<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A NO. 1
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number : 1-12955
JOURNAL REGISTER COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 22-3498615
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
50 WEST STATE STREET
TRENTON, NEW JERSEY 08608-1298
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
Registrant's telephone number, including area code: (609) 396-2200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Common Stock, par value $0.01 per share
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
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. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X].
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of June 15, 1999 was approximately $170,373,339.
As of June 15, 1999, 46,534,081 shares of the registrant's Common Stock,
par value $0.01 per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE. None.
================================================================================
<PAGE>
The information required by Part III (Items 10, 11, 12 and 13) of the
undersigned Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (the "Annual Report"), filed pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), was to
be incorporated by reference to the definitive Proxy Statement for the 1999
Annual Meeting of Stockholders of the Company, which Proxy Statement was to be
filed pursuant to Regulation 14A under the Exchange Act within 120 days
following the end of the Company's fiscal year as permitted under General
Instruction G of Form 10-K. However, the definitive Proxy Statement was not
filed with the Securities and Exchange Commission (the "Commission") within such
time period. Accordingly, the Company hereby amends Items 10, 11, 12 and 13 of
the Annual Report to include the information previously to be incorporated by
reference. This information, except for Item 12 which has been updated, is
identical to the corresponding information contained in the Company's definitive
Proxy Statement, which was mailed on March 29, 1999 to stockholders of record as
of March 23, 1999.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information with respect to executive officers of the Company is
presented in Item 4 of this Report under the caption "Executive Officers of
the Registrant."
The following table sets forth the name and age (as of May 18, 1999) of
the directors, the class to which each director has been nominated for election
or elected, their principal occupations at present, the positions and offices,
if any, held by each director with the Company in addition to their position as
a director, and the period during which each has served as a director of the
Company.
<TABLE>
<CAPTION>
SERVED AS A
DIRECTOR OF THE
NAME AGE PRINCIPAL OCCUPATION-POSITION HELD COMPANY SINCE
- ---- --- ---------------------------------- ----------------
<S> <C> <C> <C>
CLASS A-2001
Douglas M. Karp....................... 44 Managing Director of E.M. Warburg, Pincus & 1997
Co., LLC
John R. Purcell....................... 67 Chairman and Chief Executive Officer of 1997
Grenadier Associates Ltd.
CLASS B-1999
Gary D. Nusbaum....................... 32 Managing Director of E.M. Warburg, Pincus & 1999
Co., LLC
Jean B. Clifton....................... 38 Executive Vice President, Chief Financial 1997
Officer and Secretary
Joseph A. Lawrence.................... 49 Private Investor 1997
CLASS C-2000
John L. Vogelstein.................... 64 Vice Chairman and President of E.M. Warburg, 1997
Pincus & Co., LLC
Robert M. Jelenic..................... 48 Chairman, President and Chief Executive 1997
Officer
</TABLE>
CLASS A DIRECTORS
DOUGLAS M. KARP has been a director of the Company since March 1997.
Mr. Karp has been a General Partner of Warburg, Pincus & Co. ("WP") and a Member
and Managing Director of E.M. Warburg, Pincus & Co., LLC ("EMWP") and its
predecessors since 1991. Mr. Karp is a director of Qwest Communications
-1-
<PAGE>
International, Inc. ("Qwest"); Golden Books Family Entertainment, Inc.; Primus
Telecommunications Group, Inc.; TV Filme, Inc.; Paging Network do Brasil, S.A.;
and several privately held companies.
JOHN R. PURCELL has been a director of the Company since June 1997. Mr.
Purcell has been Chairman and Chief Executive Officer of Grenadier Associates
Ltd., a venture banking firm, since 1989. From 1991 to 1996, Mr. Purcell was
also Chairman of Donnelly Marketing, Inc., a data-based direct marketing
company. From 1987 to 1990, Mr. Purcell served as Chairman of Mindscape,
Inc., an educational and entertainment computer software company. From 1982 to
1986, Mr. Purcell was Chairman and President of SFN Companies, Inc., a
communications company. Prior to 1982, Mr. Purcell was also an Executive Vice
President of CBS, Inc. and was a Senior Vice President, Finance and Business
Operations of Gannett Co., Inc. Mr. Purcell is a director of Bausch & Lomb,
Inc.; Technology Solutions Company and Omnicom Group, Inc.
CLASS B DIRECTORS
GARY D. NUSBAUM has been a director of the Company since February 1999. Mr.
Nusbaum has been a General Partner of WP and a Member and Managing Director of
EMWP since January 1997. Mr. Nusbaum was a Vice President of Warburg, Pincus
Ventures, LLC from January 1995 to December 1996 and was an Associate at
Warburg, Pincus Ventures, LLC from September 1989 to December 1994. Mr. Nusbaum
is a director of TV Filme, Inc.; Paging Network do Brasil, S.A.; and several
privately held companies.
