UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1997
OR
( ) 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
---------------
GARDEN STATE NEWSPAPERS, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2675173
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1560 Broadway 80202
------------- -----
Denver, Colorado (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (303)837-0886
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether a registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities and 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
--- ---
INDEX TO GARDEN STATE NEWSPAPERS, INC.
REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1997
ITEM NO. PAGE
- -------- ----
PART I - FINANCIAL INFORMATION
1 Financial Statements 3
2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 3
PART II - OTHER INFORMATION
1 Legal Proceedings 3
2 Changes in Securities 3
3 Defaults Upon Senior Securities 3
4 Submission of Matters to a Vote of Security Holders 3
5 Other Information 4
6 Exhibits and Reports on Form 8-K 4
2
PART I
- --------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
The information required by this item is filed as part of this Form 10-Q.
See Index to Financial Information at page 5 of this Form 10-Q.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is filed as part of this Form 10-Q.
See Index to Financial Information at page 5 of this Form 10-Q.
PART II
- --------------------------------------------------------------------------------
ITEM 1. LEGAL PROCEEDINGS
The Company's subsidiaries are involved in litigation arising in the ordinary
course of business, none of which is expected to result in material loss.
ITEM 2. CHANGES IN SECURITIES
There were no changes in the rights of security holders during the quarter
for which this report is filed.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no defaults upon senior securities during the quarter for which
this report is filed.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
quarter for which this report is filed.
3
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
27 - Financial Data Schedule.
REPORTS ON FORM 8-K
On August 12, 1997, the Company filed a report on Form 8-K with the
Securities and Exchange Commission regarding the July 31, 1997, acquisition
of THE SUN and THE SUNDAY SUN, daily and Sunday newspapers published in
Lowell, Massachusetts.
No other reports on Form 8-K were filed during the quarter ended September
30, 1997.
SIGNATURES
- --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GARDEN STATE NEWSPAPERS, INC.
Dated: NOVEMBER 11, 1997 By: /s/ JOSEPH J. LODOVIC, IV
----------------- -------------------------------------
Joseph J. Lodovic, IV
Executive Vice President,
Chief Financial Officer and
Duly Authorized Officer of Registrant
4
GARDEN STATE NEWSPAPERS, INC.
INDEX TO FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS: PAGE
----
Condensed Consolidated Balance Sheets. . . . . . . . . . . . . . . . . 6
Unaudited Condensed Consolidated Statements of Operations. . . . . . . 8
Unaudited Condensed Consolidated Statements of Cash Flows. . . . . . . 9
Notes to Unaudited Condensed Consolidated Financial Statements . . . . 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . 13
5
GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, June 30,
ASSETS 1997 1997
------------- --------
(In thousands)
CURRENT ASSETS
Cash and cash equivalents. . . . . . . . . . . . . . $ 6,655 $ 8,944
Accounts receivable, less allowance for
doubtful accounts of $4,562 and $4,252
at September 30, 1997 and June 30, 1997,
respectively . . . . . . . . . . . . . . . . . . . 39,194 36,170
Inventories of newsprint and supplies. . . . . . . . 5,716 6,170
Prepaid expenses and other assets. . . . . . . . . . 4,108 3,295
-------- --------
Total Current Assets . . . . . . . . . . . . . . 55,673 54,579
PROPERTY, PLANT AND EQUIPMENT
Land . . . . . . . . . . . . . . . . . . . . . . . . 8,457 8,307
Buildings and improvements . . . . . . . . . . . . . 44,382 43,462
Machinery and equipment. . . . . . . . . . . . . . . 132,362 126,450
-------- --------
Total Property, Plant and Equipment. . . . . . . 185,201 178,219
Less accumulated depreciation and amortization . . . 58,793 57,670
-------- --------
Net Property, Plant and Equipment. . . . . . . . 126,408 120,549
OTHER ASSETS
Investment in partnership. . . . . . . . . . . . . . 6,792 6,365
