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 March 24, 1996
(3 Accounting Periods)
Commission file number 0-7831
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)
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 - March 24, 1996
13,476,678
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
Quarter Ended March 24, 1996 Commission file number 0-7831
(3 Accounting Periods)
INDEX
Page No.
Part I. Financial Information
Consolidated Condensed Balance Sheets
March 24, 1996 and December 31, 1995 2
Condensed Consolidated Statements of Income
Three Periods Ended March 24, 1996
and March 26, 1995 3
Consolidated Condensed Statements of Cash Flows
Three Periods Ended March 24, 1996
and March 26, 1995 4
Notes to Consolidated Condensed
Financial Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6-7
Part II. Other Information 8
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended March 24, 1996 Commission file number 0-7831
(3 Accounting Periods)
Consolidated Condensed Balance Sheets
March 24, 1996 and December 31, 1995
(Dollars in thousands)
ASSETS 3/24/96 12/31/95
(Unaudited)
Current Assets:
Cash $ 10,018 $ 10,133
Short-term investments 37,208 61,362
Receivables 87,835 94,671
Inventories:
Paper and supplies 19,474 19,143
Work in process 4,879 4,559
Finished goods 8,478 7,590
-------- --------
32,831 31,292
Prepaid expenses 9,199 9,212
Prepaid income taxes 1,601 4,198
Deferred Income Taxes 4,706 4,706
-------- --------
Total current assets 183,398 215,574
Property and equipment, less accumulated
depreciation of $212,436 and $206,464 160,680 160,433
Deferred charges and other assets 72,898 65,473
Goodwill 39,090 33,259
-------- --------
Total Assets $456,066 $474,739
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 29,059 $ 33,592
Accrued liabilities 57,918 63,977
Current portion of long-term obligations 6,466 6,889
-------- --------
Total current liabilities 93,443 104,458
Long-term obligations 2,242 2,762
Other liabilities and deferred credits 1,189 1,189
Stockholders' equity:
Common stock - Authorized and issued
14,400,000 ($0.25 par value) 3,600 3,600
Retained earnings 389,203 390,279
Treasury stock, at cost (33,611) (27,549)
-------- --------
Total stockholders' equity 359,192 366,330
-------- --------
Total liabilities and
stockholders' equity $456,066 $474,739
======== ========
Note: The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date but does not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended March 24, 1996 Commission file number 0-7831
(3 Accounting Periods)
Consolidated Condensed Statement of Income
(Dollars in thousands except share and per share amounts)
Three Periods Ended
03/24/96 03/26/95
(Unaudited) (Unaudited)
(Note 3)
Net Sales $ 131,689 $ 126,221
--------- ---------
Operating costs and expenses:
Cost of sales 79,064 72,885
Selling/administrative expenses 42,712 40,435
-------- ---------
121,776 113,320
-------- ---------
Operating Earnings 9,913 12,901
Dividend and interest income 1,054 542
Interest expense (12) (3)
-------- ---------
Earnings before income taxes 10,955 13,440
Provision for income taxes 4,448 5,508
--------- ---------
Income from Continuing Operations 6,507 7,932
Discontinued Operations-Note 3:
Income from discontinued operations
net of applicable income tax expense
of $0 and $1,002 -- 1,786
--------- --------
Net Income $ 6,507 $ 9,718
========== ========
Weighted average number of common
shares outstanding 13,588,291 14,111,594
========== ==========
Earnings per share:
Continuing Operations .48 .56
Discontinued Operations -- .13
--------- ---------
$ .48 $ .69
========= =========
Cash dividend per share $ 0.55 $ 0.45
========= =========
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended March 24, 1996 Commission file number 0-7831
(3 Accounting Periods)
Condensed Consolidated Statement of Cash Flows
(Dollars in thousands)
Three Periods Ended
03/24/96 03/26/95
(Unaudited) (Unaudited)
(Note 3)
Cash flow from operating activities:
Earnings from continuing operations $ 6,507 $ 7,932
Adjustments to net earnings for
non-cash items:
Depreciation and amortization 8,012 7,436
Change in:
Accounts receivable 6,836 551
Inventories (1,626) (4,230)
Accounts payable (4,533) (130)
Other current assets and liabilities (4,081) 5,392
------- -------
Net cash provided by operating activities $11,115 $ 16,951
------- -------
Cash flow from investing activities:
Property and equipment expenditures (5,047) (15,613)
Assets of business acquired (16,154) (12,780)
Net decrease in short-term
investments 24,154 13,660
------- -------
Net cash provided by investing activities 2,953 (14,733)
------- -------
Net cash provided by discontinued operations-
Note 3 - 4,097
Cash flow from financing activities:
Purchase of treasury stock (6,327) --
Reduction in long-term obligations ( 854) (1,293)
Sale and distribution of treasury stock 272 306
Cash dividends (7,274) (6,352)
------- -------
Net cash used for financing activities (14,183) (7,339)
------- -------
Net increase (decrease) in cash ( 115) (1,024)
Cash:
Beginning of year 10,133 13,111
------- -------
End of year $ 10,018 $12,087
======= =======
See notes to condensed consolidated financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended March 24, 1996 Commission file number 0-7831
(3 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 24, 1996, are not necessarily indicative of the results that
may be expected for the year ended December 31, 1996. 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, 1995.
