticipated increases in postage rates and paper prices
may significantly impair profit growth. Significant expenditures for product and
market development are planned in 1995 in the new areas of consumer multimedia
software and television programming.
11
<PAGE>
CONSOLIDATED RESULTS OF OPERATIONS
The following table summarizes Times Mirror's financial results (in
thousands except per share amounts):
<TABLE>
<CAPTION>
THIRD QUARTER THREE QUARTERS
-------------------- ------------------------
1994 1993 1994 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues................................ $ 858,726 $ 806,882 $ 2,400,068 $ 2,346,683
Operating profit........................ 88,527 58,603 186,755 163,760
Interest expense........................ (17,445) (21,057) (51,757) (64,777)
Nonrecurring gains...................... 11,872 -- 22,009 --
Income from continuing operations....... 39,794 15,249 79,385 47,306
Income from discontinued operations..... 12,505 62,458 41,009 108,047
Net income.............................. 52,299 77,707 120,394 155,353
Earnings per share:
Continuing operations................. $ .31 $ .12 $ .61 $ .37
Discontinued operations............... .10 .48 .32 .84
--------- --------- ----------- -----------
Earnings per share...................... $ .41 $ .60 $ .93 $ 1.21
--------- --------- ----------- -----------
--------- --------- ----------- -----------
</TABLE>
The following sections discuss the revenues and operating profits of the
Company's principal lines of business. All comments, except as noted, apply to
both the third quarter and first three quarters of 1994 compared to the same
prior year periods.
Times Mirror's revenues increased 6.4 percent for the third quarter of 1994,
and rose 2.3 percent for the year-to-date. Growth in newspaper and magazine
advertising revenues, combined with strong third-quarter revenue gains in
college and health science publishing, more than offset revenue declines in
legal publishing for the quarter and year-to-date periods.
Operating profit for the third quarter of 1994 increased 51.1 percent from
the previous year, due primarily to strong performances in the professional
information companies and continued advertising revenue growth and cost
containment efforts in the newspaper segment. For the first three quarters,
operating profit rose 14.0 percent, as improvements at the newspapers and
magazines more than offset first-half declines in the professional information
companies.
For the third quarter, income from continuing operations of $39.8 million,
or 31 cents per share, more than doubled from $15.2 million, or 12 cents per
share, in the prior year. For the first three quarters, income from continuing
operations rose 67.8 percent primarily on the strength of third-quarter results.
In addition, interest expense declined in 1994 for the third quarter and the
year-to-date, as the debt level was reduced using proceeds received earlier in
the year from the sale of the broadcast television stations. Net income was down
for both the third quarter and year-to-date due to the absence of results from
the discontinued broadcast television operations and the 1993 gains on asset
sales at cable television.
12
<PAGE>
NEWSPAPER PUBLISHING
Newspaper Publishing segment revenues and operating profit were as follows
(in thousands):
<TABLE>
<CAPTION>
THIRD QUARTER THREE QUARTERS
------------------ ----------------------
1994 1993 1994 1993
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Advertising............................................... $372,218 $345,975 $1,119,480 $1,064,035
Circulation............................................... 111,000 111,471 333,131 336,535
Other..................................................... 9,991 12,904 29,033 30,698
-------- -------- ---------- ----------
$493,209 $470,350 $1,481,644 $1,431,268
-------- -------- ---------- ----------
-------- -------- ---------- ----------
Operating Profit............................................ $ 32,963 $ 13,713 $ 121,979 $ 78,208
-------- -------- ---------- ----------
-------- -------- ---------- ----------
</TABLE>
Newspaper Publishing's advertising revenues rose 7.6 percent for the third
quarter of 1994 and 5.2 percent for the year-to-date. Circulation revenues
declined slightly for both periods due to the planned reduction of circulation
outside the newspapers' primary market areas. Advertising volume and revenues
increased at the segment's largest newspaper, the LOS ANGELES TIMES, with
continued gains in classified advertising volume, particularly in the
help-wanted category, as well as increases in retail advertising volume.
