Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR
--- 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1998
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number: 1-10333
CENTRAL NEWSPAPERS, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-0220660
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
200 E. Van Buren Street, Phoenix, Arizona 85004
(Address of principal executive office)
(602) 444-8000
(Registrant's telephone number)
Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES x NO
--- ---
The number of shares of each class of common stock outstanding as of March 31,
1998:
CLASS A COMMON STOCK 22,114,290
CLASS B COMMON STOCK 31,345,500
<PAGE>2
Central Newspapers, Inc.
Index to Form 10-Q
Part I -- FINANCIAL INFORMATION Page
Item 1 -- Financial Statements:
Consolidated Statement of Financial Position 3-4
Consolidated Statement of Income 5
Consolidated Statement of Shareholders' Equity 6
Consolidated Statement of Cash Flows 7
Notes to Consolidated Financial Statements 8-9
Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
Part II -- OTHER INFORMATION 13-14
<PAGE> 2
PART I.
Item 1. Financial Statements
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Financial Position
Mar. 29, Dec. 28,
ASSETS 1998 1997
(In thousands) (Unaudited)
-------- --------
CURRENT ASSETS:
Cash and cash equivalents $65,182 $36,924
Marketable securities 12,674 11,524
Accounts receivable (net of allowances of
$2,506 and $2,959) 86,705 89,707
Inventories 13,313 10,320
Deferred income tax benefits 7,843 7,919
Other current assets 7,997 5,712
------- -------
Total current assets 193,714 162,106
------- -------
PROPERTY, PLANT AND EQUIPMENT:
Land 18,616 18,616
Buildings and improvements 122,591 122,409
Leasehold improvements 4,787 4,412
Machinery and equipment 386,608 383,626
Construction in progress 9,527 8,071
------- -------
542,129 537,134
Less accumulated depreciation 259,739 250,451
------- -------
282,390 286,683
------- -------
OTHER ASSETS:
Land held for development 3,166 3,116
Goodwill and other intangibles 121,445 122,729
Investment in Affiliate 8,558 8,321
Other 36,142 31,356
------- -------
169,311 165,522
------- -------
TOTAL ASSETS $645,415 $614,311
======== ========
See accompanying notes to consolidated financial statements.
<PAGE> 3
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Financial Position
Mar. 29, Dec. 28,
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997
(In thousands, except share data) (Unaudited)
-------- --------
CURRENT LIABILITIES:
Accounts payable $17,017 $19,672
Short-term bank debt 10,000
Accrued compensation 17,346 20,061
Dividends payable 5,302 5,613
Accrued expenses and other liabilities 19,299 16,825
Federal and state income taxes 15,463 1,578
Deferred revenue 33,818 23,618
------- -------
Total current liabilities 108,245 97,367
------- -------
DEFERRED INCOME TAXES 26,306 26,882
POSTRETIREMENT AND OTHER NONCURRENT LIABILITIES 88,779 86,997
MINORITY INTEREST IN SUBSIDIARIES 2,181 1,866
REDEEMABLE PREFERRED STOCK ISSUED BY SUBSIDIARY 18,920 18,920
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 and outstanding--22,095,499 and 22,071,626 33,302 29,934
Class B common stock--without par value:
Authorized--50,000,000 shares
Issued and outstanding--31,345,500 shares 63 63
Retained earnings 367,517 352,531
Unamortized value of restricted stock (1,648) (1,924)
Unrealized gain on available-for-sale securities 1,750 1,675
------- -------
400,984 382,279
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $645,415 $614,311
======== ========
See accompanying notes to consolidated financial statements.
