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,
1995.
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)
Registrant's telephone number, including area code:
(414) 224-2374
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of March 13, 1996:
Class Outstanding at March 13, 1996
Common stock, par value $0.25 13,476,678
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 ]
State the aggregate market value of the voting stock held by non-
affiliates of the Registrant: Not applicable.
Portions of the Proxy Statement for the Registrant's Annual Meeting of
Shareholders, to be held June 4, 1996, are incorporated by reference in
Part III.
<PAGE>
PART I
ITEM 1. BUSINESS
The Registrant is a diversified communications and media company. Its
1995 revenues, broken down by business segments, were: publishing -
44.5%; printing - 34.2%; broadcast - 12.6%; telecommunications - 6.7%, and
direct marketing - 2.0%. Material developments in the Registrant's
business in 1995 included: the launching of a new Milwaukee newspaper
from the merger of its two daily newspapers; the acquisition of its first
radio duopoly (in Omaha) and reaching an agreement to acquire a second
multi-station radio operation (in Tucson); extending its label printing
market into Latin America; the divestiture of Perry Printing Corporation,
a long-run printer of magazines and catalogs; the launching of a major
expansion of its fiber optic network in northern Wisconsin; the
acquisition of a direct mail business; the adverse impact on earnings of a
forty percent (40%) increase in the price of newsprint, and the final
payment that settled a 16-year patent infringement lawsuit. 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."
The following indicates the percent of consolidated revenues derived from
the activities noted for the past three (3) years:
Source 1995 1994 1993
Publications 44.5% 42.2% 44.1%
Advertising 35.3 32.7 33.6
Circulation 9.2 9.5 10.5
Broadcast 12.6 10.0 9.8
Commercial Printing 34.2 40.9 40.4
Telecommunications 6.7 5.7 5.7
Direct Marketing 2.0 1.2 0.0
Publishing
Journal Sentinel Inc., a wholly-owned subsidiary of the Registrant,
publishes the major daily newspaper in the Milwaukee, Wisconsin, market.
Prior to April 2, 1995, it had published the evening Milwaukee Journal
(The Journal) since 1882, the Sunday edition of The Journal (Sunday
Journal) since 1911, and the morning Milwaukee Sentinel (the Sentinel)
since it was acquired in 1962. On April 2, 1995, both daily newspapers
were merged and became one morning newspaper, the Milwaukee Journal
Sentinel. Average paid circulation for the twelve months ended March 31,
1995, for the last five years, as audited by the Audit Bureau of
Circulation, was:
1995 1994 1993 1992 1991
Journal 211,801 228,454 238,351 240,566 260,480
Sentinel 173,895 173,019 171,271 166,085 172,772
Sunday Journal 486,422 492,425 490,077 490,361 497,777
Since the newspapers were combined, average daily paid circulation for the
six months ended September 30, 1995, as provided to the Audit Bureau of
Circulations, was 309,137.
Advertising volume in column inches and units for the Company's Milwaukee
newspapers for the last five calendar years was:
(in thousands)
1995 1994 1993 1992 1991
Column Inches
Full Run 2,289.7 2,666.0 2,657.6 2,619.0 2,526.8
Part Run 257.1 213.4 260.9 181.3 195.5
Units
Preprint 2.8 2.4 1.9 1.6 1.5
There are 101 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 101 publications, 39 are paid
subscription and 62 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 is
circulated in portions of Waukesha County. In addition, editions of USA
Today, Chicago Tribune, Chicago Sun Times, Madison Capitol-Times,
Wisconsin State Journal and New York Times are sold in the Milwaukee
market. Journal Sentinel Inc.'s newspaper also competes for advertising
revenue or support with five (5) network-affiliated commercial television
stations, five (5) independent television stations (two (2) of which are
low power television stations), two public television stations and 34 AM
and FM radio stations located in the four-county market, several cable
television companies and several direct mail services. One network-
affiliated television station and two radio stations in the Milwaukee
market are owned by a subsidiary of the Registrant.
The Milwaukee Journal Sentinel maintains news bureau offices in Madison,
Wisconsin, and Washington, D.C. It also has suburban bureaus in Waukesha
and Cedarburg and correspondents based in West Bend and Stevens Point,
Wisconsin. The Journal Sentinel is a member of the Associated Press and
subscribes to these wire services: the Washington Post-Los Angeles Times
News Service, the New York Times News Service, the Knight-Ridder News
Service and the feature portion of the Gannett News Service. The Journal
Sentinel is also a contributing member of the Scripps Howard News
Service.
The April 1995 merger resulted in a work-force reduction. Severance,
early retirement payments and other non-recurring costs associated with
the launch of the Milwaukee Journal Sentinel resulted in a pre-tax charge
of $17.5 million.
