SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required) for the fiscal year ended December 31,
1993
Commission File Number: 0-7831
JOURNAL COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
Wisconsin 39-0382060
(State of incorporation) (I.R.S. Employer identification number)
333 West State Street, Milwaukee, Wisconsin 53203
Address of principal executive offices (zip code)
Registrant's telephone number, including area code:
(414) 224-2728
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.25 Per Share
(title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports) and (2) has been subject
to such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) 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 ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of March 15, 1994.
Class Outstanding at March 15, 1994
Common stock, par value $.25 14,044,361
<PAGE>
PART I
ITEM 1. BUSINESS
The Registrant is a diversified communications and media company. Its
1993 revenues, broken down by business segments, are as follows:
publishing - 44.1%; commercial printing - 40.4%; broadcast - 9.8% and
telecommunications - 5.7%. In addition to the information provided below,
see Item 6 "Selected Financial Data," Item 7, "Management Discussion and
Analysis" and Item 8, "Consolidated Financial Statements and Supplementary
Data."
Publishing
Journal/Sentinel Inc., a wholly-owned subsidiary of the Registrant
publishes the two major daily newspapers in the Milwaukee, Wisconsin,
market. It has published the evening Milwaukee Journal (The Journal)
since 1882, the Sunday edition of The Journal since 1911, and the morning
Milwaukee Sentinel (the Sentinel) since it was acquired in 1962. Average
paid circulation for the twelve months ended March 31, 1993, for the last
five years, as audited by the Audit Bureau of Circulation, was:
1993 1992 1991 1990 1989
Journal 238,351 240,566 260,480 275,957 272,454
Sentinel 171,271 166,085 172,772 176,097 178,736
Sunday Journal 490,077 490,361 497,777 503,994 508,188
Advertising volume in column inches and units for the Company's Milwaukee
newspapers for the last five calendar years was:
(in thousands)
1993 1992 1991 1990 1989
Column Inches
Full Run 2,657.6 2,619.0 2,526.8 2,866.6 2,951.0
Part Run 260.9 181.3 195.5 205.3 137.5
Units
Preprint 1.9 1.6 1.5 1.5 1.5
There are 108 other newspapers and shoppers published in the four-county
Milwaukee market. Most of these are weekly publications, while a few are
biweekly, fortnightly or monthly. Of these 108 publications, 39 are paid
subscription and 69 are delivered without charge or are available free at
various public locations. These publications cover a wide variety of
interests, including community, business, labor, religious, ethnic,
foreign language or other special interest newspapers.
One other daily newspaper, The Freeman, is published in Waukesha and it is
circulated in portions of Waukesha County. In addition, editions of USA
Today, Chicago Tribune and New York Times are sold in the Milwaukee
market.
Journal/Sentinel Inc.'s newspapers also compete for advertising revenue or
support with three (3) network-affiliated commercial television stations,
six (6) independent television stations, two (2) of which are low power
television stations, two public television stations and 35 AM and FM radio
stations located in the four-county market, several cable television
companies and some direct mail services. One television station and two
radio stations in the Milwaukee market are owned by a subsidiary of the
Registrant.
Journal/Sentinel Inc.'s newspapers have separate news reporting and
editorial staffs and separate news offices in Madison, West Bend, Port
Washington and Waukesha, Wisconsin. The Milwaukee Journal also has a news
office in Washington, D.C. The Milwaukee Sentinel also has a news office
in Stevens Point, Wisconsin. Both newspapers subscribe to the Associated
Press and Washington Post-Los Angeles Times news services. In addition,
The Milwaukee Journal subscribes to the New York Times and Scripps Howard
News Services; the Milwaukee Sentinel subscribes to the Knight-Ridder News
Service.
During 1993, newsprint consumption at the Milwaukee newspapers was higher
than the prior year. Newsprint is purchased from four Canadian and two
American suppliers and supplies for 1994 are considered sufficient.
Registrant also publishes, through other subsidiaries, eight (8) weekly
newspapers in southwestern Connecticut, seven (7) weekly newspapers and
one (1) monthly controlled-circulation business publication in Wisconsin,
three (3) weekly newspapers and one (1) daily newspaper in Florida, forty-
four (44) shopper publications, with twenty-one (21) in Wisconsin, fifteen
(15) in Ohio, two (2) in Florida, two (2) in Pennsylvania, two (2) in
Vermont, one (1) in Georgia and one (1) in New York; three (3) paid auto
publications, two (2) in Louisiana and one (1) in Wisconsin; three (3)
free auto publications in Ohio; five (5) monthly real estate publications
and three (3) senior citizens' publications in Ohio published six (6)
times per year; and one (1) paid monthly memorabilia collector publication
in Wisconsin.
Commercial Printing
Perry Printing Corporation, Waterloo, Wisconsin, a wholly-owned
subsidiary, utilizes a wide array of printing technologies. These include
heat-set web offset, sheet-fed offset, rotogravure and flexographic
processes that are used to print high-quality, multi-color national
consumer and trade magazines, catalogs, free-standing newspaper inserts,
out-of-home media, point-of-purchase-point-of-sale materials and labels
for consumer goods and industry manufacturers.
Perry's principal raw materials are paper and ink. Presently, paper
markets, for the grades consumed by the company, are operating at levels
well below capacity and management does not believe that paper
availability will be a concern for 1994. The inks utilized by the company
are available in abundant supply from a number of suppliers. Perry
Printing competes with the top 15 domestic and foreign-owned printing
companies.
Imperial Printing Company, a wholly-owned subsidiary acquired on October
6, 1992, specializes in the production of short to medium runs (1,000 to
100,000 copies) of medical and technical journals for various trade
associations, documentation manuals for hardware and software
manufacturers and in the duplication of floppy disks and computer tapes.
Imperial is based in St. Joseph, Michigan and has additional operations in
Fremont and Irvine, California. The 1993 purchase of a printing plant in
northern France allowed Imperial to expand its European marketing effort.
No supply restrictions in 1994 are anticipated for the raw materials
Imperial utilizes.
Broadcasting
WTMJ, Inc., a wholly-owned subsidiary, operates three television stations
and five radio stations in four states. All operate under licenses from
the Federal Communications Commission.
In Milwaukee, WTMJ, Inc. has been the pioneer and leading broadcaster
since it started AM operations in 1927, FM in 1941 (discontinued 1950-
1960) and television in 1947. News reporting and editorial operations at
WTMJ, Inc., are independent of the Registrant's newspaper operations.
Registrant's three (3) Milwaukee broadcast operations consistently rank
high in audience rating surveys. Competition for advertising revenue in
the ten-county area of dominant influence ("ADI") includes eight (8) other
commercial television stations, including two (2) low power television
stations, thirty-three (33) other radio stations, several cable television
companies, eight (8) daily newspapers (including two owned by Registrant),
and numerous weekly newspapers.
WTMJ, Inc. also operates KTNV-TV, Las Vegas, Nevada, an ABC affiliate;
WSYM-TV, Lansing, Michigan, a Fox affiliate, two leading radio stations in
Wausau, Wisconsin, WSAU-AM and WIFC-FM, and KQRC-FM, Kansas
City/Leavenworth, Kansas. WTMJ-TV is affiliated with the National
Broadcasting Company (NBC). WTMJ Radio is affiliated with the CBS and NBC
Radio networks. KTNV-TV, WSAU-AM and WIFC-FM, WKTI-FM and KQRC-FM are
affiliated with the American Broadcasting Company (ABC).
Telecommunications
MRC Telecommunications, Inc., a wholly-owned subsidiary, provides
telecommunications transmission services as a licensed common carrier in
Wisconsin, Minnesota, Illinois and Michigan. Its services include
terrestrial and satellite transmission of message/data, video and audio
signals for long distance telephone companies, resellers, corporate users
(through its NorLight, Inc., subsidiary), and television and radio
networks, using fiber optics, microwave and satellite technologies.
Employees
The Registrant and its subsidiaries, as of December 31, 1993, had
approximately 4,900 full-time and 2,500 part-time employees.
