FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ending June 18, 1995
(6 Accounting Periods)
Commission file number 0-783l
JOURNAL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
WISCONSIN 39-0382060
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Journal Square, P.O. Box 661, 333 W. State St.,
Milwaukee, Wisconsin 5320l
(Address of principal executive offices) (Zip Code)
414-224-2728
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13
or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter
period that the registrant was required to file such
reports, and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
Number of share of Common Stock Outstanding - June 18, 1995 14,028,126
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
Quarter Ended June 18, 1995 Commission file number 0-7831
(6 Accounting Periods)
INDEX
Page No.
Part I. Financial Information
Consolidated Condensed Balance Sheets
June 18, 1995 and December 31, 1994 2
Condensed Consolidated Statements of Income
Six Periods Ended June 18, 1995
and June 19, 1994 3
Consolidated Condensed Statements of Cash Flows
Six Periods Ended June 18, 1995
and June 19, 1994 4
Notes to Consolidated Condensed
Financial Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6
Part II. Other Information 8
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 18, 1995 Commission file number 0-783l
(6 Accounting Periods)
Consolidated Condensed Balance Sheets
June 18, 1995 and December 31, 1994
(Dollars in thousands)
ASSETS 06/18/95 12/31/94
(Unaudited) (Note 3)
Current Assets:
Cash $ 11,238 $ 13,111
Short-term investments 98,725 38,964
Receivables 85,720 81,386
Inventories:
Paper and supplies 18,744 15,265
Work in process 4,455 4,812
Finished goods 7,731 5,366
-------- --------
30,930 25,443
Prepaid expenses 8,423 10,348
Net current assets of discontinued
operations-Note 3 -- 75,272
-------- --------
Total current assets 235,036 244,524
Property and equipment, less accumulated
depreciation of $195,647 and $184,888 154,847 149,687
Deferred charges and other assets 61,667 41,661
Goodwill 30,123 28,864
-------- --------
Total Assets $481,673 $464,736
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 29,575 $ 31,363
Taxes on income 2,094 133
Accrued liabilities 58,497 49,039
Current portion of long-term obligations 1,720 3,201
-------- --------
Total current liabilities 91,886 83,736
Long-term obligations 2,518 2,946
Other liabilities and deferred credits 10,625 10,625
Stockholders' equity:
Common stock - Authorized and issued
14,400,000 ($0.25 par value) 3,600 3,600
Retained earnings 385,788 373,626
Treasury stock, at cost (12,744) (9,797)
-------- --------
Total stockholders' equity 376,644 367,429
-------- --------
Total liabilities and
stockholders' equity $481,673 $464,736
======== ========
Note: The balance sheet at December 31, 1994 has been derived from the
audited financial statements at that date but does not include all the
information and foot notes required by generally accepted accounting
principles for complete financial statements. Certain reclassifications
have been made in relation to the discontinued operations. See Note 3.
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 18, 1995 Commission file number 0-7831
(6 Accounting Periods)
<TABLE>
Consolidated Condensed Statement of Income
(Dollars in thousands except share and per share amounts)
<CAPTION>
Three Periods Ended Six Periods Ended
06/18/95 06/19/94 6/18/95 06/19/94
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(Note 3) (Note 3)
<S> <C> <C> <C> <C>
Net Sales $ 134,783 $ 115,234 $ 261,004 $ 227,638
Operating costs and expenses:
Cost of sales 75,249 62,684 149,082 124,187
Selling/administrative expenses 42,291 36,005 82,287 71,419
Restructuring charges-Note 4 14,945 -- 14,945 --
--------- --------- --------- ---------
132,485 98,689 246,314 195,606
--------- --------- --------- ---------
Operating Earnings 2,298 16,545 14,690 32,032
Dividend and interest income 306 425 1,685 811
Interest expense (65) (52) (71) (92)
--------- --------- --------- ---------
Earnings before income taxes 2,539 16,918 16,304 32,751
Provision for income taxes 901 6,892 6,409 13,218
--------- --------- --------- ---------
Income from Continuing Operations 1,638 10,056 9,895 19,533
Discontinued Operations-Note 3:
Income (loss) from operations
net of applicable income tax
expense (benefit) of $487,
$(98), $1,489 and $20 101 (155) 1,562 30
Gain on sale of Perry Printing
Corporation net of applicable
income tax expense of $9,710
and $0 14,565 -- 14,565 --
--------- --------- --------- ---------
Net Income $ 16,304 $ 9,901 $ 26,022 $ 19,563
========= ========= ========= =========
Weighted average number
of common shares
outstanding 14,028,126 13,991,861 14,070,107 14,016,490
========== ========== ========== ==========
Earnings per share:
Continuing Operations .12 .72 .70 1.40
Discontinued Operations 1.04 (.01) 1.15 .00
---------- ---------- ---------- ----------
$ 1.16 $ .71 $ 1.85 $ 1.40
========== ========== ========== ==========
Cash dividend per share $ 0.55 $ 0.45 $ 1.00 $ 0.90
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 18, 1995 Commission file number 0-7831
(6 Accounting Periods)
Condensed Consolidated Statement of Cash Flows
(Dollars in thousands)
Six Periods Ended
06/18/95 06/19/94
(Unaudited) (Unaudited)
(Note 3)
Cash flow from operating activities:
Net earnings $ 26,022 $ 19,563
