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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 September 30, 1999
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: 1-12955
JOURNAL REGISTER COMPANY
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 22-3498615
(State or Other Jurisdiction of Incorporation (I.R.S. Employer
or Organization) Identification No.)
50 WEST STATE STREET, TRENTON, NEW JERSEY 08608-1298
(Address of Principal Executive Offices) (Zip Code)
(609) 396-2200
(Registrant's Telephone Number, Including Area Code)
__________________________________________________________________________
(Former Name, Former Address and Former Fiscal Year, if
Changed Since Last Report)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: common stock, $.01 par value
per share, 46,524,128 shares outstanding (exclusive of treasury shares) as of
November 15, 1999.
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JOURNAL REGISTER COMPANY
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
PAGE NO.
<S> <C> <C>
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets at September 30, 1999
(Unaudited) and December 31, 1998.................................................... 1
Condensed Consolidated Statements of Income for the three and nine
months ended September 30, 1999 and 1998 (Unaudited)................................. 2
Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 1999 and 1998 (Unaudited)........................................ 3
Notes to Unaudited Condensed Consolidated Financial Statements....................... 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................................ 6
Item 3. Quantitative and Qualitative Disclosures About Market Risk........................... 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................................... 12
Item 2. Changes in Securities and Use of Proceeds............................................ 12
Item 3. Defaults Upon Senior Securities...................................................... 12
Item 4. Submission of Matters to a Vote of Security Holders.................................. 12
Item 5. Other Information.................................................................... 12
Item 6. Exhibits and Reports on Form 8-K..................................................... 12
Signature ..................................................................................... 13
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JOURNAL REGISTER COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
September 30 December 31,
1999 1998
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ASSETS
Current assets:
Cash and cash equivalents $ 6,163 $ 8,542
Accounts receivable, less allowance for doubtful accounts of $ 5,595 at
September 30, 1999 and $4,632 at December 31, 1998 61,695 58,244
Inventories 9,334 8,440
Deferred income taxes 2,852 2,522
Other current assets 6,884 4,130
------------- --------------
Total current assets 86,928 81,878
Property, plant and equipment: 244,137 230,160
Less accumulated depreciation (140,480) (130,182)
------------- --------------
103,657 99,978
Intangible and other assets, net of accumulated amortization of $39,311 at
September 30, 1999 and $28,297 at December 31, 1998 497,289 490,013
-------------- --------------
Total assets $ 687,874 $ 671,869
============= ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities:
Current maturities of long-term debt $ 13,000 $ ---
Accounts payable 12,768 12,107
Income taxes payable 276 829
Accrued interest 7,432 6,374
Other accrued expenses and current liabilities 33,045 30,814
------------- --------------
Total current liabilities 66,521 50,124
Senior debt, less current maturities 736,000 765,000
Deferred income taxes 17,403 14,029
Accrued retiree benefits and other liabilities 16,054 17,078
Income taxes payable 67,804 50,951
Commitments and contingencies
Stockholders' deficit:
Common stock, $.01 par value per share, 300,000,000 shares authorized,
48,437,581 issued and outstanding at September 30, 1999 and
December 31, 1998 484 484
Additional paid-in capital 358,245 358,236
Accumulated deficit (550,514) (583,821)
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Total (191,785) (225,101)
Less treasury stock, 1,897,253 shares at cost (23,911)
---
Accumulated other comprehensive loss, net of tax of $153 (212) (212)
------------- --------------
Net stockholders' deficit (215,908) (225,313)
--------------
=============
Total liabilities and stockholders' deficit $ 687,874 $ 671,869
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</TABLE>
SEE ACCOMPANYING NOTES.
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JOURNAL REGISTER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Advertising $ 88,656 $ 83,349 $258,879 $ 222,369
Circulation 24,616 24,063 73,244 64,780
--------------- ------------- ------------- ---------------
Newspaper revenues 113,272 107,412 332,123 287,149
Commercial printing and other 6,273 6,634 18,490 18,439
--------------- ------------- ------------- ---------------
119,545 114,046 350,613 305,588
Operating expenses:
Salaries and employee benefits 40,515 37,097 119,204 99,917
Newsprint, ink and printing charges 12,122 14,477 37,197 39,068
Selling, general and administrative 12,098 12,807 33,554 29,386
Depreciation and amortization 7,399 6,776 21,908 16,800
Other 14,902 15,082 43,510 38,569
--------------- ------------- ------------- ---------------
87,036 86,239 255,373 223,740
Operating income 32,509 27,807 95,240 81,848
Net interest and other expense (13,264) (14,100) (39,501) (31,315)
--------------- ------------- ------------- ---------------
Income before provision for income taxes,
equity interest and extraordinary item 19,245 13,707 55,739 50,533
Provision for income taxes 7,663 5,597 22,365 19,254
--------------- ------------- ------------- ---------------
Income before equity interest and
extraordinary item 11,582 8,110 33,374 31,279
Equity interest (67) --- (67) ---
--------------- ------------- ------------- ---------------
Income before extraordinary item 11,515 8,110 33,307 31,279
Extraordinary item, net of tax --- 4,495 --- 4,495
--------------- ------------- ------------- ---------------
Net income $ 11,515 $ 3,615 $ 33,307 $ 26,784
=============== ============= ============= ===============
Net income per common share (basic and
diluted):
Income before extraordinary item $ .25 $ .17 $ .71 $ .65
Net Income $ .25 $ .07 $ .71 $ .55
Weighted average shares outstanding:
Basic 46,536 48,438 46,942 48,438
Diluted 46,775 48,563 47,057 48,668
</TABLE>
SEE ACCOMPANYING NOTES.
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JOURNAL REGISTER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended
September 30,
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1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 33,307 $ 26,784
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for losses on accounts receivable 3,189 3,094
Depreciation and amortization 21,908 16,800
Extraordinary loss on extinguishment of deferred debt costs --- 7,250
Other, net 8,653 4,155
-------------- ---------------
Net cash provided by operating activities 67,057 58,083
CASH FLOWS FROM INVESTING ACTIVITIES:
Net additions to property, plant and equipment (14,866) (6,672)
Purchase of newspaper properties and equity investment (14,668) (340,954)
-------------- ---------------
Net cash used in investing activities (29,534) (347,626)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of senior facilities --- 808,000
Repayments of senior debt (16,000) (516,774)
Purchase of treasury shares (23,989) ---
Proceeds from exercise of stock options 87 ---
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Net cash (used in) provided by financing activities (39,902) 291,226
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(Decrease)/increase in cash and cash equivalents (2,379) 1,683
Cash and cash equivalents, beginning of period 8,542 8,183
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Cash and cash equivalents, end of period $ 6,163 $ 9,866
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $38,415 $29,054
Income taxes 3,021 2,049
</TABLE>
SEE ACCOMPANYING NOTES.
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JOURNAL REGISTER COMPANY
NOTES TO UNUADITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
1. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements include
Journal Register Company (the "Company") and all of its wholly-owned
subsidiaries. The Company was incorporated on March 11, 1997 and became a
publicly traded company on the New York Stock Exchange in May of 1997.
The Company (through its consolidated subsidiaries) primarily publishes
daily and non-daily newspapers serving markets in Connecticut, Philadelphia and
its surrounding areas, Ohio, the greater St. Louis area, central New England and
the Capital-Saratoga and Mid-Hudson, New York regions; and has commercial
printing operations in Connecticut, Ohio and Pennsylvania.