Third-quarter and year-to-date operating profit rose significantly in 1994,
benefiting somewhat from a small severance-related charge at THE TIMES in the
third quarter of 1993. This profitability improvement reflects the advertising
revenue growth as well as ongoing cost containment efforts over the past three
years. Newsprint expense for the first three quarters was slightly lower than
1993, as the impact of lower average per-ton cost in the first half of 1994 more
than offset a slight increase in consumption.
PROFESSIONAL INFORMATION
Professional Information segment revenues and operating profit were as
follows (in thousands):
<TABLE>
<CAPTION>
THIRD QUARTER THREE QUARTERS
------------------ ----------------------
1994 1993 1994 1993
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues.................................................... $288,509 $264,362 $ 709,291 $ 716,853
-------- -------- ---------- ----------
-------- -------- ---------- ----------
Operating Profit............................................ $ 68,411 $ 57,087 $ 113,772 $ 138,897
-------- -------- ---------- ----------
-------- -------- ---------- ----------
</TABLE>
Professional Information revenues in the third quarter of 1994 rose to a
record high for a single quarter, up 9.1 percent over the prior year, as
substantial growth in college and health science publishing more than offset
lower revenues in legal publishing. Revenue declines in the first half at
Matthew Bender, due principally to the impact of changes in its pricing and
marketing strategies, resulted in a slight year-to-date decline for the segment
as compared to 1993.
Operating profit for the third quarter also reached a record high, up 19.8
percent over 1993 on the strength of the revenue gains. Results for the
year-to-date period remained below 1993 levels, down 18.1 percent, due largely
to depressed results at Matthew Bender in the first half of 1994.
13
<PAGE>
CONSUMER MULTIMEDIA
Consumer Multimedia segment revenues and operating profit (losses) were as
follows (in thousands):
<TABLE>
<CAPTION>
THIRD QUARTER THREE QUARTERS
-------------------- --------------------
1994 1993 1994 1993
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues............................................ $ 77,177 $ 72,317 $ 209,581 $ 198,877
--------- --------- --------- ---------
--------- --------- --------- ---------
Operating Profit (Loss)............................. $ 3,352 $ 2,361 $ (1,286) $ (5,285)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Consumer Multimedia segment revenues rose 6.7 percent in the third quarter
of 1994 and 5.4 percent for the year-to-date, as consumer magazines showed
improved advertising revenues. The segment's third-quarter advertising revenues
rose 6.1 percent, lifting the year-to-date increase in advertising revenues to
5.8 percent. Advertising revenue growth in the third quarter contributed to the
segment's nearly $1.0 million improvement in operating profit as compared to
1993. For the first three quarters, the segment reduced its operating loss over
the prior year, as improvements at the magazines were only partially offset by
costs related to the Company's new multimedia and programming businesses.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
Total debt at September 25, 1994 of $877.1 million declined $254.7 million
from the year-end 1993 level, as proceeds from the sale of the broadcast
television stations were used to reduce commercial paper borrowings during the
early part of 1994. The Company's debt-to-capitalization ratio at September 25,
1994 declined to 31.4 percent from 37.3 percent as of year-end 1993.
The Company's cash requirements are funded primarily by its operating
activities. If additional funds are needed, the Company obtains external
financing, primarily through the issuance of commercial paper or fixed-rate
debt. The commercial paper program is supported by unsecured short-term
revolving bank lines of credit, with commitments at September 25, 1994 totaling
$390 million. If the commercial paper program requires additional support, the
Company believes that additional lines of credit would be available to it. At
September 25, 1994, the Company had registered $250 million of debt securities
for future sales.
1994 YEAR-TO-DATE CASH FLOWS
During the first three quarters of 1994, the Company generated $234.6
million in net cash from continuing operations, compared with $212.0 million for
the same period in 1993. This increase primarily resulted from decreased cash
outlays for restructuring activities and interest offset by increased tax
payments in 1994 as compared to 1993.
Net cash provided by investing activities from continuing operations during
the first three quarters of 1994 totaled $164.1 million compared with a use of
$98.8 million, largely due to cash receipts of $334.8 million in 1994 related
primarily to the sale of the broadcast television properties. This was partially
offset by increased spending for acquisitions as well as a slight rise in
capital expenditures over the prior year. Total expenditures for capital
projects in 1994 are expected to be somewhat higher than in 1993.