JEAN B. CLIFTON has been a director of the Company and its predecessors for
more than the past five years. Ms. Clifton is the Executive Vice President,
Chief Financial Officer and Secretary of the Company, positions she has held
since the Company's inception. Prior to joining the Company, Ms. Clifton, a
Certified Public Accountant, had been employed by Arthur Young & Co. (a
predecessor to Ernst & Young LLP). Ms. Clifton has 13 years of senior
management experience in the newspaper industry. Ms. Clifton is a member of the
Board of Trustees of Junior Achievement of Central New Jersey, the Honorary
Advisory Board of KidsBridge Children's Cultural Center in Trenton, the Board of
Directors of The Fresh Air Fund, and the Postal Affairs and Employee Benefits
committees of the Newspaper Association of America.
JOSEPH A. LAWRENCE has been a director of the Company since August 1997.
From June 1998 (the date when Qwest and LCI International, Inc. ("LCI") merged)
to February 1998, Mr. Lawrence was Executive Vice President and Chief
Administrative Officer of Qwest. Prior to June 1998, Mr. Lawrence was Executive
Vice President of LCI. Mr. Lawrence joined LCI in October 1993 as Senior Vice
President of Finance and Development and Chief Financial Officer, assuming the
role of Executive Vice President and Chief Financial Officer in August 1997.
From 1990 to 1993, Mr. Lawrence was Vice President of Finance and Administration
for MCI Communications Corporation's Consumer Markets division and from 1985 to
1990 was Senior Vice President of Finance for MCI Communications
Corporation's Mid-Atlantic division.
CLASS C DIRECTORS
JOHN L. VOGELSTEIN has been a director of the Company and its predecessors
for more than the past five years. Mr. Vogelstein is a General Partner of WP
and a Member, Vice Chairman and President of EMWP, where he has been employed
since 1967. Mr. Vogelstein is a director of ADVO, Inc.; Golden Books Family
Entertainment, Inc.; and Mattel, Inc.
ROBERT M. JELENIC has been a director of the Company and its predecessors
for more than the past five years. Mr. Jelenic is the Chairman, President and
Chief Executive Officer of the Company. He has been President and Chief
Executive Officer since the inception of the Company in 1990. A Chartered
Accountant, Mr. Jelenic began his business career with Arthur Andersen in
Toronto, Canada. Mr. Jelenic has 23 years of senior management experience in
the newspaper industry, including 12 years with the Toronto Sun Publishing Corp.
Mr. Jelenic is a director of the Newspaper Association of America.
In connection with the Company's initial public offering of Common Stock in
May 1997, certain affiliates of E.M. Warburg, Pincus & Co., LLC (collectively,
"Warburg, Pincus") executed a voting agreement pursuant to which it agreed with
-2-
<PAGE>
the Company that, with respect to any matter brought to a stockholder vote,
Warburg, Pincus will vote in its own discretion shares representing no more than
50% of the voting power of the Company's shares entitled to vote on the
applicable matter. The shares owned by Warburg, Pincus, which represent in
excess of such 50%, will be voted in the same proportion as the shares voted by
the other stockholders on the applicable matter.
Pursuant to a registration rights agreement, Warburg, Pincus and certain
individuals are entitled to certain registration rights with respect to their
respective shares of capital stock of the Company aggregating approximately
36,556,250 shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
certain officers and persons holding more than 10% of a registered class of the
Company's equity securities to file reports of ownership and reports of changes
in ownership with the Commission and the New York Stock Exchange. Directors,
certain officers and greater than 10% stockholders are also required by
Commission regulations to furnish the Company with copies of all such reports
that they file. Based on the Company's review of copies of such forms provided
to it, the Company believes that all filing requirements were complied with
during the fiscal year ended December 31, 1998.
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by or paid to the Company's Chief
Executive Officer and the other four most highly compensated executive officers
of the Company, whose aggregate cash and cash equivalent compensation exceeded
$100,000 (the "Named Executives"), with respect to 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
COMPENSATION(1) SECURITIES
NAME AND UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS (#) PAYOUTS($)(2) COMPENSATION(3)
------------------ ---- --------- -------- ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Jelenic,............ 1998 $825,000 $ 195,000 320,000 $255,623 $24,750
Chairman, President and 1997 825,000 10,497,142(4) 645,834 431,137 24,750
Chief Executive Officer 1996 800,000 200,000 -- 326,667 24,000
Jean B. Clifton,.............. 1998 465,000 125,000 160,000 116,124 13,950
Executive Vice President 1997 445,000 5,268,571(4) 322,916 190,746 13,350
Chief Financial Officer 1996 425,000 125,000 -- 143,850 12,750
and Secretary
William J. Rush,.............. 1998 232,019 5,000 25,000(5) 60,796 2,803
Vice President of the 1997 275,000 1,189,676(4) 52,474(5) 34,293 3,500
Company and Publisher 1996 265,000 15,000 -- 76,050 3,450
and Chief Executive
Officer, New Haven Register
Allen J. Mailman,............. 1998 187,500 12,500 25,000 40,359 5,625
Senior Vice President of 1997 185,000 1,174,676(4) 56,510 64,091 5,550
Technology 1996 180,000 7,500 -- 48,250 5,400
William J. Higginson,......... 1998 180,000 12,500 25,000 17,359 5,400
Vice President of Production 1997 175,000 1,041,184(4) 53,126 8,213 5,175
1996 170,000 7,500 -- 4,301 5,100
</TABLE>
3
<PAGE>
- ----------------
(1) All other annual compensation has been omitted because such compensation
(which related only to perquisites and personal benefits) did not exceed
the lesser of $50,000 or 10% of the total annual salary and bonus reported
for each Named Executive.
