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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR FISCAL YEAR ENDED DECEMBER 31, 1993 COMMISSION FILE NUMBER 1-4914
THE TIMES MIRROR COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 95-1298980
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
TIMES MIRROR SQUARE
Los Angeles, California 90053
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (213) 237-3700
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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<S> <C>
Series A Common Stock New York Stock Exchange
Pacific Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
Series C Common Stock
(Title of Class)
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 ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ___
The aggregate market value of the voting stock of the Registrant held by
non-affiliates of the Registrant on March 7, 1994 was approximately $3.0
billion. (For purposes of this calculation, the market value of a share of
Series C Common Stock was assumed to be the same as a share of Series A Common
Stock, into which it is convertible.)
Number of shares of the Registrant's Series A Common Stock outstanding at
March 7, 1994: 96,347,045
Number of shares of the Registrant's Series C Common Stock outstanding at
March 7, 1994: 32,255,703
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference: In Part III, portions
of the Registrant's definitive Proxy Statement dated March 21, 1994.
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<PAGE>
PART I
ITEM 1. BUSINESS.
The Times Mirror Company was first incorporated in 1884 in the State of
California and was reincorporated in the State of Delaware in 1986. In 1993, The
Times Mirror Company (the "Registrant") and its subsidiaries (collectively
"Times Mirror" or the "Company") were engaged principally in newspaper
publishing; book, magazine and other publishing; the ownership and operation of
cable television systems; and the provision of management training services.
During 1993, the Company divested its ownership of four broadcast television
stations.
During 1993, the Company's newspapers introduced several new electronic
products and services and announced that regional on-line interactive
information services will be available through the Prodigy network in 1994 in
Los Angeles and New York and in Baltimore and Southern Connecticut in 1995. The
LOS ANGELES TIMES, NEWSDAY, NEW YORK NEWSDAY, The Baltimore Sun newspapers, THE
ADVOCATE and the GREENWICH TIME will be sources of information available to
subscribers for these services.
On January 12, 1994, the Company announced that the LOS ANGELES TIMES and
Pacific Telesis Electronic Publishing Services, a wholly-owned subsidiary of
Pacific Telesis Group, are forming a joint venture that will offer electronic
shopping information and transaction services. The Company expects that these
services will initially be offered in Southern California, but the joint venture
plans to seek partnerships with other information providers and offer its
services throughout California.
During the past year, the Company has conducted a strategic review of its
position in the cable television industry and has retained investment bankers to
assist it in pursuing its strategic alternatives. The outcome of these efforts,
however, is far from certain.
NEWSPAPER PUBLISHING
The Company publishes the LOS ANGELES TIMES, NEWSDAY and NEW YORK NEWSDAY,
the Baltimore Sun newspapers, THE HARTFORD COURANT, THE MORNING CALL, THE
ADVOCATE and the GREENWICH TIME. In addition, the Company publishes several
weekly newspapers. Each daily newspaper operates independently in order to meet
most effectively the needs of the area it serves. Editorial policies and
business practices are established by local management. Each daily newspaper is
a member of Associated Press. The LOS ANGELES TIMES, NEWSDAY and NEW YORK
NEWSDAY also subscribe to other supplementary news services. Production of the
Company's newspapers is performed on Company-owned presses.
The primary raw material used by the newspapers is newsprint. The LOS
ANGELES TIMES obtains most of its newsprint requirements from a company in which
the Registrant owns a 20 percent interest and the remainder from other United
States and Canadian sources. The other Times Mirror newspapers obtain their
newsprint requirements from sources unaffiliated with the Company. The Company
coordinates newsprint purchases among all of its newspapers in order to achieve
advantageous terms from its vendors.
LOS ANGELES TIMES
The LOS ANGELES TIMES has been published continuously since 1881. It is
published every morning, and in 1993 ranked as the second largest metropolitan
newspaper in the United States in weekday circulation based on five-day
averages, and the second largest in Sunday circulation. In 1993, its annual
average unaudited circulation was 1,104,317 for Monday through Friday, 1,025,368
for Saturday and 1,504,115 for Sunday, compared with 1,158,377; 1,069,956, and
1,531,458, respectively, in 1992. Approximately 77 percent of the Monday through
Saturday circulation was home-delivered in 1993.
In 1993, the LOS ANGELES TIMES recorded full-run billed advertising volume
of 3,356,699 standard advertising unit inches (hereafter "inches"), part-run
volume of 3,419,709 inches, and preprinted inserts of 978.9 million pieces,
compared with 3,483,352 inches, 2,844,696 inches and 1,031.6 million pieces,
respectively, in 1992. In addition, the LOS ANGELES TIMES derived revenue from
advertising supplements distributed to non-subscribers equivalent to 695.4
million pieces in 1993, compared with 590.1 million pieces in 1992.
1
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Net revenues of the LOS ANGELES TIMES were $991,997,000 in 1993,
$1,016,744,000 in 1992 and $1,051,387,000 in 1991.
The LOS ANGELES TIMES serves a six-county region in Southern California that
includes Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura
counties. In addition to the daily edition covering the Los Angeles metropolitan
area, the LOS ANGELES TIMES publishes daily Orange County, San Fernando Valley
and Ventura County editions, as well as a South Bay edition on Thursdays,
Fridays and Sundays, and six weekly or twice-weekly regional news sections
directed to specific areas. The LOS ANGELES TIMES also publishes an edition
which is distributed Monday through Friday in the Washington, D.C./New York City
area.
In its primary markets of Los Angeles and Orange counties, the LOS ANGELES
TIMES competes with 15 local daily newspapers, which range in size up to
approximately 344,000 total average daily circulation, and three daily regional
editions of national newspapers. In addition, there are over 300 weekly,
semi-weekly and free distribution newspapers.
In conjunction with the WASHINGTON POST, the LOS ANGELES TIMES operates a
supplementary news service sold to newspapers in the United States and foreign
countries. The LOS ANGELES TIMES also sells syndicated features to other
newspapers throughout the world.
NEWSDAY AND NEW YORK NEWSDAY
NEWSDAY, which is published daily, circulates primarily in Nassau and
Suffolk counties on Long Island, New York, while NEW YORK NEWSDAY circulates in
New York City. In certain locations, NEWSDAY is circulated in the morning, while
in other locations, it is an afternoon newspaper. In 1993, NEWSDAY and NEW YORK
NEWSDAY combined ranked as the fifth largest local daily newspaper in the
country for Monday through Friday circulation, and as the eighth largest for
Sunday circulation. In 1993, NEWSDAY'S annual average unaudited circulation,
which includes NEW YORK NEWSDAY, was 740,171 for Monday through Friday, 624,707
for Saturday, and 823,595 for Sunday, compared with 756,096; 644,683 and
846,862, respectively, in 1992. In 1993, NEW YORK NEWSDAY'S annual average
unaudited circulation was 260,110 for Monday through Friday, 179,491 for
Saturday, and 248,736 for Sunday, compared with 264,462; 189,313, and 262,632,
respectively, in 1992.
In 1993, NEWSDAY and NEW YORK NEWSDAY recorded full-run billed advertising
volume of 1,007,510 inches, part-run volume of 1,653,244 inches, and preprinted
inserts of 739.1 million pieces, compared with 915,378 inches, 1,748,174 inches,
and 688.4 million pieces, respectively, in 1992. In addition, NEWSDAY and NEW
YORK NEWSDAY, together with its alternate distribution company, derived revenue
from advertising supplements distributed to non-subscribers equivalent to 748.5
million pieces in 1993, compared with 424.9 million pieces in 1992.
NEWSDAY and NEW YORK NEWSDAY compete with three major metropolitan
newspapers, numerous daily and local newspapers, and daily regional editions of
national newspapers.
BALTIMORE SUN NEWSPAPERS
THE BALTIMORE SUN newspapers primarily serve the Baltimore-Annapolis
metropolitan area, including Anne Arundel, Baltimore, Carroll, Harford and
Howard counties. THE BALTIMORE SUN publishes several editions, including THE
SUN, a morning newspaper published Monday through Saturday; THE EVENING SUN, an
afternoon paper published Monday through Friday; and THE SUNDAY SUN, published
Sunday mornings. In 1993, THE SUN had an annual average unaudited circulation of
238,822 for Monday through Friday, and 364,125 for Saturday, compared with
228,823 and 365,884, respectively, in 1992. In 1993, the EVENING SUN had an
annual average unaudited circulation of 101,341 for Monday through Friday,
compared with 119,668 in 1992. In 1993, THE SUNDAY SUN had an annual average
unaudited circulation of 484,250 compared with 488,527 in 1992.
In 1993, THE BALTIMORE SUN newspapers recorded full-run billed advertising
volume of 2,694,149 inches, part-run volume of 401,520 inches, and preprinted
inserts of 499.7 million pieces, compared with 2,716,008
2
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inches, 361,915 inches and 485.1 million pieces, respectively, in 1992. In
addition, THE BALTIMORE SUN newspapers derived revenues from advertising
supplements delivered to non-subscribers equivalent to 705,000 inches in 1993
compared with 341,000 inches in 1992.
Weekly newspapers are also published by the Baltimore Sun, including THE
AEGIS and the RECORD which are distributed in Harford County, and four other
weeklies that serve the Aberdeen Proving Ground and certain zip codes in Harford
County. THE BALTIMORE SUN newspapers compete with the WASHINGTON POST in Carroll
and Howard counties, and with the ANNAPOLIS CAPITAL in Anne Arundel County. In
addition, there are other weekly and local daily newspapers in the distribution
area.
THE HARTFORD COURANT
THE HARTFORD COURANT, a morning daily and Sunday newspaper that was first
published in 1764, is the oldest continuously-published newspaper in the United
States. It is published in Hartford, Connecticut, and serves the state's
northern and central regions. THE HARTFORD COURANT publishes seven regional
editions on a daily basis, which provide local news and advertising. In 1993,
the annual average unaudited circulation was 231,899 for Monday through
Saturday, and 322,811 for Sunday, compared with 231,598 and 323,938,
respectively, in 1992.
In 1993, THE HARTFORD COURANT recorded full-run billed advertising volume of
1,230,264 inches, part-run volume of 750,292 inches, and preprinted inserts of
418.1 million pieces, compared with 1,251,853 inches, 760,716 inches and 387.5
million pieces, respectively, in 1992. In addition, THE HARTFORD COURANT derived
revenue from advertising supplements distributed to non-subscribers equivalent
to 1,339,031 inches in 1993, compared with 1,149,074 inches in 1992.
THE HARTFORD COURANT competes with several small daily and weekly newspapers
in communities adjacent or relatively close to Hartford, and with a number of
larger daily papers in metropolitan areas on the periphery of its trade area.
THE MORNING CALL
THE MORNING CALL in Allentown, Pennsylvania is published daily, and
primarily serves Lehigh and Northampton counties in eastern Pennsylvania. In
1993, annual average unaudited circulation was 135,794 for Monday through
Friday, 147,816 for Saturday, and 188,127 for Sunday, compared with 135,167;
146,934 and 185,498, respectively, in 1992.
In 1993, THE MORNING CALL recorded full-run billed advertising volume of
1,477,923 inches, part-run volume of 464,065 inches, and preprinted inserts of
204.8 million pieces, compared with 1,514,792 inches, 486,559 inches and 205.6
million pieces, respectively, in 1992. In addition, THE MORNING CALL derived
revenues from advertising supplements distributed to non-subscribers equivalent
to 227,009 inches in 1993, compared with 110,345 inches in 1992.
THE ADVOCATE AND THE GREENWICH TIME
THE ADVOCATE and the GREENWICH TIME are published every morning, and serve
the southern part of Fairfield County, Connecticut. THE ADVOCATE circulates
primarily in Stamford, Connecticut and the GREENWICH TIME circulates in
Greenwich, Connecticut. In 1993, THE ADVOCATE had an annual average unaudited
circulation of 29,712 for Monday through Saturday, and 40,305 for Sunday,
compared with 30,549 and 41,140, respectively, in 1992. In 1993, the GREENWICH
TIME had an annual average unaudited circulation of 13,146 for Monday through
Saturday, and 14,265 for Sunday, compared with 13,158 and 14,205, respectively,
in 1992.
In 1993, THE ADVOCATE recorded full-run billed advertising volume of 798,920
inches, and preprinted inserts of 34.6 million pieces, compared with 804,229
inches and 32.4 million pieces in 1992. In 1993, the GREENWICH TIME recorded
full-run billed advertising volume of 729,103 inches and preprinted inserts of
12.6
3
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million pieces, compared with 699,775 inches and 12.5 million pieces in 1992. In
addition, the newspapers derived revenues from advertising supplements
distributed to non-subscribers equivalent to 99,504 inches in 1993 compared with
113,231 inches in 1992.
BOOK, MAGAZINE AND OTHER PUBLISHING
PROFESSIONAL PUBLISHING
The Company publishes a variety of books and other media through its
subsidiaries, including legal publications by Matthew Bender & Company,
Incorporated; medical, dental, nursing and allied health books, journals and
college textbooks by Mosby-Year Book, Inc. and its subsidiaries; business and
economics textbooks and professional books by Richard D. Irwin, Inc.; science,
social science and mathematics textbooks by Wm. C. Brown Communications, Inc.;
and scientific and technical publications, including environmental science books
by CRC Press, Inc.
In addition, the Company provides sales and management training programs for
professionals in business and industry through its subsidiaries, Kaset, Inc.,
Learning International, Inc. and Zenger-Miller, Inc.
The Company also publishes aeronautical charts, flight information, pilot
training material and navigational aids worldwide through Jeppesen Sanderson,
Inc. and Jeppesen Sanderson Inc.'s European sister company, Jeppesen & Co. GmbH,
as well as computerized flight plans and weather briefings through Jeppesen
DataPlan, Inc., a subsidiary of Jeppesen Sanderson, Inc.
Books, journals and other materials published by the Company, many of which
are distributed worldwide, are sold through a variety of means, including the
use of Company sales forces, wholesalers, retailers, jobbers,
direct-to-the-consumer selling and direct mail. Printing and binding are
performed primarily by outside suppliers in the United States and abroad. In
accordance with publishing industry practice, softcover and hardcover books are
generally sold on a returnable basis.
CONSUMER PUBLISHING
The Company publishes a number of special interest and trade magazines
through its subsidiary, Times Mirror Magazines, Inc., as well as art books
through its subsidiary, Harry N. Abrams, Incorporated. The six-month average
unaudited circulation figures per issue for these magazines, for the year ended
December 31, 1993, were 2,007,901 for FIELD & STREAM; 1,815,819 for POPULAR
SCIENCE; 1,502,676 for OUTDOOR LIFE; 1,025,071 for HOME MECHANIX; 1,221,554 for
GOLF MAGAZINE; 442,463 for SKI MAGAZINE (published 8 times a year); 442,713 for
SKIING (published 7 times a year); 131,682 for YACHTING; and 140,506 for SALT
WATER SPORTSMAN. Each of these magazines is published monthly unless otherwise
noted. Advertisers that increase their aggregate advertising pages in these
magazines may purchase advertising in other of these magazines at special rates.
In addition, the Company publishes THE SPORTING NEWS, a national sports
weekly; NATIONAL JOURNAL, a weekly magazine on politics and government;
GOVERNMENT EXECUTIVE, a controlled-circulation trade magazine for government
business; SKIING TRADE NEWS, a controlled-circulation business magazine; THE
SPORTING GOODS DEALER, a monthly controlled-circulation trade magazine; and
other related publications. These magazines are primarily intended for
specialized markets.
CABLE TELEVISION
Through its subsidiary, Times Mirror Cable Television, Inc., the Company
provides cable television service in 13 states. At December 31, 1993, the
aggregate number of basic cable television subscribers measured in terms of
equivalent billing units was 1,208,398 compared with 1,182,581 at December 31,
1992. The aggregate number of pay subscribers at December 31, 1993 was 703,434
compared with 742,792 at December 31, 1992.
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Cable television is subject to regulation by the Federal Communications
Commission (the "FCC") and by state and local agencies. The regulations restrict
cable television in some respects and impose various affirmative requirements.
On October 5, 1992, Congress enacted the Cable Television Consumer
Protection and Competition Act of 1992 ("1992 Cable Act"), which substantially
amends the provisions of the Cable Communications Policy Act of 1984 and greatly
expands federal and local regulation of the cable communications industry. Among
other matters, the 1992 Cable Act provides for the regulation of basic and tier
services, allows broadcast television stations to choose either "must carry"
rights or retransmission consent rights, regulates the sale of cable programming
and implements other operational requirements.
The 1992 Cable Act is in the process of being implemented by the FCC through
various rulemaking proceedings. In April 1993, the FCC adopted regulations
governing rates for basic and tier services which became effective on September
1, 1993. The Company implemented the FCC's requirements that became effective on
September 1, 1993 in a manner management believes is consistent with the
regulations promulgated by the FCC.
On February 22, 1994, the FCC significantly modified the September 1993 rate
regulations. The reregulation activities are designed to reduce subscriber rates
and most annual basic rate increases (other than per channel and per program
services). In addition, a legislated basic rate freeze, which became effective
in April 1993 and was scheduled to expire in mid-February 1994, has been
extended to May 15, 1994. As of the date of this filing, the FCC has yet to
release the text of its February 22, 1994 decisions, and thus their impact on
the Company's operations is still largely unknown at this time.
BROADCAST TELEVISION
On March 29, 1993, the Company announced two agreements for the sale of its
four broadcast television stations to Argyle Television Holdings, Inc. The sale
of KTVI-TV in St. Louis, Missouri, and WVTM-TV in Birmingham, Alabama was
completed in July. The sale of KDFW-TV in Dallas, Texas and KTBC-TV in Austin,
Texas was completed near the end of the year. The results of operations of the
Broadcast Television segment have been reported as discontinued operations in
the Company's Statements of Consolidated Income.
COMPETITION
Besides competing vigorously with similar media in their respective markets,
the Company's newspapers and magazines compete with other local and national
advertising and sales promotion media. In addition, the Company's cable
television operations compete with broadcast television and other media in their
market areas. Keen competition is encountered in all phases of the Company's
book and magazine publishing operations, as well as in other areas of its
business.
EMPLOYEES
At December 31, 1993, the Company had 26,936 employees, 20,451 of whom were
full-time employees. Approximately 3,853 employees were represented by
collective bargaining agents. The Company believes that its employee relations
are good. Employees receive supplemental benefits ranging from various forms of
group insurance coverage to retirement income programs.
RECENT DEVELOPMENTS
None.
5
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ITEM 2. PROPERTIES.
The general character, location, terms of occupancy and approximate size of
the Company's materially important physical properties at December 31, 1993 are
listed below.
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APPROXIMATE AREA
IN SQUARE FEET
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GENERAL CHARACTER OF PROPERTY OWNED LEASED (1)
<S> <C> <C>
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NEWSPAPER PUBLISHING
Printing plants, business and editorial offices,
garages and warehouse space located in:
Los Angeles, California.............................. 2,371,000 291,000
Hartford, Connecticut................................ 1,048,000 127,000
Baltimore, Maryland.................................. 844,000 17,000
Melville, Long Island, New York...................... 700,000 2,000
Other locations...................................... 503,000 1,371,000
BOOK, MAGAZINE AND OTHER PUBLISHING
Business and editorial offices and warehouses in
California, Colorado, Illinois, Missouri, New York,
Iowa and other locations............................. 1,330,000 1,584,000
CABLE TELEVISION
Business offices, warehouses and garages located in
Arizona, California, and other locations............. 150,000 629,000
CORPORATE
Corporate offices and garage located in California, New
York, New Jersey and Washington, D.C................. 349,000 29,000
The Company also owns other business and editorial offices, warehouse
facilities and investment properties, aggregating approximately 346,000 square
feet in various separate locations.
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<FN>
(1) The Company's material lease agreements expire at various dates through
2014.
</TABLE>
ITEM 3. LEGAL PROCEEDINGS.
The Registrant 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 Registrant 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 business or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The Registrant's principal officers, including executive officers, as of
March 21, 1994 are identified in the table below. They are elected to serve
until they resign or are removed, or are otherwise disqualified to serve, or
until their successors are elected and qualified. Except as indicated below, all
such officers have been employed by the Company for more than five years:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES OFFICER
NAME AGE WITH TIMES MIRROR SINCE
<S> <C> <C> <C>
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Robert F. Erburu 63 Chairman of the Board, President and Chief 1961
Executive Officer
Curtis A. Hessler 50 Executive Vice President 1991(1)
Richard T. Schlosberg 49 Executive Vice President 1990
III
Edward E. Johnson 50 Senior Vice President 1984
Larry W. Wangberg 51 Senior Vice President 1986
Donald F. Wright 59 Senior Vice President 1988
Patrick A. Clifford 52 Group Vice President 1990
Ann E. Dilworth 47 Group Vice President, New Consumer Media 1992(2)
John H. Zenger 62 Group Vice President 1992(3)
Debra A. Gastler 41 Vice President, Taxes 1994(4)
James F. Guthrie 49 Vice President and Chief Financial Officer 1993(5)
Michael Liebhold 49 Vice President, Technology 1994(6)
Stephen C. Meier 43 Vice President, Administration and Community 1989
Affairs
James R. Simpson 53 Vice President, Human Resources 1983
Duane L. Storhaug 56 Vice President and Controller 1987
Thanos Triant 48 Vice President, Information Systems 1994(7)
Thomas Unterman 49 Vice President and General Counsel 1992(8)
Efrem Zimbalist III 46 Vice President, Strategic Development 1993(9)
Alan L. Ross 49 Treasurer 1981
O. Jean Williams 45 Secretary and Associate General Counsel 1989
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<FN>
(1) Curtis A. Hessler was elected effective February 15, 1991. Mr. Hessler was
an executive of UNISYS Corporation from June 1984 to February 1991, serving
as vice chairman at the time of his departure.
(2) Ann E. Dilworth was elected effective August 3, 1992. She was president of
Addison-Wesley General and International Publishing Company from 1988 to
1991.
(3) John H. Zenger was elected effective March 26, 1992. Prior thereto, he had
been chairman and chief executive officer of Zenger-Miller, Inc. since 1977.
(4) Debra A. Gastler was elected effective January 3, 1994. Prior thereto, she
had been Vice President -- Tax of Pacific Enterprises since 1990 and
director of taxes of Pacific Enterprises since 1987.
(5) James F. Guthrie was elected effective March 4, 1993. Prior thereto, he had
been senior vice president and chief financial officer of Times Mirror Cable
Television, Inc. since 1982.
(6) Michael Liebhold was elected effective March 3, 1994. Prior thereto, he was
lead research scientist and manager at Apple Computer, Inc. in the area of
advanced media systems since 1984, and was senior scientist, Media
Architecture Research, Advanced Technology Group at the time of his
departure.
(7) Thanos Triant was elected effective March 3, 1994. He was director, systems
architecture, of Sun Microsystems since 1992 and director of management
systems of Sun Microsystems since 1990. Prior thereto, he was senior vice
president, Business Development and Technology of McGraw Hill Financial
Services since 1989.
</TABLE>
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<TABLE>
<S> <C>
(8) Thomas Unterman was elected effective October 1, 1992. Prior thereto, he had
been a partner at Morrison & Foerster since 1986.
(9) Efrem Zimbalist III was elected effective March 4, 1993. Mr. Zimbalist was
chairman and chief executive officer of Correia Art Glass, Inc. from 1978
until he joined the Company in July 1992.
</TABLE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS.
The Registrant's Series A Common Stock is traded principally on the New York
Stock Exchange and is also listed on the Pacific Stock Exchange. The
Registrant's Series C Common Stock is not traded, is subject to restrictions on
transfer and is not listed on any securities exchange. The Series C Common Stock
is, however, convertible into Series A Common Stock at the holder's option or
upon transfer to a non-permitted transferee. At March 7, 1994, there were
approximately 4,998 record holders of Series A Common Stock and 3,466 record
holders of Series C Common Stock.
The price ranges for Series A Common Stock and the quarterly cash dividends
paid on all Common Stock in 1992 and 1993 are listed below. Although the
Registrant expects to continue its policy of paying regular quarterly cash
dividends, the continuance of this policy depends on the Company's future
earnings, capital requirements and financial condition.
<TABLE>
<CAPTION>
1993 1992
------------------------------------- -------------------------------------
STOCK PRICE CASH DIVIDEND STOCK PRICE CASH DIVIDEND
-------------------- --------------- -------------------- ---------------
QUARTER HIGH LOW DECLARED PAID HIGH LOW DECLARED PAID
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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First........................ 35 30 1/8 $.27 $.27 38 3/8 29 5/8 $.27 $.27
Second....................... 33 1/2 30 5/8 .27 .27 37 1/2 32 7/8 .27 .27
Third........................ 32 5/8 28 1/4 .27 .27 36 1/4 29 1/2 .27 .27
Fourth....................... 35 1/8 28 1/2 .27 .27 32 5/8 28 1/2 .27 .27
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</TABLE>
ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial information has been derived from the
Consolidated Financial Statements that have been audited by Ernst & Young,
independent auditors. The information set forth below is not necessarily
indicative of results of future operations, and should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and related notes thereto
included elsewhere in this Form 10-K.
8
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SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA
AND OTHER INFORMATION
(In thousands of dollars except per common share, financial ratios and
other)
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
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OPERATING RESULTS
Revenues.................... $3,714,158 $3,594,044 $3,519,975 $3,516,347 $3,414,703
Restructuring charges....... 80,164 202,700 42,300
Operating profit............ 295,529 146,729 282,815 337,837 498,531
Interest expense............ 85,237 74,501 77,403 76,359 55,020
Income from continuing
operations before income
taxes (1).................. 301,717 85,797 143,886 273,801 452,667
Income from discontinued
operations, net of income
taxes (2).................. 153,046 21,458 14,000 21,334 26,063
Income before cumulative
effect of changes in
accounting principles..... 317,159 56,775 81,954 180,477 297,987
Net income (loss) (1)....... 317,159 (66,601) 81,954 180,477 297,987
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PER COMMON SHARE
Income from continuing
operations (1)............. $1.27 $ .27 $ .53 $1.24 $2.10
Income from discontinued
operations (2)............. 1.19 .17 .11 .16 .20
Earnings (loss) per share
(1)........................ 2.46 (.52) .64 1.40 2.30
Dividends declared.......... 1.08 1.08 1.08 1.08 1.02
Dividends paid.............. 1.08 1.08 1.08 1.08 1.00
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL INFORMATION
Current assets.............. $ 1,217,258 $ 938,447 $ 871,378 $ 891,681 $ 856,304
Property, plant and
equipment -- net........... 1,756,287 1,756,840 1,705,879 1,698,469 1,543,569
Total assets................ 4,606,114 4,386,350 4,106,126 4,243,559 3,997,117
Long-term debt.............. 795,454 1,114,367 978,351 1,068,202 892,318
Shareholders' equity........ 1,899,275 1,700,646 1,884,008 1,917,413 1,877,170
Working capital............. 55,226 1,233 51,974 199,774 161,356
Additions to property, plant
and equipment (3).......... 219,007 195,907 204,490 334,699 419,227
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL RATIOS
Current ratio............... 1.05 1.00 1.06 1.29 1.23
Total debt as a % of
adjusted capitalization.... 37.3% 41.7% 36.7% 39.2% 36.7%
Income as a % of revenues
(4)........................ 3.6% 1.4% 3.6% 5.1% 8.5%
Return on average
shareholders' equity (4)... 7.5% 2.7% 6.6% 9.5% 16.4%
Dividend payout as a % of
net income (4)............. 102.8% 285.2% 110.7% 76.9% 44.3%
- ----------------------------------------------------------------------------------------------------------------------------------
OTHER
Price range of common
stock...................... $ 35 1/8 to 28 1/4 $ 38 3/8 to 28 1/2 $ 32 5/8 to 25 1/2 $ 39 3/8 to 21 1/4 $45 to 32 3/8
Book value of common
stock...................... $14.76 $13.23 $14.66 $14.92 $14.54
Number of shareholders at
end of year................ 5,098 5,257 5,365 5,547 5,663
Number of employees at end
of year.................... 26,936 28,313 27,732 29,121 29,066
Number of common shares
outstanding at end of
year....................... 128,609,051 128,572,566 128,519,055 128,484,169 129,146,775
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
This summary should be read in conjunction with the consolidated financial
statements and notes thereto.
(1) Included in income from continuing operations before income taxes and net
income (loss) are nonrecurring gains (charges) as follows (in thousands):
1993 -- $86,799 and $50,364 ($.39 per share); 1992 -- $8,673 and $5,026
($.04 per share); 1991 -- $(71,503) and $(43,415) ($.35 loss per share);
1989 -- $9,156 and $6,233 ($.05 per share, net of a nonrecurring charge),
respectively.
(2) Included in income from discontinued operations, net of income taxes (in
thousands): 1993 -- gain on the sale of broadcast television stations of
$131,702 ($1.02 per share).
(3) Excludes capital assets acquired in business combinations accounted for as
purchases.
(4) Excludes nonrecurring gains and charges, and, in 1992, the cumulative effect
of changes in accounting principles.