<PAGE> 5
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Income
(Unaudited)
(In thousands, except per share data)
Thirteen Weeks Ended
Mar. 29, Mar. 30,
1998 1997
---------------------
OPERATING REVENUES:
Advertising $136,151 $128,996
Circulation 38,501 35,554
Other 10,452 6,418
------- -------
185,104 170,968
------- -------
OPERATING EXPENSES:
Compensation 61,133 59,599
Newsprint and ink 30,127 24,320
Other operating costs 47,996 39,295
Depreciation and amortization 11,310 10,705
Work force reduction cost 6,041
------- -------
150,566 139,960
OPERATING INCOME 34,538 31,008
OTHER INCOME (principally investment income) 1,085 1,266
OTHER EXPENSES (228) (174)
------- -------
INCOME BEFORE INCOME TAXES 35,395 32,100
PROVISION FOR INCOME TAXES 14,656 13,534
------- -------
INCOME BEFORE MINORITY INTEREST AND
EQUITY IN AFFILIATE 20,739 18,566
MINORITY INTEREST IN SUBSIDIARIES (315) (543)
EQUITY IN NET EARNINGS (LOSS) OF AFFILIATE 154 (285)
------- -------
NET INCOME $20,578 $17,738
======= =======
NET INCOME PER COMMON SHARE:
Basic $.82 $.67
Diluted $.79 $.66
DIVIDENDS DECLARED PER CLASS A COMMON SHARE $.21 $.19
AVERAGE COMMON SHARES OUTSTANDING:
(combined Class A and equivalent Class B shares)
Basic 25,168 26,394
Diluted 25,946 26,977
See accompanying notes to consolidated financial statements.
<PAGE> 6
<TABLE>
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Shareholders' Equity
(Unaudited)
<CAPTION>
(In thousands, except share data) Unrealized
Unamortized Gain on
Class A Class B Value of Available-
Common Stock Common Stock Retained Restricted for-Sale
Shares Amount Shares Amount Earnings Stock Securities
---------- -------- ---------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 30, 1996 23,237,711 $24,259 31,553,000 $63 $363,365 ($1,627) $1,490
Net income (13 weeks) 17,738
Dividends declared:
Class A common stock (4,407)
Class B common stock (599)
Exercise of stock options 42,700 1,224
Repurchase of Class A common stock (90,500) (91) (4,027)
Issuance of restricted stock 8,000 371 (371)
Amortization of restricted stock 198
Change in net unrealized gain on
available-for-sale securities 388
---------- ------- ---------- -------- -------- ------- --------
BALANCE AT MARCH 30, 1997 23,197,911 25,763 31,553,000 63 372,070 (1,800) 1,878
Net income (39 weeks) 63,757
Dividends declared:
Class A common stock (13,459)
Class B common stock (1,913)
Exercise of stock options, net 131,732 4,920
Repurchase of Class A common stock (1,341,767) (1,509) (67,825)
Repurchase of Class B common stock (17,500) (99)
Issuance of restricted stock, net
of cancellations 10,750 760 (760)
Amortization of restricted stock 636
Common stock conversion 19,000 (190,000)
Change in net unrealized gain on
available-for-sale securities (203)
---------- -------- ---------- --------- -------- ------- ------
BALANCE AT DECEMBER 28, 1997 22,017,626 29,934 31,345,500 63 352,531 (1,924) 1,675
Net income (13 weeks) 20,578
Dividends declared:
Class A common stock (4,644)
Class B common stock (659)
Exercise of stock options 82,273 3,374
Repurchase of Class A common stock (4,400) (6) (289)
Amortization of restricted stock 276
Change in net unrealized gain on
available-for-sale securities 75
---------- -------- ---------- --------- -------- -------- ------
BALANCE AT MARCH 29, 1998 22,095,499 $33,302 31,345,500 $63 $367,517 ($1,648) $1,750
========== ======== ========== ========= ======== ======== ======
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 7
CENTRAL NEWSPAPERS, INC.