During 1995, while the cost of newsprint increased by 40%, newsprint
consumption at the Milwaukee newspapers was higher than the prior year.
Newsprint is purchased from four Canadian and two American suppliers.
Supplies for 1996 are considered sufficient and newsprint costs are
expected to stabilize.
The Registrant also publishes, through its ADD, Inc. subsidiary, eight (8)
weekly newspapers in southwestern Connecticut; six (6) weekly newspapers
and one (1) monthly controlled-circulation business publication in
Wisconsin; three (3) weekly newspapers and one (1) daily newspaper in
Florida; forty-six (46) shopper publications, with twenty-two (22) in
Wisconsin, fifteen (15) in Ohio, two (2) in Florida, two (2) in
Pennsylvania, two (2) in Vermont, one (1) in Georgia, one (1) in Louisiana
and one (1) in New York; three (3) paid auto publications, with two (2)
in Louisiana and one (1) in Wisconsin; two (2) paid boating publications,
with one in Louisiana and one in Florida; three (3) free auto publications
in Ohio; two (2) free monthly Health & Fitness publications, with one (1)
in Pennsylvania and one (1) in Louisiana; six (6) monthly real estate
publications and two (2) senior citizens' publications in Ohio published
six (6) times per year, and one (1) nationwide electronic classified
advertising database.
Printing
Imperial Printing Company, a wholly-owned subsidiary acquired on October
6, 1992, specializes in the production of short to medium runs (1,000 to
50,000 copies) of medical, legal and technical journals for various trade
associations, documentation manuals for hardware and software
manufacturers and the duplication of CD-ROM's, floppy disks and computer
tapes. Imperial is based in St. Joseph, Michigan, and has additional
operations in Fremont, San Jose and Irvine, California and Roncq, France.
No supply restrictions are anticipated in 1996 for the raw materials
Imperial utilizes.
In June 1994, the heat-set web offset operations of Perry Printing
Corporation ("Old Perry"), a wholly-owned subsidiary of the Registrant,
were spun off into a new subsidiary corporation. Perry Printing
Corporation changed its name to NorthStar Print Group, Inc., and the name
of the new corporation, a subsidiary of NorthStar Print Group, Inc., was
changed to Perry Printing Corporation ("New Perry"). The assets and
business of New Perry were sold in May 1995 for $95 million plus the
assumption of trade and other liabilities. Payment was made by the
issuance of 115,000 shares of the buyer's preferred stock with a value of
$11.5 million and the delivery of the balance in cash.
NorthStar Print Group, Inc., a wholly-owned subsidiary of the Registrant,
the continuing portion of Old Perry, is headquartered in Brown Deer,
Wisconsin, and has manufacturing operations in Brown Deer, Green Bay and
Watertown, Wisconsin, and Norway, Michigan. It employs a wide array of
printing technologies in the various markets it serves. These include
sheed-fed offset, rotogravure and flexographic processes that are used to
print point-of-purchase materials, labels for consumer goods and industry
manufacturers (including in-mold labels), and out-of-home media.
NorthStar Print Group, Inc., is one of the nation's largest producers of
beer bottle labels and completed an arrangement in 1995 to extend its
label market to the largest beer brewer in Brazil. Its supply of raw
materials is considered adequate. NorthStar remains the owner of the
properties in Waterloo, Wisconsin, that are being leased to New Perry.
Trumbull Printing, Inc., though a wholly-owned subsidiary of the
Registrant, is managed by a subsidiary of ADD, Inc. that is co-located in
Trumbull, Connecticut. Trumbull Printing, Inc., is a small web offset
printer of newspapers and newspaper inserts. Its principal raw materials,
paper and ink, are expected to be in sufficient supply at stable prices in
1996.
Broadcasting
Journal Broadcast Group, Inc., a wholly-owned subsidiary of the Registrant
(formerly known as WTMJ, Inc.), operates three television stations and
eleven (11) radio stations in six (6) states. All operate under licenses
from the Federal Communications Commission.
In Milwaukee, Journal Broadcast Group, 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 Journal Broadcast Group, Inc., are independent of
the Registrant's newspaper operations.
Registrant's three (3) Milwaukee broadcast operations, WTMJ-TV, WTMJ-AM
and WKTI-FM, consistently rank high in audience rating surveys.
Competition for advertising revenue in the ten-county area of dominant
influence ("ADI") includes nine (9) other commercial television stations
(including two (2) low power television stations), two (2) noncommercial
stations, thirty-four (34) other radio stations, several cable television
companies, seven (7) daily newspapers (including one owned by Registrant),
and numerous weekly newspapers.