(2) Prior to the Company's initial public offering of Common Stock in May 1997
(the "Offering"), the Company maintained a bonus plan (the "StarShare
Plan"), which commenced in January 1992 and in which key employees were
eligible to participate. Each participant received award units (the
"StarShare Units") based on target percentages of his or her base salary.
Each StarShare Unit represented a proportionate share of an aggregate
dollar amount. Such dollar amount was based on certain performance
measures related to the Company's compound annual growth in cash flow and
revenue and reduction in debt and/or equity redemption over a three-year
performance period. In general, StarShare Units granted under the
StarShare Plan vest at the end of the third year of the grant. Following
the applicable vesting period, the values of the StarShare Units are paid
to the participants in three equal annual installments, with interest paid
on the second and third payments at the applicable treasury note rate from
the first applicable payment date. The Company discontinued making grants
under the StarShare Plan prior to completion of the Offering and all
future payouts with respect to outstanding grants are payable solely in
cash.
(3) These amounts represent the Company's matching contributions under the
Company's 401(k) Plan and Supplemental 401(k) Plan.
(4) Includes special management bonuses paid to these Named Executives for
past services to the Company and its predecessors (the "Management
Bonuses") in the following amounts: Mr. Jelenic, $10,337,142 ($5,685,428
in shares of Common Stock and $4,651,714 in cash); Ms. Clifton, $5,168,571
($2,842,714 in shares of Common Stock and $2,325,857 in cash); Mr. Rush,
$1,174,676 ($646,072 in shares of Common Stock and $528,604 in cash); Mr.
Mailman, $1,174,676 ($646,072 in shares of Common Stock and $528,604 in
cash); and Mr. Higginson, $1,033,684 ($568,526 in shares of Common Stock
and $465,158 in cash).
(5) In connection with his retirement in October 1998, Mr. Rush forfeited all
of his unvested options. As of his retirement, Mr. Rush had 10,494 vested
options which, in accordance with the Company's 1997 Stock Incentive Plan
(as hereinafter defined), may be exercised by Mr. Rush for a period of one
year from the date of his retirement.
STOCK OPTION GRANTS
The following table sets forth information regarding grants of options to
purchase shares of Common Stock made by the Company during the fiscal year
ended December 31, 1998 to each of the Named Executives. No stock
appreciation rights ("SARs") were granted during 1998.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1998
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL
SECURITIES TOTAL OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES IN PRICE EXPIRATION OPTION TERM(3)
NAME GRANTED (#) 1998(1) ($/SHARE)(2) DATE (5%) (10%)
- ---- ----------- ------- ------------ ---- ---- -----
<S> <C> <C> <C> <C> <C>
Robert M. Jelenic.......... 320,000(4) 34.6% $22.50 05/01/08 $4,528,000 $11,475,000
Jean B. Clifton............ 160,000(4) 17.3 22.50 05/01/08 2,264,000 5,737,500
William J. Rush............ 25,000(5) 2.7 22.50 05/01/08 353,750 896,500
Allen J. Mailman........... 25,000(4) 2.7 22.50 05/01/08 353,750 896,500
William J. Higginson....... 25,000(4) 2.7 22.50 05/01/08 353,750 896,500
- -----------------------
</TABLE>
-4-
<PAGE>
(1) The Company granted options to purchase a total of 925,700 shares of
Common Stock during 1998.
(2) The exercise price was equal to the fair market value of the shares of
Common Stock underlying the options on the grant date.
(3) Amounts reported in these columns represent amounts that may be realized
upon exercise of options immediately prior to the expiration of their term
assuming the specified compounded rates of appreciation (5% and 10%) on
the Common Stock over the term of the options. These assumptions are based
on rules promulgated by the Commission and do not reflect the Company's
estimate of future stock price appreciation. Actual gains, if any, on the
stock option exercises and Common Stock holdings are dependent on the
timing of such exercise and the future performance of the Common Stock.
There can be no assurance that the rates of appreciation assumed in this
table can be achieved or that the option holder will receive the amounts
reflected.
(4) Options vest and become exercisable in five equal annual installments
beginning on the first anniversary of the date of grant.
(5) Mr. Rush forfeited these options in connection with his retirement from
the Company in October 1998.
YEAR-END OPTION VALUES
The following table sets forth information regarding the number and
year-end value of unexercised options held at December 31, 1998 by each of the
Named Executives. The Named Executives exercised no SARs during fiscal 1998.
