<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 25, 1994
Commission File Number 1-10333
CENTRAL NEWSPAPERS, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-0220660
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
135 North Pennsylvania Street, Suite 1200, Indianapolis, Indiana 46204
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (317) 231-9200
Securities registered pursuant to Section 12(b) of the Act:
Name of each
Title of each class exchange on which registered
------------------- ----------------------------
Class A Common Stock, without par value New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates on
February 28, 1995, based on the closing price for the Company's Class A Common
Stock on the New York Stock Exchange on such date and assuming the conversion
of all outstanding shares of Class B Common Stock into shares of Class A Common
Stock at a ratio of one-tenth (.1) of a share of Class A Common Stock for each
share of Class B Common Stock: approximately $296,121,000. For purposes of
the foregoing calculation only, required by Form 10-K, the Registrant has
included as shares owned by affiliates shares of Class A Common Stock and
Class B Common Stock beneficially owned by officers and directors of the
registrant and by holders of 10% or more of either class. Such inclusion shall
not be construed as an admission that any such person is an affiliate for any
purpose.
Shares outstanding at February 28, 1995:
Class A Common Stock -- 23,483,350 shares
Class B Common Stock -- 31,553,000 shares
Documents incorporated by reference:
Portions of the Company's 1994 Annual Report to Shareholders (incorporated in
Part II to the extent provided in items 5, 6, 7 and 8 hereof) and the
definitive Proxy Statement for the Company's 1995 Annual Meeting of Share-
holders (to be held April 18, 1995) filed pursuant to Rule 14a-6 of the
Securities Exchange Act of 1934 (incorporated in Part III to the extent
provided in items 10, 11, 12 and 13 hereof).
Exhibit Index on Page 11 Page 1 of 17 Pages
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FORM 10-K TABLE OF CONTENTS
Page
Part I
Item 1 - Business 3
Item 2 - Properties 9
Item 3 - Legal Proceedings 10
Item 4 - Submission of Matters to a Vote of
Security Holders 10
Part II
Item 5 - Market for Registrant's Common
Equity and Related Stockholder
Matters 10
Item 6 - Selected Financial Data 10
Item 7 - Management's Discussion and
Analysis of Results of Operations
and Financial Condition 10
Item 8 - Financial Statements and
Supplementary Data 11
Item 9 - Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 11
Part III
Item 10 - Directors and Executive Officers of
the Registrant 11
Item 11 - Executive Compensation 11
Item 12 - Security Ownership of Certain
Beneficial Owners and
Management 11
Item 13 - Certain Relationships and Related
Transactions 11
Part IV
Item 14 - Exhibits, Financial Statement
Schedules and Reports on
Form 8-K 11
Signatures 15
<PAGE> 3
PART I
Item 1. Business.
Central Newspapers, Inc. (the "Company") is engaged, through its subsidiaries,
in newspaper publishing primarily in the metropolitan areas of Phoenix, Arizona
and Indianapolis, Indiana. The Company is an Indiana corporation organized in
1934. Through its wholly-owned subsidiary, Phoenix Newspapers, Inc., the
Company publishes The Arizona Republic (mornings and Sunday), The Phoenix
Gazette (evenings) and the Arizona Business Gazette (weekly). Through its
89.9%-owned subsidiary, Indianapolis Newspapers, Inc., the Company publishes
The Indianapolis Star (mornings and Sunday) and The Indianapolis News
(evenings). The Company also publishes several daily and weekly newspapers
serving smaller communities in Indiana. The Company is a partner (13.5%
interest) in Ponderay Newsprint Company, a general partnership that owns and
operates a newsprint mill in the State of Washington.
The Company has published its newspapers in its two primary markets for more
than forty-five years. The Company has managed its newspapers with the
objective of long-term growth and believes that this philosophy has contributed
to the stability of the Company's operations. The Company's ability to
establish and maintain its daily newspapers as the only major newspapers in
their respective markets has promoted its growth and is of primary importance
in attracting and maintaining advertising, the principal source of revenue for
the Company. Each of the Company's newspapers has substantial autonomy over
editorial policy.
PHOENIX NEWSPAPERS, INC.
Phoenix Newspapers, Inc. ("PNI") was formed in 1946 by a group of investors,
including the Company, to purchase The Arizona Republic and The Phoenix
Gazette. The Company originally owned a 30% interest in PNI and has owned 100%
of the common stock of PNI since 1977. The newspapers published by PNI are The
Arizona Republic (mornings and Sunday), The Phoenix Gazette (evenings) and the
Arizona Business Gazette (weekly).
Circulation
As of December 25, 1994, approximately 83% of the daily and 68% of the Sunday
circulation of The Arizona Republic and 88% of the daily circulation of The
Phoenix Gazette were home delivered. Single copy sales account for
approximately 31% of Sunday newspaper sales and approximately 16% of combined
daily newspaper sales.
The Arizona Business Gazette contains business news and legal notices relating
to the Phoenix metropolitan area. The average paid circulation of the Arizona
Business Gazette was 8,379, 9,599 and 10,340 for 1992, 1993 and 1994.
The circulation levels of The Arizona Republic and The Phoenix Gazette are
seasonal due to the large number of part-year residents of the Phoenix area.
Historically, circulation for The Arizona Republic and The Phoenix Gazette
achieves its highest levels in February and decreases during the late spring
and summer months. During 1994, the seasonal variation in combined daily
circulation and Sunday circulation was approximately 94,000 each. The fol-
lowing table shows the average paid circulation for The Arizona Republic and
The Phoenix Gazette for the last three fiscal years. The figures for 1992 and
1993 are based upon annual reports issued by the Audit Bureau of Circulations
("ABC"), an independent agency which audits the circulation of daily and Sunday
newspapers and include circulation outside the Phoenix metropolitan statistical
area ("MSA"). The figures for 1994 are based upon the records of the Company
because, as of the date of this report, the ABC annual report for 1994 has not
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been released. Net circulation revenue for the last three fiscal years is
based upon the records of the Company.
52 Weeks 52 Weeks 52 Weeks
Dec. 27 Dec. 26 Dec. 25
Fiscal Years Ended 1992 1993 1994
The Arizona Republic (Sunday) 560,850 573,497 591,086
The Arizona Republic (Daily) 360,148 365,544 379,895
The Phoenix Gazette (Daily) 86,126 81,118 77,951
Net Circulation Revenue
(in thousands) $70,621 $74,368 $77,537
Effective June 1994, the home delivery pricing structure for seven day
subscriptions is based on length of subscription. The home-delivered price for
The Arizona Republic (seven days) in the Phoenix MSA ranges from $2.90 per week
for a fifty-two week subscription to $3.15 per week for an eight week
subscription and a four week bank withdrawal option of $3.00 per week. The
home-delivered price for The Phoenix Gazette (seven days) in the Phoenix MSA,
which includes six evenings and one Sunday paper, ranges from $2.65 per week
for a fifty-two week subscription to $2.90 per week for an eight week sub-
scription and a four week bank withdrawal option of $2.75 per week. The home-
delivered price for The Arizona Republic (six days) is $1.80 per week for all
subscription terms. The home-delivered price for The Phoenix Gazette (six
days) is $1.50 per week for all subscription terms. A weekend package
comprising the Sunday paper and the Friday and Saturday edition of either the
morning or evening paper is offered at $2.15 per week, which includes a $.15
increase during June 1994. During January 1993, the single copy price of the
morning paper increased by $.15 to $.50. The single copy price of the after-
noon paper is $.35. The single copy price of the Sunday paper is $1.50,
including a $.25 increase in January 1991.
Advertising
The newspapers generate revenue from two primary types of advertisements, "run
of paper," which are printed in the body of the newspaper, and "preprinted,"
which are furnished by the advertiser and inserted into the newspaper. PNI
derives the majority of its advertising revenue from run of paper
advertisements. However, like other major newspapers, The Arizona Republic and
The Phoenix Gazette have experienced an increase in the use by advertisers of
preprinted advertisements in recent years. Because preprinted advertisements
are furnished by the advertisers and can be distributed by alternate means,
revenues and profits from preprinted advertisements are generally lower than
would be derived if an advertiser had chosen to use run of paper advertise-
ments. To encourage use of run of paper advertisements, PNI structures its
advertising rates to provide more favorable rates to high volume and frequent
run of paper advertisers.
PNI also structures its advertising format to accommodate the numerous
communities that comprise the Phoenix metropolitan area. The Arizona Republic
and The Phoenix Gazette publish a common "Community" section that is inserted
in up to twelve zoned editions on certain days of the week. Zoned editions,
which include news stories and advertisements targeted to specific communities
or geographic areas, provide an important means of competing with news coverage
of local newspapers and thereby promote circulation. Other part run sections
are also provided to accommodate the needs of advertisers for more targeted
distribution.
The combined run of paper advertising linage for The Arizona Republic, The
Phoenix Gazette and the Arizona Business Gazette for the past three fiscal
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years and the combined advertising revenues of the newspapers for such periods
are set forth in the following table:
52 Weeks 52 Weeks 52 Weeks
Dec. 27 Dec. 26 Dec. 25
Fiscal Years Ended 1992 1993 1994
Advertising Linage--Run of Paper
(in thousands of six-
column inches):
Full run 3,371 3,562 4,014
Part run 2,024 2,239 2,350
Weekly 324 278 269
Net Advertising Revenue
(in thousands) $203,267 $218,092 $248,528
Distribution
PNI distributes The Arizona Republic and The Phoenix Gazette primarily by home
delivery through a network of independent contractors that deliver newspapers
pursuant to agreements with PNI. PNI has implemented a centralized billing
system which removes the responsibility for billing and collection from the
independent contractors. Newspapers are distributed to the independent
contractor network by an outside company which has been under contract with PNI
for over forty years.
Production
The Arizona Republic and The Phoenix Gazette have separate editorial/news
staffs but share the same production facilities and equipment. The editing and
composing functions are performed primarily at PNI's facility in downtown
Phoenix. To increase efficiency and reduce work force requirements, the
editing and composing functions have been computerized. Electronic pagination
allows entire pages of the newspaper to be formatted at a computer terminal.
Composed pages are electronically transmitted from PNI's downtown facility to
its two satellite production facilities.
PNI has two satellite production facilities, one located in Deer Valley which
is north of downtown Phoenix and one in Mesa, Arizona. Construction of the
Deer Valley facility began in 1990 and was completed in 1992. This facility
includes four new offset presses and related production equipment as well as
circulation, advertising and editorial offices. Production began during the
first quarter of 1992 with full operation commencing in the third quarter of
1992. The Mesa facility began operation in 1982 and has been expanded and
upgraded since that date. It has three offset presses and related production
equipment.
Because of the growth expected in the Phoenix area, PNI owns an additional site
in western Maricopa County for a future satellite production facility.
INDIANAPOLIS NEWSPAPERS, INC.
Indianapolis Newspapers, Inc. ("INI") was formed by the Company in 1948. The
Company owns all of the issued and outstanding Class B Common Stock of INI. On
September 12, 1994, the Company purchased 3,591 shares of Class A Common Stock
of INI which increased the Company ownership of Class A Common Stock to 66.4%
from 4.1%. The Company now owns 89.9% of the voting power and equity and has
the right to elect INI's Board of Directors. Prior to this purchase, the
Company owned 71.2% of the voting power and equity of INI. The remaining 10.1%
of the voting power and equity of INI is held either directly or through trusts
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by members of the family which previously owned The Indianapolis News. The
primary newspapers published by INI are The Indianapolis Star (mornings and
Sunday) and The Indianapolis News (evenings).
Circulation
As of December 25, 1994, approximately 80% of the daily and 81% of the Sunday
circulation of The Indianapolis Star and 81% of the daily circulation of The
Indianapolis News were home delivered. Single copy sales account for
approximately 18% of Sunday newspaper sales and 17% of combined daily newspaper
sales.
The following table shows the average paid circulation for The Indianapolis
Star and The Indianapolis News for the last three fiscal years. The figures
for 1992 and 1993 are based upon annual reports issued by ABC and include
circulation outside the Indianapolis MSA. The figures for 1994 are based upon
records of the Company because, as of the date of this report, the ABC annual
report for 1994 has not been released. Net circulation revenue for the last
three fiscal years is based upon the records of the Company.
52 Weeks 52 Weeks 52 Weeks
Dec. 27 Dec. 26 Dec. 25
Fiscal Years Ended 1992 1993 1994
The Indianapolis Star (Sunday) 413,630 411,260 404,468
The Indianapolis Star (Daily) 229,842 231,150 229,811
The Indianapolis News (Daily) 96,540 93,256 87,435
Net Circulation Revenue
(in thousands) $36,979 $38,523 $38,886
The home-delivered price for The Indianapolis Star (seven days) in the
Indianapolis MSA is $3.00 per week which includes a $.25 price increase during
May 1993. The home delivered price for The Indianapolis News (six days) is
$1.50 per week. The single copy price is $.35 for each daily paper. The home-
delivered price of the Sunday newspaper is $1.50, which includes a $.25 price
increase during May 1993. The single copy price of the Sunday newspaper is
$1.50 which includes a $.25 price increase during September 1991.
Advertising
Newspapers generate revenue from two primary types of advertisements, "run of
paper," which are printed in the body of the newspaper, and "preprinted," which
are furnished by the advertiser and inserted into the newspaper. INI derives
the majority of its advertising revenue from run of paper advertisements.
Like the Company's Phoenix newspapers, The Indianapolis Star and The
Indianapolis News have experienced an increase in the use by advertisers of
preprinted advertisements in recent years. To encourage use of run of paper
advertisements, INI structures its advertising rates to provide more favorable
rates to high volume and frequent run of paper advertisers. The combined run
of paper advertising linage for The Indianapolis Star and The Indianapolis News
for the past three fiscal years and the combined advertising revenue of the
newspapers for such periods are set forth in the following table:
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52 Weeks 52 Weeks 52 Weeks
Dec. 27 Dec. 26 Dec. 25
Fiscal Years Ended 1992 1993 1994
Advertising Linage--Run of Paper
(in thousands of six-
column inches):
Full run 2,425 2,458 2,716
Part run 22 62 125
Net Advertising Revenue
(in thousands) $106,056 $114,004 $131,288
Distribution
INI distributes The Indianapolis Star and The Indianapolis News primarily by
home delivery through a network of approximately 3,200 carriers. Generally, a
carrier is an independent contractor who purchases newspapers from INI and
resells them to his or her customers.
Production
The Indianapolis Star and The Indianapolis News have separate editorial/news
staffs but share the same production and distribution facilities. All
editorial, production and distribution functions are handled from INI's
facility in downtown Indianapolis. INI's production facility is equipped with
six offset presses, after the conversion of four letterpress presses and the
installation of two new offset presses during the period 1988 through 1992 at a
cost of $57.7 million.
During 1994, INI began construction of a satellite production facility to
process the preprinted sections of the newspapers. The facility is estimated
to cost $20 million and be completed by the end of 1995.
SMALLER NEWSPAPERS
The Company also publishes several smaller newspapers. Through Muncie
Newspapers, Inc., which is 88% owned by INI and 12% owned by the Company, the
Company publishes The Muncie Star (mornings and Sunday) and The Muncie Evening
Press (evenings). These two daily newspapers serve the Muncie, Indiana area,
which has a population of approximately 119,000. As of December 25, 1994, the
average paid circulation of The Muncie Star was 29,470 daily, and 36,339 Sunday
and the average paid circulation of The Muncie Evening Press was 12,733 daily.
The Company publishes the Vincennes Sun-Commercial, a daily newspaper which
serves the city of Vincennes, Indiana, with a population of approximately
19,800. As of December 25, 1994, the average paid circulation of the Vincennes
Sun-Commercial was 13,748 daily (five days) and 15,758 Sunday.
