<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 25, 1995
----- 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 June 25,
1995:
CLASS A COMMON STOCK 23,490,350
CLASS B COMMON STOCK 31,553,000
- -----------------------------------------------------------------------------
<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 10-13
Part II -- OTHER INFORMATION 13-15
<PAGE>3
PART I
Item 1. Financial Statements
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Financial Position
=============================================================================
June 25, Dec. 25,
ASSETS 1995 1994
(In thousands) (Unaudited)
- -----------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $21,171 $22,105
Marketable securities 106,808 107,413
Accounts receivable (net of allowances of
$981 and $1,071) 52,238 54,625
Inventories 8,779 9,142
Deferred income tax benefits 6,713 7,636
Other current assets 6,512 2,418
- -----------------------------------------------------------------------------
Total current assets 202,221 203,339
- -----------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT:
Land 14,666 14,665
Buildings and improvements 100,831 99,985
Leasehold improvements 4,075 4,075
Machinery and equipment 313,084 302,333
Construction in progress 23,036 9,934
- -----------------------------------------------------------------------------
455,692 430,992
Less accumulated depreciation 194,645 181,675
- -----------------------------------------------------------------------------
261,047 249,317
- -----------------------------------------------------------------------------
OTHER ASSETS:
Land held for development 4,148 4,148
Goodwill 29,176 29,112
Investment in Affiliate 5,002 3,989
Other 13,094 10,539
- -----------------------------------------------------------------------------
51,420 47,788
- -----------------------------------------------------------------------------
TOTAL ASSETS $514,688 $500,444
=============================================================================
See accompanying notes to consolidated financial statements.
<PAGE>4
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Financial Position
=============================================================================
June 25, Dec. 25,
LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1994
(In thousands, except share data) (Unaudited)
- -----------------------------------------------------------------------------
CURRENT LIABILITIES:
Accounts payable $12,254 $17,134
Accrued compensation 16,951 16,423
Dividends payable 3,730 4,205
Accrued expenses and other liabilities 13,958 18,240
Deferred revenue 16,884 14,430
- -----------------------------------------------------------------------------
Total current liabilities 63,777 70,432
- -----------------------------------------------------------------------------
DEFERRED INCOME TAXES 22,990 22,216
- -----------------------------------------------------------------------------
LONG-TERM DEBT (4 1/2% debentures due
December 1, 1998) 2,678 2,678
- -----------------------------------------------------------------------------
POSTRETIREMENT BENEFIT OBLIGATION 78,688 77,802
- -----------------------------------------------------------------------------
MINORITY INTEREST IN SUBSIDIARY 7,987 7,554
- -----------------------------------------------------------------------------
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--23,490,350 and 23,483,000 shares 18,336 18,182
Class B common stock--without par value:
Authorized--50,000,000 shares
Issued--31,553,000 shares 63 63
Retained earnings 319,301 300,968
Unrealized gain on available-for-sale securities 868 549
- -----------------------------------------------------------------------------
338,568 319,762
- -----------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $514,688 $500,444
=============================================================================
See accompanying notes to consolidated financial statements.
<PAGE>5
<TABLE>
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Income
(Unaudited)
<CAPTION>
========================================================================================
(In thousands, except per share data) 13 Weeks Ended 26 Weeks Ended
June 25, June 26, June 25, June 26,
1995 1994 1995 1994
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Advertising $109,519 $98,330 $213,511 $190,221
Circulation 32,042 30,385 64,010 61,537
Other 911 547 1,833 1,032
- ----------------------------------------------------------------------------------------
142,472 129,262 279,354 252,790
- ----------------------------------------------------------------------------------------
OPERATING EXPENSES:
Operating costs 63,745 53,685 125,275 106,848
Distribution and general 48,868 46,233 96,706 90,710
Depreciation 7,226 6,708 14,400 13,320
Work force reduction cost 1,510 1,758 132
- ----------------------------------------------------------------------------------------
121,349 106,626 238,139 211,010
- ----------------------------------------------------------------------------------------
OPERATING INCOME 21,123 22,636 41,215 41,780
OTHER INCOME (principally interest) 2,725 1,371 5,258 2,700
OTHER EXPENSE (270) (179) (548) (420)
- ----------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 23,578 23,828 45,925 44,060
PROVISION FOR INCOME TAXES 9,731 9,771 18,854 18,028
- ----------------------------------------------------------------------------------------
INCOME BEFORE MINORITY INTEREST AND
EQUITY IN AFFILIATE 13,847 14,057 27,071 26,032
MINORITY INTEREST IN SUBSIDIARY (325) (1,150) (629) (1,907)
EQUITY IN AFFILIATE, NET OF TAX BENEFITS (111) (930) (648) (1,944)