Journal Broadcast Group, Inc. also operates: KTNV-TV, Las Vegas, Nevada,
an ABC affiliate; WSYM-TV, Lansing, Michigan, a Fox affiliate; two radio
stations in Wausau, Wisconsin, WSAU-AM and WIFC-FM, both ABC radio
affiliates; KQRC-FM, Kansas City/Leavenworth, Kansas, affiliated with The
Source/Westwood One network; KEZO-AM, KEZO-FM and KKCD-FM in Omaha,
Nebraska where KEZO-AM and KKCD-FM are affiliated with the CBS Spectrum
Network, and KMXZ-FM, KKND-AM and KKHG-FM in Tucson, Arizona. WTMJ-TV is
affiliated with the NBC network. WTMJ-AM is affiliated with the CBS Radio
network, and WKTI-FM is affiliated with the ABC radio network.
Telecommunications
MRC Telecommunications, Inc. (MRC), a wholly-owned subsidiary, provides
telecommunications services. Its services include terrestrial and
satellite transmission of broadcast-quality video signals. In addition,
MRC offers state-of-the-art, bulk, network transmission, including SONET
and bandwidth-on-demand, to other common carriers. NorLight, Inc., is a
wholly-owned subsidiary of MRC. NorLight, Inc., MRC's business-to-
business service, markets advanced data circuits, frame relay, and
switched voice services including domestic, international and calling card
services, to medium and large businesses in Wisconsin, Michigan, Minnesota
and Illinois where NorLight is authorized by the public service
commissions to offer services. NorLight has two wholly-owned subsidiaries,
Telephone Associates Long Distance, Inc. (TALD) and Bemidji Long Distance,
Inc. (BLD), which provide switched voice services to residential and small
business customers in Minnesota, Michigan and Wisconsin.
MRC Telecommunications, Inc., is a co-founding member of UniSPAN, a
national and international consortium of other regional carriers that
provide frame relay services.
Direct Marketing
PrimeNet Marketing, Inc., a wholly-owned subsidiary, was acquired in
January 1994. Located in St. Paul, Minnesota, it is engaged in the
business of providing personalized database marketing services to
merchandisers and manufacturers, which services include the design and
development of database systems; the creation, maintenance and enhancement
of data files; the development of personalized communications for the
purpose of executing specific promotions; mail processing; receiving
orders and/or requests through its 1-800 Response Center, and fulfilling
such orders and requests.
Mega Direct, Inc., was acquired on June 22, 1995, by ADD, Inc., a wholly-
owned subsidiary of the Registrant. Mega Direct is a marketing firm that
provides complete direct mail services, including design, printing and
distribution. It is one of the largest direct mail firms in the country
serving the automotive industry.
Compliance with Environmental Laws
No operation of the Registrant has suffered material adverse effects from
having to bring its operations into compliance with environmental laws.
Methods of Distribution
The Registrant's newspapers are distributed through networks of carriers,
most of whom are independent contractors. Advertising for Registrant's
newspapers and broadcast stations is generally sold by employees, with
some national advertising obtained by agents. Sales for the Registrant's
commercial printing, telecommunications and direct marketing operations
are generally obtained by employees and a limited number of agents.
Employees
The Registrant and its subsidiaries, as of December 31, 1995, had
approximately 4,510 full-time and 2,040 part-time employees.
Financial Information About Industry Segments
Financial information about Registrant's industry segments is presented in
Note 10 to the Consolidated Financial Statements appearing on pages 27 and
28 of 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
Centers Milwaukee, WI Leased 166,100
ADD, Inc.
(Publishing)
Office/Plant WI, OH, GA, FL Owned or Leased 252,500
VT, NY, PA, LA
Hometown Publications, Inc.
(Publishing)
Office Trumbull, CT Leased 5,600
Auto Mart Publishing, Inc.
(Publishing)
Office Dayton, Columbus Leased 4,300
& Cincinnati, OH
Mega Direct, Inc.
(Direct Marketing)
Office Clearwater, FL Leased 39,700
Journal Broadcast Group, 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
KEZO-AM/FM & KKCD-FM
Office and Studios Omaha, NE Leased 12,200
NorthStar Print Group, Inc.
(Commercial Printing)
Office/Plant Brown Deer, WI Owned 127,300
Office/Plant Norway, MI Owned 101,700
Office/Plant Watertown, WI Owned 201,700
Label Products & Design Inc.
(Commercial Printing)
Office and Plant Green Bay, WI Owned 39,600
PPC Liquidations, Inc.