Financial Information About Industry Segments
Financial information about Registrant's industry segments is presented in
Note 8 to the Consolidated Financial Statements appearing below is this
report.
ITEM 2. PROPERTIES
Principal properties operated by the Registrant and its subsidiaries are
summarized as follows:
Subsidiary Location How Held Square Footage
Journal/Sentinel Inc.
(Publishing)
Offices/Plant Milwaukee, WI Owned 464,000
Garage Milwaukee, WI Owned 67,500
Distribution Center Milwaukee, WI Leased 46,000
ADD, Inc.
(Publishing)
Office/Plant WI, OH, GA, FL Owned or Leased 231,000
VT, NY, PA, LA
Buyers' Guide, Inc.
(Publishing)
Office CT Leased 5,600
Striplin Publishing, Inc.
(Publishing)
Office Ohio Leased 4,300
WTMJ, Inc.
(Broadcasting)
Office and Studios Milwaukee, WI Owned 101,500
KTNV-TV Studios Las Vegas, NV Owned 20,300
WSYM-TV Studios Lansing, MI Leased 10,300
WSAU-AM/WIFC-FM
Studios Wausau, WI Owned 5,600
KQRC-FM Studios Kansas City/
Leavenworth, KS Leased 3,700
Perry Printing Corp.
(Commercial Printing)
Office/Plant
and Warehouse Waterloo, WI Owned 445,700
Perry/Baraboo
Office/Plant Baraboo, WI Owned 313,800
Perry/Milwaukee
Office/Plant Brown Deer, WI Owned 127,300
Perry/Norway
Office/Plant Norway, MI Owned 101,700
Perry/Watertown
Office/Plant Watertown, WI Owned 201,700
Label Products & Design
Inc.
(Commercial Printing)
Office and Plant Green Bay, WI Owned 40,000
Trumbull Printing, Inc.
(Commercial Printing)
Office/Plant Trumbull, CT Owned 51,600
Imperial Printing
Company
(Commercial Printing)
Office, Plant
and Warehouse St. Joseph, MI Leased 321,000
Office/Plant Fremont, CA Leased 30,000
Office/Plant Irvine, CA Leased 49,000
MRC Telecommunications,
Inc. (Fiber optics & Rubicon, WI Owned 3,800
Microwave transmission Skokie, IL Owned 6,100
services) Afton, WI Owned 3,800
Arden Hills, MN Owned 1,700
Minneapolis, MN Leased 2,100
Brookfield, WI Leased 15,600
NorLight, Inc.
(Fiber optics &
Microwave transmission
services)
Office Minneapolis, MN Leased 3,400
Nordoc Software Services
(Commercial Printing)
Office/Plant Roncq, France Leased 41,800
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various claims and lawsuits incidental to its
business. In the opinion of legal counsel, claims and lawsuits in the
aggregate will not have a material effect on the Company's financial
position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 4A. EXECUTIVE OFFICERS OF REGISTRANT
The executive officers of Registrant, as of March 1994, all of whom hold
office until the next annual meeting of the board of directors, which will
be held immediately following the annual meeting of shareholders on June
7, 1994, are:
Name Age Office Held Since
Robert A. Kahlor 60 Chairman of the Board/CEO September 4, 1992
Steven J. Smith 43 President September 4, 1992
Thomas M. Karavakis 63 Senior Vice President June 2, 1987
Peter P. Jarzembinski 41 Senior Vice President/CFO December 1, 1992
Douglas G. Kiel 45 Senior Vice President June 2, 1992
Craig A. Hutchison 42 Senior Vice President June 5, 1990
Robert M. Dye 46 Vice President June 5, 1990
Gregory H. Forbes 44 Vice President June 8, 1993
James C. Currow 50 Vice President June 8, 1993
Paul M. Bonaiuto 43 Vice President June 8, 1993
Stephen O. Huhta 38 Vice President June 8, 1993
Ronald G. Kurtis 46 Vice President June 8, 1993
Paul E. Kritzer 51 Vice President June 5, 1990
& Secretary September 1, 1992
All of the executive officers of the Company except Messrs. Forbes, Currow
and Bonaiuto have been employed by the Company in key management positions
for more than five years.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Registrant's common stock can be purchased only by full-time employees
with two (2) years of service. As of February 23, 1994, the Journal
Employes' Stock Trust owned of record 12,960,000 of the issued common
stock shares or 90% of the issued common stock of the Registrant at that
date. The Trust issues units, each representing one share of the
Registrant's stock, to eligible employees ("unitholders"). On February
23, 1994, 2,885 unitholders owned 11,763,541 units (representing 82% of
Registrant's issued common stock) and thus were the beneficial owners of a
like number of shares of the Registrant's stock held by the Trust. The
balance of 1,196,459 units issued by the Trust were, on the above date,
held by employee benefit trusts and by the Company as treasury stock.
Prior to all meetings of shareholders of the Registrant, the Trustees are
required to deliver to each active employee-unitholder a proxy, with the
right of substitution, for the number of the Registrant's shares
represented by his or her units.
Unitholders may sell their units only to other employees designated by
President of the Registrant. Whenever a unitholder ceases to be an
employee, for any reason except retirement, he or she must offer his or
her units for resale to active employees designated by the President of
the Company. Employees who retire may retain a decreasing percentage of
their units for 10 years after retirement. All units held by retirees are
voted by the Trustees. Units may also be held by employee benefit trusts,
and unitholders may transfer units to trusts for individuals and for
charitable, educational or religious purposes. All units held by such
trusts are likewise voted by the Trustees of the Stock Trust. As of
February 23, 1994, retirees, an employee benefit trust, and other trusts
held 4,547,036 units, representing 31.6% of the Registrant's issued common
stock.
All of the Trustees under the Journal Employes' Stock Trust Agreement are
directors of the Registrant. They have no financial interest in the
Registrant's stock owned by the Trust other than through the units they
own individually.