Net cash used in financing activities during the first three quarters of
1994 increased by $146.6 million over 1993, which primarily reflected the
repayment in 1994 of $254.7 million of commercial paper using cash obtained from
the sale of the broadcast television properties. Dividends to shareholders of
$104.2 million were paid during the first three quarters of both years. As
discussed elsewhere herein, the proposed recapitalization of Times Mirror is
expected to reduce future dividends payable on common shares.
CABLE TELEVISION MERGER AND RELATED FINANCINGS
The Company has commenced a tender offer for $399.5 million aggregate
principal amount of its fixed-rate debt maturing from 1997 through 2001. The
offer is scheduled to end in mid-December 1994. Proceeds from private sales of
short-term securities are expected to fund the tender and these borrowings are
expected
14
<PAGE>
to be repaid in early 1995 when the cable merger is completed. In connection
with the short-term security issuances, the Company expects to increase its
unsecured short-term revolving bank lines of credit to an aggregate amount of
$630 million. If the entire $399.5 million is tendered under the terms of the
tender offer, the Company expects to record an extraordinary loss of
approximately $15 million in the fourth quarter of 1994. In connection with the
tender, in September the Company entered into interest rate swap agreements
which commence in January 1995 and exchange payments at fixed rates for payments
at variable rates on an aggregate principal amount of $200 million of debt.
These swaps are expected to be redeemed upon the successful completion of the
tender offer.
In early November, the Company will also file a registration statement with
the Securities and Exchange Commission with respect to long-term debt securities
that it intends to offer to exchange for $250 million of its outstanding
long-term debt in connection with the cable television merger. With respect to
this debt, the Company entered into long-term interest rate swap agreements
commencing January 1995 which exchange payments at fixed rates for payments at
variable rates.
As contemplated by the cable merger agreement, the Company expects to borrow
up to approximately $1.36 billion prior to the merger and the related debt will
be assumed by Cox Cable. Part of the proceeds of these borrowings are expected
to be used to retire the short-term securities issued to finance the debt tender
and to redeem, when first callable on February 1, 1995, the $100 million of
8 7/8% Notes due February 1, 1998.
CABLE TELEVISION PROGRAMMING PARTNERSHIP
At the time of the execution of the agreement to merge its cable operations,
the Company committed up to $200 million to a proposed joint venture with Cox
Cable. The joint venture is expected to develop and purchase substantial
investment interests in theme-based cable television programming operations. The
$200 million is expected to be contributed to the venture as capital calls are
made.
POST-MERGER DIVIDEND POLICY
At the completion of the cable merger, the Company expects to have
approximately $412 million in face amount of Series A preferred stock
outstanding. This class of preferred stock will have a perpetual fixed-rate
dividend which will be established 90 days after the completion of the cable
merger. As soon as practicable after the merger, the Company has agreed to offer
approximately $350 million of Series B preferred stock to shareholders in
exchange for shares of its common stock. The aggregate annual dividends on these
shares of preferred stock are expected to be approximately $60 million through
early 1998, at which time the Series B preferred stock will convert into common
stock. The Series B preferred stock may, however, be called for redemption
earlier under certain circumstances, with the redemption price payable in shares
of common stock. Beginning in June 1995 and continuing for a period of three
years, the Company has agreed to pay an annual dividend on shares of its common
stock of no less than 24 cents per share, subject to the fiduciary duties of the
Company's Board of Directors. Thereafter, the payment of dividends on common
stock will depend on future earnings, capital requirements, financial condition
and other factors.
15
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The following litigation arose out of the transactions described in Note B
of the condensed consolidated financial statements (referred to herein as the
"Transactions.")
DELAWARE PROCEEDINGS
As of November 1, 1994, the following putative class actions have been filed
in the Court of Chancery, New Castle County, State of Delaware with respect to
the Transactions: Bert Vladimir, on behalf of himself and all persons similarly
situated v. John E. Bryson, et al., (Civil Action No. 13550); Erab Capital Ltd.
v. Robert F. Erburu, et al. (Civil Action No. 13552); Moise Katz v. The Times
Mirror Co., et al. (Civil Action No. 13554); Gary Goldberg v. Gwendolyn G.
