FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 27, 1995
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 53201
(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)
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Journal Communications, Inc.
Item 2. Disposition of Assets
Pursuant to an Asset Purchase Agreement, dated as of December 31, 1994, as
amended, with Milhous Corporation, a California corporation, and certain
of its affiliates (collectively the "Buyer"), Perry Printing Corporation
("Perry") and NorthStar Print Group, Inc. ("NorthStar"), wholly-owned
subsidiaries of Journal Communications, Inc. (the "Company"), sold
substantially all of the assets used in the business of Perry effective
as of April 27, 1995. Perry was a heatset offset web printer of long run
catalogs and publications. The assets sold by Perry consisted of accounts
receivable, inventories, and fixtures and equipment. NorthStar sold to
Buyer the plants and certain other real estate used in the business of
Perry. NorthStar also leased the headquarters building to Buyer under a
short-term lease and leased two warehouse facilities to Buyer under leases
that require the purchase and sale upon satisfaction of certain
contingencies by NorthStar. The aggregate sale price for the assets sold
by Perry and NorthStar was approximately $92,440,000 plus the assumption
of trade and other liabilities by Buyer. Payment of the sale price was
made by issuance to the Company of 115,000 shares of the Buyer's preferred
stock with an agreed value of $11,500,000 and the payment of the balance
in cash. The sale price for the additional warehouse facilities upon the
satisfaction of the contingencies would be $560,000. The Buyer also paid
Perry and the Company an additional $2,000,000 as consideration for a
covenant not to compete. The Asset Purchase Agreement and aggregate sale
price was negotiated at arm's length between the Buyer and the Company.
The description in this Form 8-K of the terms and provisions of the Asset
Purchase Agreement is a summary only and is qualified in its entirety by
reference to the text thereof, which is incorporated by reference herein.
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Journal Communications, Inc.
Item 7. Financial Statements and Exhibits
b. Pro Forma Financial Statements
Journal Communications, Inc.
Unaudited Pro Forma Consolidated Financial Statements
Basis of Presentation
The pro forma consolidated condensed statements of income for the year
ended December 31, 1994, and for the three accounting periods ended March
26, 1995, present the operating results of Journal Communications, Inc.
(the "Company"), excluding the operations of Perry Printing Corporation,
as if such operations had been disposed of at the beginning of the
respective periods. The pro forma consolidated condensed balance sheet
has been prepared assuming the Perry Printing Corporation disposition took
place as of March 26, 1995.
The unaudited pro forma consolidated statements of earnings, balance sheet
and notes thereto should be read in conjunction with the consolidated
financial statements and notes thereto of the Company, incorporated by
reference from the Company's Annual Report on Form 10-K for the audited
fiscal year ended December 31, 1994, and the Company's Quarterly Report on
Form 10-Q for the unaudited fiscal quarter ended March 26, 1995.
The unaudited pro forma information is not necessarily indicative of the
consolidated results of operations or consolidated financial position that
would have resulted had the Perry Printing Corporation disposition
occurred as described above, nor is it necessarily indicative of the
results of operations of future periods or future consolidated financial
position.
c. Exhibits.
99.1* Asset Purchase Agreement, dated as of December 31, 1994.
99.2* First Amendment to Asset Purchase Agreement, dated as of
April 28, 1995.
99.3* Memorandum of Understanding dated as of April 28, 1995.
99.4* Second Amendment to Asset Purchase Agreement, dated as of
September 15, 1995.
* The schedules and exhibits to the Asset Purchase Agreement are not
being filed herewith because the Company believes that the information
contained in such schedules and exhibits should not be considered material
to an investment decision in the Company or such information is otherwise
adequately disclosed in this Form 8-K. The Asset Purchase Agreement
identifies internally the contents of all omitted schedules and exhibits.
The Company agrees to furnish supplementally (but not to "file") a copy of
any such schedule or exhibit to the Commission upon request.
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Journal Communications, Inc.
Pro Forma Consolidated Condensed Balance Sheets
March 26, 1995
(Dollars in thousands)
(Unaudited)
Pro Forma
Originally Adjustments
ASSETS Reported Note A ProForma
Current Assets:
Cash $ 12,087 $ 93,819 $105,906
Short-term investments 25,304 -- 25,304
Receivables 101,879 (19,289) 82,590
Inventories:
Paper and supplies 22,465 (6,018) 16,447
Work in process 9,025 (3,983) 5,042
Finished goods 6,024 -- 6,024
--------- -------- -------
37,514 (10,001) 27,513
Prepaid expenses 10,088 (408) 9,680
--------- -------- ------
Total current assets 186,872 64,121 250,993
Property and equipment, less
accumulated depreciation of
$266,374, $76,097 and $190,277 216,567 (67,916) 148,651
Deferred charges and other assets 50,927 11,500 62,427
Goodwill 30,310 -- 30,310
-------- ------- -------
Total Assets $484,676 $ 7,705 $492,381
======== ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 38,098 $(10,052) $ 28,046
Taxes on income 4,210 9,710 13,920
Accrued liabilities 55,438 (6,186) 49,252
Current portion of long-term
obligations 2,429 --- 2,429
-------- ------- ------
Total current liabilities 100,175 (6,528) 93,647
Long-term obligations 2,680 --- 2,680
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 377,118 14,233 391,351
Treasury stock, at cost (9,522) --- (9,522)
-------- ------ -------
Total stockholders' equity 371,196 14,233 385,429
-------- ------ -------
Total liabilities and
stockholders' equity $484,676 $ 7,705 $492,381
======== ======== ========
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Journal Communications, Inc.