</TABLE>
9
<PAGE>
FIVE-YEAR SUMMARY OF BUSINESS SEGMENT INFORMATION
(In thousands of dollars)
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
REVENUES
Newspaper Publishing.............. $1,980,717 $1,943,229 $1,974,351 $2,066,872 $2,065,890
Book, Magazine and Other
Publishing....................... 1,263,326 1,213,054 1,143,486 1,068,975 960,296
Cable Television.................. 470,409 438,614 402,801 370,028 332,450
Corporate and Other............... 391 11,412 56,487
Intersegment Revenues............. (294) (853) (1,054) (940) (420)
- -------------------------------------------------------------------------------------------
$3,714,158 $3,594,044 $3,519,975 $3,516,347 $3,414,703
- -------------------------------------------------------------------------------------------
OPERATING PROFIT (1)
Newspaper Publishing.............. $ 107,346 $ 19,126 $ 93,094 $ 171,257 $ 309,850
Book, Magazine and Other
Publishing....................... 171,070 110,821 185,386 156,245 143,656
Cable Television.................. 106,487 82,970 74,143 69,699 58,131
Corporate and Other............... (89,374) (66,188) (69,808) (59,364) (13,106)
- -------------------------------------------------------------------------------------------
$ 295,529 $ 146,729 $ 282,815 $ 337,837 $ 498,531
- -------------------------------------------------------------------------------------------
IDENTIFIABLE ASSETS
Newspaper Publishing.............. $1,996,993 $2,026,615 $2,019,038 $2,033,605 $1,893,627
Book, Magazine and Other
Publishing....................... 1,302,189 1,302,362 1,121,847 1,154,782 1,112,372
Cable Television.................. 759,774 742,619 621,368 636,489 616,739
Broadcast Television.............. 122,955 120,649 124,597 125,406
Corporate and Other............... 549,890 241,533 339,590 378,984 341,074
Eliminations...................... (2,732) (49,734) (116,366) (84,898) (92,101)
- -------------------------------------------------------------------------------------------
$4,606,114 $4,386,350 $4,106,126 $4,243,559 $3,997,117
- -------------------------------------------------------------------------------------------
DEPRECIATION, AMORTIZATION AND DEPLETION
Newspaper Publishing.............. $ 113,877 $ 105,939 $ 110,946 $ 100,458 $ 82,234
Book, Magazine and Other
Publishing....................... 55,306 50,797 56,296 66,431 64,765
Cable Television.................. 95,336 78,314 76,499 70,401 61,991
Corporate and Other............... 1,795 1,753 2,664 2,588 7,616
- -------------------------------------------------------------------------------------------
$ 266,314 $ 236,803 $ 246,405 $ 239,878 $ 216,606
- -------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Newspaper Publishing.............. $ 66,429 $ 88,226 $ 119,963 $ 231,493 $ 312,473
Book, Magazine and Other
Publishing....................... 34,724 21,563 20,466 28,824 29,190
Cable Television.................. 116,914 82,333 60,426 66,641 70,590
Broadcast Television.............. 3,464 3,141 6,803 6,189
Corporate and Other............... 940 321 494 938 785
- -------------------------------------------------------------------------------------------
$ 219,007 $ 195,907 $ 204,490 $ 334,699 $ 419,227
- -------------------------------------------------------------------------------------------
<FN>
(1) Includes restructuring charges as follows (in thousands):
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
- ---------------------------------------------------------------------
Newspaper Publishing................ $33,080 $106,700 $39,690
Book, Magazine and Other
Publishing........................ 25,300 96,000 1,160
Corporate and Other................. 21,784 1,450
- ---------------------------------------------------------------------
$80,164 $202,700 $42,300
- ---------------------------------------------------------------------
</TABLE>
10
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto.
OVERVIEW
Times Mirror's revenues and operating profit improved in 1993, but continued
to be impacted by recessionary conditions in key markets, as well as by cost
restructuring activities.
The economic weakness of Southern California, the Company's largest
newspaper market; the restructuring of Matthew Bender, the largest professional
publishing company; and the impact of cable rate regulations imposed during 1993
limited the growth of the Company's three business segments. These factors are
expected to continue to constrain operating performance in 1994.
RESTRUCTURING CHARGES
Efforts to streamline and restructure the operational and administrative
functions in the Company's businesses were undertaken in 1991, 1992 and 1993 in
newspaper publishing, in 1992 at Matthew Bender, the Company's legal information
publisher, and in 1993 at other professional publishing companies and in
corporate administration. The restructuring charges over this three-year period
have totaled $325.2 million, or $196.5 million after taxes, principally for
severance and payroll-related costs for staff reductions and for expected losses
on leased facilities. Approximately 20 percent of the restructuring charges
consisted of non-cash items, primarily for enhanced pension or postretirement
benefits with a smaller portion for asset write-offs. The restructuring efforts
have helped to improve operating results in newspaper publishing and are
expected to improve results at the professional publishing companies over the
longer term. The Company is continuing to pursue cost reduction and process
re-engineering opportunities. This work could lead to additional restructuring
or other charges in future periods.
SALE OF BROADCAST TELEVISION STATIONS
The Company sold its four broadcast television stations to Argyle Television
Holdings, Inc. ("Argyle"). These television stations formed the Company's entire
business segment for Broadcast Television. This divestiture was completed near
year-end 1993 for $320 million in cash as well as warrants in Argyle. Earnings
from this divested segment as well as the gain on the sale are reported as
Income from Discontinued Operations for 1993 and prior years. Additional
information regarding the discontinuance and sale of this segment and its
financial results is set forth in Note P to the consolidated financial
statements.
SALES OF OTHER ASSETS
Other assets sold in 1993 were QVC Network, Inc. common stock, and a small
cable system. In the prior two years, the Company sold two other cable systems
and Broadcasting Publications, Inc., a trade magazine publisher. Over the
three-year period, the net gains on these sales totaled $89.0 million, or $53.8
million after taxes.
ACQUISITIONS IN PROFESSIONAL PUBLISHING
Strategic acquisitions of professional publishing companies, including the
1993 acquisition of three small medical publishers and a small specialty
education publisher, and the fourth-quarter 1992 acquisition of Wm C. Brown
Communications, Inc. contributed to the continued growth of professional
publishing. The Brown acquisition substantially increased Times Mirror's base of
higher education publishing operations that also includes the business and
economics publishing of Richard D. Irwin and the health science and technical
textbooks of Mosby-Year Book. College publishing revenues and profits are highly
seasonal, with low activity in the first quarter and peak performance in the
third and fourth quarters of the year.
NEWSPAPER PUBLISHING OUTLOOK
Growth in the Newspaper Publishing group will depend primarily on the timing
and extent of economic recovery in Times Mirror's local newspaper markets,
particularly Southern California. Newspaper publishing operating results
traditionally reflect the economic trends of the local marketplace. Full-run
retail and classified advertising volume, which historically contribute more
than 50 percent of a newspaper's operating revenues, remained depressed in 1993
for a third consecutive year, due principally to severe regional
11
<PAGE>
recessions in the northeastern United States and in Southern California. In
addition, structural shifts in the retail marketplace, including retailer
consolidations, changing consumer buying habits and growth in discount stores
which do not use newspaper advertising, have depressed past results and may
impact the extent of retail advertising growth in the future.
BOOK, MAGAZINE AND OTHER PUBLISHING OUTLOOK
The Book, Magazine and Other Publishing group will face several major
challenges in 1994. The restructuring of pricing policies at Matthew Bender will
result in reduced revenue and operating profit, particularly during the first
half of 1994. Federal and state budgetary pressures are expected to constrain
growth in most academic textbook and health science information markets.
Magazine publishing is likely to face continued weakness in advertising. The
Company's emphasis throughout this sector is on positioning cost structures and
product development so as to generate superior profit and market share growth as
industry conditions improve. Over the longer term, the introduction of
electronic versions of core products, a continued expansion into international
sales and the recovery of the magazine advertising market are expected to
stimulate renewed growth in this business group.
CABLE TELEVISION REREGULATION
The Federal Communications Commission's ("FCC") rate regulations
implementing the Cable Television Consumer Protection and Competition Act of
1992 were effective September 1, 1993. The Company implemented the FCC's
regulations in a manner which mitigated the impact on revenues to the extent
legally permitted. Costs related to subscriber communications, required by the
changed regulations, dampened growth in operating profit at cable television
during 1993. The September 1993 guidelines were significantly modified by the
FCC on February 22, 1994. Revenue and operating profit growth are expected to be
adversely affected in 1994 by this reregulation.
CABLE TELEVISION STRATEGIC REVIEW
During 1993, the Company conducted a number of strategic reviews of its
position in the cable television industry. The Company has retained investment
bankers to assist in this pursuit of strategic alternatives. The outcome of
these efforts cannot be predicted at this time.
CONSOLIDATED RESULTS OF OPERATIONS
The following table summarizes Times Mirror's financial results (in
millions, except per share amounts and tax rates):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Revenues.................................................. $3,714.2 $3,594.0 $3,520.0
Restructuring charges..................................... 80.2 202.7 42.3
Operating profit.......................................... 295.5 146.7 282.8
Interest expense.......................................... 85.2 74.5 77.4
Nonrecurring gains (charges).............................. 86.8 8.7 (71.5)
Income from continuing operations......................... 164.1 35.3 68.0
Income from discontinued operations, net of tax........... 21.3 21.5 14.0
Gain on sale of discontinued operations, net of tax....... 131.7
Income before changes in accounting principles, net of
tax...................................................... 56.8
Cumulative effect of changes in accounting principles, net
of tax................................................... (123.4)
Net income (loss)......................................... 317.2 (66.6) 82.0
Earnings (loss) per share................................. $ 2.46 $ (.52) $ .64
Effective tax rate........................................ 45.6% 58.8% 52.8%
- -------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
1993 COMPARED TO 1992
Year-to-year comparisons were significantly affected by the following items
(in millions):
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
Nonrecurring gains........................................................... $ 86.8 $ 8.7
- ---------------------------------------------------------------------------------------------------
Restructuring charges
LOS ANGELES TIMES.......................................................... $ 28.5 $ 87.7
Other Newspaper Publishing................................................. 4.6 19.0
Matthew Bender............................................................. 96.0
Other Professional Publishing.............................................. 25.3
Corporate.................................................................. 21.8
- ---------------------------------------------------------------------------------------------------
$ 80.2 $ 202.7
Cumulative effect of changes in accounting principles, net of tax............ $ 123.4
- ---------------------------------------------------------------------------------------------------
</TABLE>
The above items were nearly offsetting in 1993 but reduced net income in
1992 by $241.6 million.
Revenue growth in all business segments produced a 3.3 percent increase in
consolidated revenues between years, with acquisitions during late 1992 and in
1993 contributing to the overall growth. Operating profit more than doubled in
1993, reflecting significantly lower restructuring charges between years.
Nonrecurring gains in 1993 (39 cents per share) and 1992 (4 cents per share)
resulted from the 1993 sales of an investment in QVC Network, Inc. common stock
and a small cable system with approximately 12,600 basic subscribers and the
sale of two small cable systems in 1992.
Financial results for 1993 were reduced by restructuring charges of $80.2
million, primarily for voluntary separation programs in the Newspaper Publishing
group, costs related to streamlining operations in the Book, Magazine and Other
Publishing group, and costs associated with the planned consolidation of certain
administrative functions across all Times Mirror companies. Financial results
for 1992 were reduced by restructuring charges of $202.7 million for voluntary
early retirement and separation programs at the LOS ANGELES TIMES and NEWSDAY,
costs for the shutdown of a regional edition of THE TIMES, and costs related to
a restructuring program at Matthew Bender.
Income from continuing operations in 1993 was substantially improved over
the prior year, helped by the slightly higher revenues. In addition,
restructuring charges were more than offset by nonrecurring gains from asset
sales in 1993, while 1992's income from continuing operations absorbed $202.7
million of restructuring charges.
Cost containment across all business activities is an integral part of the
restructuring effort. Managed health care programs were established in 1993 for
current employees and substantial changes were made to the postretirement
medical and life insurance benefit programs. These actions lowered employee
health care costs in 1993 and significantly reduced the Company's postretirement
benefit costs for 1993 and future years. Higher pension expense in 1993, due to
a decline in interest rates, offset the favorable impact of these actions. Notes
A and K to the consolidated financial statements describe the Company's pension
and postretirement benefit plans.
Discontinued operations consist of the operating results of the Broadcast
Television segment, which was sold near year-end 1993 for an after-tax gain of
$131.7 million. Operating results of this segment were relatively unchanged
between years, except that the 1992 results included a gain of $3.9 million
($3.1 million after taxes, or 2 cents per share) from the settlement of
litigation over damage to the broadcast tower of the Dallas television station.
Net income in 1993 rose on the higher income from continuing operations as
well as the gain on the sale of the discontinued operations. The 1992 net loss
arose primarily as a result of the cumulative adjustment from the adoption of
the new accounting standard for postretirement benefits.
13
<PAGE>
Interest expense in 1993 increased to $85.2 million, from $74.5 million last
year. Average daily debt levels in 1993 were approximately $100 million higher
than 1992. Lower interest rates between years partly offset this increase in
debt. Also contributing to the rise in interest expense during 1993 was a $3.6
million decline in capitalized interest and interest related to subleases.
The 1993 effective tax rate reflects the new federal income tax rates
enacted in the third quarter of 1993. The 1993 tax provision increased by $5.9
million, or 5 cents per share, as a result of this tax legislation. The high
effective tax rates in 1992 and 1991 were primarily the result of state taxes
and permanent state and federal tax differences related to the non-deductible
amortization of goodwill and other intangibles, which cause a higher effective
tax rate when operating income declines.
FOURTH QUARTER 1993 COMPARED WITH 1992
Consolidated revenues of $1.02 billion for the fourth quarter of 1993 were
3.9 percent higher than the prior-year quarter. Operating profit was $53.4
million in 1993 compared to a net operating loss of $85.9 million in 1992's
fourth quarter. The fourth quarter included restructuring charges of $76.4
million (35 cents per share) in 1993 and $183.7 million (86 cents per share) in
1992. Fourth-quarter 1993 income from continuing operations rose to $23.2
million, or 18 cents per share, compared with a loss from continuing operations
of $66.5 million, or 52 cents per share, in 1992. Net income in the fourth
quarter of 1993 was $161.8 million, or $1.26 per share, compared to a net loss
of $61.7 million, or 48 cents per share, in 1992.
Newspaper Publishing group revenues of $549.5 million in the fourth quarter
of 1993 were 5.9 percent higher than the same period in the prior year, with all
newspapers reporting higher advertising revenues. Circulation revenue gains
related to a change to a dealer distribution system at one of the eastern
newspapers were mostly offset by lower circulation revenues at the LOS ANGELES
TIMES due to the closure of the San Diego Edition and the curtailment of
deliveries to other outlying areas. Modest price increases for home-delivered
subscriptions at THE TIMES were more than offset by lower single copy sales. THE
TIMES offered several voluntary separation programs to employees during the last
quarters of each year, the costs of which are included in fourth-quarter charges
of $29.3 million in 1993 and $87.7 million in 1992. Excluding these
fourth-quarter restructuring charges, the group's 1993 fourth-quarter operating
profit would have risen 48.1 percent to $58.5 million, reflecting the higher
revenues. This improvement also includes newsprint volume and price declines at
THE TIMES, which were partially offset by higher newsprint volume and prices at
the eastern newspapers, as well as significantly lower distribution costs.
Book, Magazine and Other Publishing fourth-quarter revenues of $347.7
million were about one percent more than the $345.4 million reported in the
comparable period of 1992. Revenue increases were generated primarily by small
acquisitions in the health sciences area during 1993 and the acquisition of Wm
C. Brown Communications, Inc. on October 31, 1992. These gains were largely
offset by revenue declines at Matthew Bender and the training companies. Matthew
Bender's revenue declines were an anticipated part of the restructuring which
began in late 1992. Bender's revenue declines are expected to continue in 1994.
Fourth-quarter 1993 operating profit for the group included $25.3 million of
restructuring charges related to streamlining operations at certain professional
publishing companies. The operating loss of $34.3 million in the fourth quarter
of 1992 included a $96 million charge for the restructuring program at Matthew
Bender. Excluding the restructuring charges in both years, the group's operating
profit would have been $62.8 million in the fourth quarter of 1993 and $61.7
million in the fourth quarter of 1992. The revenue impacts described above
similarly affected operating profits.
Fourth-quarter 1993 Cable Television revenues of $121.9 million improved 5.0
percent from the prior-year quarter on the strength of basic subscriber growth.
Substantial subscriber growth in Phoenix, Arizona, and increased advertising and
other revenues more than offset slight revenue declines resulting from the cable
rate reregulation. Operating profit benefited from the reversal of a $3.7
million charge made in 1992 for an expected loss on a sublease for facilities in
Orange County, California. Excluding the charge in 1992 and the reversal in
1993, fourth-quarter operating profit would have risen 12.9 percent as a result
of higher revenues and operational improvements. Operating profit growth during
the 1993 fourth quarter was moderated by increased depreciation and amortization
and the additional costs associated with subscriber communications during the
implementation of legislated cable rate reregulation. Cable operating cash flow,
14
<PAGE>
defined as operating profit plus depreciation and amortization, rose to $53.5
million, for an operating cash flow margin of 43.9 percent for the 1993 fourth
quarter, compared to 32.0 percent for the same period in 1992.
Corporate and Other's deficit in the fourth quarter of 1993 increased to
$41.3 million, nearly $20 million larger than the prior year's deficit of $21.3
million. The 1993 fourth quarter includes a $21.8 million restructuring charge
for the costs associated with the planned re-engineering and consolidation of
certain financial processes across all Times Mirror companies.
As described in the Overview section and in further detail in Note P to the
consolidated financial statements, the Company's Broadcast Television segment
was sold near year-end 1993. The $131.7 million after-tax gain from the sale is
reported as part of Income from Discontinued Operations for the fourth quarter
of 1993.
1992 COMPARED WITH 1991
Consolidated 1992 revenues were $3.59 billion compared with $3.52 billion in
1991. Income from continuing operations in 1992 declined to $85.8 million from
$143.9 million in 1991. The 1992 restructuring charges of $202.7 million (96
cents per share) were partially offset by a gain on the sale of cable assets of
$8.7 million (4 cents per share). The Company's 1991 results were adversely
impacted by $42.3 million (18 cents per share) for restructuring charges, as
well as nonrecurring charges totaling $71.5 million (35 cents per share) for a
write-down of THE DENVER POST note and other assets and a loss on asset sales.
For 1992, a net loss of $66.6 million, or 52 cents per share, compared with 1991
net income of $82.0 million, or 64 cents per share. The 1992 net loss primarily
arose from the $123.4 million net cumulative charge (96 cents per share)
resulting from the January 1, 1992 adoption of new accounting standards for
postretirement benefits and income taxes.
Excluding restructuring charges in both 1992 and 1991, operating profit of
$349.4 million in 1992 was up $24.3 million from the prior year due to the
acquisition of Wm. C. Brown Communications, Inc. and strong revenue gains in
college publishing, flight information and cable television.
Interest expense of $74.5 million in 1992 was lower than the $77.4 million
recorded in 1991, due to lower average debt levels and interest rates, although
these favorable factors were largely offset by a $9.6 million decrease in
interest capitalized for major construction activities between years.
ANALYSIS BY SEGMENT
NEWSPAPER PUBLISHING
Newspaper Publishing revenues and operating profit are as follows (in
millions):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Revenues
Advertising.................................................. $ 1,465.1 $ 1,469.2 $ 1,516.7
Circulation.................................................. 453.0 428.4 418.1
Other........................................................ 62.6 45.6 39.6
- ------------------------------------------------------------------------------------------------
$ 1,980.7 $ 1,943.2 $ 1,974.4
- ------------------------------------------------------------------------------------------------
Operating Profit............................................... $ 107.3 $ 19.1 $ 93.1
- ------------------------------------------------------------------------------------------------
</TABLE>
Recessionary conditions in Southern California continued to depress
advertising volume and revenue growth at the LOS ANGELES TIMES, offsetting the
impact of an improvement in the major markets of Times Mirror's eastern
newspapers.
Revenues for the group rose 1.9 percent in 1993 due primarily to an increase
in circulation revenues related to a change to dealer distribution systems at
NEWSDAY and the HARTFORD COURANT in 1992. Advertising revenues of $1.47 billion
in 1993 were essentially level with the prior year, as a third consecutive year
of declines at THE TIMES offset growth at the eastern newspapers. In 1993,
advertising revenues at THE TIMES
15
<PAGE>
declined 3.3 percent to $775.7 million, compared with $802.1 million in 1992 and
$835.2 million in 1991. Times Mirror's eastern newspapers, led by a strong
performance at NEWSDAY, reported advertising revenues of $689.4 million for
1993, compared to $667.1 million in 1992 and $681.5 million in 1991.
Circulation revenues rose 5.7 percent in 1993, primarily reflecting the
previously mentioned dealer distribution systems change and modest circulation
price increases in some markets. Excluding the impact of the dealer distribution
change, circulation revenues would have declined 2.0 percent in 1993 as a result
of expected circulation volume declines with the elimination of THE TIMES' San
Diego Edition in late 1992, the reduction of duplicate morning and evening
circulation at THE BALTIMORE SUN newspapers, and lower single copy sales.
Other newspaper group revenues rose 37.3 percent from the prior year, aided
by growth in alternative delivery services.
Newspaper Publishing operating profit for 1993 was reduced by $33.1 million,
primarily for voluntary separation programs at THE TIMES, NEWSDAY and THE
BALTIMORE SUN, while 1992 operating profit was reduced by $106.7 million for
voluntary separation programs at THE TIMES and NEWSDAY, as well as the costs of
closing the San Diego Edition of THE TIMES. Excluding restructuring charges in
both years, operating profit in 1993 would have increased 11.6 percent to $140.4
million from $125.8 million in 1992. Operating costs rose slightly in 1993 due
to the change in dealer distribution systems. Excluding the change and
restructuring charges, operating costs would have declined on a year-over-year
basis. Newsprint expense was virtually flat as lower consumption offset a one
percent average price increase. The operating profit margin for the group,
excluding restructuring charges, would have been 7.1 percent in 1993 and 6.5
percent in 1992.
The Newspaper Publishing group's 1992 revenues were 1.6 percent below 1991,
while operating profit was off 79.5 percent from 1991. The 1992 results include
the impact of restructuring charges of $106.7 million but also reflect declines
in advertising volume. The 1991 operating profit was reduced by a $39.7 million
restructuring charge for voluntary early retirement and separation programs at
THE TIMES and THE BALTIMORE SUN. Excluding restructuring charges in both years,
operating profit would have declined 5.3 percent to $125.8 million in 1992, from
$132.8 million in 1991, as higher postretirement benefit expense was only partly
offset by lower newsprint expense between years.
BOOK, MAGAZINE AND OTHER PUBLISHING
Book, Magazine and Other Publishing revenues and operating profit are as
follows (in millions):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Revenues
Professional Publishing...................................... $ 1,032.5 $ 979.4 $ 894.8
Consumer Publishing.......................................... 230.8 233.7 248.7
- ------------------------------------------------------------------------------------------------
$ 1,263.3 $ 1,213.1 $ 1,143.5
- ------------------------------------------------------------------------------------------------
Operating Profit............................................... $ 171.1 $ 110.8 $ 185.4
- ------------------------------------------------------------------------------------------------
</TABLE>
Book, Magazine and Other Publishing group revenues increased 4.1 percent in
1993. Revenue gains from the 1993 acquisition of three small health science
publishing companies and the fourth-quarter 1992 acquisition of Wm. C. Brown
Communications, Inc., a major college publisher, more than offset an
approximately 15 percent decline in revenue at Matthew Bender, the Company's
legal information publisher. Group revenues also benefited from the continued
growth of the Red Cross product line for Mosby-Year Book and market share gains
within college publishing. Consumer publishing revenues declined one percent in
1993 as magazine advertising remained weak nationally.
The revenue decline at Matthew Bender is the result of the major
restructuring program initiated in 1992 to enhance future operations by
transforming product lines, re-engineering work processes, reducing staff by
more than 40 percent and sharply reducing facilities and related expenses. By
marketing combined practice sets in core areas, instituting service fee annual
subscription pricing and holding 1993 prices level with 1992 prices, Bender was
able to reduce subscriber attrition rates in key product lines. The continuation
16
<PAGE>
of the price freeze in key areas and further marketing initiatives are expected
to further reduce Matthew Bender's revenues and operating profit in 1994. The
restructuring plan aims for a resumption of revenue and profit growth in 1995.
Operating profit for the group included restructuring charges in both years,
with a $25.3 million charge in 1993 for programs to streamline and consolidate
certain administrative functions within the training, college, health science
and technical publishing operations, and a $96 million charge in 1992 for the
restructuring of Matthew Bender. Excluding these charges, the group's operating
profit would have been $196.4 million in 1993, down 5.1 percent from $206.8
million in 1992. The operating profit margin for the group, excluding the
restructuring charges in both years, would have been 15.5 percent in 1993 and
17.0 percent in 1992.
In 1992, group revenues rose 6.1 percent on the strength of the legal and
flight information publishing companies. Professional publishing revenues
increased almost 10 percent in 1992, but consumer publishing revenues declined
due to the absence of revenues from Broadcasting Publications, Inc., which was
sold in May 1991. In 1992, operating profit declined to $110.8 million from the
$185.4 million reported in 1991. Excluding the impact of the restructuring
charge in 1992, group operating profit would have risen 11.5 percent to $206.8
million, reflecting strong revenue growth in flight information, health sciences
and technical publishing, lower amortization of intangibles and the absence of
operating losses at Broadcasting Publications, Inc.
CABLE TELEVISION
Cable Television revenues and operating profit are as follows (in millions):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Revenues............................................................ $ 470.4 $ 438.6 $ 402.8
- -----------------------------------------------------------------------------------------------------
Operating Profit.................................................... $ 106.5 $ 83.0 $ 74.1
- -----------------------------------------------------------------------------------------------------
</TABLE>
Cable Television's 1993 revenues rose 7.2 percent due to increased basic
subscriber revenues and the acquisition of Community Cablevision Company in the
fourth quarter of 1992. Basic service subscriber levels reached 1,208,000 at
year-end 1993. Excluding the divestiture of a small cable system of 12,600
subscribers in mid-1993, basic subscribers were up 3.2 percent over year-end
1992. Subscriber growth was particularly strong in Phoenix, Arizona, the
Company's largest operating system. The Phoenix system grew by more than 20,000
subscribers and gained two percentage points of increased market penetration for
the third consecutive year. Pay subscribers declined modestly to 703,000 from
the year-end 1992 levels.
The group's full-year operating profit rose 28.3 percent in 1993, due
largely to subscriber revenue growth and operating cost efficiencies implemented
in late 1992. The increase in operating profit between years included the 1993
reversal of a $3.7 million charge made in 1992 related to an expected loss on a
sublease for facilities in Orange County, California. Excluding the $3.7 million
in both years, cable operating profit would have risen 18.6 percent to $102.8
million. Operating costs before depreciation and amortization in 1993 were level
with 1992, despite increased expenses associated with the implementation of the
September 1, 1993 rate reregulation and the negotiation of more than 150
agreements with broadcasters for mandated consent agreements in conjunction with
the major cable legislation of 1992.
Full-year 1993 Cable Television financial results were not significantly
impacted by the September 1, 1993 implementation of the Federal Communications
Commission's ("FCC") rate regulations. However, Cable Television revenue and
operating profit growth are expected to be adversely affected in 1994 by the
FCC's reregulation activities. A legislated basic rate freeze, which was
scheduled to expire in mid-February 1994, has been extended to May 15, 1994. In
addition, the September 1993 rate regulations were significantly modified in
late February 1994. The reregulation activities are designed to reduce
subscriber rates and most annual basic rate increases.
Excluding the previously mentioned $3.7 million in both years, cable
operating cash flow, defined as operating profit plus depreciation and
amortization, would have risen 20.0 percent to $198.1 million from
17
<PAGE>
$165.0 million in 1992, while the operating cash flow margin in 1993 would have
been 42.1 percent compared with 37.6 percent in 1992. A $17.0 million increase
in depreciation and amortization is due to the significant increase in capital
spending, which rose to $116.9 million in 1993, up from $82.3 million in 1992
and $60.4 million in 1991.
The Cable group's revenues grew 8.9 percent in 1992, primarily on increased
subscriber revenues and the Community Cablevision acquisition. Operating profit
increased 11.9 percent, despite the $3.7 million sublease charge taken in late
1992. Excluding this charge, 1992 operating profit would have increased by 16.9
percent, primarily on the higher revenues. Operating cash flow, excluding the
charge, would have risen 9.5 percent to $165.0 million in 1992, up from $150.6
million in 1991. The operating cash flow margin in 1992, excluding the charge,
would have been 37.6 percent, slightly higher than the operating cash flow
margin of 37.4 percent in 1991.
LIQUIDITY AND CAPITAL RESOURCES
Total debt at December 31, 1993 of $1.132 billion was down $83.4 million
from the December 31, 1992 level. The debt-to-adjusted-capitalization ratio
declined to 37.3 percent from 41.7 percent last year-end. The lower debt level
in 1993 resulted from proceeds from asset sales which reduced overall borrowing.
Subsequent to December 31, 1993, the Company received the proceeds from the sale
of the broadcast television stations and used these proceeds to redeem
commercial paper. Total debt at January 28, 1994 was $833.5 million, down $298.3
million from year-end 1993.