During January 1993, the Company formed Topics Newspapers, Inc. as a wholly-
owned subsidiary to purchase the net assets of two daily newspapers, one weekly
newspaper and twelve controlled circulation newspapers that serve the fastest
growing area of metropolitan Indianapolis. As of December 25, 1994, the
average paid circulation of The Daily Ledger was 9,850 (six days) and the
combined weekly circulation was 90,159.
The revenues received by the Company from these smaller publications
represented approximately 4% of the total revenues of the Company in each of
its last three fiscal years.
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RAW MATERIALS - PONDERAY NEWSPRINT COMPANY
The Company consumed approximately 161,000 metric tons of newsprint in fiscal
year 1994 and estimates that consumption will increase slightly in fiscal year
1995. The Company currently obtains its newsprint from a number of suppliers,
both foreign and domestic, under long-term contracts, standard in the industry,
which offer dependable sources of newsprint at current market rates.
To provide the Company with an additional source of newsprint for a portion of
its needs, the Company formed Central Newsprint Company, Inc. and Bradley Paper
Company (the "Newsprint Subsidiaries"), both of which are wholly-owned
subsidiaries of the Company. The Newsprint Subsidiaries, together with four
other newspaper publishing companies and a Canadian newsprint manufacturer, are
partners in Ponderay Newsprint Company ("Ponderay"), a general partnership
formed to own and operate a newsprint mill in Usk, Washington. The mill began
operations in December 1989. PNI has committed to purchase annually the lesser
of 13.5% of Ponderay's newsprint production or 28,400 metric tons on a "take if
tendered" basis until the debt of Ponderay is repaid.
COMPETITION
The Company faces competition for advertising revenue from television, radio
and direct mail programs, as well as competition for advertising and
circulation from suburban neighborhood and national newspapers and other
publications. Competition for advertising is based upon circulation levels,
readership demographics, price and advertiser results. Competition for
circulation is generally based upon the content, journalistic quality and price
of the newspaper.
In Indianapolis, the Company's newspapers do not receive significant direct
competition from suburban newspapers. In Phoenix, several suburban newspapers
owned by major media corporations operate in cities that are part of the
Phoenix metropolitan area and compete with The Arizona Republic and The Phoenix
Gazette for advertising and circulation.
EMPLOYEES - LABOR
As of January 31, 1995, the Company had approximately 5,030 employees
(including 1,350 part-time employees), 42% of whom were covered by collective
bargaining agreements. The Company has never had a significant strike or work
stoppage at its operations and considers its labor relationships with its
employees to be good.
EXECUTIVE OFFICERS OF THE REGISTRANT
As of February 28, 1995, the executive officers of the Company and their ages
are as follows:
Name Age Positions
Malcolm W. Applegate 59 Director; President and
General Manager of INI
Eugene S. Pulliam 80 Director and Executive
Vice President; President
of PNI; Publisher of
The Indianapolis Star and
The Indianapolis News
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Frank E. Russell 74 Director; President and
Chief Executive Officer
Louis A. Weil, III 53 Director; Executive Vice
President of PNI;
Publisher and Chief
Executive Officer of
The Arizona Republic and
The Phoenix Gazette
Wayne D. Wallace 48 Treasurer
Malcolm W. Applegate has been President since May 1993 and General Manager
since July 1990 of Indianapolis Newspapers, Inc. From 1985 until assuming his
current position with Indianapolis Newspapers, Inc., Mr. Applegate was
publisher of the Lansing (Michigan) State Journal. He has been a director of
the Company since 1991.
Eugene S. Pulliam has been the Publisher of The Indianapolis Star and The
Indianapolis News since 1975 and President of Phoenix Newspapers, Inc. since
1979. He has been a director of the Company since 1954. Mr. Pulliam is a
brother-in-law of James C. Quayle and the uncle of Dan Quayle, both of whom are
directors of the Company.
Frank E. Russell has been President of the Company since 1979. He has been a
director of the Company since 1974.
Louis A. Weil, III has been Publisher and Chief Executive Officer of The
Arizona Republic and The Phoenix Gazette and Executive Vice President of
Phoenix Newspapers, Inc. since July 1991. Mr. Weil served as Publisher of Time
from May 1989 to July 1991 and President and Publisher of The Detroit News from
May 1987 to May 1989. Mr. Weil serves as a member of the Board of Directors of
Global Government Plus Fund, Inc. as well as ten investment companies within
the Prudential family of mutual funds. He has been a director of the Company
since 1991.
Wayne D. Wallace has been Treasurer of the Company since October of 1989.
Previously, he had been Assistant Treasurer of the Company since 1983.
Each executive officer will serve as such until his successor is chosen and
qualified. No family relationships exist among the Company's executive
officers.
Item 2. Properties.
The corporate headquarters of the Company are located at 135 North Pennsylvania
Street, Indianapolis, Indiana. The general character, location and approximate
size of the principal physical properties owned by the Company at the end of
fiscal year 1994 are set forth below. In addition to those listed, the Company
owns employee recreational facilities and other real estate aggregating
approximately 130 acres.
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Approximate Area
in Square Feet
Printing plants, business and editorial
offices and warehouse space
Owned Leased
Phoenix, Arizona 765,613 44,880
Mesa, Arizona 151,451 ---
Indianapolis, Indiana 474,152 168,890
Muncie, Indiana 67,658 ---
Vincennes, Indiana 19,350 ---
Noblesville, Indiana 7,500 5,412
Carmel, Indiana 13,460 ---
The Company believes that its current and planned facilities are adequate to
meet the present needs of its newspapers.
Item 3. Legal Proceedings.
The Company becomes involved from time to time in various claims and lawsuits
incidental in the ordinary course of its business, including such matters as
libel and invasion of privacy actions and is involved from time to time in
various governmental and administrative proceedings. Management believes that
the outcome of any pending claims or proceedings will not have a significant
adverse effect on the Company and its subsidiaries, taken as a whole.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of shareholders during the quarter ended
December 25, 1994 through the solicitation of proxies and otherwise.
PART II
Item 5. Markets for Registrant's Common Equity and Related Stockholder Matters.
The information set forth under the caption "Shareholder Information" on page
31 of the Company's 1994 Annual Report to Shareholders is incorporated herein
by reference.
Item 6. Selected Financial Data.
The information set forth under the caption "Ten-Year Financial Highlights"
on page 28 of the Company's 1994 Annual Report to Shareholders is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
The information set forth under the caption "Management's Discussion and
Analysis of Results of Operations and Financial Condition" beginning on page 11
of the Company's 1994 Annual Report to Shareholders is incorporated herein by
reference.
<PAGE> 11
Item 8. Financial Statements and Supplementary Data.
The Company's Consolidated Financial Statements and Notes thereto, together
with the report thereon of Geo. S. Olive & Co. LLC dated February 24, 1995,
appearing on pages 14 through 27 of the Company's 1994 Annual Report to Share-
holders, and the information contained under the heading "Quarterly Financial
Information (unaudited)" on page 30 of such Annual Report to Shareholders are
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Incorporated herein by reference is the information set forth under the
captions "Election of Directors," on page 4 and "Committees of the Board of
Directors and Compensation of Directors" on page 5 and "Compliance with Section
16(a) of the Securities Exchange Act of 1934" on page 16 of the Company's
definitive Proxy Statement to be used in connection with the 1995 Annual
Meeting of Shareholders. See Part I, Item 1 of this report for information
regarding the executive officers of the Company.
Item 11. Executive Compensation.
Incorporated herein by reference is the information set forth under the
captions "Compensation of Executive Officers" on page 6 of the Company's
definitive Proxy Statement to be used in connection with the 1995 Annual
Meeting of Shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Incorporated herein by reference is the information set forth under the
captions "Voting Securities And Principal Holders Thereof" on page 1 and
"Security Ownership of Management" on page 3 of the Company's definitive Proxy
Statement to be used in connection with the 1995 Annual Meeting of Share-
holders.
Item 13. Certain Relationships and Related Transactions.
Incorporated herein by reference is the information set forth under the
captions "Transactions With Certain Related Persons" on page 16 and "Compen-
sation Committee Interlocks and Insider Participation" on page 13 of the
Company's definitive Proxy Statement to be used in connection with the 1995
Annual Meeting of Shareholders.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) List of Documents Included in this Report.
1. Financial Statements.
The following financial statements are incorporated into this report
by reference to the Company's 1994 Annual Report to Shareholders:
<PAGE> 12
(i) Independent Auditor's Report
(ii) Consolidated Statement of Income for each of the three fiscal years
in the period ended December 25, 1994
(iii) Consolidated Statement of Financial Position at December 25, 1994
and December 26, 1993
(iv) Consolidated Statement of Shareholders' Equity for each of the three
fiscal years in the period ended December 25, 1994
(v) Consolidated Statement of Cash Flows for each of the three fiscal
years in the period ended December 25, 1994
(vi) Notes to Consolidated Financial Statements
2. Supplementary Data and Financial Statement Schedules.
(i) Incorporated herein by reference is the information set forth under
the caption "Quarterly Financial Information (Unaudited)" appearing
on page 30 of the Company's 1994 Annual Report to Shareholders
(ii) The following financial statement schedule and report with respect
thereto are filed as a part of this Report:
Page in
this filing
Independent Auditor's Report 16
Schedule II Valuation Accounts 17
Schedules other than those referred to above have been omitted
because they are not required or because the information is included
elsewhere in the Consolidated Financial Statements of the Company.
3. Exhibits Required by Securities and Exchange Commission Regulation
S-K.
(i) The following exhibits are filed as a part of this report:
Exhibit
Number Description of Document
*10.13 Central Newspapers, Inc. Unfunded Supplemental Retirement
Plan
*10.14 Central Newspapers, Inc. Non-Qualified Savings Plan, as
amended
*10.15 Central Newspapers, Inc. Director's and Officer's Charitable
Award Program
13 Portions of the 1994 Annual Report to Shareholders of
Central Newspapers, Inc. incorporated by reference into the
1994 Annual Report on Form 10-K
23 Consent of Geo. S. Olive & Co. LLC
27 Financial Data Schedule
* Represents a contract, plan or arrangement providing for executive officer
or director benefits.
<PAGE> 13
(ii) The following exhibits are incorporated herein by reference to
documents previously filed with the Securities and Exchange
Commission as indicated.
Exhibit
Number Description of Document
3.1 Amended and Restated Articles of Incorporation of Central
Newspapers, Inc. (Filed August 10, 1989 with Form S-1
Registration Statement, No. 33-30436)
3.2 Amended and Restated Code of By-Laws of Central
Newspapers, Inc. (Filed with Form 10-K for year ended
December 29, 1991)
4.1 Form of Certificate for Class A Common Stock (Filed August
10, 1989 with Form S-1 Registration Statement, No.
33-30436)
4.2 Indenture between Indianapolis Newspapers, Inc. and the
Indiana Trust Company, as trustee, dated as of December 1,
1948 (Filed August 10, 1989 with Form S-1 Registration
Statement, No. 33-30436)
10.1 Indenture creating the Eugene C. Pulliam Trust, dated as
of December 9, 1965, as amended (Filed August 10, 1989
with Form S-1 Registration Statement, No. 33-30436)
10.2 Newsprint Purchase Agreement between Ponderay Newsprint
Company and Phoenix Newspapers, Inc., dated as of
November 18, 1987 (Filed August 10, 1989 with Form S-1
Registration Statement, No. 33-30436)
*10.3 Amended and Restated Central Newspapers, Inc. Stock Option
Plan (Filed with Form 10-K for year ended December 27,
1992)
*10.4 The Phoenix Newspapers, Inc. Non-Qualified Supplemental
Retirement Plan (Filed with Form 10-K for year ended
December 30, 1990)
10.5 Ponderay Newsprint Company Partnership Agreement between
Lake Superior Forest Products, Inc. and Central Newsprint
Company, Inc. dated as of September 12, 1985 (Filed August
10, 1989 with Form S-1 Registration Statement, No.
33-30436)
10.6 Amendment to Ponderay Newsprint Company Partnership
Agreement between Lake Superior Forest Products Inc.,
Central Newsprint Company, Inc., Bradley Paper Company,
Copley Northwest, Inc., Puller Paper Company, Newsprint
Ventures, Inc., Wingate Paper Company, Tribune Newsprint
Company and Nimitz Paper Company, dated as of June 30,
1987 (Filed August 10, 1989 with Form S-1 Registration
Statement, No. 33-30436)
10.7 Guarantee by Central Newspapers, Inc. dated as
November 18, 1987 (Filed August 10, 1989 with Form S-1
Registration Statement, No. 33-30436)
* Represents a contract, plan or arrangement providing for executive officer
or director benefits.
<PAGE> 14
*10.8 Termination Benefits Agreement dated as of August 1,
1991 between Phoenix Newspapers, Inc. and Louis A.
Weil, III (Filed with Form 10-K for year ended
December 27, 1992)
*10.9 Phoenix Newspapers, Inc. Management by Objectives Program
(Filed with Form 10-K for year ended December 27, 1992)
*10.10 Form of Split-Dollar Life Insurance Agreement for
Executive Officers between the Registrant and Malcolm W.
Applegate, Wayne D. Wallace and Louis A. Weil, III (Filed
with Form 10-K for year ended December 27, 1992)
*10.11 Form of Split-Dollar Life Insurance Agreement for Outside
Directors between the Registrant and Kent E. Agness,
William A. Franke and Dan Quayle (Filed with Form 10-K for
year ended December 27, 1992)
*10.12 Form of Death Benefit Only Insurance Plan Agreement
between the Registrant and Frank E. Russell, Eugene S.
Pulliam and James C. Quayle (Filed with Form 10-K for year
ended December 27, 1992)
21 Subsidiaries of the Registrant (Filed with Form 10-K for
year ended December 26, 1993)
* Represents a contract, plan or arrangement providing for executive officer
or director benefits.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during the fourth quarter of
1994.
<PAGE> 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, in the city
of Indianapolis, state of Indiana, on this 21st day of March, 1995.
CENTRAL NEWSPAPERS, INC.
By: /s/ Frank E. Russell
-------------------------------------
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons on behalf of the
Registrant and in the capacities indicated on this 21st day of March, 1995.
Signature Title
(1) Principal Executive Officer
/s/ Frank E. Russell President, Chief Executive
---------------------------- Officer and Director
Frank E. Russell
(2) Principal Financial and
Accounting Officer
/s/ Wayne D. Wallace Treasurer
----------------------------
Wayne D. Wallace
(3) A majority of the Board of Directors
/s/ Kent E. Agness Director
---------------------------
Kent E. Agness
/s/ Malcolm W. Applegate Director
---------------------------
Malcolm W. Applegate
/s/ William A. Franke Director
---------------------------
William A. Franke
/s/ Eugene S. Pulliam Director
---------------------------
Eugene S. Pulliam
/s/ Dan Quayle Director
---------------------------
Dan Quayle
/s/ James C. Quayle Director
---------------------------
James C. Quayle
/s/ Louis A. Weil, III Director
---------------------------
Louis A. Weil, III
<PAGE> 16
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENT SCHEDULE
Board of Directors and Shareholders
Central Newspapers, Inc.
We have audited the consolidated financial statements of Central Newspapers,
Inc. and Subsidiaries at December 25, 1994 and December 26, 1993 and for each
of the three fiscal years in the period ended December 25, 1994 and have issued
our report dated February 24, 1995. Such financial statements and reports are
included in the 1994 Annual Report to Shareholders and are incorporated herein
by reference.
Our audits also included the financial statement schedule listed under Item 14
(a)(2)(ii). The financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly,
in all material respects, the information included in the schedule.