The condensed consolidated interim financial statements included herein
have been prepared by the Company, without audit, in accordance with generally
accepted accounting principles ("GAAP") and pursuant to the rules and
regulations of the Securities and Exchange Commission. The condensed
consolidated interim financial statements do not include all the information and
footnote disclosure required by GAAP for complete financial statements. In the
opinion of the Company's management, the accompanying unaudited condensed
consolidated financial statements contain all material adjustments (consisting
only of normal recurring accruals) necessary to present fairly its financial
position as of September 30, 1999 and December 31, 1998 and the results of its
operations and cash flows for the periods ended September 30, 1999 and 1998.
These financial statements should be read in conjunction with the December 31,
1998 audited Consolidated Financial Statements and Notes thereto. The interim
operating results are not necessarily indicative of the results to be expected
for an entire year.
2. EARNINGS PER COMMON SHARE
The following table sets forth the computation of weighted-average
shares outstanding for calculating both basic and diluted earnings per share:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Weighted-average shares outstanding - basic 46,535,909 48,437,500 46,941,752 48,437,500
Effect of dilutive securities:
Employee stock options 239,196 125,409 115,660 229,876
------------- ------------- ------------- -------------
Adjusted weighted-average shares
outstanding - diluted 46,775,105 48,562,909 47,057,412 48,667,376
============= ============= ============= =============
</TABLE>
Options to purchase 1.6 million shares of common stock at a range of
$17.63 to $22.50 were outstanding during the three and nine month periods ended
September 30, 1999, but were not included in the computation of the diluted EPS
because the options' exercise price was greater than the average market price of
the common shares.
3. COMMON STOCK
On January 11, 1999, the Company's Board of Directors authorized a
share repurchase program of up to two million shares of the Company's common
stock. On April 8, 1999, the Company's Board of Directors authorized the
repurchase of an additional one million shares. Shares under the program are to
be repurchased at management's discretion, either in the open market or in
privately negotiated transactions. At September 30, 1999, the Company had
repurchased 1,903,500 shares at a total cost of approximately $24 million.
Subsequent to September 30, 1999, the Company repurchased 16,200 shares at a
total cost of approximately $211,000.
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JOURNAL REGISTER COMPANY
NOTES TO UNUAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
4. ACQUISITIONS
On June 7, 1999, the Company acquired certain assets and liabilities of
THE FARMINGTON VALLEY POST in Avon, Connecticut, a suburban monthly newspaper.
On July 13, 1999, the Company acquired certain assets and liabilities of TOWN
TALK SOUTHERN, TOWN TALK EASTERN and the DELAWARE COUNTY JOURNAL in Ridley,
Pennsylvania. On August 12, 1999, the Company acquired the stock of Hometown
News, Inc., in West Warwick, Rhode Island, comprising a daily, weekly and three
non-daily publications. On September 1, 1999, the Company acquired certain
assets and liabilities of CONNECTICUT MAGAZINE, in Trumbull, Connecticut, a
monthly publication. The Company applied the purchase method of accounting for
these transactions. Accordingly, the total acquisition cost was allocated to the
tangible assets and liabilities based on their relative estimated fair value on
the effective dates of the acquisition of approximately $1.2 million and
$800,000, respectively. Intangible assets of approximately $14.3 million were
recorded for the excess of the purchase price over the value of identifiable net
assets and are being amortized according to the Company's policy.
5. SEGMENTS
In 1998, the Company adopted Financial Accounting Standards Board, No.
131, "Disclosure About Segments of an Enterprise and Related Information." In
accordance with FASB 131, the Company concluded that it operates in one
reportable segment. The Company determined its operating segment based on
individual operations that the chief operating decision maker reviews for
purposes of assessing performance and making operational decisions. The combined
operations have similar economic characteristics and each operation has similar
products, services, customers, production processes and distribution systems.
6. RECLASSIFICATIONS
Certain reclassifications were made to the 1998 financial statements to
conform with the 1999 presentation.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company's business is publishing newspapers in the United States,
where its publications are primarily daily and non-daily newspapers. The
Company's revenues are derived primarily from advertising, paid circulation and
commercial printing.
As of September 30, 1999, the Company owned and operated 25 daily
newspapers and 194 non-daily publications strategically clustered in seven
geographic areas: Connecticut; Philadelphia and its surrounding areas; Ohio; the
greater St. Louis area; central New England; and the Capital-Saratoga and
Mid-Hudson, New York regions. As of September 30, 1999, the Company had total
paid daily circulation of approximately 640,000 and total non-daily distribution
of approximately 4.0 million. In addition, the Company has 26 Web sites,
featuring all of the Company's daily and weekly newspapers.
The Company's objective is to continue its growth in revenues, EBITDA
and net income. The principal elements of the Company's strategy are to: (i)
expand advertising revenues and readership; (ii) grow by acquisition; (iii)
capture synergies from geographic clustering; and (iv) implement consistent
operating policies and standards. From 1993 through present, the Company
successfully completed 17 strategic acquisitions, acquiring 13 daily newspapers,
126 non-daily publications and three commercial printing companies, two of which
print a number of the non-daily publications. The third is a premium quality
sheet-fed printing company.
Newspaper companies tend to follow a distinct and recurring seasonal
pattern. The first quarter of the year (January-March) tends to be the weakest
quarter because advertising volume is then at its lowest level. Conversely, the
fourth quarter (October-December) tends to be the strongest quarter as it
includes heavy holiday season advertising.
The third quarter and nine-month period ended September 30, 1999
include the results of the following acquisitions: the Goodson Acquisition,
completed July 15, 1998; Taconic Media, Dutchess County, New York, acquired
September 21, 1998; The Saratogian, Saratoga Springs, New York, acquired March
9, 1998; The Farmington Valley Post, Avon Connecticut, acquired June 7, 1999;
Towntalk Newspaper, Ridley, Pennsylvania, acquired July 13, 1999; Kent County
Daily Times, West Warwick, Rhode Island, acquired August 12, 1999; and
Connecticut Magazine, Trumbull, Connecticut, acquired September 1, 1999. In
addition, during the third quarter, the Company purchased a 7.14% interest in
AdOne, LLC, a provider of classified advertising on the Internet.
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1998
REVENUES. In the three months ended September 30, 1999, revenues
increased $5.5 million, or 4.8%, to $119.5 million. Newspaper revenues in the
third quarter increased $5.9 million, or 5.5%, to $113.3 million, lead by growth
in advertising revenues. On a pro forma basis, including the acquisitions as
though they were owned as of the beginning of the prior year period, advertising
revenue increased approximately 3.0%. Circulation revenues increased $553,000,
or 2.3%, as compared to the prior-year period. Commercial printing and other
represented 5.2% of the Company's revenues in the third quarter of 1999, as
compared to 5.8% in the third quarter of 1998. On-line revenue, included in
advertising revenue, increased 71% from the prior-year quarter to approximately
$900,000.
SALARIES AND EMPLOYEE BENEFITS. Salaries and employee benefit expenses
were 33.9% of the Company's revenues in the third quarter of 1999 as compared to
32.5% in the third quarter of 1998. Salaries and employee benefits increased
$3.4 million, or 9.2%, in the third quarter of 1999 to $40.5 million, primarily
due to acquisitions and increased pension expense. Excluding the effect of
acquisitions, salaries and benefits increased 3.5%.