Working capital, excluding short-term debt and the receivable from the 1993
sale of the broadcast television stations, was $95.1 million at December 31,
1993 compared to $102.0 million at the end of 1992. This decline primarily
reflects higher unearned income at year-end 1993, due to the new pricing
policies at Matthew Bender, which was partly offset by a reduction in accrued
liabilities for restructuring activities.
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 long-term revolving
bank lines of credit with commitments at December 31, 1993 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
December 31, 1993, the Company had registered for future sale $250 million of
debt securities.
During 1993, the Company generated $402.9 million in net cash from
continuing operations, compared with $432.7 million in 1992. Cash outlays in
1993 for restructuring activities were only partly offset by cash receipts from
newly instituted annual service fees for certain legal information products.
Net cash used in investing activities during 1993 totaled $227.3 million, as
compared to $460.9 million used in 1992. Cash used in acquisitions decreased
$210.3 million in 1993, while cash received from asset sales increased by $63.4
million between years. These cash flow improvements were partly offset by a
$30.5 million rise in capital expenditures during 1993. Spending on capital
projects in 1994 is expected to be slightly higher than the 1993 spending.
Net cash used in financing activities rose to $218.6 million in 1993 from
$9.7 million in the prior year, reflecting a net repayment of debt during 1993.
The Company paid dividends to shareholders of $138.9 million and $138.8 million
in 1993 and 1992, respectively.
FUTURE ACCOUNTING REQUIREMENTS
Statement of Position 93-6, "Employers' Accounting for Employee Stock
Ownership Plans," (SOP 93-6) will be adopted by Times Mirror on January 1, 1994.
SOP 93-6 requires, among other things, that expense for certain ESOP shares be
recognized based on the fair value of the shares on the date the shares are
allocated to participants. Shares acquired by ESOPs on or before December 31,
1992 may continue to be accounted for under the prior accounting rules rather
than SOP 93-6. All shares held by Times Mirror's ESOP were acquired prior to
December 31, 1992. Times Mirror has elected to continue with its present method
of accounting for those shares. As a result, SOP 93-6 will not have any effect
on Times Mirror's 1994 earnings. Future shares purchased by the ESOP, if any,
will be accounted for in accordance with SOP 93-6.
18
<PAGE>
Statement of Financial Accounting Standards No. 112, "Employers Accounting
for Postemployment Benefits," (SFAS 112) will be adopted by Times Mirror on
January 1, 1994. SFAS 112 requires that, if certain conditions are met,
postemployment costs must be accrued during an employee's expected service
period. No cumulative adjustment will be recorded. The adoption of SFAS 112 is
not expected to have a significant effect on the Company's 1994 earnings.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
<S> <C>
- -------------------------------------------------------------------------------------------
Report of Independent Auditors....................................................... 20
Statements of Consolidated Income -- Years Ended December 31, 1993, 1992 and 1991.... 21
Consolidated Balance Sheets -- December 31, 1993 and December 31, 1992............... 22
Statements of Shareholders' Equity -- Years Ended December 31, 1993, 1992 and 1991... 24
Statements of Consolidated Cash Flows -- Years Ended December 31, 1993, 1992 and
1991................................................................................ 26
Notes to Consolidated Financial Statements........................................... 27
</TABLE>
Financial Statement Schedules:
<TABLE>
<S> <C> <C> <C>
Schedule II -- Amounts Receivable From Related Parties and Underwriters,
Promoters and Employees Other Than Related Parties............ 43
Schedule V -- Property, Plant and Equipment................................. 44
Schedule VI -- Accumulated Depreciation and Amortization of Property, Plant
and Equipment................................................. 45
Schedule VIII -- Valuation and Qualifying Accounts and Reserves................ 46
Schedule IX -- Short-Term Borrowings......................................... 47
Schedule X -- Supplementary Income Statement Information.................... 48
- --------------------------------------------------------------------------------------------------
All other schedules are omitted because they are not required by the regulations or
related instructions or are not applicable.
</TABLE>
19
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of
The Times Mirror Company
We have audited the accompanying consolidated balance sheets of The Times
Mirror Company and subsidiaries as of December 31, 1993 and 1992, and the
related statements of consolidated income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1993. Our audits
also included the financial statement schedules listed in the Index to Financial
Statements and Financial Statement Schedules. These financial statements and
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedules based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
The Times Mirror Company and subsidiaries at December 31, 1993 and 1992, and the
consolidated results of its operations and cash flows for each of the three
years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
As discussed in Notes H and K to the consolidated financial statements, in
1992 The Times Mirror Company changed its method of accounting for income taxes
and postretirement benefits other than pensions.
ERNST & YOUNG
Los Angeles, California
February 3, 1994
20
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(In thousands of dollars except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1993 1992 1991
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
REVENUES......................................................... $3,714,158 $3,594,044 $3,519,975
- -----------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Cost of sales.................................................. 2,039,034 1,977,862 1,943,204
Selling, general and administrative expenses................... 1,299,431 1,266,753 1,251,656
Restructuring charges.......................................... 80,164 202,700 42,300
- -----------------------------------------------------------------------------------------------------
3,418,629 3,447,315 3,237,160
- -----------------------------------------------------------------------------------------------------
OPERATING PROFIT................................................. 295,529 146,729 282,815
Interest expense............................................... (85,237) (74,501) (77,403)
Nonrecurring gains (charges)................................... 86,799 8,673 (71,503)
Other, net..................................................... 4,626 4,896 9,977
- -----------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes.......... 301,717 85,797 143,886
Income taxes................................................... 137,604 50,480 75,932
- -----------------------------------------------------------------------------------------------------
Income from continuing operations.............................. 164,113 35,317 67,954
Discontinued operations:
Income from discontinued operations, net of income taxes..... 21,344 21,458 14,000
Gain on sale of discontinued operations, net of income
taxes....................................................... 131,702
- -----------------------------------------------------------------------------------------------------
Income before cumulative effect of changes in accounting
principles................................................... 317,159 56,775 81,954
Cumulative effect of changes in accounting principles:
Postretirement benefits, net of income tax benefit of
$84,931..................................................... (133,376)
Income taxes................................................. 10,000
- -----------------------------------------------------------------------------------------------------
NET INCOME (LOSS)................................................ $ 317,159 $ (66,601) $ 81,954
- -----------------------------------------------------------------------------------------------------
Earnings (loss) per share:
Continuing operations........................................ $1.27 $ .27 $.53
Discontinued operations:
Income from operations..................................... .17 .17 .11
Gain on sale............................................... 1.02
- -----------------------------------------------------------------------------------------------------
Before cumulative effect of changes in accounting
principles.................................................. 2.46 .44 .64
Cumulative effect of changes in accounting principles:
Postretirement benefits.................................... (1.04)
Income taxes............................................... .08
- -----------------------------------------------------------------------------------------------------
Earnings (loss) per share...................................... $2.46 $ (.52) $.64
- -----------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1993 1992
<S> <C> <C>
- -------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents........................................ $ 5,023 $ 24,769
Accounts receivable, less allowances for doubtful accounts and
returns of
$72,645 and $67,302............................................ 550,102 553,394
Note and other receivables....................................... 296,458
Inventories...................................................... 161,251 167,168
Deferred income taxes............................................ 47,305 53,606
Prepaid and other................................................ 157,119 139,510
- -------------------------------------------------------------------------------------------
Total current assets............................................. 1,217,258 938,447
PROPERTY, PLANT AND EQUIPMENT
Land............................................................. 98,903 101,954
Buildings........................................................ 638,679 617,962
Machinery and equipment.......................................... 2,198,761 2,146,423
- -------------------------------------------------------------------------------------------
2,936,343 2,866,339
Less allowances for depreciation and amortization................ 1,180,056 1,109,499
- -------------------------------------------------------------------------------------------
1,756,287 1,756,840
OTHER ASSETS
Goodwill......................................................... 868,016 909,435
Other intangibles................................................ 217,734 231,467
Deferred charges................................................. 159,137 160,055
Other assets..................................................... 387,682 390,106
- -------------------------------------------------------------------------------------------
1,632,569 1,691,063
- -------------------------------------------------------------------------------------------
$4,606,114 $4,386,350
- -------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
22
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS -- CONTINUED
(In thousands of dollars)
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1993 1992
<S> <C> <C>
- -------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable................................................. $ 380,439 $ 388,157
Short-term debt.................................................. 336,356 100,809
Accrued liabilities.............................................. 105,467 123,337
Employees' compensation.......................................... 104,737 104,101
Income taxes..................................................... 1,690 10,780
Unearned income.................................................. 198,619 175,315
Dividends payable................................................ 34,724 34,715
- -------------------------------------------------------------------------------------------
Total current liabilities........................................ 1,162,032 937,214
LONG-TERM DEBT..................................................... 795,454 1,114,367
OTHER LIABILITIES AND DEFERRALS
Deferred income taxes............................................ 279,972 135,986
Postretirement benefits.......................................... 250,894 252,300
Other liabilities................................................ 218,487 245,837
- -------------------------------------------------------------------------------------------
749,353 634,123
SHAREHOLDERS' EQUITY
Series A common stock............................................ 97,588 96,534
Series C common stock, convertible............................... 32,366 33,382
Additional paid-in capital....................................... 167,490 163,896
Retained earnings................................................ 1,687,574 1,513,977
- -------------------------------------------------------------------------------------------
1,985,018 1,807,789
Less treasury stock, at cost..................................... 61,543 61,543
- -------------------------------------------------------------------------------------------
1,923,475 1,746,246
Less guaranteed debt of ESOP..................................... 24,200 45,600
- -------------------------------------------------------------------------------------------
1,899,275 1,700,646
- -------------------------------------------------------------------------------------------
$4,606,114 $4,386,350
- -------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
23
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands of dollars except for number of shares)
<TABLE>
<CAPTION>
THREE YEARS ENDED DECEMBER 31, 1993
----------------------------------------
COMMON STOCK
----------------------------------------
SERIES A SERIES C
------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- --------------------------------------------------------------
BALANCE AT JANUARY
1, 1991........... 92,152,363 $93,497 36,331,806 $36,332
Conversion of
Series C shares to
Series A shares... 1,550,166 1,550 (1,550,166) (1,550 )
Transactions
related to stock
option and
restricted
stock plans..... 19,931 20 14,955 15
Dividends on
common stock.....
Net income........
Reduction of
guaranteed ESOP
debt.............
Translation gains
and other........
- --------------------------------------------------------------
BALANCE AT DECEMBER
31, 1991.......... 93,722,460 95,067 34,796,595 34,797
Conversion of
Series C shares
to Series A
shares........... 1,437,979 1,438 (1,437,979) (1,438 )
Transactions
related to stock
option and
restricted
stock plans..... 30,017 29 23,494 23
Dividends on
common stock.....
Net loss..........
Reduction of
guaranteed ESOP
debt.............
Translation losses
and other........
- --------------------------------------------------------------
BALANCE AT DECEMBER
31, 1992.......... 95,190,456 96,534 33,382,110 33,382
Conversion of
Series C shares
to Series A
shares........... 1,033,714 1,034 (1,033,714) (1,034 )
Transactions
related to stock
option and
restricted
stock plans..... 18,537 20 17,948 18
Dividends on
common stock.....
Net income........
Reduction of
guaranteed ESOP
debt.............
Translation
losses...........
- --------------------------------------------------------------
BALANCE AT DECEMBER
31, 1993.......... 96,242,707 $97,588 32,366,344 $32,366
- --------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
24
<PAGE>
<TABLE>
<CAPTION>
ADDITIONAL TREASURY STOCK
PAID-IN RETAINED -------------------- GUARANTEED
CAPITAL EARNINGS SHARES AMOUNT ESOP DEBT TOTAL
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
BALANCE AT JANUARY
1, 1991........... $150,942 $1,779,685 1,345,075 $ (61,543) $(81,500) $1,917,413
Conversion of
Series C shares to
Series A shares...
Transactions
related to stock
option and
restricted
stock plans..... 6,611 6,646
Dividends on
common stock...... (138,801) (138,801)
Net income........ 81,954 81,954
Reduction of
guaranteed ESOP
debt.............. 16,900 16,900
Translation gains
and other......... (104) (104)
- ------------------------------------------------------------------------------------------
BALANCE AT DECEMBER
31, 1991.......... 157,553 1,722,734 1,345,075 (61,543) (64,600) 1,884,008
Conversion of
Series C shares
to Series A
shares............
Transactions
related to stock
option and
restricted
stock plans..... 6,343 6,395
Dividends on
common stock...... (138,861) (138,861)
Net loss.......... (66,601) (66,601)
Reduction of
guaranteed ESOP
debt.............. 19,000 19,000
Translation losses
and other......... (3,295) (3,295)
- ------------------------------------------------------------------------------------------
BALANCE AT DECEMBER
31, 1992.......... 163,896 1,513,977 1,345,075 (61,543) (45,600) 1,700,646
Conversion of
Series C shares
to Series A
shares............
Transactions
related to stock
option and
restricted
stock plans..... 3,594 3,632
Dividends on
common stock...... (138,887) (138,887)
Net income........ 317,159 317,159
Reduction of
guaranteed ESOP
debt.............. 21,400 21,400
Translation
losses............ (4,675) (4,675)
- ------------------------------------------------------------------------------------------
BALANCE AT DECEMBER
31, 1993.......... $167,490 $1,687,574 1,345,075 $ (61,543) $(24,200) $1,899,275
- ------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(In thousands of dollars)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1993 1992 1991
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Income from continuing operations........................... $ 164,113 $ 35,317 $ 67,954
Adjustments to derive cash flows from continuing operating
activities:
Depreciation and amortization............................. 266,314 236,803 246,405
Nonrecurring (gains) charges.............................. (86,799) (8,673) 71,503
Amortization of product development costs................. 55,876 51,948 43,696
Provision (benefit) for deferred income taxes............. 365 (28,461) (11,029)
Restructuring charges..................................... (35,523) 169,063 32,700
Provision for doubtful accounts........................... 29,517 44,019 46,100
Changes in assets and liabilities:
Trade accounts receivable............................... (42,726) (44,531) (26,564)
Inventories............................................. 5,618 (265) 674
Accounts payable........................................ 2,097 3,582 28,845
Income taxes............................................ 65,822 (19,704) (6,737)
Other, net................................................ (21,747) (6,427) (11,646)
- -----------------------------------------------------------------------------------------------
Net cash provided by continuing operating activities...... 402,927 432,671 481,901
Income from discontinued operations......................... 21,344 21,458 14,000
Adjustment to derive cash flows from discontinued operating
activities:
Change in net operating assets............................ 1,901 7,146 6,928
- -----------------------------------------------------------------------------------------------
Net cash provided by discontinued operating activities.... 23,245 28,604 20,928
- -----------------------------------------------------------------------------------------------
Net cash provided by operating activities................. 426,172 461,275 502,829
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures........................................ (228,617) (198,073) (216,999)
Proceeds from sales of operating assets..................... 125,211 61,794 66,269
Additions to product development costs...................... (61,722) (62,002) (62,237)
Acquisitions, net of cash acquired.......................... (55,731) (266,040) (18,556)
Other, net.................................................. (6,462) 3,423 2,061
- -----------------------------------------------------------------------------------------------
Net cash used in investing activities..................... (227,321) (460,898) (229,462)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of debt........................................... (311,348) (101,722) (333,891)
Proceeds from issuance of debt.............................. 249,397 243,463 206,994
Dividends paid.............................................. (138,878) (138,846) (138,792)
Reduction of guaranteed ESOP debt........................... (21,400) (19,000) (16,900)
Common stock issuance related to stock options and awards... 3,632 6,395 6,646
- -----------------------------------------------------------------------------------------------
Net cash used in financing activities..................... (218,597) (9,710) (275,943)
- -----------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents......................... (19,746) (9,333) (2,576)
Cash and cash equivalents at beginning of year................ 24,769 34,102 36,678
- -----------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year...................... $ 5,023 $ 24,769 $ 34,102
- -----------------------------------------------------------------------------------------------
Cash paid during the year for:
Interest (net of amounts capitalized)....................... $ 89,134 $ 80,415 $ 73,010
Income taxes................................................ 106,540 117,862 101,724
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
26
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries after elimination of all significant intercompany
transactions and balances. Affiliated companies in which the Company owns a 20
percent to 50 percent interest are accounted for by the equity method. The
Company's share of affiliates' operating results is included in "Other, net."
RECLASSIFICATIONS
Certain amounts in previously issued financial statements have been
reclassified to conform to the 1993 presentation.
CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1992, the Company adopted new accounting principles for
income taxes and postretirement benefits. These changes in accounting are
described in Note H and Note K, respectively.
CASH EQUIVALENTS
Cash equivalents consist of investments that are readily convertible into
cash and generally have original maturities of three months or less.
INVENTORIES
Inventories are carried at the lower of cost or market and are determined
under the first-in, first-out method for books and certain finished products,
and under the last-in, first-out method for newsprint, paper and certain other
inventories.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are carried on the basis of cost. Generally,
depreciation is provided on a straight-line basis for buildings, machinery and
equipment.
GOODWILL AND OTHER INTANGIBLES
Goodwill recognized in business combinations accounted for as purchases
subsequent to October 31, 1970 ($854,563,000 at December 31, 1993, and
$895,982,000 at December 31, 1992--net of accumulated amortization of
$195,412,000 and $195,411,000, respectively) is being amortized over a period of
40 years. Goodwill arising from business combinations consummated prior to
November 1, 1970 is not being amortized because, in the opinion of management,
it has not diminished in value. Goodwill amortization expense amounted to
$26,737,000 for 1993, $25,404,000 for 1992, and $25,648,000 for 1991.
Other intangibles arising in connection with acquisitions are being
amortized on a straight-line basis over their estimated useful lives from 3 to
21 years. Accumulated amortization was $125,917,000 and $117,021,000 at December
31, 1993 and 1992, respectively.
DEFERRED CHARGES
Deferred charges, principally book and training material preparation,
printing and duplication costs, are written off over the estimated product life
as the products are sold.
REVENUE RECOGNITION
Revenues from certain products sold with the right of return, principally
books, are recognized net of a provision for estimated returns. Magazine,
newspaper and other subscription revenues are deferred as unearned income at the
time of sale. As products are delivered to subscribers, a pro rata share of the
subscription price is included in revenue.
Magazine subscription selling expenses are deferred as current or noncurrent
assets and charged to expense over the same period as the related revenue is
earned.
27
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RETIREMENT PLANS AND POSTRETIREMENT BENEFITS
The Company has defined benefit pension plans and various other contributory
and noncontributory retirement plans covering substantially all employees. In
general, benefits under the defined benefit plans are based on years of service
and the employee's compensation during the last five years of employment. In
determining net periodic pension expense (income), prior service costs are
amortized on a straight-line basis over 10 years. The defined benefit plans are
funded on a current basis in accordance with the Employee Retirement Income
Security Act of 1974. An Employee Stock Ownership Plan (ESOP) provides benefits
in conjunction with certain defined benefits, and the fair value of ESOP assets
is recognized as an offset to required funding. The majority of the Company's
employees are covered by one defined benefit plan. Funding is not expected to be
required for this plan in the near future as this plan is overfunded.
Postretirement health care and life insurance benefits provided by the
Company were substantially reduced as a result of plan modifications in 1993.
Various unfunded postretirement health care plans cover employees hired before
January 1, 1993, or approximately half of the Company's current employees. The
plans have significantly different provisions for lifetime maximums, retiree
cost-sharing, health care providers, prescription drug coverage and other
benefits. Postretirement life insurance benefits are generally insured by life
insurance policies and cover employees who retired on or before December 31,
1993. Life insurance benefits vary by plan, ranging from $1,000 to $250,000.
Certain employees become eligible for the postretirement health care benefits if
they meet minimum age and service requirements and retire from full-time, active
service.
VOLUNTARY EMPLOYEE BENEFICIARY ASSOCIATION
The Company maintains a Voluntary Employee Beneficiary Association (VEBA)
trust to fund certain health care benefits. At December 31, 1993 and 1992, the
VEBA trust balance of $53,949,000 and $48,895,000, respectively, is included in
"Prepaid and other".
NOTE B -- CAPITAL STOCK
The Company's authorized capital stock consists of 550,000,000 shares of
common stock, $1 par value, and 4,500,000 shares of preferred stock, $1 par
value. The Company is authorized to issue 300,000,000 shares of Series A common
stock, 100,000,000 shares of Series B common stock and 150,000,000 shares of
Series C common stock; these three series have disparate voting rights. Series B
common stock is entitled to one-tenth vote per share and is available for common
stock issuance transactions, such as underwritten public offerings and
acquisitions. The preferred stock is issuable in series under such terms and
conditions as the board of directors may determine.
The outstanding shares consist of Series A common stock and Series C common
stock. Shares of Series A and Series C common stock are identical, except with
respect to voting rights, restrictions on transfer of Series C shares and the
right to convert Series C shares into Series A shares. Series A shares are
entitled to one vote per share and Series C shares are entitled to ten votes per
share. Series C shares are subject to mandatory conversion into Series A shares
upon transfer to any person other than a "Permitted Transferee" as defined in
the Company's Certificate of Incorporation or upon the occurrence of certain
regulatory events.
NOTE C -- ACQUISITIONS
In July 1992, the Company acquired 20 percent of Community Cablevision
Company, which operates systems serving approximately 42,000 subscribers in
Orange County, California. The remaining 80 percent was acquired on October 1,
1992.
On October 30, 1992, the Company acquired Wm. C. Brown Communications, Inc.,
a leading publisher of college textbooks.
28
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE C -- ACQUISITIONS (CONTINUED)
These acquisitions were accounted for by the purchase method and resulted in
non-cash transactions of $38,212,000 for liabilities assumed. The operations of
these companies are reflected in the Company's financial statements from date of
acquisition. These acquisitions resulted in goodwill of $80,486,000, which is
being amortized over 40 years. Pro forma results for 1992, assuming these
acquisitions occurred on January 1, are not materially different from the
results reported.
NOTE D -- RESTRUCTURING CHARGES
Over the past three years, the Company has undertaken a number of
restructuring actions aimed at streamlining or consolidating certain operational
and administrative processes as well as refocusing certain product offerings. In
each of these years, the Company has charged the estimated costs related to
these actions against operations. Remaining liabilities of $116,560,000 related
to these restructuring charges are included in the consolidated balance sheet at
December 31, 1993. The majority of this amount will be spent during 1994, with
the remainder, principally related to lease payments, to be paid over lease
periods extending to 2002.
During 1993, the Company recorded restructuring charges of $80,164,000
($47,724,000 after taxes, or 37 cents per share). More than half of this amount
is for severance or pay-related actions and approximately forty percent relates
to leased facilities, product line changes and other costs necessary to
implement the Company's plans. The remainder includes various asset write-offs.
During 1992, the Company recorded restructuring charges of $202,700,000
($123,248,000 after taxes, or 96 cents per share). Nearly two-thirds of this
amount is for severance or pay-related actions. Approximately fifteen percent is
for leased facilities, while the remainder relates to product line changes and
other costs necessary to implement the restructuring plan at Matthew Bender.
During 1991, the Company recorded restructuring charges of $42,300,000
($25,514,000 after taxes, or 18 cents per share) primarily related to voluntary
early retirement and separation programs at the LOS ANGELES TIMES and THE
BALTIMORE SUN.
NOTE E -- NONRECURRING GAINS AND CHARGES
During 1993, the Company sold its investment in QVC Network, Inc. common
stock for a gain of $75,740,000 and sold a small cable system for a gain of
$11,059,000. These gains increased income before income taxes by $86,799,000 or
$50,364,000 (39 cents per share) after applicable income taxes.
During 1992, the Company sold two of its Texas cable television systems for
a gain of $8,673,000 before income taxes or $5,026,000 (4 cents per share) after
applicable income taxes.
During 1991, the Company sold Broadcasting Publications, Inc. at a loss of
$20,614,000 and sold certain assets of its cable television subsidiary for gains
of $14,111,000. The Company also recorded a $65,000,000 write-down of the note
and other assets outstanding from the 1987 sale of THE DENVER POST. These items
reduced income before income taxes by $71,503,000 or $43,415,000 (35 cents per
share) after applicable income taxes.
NOTE F -- INTEREST EXPENSE
For the years ended December 31, 1993, 1992 and 1991, interest expense of
$85,628,000, $78,464,000 and $90,940,000, respectively, was incurred; $391,000,
$3,963,000 and $13,537,000 of which was capitalized.
29
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE G -- INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------
1993 1992 1991
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Newsprint, paper and other raw materials...................... $ 39,066 $ 50,633 $ 59,557
Books and other finished products............................. 94,675 91,205 71,788
Work-in-process............................................... 27,510 25,330 20,596
- -----------------------------------------------------------------------------------------------
$ 161,251 $ 167,168 $ 151,941
- -----------------------------------------------------------------------------------------------
</TABLE>
Inventories determined on the last-in, first-out method were $26,994,000,
$40,177,000 and $51,133,000 at December 31, 1993, 1992 and 1991, respectively,
and would have been higher by $8,232,000 in 1993, $4,631,000 in 1992 and
$7,427,000 in 1991 had the first-in, first-out method (which approximates
current cost) been used exclusively.
NOTE H -- INCOME TAXES
Income tax expense from continuing operations consists of the following (in
thousands):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Current
Federal..................................................... $ 95,199 $ 37,070 $ 44,949
State....................................................... 31,349 28,737 28,686
Foreign..................................................... 10,691 13,074 13,450
Deferred
Federal..................................................... (3,059) (18,049) (12,222)
State....................................................... 3,424 (10,352) 1,069
- -----------------------------------------------------------------------------------------------
$ 137,604 $ 50,480 $ 75,932
- -----------------------------------------------------------------------------------------------
</TABLE>
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," and recorded a cumulative adjustment increasing
net income by $10,000,000 (8 cents per share) as of January 1, 1992. There was
no other effect on earnings for 1992. Prior-year financial statements have not
been restated.
30
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE H -- INCOME TAXES (CONTINUED)
The tax effect of temporary differences results in deferred income tax
assets (liabilities) as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1993 1992
<S> <C> <C>
- --------------------------------------------------------------------------------------------
Accelerated depreciation.............................................. $(273,957) $(232,730)
Retirement and health benefits........................................ (139,074) (127,162)
Postretirement benefits............................................... 109,215 91,094
Valuation and other reserves.......................................... 85,756 69,017
Deferred gain on sale of assets....................................... (84,901)
Other employee benefits............................................... 37,533 38,057
State and local income taxes.......................................... 27,881 17,661
Restructuring charges................................................. 21,785 70,897
Subscription selling expenses......................................... (13,746) (18,217)
Other deferred tax assets............................................. 40,972 46,201
Other deferred tax liabilities........................................ (44,131) (37,198)
- --------------------------------------------------------------------------------------------
$(232,667) $ (82,380)
- --------------------------------------------------------------------------------------------
</TABLE>
The above amounts aggregate to a current deferred tax asset of $47,305,000
and $53,606,000 at December 31, 1993 and 1992, respectively, and to a noncurrent
deferred tax liability of $279,972,000 and $135,986,000 at December 31, 1993 and
1992, respectively.
