<PAGE>1
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR
--- 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period September 25, 1994
TRANSITION REPORT PURSUANT TO SECTION 13 OR
--- 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------- --------
Commission File Number: 1-10333
CENTRAL NEWSPAPERS, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-0220660
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
135 North Pennsylvania Street, Suite 1200, Indianapolis, Indiana 46204
(Address of principal executive office)
(317) 231-9200
(Registrant's telephone number)
Indicate by check mark whether the registrant has (1) 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
--- ---
The number of shares of each class of common stock outstanding as of
September 25, 1994:
CLASS A COMMON STOCK 23,469,200
CLASS B COMMON STOCK 31,578,000
<PAGE>2
Central Newspapers, Inc.
Index to Form 10-Q
Part I - FINANCIAL INFORMATION Page
Item 1 - Financial Statements:
Consolidated Statement of Financial Position 3-4
Consolidated Statement of Income 5
Consolidated Statement of Shareholders' Equity 6
Consolidated Statement of Cash Flows 7
Notes to Consolidated Financial Statements 8-9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
Part II - OTHER INFORMATION 13-15
<PAGE>3
PART I.
Item 1. Financial Statements
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Financial Position
============================================================================
Sept. 25, Dec. 26,
ASSETS 1994 1993
(In thousands) (Unaudited)
- - ----------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $12,869 $22,143
U. S. Government obligations 110,663 102,010
Accounts receivable (net of allowances of
$916 and $1,142) 45,345 46,348
Inventories 8,852 10,116
Deferred income tax benefits 6,522 6,651
Other current assets 4,194 3,229
- - ----------------------------------------------------------------------------
Total current assets 188,445 190,497
- - ----------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT:
Land 12,525 11,656
Buildings and improvements 98,397 98,248
Leasehold improvements 4,142 4,141
Machinery and equipment 304,576 297,358
Construction in progress 3,562 875
- - ----------------------------------------------------------------------------
423,202 412,278
Less accumulated depreciation 177,385 164,942
- - ----------------------------------------------------------------------------
245,817 247,336
- - ----------------------------------------------------------------------------
OTHER ASSETS:
Land held for development 4,139 4,139
Goodwill 29,289 9,807
Investment in Affiliate 2,668 3,855
Other 8,585 9,054
- - ----------------------------------------------------------------------------
44,681 26,855
- - ----------------------------------------------------------------------------
TOTAL ASSETS $478,943 $464,688
============================================================================
See accompanying notes to consolidated financial statements.
<PAGE>4
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Financial Position
============================================================================
Sept. 25, Dec. 26,
LIABILITIES AND SHAREHOLDERS' EQUITY 1994 1993
(In thousands, except share data) (Unaudited)
- - ----------------------------------------------------------------------------
CURRENT LIABILITIES:
Accounts payable $10,340 $12,675
Accrued compensation 16,267 15,166
Dividends payable 3,728 4,547
Accrued expenses and other liabilities 13,514 15,434
Federal and state income taxes 0 2,406
Deferred revenue 12,973 12,270
- - ----------------------------------------------------------------------------
Total current liabilities 56,822 62,498
- - ----------------------------------------------------------------------------
DEFERRED INCOME TAXES 22,664 17,214
- - ----------------------------------------------------------------------------
LONG-TERM DEBT (4 1/2% debentures due
December 1, 1998) 2,678 2,678
- - ----------------------------------------------------------------------------
POSTRETIREMENT BENEFIT OBLIGATION 75,618 72,937
- - ----------------------------------------------------------------------------
MINORITY INTEREST IN SUBSIDIARY 7,641 18,668
- - ----------------------------------------------------------------------------
SHAREHOLDERS' EQUITY:
Preferred stock--issuable in series:
Authorized--25,000,000 shares
Issued--none
Class A common stock--without par value:
Authorized--75,000,000 shares
Issued--23,469,200 and 23,431,450 shares 17,938 17,137
Class B common stock--without par value:
Authorized--50,000,000 shares
Issued--31,578,000 shares 63 63
Retained earnings 294,864 273,493
Unrealized gain on securities available-for-sale 655
- - ----------------------------------------------------------------------------
313,520 290,693
- - ----------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $478,943 $464,688
============================================================================
See accompanying notes to consolidated financial statements.