(Real Estate Holding)
Office & Warehouses Waterloo, WI Owned 120,000
Trumbull Printing, Inc.
(Commercial Printing)
Office/Plant Trumbull, CT Owned 51,600
Imperial Printing Company
(Commercial Printing)
Office/Plant/
Warehouse St. Joseph, MI Leased 318,500
Office/Plant Fremont, CA Leased 98,700
Office/Plant Irvine, CA Leased 49,000
Office/Plant/
Warehouse San Jose, CA Leased 226,000
Office/Plant San Jose, CA Leased 83,000
MRC Telecommunications,
Inc.
(Fiber optic & Rubicon, WI Owned 3,800
microwave Skokie, IL Owned 6,100
transmission Afton, WI Owned 3,800
services) 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 1,300
Telephone Associates
Long Distance, Inc. &
Bemidji Long Duluth, MN Leased 5,200
Distance, Inc. Bemidji, MN
(Long distance
telecommunications service)
Nordoc Software Services, S.A.
(Commercial Printing)
Office/Plant Roncq, France Leased 80,700
PrimeNet Marketing, Inc.
(Data Base
Management) Mendota Heights,
Office/Plant Minnesota Leased 87,200
ITEM 3. LEGAL PROCEEDINGS
The Company paid damages of $18.6 million in 1991 and $5.7 million in
February 1996 in settlement of a patent infringement lawsuit. Otherwise,
the Company is involved in various claims and lawsuits incidental to its
business, which, in the opinion of management, will not have a material
effect in the aggregate on the Company's financial position or 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 25, 1996, 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 4, 1996, are:
Name Age Office Held Since
Robert A. Kahlor 62 Chairman of the Board/CEO September 4, 1992
Steven J. Smith 45 President September 4, 1992
Thomas M. Karavakis 65 Senior Vice President June 2, 1987
Douglas G. Kiel 47 Senior Vice President June 2, 1992
Keith K. Spore 53 Senior Vice President September 6, 1995
Paul M. Bonaiuto 45 Senior Vice President March 5, 1996
Robert M. Dye 48 Vice President June 5, 1990
Gregory H. Forbes 46 Vice President June 8, 1993
Stephen O. Huhta 40 Vice President June 8, 1993
Ronald G. Kurtis 48 Vice President June 8, 1993
James J. Ditter 34 Vice President September 6, 1995
William T. Lutzen 34 Vice President June 7, 1994
Daniel L. Harmsen 40 Vice President March 5, 1996
Paul E. Kritzer 53 Vice President June 5, 1990
& Secretary September 1, 1992
Christine A.
Farnsworth 47 Assistant Secretary June 8, 1993
All of the executive officers of the Registrant except Messrs. Forbes,
Bonaiuto and Ditter have been employed by the Company in key management
positions for more than five (5) years. Mr. Forbes joined the Company in
October 1992 when Imperial Printing Company, of which he was president and
owner, was acquired by the Registrant. Mr. Bonaiuto has been Chief
Financial Officer of the Registrant since January 1996 and was elected a
Senior Vice President in March 1996. Previously Mr. Bonaiuto had been
President of NorthStar Print Group, Inc., a subsidiary of the Registrant,
from June 1994 to January 1996; Senior Vice President and Chief Financial
Officer of Perry Printing Corporation, then a subsidiary of the
Registrant, from July 1992 to June 1994, and executive vice president of
The Peterson Group, Wilmington, Delaware, a private equity investment
firm, for the remainder of the past five-year period. Mr. Ditter was
elected President of MRC Telecommunications, Inc., a subsidiary of the
Registrant, in September 1995 after serving as that company's senior vice
president and chief financial officer since August 1992. Prior to that,
Mr. Ditter had been the controller of Peck Foods Corporation, Milwaukee.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK
AND RELATED STOCKHOLDER MATTERS
There is no established public trading market for the Registrant's common
stock. Units representing beneficial interests in the Registrant's common
stock can be purchased only by full-time employees with ninety (90) days
service and part-timers with two consecutive years of service of one
thousand (1,000) hours each year. As of March 13, 1996, the Journal
Employes' Stock Trust (the "Trust") owned of record 12,960,000 of the
issued common stock shares or 90% of the issued common stock of the
Registrant. The Trust issues units, each representing a beneficial
interest in one share of the Registrant's stock, to eligible employees
("unitholders"). On March 13, 1996, 2,623 unitholders owned 11,195,983
units (representing 83.1% of Registrant's outstanding 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 1,764,017 units
issued by the Trust were, on the above date, held by personal trusts and
employee benefit trusts or by the Company, which are treated as treasury
stock and not voted.
