SEC Info  
    Home      Search      My Interests      Help      Sign In      Please Sign In

Knight Ridder Inc – ‘10-K’ for 12/25/94

As of:  Friday, 3/24/95   ·   For:  12/25/94   ·   Accession #:  205520-95-7   ·   File #:  1-07553

Previous ‘10-K’:  ‘10-K’ on 3/23/94 for 12/26/93   ·   Next:  ‘10-K’ on 3/20/96 for 12/31/95   ·   Latest:  ‘10-K/A’ on 4/14/06 for 12/25/05

  in   Show  &   Hints

  As Of                Filer                Filing    For·On·As Docs:Size

 3/24/95  Knight Ridder Inc                 10-K       12/25/94    2:241K

Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        1994 10-K                                            168    437K 
 2: EX-27       Financial Data Schedule                                2      7K 


10-K   —   1994 10-K
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
4Item 1 & 2:. Business/Properties
"Operating Revenue
"Operating income
28Business Information Services
36Other
39Item 3. Legal Proceedings
40Item 4. Submission of matters to a vote of security holders
421993
"1992
44Item 6. Selected Financial Data
45Discontinued broadcast operations (2)
50Item 7. Management's Discussion and Analysis of Financial Condition
66Total debt
70Shareholders' Equity
73Item 8. Financial statements and supplementary data
"Property, plant and equipment
74Excess of cost over net assets acquired
79Cash Required For Investing Activities
81Notes to Consolidated Financial Statements
112Item 9. Changes in and Disagreements with Accountants on Accounting and
"Item 10. Directors and Executive Officers of the Registrant
143Cumulative effect of changes in accounting principles
146Interest expense
151Consent of Independent Certified Public Accountants
10-K1st Page of 168TOCTopPreviousNextBottomJust 1st
 

UNITED STATES 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 the fiscal year ended DECEMBER 25, 1994 Commission file number 1-7553 KNIGHT-RIDDER, INC. (Exact name of registrant as specified in its charter) A Florida corporation NO. 38-0723657 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) One Herald Plaza Miami, Florida 33132 (Address of principal executive offices) Registrant's telephone number, including area code (305) 376-3800 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, $.02 1/12 Par Value New York Stock Exchange Tokyo Stock Exchange Frankfurt Stock Exchange Securities registered pursuant to Section 12(g) of the Act: none 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 -3-
10-K2nd Page of 168TOC1stPreviousNextBottomJust 2nd
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. [ ] State the aggregate market value of the voting stock held by non-affiliates of the registrant. (The aggregate market value is computed by reference to the price at which the stock was sold as of February 26,1995: $2,445,400,722. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: February 26, 1995 - 51,479,820 one class Common Stock, $.02 1/12 Par Value DOCUMENTS INCORPORATED BY REFERENCE (1) Portions of definitive Proxy Statement dated March 24, 1995, in connection with the Annual Meeting of Shareholders to be held on May 5, 1995, are incorporated into Part III. -4-
10-K3rd Page of 168TOC1stPreviousNextBottomJust 3rd
Table of Contents for 1994 10-K Page PART I Item 1. Business 6-40 Item 2. Properties 6-40 Item 3. Legal Proceedings 40-41 Item 4. Submission of Matters to a Vote of Security Holders 41 PART II Item 5. Market for Registrant's Common Stock and Related Stockholder Matters 41-44 Item 6. Selected Financial Data 45-50 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 51-73 Item 8. Financial Statements and Supplementary Data 43-44,74-106 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 106 PART III Item 10. Directors and Executive Officers of the Registrant 106-113 Item 11. Executive Compensation 114 Item 12. Security Ownership of Certain Beneficial Owners and Management 114 Item 13. Certain Relationships and Related Transactions 114 PART IV Item 14. Exhibits, Financial Schedule and Reports on Form 8-K 115-117 SIGNATURES 118-122 SCHEDULES 123-125 EXHIBITS 126-162 -5-
10-K4th Page of 168TOC1stPreviousNextBottomJust 4th
PART I ITEM 1 & 2: Business/Properties [Download Table] Business Segment Information (In thousands) 1994 1993 1992 --------- --------- --------- OPERATING REVENUE Newspapers $2,134,922 $2,012,823 $1,944,090 Business Information Services 514,039 438,525 385,439 --------- --------- --------- $2,648,961 $2,451,348 $2,329,529 ========= ========= ========= OPERATING INCOME Newspapers $350,856 $298,767 $ 290,522 Business Information Services 23,110 23,405 22,069 Corporate (42,705) (37,315) (34,080) --------- --------- --------- $331,261 $284,857 $ 278,511 ========= ========= ========= IDENTIFIABLE ASSETS Newspapers $1,553,160 $1,578,935 $1,602,373 Business Information Services 589,147 548,266 466,456 Corporate 304,882 304,231 389,230 --------- --------- --------- $2,447,189 $2,431,432 $2,458,059 ========= ========= ========= DEPRECIATION AND AMORTIZATION Newspapers $94,927 $94,600 $ 88,033 Business Information Services 52,714 45,525 38,556 Corporate 1,686 1,633 1,632 --------- --------- --------- $149,327 $141,758 $ 128,221 ========= ========= ========= -6-
10-K5th Page of 168TOC1stPreviousNextBottomJust 5th
CAPITAL EXPENDITURES Newspapers $32,896 $27,971 $ 74,213 Business Information Services 33,470 40,329 25,991 Corporate 744 1,241 789 --------- --------- --------- $67,110 $69,541 $ 100,993 ========= ========= =========
---------------------------------------------------------------------------- [Download Table] Source Of Knight-Ridder Operating Revenue 1994 1993 1992 ----------------------------------------- ---- ---- ---- The Philadelphia Inquirer and Philadelphia Daily News.................... 17% 18% 18% The Miami Herald............................... 12 13 12 San Jose Mercury News.......................... 9 9 9 Detroit Free Press*............................ 9 9 9 The Charlotte Observer......................... 5 5 5 Saint Paul Pioneer Press....................... 4 4 4 Akron Beacon Journal........................... 3 3 3 (Long Beach) Press Telegram.................... 2 2 3 The (Columbia) State........................... 2 2 3 The Wichita Eagle.............................. 2 2 3 All other newspapers........................... 16 15 15 Business Information Services.................. 19 18 16 ---- ---- ---- 100% 100% 100% ==== ==== ==== *Knight-Ridder portion of Detroit Newspapers -7-
10-K6th Page of 168TOC1stPreviousNextBottomJust 6th
Newspapers Knight-Ridder's Newspaper Division had 28 daily newspapers and three nondaily newspapers at the end of 1994. The Journal of Commerce, the company's 29th daily, is part of the Business Information Services Division. Newspaper operating revenue is derived primarily from the sale of newspaper advertising. Due to seasonal factors such as heavier retail selling during the winter and spring holiday seasons, advertising income fluctuates significantly throughout the year. Consecutive quarterly results are not uniform or comparable and are not indicative of the results over an entire year. Each of Knight-Ridder's newspapers is operated on a substantially autonomous basis by local management appointed by corporate headquarters in Miami. Each newspaper is free to manage its own news coverage, set its own editorial policies and establish most business practices. Basic business policies, however, are set by the corporate staff in Miami. Editorial services and quality control also are provided by the corporate staff. Each newspaper is served by the company-owned news bureau in Washington, D.C. A supplemental news service provided by KRT Information Services, a partnership between Knight-Ridder and Tribune Co., distributes editorial material produced by all Knight-Ridder newspapers and by 19 foreign correspondents. The service also distributes editorial computer graphics via the Knight-Ridder-owned PressLink electronic network and provides a deadline photo service to hundreds of newspapers around the world as a commercial venture. All of the company's newspapers compete for advertising and readers' time and attention with broadcast and cable television, radio, magazines, nondaily suburban newspapers, free shoppers, billboards and direct mail. In many cases, the newspapers also compete with other newspapers published in nearby cities and towns. With the exception of papers published in Detroit, Fort Wayne and St. Paul, company-owned newspapers are the only daily and Sunday papers of general circulation published in their communities. The newspapers rely on local sales operations for local retail and classified advertising. The larger papers are assisted by Newspapers First and by the Newspaper National Network, a sales force created by a group of some 50 major newspapers, in obtaining national or general advertising in such areas as travel, automobiles, cigarettes, pharmaceuticals and beer. The table on the preceding page presents the relative percentage contributions by individual papers to the company's overall operating revenue for the three years ended Dec. 25, 1994. The percentage contributions of each paper to operating revenue are not indicative of contributions to operating profit. -8-
10-K7th Page of 168TOC1stPreviousNextBottomJust 7th
NEWSPRINT : Newsprint is the primary raw material used in publishing newspapers, and in 1994, Knight-Ridder was one of the largest consumers in the United States. Approximately 12.3% of the company's total operating expenses during the year were for newsprint. Purchases are made under long-term agreements with a wide variety of newsprint producers. Knight-Ridder purchases approximately 70% of its annual consumption from United States mills, with the remainder purchased from Canada. In the opinion of management, sources are adequate to meet current demands. Approximately 76% of the newsprint consumed by the company contained some recycled fiber; the average content was 47% recycled fiber. A tightening market is anticipated for 1995 and the foreseeable future. This tightened market will allow prices to increase dramatically for 1995. Knight-Ridder is a one-third partner with Cox Enterprises, Inc., and Media General, Inc., in Southeast Paper Manufacturing Co., a newsprint mill in Dublin, Ga. The mill's full capacity exceeds 445,000 metric tonnes of newsprint annually, using recycled newsprint as the principal raw material and coal as the primary energy source. Because of recycling considerations and as part of an agreement among the partners, Knight-Ridder purchased approximately 125,000 metric tonnes in 1994. The partnership commitment is to purchase a major share of any unsold surplus up to a maximum annual total of 90,000 metric tonnes. In addition, Knight-Ridder owns a 13.5% equity share of Ponderay Newsprint Company in Usk, Wash., which produces approximately 225,000 metric tonnes annually. Knight-Ridder purchases approximately 28,400 metric tonnes annually from Ponderay for its western newspapers. PROPERTIES: The company has daily newspaper printing and publishing facilities in 26 cities located in 16 states. These production facilities vary in size from 7,300 square feet at The Florida Keys Keynoter operation in Marathon, Fla., to 2.0 million square feet in Philadelphia. In total, the company's newspaper facilities occupy about 8.6 million square feet. Approximately 1.6 million of the total square feet is leased from others. Virtually all the owned property is owned in fee. The company owns substantially all of its production equipment, although certain office equipment is leased. The company also owns land for future expansion in Columbus and Macon, Ga., Detroit and San Jose. The company's properties are maintained in excellent operating condition and are suitable for present and foreseeable publishing operations. During the three years ended Dec. 25, 1994, the company spent approximately $237.6 million for capital additions and improvements to its existing properties. -9-
10-K8th Page of 168TOC1stPreviousNextBottomJust 8th
TECHNOLOGY: Knight-Ridder moved ahead with a number of technology initiatives in an ongoing effort to improve the quality of products and services. The company made significant investments in replacing outdated publishing systems. A new editorial and ad production system was installed in Duluth. Long Beach completed installation of new editorial and classified systems, and is now in the process of implementing full pagination. State College began installation of new editorial and ad production systems, and Wichita received approval to purchase new editorial, classified, ad production and pagination systems. PressLink Explorer was launched in October, allowing users to rapidly browse, search and access downloaded material while working within another application, such as QuarkXPress. A multiyear effort to migrate all newspapers to state-of-the-art RISC (Reduced Instruction Set Computing) technology was completed. Programming was completed on a project to enhance Collier-Jackson's circulation software. Installation of the system, which provides more than 100 new features, will begin in 1995. Support for flexible employee benefits was completed and went live on the CYBORG Human Resources System Jan. 1, 1994. Conversion of local HR systems to CYBORG is expected to be completed in 1995. The Charlotte Observer press expansion project remains on schedule. Ink and washwater systems have been installed and minor construction has begun. The two new presses are scheduled to be operational in the fourth quarter of 1995 and the second quarter of 1996. The company made investments to upgrade press equipment in a number of our newspaper operations. The Tallahassee Democrat and The (Milledgeville) Union-Recorder each added an additional press unit to their press line. Funding was approved to rebuild the commercial printing presses at the Bradenton Herald and The Union-Recorder. During 1994, formal quality audits were completed for all of our newspapers. Audits included review of standard procedures, calibration of equipment, printing press tests, recommendations and appropriate follow-up. Major improvements were made to the facilities of many of our newspapers, including newsroom renovations at The Miami Herald and the Post-Tribune in Gary. The San Jose Mercury News will undertake a building renovation project in 1995 to improve areas of the newsroom, advertising and circulation. Knight-Ridder Information, Inc., (formerly Dialog Information Services, Inc.) moved into a headquarters office facility in early 1995. -10-
10-K9th Page of 168TOC1stPreviousNextBottomJust 9th
GENERAL ADVERTISING SALES: Knight-Ridder newspapers depend most heavily on three agents for the sale of general advertising. Newspapers First is an advertising sales cooperative formed in 1990 with the merger of Knight-Ridder Newspaper Sales and Times Mirror Million Markets. In 1994, Times Mirror withdrew from the arrangement, leaving Newspapers First the primary sales representative for the larger Knight-Ridder newspapers, Detroit Newspapers and several leading independents. Through Newspapers First, a customer can place an ad in a combination of papers owned by different companies, rather than dealing with each one separately. Newspaper National Network (NNN), Knight-Ridder's second general sales agent, was established last year as a three-year experiment in focused national selling on behalf of the newspaper industry. It represents all the Knight-Ridder newspapers, plus over 500 others. Like Newspapers First, it makes the purchase of newspaper advertising a "one-stop shopping" prospect; the agent handles placement and billing. Through NNN, the industry hopes to rekindle interest among certain categories of general advertisers who have not been in newspapers in a significant way for years (i.e., pharmaceuticals, beverages). Currently, about $80 billion annually is spent in general measured media; newspapers get no more than 5% of that - and would like to do better. The primary difference between Newspapers First and NNN insofar as Knight-Ridder papers are concerned is the degree of attention: Newspapers First is focused on a relatively few papers and can provide each of them with considerable care. While it will go after the same new revenue as NNN, it will do whatever else benefits its members as well. NNN, by dint of its large membership, is necessarily spread more thinly - but is more closely focused on expanding the revenue base. Knight-Ridder's third agent for general sales is Landon Associates, Inc., a private company that sells sales-representative services for medium to small markets. In addition to helping with general buys for our medium to small newspapers, Landon will help with regional retail. The Miami Herald The Miami Herald, the only metropolitan morning newspaper published in Dade County, Fla., has the largest circulation of any daily newspaper in the southeastern United States. Circulated primarily in Dade County (Miami Metropolitan Statistical Area) and in adjacent Broward and Monroe counties, The Herald also has considerable circulation elsewhere in Florida. -11-
10-K10th Page of 168TOC1stPreviousNextBottomJust 10th
In 1994, The Herald produced six daily and eight Sunday editions and seven zoned Neighbors editions and four zoned Hometown Herald editions twice weekly, and four local zoned news sections serving Dade, Broward, Palm Beach and Monroe counties. The Herald added five new customized, cable-specific TV books in Dade and Broward. The Herald's International edition was distributed daily in 30 cities throughout Latin America and the Caribbean. El Nuevo Herald, The Herald's Spanish-language publication, marked its seventh anniversary. Since its inception in 1987, El Nuevo Herald's circulation has grown to 100,973 daily and 126,057 Sunday. It is available on request for Herald home-delivery customers for a 10-cent daily delivery charge and in special racks in nearby counties. In 1994, South Florida's economy pushed ahead of national trends and grew slightly due to the lingering impact of Hurricane Andrew. Retail and classified revenue stayed ahead of last year's hurricane-recovery pace, fueled by national accounts, department stores, financial institutions and travel in retail; real estate in classified. Most categories continued to perform well. New retailers who opened or plan to open stores in South Florida include Incredible Universe, Dillard's and Best Buy. With advertiser input, The Herald began a zoned tabloid real estate section in May that increased linage by 37.5%. That same month, The Herald hired 16 commission-only sales associates. By year end, that group had generated $1.0 million in new business. The Herald continued its commitment to developing new, nontraditional revenue sources. Book titles included The 1994 Almanac of Florida Politics, Enchanted Ground and Crime Proof. The company also sponsored its second successful International Women's Show. Population in Dade and Broward counties grew 2.9% from 1990 to 1993, the latest year for which statistics are available. The area's population is expected to grow 42.2% between 1993 and 2015, compared with the U.S. average of 22.9%. Daily circulation declined by 6,008, or 1.5%, and Sunday circulation decreased 8,193, or 1.6%, compared with the previous year. In Dade County, The Herald's daily circulation household penetration rate in 1994 was 36%; Sunday circulation penetration was 47%. Daily coverage of Broward households was 18%; Sunday coverage was 22%. Home-delivered papers accounted for 73% of total daily circulation and 64% of total Sunday circulation. Cox Newspapers and The Miami Herald Publishing Co. are parties to a joint operating agreement that runs until the year 2021, covering the publication of The Herald and The Miami News, which ceased publication Dec. 31, 1988. -12-
10-K11th Page of 168TOC1stPreviousNextBottomJust 11th
This table presents average audited circulation for The Miami Herald and El Nuevo Herald for the years ended June 26, 1994, 1993 and 1992. Advertising linage, preprints inserted and revenue amounts are for the fiscal years. Largest contributor to Knight-Ridder profits. 1994 revenue - $317.0 million 1993 revenue - $306.9 million Metro Market* - 9th-largest in U.S. Population* - 3.3 million Penetration:* Daily 27.9% - Sunday 35.9% *(Miami-Fort Lauderdale)
10-K12th Page of 168TOC1stPreviousNextBottomJust 12th
[Download Table] The Miami Herald 1994 1993 1992 ------- ------- ------- Average Circulation Daily........................................ 395,725 401,733 405,779 Sunday....................................... 518,038 526,231 527,658 Average Linage (In 000s of six-column inches) ROP Full-Run Retail...................................... 1,101.0 1,100.7 1,022.6 General..................................... 245.5 225.4 257.7 Classified.................................. 1,016.0 999.7 914.1 ------- ------- ------- Total...................................... 2,362.5 2,325.8 2,194.4 ======= ======= ======= ROP Factored Part-Run.................................... 644.8 675.3 566.4 Preprints- Full-Run......................... 650.4 667.7 669.7 Part-Run......................... 1,622.9 1,265.3 987.6 Total Preprints Inserted (In 000s)............. 595,671 571,914 520,200 -13-
10-K13th Page of 168TOC1stPreviousNextBottomJust 13th
Advertising Revenue (In 000s) Retail....................................... $ 116,461 $ 112,878 $ 110,665 General...................................... 42,622 38,911 43,154 Classified................................... 100,354 97,483 85,618 ------- ------- ------- Total........................................ $ 259,437 $ 249,272 $ 239,437 ======= ======= ======= Circulation Revenue (In 000s).................. $ 48,467 $ 48,603 $ 48,473 ======= ======= =======
-14-
10-K14th Page of 168TOC1stPreviousNextBottomJust 14th
San Jose Mercury News The San Jose Mercury News, located in California's seventh-largest metro area, reaches a much larger community than the businesses and homes of the Silicon Valley. Under the guidance of new publisher Jay Harris, the Mercury News continues to break new ground in information technology, marketing and journalistic excellence. Mercury Center, which carries the newspaper's full editorial content to subscribers through an online computer service, in 1994 developed a World Wide Web site on the Internet and introduced a low-cost personalized electronic clipping service. The World Wide Web makes Mercury Center accessible to any computer user on the Internet, even if the user is not a member of a commercial online service - tremendously increasing the number of potential users. NewsHound, an online clipping service, uses a profile of keywords entered by a subscriber to search thousands of articles from the Mercury News and wire services. Stories that match the profile are retrieved as electronic mail. Melding technology with community service and event marketing, the Mercury News launched the Electronic Learning Fair (ELF) in December. ELF provided a hands-on glimpse of how technology can enhance education. Attracting such well-known corporate sponsors as Microsoft, Intel and Apple, ELF drew thousands to view equipment and software demonstrated by students whose schools shared in the event proceeds. In October, the Mercury News became the first U.S. newspaper to open a bureau in post-war Vietnam. Correspondent Kristin Huckshorn reports news from the homeland of some 90,000 Vietnamese-Americans living in the San Jose area. Huckshorn joins Pulitzer-winner Lew Simons in Tokyo and Esther Schrader in Mexico City in covering areas of vital interest to the multicultural Bay Area population and to the international businesses of the Pacific Rim. Another initiative in 1994 involved a team approach to developing and launching new revenue-generating products. The Mercury News Revenue Team researched success stories at newspapers across the country, then distilled the results into an eight-point plan. The revenue growth will more than offset the substantial increase in newsprint costs in 1995 and lead to continued positive financial performance in San Jose, where circulation and advertising showed solid growth throughout the year. The population of the San Jose Metropolitan Statistical Area (MSA), which includes only Santa Clara County, is expected to grow 33.5% between 1993 and 2015, compared with the U.S. average of 22.9%. Daily circulation increased by 6,096, or 2.2%, and Sunday circulation increased 5,971, or 1.8%, compared with 1993. -15-
10-K15th Page of 168TOC1stPreviousNextBottomJust 15th
The following table presents average unaudited circulation for the year ended Sept. 30, 1994, and average audited circulation for San Jose for the two years ended Sept. 30, 1993, and 1992. Advertising linage, preprints inserted and revenue amounts are for the fiscal years. Second-largest contributor to Knight-Ridder profits. 1994 revenue - $230.1 million 1993 revenue - $212.9 million Metro Market - 31st-largest in U.S. Population - 1.6 million Penetration (MSA): Daily 44.2% - Sunday 52.9% [Enlarge/Download Table] San Jose Mercury News 1994 1993 1992 --------- --------- --------- Average Circulation Daily............................................. 284,414 * 278,318 269,286 Sunday............................................ 345,494 * 339,523 332,080 Average Linage (In 000s of six-column inches) ROP Full-Run Retail....................................... 1,178.7 1,144.3 1,183.0 General...................................... 263.6 252.1 255.5 Classified................................... 1,368.4 1,315.3 1,299.1 --------- --------- --------- Total.................................... 2,810.7 2,711.7 2,737.6 ========= ========= ========= ROP Factored Part-Run..................................... 44.8 50.9 49.3 Preprints - Full-Run......................... 1,528.5 1,561.8 1,664.8 Part-Run......................... 833.0 602.2 1,583.8 Total Preprints Inserted (In 000s).................... 431,493 434,877 471,794 -16-
10-K16th Page of 168TOC1stPreviousNextBottomJust 16th
Advertising Revenue (In 000s) Retail............................................ $ 72,816 $ 70,490 $ 73,047 General........................................... 22,286 21,406 20,622 Classified........................................ 98,950 88,083 82,556 --------- --------- --------- Total........................................ $ 194,052 $ 179,979 $ 176,225 ========= ========= ========= Circulation Revenue (In 000s)......................... $ 32,851 $ 30,502 $ 29,566 ========= ========= ========= *unaudited
-17-
10-K17th Page of 168TOC1stPreviousNextBottomJust 17th
The Philadelphia Inquirer and Philadelphia Daily News Philadelphia Newspapers, Inc., publisher of The Philadelphia Inquirer and Philadelphia Daily News, strengthened its core business with reader- and advertiser-related improvements to both newspapers, while also pursuing new media opportunities. The Inquirer introduced a new Sports Final street-sales edition with later sports scores, more prominent Page One headlines and more photographs. The new edition, aimed at single-copy purchasers throughout the city, followed the successful introduction of a second daily zoned section for suburban readers in the Main Line/Delaware County area. The new Sports Final, tighter zoning, enhanced sectioning capabilities and improved use of color are improvements for customers made possible by Philadelphia's new printing plant. The Inquirer introduced a Health and Science section that features an expanded Kids Talk column answering science questions from young readers. Readers can communicate directly with the newspaper by e-mail. The Inquirer also introduced a new 30-minute weekly television program, The Inquirer High School Sportshow, on WPHL-TV. The program features coverage of more than 300 regional high school sports teams. WPHL-TV is the same station on which KR Video's new nightly Inquirer News Tonight is broadcast. The Philadelphia Daily News, a tabloid noted for its clever headlines, strong sports, local news and entertainment coverage, and for its attractive use of color, continued to show strength as a principally single-copy-sales newspaper. The Daily News reaches young people in their own language with the weekly Fresh Ink section, which has strong youth involvement in the content. In 1994, the newspaper added a monthly, free-standing, advertising-supported 70,000-copy edition of Fresh Ink for free distribution in malls and other locations. Car shoppers can now reach the classifieds by calling AutoLine and specifying the year, make and model, and color of the used car they're seeking. Response can be delivered by telephone, fax or e-mail. To ensure that The Inquirer and Daily News become full participants in the multimedia future, a group of PNI managers worked to develop a strategy for involvement in online services and other electronic information services. PNI entered the show marketing business in 1994 as part of its augmentation strategy with a highly successful International Women's Show presented in the new Pennsylvania Convention Center. Attendance far exceeded expectations, and vendors requested a 1995 show. A first-time home decor show also was successful and will be repeated in 1995. -18-
10-K18th Page of 168TOC1stPreviousNextBottomJust 18th