<PAGE>5
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Income
(UNAUDITED)
================================================================================
(In thousands, except per share data) 13 Weeks Ended 39 Weeks Ended
Sept. 25, Sept. 26, Sept. 25, Sept. 26,
1994 1993 1994 1993
- - --------------------------------------------------------------------------------
OPERATING REVENUES:
Advertising $94,947 $81,452 $285,168 $249,061
Circulation 29,285 28,197 90,822 87,942
Other 618 589 1,650 1,496
- - --------------------------------------------------------------------------------
124,850 110,238 377,640 338,499
- - --------------------------------------------------------------------------------
OPERATING EXPENSES:
Operating costs 53,823 48,325 160,671 146,097
Distribution and general 47,616 42,790 138,326 129,902
Depreciation 6,639 6,354 19,959 19,258
Work force reduction cost 132 580
- - --------------------------------------------------------------------------------
108,078 97,469 319,088 295,837
- - --------------------------------------------------------------------------------
OPERATING INCOME 16,772 12,769 58,552 42,662
OTHER INCOME (principally interest) 1,578 894 4,278 2,639
OTHER EXPENSE (275) (83) (695) (711)
- - --------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 18,075 13,580 62,135 44,590
PROVISION FOR INCOME TAXES 7,347 5,754 25,375 18,256
- - --------------------------------------------------------------------------------
INCOME BEFORE MINORITY INTEREST AND
EQUITY IN AFFILIATE 10,728 7,826 36,760 26,334
MINORITY INTEREST IN SUBSIDIARY (668) (758) (2,575) (2,201)
EQUITY IN AFFILIATE, NET OF TAX BENEFITS (753) (1,153) (2,697) (3,298)
- - --------------------------------------------------------------------------------
NET INCOME $9,307 $5,915 $31,488 $20,835
================================================================================
NET INCOME PER COMMON SHARE $.35 $.22 $1.18 $.78
================================================================================
DIVIDENDS DECLARED PER COMMON SHARE $.14 $.12 $.38 $.34
AVERAGE COMMON SHARES OUTSTANDING 26,625 26,579 26,618 26,566
See accompanying notes to consolidated financial statements.
<PAGE>6
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Shareholders' Equity
(UNAUDITED)
================================================================================
(In thousands) Unrealized
Gain on
Class A Class B Securities
Common Common Retained Available-
Stock Stock Earnings for-Sale
- - --------------------------------------------------------------------------------
BALANCE AT DECEMBER 28, 1992 $16,340 $65 $253,592
Net income (39 weeks) 20,835
Dividends declared:
Class A common stock (7,945)
Class B common stock (1,091)
Common stock conversion 2 (2)
Exercise of stock options 722
- - --------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 26, 1993 17,064 63 265,391
Net income (13 weeks) 11,293
Dividends declared:
Class A common stock (2,812)
Class B common stock (379)
Exercise of stock options 73
- - --------------------------------------------------------------------------------
BALANCE AT DECEMBER 26, 1993 17,137 63 273,493
Adoption of SFAS No. 115,
net of deferred income
taxes and minority interest $649
Net income (39 weeks) 31,488
Dividends declared:
Class A common stock (8,917)
Class B common stock (1,200)
Exercise of stock options 801
Change in unrealized gain on
securities available-for-sale 6
- - -------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 25, 1994 $17,938 $63 $294,864 $655
================================================================================
See accompanying notes to consolidated financial statements.
<PAGE>7
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Cash Flows
(UNAUDITED)
============================================================================
(In thousands) 39 Weeks Ended
Sept. 25, Sept. 26,
1994 1993
- - ----------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income $31,488 $20,835
Items which did not use (provide) cash:
Depreciation and amortization 20,356 19,299
Postretirement and pension benefits 4,751 4,331
Gain on disposition of assets (159) (176)
Minority interest in earnings of subsidiary 2,575 2,201
Equity in Affiliate 2,697 3,298
Deferred income taxes 1,082 2,802
Changes in assets and liabilities-net 450 892
- - ----------------------------------------------------------------------------
Net cash provided by operating activities 63,240 53,482
- - ----------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of property, plant and equipment-net (13,748) (14,006)
Purchase of U. S. Government obligations (194,678) (136,662)
Proceeds from U. S. Government obligations 186,728 109,064
Purchase of minority interest in subsidiary (36,205)
Investment in Affiliate (2,970) (2,903)
Purchase of intangibles and other (774) (5,330)
- - ----------------------------------------------------------------------------
Net cash used by investing activities (61,647) (49,837)
- - ----------------------------------------------------------------------------
FINANCING ACTIVITIES:
Cash dividends paid (9,580) (8,765)
Dividends paid to minority interest (1,937) (1,991)
Proceeds from exercise of stock options 650 621
- - ----------------------------------------------------------------------------
Net cash used by financing activities (10,867) (10,135)
- - ----------------------------------------------------------------------------
DECREASE IN CASH AND CASH EQUIVALENTS (9,274) (6,490)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 22,143 17,221
- - ----------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $12,869 $10,731
============================================================================
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid during the period $24,905 $14,609
Interest paid during the period 161 175
See accompanying notes to consolidated financial statements.