NEWSPRINT, INK AND PRINTING CHARGES. In the third quarter of 1999,
newsprint, ink and printing charges were 10.1% of the Company's revenues, as
compared to 12.7% in the third quarter of 1998. Newsprint, ink and printing
charges in the three months ended September 30, 1999 decreased approximately
$2.4 million as compared to the prior year period. During the third quarter of
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1999, newsprint prices continued to decline, resulting in a price decrease of
approximately 19% from the prior year period. The decrease in newsprint expense
attributable to cost savings has been offset by volume increases related to the
Company's acquisitions.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses were 10.1% and 11.2% of the Company's revenues for the
third quarter of 1999 and 1998, respectively. Selling, general and
administrative expenses for the third quarter of 1999 decreased $709,000, or
5.5%, to $12.1 million. The 1998 third quarter includes special charges of $3.2
million. Excluding the effect of the 1998 special charges, selling, general and
administrative expenses increased $2.5 million due to the Company's acquisitions
and promotion costs associated with the company's revenue generating activities.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
were 6.2% of the Company's revenues in the third quarter of 1999 as compared to
5.9% in the third quarter of 1998. Depreciation and amortization expenses in the
third quarter of 1999 increased $623,000, or 9.2%, to $7.4 million due to
increased amortization resulting from the Company's acquisitions.
OTHER EXPENSES. Other expenses accounted for 12.5% and 13.2% of the
Company's revenues in the third quarter of 1999 and 1998, respectively. Other
expenses decreased $180,000, or 1.2%, to $14.9 million in the third quarter of
1999. Other expenses in the third quarter of 1998 included special charges of
$630,000. Excluding the effect of the 1998 special charge, other expenses
increased $450,000 due to acquisitions.
OPERATING INCOME. Operating income increased $4.7 million, or 16.9%,
for the third quarter of 1999 as compared to the third quarter of 1998.
Excluding the effects of the special charges noted above, operating income
increased $928,000, or 2.9%, due to the growth in the Company's advertising
revenue, continued newsprint cost savings and the effect of acquisitions during
the third quarter of 1999.
INTEREST AND OTHER EXPENSE. Interest and other expense in the third
quarter of 1999 as compared to the third quarter of 1998 decreased
approximately $836,000 due to a decrease in interest expense as a result of
lower average outstanding debt and a decrease in average borrowing rates.
PROVISION FOR INCOME TAXES. The Company reported an effective tax rate
of 39.8% for the third quarter of 1999 as compared to 40.8% for the third
quarter of 1998. The decrease in the effective tax rate for the third quarter of
1999 as compared to the third quarter of 1998 is primarily a result of the
Company's inclusion of the Toodson Acquisition for all 1999 as opposed to the
tax accounting adjustments required in the initial recording of the acquisition
in the third quarter of 1998.
NET INCOME. Net income was $11.5 million, or $.25 per share, basic and
diluted, for the third quarter of 1999 as compared to $3.6 million, or $.07 per
share, basic and diluted, for the third quarter of 1998. Excluding the effect of
the 1998 special charges and extraordinary item, net income increased $1.1
million, or 10.1%.
OTHER INFORMATION. EBITDA1 for the third quarter of 1999 was $39.9
million. Tangible net income1 per share, on a diluted basis, increased 14.8% to
$.31 in the third quarter of 1999 as compared to $.27 per share in the third
quarter of 1998, as adjusted for the special charges noted above.
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1 EBITDA is defined by the Company as operating income (loss) plus
depreciation, amortization and other non-cash, special or non-recurring charges.
Tangible net income is defined as net income, excluding equity interest, plus
after-tax amortization. EBITDA and tangible net income are not intended to
represent cash flow from operations and should not be considered as alternatives
to operating or net income computed in accordance with generally accepted
accounting principles ("GAAP"), as indicators of the Company's operating
performance, as alternatives to cash from operating activities (as determined in
accordance with GAAP) or as measures of liquidity. The Company believes that
EBITDA is a standard measure commonly reported and widely used by analysts,
investors and other interested parties in the media industry. Accordingly, this
information has been disclosed herein to permit a more complete comparative
analysis of the Company's operating performance relative to other companies in
the industry. However, not all companies calculate EBITDA and tangible net
income using the same methods; therefore, the EBITDA and tangible net income
figures set forth above may not be comparable to EBITDA and tangible net income
reported by other companies. Certain covenants contained in the Company's credit
agreement are based upon EBITDA.
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NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1998
REVENUES. In the nine months ended September 30, 1999, revenues
increased $45.0 million, or 14.7%, to $350.6 million, primarily due to
acquisitions. Newspaper revenues in the nine months ended September 30, 1999
increased $45.0 million, or 15.7%, to $332.1 million, principally due to
increased advertising revenue as a result of acquisitions. Advertising revenues
increased $36.5 million, or 16.4%, from the prior year period and circulation
revenues increased approximately $8.5 million, or 13.1%, primarily due to
acquisitions. Commercial printing and other represented 5.3% of the Company's
revenues in the nine months ended September 30, 1999 as compared to 6.0% in the
nine months ended September 30, 1998.
SALARIES AND EMPLOYEE BENEFITS. Salaries and employee benefit expenses
were 34.0% of the Company's revenues for the nine months ended September 30,
1999 as compared to 32.7% for the nine months ended September 30, 1998. Salaries
and employee benefits increased $19.3 million, or 19.3%, during the nine months
ended September 30, 1999 to $119.2 million, primarily due to acquisitions and
increased pension expense.
NEWSPRINT, INK AND PRINTING CHARGES. In the nine months ended September
30, 1999, newsprint, ink and printing charges were 10.6% of the Company's
revenues as compared to 12.8% in the nine months ended September 30, 1998.
Newsprint, ink and printing charges in the nine months ended September 30, 1999
decreased approximately $1.9 million, or 4.8%, as compared to the prior year
period. During the nine months ended September 30, 1999, newsprint prices
declined approximately 12% from the prior year period. The decrease in newsprint
expense attributable to cost savings has been offset by volume increases related
to the Company's acquisitions.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses were 9.6% of the Company's revenue for both nine month
periods ended September 30, 1999 and 1998. Selling, general and administrative
expenses for the nine months ended September 30, 1999 increased $4.2 million, or
14.2%, to $33.6 million. The 1998 third quarter includes special charges of $3.2
million. Excluding the effect of the 1998 special charges, selling, general and
administrative expenses for the nine month period increased $7.3 million, or
28.0%, due to the Company's acquisitions and promotion costs associated with the
Company's revenue generating activities.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
were 6.2% of the Company's revenues in the nine months ended September 30, 1999
as compared to 5.5% in the nine months ended September 30, 1998. Depreciation
and amortization expenses in the nine months ended September 30, 1999 increased
$5.1 million, or 30.4%, to $21.9 million due to increased amortization resulting
from the Company's acquisitions.
OTHER EXPENSES. Other expenses accounted for approximately 12.4% and
12.6% of the Company's revenues in the nine months ended September 30, 1999 and
1998, respectively. Other expenses increased $4.9 million, or 12.8%, to $43.5
million in the nine months ended September 30, 1999, primarily due to
acquisitions and increased circulation promotion and distribution expenses.
Other expenses in the third quarter of 1998 included special charges of $630,000
noted above. Excluding the effect of the 1998 special charge, other expenses for
the nine-month period increased $5.6 million from the prior year period,
primarily due to acquisitions and increased promotion expense.