GEO. S. OLIVE & CO. LLC
Indianapolis, Indiana
February 24, 1995
<PAGE> 17
<TABLE>
Schedule II
CENTRAL NEWSPAPERS, INC. AND SUBSIDIARIES
Valuation Accounts
<CAPTION>
Column A Column B Column C Column D Column E
Additions Additions
Balance at Charged to Charged to Balance at
Beginning Costs and Other End
Description of Period Expense Accounts Deductions of Period
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Year Ended December 25,
1994 (52 Weeks):
Provision for doubtful
accounts and advertising
refunds $1,141,957 $4,569,894 $(4,640,464) $1,071,387
Year Ended December 26,
1993 (52 Weeks):
Provision for doubtful
accounts and advertising
refunds $779,346 $3,334,553 $(2,971,942) $1,141,957
Year Ended December 27,
1992 (52 Weeks):
Provision for doubtful
accounts and advertising
refunds $813,689 $3,590,648 $(3,624,991) $779,346
</TABLE>
CENTRAL NEWSPAPERS, INC.
UNFUNDED SUPPLEMENTAL RETIREMENT PLAN
FOR A SELECT GROUP OF MANAGEMENT EMPLOYEES
(EFFECTIVE JANUARY 1, 1994)
Central Newspapers, Inc., Phoenix Newspapers, Inc., Indianapolis
Newspapers, Inc. and Muncie Newspapers, Inc. hereby adopt this Central
Newspapers, Inc. Unfunded Supplemental Retirement Plan for a Select Group of
Management Employees (the "Plan"), effective as of January 1, 1994 to provide,
in its entirety, as follows:
PREAMBLE
This Plan is an unfunded supplemental retirement plan for a select group
of management employees of Central Newspapers, Inc. (the "Company"), Phoenix
Newspapers, Inc., Indianapolis Newspapers, Inc. and Muncie Newspapers, Inc.
(the Company and its affiliated entities are individually referred to as an
"Employer" and collectively referred to as the "Employers") and is designed to
meet applicable exemptions under Sections 201(2), 301(a)(3), 401(a)(1) and
4021(b)(6) of the Employee Retirement Income Security Act of 1974, as amended,
and under Department of Labor Regulation Section 2520.104-23.
ARTICLE I
DEFINITIONS
Section 1.01. Administrator. The term "Administrator" means the Company,
which shall have the sole authority to manage and to control the operation and
administration of this Plan.
Section 1.02. Board. The term "Board" means the Board of Directors of
each Employer.
Section 1.03. Code. The term "Code" means the Internal Revenue Code of
1986 as now in effect or hereafter amended and shall also include all
regulations promulgated thereunder.
Section 1.04. Actuarial Equivalent. The term "Actuarial Equivalent" has
the same meaning as is ascribed to that term in the Company Pension Plan.
Section 1.05. Beneficiary. The term "Beneficiary" means with respect to
a Participant each individual other than that Participant's Spouse who is
entitled to benefits under the Company Pension Plan as a result of the death of
that Participant.
Section 1.06. Company Pension Plan. The term "Company Pension Plan"
means the Central Newspapers, Inc. Retirement Plan or the Phoenix Newspapers,
Inc. Retirement Plan, as each is now in effect or is hereafter amended.
Section 1.07. Effective Date. The term "Effective Date" means January 1,
1994.
Section 1.08. Participant. The term "Participant" means any individual
who is eligible for benefits under Article II of this Plan.
Section 1.09. Plan. The term "Plan" means the Central Newspapers, Inc.
Unfunded Supplemental Retirement Plan for a Select Group of Management
Employees.
Section 1.10. Spouse. The term "Spouse" means, with respect to the
payment of death benefits under Section 2.01 of this Plan with respect to a
Participant, that Participant's spouse who is entitled to benefits under the
Company Pension Plan as a result of the death of that Participant. The term
"Spouse" means, with respect to the payment of retirement benefits under
Section 2.02 of this Plan with respect to a Participant, that Participant's
spouse who is entitled to retirement benefits under the Company Pension Plan as
a result of the Termination of Employment of that Participant.
Section 1.11. Termination of Employment. The term "Termination of
Employment" means the date on which a Participant retires, resigns, incurs a
total disability or otherwise, voluntarily or involuntarily, terminates his
full-time employment with the Employers for reasons other than death.
Section 1.12. Benefit Calculation Date. The term "Benefit Calculation
Date" means with respect to a Participant the earliest date on which that
Participant would have been entitled to receive a benefit payment under the
Company Pension Plan by reason of his Termination of Employment (determined
without regard to any requirement of notice, application or consent by the
Company, the Participant, his Spouse or any other person).
ARTICLE II
PARTICIPATION
The individuals eligible for benefits as Participants under this Plan
shall include each employee of an Employer who is covered under the Central
Newspapers, Inc. Executive Life Insurance Plan and whose retirement benefits
under a Company Pension Plan are limited by Section 401(a)(17) or Section 415
of the Code. An Employer may add additional Participants by action of its
Board.
ARTICLE III
BENEFITS
Section 3.01. Death Benefits. Upon the death of a Participant on or
after the Effective Date and before the commencement of his benefits hereunder,
his Spouse or Beneficiary, if any, shall be entitled to receive death benefits
under this Plan. The death benefits to which such Spouse or Beneficiary shall
be entitled shall be payable in the form of an Actuarial Equivalent single lump
sum cash payment and shall be calculated in the same manner and shall be
payable at the same time as benefit payments commence to such Spouse or
Beneficiary under the Company Pension Plan as a result of the Participant's
death; provided, however, that the amount of the Participant's retirement
income upon which the Spouse's or Beneficiary's death benefits under this Plan
shall be based shall equal the amount of retirement income determined under
Section 3.02.
Section 3.02. Retirement Benefits. Upon a Participant's Termination of
Employment on or after the Effective Date, such Participant shall be entitled
to receive retirement benefits under this Plan in an amount determined in
accordance with this Section 3.02. Unless an optional form of benefit is
elected in accordance with Section 3.03, such benefits shall be payable in an
Actuarial Equivalent single lump sum cash payment determined as though monthly
retirement benefits had begun coincident with that Participant's Benefit
Calculation Date.
The amount of the retirement benefits for a Participant shall be equal to
the amount by which:
(a) the sum of:
(1) the Employer-provided monthly benefits that such
Participant is entitled to receive under the provisions of the
Company Pension Plan in effect with respect to that Participant on
the date of his Termination of Employment (assuming his benefit
payments under the Company Pension Plan commence on his Benefit
Calculation Date and are determined without regard to the
limitations contained in Section 401(a)(17) and Section 415 of the
Code) and based solely on his service with the Employers on and
after the Effective Date; and
(2) the monthly benefits such Participant would be entitled
to receive under the provisions of the Company Pension Plan in
effect with respect to that Participant on December 31, 1993 based
solely on his service with the Employers before the Effective Date
(assuming such benefit payments under the Company Pension Plan would
have commenced on his Benefit Calculation Date);
exceeds
(b) the sum of:
(1) the Employer-provided monthly benefits that such
Participant is entitled to receive under the provisions of the
Company Pension Plan in effect with respect to that Participant on
the date of his Termination of Employment (assuming his benefit
payments under the Company Pension Plan commence on his Benefit
Calculation Date) and based solely on his service with the Employers
on and after the Effective Date; and
(2) the monthly benefits such Participant would be entitled
to receive under the provisions of the Company Pension Plan in
effect with respect to that Participant on December 31, 1993 based
solely on his service with the Employers before the Effective Date
(assuming such benefit payments under the Company Pension Plan would
have commenced on his Benefit Calculation Date).
For purposes of calculating a Participant's Employer-provided monthly
benefit under subsection (a)(1) and subsection (b)(1), that Participant shall
be deemed to have made the maximum voluntary non-deductible contributions under
the Company Pension Plan (determined in the case of subsection (a)(1) without
regard to the limitations contained in Section 401(a)(17) and Section 415 of
the Code) and to have elected to receive as of the date his benefit payments
commence under the Company Pension Plan a refund of his deemed and actual
voluntary non-deductible contributions plus interest, thereby resulting in the
cancellation of his deemed and actual supplemental credits earned under the
Company Pension Plan.
Section 3.03. Payment Options. A Participant may elect within thirty
(30) calendar days from the date he becomes eligible to be a Participant in the
Plan for benefits to be paid under Section 3.01 or Section 3.02 in any
Actuarial Equivalent optional form then permitted under a Company Pension Plan
with benefit payments made at the same time and in the same manner as under
that Company Pension Plan. Any election under this Section shall be made on
the form prescribed by the Company and may not be revoked unless the revocation
is consented to by the Board of his Employer and is requested because of the
Participant's (or his Spouse's or Beneficiary's) extreme financial hardship.
ARTICLE IV
ADMINISTRATION OF THE PLAN
Section 4.01. Administrator. The Company shall be responsible for the
general operation and administration of the Plan and for carrying out the
provisions thereof.
Section 4.02. General Powers of Administration. All provisions set
forth in the Company Pension Plan with respect to the administrative powers and
duties of the Company, expenses of administration, and procedures for filing
claims shall also be applicable with respect to this Plan. The Company shall
be entitled to rely conclusively upon all tables, valuations, certificates,
opinions and reports furnished by any actuary, accountant, counsel or other
person employed or engaged by the Company with respect to this Plan or the
Company Pension Plan.
ARTICLE V
AMENDMENT OR TERMINATION
Section 5.01. Amendment or Termination. The Employers intend the Plan
to be permanent but reserve the right to amend or terminate the Plan when, in
the sole opinion of the Employers, such amendment or termination is advisable.
Any such amendment or termination shall be made pursuant to a resolution of
each Board and shall be effective as of the date of such resolution.
Section 5.02. Effect of Amendment or Termination. No amendment or
termination of this Plan shall directly or indirectly reduce the benefit
accrued by a Participant under Section 3.02 as of the effective date of such
amendment or termination. Upon termination of this Plan, payment of benefits
hereunder shall be made to the Participant, his Spouse or his Beneficiary in
the manner and at the time described in Article III of the Plan. No additional
benefits shall accrue under this Plan with respect to a Participant after
termination of the Plan.
ARTICLE VI
GENERAL PROVISIONS
Section 6.01. Participant's Rights Unsecured. The Plan at all times
shall be entirely unfunded and, except as may be provided under the Central
Newspapers, Inc. Employee Benefit Trust, no provision shall at any time be made
with respect to segregating any assets of the Employers for payment of any
benefits hereunder. The right of a Participant, his Spouse or his Beneficiary
to receive a distribution hereunder shall be an unsecured claim against the
general assets of the Employers, and neither the Participant, his Spouse nor
his Beneficiary shall have any rights in or against any specific assets of the
Employers.
Section 6.02. General Conditions. Nothing in this Plan shall operate
or be construed in any way to modify, amend or affect the terms and provisions
of a Company Pension Plan.
Section 6.03. No Guarantee of Benefits. Nothing contained in this Plan
shall constitute a guaranty by the Employers or any other person or entity that
the assets of the Employers will be sufficient to pay any benefit hereunder.
Section 6.04. No Enlargement of Employee Rights. No Participant shall
have any right to receive a distribution under this Plan except in accordance
with the terms of the Plan. Establishment of this Plan shall not be construed
to give any Participant the right to be retained in the service of the
Employers.
Section 6.05. Spendthrift Provision. No interest of any person or
entity in, or right to receive a distribution under, the Plan shall be subject
in any manner to sale, transfer, assignment, pledge, attachment, garnishment,
or other alienation or encumbrance of any kind; nor may such interest or right
to receive a distribution be taken, either voluntarily or involuntarily for the
satisfaction of the debts of, or other obligations or claims against, such
person or entity, including claims for alimony, support, separate maintenance
and claims in bankruptcy proceedings.
Section 6.06. Applicable Law. Except to the extent preempted by the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the Plan
shall be construed and administered under the laws of the State of Indiana.
Section 6.07. Incapacity of Recipient. If any person entitled to a
distribution under the Plan is deemed by the Administrator to be incapable of
personally receiving and giving a valid receipt for such payment, then, unless
and until claim therefor shall have been made by a duly appointed guardian or
other legal representative of such person, the Administrator may provide for
such payment or any part thereof to be made to any other person or institution
then contributing toward or providing for the care and maintenance of such
person. Any such payment shall be a payment for the account of such person and
a complete discharge of any liability of the Employers and the Plan therefor.
Section 6.08. Corporate Successors. The Plan shall not be
automatically terminated by a transfer or sale of assets of an Employer or by
the merger or consolidation of an Employer into or with any other corporation
or other entity, but the Plan shall be continued after such sale, merger or
consolidation with respect to that transferee, purchaser or successor entity
only if and to the extent that the transferee, purchaser or successor entity
agrees to continue the Plan. In the event that the Plan is not continued by the
transferee, purchaser or successor entity, then the Plan shall terminate with
respect to that transferee, purchaser or successor entity subject to the
provisions of Section 5.02.
Section 6.09. Unclaimed Benefit. Each Participant shall keep the
Administrator informed of his current address and the current address of his
designated beneficiary. The Administrator shall not be obligated to search for
the whereabouts of any person. If the location of a Participant is not made
known to the Administrator within three (3) years after the date on which
payment of the Participant's benefits may first be made, payment may be made as
though the Participant had died at the end of the three-year period. If,
within one additional year after such three-year period has elapsed, or, within
three years after the actual death of a Participant, the Administrator is
unable to locate any designated beneficiary of the Participant, then the
Employers shall have no further obligation to pay any benefit hereunder to such
Participant or designated beneficiary and such benefit shall be irrevocably
forfeited.
Section 6.10. Limitations on Liability. Notwithstanding any of the
preceding provisions of the Plan, neither the Employers nor any individual
acting as employee or agent of the Employers shall be liable to any
Participant, former Participant, Spouse, Beneficiary or other person for any
claim, loss, liability or expense incurred in connection with the Plan.
Section 6.11. Construction. Words in the masculine gender shall
include the feminine and the singular shall include the plural, and vice versa,
unless qualified by the context. Any headings used herein are included for
ease of reference only, and are not to be construed so as to alter the terms
hereof.
This Plan has been executed on this 10th day of August, 1994
retroactively effective as of January 1, 1994.
CENTRAL NEWSPAPERS, INC.
By /s/ Frank E. Russell
------------------------
Frank E. Russell
Its President
ATTEST:
By /s/ Marjorie C. Tarplee
---------------------------
Marjorie C. Tarplee
Its Secretary
INDIANAPOLIS NEWSPAPERS, INC.
By /s/ Malcolm W. Applegate
----------------------------
Malcolm W. Applegate
Its President
ATTEST:
By /s/ Frank E. Russell
------------------------
Frank E. Russell
Its Secretary
MUNCIE NEWSPAPERS, INC.
By /s/ Frank E. Russell
------------------------
Frank E. Russell
Its President
ATTEST:
By /s/ Marjorie C. Tarplee
---------------------------
Marjorie C. Tarplee
Its Secretary
PHOENIX NEWSPAPERS, INC.
By /s/ Eugene S. Pulliam
-------------------------
Eugene S. Pulliam
Its President
ATTEST:
By /s/ Frank E. Russell
------------------------
Frank E. Russell
Its Secretary
CENTRAL NEWSPAPERS, INC.
NON-QUALIFIED SAVINGS PLAN
The Central Newspapers, Inc. Non-Qualified Savings Plan (the "Plan") is
hereby adopted effective August 1, 1994. The Plan is established and main-
tained by Central Newspapers, Inc., Indianapolis Newspapers, Inc., Phoenix
Newspapers, Inc. and Muncie Newspapers, Inc. solely for the purpose of
permitting certain of their employees who participate in the Central
Newspapers, Inc. Savings Plus Plan to receive contributions equal to amounts in
excess of the limitations on contributions imposed by Section 401(a)(17),
Section 401(k), Section 401(m), Section 402(g) and Section 415 of the Internal
Revenue Code of 1986, as amended, on cash or deferred arrangements to which
those Sections apply.