<PAGE>8
CENTRAL NEWSPAPERS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
1. The accompanying unaudited consolidated financial statements do not include
all of the information and disclosures which are normally included in Form 10-K
and annual report to shareholders. These financial statements should be read
in conjunction with the Company's audited consolidated financial statements and
related notes for the year ended December 26, 1993. The accompanying
consolidated financial statements have been prepared in accordance with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The consolidated
financial position at December 26, 1993 has been derived from audited financial
statements. In the opinion of the Company's management, the unaudited
consolidated financial statements reflect all adjustments which are necessary
to present fairly the Company's financial position, results of operations and
cash flows for the interim periods presented. All adjustments are of a normal
recurring nature. Such statements are not necessarily indicative of the
results to be expected for the full year. Certain 1993 amounts have been
reclassified to conform with the 1994 presentation.
2. The Company's fiscal year ends on the last Sunday of the calendar year.
The years ending December 25, 1994 and December 26, 1993 each comprise 52
weeks.
3. The income per common share is computed based on the weighted average
number of common shares outstanding. The Class B common shareholders have the
right to convert their shares into shares of Class A common stock at the ratio
of ten shares of Class B common stock for one share of Class A common stock.
The Class B common stock is included in the computation as if converted into
Class A common stock.
4. During 1994 and 1993, the Company reduced its work force in response to the
advertising environment and technological changes. Certain employees were
offered retirement benefits through a non-qualified supplemental retirement
plan. As of September 25, 1994, work force reduction costs were $132,000. As
of September 26, 1993, work force reduction costs were $580,000.
5. The Company, through its subsidiaries, has a 13.5% partnership interest in
Ponderay Newsprint Company (Ponderay), which was formed to own and operate a
newsprint mill in Washington. The Company's investment in Ponderay at
September 25, 1994 and September 26, 1993 was $31.3 million and $26.5 million.
The Company has committed to purchase for use in Phoenix the lesser of 13.5% of
annual newsprint production or 28,400 metric tons on a "take if tendered" basis
until the partnership debt is repaid. During the 39 weeks ended September 25,
1994 and September 26, 1993 the Company purchased $9.8 million and $10.3
million of newsprint from Ponderay. For the nine months ended September 30,
1994, Ponderay's net revenue and net losses were $72.3 million and $30.8
million, respectively; compared to $69.4 million and $34.5 million during the
first nine months of 1993.
6. The Company's Stock Option Plan has 323,750 options exercisable as of
September 25, 1994. During the fiscal nine months ended September 25, 1994,
options for 37,750 shares of Class A common stock were exercised.
7. On January 21, 1993 the Company completed the purchase of two daily
newspapers, one weekly newspaper and twelve controlled circulation weekly
newspapers that serve the fastest growing area of metropolitan Indianapolis.
The operating results of this acquisition are included in the financial
statements as of January 1, 1993.
<PAGE>9
8. During 1993 the Company announced the construction of a new downtown
Phoenix office building. Total costs of the building and related expenditures
are expected to be $32 million with completion anticipated in 1996. Phoenix
Newspapers, Inc. will install a new computer system with an estimated maximum
cost of $20 million. The anticipated completion date is mid-1997. Formal
commitments totaling $28.7 million have been entered into related to these and
other capital projects. Expenditures on these commitments were $3.5 million at
September 25, 1994.
The Board of Directors also has approved the construction of a production
facility in Indianapolis at an estimated cost of $20 million with completion
expected during the third quarter of 1995. During October 1994, expenditures
of $2.1 million were made on this project. No other significant formal
commitments have been made on this project.
9. Effective December 27, 1993, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" (SFAS No. 115). SFAS No. 115 requires that available-for-
sale debt securities and equity securities be reported at fair value. As of
the beginning of the current year and September 25, 1994, all investments in
equity and U.S. Government obligations have been classified as available-for-
sale securities and, accordingly, the net unrealized gain has been reflected as
a change in shareholders' equity net of deferred income taxes and minority
interest.