The Registrant's unit option price and dividend history for the past
decade are presented in the following table:
Employee Stock Ownership Plan
Option Option Option Return on
Price Price Price Cash Total January 1
Year Jan. 1 Dec. 31 Increase Dividend Yield Option Price
1984 14.73 16.72 1.99 1.00 2.99 20.3%
1985 17.65 18.54 .89 2.38(1) 3.27 18.5
1986 18.54 20.94 2.40 1.25 3.65 19.7
1987 20.94 23.71 2.77 1.38 4.15 19.8
1988 23.71 26.65 2.94 1.50 4.44 18.7
1989 26.65 29.66 3.01 1.70 4.71 17.7
1990 29.66 31.48 1.82 1.70 3.52 11.9
1991 31.48 32.60 1.12 1.80 2.92 9.3
1992 32.60 33.60 1.00 1.80 2.80 8.6
1993 33.60 34.64 1.04 1.80 2.84 8.5
(1) Includes special dividend on sale of Teltron
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data of the Registrant is presented in the following
table:
<PAGE>
<TABLE>
<CAPTION>
TEN YEARS IN REVIEW
1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS AND DIVIDENDS
(in thousands of dollars)
Earnings before taxes $72,804 $67,831 $65,335 $66,913 $90,388 $81,696 $74,914(1)
Net earnings 44,204 41,631 40,035 41,113 54,988 49,633 41,614(1)
Earnings for option
price 44,204 41,631 40,626 49,443 54,988 51,745 41,944(1)
Dividends 25,156 25,244 25,358 24,192 24,374 21,496 19,576
Earnings retained 19,048 16,387 14,677 16,921 30,614 28,137 22,038
PER SHARE
Net earnings $3.16 $2.97 $2.84 $2.89 $3.83 $3.46 $2.93(1)
Earnings for option
price 3.16 2.97 2.88 3.47 3.83 3.61 2.95(1)
Dividends 1.80 1.80 1.80 1.70 1.70 1.50 1.38
Book value 24.76 23.40 22.11 21.54 20.08 18.14 16.27
Unit option price 34.64 33.60 32.60 31.48 29.66 26.65 23.71
NET SALES
(in thousands of dollars)
Publications $250,298 $238,386 $232,756 $235,853 $232,371 $222,209 $200,873
Commercial printing 226,548 175,643 167,371 173,660 174,837 157,848 142,046
Broadcast 54,850 52,891 52,088 56,456 54,087 52,744 48,339
Telecommunications 32,411 31,256 15,398 12,414 11,429 11,342 11,539
Other - - - - - - 1,986
Eliminations (3,501) (1,814) (1,631) (1,462) (1,608) (940) (767)
--------- ------- ------- ------- ------- ------- --------
Total net sales $560,606 $496,362 $465,982 $476,921 $471,116 $443,203 $404,016
OPERATING EXPENSES
(in thousands of dollars)
Payroll $180,267(4) $161,999(3) $147,452 $144,517 $137,685 $129,802 $123,119
Materials and
components services 133,347 110,063 110,230 114,998 119,316 111,846 100,285
Depreciation and
amortization 38,102 33,669 32,066 28,498 27,332 27,372 21,348
Other services 137,607 125,167 116,486 116,161 103,883 96,559 87,161
-------- ------- ------- ------- ------- ------- --------
Total expenses $489,323 $430,898 $406,234 $404,174 $388,216 $365,579 $331,913
INVESTED CAPITAL
(in thousands of dollars)
Property and equipment $189,146 $181,853 $177,128 $140,697 $132,435 $128,273 $114,667
Net working capital 111,009 95,774 93,847 128,859 125,841 106,805 97,525
Long-term obligations 3,679 2,332 1,958 1,700 1,903 2,681 9,273
Stockholders' equity 347,447 328,230 311,772 306,793 288,036 260,002 231,446
Total assets 437,429 409,863 389,958 401,371 364,860 335,395 307,682
Percent return on
stockholders' equity 13.5% 13.4% 13.1% 14.3% 21.1% 21.4% 20.8%
Percent return on total 10.8% 10.7% 10.0% 11.3% 16.4% 16.1% 15.5%
assets
<CAPTION>
Average Annual
Compound %
1986 1985 1984 Increase
<S> <C> <C> <C> <C>
EARNINGS AND DIVIDENDS
(in thousands of dollars)
Earnings before taxes $73,262 $68,218(1) $66,686 0.98%
Net earnings 38,762 35,818(1) 34,058 2.94
Earnings for option
price 38,762 35,926(1) 34,112 2.92
Dividends 17,783 15,384(2) 14,244 6.52
Earnings retained 20,979 15,105 19,814 (.44)
PER SHARE
Net earnings $2.71 $2.51(1) $2.39 3.15%
Earnings for option
price 2.71 2.52(1) 2.39 3.15
Dividends 1.25 1.08(2) 1.00 6.75
Book value 14.02 12.86 11.84 8.54
Unit option price 20.94 18.54 16.72 8.43
NET SALES
(in thousands of dollars)
Publications $183,504 $176,553 $163,567 4.84%
Commercial printing 119,812 112,077 127,222 6.62
Broadcast 45,194 39,217 33,718 5.56
Telecommunications 9,598 7,799 7,034 18.50
Other 3,343 3,665 3,735 N.A.
Eliminations (635) (607) (622) N.A.
------- -------- -------- ------
Total net sales $360,816 $338,704 $334,654 5.90%
OPERATING EXPENSES
(in thousands of dollars)
Payroll $111,050 $102,249 $99,626 6.81%
Materials and
components services 85,664 81,883 95,379 3.79
Depreciation and
amortization 18,035 16,130 14,454 11.37
Other services 78,042 75,170 66,098 8.49
-------- -------- -------- -----
Total expenses $292,791 $275,432 $275,557 6.59
INVESTED CAPITAL
(in thousands of dollars)
Property and equipment $106,333 $89,194 $82,895 9.60%
Net working capital 81,448 81,560 75,374 4.40
Long-term obligations 6,953 7,606 7,546 N.A.
Stockholders' equity 200,260 183,844 168,635 8.36
Total assets 268,902 244,283 225,169 7.66
Percent return on
stockholders' equity 21.1% 21.2% 23.7%
Percent return on total 15.9% 15.9% 16.8%
assets
<FN>
(1) Does not include cumulative effect on prior years of change in accounting for deferred income taxes of $3,571,749 or
$0.25 per share in 1987, or gain on sale of Teltron, Inc. of $13,362,288 or $0.935 per share in 1985.
(2) Does not include special distribution of $2.62 per share.
(3) Includes full year of NorLight and IPC since October 6.
(4) Includes full year of IPC and Nordoc Software Services since February 28.
N.A. = Not Applicable
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Consolidated
Operating revenue in 1993 was $560,606,000, an increase of 12.9% over 1992
sales of $496,362,000. Operating revenue in 1991 was $465,982,000. 1993
operating earnings increased by 8.9% from $65,464,000 in 1992 to
$71,283,000 for 1993. 1991 operating earnings were $59,748,000. All
segments of the company contributed to the increase 1993 operating
results. These results were achieved despite only a modest upturn in
economic conditions during 1993.
Publications
The publications segment includes daily and weekly newspapers, shoppers
and specialty publications.
1993 revenue was $250,298,000, up 5.0% over 1992 and 7.5% greater than
1991. 1992 and 1991 revenue for this segment was $238,386,000 and
$232,756,000, respectively. Operating earnings in 1993 were $41,491,000,
an increase of 1.6% over the prior year. Operating earnings for 1992 were
$40,828,000, an impressive 18.3% increase over 1991 operating earnings of
$34,520,000.
Journal/Sentinel Inc. is the largest company in the publications segment.
1993 revenue increased by 3.1% to $196,673,000 compared to $190,727,000 in
1992. However, 1993 operating earnings were down 4.8% from the prior
year. The decline in operating earnings was due to increased operating
costs, including those costs attributable to the development of an
alternate circulation delivery system.
Advertising revenue in 1993, 1992 and 1991 was $137,974,000, $132,764,000
and $130,596,000, respectively. In 1993, retail advertising revenue was
approximately equal to the prior year while classified advertising
increased by 8% over 1992. General advertising revenue declined 13%, but
on a much smaller base. Preprint revenue increased 11% over 1992
primarily as a result of increased volume. From 1991 to 1992, retail and
classified advertising revenue increased by 1.9% and 3.5%, respectively,
while general advertising revenue declined 7.2%.
1993 circulation revenue was $55,860,000, up slightly from 1992. 1992
circulation revenue was $55,396,000, while in 1991 it was $55,179,000.
ADD Inc. is the other operation in the publications segment. Its 1993
revenue was $53,625,000, a 12.5% increase over 1992 revenue of
$47,659,000. 1991 revenue was $44,506,000. 1993 operating earnings
showed significant growth over the prior year, increasing 24.5%. This
resulted not only from the increase in revenue, but also from closely
monitoring its operating expenses. 1993 revenue for the Wisconsin and
Ohio operations increased 17% and 15%, respectively. During 1993,
operations in both the East and South continued to experience improved
operating results as their regional economies began to recover from the
recession.
Broadcast
1993 revenue was $54,850,000, an increase of 3.7% over 1992 revenue of
$52,891,000. 1993 operating earnings increased slightly over the prior
year. The 1993 revenue increase was significant, since 1992 included $4.0
million in revenue from both the summer Olympics and election year
political advertising.
In 1993, the company's television stations accounted for 69% of this
segment's revenue, and 71% of its operating earnings. Operating results
at the Las Vegas and Lansing television stations were ahead of 1992, while
the Milwaukee station was below its 1992 results.
1993 operating earnings for the Milwaukee and Kansas City radio stations
were ahead of 1992, while Wausau was below its 1992 operating results.
Operating costs and expenses were tightly controlled for 1993, 1992 and
1991.