Consolidated Statement of Cash Flows
(Unaudited)
(In thousands)
Thirteen Weeks Ended
Mar. 29, Mar. 30,
1998 1997
-------- --------
OPERATING ACTIVITIES:
Net income $20,578 $17,738
Items which did not use (provide) cash:
Depreciation and amortization 11,310 10,705
Postretirement and pension benefits (1,954) 1,728
Minority interest in earnings of subsidiaries 315 543
Equity earnings in Affiliate (154) 285
Deferred income taxes (413) 420
Amortization of restricted stock awards 276 198
Other 315 (65)
Net proceeds from (purchases of) trading
securities (1,133) 2,048
Net change in other current assets and liabilities 23,275 27,515
------- -------
Net cash provided by operating activities 52,415 61,115
------- -------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (8,723) (6,665)
Proceeds from available-for-sale securities 11,437
Acquisitions (33,219)
Other (1,293) (36)
------- -------
Net cash used by investing activities (10,016) (28,483)
------- -------
FINANCING ACTIVITIES:
Cash dividends paid (5,282) (5,015)
Dividends paid to minority interest (331) (165)
Proceeds from exercise of stock options 1,767 763
Repayments of short-term debt (10,000)
Repayments of long-term debt (800)
Repurchase of common stock (295) (4,117)
------- -------
Net cash used by financing activities (14,141) (9,334)
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS 28,258 23,298
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 36,924 36,149
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $65,182 $59,447
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Issuance by subsidiary of redeemable preferred stock
in exchange for Class A common stock of subsidiary $18,920
Income taxes paid $25 4,065
Interest paid 130 25
See accompanying notes to consolidated financial statements.
<PAGE> 8
CENTRAL NEWSPAPERS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
1. Central Newspapers, Inc. and its subsidiaries (the "Company") are primarily
engaged in the publishing and distribution of newspapers. Revenues are
principally derived from advertising and newspaper sales in the Phoenix, Arizona
and Indianapolis, Indiana metropolitan areas. The Company also has an 80%
interest in the Westech group of companies which are predominantly in the jobs
fair business and a 13.5% interest in Ponderay Newsprint Company ("Affiliate"),
a partnership formed to own a newsprint mill in the State of Washington.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and revenues and expenses
as of and for the period ending with the financial reporting date. Actual
results could differ from those estimates.
2. The accompanying unaudited consolidated financial statements do not include
all of the information and disclosures which are normally included in Form 10-K
and the annual report to shareholders. These financial statements should be read
in conjunction with the Company's audited consolidated financial statements and
related notes for the year ended December 28, 1997. The accompanying
consolidated financial statements have been prepared in accordance with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The consolidated
statement of financial position at December 28, 1997 has been derived from
audited financial statements. In the opinion of the Company's management,
the unaudited consolidated financial statements reflect all adjustments which
are necessary to present fairly the Company's financial position, results of
operations and cash flows for the interim periods presented. All adjustments
are of a normal recurring nature. Such statements are not necessarily
indicative of the results to be expected for the full year.
3. The Company's fiscal year ends on the last Sunday of the calendar year. The
years ending December 27, 1998 and December 28, 1997 each comprise 52 weeks.
4. Net income per common share is computed using the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share," which
requires companies to present basic earnings per share ("EPS") and diluted EPS.
The Company adopted this new standard in the fourth quarter of 199and has
restated EPS for all prior periods disclosed in the financial statements. Basic
EPS is computed based upon 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 10 shares of
Class B common stock to one share of Class A common stock. Diluted EPS includes
the effect of stock options granted under the Company's Amended and Restated
Stock Compensation Plan.
5. During 1997 the Company reduced its work force in response to circulation
distribution changes, technological changes and the closure of the Phoenix
afternoon newspaper. Certain employees were offered retirement benefits through
a non-qualified supplemental retirement plan. This work force reduction
resulted in an after tax charge of $3.5 million, or $.13 per diluted share
in the first quarter of 1997.