Subscriber accounts, less accumulated
amortization of $48,425 and $45,808 at
September 30, 1997 and June 30, 1997,
respectively . . . . . . . . . . . . . . . . . . . 77,944 69,960
Excess of cost over fair value of net assets
acquired, less accumulated amortization
of $13,974 and $12,718 at September 30,
1997 and June 30, 1997, respectively . . . . . . . 182,745 154,294
Covenants not to compete and other
identifiable intangible assets, less
accumulated amortization of $16,683 and
$15,861 at September 30, 1997 and
June 30, 1997, respectively. . . . . . . . . . . . 17,730 6,684
Other. . . . . . . . . . . . . . . . . . . . . . . . 5,652 2,000
-------- --------
Total Other Assets . . . . . . . . . . . . . . . 290,862 239,303
-------- --------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . $472,943 $414,431
-------- --------
-------- --------
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
6
GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, June 30,
LIABILITIES AND SHAREHOLDER'S DEFICIT 1997 1997
------------- --------
(In thousands, except
share data)
CURRENT LIABILITIES
Trade accounts payable . . . . . . . . . . . . . . . $ 6,729 $ 6,286
Other accrued liabilities. . . . . . . . . . . . . . 21,910 23,714
Unearned income. . . . . . . . . . . . . . . . . . . 10,734 10,746
Income taxes . . . . . . . . . . . . . . . . . . . . 850 1,308
Current portion of long-term debt and
capital lease obligation . . . . . . . . . . . . . 34,344 6,247
-------- --------
Total Current Liabilities. . . . . . . . . . . . 74,567 48,301
LONG-TERM DEBT AND CAPITAL
LEASE OBLIGATION . . . . . . . . . . . . . . . . . . 374,698 344,575
OTHER LIABILITIES. . . . . . . . . . . . . . . . . . . 5,549 5,092
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . 12,483 12,516
SHAREHOLDER'S DEFICIT
Common stock, par value $1.00 per share;
authorized 1,000 shares; 1,000 shares issued
and outstanding. . . . . . . . . . . . . . . . . . 1 1
Additional paid-in capital . . . . . . . . . . . . . 78,570 78,570
Deficit. . . . . . . . . . . . . . . . . . . . . . . (72,925) (74,624)
-------- --------
Total Shareholder's Deficit. . . . . . . . . . . 5,646 3,947
-------- --------
TOTAL LIABILITIES AND SHAREHOLDER'S DEFICIT. . . . . . $472,943 $414,431
-------- --------
-------- --------
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
7
GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended September 30,
-------------------------------
1997 1996
------- -------
(In thousands)
REVENUES
Advertising. . . . . . . . . . . . . . . . $71,635 $49,595
Circulation. . . . . . . . . . . . . . . . 15,091 9,401
Other. . . . . . . . . . . . . . . . . . . 3,435 2,084
------- -------
TOTAL OPERATING REVENUES . . . . . . . . 90,161 61,080
COST AND EXPENSES
Cost of sales. . . . . . . . . . . . . . . 31,607 23,568
Selling, general and administrative. . . . 38,381 26,518
Depreciation and amortization. . . . . . . 8,037 5,138
Interest expense . . . . . . . . . . . . . 9,164 6,334
Other, net . . . . . . . . . . . . . . . . 836 207
------- -------
TOTAL COST AND EXPENSES. . . . . . . . . 88,025 61,765
NET INCOME (LOSS) BEFORE INCOME TAXES. . . . 2,136 (685)
INCOME TAX EXPENSE . . . . . . . . . . . . . (437) (53)
------- -------
NET INCOME (LOSS). . . . . . . . . . . . . . $ 1,699 $ (738)
------- -------
------- -------
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
8
GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended September 30,
--------------------------------
1997 1996
-------- --------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss). . . . . . . . . . . . . . . $ 1,699 $ (738)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization. . . . . . . . . 7,853 4,836
Provision for losses on accounts
receivable . . . . . . . . . . . . . . . . . 923 634
Amortization of debt discount. . . . . . . . . 668 472
Loss on sale of assets . . . . . . . . . . . . 47 --
Distributions in excess of (less than)
earnings from investment in partnership. . . (427) 278
Deferred income tax benefit. . . . . . . . . . (33) (69)
Change in operating assets and
liabilities. . . . . . . . . . . . . . . . . (4,390) (3,283)
-------- --------
NET CASH FLOWS FROM OPERATING
ACTIVITIES . . . . . . . . . . . . . . . 6,340 2,130
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of newspaper properties . . . . . . . (51,931) --
Purchase of machinery, equipment and