Debt and equity securities at September 25, 1994 (in thousands):
Gross
Carrying Unrealized Fair
Value Gain (Loss) Value
Available-for-sale securities:
Equity securities $131 $1,801 $1,932
U.S. Government obligations
due within one year $110,862 ($199) $110,663
10. On June 24, 1994, the Company announced an offer to purchase all of the
Class A common stock (shares) of Indianapolis Newspapers, Inc. not already
owned for $10,000 in cash per share. The Company purchased 3,591 shares on
September 12, 1994 which increased the Company's ownership from 71.2% to 89.9%.
INI is now considered a part of the Company's "consolidated group" for federal
tax purposes.
The total acquisition cost of $36.2 million, including legal, accounting and
consulting fees was accounted for using the purchase method of accounting. The
fair value of assets acquired was $22.9 million, including $19.7 million of
goodwill. The transaction resulted in a reduction of the minority interest of
$13.4 million. The share purchases are not expected to significantly affect
reported net earnings for the 1994 fiscal year.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
The Company's business is to a certain extent seasonal with peak revenues and
profits generally occurring in the second and fourth quarters. On January 21,
<PAGE>10
1993, the Company completed its acquisition of two daily newspapers, one weekly
newspaper and twelve controlled circulation weekly newspapers that serve the
fastest growing area of metropolitan Indianapolis. These newspapers along with
the other smaller community newspapers constituted approximately 4% of
operating revenues during 1993 and it is anticipated to be the same for 1994.
On September 12, 1994, the Company completed the purchase of 3,591 shares of
the Class A common stock of Indianapolis Newspapers, Inc. (INI) for $10,000
cash per share. The transaction increased the Company's ownership in INI to
89.9% from 71.2%. The increase in ownership will permit INI to be included in
the consolidated group for income tax reporting. The Company does not
anticipate the acquisition of shares will have a significant impact on reported
earnings per share for the current fiscal year.
Phoenix Newspapers, Inc. has announced a voluntary early-out program for full-
time nonunion employees age 50 and over with at least five years of service.
The program is being made available due to ongoing projects that will result in
the consolidation of selected job functions. It is anticipated a fourth
quarter charge will be recorded in conjunction with this program. The cost of
these staff reductions will depend on the number of employees who accept the
offer by the December 8, 1994 closing date.
Results of Operations - Fiscal Third Quarter Comparisons
Operating revenues for the quarter increased $14.6 million, or 13.3%, which
consisted of an increase in advertising revenue of $13.5 million, or 16.6%, and
an increase in circulation revenue of $1.1 million, or 3.9%.
Advertising full run-of-press (ROP) linage was up 14.5% for the quarter.
Retail linage was up 11.8%, national linage was up 14.8% and classified linage
increased 17.1%. The increase in ROP linage reflects improved economic
conditions in our markets. The volume of preprinted inserts, which includes
local and national advertising supplements inserted into the newspapers,
increased 9.9%.
Advertising revenue at Phoenix increased 15.5% while full run linage was up
14.1%. At Indianapolis advertising revenue was up 19.9% while full run linage
was up 15.1%. Both newspapers increased advertising rates during the first
quarter of 1994.
Circulation revenue increased 5.9% at Phoenix. Circulation of the Phoenix
morning newspaper was up 4.4%, evening down 7.7% and Sunday circulation
increased 2.7%. The morning single copy price was increased during January
1993 by 42.8% to $.50. Circulation revenue decreased .3% at Indianapolis.
Circulation of the Indianapolis morning newspaper was flat, evening down 6.3%
and Sunday circulation was down 1.2%. The Sunday delivered price was increased
during May 1993 by 20% to $1.50. Generally a rate increase will cause a
temporary decline in circulation, however, the evening newspapers have
experienced an ongoing decline in their circulation.
Operating expenses of $108.1 million were up 10.9% for the period.
Compensation expense, which includes fringe benefits, was up 8.2% for the
period. The increase in compensation expense reflects higher payroll costs
related to the zoned and total market advertising program in Indianapolis that
began during August 1993 and payroll expense related to production volume
increases in Phoenix. Changes to the retirement plans that were effective
January 1, 1994 also increased compensation costs. These changes contributed
to an increase of 14% in fringe benefits costs. Newsprint expense increased
14.9%, reflecting a 9.7% increase in consumption and higher newsprint prices.
<PAGE>11
It is anticipated suppliers will increase newsprint prices during the latter
part of the year. Depreciation expense of $6.6 million increased 4.5%. The
Company did not incur any work force reduction costs during the current
quarter. Other operating, distribution and general expenses were up 15.4%
reflecting costs associated with production and delivery of the zoned
advertising products and increased promotional expenses.