OPERATING INCOME. Operating income increased $13.4 million, or 16.4%,
for the nine months ended September 30, 1999 as compared to the nine months
ended September 30, 1998. Excluding the effects of the special charges noted
above, operating income for the nine month period increased $9.6 million, or
11.2%, due to the growth in the Company's advertising revenue, continued
newsprint cost savings and the effect of acquisitions during the third quarter
of 1999.
INTEREST AND OTHER EXPENSE. Interest and other expense increased
primarily due to an increase in interest expense of $8.0 million, or 25.4%, in
the nine months ended September 30, 1999 as compared to the nine months ended
September 30, 1998, as a result of increased borrowing in connection with the
Company's acquisitions including the Goodson Acquisition completed in the third
quarter of 1998, offset in part by a decrease in average borrowing rates.
PROVISION FOR INCOME TAXES. The Company reported an effective tax rate
of 40.1% for the nine months ended September 30, 1999 as compared to 38.1% for
the nine months ended September 30, 1998. The increase in the effective tax rate
for the nine months ended September 30, 1999 is primarily the result of the
Company's 1998 acquisitions, particularly the Goodson Acquisition completed in
the third quarter of 1998.
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NET INCOME. Net income was $33.3 million, or $.71 per share, basic and
diluted, for the nine months ended September 30, 1999 as compared to $26.8
million, or $.55 per share, basic and diluted, for the nine months ended
September 30, 1998. Excluding the effect of the 1998 special charges and
extraordinary item, net income decreased $320,000 due to the dilutive effect of
increased interest and intangible amortization expense in connection with the
Goodson Acquisition.
OTHER INFORMATION. EBITDA for the nine months ended September 30, 1999
was $117.1 million. An increase of $14.7 million from the prior year period.
Tangible net income per share, as adjusted for the special charges, on a diluted
basis, increased 12.1% to $.89 for the nine months ended September 30, 1999 as
compared to $.79 per share in the nine months ended September 30, 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operations have historically generated strong positive
cash flow. The Company believes cash flows from operations will be sufficient to
fund its operations, capital expenditures and long-term debt obligations. The
Company also believes that cash flows from operations and future borrowings and
its ability to issue common stock as consideration for future acquisitions, will
provide it with the flexibility to fund its acquisition strategy while
continuing to meet its operating needs, capital expenditures and long-term debt
obligations.
CASH FLOWS FROM OPERATIONS. Net cash provided by operating activities
in the first nine months of 1999 increased $9.0 million to $67.1 million as
compared to the first nine months of 1998. Net cash provided by operating
activities in 1999 primarily resulted from net income before non-cash expenses
(i.e., depreciation and amortization), of $55.2 million.
CASH FLOWS FROM INVESTING ACTIVITIES. Net cash used in investing
activities decreased $317.9 million to $29.5 million in the first nine months of
1999 due primarily to the Goodson Acquisition completed in the third quarter of
1998. In 1999, the Company's capital expenditures increased by $8.2 million. The
Company has a capital expenditure program (excluding future acquisitions) of
approximately $17.0 million in place for 1999, which includes spending on
technology, including prepress and business systems, computer hardware and
software, other machinery and equipment, plants and property, vehicles and other
assets. The Company believes its capital expenditure program is sufficient to
maintain its current level and quality of operations. The Company reviews its
capital expenditure program periodically and modifies it as required to meet
current needs. The Company expects to continue to fund the 1999 capital
expenditure program from operating cash flow. The success of the Company's
operations in Philadelphia and surrounding areas has necessitated the
construction of a centralized production facility, scheduled to begin in the
first quarter of 2000. Costs for this facility are currently estimated to be
approximately $35.0 million. In addition to the Company's capital expenditure
program noted above, approximately $4.0 - $5.0 million will be expended in 1999
in connection with the Philadelphia facility. The Company expects to fund this
construction project with cash flows from operations and borrowings.
CASH FLOWS FROM FINANCING ACTIVITIES. Net cash used in financing
activities was $39.9 million in the first nine months of 1999 as compared to net
cash provided by financing activities of $291.2 million in the first nine months
of 1998. The cash provided in 1998 includes borrowed funds of approximately
$808.0 million used to finance the Company's acquisitions. The 1999 activity
reflects the use of funds of approximately $24.0 million in connection with the
Company's stock repurchase program and approximately $16.0 million for the
repayment of senior debt.
The amounts outstanding under the Company's credit agreement bear
interest at (i) 1 3/4% to 1/2% above LIBOR (as defined in the credit agreement)
or (ii) 1/2% to 0% above the higher of (a) the Prime Rate (as defined in the
credit agreement) or (b) 1/2% above the Federal Funds Rate (as defined in the
credit agreement). The interest rate spreads ("the applicable margins") are
dependent upon the ratio of debt to trailing four quarters Cash Flow (as defined
in the credit agreement) and reduce as such ratio declines.
In connection with the requirements of the Company's credit facility,
the Company is required to maintain interest rate protection agreements for a
certain percentage of its outstanding debt, based upon the Total Leverage Ratio
(as defined in the credit agreement). On January 29, 1999, certain SWAP
agreements entered into during 1998 became effective. The agreements exchange a
floating LIBOR rate plus the applicable margin for a fixed LIBOR rate of
approximately 5.85% plus the applicable margin on $400.0 million of debt, in the
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<PAGE>
aggregate. The $400.0 million interest rate protection agreements are
specifically attributable to certain LIBOR loans (as defined in the Company's
credit agreement), reduce by $75.0 million per year and expire in October 2002.
As of September 30, 1999, the Company had outstanding indebtedness
under the credit facility, due and payable in installments through 2006, of
$749.0 million, of which $249.0 million was outstanding under the revolving
credit facility. There was $151.0 million of unused and available funds under
the revolving credit facility at September 30, 1999.
YEAR 2000
In 1996, the Company began the initial planning of a comprehensive
initiative to address the Year 2000 issue. The Company organized a Year 2000
oversight team led by the Company's senior information technology officer to
develop a strategy of evaluation, implementation, testing and contingency
planning to address the Company's Year 2000 readiness. The evaluation phase,
which began in September 1996 and was completed by December 1996, involved
performing a complete, company-wide inventory to identify all internal and
external, general purpose and production hardware and software systems, commonly
referred to as information technology ("IT") systems, that required modification
to become Year 2000 compliant. In conjunction with the Company's internal
assessment, the Company communicated with key third parties, namely suppliers of
production equipment as well as financial institutions to determine their state
of Year 2000 readiness, implementation of Year 2000 compliant systems and
related contingency plans. The Company has received a substantial number of
responses and is now focusing on non-replies from key third parties. During the
third quarter, the Company formalized its contingency plan. The Plan involves
utilizing the Company's various production and system resources within each
operating cluster to provide alternative support in the event of a system
failure at one or more of its properties. The Company will continue to
correspond with critical vendors and modify the Company's contingency plans as
necessary.
In January of 1997, the Company began the implementation phase of
replacing or modifying system hardware and software as required. The Company has
now completed the installation and testing of such hardware and software at its
operating properties.
In accordance with GAAP, the Company's direct Year 2000 costs,
including modifying computer software or converting to new programs, are
expensed as incurred. Additionally, a majority of the hardware costs for
replacement systems will be capitalized as ordinarily accounted for in the
normal course of business. These system replacements represent upgrades
consistent with the Company's goal to maintain and improve operational
efficiencies. The Company has capitalized approximately $6.0 million during the
nine-month period ended September 30, 1999 related to new hardware and software
in connection with its Year 2000 compliance plan.