other, (net) . . . . . . . . . . . . . . . . (2,226) (1,918)
-------- --------
NET CASH FLOWS FROM INVESTING
ACTIVITIES . . . . . . . . . . . . . . . (54,157) (1,918)
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term debt. . . . . . . . . . (9,341) (10,174)
Reduction of non-operating liabilities . . . . (131) (1,423)
Issuance of long-term debt . . . . . . . . . . 55,000 9,600
-------- --------
NET CASH FLOWS FROM FINANCING
ACTIVITIES . . . . . . . . . . . . . . . 45,528 (1,997)
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS. . . . . . (2,289) (1,785)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD. . . . . . . . . . . . . . . . . . . 8,944 4,415
-------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD . . . . . . . . . . . . . . . . . . . . $ 6,655 $ 2,630
-------- --------
-------- --------
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid. . . . . . . . . . . . . . . . . $ 12,753 $ 7,048
-------- --------
-------- --------
Income taxes paid. . . . . . . . . . . . . . . $ 966 $ 143
-------- --------
-------- --------
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
9
GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
PRINCIPLES OF CONSOLIDATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulations S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete consolidated financial statements and
should be read in conjunction with the consolidated financial statements and
footnotes thereto included in Garden State Newspapers, Inc.'s Annual Report
on Form 10-K for the year ended June 30, 1997. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three month period ended September 30, 1997, are not necessarily
indicative of the results that may be expected for the year ended June 30,
1998.
The unaudited condensed consolidated financial statements include the
accounts of Garden State Newspapers, Inc. (the "Company" or "Garden State")
and Garden State Investments, Inc., a wholly owned subsidiary of Garden
State, and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated upon consolidation. Garden State is a
wholly owned subsidiary of Affiliated Newspapers Investments, Inc.
INCOME TAXES
The effective income tax rate varies from the federal statutory rate
primarily because of the nondeductibility of certain expenses.
SEASONALITY
Newspaper companies tend to follow a distinct and recurring seasonal
pattern, with higher advertising revenues in months containing significant
events or holidays. Accordingly, the fourth calendar quarter, or the
Company's second fiscal quarter, is the Company's strongest revenue quarter
of the year. Due to generally poor weather and lack of holidays, the first
calendar quarter, or the Company's third fiscal quarter, is the Company's
weakest revenue quarter of the year.
BUSINESS ACQUISITIONS
On July 31, 1997, the Company acquired substantially all of the assets
used in the publication of THE SUN, an evening newspaper published in Lowell,
Massachusetts. The assets were purchased for $49.0 million in cash plus an
adjustment for working capital and a covenant not to compete with the prior
owners, with a discounted value of approximately $11.8 million. The
newspaper has daily and Sunday circulation of approximately 52,000 and
56,000, respectively.
The acquisition was accounted for as a purchase; accordingly, the
consolidated financial statements include the operations of the acquired
newspapers from August 1, 1997. The assets acquired and the liabilities
assumed have been recorded at their estimated fair market value as of the
date of acquisition. These estimates are based on management's preliminary
estimates and are subject to change upon final allocation of the purchase
price.
10
GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 2: SUBSEQUENT EVENTS
LONG-TERM DEBT
On October 1, 1997, the Company issued $250.0 million of Senior
Subordinated Notes due 2009. The Company used the net proceeds to reduce
bank debt at Garden State and pay off and terminate a bank credit facility of
one of the Company's subsidiaries.
The following table sets forth, after giving effect to borrowings
associated with the July 31, 1997, acquisition of THE SUN (previously
discussed), the issuance of $250.0 million of Senior Subordinated Notes and
the paydown of bank debt associated therewith, the approximate expected
scheduled maturities of long-term debt of the Company for the periods
indicated.