<TABLE>
<CAPTION>
FISCAL 1998 YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED "IN-THE-MONEY"
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END (#) YEAR-END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---- ------------------------- -------------------------
<S> <C> <C>
Robert M. Jelenic......................................... 129,166/836,668 $64,583/$258,334
Jean B. Clifton........................................... 64,582/418,334 32,291/129,167
William J. Rush(2)........................................ 10,494/0 5,247/0
Allen J. Mailman.......................................... 11,302/70,208 5,651/22,604
William J. Higginson...................................... 10,624/67,502 5,312/21,251
</TABLE>
- ------------------
(1) Options are "in-the-money" if the fair market value of the underlying
securities exceeds the exercise price of the options. The amounts set
forth represent the difference between $15.00 per share, the fair market
value of the Common Stock issuable upon exercise of options at December
31, 1998, and the exercise price of the option, multiplied by the
applicable number of options.
(2) In connection with his retirement in October 1998, Mr. Rush forfeited all
of his unvested options. As of his retirement, Mr. Rush had 10,494 vested
-5-
<PAGE>
options which, in accordance with the Company's 1997 Stock Incentive Plan
(as hereinafter defined), may be exercised by Mr. Rush for a period of one
year from the date of his retirement.
COMPENSATION PURSUANT TO PLANS
1997 STOCK INCENTIVE PLAN
Prior to completion of the Offering, the Board adopted and the
stockholders approved the Company's 1997 Stock Incentive Plan (the "1997 Plan").
Set forth below is a discussion of the material terms of the 1997 Plan.
Subject to adjustment as provided in the 1997 Plan, the 1997 Plan
authorizes the granting of up to 4,843,750 shares of Common Stock through (i)
incentive stock options ("ISOs") and non-qualified stock options ("NQOs") (in
each case, with or without related SARs) to acquire Common Stock, (ii) awards of
restricted shares of Common Stock ("Restricted Stock"), and (iii) performance
units ("Performance Units") (collectively, "Awards") to such directors, officers
and other employees of, and consultants to the Company, its subsidiaries and
affiliates, as may be designated by the Compensation Committee or such other
committee of the Board as the Board may designate. All directors, officers,
employees of, and consultants to the Company, its subsidiaries and affiliates
who are responsible for or contribute to the management, growth and
profitability of the business of the Company, its subsidiaries and affiliates
are eligible to receive Awards under the 1997 Plan, provided, that (i)
consultants are not eligible to receive grants of ISOs and (ii) directors are
eligible to receive only NQOs, as described below, and Restricted Stock.
Approximately 200 persons are currently participating in the 1997 Plan. No
participant in the 1997 Plan may be granted Awards covering in excess of 700,000
shares of Common Stock in any fiscal year. The aggregate number of shares
available for Awards and the per-participant limitation are 4,843,750 and
2,000,000, respectively, subject to adjustment for certain changes in the
Company's capitalization, such as stock dividends or stock splits. Each of the
Named Executives received a grant of stock options during 1998. For details
regarding the 1998 grants made to the Named Executives, see "--Summary
Compensation Table" and "--Stock Option Grants."
The Compensation Committee currently administers the 1997 Plan,
approves the eligible participants who will receive Awards, determines the form
and terms of the Awards and has the power to fix vesting periods. Subject to
certain limitations, the Compensation Committee may from time to time delegate
some of its authority under the 1997 Plan.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), provides that publicly traded companies may not deduct compensation
paid to the chief executive officer or any of the four most highly compensated
other officers ("Covered Employees") to the extent it exceeds $1,000,000 in any
one tax year, unless the payments are made based upon the attainment of
objective performance goals that are established by a committee of the Board, in
accordance with requirements of Section 162(m) of the Code, based upon business
criteria and other material terms approved by stockholders. This limitation
applies to the Company but did not apply to the Management Bonuses because they
were issued prior to the Offering. The 1997 Plan is designed so that options and
SARs granted with a fair market value exercise price, and awards of Common Stock
designated as "Performance Awards" (as described below), that are made to
Covered Employees will be considered performance-based and hence fully
deductible. However, the Compensation Committee will have the discretion to
grant awards to Covered Employees that will not qualify for the exemption from
Section 162(m). Moreover, in certain cases such as death or disability (as
described below), Performance Awards may become payable even though the
performance goals are not met, in which event the Performance Awards will not be
exempt from Section 162(m) and the Company might lose part or all of its tax
deduction.
Under the terms of the 1997 Plan, the Compensation Committee may from
time to time grant options to purchase shares of Common Stock at a price
(generally payable in cash and/or shares of Common Stock) determined by the
Compensation Committee which in the case of ISOs may not be less than the Fair
Market Value (as defined in the 1997 Plan) of the shares of Common Stock, as
determined by the mean between the highest and lowest sale prices on the New
York Stock Exchange or such other exchange on which the Common Stock is listed
on the date the option is granted. Generally, options may not be exercised later
than ten years after the date of grant. The Compensation Committee may also
grant SARs related to the options granted under the 1997 Plan. A SAR would
-6-
<PAGE>
entitle the holder thereof to receive, upon exercise, the appreciation from the
option price to the fair market value of the shares of Common Stock on the date
of exercise, such appreciation being payable in cash and/or in shares of Common
Stock as determined by the Compensation Committee. Exercise of a SAR cancels the
related option to the extent of such exercise, and the shares of Common Stock
related thereto are not available for future grants under the 1997 Plan.