Although the Company believes it has taken all of the necessary steps
to ensure that the Company will be Year 2000 compliant, there can be no
assurances that the Company will be able to complete all of the modifications in
the required time frame, that all third parties will be Year 2000 compliant or
that unforeseen Year 2000 issues will not arise. The Company's assessment at
this time is that the failure of any of the Company's IT or non-IT systems, or
failure by a third party to become Year 2000 compliant would not have a material
adverse effect on the Company, although there can be no assurances that a
material adverse effect could not result.
RECENT EVENTS
On November 9, 1999, the Board of Directors approved a change effective
December 27, 1999 in the Company's fiscal year from a calendar year to an
industry standard 52/53 week fiscal year ending on the Sunday nearest to
December 31. Accordingly, the Company's 1999 fiscal year end will be December
26, 1999.
INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
Management's Discussion and Analysis of Financial Condition and Results
of Operations and other sections of this Form 10-Q include forward-looking
statements, which may be identified by use of terms such as "believes,"
"anticipates," "plans," "will," "likely," "continues," "intends" or "expects."
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<PAGE>
These forward-looking statements relate to the plans and objectives of the
Company for future operations. In light of the risks and uncertainties inherent
in all future projections, the inclusion of forward-looking statements herein
should not be regarded as a representation by the Company or any other person
that the objectives or plans of the Company will be achieved. Many factors could
cause the Company's actual results to differ materially from those in the
forward-looking statements, including, among other things: (i) a decline in
general economic conditions, (ii) the unavailability or material increase in the
price of newsprint, (iii) an adverse judgement in pending or future litigation,
(iv) increased competitive pressure from current competitors and future market
entrants, (v) sales of substantial amounts of the common stock in the public
markets, or the perception that such sales could occur and (iv) the factors
discussed in the Company's Form 10-K for 1998 in "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Certain Factors Which May Affect the Company's Future Performance."
The following factors should not be construed as exhaustive. The Company
undertakes no obligation to release publicly the results of any future revisions
it may make to forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk arising from changes in interest
rates associated with its long-term debt obligations. The Company's long-term
debt is at variable interest rates based on certain interest rate spreads
applied to LIBOR, the Prime Rate or Federal Funds Rate each as defined in the
credit agreement. To manage its exposure to fluctuations in interest rates, the
Company, as required by its credit agreement, enters into certain interest rate
protection agreements, which allows the Company to exchange variable rate
interest for fixed rate, maturing at specific intervals. The difference to be
paid or received as interest rates change is accrued and recognized as an
adjustment of interest expense related to the debt. The related amount payable
to or receivable from counterparties is included in accrued interest. The
Company's use of these agreements is limited to hedging activities and not for
trading or speculative activity.
At September 30, 1999, the Company had in effect SWAP agreements for a
notional amount of $400 million. The fair market value of the SWAPs at September
30, 1999, had the SWAPs been marked to market, would have resulted in a gain of
approximately $1.9 million. Assuming a 10% increase or reduction in interest
rates for the nine months ended September 30, 1999, the effect on the Company's
pre-tax earnings and cash flows would be approximately $1.8 million.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
Stockholder proposals submitted for inclusion in the Company's Proxy
Statement to be issued in connection with its 2000 Annual Meeting of
Stockholders must be mailed to the Secretary, Journal Register Company, State
Street Square, 50 West State Street, Trenton, New Jersey 08608-1298, and must be
received by the Secretary on or before December 1, 1999. In accordance with the
advance notice provisions contained in the Company's Amended and Restated
By-Laws filed as an exhibit to this report, stockholde prposals for presentation
at the Company's 2000 Annual Meteing of Stockholders must be received by the
Secretary no sooner than January 19, 2000 and no later than February 18, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
3(ii) Form of Amended and Restated By-Laws
27.1 Financial Data Schedule
(B) REPORTS ON FORM 8-K
None.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 15, 1999 JOURNAL REGISTER COMPANY
By: /S/ JEAN B. CLIFTON
----------------------------
Jean B. Clifton
Executive Vice President &
Chief Financial Officer
(signing on behalf of the
registrant and as principal
financial officer)
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<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
3(ii) Form of Amended and Restated By-Laws
27.1 Financial Data Schedule
FORM of AMENDED AND RESTATED
BY-LAWS
of
JOURNAL REGISTER COMPANY
Incorporated under the Laws of the State of Delaware
ARTICLE I
OFFICES AND RECORDS
SECTION 1.1. DELAWARE OFFICE. The principal office of the
Corporation in the State of Delaware shall be located in the City of Wilmington,
County of New Castle, and the name and address of its registered agent is The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware.
SECTION 1.2. OTHER OFFICES. The Corporation may have such other
offices, either within or without the State of Delaware, as the Board of
Directors may designate or as the business of the Corporation may from time to
time require.
SECTION 1.3. BOOKS AND RECORDS. The books and records of the
Corporation may be kept outside the State of Delaware at such place or places as
may from time to time be designated by the Board of Directors.
ARTICLE II
STOCKHOLDERS
SECTION 2.1. ANNUAL MEETING. The annual meeting of the
stockholders of the Corporation shall be held on such date and at such place and
time as may be fixed by resolution of the Board of Directors.
SECTION 2.2. SPECIAL MEETING. Subject to the rights of the holders
of any series of stock having a preference over the Common Stock of the
Corporation as to dividends or upon liquidation ("Preferred Stock") with respect
to such series of Preferred Stock, special meetings of the stockholders may be
called only by the Chairman of the Board or by the Board of Directors pursuant
to a resolution adopted by a majority of the total number of directors which the
Corporation would have if there were no vacancies (the "Whole Board").
SECTION 2.3. PLACE OF MEETING. The Board of Directors or the
Chairman of the Board, as the case may be, may designate the place of meeting
for any annual meeting or for of Directors or the Chairman of the Board. If no
designation is so made, the place of meeting shall be the principal office of
the Corporation.
SECTION 2.4. NOTICE OF MEETING. Written or printed notice, stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered by the Corporation not less than ten (10)
days nor more than sixty (60) days before the date of the meeting, either
personally or by mail, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail with postage thereon prepaid, addressed to the
stockholder at his address as it appears on the stock transfer books of the
Corporation. Such further notice shall be given as may be required by law. Only
such business shall be conducted at a special meeting of stockholders as shall
have been brought before the meeting pursuant to the Corporation's notice of
meeting. Meetings may be held without notice if all stockholders entitled to
vote are present, or if notice is waived by those not present in accordance with
Section 6.4 of these By-Laws. Any previously scheduled meeting of the
stockholders may be postponed, and (unless the Certificate of Incorporation
otherwise provides) any special meeting of the stockholders may be canceled, by
resolution of the Board of Directors upon public notice given prior to the date
previously scheduled for such meeting of stockholders.
<PAGE>
SECTION 2.5. QUORUM AND ADJOURNMENT. Except as otherwise provided by
law or by the Certificate of Incorporation, the holders of a majority of the
outstanding shares of the Corporation entitled to vote generally in the election
of directors (the "Voting Stock"), represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders, except that when specified
business is to be voted on by a class or series of stock voting as a class, the
holders of a majority of the shares of such class or series shall constitute a
quorum of such class or series for the transaction of such business. The
Chairman of the meeting or a majority of the shares so represented may adjourn
the meeting from time to time, whether or not there is such a quorum. No notice
of the time and place of adjourned meetings need be given except as required by
law. The stockholders present at a duly called meeting at which a quorum is
present may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
SECTION 2.6. PROXIES. At all meetings of stockholders, a stockholder
may vote by proxy executed in writing (or in such manner prescribed by the
General Corporation Law of the State of Delaware) by the stockholder, or by his
duly authorized attorney in fact.