Printing
Perry Printing Corp.'s 1993 revenue was $157,673,000, a 3.0% increase over
the prior year's $153,098,000. 1991 revenue was $157,974,000. Operating
earnings for 1993 increased by 39.5% over the prior year. 1992 operating
earnings declined by 55% from 1991. The 1993 increase in both sales and
operating earnings is due to the Norway and Baraboo operations.
Trumbull Printing Inc.'s 1993 revenue of $7,807,000 was up 5.7% over 1992
revenue of $7,385,000. However, operating earnings increased
significantly over the prior year.
1993 was the first full year of operations for Imperial Printing Company
(IPC). Revenues in 1993 were $53,096,000, while operating earnings were
$5.2 million. During February 1993, IPC acquired Nordoc Software Services
located in France.
The French company showed very good growth during the year.
Telecommunications
The company's telecommunications segment's 1993 revenue increased by 3.7%
to $32,411,000. This increase is a result of a substantial increase in
the volume of circuits sold, since the competitive nature of the
telecommunications industry has resulted in a drop in the average circuit
mile price charged. In 1992, revenue of $31,265,000 more than doubled the
prior year. In 1991, revenue was $15,398,000. With continued growth in
the telecommunications industry, 1993 operating earnings increased by 5.2%
over 1992.
Other Income and Expenses
Dividends and interest income have continued to decline from $2,550,000 in
1992, to $1,521,000 in 1993. In 1991, this amount was $6,636,000. The
decrease over the last three years resulted from a combination of less
dollars invested and at significantly lower interest rates. Company
investments in short-term securities have decreased due to the use of
funds for acquisitions and capital expenditures of property and equipment.
Income Taxes
Income taxes were 39.3% of pre-tax earnings in 1993, 38.6% in 1992, and
38.7% in 1991. The increase in 1993 over the 1992 tax rate reflects the
increase in the federal statutory tax rate from 34% to 35%. Permanent tax
differences exist for goodwill amortization and the increase in the cash
surrender value of the company's life insurance investment pool.
Net Earnings
Net earnings for 1993 were $44,204,000, or $3.16 per share, versus net
earnings of $41,631,000, or $2.97 per share. In 1991, net earnings for
the year were $40,035,000, or $2.84 per share.
Liquidity and Capital Resources
Cash provided by operations is the company's major source of liquidity and
totalled $64,453,000 in 1993, $83,650,000 in 1992 and $61,195,000 in 1991.
The reduction in cash provided by operations in 1993 is attributable to a
revenue increase which resulted in a substantial increase in accounts
receivable. The reduction in cash provided by operations in 1991 resulted
from the litigation payment made on a patent infringement lawsuit.
Principal uses of cash during this period were for property and equipment
expenditures and acquisitions. Capital expenditures for property and
equipment were $36,327,000, $26,211,000 and $22,775,000 in 1993, 1992 and
1991, respectively. 1994 capital expenditures will approximate the 1993
expenditure range. The company has also remained active in acquiring
other businesses. During 1993, the company made smaller acquisitions
expanding its shopper and printing operations. As described in the notes
to consolidated financial statements (included in Item 8), the company
purchased the assets of Imperial Printing Company in 1992 and the assets
of NorLight in 1991.
Cash used for financing activities was: 1993-$28,466,000; 1992-
$28,330,000; and 1991-$38,182,000. Dividends paid during 1993 were
$25,156,000, or $1.80 per share. This compares to $25,244,000 ($1.80 per
share) in 1992 and $25,358,000 ($1.80 per share) in 1991.
Net working capital at the end of 1993 increased $15.2 million to
$111,009,000. Committments for television programs not yet produced as of
December 31, 1993, were $4,858,000. The company has traditionally not
used debt as a source of funds. The company anticipates that amounts
necessary for capital expenditures, dividends and other working capital
requirements will continue to be available from internally generated
funds.
Effect of Inflation
The company's results of operations and financial conditions have not been
significantly affected by inflation. The company has reduced the effect
of rising costs through improvements in productivity, cost containment
programs and, where the competitive environment permits, increased selling
prices.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements:
Form 10-K
Page Number:
Report of Independent Auditors 12
Consolidated Balance Sheets at December
31, 1993, 1992 and 1991 13
For each of the three years in the period
ended December 31, 1993:
--Consolidated Statements of Earnings
and Retained Earnings 14
--Consolidated Statements of Cash Flows 15
Notes to Consolidated Financial Statements 16-21
<PAGE>
Report of Independent Auditors
The Board of Directors and Stockholders
Journal Communications Inc.
We have audited the accompanying consolidated balance sheets of
Journal Communications Inc. as of December 31, 1993, 1992, and 1991, and
the related consolidated statements of earnings and retained earnings, and
cash flows for each of the years then ended. Our audit also included the
financial statement schedules listed in the Index in Item 14(a). These
financial statements and schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Journal Communications Inc. at December 31, 1993, 1992, and 1991, and its
consolidated results of operations and its cash flows for each of the
years then ended in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements
taken as a whole, present fairly, in all material respects the information
set forth therein.
As discussed in Notes 2 and 3 to the consolidated financial
statements, the Company changed its method of accounting for
postretirement benefits other than pensions and income taxes effective
January 1, 1993.
ERNST & YOUNG
Milwaukee, Wisconsin
February 10, 1994
<PAGE>
<TABLE>
JOURNAL COMMUNICATIONS INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31
ASSETS 1993 1992 1991
<S> <C> <C> <C>
Current assets:
Cash $ 12,794,479 $ 10,987,033 $ 18,782,850
Short-term investments (Note 1) 50,166,016 53,953,462 48,786,595
Receivables 76,563,404 66,554,692 61,960,009
Inventories:
Paper and supplies 16,994,981 15,686,927 14,105,537
Work in process 5,538,114 5,397,614 4,809,575
Finished goods 3,410,379 2,302,497 1,827,713
------------ --------- ----------
Total inventories 25,943,474 23,387,038 20,742,825
Prepaid expenses 21,122,044 10,933,725 9,670,431
------------ --------- ----------
Total current assets 186,589,417 165,815,950 159,942,710
Property and equipment, at cost:
Land and land improvements 11,306,428 9,483,943 9,385,393
Buildings 60,580,129 57,226,313 56,784,137
Equipment 357,989,587 329,801,757 305,877,087
------------ --------- ----------
429,876,144 396,512,013 372,046,617
Less accumulated depreciation 240,730,353 214,659,191 194,918,511
------------ --------- ----------
Net property and equipment 189,145,791 181,852,822 177,128,106
Corporate life insurance investment pool 12,197,777 10,280,750 8,537,353
Other assets (Note 1) 27,335,976 29,292,884 21,159,031
Goodwill (Note 1) 22,160,252 22,620,282 23,190,889
------------ ---------- -----------
$437,429,213 $409,862,688 $389,958,089
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 24,184,202 $ 24,396,813 $ 23,357,566
Taxes on income 58,147 2,101,058 614,218
Accrued compensation 18,773,167 15,418,542 17,207,784
Customer service deposits 11,691,953 10,874,082 9,325,744
Accrued employee benefits (Note 2) 11,528,998 7,006,467 6,120,982
Other current liabilities 5,800,228 8,806,726 7,686,862
Current portion of long-term obligations 3,543,434 1,438,193 1,782,915
------------ --------- ----------
Total current liabilities 75,580,129 70,041,881 66,096,071
Long-term obligations (Note 5) 3,678,611 2,331,842 1,958,120
Deferred income taxes (Note 3) 10,723,000 9,259,000 10,132,000
Stockholders' equity (Note 6):
Common stock, $.25 par value; authorized
and issued 14,400,000 shares 3,600,000 3,600,000 3,600,000
Retained earnings 355,878,873 336,553,427 320,163,437
Treasury stock, at cost (Note 6) (12,031,400) (11,923,462) ( 11,991,539)
------------ ----------- ----------
Total stockholders' equity 347,447,473 328,229,965 311,771,898