The Compensation Committee determines the times at which an option may
be exercised. Except as otherwise determined and as set forth below, an option
may only be exercised during employment or generally during the three months
following termination of employment for any reason other than death, permanent
disability, retirement or cause. Upon termination of employment for cause, an
option may no longer be exercised. Stock options generally may be exercised
during the period of one year after death if the optionee is still in the employ
of the Company or any of its subsidiaries or affiliates at the time of death, to
the extent exercisable at the time of termination by death. After termination of
an optionee's employment with the Company or any of its subsidiaries or
affiliates on account of permanent disability, stock options generally may be
exercised during the period of three years after the date of termination to the
extent exercisable at the time of termination; provided, that in the event of
death prior to expiration of the option term following termination of employment
for permanent disability, options generally may be exercised during the period
of one year following the date of death, to the extent exercisable at the time
of death. After an optionee retires from the Company or any of its subsidiaries
or affiliates, the optionee's stock options generally may thereafter be
exercised to the extent to which they were exercisable at the time of the
optionee's retirement and may be exercised at any time during the one-year
period following retirement (or such shorter period as the Compensation
Committee determines); provided, that in the event of death prior to the
expiration of the option, options generally may be exercised during the period
of one year following the date of death.
The 1997 Plan provides that the Compensation Committee may establish
option exercise procedures for purposes of permitting an optionee to defer
receipt of compensation beyond the date of the option exercise.
Under the 1997 Plan, the Compensation Committee may also make awards of
Restricted Stock. The Committee may condition the grant or vesting of such
awards on the attainment of certain performance goals and/or upon the
participant's continued service with the Company or any of its subsidiaries or
affiliates. During the period (the "Restricted Period") commencing with the
grant of Restricted Stock and ending on attainment of the applicable performance
goals or satisfaction of the requisite period of service, the participant is not
permitted to sell, transfer, assign or otherwise dispose of the Restricted
Stock. The participant generally has the right during the Restricted Period to
vote the Restricted Stock and to receive cash dividends paid thereon. However,
the Compensation Committee may determine that such cash dividends be deferred
and reinvested in additional Restricted Stock and that dividends payable in
Common Stock be paid in Restricted Stock. Upon termination of employment prior
to the end of the Restricted Period, the Restricted Stock will be forfeited,
although the Compensation Committee may waive any remaining restrictions upon
termination of employment due to retirement or involuntary termination of
employment other than for cause.
The Compensation Committee may award Performance Units. The
Compensation Committee may condition the vesting of such Performance Units on
the attainment of specified levels of one or more performance goals described
below and/or upon the continued service of the participant. The Performance
Units may not be sold, assigned or otherwise transferred during the period (the
"Performance Cycle") over which the Performance Units are to be earned. Upon
termination of employment prior to the end of the Performance Cycle, the
Performance Units will be forfeited, although the Compensation Committee may
waive any remaining payment limitations, except as described in the immediately
following paragraph, upon termination of employment due to retirement or
involuntary termination other than for cause. Subject to the Compensation
Committee's approval, a participant may, generally prior to commencement of the
Performance Cycle, elect to defer receipt of cash or shares in settlement of the
Performance Units. At the end of the Performance Cycle, the Compensation
Committee will determine which Performance Units have been earned and will cause
to be delivered to the participant a number of shares equal to the number of
Performance Units deemed by the Compensation Committee to have been earned or
cash equal to the fair market value of such shares.
-7-
<PAGE>
The Compensation Committee may designate an award of Restricted Stock
or Performance Units to a Covered Employee as a qualified performance-based
award ("Performance Award") and condition the vesting of such awards upon the
attainment of specified levels of one or more of the following performance
goals: earnings per share and/or return on equity. The Compensation Committee
does not have the power to waive achievement of such goals, except upon the
death or disability of the participant.
The 1997 Plan provides that the Compensation Committee may establish
procedures for the distribution of shares distributable pursuant to Performance
Units for purposes of permitting an awardee to defer compensation.
At the time any Award under the 1997 Plan is granted, the Compensation
Committee may grant the participant the right to receive a cash payment in an
amount specified by the Compensation Committee, to be paid when the Award
results in compensation income to the participant and to help the participant
pay the resulting taxes.
The 1997 Plan also provides that each director of the Company who is
not otherwise an employee of the Company or any of its subsidiaries or
affiliates and is not an officer, director or employee of EMWP or one of its
affiliates will receive, during the term of his or her directorship, an annual
grant of NQOs to purchase 10,000 shares of Common Stock on terms and conditions
specified by the Compensation Committee.