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 through procedures, and at a formula
price, dictated pursuant to the Stock Trust Agreement and only to other
employees designated by President of the Registrant. Whenever a
unitholder ceases to be an employee, for any reason except retirement,
corporate downsizing or divestiture, 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
up to ten (10) years after the first anniversary of their 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 personal
trusts and to charitable, educational or religious trusts. All units held
by such trusts are likewise voted by the Trustees of the Stock Trust. As
of March 13, 1996, retirees, personal trusts, an employee benefit trust,
and other trusts held 5,302,026 units, representing a beneficial interest
in 39.3% of the Registrant's outstanding 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 price and dividend history for the past decade are
presented in the following table:
Employee Stock Ownership Plan
Unit Unit Unit Price Total
Price Price Increase Cash Annual
Year Begin End (Decrease) Dividend Return
1995 - 4th Qtr 35.95 36.24 0.29 0.55 8.3
1995 - 3rd Qtr 36.12 35.95 (0.17) 0.55
1995 - 2nd Qtr 35.62 36.12 0.50 0.55
1995 - 1st Qtr 35.40 35.62 0.22 0.45
1994 - 4th Qtr 34.97 35.40 0.43 0.55 7.7
1994 - 3nd Qtr 34.92 34.97 0.05 0.45
1994 - 2nd Qtr 34.84 34.92 0.08 0.45
1994 - 1st Qtr 34.64 34.84 0.20 0.45
1993 33.60 34.64 1.04 1.80 8.5
1992 32.60 33.60 1.00 1.80 8.6
1991 31.48 32.60 1.12 1.80 9.3
1990 29.66 31.48 1.82 1.70 11.9
1989 26.65 29.66 3.01 1.70 17.7
1988 23.71 26.65 2.94 1.50 18.7
1987 20.94 23.71 2.77 1.38 19.8
1986 18.54 20.94 2.40 1.25 19.7
In addition to the Journal Employees' Stock Trust, there are two (2) other
record holders of stock of the Registrant. The Registrant is not aware of
any recent sales of such stock.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data of the Registrant is presented in the table on
following page.
<TABLE>
<CAPTION>
JOURNAL COMMUNICATIONS
10 YEARS IN REVIEW
1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
EARNINGS AND DIVIDENDS
(in thousands of dollars)
Earnings from continuing
operations before income
taxes (6) $46,231(5) $67,831 $67,498 $62,670 $55,458 $48,992
Net earnings 44,213 43,867 44,204 41,631 40,035 41,113
Earnings for option price 43,149 43,867 44,204 41,631 40,626 49,443
Dividends 29,157 26,699 25,156 25,244 25,358 24,192
Earnings retained 15,057 17,168 19,048 16,387 14,677 16,921
PER SHARE
Net earnings $3.18 $3.13 $3.16 $2.97 $2.84 $2.89
Earnings for option price 3.10 3.13 3.16 2.97 2.88 3.47
Dividends 2.10 1.90 1.80 1.80 1.80 1.70
Book value 26.85 26.04 24.76 23.40 22.11 21.54
Unit option price 36.24 35.40 34.64 33.60 32.60 31.48
NET SALES (6)
(in thousands of dollars)
Publications $267,148 $261,303 $244,529 $238,386 $232,756 $235,853
Broadcast 74,623 63,445 54,851 52,891 52,088 56,456
Printing 202,556 151,853 126,401 68,372 60,161 57,852
Telecommunications 39,977 35,974 32,411 31,256 15,398 12,414
Direct Marketing 11,578 7,799 - - - -
Other - - - - - -
Eliminations (4,050) (2,793) (3,501) (1,814) (1,631) (1,462)
------ ------ ------ ------ ------ ------
Total net sales $591,832 $517,581 $454,691 $389,091 $358,772 $361,113
OPERATING EXPENSES (6)
(in thousands of dollars)
Payroll $169,198 $158,450(4) $137,580(3) $117,815(2) $105,151 $102,463
Materials and component
services 172,381 117,320 99,170 75,685 77,576 80,318
Depreciation and
amortization 34,413 29,779 28,335 25,585 24,301 20,442
Other services 174,461 145,756 123,675 109,721 101,884 103,084
------ ------ ------ ------ ------ ------
Total expenses $550,453 $451,305(4) $388,760(3) $328,806(2) $308,912 $306,307
INVESTED CAPITAL
(in thousands of dollars)
Property and equipment (6) $160,433 $149,687 $135,716 $124,107 $121,665 $83,154
Net working capital 111,116 107,675 100,780 95,774 93,847 128,859
Long-term capital 2,762 2,947 3,609 2,251 1,369 608