The Inquirer's daily circulation was down 16,137, or 3.2%, from 1993. Sunday circulation was down 19,441, or 2.0%, from 1993, according to unaudited ABC reports. Daily News circulation was up 3,673, or 1.9%, from 1993. The following table presents the average unaudited circulation for The Philadelphia Inquirer and Philadelphia Daily News for the year ended March 31, 1994, and average audited circulation for the years ended March 31, 1993, and 1992. Advertising linage, preprints inserted and revenue amounts are for the fiscal years. Third-largest contributor to Knight-Ridder profits. 1994 revenue - $455.5 million 1993 revenue - $431.5 million Metro Market - 4th-largest in U.S. Population - 5.0 million Penetration (MSA): Inquirer 24.6% Daily News 10.3% Sunday 47.2% -19-
10-K19th Page of 168TOC1stPreviousNextBottomJust 19th
[Enlarge/Download Table] The Philadelphia Inquirer and Philadelphia Daily News 1994 1993 1992 ---------------------------- ---------------------------- -------------------------- Inquirer Daily News Inquirer Daily News Inquirer Daily News --------- ---------- --------- ---------- -------- ---------- Average Circulation Daily............................... 486,291 * 198,809 * 502,428 195,136 502,136 196,715 Sunday.............................. 945,491 * 964,932 976,223 Average Linage (In 000s of six-column inches) ROP Full-Run Retail......................... 1,055.1 338.3 1,056.0 368.3 1,029.8 348.4 General........................ 227.2 67.7 203.9 44.5 210.2 46.1 Classified..................... 827.3 325.6 760.7 311.4 788.8 315.9 --------- ---------- --------- ---------- --------- ---------- Total...................... 2,109.6 731.6 2,020.6 724.2 2,028.8 710.4 ========= ========== ========= ========== ========= ========== ROP Factored Part-Run....................... 91.8 93.1 79.0 Preprints - Full-Run........... 324.3 6.5 287.1 41.0 327.1 59.3 Part-Run........... 2,001.8 58.0 1,932.7 51.0 1,630.2 111.2 Combined Combined Combined -------- -------- -------- Total Preprints Inserted (In 000s)...... 762,601 752,429 787,440 Advertising Revenue (In 000s) Retail.............................. $152,096 $148,082 $145,485 General............................. 56,660 49,119 50,845 Classified.......................... 113,885 101,284 98,687 ------- ------- ------- Total...................... $322,641 $298,485 $295,017 ======= ======= ======= Circulation Revenue (In 000s)........... $128,238 $128,801 $126,738 ======= ======= ======= * unaudited -20-
10-K20th Page of 168TOC1stPreviousNextBottomJust 20th
The Charlotte Observer The Charlotte Observer, the only daily newspaper published in Mecklenburg County, has the largest circulation of any daily in North and South Carolina. Its primary market is a 15-county region in North and South Carolina. It also distributes in major metropolitan and vacation areas across the Carolinas. In 1994, The Observer produced four daily and Sunday editions. It also published four zoned Mecklenburg Neighbors sections twice weekly; two zoned daily and Sunday sections; two twice-weekly zoned sections; and two thrice-weekly sections. Charlotte expects to continue the healthy growth it experienced in 1994. Employment growth in the first eight months of 1994 was 2.5% over the comparable period in 1993. Unemployment was below national and state averages. Retail sales in Mecklenburg County were up 9.4% through June 1994, the latest date for which figures were available. Retail sales in key regional counties also showed healthy growth. The success of the NBA Charlotte Hornets and the awarding of the NFL Carolina Panthers franchise (which begins play in 1995) have brought increased national attention. Diversified economic development is expected to continue at a strong pace through 1995 with several more large-scale new companies arriving. In 1994, Sealand, Transamerica Insurance and General Tire announced plans to relocate corporate offices to Charlotte. -21-
10-K21st Page of 168TOC1stPreviousNextBottomJust 21st
The Observer published two weekly tabloids - Break Magazine, aimed at the entertainment market, and Employment Weekly. Four monthly publications - Lake Norman Magazine, University City Magazine, Realtor Reflections Magazine and Community Pride Magazine - target specific audiences. Foothills Magazine publishes 15 issues per year. In 1995, The Observer will introduce The Insider's Guide to the North Carolina Mountains. The Observer's alternate delivery operation, KPCDelivery, provides targeted delivery of retail advertising and samples across Mecklenburg County. Its commercial research business, KPC Research, provides market research services. KPC Photography provides a wide range of commercial photography services. Observer Transportation Co., a subsidiary, is a common carrier trucking firm that delivers The Observer across the Carolinas and provides general commodity service to much of the Southeast. In 1994, The Observer began a $35.0 million press conversion to expand its color capacity and convert to 100% Flexographic printing. Population in the Charlotte Metropolitan Statistical Area (MSA) grew 6.2% from 1990 to 1993. The area's population is expected to grow 33.7% between 1993 and 2015, compared with the U.S. average of 22.9%. Daily circulation increased by 2,566, or 1.1%, and Sunday circulation increased 3,719, or 1.2%, compared with the previous year. Home-delivered newspapers accounted for 86.2% of total daily circulation and 74.9% of total Sunday circulation. This table presents average audited circulation for The Charlotte Observer for the years ended March 27, 1994, 1993 and 1992. Advertising linage, preprints inserted and revenue amounts are for the fiscal years. Fourth-largest contributor to Knight-Ridder profits. 1994 revenue - $132.2 million 1993 revenue - $121.5 million Metro Market - 43rd-largest in U.S. Population - 1.3 million Penetration (MSA): Daily 36.9% Sunday 45.2% -22-
10-K22nd Page of 168TOC1stPreviousNextBottomJust 22nd
[Enlarge/Download Table] The Charlotte Observer 1994 1993 1992 --------- --------- --------- Average Circulation Daily............................................. 234,860 232,294 231,722 Sunday............................................ 302,595 298,876 297,548 Average Linage (In 000s of six-column inches) ROP Full-Run Retail....................................... 790.1 770.1 791.2 General...................................... 82.3 66.4 64.8 Classified................................... 665.8 616.1 606.5 --------- --------- --------- Total.................................... 1,538.2 1,452.6 1,462.5 ========= ========= ========= ROP Factored Part-Run..................................... 223.2 230.2 225.3 Preprints - Full-Run......................... 223.6 210.9 217.0 Part-Run......................... 692.7 754.7 707.1 Total Preprints Inserted (In 000s).................... 261,052 247,702 221,791 Advertising Revenue (In 000s) Retail............................................ $ 51,295 $ 48,585 $ 47,663 General........................................... 8,316 6,948 6,643 Classified........................................ 43,539 38,125 35,920 --------- --------- --------- Total........................................ $ 103,150 $ 93,658 $ 90,226 ========= ========= ========= Circulation Revenue (In 000s)......................... $ 24,611 $ 24,084 $ 23,661 ========= ========= ========= -23-
10-K23rd Page of 168TOC1stPreviousNextBottomJust 23rd
Detroit Free Press The Detroit Free Press in 1994 continued its long tradition of serving readers across Michigan through public service journalism, youth literacy and high-tech presentations of information. An extraordinary six-part series, Our Values, Our Lives, set the tone for the year. Thousands of readers called and wrote to share their views. Children First continued its 2-year-old campaign to focus attention on children's needs. Free Press Plus, a phone, fax and computer medium for reaching the newspaper, attracted more than 10,000 members to its area on CompuServe. Users can subscribe to the paper, write letters to the editor, read articles and view photographs. Free Press Plus has begun combining video clips with text and graphics to create downloadable multimedia documents. In July, Detroit Newspapers began side-by-side production and distribution of the outstate and single-copy editions of the Detroit Free Press and The Detroit News. Home delivery of The News is restricted to the afternoon edition. The side-by-side plan has produced significant operational savings, primarily in transportation costs. Since the change, The News has recorded slight gains in the outlying state area. Single-copy price for the Free Press in the six-county Metropolitan Statistical Area (MSA) remained at 35 cents daily; daily home delivery prices remained at 25 cents. Sunday single-copy prices and home delivery prices for weekend-only subscribers increased from $1.25 to $1.50 in March 1994. The Detroit Free Press is the largest newspaper in Michigan. More than 78% of its daily circulation is in the six-county Detroit metro area, which contains 45.4% of the state's population. On Nov. 27, 1989, business operations of the Free Press and The Detroit News, owned by Gannett Co., were transferred to the Detroit Newspaper Agency (DNA), now called Detroit Newspapers - a partnership owned equally by the Detroit Free Press and The Detroit News under the terms of a joint operating agreement (JOA) between Knight-Ridder and Gannett. Under the agreement, the Free Press publishes in the morning, Monday through Friday. The News, formerly an all-day paper, publishes on an afternoon cycle. On weekends, the newspapers publish combined morning editions under the name The Detroit News and Free Press. On Saturdays, the Free Press provides news, sports and business and The News provides features. On Sundays, those roles reverse. -24-
10-K24th Page of 168TOC1stPreviousNextBottomJust 24th
Knight-Ridder received 45% of any profit of the agency through the first three years, with Gannett receiving 55%. In the fourth year, Knight-Ridder received 47% of the DNA profit and, beginning Dec. 27, 1993, received 49%. As of Dec. 26, 1994, profits are split equally through the end of the 100-year JOA. Average audited circulation of just under 1.2 million ranked the Sunday Detroit News and Free Press third in the nation. Free Press daily circulation decreased by 23,756, or 4.1%, while Detroit News daily circulation declined 31,901, or 8.1%. Sunday circulation decreased 10,247, or 0.9%, compared with the previous year. The following table shows average audited circulation for the years ended March 31, 1994, 1993 and 1992. Advertising linage, preprints inserted and revenue amounts are for the fiscal years. Fifth-largest contributor to Knight-Ridder profits.* 1994 revenue* - $228.7 million 1993 revenue* - $214.3 million Metro Market - 6th-largest in U.S. Population - 4.3 million Penetration (MSA): Free Press 27.2% Detroit News 20.0% Sunday 59.9% *(Knight-Ridder portion of the Detroit Newspaper Agency). -25-
10-K25th Page of 168TOC1stPreviousNextBottomJust 25th
[Enlarge/Download Table] Detroit Free Press 1994 1993 1992 -------- -------- -------- Average Circulation Morning (Detroit Free Press).............. 552,603 576,359 592,502 Evening (The Detroit News) ............... 359,867 391,768 434,181 Combined editions Saturday.................................. 859,893 869,613 897,762 Sunday.................................... 1,170,258 1,180,505 1,195,497 Average Linage* (In 000s of six-column inches) ROP Full-Run Retail............................... 601.5 623.3 596.1 General.............................. 89.6 79.4 88.2 Classified........................... 500.7 420.0 407.4 -------- -------- -------- Total............................ 1,191.8 1,122.7 1,091.7 ======== ======== ======== ROP Factored Part-Run.................................. 90.3 73.0 62.6 Preprints - Full-Run..................... 401.4 347.8 280.4 Part-Run..................... 555.0 522.2 496.0 Total Preprints Inserted* (In 000s)........... 500,098 495,338 448,665 Advertising Revenue* (In 000s) Retail.................................... $ 94,973 $ 93,241 $ 87,458 General................................... 19,472 18,897 20,568 Classified................................ 54,694 45,181 41,174 -------- -------- -------- Total............................ $ 169,139 $ 157,319 $ 149,200 ======== ======== ======== Circulation Revenue* (In 000s)................ $ 57,782 $ 55,694 $ 53,626 ======== ======== ======== *Under the joint operating agreement, Knight-Ridder reports 50 percent of total linage, preprints inserted and revenue for Free Press and Detroit News advertising , which is handled by the Detroit News Agency. -26-
10-K26th Page of 168TOC1stPreviousNextBottomJust 26th
The Newspapers The following table presents for each of the daily newspapers the average daily and Sunday circulation for the 1994 audit year, the advertising linage and household coverage through Dec. 25, 1994, and the percentage population growth for each area from 1990 through 1993. [Enlarge/Download Table] -27-
10-K27th Page of 168TOC1stPreviousNextBottomJust 27th
Advertising Volume ---------------------------------- (in 000s of Six-Column Inches) ---------------------------------- Run-of-Press ---------------------------------- 1990 to Circulation* Full-Run Daily ABC 1993 -------------------- -------------------------- City Zone % Change Factored Household in Popu- Publication Daily Sunday Retail General Classified Part-Run Coverage lation ------------------------ -------- -------- ------ ------ -------- -------- -------- --------
Aberdeen American News-AM 18,501 20,142 293.1 7.9 151.6 17.6 76.6% (0.4)(a) Akron Beacon Journal-AM 157,824 225,569 572.8 50.9 740.7 30.7 57.7% 2.5 Biloxi Sun Herald-AM 49,209 # 53,623 # 491.9 19.4 402.9 4.8 52.7% 4.7 Boca Raton News-AM 22,332 26,299 (b) 573.0 84.2 444.1 0.0 28.4% 6.4(a) ----------------------------------------------------------------------------------------------------------------------------- Boulder Daily Camera-AM 34,812 # 43,316 # 604.4 28.1 582.5 13.9 54.0% 9.6 Bradenton Herald-AM 43,195 # 55,150 # 520.4 9.7 398.9 1.8 42.8% 4.7 Charlotte Observer-AM 234,860 302,595 790.1 82.3 665.8 223.2 57.0% 6.2 Columbia State-AM 134,103 169,365 650.1 51.0 549.5 15.5 53.8% 3.4 ----------------------------------------------------------------------------------------------------------------------------- Columbus Ledger-Enquirer-AM 52,838 67,014 398.6 15.9 351.4 17.4 46.9% 4.9 Detroit Free Press-AM 552,603 1,170,258 601.5 89.6 500.7 90.3 24.6% 1.0 Duluth News-Tribune-AM 55,965 83,682 335.0 13.5 362.8 33.2 62.0% (0.1) Fort Wayne News-Sentinel-PM (c) 53,098 # 828.3 33.9 728.0 71.0 36.7% 3.4 ----------------------------------------------------------------------------------------------------------------------------- Gary Post-Tribune-AM 72,490 83,088 487.3 14.3 499.1 107.6 45.4% 2.9(a) Grand Forks Herald-AM 39,697 40,785 299.3 12.1 241.9 4.0 68.4% 0.1(a) Lexington Herald-Leader-AM 121,463 # 165,535 # 582.3 14.8 378.8 25.1 54.0% 5.3 Long Beach Press-Telegram-AD 123,474 139,852 503.2 79.9 511.9 143.4 32.8% 3.0(a) ----------------------------------------------------------------------------------------------------------------------------- Macon Telegraph-AM 75,447 104,713 389.7 20.0 292.4 32.8 54.2% 3.6 Miami Herald-AM 395,725 518,038 1,101.0 245.5 1,016.0 644.8 36.1% 2.9(a) Milledgeville Union-Recorder-AM 8,480 (b) 132.9 7.6 66.5 48.9 56.0% 2.5(a) Myrtle Beach Sun News-AM 39,334 # 48,354 # 560.9 13.5 527.0 15.4 69.8% 9.4(a) ----------------------------------------------------------------------------------------------------------------------------- Philadelphia Inquirer-AM 486,291 # 945,491 # 1,055.1 227.2 827.3 91.8 26.7% 1.2 Philadelphia Daily News-PM 198,809 # 338.3 67.7 325.6 0.0 22.8% 1.2 Saint Paul Pioneer Press-AM 212,648 276,941 610.4 67.2 509.4 12.1 41.8% 5.2(a) San Jose Mercury News-AD 284,414 # 345,494 # 1,178.7 263.6 1,368.4 44.8 44.2% 3.2 ----------------------------------------------------------------------------------------------------------------------------- -28-
10-K28th Page of 168TOC1stPreviousNextBottomJust 28th
State College Centre Daily Times-AM 25,712 # 34,358 # 434.7 6.2 288.1 13.9 50.2% 2.8 Tallahassee Democrat-AM 58,230 80,258 703.2 18.0 594.4 49.8 54.1% 6.1 Wichita Eagle-AM 113,609 # 189,196 # 466.7 22.3 485.4 76.0 48.3% 3.7 ----------------------------------------------------------------------------------------------------------------------------- U.S.A. Average = +3.5% *On the average, 71.8% of daily circulation and 67.3% of Sunday circulation was home-delivered in 1994. # Subject to audit. (a) Company definition of newspaper market because this community is not a separate Metropolitan Statistical Area. (b) Company circulation data. (c) In addition to the circulation of the News-Sentinel, the JOA partner (The Journal-Gazette) had circulation of 62,598 daily and 136,572 Sunday. Linage statistics include both newspapers.
BUSINESS INFORMATION SERVICES Knight-Ridder Business Information Services (BIS) produces, distributes and facilitates the use of finance, general business, science, technology, transportation and other information by global business and professional users. BIS represented 19.4% of total Knight-Ridder operating revenue in 1994. Since its 1983 inception, it has been the fastest-growing Knight-Ridder division. BIS revenue has grown at a compound annual rate of 22.6% over the past 10 years on the strength of acquisitions, new product development and global market expansion. During 1994, BIS consisted of four operations: Knight-Ridder Information, Inc. (formerly Dialog Information Services, Inc.), Knight-Ridder Financial, Journal of Commerce and Technimetrics. Knight-Ridder Information, Inc. - KRII is the leading online source for global business and professional information, serving subscribers in more than 100 countries. Principal KRII products are the DIALOG, Data-Star and Infomart DIALOG online services, the KRII OnDisc CD-ROM product series and SourceOne, a fax-based document delivery service. DIALOG provides online and on-site library services to the U.S. and Latin American newspaper industry. -29-
10-K29th Page of 168TOC1stPreviousNextBottomJust 29th
The DIALOG online service and on-site products provide access to over 490 online databases and 70 CD-ROM products, including abstracts and the full text of leading publications covering science and technology, general business (products and markets, people, company fundamentals), legal issues and news. In addition, users can retrieve patent and chemical substructure information from the DIALOG online service. The Data-Star online service provides access to more than 300 medical, business, pharmaceutical and European directory databases. KRII subscribers are business and professional information specialists and end-users interested in scientific research, competitive intelligence, technology, industry and market developments and general business and financial information. Subscribers for these services include business executives, research chemists, engineers, lawyers, doctors and educators. During 1994, KRII added 60 new databases to the DIALOG and Data-Star online services, increasing the amount of information available by 40%. KRII currently provides access to more than three terabytes (the equivalent of more than 700 million typed pages) of information from thousands of publications in addition to two terabytes of document image data in optical storage. The databases include information from other Knight-Ridder companies, including Knight-Ridder Financial (MoneyCenter), the Journal of Commerce (PIERS) and 12 Knight-Ridder newspapers. DIALOG published 17 new CD-ROM titles during 1994. Several companies compete with KRII, including Reed-Elsevier's Lexis/Nexis and Scientific and Technical Information Network (STN), offered by the American Chemical Society. Knight-Ridder Financial - KRF provides real-time and historical news and price information to the global financial community. In addition, KRF delivers print and CD-ROM-based historical price information and market commentary to more than 15,000 subscribers in 100 countries. KRF offers real-time and historical access to market-moving news, cash market and exchange prices, expert third-party market analyses and technical analysis features developed by KRF and others. Subscribers to KRF information include traders, brokers and analysts in leading financial institutions, agricultural companies and industry throughout the world. KRF customers have access to real-time and historic price and other pertinent information for more than 87,000 financial instruments. -30-
10-K30th Page of 168TOC1stPreviousNextBottomJust 30th
KRF provides information products to subscribers on the following platforms: * Digital Datafeed and Digital Page Server provide full access to KRF information on systems currently in use at most leading financial institutions around the world. * MoneyCenter for Windows (Trademark) delivers KRF information and functionality on industry-standard Local Area Networks (LANs) and offers real-time links to electronic spreadsheets and graphics software. * MoneyCenter for UNIX (MCU) provides a UNIX-based information delivery platform and charting tool on customer-owned LANs with Motif or Open Look graphical user interfaces. MCU subscribers can configure client workstations to operate as a single system or to operate on a LAN driven by a server or another client workstation. In addition to fixed-format pages, there is a scrolling ticker, more advanced expressions and several new chart study types. * TradeCenter II and ProfitCenter provide sophisticated technical analysis tools for real-time decision support, including flexible software to view and analyze time series information ranging from trade-to-trade to over 20 years of historical data. TradeCenter II operates in the UNIX environment. * CommodityCenter addresses the need of the U.S.-based commodities markets for advanced, low-priced products. The CommodityCenter platform allows KRF to deliver real-time exchange and market price information, real-time news and weather data to the agricultural commodities customer. * Equinet provides access to real-time and historic Australian and New Zealand equities and option price information and related analytic features. Equinet operates in a Windows (Trademark) environment and is interactive. KRF also operates the world's largest print chart and market analysis information service, with principal products of Commodity Perspective and Commodity Research Bureau (CRB). KRF also publishes KR-CRB Infotech, a CD-ROM product that offers access to more than 50 years of KR-CRB market commentary and price information. KRF competes with a number of financial information services, including Bloomberg, Dow Jones/Telerate and Reuters. Journal of Commerce - JoC provides print and electronic products geared to businesses involved in international trade and transportation. The 168-year-old daily Journal of Commerce has a circulation of 20,900. The JoC also publishes a monthly International Edition delivered to more than 14,000 subscribers on a controlled basis. In addition, it produces news and places -31-
10-K31st Page of 168TOC1stPreviousNextBottomJust 31st
advertising in special monthly editions that appear in leading Chinese and Latin American newspapers. The Journal of Commerce also publishes Traffic World, Florida Shipper and Gulf Shipper, three leading transportation weekly magazines. JoC offers a series of electronic products, including Port Import/Export Reporting Service (PIERS), Rapid Access Tariff Expediting Service (RATES), Shiprate and Traderate. PIERS provides access to a comprehensive database containing information on all maritime-borne products entering or leaving United States and leading Latin American ports. RATES provides access to steamship tariff information in page format. Shiprate and Traderate allow steamship companies to maintain and access tariff databases in page or FMC-ATFI formats, respectively. In addition, JoC provides technology consulting services to the transportation and logistics industries. In early 1995, Knight-Ridder reached an agreement in principle to sell the Journal of Commerce. The sale is expected to be completed in April 1995. Technimetrics - This diversified information services company specializes in the creation of global financial databases. Technimetrics' research revolves around four core proprietary databases: * Institutional Investors Database provides detailed information on worldwide equity and fixed income influentials (portfolio managers, securities analysts, research directors), focusing on their industry specialization, individual investment style and geographic area of expertise. * Shareholder Database tracks the securities holdings of financial institutions around the world using highly accurate disclosure information gathered from public company proxies, 13(f), 13(d), and 13(g) SEC filings, global mutual fund portfolios and overseas stock exchanges. * Stockholder Database provides information on over 65,000 registered stockbrokers and branch managers at the leading brokerage firms in North America. * Finex Database of Business Decision-Makers identifies nearly 300,000 executives in more than 50,000 global organizations, both public and private, by functional responsibility. Technimetrics' information is used by investor relations and marketing professionals in America's leading corporations for communications programs, audience targeting and direct marketing. It also is used by brokerage firms for research distribution to buy-side institutions and account management. Data are provided on hard copy, tape or diskette; Anamate, a proprietary software product; and, through Share/World, an online service available through third-party vendors. -32-
10-K32nd Page of 168TOC1stPreviousNextBottomJust 32nd
During 1994, Technimetrics expanded its sales efforts, adding Latin American investor relations and brokerage clients. A new Tokyo office officially opened in December. Technimetrics also enhanced its financial database products with global mutual fund information and introduced a Macintosh version of its industry-preferred investor relations software product. Technimetrics responds to customized requests for precise and hard-to-obtain information, offering breadth of information and an exceptionally high degree of accuracy. PROPERTIES: BIS maintains production, news and sales facilities throughout the world. Of the 642,600 square feet of office and production capacity currently utilized, approximately 85% is leased under operating leases that expire between 1995 and 2007. During the three years ended Dec. 25, 1994, BIS spent approximately $100 million for capital additions and improvements to its existing properties. TECHNOLOGY: BIS operations utilize industry standard data processing and communications equipment. BIS uses internal staff resources to develop data storage, access and display applications, but operates with a preference for open-architecture systems, which facilitate the broadest possible use of BIS information. During 1994, BIS enhanced products by expanding data offerings and improving subscriber access and analysis. Some of these enhancements are: Knight-Ridder Information, Inc.: KRII now offers an impressive array of delivery methods, including the Internet, fax, a variety of e-mail options and, for large-volume users, DIALOG SitePrints. The new DIALOG ERA service allows customers to archive and distribute search results throughout the organization while complying with the copyright requirements of most databases. KRII SourceOne was introduced in January 1994 as a worldwide fax-based delivery system for full-source copies of U.S. patents and articles from selected business journals. This service has since been expanded to European patents. DIALOG DIRECT uses corporate e-mail systems to automatically deliver titles and selected full-text documents to professionals who need to track the latest news from the pharmaceutical, health care and agrochemical industries. -33-
10-K33rd Page of 168TOC1stPreviousNextBottomJust 33rd
The DIALOG/Data-Star telecommunications link allows users to pass easily from one system to the other. Knight-Ridder Financial: KRF increased its real-time and historical price information database to include more than 87,000 instruments. KRF introduced MoneyCenter for UNIX in the U.S. in March 1994. MCU provides a UNIX-based information delivery platform and charting tool on customer-owned LANs with Motif or Open Look graphical user interface. KRF improved network performance in 1994 by implementing actions to increase network band-width. As a result, it has been able to accommodate more data contributors, increase transmission speed of information to users and upgrade communication links from analog to digital. Journal of Commerce - In 1994, JoC added information on maritime cargo entering and leaving Mexico and Latin America to the U.S. information already present in the PIERS database. With the formation of Transax Systems in 1994, a joint venture between JoC and America Systems, Inc., technology consulting and new workstation-based products are offered by Transax to ship lines and shippers. Technimetrics - In 1994, Technimetrics introduced a Macintosh version of its investor relations software product. In 1995, it will introduce a UNIX-based database system that will support an expanded series of products. INVESTMENTS: KRII acquired a small share of Helix, a software developer for laboratory groupware solutions, and participated in the joint development of systems designed to deliver research information directly to scientists. KRII acquired Article Express International, a full-service document delivery operation, in the last quarter of 1994. This operation, in addition to the SourceOne service, has positioned KRII to become a leading provider of source documents. Through a joint venture with the Canadian newspaper company Southam, DIALOG and Southam's Infomart business news service combined to form INFOMART DIALOG, the leading information service for the Canadian market. JoC formed Transax Systems in 1994 as a joint venture between Transax Data and Americas Systems, Inc., a privately held firm that specialized in software development. In 1994, JoC acquired Gulf Shipper, a weekly magazine covering shipping to and from the Gulf States with special focus on local trade routes. Florida Shipper covers similar information for the Florida and Caribbean area. -34-