ARTICLE I
DEFINITIONS
Wherever used herein the following terms shall have the meanings
hereinafter set forth:
1.1. "Accounting Date" means the last day of each calendar month.
1.2. "Administrator" means the Central Newspapers, Inc. Savings Plus Plan
Committee.
1.3. "Board" means the Board of Directors of each Company.
1.4. "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any regulations promulgated thereunder.
1.5. "Company" means Central Newspapers, Inc., Indianapolis Newspapers,
Inc., Phoenix Newspapers, Inc. or Muncie Newspapers, Inc. or, to the extent
provided in Section 8.8 below, any successor corporation or other entity
resulting from a merger or consolidation into or with a Company or a transfer
or sale of substantially all of the assets of a Company.
1.6. "Participant" means an executive employee of one of the Companies
who is a participant under the Qualified Plan, who is covered under the Central
Newspapers, Inc. Executive Life Insurance Plan and to whom or with respect to
whom contributions may be made under this Plan. Each eligible Participant
shall be identified by the Boards prior to the beginning of each Plan Year and
listed on Exhibit A attached hereto and incorporated by reference herein.
1.7. "Plan" means this Central Newspapers, Inc. Non-Qualified Savings
Plan.
1.8. "Plan Year" means each calendar year.
1.9. "Qualified Plan" means the Central Newspapers, Inc. Savings Plus
Plan and any successor or replacement cash or deferred arrangement.
1.10. "Qualified Plan Company Matching Contribution" means the total of
all matching contributions made by a Company for the benefit of a Participant
under and in accordance with the terms of the Qualified Plan in any Plan Year.
1.11. "Qualified Plan Salary Reduction Contribution" means the salary
reduction contribution made by a Company for the benefit of a Participant under
and in accordance with the terms of the Qualified Plan in any Plan Year.
1.12. "Qualified Plan Limits" mean the limits imposed, at any time and
from time to time, upon the amount of Qualified Plan Salary Reduction
Contributions or Qualified Plan Company Matching Contributions that may be made
on behalf of a Participant by Section 401(a)(17), Section 401(k) (including any
limits resulting from the application of Section 4.5 of the Qualified Plan),
Section 401(m), Section 402(g) and Section 415 of the Code.
1.13. "Salary Reduction Agreement" means the written salary reduction
agreement entered into by a Participant with a Company pursuant to the
Qualified Plan.
1.14. "Supplemental Company Matching Contribution" means the matching
contribution made by a Company for the benefit of a Participant under and in
accordance with the terms of this Plan in any Plan Year.
1.15. "Supplemental Salary Reduction Contribution" means the salary
reduction contribution made by a Company for the benefit of a Participant under
and in accordance with the terms of this Plan in any Plan Year.
1.16. "Supplemental Subaccount" means the account maintained by the
Companies under the Plan for a Participant that is credited with amounts
contributed under Section 3.1 and Section 3.3 of the Plan.
ARTICLE II
ELIGIBILITY
A Participant who makes Qualified Plan Salary Reduction Contributions and
receives Qualified Plan Company Matching Contributions, the total amounts of
which are reduced by reason of the application of the Qualified Plan Limits,
shall be eligible to participate in the Plan.
ARTICLE III
SUPPLEMENTAL CONTRIBUTIONS
3.1. Supplemental Salary Reduction Contributions. The Supplemental
Salary Reduction Contribution to be made by the Companies for the benefit of a
Participant for any Plan Year shall be in an amount equal to (a) minus (b)
where:
(a) equals the Qualified Plan Salary Reduction Contribution that
would have been allocated to the Qualified Plan on behalf of the
Participant for the Plan Year, based on the Salary Reduction Agreement
between the Participant and a Company in effect for such Plan Year
pursuant to the terms of the Qualified Plan, without giving effect to the
Qualified Plan Limits; and
(b) equals the amount of the Qualified Plan Salary Reduction
Contribution actually allocated to the Qualified Plan on behalf of the
Participant for the Plan Year.
Supplemental Salary Reduction Contributions made for the benefit of a
Participant for any Plan Year shall be credited to such Participant's
Supplemental Subaccount within 30 days after the last day of each calendar
month.
3.2. Supplemental Salary Reduction Agreement. As a condition to the
Companies' obligation to make a Supplemental Salary Reduction Contribution for
the benefit of a Participant pursuant to Section 3.1, that Participant must
execute a Supplemental Salary Reduction Agreement in the form attached hereto.
The Supplemental Salary Reduction Agreement for any Plan Year shall be made
before the beginning of that Plan Year and shall remain in full force and
effect for subsequent Plan Years unless revoked or modified by a Participant by
written instrument delivered to the Administrator prior to the beginning of the
Plan Year in which such revocation or modification is to be effective.
3.3. Supplemental Company Matching Contributions. The Supplemental
Company Matching Contribution to be made by the Companies for the benefit of a
Participant for any Plan Year shall be in an amount equal to (a) minus (b)
where:
(a) equals the Qualified Plan Company Matching Contribution that
would have been allocated to the Qualified Plan on behalf of the
Participant for the Plan Year without giving effect to any reduction in
the Participant's Qualified Plan Salary Reduction Contribution required by
the Qualified Plan Limits; and
(b) equals the amount of the Qualified Plan Company Matching
Contribution actually allocated to the Qualified Plan on behalf of the
Participant for the Plan Year.
Supplemental Company Matching Contributions made for the benefit of a
Participant for any Plan Year shall be credited to such Participant's
Supplemental Subaccount within 30 days after the last day of each calendar
month.
ARTICLE IV
INVESTMENT OF SUPPLEMENTAL CONTRIBUTIONS
4.1. Deemed Investment. Unless actual investment options are provided to
Participants under Section 4.2 of this Plan, amounts credited hereunder to the
Supplemental Subaccount of a Participant shall be treated as if they were
actually invested in the Qualified Plan Subaccount of the Participant and shall
be subject to the same Participant investment elections, and credited with
gains and losses at the same time and in the same manner, as are applicable to
amounts invested in the Qualified Plan Subaccount of such Participant. A
change by a Participant in the investment election applicable to amounts in his
Qualified Plan Subaccount, or a direction to transfer amounts in his Qualified
Plan Subaccount among investment funds maintained under the Qualified Plan,
shall also apply to amounts credited to his Supplemental Subaccount and shall
be effective at the same time that such change in election or direction to
transfer is applicable to his Qualified Plan Subaccount.
4.2. Actual Investment. In lieu of crediting earnings and losses under
Section 4.1 of this Plan, the Administrator may provide for investment funds
into which Participants may direct the investment of their Supplemental
Subaccount balances. To the extent such investment funds are provided to
Participants:
(a) each Participant shall be required to elect in writing the
manner and extent to which his Supplemental Subaccount shall be invested
in each of the available investment funds; and
(b) such Participant's Supplemental Subaccount shall be credited
with income, gain or loss as though it had been invested in the investment
fund or funds as directed by that Participant.
Except as may otherwise be communicated by the Administrator to the
Participants, the rules regarding the timing and manner of electing investment
funds (including changing elections or transfering amounts from one investment
fund to another) and of allocating income, gains and losses to Supplemental
Subaccounts shall be the same as is set forth in the Qualified Plan from time
to time. Notwithstanding anything in this Section 4.2 to the contrary, each
Participant's interest in his Supplemental Subaccount shall be unfunded,
neither the Companies, the Administrator nor the Trustees of the Central
Newspapers, Inc. Employee Benefit Trust shall be under any legal obligation to
actually invest a Participant's Supplemental Subaccount as directed by that
Participant, and that Participant shall have no right, title or interest in or
to his Supplemental Subaccount except as may otherwise be provided under the
Central Newspapers, Inc. Employee Benefit Trust.
ARTICLE V
DISTRIBUTIONS
All amounts credited to a Participant's Supplemental Subaccount, including
gains and losses credited in accordance with Section 4.1 or Section 4.2 of the
Plan, shall be distributed in a single lump sum cash payment to that
Participant (or, in the event that Participant's termination of employment is
caused by his death, to his beneficiary under the Qualified Plan) as soon as is
practicable after the termination of the Participant's employment with the
Companies for any reason.
ARTICLE VI
ADMINISTRATION OF THE PLAN
6.1. Administrator. The Administrator shall be responsible for the
general operation and administration of the Plan and for carrying out the
provisions thereof.
6.2. General Powers of Administration. All provisions set forth in the
Qualified Plan with respect to the administrative powers and duties of the
Administrator, expenses of administration, and procedures for filing claims
shall also be applicable with respect to this Plan. The Administrator shall be
entitled to rely conclusively upon all tables, valuations, certificates,
opinions and reports furnished by any actuary, accountant, counsel or other
person employed or engaged by the Administrator with respect to this Plan or
the Qualified Plan.
ARTICLE VII
AMENDMENT OR TERMINATION
7.1. Amendment or Termination. The Companies intend the Plan to be
permanent but reserve the right to amend or terminate the Plan when, in the
sole opinion of the Companies, such amendment or termination is advisable. Any
such amendment or termination shall be made pursuant to a resolution of each
Board and shall be effective as of the date of such resolution.
7.2. Effect of Amendment or Termination. No amendment or termination of
this Plan shall directly or indirectly reduce the balance of any Supplemental
Subaccount held hereunder as of the effective date of such amendment or
termination. Upon termination of this Plan, distribution of amounts in each
Supplemental Subaccount shall be made to the Participant or his beneficiary in
the manner and at the time described in Article V of the Plan. No additional
credits of Supplemental Salary Reduction Contributions or Supplemental Company
Matching Contributions shall be made to the Supplemental Subaccount of a
Participant after termination of the Plan, but the Companies shall continue to
credit gains and losses to each Supplemental Subaccount pursuant to Section 4.1
or Section 4.3, until the balance of such Supplemental Subaccount has been
fully distributed to each Participant or his beneficiary.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Participant's Rights Unsecured. The Plan at all times shall be
entirely unfunded and, except as provided under the Central Newspapers, Inc.
Employee Benefit Trust, no provision shall at any time be made with respect to
segregating any assets of the Companies for payment of any distributions
hereunder. The right of a Participant or his designated beneficiary to receive
a distribution hereunder shall be an unsecured claim against the general assets
of the Companies, and neither the Participant nor his designated beneficiary
shall have any rights in or against any specific assets of the Companies.
Except as provided under the Central Newspapers, Inc. Employee Benefit Trust,
all amounts credited to the Supplemental Subaccount of a Participant shall con-
stitute general assets of the Companies and may be disposed of by the Companies
at such time and for such purposes as they may deem appropriate.
8.2. General Conditions. Except as otherwise expressly provided herein,
all terms and conditions of the Qualified Plan applicable to a Qualified Plan
Salary Reduction Contribution or a Qualified Plan Company Matching Contribution
shall also be applicable to a Supplemental Salary Reduction Contribution or a
Supplemental Company Matching Contribution to be made hereunder. Any Qualified
Plan Salary Reduction Contribution or Qualified Plan Company Matching
Contribution, or any other contributions to be made under the Qualified Plan,
shall be made solely in accordance with the terms and conditions of the
Qualified Plan and nothing in this Plan shall operate or be construed in any
way to modify, amend or affect the terms and provisions of the Qualified Plan.
8.3. No Guarantee of Benefits. Nothing contained in this Plan shall
constitute a guaranty by the Companies or any other person or entity that the
assets of the Companies will be sufficient to pay any benefit hereunder.
8.4. No Enlargement of Employee Rights. No Participant shall have any
right to receive a distribution of contributions made under this Plan except in
accordance with the terms of the Plan. Establishment of this Plan shall not be
construed to give any Participant the right to be retained in the service of
the Companies.
8.5. Spendthrift Provision. No interest of any person or entity in, or
right to receive a distribution under, the Plan shall be subject in any manner
to sale, transfer, assignment, pledge, attachment, garnishment, or other
alienation or encumbrance of any kind; nor may such interest or right to
receive a distribution be taken, either voluntarily or involuntarily for the
satisfaction of the debts of, or other obligations or claims against, such
person or entity, including claims for alimony, support, separate maintenance
and claims in bankruptcy proceedings.
8.6. Applicable Law. Except to the extent preempted by the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Plan shall be
construed and administered under the laws of the State of Indiana.
8.7. Incapacity of Recipient. If any person entitled to a distribution
under the Plan is deemed by the Administrator to be incapable of personally
receiving and giving a valid receipt for such payment, then, unless and until
claim therefor shall have been made by a duly appointed guardian or other legal
representative of such person, the Administrator may provide for such payment
or any part thereof to be made to any other person or institution then
contributing toward or providing for the care and maintenance of such person.
Any such payment shall be a payment for the account of such person and a
complete discharge of any liability of the Companies and the Plan therefor.
8.8. Corporate Successors. The Plan shall not be automatically
terminated by a transfer or sale of assets of a Company or by the merger or
consolidation of a Company into or with any other corporation or other entity,
but the Plan shall be continued after such sale, merger or consolidation with
respect to that transferee, purchaser or successor entity only if and to the
extent that the transferee, purchaser or successor entity agrees to continue
the Plan. In the event that the Plan is not continued by the transferee,
purchaser or successor entity, then the Plan shall terminate with respect to
that transferee, purchaser or successor entity, subject to the provisions of
Section 7.2.
8.9. Unclaimed Benefit. Each Participant shall keep the Administrator
informed of his current address and the current address of his designated
beneficiary. The Administrator shall not be obligated to search for the
whereabouts of any person. If the location of a Participant is not made known
to the Administrator within three (3) years after the date on which payment of
the Participant's Supplemental Subaccount may first be made, payment may be
made as though the Participant had died at the end of the three-year period.
If, within one additional year after such three-year period has elapsed, or,
within three years after the actual death of a Participant, the Administrator
is unable to locate any designated beneficiary of the Participant, then the
Companies shall have no further obligation to pay any benefit hereunder to such
Participant or designated beneficiary and such benefit shall be irrevocably
forfeited.
8.10. Limitations on Liability. Notwithstanding any of the preceding
provisions of the Plan, neither the Companies, the Administrator, nor any
individual acting as employee or agent of either shall be liable to any
Participant, former Participant, beneficiary or other person for any claim,
loss, liability or expense incurred in connection with the Plan.
8.11. Contruction. Words in the masculine gender shall include the
feminine and the singular shall include the plural, and vice versa, unless
qualified by the context. Any headings used herein are included for ease of
reference only, and are not to be construed so as to alter the terms hereof.
IN WITNESS WHEREOF, the Companies have adopted this Plan effective as of
August 1, 1994.
CENTRAL NEWSPAPERS, INC.
By /s/ Frank E. Russell
------------------------
Frank E. Russell
Its President
ATTEST:
By /s/ Marjorie C. Tarplee
---------------------------
Marjorie C. Tarplee
Its Secretary
INDIANAPOLIS NEWSPAPERS, INC.
By /s/ Malcolm W. Applegate
----------------------------
Malcolm W. Applegate
Its President
ATTEST:
By /s/ Frank E. Russell
------------------------
Frank E. Russell
Its Secretary
MUNCIE NEWSPAPERS, INC.
By /s/ Frank E. Russell
------------------------
Frank E. Russell
Its President
ATTEST:
By /s/ Marjorie C. Tarplee
---------------------------
Marjorie C. Tarplee
Its Secretary
PHOENIX NEWSPAPERS, INC.
By /s/ Eugene S. Pulliam
-------------------------
Eugene S. Pulliam
Its President
ATTEST:
By /s/ Frank E. Russell
------------------------
Frank E. Russell
Its Secretary
FIRST AMENDMENT TO THE
CENTRAL NEWSPAPERS, INC.