Babcock, et al. (Civil Action No. 13555); Joseph E. Kassoway, et al. v. The
Times Mirror Company, et al. (Civil Action No. 13556); Frederick Rand and Miriam
Sarnoff v. The Times Mirror Company, et al. (Civil Action No. 13557); and
Kathleen Pessin v. The Times Mirror Co., et al. (Civil Action No. 13558). Five
of the Delaware actions have been consolidated by the Delaware Chancery Court
under the name In re The Times Mirror Company Shareholders Litigation. Two of
the actions (Kassoway and Rand) were voluntarily dismissed by the plaintiffs.
The five consolidated actions are collectively referred to herein as the
"Delaware Stockholders' Litigation."
The Delaware Stockholders' Litigation challenges the terms of the
Transactions and names as defendants, among others, Times Mirror, present and
certain former directors of Times Mirror, the Chandler Trusts, and certain
trustees of the Chandler Trusts. Cox Enterprises, Inc. ("CEI") is also named as
a defendant in two of the actions. The Delaware Stockholders' Litigation alleges
that the defendants breach their fiduciary duties to the non-Chandler Trust
Stockholders ("Other Stockholders") by entering into the Transactions, that the
defendants failed to properly evaluate the Transactions, that the defendants
favored the interests of the Chandler Trusts over the interests of the Other
Stockholders, that the merger consideration to be paid to the Other Stockholders
is inadequate and unfair, and that the defendants have engaged in other
allegedly improper conduct.
CALIFORNIA PROCEEDINGS
On June 13, 1994, the following putative class and derivative action was
filed in the Superior Court of California, County of Los Angeles: Fred Vondy,
Miriam Sarnoff, and Joseph E. Kassoway and Robert Kassoway, Trustees Under Deed
of Trust for the Benefit of Joseph E. Kassoway, On Behalf of Themselves and All
Other Similarly Situated, and Derivatively on Behalf of The Times Mirror
Company, a Delaware corporation v. John E. Bryson, et al. (Case No. BC106783).
This action is referred to herein as the "California Stockholders' Litigation."
The California Stockholders' Litigation purports to be a stockholders'
derivative action on behalf of Times Mirror, which is named as a nominal
defendant only. It also purports to be a class action on behalf of the same
class as in the Delaware Stockholders' Litigation. The California Stockholders'
Litigation names as defendants, among others, present and certain former
directors of Times Mirror, certain officers of Times Mirror, the Chandler
Trusts, and certain trustees of the Chandler Trusts. CEI also is named as a
defendant. The California Stockholders' Litigation asserts essentially the same
allegations concerning the Transactions as the Delaware Stockholders'
Litigation. It purports to assert claims for breach of fiduciary duty, unjust
enrichment, constructive fraud, and abusive control. The California
Stockholders' Litigation seeks a declaration that the Transactions are unfair,
unjust, and inequitable to Times Mirror and its public stockholders; to enjoin
the Transactions; to enjoin the defendants from further alleged abuses of
control; a declaration setting aside the Transactions; unspecified damages,
including unspecified punitive damages; an accounting; and unspecified fees and
expenses.
FEDERAL PROCEEDINGS
On July 11, 1994, the following putative class action was filed in the
United States District Court for the Central District of California: Frederick
Rand, On Behalf of Himself and All Other Similarly Situated v. John E. Bryson,
et al. (Case Number CV 94 4632 WDK (Ex)). This action is referred to herein as
the "Federal Stockholders' Litigation." The Federal Stockholders' Litigation
alleges that the proxy statement
16
<PAGE>
disseminated in connection with the annual meeting of Times Mirror's
stockholders held on May 3, 1994 was materially false and misleading in that it
failed to disclose the plan of Times Mirror's Board of Directors to enter into
the Transactions. The Federal Stockholders' Litigation asserts that the
Transactions were improper for the same reasons alleged in the California
Stockholders' Litigation and names as defendants Times Mirror, present and
certain former directors of Times Mirror, certain officers of Times Mirror, and
the Chandler Trusts.