------------ ----------- ----------
$437,429,213 $409,862,688 $389,958,089
============ ============ ============
</TABLE>
See accompanying notes
<PAGE>
<TABLE>
JOURNAL COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
<CAPTION>
Years ended December 31
1993 1992 1991
<S> <C> <C> <C>
Earnings:
Operating revenue:
Publications:
Advertising $182,536,690 $173,323,869 $169,223,208
Circulation 57,272,146 56,510,619 56,314,619
Other 10,488,361 8,550,965 7,218,505
Broadcast 54,850,495 52,891,332 52,088,272
Printing 226,547,901 175,642,714 167,370,361
Telecommunications 32,411,290 31,256,362 15,397,788
Eliminations (3,501,062) (l,813,650) (1,630,908)
------------ ----------- -----------
$560,605,821 $496,362,211 $465,981,845
Operating costs and expenses:
Cost of sales 342,809,366 301,583,400 280,738,627
Selling and administrative expenses 146,513,746 129,314,942 125,495,658
------------ ----------- -----------
489,323,112 430,898,342 406,234,285
------------ ----------- -----------
Operating earnings 71,282,709 65,463,869 59,747,560
Other income(deductions):
Dividends and interest - net 1,521,453 2,549,614 6,635,877
Provision for litigation (Note 4) -- -- (972,000)
Loss on sale of assets ( 44) (182,036) (76,285)
------------ ----------- -----------
1,521,409 2,367,578 5,587,592
------------ ----------- -----------
Earnings before income taxes 72,804,118 67,831,447 65,335,152
Provision for income taxes (Note 3) 28,600,000 26,200,000 25,300,000
------------ ----------- -----------
Net earnings (per share, 1993 $3.16,
1992 $2.97, 1991 $2.84) (Note 1) $ 44,204,118 $ 41,631,447 $ 40,035,152
============ ============ ============
Retained earnings:
Balance at beginning of year $336,553,427 $320,163,437 $305,484,124
Net earnings 44,204,118 41,631,447 40,035,152
Cash dividends (per share, 1993
$1.80, 1992 $1.80, 1991 $1.80) (25,156,340) (25,243,614) (25,358,483)
Treasury stock transactions (Note 6) 365,145 2,157 2,644
Currency translation adjustment (87,477) -- --
------------ ----------- -----------
Balance at end of year $355,878,873 $336,553,427 $320,163,437
============ ============ ============
</TABLE>
See accompanying notes
<PAGE>
<TABLE>
JOURNAL COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Years ended December 31
1993 1992 1991
<S> <C> <C> <C>
Cash flow from operating activities:
Net earnings $44,204,118 $41,631,447 $40,035,152
Adjustments to net earnings
for non-cash items:
Depreciation and amortization 38,101,604 33,669,136 32,065,992
Deferred income taxes (700,000) (300,000) 4,700,000
Net loss from sales of assets 44 182,036 76,285
Provision for litigation -- -- 972,000
Change in:
Receivables (10,238,101) 4,646,768 1,862,270
Inventories (2,541,964) 2,045,264 106,333
Accounts payable (250,735) 1,012,400 (109,860)
Other current assets
and liabilities (4,122,210) 762,540 158,628
Litigation settlement payment -- -- (18,671,892)
----------- ---------- ----------
Net cash provided by operating
activities 64,452,756 83,649,591 61,194,908
----------- ---------- ----------
Cash flow from investing activities:
Proceeds from sales of assets 773,593 883,418 783,631
Property and equipment expenditures (36,326,664) (26,210,819) (22,775,391)
Net (increase) decrease in
short-term investments 3,787,446 (5,166,867) 51,142,529
Assets of businesses acquired (1,572,769) (31,088,347) (41,178,347)
Other - net (840,657) (1,532,613) ( 2,430,262)
----------- ---------- ----------
Net cash used for investing
activities (34,179,051) (63,115,228) (14,457,840)
----------- ---------- ----------
Cash flow from financing activities:
Reduction in long-term obligations (3,567,126) (3,156,800) (3,126,342)
Purchase of treasury stock (3,865,125) -- (9,746,227)
Sale and distribution of treasury stock 4,122,332 70,234 48,799
Cash dividends (25,156,340) (25,243,614) (25,358,483)
----------- ---------- ----------
Net cash used for financing
activities (28,466,259) (28,330,180) (38,182,253)
----------- ---------- ----------
Net increase (decrease) in cash 1,807,446 (7,795,817) 8,554,815
Cash at beginning of year 10,987,033 18,782,850 10,228,035
----------- ---------- ----------
Cash at end of year $12,794,479 $10,987,033 $18,782,850
----------- ---------- ----------
Cash paid for income taxes $31,122,000 $25,438,000 $23,030,000
----------- ---------- ----------
</TABLE>
See accompanying notes
<PAGE>
JOURNAL COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993, 1992 and 1991
l. Principal accounting policies
Basis of consolidation - The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries. All
significant intercompany balances and transactions have been eliminated.
Foreign currency translation - Assets and liabilities of French
subsidiaries are translated into U.S. dollars at year-end exchange rates
while income and expense items are translated at the average exchange
rates for the year. Resulting translation adjustments are reflected in
retained earnings.
Earnings per share - Earnings per share is based on the weighted average
shares outstanding during each period.
Short-term investments - Short-term investments, which consist
principally of government securities, commercial paper and bank
certificates of deposit with maturities of one year or less, are stated
at cost, which approximates market value.
Inventories - Inventories are stated at the lower of cost (first in,
first out method) or market.
Depreciation - Depreciation of property and equipment is computed
principally using the straight-line method.
Other assets - Identifiable intangible assets resulting from
acquisitions are amortized on the straight-line basis. Accumulated
amortization relating to intangible assets at December 31, 1993, 1992
and 1991 was $11,393,585, $8,371,103 and $6,049,956, respectively.
Other assets also include the costs of television program contracts,
recorded under the gross method, which are deferred and amortized over
the estimated number of runs of the related programs.
Goodwill - Goodwill arising from acquisitions subsequent to November 1,
1970, is amortized on the straight-line basis over 40 years. Goodwill
prior to November 1, 1970 is amortized when it is determined that such
intangible assets have a limited useful life. At December 31, 1993,
$3,095,000 of goodwill is not being amortized. Accumulated amortization
at December 31, 1993, 1992 and 1991 was $8,723,367, $8,082,677 and
$7,469,696, respectively.
2. Employee benefit plans
Contributory and noncontributory pension and savings plans cover
substantially all employees. The amount charged against earnings with
respect to all of these plans was $5,712,000, $5,256,000 and $4,611,000
in 1993, 1992 and 1991, respectively.
Net pension cost for the defined benefit plan includes the following
components:
(thousands of dollars)
1993 1992 1991
Service cost $ 2,233 $ 2,175 $ 2,040
Interest on projected
benefit obligation 5,551 5,186 4,873
Less return on plan assets (4,768) (2,325) (10,064)
Net amortization and deferral (683) (3,034) 4,980
------- ------- -------
Net pension cost $ 2,333 $ 2,002 $ 1,829
======= ======= =======
Actuarial assumptions used to project the benefit obligations and the
net pension cost were:
1993 1992 1991
Discount rate 7.25% 8.00% 8.00%
Rate of increase in
compensation levels 4.75% 5.50% 5.50%
Expected long-term rate of
return on plan assets 9.50% 9.50% 9.50%
The assets of the plan consist primarily of government and other bonds
and listed stocks. The actuary estimated a pension liability at
December 31, 1993, 1992 and 1991 of $8,107,000, $6,155,000 and
$4,962,000, respectively.
The funded status of the plan was as follows:
Actuarial present value of
benefit obligations:
(thousands of dollars)
December 31,
1993 1992 1991
Vested benefits $62,651 $54,076 $49,599
Nonvested benefits 3,449 2,885 2,388
------- ------- -------
Accumulated benefit obligation 66,100 56,961 51,987
Effect of projected
compensation levels 14,477 13,429 14,082
------- ------- ------
Projected benefit obligation 80,577 70,390 66,069
Plan assets at fair value 60,473 59,619 60,147
------- ------ ------
Projected benefit obligation
in excess of plan assets $20,104 $10,771 $ 5,922
======= ====== =======
On January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" (SFAS 106). This standard requires that
the expected cost of postretirement health and life insurance benefits
be charged to expense during the years the employees render service.