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.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended March 24, 1996 Commission file number 0-7831
(3 Accounting Periods)
Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
In looking at the three accounting periods that make up the first
quarter, it is clear that the first and second periods were the weakest.
We started to see positive results in period three, when our net earnings
were $3.2 million, just 4% below a year ago and about 87% of the budgeted
amount.
Our consolidated revenue from continuing operations through three
periods totaled $131.7 million, up 4.3% from last year. However, net
earnings were $6.5 million, down one-third from a year ago.
The option price as of March 24 was $36.10, or 48 cents more than
a year ago. During the first quarter of 1995, we had three option price
increases that totaled 67 cents. This year, the three increases totaled
41 cents. Our March dividend this year was 55 cents, compared with a 45-
cent dividend in March of 1995.
Journal Sentinel Inc. had first quarter revenue of $45.4 million,
down 7.6% from last year. One less Sunday paper in the same time period
this year was a major factor. Operating earnings were $4.5 million, down
47%, due to the revenue shortfall and the increasing cost of newsprint,
36% higher in the first quarter of 1996 than in 1995. There will be a
strong focus on expense reductions throughout the remainder of the year.
Several of the major newspaper companies with publicly traded
stock also are reporting sluggish first quarter earnings. According to a
recent report in The Wall Street Journal, publishers have been "slammed
by the potent combination of higher newsprint price and feeble advertising
revenue." The Tribune Co., Central Newspapers Inc. (Phoenix,
Indianapolis), Knight-Ridder Inc., McClatchy Newspapers Inc., of
Sacramento, Calif., all are seeing lower profits.
At the Journal Broadcast Group Inc., revenue was up 24% to $18.2
million. Included in that total is $823,000 from the three radio stations
acquired in Tucson, Ariz. WTMJ-TV in Milwaukee was up 20%, KTNV-TV in Las
Vegas, Nev., up 23% and WKTI-FM in Milwaukee up 26%.
Operating earnings for Journal Broadcast Group were $4.9 million,
up 57%, including WTMJ-TV in Milwaukee, up 73%; WKTI-FM in Milwaukee, up
67%; KTNV-TV in Las Vegas, up 38%, and WSYM-TV in Lansing, Mich., up 25%.
The Tucson stations added $154,000 in operating earnings.
Our three television stations will continue to benefit from
election advertising, and NBC broadcasting the Olympics is a plus for NBC-
affiliate WTMJ-TV.
NorthStar Print Group Inc. had revenue of $11.0 million, down
13.7%, due to a lack of volume at Label Products & Design in Green Bay and
at the Norway/Watertown operations. Operating earnings were $286,000, up
67%. The Milwaukee plant contributed $254,000 of the earnings, contrasted
with a first quarter last year of $6,000. The Norway/Watertown operation
should perform significantly better as we begin to produce the new label
business for Brahma in Brazil.
At MRC Telecommunications Inc., revenue was flat at $9.5 million,
while operating earnings were down 16.9% to $2.2 million. With a new
marketing plan and key management additions, we expect NorLight sales to
significantly improve this year.
At ADD Inc. and Trumbull Printing Inc., revenue was up 21% to
$20.5 million, while operating earnings were flat at $2.3 million due to
the same newsprint price increases that affected Journal Sentinel. ADD
Inc. also encountered increased competition in Ohio and Vermont.
Nevertheless, we continue to be optimistic that ADD Inc. will have another
record year.
IPC Communication Services had a loss in the first two periods,
but showed a good profit in the third period. For three periods, revenue
of $26.1 million was up 19%, but operating earnings fell 81% to $151,000.
New general managers have been hired in California and Europe. They are
key to managing the tremendous growth we have experienced in those areas.
With volume continuing to rise, earnings should improve once the
operational problems have been resolved.
PrimeNet Marketing Services had three straight periods of
operating profits to start off 1996. Year-to-date, earnings were
$138,000, compared with a loss last year of $556,000, as efforts to
reorganize and refocus the business have taken hold.
Working capital remains strong at $90 million, while total assets
are $456 million. Stockholders equity is $359.2 million.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended March 24, 1996 Commission file number 0-7831
(3 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 three accounting periods ended March 24, 1996.
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 May 6, 1996 /s/ Robert A. Kahlor
Robert A. Kahlor, Chairman of the
Board
Date May 6, 1996 /s/Paul M. Bonaiuto
Paul M. Bonaiuto, Senior Vice
President and Chief Financial Officer
<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
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF JOURNAL COMMUNICATIONS, INC.
AS OF AND FOR THE THREE MONTHS ENDED MARCH 24, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-24-1996
<CASH> 10,018
<SECURITIES> 37,208
<RECEIVABLES> 87,835
<ALLOWANCES> 0
<INVENTORY> 32,831
<CURRENT-ASSETS> 183,398
<PP&E> 373,116
<DEPRECIATION> 212,436
<TOTAL-ASSETS> 456,066
<CURRENT-LIABILITIES> 93,443
<BONDS> 2,242
0
0
<COMMON> 3,600
<OTHER-SE> 355,592
<TOTAL-LIABILITY-AND-EQUITY> 456,066
<SALES> 131,689
<TOTAL-REVENUES> 131,689
<CGS> 79,064
<TOTAL-COSTS> 121,776
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12
<INCOME-PRETAX> 10,955
<INCOME-TAX> 4,448
<INCOME-CONTINUING> 6,507
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,507
<EPS-PRIMARY> .48
<EPS-DILUTED> .48
</TABLE>