- ----------------------------------------------------------------------------------------
NET INCOME $13,411 $11,977 $25,794 $22,181
========================================================================================
NET INCOME PER COMMON SHARE $.51 $.45 $.97 $.83
========================================================================================
DIVIDENDS DECLARED PER CLASS A COMMON SHARE $.14 $.12 $.28 $.24
AVERAGE COMMON SHARES OUTSTANDING 26,643 26,620 26,641 26,615
<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 Available-
Common Common Retained for-Sale
Stock Stock Earnings Securities
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 27, 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 net unrealized gain on
available-for-sale securities (66)
- ----------------------------------------------------------------------------------------
BALANCE AT JUNE 26, 1994 17,852 63 289,286 583
Net income (26 weeks) 19,140
Dividends declared:
Class A common stock (6,574)
Class B common stock (884)
Exercise of stock options 330
Change in net unrealized gain on
available-for-sale securities (34)
- ----------------------------------------------------------------------------------------
BALANCE AT DECEMBER 25, 1994 18,182 63 300,968 549
Net income (26 weeks) 25,794
Dividends declared:
Class A common stock (6,577)
Class B common stock (884)
Exercise of stock options 154
Change in net unrealized gain on
available-for-sale securities 319
- ----------------------------------------------------------------------------------------
BALANCE AT JUNE 25, 1995 $18,336 $63 $319,301 $868
========================================================================================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>7
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Cash Flows
(Unaudited)
=============================================================================
(In thousands) Twenty-six Weeks Ended
June 25, June 26,
1995 1994
- -----------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income $25,794 $22,181
Items which did not use (provide) cash:
Depreciation and amortization 14,794 13,573
Postretirement and pension benefits 2,223 3,150
Gain on disposition of assets (151) (191)
Minority interest in earnings of subsidiary 629 1,907
Equity in Affiliate 648 1,944
Deferred income taxes 1,734 668
Net change in current assets and liabilities (7,037) (566)
- -----------------------------------------------------------------------------
Net cash provided by operating activities before
net purchases of trading securities 38,634 42,666
Net purchases of trading securities (15,309)
- -----------------------------------------------------------------------------
Net cash provided by operating activities 23,325 42,666
- -----------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of property, plant and equipment-net (26,870) (8,810)
Purchases of available-for-sale securities (41,482) (118,563)
Proceeds from available-for-sale securities 58,140 89,283
Investment in Affiliate (2,012) (1,755)
Other (4,090) (94)
- -----------------------------------------------------------------------------
Net cash used by investing activities (16,314) (39,939)
- -----------------------------------------------------------------------------
FINANCING ACTIVITIES:
Cash dividends paid (7,459) (6,385)
Dividends paid to minority interest (612) (1,743)
Proceeds from exercise of stock options 126 581
- -----------------------------------------------------------------------------
Net cash used by financing activities (7,945) (7,547)
- -----------------------------------------------------------------------------
DECREASE IN CASH AND CASH EQUIVALENTS (934) (4,820)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 22,105 22,143
- -----------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $21,171 $17,323
=============================================================================
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid during the period $19,789 $15,432
Interest paid during the period 104 104
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 25, 1994.
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 statement of financial position at December 25, 1994
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.
2. The Company's fiscal year ends on the last Sunday of the calendar year.
The years ending December 31, 1995 and December 25, 1994 comprise 53 and 52
weeks, respectively.
3. Net 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 1995 and 1994, 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. For the period ended June 25, 1995, work force reduction costs were
$1,758,000. For the period ended June 26, 1994, work force reduction costs
were $132,000.
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 25, 1995 and June 26, 1994 was $35.9 million and $30.1 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 25, 1995 and June 26, 1994 the Company purchased $8.3 million and
$6.2 million of newsprint from Ponderay. For the six months ended June 30,
1995, Ponderay's net revenue and net losses were $67.1 million and
$7.4 million, respectively; compared to $47 million and $22.2 million during
the first six months of 1994.
6. The Company's Stock Option Plan has 565,300 options exercisable as of
June 25, 1995. During the period ended June 25, 1995, options for 7,650
shares of Class A common stock were exercised.
7. 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 $35.2 million have been entered into related to these and
other capital projects. Cumulative expenditures on these commitments were
$18.7 million at June 25, 1995.