Prior to January 1, 1992, deferred income taxes were provided on timing
differences between book and taxable income. Deferred income tax expense
(benefit) for 1991 resulted from the following (in thousands):
<TABLE>
<CAPTION>
1991
<S> <C>
- ---------------------------------------------------------------------------------------------
Accelerated depreciation.......................................................... $ 18,940
Pension income.................................................................... 8,715
Write-down of assets.............................................................. (23,184)
Restructuring costs............................................................... (9,204)
Self-insurance reserves........................................................... (3,165)
Other............................................................................. (3,255)
- ---------------------------------------------------------------------------------------------
$ (11,153)
- ---------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE H -- INCOME TAXES (CONTINUED)
The difference between actual income tax expense and the U.S. federal
statutory income tax expense for continuing operations is reconciled as follows
(in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes:
United States................................................ $ 280,735 $ 64,621 $ 121,823
Foreign...................................................... 20,982 21,176 22,063
- ------------------------------------------------------------------------------------------------
$ 301,717 $ 85,797 $ 143,886
- ------------------------------------------------------------------------------------------------
Federal statutory income tax rate.............................. 35% 34% 34%
Federal statutory income tax expense........................... $ 105,601 $ 29,171 $ 48,921
Increase (decrease) in income taxes resulting from:
State and local income taxes, net of Federal effect.......... 22,603 12,134 19,638
Goodwill amortization not deductible for tax purposes........ 9,012 8,204 7,456
Other........................................................ 388 971 (83)
- ------------------------------------------------------------------------------------------------
$ 137,604 $ 50,480 $ 75,932
- ------------------------------------------------------------------------------------------------
</TABLE>
NOTE I -- DEBT
Short-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1993 1992
<S> <C> <C>
- -------------------------------------------------------------------------------------------
Commercial paper..................................................... $ 312,000
Current maturities of long-term debt................................. 24,356 $100,809
- -------------------------------------------------------------------------------------------
Total short-term debt................................................ $ 336,356 $100,809
- -------------------------------------------------------------------------------------------
</TABLE>
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1993 1992
<S> <C> <C>
- -------------------------------------------------------------------------------------------
Commercial paper..................................................... $ 46,231 $ 368,351
7 1/8% Debentures due March 1, 2013.................................. 150,000
7 3/8% Debentures due July 1, 2023................................... 100,000
8 7/8% Notes due March 1, 2001....................................... 100,000 100,000
8.70% Notes due June 15, 1999........................................ 100,000 100,000
8.60% Notes due November 15, 1993.................................... 100,000
8.55% Notes due June 1, 2000......................................... 99,500 100,000
Ten-Year Notes
8 7/8% due February 1, 1998........................................ 100,000 100,000
8% due December 15, 1996........................................... 100,000
8 1/4% due April 1, 1996........................................... 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 through December 15, 1994........... 24,200 45,600
Others at various interest rates, maturing through 2001.............. 1,761 1,710
- -------------------------------------------------------------------------------------------
821,692 1,215,661
Unamortized discount................................................. (1,882) (485)
Less current maturities.............................................. (24,356) (100,809)
- -------------------------------------------------------------------------------------------
Total long-term debt................................................. $ 795,454 $1,114,367
- -------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE I -- DEBT (CONTINUED)
Commercial paper borrowings of $358,231,000 and $368,351,000 at December 31,
1993 and 1992, respectively, carried a weighted average interest rate of 3.3% in
1993 and 3.5% in 1992. The Company has agreements with several domestic and
foreign banks for unsecured long-term revolving lines of credit which support
its commercial paper borrowings. The domestic agreements, which expire April 27,
1995, provide for borrowings up to $240,000,000 at the banks' base rates. The
commitment fee is 3/20 of one percent per annum. The foreign agreements, which
expire May 25, 1995, provide for borrowings up to $150,000,000 at interest rates
based on, at the Company's option, London Interbank Offered Rates (LIBOR),
certificate of deposit rates or the bank's base rate. The commitment fee is 1/16
of one percent per annum. As of December 31, 1993, the Company had not borrowed
under the agreements. Commercial paper borrowings aggregating $46,231,000 are
classified as long-term obligations at December 31, 1993, since the Company
intends to refinance this debt on a long-term basis. In addition, the Company
has $51,850,000 of unused standby letters of credit at December 31, 1993.
The ten-year notes are callable three years prior to maturity. A medium-term
note for $30,000,000 is callable two years prior to its maturity date of March
20, 1998. The 8.70% Notes are due at the option of the holder five years prior
to maturity. The 8.55% Notes were due at the option of the holder on June 1,
1993, and $500,000 was repaid on that date. The 8 1/4% Notes due April 1, 1996
were called March 1, 1993 and repaid on April 1, 1993. The 8% Notes due December
15, 1996 were called November 15, 1993 and repaid on December 15, 1993.
The Company has an interest rate swap agreement expiring January 22, 1996.
This agreement is for a $100,000,000 notional amount and exchanges payments to
the Company at a fixed rate of 7.4% for payments by the Company at a variable
rate based on a spread over three month LIBOR set in arrears.
The Company has guaranteed the debt of its Employee Stock Ownership Plan
(ESOP). Over the remaining term of the debt, interest is payable based on the
lesser of (a) 74 percent of the prime rate or (b) 88 percent of the certificate
of deposit rate. The Company has entered into interest rate swap agreements that
exchange interest payments at the prime rate for payments at fixed rates. As a
result of these agreements, the effective interest rate on the ESOP loans
varies, but in no event will it exceed 7.44%.
The Company's agreements with banks contain restrictive provisions relating
primarily to levels of indebtedness and maintenance of net worth. Under the most
restrictive of these agreements, consolidated debt may not exceed 135% of
consolidated net worth, and consolidated net worth must be at least
$1,250,000,000.
At December 31, 1993, the aggregate maturities of debt for the five
subsequent years are as follows (in thousands):
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
1994.............................................................................. $ 336,356
1995.............................................................................. 47,706
1996.............................................................................. --
1997.............................................................................. 10,000
1998.............................................................................. 140,000
- ---------------------------------------------------------------------------------------------
</TABLE>
The fair value of debt at December 31, 1993, based primarily on the
Company's current refinancing rates for publicly-issued fixed rate debt with
comparable maturities, approximates its carrying value of $1,131,810,000. The
fair value of off-balance-sheet financial instruments is not significant at
December 31, 1993.
33
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE J -- STOCK OPTION AND AWARD PLANS
The 1984 and 1988 Executive Stock Option Plans, as amended, and the 1992 Key
Employee Long-Term Incentive Plan (Incentive Plan) provide that options may be
granted to key employees to purchase shares of the Company's common stock at a
price equal to the fair market value at the date of grant. Options granted prior
to December 27, 1991 had a purchase price equal to 75 percent of the fair market
value at the date of grant. The Incentive Plan allows for the granting of
incentive stock options, nonqualified stock options and deferred cash incentive
awards. Options that are not exercised expire ten years from the date of grant.
Options generally vest over a four-year period, except that incentive stock
options generally vest nine years and nine months from the date of grant.
Accelerated vesting for incentive stock options is available, based on
performance goals determined by the Board of Directors over a three-year
performance period. The following table sets forth information relative to the
plans:
<TABLE>
<CAPTION>
NUMBER OPTION
OF SHARES PRICE PER SHARE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Options Outstanding
January 1, 1991............................................... 902,525 $18.66 to $37.93
Granted..................................................... 820,560 29.44
Exercised................................................... (57,950) 18.66 to 30.90
Canceled.................................................... (55,415)
- -----------------------------------------------------------------------------------------------
Options Outstanding
December 31, 1991............................................. 1,609,720 18.66 to 37.93
Granted..................................................... 456,550 30.13 to 36.94
Exercised................................................... (116,027) 18.66 to 28.36
Canceled.................................................... (55,025) 19.46 to 36.94
- -----------------------------------------------------------------------------------------------
Options Outstanding
December 31, 1992............................................. 1,895,218 18.66 to 37.93
Granted..................................................... 2,425,960 31.25 to 32.13
Exercised................................................... (138,721) 18.66 to 30.71
Canceled.................................................... (170,909) 18.66 to 36.94
- -----------------------------------------------------------------------------------------------
Options Outstanding
December 31, 1993............................................. 4,011,548 $18.66 to $37.93
- -----------------------------------------------------------------------------------------------
Options Exercisable
December 31, 1993............................................. 868,540 $18.66 to $37.93
- -----------------------------------------------------------------------------------------------
</TABLE>
At December 31, 1993, there were 515,492 options outstanding with purchase
prices equal to 75 percent of the fair market value at the date of grant. At
December 31, 1993, there were 239,800 shares of Series A common stock reserved
for future grants under the 1984 and 1988 Executive Stock Option Plans and
1,269,024 shares of Series A common stock reserved for future grants under the
Incentive Plan.
The 1982 and 1987 Restricted Stock Plans provide for the sale of 2,800,000
shares of the Company's common stock to key employees, including officers, at a
price equal to par value. The Incentive Plan generally replaced the restricted
stock sales. At December 31, 1993, there were 1,241,280 shares of Series A
common stock reserved for future sales. The Company expects that future sales,
if any, will not be significant.
34
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE K -- RETIREMENT PLANS AND POSTRETIREMENT BENEFITS
Retirement plan expense of $34,137,000 for 1993, $16,454,000 for 1992, and
$19,470,000 for 1991 includes net periodic pension expense (income) for the
defined benefit plans as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Service cost -- benefits earned during period.................. $ 55,897 $ 48,325 $ 43,705
Interest cost on projected benefit obligation.................. 57,591 55,245 55,502
Return on plan assets.......................................... (96,143) (96,796) (91,159)
Net amortization and deferral.................................. (8,263) (14,178) (11,005)
- ------------------------------------------------------------------------------------------------
Net periodic pension expense (income).......................... $ 9,082 $ (7,404) $ (2,957)
- ------------------------------------------------------------------------------------------------
</TABLE>
Assumptions used in the actuarial computations were:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------------
1993 1992 1991
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Discount rate.......................................................... 7.5% 7.0% 7.5%
Rate of increase in compensation levels................................ 6.25% 6.25% 6.25%
Expected long-term rate of return on assets............................ 9.75% 10.0% 10.0%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth the plans' funded status and amounts
recognized in the consolidated balance sheets (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1993 1992
<S> <C> <C>
- -------------------------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Vested............................................................. $ 582,105 $ 615,625
Nonvested.......................................................... 8,480 12,655
- -------------------------------------------------------------------------------------------
Accumulated benefit obligations...................................... $ 590,585 $ 628,280
- -------------------------------------------------------------------------------------------
Projected benefit obligations........................................ $ 806,986 $ 889,563
Plan assets at fair value............................................ 1,054,781 1,004,419
- -------------------------------------------------------------------------------------------
Excess of plan assets over projected benefit obligations............. 247,795 114,856
Unrecognized net loss from past experience different from that
assumed............................................................. 116,153 272,002
Prior service cost not yet recognized................................ 4,434 5,284
Unrecognized net asset being amortized over 13-15 years.............. (112,224) (133,538)
Other................................................................ 5,008 13,124
- -------------------------------------------------------------------------------------------
Prepaid pension cost................................................. $ 261,166 $ 271,728
- -------------------------------------------------------------------------------------------
</TABLE>
Prepaid pension cost is included in "Other Assets." Projected benefit
obligations decreased by $71,310,000 at December 31, 1993 as a result of the
change in the discount rate.
Plan assets include the Company's common stock, other listed stocks, and
corporate and government fixed-income securities. The fair value of plan assets
attributable to the Company's common stock at December 31, 1993 and 1992, was
$192,085,000 and $165,847,000, respectively, of which $161,995,000 and
$137,673,000, respectively, relate to the ESOP.
In 1985, the Company issued and sold shares of common stock at market value
of $150,000,000 to its ESOP. Repayment of the ESOP's bank debt has been
guaranteed by the Company. Company contributions are the primary source of funds
for the ESOP's repayment of its debt. Benefits provided by the ESOP are
35
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE K -- RETIREMENT PLANS AND POSTRETIREMENT BENEFITS (CONTINUED)
coordinated with certain pension benefits. At December 31, 1993, the ESOP held
3,151,365 shares of Series A common stock and 2,427,512 shares of Series C
common stock. The ESOP currently covers approximately two-thirds of the
Company's employees.
Substantially all employees over age 21 with one year of service are
eligible to participate in the Company's Savings Plus Plan. Eligible employees
may contribute from 1 percent to 13 percent of their basic compensation. The
Company makes matching contributions equal to 50 percent of employee before-tax
contributions from 1 percent to 6 percent. Employees may choose among five
investment options, including a Company common stock fund, for investing their
contributions and the Company's matching contribution.
The Company adopted Statement of Financial Accounting Standards No. 106
(SFAS 106) "Employers' Accounting for Postretirement Benefits Other Than
Pensions," and recorded a cumulative charge of $218,307,000 ($133,376,000 net of
taxes, or $1.04 per share) as of January 1, 1992. SFAS 106 requires that
postretirement health care and life insurance be charged to expense over the
period the benefits are earned. The effect of this change in accounting
principle was to increase postretirement expense in 1992 by $20,221,000
($12,133,000 net of taxes, or 9 cents per share).
The net periodic postretirement benefit expense is as follows (in
thousands):
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
- ------------------------------------------------------------------------------------------------
Service cost -- benefits earned during period............................. $ 3,457 $ 10,903
Interest cost on accumulated projected benefit obligation................. 11,110 15,947
Net amortization.......................................................... (8,155)
- ------------------------------------------------------------------------------------------------
Net periodic postretirement expense....................................... $ 6,412 $ 26,850
- ------------------------------------------------------------------------------------------------
</TABLE>
Postretirement benefit expense in 1991, which was charged to expense as
incurred, was not significant.
Assumptions used in the actuarial computations were:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1993 1992
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
Discount rate............................................................... 7.5% 7.0%
Health care cost trend rate................................................. 12.0% 13.0%
- ------------------------------------------------------------------------------------------------------
</TABLE>
At December 31, 1993, the health care cost trend rate of 12 percent was
assumed to ratably decline to 5.5 percent by 2004 and remain at that level. At
December 31, 1992, the health care cost trend rate of 13 percent was assumed to
ratably decline to 5 percent by 2005 and remain at that level.
36
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE K -- RETIREMENT PLANS AND POSTRETIREMENT BENEFITS (CONTINUED)
The following table sets forth the plans' unfunded obligations and amounts
recognized in the consolidated balance sheet (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1993 1992
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Retirees.............................................................. $ 126,334 $ 102,033
Other fully eligible participants..................................... 8,232 9,368
Other active participants............................................. 31,323 39,312
- ----------------------------------------------------------------------------------------------
Accumulated postretirement benefit obligations.......................... 165,889 150,713
Unrecognized net decrease in prior service cost......................... 102,614 114,011
Unrecognized net loss from past experience different from that
assumed................................................................ (17,609) (12,424)
- ----------------------------------------------------------------------------------------------
Postretirement benefit liability........................................ $ 250,894 $ 252,300
- ----------------------------------------------------------------------------------------------
</TABLE>
The assumed health care cost trend rate can significantly affect
postretirement expense and liabilities. An increase of 1% in the health care
cost trend rate would increase 1993 net periodic postretirement expense by
$1,802,000 and increase the accumulated postretirement benefit obligations as of
December 31,1993 by $15,184,000.
In December 1992 the Company amended its postretirement health care and life
insurance benefit plans to substantially reduce benefits. The effect of the plan
amendments, which reduced the accumulated postretirement benefit obligations by
approximately $114,011,000 at December 31, 1992, will be amortized over the
average remaining eligibility period of plan participants.
NOTE L -- LEASES
Rental expense under operating leases amounted to $76,571,000, $79,034,000,
and $76,541,000 for the years ended December 31, 1993, 1992 and 1991,
respectively. Capital leases and contingent rentals are not significant. The
future minimum lease payments as of December 31, 1993 for all noncancellable
operating leases are as follows (in thousands):
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
1994.............................................................................. $ 51,030
1995.............................................................................. 47,677
1996.............................................................................. 43,220
1997.............................................................................. 41,283
1998.............................................................................. 34,189
Later years....................................................................... 131,322
- ---------------------------------------------------------------------------------------------
Total............................................................................. $ 348,721
- ---------------------------------------------------------------------------------------------
</TABLE>
NOTE M -- EARNINGS AND DIVIDENDS PER SHARE
Earnings per share computations are based upon the weighted average number
of shares of common stock and common stock equivalents outstanding during the
year. Fully diluted earnings per share are the same as the earnings per share
indicated.
Cash dividends declared per share of common stock amounted to $1.08 in 1993,
1992 and 1991.
NOTE N -- BUSINESS SEGMENTS
Financial data regarding the Company's business segments presented on page
10 of this report are incorporated herein by reference.
37
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE N -- BUSINESS SEGMENTS (CONTINUED)
The Company operates principally in three industries: Newspaper Publishing;
Book, Magazine and Other Publishing; and Cable Television. Operations in
Newspaper Publishing include the publication and sale of metropolitan
newspapers. Operations in Book, Magazine and Other Publishing include the
publishing and sale of various types of books, including law, medical and
college-level business and economic textbooks, magazine publishing, the
publishing of aeronautical charts and flight information, and skills training
and consulting support for management development. Operations in Cable
Television include basic and pay cable television services. Total revenue by
industry segment includes sales to unaffiliated customers and intersegment
sales, which are accounted for at market price.
NOTE O -- QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
A summary of the unaudited quarterly results of operations follows (in
thousands of dollars, except per share amounts):
<TABLE>
<CAPTION>
1993 QUARTERS ENDED MAR. 28 JUNE 27 SEPT. 26 DEC. 31
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Revenues................................................ $ 868,403 $ 902,879 $ 923,953 $1,018,923
- ----------------------------------------------------------------------------------------------------
Costs and expenses
Cost of sales......................................... 489,483 474,329 535,798 539,424
Selling, general and administrative expenses.......... 308,619 339,465 301,645 349,702
Restructuring charges................................. 3,750 76,414
- ----------------------------------------------------------------------------------------------------
798,102 813,794 841,193 965,540
- ----------------------------------------------------------------------------------------------------
Operating profit........................................ 70,301 89,085 82,760 53,383
Interest expense...................................... (22,788) (21,226) (21,700) (19,523)
Nonrecurring gains.................................... 4,780 82,019
Other, net............................................ 2,025 1,698 (1,103) 2,006
- ----------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes... 49,538 74,337 141,976 35,866
Income taxes............................................ 22,469 34,006 68,414 12,715
- ----------------------------------------------------------------------------------------------------
Income from continuing operations....................... 27,069 40,331 73,562 23,151
Income from discontinued operations, net of income
taxes.................................................. 2,715 7,531 4,145 6,953
Gain on sale of discontinued operations, net of income
taxes.................................................. 131,702
- ----------------------------------------------------------------------------------------------------
Net income.............................................. $ 29,784 $ 47,862 $ 77,707 $ 161,806
- ----------------------------------------------------------------------------------------------------
Earnings per share:
Continuing operations................................. $.21 $.31 $.57 $ .18
Discontinued operations:
Income from operations.............................. .02 .06 .03 .06
Gain on sale........................................ 1.02
- ----------------------------------------------------------------------------------------------------
Earnings per share...................................... $.23 $.37 $.60 $1.26
- ----------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE O -- QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
1992 QUARTERS ENDED MAR. 29 JUNE 28 SEPT. 27 DEC. 31
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Revenues.................................................. $ 842,377 $ 883,382 $ 888,045 $ 980,240
Restructuring charges..................................... 19,000 183,700
Operating profit (loss)................................... 67,720 78,309 86,626 (85,926)
Nonrecurring gains........................................ 8,673
Income (loss) from continuing operations.................. 27,491 37,972 36,384 (66,530)
Income from discontinued operations, net of income
taxes.................................................... 6,096 6,167 4,351 4,844
Cumulative effect of changes in accounting principles..... (123,376)
Net income (loss)......................................... (89,789) 44,139 40,735 (61,686)
Earnings (loss) per share:
Continuing operations................................... .21 .29 .29 (.52)
Discontinued operations................................. .05 .05 .03 .04
Cumulative effect of changes in accounting principles... (.96)
Earnings (loss) per share................................. $(.70) $.34 $.32 $(.48)
- ------------------------------------------------------------------------------------------------------
</TABLE>
NOTE P -- DISCONTINUED OPERATIONS
On March 29, 1993, the Company announced two agreements for the sale of its
four broadcast television stations to Argyle Television Holdings, Inc. (Argyle).
The sale of KTVI-TV, an ABC affiliate in St. Louis, Missouri, and WVTM-TV, an
NBC affiliate in Birmingham, Alabama, was completed in July. The sale of its
remaining two stations, KDFW-TV in Dallas, Texas, and KTBC-TV in Austin, Texas,
both CBS affiliates, was completed near the end of the year. The sale of the
four stations resulted in an after-tax gain of $131,702,000 or $1.02 per share.
At year-end, the Company exercised its option to increase the cash and decrease
the securities portion of the sale price and received $320 million in cash as
well as warrants in Argyle. Most of the proceeds were received in January 1994
and were used to redeem commercial paper.
The results of operations of the Broadcast Television segment have been
reported as discontinued operations in the Statements of Consolidated Income.
Prior year financial statements have been reclassified to present the segment as
a discontinued operation. Operating results of the discontinued operations were
as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1993 1992 1991
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Revenues........................................................ $ 94,833 $ 107,929 $ 94,086
- -------------------------------------------------------------------------------------------------
Income before income taxes...................................... 35,335 33,776 22,066
Income taxes.................................................... 13,991 12,318 8,066
- -------------------------------------------------------------------------------------------------
Net income...................................................... $ 21,344 $ 21,458 $ 14,000
- -------------------------------------------------------------------------------------------------
</TABLE>
NOTE Q -- TRANSACTIONS WITH AN AFFILIATE
To assure a long-term supply of newsprint for the LOS ANGELES TIMES, the
Company has an agreement to purchase specified quantities of newsprint from a
supplier in which the Company has a 20 percent interest. The specified
quantities represent a majority of the LOS ANGELES TIMES' newsprint requirements
and are purchased at prevailing market prices.
39
<PAGE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Registrant's principal officers, including executive officers, are
listed in Part I hereof. The information under the headings "Election of
Directors" and "Other Matters" in the definitive Proxy Statement for the
Registrant's 1994 Annual Meeting of Shareholders is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information contained under the headings "Information Concerning the
Board of Directors" and "Executive Compensation" in the definitive Proxy
Statement for the Registrant's 1994 Annual Meeting of Shareholders is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information contained under the heading "Ownership of Common Stock" in
the definitive Proxy Statement for the Registrant's 1994 Annual Meeting of
Shareholders is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information contained under the heading "Executive Compensation" in the
definitive Proxy Statement for the Registrant's 1994 Annual Meeting of
Shareholders is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
<TABLE>
<C> <S>
(a)(1) and Financial Statements and Financial Statement Schedules filed as part
(2) of this report:
As listed in the Index to Financial Statements and Financial
Statement Schedules on page 19 hereof.
(a)(3) Exhibits filed as part of this report:
As listed in the Exhibit Index beginning on page 49 hereof.
(b) Reports on Form 8-K:
None.
</TABLE>
40
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE TIMES MIRROR COMPANY
By ROBERT F. ERBURU
------------------------------------
Robert F. Erburu
Chairman of the Board, President
and Chief Executive Officer
Dated: March 21, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant in
the capacities indicated:
<TABLE>
<CAPTION>
Signature Title
- -------------------------------------------- --------------------------------------------
<C> <S>
ROBERT F. ERBURU Chairman of the Board, President,
- ------------------------------------------- Chief Executive Officer and Director
Robert F. Erburu (Principal Executive Officer)
JAMES F. GUTHRIE
- ------------------------------------------- Vice President and Chief Financial Officer
James F. Guthrie (Principal Financial Officer)
DUANE L. STORHAUG
- ------------------------------------------- Vice President and Controller
Duane L. Storhaug (Principal Accounting Officer)
GWENDOLYN GARLAND BABCOCK
- ------------------------------------------- Director
Gwendolyn Garland Babcock
DONALD R. BEALL
- ------------------------------------------- Director
Donald R. Beall
JOHN E. BRYSON
- ------------------------------------------- Director
John E. Bryson
- ------------------------------------------- Director
Bruce Chandler
OTIS CHANDLER
- ------------------------------------------- Director
Otis Chandler
CLAYTON W. FRYE, JR.
- ------------------------------------------- Director
Clayton W. Frye, Jr.
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Signature Title
- -------------------------------------------- --------------------------------------------
<C> <S>
- ------------------------------------------- Director
Eli S. Jacobs
DAVID LAVENTHOL
- ------------------------------------------- Director
David Laventhol
ALFRED E. OSBORNE, JR.
- ------------------------------------------- Director
Alfred E. Osborne, Jr.
JOAN A. PAYDEN
- ------------------------------------------- Director
Joan A. Payden
WILLIAM STINEHART, JR.
- ------------------------------------------- Director
William Stinehart, Jr.
HAROLD M. WILLIAMS
- ------------------------------------------- Director
Harold M. Williams
WARREN B. WILLIAMSON
- ------------------------------------------- Director
Warren B. Williamson
EDWARD ZAPANTA
- ------------------------------------------- Director
Edward Zapanta
</TABLE>
42
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN
RELATED PARTIES
(In thousands of dollars)
<TABLE>
<CAPTION>
BALANCE AT END
DEDUCTIONS OF PERIOD
BALANCE AT ---------------------- ----------------
BEGINNING AMOUNTS AMOUNTS NON
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT CURRENT
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Year ended 12/31/93
Patrick A. Clifford*........................................... $267 $0 $24 $0 $25 $218
- ----------------------------------------------------------------------------------------------------------------------------------
Year ended 12/31/92
Patrick A. Clifford*........................................... $295 $0 $28 $0 $24 $243
- ----------------------------------------------------------------------------------------------------------------------------------
Year ended 12/31/91
Patrick A. Clifford*........................................... $300 $0 $ 5 $0 $28 $267
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
* This indebtedness represents a relocation loan to Patrick A. Clifford in
connection with his promotion to a Vice President of the Company and his
subsequent transfer to and purchase of a cooperative apartment in New York
City. This obligation is evidenced by an unsecured promissory note bearing
interest at the rate of prime, adjusted annually, with interest and principal
payments to be made in seven installments, such payments to be due on March 15
of each year commencing July 15, 1991 and ending March 15, 1997. The entire
principal amount outstanding and accrued interest shall become immediately due
and payable in the event Mr. Clifford's employment terminates before
completing payments. Mr. Clifford has the right to prepay the note in whole or
in part at any time without penalty.
</TABLE>
43
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
(In thousands of dollars)
<TABLE>
<CAPTION>
BALANCE AT ADD (DEDUCT) BALANCE AT
BEGINNING ADDITIONS -------------------------- END OF
OF PERIOD AT COST RETIREMENTS ACQUISITIONS DIVESTITURES OTHER PERIOD
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Year ended 12/31/93
Land........................ $ 101,954 $ 811 $ 802 $ 1,890 $ (5,110) $ 160 $ 98,903
Buildings................... 617,962 31,787 2,933 922 (8,416) (643) 638,679
Machinery and
equipment................. 2,146,423 186,409 66,678 6,969 (49,733) (24,629) (A) 2,198,761
- --------------------------------------------------------------------------------------------------------------------------------
$2,866,339 $219,007 $70,413 $ 9,781 $(63,259) $(25,112) $2,936,343
- --------------------------------------------------------------------------------------------------------------------------------
Year ended 12/31/92
Land........................ $ 99,760 $ 1,927 $ 16 $ 442 $ (159) $ 101,954
Buildings................... 598,663 25,208 809 6,891 $(149) (11,842) (B) 617,962
Machinery and
equipment................. 1,984,964 173,624 62,936 46,657 (7,907) 12,021 (A) 2,146,423
- --------------------------------------------------------------------------------------------------------------------------------
$2,683,387 $200,759 $63,761 $53,990 $ (8,056) $ 20 $2,866,339
- --------------------------------------------------------------------------------------------------------------------------------
Year ended 12/31/91
Land........................ $ 105,550 $ 467 $ 348 $ 5 $ (896) $ (5,018) $ 99,760
Buildings................... 572,266 22,372 2,942 6,967 598,663
Machinery and
equipment................. 1,871,949 181,651 67,123 4,366 (3,774) (2,105) 1,984,964
- --------------------------------------------------------------------------------------------------------------------------------
$2,549,765 $204,490 $70,413 $ 4,371 $ (4,670) $ (156) $2,683,387
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
(A) Includes reclassifications totalling $(17,320,000) and $8,523,000 at
December 31, 1993 and 1992, respectively.
(B) Includes reclassifications totalling $(9,293,000) at December 31, 1992.
</TABLE>
Estimated useful lives and methods used for depreciation and amortization are as
follows:
Buildings -- 10 to 55 years -- straight line.
Machinery and equipment -- 2 to 20 years -- straight line.
44
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
(In thousands of dollars)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO ADD (DEDUCT) BALANCE AT
BEGINNING COSTS AND ----------------------- END OF
CLASSIFICATION OF PERIOD EXPENSES RETIREMENTS DIVESTITURES OTHER PERIOD
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
Year ended 12/31/93
Buildings................... $ 148,461 $ 20,091 $ 1,761 $( 4,488) $ (3,371) $ 158,932
Machinery and equipment..... 961,038 176,178 59,490 (34,924) (21,678) (A) 1,021,124
- -------------------------------------------------------------------------------------------------------------------
$1,109,499 $196,269 $61,251 $(39,412) $(25,049) $1,180,056
- -------------------------------------------------------------------------------------------------------------------
Year ended 12/31/92
Buildings................... $ 125,844 $ 21,655 $ 605 $ (107) $ 1,674 $ 148,461
Machinery and equipment..... 851,664 165,644 57,902 (3,520) 5,152 961,038
- -------------------------------------------------------------------------------------------------------------------
$ 977,508 $187,299 $58,507 $ (3,627) $ 6,826 $1,109,499
- -------------------------------------------------------------------------------------------------------------------
Year ended 12/31/91
Buildings................... $ 108,456 $ 19,790 $ 2,363 $ (39) $ 125,844
Machinery and equipment..... 742,840 161,309 60,742 $ (2,050) 10,307 (A) 851,664
- -------------------------------------------------------------------------------------------------------------------
$ 851,296 $181,099 $63,105 $ (2,050) $ 10,268 $ 977,508
- -------------------------------------------------------------------------------------------------------------------
<FN>
(A) Includes reclassifications totalling $(17,240,000) at December 31, 1993 and
$5,084,000 at December 31, 1991.