FISCAL IN THOUSANDS
------ ------------
1998. . . . . . . . . . . . . . . . $ 2,625
1999. . . . . . . . . . . . . . . . 4,673
2000. . . . . . . . . . . . . . . . 4,897
2001. . . . . . . . . . . . . . . . 4,703
2002. . . . . . . . . . . . . . . . 7,987
Thereafter. . . . . . . . . . . . . 384,338
--------
$409,223
--------
--------
In conjunction with the issuance of the Senior Subordinated Notes, the
Company also amended its existing Bank Credit Agreement to change Term Loan B
into a revolving credit facility ("RCC"), reduce the Company's borrowing
spreads (in most cases by 0.375%), and change the amortization of the RCA
commitment.
The following table sets forth the annual commitment reductions for RCA,
RCB and RCC, as well as annual payments under Term A Loan, giving effect to
the amended Bank Credit Agreement.
RCA RCB RCC TERM A LOAN
-------- ------- ------- -----------
(In thousands)
1998. . . . . . $ 10,000 $ -- $ 4,000 $ --
1999. . . . . . 31,000 -- 7,500 --
2000. . . . . . 31,000 -- 7,500 --
2001. . . . . . 31,000 -- 12,000 --
2002. . . . . . 31,000 -- 12,000 3,750
Thereafter. . . 33,000 27,000 33,000 11,250
-------- ------- ------- -------
$167,000 $27,000 $76,000 $15,000
-------- ------- ------- -------
-------- ------- ------- -------
11
NOTE 2: SUBSEQUENT EVENTS--CONTINUED
ACQUISITION
In November 1997, the Company agreed to acquire substantially all the
operating and intangible assets used in the publication of the
PRESS-TELEGRAM, a daily newspaper located in Long Beach, California, for
approximately $38.2 million. This daily newspaper had daily and Sunday
circulation of approximately 109,000 and 124,000, respectively, at March 31,
1997. The Company anticipates closing this acquisition in December 1997.
12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OPERATING RESULTS
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
REVENUES
Revenues increased $29.1 million or 47.6% in the first quarter of fiscal
year 1998 as compared to the same quarter of fiscal year 1997. The increase
in revenue was primarily attributable to the October 31, 1996, acquisition of
the PASADENA STAR NEWS, SAN GABRIEL VALLEY TRIBUNE, WHITTIER DAILY NEWS,
TIMES-STANDARD and THE EVENING SUN; the February 28, 1997, acquisition of the
SENTINEL & ENTERPRISE, LEBANON DAILY NEWS and THE DAILY NONPAREIL; and the
July 31, 1997, acquisition of THE SUN. Combined, the acquisitions discussed
above increased revenues approximately $28.5 million in the first quarter of
fiscal year 1998. These revenue increases were partially offset by a $3.1
million decline in revenue resulting from the sale of the POTOMAC NEWS on
February 13, 1997. Excluding the acquisition and disposition transactions,
the Company's remaining newspaper operations combined, posted a $3.7 million
increase in operating revenues for the first quarter of fiscal year 1998.
The increase in operating revenue at these newspapers was primarily
attributable to a combined 4.3% and 11.4% gain in retail and classified
revenue, respectively.
COST OF SALES
Cost of sales increased $8.0 million or 34.1% in first quarter of fiscal
year 1998 compared to the same quarter of fiscal year 1997. The
aforementioned acquisitions caused cost of sales to increase approximately
$9.0 million for the quarter ended September 30, 1997. However, this increase
was offset in part by a $1.1 million decrease in cost of sales resulting from
the sale of the POTOMAC NEWS. Excluding acquisition and disposition
transactions, cost of sales increased approximately $0.1 million. Excluding
the impact of newsprint, cost of sales on a same newspaper basis increased
$1.1 million in the first quarter of fiscal 1998.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative ("SG&A") expenses increased $11.9
million or 44.7% in the first quarter of fiscal year 1998 as compared to the
same quarter of fiscal year 1997. The aforementioned acquisitions resulted
in SG&A expense increases of approximately $11.8 million; however, this was
in part offset by a $1.1 million reduction in SG&A expense associated with
the sale of the POTOMAC NEWS. Excluding the acquisition and disposition
transactions, SG&A expense increased $1.2 million. The overall increase in
SG&A expense on a same newspaper basis is associated with increases in
advertising and circulation expenditures, which were primarily related to
ongoing efforts to increase advertising linage and circulation volumes.