NON-QUALIFIED SAVINGS PLAN
Central Newspapers, Inc., Indianapolis Newspapers, Inc., Muncie
Newspapers, Inc. and Phoenix Newspapers, Inc. (the "Companies"), acting
pursuant to Section 7.1 of the Central Newspapers, Inc. Non-Qualified Savings
Plan (the "Plan"), amend the Plan as follows:
1. Section 7.1 of the Plan is amended and restated, retroactively
effective as of July 1, 1994, to provide in its entirety as follows:
7.1 Amendment or Termination. The Companies intend the Plan to be
permanent but reserve the right to amend or terminate the Plan when, in
the sole opinion of the Companies, such amendment or termination is
advisable; provided, however, that the Plan may not be amended more than
once in any six (6) month period other than to comply with the
requirements of the Code or ERISA. Any such amendment or termination
shall be made pursuant to a resolution of each Board and shall be
effective as of the date of such resolution.
This First Amendment has been executed by the Companies on this 21st day
of March, 1995 to be effective as of the date set forth above.
CENTRAL NEWSPAPERS, INC.
By /s/ Frank E. Russell
----------------------
Frank E. Russell
Its President
ATTEST:
By /s/ Marjorie C. Tarplee
--------------------------
Marjorie C. Tarplee
Its Secretary
INDIANAPOLIS NEWSPAPERS, INC.
By /s/ Malcolm W. Applegate
---------------------------
Malcolm W. Applegate
Its President
ATTEST:
By /s/ Frank E. Russell
--------------------------
Frank E. Russell
Its Secretary
MUNCIE NEWSPAPERS, INC.
By /s/ Frank E. Russell
----------------------
Frank E. Russell
Its President
ATTEST:
By /s/ Marjorie C. Tarplee
--------------------------
Marjorie C. Tarplee
Its Secretary
PHOENIX NEWSPAPERS, INC.
By /s/ Eugene S. Pulliam
-----------------------
Eugene S. Pulliam
Its President
ATTEST:
By /s/ Frank E. Russell
--------------------------
Frank E. Russell
Its Secretary
CENTRAL NEWSPAPERS, INC.
DIRECTOR'S AND OFFICER'S CHARITABLE AWARD PROGRAM
1. Purpose of the Program.
The Central Newspapers, Inc. Director's and Officer's Charitable Award
Program (the "Program") allows each eligible Director and Officer of Central
Newspapers, Inc. (the "Company") to recommend that the Company make a donation
of up to $500,000 to the eligible tax-exempt organization(s) (the "Donee(s)")
selected by the participant, with the donation to be made, in the
participant's name, in ten equal annual installments, with the first
installment to be made as soon as is practical after the participant's death.
The purpose of the program is to recognize the interest of the Company and its
Directors and Officers in supporting worthy educational institutions and other
charitable organizations.
2. Eligibility.
All persons serving as Directors or Officers of the Company as of August
1, 1994, shall be eligible to participate in the Program. All participants
who join the Company's Board of Directors after that date shall be immediately
eligible to participate in the program upon election to the Board. Any
individual who becomes an Officer of the Company after that date shall be
eligible to participate as determined by the Board of Directors. For the
purpose of the Program, an individual shall be considered an Officer of the
Company if he or she is serving as the President, an Executive Vice President,
a Vice President, the Secretary or the Treasurer of the Company.
3. Vesting.
A Director will become vested in the Program when he or she completes
five continuous years of Board service, including any service prior to
adoption of the Program. An Officer designated to participate in the program
will become vested in the Program when he or she completes five continuous
years of service as an Officer and/or Director, including any service prior to
adoption of the Program. A participant will become immediately vested in the
Program if he or she dies or becomes disabled while serving as a Director or
Officer of the Company. The Board may waive the vesting requirement for a
participant under circumstances it deems to be appropriate. If a Director or
Officer terminates Board service or employment before becoming vested, no
donation will be made on his or her behalf.
4. Recommendation of Donation.
When a Director or Officer becomes eligible to participate in the
Program, he or she shall make a written recommendation to the Company, on a
form approved by the Company for this purpose, designating the Donee(s) which
he or she intends to be the recipient(s) of the Company donation to be made on
his or her behalf. A participant may revise or revoke any such recommendation
prior to his or her death by signing a new recommendation form and submitting
it to the Company.
5. Amount and Timing of Donation.
Each participant may choose one organization to receive a Company
donation of $500,000, or up to five organizations to receive donations
aggregating $500,000. Each recommended organization must be recommended to
receive a donation of at least $100,000. The donation will be made by the
Company in ten equal annual installments, with the first installment to be
made as soon as is practical after the participant's death. If a participant
recommends more than one organization to receive a donation, each will receive
a prorated portion of each annual installment. Each annual installment
payment will be divided among the recommended organizations in the same
proportions as the total donation amount has been allocated among the
organizations by the participant.
6. Donees.
In order to be eligible to receive a donation, a recommended
organization must initially, and at the time a donation is to be made, qualify
as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue
Code and thereby be eligible to receive tax-deductible donations, and at least
50% of a participant's total donation amount must be donated to eligible
Donees located in Indiana and/or Arizona. Also, each recommended organization
must be reviewed and approved by the Compensation Committee of the Board of
Directors of the Company (the "Committee"). A recommendation will be approved
unless it is determined, in the exercise of good faith judgment, that donation
to the organization would be detrimental to the best interests of the Company.
A participant's private foundation is not eligible to receive donations under
the Program. If an organization recommended by a participant ceases to
qualify as a Donee, and if the participant does not submit a form to change
the recommendation before his or her death, the amount recommended to be
donated to the organization will instead be donated to the Central Newspapers
Foundation.
7. Funding and Program Assets.
The Company may fund the Program or it may choose not to fund the
Program. If the Company elects to fund the Program in any manner, neither the
participants nor their recommended Donee(s) shall have any rights or interests
in any assets of the Company identified for such purpose. Nothing contained
in the Program shall create, or be deemed to create, a trust, actual or
constructive, for the benefit of a participant or any Donee recommended by a
participant to receive a donation, or shall give, or be deemed to give, any
participant or recommended Donee any interest in any assets of the Program or
the Company. If the Company elects to fund the Program through life insurance
policies, a participant agrees to cooperate and fulfill the enrollment
requirements necessary to obtain insurance on his or her life.
8. Amendment or Termination.
The Board of Directors of the Company may, at any time, without the
consent of the participants in the Program, amend, suspend, or terminate the
Program.
9. Administration.
The Program shall be administered by the Committee. The Committee shall
have plenary authority in its discretion, but subject to the provisions of the
Program, to prescribe, amend, and rescind rules, regulations and procedures
relating to the Program. The determinations of the Committee on the foregoing
matters shall be conclusive and binding on all interested parties.
10. Governing Law.
The Program shall be construed and enforced according to the laws of the
State of Indiana, and all provisions thereof shall be administered according
to the laws of said state.
11. Effective Date.
The Program effective date is August 1, 1994. The recommendation of an
individual participant will be effective when he or she completes all
enrollment requirements.
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Central Newspapers, Inc. (the "Company") is primarily engaged in the publishing
and distribution of newspapers. Revenue is derived primarily from advertising
and newspaper sales, principally in the Phoenix, Arizona and Indianapolis,
Indiana metropolitan areas. The Company has a 13.5% interest in Ponderay
Newsprint Company ("Affiliate"), a partnership formed to own and operate a
newsprint mill in Washington. The following analysis should be read in
conjunction with the consolidated financial statements and the accompanying
notes to the consolidated financial statements.
During July 1994, the Company offered to buy the 5,533 shares of Class A common
stock of Indianapolis Newspapers, Inc. (INI) not already owned for $10,000 net
in cash per share. On September 12, 1994, the Company purchased 3,591 shares
of the Class A common stock of INI. The stock purchase resulted in the Company
increasing its ownership of INI to 89.9% and permits INI to be considered part
of the consolidated group for federal income tax purposes. The purchase of the
minority interest did not have a significant effect on the reported earnings
per share for 1994.
The current year financial statements include the adoption as of the beginning
of the year Statement of Financial Accounting Standards (SFAS) No. 115
"Accounting for Certain Investments in Debt and Equity Securities." The
adoption of SFAS No. 115 resulted in the Company carrying its investments in
debt and equity securities at fair value. Unrealized gains and losses on
available-for-sale securities are recorded as a component of shareholders'
equity. Unrealized gains and losses on trading securities are reflected in
earnings.
During 1993, the Company adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." During 1992, the Company adopted SFAS No. 109,
"Accounting for Income Taxes." The adoption of SFAS No. 112 and SFAS No. 109
did not have a significant effect on operating results. The Company also
adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits,"
during 1992 which resulted in a cumulative effect adjustment of $34.2 million.
The Company changed the eligibility requirements to participate in its various
postretirement benefit plans during 1993.
The Company formed Topics Newspapers, Inc. (a wholly-owned subsidiary) in 1993
to acquire the net assets 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 Topics Newspapers,
Inc. are included in the financial statements as of January 1, 1993.
The Phoenix production facility, on which construction began in 1990, was
completed and placed in service during 1992. This resulted in significantly
increased costs during 1992 as the existing downtown production facility was
operated while production was phased in at the new facility. After production
was transferred to the new facility, all newspaper printing ceased at the
downtown location.
During August 1993, Indianapolis Newspapers, Inc. began a program called
Indianapolis Market Penetration And Custom Targeting (IMPACT). This program
utilizes total market coverage, zoned run of press advertising and preprint
programs which provide advertisers flexibility in their needs for high
penetration and the ability to reach their target markets. The utilization of
this program significantly increased the volume of part run advertising.
Operating expenses for 1994 included a full year of the IMPACT program.
1994 Compared to 1993
Operating revenue increased $53.1 million, or 11.4%, to $519.7 million in 1994.
The gain resulted from a $48.9 million, or 14.1%, increase in advertising
revenue and a $3.8 million, or 3.2%, increase in circulation revenue. Phoenix
and Indianapolis combined full run advertising linage was up 11.8% from 1993.
Advertising revenue at Phoenix newspapers increased 14.0%. The revenue
increase reflects a gain of 12.7% in full run linage, an increase of 5.2% in
part run linage and an increase in advertising rates at the beginning of 1994.
At Indianapolis, advertising revenue was up 15.2% from the prior year. The
revenue increase reflects a gain of 10.5% in full run linage, a gain of 100.4%
in part run linage and advertising rate increases effective January 1, 1994.
The significant gain in Indianapolis part run linage reflects a full year of
the IMPACT program.
Circulation revenue increased 4.3% at Phoenix, reflecting a gain of 2.5% in the
average Sunday circulation and a 2.1% gain in combined daily circulation. The
single copy price of the morning newspaper was raised by $.15, or 42.9%, to
$.50 in January 1993.
Circulation revenue increased .9% at Indianapolis, reflecting a loss of 2.2% in
combined daily circulation and a loss of 1.7% in Sunday circulation which was
offset by the Sunday delivered price increase of $.25, or 20%, to $1.50 in May
1993.
During the past three years, circulation rates have been increased from time to
time. Generally, a rate increase will cause a temporary decline in circu-
lation; however, the evening newspapers are experiencing an ongoing decline in
their average annual circulation.
Operating expenses increased $43.0 million, or 10.7%, to $444.0 million.
Compensation and fringe benefit costs increased 9.2% during 1994 due to the
higher volume of production in Phoenix, the full year of operation of the
IMPACT program in Indianapolis and changes in the retirement plans. Newsprint
expense was up $8.0 million, or 12.2%, as average newsprint prices were up 3.9%
and consumption increased 8.2%. Other operating, distribution and general
expenses increased $10.4 million, or 9.5%, from the prior year. Contributing
to this increase were the additional costs related to the full year of expenses
associated with the IMPACT program, increased equipment repair costs and higher
circulation and distribution costs. Depreciation expense increased $.8
million, or 3.2%. Work force reduction costs of $7.1 million for 1994 and $1.5
million for 1993 are associated with the voluntary early retirement programs in
Indianapolis and Phoenix. These programs were undertaken due to economic
conditions and changes in technology.
Operating income increased $10.1 million, or 15.4%, to $75.7 million for the
year. Other income increased $2.4 million, or 65.6%, which reflects larger
amounts available for investment compared to the prior year and higher rates of
return on investments. Other expense of $1.0 million decreased $171,000.
Income before income taxes increased $12.7 million, or 18.6%, to $80.7 million.
The effective income tax rate for 1994 was 40.7% compared to 41.1% for 1993.
The Company's equity in Affiliate, net of tax benefits, resulted in a loss of
$3.6 million for 1994 compared to a loss of $4.3 million during 1993.
Net income for 1994 was $41.3 million compared to $32.1 million during 1993.
Earnings per share were $1.55 for 1994, an increase of 28.1% from the $1.21
reported last year. Excluding the incremental work force reduction cost of
$5.6 million during 1994, earnings per share would have been $1.67 for the
current year.
1993 Compared to 1992
Operating revenue increased $33.0 million, or 7.6%, to $466.6 million in 1993.
The gain resulted from a $26.7 million, or 8.4%, increase in advertising
revenue and a $5.9 million, or 5.2%, increase in circulation revenue. Phoenix
and Indianapolis combined full run advertising linage was up 3.9% from 1992.
Advertising revenue at Phoenix newspapers was up 7.3%. The revenue increase
reflects a gain of 5.7% in full run linage, an increase of 11.2% in part run
linage and an increase in advertising rates at the beginning of 1993. At
Indianapolis, advertising revenue was up 7.5% from the prior year. The revenue
increase reflects a gain of 1.3% in full run linage, a gain of 180.7% in part
run linage and advertising rate increases effective January 1, 1993.
Circulation revenue increased 5.3% at Phoenix, reflecting price increases and a
gain of 2.3% in the average Sunday circulation and a flat combined daily
circulation. The single copy price of the morning newspaper was raised by
$.15, or 42.9%, to $.50 in January 1993.
Circulation revenue increased 4.2% at Indianapolis, reflecting a Sunday price
increase, a loss of .5% in combined daily circulation and a loss of .5% in
Sunday circulation. The Sunday delivered price of $1.50 reflects a $.25, or
20%, increase in May 1993.
During the past three years, circulation rates have been increased from time to
time. Generally, a rate increase will cause a temporary decline in circula-
tion; however, the evening newspapers are experiencing an ongoing decline in
their average annual circulation.
Operating expenses increased $19.0 million, or 5.0%, to $400.9 million.
Compensation and fringe benefit costs increased 3.0% compared to 1992.
Newsprint expense was up $5.1 million, or 8.4%, as newsprint prices were up
slightly and consumption increased 7.8%. Other operating, distribution and
general expenses increased $6.0 million, or 5.9%, from the prior year.
Contributing to this increase were the additional costs related to the new
production facility in Phoenix which was operational for the full year during
1993. Other cost increases resulted from higher sales taxes on increased
circulation revenue and the costs associated with the IMPACT program in
Indianapolis. Depreciation expense increased $4.2 million, or 19.2%, primarily
from the production facility in Phoenix. Work force reduction costs of $1.5
million for 1993 and $3.6 million for 1992 are associated with the voluntary
early retirement programs in Indianapolis and Phoenix. These programs were
undertaken due to economic conditions and changes in technology.
Operating income increased $14.0 million, or 27.0%, to $65.6 million for the
year. Other income increased $327,000, or 9.9%, which reflects larger amounts
available for investment compared to the prior year. Other expense of $1.2
million decreased $979,000, or 44.8%, reflecting primarily the 1992 write-off
of printing presses and certain production equipment no longer used in Phoenix.
Income before income taxes increased $15.3 million, or 28.9%, to $68.0 million.
The effective income tax rate for 1993 was 41.1% compared to 40.7% for 1992.
The Company's equity in Affiliate, net of tax benefits, resulted in a loss of
$4.3 million for 1993 compared to a loss of $4.8 million during 1992.