Operating income increased $4 million, or 31.4%. Other income was up $684,000,
or 76.5%, due to higher earnings on cash investments. Income before provision
for income taxes was up $4.5 million, or 33.1%. The provision for income taxes
was up $1.6 million, or 27.7%, which reflects higher income for the period and
a 1% increase in the federal income tax rate that became effective during 1993.
The Company recorded a cumulative tax rate adjustment during the third quarter
of 1993.
Minority interest in subsidiary decreased primarily from the increase in the
Company's ownership of Indianapolis Newspapers, Inc. to 89.9% on September 12,
1994. The loss from Equity in Affiliate (Ponderay Newsprint Company), net of
tax benefits, decreased $400,000 in the current quarter and reflects a smaller
loss by Ponderay.
Net income for the quarter increased $3.4 million, or 57.3%, compared to the
same period the prior year. Earnings per share for the quarter were $.35 for
1994, an increase of 59.1%, from the $.22 per share the prior year quarter.
Results of Operations - Fiscal Nine Months Comparison
Operating revenues for the period increased $39.1 million, or 11.6%, which
consisted of an increase in advertising revenue of $36.1 million or 14.5%, and
an increase in circulation revenue of $2.9 million, or 3.3%.
Advertising full run-of-press (ROP) linage was up 12% for the period. Retail
linage was up 6.7%, national linage was up 11.1% and classified linage was up
17.8%. The volume of preprinted inserts, which includes local and national
advertising supplements inserted into the newspapers, increased 21.4%.
Advertising revenue at Phoenix increased 14% while full run linage was up
13.2%. At Indianapolis advertising revenue was up 16.7% while full run linage
increased 10.2%. Both newspapers increased advertising rates during the first
quarter of each year.
The increase in circulation revenue is primarily attributed to rate increases
and gains in circulation. Circulation revenue increased 3.8% at Phoenix. The
morning paper single copy price was raised by $.15, or 42.8%, to $.50 on
January 4, 1993. Average circulation for the Phoenix morning newspaper was up
3.6%, evening circulation was down 3% and Sunday circulation increased 3%.
Circulation revenue increased 2% at Indianapolis. The delivered price of the
Sunday newspaper was increased by $.25, or 20%, to $1.50 on May 2, 1993.
Average circulation for the Indianapolis morning newspaper was down .6%,
evening circulation was down 6.9% and Sunday circulation was down 1.7%.
Operating expenses of $319.1 million were up 7.9% for the period. Compensation
expense, which includes fringe benefits, was up 7.7% for the period. The
increase in compensation expense reflects higher payroll costs related to the
zoned and total market advertising program in Indianapolis that began during
August 1993 and payroll expense related to production volume increases in
Phoenix. Changes to the retirement plans that were effective January 1, 1994
also increased compensation costs. These changes contributed to an increase of
11.9% in fringe benefit costs. Newsprint expense increased 7.1%, reflecting a
<PAGE>12
9.5% increase in consumption. Depreciation expense of $20 million increased
3.6%. Work force reduction costs in the current period were $132,000 compared
to $580,000 last year which were both related to staff reductions made in
Indianapolis. Other operating, distribution and general expenses were up 10.3%
reflecting costs associated with production and delivery of the zoned
advertising products and advertising/circulation promotional expenses. General
expenses for 1994 include a decrease in property tax expense of $951,000
resulting from a property tax refund during the first quarter of 1994.
Operating income increased $15.9 million, or 37.3%. Other income was up
$1.6 million, or 62.1%. Income before provision for income taxes was up $17.5
million, or 39.4%. The provision for income taxes was up $7.1 million, or 39%,
which reflects higher income for the period and an increase to 35%, from 34%,
in the statutory federal corporate income tax rate. The Company recorded a
cumulative tax rate adjustment during the third quarter of 1993.
Minority interest in subsidiary increased due to higher earnings of
Indianapolis Newspapers, Inc. (INI), a majority owned subsidiary. On September
12, 1994, the Company increased its ownership in INI to 89.9% from 71.2%.
Net income for the period was $31.5 million compared to $20.8 million last
year, an increase of 51.1%. Earnings per share for the period were $1.18 for
1994, an increase of 51.3%, from the $.78 per share in the prior year period.