<PAGE> 9
6. For comparative purposes, certain amounts in the financial statements have
been reclassified to conform with the current year presentation.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL
The Company's principal line of business is newspaper publishing. Revenues are
derived primarily from advertising and newspaper sales in the Phoenix, Arizona
and Indianapolis, Indiana metropolitan areas. The Company also has an 80%
interest in the Westech group of companies, which is predominantly in the jobs
fair business and a 13.5% interest in Ponderay, a partnership formed to own a
newsprint mill in the State of Washington. The analysis of the first quarter of
1998 compared with the comparable 1997 period should be read in conjunction with
the fiscal 1997 consolidated financial statements and the accompanying notes to
the consolidated financial statements.
The Company's business tends to be somewhat seasonal, with peak revenues and
profits generally occurring in the second and fourth quarters of each year.
FIRST QUARTER OF 1998 COMPARED WITH THE FIRST QUARTER OF 1997
QUARTERLY RESULTS OF OPERATIONS
First quarter diluted earnings per share were $.79, a 19.7% increase over the
$.66 earned in the first quarter of 1997. The 1997 first quarter included the
effects of work force reduction costs ("special charges") which negatively
impacted earnings. Excluding the special charges, diluted earnings per share
would have been $.79 in the first quarters of 1998 and 1997. Operating
income for the first quarter of 1998 was $34.5 million for an increase of 11.4%
from the $31.0 million earned in the first quarter of 1997. The change in
operating income between the periods was due to an increase in operating
revenues, and the 1998 benefit from a $6.0 million work force reduction charge
in the first quarter of 1997, (due primarily to The Phoenix Gazette closure),
offset by substantially higher newsprint prices. Excluding work force
reductions, the 1997 first quarter operating income would have been $37.0
million. EBITDA (operating earnings before depreciation, amortization and
special charges) for the comparable periods was $45.8 million in 1998 and
$47.8 million in the 1997 period, a decrease of 4.0%. Net income for the 1998
first quarter was $20.6 million, a 16.0% increase from the $17.7 million net
income for the first quarter of 1997. Excluding the special charges, net income
in the first quarter of 1997 would have been $21.2 million.
OPERATING REVENUES
The Company's first quarter operating revenues rose to $185.1 million in 1998
from $171.0 million in 1997, an increase of 8.3%. Advertising and circulation
revenues increased 5.5% and 8.3%, respectively, in the first quarter of 1998
versus the corresponding 1997 quarter. The gains in advertising revenues for
the first quarter of 1998 were due to a .8% increase in full run linage along
with a 4.7% aggregate increase in advertising rates. The classified
advertising recruitment category continues to be the strongest growth sector
in both major markets. The retail department store category demonstrated
continued softness.
Circulation revenues increased $2.9 million, or 8.3% in the quarter due
primarily to the distribution system change in Indianapolis (resulting in a
revenue increase of $2.9 million in the first quarter of 1998) and Phoenix
<PAGE> 10
circulation growth. Paid circulation in Indianapolis was boosted by a Friday/
Saturday weekend promotional package.
The following is a summary of major market linage and circulation statistics for
the period:
(In thousands, except circulation)
1st Quarter 1st Quarter %
1998 1997 Change
---------- --------- ------
Full Run Linage in six column inches: (1)
Retail 620.0 633.6 (2.1)
National 109.8 101.3 8.4
Classified 776.7 759.5 2.3
---------- ---------
Total 1,506.5 1,494.4 .8
Full Run Linage by Major Markets:
Phoenix (1) 712.2 686.9 3.7
Indianapolis 794.3 807.5 (1.6)
---------- ---------
Total 1,506.5 1,494.4 .8
Net Advertising Revenue (1) $136,151 $128,996 5.5
Combined Average Daily Circulation:
Phoenix 510,543 484,009 5.5
Indianapolis 279,227 274,660 1.7
Sunday Circulation:
Phoenix 630,544 618,546 1.9
Indianapolis 389,741 393,219 (.9)
(1) For comparability, linage statistics for the 13 weeks ended March 30, 1997
exclude the linage of The Phoenix Gazette, which ceased publication in January,
1997. Advertising revenue was not significantly affected by the closure of The
Phoenix Gazette and has not been restated.