Income before cumulative effect of accounting change increased $8.8 million, or
37.6%, from the prior year to $32.1 million. During 1992, the Company recorded
a cumulative effect of accounting change net of tax benefits and minority
interest of $34.2 million in conjunction with the adoption of SFAS No. 106.
The Company elected to immediately recognize the accumulated benefit obligation
related to prior service costs. Net income for 1993 was $32.1 million compared
to a loss of $10.9 million for 1992.
Investment In Affiliate
The Company owns a 13.5% interest in Ponderay Newsprint Company ("Ponderay"), a
general partnership formed to own and operate a newsprint mill. The Company's
investment in Ponderay is accounted for using the equity method, which reflects
the Company's share of Ponderay's net loss, tax credits and related income tax
expense or benefits. While Ponderay's operating results will be affected by
movements in newsprint prices, it is currently anticipated that Ponderay may
experience operating losses for the next several years and that such losses
will adversely affect the Company's net income. The Company expects to make
additional cash investments to help finance the operating losses of Ponderay.
See Note 11 of Notes to Consolidated Financial Statements.
Capital Resources and Liquidity
Cash provided by operations is the Company's primary source of liquidity. In
the past three years, net cash provided from operations in conjunction with
cash investments has been sufficient to fund all capital expenditures including
the replacement and modernization of presses in Indianapolis and the construc-
tion of a satellite production facility in Phoenix. Operating activities
generated $41.9 million of cash during 1994 which includes $45.8 million of net
purchases of trading securities that are classified as operating activities
under SFAS No. 115. In prior years, the purchases of and proceeds from
marketable securities were considered to be investing activities. The Company
had working capital of $132.9 million at December 25, 1994 and $128.0 million
at December 26, 1993.
Total capital expenditures in 1994 were $23.3 million, up from $16.0 million
for 1993. During 1992, the conversion from letterpress to offset printing in
Indianapolis and the construction of a production facility in Phoenix were
completed and placed in service. It is estimated capital expenditures for 1995
will be $67.5 million which includes the anticipated expenditures on the
Phoenix office building, client-server computer system and the Indianapolis
production facility discussed in Note 16 of Notes to Consolidated Financial
Statements.
The Company invested $5.6 million in Ponderay during 1994 and $3.8 million
during 1993. See Note 11 of Notes to Consolidated Financial Statements for
guarantees of certain debt related to Ponderay. Cash dividend payments of
$15.2 million and $13.9 million were made in 1994 and 1993.
The Company purchased 3,591 shares of Class A common stock of Indianapolis
Newspapers, Inc. in September 1994 at a total cost of $36.2 million which
increased its ownership of Indianapolis Newspapers, Inc. to 89.9%.
The Company anticipates that cash flow generated from operations and cash
reserves in conjunction with credit resources are adequate to meet its
requirements for capital expenditures, working capital and dividend payments.
Inflation
The impact of inflation on the Company's operations has become less significant
with lower inflation rates in recent years. Generally, the Company has been
able to offset the inflationary effects on operating expenses by increasing
advertising and circulation rates. During 1992 and 1993, newsprint prices
declined due to an oversupply in the newsprint industry. During 1994, the
Company experienced an overall increase in the average cost of newsprint of
3.9%. The Company's newsprint suppliers have announced significant price
increases that are expected to be implemented during 1995. The Company
anticipates newsprint expense will increase substantially during 1995.
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Shareholders
Central Newspapers, Inc.
We have audited the accompanying consolidated statement of financial position
of Central Newspapers, Inc. and Subsidiaries as of December 25, 1994 and
December 26, 1993 and the related consolidated statements of income, share-
holders' equity and cash flows for each of the three fiscal years in the period
ended December 25, 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Central Newspapers, Inc. and Subsidiaries as of December 25, 1994 and
December 26, 1993 and the consolidated results of their operations and their
cash flows for each of the three fiscal years in the period ended December 25,
1994, in conformity with generally accepted accounting principles.
As discussed in Note 2, the Company adopted, effective at the beginning of
1994, SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" and as discussed in Note 5, effective at the beginning of 1992,
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions."
/s/ Geo. S. Olive & Co. LLC
---------------------------
Geo. S. Olive & Co. LLC
Indianapolis, Indiana
February 24, 1995
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except share data)
FOR THE YEAR ENDED: Dec. 25 Dec. 26 Dec. 27
1994 1993 1992
------- ------- -------
Operating revenues:
Advertising $395,450 $346,566 $319,872
Circulation 121,823 118,032 112,180
Other 2,429 1,969 1,548
-------- -------- --------
519,702 466,567 433,600
Operating expenses:
Operating costs 222,074 200,200 187,611
Distribution and general 188,195 173,444 169,105
Depreciation 26,639 25,810 21,649
Work force reduction cost 7,064 1,491 3,572
-------- -------- --------
443,972 400,945 381,937
-------- -------- --------
Operating income 75,730 65,622 51,663
Other income--net 4,965 2,417 1,111
-------- -------- --------
Income before income taxes 80,695 68,039 52,774
Provision for income taxes 32,847 27,948 21,491
-------- -------- --------
Income before minority interest and
equity in Affiliate 47,848 40,091 31,283
Minority interest in subsidiary (2,977) (3,683) (3,105)
Equity in Affiliate, net of tax benefits (3,550) (4,280) (4,820)
-------- -------- --------
Income before cumulative effect of
accounting change 41,321 32,128 23,358
Cumulative effect of accounting change,
net of tax benefits (34,212)
-------- -------- --------
Net income (loss) $ 41,321 $ 32,128 $(10,854)
======== ======== ========
Net income per common share:
Income before cumulative effect of
accounting change $1.55 $1.21 $ .88
Cumulative effect of accounting change,
net of tax benefits (1.29)
----- ----- -----
Net income (loss) $1.55 $1.21 $(.41)
===== ===== =====
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(In thousands, except share data)
Dec. 25 Dec. 26
1994 1993
------- -------
ASSETS
Current assets:
Cash and cash equivalents $ 22,105 $ 22,143
Marketable securities 107,413 102,010
Accounts receivable (net of allowances of
$1,071 and $1,142) 54,625 46,348
Inventories 9,142 10,116
Deferred income tax benefits 7,636 6,651
Other current assets 2,418 3,229
-------- --------
Total current assets 203,339 190,497
-------- --------
Property, plant and equipment:
Land 14,665 11,656
Buildings and improvements 99,985 98,248
Leasehold improvements 4,075 4,141
Machinery and equipment 302,333 297,358
Construction in progress 9,934 875
-------- --------
430,992 412,278
Less accumulated depreciation 181,675 164,942
-------- --------
249,317 247,336
-------- --------
Other assets:
Land held for development 4,148 4,139
Goodwill and other intangibles 29,112 9,807
Investment in Affiliate 3,989 3,855
Other 10,539 9,054
-------- --------
47,788 26,855
-------- --------
TOTAL ASSETS $500,444 $464,688
======== ========
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Dec. 25 Dec. 26
1994 1993
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,134 $ 12,675
Accrued compensation 16,423 15,166
Dividends payable 4,205 4,547
Accrued expenses and other liabilities 18,240 15,434
Federal and state income taxes 2,406
Deferred revenue 14,430 12,270
-------- --------
Total current liabilities 70,432 62,498
-------- --------
Deferred income taxes 22,216 17,214
-------- --------
Long-term debt 2,678 2,678
-------- --------
Postretirement benefit obligation 77,802 72,937
-------- --------
Minority interest in subsidiary 7,554 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--23,483,000 and 23,431,450 shares 18,182 17,137
Class B common stock--without par value:
Authorized--50,000,000 shares
Issued--31,553,000 and 31,578,000 shares 63 63
Retained earnings 300,968 273,493
Net unrealized gain on
available-for-sale securities 549
-------- --------
319,762 290,693
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $500,444 $464,688
======== ========
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Net
(In thousands) Unrealized
Gain on
Class A Class B Available-
Common Common Retained for-Sale
Stock Stock Earnings Securities
------- ------- -------- ----------
Balance at December 29, 1991 $15,330 $65 $275,587
Net loss (10,854)
Dividends declared:
Class A common stock (9,782)
Class B common stock (1,359)
Exercise of stock options 1,010
------- --- --------
Balance at December 27, 1992 16,340 65 253,592
Net income 32,128
Dividends declared:
Class A common stock (10,757)
Class B common stock (1,470)
Exercise of stock options 795
Common stock conversion 2 (2)
------- --- --------
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 41,321
Dividends declared:
Class A common stock (12,204)
Class B common stock (1,642)
Exercise of stock options 1,045
Change in net unrealized gain on
available-for-sale securities (100)
------- --- -------- ----
Balance at December 25, 1994 $18,182 $63 $300,968 $549
======= === ======== ====
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
FOR THE YEAR ENDED: Dec. 25 Dec. 26 Dec. 27
1994 1993 1992
------- ------- -------
Operating activities:
Net income (loss) $ 41,321 $ 32,128 $(10,854)
Items which did not use (provide) cash:
Cumulative effect of accounting change 34,212
Depreciation and amortization 27,284 26,305 21,666
Postretirement and pension benefits 7,815 2,741 4,471
(Gain) loss on disposition of assets (171) (56) 1,420
Gain on sale of marketable securities (32) (37) (174)
Minority interest in earnings of subsidiary 2,977 3,683 3,105
Equity in Affiliate 3,550 4,280 4,820
Deferred income taxes (92) 4,979 1,346
Change in assets and liabilities:
Net purchases of trading securities (45,787)
Accounts receivable (8,276) (4,602) (3,349)
Inventories 974 (126) 2,306
Other current assets 428 539 (845)
Accounts payable 3,564 (712) (1,069)
Accrued compensation 1,257 (310) 1,005
Accrued expenses and other liabilities 3,586 398 4,269
Federal and state income taxes 1,340 3,591 4,361
Deferred revenue 2,159 931 944
-------- -------- --------
Net cash provided by operating activities 41,897 73,732 67,634
-------- -------- --------
Investing activities:
Purchases of property, plant and equipment (23,256) (16,049) (26,175)
Proceeds from disposition of assets 622 258 706
Purchases of available-for-sale securities (234,011) (161,331) (128,739)
Proceeds from available-for-sale securities 274,800 132,087 106,203
Investment in Affiliate (5,603) (3,834) (3,780)
Purchase of minority interest in subsidiary (36,205)
Purchase of intangibles and other (3,877) (6,678) (134)
-------- -------- --------
Net cash used by investing activities (27,530) (55,547) (51,919)
-------- -------- --------
Financing activities:
Cash dividends paid (13,308) (11,956) (10,870)
Dividends paid to minority interest (1,937) (1,991) (1,993)
Proceeds from exercise of stock options 840 684 907
-------- -------- --------
Net cash used by financing activities (14,405) (13,263) (11,956)
-------- -------- --------
Increase (decrease) in cash and cash
equivalents (38) 4,922 3,759
Cash and cash equivalents, beginning of year 22,143 17,221 13,462
-------- -------- --------
Cash and cash equivalents, end of year $ 22,105 $ 22,143 $ 17,221
======== ======== ========
Supplemental cash flow information:
Income taxes paid during the year $31,920 $19,377 $17,926
Interest paid during the year 208 221 295
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1--SIGNIFICANT ACCOUNTING POLICIES
Central Newspapers, Inc. and its subsidiaries (the "Company") are engaged
primarily in the publication of newspapers in Phoenix, Arizona and
Indianapolis, Indiana as well as smaller communities in Indiana.
Principles of Consolidation - The consolidated financial statements include the
accounts of the Company after the elimination of all significant intercompany
transactions.
Fiscal Year - The Company's fiscal year ends on the last Sunday of the calendar
year. The fiscal years 1994, 1993 and 1992 each comprised fifty-two weeks.
Revenue Recognition - Advertising revenue is recognized when the advertisement
appears in the newspaper. Deferred subscription revenue, which primarily
represents amounts received from customers in advance of newspaper delivery, is
included in revenue over the subscription term.
Cash Equivalents - The Company considers highly liquid investments with a
maturity of three months or less when purchased to be cash equivalents.
Concentrations of Credit Risk - Financial instruments which potentially subject
the Company to concentrations of credit risk consist primarily of cash
equivalents, trade accounts receivable and investments in marketable
securities. The Company places its temporary cash with financial institutions
and limits the amount of credit exposure to any one financial institution.
Accounts receivable are with customers located primarily in the immediate
geographical area of each city of publication. The Company reviews a
customer's credit history before extending credit and establishes an allowance
for doubtful accounts based on factors surrounding the credit risk of specific
customers, historic trends and other information. The Company, by policy,
limits the type and amount of its investments in marketable securities.
Inventories - Newsprint is valued at the lower of cost or market on the
last-in, first-out (LIFO) method. Other inventories are valued at the lower of
cost or market using the first-in, first-out (FIFO) and moving average methods.
Property, Plant and Equipment - Property, plant and equipment are carried at
cost. Depreciation is computed using primarily the straight-line method based
on the estimated useful lives of the assets.
Goodwill and Other Intangibles - Goodwill acquired before 1970 is not being
amortized. Goodwill and other intangibles acquired after 1970 are being
amortized on a straight-line basis over periods from two to forty years.
Amortization amounted to $639,000 for 1994, $495,000 for 1993 and $17,000 for
1992. Accumulated amortization was $1,443,000 and $804,000 at the end of 1994
and 1993, respectively.
Investment in Affiliate - The Company uses the equity method of accounting for
its 13.5% partnership interest in Ponderay Newsprint Company.
Income Taxes - In 1992, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes" which provides for the
determination of deferred tax liabilities and assets at the end of each period
based on the difference between financial statement and tax basis of assets and
liabilities using presently enacted tax rates. The Company files a con-
solidated federal income tax return with its wholly-owned subsidiaries.
Effective September 12, 1994, Indianapolis Newspapers, Inc. ("INI") became a
majority-owned subsidiary for income tax reporting purposes and subsequently,
will be included in the Company's consolidated income tax returns. In prior
periods, INI filed separate consolidated income tax returns with its majority-
owned subsidiary.
Net Income Per Common Share - The net income per common share is computed based
on the weighted average number of common shares outstanding in each year. The
Class B common stock is included in the computation as if converted to Class A
common stock at a ratio of ten shares of Class B common stock to one share of
Class A common stock. The weighted average common shares outstanding
were 26,621,133; 26,570,973 and 26,514,750 for 1994, 1993 and 1992. Out-
standing stock options are common stock equivalents but are excluded from net
income per common share computations as their effect is not significant.
Accounting Changes - At the beginning of the 1994 fiscal year, the Company
adopted SFAS No. 115 "Accounting for Certain Investments in Debt and Equity
Securities." During 1993, the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." During 1992, the Company adopted SFAS
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" and SFAS No. 109, "Accounting for Income Taxes."
2--MARKETABLE SECURITIES
The Company adopted SFAS No. 115, "Accounting for Certain Investments in Debt
and Equity Securities" effective December 27, 1993. Prior years' financial
statements have not been restated to reflect the change in accounting method.
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.
(In thousands) Fair Value Cost
---------- ----
Available-for-Sale Securities
Debt securities of the U.S. Treasury $ 60,560 $ 60,724
Equity securities 1,705 142
Corporate debt securities 483 485
-------- --------
62,748 61,351
-------- --------
Trading Securities
Debt securities of U.S. Treasury and
agencies 13,809 13,927
Corporate debt securities 12,080 12,089
Mortgage-backed securities 20,481 20,249
-------- --------
46,370 46,265
-------- --------
Total $109,118 $107,616
======== ========
The gross unrealized gain (loss) on available-for-sale securities at year end
was $7,000 and $(171,000) for debt securities of the U.S. Treasury, $1,563,000
for equity securities and $(2,000) for corporate debt securities.