The Company has elected to amortize the unfunded obligation of
$25,324,000 at January 1, 1993 over a period of 20 years. The
incremental effect of this change in accounting method was to increase
1993 postretirement benefit expense by $2,014,000. Prior to 1993, the
Company recognized postretirement benefit expense in the year that the
benefits were paid. Postretirement benefits paid in 1992 and 1991 were
$1,337,000 and $1,372,000, respectively.
Postretirement benefit expense for 1993 includes the following
components:
(thousands of dollars)
1993
Service cost $ 454
Interest cost on accumulated postretirement
benefit obligation 2,073
Amortization of transition obligation 1,266
------
Postretirement benefit expense $3,793
======
The funded status of the plans on an aggregate basis at December 31,
1993 was as follows:
(thousands of dollars)
1993
Accumulated postretirement benefit obligation:
Retirees $16,243
Fully eligible participants 1,919
Other active participants 9,469
------
Total accumulated postretirement benefit
obligation 27,631
Less: Unrecognized transition obligation 24,058
Unrecognized actuarial loss 1,559
------
Accrued postretirement benefit cost liability $ 2,014
======
For measurement purposes, benefit cost trend rates of 10% and 9%
annually were assumed in 1993 for pre-age 65 and 65 and over groups,
respectively. These rates gradually decrease to 5% through 2010 for the
pre-age 65 group and through 2008 for the 65 and over group and remained
level thereafter. The benefit cost trend rates have a significant
effect on the amounts reported. Increasing the assumed benefit cost
trend rates by 1% in each year would increase the accumulated
postretirement benefit obligation at December 31, 1993 by 5.8% and the
aggregate service and interest cost components of postretirement benefit
expense for 1993 by 5.0%, respectively. The weighted average discount
rate used in determining the accumulated postretirement benefit
obligation was 7.5%.
3. Income Taxes
Effective January 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" (SFAS 109). SFAS 109 requires recognition of deferred tax
assets and liabilities for the expected future tax consequences of
events that have been included in the financial statements or tax
returns. Under this method, deferred tax assets and liabilities are
determined based on the difference between the financial statement and
tax basis of assets and liabilities using enacted tax rates for the year
in which the differences are expected to reverse. The impact of
adopting SFAS 109 was not material to 1993 operations.
The provision for income taxes consists of the following:
(thousands of dollars)
1993 1992 1991
Current
Federal $23,300 $21,400 $15,600
State 6,000 5,100 5,000
------- ------- -------
29,300 26,500 20,600
Deferred (700) (300) 4,700
------- ------- -------
$28,600 $26,200 $25,300
======= ======= =======
The components of the net deferred tax liability as of December 31, 1993
were as follows:
Deferred tax assets:
Accrued employee benefit $ 3,304,000
Inventories 348,000
Accrued compensation 3,350,000
Accounts receivable 891,000
Deferred revenue 172,000
State credit carryforward 461,000
Other 1,405,000
-----------
Total deferred tax assets $ 9,931,000
Deferred tax liabilities:
Property, plant and equipment $20,408,000
Other 246,000
-----------
Total deferred tax liabilities $20,654,000
Net deferred tax liability included
in balance sheet $10,723,000
===========
4. Litigation
In September 1991, the Company paid $18.7 million in partial settlement
of a patent infringement lawsuit. The one remaining issue is a
technical question upon which management and legal counsel believe the
Company will prevail. The Company was required to renew a $16.8 million
bond until the court rules. The bond is fully guaranteed by standby
letters of credit which are partially collateralized by $8.5 million of
short-term investments.
5. Long-term obligations
1993 1992 1991
Capital lease &
other obligations,
average interest 8% $1,579,020 $ 403,115 $ 590,910
Television program
contracts, due
through 1997 5,643,025 3,366,920 3,150,125
---------- ---------- ----------
7,222,045 3,770,035 3,741,035
Less current portion 3,543,434 1,438,193 1,782,915
---------- ---------- ----------
$3,678,611 $2,331,842 $1,958,120
========== ========== ==========
In addition, Company has the rights to broadcast certain television
programs during the years 1994-1997 under contracts aggregating
$4,858,000.
6. Stockholders' equity
The Company periodically purchases units of beneficial interest in The
Journal Employes' Stock Trust (JESTA) for use in its Incentive
Compensation and Suggest and Share Plans and for resale to its employees.
Treasury stock activity is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
Units Amount Units Amount Units Amount
<S> <C> <C> <C> <C> <C> <C>
Beginning
balance 375,214 $11,923,462 377,384 $11,991,539 73,384 $ 2,291,467
Purchases 112,245 3,865,125 -- -- 305,550 9,746,227
Sales (120,885) (3,757,187) (2,170) (68,077) (1,550) (46,155)
-------- ---------- ------- ---------- ------- ---------
Ending
balance 366,574 $12,031,400 375,214 $11,923,462 377,384 $11,991,539
======== ========== ======== =========== ======== ===========
Gain on
sales $ 365,145 $ 2,157 $ 2,644
========== =========== =========
</TABLE>
7. Acquisitions
On October 6, 1992, the Company acquired the business and substantially
all of the assets of Imperial Printing Company. The cash purchase price
was approximately $30.7 million, with additional contingent payments, not
to exceed $6.8 million, payable over six years, beginning in 1994, if
target profit levels are achieved. Contingent payments, if made, will be
accounted for as an adjustment to the purchase price.
On December 4, 1991, the Company acquired the business and substantially
all of the assets of NorLight. The cost of the acquisition totalled
approximately $43 million in cash and liabilities assumed.
The acquisitions were accounted for using the purchase method.
Accordingly, the operating results and cash flows of the acquired
businesses are included in the Company's consolidated financial statements
from the date of acquisition. Had Imperial Printing Company and NorLight
been acquired as of January 1, 1991 and 1990, respectively, the effect of
the acquisitions on the Company's consolidated results of operations would
not have been material.
8. Segment analysis (thousands of dollars)
<TABLE>
<CAPTION>
Sales Earnings
1993 1992 1991 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Publications $250,298 $238,386 $232,756 $41,491 $40,828 $34,520
Broadcast 54,850 52,891 52,088 10,853 9,637 8,759
Printing 226,548 175,643 167,371 12,204 7,109 10,935
Telecommunications 32,411 31,256 15,398 8,715 8,283 5,414
Corporate &
eliminations (3,501) (1,814) (1,631) (1,980) (393) 120
-------- -------- -------- ------- ------- -------
$560,606 $496,362 $465,982
======== ======== ========
Total segment
operating earnings 71,283 65,464 59,748
Corporate - other income 1,521 2,367 5,587
------- ------- -------
Earnings before income taxes $72,804 $67,831 $65,335
====== ====== =======
<CAPTION>
December 31
Identifiable total assets Depreciation Capital expenditures
1993 1992 1991 1993 1992 1991 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Publications $ 92,943 $ 84,152 $ 91,177 $ 6,296 $ 5,651 $ 6,183 $ 9,971 $ 7,380 $ 8,185
Broadcast 50,347 48,693 48,763 2,586 2,511 2,350 3,451 2,965 2,386
Printing 170,671 150,196 116,765 13,894 11,764 11,041 17,270 13,390 8,356
Telecommunications 56,024 58,357 64,035 6,843 6,808 4,596 5,206 2,449 3,800
Corporate 67,444 68,465 69,218 121 102 102 429 27 48
------- ------- ------- ------ ------ ------ ------- ------ ------
$437,429 $409,863 $389,958 $29,740 $26,836 $24,272 $36,327 $26,211 $22,775
======== ======== ======= ====== ====== ======= =======
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS OF THE REGISTRANT
Directors Auer, Engelmann, Felix, Gigowski, Schwartz, Thompson and Weyer
are elected representatives of the Unitholders Council and have been
employed by the Company for more than five years. Mr. Bonaiuto, Mr.