Adjustments to net earnings for
Non-cash items:
Depreciation and amortization 15,117 16,062
Increase in accounts receivable (2,142) (146)
Increase in inventories (5,487) (725)
Increase (decrease) in accounts payable (3,075) 704
Other current assets and liabilities 11,763 (3,108)
Gain on sale of assets of discontinued
operations-Note 3 (24,275) --
Discontinued operations - noncash charges
and working capital changes-Note 3 (1,810) 6,211
--------- --------
Net cash provided by operating activities $ (16,113) $ 38,651
--------- --------
Cash flow from investing activities:
Property and equipment expenditures (15,438) (19,778)
Assets of business acquired (12,814) (6,904)
Net (increase) decrease in short-term
investments (59,761) 10,629
Proceeds from sale of discontinued
operations - Note 3 91,390 --
Investing activities of discontinued
operations - Note 3 (1,474) (3,489)
--------- --------
Net cash used for investing activities 1,903 (19,542)
--------- --------
Cash flow from financing activities:
Purchase of treasury stock (3,550) (1,834)
Reduction in long-term obligations (2,915) (1,881)
Sale and distribution of treasury stock 635 382
Cash dividends (14,059) (12,616)
--------- --------
Net cash used for financing activities (19,889) (15,949)
--------- --------
Net increase (decrease) in cash (1,873) 3,160
Cash:
Beginning of year 13,111 12,794
--------- --------
End of year $ 11,238 $15,954
========= ========
See notes to condensed consolidated financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 18, 1995 Commission file number 0-7831
(6 Accounting Periods)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulations S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the three periods ended March 26, 1995, are not
necessarily indicative of the results that may be expected for the
year ended December 31, 1995. For further information, refer to
the consolidated financial statements and footnotes thereto
included in the Journal Communications, Inc. annual report on Form
10-K for the year ended December 31, 1994.
2. The Registrant divides its calendar year into thirteen four-week
accounting periods, except that the first and thirteenth periods
may be longer or shorter to the extent necessary to make each
accounting year end on December 31. Registrant follows a practice
of publishing its financial statement at the end of the third
accounting period (its first quarter) and at the end of the sixth
accounting period (its second quarter), and at the end of the tenth
accounting period (its third quarter).
3. Effective April 27, 1995, the Company sold its long-run catalog and
publication printing business assets. The Company has accounted for
this operation as a discontinued operation, using an April 27, 1995
measurement date. Prior period financial statements have been
restated to reflect the discontinuation of this business segment.
The Company has recorded an after tax gain on the sale of
$14,565,000. The sale agreement requires certain purchase price
adjustment calculations to be finalized in the third quarter of
fiscal 1995.
4. Journal/Sentinel Inc. merged The Milwaukee Journal and the
Milwaukee Sentinel into one newspaper called the Milwaukee Journal
Sentinel. Distribution of the Milwaukee Journal Sentinel began
April 2, 1995.
The merger resulted in a work force reduction. The Company
recorded severance and early retirement payments and other costs
associated with the launch of the Milwaukee Journal Sentinel of
$14,945,000 in the second quarter of 1995. Continued improvements
and process restructuring are still being finalized. The Company
anticipates that this process will be completed by December 31,
1995.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 18, 1995 Commission file number 0-7831
(6 Accounting Periods)
Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
Halfway through the year, three of our divisions, Journal Broadcast
Group, Inc., ADD, Inc. and IPC Software Publishing Services, have had
excellent earnings growth.
However, operating earnings at Journal Sentinel Inc., NorthStar
Print Group, Inc. and PrimeNet DataSystems compared unfavorably to last
year.
At the end of the first six accounting periods, the option price
was $36.12, or $1.20 more than a year ago. A total of 48 cents of the
increase was the result of the Perry Printing Corp. sale minus
restructuring costs at Journal Sentinel Inc. Even without the 48-cent
gain from the Perry sale, the option price increase in five of the six
accounting periods of 1995 has been equal to or greater than the increase
in 1994.
Dividends this year have totaled $1, compared to 90 cents in 1994.
A special 10-cent dividend was declared at the June meeting of the board
of directors. The special dividend helped offset the increased interest
rates shareholders were paying on their stock loans. There are no plans
to increase the regular dividend until there is an additional increase in
earnings.
Consolidated revenue from continuing operations for the first six
periods totaled $261 million, up 14.7% from last year. Operating earnings
from continuing operations excluding restructuring costs were $29.6
million, down 7.5%, while income from continuing operations excluding
after-tax restructuring costs was $18.8 million, down 3.6%. Operating
earnings, including restructuring costs, totalled $14.7 million compared
to $32 million in the prior year.