All available-for-sale securities had a contractual maturity of one year or
less. The fair value of equity securities of $1,705,000 has been classified
with other noncurrent assets.
The Company's proceeds from available-for-sale securities were $274,800,000.
The net unrealized gain on trading securities included in earnings during 1994
amounted to $105,000.
At December 26, 1993, the value of marketable securities approximated fair
value, except equity securities for which fair value exceeded carrying value by
$1,551,000.
3--PURCHASE OF MINORITY INTEREST AND GOODWILL
During July 1994, the Company made a tender offer for the 5,533 shares of
Class A common stock of INI not already owned for $10,000 net in cash per
share. On September 12, 1994, the Company purchased 3,591 shares of INI which
increased the Company's ownership to 89.9% from 71.2%. The total acquisition
cost of $36,200,000, including consulting fees, was accounted for using the
purchase method of accounting. The fair value of assets acquired was
$22,900,000, including $19,700,000 of goodwill. The transaction resulted in a
reduction of the minority interest of $13,400,000. The purchase did not
significantly effect reported earnings for the 1994 fiscal year.
4--EMPLOYEE BENEFIT PLANS
The Company has defined benefit plans to provide pension benefits to all
employees who have met the eligibility requirements. Benefits are based
primarily on length of service, wages earned, age and the amount of optional
employee contributions. The Company's policy is to fund at least the minimum
amount required by ERISA. Assets of the plans consist primarily of stocks,
bonds and short-term investments.
The funded status for the Company's defined benefit plans at year end:
(In thousands) 1994 1993
---- ----
Actuarial present value of plan benefits:
Vested $142,998 $156,061
Nonvested 8,165 3,773
-------- --------
Accumulated benefit obligation 151,163 159,834
Effect of future salary increases 7,771 17,501
-------- --------
Projected benefit obligation 158,934 177,335
Plan assets at fair value 168,634 180,805
-------- --------
Plan assets in excess of projected benefit
obligation 9,700 3,470
Unrecognized SFAS No. 87 transition asset (8,831) (10,118)
Unrecognized prior service cost 4,123 3,665
Unrecognized net (gain) loss (3,557) 7,668
-------- --------
Prepaid pension cost $ 1,435 $ 4,685
======== ========
Assumptions used in determining funded status at the end of 1994 were a 9% rate
of return, 8.75% discount rate and a 5% rate of compensation increase. The
assumptions for determining funded status at the end of 1993 were an 8.5% rate
of return, 7.25% discount rate and a 4% rate of compensation increase.
Pension expense (income), excluding the special retirement benefits discussed
in Note 7, included the following components:
(In thousands) 1994 1993 1992
---- ---- ----
Service cost--benefits earned during the year $ 5,959 $ 3,231 $ 3,185
Interest cost on projected benefit obligation 12,851 12,492 11,944
Return on assets:
Actual 84 (17,927) (15,070)
Deferred gain (loss) (14,551) 3,028 780
Amortization of:
Transition asset (1,286) (1,286) (1,287)
Prior service cost 443 403 403
Gain (10) (7) (8)
------- ------- -------
Pension expense (income) $ 3,490 $ (66) $ (53)
======= ======= =======
Significant assumptions used in determining pension expense (income):
1994 1993 1992
---- ---- ----
Expected long-term rate of return 8.5% 9.0% 9.0%
Discount rate 7.25 8.25 8.25
Rate of increase in future compensation levels 4.0 5.0 5.0
Effective January 1, 1994, the pension plans were amended to eliminate the
voluntary employee contributions, provide future benefits based on the
participants' years of service and average compensation at retirement, enhance
pension benefits of participants who begin receiving benefits before age 65 and
increase benefits to all eligible retirees. The amendments are subject to
approval by the Internal Revenue Service and were accounted for as of
January 1, 1994.
The Company has a wage deferral plan qualified under Section 401(k) of the
Internal Revenue Code that covers all eligible employees. Company contribu-
tions to this plan were $4,414,000, $1,743,000 and $1,704,000 for 1994, 1993
and 1992. The plan was amended effective January 1, 1994 to increase the
allowable amount of participants' contributions and to change the basis of
Company contributions.
5--POSTRETIREMENT BENEFIT OBLIGATION
The Company sponsors postretirement medical and life insurance plans which are
available to most of its employees. In order to be eligible for these plans,
employees must retire from the Company and have been covered under an active
plan. The level of benefits provided depends on the year of retirement and
years of service. The plans are contributory with periodic adjustments in the
amount of contributions by retirees. The Company's policy is to fund these
benefits as claims and premiums are paid.
During 1992, the Company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." Under SFAS No. 106, the costs of
providing retiree health care and life insurance benefits are actuarially
determined and accrued over the employee's service life.
The Company elected to immediately recognize in 1992 the accumulated benefit
obligation related to prior service costs. The postretirement obligation of
$34,212,000 (net of income tax benefits of $22,243,000 and minority interest)
is shown on the Consolidated Statement of Income as the cumulative effect of
accounting change. The plans were amended January 1, 1993 to change the
service requirements to become eligible for plan benefits. The amendments
resulted in an unrecognized reduction in prior service cost, which is being
amortized over future years.
The status of the postretirement benefit obligation at year end:
(In thousands) 1994 1993
---- ----
Accumulated postretirement benefit obligation:
Retirees $36,880 $38,120
Fully eligible active plan participants 14,534 15,812
Other active plan participants 14,030 18,596
------- -------
Total accumulated postretirement benefit obligation 65,444 72,528
Unrecognized prior service cost 6,811 8,625
Unrecognized net gain (loss) 8,721 (4,246)
------- -------
Accrued postretirement benefit obligation $80,976 $76,907
======= =======
The net postretirement benefit cost included
the following components:
Service cost--benefits earned during the year $2,646 $2,451
Interest cost on accumulated benefit obligation 5,765 5,851
Amortization of unrecognized prior service cost (1,934) (1,898)
Amortization of loss 6
------ ------
Postretirement benefit expense $6,483 $6,404
====== ======
The accumulated postretirement benefit obligation was determined using a
discount rate of 8.75% and a health care cost trend rate of 11% in 1994
decreasing to 5% in the year 2000 and thereafter. The discount rate used for
1993 was 7.75%. The effect of a 1% increase each year in the health care cost
trend rate used, would result in an increase of approximately $5,123,000 in the
accumulated postretirement benefit obligation at the end of 1994 and $994,000
in the aggregate service and interest components of the 1994 expense.
6--POSTEMPLOYMENT BENEFITS
The Company has certain postemployment benefit plans covering most of its
employees. The benefit plans provide severance, disability, supplemental
health care, life insurance and other welfare benefits. The Company adopted
SFAS No. 112, "Employers' Accounting for Postemployment Benefits" in 1993.
SFAS No. 112 prescribes accounting methods for employers who provide certain
benefits to former or inactive employees after employment but before retire-
ment. Adoption of this accounting standard did not have a significant effect
on the results of operations and did not require a cumulative effect
adjustment.
7--WORK FORCE REDUCTION
The Company has reduced its work force in response to economic conditions,
increasing costs and changes in technology. The reductions were effected
through voluntary early retirement incentive programs and involuntary job
elimination plans. Employees were offered early retirement benefits through a
non-qualified supplemental retirement plan and those terminated due to job
eliminations received severance payments. Work force reduction costs included
retirement benefits, severance payments and professional support.
8--OTHER INCOME--NET
(In thousands) 1994 1993 1992
---- ---- ----
Income items:
Interest $5,562 $3,083 $2,722
Gain on disposition of assets 171
Dividends 62 57 57
Gain on sale of marketable securities 32 37 174
Other 172 445 342
------ ------ ------
5,999 3,622 3,295
------ ------ ------
Expense items:
Interest 204 221 295
Loss on disposition of assets 102 1,420
Other 830 882 469
------ ------ ------
1,034 1,205 2,184
------ ------ ------
Other income--net $4,965 $2,417 $1,111
====== ====== ======
9--INCOME TAXES
During 1992, the Company adopted SFAS No. 109, "Accounting for Income Taxes."
Adoption of this statement did not have a significant effect on the results of
operations for 1992 and did not require a cumulative effect adjustment. The
provision for income taxes, exclusive of tax benefits from equity in Affiliate
and the cumulative effect of the adoption of SFAS No. 106, consisted of:
(In thousands) 1994 1993 1992
---- ---- ----
State:
Currently payable $ 6,376 $ 4,192 $ 3,795
Deferred 54 1,381 445
------- ------- -------
6,430 5,573 4,240
------- ------- -------
Federal:
Currently payable 26,077 17,376 15,264
Deferred 340 4,999 1,987
------- ------- -------
26,417 22,375 17,251
------- ------- -------
Provision for income taxes $32,847 $27,948 $21,491
======= ======= =======
Components of net deferred income tax liability:
(No valuation allowance required)
(In thousands) 1994 1993 1992
---- ---- ----
Depreciation $52,982 $47,160 $37,848
Pension 549 1,864 1,917
Other 641
------- ------- -------
Gross deferred tax liability 54,172 49,024 39,765
------- ------- -------
Postretirement benefits (32,020) (31,015) (31,240)
Vacation (3,830) (3,740) (3,816)
Tax credit carryforward (2,400) (1,000)
Other (3,742) (1,726) (1,010)
------- ------- -------
Gross deferred tax asset (39,592) (38,881) (37,066)
------- ------- -------
Net deferred income tax liability $14,580 $10,143 $ 2,699
======= ======= =======
Reconciliation of the U.S. federal statutory tax rate to the effective tax rate:
(In thousands) 1994 1993 1992
-------------- -------------- --------------
Federal statutory tax rate $28,243 35.0% $23,814 35.0% $17,943 34.0%
State taxes net of federal
tax effect 4,181 5.2 3,622 5.3 2,799 5.3
Dividend benefit
eliminations 101 .1 335 .5 322 .6
Other 322 .4 177 .3 427 .8
------- ----- ------- ---- ------- -----
Provision for income taxes $32,847 40.7% $27,948 41.1% $21,491 40.7%
======= ===== ======= ===== ======= =====
10--INVENTORIES
Newsprint inventory amounted to $5,962,000 and $6,686,000 at the end of 1994
and 1993 and the current value exceeded LIFO value by $3,779,000 and
$2,088,000. Other inventories amounted to $3,180,000 and $3,430,000 at the end
of 1994 and 1993.
11--INVESTMENT IN AFFILIATE
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. During 1992, the lending agent for the banks
that provided financing for the mill issued a Completion Receipt acknowledging
that completion was deemed to have occurred as of April 7, 1992. Under the
terms of the loan agreement, the Company's guarantee of debt became $16,875,000
as the assets of the completed mill became collateral for a portion of the
partnership debt. At the end of 1994 and 1993, $33,916,000 and $28,313,000
had been invested in Ponderay. 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 debt is repaid. Newsprint
purchased from Ponderay amounted to $14,812,000 during 1994 and $14,679,000
during 1993.
Summarized financial data for Affiliate:
(Audited by other independent accountants)
(In thousands) 1994 1993 1992
---- ---- ----
Results of operations:
Net sales $100,233 $ 94,375 $ 89,807
Net loss 40,509 45,713 49,435
Financial position:
Current assets $ 19,484 $ 19,633 $ 18,361
Property and equipment, at cost--net 291,033 304,315 321,065
Other assets 1,654 5,690 10,075
-------- -------- --------
$312,171 $329,638 $349,501
======== ======== ========
Current liabilities $ 34,010 $ 33,771 $ 27,515
Long-term debt ($125 million
guaranteed by partners) 248,633 267,330 282,636
Partners' capital 29,528 28,537 39,350
-------- -------- --------
$312,171 $329,638 $349,501
======== ======== ========
Summary of the Company's investment in Affiliate:
(In thousands) 1994 1993 1992
---- ---- ----
Investment, beginning of year $ 3,855 $ 5,315 $ 8,209
Equity in partnership loss (5,469) (6,171) (6,674)
Additional investments 5,603 4,711 3,780
------- ------- -------
Investment, end of year $ 3,989 $ 3,855 $ 5,315
======= ======= =======
Equity in Affiliate:
Equity in partnership loss $(5,469) $(6,171) $(6,674)
Current income tax benefit 1,325 4,356 4,187
Deferred tax benefit (expense) 594 (2,465) (2,333)
------- ------- -------
Equity in Affiliate, net of
tax benefits $(3,550) $(4,280) $(4,820)
======= ======= =======
12--LONG-TERM DEBT
The trust indenture relating to the fifty year 4 1/2% debentures due
December 1, 1998 contains various requirements and restrictions as to the
financial activities of INI and its subsidiary. There are certain restrictions
on capital expenditures and dividend payments by INI. Interest paid amounted
to $121,000 for 1994, 1993 and 1992.
13--RENTAL EXPENSE AND LEASE COMMITMENTS
Rental expense for 1994, 1993 and 1992 amounted to $3,843,000, $4,190,000 and
$3,522,000. Future obligations for minimum annual rentals under noncancelable
long-term leases are not considered to be significant.
14--CAPITAL STOCK AND STOCK OPTION PLAN
Class A common stock is entitled to 1/10 of a vote per share. At December 25,
1994 the Company has reserved 2,055,950 shares that are available for issuance
under its Stock Option Plan, 500,000 shares for issuance under its 401(k) plan
and 3,155,300 shares for issuance upon conversion of Class B common stock. The
Class B common stock has one vote per share while its dividend and liquidation
distributions are 1/10 of the amount of Class A common stock. Class B common
stock may be converted into Class A common stock at a ratio of ten shares of
Class B common stock for one share of Class A common stock. The Eugene C.
Pulliam Trust ("Trust") owns Class B common stock which provides the Trust the
majority voting control of the Company.
Dividend declared per share: 1994 1993 1992
--------------------------- ---- ---- ----
Class A common stock $.52 $.46 $.42
Class B common stock .052 .046 .042
The Stock Option Plan provides for the granting of stock options to certain
officers and key employees. The options are granted at prices determined by
the Stock Option Committee of the Board of Directors but not less than fair
market value on date of grant. Options granted may be incentive or non-
qualified options with a term of ten years. Options granted before
December 27, 1992 are currently exercisable. Options granted in 1993 become
exercisable three years from date of grant.
Stock Option Plan Summary:
Shares Price
------ -----
Outstanding, December 29, 1991 459,000 $16.625 - 18.000
Granted 273,000 23.000
Exercised (52,500) 16.625 - 18.000
Cancelled (5,500) 16.625 - 18.000
------- ---------------
Outstanding, December 27, 1992 674,000 16.625 - 23.000
Granted 300,500 23.875
Exercised (39,500) 16.625 - 18.000
Cancelled (11,500) 23.000
------- ----------------
Outstanding, December 26, 1993 923,500 16.625 - 23.875
Exercised (49,050) 16.625 - 18.000
Cancelled (6,000) 23.875
------- ----------------
Outstanding, December 25, 1994 868,450 $16.625 - 23.875
======= ================
Exercisable at December 25, 1994 573,950 $16.625 - 23.000
======= ================
15--FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, accounts receivable, other
current assets, accounts payable and accrued expenses approximate fair value
because of the short maturity of those instruments. Long-term debt has a
carrying value of $2,678,000 and a fair value of $2,595,000. Fair value was
determined based on current rates offered for similar debt. The Company has
guaranteed $16,875,000 of the debt of Ponderay. As this guarantee is specific
and unique to Ponderay and its lender, the Company does not believe it is
practicable to determine the fair value of this financial instrument.
16--COMMITMENTS AND CONTINGENCIES
See Note 11 for commitments related to Affiliate.