</TABLE>
45
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In thousands of dollars)
<TABLE>
<CAPTION>
ADDITIONS (DEDUCTIONS)
BALANCE ----------------------
AT CHARGED TO CHARGED TO DEDUCTIONS BALANCE
BEGINNING COSTS AND OTHER FROM AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS RESERVES PERIOD
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Year ended 12/31/93
Allowance for doubtful accounts... $29,052 $29,517 $ 318 $27,442 $31,445
Allowance for returns............. 38,250 4,373 (1,423) 41,200
- ----------------------------------------------------------------------------------------------
$67,302 $33,890 $(1,105) $27,442 $72,645
- ----------------------------------------------------------------------------------------------
Year ended 12/31/92
Allowance for doubtful accounts... $27,433 $44,299 $ 454 $43,134 $29,052
Allowance for returns............. 30,340 1,708 6,202 38,250
- ----------------------------------------------------------------------------------------------
$57,773 $46,007 $ 6,656 $43,134 $67,302
- ----------------------------------------------------------------------------------------------
Year ended 12/31/91
Allowance for doubtful accounts... $25,485 $47,032 $ (24) $45,060 $27,433
Allowance for returns............. 28,892 1,448 30,340
- ----------------------------------------------------------------------------------------------
$54,377 $48,480 $ (24) $45,060 $57,773
- ----------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
SCHEDULE IX -- SHORT-TERM BORROWINGS
(In thousands of dollars)
<TABLE>
<CAPTION>
WEIGHTED
MAXIMUM AVERAGE AVERAGE
WEIGHTED AMOUNT AMOUNT INTEREST
BALANCE AVERAGE OUTSTANDING OUTSTANDING RATE
CATEGORY OF AGGREGATE AT END OF INTEREST DURING THE DURING THE DURING THE
SHORT-TERM BORROWINGS(A) PERIOD RATE PERIOD PERIOD(B) PERIOD(C)
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
Year ended 12/31/93
Commercial paper................. $358,231 3.34% $403,200 $231,758 3.25%
Year ended 12/31/92
Commercial paper................. $368,351 3.52% $368,351 $225,586 3.63%
Year ended 12/31/91
Note payable to bank............. None $ 50,000 $ 47,123 7.99%
Commercial paper................. $125,142 6.50% $371,700 $135,486 6.50%
- ---------------------------------------------------------------------------------------------
<FN>
(A) Notes payable to banks represent unsecured borrowings maturing from one to
365 days. Commercial paper can mature from one to 270 days but is supported
by revolving lines of credit which expire in 1995. At December 31, 1993 and
1992, commercial paper totaling $46,231,000 and $368,351,000, respectively,
is classified as long-term debt.
(B) The average amount outstanding during the period is a daily average.
(C) The weighted average interest rate during the period is computed by dividing
the actual interest expense by average amounts outstanding.
</TABLE>
47
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
(In thousands of dollars)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1993 1992 1991
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Maintenance and repairs....................................... $ 39,399 $ 37,248 $ 32,527
Amortization of other intangibles............................. $ 32,960 $ 20,647 $ 19,596
Royalties..................................................... $ 171,163 $ 161,290 $ 145,182
Advertising costs............................................. $ 38,419 $ 36,767 $ 35,787
- -----------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE>
EXHIBIT INDEX
Exhibits marked with an asterisk (*) are incorporated by reference to
documents previously filed by the Registrant with the Securities and Exchange
Commission, as indicated. All other documents listed are filed with this report,
unless otherwise indicated.
<TABLE>
<CAPTION>
EXHIBITS PAGE
<C> <S> <C>
- ------------------------------------------------------------------------------------------------------
3.1 Restated Certificate of Incorporation of the Registrant, dated as of
November 30, 1993. (Exhibit to the Registrant's Current Report on Form 8-K,
dated February 28, 1986.)
3.2 Bylaws of the Registrant as amended through May 4, 1993.
4.2 Copies of instruments defining the rights of holders of long-term debt of
the Registrant under Item 601(b)(4)(iii)(A) of Regulation S-K, not required
to be filed, but will be filed upon request of the Commission.
10.1* 1985 Deferred Bonus-Incentive Plan. (Exhibit 10.2 to the Registrant's 1984
Annual Report on Form 10-K.)
10.2* 1986 Deferred Bonus-Incentive Plan. (Exhibit 10.8 to the Registrant's 1985
Annual Report on Form 10-K.)
10.3* 1987 Restricted Stock Plan. (Exhibit II to the Registrant's definitive Proxy
Statement, dated March 27, 1987.)
10.4* 1984 Executive Stock Option Plan. (Exhibit A to the Registrant's definitive
Proxy Statement, dated April 23, 1984.)
10.5* 1988 Executive Stock Option Plan. (Exhibit A to the Registrant's Proxy
Statement, dated March 30, 1988.)
10.6* Deferral Plan for Directors' Fees. (Exhibit 10.8 to the Registrant's 1981
Annual Report on Form 10-K.)
10.7* The Times Mirror Pension Plan for Directors, as Amended and Restated on
March 5, 1987. (Exhibit 10.11 to the Registrant's 1986 Annual Report on
Form 10-K.)
10.8* Agreement dated April 29, 1985 between the Registrant and Otis Chandler.
(Exhibit 10.10 to the Registrant's 1985 Annual Report on Form 10-K.)
10.9* Agreements dated as of March 30, 1988 and entered into between the
Registrant and Robert F. Erburu in March 1990.
10.10* 1992 Key Employee Long-Term Incentive Plan. (Appendix A to Registrant's
Proxy Statement dated March 20, 1992.)
11 Computation of Earnings Per Share.
12 Computation of Ratio of Earnings to Fixed Charges.
22 List of Subsidiaries.
23 Consent of Independent Auditors (set forth on page 50 of this report).
28* Undertakings incorporated by reference into Registration Statements on Form
S-8. (Exhibit 28 to the Registrant's 1982 Annual Report on Form 10-K.)
- ------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
The Times Mirror Company, a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is The Times Mirror Company. The Times
Mirror Company was originally incorporated under DTM, Inc., and the original
Certificate of Incorporation of The Times Mirror Company was filed with the
Secretary of State of the State of Delaware on December 3, 1985.
2. Pursuant to Section 245 of the General Corporation Law of the State of
Delaware, this Restated Certificate of Incorporation restates and integrates but
does not amend the provisions of the Certificate of Incorporation of The Times
Mirror Company.
3. The text of the Restated Certificate of Incorporation as heretofore
amended or supplemented is hereby restated to read in its entirety as set forth
in the Restated Certificate of Incorporation designated Appendix A, Part 1 and
in the Certificate of Designation of Series C Common Stock designated as
Appendix A, Part 2, both of which are attached hereto and incorporated herein by
this reference.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been
signed under the seal of The Times Mirror Company this fifteenth day of November
1993.
THE TIMES MIRROR COMPANY
By:/s/ Thomas Unterman
________________________________
Thomas Unterman
Vice President
[ S E A L ]
Attest:
/s/ O. Jean Williams
______________________________
O. Jean Williams
Secretary
<PAGE>
APPENDIX A
(PART 1)
RESTATED
CERTIFICATE OF INCORPORATION OF
THE TIMES MIRROR COMPANY
_______________
Article I: NAME
The name of this corporation (the "Corporation") is:
The Times Mirror Company
Article II: DEFINITIONS
For the purposes of this Restated Certificate of Incorporation:
A. "Affiliate" and "Associate" have the meanings set forth in Rule 12b-2
under the Securities Exchange Act of 1934 as in effect on December 31, 1985.
B. "Beneficially Owns" has the meaning set forth in Rule 13d-3 under the
Securities Exchange Act of 1934 as in effect on December 31, 1985.
C. "Business Combination" means (a) any merger, consolidation,
combination or reorganization of the Corporation or a Subsidiary with or into a
Related Person or of a Related Person with or into the Corporation or a
Subsidiary, (b) any sale, lease, exchange, transfer, liquidation or other
disposition (including without limitation, a mortgage or any other security
device) of assets of the Corporation and/or one or more Subsidiaries (including
without limitation any voting securities of a Subsidiary) constituting a
Substantial Part of the Corporation to a Related Person, (c) any sale, lease,
exchange, transfer, liquidation or other disposition (including without
limitation, a mortgage or any other security device) of assets of a Related
Person (including without limitation any voting securities of a subsidiary of
such Related Person) constituting a Substantial Part of such Related Person to
the Corporation and/or one or more Subsidiaries, (d) the issuance or transfer of
any securities (other than by way of a pro rata distribution to all
shareholders) of the Corporation or a Subsidiary to a Related Person which, when
aggregated with all prior issuances and transfers to such Related
<PAGE>
Person of securities of the Corporation or such Subsidiary during the preceding
365 days, constitutes five percent (5%) or more of the outstanding class or
series of securities of the Corporation or such Subsidiary, (e) the acquisition
by the Corporation or a Subsidiary of any securities issued by a Related Person
if, after giving effect thereto, the Corporation and its Subsidiaries would own
an aggregate of one percent (1%) or more of (i) the outstanding shares of any
class or series of any equity security issued by the Related Person or (ii) the
outstanding principal amount of any class or series of any debt security issued
by the Related Person (for purposes of such calculation, the Corporation and its
Subsidiaries shall be deemed to own at the time of such calculation any such
equity or debt securities of the Related Person that may then or thereafter be
acquired (x) upon the exercise of any options, warrants or other rights then
owned by the Corporation or a Subsidiary or (y) upon the conversion or exchange
of any other security then owned by the Corporation or a Subsidiary), (f) any
recapitalization or reorganization that would have the effect, directly or
indirectly, of increasing the voting power of a Related Person, and (g) any
agreement, contract or other arrangement providing for any of the transactions
described in this definition of a Business Combination.
D. "Continuing Director" means, as to any Related Person, any member of
the Board of Directors of the Corporation (the "Board") who (i) is unaffiliated
with and is not the Related Person and (ii) was a member of the board of
directors of The Times Mirror Company, a California corporation, prior to
December 4, 1985 or thereafter became a member of the Board prior to the time
that the Related Person became a Related Person, and any successor of a
Continuing Director who is recommended to succeed a Continuing Director by a
majority of Continuing Directors then on the Board.
E. "Disinterested Shares" means, as to any Related Person, shares of
Voting Stock held by shareholders other than such Related Person.
F. "Effective Date" means the date upon which the merger between The
Times Mirror Company, a California corporation, and the Corporation becomes
effective.
G. "Fair Market Value" means: (a) in the case of stock, the highest
closing sale price during the thirty (30) day period immediately preceding and
including the date in question of a share of such stock on the Composite Tape
for securities listed on the New York Stock Exchange, or, if such stock is not
quoted on the Composite Tape, on the New York Stock Exchange, or if such stock
is not listed on such Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a share of such stock during the
thirty (30) day period preceding and including the date in question on the
National
-2-
<PAGE>
Association of Securities Dealers, Inc. Automated Quotation System or any other
quotation reporting system then in general use, or, if no such quotations are
available, the Fair Market Value on the date in question of a share of such
stock as determined by the Continuing Directors in good faith, which
determination shall be final; and (b) in the case of property other than cash or
stock, the Fair Market Value of such property on the date in question as
determined by the Continuing Directors in good faith, which determination shall
be final. In making such determinations, the Continuing Directors may rely in
good faith upon the books of account or other records of the Corporation or
statements prepared by its officers or by independent accountants or by an
appraiser selected with reasonable care by the Board.
H. "Related Person" means and includes any individual, corporation,
partnership or other person or entity, or any group of two or more of the
foregoing that have agreed to act together, which, together with its Affiliates
and Associates, Beneficially Owns, in the aggregate, five percent (5%) (the
"Threshold Percentage") or more of the outstanding Voting Interests of the
Corporation, and any Affiliate or Associate of any such individual, corporation,
partnership or other person or entity; provided, however, that the term "Related
Person" shall not include either (i) any individual, corporation, partnership or
other person, entity or group which beneficially owned on December 4, 1985 five
percent (5%) or more of the common stock of The Times Mirror Company, a
California corporation, or (ii) any employee benefit plan established to provide
benefits for employees of the Corporation or its subsidiaries, any trust
established pursuant thereto, or any trustee or fiduciary when acting in such
capacity with respect to any such plan or trust.
I. "Subsidiary" means any corporation in which the Corporation owns,
directly or indirectly, securities which entitle the Corporation to elect a
majority of the board of directors of such corporation or which otherwise give
to the Corporation the power to control such corporation.
J. "Substantial Part" means more than ten percent (10%) of the Fair
Market Value of the total consolidated assets of the corporation in question and
its subsidiaries as of the end of its most recent fiscal year ending prior to
the time the determination is being made.
K. "Voting Interests" means the total number of votes which can be cast
by all shares of Voting Stock then outstanding.
L. "Voting Stock" means all outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors of the
Corporation, and each reference to a percentage or portion of shares of Voting
Stock shall refer to such percentage or portion of the votes entitled to be cast
by such shares.
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Article III: REGISTERED OFFICE
The address of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, and the name of its registered agent at that
address is The Corporation Trust Company.
Article IV: BUSINESS
The nature of the business and the purposes to be conducted or promoted by
the Corporation are to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
Article V: AUTHORIZED CAPITAL STOCK
Section 1. AUTHORIZED SHARES.
The total number of shares of all classes of capital stock which the
Corporation shall have authority to issue is five hundred fifty-four million
five hundred thousand (554,500,000) shares, of which (i) five hundred fifty
million (550,000,000) shares, of a par value of $1 per share, shall be Common
Stock (the "Common Stock"), and (ii) four million five hundred thousand
(4,500,000) shares, of a par value of $1 per share, shall be Preferred Stock
(hereinafter called "Preferred Stock").
The Common Stock may be issued as a single class, without series, or if so
determined from time to time by the Board of Directors, either in whole or in
part in two or more series. Unless and until a Certificate of Designation is
filed with respect to two or more series, all shares of Common Stock shall be of
one class without series and shall be denominated Common Stock. Upon the filing
with the Secretary of State of a Certificate of Designation providing for the
issuance of either Series B Stock or Series C Stock, each share of Common Stock
outstanding or held in the treasury immediately prior to such filing shall be
converted without any action by the holder thereof into one share of Series A
Stock and each certificate representing outstanding shares of Common Stock shall
thereafter be deemed to represent shares of Series A Stock.
If shares of Common Stock are issued in two or more series, three hundred
million (300,000,000) shares shall be denominated Series A Common Stock
(hereinafter called "Series A Stock"). The remaining shares of Common Stock may
be issued as additional shares of Series A Stock, as Series B Common Stock
(hereinafter called "Series B Stock") and/or Series C Common Stock (hereinafter
called "Series C Stock"). Subject to the foregoing, the Board of Directors
shall have the authority to fix the number of shares constituting any such
series, and to increase or decrease the number of shares of any series prior to
or after the issuance of
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shares of that series, but not below the number of shares of such series then
outstanding. In case the number of shares of any series shall be so decreased,
the shares constituting such decrease shall resume the status of authorized but
unissued shares of Common Stock.
Section 2. SERIES A STOCK, SERIES B STOCK AND SERIES C STOCK.
A. POWERS, PREFERENCES AND RIGHTS.
The Board of Directors shall have the authority to fix or to alter the
powers, designations, preferences and relative, participating, optional or other
rights, if any, or the qualifications, limitations or restrictions thereof, if
any, of the Series B Stock or Series C Stock; provided that, except as set forth
in the next sentence, in no such case shall the powers, preferences and rights
of the Series B Stock or Series C Stock be greater than those provided for
herein; and provided further that in no such case shall the voting rights of the
Series B Stock or the Series C Stock be other than as provided for herein. The
Board of Directors shall have the authority to provide, in the case of the
Series B Stock or Series C Stock, that upon the voluntary or involuntary
liquidation, winding-up or dissolution of the Corporation, the holders of shares
of such series shall be entitled to payment from, or to participate in the
distribution of, assets of the Corporation up to the amount of the par value
thereof prior to any payment to, or participation in such distribution of assets
by, the holder of Series A Stock. The Board also may make other changes in the
powers, preferences and rights of the Series B Stock and the Series C Stock,
provided that in no such case may the powers, preferences and rights of any such
series be greater than those described herein. Except as otherwise required by
law or expressly provided for in or pursuant to the authority provided in this
Certificate of Incorporation or any resolution or resolutions providing for the
issuance of Series B Stock or Series C Stock, the powers, preferences and rights
of the Series A Stock, the Series B Stock and the Series C Stock and the
qualifications, limitations or restrictions thereof, shall be in all respects
identical.
B. VOTING RIGHTS.
Subject to the provisions for cumulative voting set forth in Article
IX:
1. If there shall be only one series of Common Stock outstanding,
each share of Common Stock shall entitle the holder thereof to one (1) vote.
2. If two or more series are issued and outstanding, each share of
Series A Stock shall entitle the holder thereof to one (1) vote, each share of
Series B Stock shall entitle the holder thereof to not less than one-tenth
(1/10) of a vote nor more than one (1) vote, and each share of Series C Stock
shall entitle the
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holder thereof to not less than one (1) vote nor more than ten (10) votes. Such
voting rights shall be set forth in a Certificate of Designation to be filed
with respect to such series. Except as set forth herein, all actions submitted
to a vote of shareholders shall be voted on by the holders of Series A Stock,
Series B Stock and Series C Stock (as well as the holders of any series of
Preferred Stock, if any, entitled to vote thereon) voting together as a single
class.
3. The holders of Series A Stock, Series B Stock and Series C Stock
shall each be entitled to vote separately as a series with respect to (i)
amendments to this Certificate of Incorporation that alter or change the powers,
preferences or special rights of their respective class of stock so as to affect
them adversely and (ii) such other matters as require class votes under the
General Corporation Law of the State of Delaware (except that the Board may
increase or decrease the number of shares constituting Series B Stock or Series
C Stock).
4. Except as otherwise provided by law or pursuant to this Article V
or by resolution or resolutions of the Board providing for the issue of any
series of Preferred Stock, the holders of the Series A Stock, the Series B Stock
and the Series C Stock shall have sole voting power for all purposes, each
holder of the Series A Stock, Series B Stock and Series C Stock being entitled
to vote as provided in the paragraph B of Section 2 and in the resolution or
resolutions providing for the issuance of the Series B Stock or the Series C
Stock.
C. DIVIDENDS.
1. If no shares of a particular series of Common Stock are
outstanding, the Board may declare and distribute a stock dividend payable in
shares of that series to the holders of any other class or series of stock then
outstanding.
2. If and when dividends on the Series A Stock, Series B Stock and
Series C Stock are declared payable from time to time by the Board as provided
in this subparagraph C.2, whether payable in cash, in property or in shares of
stock of the Corporation, the holders of Series A Stock, the holders of Series B
Stock and the holders of Series C Stock shall be entitled to share equally, on a
per share basis, in such dividends, subject to the limitations described below.
Except for dividends permitted by subparagraph C.1, if dividends are declared
that are payable in shares of Series A Stock, Series B Stock, or Series C Stock,
such dividends shall be payable at the same rate on all series of stock and the
dividends payable in shares of Series A Stock shall be payable only to holders
of Series A Stock, the dividends payable in shares of Series B Stock shall be
payable only to holders of Series B Stock and the dividends payable in shares of
Series C Stock shall be payable only to holders of Series C Stock. If the
Corporation shall in any manner subdivide or combine the outstanding shares of
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Series A Stock, Series B Stock, or Series C Stock, the outstanding shares of the
other such series of Common Stock shall be proportionally subdivided or combined
in the same manner and on the same basis as the outstanding shares of Series A
Stock, Series B Stock or Series C Stock, as the case may be, which have been
subdivided or combined.
3. Subject to provisions of law and the preferences of the Preferred
Stock and of any other stock ranking prior to the Series A Stock, the Series B
Stock, or the Series C Stock as to dividends, the holders of the Series A Stock,
the Series B Stock, and the Series C Stock shall be entitled to receive
dividends at such time and in such amounts as may be determined by the Board and
declared out of any funds lawfully available therefor, and shares of Preferred
Stock of any series shall not be entitled to share therein except as otherwise
expressly provided in the resolution or resolutions of the Board providing for
the issue of such series.
D. CONVERSION OF SERIES C STOCK BY HOLDER.
1. The holder of each share of Series C Stock shall have the right
at any time, or from time to time, at such holder's option, to convert such
share into one fully paid and nonassessable share of Series A Stock on and
subject to the terms and conditions hereinafter set forth.
2. In order to exercise his conversion privilege, the holder of any
shares of Series C Stock to be converted shall present and surrender the
certificate or certificates representing such shares during usual business hours
at any office or agency of the Corporation maintained for the transfer of Series
C Stock and shall deliver a written notice of the election of the holder to
convert the shares represented by such certificate or any portion thereof
specified in such notice. Such notice shall also state the name or names (with
address) in which the certificate or certificates for shares of Series A Stock
issuable on such conversion shall be registered. If required by the
Corporation, any certificate for shares surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder of such shares or his duly authorized
representative. Each conversion of shares of Series C Stock shall be deemed to
have been effected on the date (the "conversion date") on which the certificate
or certificates representing such shares shall have been surrendered and such
notice and any required instruments of transfer shall have been received as
aforesaid, and the person or persons in whose name or names any certificate or
certificates for shares of Series A Stock shall be issuable on such conversion
shall be, for the purpose of receiving dividends and for all other corporate
purposes whatsoever, deemed to have become the holder or holders of record of
the shares of Series A Stock represented thereby on the conversion date.
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3. As promptly as practicable after the presentation and surrender
for conversion, as herein provided, of any certificate for shares of Series C
Stock, the Corporation shall issue and deliver at such office or agency, to or
upon the written order of the holder thereof, certificates for the number of
shares of Series A Stock issuable upon such conversion. Subject to the
provisions of paragraph F of this Section 2, in case any certificate for shares
of Series C Stock shall be surrendered for conversion of a part only of the
shares represented thereby, the Corporation shall deliver at such office or
agency, to or upon the written order of the holder thereof, a certificate or
certificates for the number of shares of Series C Stock represented by such
surrendered certificate which are not being converted. The issuance of
certificates for shares of Series A Stock issuable upon the conversion of shares
of Series C Stock by the registered holder thereof shall be made without charge
to the converting holder for any tax imposed on the Corporation in respect of
the issue thereof. The Corporation shall not, however, be required to pay any
tax which may be payable with respect to any transfer involved in the issue and
delivery of any certificate in a name other than that of the registered holder
of the shares being converted, and the Corporation shall not be required to
issue or deliver any such certificate unless and until the person requesting the
issue thereof shall have paid to the Corporation the amount of such tax or has
established to the satisfaction of the Corporation that such tax has been paid.
4. Upon any conversion of shares of Series C Stock into shares of
Series A Stock pursuant hereto, no adjustment with respect to dividends shall be
made; only those dividends shall be payable on the shares so converted as have
been declared and are payable to holders of record of shares of Series C Stock
on a date prior to the conversion date with respect to the shares so converted;
and only those dividends shall be payable on shares of Series A Stock issued
upon such conversion as have been declared and are payable to holders of record
of shares of Series A Stock on or after such conversion date.
5. In case of any consolidation or merger of the Corporation as a
result of which the holders of Series A Stock shall be entitled to receive cash,
stock, other securities or other property with respect to or in exchange for
Series A Stock or in case of any sale or conveyance of all or substantially all
of the property or business of the Corporation as an entirety, a holder of a
share of Series C Stock shall have the right thereafter to convert such share
into the kind and amount of cash, shares of stock and other securities and
properties receivable upon such consolidation, merger, sale or conveyance by a
holder of one share of Series A Stock and shall have no other conversion rights
with regard to such share. The provisions of this subparagraph D.5 shall
similarly apply to successive consolidations, mergers, sales or conveyances.
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6. Shares of the Series C Stock converted into Series A Stock shall
be retired and shall resume the status of authorized but unissued shares of
Series C Stock.
7. Such number of shares of Series A Stock as may from time to time
be required for such purpose shall be reserved for issuance upon conversion of
outstanding shares of Series C Stock.
E. TERMINATION OF SERIES B OR SERIES C STOCK.
1. All outstanding shares of Series B Stock shall automatically,
without any further act or deed on the part of this Corporation or any other
person, be converted into shares of Series A Stock on a share-for-share basis
a. if, as a result of the existence of the Series B Stock, the
Series A Stock is excluded from trading on the New York Stock
Exchange, the American Stock Exchange and all other national
securities exchanges and is also excluded from quotation on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") and any other national quotation system then in use; or
b. at the option of the Corporation:
(i) at any time when the Board and the holders of a
majority of the outstanding shares of the Series B Stock approve
the conversion of all of the Series B Stock into Series A Stock;
or
(ii) if the Board, in its sole discretion, elects to
effect a conversion in connection with its approval of any sale
or lease of all or any substantial part of the Corporation's
assets or any merger, consolidation, liquidation or dissolution
of the Corporation; or
(iii) if the Board, in its sole discretion, elects to
effect a conversion after a determination that there has been a
material adverse change in the liquidity, marketability or market
value of the outstanding Series A Stock, considered in the
aggregate, (X) due to the exclusion of the Series A Stock from
trading on a national securities exchange or the exclusion of the
Series A Stock from quotation on NASDAQ or such other system then
in use, or (Y) due to requirements under federal or state law, in
any such case as a result of the existence of the Series B Stock.
2. All outstanding shares of Series C Stock shall automatically,
without any further act or deed on the part of this
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Corporation or any other person, be converted into shares of Series A Stock on a
share-for-share basis
a. if, as a result of the existence of the Series C Stock, the
Series A Stock is excluded from trading on the New York Stock
Exchange, the American Stock Exchange and all other national
securities exchanges and is also excluded from quotation on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") and any other national quotation system then in use; or
b. at the option of the Corporation:
(i) at any time when the Board and the holders of a
majority of the outstanding shares of the Series C Stock approve
the conversion of all of the Series C Stock into Series A Stock;
or
(ii) if the Board, in its sole discretion, elects to
effect a conversion in connection with its approval of any sale
or lease of all or any substantial part of the Corporation's
assets or any merger, consolidation, liquidation or dissolution
of the Corporation; or
(iii) if the Board, in its sole discretion, elects to
effect a conversion after a determination that there has been a
material adverse change in the liquidity, marketability or market
value of the outstanding Series A Stock, considered in the
aggregate, (X) due to the exclusion of the Series A Stock from
trading on a national securities exchange or the exclusion of the
Series A Stock from quotation on NASDAQ or such other system then
in use, or (Y) due to requirements under federal or state law, in
any such case as a result of the existence of the Series C Stock.
3. In the event of any automatic conversion of Series B Stock or
Series C Stock pursuant to this paragraph E, certificates formerly representing
outstanding shares of Series B Stock or Series C Stock will thereafter be deemed
to represent a like number of shares of Series A Stock.
F. LIMITATIONS ON TRANSFER OF SERIES C STOCK.
1. No record or beneficial owner of shares of Series C Stock may
transfer, and the Corporation shall not register the transfer of, such shares of
Series C Stock, whether by sale, assignment, gift, bequest, appointment or
otherwise, except to a "Permitted Transferee" as provided herein.