Stockholders' equity 366,330 367,429 347,447 328,230 311,772 306,793
Total assets 474,738 461,416 437,429 409,863 389,958 401,371
Percent return on
stockholders' equity 12.0% 12.6% 13.5% 13.4% 13.1% 14.3%
Percent return on total
assets 9.6% 10.0% 10.8% 10.7% 10.0% 11.3%
<CAPTION>
Average Annual
Compound %
1989 1988 1987 1986 Increase
<S> <C> <C> <C> <C> <C>
EARNINGS AND DIVIDENDS
(in thousands of dollars)
Earnings from continuing
operations before income
taxes (6) $69,668 $61,901 $57,048(1) $58,247 -2.53%
Net earnings 54,988 49,633 41,614(1) 38,762 1.47%
Earnings for option price 54,988 51,745 41,944(1) 38,762 1.20%
Dividends 24,374 21,496 19,576 17,783 5.65%
Earnings retained 30,614 28,137 22,038 20,979 -3.62%
PER SHARE
Net earnings $3.83 $3.46 $2.93(1) $2.71 1.79%
Earnings for option price 3.83 3.61 2.95(1) 2.71 1.51%
Dividends 1.70 1.50 1.38 1.25 5.93%
Book value 20.08 18.14 16.27 14.02 7.49%
Unit option price 29.66 26.65 23.71 20.94 6.28%
NET SALES (6)
(in thousands of dollars)
Publications $232,371 $222,209 $200,873 $183,504 4.26%
Broadcast 54,087 52,744 48,339 45,194 5.73%
Printing 55,301 51,427 43,923 45,179 18.14%
Telecommunications 11,429 11,342 11,539 9,598 17.18%
Direct Marketing - - - - N.A.
Other - - 1,986 3,343 N.A.
Eliminations (1,608) (940) (767) (635) N.A.
-------- ------- ------- ------- -----
Total net sales $351,580 $336,782 $305,893 $286,183 8.41%
OPERATING EXPENSES (6)
(in thousands of dollars)
Payroll $98,161 $94,787 $89,029 $83,581 8.15%
Materials and component
services 81,008 79,835 71,183 65,940 11.27%
Depreciation and
amortization 19,536 19,884 14,553 12,631 11.78%
Other services 90,756 84,477 76,931 71,042 10.50%
------ ------- ------- ------- ------
Total expenses $289,461 $278,983 $251,696 $233,194 10.01%
INVESTED CAPITAL
(in thousands of dollars)
Property and equipment (6) $76,746 $74,789 $66,131 $67,730 10.06%
Net working capital 125,841 106,805 97,525 81,448 3.51%
Long-term capital 1,808 2,583 9,072 6,643 N.A.
Stockholders' equity 288,036 260,002 231,446 200,260 6.94%
Total assets 364,860 335,395 307,682 268,902 6.62%
Percent return on
stockholders' equity 21.1% 21.4% 20.8% 21.1%
Percent return on total
assets 16.4% 16.1% 15.5% 15.9%
<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.
2) Includes full year of Norlight and IPC since Oct. 6.
3) Includes full year of IPC, and NOrdoc Software Services since Feb 28.
4) Includes full year of PrimeNet DataSystems.
5) Does not include gain on sale of Perry Printing Corp. of $14,940,942 or $1.07 per share in 1995.
6) Figures have been restated to exclude the discontinued operations of Perry Printing Corp.
</TABLE>
ITEM 7. MANAGEMENT ANALYSIS AND DISCUSSION
Consolidated
Revenue from continuing operations in 1995 was $591.8 million, a 14.3%
increase over 1994 revenue of $517.6 million. Revenue from continuing
operations in 1993 was $454.7 million. In 1995, operating earnings were
$41.4 million, a decrease from 1994 earnings of $66.3 million. The
decrease in operating earnings was a result of the one-time newspaper
merger charges of $17.5 million and the Webcraft lawsuit settlement of
$5.7 million. In 1993, operating earnings were $65.9 million. During
1995, the improving economic conditions and an increase in advertising
market share helped to increase advertising revenue and operating profits
for the broadcast segment. The printing segment experienced growth
through increased revenues in the computer software industry. Operating
results, however, declined in the publications segment due to the 40%
increase in newsprint prices. The direct marketing segment showed a net
loss.
Publications
The publications segment includes daily and weekly newspapers, shoppers
and specialty publications. In 1995, revenue was $267.1 million, up 2.2%
over 1994 and 9.3% better than in 1993. In 1994 and 1993, revenues from
this segment were $261.3 million and $244.5 million, respectively.