The Internal Revenue Service ("IRS") has issued a notice of proposed
adjustments for certain tax matters involving Ponderay Newsprint Company, a
partnership in which the Company owns a 13.5% interest, for the years 1987,
1988 and 1989. Ponderay filed a protest on February 17, 1993 in opposition to
the proposed adjustments. The item now pending before the IRS appeals officer
is related to the eligibility of specific assets for investment tax credit and
their cost. While this process is expected to extend over a lengthy period,
management of the Company and tax counsel currently believe that Ponderay has
meritorious defenses available and that the IRS' position is unlikely to be
fully sustained in the amounts proposed. The amount of investment tax credit
claimed by the Company was approximately $2,600,000. No provision for addi-
tional income taxes, penalties or interest has been recorded in the financial
statements. The IRS has completed its examination of the Company's federal
income tax returns through 1989 and all adjustments have been settled except
for the items noted above.
There are various libel and other legal actions that have arisen in the normal
course of business and are now pending against the Company. It is the opinion
of management that final disposition of such litigation will not have any
material adverse effect on the Company's financial position or results of
operations.
During 1994, the Board of Directors approved the implementation of a client-
server computer system in Phoenix with an estimated cost of $20,000,000.
Conversion to this system is scheduled for completion by 1997. During 1993,
the Board of Directors approved the construction of a new downtown Phoenix
office building. Total costs of the building and related expenditures are
expected to be $32,000,000 with completion anticipated in 1996. Formal commit-
ments totaling $33,513,000 have been entered into as of December 25, 1994
relating to these projects and equipment at other facilities. Expenditures as
of December 25, 1994 related to these commitments approximate $7,614,000.
The Board of Directors approved the construction of a production facility in
Indianapolis at an estimated cost of $20,000,000 with completion expected
during the last quarter of 1995. Expenditures on this project amounted to
$3,200,000 for land and site development during 1994. Formal commitments of
$1,200,000 have been made on this project.
The Board of Directors have also approved $4,000,000 for a new facility for
Topics Newspapers, Inc. and $12,500,000 for investments in partnership business
ventures. No expenditures have been made on these as of December 25, 1994.
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The Company's business is to a certain extent seasonal, with peak revenue and
profits generally occurring in the second and fourth quarters of each year.
Operating results for the last three years:
(In thousands, except share data) 1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
1994 (52 weeks)
Operating revenues $123,528 $129,262 $124,850 $142,062 $519,702
Operating expenses 104,384 106,626 108,078 124,884 443,972
-------- -------- -------- -------- --------
Operating income 19,144 22,636 16,772 17,178 75,730
Other income--net 1,088 1,192 1,303 1,382 4,965
Provision for income taxes (8,257) (9,771) (7,347) (7,472) (32,847)
Minority interest (757) (1,150) (668) (402) (2,977)
Equity in Affiliate--net (1,014) (930) (753) (853) (3,550)
-------- -------- -------- -------- --------
Net income $ 10,204 $ 11,977 $ 9,307 $ 9,833 $ 41,321
======== ======== ======== ======== ========
Net income per common share $.38 $.45 $.35 $.37 $1.55
==== ==== ==== ==== =====
1993 (52 weeks)
Operating revenues $111,318 $116,943 $110,238 $128,068 $466,567
Operating expenses 99,495 98,873 97,469 105,108 400,945
-------- -------- -------- -------- --------
Operating income 11,823 18,070 12,769 22,960 65,622
Other income--net 502 615 811 489 2,417
Provision for income taxes (4,949) (7,553) (5,754) (9,692) (27,948)
Minority interest (405) (1,038) (758) (1,482) (3,683)
Equity in Affiliate--net (1,148) (997) (1,153) (982) (4,280)
-------- -------- -------- -------- --------
Net income $ 5,823 $ 9,097 $ 5,915 $ 11,293 $ 32,128
======== ======== ======== ======== ========
Net income per common share $.22 $.34 $.22 $.43 $1.21
==== ==== ==== ==== =====
1992 (52 weeks)
Operating revenues $104,162 $109,136 $102,134 $118,168 $433,600
Operating expenses 96,146 94,434 92,613 98,744 381,937
-------- -------- -------- -------- --------
Operating income 8,016 14,702 9,521 19,424 51,663
Other income--net 899 766 529 (1,083) 1,111
Provision for income taxes (3,634) (6,255) (4,151) (7,451) (21,491)
Minority interest (265) (968) (509) (1,363) (3,105)
Equity in Affiliate--net (698) (1,348) (1,151) (1,623) (4,820)
-------- -------- -------- -------- --------
Income before cumulative effect
of accounting change 4,318 6,897 4,239 7,904 23,358
Cumulative effect of accounting
change, net of tax benefits (34,212) (34,212)
-------- -------- -------- -------- --------
Net income (loss) $(29,894) $ 6,897 $ 4,239 $ 7,904 $(10,854)
======== ======== ======== ======== ========
Net income per common share:
Income before cumulative
effect of accounting
change $ .16 $.26 $.16 $.30 $ .88
Cumulative effect of
accounting change, net of
tax benefits (1.29) (1.29)
------ ---- ---- ---- -----
Net income (loss) per common
share $(1.13) $.26 $.16 $.30 $(.41)
====== ==== ==== ==== =====
TEN-YEAR FINANCIAL HIGHLIGHTS
(In thousands except share data)
Fiscal Years Ended Dec. 25 Dec. 26 Dec. 27 Dec. 29 Dec. 30
1994 1993 1992 1991 1990
52 Weeks 52 Weeks 52 Weeks 52 Weeks 52 Weeks
-------- -------- -------- -------- --------
Consolidated Statement of Income
Operating revenues:
Advertising $395,450 $346,566 $319,872 $316,950 $ 335,795
Circulation 121,823 118,032 112,180 102,459 94,689
Other 2,429 1,969 1,548 942 1,175
-------- -------- -------- -------- --------
519,702 466,567 433,600 420,351 431,659
-------- -------- -------- -------- --------
Operating expenses:
Operating costs 222,074 200,200 187,611 197,584 209,191
Distribution and general 188,195 173,444 169,105 154,410 151,719
Depreciation 26,639 25,810 21,649 17,334 15,902
Work force reduction cost 7,064 1,491 3,572 3,281 2,082
-------- -------- -------- -------- --------
443,972 400,945 381,937 372,609 378,894
-------- -------- -------- -------- --------
Operating income 75,730 65,622 51,663 47,742 52,765
Other income--net 4,965 2,417 1,111 3,735 8,963
-------- -------- -------- -------- --------
Income before income taxes 80,695 68,039 52,774 51,477 61,728
Provision for income taxes 32,847 27,948 21,491 20,792 25,813
-------- -------- -------- -------- --------
Income before minority
interest and equity
in Affiliate 47,848 40,091 31,283 30,685 35,915
Minority interest in
subsidiary (2,977) (3,683) (3,105) (1,729) (3,117)
Equity in Affiliate, net
of tax benefits (3,550) (4,280) (4,820) (3,053) (4,515)
-------- -------- -------- -------- --------
Income before cumulative
effect of accounting change 41,321 32,128 23,358 25,903 28,283
Cumulative effect of accounting
change (34,212)
-------- -------- -------- -------- --------
Net income (loss) $ 41,321 $ 32,128 $(10,854) $ 25,903 $ 28,283
======== ======== ======== ======== ========
Class A Share Data
Income before cumulative
effect of accounting
change $1.55 $1.21 $.88 $.98 $1.07
Cumulative effect of
accounting change (1.29)
Net income (loss) 1.55 1.21 (.41) .98 1.07
Dividends declared .52 .46 .42 .40 .40
Other Financial Data
Total assets $500,444 $464,688 $432,872 $403,627 $383,758
Working capital 132,907 127,999 90,488 70,217 122,710
Long-term debt 2,678 2,678 2,678 2,678 2,678
Shareholders' equity 319,762 290,693 269,997 290,982 275,623
======== ======== ======== ======== ========
This data was compiled from the consolidated financial statements of Central
Newspapers, Inc. and Subsidiaries. The consolidated financial statements and
related notes and discussions for the year ended December 25, 1994 should be
read in order to obtain a better understanding of this data.
Dec. 31 Dec. 25 Dec. 27 Dec. 28 Dec. 29
1989 1988 1987 1986 1985
53 Weeks 52 Weeks 52 Weeks 52 Weeks 52 Weeks
Consolidated Statement of Income
Operating revenues:
Advertising $346,924 $337,854 $329,067 $319,237 $299,077
Circulation 88,160 78,575 72,434 68,806 64,001
Other 1,144 1,179 1,197 1,084 1,002
-------- -------- -------- -------- --------
436,228 417,608 402,698 389,127 364,080
-------- -------- -------- -------- --------
Operating expenses:
Operating costs 213,377 216,788 208,633 193,521 191,349
Distribution and general 148,015 133,842 129,782 120,969 110,922
Depreciation 14,908 13,970 12,190 10,952 9,682
Work force reduction cost 7,586
-------- -------- -------- -------- --------
376,300 372,186 350,605 325,442 311,953
-------- -------- -------- -------- --------
Operating income 59,928 45,422 52,093 63,685 52,127
Other income--net 8,389 5,918 5,134 5,071 6,600
-------- -------- -------- -------- --------
Income before income taxes 68,317 51,340 57,227 68,756 58,727
Provision for income taxes 27,748 18,911 24,071 33,339 28,560
-------- -------- -------- -------- --------
Income before minority
interest and equity
in Affiliate 40,569 32,429 33,156 35,417 30,167
Minority interest in
subsidiary (3,411) (3,916) (3,754) (3,496) (2,908)
Equity in Affiliate, net
of tax benefits 1,309 743 8
-------- -------- -------- -------- --------
Income before cumulative
effect of accounting change 38,467 29,256 29,410 31,921 27,259
Cumulative effect of accounting
change 3,388
-------- -------- -------- -------- --------
Net income (loss) $ 38,467 $ 29,256 $ 32,798 $ 31,921 $ 27,259
======== ======== ======== ======== ========
Class A Share Data
Income before cumulative
effect of accounting change $1.45 $1.10 $1.10 $1.19 $1.01
Cumulative effect of accounting
change .13
Net income (loss) 1.45 1.10 1.23 1.19 1.01
Dividends declared .325 .325 .325 .325 .325
Other Financial Data
Total assets $356,103 $321,809 $300,966 $270,815 $241,211
Working capital 134,755 116,192 106,705 101,566 92,753
Long-term debt 2,678 2,678 2,678 2,678 2,678
Shareholders' equity 257,938 230,316 213,579 189,312 165,939
======== ======== ======== ======== =======
SHAREHOLDER INFORMATION
Since an initial public offering on September 21, 1989, shares of Class A
common stock have traded on the New York Stock Exchange under the symbol "ECP."
No established trading market currently exists for the Company's Class B common
stock. Shares of Class B common stock are convertible into Class A common
stock at a ratio of ten B shares for one A share. At December 31, 1994, there
were approximately 371 shareholders of record of Class A common stock and 24
shareholders of record of Class B common stock.
Dividends
Dividends declared per share:
1994 Class A Class B
---- ------- -------
1st Quarter $ .12 $ .012
2nd Quarter .12 .012
3rd Quarter .14 .014
4th Quarter .14 .014
----- ------
$ .52 $ .052
===== ======
1993 Class A Class B
---- ------- -------
1st Quarter $ .11 $ .011
2nd Quarter .11 .011
3rd Quarter .12 .012
4th Quarter .12 .012
----- ------
$ .46 $ .046
===== ======
Form 10-K
The Central Newspapers, Inc. annual report on Form 10-K filed with the
Securities and Exchange Commission is available at no charge upon written
request to Corporate Secretary, Central Newspapers, Inc., 135 North
Pennsylvania Street, Suite 1200, Indianapolis, Indiana 46204.
Stock Prices
Calendar Quarter 1st 2nd 3rd 4th
---------------- --- --- --- ---
1994 High $29 $30 $28 5/8 $28 5/8
Low 26 3/4 24 5/8 26 24 3/4
1993 High 23 7/8 25 7/8 27 3/8 27 3/4
Low 20 7/8 23 5/8 24 1/4 23
Annual Meeting
The Annual Meeting of Shareholders will be held at the First Indiana Plaza, 135
North Pennsylvania Street, Seventh Floor, Indianapolis, Indiana, on April 18,
1995, at 10:00 a.m. local time.
Transfer Agent and Registrar:
Bank One, Indianapolis, NA
Security Holder Services
Bank One Center/Tower
111 Monument Circle - Suite 1611
P.O. Box 7700
Indianapolis, Indiana 46277-0116
CORPORATE DIRECTORY
Board of Directors and Officers
-------------------------------
Board of Directors
------------------
Kent E. Agness
Partner
Barnes & Thornburg
Malcolm W. Applegate
President and General Manager
Indianapolis Newspapers, Inc.
William A. Franke
Chairman and Chief Executive Officer
America West Airlines, Inc.
President
Franke & Company, Inc.
Eugene S. Pulliam
Executive Vice President
Central Newspapers, Inc.
Dan Quayle
Chairman
Circle Investors, Inc.
James C. Quayle
President
Huntington Newspapers, Inc.
Frank E. Russell
President and Chief Executive Officer
Central Newspapers, Inc.
Louis A. Weil III
Executive Vice President
Phoenix Newspapers, Inc.
Officers
--------
Marjorie C. Tarplee
Secretary
Central Newspapers, Inc.
Wayne D. Wallace
Treasurer
Central Newspapers, Inc.
Corporate Officers and
----------------------
Executive Management
--------------------
Frank E. Russell
President and Chief Executive Officer
Central Newspapers, Inc.
Eugene S. Pulliam
Executive Vice President
Central Newspapers, Inc.
President
Phoenix Newspapers, Inc.
Publisher
The Indianapolis Star
The Indianapolis News
Marjorie C. Tarplee
Secretary
Central Newspapers, Inc.
Wayne D. Wallace
Treasurer
Central Newspapers, Inc.
Malcolm W. Applegate
President and General Manager
Indianapolis Newspapers, Inc.
Louis A. Weil III
Executive Vice President
Phoenix Newspapers, Inc.
Publisher
The Arizona Republic
The Phoenix Gazette
CONSENT OF GEO. S. OLIVE & CO. LLC
We consent to the incorporation by reference into this Annual Report on Form
10-K of our report dated February 24, 1995 with respect to the consolidated
financial statements of Central Newspapers, Inc. for the year ended
December 25, 1994, included in the Central Newspapers, Inc. Annual Report to
Shareholders and to the incorporation of such report by reference into (a)
the Registration Statement on Form S-8 (File Number 33-37566) and related
Prospectus pertaining to the Central Newspapers, Inc. Stock Option Plan and
(b) the Registration Statement on Form S-8 (File Number 33-33026) and related
Prospectus pertaining to the Central Newspapers, Inc. Saving Plus Plan.
/s/ Geo. S. Olive & Co. LLC
----------------------------------
GEO. S. OLIVE & CO. LLC
Indianapolis, Indiana
March 21, 1995
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<LEGEND>
This schedule contains unaudited summary financial information extracted from
the consolidated statement of financial position of Central Newspapers, Inc. as
of December 25, 1994 and the consolidated statements of income, shareholders'
equity and cash flows for the fiscal year ended December 25, 1994 and is
qualified in its entirety by reference to such statements.
</LEGEND>
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<PERIOD-END> DEC-25-1994
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<RECEIVABLES> 54625
<ALLOWANCES> 1071
<INVENTORY> 9142
<CURRENT-ASSETS> 203339
<PP&E> 430992
<DEPRECIATION> 181675
<TOTAL-ASSETS> 500444
<CURRENT-LIABILITIES> 70432
<BONDS> 2678
<COMMON> 18245
0
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<OTHER-SE> 301517
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<TOTAL-COSTS> 443972
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<INTEREST-EXPENSE> 204
<INCOME-PRETAX> 80695
<INCOME-TAX> 32847
<INCOME-CONTINUING> 41321
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