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a. In the case of a holder of record of the Series C Stock (the
"Series C Holder") who is a natural person and the beneficial owner of
the shares of Series C Stock to be transferred, Permitted Transferees
shall include only the following:
(i) The spouse of such Series C Holder, any lineal
descendant of a grandparent of such Series C Holder, or any
spouse of such lineal descendant (herein collectively referred to
as "such Series C Holder's Family Members");
(ii) The trustee or trustees of a trust (including a
voting trust) principally for the benefit of such Series C Holder
and/or one or more such Series C Holder's Family Members,
provided, however, if at any time such trust ceases to meet the
requirements of this subparagraph (ii), all shares of Series C
Stock then held by such trustee or trustees shall immediately and
automatically, without further act or deed on the part of the
Corporation or any other person, be converted into Series A Stock
on a share-for-share basis, and stock certificates formerly
representing such shares of Series C Stock shall thereupon and
thereafter be deemed to represent a like number of shares of
Series A Stock;
(iii) A corporation, if sufficient shares entitled to
elect at least a majority of the entire board of directors of
such corporation are beneficially owned by, or a partnership in
which all of the partners are, and all of the partnership
interests are owned by, the Series C Holder and/or one or more of
the Permitted Transferees of such Series C Holder determined
under this subparagraph F.a. provided that if by reason of any
change in the ownership of such stock or partners or partnership
interests, such corporation or partnership would no longer
qualify as a Permitted Transferee of such Series C Holder, all
shares of Series C Stock then held by such corporation or
partnership shall immediately and automatically, without further
act or deed on the part of the corporation or any other person,
be converted into shares of Series A Stock on a share-for-share
basis, and stock certificates formerly representing such shares
of Series C Stock shall thereupon and thereafter be deemed to
represent a like number of shares of Series A Stock;
(iv) An organization established by the Series C Holder
or such Series C Holder's Family
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Members, contributions to which are deductible for federal
income, estate or gift tax purposes (a "Charitable Organization")
and a majority of whose governing board at all times consists of
the Series C Holder and/or one or more of the Permitted
Transferees of such Series C Holder, or any successor to such
Charitable Organization meeting such definition; provided that if
by reason of any change in the composition of the governing board
of such Charitable Organization, such Charitable Organization
shall no longer qualify as a Permitted Transferee of such Series
C Holder, all shares of Series C Stock then held by such
Charitable Organization shall immediately and automatically,
without further act or deed on the part of the Corporation or any
other person, be converted into shares of Series A Stock on a
share-for-share basis, and stock certificates formerly
representing such shares of Series C Stock shall thereupon and
thereafter be deemed to represent a like number of shares of
Series A Stock; and
(v) The executor, administrator or personal
representative of the estate of a deceased Series C Holder or the
trustee of the estate of a bankrupt or insolvent Series C Holder
or the guardian or conservator of a Series C Holder adjudged
disabled or incompetent by a court of competent jurisdiction,
acting in his capacity as such.
b. In the case of a Series C Holder holding the shares of
Series C Stock as trustee pursuant to a trust other than a trust
described in subparagraph F.1.c. below, Permitted Transferees shall
include only the following:
(i) any successor trustee of such trust who is not,
and by becoming successor trustee will not become, a Related
Person;
(ii) the person who established such trust; and
(iii) a Permitted Transferee of such person who
established such trust.
c. In the case of a Series C Holder holding the shares of
Series C Stock as trustee pursuant to a trust which was irrevocable on
the Record Date (a "Transferor Trust"), Permitted Transferees shall
include only the following:
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(i) any successor trustee of such Transferor Trust who
is described in subparagraph F.1.c(ii), (iii) or (iv) below or
who is not, and by becoming successor trustee will not otherwise
become, a Related Person;
(ii) any person to whom or for whose benefit the income
may be distributed during the term of such Transferor Trust;
(iii) any person to whom or for whose benefit the
principal may be distributed either during or at the end of the
term of such Transferor Trust whether by power of appointment or
otherwise; and
(iv) any lineal descendant of a grandparent of the
creator of such Transferor Trust, the spouse of such creator and
the spouse of any such lineal descendant.
d. In the case of a record (but not beneficial) owner of the
Series C Stock as nominee for the person who was the beneficial owner
thereof on the Record Date, Permitted Transferees shall include only
such beneficial owner and a Permitted Transferee of such beneficial
owner.
e. In the case of a Series C Holder which is a partnership and
the beneficial owner of the shares of Series C Stock proposed to be
transferred, Permitted Transferees shall include only:
(i) any partner of such partnership who was also a
partner of such partnership on the Record Date;
(ii) any person transferring shares of Series C Stock
to such partnership after the Record Date (provided, however,
that such transferor may not receive shares of Series C Stock in
excess of the shares transferred by the transferor to such
partnership); and
(iii) any Permitted Transferee of such person referred
to in subparagraph F.1.e(i) or F.1.e(ii) above (not in excess of
the number of shares which such person is entitled to receive
pursuant to this subparagraph F.1.e).
f. In the case of a Series C Holder which is a corporation and
the beneficial owner of the shares
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proposed to be transferred, Permitted Transferees shall include only:
(i) any shareholder of such corporation on the Record
Date that is generally entitled to vote in the election of
directors of such corporation (a "Voting Shareholder"), provided
that such corporation does not have more than 30 Voting
Shareholders of Record on the Record Date (or such greater number
of Voting Shareholders as may be allowed under the applicable
state law of such corporation in order to qualify as a close
corporation);
(ii) any shareholder of such corporation on the Record
Date who receives shares of Series C Stock pro rata to his stock
ownership in such corporation through a dividend or through a
distribution made upon liquidation of such corporation;
(iii) any person transferring shares of Series C Stock
to such corporation after the Record Date (provided, however,
that such transferor may not receive shares of Series C Stock in
excess of the shares transferred by the transferor to such
corporation);
(iv) any Permitted Transferee of such shareholder or
person referred to in subparagraph F.1.f(i), (ii) or (iii) above
(not in excess of the number of shares which such shareholder or
person is entitled to receive pursuant to this subparagraph
F.1.f); and
(v) the survivor of a merger or consolidation of such
corporation if those persons who owned beneficially sufficient
shares entitled to elect at least a majority of the entire board
of directors of such constituent corporation immediately prior to
the merger or consolidation own beneficially sufficient shares
entitled to elect at least a majority of the entire board of
directors of the surviving corporation, provided that if by
reason of any change in the ownership of such stock such
surviving corporation would no longer qualify as a Permitted
Transferee, all shares of Series C Stock then held by such
surviving corporation shall immediately and automatically,
without further act or deed on the part of the corporation or any
other person, be converted into shares of Series A Stock on a
share-for-share basis, and stock certificates
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formerly representing such shares of Series C Stock shall
thereupon and thereafter be deemed to represent a like number of
shares of Series A Stock.
For purposes of subparagraph F.1.f., a mutual company shall be treated as a
corporation, and the persons holding voting interests therein shall be
treated as shareholders.
g. In the case of a Series C Holder who is the executor or
administrator of the estate of a deceased Series C Holder, guardian or
conservator of the estate of a disabled or incompetent Series C Holder
or who is a trustee of the estate of a bankrupt or insolvent Series C
Holder, Permitted Transferees shall include only a Permitted
Transferee of such deceased, disabled, bankrupt or insolvent Series C
Holder.
2. Notwithstanding anything to the contrary set forth herein, any
Series C Holder may pledge such holder's shares of Series C Stock to a pledgee
pursuant to a bona fide pledge of such shares as collateral security for
indebtedness due to the pledgee, provided that such shares shall not be
transferred to or registered in the name of the pledgee and shall remain subject
to the provisions of this paragraph F. In the event of foreclosure or other
similar action by the pledgee, such pledged shares of Series C Stock may only be
transferred to a Permitted Transferee of the pledgor or converted into shares of
Series A Stock, as the pledgee may elect.
3. For purposes of this paragraph F:
a. The relationship of any person that is derived by or through
a legal adoption shall be considered a natural one;
b. Each joint owner of shares of Series C Stock shall be
considered a Series C Holder of such shares;
c. A minor for whom shares of Series C Stock are held pursuant
to a Uniform Gifts to Minors Act or similar law shall be considered a
Series C Holder of such shares;
d. Unless otherwise specified, the term "person" means both
natural persons and legal entities; and
e. The "Record Date" is the date for determining the persons to
whom the Series C Stock is initially distributed by the Corporation as
a dividend on the Common Stock.
4. Any purported transfer of shares of Series C Stock not permitted
hereunder shall result in the conversion of the
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transferee's shares of Series C Stock into shares of Series A Stock, effective
on the date on which certificates representing such shares are presented for
transfer on the stock transfer record books of the Corporation; provided,
however, that if the Corporation should determine that such shares were not so
presented for transfer within 20 days after the date of such sale, transfer,
assignment or other disposition, the transfer date shall be the actual date of
such sale, transfer, assignment or other disposition, as determined in good
faith by the Board or its appointed agent. The Corporation may, as a condition
to the transfer or the registration of transfer of shares of Series C Stock to a
purported Permitted Transferee, require the furnishing of such affidavits or
other proof as it deems necessary to establish that such transferee is a
Permitted Transferee. If no indication to the contrary is supplied at the time
shares of Series C Stock are presented for transfer, the transfer shall be
presumed by the Corporation to be a transfer to a person other than a Permitted
Transferee.
G. REGISTRATION OF SERIES C STOCK.
1. Shares of Series C Stock shall be registered in the name(s) of
the beneficial owner(s) thereof (as hereafter defined) and not in "street" or
"nominee" names; provided, however, certificates representing shares of Series C
Stock issued as a stock dividend on the Corporation's then outstanding Common
Stock may be registered in the same name and manner as the certificates
representing the shares of Common Stock with respect to which the shares of
Series C Stock were issued. For the purposes of paragraphs F and G of this
Section 2, the term "beneficial owner(s)" of any shares of Series C Stock shall
mean the person or persons who possess the power to vote or dispose, or to
direct the voting or disposition, of such shares and "beneficially owned" shares
shall refer to shares owned by such a beneficial owner.
2. The Corporation shall note on the certificates representing the
shares of Series C Stock that there are restrictions on transfer and
registration of transfer imposed by paragraphs F and G of this Section 2.
H. PRIORITY OF PREFERRED STOCK.
The Series A Stock, Series B Stock, and the Series C Stock are subject
to all the powers, rights, privileges, preferences and priorities of the
Preferred Stock as may be stated herein and as shall be stated and expressed in
any resolution or resolutions adopted by the Board, pursuant to authority
expressly granted to and vested in it by the provisions of this Article V.
I. LIQUIDATION, DISSOLUTION OR WINDING UP.
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary (sometimes
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referred to as liquidation), after payment or provision for payment of the debts
and other liabilities of the Corporation and the preferential amounts to which
the holders of any stock ranking prior to the Series A Stock, the Series B Stock
and the Series C Stock in the distribution of assets shall be entitled upon
liquidation, unless otherwise provided by the Board in the resolution or
resolutions providing for the issuance of Series B Stock or Series C Stock the
holders of the Series A Stock, the Series B Stock and the Series C Stock and the
holders of any other stock ranking on a parity with the Series A Stock, the
Series B Stock and the Series C Stock in the distribution of assets upon
liquidation shall be entitled to share pro rata in the remaining assets of the
Corporation according to their respective interests.
Section 3. PREFERRED STOCK.
Shares of Preferred Stock may be issued from time to time in one or more
series. Shares of Preferred Stock which may be redeemed, purchased or acquired
by the Corporation may be reissued except as otherwise provided by law. The
Board is hereby authorized to fix or alter the designations and powers,
preferences and relative, participating, optional or other rights, if any, and
qualifications, limitations or restrictions thereof, including, without
limitation, the dividend rate (and whether dividends are cumulative), conversion
rights, if any, voting rights, rights and terms of redemption (including sinking
fund provisions, if any), redemption price and liquidation preferences of any
wholly unissued series of Preferred Stock, and the number of shares constituting
any such series and the designation thereof, or any of them; and to increase or
decrease the number of shares of any series subsequent to the issue of shares of
that series, but not below the number of shares of such series then outstanding.
Article VI: NUMBER OF DIRECTORS AND LIMITATION
OF LIABILITY OF DIRECTORS
Section 1. NUMBER OF DIRECTORS.
The number of directors which shall constitute the whole Board of the
Corporation shall be as specified in the Bylaws of the Corporation, as the same
may be amended from time to time.
Section 2. LIMITATION OF LIABILITY OF DIRECTORS.
No director of the Corporation shall be personally liable to the
Corporation or its shareholder for monetary damages for breach of fiduciary duty
as a director; provided, however, that this Section shall not eliminate or limit
the liability of a director (i) for any breach of the director's duty of loyalty
to the Corporation or its shareholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the
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director derived an improper personal benefit. This Section shall not eliminate
or limit the liability of a director for any act or omission occurring prior to
the date on which this Section becomes effective.
Section 3. FUTURE AMENDMENTS.
In addition to the provisions of Section 2 hereof, if Delaware law is
amended hereafter to authorize or permit corporate action further limiting or
eliminating the personal liability of a director to the Corporation or its
shareholders, then the liability of each director of the Corporation shall be
further limited or eliminated to the fullest extent permitted by any such future
amendment of the law of the State of Delaware.
Section 4. REPEAL OR MODIFICATION.
Any repeal or modification of this Article VI or any provision hereof shall
not increase the personal liability of any director of the Corporation for any
act or occurrence taking place prior to such repeal or modification, or
otherwise adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
Article VII: MEETINGS
Meetings of shareholders may be held within or without the State of
Delaware, as the Bylaws of the Corporation may provide. The books of the
Corporation may be kept (subject to any provision of Delaware law) outside the
State of Delaware at such place or places as may be designated from time to time
by the Board or in the Bylaws of the Corporation. Elections of directors need
not be by written ballot unless the Bylaws of the Corporation shall so provide.
Article VIII: ELECTION OF DIRECTORS
Section 1. CLASSIFIED BOARD.
The directors who shall take office on the Effective Date shall serve until
the first annual meeting of shareholders at which directors are elected
following the Effective Date (the "1986 Annual Meeting"). Effective at the 1986
Annual Meeting, the Board shall be divided into three classes: Class I, Class
II and Class III. Such classes shall be as nearly equal in number of directors
as possible. Each director shall serve for a term ending at the third annual
shareholders meeting following the annual meeting at which such director was
elected; provided, however, that the directors first elected to Class I shall
serve for a term ending at the annual meeting to be held in 1987, the directors
first elected to Class II shall serve for a term ending at the annual meeting to
be held in 1988, and the directors first elected to Class III shall serve for a
term ending at the annual meeting to be held in 1989.
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Notwithstanding any of the foregoing provisions of this Article VIII, each
director shall serve until his term has expired and his successor is elected and
qualified, or until his earlier death, resignation or removal.
At each annual election held after the 1986 Annual Meeting, the directors
chosen to succeed those whose terms then expire shall be identified as being of
the same class as the directors they succeed, unless, by reason of any
intervening changes in the authorized number of directors, the Board shall
designate one or more directorships whose term then expires as directorships of
another class in order more nearly to achieve equality in the number of
directors among the classes. When the Board of Directors fills a vacancy
resulting from the death, resignation or removal of a director, the director
chosen to fill that vacancy shall be of the same class as the director he
succeeds, unless, by reason of any previous changes in the authorized number of
directors, the Board shall designate the vacant directorship as a directorship
of another class in order more nearly to achieve equality in the number of
directors among the classes.
Notwithstanding the rule that the three classes shall be as nearly equal in
number of directors as possible, in the event of any change in the authorized
number of directors each director then continuing to serve as such will
nevertheless continue as a director of the class of which he is a member, until
the expiration of his current term or his earlier death, resignation or removal.
If any newly created directorship or vacancy on the Board, consistent with the
rule that the three classes shall be as nearly equal in number of directors as
possible, may be allocated to one of two or more classes, the Board shall
allocate it to that of the available classes whose term of office is due to
expire at the earliest date following such allocation.
Section 2. DIRECTORS ELECTED BY PREFERRED STOCK.
During any period when the holders of Preferred Stock or any one or more
series thereof, voting as a class, shall be entitled to elect a specified number
of directors by reason of dividend arrearages or other contingencies giving them
the right to do so, then and during such times as such right continues (1) the
then otherwise authorized number of directors shall be increased by such
specified number of directors, and the holders of the Preferred Stock or such
series thereof, voting as a class, shall be entitled to elect the additional
directors so provided for, pursuant to the provisions of such Preferred Stock or
series; (2) the additional directors shall be members of those respective
classes of directors in which vacancies are created as a result of such increase
in the authorized number of directors; and (3) each such additional director
shall serve until the annual meeting at which the term of office of his class
shall expire and until his successor shall be elected and shall qualify, or
until his right to hold such office terminates pursuant to the provisions of
such Preferred Stock or
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series, whichever occurs earlier. Whenever the holders of such Preferred Stock
or series thereof are divested of such rights to elect a specified number of
directors, voting as a class, pursuant to the provisions of such Preferred Stock
or series, the terms of office of all directors elected by the holders of such
Preferred Stock or series, voting as a class pursuant to such provisions, or
elected to fill any vacancies resulting from the death, resignation or removal
of directors so elected by the holders of such Preferred Stock or series, shall
forthwith terminate and the authorized number of directors shall be reduced
accordingly.
Section 3. REMOVAL.
Subject to the rights of any series of Preferred Stock then outstanding,
any director, or the entire Board, may be removed from office at any time, but
only (1) for cause, and (2) by the affirmative vote of the holders of a majority
of the Voting Interests; provided, however, that if the proposal to remove a
director is made by or on behalf of a Related Person or a director affiliated
with a Related Person, then in addition to (1) and (2) above such removal shall
require the affirmative vote of a majority of the Voting Interests of the
Disinterested Shares.
Section 4. NOTICE OF SHAREHOLDER NOMINEES.
Nominations of persons for election to the Board of the Corporation shall
be made only at a meeting of shareholders and only (1) by or at the direction of
the Board or (2) by any shareholder of the Corporation entitled to vote for the
election of directors at the meeting who complies with the notice procedures set
forth in this Section 4. Such nominations, other than those made by or at the
direction of the Board, shall be made pursuant to timely notice in writing to
the Secretary of the Corporation. To be timely, a shareholder's notice shall be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than thirty (30) days nor more than sixty (60) days prior
to the meeting; PROVIDED, HOWEVER, that in the event that less than forty (40)
days' notice or prior public disclosure of the date of the meeting is given or
made to shareholders, notice by the shareholder to be timely must be so received
not later than the close of business on the 10th day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. For purposes of this Section 4, any adjournment(s) or postponement(s) of
the original meeting whereby the meeting will reconvene within thirty (30) days
from the original date shall be deemed for purposes of notice to be a
continuation of the original meeting and no nominations by a shareholder of
persons to be elected directors of the Corporation may be made at any such
reconvened meeting unless pursuant to a notice which was timely for the meeting
on the date originally scheduled. Such shareholder's notice shall set forth:
(i) as to each person whom the shareholder proposes to nominate for election or
re-election as a director, all information relating to such
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person that is required to be disclosed in solicitations of proxies for election
of directors, or is otherwise required, in each case pursuant to the Securities
Exchange Act of 1934, as amended, (including such person's written consent to
being named in the proxy statement as a nominee and to serving as a director if
elected); and (ii) as to the shareholder giving the notice (A) the name and
address, as they appear on the Corporation's books, of such shareholder, and (B)
the class and number of shares of the Corporation which are beneficially owned
by such shareholder. Notwithstanding the foregoing, nothing in this Section 4
shall be interpreted or construed to require the inclusion of information about
any such nominee in any proxy statement distributed by, at the direction of, or
on behalf of the Board.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by this Section 4, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded.
Article IX: CUMULATIVE VOTING
In any election of directors of the Corporation, a holder of any class or
series of stock then entitled to vote in such election shall be entitled to as
many votes as shall equal (i) the number of votes which (except for this Article
as to cumulative voting) he would be entitled to cast for the election of
directors with respect to his shares of stock multiplied by (ii) the number of
directors to be elected in the election in which his class or series of shares
is entitled to vote and each shareholder may cast all of such votes for a single
director or for any two or more of them as he may see fit.
Article X: BUSINESS COMBINATIONS
Section 1. VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS.
Except as otherwise expressly provided in Section 2 of this Article X, in
addition to any affirmative vote required by law or any other provision of this
Certificate of Incorporation, and in addition to any voting rights granted to or
held by holders of Preferred Stock, the approval or authorization of any
Business Combination shall require (1) the affirmative vote of the holders of
not less than eighty percent (80%) of the Voting Interests (the "80% Voting
Requirement") and (2) the affirmative vote of the holders of a majority of the
Voting Interests of the Disinterested Shares.
Section 2. EXCEPTIONS.
A. Section 1 of this Article X shall not be applicable to any particular
Business Combination, and such Business Combination shall require only such
affirmative vote as may be required by law,
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by any voting rights granted to or held by holders of Preferred Stock and by any
other provision of this Certificate of Incorporation, if the Business
Combination shall have been approved by a majority of the Continuing Directors.
B. The 80% Voting Requirement of Section 1 of this Article X shall not be
applicable to any particular Business Combination in which shareholders of the
Corporation, in one or more transactions, are to receive cash, securities or
other property in exchange for their shares of capital stock of the Corporation,
and such Business Combination shall require only such affirmative vote as may be
required by law, by any voting rights granted to or held by holders of Preferred
Stock and by any other provisions of this Certificate of Incorporation if all of
the following conditions are met:
1. The aggregate amount of cash plus the Fair Market Value as of the
date of the consummation of the Business Combination of any consideration other
than cash to be received per share by holders of Common Stock in such Business
Combination shall be at least equal to the higher of the following:
a. the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid or
agreed to be paid by the Related Person for any shares of Common Stock
acquired by it (1) within the period of eighteen (18) months
immediately prior to and including the date of the most recent public
announcement of the proposal of the Business Combination (the
"Announcement Date") or (2) in the transaction or series of
transactions in which it became a Related Person; or
b. the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Related Person became a
Related Person (such latter date is referred to as the "Determination
Date"), whichever is higher; and
2. The aggregate amount of the cash plus the Fair Market Value as of
the date of the consummation of the Business Combination of any consideration
other than cash to be received per share by holders of shares of any of a
particular class or series of outstanding capital stock, other than Common
Stock, shall be at least equal to the highest of the following (it being
intended that the requirements of this paragraph B.2 shall be required to be met
with respect to every class or series of outstanding capital stock other than
Common Stock whether or not the Related Person has previously acquired any
shares of that particular class or series of capital stock):
a. the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid or
agreed to be paid by the Related
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Person for any shares of such class or series of capital stock
acquired by it (1) within the period of eighteen (18) months
immediately prior to and including the Announcement Date or (2) in the
transaction or series of transactions in which it became a Related
Person; or
b. the redemption price of each share of such class or series,
or if such shares have no redemption price, the highest amount per
share which such class or series was entitled to receive upon
liquidation of the Corporation as of the Announcement Date or the
Determination Date, whichever is higher; or
c. the Fair Market Value per share of such class or series on
the Announcement Date or on the Determination Date, whichever is
higher; and
3. The consideration to be received by holders of a particular class
or series of outstanding capital stock (including, without limitation, Common
Stock) shall be in cash or in the same form as the Related Person has previously
paid for shares of such class or series of capital stock. If the Related Person
has paid for shares of any class or series of capital stock with varying forms
of consideration, the form of consideration for such class or series of capital
stock shall be either cash or the form used to acquire the largest number of
shares of such class or series of capital stock previously acquired by the
Related Person; and
4. The Business Combination is approved by the holders of a majority
of the Voting Interests of the Disinterested Shares.
Section 3. DETERMINATION OF COMPLIANCE.
A majority of the total number of Continuing Directors shall have the power
and duty to determine, on the basis of information known to them after
reasonable inquiry, all facts necessary to determine compliance with this
Article X, including, without limitation, (a) whether a person is a Related
Person, (b) the number of shares of capital stock Beneficially Owned by any
person, (c) whether a person is an Affiliate or Associate of another, (d)
whether the applicable conditions set forth in paragraph B of Section 2 of this
Article X have been met with respect to any Business Combination, and (e)
whether the proposed transaction is a Business Combination.
Article XI: FACTORS TO CONSIDER
The Board, when evaluating any proposed transaction that would result in a
person or entity becoming a Related Person or a Related Person increasing its
ownership of capital stock of the Corporation, or any transaction or any
proposed transaction with another party which would constitute a Business
Combination if the other party to the transaction were a Related Person, shall,
in
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connection with the exercise of its judgment in determining what is in the best
interests of the Corporation and its shareholders, give due consideration to all
relevant factors, including without limitation freedom of the press, the
independence and integrity of the Company's media operations, the social and
economic effects on the shareholders, employees, customers, suppliers and other
constituents of the Corporation and its Subsidiaries and on the communities in
which the Corporation and its Subsidiaries operate or are located or which they
serve.
Article XII: INDEMNIFICATION
The Corporation shall indemnify, in the manner and to the full extent
permitted by law, any person (or the estate of any person) who was or is a party
to, or is threatened to be made a party to, any threatened, pending or completed
action, suit or proceeding, whether or not by or in the right of the
Corporation, and whether civil, criminal, administrative, investigative or
otherwise, by reason of the fact that such person is or was a director, officer
or employee of the Corporation, or is or was serving at the request of the
Corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise. The Corporation may, to
the full extent permitted by law, purchase and maintain insurance on behalf of
any such person against any liability which may be asserted against him. To the
full extent permitted by law, the indemnification provided herein shall include
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, and, in the manner provided by law, any such expenses may be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding. The indemnification provided herein shall not be deemed to limit
the right of the Corporation to indemnify any other person for any such expenses
to the full extent permitted by law, nor shall it be deemed exclusive of any
other rights to which any person seeking indemnification from the Corporation
may be entitled under any agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office.
Article XIII: SHAREHOLDER VOTE
Any election or other action by shareholders of this Corporation must be
effected at an annual or special meeting of shareholders, and may not be
effected by written consent without a meeting.
Article XIV: SHAREHOLDER PROPOSALS AT ANNUAL MEETINGS
Business may be properly brought before an annual meeting by a shareholder
only upon the shareholder's timely notice thereof in writing to the Secretary of
the Corporation. To be timely, a shareholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than
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thirty (30) days nor more than sixty (60) days prior to the meeting as
originally scheduled; PROVIDED, HOWEVER, that in the event that less than forty
(40) days' notice or prior public disclosure of the date of the meeting is given
or made to shareholders, notice by the shareholder to be timely must be so
received not later than the close of business on the 10th day following the day
on which such notice of the date of the annual meeting was mailed or such public
disclosure was made. For purposes of this Article XIV, any adjournment(s) or
postponement(s) of the original meeting whereby the meeting will reconvene
within thirty (30) days from the original date shall be deemed for purposes of
notice to be a continuation of the original meeting and no business may be
brought before any reconvened meeting unless such timely notice of such business
was given to the Secretary of the Corporation for the meeting as originally
scheduled. A shareholder's notice to the Secretary shall set forth as to each
matter the shareholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting,
(ii) the name and record address of the shareholder proposing such business,
(iii) the class and number of shares of the Corporation which are beneficially
owned by the shareholder, and (iv) any material interest of the shareholder in
such business. Notwithstanding the foregoing, nothing in this Article XIV shall
be interpreted or construed to require the inclusion of information about any
such proposal in any proxy statement distributed by, at the direction of, or on
behalf of the Board.
The chairman of an annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Article XIV, and if he should
so determine, he shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
Article XV: CALL OF SPECIAL MEETINGS
Special meetings of the shareholders of the Corporation for any purpose or
purposes may be called at any time by the Board, or by a majority of the members
of the Board; provided however, that where a proposal requiring shareholder
approval is made by or on behalf of a Related Person or director affiliated with
a Related Person, or where a Related Person otherwise seeks action requiring
shareholder approval, then the affirmative vote of a majority of the Continuing
Directors shall also be required to call a special meeting of shareholders for
the purpose of considering such proposal or obtaining such approval. Such
special meetings may not be called by any other person or persons or in any
other manner.
Article XVI: AMENDMENT OF CORPORATE DOCUMENTS
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Section 1. CERTIFICATE OF INCORPORATION.
In addition to any affirmative vote required by applicable law and any
voting rights granted to or held by the holders of Preferred Stock, any
alteration, amendment, repeal or rescission (any "Change") of any provision of
this Certificate of Incorporation must be approved by a majority of the
directors of the Corporation then in office and by the affirmative vote of the
holders of a majority of the Voting Interests; provided, however, that if any
such Change relates to Articles II, V, VI, VIII, IX, X, XI, XII, XIII, XIV, or
XV hereof or to this Article XVI, such Change must be approved either (i) by a
majority of the authorized number of directors, and if one or more Related
Persons exist, by a majority of the directors who are Continuing Directors with
respect to all Related Persons, or (ii) by the affirmative vote of the holders
of not less than eighty percent (80%) of the Voting Interests and, if the Change
is proposed by or on behalf of a Related Person or a director affiliated with a
Related Person, by the affirmative vote of the holders of a majority of the
Voting Interests of the Disinterested Shares.
Subject to the foregoing, the Corporation reserves the right to amend,
alter, repeal or rescind any provision contained in this Certificate of
Incorporation in the manner now or hereafter prescribed by law.
Section 2. BYLAWS.
Any proposed Change of Section 2 or Section 5 of Article III of the Bylaws
of the Corporation must be approved either (i) by a majority of the authorized
number of directors and, if one or more related Persons exist, by a majority of
the directors who are Continuing Directors with respect to all Related Persons,
or (ii) by the affirmative vote of the holders of not less than eighty percent
(80%) of the Voting Interests and, if the Change is proposed by or on behalf of
a Related Person or a director affiliated with a Related Person, by the
affirmative vote of the holders of a majority of the Voting Interests of the
Disinterested Shares.
Subject to the foregoing, the Board shall have the power to make, alter,
amend, repeal or rescind the Bylaws of the Corporation.
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APPENDIX A
(PART 2)
CERTIFICATE OF DESIGNATION
OF
SERIES C COMMON STOCK
OF
THE TIMES MIRROR COMPANY
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The Times Mirror Company, a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article V of its
Certificate of Incorporation, as amended, and in accordance with the provisions
of Section 151 of the General Corporation Law of the State of Delaware, its
Board of Directors has adopted the following resolution creating a series of its
Common Stock, par value $1 per share, designated as Series C Common Stock.
RESOLVED, that a series of the class of authorized Common Stock, par value
$1 per share, of the Corporation be hereby created, and that the designation and
amount thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as the "Series C Common Stock" (the "Series C Stock") and the number
of shares constituting such series shall be Seventy Million (70,000,000), which
number may be increased or decreased by the Board of Directors without a vote of
shareholders; PROVIDED, HOWEVER, that such number may not be decreased below the
number of then outstanding shares of Series C Stock.
Section 2. VOTING RIGHTS. Subject to the provisions for cumulative voting
set forth in Article IX of the Certificate of Incorporation:
(A) Each share of Series C Stock shall entitle the holder thereof to ten
(10) votes. Except as set forth herein and in the Certificate of Incorporation,
all actions submitted to a vote of shareholders shall be voted on by the holders
of Series A Common Stock (the "Series A Stock") and Series C Stock (as well as
the holders of any other series of Common Stock and any series of Preferred
Stock, if any, entitled to vote thereon), voting together as a single class.
<PAGE>
(B) The holders of Series C Stock shall be entitled to vote separately as
a series with respect to (i) amendments to the Certificate of Incorporation or
this Certificate of Designation that alter or change the powers, preferences or
special rights of the Series C Stock so as to affect them adversely and (ii)
such other matters as require class votes under the General Corporation Law of
the State of Delaware (except that the Board may increase or decrease the number
of shares constituting Series C Stock, but not below the number of shares of
Series C Stock then outstanding).