10-K34th Page of 168TOC1stPreviousNextBottomJust 34th
PARTIALLY OWNED COMPANIES Knight-Ridder owns 49.5% of the voting common stock and 65% of the nonvoting common stock of the Seattle Times Company, which publishes The Seattle Times in Seattle, Wash., the Walla Walla Union-Bulletin in Walla Walla, Wash., and the Yakima Herald-Republic in Yakima, Wash. Knight-Ridder is an equal partner with Media General and Cox Enterprises in Southeast Paper Manufacturing Co., which operates a newsprint mill in Dublin, Ga. Knight-Ridder is a 13.5% owner, with eight partners, of Ponderay Newsprint Company, a 225,000-metric-tonne newsprint mill in Usk, Wash. The managing partner, with 40% ownership, is Lake Superior Forest Products, Inc. TKR Cable Company, jointly owned with Tele-Communications, Inc., currently operates cable television systems in New York and New Jersey. In addition, Knight-Ridder also owns 15% of a partnership which operates cable television systems in Kentucky, Texas, Alabama, Georgia, and Florida. In 1989, business operations of the Detroit Free Press were merged with those of The Detroit News to form the Detroit Newspaper Agency, a joint venture between Knight-Ridder and Gannett Co., Inc. The news and editorial functions of the two newspapers are separate and independent. Knight-Ridder owns 33.33% of the voting stock of Newspapers First; the balance is owned by a group of major-market independents. Newspapers First is responsible for the sale and service of general, retail and national classified advertising accounts for a number of newspapers. In 1994, Knight-Ridder Information, Inc., purchased 50.2% of the voting and 49.8% of the nonvoting common stock of a joint venture with Southam, Inc., that combined the Canadian electronic business information operations of the two companies. The new company is called Infomart DIALOG. Transax Data, a wholly owned subsidiary of Journal of Commerce, Inc., and Americas Systems, Inc., formed a partnership called Transax Systems, in which Journal of Commerce, Inc., has a 51% interest. TRAINING AND ORGANIZATIONAL DEVELOPMENT Recognizing that Knight-Ridder's greatest asset is its people, the company places a premium on human resources development. Knight-Ridder is dedicated to helping employees realize their full potential while sharpening their focus on serving their internal and external customers. -35-
10-K35th Page of 168TOC1stPreviousNextBottomJust 35th
The most comprehensive commitment to employee and organizational development is the "attitude and opinion" survey, used on a regular cycle at each company to get employee feedback about workplace issues that concern them. Significant concerns are surfaced, explored and resolved. Knight-Ridder executives work together to conduct annual management development reviews (MDRs) at each company. The MDRs assess bench strength, identify candidates of exceptional promise and recommend growth opportunities. Special development programs are created to meet particular needs. For example, the new Marketing Leadership Development program prepares a dozen diverse, high-potential advertising and circulation managers for significant division-executive roles. Participants work with local and corporate executives to address important marketing issues facing the company and to gain specific experiences targeted in their personal development plans. An intensive five-day General Executive Development program focuses development planning for high-potential mid-career executives. Specifically tailored experiences and corporate sponsorships prepare them for key leadership roles. The Executive Leadership Program, targeted to key executives, is a 25-day educational experience conducted over the course of one year. This extended commitment to leadership development is unique in corporate executive education. Learning and leading change are increasingly critical abilities for Knight-Ridder people at all levels. Executive team-building is an ongoing practice that supports efforts at the individual company level. In addition, specific programs support key initiatives. Strategic Newsroom Management and Strategic Change Leadership are five-day workshops for middle managers who have exhibited career flexibility and a passion for leadership. Every Knight-Ridder company is engaged in frontline supervisory skills and employee skills training to enhance their individual and team effectiveness in serving customers. Each year, Knight-Ridder funds and delivers the industry's most intensive newspaper-specific sales training for every new field salesperson. Advanced courses strengthen the partnership between advertising category salespeople, managers and customers. In 1995, a four-day marketing and research program will be delivered for circulation managers at every newspaper. In a supplementary program, Knight-Ridder supports local company efforts to accelerate individual and organizational development. To that end, matching funds add $3 to every dollar spent at the local level. -36-
10-K36th Page of 168TOC1stPreviousNextBottomJust 36th
Knight-Ridder has a long-standing commitment to increasing the role of women and minorities in its businesses, reflecting the diversity of the communities it serves. Growth in the percentage of minority and female employees has continued uninterrupted for the past decade. Managers are evaluated on the progress they make toward significantly increasing the pool of women and minority members who are qualified to fill key positions. The Minority Hiring Program assists companies in funding positions for talented minority group members in those cases where such support otherwise would not exist. In the past six years, thousands of employees have participated in discrimination awareness efforts. In 1994, the company began preparing new diversity training to reach all employees. Knight-Ridder is an equal opportunity employer. Specific policies prohibit discrimination and harassment of any kind, including sexual harassment. Knight-Ridder is committed to positive, productive employee relations. Approximately 42% of the 21,000 full-time employees are represented by nearly 100 local unions under collective bargaining agreements that expire and are renegotiated at varying times every few years. These agreements conform with the pattern of labor agreements in the American newspaper industry. OTHER The company's business is such that the dollar amount of the backlog of orders would not be of any significance to the understanding of its operations. The company does not anticipate that compliance with the federal, state or local provisions regulating the discharge of materials into the environment will have a material effect upon its capital expenditures, earnings or competitive position. SOURCES OF INFORMATION Population and household figures for 1990 are from the U.S. Bureau of the Census, while estimates for Dec. 31, 1993, are from the Sales & Marketing Management Survey of Buying Power, Aug. 30, 1994. Metropolitan Statistical Areas, as defined by the U.S. Office of Management and Budget, are used for newspaper markets unless otherwise indicated. Population estimates for 2015 are from the National Planning Association Data Services, Inc. (93-R-1 & 2). Newspaper households and circulation data for 1994 are from the latest available annual audit reports from the Audit Bureau of Circulations. -37-
10-K37th Page of 168TOC1stPreviousNextBottomJust 37th
Advertising linage is from company records. Where necessary, certain previously reported statistics have been restated to be consistent with measurement guidelines currently used. The Company Knight-Ridder,Inc., was formed in 1974 by a merger between Knight Newspapers and Ridder Publications, Inc. In 1903, Charles Landon Knight purchased the Akron Beacon Journal. Knight Newspapers was founded by John S. Knight, who inherited the Beacon Journal from his father in 1933. Ridder Publications was begun in 1892 when Herman Ridder acquired the German-language Staats-Zeitung in New York. Both groups flourished, each taking its stock public in 1969. The merger created a company with operations coast to coast. The Business Information Services Division was formally established in 1983, although Knight-Ridder owned the Journal of Commerce and Commodity News services prior to that time. Dialog Information Services, Inc. (now Knight-Ridder Information, Inc.), was acquired in 1988. Knight-Ridder, Inc. was incorporated in Ohio in 1974. Headquartered in Miami, the Company was reincorporated in Florida in 1976. [Download Table] Newsprint Consumption (In thousands of metric tonnes) Year Amount ---- ------- 1984 635 1985 612 1986 642 1987 685 1988 687 1989 693 1990 667 1991 619 1992 618 1993 639 1994 650 Knight-Ridder's newsprint consumption increased 1.7% over 1993 as a result of increased linage. -38-
10-K38th Page of 168TOC1stPreviousNextBottomJust 38th
[Download Table] Average Daily Circulation For Knight-Ridder Newspapers (In thousands of copies) Year Amount ---- ------- 1984 3,827 1985 3,749 1986 3,731 1987 3,978 1988 3,945 1989 3,955 1990 3,872 1991 3,745 1992 3,678 1993 3,654 1994 3,602 Total circulation of Knight-Ridder's daily newspapers decreased 1.4%. -39-
10-K39th Page of 168TOC1stPreviousNextBottomJust 39th
[Download Table] Average Sunday Circulation For Knight-Ridder Newspapers (In thousand of copies) Year Amount ---- ------- 1984 4,593 1985 4,545 1986 4,556 1987 4,817 1988 4,844 1989 4,919 1990 4,808 1991 4,782 1992 4,774 1993 4,760 1994 4,715 Total circulation of Knight-Ridder's Sunday newspapers decreased 0.9%. ITEM 3. Legal Proceedings The Comprehensive Environmental Response, Compensation and Liability Act (Superfund) establishes a fund to clean up deposits and spills of hazardous substances. The Company has been identified by certain regulatory agencies as one of several potentially responsible parties in connection with the generation of allegedly hazardous substances which may have been disposed of or reclaimed by third-party contractors at sites in New Jersey, Maryland, South Carolina, North Carolina, Pennsylvania, and Kansas. The Company, certain other potentially responsible parties and the United States Environmental Protection Agency (EPA) have entered into consent orders relating to the sites in New Jersey, South Carolina, and North Carolina providing for remedial investigations and feasibility studies or remediation to be performed. The Company does not anticipate that any liability arising from ultimate relief secured by regulatory agencies or other persons will have a material effect on the Company's business or financial condition. The Company is cooperating with the appropriate regulatory agencies with respect to compliance with environmental laws. -40-
10-K40th Page of 168TOC1stPreviousNextBottomJust 40th
In 1990, a verdict was rendered against the company's subsidiary, Philadelphia Newspapers, Inc. (PNI), publisher of The Philadelphia Inquirer and Philadelphia Daily News, in a libel action entitled Sprague v. Philadelphia Newspapers, Inc., for $2.5 million in compensatory damages and $31.5 million in punitive damages. Following entry of the judgment on Sept. 15, 1992, PNI appealed the judgment to the Pennsylvania Superior Court. The Superior Court has affirmed the $2.5 million in compensatory damages and vacated the $31.5 million award of punitive damages. The court remanded the case to the trial court, which will either hold a new trial solely on the issue of punitive damages or reduce the punitive damages judgment to $21.5 million. PNI believes that substantial grounds exist for a decision by an appellate court to grant a new trial on all issues. In the opinion of management, the ultimate liability to the company and its subsidiaries as a result of this and other legal proceedings will not be material. ITEM 4. Submission of matters to a vote of security holders. None. PART II ITEM 5. Market for registrant's common stock and related stockholder matters ------------------------------------------------------------------- KRI STOCK Knight-Ridder common stock is listed on the New York Stock Exchange and the Frankfurt Stock Exchange under the symbol KRI and on the Tokyo Stock Exchange with the designation 9491. The stock also is traded on exchanges in Philadelphia, Chicago, Boston, San Francisco, Los Angeles and Cincinnati, as well as through the Intermarket Trading System. Options are traded in the Philadelphia Exchange. -41-
10-K41st Page of 168TOC1stPreviousNextBottomJust 41st
[Enlarge/Download Table] Market Price of Common Stock The last closing price of the Company's common stock prior to the preparation of this report was $53 on Jan. 30, 1995. The number of shareholders of record at Dec. 25, 1994, was 10,727. The following market data is reported by Knight-Ridder Financial Services: 1994 1993 1992 --------------------- ------------------ ------------------ Quarter High Low High Low High Low -------- ------- ------ ------- ------- ------- ------- 1st............ 61 54 7/8 65 56 1/2 60 7/8 50 3/4 2nd............ 60 1/4 52 58 3/4 51 1/8 64 1/8 55 3rd............ 54 5/8 49 1/2 55 1/2 50 5/8 63 1/4 57 1/8 4th............ 52 1/2 46 1/2 61 3/4 52 61 3/4 54 7/8 [Download Table] Treasury Stock Purchases The table below is a summary of treasury stock purchases since 1984: Shares Cost Purchased (000s) ---------- ---------- 1994....................... 2,522,300 $ 136,977 1993....................... 750,000 40,693 1992....................... - - 1991....................... - - 1990....................... 2,662,700 129,909 1989....................... 2,761,100 131,885 1988....................... 4,549,600 198,279 1987....................... 1,000,000 38,728 1986....................... - - 1985....................... 9,500,000 332,308 1984....................... - - [Enlarge/Download Table] -42-
10-K42nd Page of 168TOC1stPreviousNextBottomJust 42nd
QUARTERLY OPERATIONS The company's largest source of revenue, retail advertising, is seasonal and tends to fluctuate with retail sales in markets served. Historically, retail advertising is higher in the second and fourth quarters. General advertising, while not as seasonal as retail, is lower during the summer months. Classified advertising revenue has in the past been a reflection of the overall economy and has not been significantly affected by seasonal trends. The following table summarizes the company's unaudited quarterly results of operations (in thousands, except per share data): QUARTER -------------------------------------------------- First Second Third Fourth -------- -------- -------- --------
Description 1994 Operating revenue................................. $ 630,863 $ 661,550 $ 642,613 $ 713,935 Operating income.................................. 64,810 95,286 75,277 95,888 Net income........................................ 30,372 50,121 37,243 53,164 Net income per common and common equivalent share .............................. .55 .92 .69 .99 Dividends declared per common share............... .35 .37 * .37 .37 1993 Operating revenue................................. $583,894 $621,682 $593,124 $652,648 Operating income.................................. 53,680 76,245 58,314 96,618 Net income........................................ 23,136 42,497 31,251 51,205 Net income per common and common equivalent share (1)........................... .42 .77 .57 .93 Dividends declared per common share............... .35 .35 .35 .35 1992 Operating revenue................................. $555,438 $590,531 $564,854 $618,706 Operating income.................................. 50,360 79,049 61,058 88,044 Income before cumulative effect of changes in accounting principles............... 25,006 46,090 31,392 43,598 Cumulative effect of changes in accounting principles for: Income taxes................................ 25,800 Postretirement benefits other than pensions. (131,000) Net income (loss)................................. (80,194) 46,090 31,392 43,598 -43-
10-K43rd Page of 168TOC1stPreviousNextBottomJust 43rd
Net income (loss) per common and common equivalent share (1): Income before cumulative effect of changes in accounting principles...... .46 .84 .57 .79 Cumulative effect of changes in accounting principles................. (1.93) Net income (loss)........................... (1.47) .84 .57 .79 Dividends declared per common share............... .35 .35 .35 .35 (1) Amounts do not total to the annual earnings per share because each quarter and the year are calculated separately based on average outstanding shares during that period. * The second quarter ended June 26, 1994. These dividends were declared June 28, 1994, and recorded in the third quarter.
-44-
10-K44th Page of 168TOC1stPreviousNextBottomJust 44th
ITEM 6. Selected Financial Data ----------------------- [Enlarge/Download Table] 11-Year Financial Highlights (In thousands, except per share data and ratios) The following data were compiled from the consolidated financial statements of Knight-Ridder, Inc., and subsidiaries. The consolidated financial statements and related notes and discussions for the year ended Dec. 25, 1994, Items 7 & 8 also should be read in order to obtain a better understanding of this data. Compound Growth Rate ----------------- Dec. 25 Dec. 26 Dec. 27 Dec. 29 Dec.30 5-Year(1) 10-Year 1994 1993 1992 1991 1990 ------ ------- --------- --------- --------- --------- --------- SUMMARY OF OPERATIONS Operating Revenue Newspapers Advertising........................ 0.1 % 2.9 % $ 1,583,373 $ 1,481,631 $ 1,444,144 $ 1,429,661 $ 1,556,932 Circulation........................ 4.7 4.8 484,581 474,420 460,014 439,029 403,188 Other.............................. 15.8 10.7 66,968 56,772 39,932 35,127 31,981 --------- --------- --------- --------- --------- Total Newspapers....................... 1.4 3.5 2,134,922 2,012,823 1,944,090 1,903,817 1,992,101 Business Information Services.......... 12.2 22.6 514,039 438,525 385,439 354,361 332,628 Other.................................. --------- --------- --------- --------- --------- Total Operating Revenue........ 3.0 5.2 2,648,961 2,451,348 2,329,529 2,258,178 2,324,729 --------- --------- --------- --------- --------- -45-
10-K45th Page of 168TOC1stPreviousNextBottomJust 45th
Operating Costs Depreciation & amortization ........ 3.8 10.1 149,327 141,758 128,221 124,055 127,772 Other operating costs 3.4 5.2 2,168,373 2,024,733 1,922,797 1,890,850 1,896,331 --------- --------- --------- --------- --------- Total Operating Costs......... 3.4 5.4 2,317,700 2,166,491 2,051,018 2,014,905 2,024,103 --------- --------- --------- --------- --------- Operating Income....................... 0.6 3.4 331,261 284,857 278,511 243,273 300,626 Interest expense................... (12.0) 16.4 (44,585) (45,112) (52,375) (68,843) (71,803) Other, net......................... (43.2) (14.2) 3,394 3,656 13,580 35,940 17,119 Income taxes, net.................. 0.7 0.7 (119,170) (95,312) (93,630) (78,302) (96,897) --------- --------- --------- --------- --------- Net Income from continuing operations. (1.0) 2.7 170,900 148,089 146,086 132,068 149,045 Discontinued broadcast operations (2). Cumulative effect of changes in accounting principles (3)...... (105,200) --------- --------- --------- --------- --------- Net income........................... (7.1) 2.0 $ 170,900 $ 148,089 $ 40,886 $ 132,068 $ 149,045 ========= ========= ========= ========= ========= Operating Income Percentage (Profit margin) 12.5% 11.6% 12.0% 10.8% 12.9% --------------------------------------------------------------------------------------------------------------------------- SHARE DATA Average number of common and common equivalent shares outstanding 54,275 55,332 55,178 51,797 50,683 Income per common and common equivalent share............ Continuing operations.............. (1.7) 4.6 $ 3.15 $ 2.68 $ 2.65 $ 2.55 $ 2.94 Discontinued broadcast operations (2) Cumulative effect of changes in accounting principles (3). (1.91) Net income......................... 3.15 2.68 0.74 2.55 2.94 Cash dividends per common share......... 3.2 8.1 1.46 1.40 1.40 1.40 1.34 Common stock price High................................ 61 65 64 1/8 57 1/2 58 Low................................. 46 1/2 50 5/8 50 3/4 43 3/4 37 Close............................... 50 7/8 59 3/8 58 1/8 50 3/4 45 7/8 Shareholders' equity per common share... 5.4 5.0 $ 23.15 $ 22.67 $ 21.50 $ 21.44 $ 18.09 Price/Earnings Ratio (4)................ 16.2:1 22.2:1 21.9:1 19.9:1 15.6:1 -46-
10-K46th Page of 168TOC1stPreviousNextBottomJust 46th
--------------------------------------------------------------------------------------------------------------------------- OTHER FINANCIAL DATA Net change in total debt................... $ (39,571)$ (109,170)$ (46,595)$ (217,118)$ 111,018 Common stock acquired...................... 136,977 40,693 129,909 Payment of cash dividends.................. 77,942 76,787 75,992 71,087 66,422 Ratio of Earnings to Fixed Charges (5)..... 5.2:1 4.5:1 3.9:1 2.9:1 3.4:1 At Year End Total assets.......................... 2,447,189 2,431,432 2,458,059 2,332,751 2,270,459 Working capital...................... 2,163 (5,180) 55,669 34,023 75,396 Long-term debt (excluding current maturities)..................... 411,504 410,388 495,941 556,797 803,914 Total debt........................... 411,504 451,075 560,245 606,840 823,958 Shareholders' Equity................. 1,224,654 1,243,169 1,181,812 1,148,620 894,913 Current ratio........................ 1.01:1 1.0:1 1.1:1 1.1:1 1.2:1 Total debt/total capital ratio....... 25.2 % 26.6 % 32.2 % 34.6 % 47.9 % Long-term debt/equity ratio.......... 33.6 % 33.0 % 42.0 % 48.5 % 89.8 % See Notes on Pages 49 and 50.
[Enlarge/Download Table] -47-
10-K47th Page of 168TOC1stPreviousNextBottomJust 47th
11-Year Financial Highlights (In thousands, except per share data and ratios) The following data were compiled from the consolidated financial statements of Knight-Ridder, Inc., and subsidiaries. The consolidated financial statements and related notes and discussions for the year ended Dec. 25, 1994, Items 7 & 8 also should be read in order to obtain a better understanding of this data. Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 1989 1988 1987 1986 1985 1984 --------- --------- --------- --------- --------- ---------
SUMMARY OF OPERATIONS Operating Revenue Newspapers Advertising..............................$ 1,577,449 $ 1,523,030 $ 1,464,447 $ 1,332,820 $ 1,220,534 $ 1,186,559 Circulation................................ 385,214 370,898 357,553 334,670 312,988 302,281 Other...................................... 32,212 29,743 28,578 25,362 25,873 24,235 --------- --------- --------- --------- --------- --------- Total Newspapers....................... 1,994,875 1,923,671 1,850,578 1,692,852 1,559,395 1,513,075 Business Information Services.................. 289,585 159,659 99,260 88,904 80,095 66,961 Other.......................................... 18,344 26,338 24,871 21,938 --------- --------- --------- --------- --------- --------- Total Operating Revenue................ 2,284,460 2,083,330 1,968,182 1,808,094 1,664,361 1,601,974 --------- --------- --------- --------- --------- --------- Operating Costs Depreciation & Amortization................... 123,810 104,576 92,425 81,901 70,752 57,096 Other operating costs........................ 1,838,656 1,707,991 1,580,664 1,467,543 1,372,840 1,308,741 --------- --------- --------- --------- --------- --------- Total Operating costs................ 1,962,466 1,812,567 1,673,089 1,549,444 1,443,592 1,365,837 --------- --------- --------- --------- --------- --------- Operating Income................................. 321,994 270,763 295,093 258,650 220,769 236,137 Interest Expense............................. (84,622) (62,465) (49,583) (33,248) (21,624) (9,723) Other, net................................... 57,381 26,515 20,061 20,172 21,866 15,718 Income taxes, net............................ (114,917) (88,038) (116,837) (113,000) (96,577) (110,741) --------- --------- --------- --------- --------- --------- Net Income from continuing operations........... 179,836 146,775 148,734 132,574 124,434 131,391 Discontinued broadcast operations (2)........... 67,366 9,608 6,429 7,465 8,290 9,419 Cumulative effect of changes in accounting principles (3)................ --------- --------- --------- --------- --------- --------- Net income................................... $ 247,202 $ 156,383 $ 155,163 $ 140,039 $ 132,724 $ 140,810 ========= ========= ========= ========= ========= ========= Operating Income Percentage (Profit margin) 14.1% 13.0% 15.0% 14.3% 13.3% 14.7% -48-
10-K48th Page of 168TOC1stPreviousNextBottomJust 48th
SHARE DATA Average number of common and common equivalent shares outstanding....... 52,439 56,703 58,646 58,202 60,732 65,578 Income per common and common equivalent share.................... Continuing operations.................... $ 3.43 $ 2.59 $ 2.54 $ 2.28 $ 2.05 $ 2.00 Discontinued broadcast operations (2).... 1.28 .17 .11 .13 .14 .15 Cumulative effect of changes in accounting principles (3)......... Net income.............................. 4.71 2.76 2.65 2.41 2.19 2.15 Cash dividends per common share................. 1.24 1/2 1.14 1/2 1.03 0.91 0.79 0.67 Common stock price High........................................ 58 3/8 47 3/4 61 1/4 57 7/8 41 3/8 31 Low......................................... 42 7/8 35 3/4 33 1/4 37 1/2 28 21 1/4 Close....................................... 58 3/8 45 3/8 40 1/8 46 7/8 39 7/8 29 1/4 Shareholders' equity per common share........... $ 17.83 $ 15.47 $ 15.85 $ 14.28 $ 12.38 $ 14.17 Price/Earnings Ratio (4)........................ 20.4:1 17.5:1 15.1:1 19.5:1 18.2:1 13.6:1 ---------------------------------------------------------------------------------------------------------------------------- OTHER FINANCIAL DATA Net change in total debt..................... .$ (324,135) $ 483,840 (115,026)$ 360,041 $ 240,597 $ (1,883) Common stock acquired........................... 131,885 198,279 38,728 332,308 Payment of cash dividends....................... 63,260 62,990 57,426 49,877 46,077 41,344 Ratio of Earnings to Fixed Charges (5).......... 3.6:1 3.7:1 5.1:1 6.4:1 8.6:1 16.6:1 At Year End Total assets............................... 2,134,626 2,357,040 1,919,875 1,906,459 1,355,480 1,312,804 Working capital........................... 70,269 83,695 48,835 74,429 90,019 133,585 Long-term debt (excluding current maturities)....................... 660,900 727,043 508,203 620,389 263,058 67,612 Total debt................................ 712,940 1,037,075 553,235 668,261 308,220 67,623 Shareholders' Equity...................... 917,145 821,625 901,498 815,982 696,576 921,569 Current ratio............................. 1.2:1 1.1:1 1.2:1 1.2:1 1.3:1 1.6:1 Total debt/total capital ratio............ 43.7 % 55.8 % 38.0 % 45.0 % 30.7 % 6.9 % Long-term debt/equity ratio.............. 72.1 % 88.5 % 56.4 % 76.0 % 37.8 % 7.3 % NOTES (1) The five-year compound growth rate is calculated using 1989 as the base year, which includes the gain on the sale of broadcast assets and results of operations of the company's Broadcast Division and the gain on the sale of the Pasadena Star-News. (2) Results of operations of the company's Broadcast Division (sold in 1989) and the gain on the sale of broadcast assets are presented as "discontinued broadcast operations." (3) For 1992, the cumulative effect of changes in accounting principles represents adjustments from the implementation of FAS109 - Accounting for Income Taxes and FAS 106-Accounting for Postretirement Benefits Other Than Pensions. -49-
10-K49th Page of 168TOC1stPreviousNextBottomJust 49th
(4) Price/Earnings Ratio is computed by dividing closing market price by earnings for the trailing 12-month period. 1992 earnings exclude the effects of changes in accounting principles. For 1989 and 1988, the earnings represent continuing operations. 1989 earnings also exclude the gain on the sale of the Pasadena Star-News. (5) The ratio of earnings to fixed charges is computed by dividing earnings (as adjusted for fixed charges and undistributed equity income from unconsolidated subsidiaries) by fixed charges for the period. Fixed charges include interest on debt (before capitalized interest), interest component of rental expense, the proportionate share of interest expense on guaranteed debt of certain equity-method investees and on debt of 50%-owned companies.