Liquidity and Capital Resources
Net cash provided by operating activities of $63.2 million was used primarily
for the purchase of property and equipment, acquisition of minority interest,
investment in Affiliate, the payment of dividends and purchases of U.S.
Government obligations. At the end of the period, the Company's cash and
investments in U.S. Government obligations totaled $123.5 million, down
$600,000 from the beginning of the year. Working capital at September 25, 1994
was $131.6 million, up $3.6 million from the beginning of the year.
Capital expenditures through September 25, 1994 were $13.7 million. Capital
expenditures for the year are expected to approximate $25 million. During 1993
the Company announced the construction of a new downtown Phoenix office
building. Total costs of the building and related expenditures are expected to
be $32 million with completion anticipated in 1996. Phoenix Newspapers, Inc.
will install a new computer system with an estimated maximum cost of $20
million with completion expected in mid-1997. Formal commitments totaling
$28.7 million have been entered into related to these and other capital
projects. Expenditures on these commitments were $3.5 million at September 25,
1994. The Company plans to build a production facility in Indianapolis at an
estimated cost of $20 million with completion during the third quarter of 1995.
No significant formal commitments have been made on this project. The Company
currently does not anticipate borrowing any funds for these capital projects.
The Company invested $3 million in Ponderay (Affiliate) during the current year
and expects to contribute additional funds to help finance losses for several
years. The debt guarantees related to Ponderay are discussed in Notes to
Consolidated Financial Statements in the 1993 Annual Report.
Quarterly dividends of $.14 per share on Class A common stock and $.014 per
share on Class B common stock were declared during the quarter which reflects
an increase of 16.7% in the quarterly dividend rates. The Company expects cash
generated from operations and cash reserves, in conjunction with credit
resources, will be adequate to satisfy its liquidity needs.
<PAGE>13
Part II
CENTRAL NEWSPAPERS, INC.
Item 1. Legal Proceedings--None
Item 2. Changes in Securities--None
Item 3. Default Upon Senior Securities--None
Item 4. Submission of Matters to a Vote of Security Holders--None
Item 5. Other Information--None
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 -- Financial Data Schedule
Exhibit 99 - Independent Accountant's Report
No reports on Form 8-K were filed during the quarter.
<PAGE>14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
October 28, 1994 CENTRAL NEWSPAPERS, INC.
By: /s/ Frank E. Russell
--------------------------
Frank E. Russell
President and
Chief Executive Officer
By: /s/ Wayne D. Wallace
--------------------------
Wayne D. Wallace
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains unaudited summary financial information extracted from
the consolidated statement of financial position of Central Newspapers, Inc. as
of September 25, 1994 and the consolidated statements of income, shareholders'
equity and cash flows for the fiscal nine-month period ended September 25, 1994
and is qualified in its entirety by reference to such statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-25-1994
<PERIOD-END> SEP-25-1994
<CASH> 12869
<SECURITIES> 110663
<RECEIVABLES> 46261
<ALLOWANCES> 916
<INVENTORY> 8852
<CURRENT-ASSETS> 188445
<PP&E> 423202
<DEPRECIATION> 177385
<TOTAL-ASSETS> 478943
<CURRENT-LIABILITIES> 56822
<BONDS> 2678
<COMMON> 18001
0
0
<OTHER-SE> 295519
<TOTAL-LIABILITY-AND-EQUITY> 478943
<SALES> 377640
<TOTAL-REVENUES> 377640
<CGS> 0
<TOTAL-COSTS> 319088
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 161
<INCOME-PRETAX> 62135
<INCOME-TAX> 25375
<INCOME-CONTINUING> 31488
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31488
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 0
</TABLE>
<PAGE>15
INDEPENDENT ACCOUNTANT'S REPORT
To the Board of Directors
Central Newspapers, Inc.
We have reviewed the consolidated statement of financial position of Central
Newspapers, Inc. as of September 25, 1994, and the consolidated statements of
income, shareholders' equity and cash flows for the fiscal three-month and
fiscal nine-month periods ended September 25, 1994 and September 26, 1993.
These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of financial position as of December 26,
1993, and the related consolidated statements of income, shareholders' equity
and cash flows for the year then ended (not presented herein); and in our
report dated February 18, 1994 we expressed an unqualified opinion on those
consolidated financial statements.
As discussed in Note 9 to the consolidated financial statements, the Company
adopted, effective at the beginning of 1994, Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (SFAS No. 115).
/s/ Geo. S. Olive & Co. LLC
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Geo. S. Olive & Co. LLC
Indianapolis, Indiana
October 20, 1994