Section 3. DIVIDENDS.
(A) If and when dividends on the Series A Stock, Series B Common Stock
(the "Series B Stock") (if any) and Series C Stock are declared payable from
time to time by the Board as provided in Article V, Section 2, subparagraph C.2
of the Certificate of Incorporation, whether payable in cash, in property or in
shares of stock of the Corporation, the holders of Series A Stock, the holders
of Series B Stock (if any) and the holders of Series C Stock shall be entitled
to share equally, on a per share basis, in such dividends, subject to the
limitations described below. Except for dividends permitted by Article V,
Section 2, subparagraph C.1 of the Certificate of Incorporation, if dividends
are declared that are payable in shares of Series A Stock, Series B Stock (if
any), or Series C Stock, such dividends shall be payable at the same rate on all
series of stock and the dividends payable in shares of Series A Stock shall be
payable only to holders of Series A Stock, the dividends payable in shares of
Series B Stock (if any) shall be payable only to holders of Series B Stock (if
any) and the dividends payable in shares of Series C Stock shall be payable only
to holders of Series C Stock. If the Corporation shall in any manner subdivide
or combine the outstanding shares of Series A Stock, Series B Stock (if any), or
Series C Stock, the outstanding shares of the other such series of Common Stock
shall be proportionally subdivided or combined in the same manner and on the
same basis as the outstanding shares of Series A Stock, Series B Stock (if any)
or Series C Stock, as the case may be, which have been subdivided or combined.
(B) Subject to provisions of law and the preferences of the Preferred
Stock and of any other stock ranking prior to the Series A Stock, the Series B
Stock (if any), or the Series C Stock as to dividends, the holders of the Series
A Stock, the Series B Stock (if any), and the Series C Stock shall be entitled
to receive dividends at such time and in such amounts as may be determined by
the Board and declared out of any funds lawfully available therefor, and shares
of Preferred Stock of any series shall not be entitled to share therein except
as otherwise expressly provided in the resolution or resolutions of the Board
providing for the issue of such series.
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Section 4. CONVERSION OF SERIES C STOCK BY HOLDER.
(A) The holder of each share of Series C Stock shall have the right at any
time, or from time to time, at such holder's option, to convert such share into
one fully paid and nonassessable share of Series A Stock on and subject to the
terms and conditions hereinafter set forth.
(B) In order to exercise his conversion privilege, the holder of any
shares of Series C Stock to be converted shall present and surrender the
certificate or certificates representing such shares during usual business hours
at any office or agency of the Corporation maintained for the transfer of Series
C Stock and shall deliver a written notice of the election of the holder to
convert the shares represented by such certificate or any portion thereof
specified in such notice. Such notice shall also state the name or names (with
address) in which the certificate or certificates for shares of Series A Stock
issuable on such conversion shall be registered. If required by the
Corporation, any certificate for shares surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder of such shares or his duly authorized
representative. Each conversion of shares of Series C Stock shall be deemed to
have been effected on the date (the "conversion date") on which the certificate
or certificates representing such shares shall have been surrendered and such
notice and any required instruments of transfer shall have been received as
aforesaid, and the person or persons in whose name or names any certificate or
certificates for shares of Series A Stock shall be issuable on such conversion
shall be, for the purpose of receiving dividends and for all other corporate
purposes whatsoever, deemed to have become the holder or holders of record of
the shares of Series A Stock represented thereby on the conversion date.
(C) As promptly as practicable after the presentation and surrender for
conversion, as herein provided, of any certificate for shares of Series C Stock,
the Corporation shall issue and deliver at such office or agency, to or upon the
written order of the holder thereof, certificates for the number of shares of
Series A Stock issuable upon such conversion. Subject to the provisions of
Section 6, below, in case any certificate for shares of Series C Stock shall be
surrendered for conversion of a part only of the shares represented thereby, the
Corporation shall deliver at such office or agency, to or upon the written order
of the holder thereof, a certificate or certificates for the number of shares of
Series C Stock represented by such surrendered certificate which are not being
converted. The issuance of certificates for shares of Series A Stock issuable
upon the conversion of shares of Series C Stock by the registered holder thereof
shall be made without charge to the converting holder for any tax imposed on the
Corporation in respect of the issue thereof. The Corporation shall not,
however, be required to pay any tax which may be payable with
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respect to any transfer involved in the issue and delivery of any certificate in
a name other than that of the registered holder of the shares being converted,
and the Corporation shall not be required to issue or deliver any such
certificate unless and until the person requesting the issue thereof shall have
paid to the Corporation the amount of such tax or has established to the
satisfaction of the Corporation that such tax has been paid.
(D) Upon any conversion of shares of Series C Stock into shares of Series
A Stock pursuant hereto, no adjustment with respect to dividends shall be made;
only those dividends shall be payable on the shares so converted as have been
declared and are payable to holders of record of shares of Series C Stock on a
date prior to the conversion date with respect to the shares so converted; and
only those dividends shall be payable on shares of Series A Stock issued upon
such conversion as have been declared and are payable to holders of record of
shares of Series A Stock on or after such conversion date.
(E) In case of any consolidation or merger of the Corporation as a result
of which the holders of Series A Stock shall be entitled to receive cash, stock,
other securities or other property with respect to or in exchange for Series A
Stock or in case of any sale or conveyance of all or substantially all of the
property or business of the Corporation as an entirety, a holder of a share of
Series C Stock shall have the right thereafter to convert such share into the
kind and amount of cash, shares of stock and other securities and properties
receivable upon such consolidation, merger, sale or conveyance by a holder of
one share of Series A Stock and shall have no other conversion rights with
regard to such share. The provisions of this subsection 4(E) shall similarly
apply to successive consolidations, mergers, sales or conveyances.
(F) Shares of the Series C Stock converted into Series A Stock shall be
retired and shall resume the status of authorized but unissued shares of Series
C Stock.
(G) Such number of shares of Series A Stock as may from time to time be
required for such purpose shall be reserved for issuance upon conversion of
outstanding shares of Series C Stock.
Section 5. TERMINATION OF SERIES C STOCK.
(A) All outstanding shares of Series C Stock shall automatically, without
any further act or deed on the part of this Corporation or any other person, be
converted into shares of Series A Stock on a share-for-share basis
(1) if, as a result of the existence of the Series C Stock, the Series A
Stock is excluded from trading on the New York Stock Exchange, the American
Stock Exchange and all other national securities exchanges and is also
excluded from
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<PAGE>
quotation on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") and any other national quotation system then in
use; or
(2) at the option of the Corporation:
(a) at any time when the Board and the holders of a majority of the
outstanding shares of the Series C Stock approve the conversion of all
of the Series C Stock into Series A Stock; or
(b) if the Board, in its sole discretion, elects to effect a
conversion in connection with its approval of any sale or lease of all
or any substantial part of the Corporation's assets or any merger,
consolidation, liquidation or dissolution of the Corporation; or
(c) if the Board, in its sole discretion, elects to effect a
conversion after a determination that there has been a material
adverse change in the liquidity, marketability or market value of the
outstanding Series A Stock, considered in the aggregate, (X) due to
the exclusion of the Series A Stock from trading on a national
securities exchange or the exclusion of the Series A Stock from
quotation on NASDAQ or such other system then in use, or (Y) due to
requirements under federal or state law, in any such case as a result
of the existence of the Series C Stock.
(B) In the event of any automatic conversion of Series C Stock pursuant to
this Section 5, certificates formerly representing outstanding shares of Series
C Stock will thereafter be deemed to represent a like number of shares of Series
A Stock.
Section 6. LIMITATIONS ON TRANSFER OF SERIES C STOCK.
(A) No record or beneficial owner of shares of Series C Stock may
transfer, and the Corporation shall not register the transfer of, such shares of
Series C Stock, whether by sale, assignment, gift, bequest, appointment or
otherwise, except to a "Permitted Transferee" as provided herein.
(1) In the case of a holder of record of the Series C Stock (the
"Series C Holder") who is a natural person and the beneficial owner of
the shares of Series C Stock to be transferred, Permitted Transferees
shall include only the following:
(a) The spouse of such Series C Holder, any lineal descendant of
a grandparent of such Series C Holder, or any spouse of such
lineal descendant
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(herein collectively referred to as "such Series C Holder's
Family Members");
(b) The trustee or trustees of a trust (including a voting
trust) principally for the benefit of such Series C Holder and/or
one or more of such Series C Holder's Family Members, provided,
however, if at any time such trust ceases to meet the
requirements of this subparagraph (b), all shares of Series C
Stock then held by such trustee or trustees shall immediately and
automatically, without further act or deed on the part of the
Corporation or any other person, be converted into Series A Stock
on a share-for-share basis, and stock certificates formerly
representing such shares of Series C Stock shall thereupon and
thereafter be deemed to represent a like number of shares of
Series A Stock;
(c) A corporation, if sufficient shares entitled to elect at
least a majority of the entire board of directors of such
corporation are beneficially owned by, or a partnership in which
all of the partners are, and all of the partnership interests are
owned by, the Series C Holder and/or one or more of the Permitted
Transferees of such Series C Holder determined under this
subparagraph 6(A)(1), provided that if by reason of any change in
the ownership of such stock or partners or partnership interests,
such corporation or partnership would no longer qualify as a
Permitted Transferee of such Series C Holder, all shares of
Series C Stock then held by such corporation or partnership shall
immediately and automatically, without further act or deed on the
part of the corporation or any other person, be converted into
shares of Series A Stock on a share-for-share basis, and stock
certificates formerly representing such shares of Series C Stock
shall thereupon and thereafter be deemed to represent a like
number of shares of Series A Stock;
(d) An organization established by the Series C Holder or such
Series C Holder's Family Members, contributions to which are
deductible for federal income, estate or gift tax purposes (a
"Charitable Organization") and a majority of whose governing
board at all times consists of the Series C Holder and/or one or
more of the Permitted Transferees of such Series C Holder, or any
successor to such Charitable Organization meeting such
definition; provided that if by reason of any change in the
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composition of the governing board of such Charitable
Organization, such Charitable Organization shall no longer
qualify as a Permitted Transferee of such Series C Holder, all
shares of Series C Stock then held by such Charitable
Organization shall immediately and automatically, without further
act or deed on the part of the Corporation or any other person,
be converted into shares of Series A Stock on a share-for-share
basis, and stock certificates formerly representing such shares
of Series C Stock shall thereupon and thereafter be deemed to
represent the like number of shares of Series A Stock; and
(e) The executor, administrator or personal representative of
the estate of a deceased Series C Holder or the trustee of the
estate of a bankrupt or insolvent Series C Holder or the guardian
or conservator of a Series C Holder adjudged disabled or
incompetent by a court of competent jurisdiction, acting in his
capacity as such.
(2) In the case of a Series C Holder holding the shares of Series C
Stock as trustee pursuant to a trust other than a trust described in
subparagraph 6(A)(3) below, Permitted Transferees shall include only
the following:
(a) any successor trustee of such trust who is not, and by
becoming successor trustee will not become, a Related Person;
(b) the person who established such trust; and
(c) a Permitted Transferee of such person who established such
trust.
(3) In the case of a Series C Holder holding the shares of Series C
Stock as trustee pursuant to a trust which was irrevocable on the
Record Date (a "Transferor Trust"), Permitted Transferees shall
include only the following:
(a) any successor trustee of such Transferor Trust who is
described in subparagraph 6(A)(3)(b), (c) or (d) below or who is
not, and by becoming successor trustee will not otherwise become,
a Related Person;
(b) any person to whom or for whose benefit the income may be
distributed during the term of such Transferor Trust;
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(c) any person to whom or for whose benefit the principal may be
distributed either during or at the end of the term of such
Transferor Trust whether by power of appointment or otherwise;
and
(d) any lineal descendant of a grandparent of the creator of
such Transferor Trust, the spouse of such creator and the spouse
of any such lineal descendant.
(4) In the case of a record (but not beneficial) owner of the Series
C Stock as nominee for the person who was the beneficial owner thereof
on the Record Date, Permitted Transferees shall include only such
beneficial owner and a Permitted Transferee of such beneficial owner.
(5) In the case of a Series C Holder which is a partnership and the
beneficial owner of the shares of Series C Stock proposed to be
transferred, Permitted Transferees shall include only:
(a) any partner of such partnership who was also a partner of
such partnership on the Record Date;
(b) any person transferring shares of Series C Stock to such
partnership after the Record Date (provided, however, that such
transferor may not receive shares of Series C Stock in excess of
the shares transferred by the transferor to such partnership);
and
(c) any Permitted Transferee of such person referred to in
subparagraph 6(A)(5)(a) or 6(A)(5)(b) above (not in excess of the
number of shares which such person is entitled to receive
pursuant to this subparagraph 6(A)(5)).
(6) In the case of a Series C Holder which is a corporation and the
beneficial owner of the shares proposed to be transferred, Permitted
Transferees shall include only:
(a) any shareholder of such corporation on the Record Date that
is generally entitled to vote in the election of directors of
such corporation (a "Voting Shareholder"), provided that such
corporation does not have more than 30 Voting Shareholders of
Record on the Record Date (or such greater number of Voting
Shareholders as may be allowed under the applicable state law of
such
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corporation in order to qualify as a close corporation);
(b) any shareholder of such corporation on the Record Date who
receives shares of Series C Stock pro rata to his stock ownership
in such corporation through a dividend or through a distribution
made upon liquidation of such corporation;
(c) any person transferring shares of Series C Stock to such
corporation after the Record Date (provided, however, that such
transferor may not receive shares of Series C Stock in excess of
the shares transferred by the transferor to such corporation);
(d) any Permitted Transferee of such shareholder or person
referred to in subparagraph 6(A)(6)(a), (b) or (c) above (not in
excess of the number of shares which such shareholder or person
is entitled to receive pursuant to this subparagraph 6(A)(6));
and
(e) the survivor of a merger or consolidation of such
corporation if those persons who owned beneficially sufficient
shares entitled to elect at least a majority of the entire board
of directors of such constituent corporation immediately prior to
the merger or consolidation own beneficially sufficient shares
entitled to elect at least a majority of the entire board of
directors of the surviving corporation, provided that if by
reason of any change in the ownership of such stock such
surviving corporation would no longer qualify as a Permitted
Transferee, all shares of Series C Stock then held by such
surviving corporation shall immediately and automatically,
without further act or deed on the part of the corporation or any
other person, be converted into shares of Series A Stock on a
share-for-share basis, and stock certificates formerly
representing such shares of Series C Stock shall thereupon and
thereafter be deemed to represent a like number of shares of
Series A Stock.
For purposes of subsection 6(A)(6), a mutual company shall be treated as a
corporation, and the persons holding voting interests therein shall be
treated as shareholders.
(7) In the case of a Series C Holder who is the executor or
administrator of the estate of a deceased Series C Holder, guardian or
conservator of the estate of a
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disabled or incompetent Series C Holder or who is a trustee of the
estate of a bankrupt or insolvent Series C Holder, Permitted
Transferees shall include only a Permitted Transferee of such
deceased, disabled, bankrupt or insolvent Series C Holder.
(B) Notwithstanding anything to the contrary set forth herein, any Series
C Holder may pledge such holder's shares of Series C Stock to a pledgee pursuant
to a bona fide pledge of such shares as collateral security for indebtedness due
to the pledgee, provided that such shares shall not be transferred to or
registered in the name of the pledgee and shall remain subject to the provisions
of this Section 6. In the event of foreclosure or other similar action by the
pledgee, such pledged shares of Series C Stock may only be transferred to a
Permitted Transferee of the pledgor or converted into shares of Series A Stock,
as the pledgee may elect.
(C) For purposes of this Section 6:
(1) The relationship of any person that is derived by or through
legal adoption shall be considered a natural one;
(2) Each joint owner of shares of Series C Stock shall be considered
a Series C Holder of such shares;
(3) A minor for whom shares of Series C Stock are held pursuant to a
Uniform Gifts to Minors Act or similar law shall be considered a
Series C Holder of such shares;
(4) Unless otherwise specified, the term "person" means both natural
persons and legal entities; and
(5) The "Record Date" is the date for determining the persons to whom
the Series C Stock is initially distributed by the Corporation as a
dividend on the Common Stock.
(D) Any purported transfer of shares of Series C Stock not permitted
hereunder shall result in the conversion of the transferee's shares of Series C
Stock into shares of Series A Stock, effective on the date on which certificates
representing such shares are presented for transfer on the stock transfer record
books of the Corporation; provided, however, that if the Corporation should
determine that such shares were not so presented for transfer within 20 days
after the date of such sale, transfer, assignment or other disposition, the
transfer date shall be the actual date of such sale, transfer, assignment or
other disposition, as determined in good faith by the Board or its appointed
agent. The Corporation may, as a condition to the transfer or registration of
transfer of shares of Series C Stock to a purported Permitted Transferee,
require the furnishing of such
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affidavits or other proof as it deems necessary to establish that such
transferee is a Permitted Transferee. If no indication to the contrary is
supplied at the time shares of Series C Stock are presented for transfer, the
transfer shall be presumed by the Corporation to be a transfer to a person other
than a Permitted Transferee.
Section 7. REGISTRATION OF SERIES C STOCK.
(A) Shares of Series C Stock shall be registered in the name(s) of the
beneficial owner(s) thereof (as hereafter defined) and not in "street" or
"nominee" names; provided, however, certificates representing shares of Series C
Stock issued as a stock dividend on the Corporation's then outstanding Common
Stock may be registered in the same name and manner as the certificates
representing the shares of Common Stock with respect to which the shares of
Series C Stock were issued. For the purposes of Sections 6 and 7, the term
"beneficial owner(s)" of any shares of Series C Stock shall mean the person or
persons who possess the power to vote or dispose, or to direct the voting or
disposition, of such shares and "beneficially owned" shares shall refer to
shares owned by such a beneficial owner.
(B) The Corporation shall note on the certificates representing the shares
of Series C Stock that there are restrictions on transfer and registration of
transfer imposed by Sections 6 and 7.
Section 8. PRIORITY OF PREFERRED STOCK. The Series C Stock is subject to
all the powers, rights, privileges, preferences and priorities of the Preferred
Stock as may be stated herein and as shall be stated and expressed in any
resolution or resolutions adopted by the Board, pursuant to authority expressly
granted to and vested in it by the provisions of Article V of the Certificate of
Incorporation.
Section 9. LIQUIDATION, DISSOLUTION OR WINDING UP. In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary (sometimes referred to as liquidation), after payment or provision
for payment of the debts and other liabilities of the Corporation and the
preferential amounts to which the holders of any stock ranking prior to the
Series A Stock, the Series B Stock (if any) and the Series C Stock in the
distribution of assets shall be entitled upon liquidation, unless otherwise
provided by the Board in the resolution or resolutions providing for the
issuance of Series B Stock (if any) or Series C Stock the holders of the Series
A Stock, the Series B Stock (if any) and the Series C Stock and the holders of
any other stock ranking on a parity with the Series A Stock, the Series B Stock
(if any) and the Series C Stock in the distribution of assets upon liquidation
shall be entitled to share pro rata in the
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remaining assets of the Corporation according to their respective interests.
Section 10. EFFECTIVE DATE. Notwithstanding its earlier filing with the
Secretary of State of the State of Delaware, this Certificate of Designation
shall become effective as of the close of business on December 28, 1987.
IN WITNESS WHEREOF, said The Times Mirror Company has caused this
Certificate of Designation of Series C Common Stock to be duly executed by its
Chairman of the Board and attested to by its Secretary and has caused its
corporate seal to be affixed hereto, this 22nd day of December 1987.
THE TIMES MIRROR COMPANY
By: ROBERT F. ERBURU
-------------------------------
Robert F. Erburu
Chairman of the Board
ATTEST:
JAMES W. WALLACE
- ------------------------------
James W. Wallace
Secretary
<PAGE>
THE TIMES MIRROR COMPANY
(a Delaware corporation)
BYLAWS
AS AMENDED EFFECTIVE MAY 4, 1993
ARTICLE I
Offices
SECTION 1. REGISTERED OFFICE. The registered office of The Times Mirror
Company (hereinafter called the Corporation) shall be in the City of Wilmington,
County of New Castle, State of Delaware.
SECTION 2. PRINCIPAL OFFICE. The principal office for the transaction of
the business of the Corporation shall be at Times Mirror Square, in the City of
Los Angeles, County of Los Angeles, State of California. The Board of Directors
(hereinafter called the Board) is hereby granted full power and authority to
change said principal office from one location to another.
SECTION 3. OTHER OFFICES. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
Meetings of Shareholders
SECTION 1. PLACE OF MEETINGS. All annual meetings of shareholders and all
other meetings of shareholders shall be held either at the principal office or
at any other place within or without the State of Delaware which may be
designated by the Board pursuant to authority hereinafter granted to said Board.
SECTION 2. ANNUAL MEETINGS. Annual meetings of the shareholders of the
Corporation for the purpose of electing directors and for the transaction of
such other proper business as may come before such meetings may be held at such
time, date and place as the Board shall determine by resolution.
SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders of the
Corporation for any purpose or purposes may only be called in accordance with
the provisions in the Certificate of Incorporation.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise required by law,
notice of each meeting of the shareholders, whether annual or special, shall be
given not less than ten (10)
<PAGE>
nor more than sixty (60) days before the date of the meeting to each shareholder
of record entitled to vote at such meeting by delivering a typewritten or
printed notice thereof to him personally, or by depositing such notice in the
United States mail, in a postage prepaid envelope, directed to him at his post
office address furnished by him to the Secretary of the Corporation for such
purpose or, if he shall not have furnished to the Secretary his address for such
purpose, then at his post office address last known to the Secretary, or by
transmitting a notice thereof to him at such address by telegraph, cable or
wireless. Except as otherwise expressly required by law, no publication of any
notice of a meeting of the shareholders shall be required. Every notice of a
meeting of the shareholders shall state the place, date and hour of the meeting,
and, in the case of a special meeting, shall also state the purpose for which
the meeting is called. Notice of any meeting of shareholders shall not be
required to be given to any shareholder to whom notice may be omitted pursuant
to applicable Delaware law or who shall have waived such notice and such notice
shall be deemed waived by any shareholder who shall attend such meeting in
person or by proxy, except a shareholder who shall attend such meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Except as otherwise expressly required by law, notice of any
adjourned meeting of the shareholders need not be given if the time and place
thereof are announced at the meeting at which the adjournment is taken.
SECTION 5. QUORUM. Except as otherwise required by law, the holders of
record of a majority in voting interest of the shares of stock of the
Corporation entitled to be voted thereat, present in person or by proxy, shall
constitute a quorum for the transaction of business at any meeting of the
shareholders of the Corporation or any adjournment thereof. Subject to the
requirement of a larger percentage vote contained in the Certificate of
Incorporation, these Bylaws or by statute, the shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
In the absence of a quorum at any meeting or any adjournment thereof, a majority
in voting interest of the shareholders present in person or by proxy and
entitled to vote thereat or, in the absence therefrom of all the shareholders,
any officer entitled to preside at, or to act as secretary of, such meeting may
adjourn such meeting from time to time. At any such adjourned meeting at which
a quorum is present any business may be transacted which might have been
transacted at the meeting as originally called.
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SECTION 6. VOTING. (a) Each shareholder shall, at each meeting of the
shareholders, be entitled to vote in person or by proxy each share of the stock
of the Corporation having voting rights on the matter in question and which
shall have been held by him and registered in his name on the books of the
Corporation:
(i) on the date fixed pursuant to Article VI, Section 5 of these
Bylaws as the record date for the determination of shareholders entitled to
notice of and to vote at such meeting, or
(ii) if no such record date shall have been so fixed, then (a) at the
close of business on the day next preceding the day on which notice of the
meeting shall be given or (b) if notice of the meeting shall be waived, at
the close of business on the day next preceding the day on which the
meeting shall be held.
(b) Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors in such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary capacity
shall be entitled to vote such stock. Persons whose stock is pledged shall be
entitled to vote, unless in the transfer by the pledgor on the books of the
Corporation he shall have expressly empowered the pledgee to vote thereon, in
which case only the pledgee, or his proxy, may represent such stock and vote
thereon. Stock having voting power standing of record in the names of two or
more persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, tenants by the entirety or otherwise, or with respect to
which two or more persons have the same fiduciary relationship, shall be voted
in accordance with the provisions of the General Corporation Law of the State of
Delaware.
(c) Any such voting rights may be exercised by the shareholder entitled
thereto in person or by his proxy appointed by an instrument in writing,
subscribed by such shareholder or by his attorney thereunto authorized and
delivered to the secretary of the meeting; provided, however, that no proxy
shall be voted or acted upon after three years from its date unless said proxy
shall provide for a longer period. The attendance at any meeting of a
shareholder who may theretofore have given a proxy shall not have the effect of
revoking the same unless he shall in writing so notify the secretary of the
meeting prior to the voting of the proxy. At any meeting of the shareholders
all matters, except as otherwise provided in the Certificate of Incorporation,
in these Bylaws or by law, shall be decided by the vote of a majority in voting
interest of the shareholders present in person or by proxy
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and entitled to vote thereat and thereon, a quorum being present. The vote at
any meeting of the shareholders on any question need not be by ballot, unless so
directed by the chairman of the meeting. On a vote by ballot each ballot shall
be signed by the shareholder voting, or by his proxy, if there be such proxy,
and it shall state the number of shares voted.
SECTION 7. LIST OF SHAREHOLDERS. The Secretary of the Corporation shall
prepare and make, at least ten (10) days before every meeting of shareholders, a
complete list of the shareholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each shareholder and the number
of shares registered in the name of each shareholder. Such list shall be open
to the examination of any shareholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any shareholder who is present.
SECTION 8. JUDGES. If at any meeting of shareholders a vote by written
ballot shall be taken on any question, the chairman of such meeting may appoint
a judge or judges to act with respect to such vote. Each judge so appointed
shall first subscribe an oath faithfully to execute the duties of a judge at
such meeting with strict impartiality and according to the best of his ability.
Such judges shall decide upon the qualification of the voters and shall report
the number of shares represented at the meeting and entitled to vote on such
question, shall conduct and accept the votes, and, when the voting is completed,
shall ascertain and report the number of shares voted respectively for and
against the question. Reports of judges shall be in writing and subscribed and
delivered by them to the Secretary of the Corporation. The judges need not be
shareholders of the Corporation, and any officer of the Corporation may be a
judge on any question other than a vote for or against a proposal in which he
shall have a material interest.
ARTICLE III
Board of Directors
SECTION 1. GENERAL POWERS. Subject to any requirements in the Certificate
of Incorporation, the Bylaws, and of the Delaware General Corporation Law as to
action which must be authorized or approved by the shareholders, any and all
corporate powers shall be exercised by or under the authority of, and the
business and affairs of the Corporation shall be under the direction of the
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Board to the fullest extent permitted by law. Without limiting the generality
of the foregoing, it is hereby expressly declared that the directors shall have
the following powers, to wit:
First - To select and remove all the officers, agents and employees of the
Corporation, prescribe such powers and duties for them as may not be
inconsistent with law, with the Certificate of Incorporation or the Bylaws, fix
their compensation, and require from them security for faithful service.
Second - To conduct, manage and control the affairs and business of the
Corporation, and to make such rules and regulations therefor not inconsistent
with law, or with the Certificate of Incorporation or the Bylaws, as they may
deem best.
Third - To change the location of the registered office of the Corporation
in Article I, Section 1 hereof; to change the principal office and the principal
office for the transaction of the business of the Corporation from one location
to another as provided in Article I, Section 2, hereof; to fix and locate from
time to time one or more subsidiary offices of the Corporation within or without
the State of Delaware as provided in Article I, Section 3 hereof; to designate
any place within or without the State of Delaware for the holding of any
shareholders' meeting or meetings; and to adopt, make and use a corporate seal,
and to prescribe the forms of certificates of stock, and to alter the form of
such seal and of such certificates from time to time, and in their judgment they
may deem best, provided such seal and such certificate shall at all times comply
with the provisions of law.
Fourth - To authorize the issue of shares of stock of the Corporation from
time to time, upon such terms and for such considerations as may be lawful.
Fifth - To borrow money and incur indebtedness for the purposes of the
Corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust and
securities therefor.
Sixth - By resolution adopted by a majority of the authorized number of
directors, to designate an executive and other committees, each consisting of
one or more directors, to serve at the pleasure of the Board, and to prescribe
the manner in which proceedings of such committee shall be conducted. Unless
the Board or these Bylaws shall otherwise prescribe the manner of proceedings of
any such committee, meetings of such committee may be regularly scheduled in
advance and may be called at any time by the chairman of the committee or by any
two members thereof; otherwise, the provisions of these Bylaws with respect to
notice and conduct of meetings of the Board shall govern. Any such committee,
to the extent provided in a
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resolution of the Board and subject to any restrictions or limitations on the
delegation of power and authority imposed by applicable Delaware law, shall have
and may exercise all of the powers and authority of the Board.