Currow and Mr. Forbes have less than five years of service with the
Company. The other directors, except for Mr. Meissner, have been employed
by the Company or its subsidiaries in key management positions for more
than five years. Information regarding the executive officers of the
Company is set forth in Part I, Item 4A above. Mr. Meissner is President
and Chief Executive Officer of Morgan&Myers/The Barkin Group, a Milwaukee
public relations firm. The following chart states the equity ownership of
each Director in the Registrant:
<TABLE>
<CAPTION>
Held Units Held Percent of
Office as of Ownership
Name Age Since February 15, 1994(1) *denotes < 1%)
<S> <C> <C> <C> <C>
James M. Auer 65 June 8, 1993 11,570 *
Paul M. Bonaiuto 43 June 8, 1993 3,000 *
Nancy B. Carey 44 December 7, 1993 0 *
James C. Currow 50 June 8, 1993 3,000 *
Robert M. Dye 46 March 6, 1990 32,025 *
Corinne A. Engelmann 28 June 8, 1993 1,325 *
Christine A. Farnsworth 45 June 8, 1993 21,820 *
Barbara L. Felix 45 June 8, 1993 3,100 *
Gregory H. Forbes 44 June 8, 1993 3,000 *
Karen A. Gigowski 42 June 8, 1993 1,615 *
Stephen O. Huhta 38 June 8, 1993 16,845 *
Craig A. Hutchison 42 June 6, 1989 40,785 *
Peter P. Jarzembinski 41 March 9, 1990 39,305 *
Robert A. Kahlor 60 March 6, 1973 72,435 *
Thomas M. Karavakis 63 June 5, 1984 59,490 *
Douglas G. Kiel 45 June 4, 1991 19,800 *
Paul E. Kritzer 51 June 5, 1990 28,570 *
Ronald G. Kurtis 46 June 8, 1993 38,125 *
David G. Meissner 56 June 7, 1988 --(2) --(2)
Cecil G. Schwartz 45 June 8, 1993 9,940 *
Steven J. Smith 43 June 2, 1987 51,580 *
Lloyd M. Thompson 49 June 8, 1993 4,380 *
Donald J. Weyer 46 June 8, 1993 4,130 *
<FN>
(1) A "Unit" is equivalent to a share of the common stock of Journal Communications, Inc.
(2) Mr. Meissner owns no Units but is an officer and director of Matex Inc. which owns 1,320,000 shares of Journal stock.
Mr. Meissner's wife is also an officer and director of Matex Inc. and together with her children owns or has a
beneficial interest in 33% of the outstanding common stock of Matex Inc. Mrs. Meissner also has a 33% beneficial
interest in 120,000 shares of Journal Communications, Inc. common stock. Other members of Mrs. Meissner's family own
or have a beneficial interest in the remaining 67% of the Matex Inc. shares and the 120,000 shares of Journal stock.
</TABLE>
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Information in response to this item is incorporated herein by reference
to the Company's proxy statement, which shall be filed with the Securities
and Exchange Commission no later than three (3) weeks prior to the
Company's Annual Meeting which shall be held Tuesday, June 7, 1994.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information in response to this item is incorporated herein by reference
to the Company's proxy statement, which shall be filed with the Securities
and Exchange Commission no later than three (3) weeks prior to the
Company's Annual Meeting which shall be held Tuesday, June 7, 1994.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information in response to this item is incorporated herein by reference
to the Company's proxy statement, which shall be filed with the Securities
and Exchange Commission no later than three (3) weeks prior to the
Company's Annual Meeting which shall be held Tuesday, June 7, 1994.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements and Financial Statement Schedules
The following consolidated financial statements of the Registrant
are included in Item 8:
Form 10-K
Page Number
Consolidated Balance Sheets at
December 31, 1993, 1992 and 1991 13
Consolidated Statements of Earnings
and Retained Earnings for each of
the three years in the period ended
December 31, 1993 14
Consolidated Statements of Cash Flows
for each of the three years in the
period ended December 31, 1993 15
Notes to Consolidated Financial Statements 16-21
The following consolidated financial statements schedules of the
Registrant are filed as a part of this report:
Form 10-K
Page Number
Schedule I-Consolidated Short-Term
Investments at December 31, 1993 25
Schedule V-Consolidated Property &
Equipment for each of the three
years in the period ended December
31, 1993 26
Schedule VI-Consolidated Accumulated
Depreciation of Property & Equipment
for each of the three years in the
period ended December 31, 1993 27
Schedule X-Consolidated Supplementary
Income Statement Information for each
of the three years in the period ended
December 31, 1993 28
All other schedules are omitted since the required information is
not present, or is not present in amounts sufficient to require
submission of the schedule, or because the information required is
included in the consolidated financial statements and notes
thereto.
2. Exhibits
The exhibits listed in the accompanying index are filed as part of
this annual report.
<PAGE>
JOURNAL COMMUNICATIONS, INC.
SCHEDULE I - CONSOLIDATED SHORT-TERM INVESTMENTS
December 31, 1993
Amount Market
at cost (1) Value
U. S. Government securities $41,087,798 $41,385,219
Certificates of deposit 5,500,000 5,500,000
Commercial paper 3,500,000 3,500,000
Common stock 62,881 76,975
Preferred stock 15,337 48,300
----------- ----------
$50,166,016 $50,510,494
=========== ==========
(1) Amount at which each portfolio of equity security issues and each
other security issue is carried in the consolidated balance sheet
<PAGE>
<TABLE>
JOURNAL COMMUNICATIONS, INC.
SCHEDULE V - CONSOLIDATED PROPERTY AND EQUIPMENT
Years ended December 31, 1993, 1992 and 1991
<CAPTION>
Balance at Additions Other changes Balance at
Classification Beg. of Year at cost Retirements add (deduct) end of year
<S> <C> <C> <C> <C> <C>
1993:
Land and land
improvements $ 9,483,943 $ 1,843,688 $ 81,203 $ 60,000 $ 11,306,428
Buildings 57,226,313 3,579,665 302,349 76,500 60,580,129
Equipment 329,801,757 30,903,311 4,051,025 1,335,544 357,989,587
----------- ---------- --------- ---------- ------------
$396,512,013 $36,326,664 $4,434,577 $1,472,044 $429,876,144
============ ========== ========= ========== ============
(1)
1992:
Land and land
improvements $ 9,385,393 $ 150,176 $ 51,626 $ - $ 9,483,943
Buildings 56,784,137 520,462 82,978 4,692 57,226,313
Equipment 305,877,087 25,540,181 8,026,541 6,411,030 329,801,757
------------ ---------- ---------- ---------- ------------
$372,046,617 $26,210,819 $8,161,145 $6,415,722 $396,512,013
============ ========== ========= ========== ============
(2)
1991:
Land and land
improvements $ 8,880,215 $ 57,971 $ 4,704 $ 451,911 $ 9,385,393
Buildings 54,108,707 2,035,934 543,607 1,183,103 56,784,137
Equipment 253,057,770 20,681,486 5,014,544 37,152,375 305,877,087
----------- ---------- --------- ----------- -----------
$316,046,692 $22,775,391 $5,562,855 $38,787,389 $372,046,617
=========== ========== ========= ========== ===========
(3)
<FN>
(1) Cost of property and equipment at acquisition of
Nordoc Software Services, purchased by Imperial
Printing Corporation $ 1,202,044
Cost of property and equipment at acquisition a
shopper and a newspaper purchased
by Add, Inc. 270,000
-----------
$ 1,472,044
===========
(2) Cost of property and equipment at acquisition of
Imperial Printing Corporation, purchased by
Journal Communications, Inc. $ 6,362,000
Cost of property and equipment at acquisition of a
shopper purchased by Add, Inc. 53,722
-----------
$ 6,415,722
===========
(3) Cost of property and equipment at acquisition of
NorLight, Inc., purchased by MRC $ 38,787,389
Telecommunications, Inc. ===========
</TABLE>
Depreciation is provided on the straight line basis over the estimated
useful lives of the respective assets. Land improvements - 10 to 20
years; Buildings - 20 to 50 years; Equipment - 7 to 20 years
<PAGE>
<TABLE>
JOURNAL COMMUNICATIONS, INC.