OPERATING EXPENSES
Compensation costs, which include payroll and fringe benefits, increased 2.6% to
$61.1 million in the first quarter of 1998 compared with the first quarter of
1997. Although period over period headcount decreased approximately 4%, due
primarily to the closure of The Phoenix Gazette and the impact of a conversion
from a carrier-based distribution arrangement to an agency-based distribution
work force in Indianapolis, the increase in expense was mostly attributable to
increased fringe benefit costs, commissions and merit increases.
Newsprint and ink expense was $30.1 million in the first quarter of 1998, a
23.9% increase from the first quarter of 1997. Newsprint prices increased
approximately 13% in 1998 when compared with the first quarter of 1997 and the
Company also increased newsprint consumption by 8.6% due to increased
advertising linage and circulation gains.
Other operating costs increased 22.1% to $48.0 million in the first quarter of
1998. Significant items contributing to the 1998 increase included the change
in the circulation delivery system in Indianapolis (which increased the first
quarter 1998 expense by $4.3 million), costs associated with new Phoenix and
Indianapolis promotional/marketing programs, higher Arizona Republic delivery
costs due to increased circulation and expenses related to the jobs fair
business.
The Company recorded work force reduction costs of approximately $6.0 million in
the first quarter of 1997. Of this amount, approximately $4.8 million resulted
from the closure of The Phoenix Gazette where approximately 85 positions were
<PAGE> 11
eliminated. The balance of the charge related to the costs of eliminating 18
positions in the conversion of distribution systems in Indianapolis.
NON-OPERATING ITEMS AND EQUITY IN AFFILIATE
Other non-operating income (primarily investment income) decreased 14.3% in the
first quarter of 1998 primarily due to a reduction in investable cash because of
1997 acquisitions. Income tax expense increased 8.3% reflecting higher taxable
income. Equity in affiliate increased $.4 million due to an increase in
newsprint selling prices being realized by Ponderay Newsprint Company.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities is the Company's primary source of
liquidity. Net cash provided by operating activities was $52.4 million in the
first quarter of 1998 and $61.1 million in the first quarter of 1997. Net cash
provided by operating activities, excluding the effects of net proceeds from (or
net purchases of) trading securities for the first quarters of 1998 and 1997,
was $53.5 million and $59.1 million, respectively. Changes for both years were
primarily attributable to net income and working capital differences. The
principal uses of cash in the first quarter of 1998 were the payment of
dividends, capital expenditures and the repayment of a $10.0 million short term
bank line of credit. At the end of the quarter, the Company's available cash and
investments totaled $77.9 million, up $29.4 million from the end of 1997.
Working capital for the same period increased $20.7 million to $85.5 million.
Total capital expenditures in the first quarter of 1998 were $8.7 million
compared with $6.7 million in the first quarter of 1997. As of March 29, 1998,
there were no significant formal commitments related to future capital
expenditures.
The Company announced in December, 1997 that it was authorized to repurchase up
to $100.0 million of its Class A common stock on the open market or in privately
negotiated transactions over a three year time period. For the quarter ended
March 29, 1998 the Company repurchased 4,400 shares for an aggregate cost of $.3
million.
Dividends of $.21 per share on the Class A common stock and $.021 on the Class
B common stock were declared during the quarter. Total Class A and B dividends
paid during the quarter were $5.3 million.
The Company has demonstrated a consistent ability to generate net cash flow from
operations. Management believes that existing cash and investments, net cash
flows from operations and available bank credit resources are sufficient to
enable the Company to maintain its current level of operations. Financing for
future investing opportunities is expected to come from a combination of
existing cash, new debt facilities and/or the use of equity.
OUTLOOK FOR THE REMAINDER OF 1998
The Company foresees continued growth in advertising revenues in 1998, but at a
rate less than that experienced during 1997. Despite the closure of The Phoenix
Gazette in January 1997, circulation revenue is also expected to increase
modestly in 1998 when compared with 1997 due to circulation gains in Phoenix and
circulation delivery changes in Indianapolis. Non-newsprint operating expenses
are expected to increase at a rate comparable with revenue growth. The cost of
newsprint expense, the second largest expense item, is expected to increase
significantly in 1998. Nonetheless, the Company still expects net income to
increase in 1998.