<PAGE>9
The Company is constructing a production facility in Indianapolis at an
estimated cost of $20 million with completion expected during the third
quarter of 1995. Formal commitments of $14.5 million and cumulative
expenditures of $9.7 million have been made on this project.
8. The Company adopted SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" effective December 27, 1993. Management
determines the classification of its investments in debt and equity securities
at the time of purchase. Securities classified as available-for-sale are
carried at fair value, with unrealized gains and losses, net of tax, reported
in a separate component of shareholders' equity. Securities classified as
trading securities are carried at fair value with unrealized gains and losses
reported in earnings. The cost of securities sold is based on the specific
identification method. All marketable debt securities are classified as
current assets. All equity securities are classified as noncurrent assets.
Debt and equity securities at June 25, 1995 (in thousands):
June 25, 1995
-------------------
(In thousands) Fair Value Cost
Available-for-sale securities:
- -----------------------------
Debt securities of the U.S.
Treasury and agencies $ 43,775 $ 43,677
Equity securities 2,217 142
Corporate debt securities 491 488
-------- --------
46,483 44,307
-------- --------
Trading securities:
- ------------------
Debt securities of the U.S.
Treasury and agencies 4,519 4,516
Corporate debt securities 18,574 18,288
Mortgaged-backed securities 29,429 28,803
Preferred stock 9,964 9,754
Other 56 347
-------- --------
62,542 61,708
-------- --------
Total $109,025 $106,015
======== ========
The net unrealized gain on trading securities included in earnings during 1995
amounted to $729,000.
9. On June 24, 1994, the Company announced an offer to purchase all of the
Class A common stock (shares) of Indianapolis Newspapers, Inc. (INI) not
already owned for $10,000 net in cash per share. The Company purchased 3,591
shares on September 12, 1994, which increased the Company's ownership in INI
from 71.2% to 89.9%. INI is now considered a part of the Company's
"consolidated group" for income tax reporting 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
in subsidiary of $13.4 million. The share purchases did not significantly
affect reported net income for the 1994 fiscal year.
On June 1, 1995, the Company purchased 50 shares of Class A common stock of
INI for $10,000 net in cash per share. This transaction increased the
Company's ownership of INI to 90.2%.
<PAGE>10
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 September 12, 1994, the Company completed the purchase of 3,591 shares of
the Class A common stock of Indianapolis Newspapers, Inc. for $10,000 net in
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. On June 1, 1995, the Company
purchased 50 shares of Class A common stock of INI for $10,000 net in cash per
share, which increased its ownership of INI to 90.2%. The Company does not
anticipate the acquisition of shares will have a significant impact on
reported earnings per share for the current fiscal year.
On February 20, 1995, INI announced a voluntary buy-out incentive plan to 237
union employees with the provision the Company may limit the number of
employees who can accept the offer. The offer closed on April 19, 1995. Work
force reduction costs related to this offer were $248,000 for the first
quarter of 1995 and $279,000 during the second quarter of 1995.
During the second quarter of 1995, INI and Muncie Newspapers, Inc. completed a
voluntary staff reduction program offered to employees in certain nonunion
departments. Costs related to this offer were $1,231,000.
Currently, INI has offered a voluntary staff reduction program to certain
transportation department employees. It is anticipated INI will record an
expense of $840,000 during the third quarter of 1995 related to this offer.
Results of Operations -- Fiscal Second Quarter Comparisons
Operating revenues for the quarter increased $13.2 million, or 10.2%, which
consisted of an increase in advertising revenue of $11.2 million, or 11.4%,
and an increase in circulation revenue of $1.7 million, or 5.5%.
Advertising full run-of-press (ROP) linage was up 9.2% for the quarter.
Retail linage increased 8.6%, national linage increased 5.4% and classified
linage increased 10.3%. 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 16.8%.
Advertising revenue at Phoenix increased 12.9%, while full run linage was up
11.2%. At Indianapolis, advertising revenue was up 8.9%, while full run
linage was up 6.4%. Both newspapers increased advertising rates during the
first quarter of 1995.
Circulation revenue increased 6.7% at Phoenix. Circulation of the Phoenix
morning newspaper was up 3.5%, evening down 6.2% and Sunday circulation
decreased 1.2%. Effective March 12, 1995, the Sunday single-copy price
increased to $2.00 from $1.50. Circulation revenue increased 3% at
Indianapolis. Circulation of the Indianapolis morning newspaper was down
2.7%, evening down 15.2% and Sunday down 2.3%. Effective March 6, 1995, the
home-delivered price of the daily newspaper increased to $1.80 per week from
$1.50. The daily single-copy price increased to $.50 from $.35. 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 $121.3 million were up 13.8% for the period.