The 1997 Plan provides for the use of authorized but unissued shares of
Common Stock or treasury shares. To the extent that treasury shares are not
used, authorized but unissued shares of Common Stock of the Company have been
reserved for issuance upon exercise of options or distribution of Awards granted
under the 1997 Plan.
No Awards may be granted under the 1997 Plan after May 6, 2007, but
Awards theretofore granted may extend beyond that date. The 1997 Plan may be
amended or discontinued by the Board at any time, but no termination may impair
the rights of any holders of options or Awards granted prior thereto without
such holder's consent. Subject to certain limitations, the Compensation
Committee may amend the terms of any Award retroactively or prospectively, but
the 1997 Plan does not permit the Compensation Committee to cause a Performance
Award to fail to be exempt from Section 162(m) or impair the rights of any
holder without the holder's consent. The Compensation Committee has the power to
interpret the 1997 Plan and to make all other determinations necessary or
advisable for its administration.
The Company has filed a registration statement covering the issuance of
shares of Common Stock pursuant to the 1997 Plan.
PENSION PLAN
Mr. Rush participated in the Journal News, Inc. Retirement Plan (the
"JNI Retirement Plan"), which is a noncontributory defined benefit pension plan
covering substantially all non-union employees of certain of the Company's
subsidiaries. The JNI Retirement Plan provides for normal retirement benefits on
the later of the date on which the participant attains age 65 or the fifth
anniversary of such participant's becoming a JNI Retirement Plan participant.
Annual normal retirement benefits are based on career average pay and generally
consists of the sum of the following: (i) for each year after 1993, 1% of the
participant's "covered compensation" plus 1.5% of compensation in excess of
"covered compensation," (ii) if the participant also participated in the
predecessor pension plan, 1.5% of the participant's average annual compensation
for 1988-1993, times years of service through October 31, 1993, minus 1.25% of
the participant's Social Security benefit, times years of service through
October 31, 1993 (up to 40) and (iii) for the period from November 1, 1993
through December 31, 1993, 1% of compensation for such period, up to $3,786,
plus 1.5% of the compensation for such period in excess of $3,786. "Covered
compensation" is the average of the taxable Social Security wage bases for the
35 years ending in the year of retirement. Mr. Rush retired early, on October
23, 1998, with an annual retirement benefit of $56,458.
COMPENSATION OF DIRECTORS
Independent directors receive an annual fee of $10,000, a fee of $1,000
for each Board meeting attended in person and a fee of $500 for each Board
meeting attended by telephone conference call. All directors are reimbursed for
-8-
<PAGE>
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
all reasonable expenses incurred in connection with their attendance at Board
meetings. Under the Company's 1997 Plan, the Company grants independent
directors, during the term of their directorships, NQOs to purchase 10,000
shares of Common Stock annually on terms and conditions specified by the
Compensation Committee.
The current members of the Compensation Committee are Messrs. Karp,
Purcell and Lawrence. The Compensation Committee oversees the compensation
policies applicable to all employees, including the executive officers; has the
responsibility for establishing the specific compensation packages for the
Company's Chief Executive Officer and Chief Financial Officer; has the primary
responsibility for administering the 1997 Plan; and will administer the
Executive Incentive Compensation Plan, if it is approved by stockholders.
EXECUTIVE COMPENSATION POLICY
The Company's compensation program is designed to achieve four
fundamental objectives: (1) to provide competitive salary levels and
compensation incentives that attract and retain qualified executives; (2) to
motivate executives to achieve specific strategic short-term and long-term
objectives of the Company; (3) to recognize individual performances and
achievements, as well as the performance of the Company relative to that of
certain of its peers; and (4) to link the interests of its senior management
with the long-term interests of the Company's stockholders. During 1998, the
Company's compensation program consisted of base salary, an annual incentive
bonus and an annual grant of stock options. Base salary provides the foundation
for the Company's executive pay; its purpose is to compensate the executive for
performing his or her basic duties. The purpose of annual incentive bonuses is
to provide recognition for favorable performance and achievement of
intermediate-term objectives while the purpose of long-term incentive plan
awards and stock option grants is to provide incentives and rewards for
long-term performance and to motivate long-term strategic planning. The Company
generally establishes base salary, annual incentive bonuses and other
compensation awards primarily based on job responsibilities, prior job
performance and Company and/or unit performance.
BASE SALARIES. Base salaries for the Company's executive officers are
established annually and when there is a significant change in the executive's
level of responsibility. During 1998, the Company did not utilize any formal
survey or other compilation of empirical data on executive compensation paid at
other companies. Instead, executive compensation was determined based on a
number of factors, including the responsibilities, experience, performance and
potential of the executive officers and their period of service at current
salary levels. In addition, the Company also considered the financial results of
the Company and/or unit and certain non-financial measures. The base salary of
$825,000 paid to the Company's Chief Executive Officer in 1998 was unchanged
from his 1997 base salary. The 1998 stock option grant demonstrates that the
Company has continued to transition the Company's compensation program from one
based purely on cash to one containing a significant equity component.