SECTION 2. NUMBER AND TERM OF OFFICE. The authorized number of directors
of this Corporation shall be not less than ten (10) nor more than twenty (20)
until this Section 2 is amended by a resolution duly adopted by the directors or
by the shareholders, in either case in accordance with the provisions of Article
XVI of the Certificate of Incorporation. The authorized number of directors
shall be fixed at fifteen (15) until such authorized number is changed by a
resolution duly adopted by the directors or by the shareholders, in either case
in accordance with the provisions of Article XVI of the Certificate of
Incorporation. Directors need not be shareholders. Each of the directors of
the Corporation shall serve until his or her term has expired and his or her
successor is elected and qualified, or until his or her earlier death,
resignation or removal.
SECTION 3. ELECTION OF DIRECTORS. The directors shall be elected by the
shareholders of the Corporation, and at each election the persons receiving the
greatest number of votes, up to the number of directors then to be elected,
shall be the persons then elected. The election of directors is subject to any
provisions contained in the Certificate of Incorporation relating thereto,
including any provisions for a classified Board and for cumulative voting.
SECTION 4. RESIGNATIONS. Any director of the Corporation may resign at
any time by giving written notice to the Board or to the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time be not specified, it shall take effect immediately upon
receipt; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 5. VACANCIES. Except as otherwise provided in the Certificate of
Incorporation, any vacancy on the Board, whether because of death, resignation,
disqualification, an increase in the number of directors, or any other cause,
may be filled by vote of the majority of the remaining directors, although less
than a quorum. Each director so chosen to fill a vacancy shall hold office
until his successor shall have been elected and shall qualify or until he shall
resign or shall have been removed.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of his term of office.
SECTION 6. PLACE OF MEETING, ETC. The Board or any committee thereof may
hold any of its meetings at such place or places within or without the State of
Delaware as the Board or
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<PAGE>
such committee may from time to time by resolution designate or as shall be
designated by the person or persons calling the meeting or in the notice or a
waiver of notice of any such meeting. Directors may participate in any regular
or special meeting of the Board or any committee thereof by means of conference
telephone or similar communications equipment pursuant to which all persons
participating in the meeting of the Board or such committee can hear each other,
and such participation shall constitute presence in person at such meeting.
SECTION 7. FIRST MEETING. The Board shall meet as soon as practicable
after each annual election of directors and notice of such first meeting shall
not be required.
SECTION 8. REGULAR MEETINGS. Regular meetings of the Board may be held at
such times as the Board shall from time to time by resolution determine. If any
day fixed for a regular meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting shall be held at the same hour and place
on the next succeeding business day not a legal holiday. Except as provided by
law, notice of regular meetings need not be given.
SECTION 9. SPECIAL MEETINGS. Special meetings of the Board for any
purpose or purposes shall be called at any time by the Chairman of the Board or,
if he is absent or unable or refuses to act, by the President or, if he is
absent or unable or refuses to act, or by the Executive Vice President, or if he
is absent or unable or refuses to act, by any Senior Vice President or by any
Vice President or by any two directors. Except as otherwise provided by law or
by these Bylaws, written notice of the time and place of special meetings shall
be delivered personally to each director, or sent to each director by mail or by
other form of written communication, charges prepaid, addressed to him at his
address as it is shown upon the records of the Corporation, or if it is not so
shown on such records and is not readily ascertainable, at the place in which
the meetings of the directors are regularly held. In case such notice is mailed
or telegraphed, it shall be deposited in the United States mail or delivered to
the telegraph company in the County in which the principal office for the
transaction of the business of the Corporation is located at least forty-eight
(48) hours prior to the time of the holding of the meeting. In case such notice
is delivered personally as above provided, it shall be so delivered at least
twenty-four (24) hours prior to the time of the holding of the meeting. Such
mailing, telegraphing or delivery as above provided shall be due, legal and
personal notice to such director. Except where otherwise required by law or by
these Bylaws, notice of the purpose of a special meeting need not be given.
Notice of any meeting of the Board shall not be required to be given to any
director who is present at such meeting, except a director who shall attend such
meeting for the express purpose of objecting, at the beginning of the meeting,
to the
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<PAGE>
transaction of any business because the meeting is not lawfully called or
convened.
SECTION 10. QUORUM AND MANNER OF ACTING. Except as otherwise provided in
these Bylaws, the Certificate of Incorporation or by applicable law, the
presence of a majority of the authorized number of directors shall be required
to constitute a quorum for the transaction of business at any meeting of the
Board, and all matters shall be decided at any such meeting, a quorum being
present, by the affirmative votes of a majority of the directors present. A
meeting at which a quorum is initially present may continue to transact business
notwithstanding the withdrawal of directors, provided any action taken is
approved by at least a majority of the required quorum for such meeting. In the
absence of a quorum, a majority of directors present at any meeting may adjourn
the same from time to time until a quorum shall be present. Notice of any
adjourned meeting need not be given. The directors shall act only as a Board,
and the individual directors shall have no power as such.
SECTION 11. ACTION BY CONSENT. Any action required or permitted to be
taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if consent in writing is given thereto by all members of the
Board or of such committee, as the case may be, and such consent is filed with
the minutes of proceedings of the Board or committee.
SECTION 12. COMPENSATION. Directors who are not employees of the
Corporation or any of its subsidiaries may receive an annual fee for their
services as directors in an amount fixed by resolution of the Board, and in
addition, a fixed fee, with or without expenses of attendance, may be allowed by
resolution of the Board for attendance at each meeting, including each meeting
of a committee of the Board. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity as an
officer, agent, employee, or otherwise, and receiving compensation therefor.
SECTION 13. COMMITTEES. The Board may, by resolution passed by a majority
of the whole Board, designate one or more committees, each committee to consist
of one or more of the directors of the Corporation. Any such committee, to the
extent provided in the resolution of the Board and subject to any restrictions
or limitations on the delegation of power and authority imposed by applicable
Delaware law, shall have and may exercise all the powers and authority of the
Board in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it. Any such committee shall keep written minutes of its meetings and
report the same to the Board at the next regular meeting of the Board.
-8-
<PAGE>
ARTICLE IV
Officers
SECTION 1. OFFICERS. The officers of the Corporation shall be a Chairman
of the Board, one or more Vice Chairmen of the Board, a President, one or more
Executive Vice Presidents, Senior Vice Presidents and Vice Presidents, a
Secretary, a Treasurer, a Controller, one or more Assistant Secretaries,
Assistant Treasurers, and Assistant Controllers, and such other officers as may
be appointed at the discretion of the Board in accordance with the provisions of
Section 3 of this Article IV. One person may hold two or more offices, except
that the Secretary may not hold the offices of Chairman of the Board or
President.
SECTION 2. ELECTION. The officers of the Corporation, except such
officers as may be appointed or elected in accordance with the provisions of
Section 3 or Section 5 of this Article IV, shall be chosen annually by the Board
at the organization meeting hereof, and each shall hold office until he or she
shall resign or shall be removed or otherwise disqualified to serve, or his or
her successor shall be elected and qualified.
SECTION 3. OTHER OFFICERS. In addition to the officers chosen annually by
the Board at its organization meeting, the Board also may appoint or elect such
other officers as the business of the Corporation may require, each of whom
shall have such authority and perform such duties as are provided in these
Bylaws or as the Board may from time to time specify, and shall hold office
until he or she shall resign or shall be removed or otherwise disqualified to
serve, or his or her successor shall be elected and qualified.
SECTION 4. REMOVAL AND RESIGNATION. Any officer may be removed, either
with or without cause, by a majority of the directors at the time in office, at
any regular or special meeting of the Board, or, except in case of an officer
chosen by the Board, by any officer upon whom such power of removal may be
conferred by the Board.
Any officer may resign at any time by giving written notice to the Board or
to the President or to the Secretary of the Corporation. Any such resignation
shall take effect at the date of the receipt of such notice or at any later time
specified therein and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the Bylaws for regular appointments to such office.
-9-
<PAGE>
SECTION 6. CHAIRMAN OF THE BOARD. The Chairman of the Board shall be the
chief executive officer of the Corporation and shall, subject to the control of
the Board, have general supervision, direction and control of the business and
affairs of the Corporation. The Chairman of the Board shall preside at all
meetings of the shareholders and at all meetings of the Board. The Chairman of
the Board shall be a member of all committees, if any, and shall have the
general powers and duties of management usually vested in the chief executive
officer of a corporation and shall have such other powers and duties as may be
prescribed by the Board or the Bylaws.
SECTION 7. VICE CHAIRMEN OF THE BOARD. The Vice Chairmen of the Board
shall exercise and may perform such powers and duties as may be assigned to them
by the Chairman of the Board, or by the Board, or as may be prescribed by the
Bylaws. In the absence or disability of the Chairman of the Board, or in the
event and during the period of a vacancy in that office, the Vice Chairmen, in
order of their rank as fixed by the Board or, if not ranked, the Vice Chairman
designated by the Board, shall preside at all meetings of the shareholders and
at all meetings of the Board.
SECTION 8. PRESIDENT. The President shall exercise and may perform such
powers and duties with respect to the administration of the business and affairs
of the Corporation as may from time to time be assigned by the Chairman of the
Board, or by the Board, or as may be prescribed by the Bylaws. In the absence
or disability of the Chairman of the Board and Vice Chairmen of the Board, or in
the event and during the period of a vacancy in such office, the President shall
perform all the duties of the Chairman of the Board and when so acting shall
have all of the powers of, and be subject to all the restrictions upon, the
Chairman of the Board and chief executive officer of the Corporation.
SECTION 9. EXECUTIVE VICE PRESIDENTS. The Executive Vice Presidents shall
exercise and may perform such powers and duties with respect to the
administration of the business and affairs of the Corporation as may from time
to time be assigned by the Chairman of the Board, or the Board, or as may be
prescribed by these Bylaws. In the absence or disability of the Chairman of the
Board, Vice Chairmen of the Board and the President, the Executive Vice
Presidents in order of their rank as fixed by the Board or, if not ranked, the
Executive Vice President designated by the Board, shall perform all of the
duties of the Chairman of the Board and when so acting shall have all the powers
of, and be subject to all the restrictions upon, the Chairman of the Board and
chief executive officer of the Corporation.
SECTION 10. SENIOR VICE PRESIDENTS AND VICE PRESIDENTS. The Senior Vice
Presidents and Vice Presidents shall exercise and may perform such powers and
duties with respect to the
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<PAGE>
Corporation as may from time to time be assigned to each of them by the Chairman
of the Board, a Vice Chairman of the Board, the President, an Executive Vice
President, or the Board, or as may be prescribed by these Bylaws. In the
absence or disability of the Chairman of the Board, the Vice Chairmen of the
Board, the President and the Executive Vice Presidents, the Senior Vice
President and Vice President in order of their rank as fixed by the Board or, if
not ranked, the Senior Vice President or Vice President designated by the Board,
shall perform all of the duties of the Chairman of the Board, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
Chairman of the Board and chief executive officer of the Corporation.
SECTION 11. SECRETARY. The Secretary shall keep, or cause to be kept, a
book of minutes at the principal office, or such other place as the Board may
order, of all meetings of directors and shareholders, with the time and place of
holding, whether regular or special, and if special, how authorized and the
notice thereof given, the names of those present at directors' meetings, the
number of shares present or represented at shareholders' meetings, and the
proceedings thereof.
The Secretary shall keep, or cause to be kept, at the principal office or
at the office of the Corporation's transfer agent, a share register, or a
duplicate share register, showing the names of the shareholders and their
addresses; the number of classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the meetings
of the shareholders and of the Board required by these Bylaws or by law to be
given, and he shall keep the seal of the Corporation in safe custody, and shall
have such other powers and perform such other duties as may be prescribed by
these Bylaws or assigned by the Board, the Chairman of the Board, a Vice
Chairman of the Board, the President, an Executive Vice President or any Senior
Vice President or Vice President to whom the Secretary may report. If for any
reason the Secretary shall fail to give notice of any special meeting of the
Board called by one or more of the persons identified in the first paragraph of
Section 9, Article III, or if the Secretary shall fail to give notice of any
special meeting of the shareholders called by one or more of the persons
identified in Section 2, Article II, then any such person or persons may give
notice of any such special meeting.
SECTION 12. TREASURER. The Treasurer shall supervise, have custody of and
be responsible for all funds and securities of the Corporation. The Treasurer
shall deposit all moneys and other valuables in the name and to the credit of
the Corporation with such depositaries as may be designated by the Board or in
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<PAGE>
accordance with authority delegated by the Board. The Treasurer shall disburse
the funds of the Corporation as may be ordered or authorized by the Board, shall
render to the Chairman of the Board, the President and the directors, whenever
they request it, an account of all transactions as Treasurer and shall have such
other powers and perform such other duties as may be prescribed by these Bylaws
or assigned by the Board, the Chairman of the Board, a Vice Chairman of the
Board, the President, an Executive Vice President or any Senior Vice President
or Vice President to whom the Treasurer may report.
SECTION 13. CONTROLLER. The Controller shall keep and maintain, or cause
to be kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, surplus and
shares. Any surplus, including earned surplus, paid-in surplus and surplus
arising from a reduction of stated capital, shall be classified according to
source and shown in a separate account. The books of account shall at all
reasonable times be open to inspection by any director.
The Controller also shall supervise the maintenance of adequate and correct
accounts of the properties and business transactions of all subsidiaries of the
Corporation and shall have such other powers and perform such other duties as
may from time to time be prescribed by these Bylaws or assigned to him by the
Board, the Chairman of the Board, a Vice Chairman of the Board, the President,
an Executive Vice President or any Senior Vice President or Vice President to
whom the Controller may report.
ARTICLE V
Contracts, Checks, Drafts, Bank Accounts, Etc.
SECTION 1. EXECUTION OF CONTRACTS. The Board, except as in these Bylaws
otherwise provided, may authorize any officer or officers, agent or agents, to
enter into any contract or execute any instrument in the name of and on behalf
of the Corporation, and such authority may be general or confined to specific
instances; and unless so authorized by the Board or by these Bylaws, no officer,
agent or employee shall have any power or authority to bind the Corporation by
any contract or engagement or to pledge its credit or to render it liable for
any purpose or in any amount.
SECTION 2. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
payment of money, notes or other evidence of indebtedness, issued in the name of
or payable to the Corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be
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<PAGE>
determined by resolution of the Board. Each such officer, assistant, agent or
attorney shall give such bond, if any, as the Board may require.
SECTION 3. DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositaries as the Board may select, or as may
be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. For the purpose of deposit and for the
purpose of collection for the account of the Corporation, the President, any
Vice President or the Treasurer (or any other officer or officers, assistant or
assistants, agent or agents, or attorney or attorneys of the Corporation who
shall from time to time be determined by the Board) may endorse, assign and
deliver checks, drafts and other orders for the payment of money which are
payable to the order of the Corporation.
SECTION 4. GENERAL AND SPECIAL BANK ACCOUNTS. The Board may from time to
time authorize the opening and keeping of general and special bank accounts with
such banks, trust companies or other depositaries as the Board may select or as
may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent with the
provisions of these Bylaws, as it may deem expedient.
ARTICLE VI
Shares and Their Transfer
SECTION 1. CERTIFICATES FOR STOCK. Every owner of stock of the
Corporation shall be entitled to have a certificate or certificates, to be in
such form as the Board shall prescribe, certifying the number and class of
shares of the stock of the Corporation owned by him. The certificates
representing shares of such stock shall be numbered in the order in which they
shall be issued and shall be signed in the name of the Corporation by the
Chairman of the Board, or the President or the Executive Vice President or a
Senior Vice President or a Vice President, and by the Secretary or an Assistant
Secretary. Any of or all of the signatures on the certificates may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon any such certificate shall
thereafter have ceased to be such officer, transfer agent or registrar before
such certificate is issued, such certificate may nevertheless be issued by the
Corporation with the same effect as though the person who signed such
certificate, or whose facsimile signature shall have been placed thereupon, were
such
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<PAGE>
officer, transfer agent or registrar at the date of issue. A record shall be
kept of the respective names of the persons, firms or corporations owning the
stock represented by such certificates, the number and class of shares
represented by such certificates, respectively, and the respective dates
thereof, and in case of cancellation, the respective dates of cancellation.
Every certificate surrendered to the Corporation for exchange or transfer shall
be canceled, and no new certificate or certificates shall be issued in exchange
for any existing certificate until such existing certificate shall have been so
canceled, except in cases provided for in Section 4 of this Article VI.
SECTION 2. TRANSFERS OF STOCK. Transfers of shares of stock of the
Corporation shall be made only on the books of the Corporation by the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary, or with a transfer clerk or a
transfer agent appointed as provided in Section 3 of Article VI, and upon
surrender of the certificate or certificates for such shares properly endorsed
and the payment of all taxes thereon. The person in whose name shares of stock
stand on the books of the Corporation shall be deemed the owner thereof for all
purposes as regards the Corporation. Whenever any transfer of shares shall be
made for collateral security, and not absolutely, such fact shall be so stated
expressly in the entry of transfer if, when the certificate or certificates
shall be presented to the Corporation for transfer, both the transferor and the
transferee request the Corporation to do so.
SECTION 3. REGULATIONS. The Board may make such rules and regulations as
it may deem expedient, not inconsistent with these Bylaws, concerning the issue,
transfer and registration of certificates for shares of the stock of the
Corporation. It may appoint, or authorize any officer or officers to appoint,
one or more transfer clerks or one or more transfer agents and one or more
registrars, and may require all certificates for stock to bear the signature or
signatures of any of them.
SECTION 4. LOST, STOLEN, DESTROYED, AND MUTILATED CERTIFICATES. In any
case of loss, theft, destruction, or mutilation of any certificate of stock,
another may be issued in its place upon proof of such loss, theft, destruction,
or mutilation and upon the giving of a bond of indemnity to the Corporation in
such form and in such sum as the Board may direct; provided, however, that a
new certificate may be issued without requiring any bond when, in the judgment
of the Board, it is proper to do so.
SECTION 5. FIXING DATE FOR DETERMINATION OF SHAREHOLDERS OF RECORD. In
order that the Corporation may determine the shareholders entitled to notice of
or to vote at any meeting of
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<PAGE>
shareholders or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any other change, conversion or exchange of
stock or for the purpose of any other lawful action, the Board may fix, in
advance, a record date, which shall not be more than 60 nor less than 10 days
before the date of such meeting, nor more than 60 days prior to any other event
for which a record date is fixed. When a record date is so fixed, only
shareholders who are such of record on that date are entitled to notice of and
to vote at the meeting or to give written consent without a meeting, or to
receive any such report, dividend, distribution, or allotment or rights, or to
exercise the rights, as the case may be, notwithstanding any transfer of any
shares on the books of the Corporation after the record date. If in any case
involving the determination of shareholders for any purpose other than notice of
or voting as a meeting of shareholders or expressing consent to corporate action
without a meeting the Board shall not fix such a record date, the record date
for determining shareholders for such purpose shall be the close of business on
the day on which the Board shall adopt the resolution relating thereto. A
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders shall apply to any adjournment of such meeting; provided, however,
that the Board may fix a new record date for the adjourned meeting.
ARTICLE VII
Indemnification
SECTION 1. SCOPE OF INDEMNIFICATION. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, to the fullest extent permitted by Delaware law and the Certificate
of Incorporation.
ARTICLE VIII
Miscellaneous
SECTION 1. SEAL. The Board shall adopt a corporate seal, which shall be
in the form of a circle and shall bear the name of the Corporation and words
showing that the Corporation is incorporated in the State of Delaware.
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<PAGE>
SECTION 2. WAIVER OF NOTICES. Whenever notice is required to be given by
these Bylaws or the Certificate of Incorporation or by law, the person entitled
to said notice may waive such notice in writing, either before or after the time
stated therein, and such waiver shall be deemed equivalent to notice.
SECTION 3. AMENDMENTS. Except as otherwise provided herein or in the
Certificate of Incorporation, these Bylaws, or any of them, may be altered,
amended, repealed or rescinded and new Bylaws may be adopted, (i) by the Board,
or (ii) by the shareholders, at any annual meeting of shareholders, or at any
special meeting of shareholders, provided that notice of such proposed
alteration, amendment, repeal, rescission or adoption is given in the notice of
meeting.
SECTION 4. REPRESENTATION OF OTHER CORPORATIONS. The Chairman of the
Board or the President or the Executive Vice President or a Senior Vice
President or any Vice President or the Secretary or any Assistant Secretary of
this Corporation are authorized to vote, represent and exercise on behalf of
this Corporation all rights incident to any and all shares of any other
corporation or corporations standing in the name of this Corporation. The
authority herein granted to said officers to vote or represent on behalf of this
Corporation any and all shares held by this Corporation in any other corporation
or corporations may be exercised either by such officers in person or by any
person authorized so to do by proxy or power of attorney duly executed by said
officers.
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<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(In thousands of dollars except per share data)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------
1993 1992 1991
------------- ------------- -------------
<S> <C> <C> <C>
PRIMARY
Average shares outstanding...................... 128,587,823 128,557,808 128,505,760
Dilutive stock options based on the treasury
stock method using average market price....... 153,081 260,641 120,606
------------- ------------- -------------
128,740,904 128,818,449 128,626,366
------------- ------------- -------------
------------- ------------- -------------
Income from continuing operations............... $164,113 $ 35,317 $67,954
Discontinued operations:
Income from discontinued operations, net of
income taxes................................ 21,344 21,458 14,000
Gain on sale of discontinued operations, net
of income taxes............................. 131,702
------------- ------------- -------------
Income before cumulative effect of changes in
accounting principles......................... 317,159 56,775 81,954
Cumulative effect of changes in accounting
principles:
Postretirement benefits..................... (133,376)
Income taxes................................ 10,000
------------- ------------- -------------
Net income (loss)............................... $317,159 $ (66,601) $81,954
------------- ------------- -------------
------------- ------------- -------------
Earnings (loss) per share:
Continuing operations......................... $1.27 $ .27 $.53
Discontinued operations:
Income from operations...................... .17 .17 .11
Gain on sale................................ 1.02
------------- ------------- -------------
Before cumulative effect of changes in
accounting principles....................... 2.46 .44 .64
Cumulative effect of changes in accounting
principles:
Postretirement benefits................... (1.04)
Income taxes.............................. .08
------------- ------------- -------------
Earnings (loss) per share....................... $2.46 $ (.52) $.64
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
EXHIBIT 11
Page 1 of 3
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(In thousands of dollars except per share data)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------
1993 1992 1991
------------- ------------- -------------
<S> <C> <C> <C>
FULLY DILUTED
Average shares outstanding...................... 128,587,823 128,557,808 128,505,760
Dilutive stock options based on the treasury
stock method using year-end market price, if
higher than average market price.............. 258,897 172,182 135,296
------------- ------------- -------------
128,846,720 128,729,990 128,641,056
------------- ------------- -------------
------------- ------------- -------------
Income from continuing operations............... $164,113 $ 35,317 $67,954
Discontinued operations:
Income from discontinued operations, net of
income taxes................................ 21,344 21,458 14,000
Gain on sale of discontinued operations, net
of income taxes............................. 131,702
------------- ------------- -------------
Income before cumulative effect of changes in
accounting principles......................... 317,159 56,775 81,954
Cumulative effect of changes in accounting
principles:
Postretirement benefits..................... (133,376)
Income taxes................................ 10,000
------------- ------------- -------------
Net income (loss)............................... $317,159 $ (66,601) $81,954
------------- ------------- -------------
------------- ------------- -------------
Earnings (loss) per share:
Continuing operations......................... $1.27 $ .27 $.53
Discontinued operations:
Income from operations...................... .17 .17 .11
Gain on sale................................ 1.02
------------- ------------- -------------
Before cumulative effect of changes in
accounting principles....................... 2.46 .44 .64
Cumulative effect of changes in accounting
principles:
Postretirement benefits................... (1.04)
Income taxes.............................. .08
------------- ------------- -------------
Earnings (loss) per share....................... $2.46 $ (.52) $.64
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
EXHIBIT 11
Page 2 of 3
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(In thousands of dollars except per share data)
<TABLE>
<CAPTION>
FOURTH QUARTER
ENDED DECEMBER 31
----------------------------
1993 1992
------------- -------------
<S> <C> <C>
PRIMARY
Average shares outstanding..................................... 128,601,111 128,569,014
Dilutive stock options based on the treasury stock method using
average market price......................................... 207,975 147,026
------------- -------------
128,809,086 128,716,040
------------- -------------
------------- -------------
Income (loss) from continuing operations....................... $ 23,151 $(66,530)
Discontinued operations:
Income from discontinued operations, net of income taxes..... 6,953 4,844
Gain on sale of discontinued operations, net of income
taxes....................................................... 131,702
------------- -------------
Net income (loss).............................................. $161,806 $(61,686)
------------- -------------
------------- -------------
Earnings (loss) per share:
Continuing operations........................................ $ .18 $(.52)
Discontinued operations:
Income from operations..................................... .06 .04
Gain on sale............................................... 1.02
------------- -------------
Earnings (loss) per share...................................... $1.26 $(.48)
------------- -------------
------------- -------------
FULLY DILUTED
Average shares outstanding..................................... 128,601,111 128,569,014
Dilutive stock options based on the treasury stock method using
year-end market price, if higher than average market price... 313,384 172,182
------------- -------------
128,914,495 128,741,196
------------- -------------
------------- -------------
Income (loss) from continuing operations....................... $ 23,151 $(66,530)
Discontinued operations:
Income from discontinued operations, net of income taxes..... 6,953 4,844
Gain on sale of discontinued operations, net of income
taxes....................................................... 131,702
------------- -------------
Net income (loss).............................................. $161,806 $(61,686)
------------- -------------
------------- -------------
Earnings (loss) per share:
Continuing operations........................................ $ .18 $(.52)
Discontinued operations:
Income from operations..................................... .06 .04
Gain on sale............................................... 1.02
------------- -------------
Earnings (loss) per share...................................... $1.26 $(.48)
------------- -------------
------------- -------------
</TABLE>
EXHIBIT 11
Page 3 of 3
<PAGE>
THE TIMES MIRROR COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In thousands of dollars)
<TABLE>
<CAPTION>
YEAR-TO-DATE
DECEMBER 31, 1993
-----------------
<S> <C>
Fixed Charges
Interest expense............................................. $ 85,237
Interest related to ESOP (1)................................. 2,611
Capitalized interest......................................... 391
Portion of rents deemed to be interest....................... 25,078
Amortization of debt expense................................. 995
--------
Total Fixed Charges........................................ $114,312
--------
--------
Earnings
Income from continuing operations before income taxes........ $301,717
Fixed charges, less capitalized interest and interest related
to ESOP..................................................... 111,310
Amortization of capitalized interest......................... 5,369
Distributed income from less than 50% owned unconsolidated
affiliates.................................................. 281
Subtract: Equity loss from less than 50% owned unconsolidated
affiliates.................................................. 1,067
--------
Total Earnings............................................. $419,744
--------
--------
Ratio of earnings to fixed charges............................. 3.7
<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>
EXHIBIT 12
<PAGE>
SUBSIDIARIES
OF
THE TIMES MIRROR COMPANY
AS OF
MARCH 1, 1994*
<TABLE>
<CAPTION>
STATE OF
NAME INCORPORATION
- ------------------------------------------------------------------------------------------------ ----------------
<S> <C>
The Baltimore Sun Company....................................................................... Maryland
CRC Press, Inc.................................................................................. Florida
Harry N. Abrams, Incorporated**................................................................. New York
The Hartford Courant Company.................................................................... Connecticut
Jeppesen & Co., GmbH**.......................................................................... Germany
Jeppesen Sanderson, Inc......................................................................... Delaware
Kaset, Inc...................................................................................... Florida
Learning International, Inc.**.................................................................. Delaware
LOS ANGELES TIMES***............................................................................
Matthew Bender & Company, Incorporated**........................................................ New York
The Morning Call, Inc........................................................................... Pennsylvania
Mosby-Year Book, Inc............................................................................ Missouri
National Journal, Inc........................................................................... Delaware
Newsday, Inc.**................................................................................. New York
Richard D. Irwin, Inc........................................................................... Delaware
Southern Connecticut Newspapers, Inc............................................................ Connecticut
The Sporting News Publishing Company............................................................ Missouri
Times Mirror Cable Television, Inc.
(dba Dimension Cable Services)................................................................ Delaware
Times Mirror Magazines, Inc.**.................................................................. New York
Wm. C. Brown Communications, Inc................................................................ Iowa
Zenger-Miller, Inc.............................................................................. California
<FN>
- ------------------------
* The names of certain other subsidiaries have been omitted because,
considered in the aggregate as a single subsidiary, they would not
constitute a significant subsidiary.
** 100% owned by a wholly-owned subsidiary of the Registrant. (All other
subsidiaries listed above are wholly-owned by the Registrant.)
*** THE LOS ANGELES TIMES is an operating division of the Registrant, rather
than a separately incorporated subsidiary.
</TABLE>
EXHIBIT 22
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statements
(Form S-3 Nos. 33-39046, 33-47766 and 33-50145) pertaining to various notes and
in the Registration Statements (Form S-8 Nos. 33-24080, 2-77412, 2-91347,
2-92163, 33-13423 and 33-51990) pertaining to certain employee benefit plans of
our report dated February 3, 1994, with respect to the consolidated financial
statements and schedules of The Times Mirror Company included in the Annual
Report (Form 10-K) for the year ended December 31, 1993.
ERNST & YOUNG
Los Angeles, California
March 21, 1994
50