Compensation expense, which includes fringe benefits, was up 3.7% for the
<PAGE>11
period. The increase in compensation expense reflects higher payroll costs
related to the zoned and total market advertising programs. Newsprint expense
increased 46.2%, reflecting a .5% increase in consumption and significantly
higher newsprint prices. It is anticipated suppliers will further increase
newsprint prices during 1995. Depreciation expense of $7.2 million increased
7.7%. The Company incurred work force reduction costs of $1.5 million during
the current quarter. Other operating, distribution and general expenses were
up 9.3%, reflecting costs associated with production and delivery of the zoned
advertising products and increased promotional expenses.
Operating income decreased $1.5 million, or 6.7%. Other income was up
$1.4 million, or 98.8%, due to higher earnings on cash investments. Income
before provision for income taxes was down $250,000, or 1.1%. The provision
for income taxes was down $40,000, or .4%, and reflects lower income for the
period.
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 $819,000 to $111,000 and reflects a smaller loss by
Ponderay.
Net income for the quarter increased $1.4 million, or 12%, compared to the
same period the prior year. Earnings per share for the quarter were $.51 for
1995, an increase of 13.3%, from the $.45 per share the prior year quarter.
Earnings per share for the 1995 quarter included an after-tax charge of $.03
for work force reduction costs.
Results of Operations -- Fiscal Six Months Comparisons
Operating revenues for the period increased $26.6 million, or 10.5%, which
consisted of an increase in advertising revenue of $23.3 million, or 12.2%,
and an increase in circulation revenue of $2.5 million, or 4%.
Advertising full run-of-press (ROP) linage was up 10.1% for the period.
Retail linage increased 8.5%, national linage increased 5.8% and classified
linage increased 12.1%. 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 16.7%.
Advertising revenue at Phoenix increased 13.7% while full run linage was up
13%. At Indianapolis, advertising revenue was up 9.9% while full run linage
was up 5.8%. Both newspapers increased advertising rates during the first
quarter of 1995.
Circulation revenue increased 5.7% at Phoenix. Circulation of the Phoenix
morning newspaper was up 2.6%, evening down 6.5% and Sunday circulation
decreased .4%. Effective March 12, 1995, the Sunday single-copy price
increased to $2.00 from $1.50. Circulation revenue increased .2% at
Indianapolis. Circulation of the Indianapolis morning newspaper was down 2%,
evening down 13.1% and Sunday down 2.2%. Effective March 6, 1995, the home-
delivered price of the daily newspaper increased to $1.80 per week from $1.50.
The daily single-copy price increased to $.50 from $.35. 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 $238.1 million were up 12.9% for the period.
Compensation expense, which includes fringe benefits, was up 3.4% for the
period. The increase in compensation expense reflects higher payroll costs
related to the zoned and total market advertising program in Indianapolis and
payroll expense related to production volume increases in Phoenix. Newsprint
expense increased 42.1%, reflecting a 1.7% increase in consumption and higher
<PAGE>12
newsprint prices. It is anticipated suppliers will further increase newsprint
prices during 1995. Depreciation expense of $14.4 million increased 8.1%.
The Company incurred work force reduction costs of $1.8 million during the
current six-month period compared to $132,000 last year. Other operating,
distribution and general expenses were up 11.2% reflecting costs associated
with production and delivery of the zoned advertising products and increased
promotional expenses and higher property taxes. General expenses for 1994
included a $951,000 property tax refund.
Operating income decreased $565,000, or 1.4%. Other income was up
$2.6 million, or 94.7%, due to higher earnings on cash investments. Income
before provision for income taxes was up $1.9 million, or 4.2%. The provision
for income taxes was up $826,000, or 4.6%, and reflects higher income for the
period.
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 $1.3 million to $648,000 and reflects a smaller loss
by Ponderay.
Net income for the period increased $3.6 million, or 16.3%, compared to the
same period the prior year. Earnings per share for the period were $.97 for
1995, an increase of 16.9%, from the $.83 per share the prior year period.
Earnings per share for the 1995 period included an after-tax charge of $.04
for work force reduction costs while the 1994 period benefited from a property
tax refund of $.02 per share.
Liquidity and Capital Resources
Net cash provided by operating activities of $23.3 million was used primarily
for the purchase of property and equipment, investment in Affiliate, the
payment of dividends and net purchases of trading securities. At the end of
the period, the Company's cash and investments in marketable securities
totaled $128 million, down $1.5 million from the beginning of the year.