Journal Sentinel Inc. had revenue of $99.2 million, up 2.7% from a
year ago. While operating earnings of $16.1 million, excluding
restructuring costs, were a respectable 16.2% return on sales, they were
down nearly 25% from 1994. Operating earnings including restructuring
costs were $1.1 million. The drop in earnings is primarily a result of
the sharp rise in the cost of newsprint, which is the newspaper's largest
expense after payroll. Another price increase is anticipated in September
and we are placing a major emphasis on finding ways to conserve newsprint.
At the Journal Broadcast Group, revenue was $32.7 million, up 23%.
Operating earnings were almost $9 million, up more than $3.7 million from
a year ago. The record-setting earnings growth is a result of strong
performance at our Milwaukee, Las Vegas, Nevada and Lansing, Michigan
television stations and at KQRC-FM in Kansas City.
ADD, Inc. is also achieving record-setting results. Sales through
the first six periods were $36.4 million, up 14.7% from last year.
Operating earnings were $6.1 million, up 18%. The largest gains are in
Wisconsin (earnings are up 27.8%), Ohio, where earnings are up 15.2% and
in Connecticut, where earnings at Hometown Publications and Trumbull
Printing are up 24.1%.
At IPC Software/Publishing Services, revenue was $47.1 million, up
more than $19 million from last year. Operating earnings were $2.4
million, up $940,000. In St. Joseph, Michigan, the printing operation has
shown solid growth. Led by the Irvine, California plant, operating
earnings from the duplication and assembly operations are significantly
ahead of last year. IPC's French operation posted a profit in the second
quarter and is showing a slight gain in earnings over last year.
At NorthStar Print Group, Inc., sales totaled $24.8 million, down
6.9% from last year. Earnings were $350,000, down significantly from
1994. Compared to last year at this time, earnings are up at Label
Products & Design, Inc. in Green Bay, but down at the Milwaukee NorthStar
operation. Results at NorthStar's Norway/Watertown operation improved
during the second quarter but are still behind last year. The NorthStar
group is expected to perform better in the second half of the year.
At MRC Telecommunications Inc., earnings were $4.8 million, up 2.7%
from last year. Sales totaled $18.4 million, up 19.2%. The acquisition
last July of Telephone Associates Long Distance in Duluth, Minnesota and
an increase in MRC's private line business are the primary reason for the
growth in sales.
At PrimeNet DataSystems, revenues were $3.2 million, down 14% from
last year. We are developing a strategic plan that will focus PrimeNet on
its core business -- database marketing. The restructuring, which will be
completed this year, will result in a stronger company that is
strategically positioned to better serve its core customers.
On April 2, 1995, Journal Sentinel Inc. merged The Milwaukee
Journal and the Milwaukee Sentinel into one newspaper called the Milwaukee
Journal Sentinel. Costs associated with the launch of the Milwaukee
Journal Sentinel of $14,945,000 were recorded in the second quarter of
1995. Costs to finalize continued improvements and process restructuring
will be completed by December 31, 1995.
Effective April 27, 1995, the assets of the long-run catalog and
publication printing business were sold. An after tax gain on the sale of
$14,565,000 was recorded in the second quarter of 1995. The sale
agreement requires certain purchase price adjustment calculations to be
finalized in the third quarter of fiscal 1995.
Working capital for our combined operations jumped from $86.7
million at the end of the first quarter to $143 million at the end of the
second quarter as a result of the sale of the assets of Perry Printing
Corporation. The Company anticipates that amounts necessary for capital
expenditures, dividends, workforce reductions and other working capital
requirements will continue to be available from internally generated
funds. Total assets grew to $481.7 million. Stockholders equity is
$376.6 million.
<PAGE>
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 18, 1995 Commission file number 0-7831
(6 Accounting Periods)
Part II. Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits.
27 - Financial Data Schedule.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed
for the six accounting periods ended June 18, 1995.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JOURNAL COMMUNICATIONS, INC.
Registrant
Date August 1, 1995 /s/ Robert A. Kahlor
Robert A. Kahlor, Chairman of the
Board
Date August 1, 1995 /s/ Peter P. Jarzembinski
Peter P. Jarzembinski, Senior Vice
President of Finance
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF JOURNAL COMMUNICATIONS, INC. AS
OF AND FOR THE QUARTER ENDED JUNE 18, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-18-1995
<CASH> 11,238
<SECURITIES> 98,725
<RECEIVABLES> 85,720
<ALLOWANCES> 0
<INVENTORY> 30,930
<CURRENT-ASSETS> 235,036
<PP&E> 350,494
<DEPRECIATION> 195,647
<TOTAL-ASSETS> 481,673
<CURRENT-LIABILITIES> 91,886
<BONDS> 2,518
<COMMON> 3,600
0
0
<OTHER-SE> 373,044
<TOTAL-LIABILITY-AND-EQUITY> 481,673
<SALES> 261,004
<TOTAL-REVENUES> 261,004
<CGS> 149,082
<TOTAL-COSTS> 231,369
<OTHER-EXPENSES> 14,945
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71
<INCOME-PRETAX> 16,304
<INCOME-TAX> 6,409
<INCOME-CONTINUING> 9,895
<DISCONTINUED> 16,127
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,022
<EPS-PRIMARY> 1.85
<EPS-DILUTED> 1.85
</TABLE>