INCENTIVE BONUSES. The Company's executive officers are eligible to
receive annual incentive bonuses, which are linked to the operating performance
of the Company and/or the operating unit(s) for which they are responsible. The
annual incentive bonus is designed to reward selected key employees of the
Company who contributed materially to the success of the Company during the most
recent fiscal year, thus enabling them to participate in that success as well as
providing future incentives. In determining the amount of incentive bonus
awarded, the Company takes into account a number of factors including the
individual's level of responsibility, performance and achievement of their
annual performance goals. For 1998, the Company's Chief Executive Officer
received an annual incentive bonus of $195,000. This bonus amount was determined
based on a number of factors, including the achievement of the Company's 1998
goals which included the Company's acquisitions completed during the year.
STOCK OPTIONS. Since May 1997, the Company has been utilizing stock
options as a means of providing long-term incentives to members of the Company's
management. All stock option awards are granted with an exercise price of at
least 100% of Fair Market Value (as defined in the 1997 Plan) of the Common
Stock on the date of grant and currently vest in increments of 20% annually.
-9-
<PAGE>
Currently, no specific formula is used to determine the number of options
granted to employees but instead awards are based on an evaluation of each
individual's overall past and expected future contribution to the Company. The
1997 Plan also provides for the grant of other forms of long-term awards
including restricted stock, SARs and performance units. The Company's Chief
Executive Officer received a grant of 320,000 options during 1998, which have an
exercise price of $22.50.
If approved at the 1999 Annual Meeting of Stockholders, the Company
intends to implement the Executive Incentive Compensation Plan which provides
for quarterly and/or annual incentive awards to the Chief Executive Officer and
the Chief Financial Officer if the Company achieves certain specified
performance objectives.
SECTION 162(M) OF THE INTERNAL REVENUE CODE
In connection with making decisions with respect to executive
compensation, the Company has taken into account, as one of the factors
considered, the provisions of Section 162(m), which limits the deductibility by
the Company of certain categories of compensation in excess of $1,000,000 paid
to Covered Employees.
Respectfully submitted,
Douglas M. Karp
Joseph A. Lawrence
John R. Purcell
CUMULATIVE TOTAL STOCKHOLDER RETURN
The following graph shows a comparison of cumulative total returns on
the Common Stock against the cumulative total return for the Standard & Poors
("S&P") 500 Index and the S&P Publishing (Newspapers) Index. The graph assumes
an investment of $100 on May 8, 1997 (the date the Common Stock began trading on
he New York Stock Exchange) in the Common Stock, the S&P 500 Index and the S&P
Publishing (Newspapers) Index. Cumulative total return assumes reinvestment of
dividends. The performance shown is not necessarily indicative of future
performance.
<TABLE>
<CAPTION>
COMPARISON OF 20 MONTH CUMULATIVE TOTAL RETURN*
AMONG JOURNAL REGISTER COMPANY, THE S&P 500 INDEX
AND THE S&P PUBLISHING (NEWSPAPERS) INDEX
[GRAPH]
CUMULATIVE TOTAL VALUES*($)
--------------------------------------------------------------------------
S&P PUBLISHING
THE S&P (NEWSPAPERS)
1997 AND 1998 THE COMPANY 500 INDEX INDEX
- ------------- ----------- --------- -----
<S> <C> <C> <C>
May 8, 1997............................... $100 $100 $100
June 30, 1997............................. $142 $111 $115
September 30, 1997........................ $140 $119 $126
December 31, 1997......................... $150 $123 $144
March 31, 1998............................ $149 $140 $163
June 30, 1998............................. $120 $144 $165
September 30, 1998........................ $105 $130 $123
December 31, 1998......................... $107 $158 $149
</TABLE>
* 100 invested on May 8, 1997 in Common Stock or index, including reinvestment
of dividends, fiscal year ending December 31, 1998.
-10-
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the
beneficial ownership of Common Stock, as of June 15, 1999, by (i) each person
known to the Company to own beneficially more than 5% of the Company's
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each of the Named Executives, and (iv) all executive officers and directors of
the Company, as a group. All information with respect to beneficial ownership
has been furnished to the Company by the respective stockholders of the Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
- ------------------------------------ ---------------- -------------
<S> <C> <C>
Warburg, Pincus Capital Company, L.P.(2)............................. 24,248,774 52.1%
466 Lexington Avenue
New York, NY 10017
Warburg Pincus Investors, L.P.(2).................................... 12,086,349 26.0
466 Lexington Avenue
New York, NY 10017
Douglas M. Karp(2)................................................... 36,335,123 78.1
Gary D. Nusbaum(2)................................................... 36,335,123 78.1
John L. Vogelstein(2)................................................ 36,335,123 78.1
Robert M. Jelenic(3)(4).............................................. 730,884 1.6
Jean B. Clifton(3)(5)................................................ 365,831 *
John R. Purcell(3) (6)............................................... 67,000 *
Joseph A. Lawrence(3)................................................ 5,750 *
William J. Rush(3)................................................... 56,642 *
Allen J. Mailman(3)(7)............................................... 75,552 *
William J. Higginson(3).............................................. 66,859 *
All directors and executive officers as a group (10 persons)......... 37,703,641 81.0%
</TABLE>
- ------------------
* Represents beneficial ownership of less than 1% of the outstanding shares of
Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Commission. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of Common Stock
subject to options and warrants held by that person that are currently
exercisable or exercisable within 60 days of June 15, 1999 are deemed
outstanding. Such shares, however, are not deemed outstanding for the
purpose of computing the percentage ownership of any other person.