SECTION 2.7. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
(A) ANNUAL MEETINGS OF STOCKHOLDERS. (1) Nominations of persons for
election to the Board of Directors of the Corporation and the proposal of
business to be considered by the stockholders may be made at an annual meeting
of stockholders (a) pursuant to the Corporation's notice of meeting, (b) by or
at the direction of the Board of Directors or (c) by any stockholder of the
Corporation who was a stockholder of record at the time of giving of the
stockholder's notice provided for in this By-Law, who is entitled to vote at the
meeting and who complies with the notice procedures set forth in this By-Law.
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of paragraph
(A)(1) of this By-Law, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation and such other business must
otherwise be a proper matter for stockholder action. To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
90th day nor earlier than the close of business on the 120th day prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is more than 30 days
before or more than 60 days after such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the close of
business on the 120th day prior to such annual meeting and not later than the
close of business on the later of the 90th day prior to such annual meeting or
the 10th day following the day on which public announcement of the date of such
meeting is first made by the Corporation. In no event shall the public
announcement of an adjournment of an annual meeting commence a new time period
for the giving of a stockholder's notice as described above. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or reelection as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and Rule 14a-11 thereunder (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (c) as to the stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (i) the name and
address of such stockholder, as they appear on the Corporation's books, and of
such beneficial owner and (ii) the class and number of shares of the Corporation
which are owned beneficially and of record by such stockholder and such
beneficial owner.
(3) Notwithstanding anything in the second sentence of
paragraph (A)(2) of this By-Law to the contrary, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement by the Corporation naming all of
the nominees for director or specifying the size of the increased Board of
Directors at least 100 days prior to the first anniversary of the preceding
<PAGE>
year's annual meeting, a stockholder's notice required by this By-Law shall also
be considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the Corporation.
(B) SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (a) by or at the direction of the Board of
Directors or (b) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice
provided for in this By-Law, who shall be entitled to vote at the meeting and
who complies with the notice procedures set forth in this By-Law. In the event
the Corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board of Directors, any such stockholder
may nominate a person or persons (as the case may be), for election to such
position(s) as specified in the Corporation's notice of meeting, if the
stockholder's notice required by paragraph (A)(2) of this By-Law shall be
delivered to the Secretary at the principal executive offices of the Corporation
not earlier than the close of business on the 120th day prior to such special
meeting and not later than the close of business on the later of the 90th day
prior to such special meeting or the 10th day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting. In no
event shall the public announcement of an adjournment of a special meeting
commence a new time period for the giving of a stockholder's notice as described
above.
(C) GENERAL. (1) Only such persons who are nominated in accordance
with the procedures set forth in this By-Law shall be eligible to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this By-Law. Except as otherwise provided by law, the Certificate
of Incorporation or these By-Laws, the Chairman of the meeting shall have the
power and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made or proposed, as the case may be, in
accordance with the procedures set forth in this By-Law and, if any proposed
nomination or business is not in compliance with this By-Law, to declare that
such defective proposal or nomination shall be disregarded.
(2) For purposes of this By-Law, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this By-Law, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this By-Law. Nothing in this By-Law shall be deemed to affect any
rights (i) of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or
(ii) of the holders of any series of Preferred Stock to elect directors under
specified circumstances.
SECTION 2.8. PROCEDURE FOR ELECTION OF DIRECTORS; REQUIRED VOTE.
Election of directors at all meetings of the stockholders at which directors are
to be elected shall be by ballot, and, subject to the rights of the holders of
any series of Preferred Stock to elect directors under specified circumstances,
a plurality of the votes cast thereat shall elect directors. Except as otherwise
provided by law, the Certificate of Incorporation, or these By-Laws, in all
matters other than the election of directors, the affirmative vote of a majority
of the shares present in person or represented by proxy at the meeting and
entitled to vote on the matter shall be the act of the stockholders.
<PAGE>
SECTION 2.9. INSPECTORS OF ELECTIONS; OPENING AND CLOSING THE Polls.
The Board of Directors by resolution shall appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives, to act at the meetings of stockholders and make a written
report thereof. One or more persons may be designated as alternate inspectors to
replace any inspector who fails to act. If no inspector or alternate has been
appointed to act or is able to act at a meeting of stockholders, the Chairman of
the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging his or her duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his or her ability. The inspectors shall have the
duties prescribed by law.
The Chairman of the meeting shall fix and announce at the meeting
the date and time of the opening and the closing of the polls for each matter
upon which the stockholders will vote at a meeting.
SECTION 2.10. NO STOCKHOLDER ACTION BY WRITTEN CONSENT. Subject to
the rights of the holders of any series of Preferred Stock with respect to such
series of Preferred Stock, any action required or permitted to be taken by the
stockholders of the Corporation must be taken at an annual or special meeting of
stockholders of the Corporation and may not be taken by any consent in writing
by such stockholders.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1. GENERAL POWERS. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors. In
addition to the powers and authorities by these By-Laws expressly conferred upon
them, the Board of Directors may exercise all such powers of the Corporation and
do all such lawful acts and things as are not by statute or by the Certificate
of Incorporation or by these By-Laws required to be exercised or done by the
stockholders.
SECTION 3.2. NUMBER, TENURE AND QUALIFICATIONS. Subject to the
rights of the holders of any series of Preferred Stock to elect directors under
specified circumstances, the number of directors shall be fixed from time to
time exclusively pursuant to a resolution adopted by a majority of the Whole
Board. The directors, other than those who may be elected by the holders of any
series of Preferred Stock under specified circumstances, shall be divided, with
respect to the time for which they severally hold office, into three classes, as
nearly equal in number as is reasonably possible, with each director to hold
office until his or her successor shall have been duly elected and qualified. At
each annual meeting of stockholders, (i) directors elected to succeed those
directors whose terms then expire shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders after their
election, with each director to hold office until his or her successor shall
have been duly elected and qualified, and (ii) if authorized by a resolution of
the Board of Directors, directors may be elected to fill any vacancy on the
Board of Directors, regardless of how such vacancy shall have been created.
SECTION 3.3. REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without other notice than this By-Law immediately after,
and at the same place as, the Annual Meeting of Stockholders. The Board of
Directors may, by resolution, provide the time and place for the holding of
additional regular meetings without other notice than such resolution.
SECTION 3.4. SPECIAL MEETINGS. Special Meetings of the Board of
Directors shall be called at the request of the Chairman of the Board, the
President or a majority of the Board of Directors then in office. The person or
persons authorized to call special meetings of the Board of Directors may fix
the place and time of the meetings.
SECTION 3.5. NOTICE. Notice of any special meetings of directors
shall be given to each director at his business or residence in writing by hand
delivery, first-class or overnight mail or courier service, telegram or
facsimile transmission, or orally by telephone. If mailed by first-class mail,
<PAGE>
such notice shall be deemed adequately delivered when deposited in the United
States mails so addressed, with postage thereon prepaid, at least five days
before such meeting. If by telegram, overnight mail or courier service, such
notice shall be deemed adequately delivered when the telegram is delivered to
the telegraph company or the notice is delivered to the overnight mail or
courier service company at least twenty-four hours before such meeting. If by
facsimile transmission, such notice shall be deemed adequately delivered when
the notice is transmitted at least twelve hours before such meeting. If by
telephone or by hand delivery, the notice shall be given at least twelve hours
prior to the time set for the meeting. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the Board of Directors
need be specified in the notice of such meeting, except for amendments to these
By-Laws, as provided under Section 8.1. A meeting may be held at any time
without notice if all the directors are present or if those not present waive
notice of the meeting in accordance with Section 6.4 of these By-Laws.