Working capital at June 25, 1995 was $138.4 million, up $5.5 million from the
beginning of the year.
Capital expenditures through June 25, 1995 were $26.9 million. Capital
expenditures for the year are expected to approximate $76 million.
Phoenix Newspapers, Inc. (PNI) is constructing 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. PNI will install a new
computer system with an estimated maximum cost of $20 million with completion
expected in mid-1997. Formal commitments totaling $35.2 million have been
entered into related to these and other capital projects at PNI. Expenditures
on these commitments were $18.7 million at June 25, 1995.
Indianapolis Newspapers, Inc. is building a production facility in
Indianapolis with completion expected during the third quarter of 1995 and
plans to acquire a building for their downtown facility. Estimated costs of
these projects are $26 million. Formal commitments of $14.5 million have been
entered into on these projects. Expenditures on these projects were
$9.7 million at June 25, 1995.
The Company's wholly-owned subsidiary, Topics Newspapers, Inc., will construct
a new facility during 1995 at an estimated cost of $4.5 million. No
significant formal commitments have been entered into on this facility.
In addition, the Board of Directors have approved investments in partnership
business ventures of $12.5 million. As of June 25, 1995, the Company has
cumulatively invested $5.6 million in these partnerships. The Company
<PAGE>13
currently does not anticipate borrowing any funds for these capital projects
and investments.
The Company invested $1.5 million in Ponderay Newsprint Company (Affiliate)
during the current quarter and expects to contribute additional funds to help
finance losses. The Company currently expects to invest $3.1 million in its
Affiliate during 1995. The debt guarantees related to Ponderay are discussed
in Notes to Consolidated Financial Statements in the 1994 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. The Company
expects cash generated from operations and cash reserves, in conjunction with
credit resources, will be adequate to satisfy its liquidity needs.
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 18, 1995 (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 33,608,620 5,796 --- ---
Malcolm W. Applegate 33,607,433 6,983 --- ---
William A. Franke 33,562,457 51,959 --- ---
Eugene S. Pulliam 33,559,920 54,496 --- ---
Dan Quayle 33,605,426 8,990 --- ---
James C. Quayle 33,561,220 53,196 --- ---
Frank E. Russell 33,604,925 9,491 --- ---
Louis A. Weil III 33,562,171 52,245 --- ---
The shareholders approved the selection of Geo. S. Olive & Co. LLC to serve as
the independent auditors for the Company by the following vote:
Votes Broker
Votes for Against Abstentions Non-Votes
--------- ------- ----------- ---------
33,612,392 1,390 634 ---
The shareholders approved the amended and restated Central Newspapers, Inc.
Stock Compensation Plan by the following vote:
Votes Broker
Votes for Against Abstentions Non-Votes
--------- ------- ----------- ---------
33,459,423 129,720 3,747 21,526
No other matters were submitted for a vote of the shareholders during the
quarter.
<PAGE>14
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.
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.
CENTRAL NEWSPAPERS, INC.
Dated: July 28, 1995 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 25, 1995, the consolidated statements of income
for the fiscal three-month and fiscal six-month periods ended June 25, 1995
and June 26, 1994 and shareholders' equity and cash flows for the fiscal six-
month periods ended June 25, 1995 and June 26, 1994. 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 25,
1994, 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 24, 1995, we expressed an unqualified opinion on those
consolidated financial statements.
As discussed in Note 8 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
- ---------------------------
Geo. S. Olive & Co. LLC
Indianapolis, Indiana
July 19, 1995
<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 June 25, 1995 and the consolidated statements of income, shareholders'
equity and cash flows for the fiscal six-month period ended June 25, 1995 and is
qualified in its entirety by reference to such statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-25-1995
<CASH> 21171
<SECURITIES> 106808
<RECEIVABLES> 52238
<ALLOWANCES> 981
<INVENTORY> 8779
<CURRENT-ASSETS> 202221
<PP&E> 455692
<DEPRECIATION> 194645
<TOTAL-ASSETS> 514688
<CURRENT-LIABILITIES> 63777
<BONDS> 2678
<COMMON> 18399
0
0
<OTHER-SE> 320169
<TOTAL-LIABILITY-AND-EQUITY> 514688
<SALES> 279354
<TOTAL-REVENUES> 279354
<CGS> 0
<TOTAL-COSTS> 238139
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 104
<INCOME-PRETAX> 45925
<INCOME-TAX> 18854
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25794
<EPS-PRIMARY> .97
<EPS-DILUTED> 0
</TABLE>