<PAGE> 12
FORWARD-LOOKING STATEMENTS
This document contains material that is forward-looking in nature. From time to
time, the Company may provide forward-looking statements relating to such
matters as anticipated financial performance, business prospects and similar
matters. All forward-looking statements are based upon information available to
the Company at the time they are made and the Company assumes no obligation to
update any forward-looking statements. The Company notes that a variety of
factors could cause the Company's actual results to differ materially from the
expectations expressed in the forward-looking statements. The risks and
uncertainties that may affect the operations, performance and results of the
Company's business include, but are not limited to:
* economic weakness in the Company's geographic markets
* weakness in retail and/or classified advertising revenue due to factors
including retail consolidations, declines in the advertising budgets of
major customers and increased competition from print and non-print
products
* declines in circulation due to changing reader preferences and/or new forms
of information dissemination
* fluctuations in the price of newsprint
* an increase in distribution and/or production costs over anticipated
levels
* the negative impact of issues related to labor agreements
* new competitors emerging in our markets
<PAGE> 13
PART II
CENTRAL NEWSPAPERS, INC.
Item 1. Legal Proceedings -- None
Item 2. Changes in Securities -- None
Item 3. Default Upon Senior Securities -- None
Item 4. Submission of Matters to a Vote of Security Holders -- None
Item 5. Other Information -- None
Item 6. Exhibit and Reports on Form 8-K
Exhibit 1 -- Independent Accountant's Report
No reports on Form 8-K were filed during the quarter
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CENTRAL NEWSPAPERS, INC.
Dated: April 24, 1998 By: /s/ Louis A. Weil, III
----------------------------
Louis A. Weil, III
President and Chief Executive
Officer
By: /s/ Thomas K. MacGillivray
----------------------------
Thomas K. MacGillivray
Vice President and Chief
Financial Officer
Exhibit 1
INDEPENDENT ACCOUNTANT'S REPORT
To the Board of Directors and Shareholders of
Central Newspapers, Inc.
We have reviewed the accompanying consolidated statement of financial position
of Central Newspapers, Inc. as of March 29, 1998, and the consolidated
statements of income, shareholders' equity and cash flows for the three-month
periods ended March 29, 1998 and March 30, 1997. These financial statements are
the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing standards,
the consolidated statement of financial position as of December 28, 1997, and
the related consolidated statements of income, shareholders' equity, and cash
flows for the year then ended (not presented herein), and in our report dated
February 2, 1998 we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated statement of financial position as of December 28,
1997, is fairly stated in all material respects in relation to the consolidated
statement of financial position from which it has been derived.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Phoenix, Arizona
April 27, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's unaudited financial statements as of and for the fiscal three month
period ended March 29, 1998 and is qualified in its entirety by reference to
such statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-END> MAR-29-1998
<CASH> 65182
<SECURITIES> 12674
<RECEIVABLES> 89211
<ALLOWANCES> 2506
<INVENTORY> 13313
<CURRENT-ASSETS> 193714
<PP&E> 542129
<DEPRECIATION> 259739
<TOTAL-ASSETS> 645415
<CURRENT-LIABILITIES> 108245
<BONDS> 0
18920
0
<COMMON> 33365
<OTHER-SE> 367619
<TOTAL-LIABILITY-AND-EQUITY> 645415
<SALES> 185104
<TOTAL-REVENUES> 185104
<CGS> 0
<TOTAL-COSTS> 150566
<OTHER-EXPENSES> 98
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 130
<INCOME-PRETAX> 35395
<INCOME-TAX> 14656
<INCOME-CONTINUING> 20578
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20578
<EPS-PRIMARY> .82
<EPS-DILUTED> .79
</TABLE>