SECTION 3.6. ACTION BY CONSENT OF BOARD OF DIRECTORS. Any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the Board
or committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
SECTION 3.7. CONFERENCE TELEPHONE MEETINGS. Members of the Board of
Directors, or any committee thereto, may participate in a meeting of the Board
of Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
SECTION 3.8. QUORUM. Subject to Section 3.9, a whole number of
directors equal to at least a majority of the Whole Board shall constitute a
quorum for the transaction of business, but if at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of the directors
present may adjourn the meeting from time to time without further notice. The
act of the majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. The directors present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum.
SECTION 3.9. VACANCIES. Subject to applicable law and the rights of
the holders of any series of Preferred Stock with respect to such series of
Preferred Stock, and unless the Board of Directors otherwise determines,
vacancies resulting from death, resignation, retirement, disqualification,
removal from office or other cause, and newly created directorships resulting
from any increase in the authorized number of directors, may be filled only by
the affirmative vote of a majority of the remaining directors, though less than
a quorum of the Board of Directors, and directors so chosen shall hold office
for a term expiring at the annual meeting of stockholders at which the term of
office of the class to which they have been elected expires and until such
director's successor shall have been duly elected and qualified. No decrease in
the number of authorized directors constituting the Whole Board shall shorten
the term of any incumbent director.
SECTION 3.10. EXECUTIVE AND OTHER COMMITTEES. The Board of Directors
may, by resolution adopted by a majority of the Whole Board, designate an
Executive Committee to exercise, subject to applicable provisions of law, all
the powers of the Board in the management of the business and affairs of the
Corporation when the Board is not in session, including without limitation the
power to declare dividends, to authorize the issuance of the Corporation's
capital stock and to adopt a certificate of ownership and merger pursuant to
Section 253 of the General Corporation law of the State of Delaware, and may, by
resolution similarly adopted, designate one or more other committees. The
Executive Committee and each such other committee shall consist of two or more
directors of the Corporation. The Board may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. Any such committee, other than the
Executive Committee (the powers of which are expressly provided for herein), may
to the extent permitted by law exercise such powers and shall have such
responsibilities as shall be specified in the designating resolution. In the
absence or disqualification of any member of such committee or committees, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not constituting a quorum, may unanimously appoint another
<PAGE>
member of the Board to act at the meeting in the place of any such absent or
disqualified member. Each committee shall keep written minutes of its
proceedings and shall report such proceedings to the Board when required.
A majority of any committee may determine its action and fix the
time and place of its meetings, unless the Board shall otherwise provide. Notice
of such meetings shall be given to each member of the committee in the manner
provided for in Section 3.5 of these By-Laws. The Board shall have power at any
time to fill vacancies in, to change the membership of, or to dissolve any such
committee. Nothing herein shall be deemed to prevent the Board from appointing
one or more committees consisting in whole or in part of persons who are not
directors of the Corporation; PROVIDED, HOWEVER, that no such committee shall
have or may exercise any authority of the Board.
SECTION 3.11. REMOVAL. Subject to the rights of the holders of any
series of Preferred Stock with respect to such series of Preferred Stock, any
director, or the entire Board of Directors, may be removed from office at any
time, but only for cause and only by the affirmative vote of the holders of at
least 80% of the voting power of all of the then-outstanding shares of Voting
Stock, voting together as a single class.
SECTION 3.12. RECORDS. The Board of Directors shall cause to be kept
a record containing the minutes of the proceedings of the meetings of the Board
and of the stockholders, appropriate stock books and registers and such books of
records and accounts as may be necessary for the proper conduct of the business
of the Corporation.
ARTICLE IV
OFFICERS
SECTION 4.1. ELECTED OFFICERS. The elected officers of the
Corporation shall be a Chairman of the Board of Directors, a President, one or
more Vice-Presidents, a Secretary, a Treasurer, and such other officers
(including, without limitation, a Chief Financial Officer) as the Board of
Directors from time to time may deem proper. The Chairman of the Board shall be
chosen from among the directors. All officers elected by the Board of Directors
shall each have such powers and duties as generally pertain to their respective
offices, subject to the specific provisions or this ARTICLE IV. Such officers
shall also have such powers and duties as from time to time may be conferred by
the Board of Directors or by any committee thereof. The Board of Directors or
any committee thereof may from time to time elect, or the Chairman of the Board
or President may appoint, such other officers (including one or more Assistant
Vice President, Assistant Secretaries, Assistant Treasurers, and Assistant
Controllers) and such agents, as may be necessary or desirable for the conduct
of the business of the Corporation. Such other officers and agents shall have
such duties and shall hold their offices for such terms as shall be provided in
these By-Laws or as may be prescribed by the Board of Directors or such
committee or by the Chairman of the Board or President, as the case may be.
SECTION 4.2. ELECTION AND TERM OF OFFICE. The elected officers of
the Corporation shall be elected annually by the Board of Directors at the
regular meeting of the Board of Directors held after the annual meeting of the
stockholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as convenient. Each officer shall
hold office until his or her successor shall have been duly elected and shall
have qualified or until his death or until he shall resign, but any officer may
be removed from office at any time by the affirmative vote of a majority of the
Whole Board or, except in the case of an officer or agent elected by the Board
of Directors, by the Chairman of the Board or President. Such removal shall be
without prejudice to the contractual rights, if any, of the person so removed.
SECTION 4.3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors. The
Chairman of the Board shall be responsible for the general management of the
affairs of the Corporation and shall perform all duties incidental to his or her
<PAGE>
office which may be required by law and all such other duties as are properly
required of him by the Board of Directors. He or she shall make reports to the
Board of Directors and the stockholders, and shall see that all orders and
resolutions of the Board of Directors and of any committee thereof are carried
into effect. The Chairman of the Board may also serve as President, if so
elected by the Board of Directors.
SECTION 4.4. PRESIDENT. The President shall have such power and
perform such duties as may from time to time be assigned to him or her by the
Board of Directors, the Chief Executive Officer (if such position is held by one
other than the President) or prescribed by these By-Laws.
SECTION 4.5. VICE-PRESIDENTS. Each Vice President shall have such
powers and shall perform such duties as shall be assigned to him or her by the
Board of Directors.
SECTION 4.6. CHIEF FINANCIAL OFFICER. The Chief Financial Officer
(if any) shall be a Vice President and act in an executive financial capacity.
He or she shall assist the Chairman of the Board and the President in the
general supervision of the Corporation's financial policies and affairs.
SECTION 4.7. TREASURER. The Treasurer shall perform such duties
and have such powers as are usually incident to the office of the Treasurer or
which may be assigned to him or her by the Board of Directors.