SETTLEMENT ACTIVITIES
Following a series of negotiations between representatives of Times Mirror
and counsel for the plaintiffs in the Stockholders' Litigation, on October 10,
1994 the parties entered into a stipulation of settlement (the "Stipulation")
with respect to the Stockholders' Litigation. Pursuant to the Stipulation, (i)
New Times Mirror will issue the New Times Mirror Series B Preferred Stock in the
Series B Exchange, (ii) Times Mirror will submit the Initial New Times Mirror
Dividend Policy to the Board of Directors of Times Mirror for its consideration
and (iii) Times Mirror will pay (on behalf of itself as well as each of the
other defendants in the Stockholders' Litigation who are past or present
officers or directors of Times Mirror) the attorneys' fees and expenses of
counsel for the plaintiffs in an aggregate amount not to exceed $6 million.
The Series B Exchange will be conducted as soon as practicable after the
Merger. Pursuant to the Series B Exchange, each holder of New Times Mirror
Common Stock will have the opportunity to exchange shares of New Times Mirror
Common Stock on a one-for-one basis for shares of New Times Mirror Series B
Preferred Stock. The Chandler Trusts have agreed and have informed New Times
Mirror that they will not participate in the Series B Exchange.
The Initial New Times Mirror Dividend Policy would provide that the dividend
on New Times Mirror Common Stock, beginning in June 1995 and continuing for a
period of three years, will be set at no less than $.24 per year. The Initial
New Times Mirror Dividend Policy would be subject to the exercise by the New
Times Mirror Board of Directors of its fiduciary duties 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.
In order for the settlement of the Stockholders' Litigation to become final,
the Stipulation must be approved by the Delaware Chancery Court in the Delaware
Stockholders' Litigation and the California Superior Court in the California
Stockholders' Litigation. Hearing dates have been scheduled with the Delaware
Chancery Court for November 30, 1994 at 10:30 a.m. and with the California
Superior court for December 2, 1994 at 9:00 a.m. Notice of the hearings has been
mailed to all stockholders of record.
The Orders and Final Judgments to be entered by the Delaware Chancery Court
and the California Superior Court (i) will dismiss the complaints in each
respective action with prejudice as to all defendants and (ii) will, on behalf
of the plaintiffs and all class members, release and discharge all defendants
(and certain other parties as described in the Stipulation) from all claims in
each respective action. In addition, the order and judgment to be entered by the
California Superior Court will, on behalf of the plaintiffs in the California
Stockholders' Litigation, Times Mirror and all current holders of Times Mirror
Common Stock, release and discharge certain defendants (as described in the
Stipulation) from any cause of action or claim by Times Mirror or derivatively
by Times Mirror that has been or could have been asserted in the California
Stockholders' Litigation.
As noted above, the resolution of these lawsuits is not expected to have a
material adverse effect on the Company's financial position or results of
operations.
17
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
11. Computation of earnings per share.
12. Computation of the ratio of earnings to fixed charges.
(B) REPORTS ON FORM 8-K
Form 8-K for Times Mirror Cable Television, Inc., a wholly owned
subsidiary of the Company, as of June 30, 1994 was filed on August
15, 1994.
18
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, who is also signing in his capacity as
Registrant's chief accounting officer.