SCHEDULE VI - CONSOLIDATED ACCUMULATED DEPRECIATION
OF PROPERTY AND EQUIPMENT
Years ended December 31, 1993, 1992 and 1991
<CAPTION>
Additions
Charged to
Balance at Costs and Other changes Balance at
Classification Beg. of Year Expenses Retirements add (deduct) end of year
<S> <C> <C> <C> <C> <C>
1993:
Land and land
improvements $ 2,817,970 $ 1,503,117 $ - $ - $ 4,321,087
Buildings 28,004,614 2,659,205 51,473 - 30,612,346
Equipment 183,836,607 25,578,005 3,617,692 - 205,796,920
------------ ----------- ---------- ------------ -------------
$214,659,191 $29,740,327 $3,669,165 $ - $240,730,353
============ =========== ========== ============ =============
1992:
Land and land
improvements $ 2,736,180 $ 82,434 $ 644 $ - $ 2,817,970
Buildings 25,882,521 2,163,296 41,203 - 28,004,614
Equipment 166,299,810 24,590,641 7,053,844 - 183,836,607
------------ ----------- ---------- ------------ -------------
$194,918,511 $26,836,371 $7,095,691 $ - $214,659,191
============ =========== ========== ============ =============
1991:
Land and land
improvements $ 2,627,878 $ 114,913 $ 6,611 $ - $ 2,736,180
Buildings 24,522,212 1,950,505 590,196 - 25,882,521
Equipment 148,199,629 22,032,312 3,932,131 - 166,299,810
------------ ----------- ---------- ------------ ------------
$175,349,719 $24,097,730 $4,528,938 $ - $194,918,511
============ =========== ========== ============ ============
</TABLE>
<PAGE>
JOURNAL COMMUNICATIONS, INC.
SCHEDULE X - CONSOLIDATED SUPPLEMENTARY INCOME
STATEMENT INFORMATION
Years Ended December 31, 1993, 1992 and 1991
Charged to Costs and Expenses
1993 1992 1991
Maintenance and repairs $8,649,250 $7,770,945 $5,786,945
Amortization of intangible
assets:
Film contracts $2,948,269 $1,839,634 $2,110,056
Consulting and
Non-competition agreements 3,310,064 2,527,278 2,641,572
Goodwill 633,227 635,606 1,244,194
Other 1,469,717 1,830,247 1,972,440
---------- --------- ---------
TOTAL $8,361,277 $6,832,765 $7,968,262
========== ========== ==========
Advertising costs $4,571,539 $4,251,128 $5,334,383
========== ========= ==========
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
Annual Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
JOURNAL COMMUNICATIONS, INC.
By: ROBERT A. KAHLOR
Robert A. Kahlor
Chairman of the Board and CEO
Principal Executive Officer
By: PETER P. JARZEMBINSKI
Peter P. Jarzembinski
Senior Vice President and CFO
Principal Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
JAMES M. AUER March 29, 1994
James M. Auer, Director
Paul M. Bonaiuto, Director
Nancy B. Carey, Director
James C. Currow, Director
ROBERT M. DYE March 29, 1994
Robert M. Dye, Director
Corinne A. Engelman, Director
CHRISTINE A. FARNSWORTH March 29, 1994
Christine A. Farnsworth, Director
BARBARA L. FELIX March 29, 1994
Barbara L. Felix, Director
Gregory H. Forbes, Director
KAREN A. GIGOWSKI March 29, 1994
Karen A. Gigowski, Director
Stephen O. Huhta, Director
Craig A. Hutchison, Director
PETER P. JARZEMBINSKI March 29, 1994
Peter P. Jarzembinski, Director
ROBERT A. KAHLOR March 30, 1994
Robert A. Kahlor, Director
Thomas M. Karavakis, Director
Douglas G. Kiel, Director
PAUL E. KRITZER March 29, 1994
Paul E. Kritzer, Director
RONALD G. KURTIS March 30, 1994
Ronald G. Kurtis, Director
David G. Meissner, Director
CECIL G. SCHWARTZ March 29, 1994
Cecil G. Schwartz, Director
STEVEN J. SMITH March 29, 1994
Steven J. Smith, Director
Lloyd M. Thompson, Director
DONALD J. WEYER March 29, 1994
Donald J. Weyer, Director
<PAGE>
JOURNAL COMMUNICATIONS, INC.
INDEX TO EXHIBITS
(Item 14(a))
Exhibits
Form
10-K
Page
Number
( 3) Articles of Incorporation and Bylaws
as previously filed, hereby incorporated
by reference N/A
(22) Subsidiaries of the Registrant filed
herewith
(23) Consent of Independent Auditors filed
herewith
N/A = Not Applicable
Exhibit No. 22
JOURNAL COMMUNICATIONS, INC.
Subsidiaries of the Registrant
The following list shows the subsidiaries of the Registrant, their
respective states of incorporation and the percentage of voting securities
of each subsidiary owned by its immediate parent. All companies listed
have been included in the consolidated financial statements filed
herewith.
Percent of Voting
Securities Owned
State/Country by Registrant or
Subsidiary of Incorporation Immediate Parent
Journal/Sentinel Inc. Wisconsin 100% by Registrant
WTMJ, Inc. Wisconsin 100% by Registrant
Perry Printing Corporation Wisconsin 100% by Registrant
ADD, Inc. Wisconsin 100% by Registrant
MRC Telecommunications, Inc. Wisconsin 100% by Registrant
Trumbull Printing, Inc. Connecticut 100% by Registrant
Imperial Printing Company Michigan 100% by Registrant
Buyers' Guide, Inc. North Carolina 100% by ADD, Inc.
Label Products & Design, Inc. Wisconsin 100% by Perry Printing
Boca Publishing Company, Inc. Wisconsin 100% by ADD, Inc.
NorLight, Inc. Wisconsin 100% by MRC
Telecommunications, Inc.
Striplin Publishing, Inc. Ohio 100% by ADD, Inc.
Nordoc Software Services France 100% by Imperial Printing
The Registrant has no controlling parent. Twelve million nine
hundred and sixty thousand (12,960,000) shares, 90% of the Registrant's
issued common stock at December 31, 1993, are owned of record by Journal
Employes' Stock Trust. The right to vote these shares in most instances
resides in the employees who hold units of beneficial interest in that
trust. Accordingly, the Registrant is not controlled by Journal Employes'
Stock Trust and does not consider it to be a "parent" of the Registrant
within the meaning of Regulation 12b-2(k). See Item 12 "Security
Ownership of Certain Beneficial Owners and Management."
Exhibit No. 23
CONSENT OF ERNST & YOUNG INDEPENDENT AUDITORS
We consent to the incorporation by reference,
(a) in the Registration Statement (Form S-8 No. 2-79770) pertaining to
Journal Communications, Inc. Employes' Individual Retirement
Agreement and in the related prospectus,
(b) in the Registration Statement (Form S-8 No. 33-14771) pertaining to
Journal Employes' Stock Trust and in the related prospectus, and
(c) in the Registration Statement (Form S-8) pertaining to Journal
Communications, Inc. Employes' Stock Trust and in the related
prospectus submitted to the Securities and Exchange Commission for
filing on March 12, 1991 with respect to 500,000 units of beneficial
interest in said trust,
of our report dated February 10, 1994 with respect to the consolidated
financial statements and financial statement schedules of Journal
Communications, Inc. included in this Annual Report (Form 10-K) of Journal
Communications, Inc.
Milwaukee, Wisconsin ERNST & YOUNG
March 24, 1994
