<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 June 26, 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
(State or other jurisdiction of
incorporation or organization)
35-0220660
(IRS Employer 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
June 26, 1994:
CLASS A COMMON STOCK 23,465,200
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
============================================================================
June 26, Dec. 26,
ASSETS 1994 1993
(In thousands) (Unaudited)
- - ----------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $17,323 $22,143
U. S. Government obligations 131,390 102,010
Accounts receivable--net 44,561 46,348
Inventories 7,557 10,116
Deferred income tax benefits 6,718 6,651
Other current assets 3,624 3,229
- - ----------------------------------------------------------------------------
Total current assets 211,173 190,497
- - ----------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT:
Land 11,806 11,656
Buildings and improvements 98,332 98,248
Leasehold improvements 4,145 4,141
Machinery and equipment 297,226 297,358
Construction in progress 2,293 875
- - ----------------------------------------------------------------------------
413,802 412,278
Less accumulated depreciation 171,465 164,942
- - ----------------------------------------------------------------------------
242,337 247,336
- - ----------------------------------------------------------------------------
OTHER ASSETS:
Land held for development 4,139 4,139
Goodwill 9,699 9,807
Investment in Affiliate 2,620 3,855
Other 8,865 9,054
- - ----------------------------------------------------------------------------
25,323 26,855
- - ----------------------------------------------------------------------------
TOTAL ASSETS $478,833 $464,688
============================================================================
See accompanying notes to consolidated financial statements.
<PAGE>4
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Financial Position
============================================================================
June 26, Dec. 26,
LIABILITIES AND SHAREHOLDERS' EQUITY 1994 1993
(In thousands, except share data) (Unaudited)
- - ----------------------------------------------------------------------------
CURRENT LIABILITIES:
Accounts payable $7,515 $12,675
Accrued compensation 15,505 15,166
Dividends payable 3,194 4,547
Accrued expenses and other liabilities 12,288 15,434
Federal and state income taxes 1,363 2,406
Deferred revenue 12,624 12,270
- - ----------------------------------------------------------------------------
Total current liabilities 52,489 62,498
- - ----------------------------------------------------------------------------
DEFERRED INCOME TAXES 20,564 17,214
- - ----------------------------------------------------------------------------
LONG-TERM DEBT (4 1/2% debentures due
December 1, 1998) 2,678 2,678
- - ----------------------------------------------------------------------------
POSTRETIREMENT BENEFIT OBLIGATION 74,875 72,937
- - ----------------------------------------------------------------------------
MINORITY INTEREST IN SUBSIDIARY 20,443 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--23,465,200 and 23,431,450 shares 17,852 17,137
Class B common stock--without par value:
Authorized--50,000,000 shares
Issued--31,578,000 shares 63 63
Retained earnings 289,286 273,493
Unrealized gain on securities available-for-sale 583
- - ----------------------------------------------------------------------------
307,784 290,693
- - ----------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $478,833 $464,688
============================================================================
See accompanying notes to consolidated financial statements.
<PAGE>5
<TABLE>
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Income
(UNAUDITED)
<CAPTION>
===============================================================================
(In thousands, except 13 Weeks Ended 26 Weeks Ended
per share data) June 26, June 27, June 26, June 27,
1994 1993 1994 1993
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Advertising $98,330 $87,127 $190,221 $167,609
Circulation 30,385 29,407 61,537 59,745
Other 547 409 1,032 907
- - -------------------------------------------------------------------------------
129,262 116,943 252,790 228,261
- - --------------------------------------------------------------------------------
OPERATING EXPENSES:
Operating costs 53,685 49,297 106,848 97,772
Distribution and general 46,233 43,130 90,710 87,112
Depreciation 6,708 6,446 13,320 12,904
Work force reduction cost 132 580
- - --------------------------------------------------------------------------------
106,626 98,873 211,010 198,368
- - --------------------------------------------------------------------------------
OPERATING INCOME 22,636 18,070 41,780 29,893
OTHER INCOME (principally interest) 1,371 924 2,700 1,745
OTHER EXPENSE (179) (309) (420) (628)
- - --------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 23,828 18,685 44,060 31,010
PROVISION FOR INCOME TAXES 9,771 7,553 18,028 12,502
- - --------------------------------------------------------------------------------
INCOME BEFORE MINORITY INTEREST AND
EQUITY IN AFFILIATE 14,057 11,132 26,032 18,508