Operating earnings in 1995 were $16 million, including newspaper merger
charges of $17.5 million. Without the $17.5 million in merger charges,
operating earnings decreased 23.8% from 1994. Operating earning for 1994
were $44 million, an increase of 9.4% over 1993 operating earnings of
$40.2 million.
Journal Sentinel Inc. is the largest company in the publications segment.
Revenue in 1995 rose by 1.2% to $212.2 million compared with $209.5
million in 1994. In 1995, operating earnings excluding the merger charge
were down 25.7% from the prior year. The decrease in operating earnings
was the result of drastic increases in newsprint cost. Newsprint costs
are expected to stabilize in 1996. Operating earnings in 1994 were up
from 1993 by 14.1%. The increase was the result of increased classified
advertising revenue and lower newsprint cost. Advertising revenue in
1995, 1994 and 1993 was $155.9 million, $149.4 million and $138 million,
respectively. In 1995, classified revenue was up 6.8% over 1994 due to
increased employment lineage and rate increases. Retail advertising
revenue increase by 4.2% from 1994. General advertising revenue decreased
by 8.5%, as a result of decreased volume. Pre-print revenues rose 1.7%
compared with 1994. From 1993 to 1994, classified advertising revenue
increased by 14%. Retail advertising revenue was approximately equal to
the prior year, while general advertising revenue rose by 21% during the
1993-'94 period. In 1995, circulation revenue was $53.1 million, down 6%
from 1994. In 1994, circulation revenue was $56.5 million, while in 1993
it was $55.9 million.
ADD, Inc. is the other operation in the publications segment. Its 1995
revenue was $54.9 million, a 6% increase over 1994 revenue of $51.8
million. In 1993, revenue was $47.8 million. Operating earnings in 1995
showed a slight decrease from the prior year, decreasing 2.5%. This
resulted from the substantial increase in newsprint prices. In 1995,
revenue for the Wisconsin and Ohio operations increased by 11.1% and
17.5%, respectively. During 1995, the Wisconsin operations showed
significant improvement in operating earnings over the previous year while
the Ohio, Louisiana and Pennsylvania operations showed declines.
Broadcast
In 1995, revenue was $74.6 million, an increase of 17.6% over 1994 revenue
of $63.4 million and 35.9% higher than 1993 revenue of $54.9 million.
Operating earnings in 1995 increased 34.6% and 81% over 1994 and 1993,
respectively. The 1995 increase was a result of strong national and local
advertising sales and excellent ratings at all broadcast operations.
In 1995, the company's television stations accounted for 68.8% of the
segment's revenue and 82.9% of its operating earnings. At the Milwaukee,
Las Vegas and Lansing television stations, the operating earnings showed
substantial growth over the prior year.
The company acquired three radio stations in Omaha during 1995. Operating
earnings in 1995 for the Milwaukee and Kansas City radio stations were
ahead of the 1994 operating results. In 1996, the company acquired three
radio stations in Tucson.
Printing
The 1995 revenue for NorthStar Print Group, Inc. was $53.9 million, a 6.7%
decrease from the prior year's revenue of $57.8 million. In 1993, revenue
was $51.8 million. NorthStar increased operating earnings to $0.6 million
from an operating loss of $0.7 million in 1994. In 1995, significant
operating efficiencies were attained at the Norway/Watertown operation.
The Milwaukee and Green Bay operations experienced a decrease in revenue
and operating earnings for 1995.
At Imperial Printing Company, doing business as IPC Software/Publishing
Services ("IPC"), 1995 revenue was $122 million, a 66.2% increase over
1994 revenue of $73.4 million The 1995 operating earnings increased by
116.3% compared with 1994. Increased revenue at the Fremont, California,
operation contributed to the increase in operating earnings. Nordoc
Software Services, located in Roncq, France (near Lille), showed a 97.2%
revenue gain, but incurred an operating loss for the year.
In 1995, revenue for Trumbull Printing Inc. was $14.1 million, a 24.8%
increase compared with 1994 revenue of $11.3 million. Revenue in 1994 was
up 45.2% over 1993 revenue. In 1995, operating earnings increased by
13.7% from the 1994 results.
The printing plants of ADD Inc. had revenue of $12.5 million in 1995, a
34.4% increase over 1994 revenue of $9.3 million and 115.5% over 1993
revenue of $5.8 million. In 1995, operating earnings increased by 4.8%
from 1994.
Telecommunications
In the telecommunications segment, 1995 revenue increased by 11.1% to $40
million. This increase is a result of a substantial increase in the
private line circuits sold and MRC Telecommunications, Inc.'s ("MRC")
entrance into the "switched voice" services market. NorLight, Inc.
purchased the business and substantially all the assets of Telephone
Associates Long Distance, Inc. ("TALD") and Bemidji Long Distance, Inc. in
mid-1994. TALD and Bemidji are "resellers" of long distance services.