-50-
10-K50th Page of 168TOC1stPreviousNextBottomJust 50th
ITEM 7. Management's Discussion and Analysis of Financial Condition ----------------------------------------------------------- and Results of Operations ------------------------- Knight-Ridder is an international information and communications company engaged in newspaper publishing, business news and information services, electronic retrieval services and news, graphics and photo services. In 1994, the gross revenue from these businesses was more than $2.6 billion. The company also is involved in other newspaper businesses, cable television and newsprint manufacturing through business arrangements, including joint ventures and partnerships. The charts at the end of this section illustrate the approximate relative percentages of the components of operating revenue and of operating costs as a percentage of operating revenue. Glossary of Newspaper Advertising Terms The following definitions may be helpful when reading the Management's Discussion and Analysis of Operations. RETAIL - Display advertising from local merchants, such as department and grocery stores, selling goods and services to the public. GENERAL - Display advertising by national advertisers who promote products or brand names on a nationwide basis. CLASSIFIED - Small, locally placed ads listed together and organized by category, such as real estate sales, employment opportunities, automobile sales and display type advertisements in these categories. FULL-RUN - Advertising appearing in all editions of a newspaper. PART-RUN - Advertising appearing in select editions or zones of a newspaper's market. Part-run advertising is translated into full-run equivalent linage (referred to as factored) based on the ratio of the circulation in a particular zone to the total circulation of a newspaper. RUN-OF-PRESS (ROP) - All advertising printed on Knight-Ridder presses and appearing within a newspaper. PREPRINT - Advertising supplements prepared by advertisers and inserted into a newspaper. -51-
10-K51st Page of 168TOC1stPreviousNextBottomJust 51st
NEWSPAPER revenue is derived principally from advertising and newspaper copy sales. Newspaper advertising currently accounts for about 60% of consolidated revenue. This revenue comes from the three basic categories of advertising - retail, general and classified - discussed above. Newspaper advertising volume is categorized as either run-of-press (ROP) or preprint. Volume for ROP advertising is measured in terms of either full-run or part-run advertising linage and reported in six-column inches. A six-column inch consists of one inch of advertising in one column of a newspaper page when that page is divided into six columns of equal size. By using part-run advertising, advertisers can direct their messages to selected market segments. Circulation revenue results from the sale of newspapers. Circulation of daily and Sunday newspapers currently accounts for 18% of consolidated revenue. It is reported at the net wholesale price for newspapers delivered or sold by independent contractors and at the retail price for newspapers delivered or sold by employees. Other newspaper revenue comes from alternate delivery systems, commercial job printing, niche publications, book publishing, audiotext, newsprint scrap sales, newspaper trucking services, and other miscellaneous sources. BUSINESS INFORMATION SERVICES (BIS) revenue includes operations of Knight-Ridder Information, Inc. (KRII, formerly known as the Dialog Group), Knight-Ridder Financial (KRF), Journal of Commerce and Technimetrics. KRII products include DIALOG, Data-Star and Infomart DIALOG, an archival information service provided through a 1994 joint venture with Southam, Inc. KRII serves more than 150,000 customers in more than 100 countries and offers more than 600 databases. Subscribers are charged according to amount of time they spend online, information procured and which databases they access. Knight-Ridder Financial products include real-time and archival information services focusing on global sovereign debt, foreign exchange, money markets and futures instruments. Information displayed on these products consists of news, quotations, charts and a variety of other analytical services. The group generates revenue from subscribers in more than 30 countries. Journal of Commerce publishes The Journal of Commerce, a daily newspaper that focuses on global trade and transportation issues, and several periodicals. It also provides access to electronic databases on imports, exports and steamship tariffs and provides tariff filings and retrieval services. Technimetrics, a January 1994 acquisition, is a leading publisher of investor information and global investment listings of business executives and professionals. -52-
10-K52nd Page of 168TOC1stPreviousNextBottomJust 52nd
SUMMARY OF OPERATIONS A summary of the company's operations, certain share data and other financial data for the past 11 years is provided in Item 6. Compound growth rates for the past five- and 10-year periods are also included, if applicable. A review of this summary and of the supplemental information section (Items 1 & 2) will provide a better understanding of the following discussion and analysis of operating results and of the financial statements as a whole. The supplemental information contains financial data for the company's operations by line of business and includes discussions of the company's largest newspapers and information regarding the company's properties, technology and the raw materials used in operations. RESULTS OF OPERATIONS: 1994 vs. 1993 Knight-Ridder, Inc., earnings per share was $3.15, up $.47, or 17.5%, from $2.68 per share in 1993. Operating income increased 16.3% on an 8.1% increase in revenue in 1994. Operating income as a percentage of revenue was 12.5% compared with 11.6% in 1993. NEWSPAPERS The Newspaper Division's operating income increased $52.1 million, or 17.4%, to $350.9 million. The increase resulted from a 6.1% revenue improvement that was partially offset by fourth quarter charges related to buyout and separation charges and nonrecurring charges for litigation and environmental matters. Overall, newspaper advertising revenue increased by $101.7 million, or 6.9%, in 1994 on a full-run ROP linage increase of 3.1%. The following table summarizes the percentage change in revenue and full-run ROP linage from 1993. Percent Gain Percent Gain in Full-Run Advertising Category in Revenue ROP Linage --------------------- ------------ ------------ Retail 3.4 0.3 General 9.3 11.1 Classified 10.9 5.5 Total 6.9 3.1 Retail advertising revenue improved $26.4 million, or 3.4%. The improvement resulted from a 0.3% increase in full-run ROP linage, increases in full-run ROP average rates and preprint revenue. General advertising revenue increased by $15.7 million, or 9.3%, from 1993 on an 11.1% increase in full-run ROP general linage, partially offset by a decrease in preprint revenue. -53-
10-K53rd Page of 168TOC1stPreviousNextBottomJust 53rd
Classified revenue improved by $59.7 million, or 10.9%, on a 5.5% increase in full-run ROP volume and a 4.9% increase in full-run average rates. Most of the increase was due to the strength of employment advertising, which was up 23.4% for the year and 32.1% in the last quarter. Circulation revenue increased $10.2 million, or 2.1%, despite a decline in average number of copies. Morning circulation declined 41,600 copies, or 1.3% and afternoon circulation declined 10,900 copies, or 2.4%. Sunday circulation declined 45,300 copies, or 0.9%. Other newspaper revenue increased $10.2 million, or 18.0%, during 1994, primarily due to increased revenue from lines of business developed to augment the revenue of our core newspaper business. BUSINESS INFORMATION SERVICES In 1994, BIS contributed 19.4% of consolidated revenue, compared with 17.9% in 1993. Operating income was $23.1 million, down $295,000, or 1.3%, from 1993 on a 17.2% increase in revenue. The decline in divisional operating income resulted from a fourth quarter KRII separation charge. Excluding the impact of acquisitions, revenue would have been up almost 9%. The graph at the end of this section illustrates the 22.6% compound growth rate for BIS revenue from 1984. EXPENSES Labor and employee benefit costs were up $65.2 million, or 6.4%, with a 1.4% increase in the work force resulting from expansion and acquisitions in the BIS Division, which was partly offset by work force reductions in the Newspaper Division. Other factors in the increase were a 4.4% increase in the average labor and employee benefit cost, and a fourth quarter charge for buyouts and separation charges. Newsprint, ink and supplements cost increased by $859,000, or 0.3%, due to a 1.7% increase in consumption and a slight decrease in average newsprint prices from the prior year. Depreciation and amortization expense increased 5.3%, or $7.6 million, due to BIS expansion and acquisitions. Other operating costs increased 11.7% from 1993 due partially to increases in volume-related BIS royalty and exchange fee expenses and other cost increases related to BIS expansion and acquisitions. A fourth quarter charge for environmental and litigation matters accounted for part of the increase. NON-OPERATING ITEMS Net interest expense decreased $1.2 million, or 3.2%, from 1993, due primarily to lower debt levels. INCOME TAXES The effective income tax rate for 1994 was 41.1%, up from 39.2% in 1993. The increase was mostly due to 1993 favorable adjustments of tax reserves resulting from settlement of IRS audits of prior years and other prior year state tax issues. -54-
10-K54th Page of 168TOC1stPreviousNextBottomJust 54th
RESULTS OF OPERATIONS: 1993 vs. 1992 Knight-Ridder, Inc., earnings per share was $2.68, up $.03, or 1.1%, from $2.65 per share before the cumulative effect of changes in accounting principles in 1992. Operating income increased 2.3% on a 5.2% increase in revenue in 1993. Operating income as a percentage of revenue was 11.6% compared with 12.0% in 1992. A 20.7% increase in net interest expense resulted from a reduction in capitalization of interest related to the Philadelphia plant. This was partially offset by higher earnings from our cable investment. NEWSPAPERS The Newspaper Division's operating income increased $8.2 million, or 2.8%, to $298.8 million. The increase resulted from improved revenue, which more than offset a 3.4% increase in the average price of newsprint, and increased costs due to the transition to the new plant in Philadelphia. Overall, newspaper advertising revenue increased by $37.5 million, or 2.6%, in 1993 on a full-run ROP linage increase of 1.3%. The following table summarizes the percentage change in revenue and full-run ROP linage from 1992. Percent Percent Gain Gain (Decline) (Decline) in Full-Run Advertising Category in Revenue ROP Linage -------------------- ---------- ---------- Retail 1.0 (1.0) General (3.4) (7.8) Classified 7.0 5.3 Total 2.6 1.3 Retail advertising revenue improved $7.6 million, or 1.0%. A 1.9% increase in full-run average rates and an increase in part-run ROP revenue was partially offset by a 1.0% decrease in full-run ROP linage. General advertising revenue declined by $6.0 million, or 3.4%, from 1992 on a 7.8% decline in full-run ROP general linage, partially offset by an increase in preprint revenue. Classified revenue improved by $35.9 million, or 7.0%, on a 5.3% increase in full-run ROP volume. Circulation revenue increased $14.4 million, or 3.1%, despite a decline in average number of copies. Morning circulation declined 11,300 copies, or 0.4% and afternoon circulation declined 11,800 copies, or 2.5%. Sunday circulation declined 14,300 copies, or 0.3%. -55-
10-K55th Page of 168TOC1stPreviousNextBottomJust 55th
Other newspaper revenue increased $16.8 million, or 42.2%, during 1993, primarily due to efforts to augment the revenue of our core newspaper business. BUSINESS INFORMATION SERVICES In 1993, BIS contributed 17.9% of consolidated revenue, compared with 16.5% in 1992. Operating income was $23.4 million, up $1.3 million, or 6.1%, from 1992 on a 13.8% increase in revenue. About half of the revenue growth was due to the first quarter acquisition of Data-Star, a Europe-based online operation. Excluding Data-Star revenue, BIS revenue was up 6.5% from the prior year. EXPENSES Labor and employee benefit costs were up $33.9 million, or 3.4%, with 141, or 0.7%, more employees resulting from expansion and acquisitions in the BIS Division. The average wage per employee increased 3.9%. Included in 1992 results were $10.5 million in severance and buyout costs related to a Detroit joint operating agreement (JOA) labor settlement. Newsprint, ink and supplements cost increased by $18.2 million, or 5.8%, due to a 3.4% increase in consumption and average newsprint prices from the prior year. Depreciation and amortization expense increased 10.6%, or $13.5 million, due to the completion of the new Philadelphia printing plant and BIS expansion. Other operating costs increased 8.1% from 1992, due partially to a $21.7 million increase in volume-related BIS royalty and exchange fee expenses. NON-OPERATING ITEMS Net interest expense increased $6.7 million, or 20.7%, from 1992 as a result of the $14.6 million reduction in capitalized interest. This was partially offset by a reduction of interest expense reserves related to prior year tax audits and the call of $100.0 million of 8.0% notes, replaced by lower rate commercial paper. Average interest rates on commercial paper decreased from 4.3% in 1992 to 3.2% in 1993. Other non-operating items improved to a $2.2 million loss, a $4.1 million improvement from 1992. Most of the improvement came from our cable investments, which contributed an additional $3.5 million to our pre-tax income. INCOME TAXES The effective income tax rate for 1993 was 39.2%, up 0.1% from 39.1% in 1992. Income tax expense included the $5.1 million unfavorable effect of the retroactive and current impact of the tax rate change in the Omnibus Budget Reconciliation Act of 1993. It was mostly offset by favorable adjustments of tax reserves and deferred tax assets resulting from settlement of IRS audits of prior years and resolution of other state tax issues. -56-
10-K56th Page of 168TOC1stPreviousNextBottomJust 56th
RESULTS OF OPERATIONS: 1992 vs. 1991 Knight-Ridder, Inc., earnings per share before the cumulative effect of changes in accounting principles was $2.65, up $.10, or 3.9%, from $2.55 per share in 1991. The company recorded a nonrecurring net charge of $105.2 million ($1.91 per share) related to the adoption of Financial Accounting Standards (FAS) 106 (Postretirement Benefits Other Than Pensions) and FAS 109 (Accounting For Income Taxes). The cumulative effect of adoption of FAS 106, relating to postretirement benefits other than pensions, was an after-tax reduction in earnings of $131.0 million, or $2.37 per share. This represents the unrecognized net obligation based on plans in place at the beginning of 1992. The company chose to recognize this "transition" amount immediately, rather than prospectively. In the second quarter, the company announced medical plan changes effective Jan. 1, 1993, that placed a maximum annual dollar cap for medical premiums that the company would pay for most future non-union retirees. Additionally, coverage after the age of 65 was eliminated for most future non-union retirees. The result of this announced plan change was a reduction in the prior service cost, which will be amortized over future years. The full-year operating profit reduction resulting from the recurring additional costs related to FAS 106 was $6.6 million, or an after-tax $.07 reduction in earnings per share. The adoption of FAS 109, which relates to accounting for deferred income taxes, resulted in an increase to 1992 net income of $25.8 million, or almost $.47 per share. Operating income increased 14.5% on a 3.2% increase in revenue in 1992. Operating income as a percentage of revenue improved to 12.0% from 10.8% in 1991. Revenue gains and a decline in the cost of newsprint contributed positively to operating income. A decline in net interest expense and higher earnings from our cable investment helped to offset the decline in earnings from our newsprint manufacturing investments. NEWSPAPERS The Newspaper Division's operating income increased $30.9 million, or 11.9%, to $290.5 million. The increase resulted from improved revenue and a decline in the cost of newsprint. Newspaper Division operating costs increased $9.3 million. Overall, newspaper advertising revenue increased by $14.5 million, or 1.0%, in 1992 on a full-run ROP linage decline of 1.5%. The following table summarizes the percentage change in revenue and full-run ROP linage from 1991. -57-
10-K57th Page of 168TOC1stPreviousNextBottomJust 57th
Percent Gain Percent Gain (Decline) (Decline) in Full-Run Advertising Category in Revenue ROP Linage -------------------- ------------ ------------ Retail (0.1) (2.8) General 1.0 (7.9) Classified 2.7 1.1 Total 1.0 (1.5) Retail advertising revenue was down $520,000, or 0.1%. A 2.8% decline in volume was partially offset by a 1.5% increase in full-run average rates and an increase in preprint and part-run revenue. General advertising revenue increased by $1.8 million, or 1.0%, from 1991 on the strength of an 8.2% increase in rates and an increase in preprint and part-run revenue. General full-run ROP linage declined 7.9% from 1991. Classified revenue improved by $13.2 million, or 2.7%, on a 1.1% increase in full-run ROP volume and a 1.7% increase in full-run average rates. Circulation revenue increased $21.0 million, or 4.8%, due to a 6.4% increase in average rates. Morning circulation declined 26,400 copies, or 0.8%, and afternoon circulation declined 40,900 copies, or 7.9%. Sunday circulation declined 7,200 copies, or 0.2%. BUSINESS INFORMATION SERVICES In 1992, BIS contributed 16.5% of consolidated revenue, compared with 15.7% in 1991. Operating income was $22.1 million, up $1.9 million, or 9.3%, from 1991 on an 8.8% increase in revenue. EXPENSES Labor and employee benefit costs were up $47.9 million, or 5.1%, with 83, or 0.4%, fewer employees. The average wage per employee increased 5.2%. Included in 1992 results were $10.5 million in severance and buyout costs related to a Detroit JOA labor settlement in the first half of the year. Newsprint, ink and supplements cost declined by $63.0 million, or 16.6%, due to a 17.8% decrease in average newsprint prices from the prior year. Newsprint consumption was 0.1% less than 1991 as a result of shifting the printing of The Journal of Commerce to an outside company. Supplements cost decreased by $4.8 million, or 10.6%. Depreciation and amortization expense increased 3.4%, or $4.2 million, due to the start-up of the new Philadelphia printing plant and BIS expansion. -58-
10-K58th Page of 168TOC1stPreviousNextBottomJust 58th
Other operating costs increased 8.3% from 1991 due partially to an $11.8 million increase in volume-related BIS royalty and exchange fee expenses, and increased circulation promotion costs. Additionally, Knight-Ridder increased its level of contributions to help with the aftermath of Hurricane Andrew. NON-OPERATING ITEMS Net interest expense declined $7.7 million, or 19.2%, from 1991 as a result of lower average debt balances and lower interest rates. Average interest rates on commercial paper decreased from 6.4% in 1991 to 4.3% in 1992. Other non-operating items decreased to a $6.2 million loss, a $13.6 million decline from 1991. The major reason for the decline was unfavorable results from our investments in newsprint manufacturing, which suffered from soft newsprint prices in 1992. Our cable investments performed well, but this was not enough to offset other non-operating losses. INCOME TAXES The effective income tax rate for 1992 was 39.1%, up 1.9% from 1991's 37.2%, as a result of the resolution of prior year tax issues. EARLIER YEARS 1990 was the first full year of operations after entering the joint operating agreement between the Detroit Free Press and The Detroit News (owned by Gannett Co., Inc.), creating the Detroit Newspaper Agency (DNA), now doing business as Detroit Newspapers. DNA performs the newspapers' production, sales and distribution functions, while the two papers maintain separate and independent newsrooms. This resulted in significantly improved bottom-line results from our Detroit operation. In October 1989, Knight-Ridder completed the sale of its eight television stations for an after-tax gain of $66.9 million, or $1.07 per share. In November 1989, the DNA was formed. Knight-Ridder purchased Dialog Information Services in midyear 1988 for approximately $353.0 million, and an effective 7-1/2% interest in SCI Holdings, Inc. (parent of Storer Communication) in November 1988. Despite the $.13 per share dilutive impact of these acquisitions, the company's earnings per share from continuing operations increased 2.0% over 1987. In 1987, the company's newspaper operations received a boost from strong classified advertising and a full year of operations from the State-Record Company acquisition. The acquisition, however, cost the company approximately $.15 in earnings per share dilution. Excluding the State-Record newspapers, newspaper advertising revenue increased 4.9% on a 0.4% decline in full-run ROP linage. -59-
10-K59th Page of 168TOC1stPreviousNextBottomJust 59th
In 1986, Knight-Ridder acquired State-Record Company with six daily newspapers in South Carolina and Mississippi. It later sold two of the newspapers. The company closed its Viewdata operation and sold the assets of TelAir Network, Inc. Newspaper advertising revenue increased 9.2% on a 0.5% gain in full-run ROP linage. Excluding the impact of a 46-day strike in Philadelphia in 1985, linage declined 1.2%, due to softness in Miami and various airline mergers. Consistent with the company's experience, newspaper advertising, particularly retail and classified, mirrored the general state of the economy in 1984 and 1985. In 1985, newspaper advertising revenue increased 2.9% on a 2.4% decline in full-run ROP linage. The linage decline resulted from the strike in Philadelphia and softness in Miami. Fueled by a strengthening economy in 1984, full-run advertising revenue was up 14.7% on a 4.6% increase in full-run linage. A Look Ahead We are optimistic for continued strong revenue growth for the company's newspapers and for the BIS Division. The average price of newsprint for 1995 is expected to be at least 40% higher than in 1994, and all of the company's operations are identifying and targeting new sources of revenue and ways to reduce other costs and operate more efficiently to help offset the increase. The company expects to continue its share repurchase program in 1995, should the share price continue to be the relative bargain we found it to be at the end of 1994. Share repurchases would increase debt and interest and have a slightly favorable impact on the company's earnings per share. The newsprint production companies that we partially own will show significant improvement in 1995 as a result of recent and expected newsprint price increases. Recent Acquisitions/Investments 1994 - In January, the company acquired the assets of Technimetrics, a leading publisher of investor information and business executives and global investment professional listings. Also in January, Knight-Ridder Information, Inc., (KRII) entered into a joint venture with Southam Electronic Publishing, creating a new archival information service called Infomart Dialog. Effective April 1994, Knight-Ridder Financial purchased its former agent in Germany, Real Time Information GmbH, today known as Knight-Ridder Financial-Germany (KRF Germany). KRF Germany is a real-time financial news and pricing provider. -60-
10-K60th Page of 168TOC1stPreviousNextBottomJust 60th