MINORITY INTEREST IN SUBSIDIARY (1,150) (1,038) (1,907) (1,443)
EQUITY IN AFFILIATE,
NET OF TAX BENEFITS (930) (997) (1,944) (2,145)
- - --------------------------------------------------------------------------------
NET INCOME $11,977 $9,097 $22,181 $14,920
================================================================================
NET INCOME PER COMMON SHARE $.45 $.34 $.83 $.56
================================================================================
DIVIDENDS DECLARED PER COMMON SHARE $.12 $.11 $.24 $.22
AVERAGE COMMON SHARES OUTSTANDING 26,620 26,566 26,615 26,559
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>6
<TABLE>
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Shareholders' Equity
(UNAUDITED)
<CAPTION>
================================================================================
(In thousands) Unrealized
Gain on
Class A Class B Securities
Common Common Retained Available-
Stock Stock Earnings for-Sale
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 28, 1992 $16,340 $65 $253,592
Net income (26 weeks)
Dividends declared: 14,920
Class A common stock (5,133)
Class B common stock (712)
Exercise of stock options 444
- - -------------------------------------------------------------------------------
BALANCE AT JUNE 27, 1993 16,784 65 262,667
Net income (26 weeks) 17,208
Dividends declared:
Class A common stock (5,624)
Class B common stock (758)
Common stock conversion 2 (2)
Exercise of stock options 351
- - --------------------------------------------------------------------------------
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 (26 weeks) 22,181
Dividends declared:
Class A common stock (5,630)
Class B common stock (758)
Exercise of stock options 715
Change in unrealized gain on
securities available-for-sale (66)
- - --------------------------------------------------------------------------------
BALANCE AT JUNE 26, 1994 $17,852 $63 $289,286 $583
===============================================================================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>7
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Cash Flows
(UNAUDITED)
============================================================================
(In thousands) 26 Weeks Ended
June 26, June 27,
1994 1993
- - ----------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income $22,181 $14,920
Items which did not use (provide) cash:
Depreciation and amortization 13,573 13,271
Postretirement and pension benefits 3,150 2,932
Gain on disposition of assets (191) (163)
Minority interest in earnings of subsidiary 1,907 1,443
Equity in Affiliate 1,944 2,145
Deferred income taxes 668 1,548
Changes in assets and liabilities-net (566) 4,230
- - ----------------------------------------------------------------------------
Net cash provided by operating activities 42,666 40,326
- - ----------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of property, plant and equipment-net (8,810) (10,874)
Purchase of U. S. Government obligations (118,563) (93,872)
Proceeds from U. S. Government obligations 89,283 76,936
Investment in Affiliate (1,755) (1,958)
Purchase of intangibles, minority interest and other (94) (4,889)
- - ----------------------------------------------------------------------------
Net cash used by investing activities (39,939) (34,657)
- - ----------------------------------------------------------------------------
FINANCING ACTIVITIES:
Cash dividends paid (6,385) (5,842)
Dividends paid to minority interest (1,743) (1,794)
Proceeds from exercise of stock options 581 390
- - ----------------------------------------------------------------------------
Net cash used by financing activities (7,547) (7,246)
- - ----------------------------------------------------------------------------
DECREASE IN CASH AND CASH EQUIVALENTS (4,820) (1,577)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 22,143 17,221
- - ----------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $17,323 $15,644
============================================================================
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid during the period $15,432 $10,467
Interest paid during the period 104 114
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 nonqualified supplemental retirement
plan. As of June 26, 1994, work force reduction costs were $132,000. As of
June 27, 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 June 26,
1994 and June 27, 1993 was $30.1 million and $25.9 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 26 weeks ended June 26, 1994
and June 27, 1993 the Company purchased $6.2 million and $6.8 million of
newsprint from Ponderay. For the six months ended June 30, 1994, Ponderay's
net revenue and net losses were $47 million and $22.2 million, respectively;
compared to $45.8 million and $24.1 million during the first six months of
1993.
6. The Company's Stock Option Plan has 327,750 options exercisable as of June
26, 1994. During the period ended June 26, 1994, options for 33,750 shares of
Class A common stock were exercised.
<PAGE>9
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.
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 $12.7 million have been entered into related to these and
other capital projects. Expenditures on these commitments were $2.9 million at
June 26, 1994.