Pro Forma Consolidated Condensed Statement of Income
Three Periods Ended March 26, 1995
(Dollars in thousands except share and per share amounts)
(Unaudited)
Pro Forma
Originally Adjustments
ASSETS Reported Note B ProForma
Net Sales $158,681 $(32,460) $126,221
Operating costs and expenses:
Cost of sales 101,092 (27,259) 73,833
Selling/administrative expenses 41,837 ( 2,542) 39,295
-------- -------- -------
Operating Earnings 15,752 ( 2,659) 13,093
Dividend and interest income 505 1,554 2,059
Interest expense - Note C (29) -- (29)
Earnings before income taxes 16,228 ( 1,105) 15,123
Provision for income taxes -
Note C and D 6,510 ( 453) 6,057
------- ------ ------
Net income $ 9,718 $ (652) $ 9,066
======= ====== =======
Weighted average number of
common shares outstanding 14,111,594 -- 14,111,594
========== ===== ==========
Earnings per share $0.69 $0.64
===== =====
Cash dividend per share $0.45 $0.45
===== =====
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Journal Communications, Inc.
Pro Forma Consolidated Condensed Statement of Income
Year Ended December 31, 1994
(Dollars in thousands except share and per share amounts)
(Unaudited)
Pro Forma
Originally Adjustment
Reported Note B Pro Forma
Net Sales $634,548 $(116,967) $ 517,581
Operating costs and expenses:
Cost of sales 392,726 (103,343) 289,383
Selling/administrative expenses 171,050 (9,128) 161,922
------- ------- -------
Operating Earnings 70,772 (4,496) 66,276
Dividend and interest net - Note C 1,718 5,870 7,588
Gain(loss) on sale of assets 777 (891) (114)
----- ----- -----
2,495 4,979 7,474
Earnings before income taxes 73,267 483 73,750
Provision for income taxes -
Note C and D 29,400 162 29,562
-------- ------ --------
Net Income $ 43,867 $ 321 $ 44,188
======== ====== ========
Weighted average number of common
shares outstanding 14,034,518 -- 14,034,518
========== ====== ==========
Earnings per share $3.13 $3.15
===== =====
Cash dividend per share $1.90 $1.90
===== =====
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Journal Communications, Inc.
Notes to Unaudited Pro Forma
Consolidated Financial Statements
Note A. Pursuant to an Asset Purchase Agreement (the "Agreement"),
dated December 31, 1994, as amended, the Company completed effective as of
April 27, 1995 the sale of the assets of its subsidiary, Perry Printing
Corporation ("Perry"), and certain real estate used in Perry's business
owned by its subsidiary, NorthStar Print Group, Inc. Pursuant to the
Agreement, the Company received approximately $82,940,000 in cash proceeds
(including consideration for a covenant not to compete) and preferred
stock of the Buyer with an agreed value of $11,500,000, resulting in a
gain on sale after tax effect of $14,565,000. The Agreement requires
certain purchase price calculations to be finalized by approximately
December 31, 1995.
The pro forma adjustment to cash and cash equivalents reflects the
assumption the proceeds and dividend and interest income earned would have
been maintained as cash and cash equivalents.
The pro forma adjustment to the income tax liability reflects the tax
liability relating to the gain on sale using 40.2% effective rate.
Note B. The pro forma adjustment removes the direct revenues and
direct operating expenses related to Perry Printing Corporation's
operations.
Note C. The pro forma adjustment to dividend and interest income
results from the assumed investment of the cash sales proceeds in various
short-term investments with average yields of 5.5% and cash dividends on
$11,500,000 of the Buyer's preferred stock at a yield of 11.8%.
Note D. The pro forma adjustment of income taxes reflects the income
tax effect of the above adjustments assuming a 40.2% effective rate.
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JOURNAL COMMUNICATIONS, INC.
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 November 7, 1995 /s/ Robert A. Kahlor
Robert A. Kahlor, Chairman of the Board
Date November 7, 1995 /s/ Peter P. Jarzembinski
Peter P. Jarzembinski, Senior Vice President
of Finance