In the second quarter, Journal of Commerce (JoC) formed a joint venture partnership with American Systems, Inc., which specializes in the development of customer software solutions for the transportation industry. The joint venture, Transax Systems, provides tariff filings and retrieval products. At the end of the third quarter, KRII acquired the remaining shares of Article Express International (AEI), a leading document delivery supplier. AEI is now a wholly owned subsidiary and is included in the operating results of the BIS Division. JoC also purchased Gulf Shipper, a magazine responsible for the publication of shipping schedules. Capital Spending Program The company's capital spending program includes normal replacements, productivity improvements, capacity increases, building construction and expansion, and printing press equipment. Over the past three years, expenditures have totaled $237.6 million for these items. Construction of the 693,000-square-foot production facility in Philadelphia began in 1989. The $299.5 million plant became fully operational in 1993. Also included in capital expenditures is the Charlotte press project that began in 1994. The $35.0 million press expansion is expected to be completed during 1996, when the second of two new presses becomes operational. 1994 investment in our BIS Division included mainframe computer equipment enhancements of $3.6 million at Knight-Ridder Information, Inc., and subscriber equipment purchases of $14.0 million at Knight-Ridder Financial. Financial Position and Liquidity 1994 vs. 1993 During 1994, net cash provided by operating activities increased $39.1 million to $369.1 million. The increase was attributed to higher earnings and increased distributions from investees. The ratio of current assets to current liabilities was 1.0:1 at year end. Cash and short-term investments were $9.3 million at the end of 1994, a $13.8 million decrease from last year. During 1994, the company repurchased 2.5 million of its shares in the open market for an aggregate price of $137.0 million. In January 1994, $40.0 million in 9.05% notes payable matured. Total debt at year-end 1994 was $39.6 million less than in 1993. As a result, the total-debt-to-total-capital ratio improved from 26.6% in 1993 to 25.2% in 1994. Standard & Poor's and Moody's rate the company's commercial paper A1+ and P1 and long-term bonds AA- and A1, respectively. -61-
10-K61st Page of 168TOC1stPreviousNextBottomJust 61st
Average outstanding commercial paper during the year was $101.0 million with an average effective interest rate of 4.0%. At year-end 1994, commercial paper outstanding was $54.8 million and aggregate unused credit lines were $445.2 million. Various libel actions, environmental and other legal proceedings that have arisen in the ordinary course of business are pending against the company and its subsidiaries. In the opinion of management, the ultimate liability to the company and its subsidiaries as a result of these actions and proceedings will not be material. In early 1995, the company reached an agreement in principle with The Economist Group in London to sell the Journal of Commerce for $115 million. The sale is expected to be completed in April 1995. The after-tax proceeds of the sale will be utilized primarily for debt reduction and share repurchases. 1993 vs. 1992 During 1993, net cash provided by operating activities decreased 2.5% from 1992 to $330.0 million. Cash and short-term cash investments were $23.0 million at year end, down $74.1 million from the prior year. The decrease in cash and short-term cash investments was due primarily to the acquisition of Data-Star and Equinet, the repurchase of treasury shares and the prepayment of debt. During 1993, the company acquired 750,000 shares of its common stock in the open market for an aggregate price of $40.7 million. Approximately $100 million in notes payable, bearing 8.0% interest and maturing in 1996, were early retired in April 1993. Total debt at year-end 1993 was $109.2 million less than at year-end 1992. This resulted in a reduced total-debt-to-total-capital ratio of 26.6% from 32.2%. Average outstanding commercial paper during the year was $97.4 million with an average effective interest rate of 3.2%. At the end of 1993, commercial paper outstanding was $54.0 million. 1992 vs. 1991 During 1992, net cash provided by continuing operations was $338.5 million, an increase of $32.5 million from 1991 due to investee distributions being less than investee earnings and net changes in working capital. Cash and short-term cash investments of $97.1 million were $70.9 million more than the prior year. Net cash required for investing activities decreased $9.9 million, or 5.1%, from 1991 levels, due to completion of the Philadelphia plant. Total debt declined $46.6 million from 1991 levels. This resulted in a reduced total-debt-to-total-capital ratio from 34.6% to 32.2%. These ratios improved despite the FAS 106 and FAS 109 net cumulative charge of $105.2 million. -62-
10-K62nd Page of 168TOC1stPreviousNextBottomJust 62nd
Average outstanding commercial paper during the year was $54.6 million with an average effective interest rate of 4.3%. At the end of 1992, commercial paper outstanding was $62.3 million. Effect of Changing Prices The Consumer Price Index, a widely used measure of the impact of changing prices, has increased only moderately in recent years, up between 3% and 6% each year since 1983. Historically, when inflation was at higher levels, the impact on the company's operating costs was not significant. Historical cost depreciation charges may not accurately reflect the economic cost of replacing capital assets, but depreciation expense represents less than 5% of total operating costs. Newsprint expense represents a significant percentage of total costs, but it is a relatively current cost as inventory levels normally fluctuate between a 30- and 45-day supply. Labor and other operating costs are, by their very nature, current costs. The principal effect of inflation on the company's operating results is to increase reported costs. Historically, the company has demonstrated the ability to raise sales prices to offset these cost increases. [Download Table] Operating Revenue Type Percent ----- ------- Newspaper Retail 30 % Newspaper General 7 % Newspaper Classified 23 % Newspaper Circulation 18 % Newspaper Other 3 % BIS 19 % -63-
10-K63rd Page of 168TOC1stPreviousNextBottomJust 63rd
[Download Table] Operating Costs (As a percentage of operating revenue) Components Percent ------------ ------- Labor and Employee Benefits 41 % Newsprint, Ink and Suppleme 13 % Other Operating Costs 28 % Depreciation and Amortization 6 % Operating Income 12 % [Enlarge/Download Table] Newspaper Advertising Revenue (In millions of dollars) Year General Classified Retail Total ---- ------- ---------- ------ ----- 1984 170 390 627 1,187 1985 170 412 639 1,221 1986 182 454 697 1,333 1987 186 527 751 1,464 1988 179 579 765 1,523 1989 187 594 796 1,577 1990 185 580 792 1,557 1991 173 498 759 1,430 1992 175 511 758 1,444 1993 169 547 766 1,482 1994 184 606 793 1,583 Newspaper advertising revenue increased in all categories over 1993. Classified revenue represented nearly half ($59.7 million) of the total advertising increase. -64-
10-K64th Page of 168TOC1stPreviousNextBottomJust 64th
[Download Table] Business Information Services Revenue (In millions of dollars) Year Amount ----- ------- 1984 67 1985 80 1986 89 1987 99 1988 160 1989 290 1990 333 1991 354 1992 385 1993 439 1994 514 BIS revenue increased 17.2% over 1993, partially due to acquisitions. -65-
10-K65th Page of 168TOC1stPreviousNextBottomJust 65th
[Download Table] Circulation Revenue (In millions of dollars) Year Amount ----- ------- 1984 302 1985 313 1986 335 1987 358 1988 371 1989 385 1990 403 1991 439 1992 460 1993 474 1994 485 Circulation revenue increased by 2.1% over 1993, due to pricing. -66-
10-K66th Page of 168TOC1stPreviousNextBottomJust 66th
[Download Table] Total Debt (In millions of dollars) Year Amount ----- ------- 1984 68 1985 308 1986 668 1987 553 1988 1,037 1989 713 1990 824 1991 607 1992 560 1993 451 1994 412 Total debt was reduced by $39.6 million as a result of strong internal cash flow. -67-
10-K67th Page of 168TOC1stPreviousNextBottomJust 67th
[Download Table] Stock Trading Volume Year Amount ----- ----------- 1984 15,790,900 1985 18,547,800 1986 25,206,600 1987 35,042,800 1988 27,201,300 1989 23,269,400 1990 18,186,000 1991 24,749,100 1992 24,915,500 1993 29,768,600 1994 32,102,600 Knight-Ridder stock trading volume rose 7.8% in 1994. -68-
10-K68th Page of 168TOC1stPreviousNextBottomJust 68th
[Download Table] Stock Price History Stock Price --------------------------- Year Low Close High ----- ------ ------ ------ 1984 21 1/4 29 1/4 31 1985 28 39 7/8 41 3/8 1986 37 1/2 46 7/8 57 7/8 1987 33 1/4 40 1/8 61 1/4 1988 35 3/4 45 3/8 47 3/4 1989 42 7/8 58 3/8 58 3/8 1990 37 45 7/8 58 1991 43 3/4 50 3/4 57 1/2 1992 50 3/4 58 1/8 64 1/8 1993 50 5/8 59 3/8 65 1994 46 1/2 50 7/8 61 Knight-Ridder's stock price reached a high of $61 during 1994. -69-
10-K69th Page of 168TOC1stPreviousNextBottomJust 69th
[Download Table] Net Cash Provided By Operating Activities (In millions of dollars) Year Amount ----- ------- 1984 194 1985 204 1986 265 1987 269 1988 230 1989 280 1990 325 1991 306 1992 338 1993 330 1994 369 Net cash provided by operating activities increased 11.9% from 1993. -70-
10-K70th Page of 168TOC1stPreviousNextBottomJust 70th
[Download Table] Shareholders' Equity (In millions of dollars) Year Amount ----- ------- 1984 922 1985 697 1986 816 1987 901 1988 822 1989 917 1990 895 1991 1,149 1992 1,182 1993 1,243 1994 1,225 Shareholders' equity decreased 1.5% to $1.225 billion due to the repurchase of 2.5 million of the company's shares. -71-
10-K71st Page of 168TOC1stPreviousNextBottomJust 71st
[Download Table] Common Shareholders' Equity Per Share Year Amount ----- ------ 1984 $14.17 1985 $12.38 1986 $14.28 1987 $15.85 1988 $15.47 1989 $17.83 1990 $18.09 1991 $21.44 1992 $21.50 1993 $22.67 1994 $23.15 Shareholders' equity per share increased by 2.1% over 1993. -72-
10-K72nd Page of 168TOC1stPreviousNextBottomJust 72nd
[Enlarge/Download Table] % Earned On Invested Capital (Return on Average Shareholders' Equity) (1992 excludes the cumulative effect of changes in accounting principles) Including Continuing Discontinued Year Operations Operations ----- ---------- --------- 1984 15.2 % 16.3 % 1985 15.4 % 16.4 % 1986 17.5 % 18.5 % 1987 17.3 % 18.1 % 1988 17.0 % 18.2 % 1989 20.7 % 28.4 % 1990 16.5 % 16.5 % 1991 12.9 % 12.9 % 1992 12.5 % 12.5 % 1993 12.2 % 12.2 % 1994 13.9 % 13.9 % Return on average shareholders' equity was 13.9% in 1994 from 12.2% in 1993. -73-
10-K73rd Page of 168TOC1stPreviousNextBottomJust 73rd
ITEM 8. Financial statements and supplementary data ------------------------------------------- See Quarterly Operations in Item 5 [Enlarge/Download Table] Consolidated Balance Sheet (In thousands of dollars, except share data) Dec. 25 Dec. 26 Dec. 27 1994 1993 1992 --------- --------- --------- ASSETS CURRENT ASSETS Cash, including short-term cash investments of $150 in 1994, $7,638 in 1993 and $87,758 in 1992 ............... $ 9,253 $ 23,012 $ 97,104 Accounts receivable, net of allowances of $13,728 in 1994, $14,554 in 1993 and $14,450 in 1992.................. 317,687 274,391 262,541 Inventories......................................................... 39,555 41,422 37,474 Other current assets.............................................. 56,309 62,491 63,654 --------- --------- --------- Total Current Assets.......................................... 422,804 401,316 460,773 --------- --------- --------- INVESTMENTS AND OTHER ASSETS Equity in unconsolidated companies and joint ventures ......... 293,205 289,986 277,193 Other............................................................... 190,515 175,058 145,008 --------- --------- --------- Total Investments and Other Assets.......................... 483,720 465,044 422,201 --------- --------- --------- PROPERTY, PLANT AND EQUIPMENT Land and improvements............................................. 66,950 66,885 62,638 Buildings and improvements........................................ 383,696 379,556 372,021 Equipment........................................................... 1,209,360 1,168,054 1,053,364 Construction and equipment installations in progress............ 17,099 13,100 91,225 --------- --------- --------- 1,677,105 1,627,595 1,579,248 Less accumulated depreciation................................... 844,593 766,474 697,507 --------- --------- --------- Net Property, Plant and Equipment........................... 832,512 861,121 881,741 --------- --------- --------- -74-
10-K74th Page of 168TOC1stPreviousNextBottomJust 74th
EXCESS OF COST OVER NET ASSETS ACQUIRED Less accumulated amortization of $182,402 in 1994, $160,545 in 1993 and $140,791 in 1992....................... 708,153 703,951 693,344 --------- --------- --------- Total........................................................... $ 2,447,189 $2,431,432 $2,458,059 ========= ========= ========= Liabilities and Shareholders' Equity CURRENT LIABILITIES Accounts payable................................................... $ 136,817 $ 124,620 $ 109,317 Accrued expenses and other liabilities.......................... 98,993 82,149 75,563 Accrued compensation and amounts withheld from employees....... 96,917 79,736 80,297 Federal and state income taxes.................................. 1,368 10 1,286 Deferred revenue................................................... 66,953 60,095 55,099 Dividends payable.................................................. 19,593 19,199 19,238 Short-term borrowings and current portion of long term debt.... 0 40,687 64,304 --------- --------- --------- Total Current Liabilities..................................... 420,641 406,496 405,104 --------- --------- --------- NON-CURRENT LIABILITIES Long-term debt.................................................... 411,504 410,388 495,941 Deferred federal and state income taxes........................... 138,611 135,979 114,199 Postretirement benefits other than pensions....................... 166,682 174,331 172,763 Employment benefits and other non-current liabilities............. 84,264 57,816 85,395 --------- --------- --------- Total Non-Current Liabilities................................. 801,061 778,514 868,298 --------- --------- --------- MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES....................... 833 3,253 2,845 --------- --------- --------- COMMITMENTS AND CONTINGENCIES - (NOTE J) SHAREHOLDERS' EQUITY Common Stock, $.02 1/12 par value; shares authorized - 250,000,000; shares issued - 52,892,720 in 1994, 54,847,486 in 1993 , and 54,965,671 in 1992...................... 1,102 1,143 1,145 Additional capital................................................ 326,392 342,201 321,034 Retained earnings................................................. 897,160 899,825 859,633 --------- --------- --------- Total Shareholders' Equity.................................... 1,224,654 1,243,169 1,181,812 --------- --------- --------- Total......................................................... $ 2,447,189 $2,431,432 $2,458,059 ========= ========= ========= See "Notes to Consolidated Financial Statements."
-75-
10-K75th Page of 168TOC1stPreviousNextBottomJust 75th
[Enlarge/Download Table] Consolidated Statement Of Income (In thousands of dollars, except per share data) Year Ended --------------------------------------------------- Dec. 25 Dec. 26 Dec. 27 1994 1993 1992 --------- --------- --------- OPERATING REVENUE Newspapers Advertising Retail............................................. $ 792,476 $ 766,105 $ 758,496 General............................................ 184,469 168,773 174,750 Classified......................................... 606,428 546,753 510,898 --------- --------- --------- Total............................................ 1,583,373 1,481,631 1,444,144 Circulation.......................................... 484,581 474,420 460,014 Other................................................ 66,968 56,772 39,932 --------- --------- --------- Total Newspapers................................ 2,134,922 2,012,823 1,944,090 Business Information Services........................ 514,039 438,525 385,439 --------- --------- --------- Total Operating Revenue........................ 2,648,961 2,451,348 2,329,529 --------- --------- --------- OPERATING COSTS Labor and employee benefits......................... 1,089,417 1,024,181 990,254 Newsprint, ink and supplements...................... 335,902 335,043 316,814 Other operating costs................................ 743,054 665,509 615,729 Depreciation and amortization........................ 149,327 141,758 128,221 --------- --------- --------- Total Operating Costs.......................... 2,317,700 2,166,491 2,051,018 --------- --------- --------- OPERATING INCOME........................................ 331,261 284,857 278,511 --------- --------- --------- -76-
10-K76th Page of 168TOC1stPreviousNextBottomJust 76th
OTHER INCOME (EXPENSE) Interest expense...................................... (44,585) (45,112) (52,375) Interest expense capitalized......................... 474 120 14,746 Interest income....................................... 6,070 5,712 5,078 Equity in earnings of unconsolidated companies and joint ventures............................... 7,412 7,254 3,940 Minority interests in earnings of consolidated subsidiaries..................... (9,650) (9,863) (9,795) Other, net............................................ (912) 433 (389) --------- --------- --------- Total............................................ (41,191) (41,456) (38,795) --------- --------- --------- Income before income taxes............................ 290,070 243,401 239,716 Income taxes............................................ 119,170 95,312 93,630 --------- --------- --------- INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES.................. 170,900 148,089 146,086 Cumulative effect of changes in accounting principles for: Income taxes....................................... 25,800 Postretirement benefits other than pensions........ (131,000) --------- --------- --------- Net income......................................... $ 170,900 $ 148,089 $ 40,886 ========= ========= ========= EARNINGS PER COMMON AND COMMON AND COMMON EQUIVALENT SHARE Income before cumulative effect of changes in accounting principles......................... $ 3.15 $ 2.68 $ 2.65 Cumulative effect of changes in accounting principles............................ (1.91) --------- --------- --------- Net income......................................... $ 3.15 $ 2.68 $ 0.74 ========= ========= ========= AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (In 000s).......................... 54,275 55,332 55,178 ========= ========= ========= See "Notes to Consolidated Financial Statements". -77-
10-K77th Page of 168TOC1stPreviousNextBottomJust 77th
10-K78th Page of 168TOC1stPreviousNextBottomJust 78th
[Enlarge/Download Table] Consolidated Statement of Cash Flows (In thousands of dollars) Year Ended -------------------------------- Dec. 25 Dec. 26 Dec. 27 1994 1993 1992 -------- -------- -------- CASH PROVIDED BY (REQUIRED FOR) OPERATING ACTIVITIES Net income.................................................... $ 170,900 $ 148,089 $ 40,886 Non-cash items included in income: Cumulative effect of changes in accounting principles..... 105,200 Depreciation.............................................. 105,776 104,314 93,838 Amortization of excess of cost over net assets acquired... 21,857 19,754 18,892 Amortization of other assets.............................. 21,694 17,690 15,491 Provision for non-current deferred taxes.................. 2,632 21,780 20,498 Earnings of investees in excess of distributions.......... (7,538) (22,802) (13,996) Other items, net.......................................... 44,697 29,584 26,708 Change in certain assets and liabilities: Accounts receivable....................................... (41,135) (3,377) (15,323) Inventories............................................... 1,867 (3,801) 5,065 Other current assets...................................... 2,104 3,086 (13,082) Accounts payable.......................................... 11,099 7,197 36,546 Federal and state income taxes............................ 1,358 3,542 195 Other current liabilities................................. 33,803 4,947 17,541 -------- -------- -------- Net cash provided by operating activities......... 369,114 330,003 338,459 -------- -------- -------- -78-
10-K79th Page of 168TOC1stPreviousNextBottomJust 79th
CASH REQUIRED FOR INVESTING ACTIVITIES Additions to property, plant and equipment.................... (67,110) (69,541) (100,993) Other items, net.............................................. (61,013) (81,046) (82,010) -------- -------- -------- Net cash required for investing activities........ (128,123) (150,587) (183,003) -------- -------- -------- CASH PROVIDED BY (REQUIRED FOR) FINANCING ACTIVITIES Proceeds from sale of commercial paper and bank borrowings.... 375,308 307,983 157,900 Reduction of total debt....................................... (414,879) (417,153) (204,495) -------- -------- -------- Net reduction in total debt....................... (39,571) (109,170) (46,595) Payment of cash dividends..................................... (77,942) (76,787) (75,992) Sale of common stock to employees............................. 25,897 30,709 68,785 Purchase of treasury stock.................................... (136,977) (40,693) Other items, net.............................................. (26,157) (57,567) (30,794) -------- -------- -------- Net cash required for financing activities........ (254,750) (253,508) (84,596) -------- -------- -------- Net Increase (Decrease) in Cash............... (13,759) (74,092) 70,860 Cash and short-term cash investments at beginning of the year..... 23,012 97,104 26,244 -------- -------- -------- Cash and short-term cash investments at end of the year........... $ 9,253 $ 23,012 $ 97,104 ======== ======== ======== Working capital at end of the year................................ $ 2,163 $ (5,180) $ 55,669 ======== ======== ======== See "Notes to Consolidated Financial Statements."
-79-
10-K80th Page of 168TOC1stPreviousNextBottomJust 80th
[Enlarge/Download Table] Consolidated Statement of Shareholders' Equity (In thousands of dollars, except share data) Common Shares Common Additional Retained Treasury Outstanding Stock Capital Earnings Stock ---------- ---------- ---------- ---------- -------- BALANCES AT DEC. 29, 1991............................. 53,571,282 $ 1,116 $ 252,278 $ 895,226 $ - Issuance of common shares under stock option plans........................... 1,155,062 24 49,503 Issuance of common shares under stock purchase plan.......................... 240,022 5 12,154 Tender of shares as payment for options excercised....................... (695) (40) Tax benefits arising from employee stock plans... 7,139 Net income....................................... 40,886 Cash dividends declared on common stock - $1.40 per share............... (76,479) ---------- ---------- ---------- ---------- -------- BALANCES AT DEC. 27, 1992............................. 54,965,671 $ 1,145 $ 321,034 $ 859,633 $ - Issuance of common shares under stock option plans............................ 323,894 7 12,883 Issuance of treasury shares under stock option plans............................ 29,670 (525) (1,612) Issuance of common shares under stock purchase plan........................... 207,223 4 10,078 Issuance of treasury shares under stock purchase plans.......................... 71,028 (596) (4,007) Purchase of treasury shares ...................... (750,000) 40,693 Retirement of 649,302 treasury shares ............ (13) (3,912) (31,148) (35,074) Tax benefits arising from employee stock plans.... 3,239 Net income........................................ 148,089 Cash dividend declared on common stock - $1.40 per share................ (76,749) ---------- ---------- ---------- ---------- -------- BALANCES AT DEC. 26, 1993.............................. 54,847,486 $ 1,143 $ 342,201 $ 899,825 $ - -80-
10-K81st Page of 168TOC1stPreviousNextBottomJust 81st
Issuance of common shares under stock option plans............................ 29,600 1,104 Issuance of treasury shares under stock option plans............................ 227,811 (3,562) (12,571) Issuance of treasury shares under stock purchase plan .......................... 310,123 (2,767) (16,835) Purchase of treasury shares ...................... (2,522,300) 136,977 Retirement of 1,984,366 treasury shares .......... (41) (12,300) (95,229) (107,571) Tax benefits arising from employee stock plans.... 1,716 Net income....................................... 170,900 Cash dividend declared on common stock - $1.46 per share................ (78,336) ---------- ---------- ---------- ---------- -------- BALANCES AT DEC. 25, 1994.............................. 52,892,720 $ 1,102 $ 326,392 $ 897,160 $ - ========== ========== ========== ========== ======== See "Notes to Consolidated Financial Statements."