Except as otherwise indicated, the persons in this table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(2) The sole General Partner of Warburg, Pincus Capital Company, L.P. ("WPCC")
and Warburg, Pincus Investors, L.P. ("Investors") is WP, a New York
general partnership. EMWP manages WPCC and Investors. The members of EMWP
-11-
<PAGE>
are substantially the same as the partners of WP. Lionel I. Pincus is the
Managing Partner of WP and the Managing Member of EMWP, and may be deemed
to control both WP and EMWP. WP has a 20% interest in the profits of WPCC
and Investors, as the General Partner. Douglas M. Karp, Gary D. Nusbaum
and John L. Vogelstein, directors of the Company, are Members and Managing
Directors of EMWP and General Partners of WP. As such, Messrs. Karp,
Nusbaum and Vogelstein may be deemed to have an indirect pecuniary
interest (within the meaning of Rule 16a-1 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), in an indeterminate portion
of the shares beneficially owned by WPCC, Investors and WP. Messrs. Karp,
Nusbaum and Vogelstein disclaim "beneficial ownership" of these shares
within the meaning of Rule 13d-3 under the Exchange Act. The address of
Messrs. Karp, Nusbaum and Vogelstein is c/o E.M. Warburg, Pincus & Co.
LLC, 466 Lexington Avenue, New York, New York 10017.
(3) Includes shares of Common Stock which these individuals have the right to
acquire through the exercise of stock options within 60 days of June 15,
1999 as follows: Robert M. Jelenic, 322,332; Jean B. Clifton, 161,166;
William J. Rush, 10,494; Allen J. Mailman, 27,604; William J. Higginson,
26,250; John R. Purcell, 4,000; and Joseph A. Lawrence, 4,000.
(4) Includes 250 shares of Common Stock owned by Mr. Jelenic's spouse and 800
shares of Common Stock held by Mr. Jelenic as custodian for his children.
(5) Includes 50 shares of Common Stock owned by Ms. Clifton's spouse, 914
shares of Common Stock held by Ms. Clifton as custodian for her children
and 600 shares of Common Stock held by Ms. Clifton as custodian for the
benefit of her nieces and nephews.
(6) Includes 7,850 shares of Common Stock owned by Mr. Purcell's spouse. Mr.
Purcell disclaims "beneficial ownership" of these shares within the
meaning of Rule 13d-3 under the Exchange Act.
(7) Includes 1,800 shares of Common Stock owned by Mr. Mailman's spouse.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In connection with the Offering, certain affiliates of E.M. Warburg,
Pincus & Co., LLC (collectively, "Warburg, Pincus") executed a voting agreement
pursuant to which it agreed with the Company that, with respect to any matter
brought to a stockholder vote, Warburg, Pincus will vote in its own discretion
shares representing no more than 50% of the voting power of the Company's shares
entitled to vote on the applicable matter. The shares owned by Warburg, Pincus,
which represent in excess of such 50%, will be voted in the same proportion as
the shares voted by the other stockholders on the applicable matter.
Pursuant to a registration rights agreement, Warburg, Pincus and
certain individuals are entitled to certain registration rights with respect to
their respective shares of capital stock of the Company aggregating
approximately 36,556,250 shares.
-12-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Trenton, State of New Jersey, on the 25th day of June, 1999.
JOURNAL REGISTER COMPANY
By:/S/ Robert M. Jelenic
-----------------------------------
Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the 25th day of June, 1999.
SIGNATURE TITLE(S)
--------- --------
/S/ Robert M. Jelenic Chairman, President, Chief Executive
- -------------------------------- Officer and Director (Principal
Robert M. Jelenic Executive Officer)
/S/ Jean B. Clifton Executive Vice President, Chief
- -------------------------------- Financial Officer (Principal Financial
Jean B. Clifton and Accounting Officer), Treasurer and
Secretary
/S/ John L. Vogelstein* Director
- --------------------------------
John L. Vogelstein
/S/ Douglas M. Karp* Director
- --------------------------------
Douglas M. Karp
/S/ Sidney Lapidus* Director
- --------------------------------
Sidney Lapidus
/S/ John R. Purcell* Director
- --------------------------------
John R. Purcell
/S/ Joseph A. Lawrence* Director
- --------------------------------
Joseph A. Lawrence
*By:/S/ Robert M. Jelenic
-----------------------------
Robert M. Jelenic
Attorney-in-fact
*By:/S/ Jean B. Clifton
-----------------------------
Jean B. Clifton
Attorney-in-fact
-13-