SECTION 4.8. SECRETARY. The Secretary shall keep or cause to be kept
in one or more books provided for that purpose, the minutes of all meetings of
the Board of Directors, the committees of the Board of Directors and the
stockholders; he or she shall see that all notices are duly given in accordance
with the provisions of these By-Laws and as required by law; he or she shall be
custodian of the records and the seal of the Corporation and affix and attest
the seal to all stock certificates of the Corporation (unless the seal of the
Corporation on such certificates shall be a facsimile, as hereinafter provided)
and affix and attest the seal to all other documents to be executed on behalf of
the Corporation under its seal; and he or she shall see the that books, reports,
statements, certificates and other documents and records required by law to be
kept and filed are properly kept and filed; and in general, he or she shall
perform all the duties incident to the office of Secretary and such other duties
as from time to time may be assigned to him or her by the Board of Directors,
the Chairman of the Board of Directors or the President.
SECTION 4.9. REMOVAL. Any officer elected, or agent appointed, by
the Board of Directors may be removed by the affirmative vote of a majority of
the Whole Board whenever, in their judgment, the best interests of the
Corporation would be served thereby. Any officer or agent appointed by the
Chairman of the Board or the President may be removed by him or her whenever, in
his or her judgment, the best interests of the Corporation would be served
thereby. No elected officer shall have any contractual rights against the
Corporation for compensation by virtue of such election beyond the date of the
election of his or her successor, his or her death, his or her resignation or
his or her removal, whichever event shall first occur, except as otherwise
provided in an employment contract or under an employee deferred compensation
plan.
SECTION 4.10. VACANCIES. A newly created elected office and a
vacancy in any elected office because of death, resignation, or removal may be
filled by the Board of Directors for the unexpired portion of the term at any
meeting of the Board of Directors. Any vacancy in an office appointed by the
Chairman of the Board or the President because of death, resignation, or removal
may be filled by the Chairman of the Board or the President.
ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
SECTION 5.1. STOCK CERTIFICATES AND TRANSFERS. The interest of each
stockholder of the Corporation shall be evidenced by certificates for shares of
stock in such form as the appropriate officers of the Corporation may from time
to time prescribe. The shares of the stock of the Corporation shall be
<PAGE>
transferred on the books of the Corporation by the holder thereof in person or
by his attorney, upon surrender for cancellation of certificates for at least
the same number of shares, with an assignment and power of transfer endorsed
thereon or attached thereto, duly executed, with such proof of the authenticity
of the signature as the Corporation or its agents may reasonably require.
The certificates of stock shall be signed, countersigned and
registered in such manner as the Board of Directors may by resolution prescribe,
which resolution may permit all or any of the signatures on such certificates to
be in facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
SECTION 5.2. LOST, STOLEN OR DESTROYED CERTIFICATES. No certificate
for shares of stock in the Corporation shall be issued in place of any
certificate alleged to have been lost, destroyed or stolen, except on production
of such evidence of such loss, destruction or theft and on delivery to the
Corporation of a bond of indemnity in such amount, upon such terms and secured
by such surety, as the Board of Directors or any financial officer may in its or
his or her discretion require.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1. FISCAL YEAR. The fiscal year of the Corporation shall
begin on the first day of January and end on the thirty-first day of December
each year.
SECTION 6.2. DIVIDENDS. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and the Certificate of
Incorporation.
SECTION 6.3. SEAL. The corporate seal shall have inscribed thereon
the words "Corporate Seal", the year of incorporation and around the margin
thereof the words "Journal Register Company -- Delaware."
SECTION 6.4. WAIVER OF NOTICE. Whenever any notice is required to be
given to any stockholder or director of the Corporation under the provisions of
the General Corporation Law of the State of Delaware or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Neither the business to be transacted at, nor the
purpose of, any annual or special meeting of the stockholders or the Board of
Directors or committee thereof need be specified in any waiver of notice of such
meeting.
SECTION 6.5. AUDITS. The accounts, books and records of the
Corporation shall be audited upon the conclusion of each fiscal year by an
independent certified public accountant selected by the Board of Directors, and
it shall be the duty of the Board of Directors to cause such audit to be done
annually.
SECTION 6.6. RESIGNATIONS. Any director or any officer, whether
elected or appointed, may resign at any time by giving written notice of such
resignation to the Chairman of the Board, the President, or the Secretary, and
such resignation shall be deemed to be effective as of the close of business on
the date said notice is received by the Chairman of the Board, the President, or
the Secretary, or at such later time as is specified therein. No formal action
shall be required of the Board of Directors or the stockholders to make any such
resignation effective.
ARTICLE VII
CONTRACTS, PROXIES, ETC.
<PAGE>
SECTION 7.1. CONTRACTS. Except as otherwise required by law, the
Certificate of Incorporation or these By-Laws, any contracts or other
instruments may be executed and delivered in the name and on the behalf of the
Corporation by such officer or officers of the Corporation as the Board of
Directors may from time to time direct. Such authority may be general or
confined to specific instances as the Board may determine. The Chairman of the
Board, the President or any Vice President may execute bonds, contracts, deeds,
leases and other instruments to be made or executed for or on behalf of the
Corporation. Subject to any restrictions imposed by the Board of Directors or
the Chairman of the Board, the President or any Vice President of the
Corporation may delegate contractual powers to others under his jurisdiction, it
being understood, however, that any such delegation of power shall not relieve
such officer of responsibility with respect to the exercise of such delegated
power.
SECTION 7.2. PROXIES. Unless otherwise provided by resolution
adopted by the Board of Directors, the Chairman of the Board, the President or
any Vice President may from time to time appoint an attorney or attorneys or
agent or agents of the Corporation, in the name and on behalf of the
Corporation, to cast the votes which the Corporation may be entitled to cast as
the holder of stock or other securities in any other corporation, any of whose
stock or other securities may be held by the Corporation, at meetings of the
holders of the stock or other securities of such other corporation, or to
consent in writing, in the name of the Corporation as such holder, to any action
by such other corporation, and may instruct the person or persons so appointed
as to the manner of casting such votes or giving such consent, and may execute
or cause to be executed in the name and on behalf of the Corporation and under
its corporate seal or otherwise, all such written proxies or other instruments
as he may deem necessary or proper in the premises.
ARTICLE VIII
AMENDMENTS
SECTION 8.1. AMENDMENTS. These By-Laws may be altered, amended, or
repealed at any meeting of the Board of Directors or of the stockholders,
provided notice of the proposed change was given in the notice of the meeting
and, in the case of a meeting of the Board of Directors, in a notice given not
less than two days prior to the meeting.
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AND THE CONDENSED CONSOLIDATED STATEMENTS
OF INCOME OF JOURNAL REGISTER COMPANY FOR THE PERIOD ENDED SEPTEMBER 30, 1999,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 6,163
<SECURITIES> 0
<RECEIVABLES> 67,290
<ALLOWANCES> 5,595
<INVENTORY> 9,334
<CURRENT-ASSETS> 86,928
<PP&E> 244,137
<DEPRECIATION> 140,480
<TOTAL-ASSETS> 687,874
<CURRENT-LIABILITIES> 66,521
<BONDS> 749,000
0
0
<COMMON> 484
<OTHER-SE> (216,392)
<TOTAL-LIABILITY-AND-EQUITY> 687,874
<SALES> 0
<TOTAL-REVENUES> 350,613
<CGS> 0
<TOTAL-COSTS> 199,911
<OTHER-EXPENSES> 21,908
<LOSS-PROVISION> 3,189
<INTEREST-EXPENSE> 39,476
<INCOME-PRETAX> 55,739
<INCOME-TAX> 22,365
<INCOME-CONTINUING> 33,307
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,307
<EPS-BASIC> 0.71
<EPS-DILUTED> 0.71
</TABLE>