Notes to Consolidated Financial Statements Note A Summary of Significant Accounting Policies A description of the company's business and the nature and scope of its operations are set forth in items 1 & 2. Reading this information is recommended for a more complete understanding of the financial statements. The company reports on a fiscal year, ending the last Sunday in the calendar year. Results for 1994, 1993 and 1992 are for the 52 weeks ended Dec. 25, Dec. 26 and Dec. 27, respectively. The basis of consolidation is to include in the consolidated financial statements all the accounts of Knight-Ridder, Inc., and its more-than-50%-owned subsidiaries. All significant intercompany transactions and account balances have been eliminated in consolidation. The company is a 50% partner in the Detroit Newspaper Agency (DNA), a joint operating agency between Detroit Free Press, Inc., a wholly owned subsidiary of Knight-Ridder, Inc., and The Detroit News, Inc., a wholly owned subsidiary of Gannett Co., Inc. The Consolidated Statement of Income includes on a line-by-line basis the company's pro rata share of the revenue and expense generated by the operation of the agency. -81-
10-K82nd Page of 168TOC1stPreviousNextBottomJust 82nd
Investments in companies in which Knight-Ridder, Inc., has an equity interest of at least 20% but not more than 50% are accounted for under the equity method. Under this method, the company records its share of earnings as income and increases the investment by the equivalent amount. Dividends are recorded as a reduction in the investment. All other investments are recorded at the lower of cost or net realizable value, and the company recognizes income from such investments upon receipt of a dividend. The investment caption "Equity in unconsolidated companies and joint ventures" in the Consolidated Balance Sheet represents the company's equity in the net assets of the Detroit Newspaper Agency, the Seattle Times Company and subsidiaries, a company responsible for the sales and services of general, retail and classified advertising accounts for a group of newspapers, two newsprint mill partnerships, a cable television joint venture and a joint venture that offers full-service copies of original journal articles. The company owns 49-1/2% of the voting common stock and 65% of the nonvoting common stock of the Seattle Times Company, owns 33-1/3% of the voting stock of Newspapers First, is a one-third partner in the Southeast Paper Manufacturing Co., owns a 13-1/2% equity share of Ponderay Newsprint Company, and jointly owns TKR Cable Company and TKR Cable Partners. Effective December 1992, after a restructuring, the company has a 15% interest in TCI/TKR Limited Partnership through TKR Cable Partners. Prior to December 1992, the company held a 7-1/2% interest in SCI Holdings, Inc., the holding company for Storer Communications, Inc. Knight-Ridder Information, Inc., a Knight-Ridder subsidiary, in October 1994 acquired additional shares of Article Express International, Inc. (AEI), in which it previously held a minority ownership, resulting in AEI becoming a wholly owned subsidiary. The impact is not material. The investment in unconsolidated companies and joint ventures at Dec. 25, 1994, includes $68.4 million representing the company's share of undistributed earnings (excluding the DNA) accumulated since the investment dates. The company's share of the earnings of the unconsolidated companies (except for the DNA) of $7.4 million in 1994, $7.3 million in 1993 and $3.9 million in 1992 is included in the caption "Equity in earnings of unconsolidated companies and joint ventures" in the Consolidated Statement of Income. Dividends and cash distributions received from the unconsolidated companies and joint ventures (excluding the DNA) were $3.1 million in 1994, $3.0 million in 1993 and $2.8 million in 1992 and were offset against the investment account. -82-
10-K83rd Page of 168TOC1stPreviousNextBottomJust 83rd
Fort Wayne Newspapers, Inc., Infomart Dialog and Transax Systems are the only consolidated subsidiaries and joint ventures that have a minority ownership interest. The minority shareholder's interest in the net income of these subsidiaries has been provided for as an expense in the Consolidated Statement of Income in the caption "Minority interests in earnings of consolidated subsidiaries." Also included in this caption is a contractual minority interest resulting from a Joint Operating Agreement between Miami Herald Publishing Co. and Cox Newspapers. The company's liability to the minority interest shareholders is included in the Consolidated Balance Sheet caption, "Minority Interests in Consolidated Subsidiaries." "Cash and short-term cash investments" includes currency and checks on hand, demand deposits at commercial banks, overnight repurchase agreements of government securities and investment-grade commercial paper with maturities of fewer than 90 days. Cash and short-term investments are recorded at cost. Due to the short-term nature of marketable securities, cost approximates market value. In 1994, the company adopted Statement of Financial Accounting Standards (FAS) 115, Accounting for Certain Investments in Debt and Equity Securities, the impact of which was not material. "Inventories" are priced at the lower of cost (first-in, first-out FIFO method), or market. Most of the inventory is newsprint, ink and other supplies used in printing newspapers. "Property, plant and equipment" is recorded at cost and the provision for depreciation for financial statement purposes is computed principally by the straight-line method over the estimated useful lives of the assets. The company capitalizes interest expense as part of the cost of major construction projects. "Excess of cost over net assets acquired" arises from the purchase of at least a 50% interest in a company for a price higher than the fair market value of the net tangible assets. Intangible assets of this type arising from acquisitions accounted for as purchases and occurring subsequent to Oct. 31, 1970, totaled approximately $799.5 million at Dec. 25, 1994. They are generally being amortized over a 40-year period on a straight-line basis, unless management has concluded a shorter term is more appropriate. If, in the opinion of management, an impairment in value occurs, based on the undiscounted cash flow method, any necessary additional write-downs will be charged to expense. "Deferred revenue" arises as a normal part of business from advance subscription payments for newspapers and business information services. Revenue is recognized in the period in which it is earned. -83-
10-K84th Page of 168TOC1stPreviousNextBottomJust 84th
"Short-term borrowings" represents the carrying amounts of commercial paper and other short-term borrowings that approximate fair value. "Long-term debt" represents the carrying amounts of debentures and notes payable. Fair values, disclosed in Note C, are estimated using discounted cash flow analyses based on the company's current incremental borrowing rates for similar types of borrowing arrangements. In 1992, the company adopted FAS 106, Accounting For Postretirement Benefits Other Than Pensions, and FAS 109, Accounting For Income Taxes. The effects of adoption are described in Notes I and B, respectively. In 1994, the company adopted FAS 112, Employers' Accounting for Postemployment Benefits. The adoption of FAS 112 did not materially impact the consolidated financial statements. In 1995, the company plans to adopt FAS 116, Accounting For Contributions Received and Contributions Made. The impact on the consolidated financial statements will not be material. Earnings per share is computed by dividing net income by the weighted average number of common and common equivalent shares outstanding. Quarterly earnings per share may not add to the total for the year, since each quarter and the year are calculated separately based on average outstanding shares during the period. Certain amounts in 1993 and 1992 have been reclassified to conform to the 1994 presentation. Note B Income Taxes The company's income tax expense is determined under the provisions of Statement of Financial Accounting Standards 109, Accounting for Income Taxes, which was adopted in 1992. This accounting standard requires the use of the liability method in adjusting previously deferred taxes for changes in tax rates. The company chose to reflect the cumulative effect of adopting this standard as a change in accounting principle as of the beginning of 1992. The adoption resulted in a credit to earnings of $25.8 million. Prior years' financial statements were not restated. Substantially all of the company's earnings are subject to domestic taxation. No material foreign income taxes have been imposed on reported earnings. -84-
10-K85th Page of 168TOC1stPreviousNextBottomJust 85th
[Enlarge/Download Table] Note B - Income Taxes Federal, state and local income taxes before cumulative effect of changes in accounting principles consist of the following (in thousands): 1994 1993 1992 ---------------------- --------------------- -------------------- Current Deferred Current Deferred Current Deferred -------- -------- -------- -------- -------- -------- Federal income taxes................ $97,824 $2,501 $53,422 $38,231 $65,968 $11,725 State and local income taxes........ 18,791 54 11,702 (8,043) 12,936 3,001 -------- -------- -------- -------- -------- -------- Total.......................... $116,615 $2,555 $65,124 $30,188 $78,904 $14,726 ======== ======== ======== ======== ======== ======== Cash payments of income taxes for the years 1994, 1993 and 1992 were $104.5 million, $82.7 million and $60.2 million, respectively. Payments in 1993 include the payment and settlement of prior year state and federal income tax examinations. -85-
10-K86th Page of 168TOC1stPreviousNextBottomJust 86th
[Enlarge/Download Table] Effective Income Tax Rates The differences between income tax expense shown in the financial statements and the amounts determined by applying the federal statutory rate of 35% in 1994 and 1993 and 34% in 1992 are as follows (in thousands): 1994 1993 1992 ------- ------- ------- Federal statutory income tax .......................................................... $101,525 $85,190 $81,505 State and local income taxes, net of federal benefit................................... 12,249 10,913 10,518 Statutory rate applied to nondeductible amortization of the excess of cost over net assets acquired....................................... 7,650 6,914 6,418 Change in deferred tax asset valuation allowance....................................... (6,695) Other items, net....................................................................... (2,254) (1,010) (4,811) ------- ------- ------- Total............................................................................. $119,170 $95,312 $93,630 ======== ======= ======= -86-
10-K87th Page of 168TOC1stPreviousNextBottomJust 87th
The deferred tax asset and liability at the fiscal year end is comprised of the following components (in thousands):
10-K88th Page of 168TOC1stPreviousNextBottomJust 88th
[Enlarge/Download Table] 1994 1993 1992 -------- -------- -------- Deferred Tax Assets Postretirement benefits other than pensions (including amounts relating to partnerships in which the company participates)............... $ 84,833 $ 87,199 $ 82,971 Compensation and benefit accruals........................................... 17,130 11,238 19,182 Accrued interest............................................................ 5,135 3,439 8,563 Other nondeductible accruals................................................ 28,127 33,900 10,027 ------- ------- ------- Gross deferred tax assets................................................. $ 135,225 $ 135,776 $ 120,743 ======= ======= ======= Deferred Tax Liability Depreciation and Amortization............................................... $ 173,500 $ 147,115 $ 132,413 Equity in partnerships and investees........................................ 46,715 49,141 37,516 Deferred intercompany transactions.......................................... 16,343 17,054 16,617 Research and experimental expenditures...................................... 9,379 6,145 4,468 Other....................................................................... 5,412 29,890 13,110 ------- ------- ------- Gross deferred tax liability.............................................. $ 251,349 $ 249,345 $ 204,124 ------- ------- ------- Net deferred tax liability................................................ $ 116,124 $ 113,569 $ 83,381 ======= ======= ======= -87-
10-K89th Page of 168TOC1stPreviousNextBottomJust 89th
The components of deferred taxes included in the Consolidated Balance Sheet are as follows (in thousands):
10-K90th Page of 168TOC1stPreviousNextBottomJust 90th
[Download Table] 1994 1993 1992 -------- -------- -------- Current asset....................... $22,487 $22,410 30,818 Non-current liability............... (138,611) (135,979) (114,199) -------- -------- -------- Net deferred tax liability.......... $(116,124) $(113,569) $ (83,381) ======== ======== ======== -88-
10-K91st Page of 168TOC1stPreviousNextBottomJust 91st
[Enlarge/Download Table] Note C - Debt Debt consisted of the following (in thousands): Dec. 25 Dec. 26 Dec. 27 1994 1993 1992 ------- ------- ------- Commercial paper due at various dates through Jan. 20, 1995 at an effective interest rate of 6.13% as of Dec. 25, 1994. Amounts are net of unamortized discounts of $136 in 1994, $15 in 1993 and $74 in 1992 (a)............................................ $ 54,764 $ 53,985 $ 62,326 Debentures due on April 15, 2009, bearing interest at 9 7/8%, net of unamortized discount of $2,363 in 1994, $2,528 in 1993, and $2,693 in 1992......................................................... 197,637 197,472 197,307 Notes payable on April 15, 1996, bearing interest at 8%, retired in April 1993, net of unamortized discount of $338 in 1992.................................................................... 99,662 Notes payable on Jan. 15, 1994, bearing interest at 9.05%, retired in January 1994, net of unamortized discount of $1 in 1993 and $35 in 1992.............................................. 39,999 39,965 Notes payable, bearing interest at 8 1/2%, subject to mandatory pro rata amortization of 25% annually commencing Sept. 1, 1998 through maturity on Sept. 1, 2001, net of unamortized discount of $897 in 1994, $1,069 in 1993, $1,240 in 1992.................................... 159,103 158,931 158,760 Other indebtedness............................................................ 688 2,225 ------- ------- ------- 411,504 451,075 560,245 Less amounts payable in one year (b).......................................... 40,687 64,304 ------- ------- ------- Total long-term debt..................................................... $ 411,504 $ 410,388 $ 495,941 ======= ======= ======= (a) Commercial paper is backed by $500.0 million of revolving credit agreements, which require no principal payment until maturity on April 9, 1998. (b) The revolving credit and term loan agreements backing commercial paper is "long-term" in that no principal repayments are required during the next 12 months. As such, approximately $54.8 million of commercial paper is classified as "noncurrent" since the company intends to maintain total outstanding commercial paper of at least this amount during the next 12 months. -89-
10-K92nd Page of 168TOC1stPreviousNextBottomJust 92nd
Interest payments during 1994, 1993 and 1992 were $40.2 million, $41.2 million and $52.7 million, respectively.
The following table presents the approximate annual maturities of long-term debt for the five years after 1994 (in thousands): [Download Table] 1995 $ - 1996 - 1997 - 1998 94,540 1999 39,776 2000 and thereafter 277,188 ------- $ 411,504 ======= The carrying amounts and fair values of debt as of Dec. 25, 1994, are as follows (in thousands): [Download Table] Carrying Fair Amount Value ------- ------- Commercial paper $ 54,764 $ 54,764 9 7/8 % Debentures 197,637 219,160 8 1/2 % Notes payable 159,103 160,848 ------- ------- Total $ 411,504 $ 434,772 ======= ======= -90-
10-K93rd Page of 168TOC1stPreviousNextBottomJust 93rd
Note D - Unconsolidated Companies and Joint Ventures
10-K94th Page of 168TOC1stPreviousNextBottomJust 94th
[Enlarge/Download Table] Summary financial information for the company's unconsolidated companies and joint ventures that are accounted for by the equity method is as follows (in thousands): 1994 1993 1992 --------- --------- --------- Current assets................................................. $ 206,128 $ 202,397 $ 191,966 Property, plant and equipment and other assets................. 1,619,548 1,647,083 1,656,851 Current liabilities............................................ 199,975 180,891 148,060 Long-term debt and other noncurrent liabilities................ 905,039 961,488 1,016,957 Net sales...................................................... 682,175 656,311 638,328 Gross profit................................................... 147,842 118,050 185,554 Net loss....................................................... (15,705) (22,096) (29,909) Company's share of: Net assets................................................. 293,205 289,986 277,193 Net income................................................. $ 7,412 $ 7,254 $ 3,940 At the end of the third quarter 1994, the company purchased the remaining shares of Article Express International (AEI). As a wholly owned subsidiary, AEI's 1994 financial information is reported in the consolidated financial statements and is excluded from above except for the company's share of AEI's net income prior to acquisition. In 1989, the Detroit Free Press and The Detroit News began operating under a joint operating agreement as the Detroit Newspaper Agency (DNA). Balance sheet amounts for the DNA at Dec. 25, 1994, Dec. 26, 1993, and Dec. 27, 1992, are included above and the net assets contributed to the DNA are included in "Equity in unconsolidated companies and joint ventures" in the Consolidated Balance Sheet. -91-
10-K95th Page of 168TOC1stPreviousNextBottomJust 95th
Note E Capital Stock In 1991, shareholders authorized 20.0 million shares of preferred stock for future issuance. Common stock authorized for issuance is 250.0 million shares at par value $.02-1/12 per share. The Employees Stock Purchase Plan provides for the sale of common stock to employees of the company and its subsidiaries at a price equal to 85% of the market value at the end of each purchase period. Participants under the plan received 310,123 shares in 1994, 278,251 shares in 1993 and 240,022 shares in 1992. The purchase price of shares issued in 1994 under this plan ranged between $41.23 and $48.72, and the market value on the purchase dates of such shares ranged from $48.50 to $57.31. The Employee Stock Option Plan provides for the issuance of nonqualified stock options and incentive stock options. Options are issued at prices not less than market value at date of grant and until 1994 were exercisable at issue date. Options granted in 1994 are exercisable in three equal installments vesting over a three-year period from the date of grant. There is no expiration date for the granting of options, but options must expire no later than 10 years from the date of grant. The option plan provides for the discretionary grant of stock appreciation rights (SARs) in tandem with previously granted options, which allow a holder to receive in cash, stock or combinations thereof the difference between the exercise price and the fair market value of the stock at date of exercise. The value of stock appreciation rights is charged to compensation expense. When options and stock appreciation rights are granted in tandem, the exercise of one cancels the exercise right of the other. Proceeds from the issuance of shares under these plans are included in shareholders' equity and do not affect income. -92-
10-K96th Page of 168TOC1stPreviousNextBottomJust 96th
Transactions under the Employee Stock Option Plan are summarized as follows:
10-K97th Page of 168TOC1stPreviousNextBottomJust 97th
[Download Table] Number Average of Price Shares Per Share --------- --------- Outstanding Dec. 29, 1991......................................... 3,933,529 $44.61 Exercised......................................... (1,155,062) 42.74 Canceled.......................................... (11,800) 48.49 Granted........................................... 714,295 58.60 --------- Outstanding Dec. 27, 1992......................................... 3,480,962 48.09 Exercised......................................... (353,564) 39.47 Canceled.......................................... (900) 58.63 Granted........................................... 739,925 58.88 --------- Outstanding Dec. 26, 1993......................................... 3,866,423 50.94 Exercised......................................... (257,411) 39.10 Canceled.......................................... (6,100) 55.57 Granted........................................... 720,450 49.24 --------- Outstanding Dec. 25, 1994......................................... 4,323,362 $51.36 ========= -93-
10-K98th Page of 168TOC1stPreviousNextBottomJust 98th
The exercise price of the shares issued upon exercise of stock options in 1994 ranged between $28.75 and $58.63. In 1993, shareholders voted in favor of a proposal amending the Employee Stock Option Plan to make an additional 3.5 million shares of the company's common stock available for options. In addition, shareholders voted in favor of an amendment to make 1.5 million shares of common stock available for purchase under the Employees Stock Purchase Plan. At Dec. 25, 1994, shares of the companys authorized but unissued common stock were reserved for issuance as follows: Shares --------- Employee stock option plans 2,855,468 Employees stock purchase plan 1,430,966 --------- Total 4,286,434 ========= Since 1984, the company has purchased 23.7 million shares of its own stock for approximately $1.0 billion. See Treasury Stock Purchases in Item 5. Each holder of a common share has been granted a right, under certain conditions, to purchase from the company one common share at a price of $200, subject to adjustment. The rights provide that in the event the company is a surviving corporation in a merger, each holder of a right will be entitled to receive common shares having a value equal to two times the exercise price of the right. In the event the company engages in a merger or other business combination transaction in which the company is not the surviving corporation, the rights agreement provides that proper provision shall be made so that each holder of a right will be entitled to receive common stock of the acquiring company having a value equal to two times the exercise price of the right. The rights agreement also provides that in the event any person acquires 20% or more of the company's outstanding common stock (other than pursuant to an offer for all outstanding stock that the board determines is fair and in the best interests of the company and stockholders), each right (other than rights held by the person who has acquired such 20% or larger block) will entitle its holder to purchase common stock of the company having a value equal to twice the exercise price of the right. No rights certificates will be distributed until 10 days following a public -94-
10-K99th Page of 168TOC1stPreviousNextBottomJust 99th
announcement that a person or group has acquired beneficial ownership of 20% or more of the company's outstanding common stock, or 10 days following the commencement of a tender offer or exchange offer for 20% or more of the company's outstanding stock. Until such time, the rights are evidenced by the common share certificates of the company. The rights are not exercisable until distributed and will expire on July 10, 1996, unless earlier redeemed. The company has the option to redeem the rights in whole, but not in part, at a price of $.05 per right. Note F Retirement Plans The company and its subsidiaries have several company-administered noncontributory defined benefit plans covering most non-union employees. These plans provide benefits that are based on the employees' compensation during various times before retirement. The funding policy for these plans is to contribute annually an amount that is intended to provide the projected benefit earned during the year for the covered employees. The company also contributes to certain union-administered, company-administered and jointly administered negotiated plans covering union employees. The funding policy for these plans is to make annual contributions in accordance with applicable agreements. The company also sponsors certain defined contribution plans established pursuant to Section 401(k) of the Internal Revenue Code. Subject to certain dollar limits, employees may contribute a percentage of their salaries to these plans, and the company will match a portion of the employees' contributions. -95-
10-K100th Page of 168TOC1stPreviousNextBottomJust 100th
A summary of the components of net periodic pension cost for the defined benefit plans (both company-administered non-negotiated and single-employer negotiated plans) is presented here, along with the total amounts charged to pension expense for multi-employer union plans, defined contribution plans and other agreements (in thousands): [Download Table] 1994 1993 1992 ------- ------- ------- Defined benefit plans: Service cost............. $23,699 $18,961 $18,162 Interest cost............ 48,559 45,961 42,638 Actual return on plan assets........... 20,553 (78,805) (43,699) Net amortization and deferral.......... (78,037) 25,632 (7,133) ------ ------ ------ Net................ 14,774 11,749 9,968 Multi-employer union plans................. 13,640 12,713 12,226 Defined contribution plans....................... 10,415 9,139 7,617 Other.......................... 2,129 2,454 2,300 ------ ------ ------ Net periodic pension cost.... $40,958 $36,055 $32,111 ====== ====== ====== -96-
10-K101st Page of 168TOC1stPreviousNextBottomJust 101st
[Download Table] Assumptions used each year in accounting for defined benefit plans were: 1994 1993 1992 ------ --------- --------- Discount rate as of year end.................... 8.5 % 5.75-7.5% 7.5-8.5% Expected long-term rate of return on assets assumed in determining pension expense............. 8.0-8.5 8.0-8.5 8.5 Rate of increase in compensation levels as of year end.............. 3.5-4.5 3.5-4.5 4.0-7.0 -97-
10-K102nd Page of 168TOC1stPreviousNextBottomJust 102nd
The following table sets forth the funded status and amounts recognized in the Consolidated Balance Sheet for the defined benefit plans (in thousands):
10-K103rd Page of 168TOC1stPreviousNextBottomJust 103rd
[Enlarge/Download Table] Dec. 25, 1994 Dec. 26, 1993 Dec. 27, 1992 ------------------------- -------------------------- ------------------------- Plans Whose Plans Whose Plans Whose Plans Whose Plans Whose Plans Whose Assets Exceed Accumulated Assets Exceed Accumulated Assets Exceed Accumulated Accumulated Benefits Accumulated Benefits Accumulated Benefits Benefits Exceed Assets Benefits Exceed Assets Benefits Exceed Assets (19 plans) (8 plans) (17 plans) (9 plans) (21 plans) (5 plans) ------------ ------------ ------------ ------------ ------------ ------------ Actuarial present value of benefit obligations: Vested benefit obligations........ ($459,237) ($49,613) ($485,172) ($51,583) ($378,523) ($38,848) ========== ========= ========== ========= ========== ========= Accumulated benefit obligations... ($468,205) ($51,217) ($495,682) ($54,205) ($386,238) ($40,668) ========== ========= ========== ========= ========== ========= Projected benefit obligation............ ($539,832) ($58,989) ($579,162) ($64,329) ($488,852) ($44,709) Plan assets at fair value............... 612,776 32,380 648,468 36,955 571,477 29,247 ---------- --------- ---------- --------- ---------- --------- Projected benefit obligation less than (in excess of) plan assets. 72,944 (26,609) 69,306 (27,374) 82,625 (15,462) Unrecognized net (gain) loss............ (37,278) 1,220 (31,764) 5,464 (54,642) 826 Prior service cost not yet recognized in net periodic pension cost......... 28,408 13,685 30,305 13,054 36,561 6,383 Unrecognized net (asset) obligation at the date FAS 87 was adopted, net of amortization..... (29,122) 2,523 (33,511) 2,962 (38,600) 3,166 Adjustment required to recognize minimum liability.................... (10,199) (11,357) (6,333) ---------- --------- ---------- --------- ---------- --------- Net pension asset (liability) recognized in the Consolidated Balance Sheet.... $34,952 ($19,380) $34,336 ($17,251) $25,944 ($11,420) ========== ========= ========== ========= ========== ========= -98-
10-K104th Page of 168TOC1stPreviousNextBottomJust 104th
Of the eight plans whose Accumulated Benefits exceed assets, four are nonqualified pension plans. These unfunded plans have total Accumulated Benefits of $13.6 million. Net pension assets are included in "Other" noncurrent assets and net pension liabilities are included in "Employment benefits and other noncurrent liabilities." Substantially all of the assets of the company-administered plans are invested in listed stocks and bonds. Note G Segment Information The company is a diversified information and communications company with two principal business segments: Newspapers and Business Information Services. Financial data regarding the company's business segments are presented in Items 1 & 2 in the supplemental information. Operating revenue by industry segment includes sales to unaffiliated customers, as reported in the company's consolidated income statement. Operating income is operating revenue less operating expenses, including depreciation expense and amortization of intangibles. General corporate expenses are not allocated to the Newspaper or Business Information Services divisions. Equity in earnings of unconsolidated companies and joint ventures, minority interests in earnings of consolidated subsidiaries, interest income, net interest expense, other non-operating income and expense items, as well as income taxes, have not been included in the amounts reflected as operating income by segment. Identifiable assets by segment are all assets employed in the individual operations of each business segment and excess of cost over net assets acquired associated with acquisitions in each segment. General corporate assets include cash and equivalents, other investments, net assets of unconsolidated companies and joint ventures (other than the Detroit Newspaper Agency, which is included in Newspaper Division assets), and property, plant and equipment used primarily for corporate purposes. Investments in unconsolidated companies and joint ventures are discussed in Notes A and D. Note H Acquisitions In January 1994, the company (through its wholly owned subsidiary Knight-Ridder Business Information Services, Inc.) acquired all of the assets of Technimetrics. Technimetrics is a leading publisher of investor relation information and business executive and institutional investor holdings information. -99-
10-K105th Page of 168TOC1stPreviousNextBottomJust 105th