THE TIMES MIRROR COMPANY
By: /s/ STUART K. COPPENS
--------------------------------------
Stuart K. Coppens
CONTROLLER AND CHIEF ACCOUNTING
OFFICER
Date: November 9, 1994
19
<PAGE>
EXHIBIT 11
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THIRD QUARTER ENDED YEAR-TO-DATE ENDED
---------------------------- ----------------------------
SEPTEMBER 25, SEPTEMBER 26, SEPTEMBER 25, SEPTEMBER 26,
1994 1993 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY
Average shares outstanding.............. 128,612,692 128,592,924 128,609,594 128,583,394
Dilutive stock options based on the
treasury stock method using average
market price.......................... 108,907 124,806 188,768 155,754
------------- ------------- ------------- -------------
Total............................... 128,721,599 128,717,730 128,798,362 128,739,148
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Income from continuing operations....... $39,794 $15,249 $ 79,385 $ 47,306
Income from discontinued operations, net
of income taxes....................... 12,505 62,458 41,009 108,047
------------- ------------- ------------- -------------
Net income.............................. $52,299 $77,707 $120,394 $155,353
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Earnings per share:
Continuing operations................. $.31 $.12 $.61 $ .37
Discontinued operations............... .10 .48 .32 .84
------------- ------------- ------------- -------------
Earnings per share...................... $.41 $.60 $.93 $1.21
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
FULLY DILUTED
Average shares outstanding.............. 128,612,692 128,592,924 128,609,594 128,583,394
Dilutive stock options based on the
treasury stock method using market
price at the close of the period, if
higher than average market price...... 108,907 124,806 188,768 155,754
------------- ------------- ------------- -------------
Total............................... 128,721,599 128,717,730 128,798,362 128,739,148
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Income from continuing operations....... $39,794 $15,249 $ 79,385 $ 47,306
Income from discontinued operations, net
of income taxes....................... 12,505 62,458 41,009 108,047
------------- ------------- ------------- -------------
Net Income.............................. $52,299 $77,707 $120,394 $155,353
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Earnings per share:
Continuing operations................. $.31 $.12 $.61 $ .37
Discontinued operations............... .10 .48 .32 .84
------------- ------------- ------------- -------------
Earnings per share...................... $.41 $.60 $.93 $1.21
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
<PAGE>
EXHIBIT 12
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR-TO-DATE ENDED
SEPTEMBER 25, 1994
- -----------------------------------------------------------------------------------------------------
<S> <C>
Fixed Charges
Interest expense.............................................................. $ 51,757
Interest related to ESOP (1).................................................. 1,056
Capitalized interest.......................................................... 1,070
Portion of rents deemed to be interest........................................ 15,569
Amortization of debt expense.................................................. 265
--------
Total Fixed Charges......................................................... $ 69,717
--------
--------
Earnings
Income from continuing operations before income taxes......................... $ 159,159
Fixed charges, less capitalized interest and interest related to ESOP......... 67,591
Amortization of capitalized interest.......................................... 3,123
Distributed income from less than 50% owned unconsolidated affiliates......... 196
Subtract: Equity loss from less than 50% owned unconsolidated affiliate....... 346
--------
Total Earnings.............................................................. $ 230,415
--------
--------
Ratio of earnings to fixed charges.............................................. 3.3
<FN>
(1) The Company has guaranteed repayment of $24,200,000 of debt of the Employee
Stock Ownership Plan and, accordingly, has included the related interest in
fixed charges.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>This schedule contains summary financial information extracted from
Times Mirror's Condensed Consolidated Balance Sheets and Statements of
Consolidated Income on pages 3 and 4 of the Form 10-Q for the period ended
September 25, 1994 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000098349
<NAME> THE TIMES MIRROR COMPANY
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-25-1994
<EXCHANGE-RATE> 1
<CASH> 92,242
<SECURITIES> 0
<RECEIVABLES> 601,854
<ALLOWANCES> 77,305
<INVENTORY> 148,472
<CURRENT-ASSETS> 1,540,280
<PP&E> 2,107,862
<DEPRECIATION> 813,857
<TOTAL-ASSETS> 4,212,840
<CURRENT-LIABILITIES> 890,626
<BONDS> 0
<COMMON> 129,959
0
0
<OTHER-SE> 1,789,034
<TOTAL-LIABILITY-AND-EQUITY> 4,212,840
<SALES> 2,400,068
<TOTAL-REVENUES> 2,400,068
<CGS> 1,291,433
<TOTAL-COSTS> 2,213,313
<OTHER-EXPENSES> (2,062)
<LOSS-PROVISION> 18,992
<INTEREST-EXPENSE> 51,757
<INCOME-PRETAX> 159,159
<INCOME-TAX> 79,774
<INCOME-CONTINUING> 79,385
<DISCONTINUED> 41,009
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 120,394
<EPS-PRIMARY> .93
<EPS-DILUTED> .93
</TABLE>