The Board of Directors also has approved the construction of a production
facility in Indianapolis at an estimated cost of $17 million with completion
expected during the second quarter of 1995. No 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 June 26, 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 June 26, 1994 (in thousands):
Gross
Carrying Unrealized Fair
Value Gain(Loss) Value
Available-for-sale securities:
Equity securities $131 $1,669 $1,800
U.S. Government obligations
due within one year $131,589 $(199) $131,390
10. On June 24, 1994, the Company announced an offer to purchase all shares of
Class A common stock (Shares) of Indianapolis Newspapers, Inc. (INI) not already
owned. Subject to the terms and conditions of the offer, the Company will pay
$10,000 in cash per share for each Class A common stock share tendered and
available for purchase by the Company. INI has 5,772 shares of Class A common
stock issued and outstanding of which 239 shares are currently owned by the
Company. All 13,468 shares of Class B common stock of INI issued and
outstanding are owned by the Company. The Company holds 71.2% of the voting
power of INI.
The offer is conditioned upon a minimum of 1,685 Shares being validly tendered
and available for purchase by the Company. The offer will expire on August 5,
1994 unless extended. The purpose of the offer is to attain at least 80% of the
voting power of INI so it will be considered a part of the Company's
"consolidated group" for federal tax purposes.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations - Fiscal Second Quarter Comparisons
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,
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.
Operating revenues for the quarter increased $12.3 million, or 10.5%, which
consisted of an increase in advertising revenue of $11.2 million, or 12.9%, and
an increase in circulation revenue of $1 million, or 3.3%.
Advertising full run of press (ROP) linage was up 9.4% for the quarter. Retail
linage was up 4.5%, national linage was up 1.3% and classified linage increased
15.8%. 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 22.3%.
Advertising revenue at Phoenix increased 12.7% while full run linage was up
10.8%. At Indianapolis advertising revenue was up 14.5% while full run linage
was up 7.5%. Both newspapers increased advertising rates during the first
quarter of 1994.
Circulation revenue increased 4.1% at Phoenix. Circulation of the Phoenix
morning newspaper was up 3.7%, evening up 2.3% and Sunday circulation increased
3.9%. The morning single copy price was increased during January 1993 by 42.8%
to $.50. Circulation revenue increased 1.7% at Indianapolis. Circulation of
the Indianapolis morning newspaper was down .7%, evening down 7.5% and Sunday
circulation was down 1.6%. 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 $106.6 million were up 7.8% for the period. Compensation
expense, which includes fringe benefits, was up 7.8% 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
12% in fringe benefits costs. Newsprint expense increased 4%, reflecting an
8.7% increase in consumption which was somewhat offset by average lower
newsprint prices. It is anticipated suppliers will increase newsprint prices
during the second half of the year. Depreciation expense of $6.7 million
increased 4.1%. The Company did not incur any work force reduction costs during
the current quarter. Other operating, distribution and general expenses were up
11.4% reflecting costs associated with production and delivery of the zoned
advertising products and increased promotional expenses.
Operating income increased $4.6 million, or 25.3%. Other income was up
$447,000, or 48.4%, due to higher earnings on cash investments. Other expense
was down $130,000. Income before provision for income taxes was up $5.1
million, or 27.5%. The provision for income taxes was up $2.2 million, or
29.4%, which reflects higher income for the period and a one percent 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.
<PAGE> 10
Minority interest in subsidiary increased due to higher earnings of the
Company's 71.2% owned subsidiary. The loss from Equity in Affiliate (Ponderay
Newsprint Company), net of tax benefits, decreased $67,000 in the current
quarter and reflects a smaller loss by Ponderay.
Net income for the quarter increased $2.9 million, or 31.7%, compared to the
same period the prior year. Earnings per share for the quarter were $.45 for
1994, an increase of 32.4%, from the $.34 per share the prior year quarter.
As discussed in Notes to Consolidated Financial Statements, the Company has
offered to purchase shares of common stock of Indianapolis Newspapers, Inc. The
acquisition of these shares is not expected to adversely affect reported
earnings per share of the Company during 1994.
Results of Operations - Fiscal Six Months Comparison
Operating revenues for the period increased $24.5 million, or 10.8%, which
consisted of an increase in advertising revenue of $22.6 million or 13.5%, and
an increase in circulation revenue of $1.8 million, or 3%.
Advertising full run of press (ROP) linage was up 10.7% for the period. Retail
linage was up 4.3%, national linage was up 9.6% and classified linage was up
18.1%. The volume of preprinted inserts, which includes local and national
advertising supplements inserted into the newspapers, increased 28.1%.