In April 1994, Knight-Ridder Financial purchased Real Time Information GmbH, a provider of real-time financial news and pricing. During July 1994, the company purchased all the assets of Gulf Shipper, a publisher of ship schedules. At the end of the 1994 third quarter, Knight-Ridder Information, Inc., (KRII) purchased the remaining stock of Article Express International (AEI). KRII previously held a minority interest in AEI, which is a leading document delivery supplier. The acquisitions were accounted for as purchases and, accordingly, the accompanying financial statements include the results of their operations from the acquisition dates. The cost of acquisitions is included in the caption "Other items, net" in the "Cash Required For Investing Activities" section of the Consolidated Statement of Cash Flows. The effect on operations and pro forma results of operations was not material. Note I Postretirement Benefits Other Than Pensions The company and its subsidiaries have defined postretirement benefit plans that provide medical and life insurance for retirees and eligible dependents. Effective with the beginning of fiscal year 1992, the company implemented, on the immediate recognition basis, Statement of Financial Accounting Standards (FAS) 106, Employers' Accounting for Postretirement Benefits Other Than Pensions. This statement requires that the cost of these benefits, which are primarily for health care and life insurance, be recognized in the financial statements throughout the employees' active working careers. The company's previous practice was to expense these costs on a cash basis, principally after retirement. The cumulative effect of adopting FAS 106 on the immediate recognition basis, as of the beginning of 1992, was to reduce net income by $131.0 million (net of income taxes of $80.3 million), or $2.37 per share. This charge includes a previously unrecognized accumulated postretirement benefit obligation of $211.3 million, including $47.2 million related to the company's share of the Detroit Newspaper Agency (DNA). This obligation was based on plans in place at the beginning of 1992. The 1992 after-tax impact of FAS 106 (excluding the cumulative effect of adoption) was to reduce earnings by $4.0 million, or $.07 per share. -100-
10-K106th Page of 168TOC1stPreviousNextBottomJust 106th
The company valued the accumulated postretirement benefit obligation using the following assumptions: [Enlarge/Download Table] 1994 1993 1992 ------ ------ ----- Discount rate at the end of the year........................... 8.5% 7.5% 8.5% Return on plan assets.......................................... 8.5 8.5 8.5 Annual rate of increase in salaries............................ 4.5 4.5 5.0 Medical trend rate: Projected.................................................. 11.0 12.0 14.0 Reducing to this percentage in 2001 & thereafter........... 5.5 5.5 6.5 In 1992, the company announced several changes to its retiree non-union benefit plans that established a maximum annual dollar cap for medical premiums the company would pay and eliminated coverage for future retirees after the age of 65. During 1993 and 1994, many of the company's unions adopted similar changes to their retiree benefit plans. These plan amendments resulted in an unrecognized reduction in prior service cost, which is being amortized over future years. Most current retirees will keep their current plans. 1993 and 1994 reflect full-year amortization for the reduction in prior service cost. The following tables present the funded status of the company's benefit plans (excluding liabilities of the DNA that are reported in the Consolidated Balance Sheet under the investment caption "Equity in unconsolidated companies and joint ventures") and the components of 1994, 1993 and 1992 periodic expense (in thousands):
10-K107th Page of 168TOC1stPreviousNextBottomJust 107th
[Enlarge/Download Table] -101-
10-K108th Page of 168TOC1stPreviousNextBottomJust 108th
1994 1993 1992 ------------------------- ------------------------------ -------------------------- Life Life Life Insurance Insurance Insurance Medical and Other Medical and Other Medical and Other Plans Plans Plans Plans Plans Plans -------- --------- --------- --------- -------- ---------
Accumulated postretirement benefit obligation: Retirees.................. $ 64,244 $ 11,194 $ 71,550 $ 13,619 $ 54,504 $ 13,375 Fully eligible active plan participants...... 11,673 4,467 12,375 5,267 22,293 3,030 Other active plan participants........... 13,554 15,454 19,667 17,679 26,411 18,558 ------- ------- ------- ------- ------- ------- Total..................... 89,471 31,115 103,592 36,565 103,208 34,963 Fair value of assets............ - - - - - - ------- ------- ------- ------- ------- ------- Accumulated benefit obligation in excess of plan assets............... 89,471 31,115 103,592 36,565 103,208 34,963 Unrecognized net reduction (increase) in prior service costs................ 35,752 (222) 34,331 (169) 34,592 - Unrecognized net gain (loss).................. 1,628 8,938 (2,900) 2,912 - - ------- ------- ------- ------- ------- ------- Accrued liability recognized in the balance sheet......... $ 126,851 $ 39,831 $ 135,023 $ 39,308 $137,800 $ 34,963 ======= ======= ======= ======= ======= ======= Net periodic postretirement benefit cost includes the following components: Service cost.............. $ 3,081 $ 3,911 $ 4,647 Interest cost............. 11,203 13,184 13,434 Amortization.............. (4,810) (3,558) (1,947) ------ ------ ------ Net periodic postretirement benefit cost........... $ 9,474 $ 13,537 $16,134 ====== ====== ====== -102-
10-K109th Page of 168TOC1stPreviousNextBottomJust 109th
Impact of one percent increase in medical trend rate: Aggregate impact on 1994 service cost and interest cost.............. $ 1,116 ====== Increase in Dec. 25, 1994, accumulated postretirement benefit obligation......... $ 6,914 ======
Note J Commitments and Contingencies At Dec. 25, 1994, the company had lease commitments currently estimated to aggregate approximately $106.1 million that expire from 1995 through 2051 as follows (in thousands): [Download Table] 1995 $ 22,560 1996 18,117 1997 15,375 1998 12,194 1999 10,600 2000 and thereafter 27,254 ------- Total $106,100 ======= Payments under the lease contracts were $27.0 million in 1994, $25.4 million in 1993 and $25.2 million in 1992. Various libel actions, environmental and other legal proceedings that have arisen in the ordinary course of business are pending against the company and its subsidiaries. -103-
10-K110th Page of 168TOC1stPreviousNextBottomJust 110th
In 1990, a verdict was rendered against the company's subsidiary, Philadelphia Newspapers, Inc. (PNI), publisher of The Philadelphia Inquirer and Philadelphia Daily News, in a libel action entitled Sprague v. Philadelphia Newspapers, Inc., for $2.5 million in compensatory damages and $31.5 million in punitive damages. Following entry of the judgment on Sept. 15, 1992, PNI appealed the judgment to the Pennsylvania Superior Court. The Superior Court has affirmed the $2.5 million in compensatory damages and vacated the $31.5 million award of punitive damages. The court remanded the case to the trial court, which will either hold a new trial solely on the issue of punitive damages or reduce the punitive damages judgment to $21.5 million. PNI believes that substantial grounds exist for a decision by an appellate court to grant a new trial on all issues. In the opinion of management, the ultimate liability to the company and its subsidiaries as a result of this and other legal proceedings will not be material. Management's Responsibility for Financial Statements Shareholders: The consolidated financial statements and other financial information were prepared by management in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods. The manner of presentation, the selection of accounting policies and the integrity of the financial information are the responsibility of management. Some of the amounts included in the financial statements are estimates based on management's best judgment of current conditions and circumstances. To fulfill its responsibilities, management has developed and continues to maintain a system of internal accounting controls. We believe the controls in use are adequate to provide reasonable assurance that assets are safeguarded from loss or unauthorized use, and that the financial records are reliable for preparing the financial statements and maintaining accountability for assets. These systems are augmented by written policies, organizational structures providing for division of responsibilities, qualified financial officers at each operating unit, careful selection and training of financial personnel and a program of internal audits. There are, however, inherent limitations in any control system, in that the cost of maintaining a control system should not exceed the benefits to be derived. The Audit Committee of the Board of Directors is composed of outside directors and meets periodically with management, internal auditors and independent auditors, both separately and together, to review and discuss the auditors' findings and other financial and accounting matters. Both the independent and internal auditors have free access to the committee. -104-
10-K111th Page of 168TOC1stPreviousNextBottomJust 111th
The consolidated financial statements have been audited by the company's independent auditors and their report is presented below. The independent auditors are elected each year at the annual shareholders meeting based on a recommendation by the Audit Committee and the Board of Directors. James K. Batten ----------------- James K. Batten Chairman and Chief Executive Officer Ross Jones ---------------- Ross Jones Senior Vice President/Finance and Chief Financial Officer Report of Independent Certified Public Accountants Shareholders Knight-Ridder, Inc. We have audited the accompanying consolidated balance sheet of Knight-Ridder, Inc., and subsidiaries as of Dec. 25, 1994, Dec. 26, 1993, and Dec. 27, 1992, and the related consolidated statements of income, cash flows and shareholders' equity for the years then ended. Our audits also included the financial statement schedule listed in the index at Item 14(a). These financial statements and schedule are the responsibility of the company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Knight-Ridder, Inc., and subsidiaries at Dec. 25, 1994, Dec. 26, 1993, and -105-
10-K112th Page of 168TOC1stPreviousNextBottomJust 112th
Dec. 27, 1992, and the consolidated results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. As discussed in Notes B and I to the financial statements, in 1992 the company changed its method of accounting for income taxes and postretirement benefits other than pensions. Ernst & Young LLP Miami, Florida January 31, 1995 ITEM 9. Changes in and Disagreements with Accountants on Accounting and --------------------------------------------------------------- Financial Disclosure. --------------------- Not Applicable PART III Item 10. Directors and Executive Officers of the Registrant -------------------------------------------------- 1995 Proxy Statement page 2, "Election of Directors"; page 3, "Nominees for Election as Directors for Terms Ending 1998"; page 3, "Nominees for Election as Directors for Terms Ending 1996"; page 15, "Certain Relationships and Reports of Certain Stock Transactions"; page 7, "Compensation Committee Interlocks and Insider Participation." -106-
10-K113th Page of 168TOC1stPreviousNextBottomJust 113th
Knight-Ridder Executive Committee James K. Batten, 59, chairman since 1989 and chief executive officer since 1988. Served as president 1982 to 1989; senior vice president 1980 to 1982; vice president/news 1975 to 1980; Charlotte Observer executive editor 1972 to 1975. Advanced Management Program, Harvard Business School, 1981; M.P.A., public affairs, Princeton University, 1962; B.S., chemistry/biology, Davidson College, 1957. Alvah H. Chapman Jr., 73, chairman of the Executive Committee since 1984. Served as chairman of the board 1982 to 1989; chief executive officer 1976 to 1988; president 1973 to 1982; executive vice president 1967 to 1973; vice president 1966 to 1967; Miami Herald general manager 1962 to 1969. B.S., business administration, The Citadel, 1942. Mary Jean Connors, 42, vice president/human resources since 1989. Served as Philadelphia Newspapers, Inc., vice president/human resources 1988 to 1989; assistant to the senior vice president/news for Knight-Ridder 1988; The Miami Herald assistant managing editor/personnel 1985 to 1988; held various editing positions at The Miami Herald 1980 to 1985. B.A., English, Miami University in Oxford, Ohio, 1973. John C. Fontaine, 63, executive vice president since 1994; senior vice president 1987 to 1993; general counsel 1980 to 1993. Formerly a partner with Hughes Hubbard & Reed. LL.B., Harvard Law School, 1956; B.A., political science, University of Michigan, 1953. Ross Jones, 52, senior vice president and chief financial officer since 1993. Served as vice president/finance in 1993; vice president and treasurer of Reader's Digest Association, Inc., 1985 to 1993 and in other positions there 1977 to 1985. Served as manager at Brown Brothers Harriman & Co. 1970 to 1977. M.B.A., finance, Columbia University Business School, 1970; B.A., classics, Brown University, 1965. Bernard H. Ridder Jr., 78, former chairman of the board 1979 to 1982; former chairman of the Executive Committee 1976 to 1984; former vice chairman of the board 1974 to 1979. Served as president and chief executive officer of Ridder Publications, Inc., 1969 to 1974. B.A., history, Princeton University, 1938. -107-
10-K114th Page of 168TOC1stPreviousNextBottomJust 114th
P. Anthony Ridder, 54, president since 1989; president of the Newspaper Division since 1986; chairman of the Operating Committee since 1985. Served as publisher of the San Jose Mercury News 1977 to 1986; general manager 1975 to 1977; business manager 1969 to 1975. B.A., economics, University of Michigan, 1962. Patrick J. Tierney, 49, chief executive officer and president of Knight-Ridder Information, Inc., since 1991. Served as vice president and general manager of the information services division of TRW, Inc. M.B.A., University of Colorado, 1970; B.S., business, University of Colorado, 1967. Other Officers Marty Claus, 46, vice president/news since 1993. Served as Detroit Free Press managing editor/business and features from 1987 to 1992; held various editing positions at the Free Press 1977 to 1987. Held various writing and editing positions at the San Bernardino (Calif.) Sun-Telegram 1970 to 1977. B.A., journalism, Michigan State University Honors College, 1970. Gary R. Effren, 38, vice president/controller since February 1995. Served as assistant vice president/ assistant treasurer 1993 to 1995; assistant to the vice president/finance and treasurer 1989 to 1993; director of corporate accounting 1986 to 1989; business manager of Viewdata Corp. of America 1984 to 1986; manager of financial reporting 1983 to 1984. M.B.A., University of Miami, 1989; B.S., accounting, Rider College, 1978; CPA. -108-
10-K115th Page of 168TOC1stPreviousNextBottomJust 115th
Virginia Dodge Fielder, 46, vice president/research since 1989. Served as vice president/news and circulation research 1986 to 1989. Served as director/news and circulation research 1981 to 1985; editorial research manager, Chicago Sun-Times 1979 to 1981; held various positions at Lexington Herald-Leader 1976 to 1979. Ph.D., mass communications, Indiana University, 1976; M.A., journalism, Indiana University, 1974; B.A., psychology, Transylvania University, 1970. Douglas C. Harris, 55, vice president and secretary since 1986. Served as vice president/personnel 1977 to 1985; director/personnel 1972 to 1977. Formerly with Peat, Marwick, Mitchell and Co. as director of college and special recruiting. Advanced Management Program, Harvard Business School, 1987; Ed.D., counseling and guidance, Indiana University, 1968; M.S., student personnel, Indiana University, 1964; B.S., business administration, Murray State University, 1961. Clark Hoyt, 52, vice president/news since 1993. Served as chief of the Knight-Ridder Washington Bureau 1987 to 1993; news editor 1985 to 1987; managing editor, The Wichita Eagle 1981 to 1985; various editing positions, Detroit Free Press 1977 to 1981; various reporting positions, the Detroit Free Press and Washington Bureau. B.A., English literature, Columbia College, 1964. Robert D. Ingle, 55, vice president/new media since January 1995. Served as president and executive editor of the San Jose Mercury News since 1981; managing editor, The Miami Herald 1977 to 1981; various editing positions, The Miami Herald 1962 to 1977. B.A., journalism and political science, University of Iowa, 1962. -109-
10-K116th Page of 168TOC1stPreviousNextBottomJust 116th
Polk Laffoon IV, 49, vice president/corporate relations since 1994. Served as assistant to the president 1992 to 1994; assistant circulation director/distribution, The Miami Herald, 1991 to 1992; executive assistant to the vice president/marketing 1989 to 1991; Living Today editor, 1987 to 1989. Served as director and vice president/investor relations, Taft Broadcasting Co., 1982 to 1987. M.B.A., marketing, Wharton School, 1970; B.A., English, Yale, 1967. Tally C. Liu, 44, vice president/finance and administration since December. Served as vice president/finance and controller 1993 to 1994; vice president and controller 1990 to 1993. Served as San Jose Mercury News vice president and chief financial officer 1987 to 1990; chief financial officer 1986 to 1987; controller 1983 to 1986; Boca Raton News controller 1980 to 1983; assistant controller 1978 to 1980. M.B.A., Florida Atlantic University, 1977; B.S., business administration, National Chen-Chi University, 1973; CPA. Larry D. Marbert, 41, vice president/technology since 1994. Served as Philadelphia Newspapers, Inc., senior vice president/operations 1991 to 1994; vice president/operations research and planning 1988 to 1991; vice president/production 1986 to 1988; Knight-Ridder director of production/Newspaper Division 1981 to 1986; various production positions, The Miami Herald 1977 to 1981. M.S., management science, Auburn University, 1977; B.S., University of North Carolina, business administration, 1976. Frank McComas, 49, vice president/operations since February 1995. Served as publisher, The (Columbia) State, 1988 to 1995; publisher, Bradenton Herald, 1980 to 1988; held various positions at The Miami Herald and The Charlotte Observer, 1970 to 1980. B.B.A. in business administration, Kent State University, 1968. -110-
10-K117th Page of 168TOC1stPreviousNextBottomJust 117th
Cristina Lagueruela Mendoza, 48, vice president/general counsel since 1993; vice president/associate general counsel 1992 to 1993; associate general counsel 1990 to 1992. Served as a partner in Murai, Wald, Biondo, Moreno & Mendoza, P.A., 1988 to 1990; associate 1984 to 1988. J.D., University of Miami Law School, 1982; M.A., political science, University of Miami, 1967; B.A., political science, Chatham College, 1966. Peter E. Pitz, 53, vice president/operations since 1994. Served as vice president/technology 1989 to 1994; San Jose Mercury News vice president/operations 1987 to 1989; Detroit Free Press director of operations 1983 to 1987; Denver Post operations manager 1974 to 1983. M.B.A., Denver University, 1979; B.S., business administration, Northern Illinois University, 1963. David K. Ray, 53, president of Business Information Services Division since 1983; Knight-Ridder vice president since 1980. Formerly a vice president, LIN Broadcasting Co. M.B.A., University of Chicago, 1965; B.A., liberal arts, Colgate University, 1963. Sharon Studer, 43, vice president/new ventures since October. Served as partner in KPMG Peat Marwick in London 1990 to 1994. Ph.D., social psychology and research, University of Minnesota, 1978; B.S., psychology, University of Minnesota, Morris, 1973. Homer E. Taylor, 52, vice president/supply since 1987. Formerly vice president/manufacturing and supply with Scripps Howard. B.S., business, West Virginia Institute of Technology, 1973; A.S., electrical engineering, West Virginia Institute of Technology, 1970. -111-
10-K118th Page of 168TOC1stPreviousNextBottomJust 118th
Jerome S. Tilis, 52, vice president/marketing since 1987. Served as president of the Detroit Free Press 1985 to 1989; senior vice president of Philadelphia Newspapers, Inc., 1980 to 1985; vice president of advertising sales and marketing 1979 to 1980; advertising director 1977 to 1979. Advanced Management Program, Harvard Business School, 1984; B.S., chemistry, Hunter College, 1964. Knight-Ridder Board The Knight-Ridder Board of Directors is composed of members who represent a wide cross-section of American business and journalism. The group includes highly experienced investment and commercial bankers, leaders of top American corporations, senior executives and retired executives of the company and members of the Knight and Ridder families. The group is the central governing body of the company. James K. Batten, 59, chairman and chief executive officer, a director since 1981; advanced Management Program, Harvard Business School, 1981; M.P.A., public affairs, Princeton University, 1962; B.S., chemistry/biology, Davidson College, 1957. P. Anthony Ridder, 54, president of Knight-Ridder and of the Newspaper Division, a director since 1987; B.A., economics, University of Michigan, 1962. Gonzalez F. Valdes-Fauli, 48, regional chief executive: Latin America of Barclays Bank PLC, a director since 1992; master's in international finance, Thunderbird Graduate School for International Management, 1970; B.S., economics, Spring Hill College, 1968. Joan Ridder Challinor, 67, a director since 1989; Ph.D., U.S. history, The American University in Washington, D.C., 1982; M.A., U.S. history/ancient history, The American University, 1974; B.A., history, The American University, 1971. Barbara Barnes Hauptfuhrer, 66, director of several public companies, a Knight-Ridder director since 1979; B.A., sociology and economics, Wellesley College, 1949. -112-
10-K119th Page of 168TOC1stPreviousNextBottomJust 119th
Eric Ridder, 76, publisher emeritus of The Journal of Commerce, a director since 1983; attended Harvard University. John L. Weinberg, 70, senior chairman of Goldman, Sachs & Co., a director since 1969; M.B.A., business administration, Harvard University, 1950; B.A., economics, Princeton University, 1948. Thomas L. Phillips, 70, retired chairman and chief executive officer of Raytheon Co., a director since 1983; M.S., electrical engineering, Virginia Polytechnic Institute, 1948; B.S., electrical engineering, Virgina Polytechnic, 1947. Alvah H. Chapman Jr., 73, chairman of the Executive Committee and former chairman of the board and chief executive officer, a director since 1962; B.S., business administration, The Citadel, 1942. Peter C. Goldmark Jr., 54, president of The Rockefeller Foundation, a director since 1990; B.A., government, Harvard College, 1962. Randall L. Tobias, 52, chairman and chief executive officer of Eli Lilly and Company, a director since March 1994; B.S., business, Indiana University, 1964. William S. Lee, 65, chairman emeritus of Duke Power, a director since 1990; B.S., civil engineering, Princeton University, 1951. Ben R. Morris, 72, former president of The State-Record Company, a director since 1986; B.S., textile engineering, North Carolina State University, 1948. Barbara Knight Toomey, 57, experienced in management consulting, data retrieval and storage, resort management and library science, a director since 1989; B.A., geography and zoology, Boston University, 1959. Jesse Hill Jr., 68, chairman and chief executive officer of Atlanta Life Insurance Co., a director since 1980; M.B.A., actuarial science, University of Michigan, 1949; B.S., mathematics and physics, Lincoln University, 1947. C. Peter McColough, 72, former chairman and CEO of Xerox Corp., a director since 1982; LL.B., law, Dalhousie University (Nova Scotia), 1947; M.B.A., Harvard University, 1949. -113-
10-K120th Page of 168TOC1stPreviousNextBottomJust 120th
11. Executive Compensation ---------------------- 1995 Proxy Statement, pages 7 and 8, "Compensation Committee Interlocks and Insider Participation"; pages 8 through 10, "Compensation Committee Report"; page 8, "Executive Compensation"; page 11, "Senior Executive Compensation"; page 12, "Stock Options Granted"; pages 12 and 13, "Stock Options Exercised"; page 13, "Pension Benefits"; page 14 "Performance of the Company's Stock"; and page 15, "Compensation of Directors" 12. Security Ownership of Certain Beneficial Owners and Management -------------------------------------------------------------- 1995 Proxy Statement page 1, "Common Stock Outstanding and Principal Holders" and page 6, "Security Ownership of Management" See Note E in Item 8. 13. Certain Relationships and Related Transactions ---------------------------------------------- 1995 Proxy Statement page 15, "Certain Relationships and Reports of Certain Stock Transactions"; page 7, "Compensation Committee Interlocks and Insider Participation"; page 1, "Common Stock Outstanding and Principal Holders" -114-
10-K121st Page of 168TOC1stPreviousNextBottomJust 121st
PART IV 14. Exhibits, Financial Statement Schedules, and Reports on Form ------------------------------------------------------------ 8-K. ---- (a) 1. The following consolidated financial statements of Knight-Ridder, Inc. and subsidiaries, included in the annual report of the registrant to its shareholders for the year ended December 25, 1994, are included in Item 8: Consolidated Balance Sheet - December 25, 1994, December 26, 1993 and December 27, 1992 Consolidated Statement of Income - Years ended December 25, 1994, December 26, 1993 and December 27, 1992 Consolidated Statement of Cash Flows - Years ended December 25, 1994, December 26, 1993 and December 27, 1992 Consolidated Statement of Shareholders' Equity - Years ended December 25, 1994, December 26, 1993 and December 27, 1992 Notes to consolidated financial statements - December 25, 1994 2. The following consolidated financial statement schedule of Knight- Ridder, Inc. and subsidiaries are included in Item 14(d): Schedule II - Valuation and qualifying accounts All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions, or are inapplicable, or have been shown in the consolidated financial statements or notes thereto, and therefore have been omitted from this section. -115-
10-K122nd Page of 168TOC1stPreviousNextBottomJust 122nd
3. Exhibits Filed No. 3 - Articles of Incorporation and Bylaws are incorporated by reference to the Company's 10K filed in March, 1981. No. 4 - Indenture, dated as of April 6, 1989, is incorporated by reference to the Company's Registration Statement on Form S-3, effective April 7, 1989. (No. 33-28010) No. 10 - Knight-Ridder Annual Incentive Plan description is incorporated herein on pages 126-134, - Amendment to the Employee Stock Option Plan is incorporated by reference to the Company's Form 10K filed electronically on March 23, 1994. - Director's Pension Plan dated January 1, 1994 is incorporated by reference to the Company's Form 10K filed electronically on March 23, 1994. - Executive Officer's Retirement Agreement dated July 19, 1993 is incorporated by reference to the Company's Form 10K filed electronically on March 23, 1994. - Executive Officer's Retirement Agreement dated December 19, 1991 is incorporated by reference to the Company's Form 10-K filed electronically on March 23, 1994. - Executive Officer's Consulting/Retirement Agreement dated September 20, 1989 is incorporated herein on pages 135-137. No. 11 - Statement re Computation of Per Share Earnings is filed herein on pages 137-138. No. 12 - Statement re Computation of Earnings to Fixed Charges Ratio From Continuing Operations is filed herein on pages 139-140. No. 21 - Subsidiaries of the registrant is filed herein on pages 141-143. -116-
10-K123rd Page of 168TOC1stPreviousNextBottomJust 123rd
No. 23 - "Consent of Independent Certified Public Accountants" is filed herewith on page 144. No. 24 - "Power of Attorneys" for all members of the Board of Directors, is filed herein on pages 145-160. No. 27 - "Finanical Data Schedule" is filed herein on pages 161-162. (b) Reports on Form 8-K None were filed during the fourth quarter of 1994. (c) Exhibits The response to this portion of Item 14 is submitted as a separate section of this report. (d) Financial Statement Schedules The response to this portion of Item 14 is submitted as a separate section of this report. -117-
10-K124th Page of 168TOC1stPreviousNextBottomJust 124th
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. KNIGHT-RIDDER, INC. Dated March 24, 1995 By P. Anthony Ridder -------------------- ------------------------------- P. Anthony Ridder President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Dated March 24, 1995 P. Anthony Ridder ---------------------- ------------------------------- P. Anthony Ridder President and Chief Executive Officer Dated March 24, 1995 Ross Jones ---------------------- ------------------------------- Ross Jones Chief Financial Officer and Senior Vice President/Finance -118-
10-K125th Page of 168TOC1stPreviousNextBottomJust 125th
Dated March 24, 1995 Gary R. Effren ---------------------- ------------------------------- Gary R. Effren Vice President/Controller (Chief Accounting Officer) /s/ James K. Batten* -------------------------------- James K. Batten Director /s/ Alvah H. Chapman, Jr.* -------------------------------- Alvah H. Chapman, Jr. Director /s/ Joan Ridder Challinor * ------------------------------- Joan Ridder Challinor Director /s/ Peter C. Goldmark, Jr.* ------------------------------- Peter C. Goldmark, Jr. Director -119-
10-K126th Page of 168TOC1stPreviousNextBottomJust 126th
/s/ Barbara Barnes Hauptfuhrer* ------------------------------- Barbara Barnes Hauptfuhrer Director /s/ Jesse Hill, Jr.* ------------------------------- Jesse Hill, Jr. Director /s/ William S. Lee* ------------------------------- William S. Lee Director /s/ C. Peter McColough* ------------------------------- C. Peter McColough Director /s/ Ben R. Morris* ------------------------------- Ben R. Morris Director /s/ Thomas L. Phillips* ------------------------------- Thomas L. Phillips Director -120-
10-K127th Page of 168TOC1stPreviousNextBottomJust 127th
/s/ P. Anthony Ridder* ------------------------------- P. Anthony Ridder Director /s/ Eric Ridder* ------------------------------- Eric Ridder Director /s/ Randall L. Tobias* ------------------------------- Randall L. Tobias Director /s/ Barbara Knight Toomey * ------------------------------- Barbara Knight Toomey Director -121-
10-K128th Page of 168TOC1stPreviousNextBottomJust 128th
/s/ Gonzalo F. Valdes-Fauli* ------------------------------- Gonzalo F. Valdes-Fauli Director /s/John L. Weinberg* ------------------------------- John L. Weinberg Director Dated March 24, 1995 *By Ross Jones ---------------------- ---------------------------- Ross Jones Attorney-in-fact -122-
10-K129th Page of 168TOC1stPreviousNextBottomJust 129th
ANNUAL REPORT ON FORM 10-K ITEM 14 (a) (2), (c) and (d) SUPPLEMENTARY DATA CERTAIN EXHIBITS YEAR ENDED DECEMBER 25, 1994 KNIGHT-RIDDER, INC. AND SUBSIDIARIES MIAMI, FLORIDA -123-
10-K130th Page of 168TOC1stPreviousNextBottomJust 130th
[Enlarge/Download Table] SCHEDULE II ------------ VALUATION AND QUALIFYING ACCOUNTS KNIGHT-RIDDER, INC. AND SUBSIDIARIES (IN THOUSANDS OF DOLLARS) COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E --------- --------- --------- --------- --------- ADDITIONS ---------------------- BALANCE AT CHARGED CHARGED BEGINNING TO COSTS TO BALANCE OF AND OTHER AT END DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD ------------ ---------- --------- --------- ---------- ---------- YEAR ENDED DECEMBER 25, 1994: RESERVES AND ALLOWANCES DEDUCTED FROM ASSET ACCOUNT: ACCOUNTS RECEIVABLE ALLOWANCES $ 14,554 $17,818 $ 18,644(1) $ 13,728 VALUATION ALLOWANCE FOR DEFERRED TAXES 3,985 - - 3,985 -------- ------- --------- -------- --------- $ 18,539 $17,818 $ 18,644 $ 17,713 -124-
10-K131st Page of 168TOC1stPreviousNextBottomJust 131st
YEAR ENDED DECEMBER 26, 1993: RESERVES AND ALLOWANCES DEDUCTED FROM ASSET ACCOUNT: ACCOUNTS RECEIVABLE ALLOWANCES $ 14,450 $18,519 $ 18,415(1) $ 14,554 VALUATION ALLOWANCE FOR DEFERRED TAXES 10,980 - 6,995(2) 3,985 -------- ------- --------- -------- --------- $ 25,430 $18,519 $ 25,410 $ 18,539 YEAR ENDED DECEMBER 27, 1992: RESERVES AND ALLOWANCES DEDUCTED FROM ASSET ACCOUNT: ACCOUNTS RECEIVABLE ALLOWANCES $ 12,305 $22,093 $ 19,948(1) $ 14,450 VALUATION ALLOWANCE FOR DEFERRED TAXES - 10,980 - 10,980 -------- ------- --------- -------- --------- $ 12,305 $33,073 $ 19,948 $ 25,430 (1) Represents uncollectible accounts written-off, net of recoveries. (2) Represents net reduction in valuation allowance which is determined to be no longer required.