DEPRECIATION AND INTEREST
Depreciation and amortization increased $2.9 million in the first quarter
of fiscal year 1998 as compared to the same quarter of fiscal year 1997. The
aforementioned acquisitions caused the majority of the increase in
depreciation and amortization expense; however, the increase was in part
offset by a $0.4 million reduction in depreciation and amortization expense
associated with the sale of the POTOMAC NEWS.
13
Interest expense increased $2.8 million in the first quarter of fiscal
year 1998 as compared to the same quarter of fiscal year 1997. Interest
expense increased primarily as a result of a $176.3 million increase in
average debt outstanding associated with acquistions. This increase was
partially offset by a 221 basis point decrease in the average interest rate,
mainly associated with the refinancing of the Company's 10.89% senior notes
with bank debt.
NET INCOME
Garden State recorded a net income of approximately $1.7 million in the
first quarter of fiscal year 1998 as compared to a loss of $0.7 million of
the first quarter of fiscal year 1997. The increase in net income is
primarily attributable to a $6.3 million increase in operating profit offset
by a $2.8 million increase in interest expense, primarily as a result of
acquisitions, and a $0.4 million increase in tax expense resulting from the
Company's improved operating results.
FINANCIAL CONDITION AND LIQUIDITY
Net cash flows from operating activities were approximately $6.3 million
and $2.1 million for the three months ended September 30, 1997 and 1996,
respectively. The $4.2 million increase in cash flow from operating
activities was primarily the result of a $5.3 million increase in net income
excluding depreciation and amortization, for the three months ended September
30, 1997, compared to September 30, 1996, offset by a $1.1 million increase
in the change in operating assets and liabilities.
Net cash flows from investing activities were $(54.1) million and $(1.9)
million for the three months ended September 30, 1997 and 1996, respectively.
The $52.2 million change was primarily the result of the Company spending
$51.9 million related to the acquisition of THE SUN in the first quarter of
fiscal year 1997.
Net cash flows from financing activities were $45.5 million and $(2.0)
million for the three months ended September 30, 1997 and 1996, respectively.
The change of approximately $47.5 million was primarily attributable to the
Company borrowing a net $45.7 million in the first quarter of fiscal 1998,
the majority of which was in conjunction with the previously discussed July
31, 1997, acquisition.
After giving effect to the issuance of the Senior Subordinated Notes and
the corresponding paydown of bank debt, Garden State has $249.0 million
available for future borrowings under the Bank Credit Agreement, net of
approximately $5.0 million in outstanding letters of credit. Approximately
$151.0 million of the availability under the Bank Credit Agreement is
available solely for future business acquisitions.
NEAR TERM OUTLOOK
Because of an industry wide year-over-year increase in newsprint
consumption, combined with a strike at Fletcher Challenge (a major West Coast
newsprint manufacturer), several suppliers have announced a $35 to $40 per
ton increase as of November 1, 1997 (previously October 1, 1997) which would
bring average transaction prices to approximately $600 per metric ton on the
East Coast and $610 per metric ton on the West Coast. If the price increase
is successful, the increase is not expected to have a significant impact on
the Company's cash flows from operations as the Company expects to purchase
approximately two-thirds of its fiscal 1998 newsprint requirements under
fixed price contracts at a weighted average price of approximately $532 per
metric ton. MediaNEWS Group has entered into fixed price contracts expiring
over the next two and one-half to three years on behalf of the Company and
its affiliates. Such contracts cover the purchase of approximately 86,000
metric tons per year, of which 60,000 metric tons is expected to be allocated
to the Company each year. While there is no assurance that the Company will
receive its full allocation each year, based on current circumstances,
management does not expect the Company's final allocation of such newsprint
to be materially different from that discussed above.
14
Based upon current operations, management believes that the Company will
have sufficient cash flows from operations which, combined with the Garden
State Credit Facility and other resources available to the Company, will be
more than adequate to fund scheduled payment of principal and interest and to
meet anticipated capital expenditure and working capital requirements for at
least the next twelve months.
The Company may, from time to time, consider strategic or targeted
newspaper acquisitions and dispositions. In the event an acquisition
opportunity is identified, management expects that it would be able to
arrange financing on terms and conditions satisfactory to the Company to the
extent current resources are insufficient.
15