Advertising revenue at Phoenix increased 13.3% while full run linage was up
12.7%. At Indianapolis advertising revenue was up 15.1% while full run linage
increased 7.9%. 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 2.9% 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 3.3%,
evening circulation was down .8% and Sunday circulation increased 3.2%.
Circulation revenue increased 3.2% 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 1%, evening
circulation was down 7.1% and Sunday circulation was down 1.9%.
Operating expenses of $211 million were up 6.4% for the period. Compensation
expense, which includes fringe benefits, was up 7.4% 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
10.9% in fringe benefit costs. Newsprint expense increased 3.6%, reflecting a
9.4% increase in consumption.
Depreciation expense of $13.3 million increased 3.2%. 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 7.8% 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 $11.9 million, or 39.8%. Other income was up
<PAGE> 11
$955,000, or 54.7%. Other expenses decreased $208,000, or 33.1%, and relates to
the amortization of intangibles associated with the purchase of a group of
newspapers in January 1993. Income before provision for income taxes was up
$13.1 million, or 42.1%. The provision for income taxes was up $5.5 million, or
44.2%, 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 the
Company's 71.2% owned subsidiary. The loss from Equity in Affiliate, net of tax
benefits, decreased $201,000 during the period.
Net income for the period was $22.2 million compared to $14.9 million last year,
an increase of 48.7%. Earnings per share for the period were $.83 for 1994, an
increase of 48.2%, from the $.56 per share in the prior year period.
<PAGE>12
Liquidity and Capital Resources
Net cash provided by operating activities of $42.7 million was used primarily
for the purchase of property and equipment, 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 $148.7 million, up $24.6 million from the beginning of the year.
Working capital at June 26, 1994 was $158.7 million, up $30.7 million from the
beginning of the year.
Capital expenditures through June 26, 1994 were $8.8 million. Capital
expenditures for the year are expected to approximate $40 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 $12.7 million
have been entered into related to these and other capital projects.
Expenditures on these commitments were $2.9 million at June 26, 1994. The
Company plans to build a production facility in Indianapolis at an estimated
cost of $17 million with completion in mid-1995. No significant formal
commitments have been made on this project. On June 24, 1994, the Company
announced an offer to purchase all of the 5,533 shares of Class A common stock
of Indianapolis Newspapers, Inc. (INI) not already owned at a price of $10,000
per share. The Company currently does not anticipate borrowing any funds for
these capital projects or INI share purchases.
The Company invested $1.8 million in Ponderay (Affiliate) during the current
year and expects to contribute additional funds to help finance losses for
several years. The debt quarantees related to Ponderay are discussed in Notes
to Consolidated Financial Statements in the 1993 Annual Report.
Quarterly dividends of $.12 per share on Class A common stock and $.012 per
share on Class B common stock were declared during the quarter. 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--
At the Annual Meeting of Shareholders of the Company on April
21, 1994 (the "Annual Meeting"), the shareholders elected the
following directors by the vote specified opposite each director's
name:
Votes Broker
Director Votes For Withheld Abstentions Non-Votes
Kent E. Agness 33,100,262 2,798 --- --
Malcolm W. Applegate 33,100,199 2,861 --- --
William A. Franke 33,100,248 2,812 --- --
Eugene S. Pulliam 33,100,262 2,798 --- --
Dan Quayle 33,100,140 2,920 --- --
James C. Quayle 33,100,191 2,869 --- --
Frank E. Russell 33,100,233 2,827 --- --
Louis A. Weil III 32,814,146 288,914 --- --
At the Annual Meeting, the shareholder's also approved the selection of
Geo. S. Olive & Co. to serve as the independent auditors for the Company
by the following vote:
Votes Broker
Vote For Against Abstentions Non-Votes
33,102,928 85 47 --
No other matters were submitted for a vote of the shareholders during the
quarter.
Item 5. Other Information--None
Item 6. Exhibits and Reports on Form 8-K
Exhibit 1 - 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 of the undersigned
thereunto duly authorized.
July 29, 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
<PAGE>15
Exhibit 1
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 June 26, 1994, and the consolidated statements of income,
shareholders' equity and cash flows for the fiscal three-month and fiscal six-
month periods ended June 26, 1994 and June 27, 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 inquires 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
July 21, 1994