-125-
10-K132nd Page of 168TOC1stPreviousNextBottomJust 132nd
EXHIBIT 10 ---------- GENERAL DESCRIPTION KNIGHT-RIDDER, INC. ANNUAL INCENTIVE PLAN (DESCRIPTION) INTRODUCTION The Knight-Ridder Annual Incentive Plan (the "Plan") is intended to motivate and reward corporate executives and top management at individual operating units who contribute significantly to Knight-Ridder's success. Specific Plan objectives include: - Focus participants on achieving key annual objectives - Link rewards to results relative to goals at the corporate, business unit and individual levels -126-
10-K133rd Page of 168TOC1stPreviousNextBottomJust 133rd
- Provide participants the opportunity to earn competitive compensation commensurate with performance The Plan provides participants the opportunity to earn cash awards each year based on their individual performance and the performance of the corporation and/or the business unit in which they work. Awards are earned on a calendar year basis (the "Plan Year") and are paid in cash following the end of the Plan Year. The first year in which the Plan will be in effect will be 1994. This plan replaces the Knight-Ridder, Inc. Executive MBO Program, which was introduced in 1977 and revised in 1989. PLAN ADMINISTRATION The Plan will be administered by the Compensation Committee of the Knight- Ridder, Inc. Board of Directors (the "Committee"). The Committee has the authority to interpret the provisions of the Plan and to make any rules and regulations necessary to administer the Plan. The Committee's decision is final in all matters of judgment pertaining to the Plan, and the Committee may, without notice, amend, suspend or revoke the Plan. ELIGIBILITY Employees in the following categories are eligible to participate in the Plan: corporate officers and certain director-level corporate employees; newspaper publishers and other business unit operating heads who report directly to corporate officers top editors, general managers and all division directors; and selected other positions that can have significant impact on results. Participants will be approved each year by the Committee. PLAN OVERVIEW Bonus Amounts Payable for Meeting Goals Each plan participant will have a potential bonus award which is payable for meeting goals. The size of this potential award varies by salary range. The bonus potential for each salary range is stated as a percentage of the salary earned during the year. Therefore, the dollar amount of an individual's opportunity is computed by multiplying the applicable percentage by the salary. The potential bonus payable for meeting goals for each salary range is as follows: -127-
10-K134th Page of 168TOC1stPreviousNextBottomJust 134th
[Download Table] Salary Range Potential Award ------------- ---------------- $250,000 and above 50.0% $150,000 to $249,999 45.0% $100,000 to $149,999 40.0% $50,000 to $99,999 32.5% Up to $49,999 25.0% Types of Performance Measures and Their Weightings Each participant's bonus will be determined based on performance on two types of measures: how well the individual performed relative to his or her goals for the year ("Personal Performance"); and how well the business unit in which the individual works performed relative to financial goals for the year ("Financial Performance"). The potential award for meeting goals will be divided between the two types of measures in the following way: 35% of each participant's potential award for meeting goals will be based on Personal Performance, and 65% will be based on Financial Performance, as shown in the following table: [Download Table] Potential Award --------------------------------- Salary Range Total Personal Financial ------------ ------ -------- --------- $250,000 and above 50.0% 17.5% 32.5% $150,000 to $249,999 45.0% 15.75% 29.25% $100,000 to $149,999 40.0% 14.00% 26.00% $50,000 to $99,999 32.5% 11.375% 21.125% Up to $49,999 25.0% 8.75% 16.25% -128-
10-K135th Page of 168TOC1stPreviousNextBottomJust 135th
As a general rule, the Financial Performance measurement will be based on the organizational level at which the individual is employed: corporate performance for those at the corporate level; divisional performance for those in divisional positions; and business unit level for those in a newspaper or other business unit. However, at the discretion of the Committee, the Financial Performance measurement for selected individuals may consist of a specified mix of two or more bases (for example, part on corporate performance and part on divisional performance). PERFORMANCE MEASUREMENT Financial Performance Measures Financial performance will be evaluated relative to budgeted goals set at the beginning of the Plan Year. In most cases the financial performance measure will be operating profit. However, the plan provides the flexibility to include additional measures of financial success, such as revenue, where Knight-Ridder management and the Committee conclude this is appropriate. The financial performance measures and the goals for the year will be communicated to participants by the early part of each year. Personal Performance Measures Personal performance will be evaluated relative to individual goals established at the beginning of the Plan Year and agreed upon by the participant and the participant's manager. It is expected that individual goals will be set to be challenging. Goals ideally should not number more than six to eight. Each goal should be well-defined in terms of what is to be accomplished and how results will be assessed. Each goal will be given a weight, based on its relative importance, with the combined weightings equaling 100. At the end of the year, each participant's manager will evaluate performance on each goal relative to the objectives, determine the degree to which the goal was achieved and assign it a number of points. For example, if a goal was weighted 10 points and half of it was achieved, it would receive five points. The points received on all goals will be added to determine the total rating, up to a maximum of 100 points. -129-
10-K136th Page of 168TOC1stPreviousNextBottomJust 136th
DETERMINING AND PAYING AWARDS Each participant's award will be determined by adding together the award earned based on Financial Performance and the award earned based on Personal Performance. An award may be paid for one type of measure even if no award was earned for the other type of measure. The only constraint is that a corporate performance threshold must be achieved for any award to be payable. Normally this threshold requirement will be that corporate operating income, as reported in the Annual Report, must equal at least 80% of prior year operating income, although the Committee reserves the right to adjust the threshold. For Personal Performance, the award is determined by multiplying the percentage of the total possible 100 Personal Performance points that were earned by the individual's potential award for fully achieving all personal goals. For Financial Performance, the award is determined by actual results compared to budgeted results. Awards can vary from zero all the way up to 150% of the amount payable for meeting budget, using the following schedule: If actual results are equal to budget, 100% of the Financial Performance award will be paid. -130-
10-K137th Page of 168TOC1stPreviousNextBottomJust 137th
If actual results are at or below 90% of budgeted results, no award will be paid for Financial Performance. If actual results are above 90% of budget, but below 100% of budget, then the award will be less than the amount payable for meeting budget, with each 1% shortfall in performance versus budget resulting in a 10% reduction of the amount payable for meeting budget, as follows: [Download Table] Actual Award vs. Budget Percentage ---------- ---------- 100% 100% 99% 90% 98% 80% 97% 70% 96% 60% 95% 50% 94% 40% 93% 30% 92% 20% 91% 10% 90% 0% -131-
10-K138th Page of 168TOC1stPreviousNextBottomJust 138th
If actual results are above 100% of budget, then the award will be greater than the amount payable for meeting budget. Each 1% improvement in performance versus budget will result in an incremental award equal to 5% of the amount payable for meeting budget, up to a maximum of 150% of the financial portion of the award for performance that is at or above 110% of budget: (The portion of the award that is based on financial performance is 65% of the total potential. So, if actual performance is 110% of budget, the financial award will be 97.5% (65% x 150%) of total potential.) [Download Table] Percentage of Actual Financial Award vs. Budget (65% of total potential) ---------- ------------------------ 100% 100% 101% 105% 102% 110% 103% 115% 104% 120% 105% 125% 106% 130% 107% 135% 108% 140% 109% 145% 110% 150% > 110% 150% Results will be calculated to the nearest one-tenth of 1% of actual performance compared to budget when computing awards, and then rounded to the nearest full percentage point. Two attached exhibits illustrate the award computation process. Exhibit 1 provides two hypothetical examples, while Exhibit 2 is a worksheet participants can use to compute their own awards. -132-
10-K139th Page of 168TOC1stPreviousNextBottomJust 139th
OTHER PLAN FEATURES Award Payment Awards will be paid in cash following the end of the Plan Year and the computation of results. Required tax amounts will be withheld. Partial Year Participants and Changes in Position Individuals who are hired or promoted into positions that qualify for Plan participation by October 1 of a Plan year will be eligible for a pro rata award based on the amount of salary earned while a participant and the performance levels achieved. If a participant's responsibilities change during a year and a different part of the company's performance is used in computing Financial Awards for the two positions, then ordinarily the financial portion of the award will be determined on a pro rata basis relative to the time spent in the two positions, although exceptions may be made on a case by case basis at the discretion of the Committee. Awards based on Personal Performance during the two parts of the year will be determined on a case by case basis. Termination In the event of death, permanent disability (as defined by Knight-Ridder, Inc.'s disability plan) or retirement prior to the date of payment, a participant (or the participant's estate) will be entitled to receive a pro rata award based on the time employed during the year. In the event of resignation or termination for other reasons (other than for cause), a pro rata payment may be made at the discretion of the Committee; no award will be paid in the event of termination for cause. Payment will be made following the termination of employment based on estimated results. Employment Rights The Plan does not constitute a contract of employment, nor does participation in one Plan Year guarantee participation in another Plan Year. -133-
10-K140th Page of 168TOC1stPreviousNextBottomJust 140th
Exhibit to Knight-Ridder, Inc. Annual Incentive Plan [Download Table] ANNUAL INCENTIVE OPPORTUNITIES AS A PERCENTAGE OF SALARY SALARY RANGE MEET GOALS MAXIMUM (ROUNDED) ------------ ---------- ----------------- $250,000 and above 50% 66% $150,000 to $249,999 45% 60% $100,000 to $149,999 40% 53% $50,000 to $99,999 32.5% 43% Up to $49,999 25% 33% -134-
10-K141st Page of 168TOC1stPreviousNextBottomJust 141st
EXECUTIVE OFFICER'S CONSULTING/RETIREMENT AGREEMENT EXHIBIT 10 ---------- September 20, 1989 Mr. Alvah H. Chapman, Jr. 4255 Lake Road Miami, Florida 33137 Dear Alvah: This letter sets forth our agreement with respect to your services to Knight-Ridder following your retirement as an officer and employee of the Company on October 1st. You have agreed to continue to serve as a Director of the Company and as Chairman of its Executive Committee. I am also pleased that you have agreed to serve as a consultant to the company for the 12 months beginning October 1, 1989 and, thereafter, for such period as you, the Compensation Committee and I may agree. In consideration of your services as Chairman of the Executive Committee and as a consultant, the Company will pay you $150,000 annually. This agreement extends from October 1, 1989 through September 30, 1994*. And as customary, you will be compensated as an outside director, including meeting fees for the Board and Board Committees (including the Executive Committee of the Company). We have calculated that you will be entitled to an aggregate annual pension benefit under the Knight-Ridder Retirement and Benefit Restoration Plans of $328,670. In addition, in recognition of your contribution to the Company and your future services to it, the Company has agreed to pay you an additional retirement benefit of $100,000 per year for your life, in equal monthly installments. Although I hope to be able to take full advantage of your broad range of experience and knowledge of the Company, it is understood between us that we will make only reasonable demands upon your time and will seek to schedule our requests for your counsel so as to accommodate your schedule of other activities in retirement. -135-
10-K142nd Page of 168TOC1stPreviousNextBottomJust 142nd
The specific matters on which we will need your help necessarily will change from time to time. I anticipate that you and I will talk at least quarterly about your then current list of consultative duties. At the outset we look forward to your continued participation in (a) our Detroit JOA undertaking and I hope you will be willing to serve on the DNA Management Committee for at least a year following implementation; (b) our ongoing shareholder relations projects (with particular attention to the founding families); and (c) the Miami property development project. I know that there will be a number of other key issues where your counsel will be invaluable. Our consulting relationship will preclude you from accepting consulting assignments and from other companies and from other profit-making activities, provided your other assignments and activities do not constitute a conflict of interest with Knight-Ridder. The Company will reimburse you, in accordance with its usual policies and procedures, for your travel and other out of pocket expenses incurred in connection with your Knight-Ridder consulting activities, your attending ANPA and other industry meetings as long as you are a Knight-Ridder director, and your activities as Chairman of the FIU Foundation, Vice Chairman of The Miami Coalition, and other civic activities which are of benefit to KRI over the next several years. In accordance with our historical practice, we will provide you as a former CEO of the Company with an office and a secretary as long as you want them. I am happy we will continue to work together. If I have accurately summarized our understanding, I'd appreciate your signing and returning the enclosed copy of this letter to me for the Company's files. Sincerely yours, Knight- Ridder, Inc. By: James K. Batten ----------------- J.K. Batten President & CEO -136-
10-K143rd Page of 168TOC1stPreviousNextBottomJust 143rd
Agreed: Alvah H. Chapman Jr. -------------------- Alvah H. Chapman, Jr. (The initial agreement was for one year and was renewed annually through September 30, 1994. At that time the agreement was extended through May 31, 1995.) [Enlarge/Download Table] EXHIBIT 11 ----------- COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS, EXCEPT PER SHARE DATA) Year Ended ------------------------------------------ Dec. 25 Dec. 26 Dec. 27 1994 1993 1992 -------- -------- -------- PRIMARY ------- Average shares outstanding 53,944 54,851 54,474 Net effect of dilutive stock options- based upon the Treasury Stock method using average market price 331 481 704 -------- -------- -------- TOTAL 54,275 55,332 55,178 ======== ======== ======== Income before cumulative effect of changes in accounting principles $170,900 $148,089 $146,086 Cumulative effect of changes in accounting principles Income taxes 25,800 Postretirement benefits other than pensions (131,000) -------- -------- -------- Net Income $170,900 $148,089 $40,886 ======== ======== ======== -137-
10-K144th Page of 168TOC1stPreviousNextBottomJust 144th
Earnings per common and common equivalent share Income before cumulative effect of changes in accounting principles $3.15 $2.68 $2.65 Cumulative effect of changes in accounting principles (1.91) -------- -------- -------- Net Income $3.15 $2.68 $0.74 ======== ======== ======== FULLY DILUTED -------------- Average shares outstanding 53,944 54,851 54,474 Net effect of dilutive stock options - based upon Treasury Stock method using the higher of quarter-end or average market price 365 511 806 -------- -------- -------- TOTAL 54,309 55,362 55,280 ======== ======== ======== Income before cumulative effect of changes in accounting principles $170,900 $148,089 $146,086 Cumulative effect of changes in accounting principles Income taxes 25,800 Postretirement benefits other than pensions (131,000) -------- -------- -------- Net Income $170,900 $148,089 $40,886 ======== ======== ======== Earnings per common and common equivalent share Income before cumulative effect of changes in accounting principles $3.15 $2.67 $2.64 Cumulative effect of changes in accounting principles (1.90) -------- -------- -------- Net Income $3.15 $2.67 $0.74 ======== ======== ======== -138-
10-K145th Page of 168TOC1stPreviousNextBottomJust 145th
EXHIBIT 12 ----------
10-K146th Page of 168TOC1stPreviousNextBottomJust 146th
[Enlarge/Download Table] COMPUTATION OF EARNINGS TO FIXED CHARGES RATIO FROM CONTINUING OPERATIONS (IN THOUSANDS OF DOLLARS, EXCEPT RATIO DATA) YEAR ENDED -------------------------------------------------------------- December 25 December 26 December 27 December 29 December 30 1994 1993 1992 1991 1990 ----------- ----------- ----------- ----------- ----------- FIXED CHARGES COMPUTATION INTEREST EXPENSE: NET INTEREST EXPENSE $ 44,111 $ 44,992 $ 37,629 $ 46,701 $ 61,672 PLUS CAPITALIZED INTEREST 474 120 14,746 22,142 10,131 -------- -------- -------- -------- -------- GROSS INTEREST EXPENSE 44,585 45,112 52,375 68,843 71,803 PROPORTIONATE SHARE OF INTEREST EXPENSE OF 50% OWNED PERSONS 12,351 13,608 15,546 15,296 17,599 INTEREST COMPONENT OF RENT EXPENSE 11,118 9,888 9,826 9,698 9,939 -------- -------- -------- -------- -------- TOTAL FIXED CHARGES $ 68,054 $ 68,608 $ 77,747 $ 93,837 $ 99,341 ======== ======== ======== ======== ======== -139-
10-K147th Page of 168TOC1stPreviousNextBottomJust 147th
EARNINGS COMPUTATION --------------------- PRETAX EARNINGS $ 290,070 243,401 $ 239,715 $ 210,370 $ 245,942 ADD: FIXED CHARGES 68,054 68,608 77,747 93,837 99,341 LESS CAPITALIZED INTEREST (474) (120) (14,746) (22,142) (10,131) LESS: DISTRIBUTIONS IN EXCESS OF (LESS THAN) EARNINGS OF INVESTEES (4,287) (4,226) (1,216) (6,330) (1,000) -------- -------- -------- -------- -------- TOTAL EARNINGS AS ADJUSTED $ 353,363 307,663 $ 301,500 $ 275,735 $ 334,152 ======== ======== ======== ======== ======== RATIO OF EARNINGS TO FIXED CHARGES 5.2:1 4.5:1 3.9:1 2.9:1 3.4:1 ======== ======== ======== ======== ========
-140-
10-K148th Page of 168TOC1stPreviousNextBottomJust 148th
SUBSIDIARIES OF THE REGISTRANT Exhibit 21 State/Country of Incorporation --------------- KNIGHT-RIDDER, INC. Aberdeen News Company Delaware The Beacon Journal Publishing Company Ohio Boca Raton News, Inc. Florida Boulder Publishing, Inc. Colorado The Bradenton Herald, Inc. Florida Circom Corporation Pennsylvania Detroit Free Press, Incorporated Michigan Detroit Newspaper Agency Michigan (partnership) Drinnon, Inc. Georgia The Gables Publishing Company Florida Grand Forks Herald, Incorporated Delaware Gulf Publishing Company, Inc. Mississippi Journal of Commerce, Inc. Delaware Transport Group International, Inc. Delaware Transax Systems Company New York (partnership) KR Newsprint Company Florida Southeast Paper Manufacturing Co. Georgia (partnership) KR Video, Inc. Delaware Keynoter Publishing Company, Inc. Florida Knight News Services, Inc. Michigan Knight-Ridder Tribune Information Services District of Columbia (partnership) The Knight Publishing Co. Delaware Knight-Ridder Business Information Services, Inc. Delaware Knight-Ridder Financial, Inc. Delaware Commodity News Services (International), Inc. Delaware -141-
10-K149th Page of 168TOC1stPreviousNextBottomJust 149th
Knight-Ridder Financial Holding AEA Company, Inc. Delaware Knight-Ridder Financial AEA, Inc. Delaware Knight-Ridder Financial/JM, Inc. Delaware Knight-Ridder Financial/Japan, Inc. Delaware Knight-Ridder Financial/Iberica Spain Knight-Ridder Financial Deutschland GMBH Germany Equinet Pty, Ltd. Australia Equinet Information (NZ) Ltd. New Zealand RWE Australian Business News Pty. Limited Australia Knight-Ridder Information, Inc. California Article Express International, Inc. Delaware Dialog Information Europe, Inc. California Dialog Information Services Europe, Ltd. England Infomart/DIALOG Ltd. Canada Knight-Ridder Compania de Servicios, S.A. de C.V. Mexico Knight-Ridder Informacion, S.A. de C.V. Mexico Knight-Ridder Information, Ltd. England Knight-Ridder Information SARL France Knight-Ridder Information GMBH Germany Knight-Ridder Information AB Sweden Knight-Ridder Information A.G. Switzerland Knight-Ridder Information A/S Denmark Technimetrics, Inc. Delaware Technimetrics England Knight-Ridder Cablevision, Inc. Florida KRC SNJ, Inc. Delaware KRC-NJFT, Inc. Delaware TKR Cable Company Colorado (partnership) TKR Cable Partners Colorado (partnership) -142-
10-K150th Page of 168TOC1stPreviousNextBottomJust 150th
Knight-Ridder Investment Company Delaware Seattle Times Company Delaware Lexington Herald-Leader Co. Kentucky MHPC International, Inc. Florida The Macon Telegraph Publishing Company Georgia The Miami Herald Publishing Company - Newberry Publishing Company, Inc. South Carolina News Publishing Company Indiana Fort Wayne Newspapers, Inc. Indiana Fort Wayne Newspapers Agency Indiana (partnership) Nittany Printing and Publishing Company Pennsylvania Northwest Publications, Inc. Delaware Duluth News-Tribune - Saint Paul Pioneer Press - The Observer Transportation Company North Carolina Philadelphia Newspapers, Inc. Pennsylvania Post-Tribune Publishing, Inc. Indiana PressLink, Inc. Delaware The R.W. Page Corporation Georgia Ridder Publications, Inc. Delaware KR Land Holding Corporation Delaware San Jose Mercury News, Inc. California Silicon Valley D.A.T.A., Inc. California The State-Record Company, Inc. South Carolina Sun Publishing Company, Inc. South Carolina Tallahassee Democrat, Inc. Florida Tribune Newsprint Company Utah Ponderay Newsprint Company Washington (partnership) Twin Cities Newspaper Services, Inc. Minnesota Twin Coast Newspapers, Inc. New York Long Beach Press-Telegram - P.T. Sales and Marketing, Inc. California Wichita Eagle and Beacon Publishing Company, Inc. Kansas Note: "-" indicates that the subsidiary listed is a division, not a legal entity. -143-
10-K151st Page of 168TOC1stPreviousNextBottomJust 151st
Exhibit 23 ---------- CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We consent to the incorporation by reference in Registration Statement No. 33-11021 on Form S-3 dated December 22, 1986, in Registration Statement No. 33-28010 on Form S-3 dated April 7, 1989, in Registration Statement No. 33-31747 on Form S-8 dated October 30, 1989, in Registration Statement No. 33-69206 on Form S-8 dated May 18, 1993, and in the related Prospectuses, of our report dated January 31, 1995, with respect to the consolidated financial statements and schedule of Knight-Ridder, Inc. incorporated by reference and included in this Annual Report (Form 10-K) for the year ended December 25, 1994. Ernst & Young LLP Miami, Florida March 23, 1995 -144-
10-K152nd Page of 168TOC1stPreviousNextBottomJust 152nd
Exhibit 24 ---------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Gonzalo F. Valdes-Fauli Date: March 24, 1995 ----------------------- ---------------------- Gonzalo F. Valdes-Fauli -145-
10-K153rd Page of 168TOC1stPreviousNextBottomJust 153rd
Exhibit 24 ---------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Barbara Barnes Hauptfuhrer Date: March 24, 1995 ---------------------------- --------------------- Barbara Barnes Hauptfuhrer -146-
10-K154th Page of 168TOC1stPreviousNextBottomJust 154th
Exhibit 24 ---------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Alvah H. Chapman, Jr. Date: March 24, 1995 ---------------------- -------------------- Alvah H. Chapman, Jr. -147-
10-K155th Page of 168TOC1stPreviousNextBottomJust 155th
Exhibit 24 ---------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Peter C. Goldmark, Jr. Date: March 24, 1995 --------------------- -------------------- Peter C. Goldmark, Jr. -148-
10-K156th Page of 168TOC1stPreviousNextBottomJust 156th
Exhibit 24 ---------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. William S. Lee Date: March 24, 1995 -------------- -------------------- William S. Lee -149-
10-K157th Page of 168TOC1stPreviousNextBottomJust 157th
Exhibit 24 ---------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. John L. Weinberg Date: March 24, 1995 ----------------- --------------------- John L. Weinberg -150-
10-K158th Page of 168TOC1stPreviousNextBottomJust 158th
Exhibit 24 ---------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Ben R. Morris Date: March 24, 1995 --------------- --------------------- Ben R. Morris -151-
10-K159th Page of 168TOC1stPreviousNextBottomJust 159th
Exhibit 24 ---------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Eric Ridder Date: March 24, 1995 ------------- ------------------- Eric Ridder -152-
10-K160th Page of 168TOC1stPreviousNextBottomJust 160th
Exhibit 24 ---------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. James K. Batten Date: March 24, 1995 ----------------- -------------------- James K. Batten -153-
10-K161st Page of 168TOC1stPreviousNextBottomJust 161st
Exhibit 24 ---------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Joan Ridder Challinor Date: March 24, 1995 ---------------------- -------------------- Joan Ridder Challinor -154-
10-K162nd Page of 168TOC1stPreviousNextBottomJust 162nd
Exhibit 24 ---------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Jesse Hill, Jr. Date: March 24, 1995 --------------- -------------------- Jesse Hill, Jr. -155-
10-K163rd Page of 168TOC1stPreviousNextBottomJust 163rd
Exhibit 24 ---------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. C. Peter McColough Date: March 24, 1995 ------------------ ---------------------- C. Peter McColough -156-
10-K164th Page of 168TOC1stPreviousNextBottomJust 164th
Exhibit 24 ---------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Thomas L. Phillips Date: March 24, 1995 ------------------- --------------------- Thomas L. Phillips -157-
10-K165th Page of 168TOC1stPreviousNextBottomJust 165th
Exhibit 24 ---------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. P. Anthony Ridder Date: March 24, 1995 ------------------- --------------------- P. Anthony Ridder -158-
10-K166th Page of 168TOC1stPreviousNextBottomJust 166th
Exhibit 24 ----------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Barbara Knight Toomey Date: March 24, 1995 ---------------------- -------------------- Barbara Knight Toomey -159-
10-K167th Page of 168TOC1stPreviousNextBottomJust 167th
Exhibit 24 ---------- POWER OF ATTORNEY The undersigned member of the Board of Directors of Knight-Ridder, Inc. hereby constitutes and appoints John C. Fontaine, Ross Jones, and Gary R. Effren and each of them severally, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all Reports on Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Randall L. Tobias Date: March 24, 1995 ------------------ --------------------- Randall L. Tobias -160-
10-KLast Page of 168TOC1stPreviousNextBottomJust 168th
EXHIBIT 27 ----------

Dates Referenced Herein   and   Documents Incorporated by Reference

Referenced-On Page
This ‘10-K’ Filing    Date First  Last      Other Filings
4/15/0991
9/1/0191
9/1/9891
4/9/9891DEFA14A
7/10/96998-A12B,  8-K
4/15/9691
5/31/95143
5/5/952
Filed on:3/24/952167DEF 14A
3/23/95151
2/26/952
1/31/95112151
1/30/9541
1/20/9591
12/26/9424
For Period End:12/25/941151
9/30/9415143
8/30/9436
6/28/9443
6/26/94114310-Q
3/31/941824
3/27/942110-Q
3/23/9412210-K
1/15/9491
1/1/948122
12/31/9336
12/27/9324
12/26/938013110-K
9/30/9315
7/19/93122
6/26/9311
5/18/93151
3/31/931824
3/27/9321
1/1/9356
12/27/9280131
9/30/9215
9/15/9240110
6/26/9211
3/31/921824
3/27/9221
 List all Filings 
Top
Filing Submission 0000205520-95-000007   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Copyright © 2018 Fran Finnegan & Company.  All Rights Reserved.
AboutPrivacyRedactionsHelp — Sat., Nov. 17, 2:27:53.1am ET