Operating earnings at MRC increased by 4.5% in 1995 compared with 1994 and
8.2% compared with 1993.
Direct Marketing
PrimeNet Marketing, Inc., doing business as PrimeNet Data Systems, which
was purchased on January 11, 1994, experienced a decrease in revenue from
$7.8 million in 1994 to $6.9 million in 1995. An operating loss was
incurred in both 1995 and 1994 as the company restructured.
On June 22, 1995, a subsidiary of ADD, Inc. purchased the business and
substantially all the assets of Mega Direct, Inc. Mega Direct specializes
in customized direct marketing services, primarily for the automotive
industry. In 1995, Mega Direct had revenue of $4.7 million and operating
earnings of $1 million.
Newspaper Merger Charges
On April 2, 1995, Journal Sentinel Inc. merged The Milwaukee Journal and
the Milwaukee Sentinel into a morning newspaper called the Milwaukee
Journal Sentinel. The merger of the newspapers resulted in a pretax
charge of $17.5 million. The charge consisted of $11.3 million in
termination benefits for approximately 250 full-time employees and $6.2
million for non-recurring start-up costs of the new newspaper. The 1995
cash outlay of $11.4 million was funded by cash flow from operations and
proceeds from the sale of Perry Printing Corporation.
Other Income and Expenses
Dividends and interest income were $4.8 million, an increase from $1.7
million in 1994. The 1995 increase was a result of the increase in short-
term investments and dividends received from preferred stock. In 1993,
this amount was $1.5 million. The company investments in short-term
securities have increased due to the proceeds from the sale of Perry.
Income Taxes
Income taxes were 39.6% of pretax earnings in 1995, 40.1% in 1994 and
39.2% in 1993. The decrease is a result of a change in the effective
state tax rate. Permanent tax "differences" exist for goodwill
amortization for acquisitions before 1993 and the increase in cash
surrender value of the company's life insurance investment pool.
Earnings from Continuing Operations
Earnings from continuing operations of $27.9 million or $2.01 per share in
1995 were $12.7 million or $0.89 per share less than in 1994. The merger
charges and the Webcraft settlement reduced 1995 earnings per share by
$1.00. Excluding the merger charges and the Webcraft settlement, earnings
per share from continuing operations were $3.01 in 1995. In 1993,
earnings from continuing operations were $41 million or $2.93 per share.
Discontinued Operations
On April 27, 1995, the company sold substantially all the assets used in
the business of its wholly-owned subsidiary, Perry Printing Corporation.
Perry is a heatset web offset printer of long-run catalogs and
publications. The sale of Perry allowed the company to redirect its
assets to other segments of the company and earn a better return on
investment. As a result, the Perry operations have been accounted for as
a discontinued operation.
Net revenues were $45.9 million, $117 million and $105.9 million in 1995,
1994 and 1993, respectively. Earnings from discontinued operations were
$1.4 million, $3.3 million and $3.2 million during the same years.
The aggregate sale price was approximately $95 million plus the assumption
of trade and other liabilities. Payment was made by the issuance of
115,000 shares of the buyer's preferred stock with a value of $11.5
million and the payment of the balance in cash.
Proceeds were used to fund the ADD, Inc. and Journal Broadcast Group
acquisitions, the Journal Sentinel merger charges and increase the cash
reserves.
Net Earnings
Net earnings from 1995 were $44.2 million or $3.18 per share, versus net
earnings of $43.9 million, or $3.13 per share in 1994. In 1993, net
earnings for the year were $44.2 million or $3.16 per share.
Liquidity and Capital Resources
Cash provided by continuing operations, which is a significant source of
the company's liquidity, totaled $43.2 million in 1995, $59.3 million in
1994 and $54 million in 1993.
Principal uses of cash during this period were for property and equipment
expenditures and acquisitions. Capital expenditures for property and
equipment were $33.4 million, $36.6 million and $31.2 million in 1995,
1994 and 1993, respectively. In 1996, capital expenditures are expected
to approximate the 1995 level. The company also has remained active in
acquiring other businesses. Cash used for acquisitions was $22.8 million
in 1995, $12.7 million in 1994 and $1.6 million in 1993. During 1995, the
company made acquisitions that expanded its broadcast, shopper and direct
marketing operations. In late January and early February 1996, the
company acquired three radio stations in Tucson, Arizona. The cash
purchase price was approximately $16.1 million.
Cash provided by discontinued operations was $82.8 million, $7.2 million
and $5.4 million in 1995, 1994 and 1993, respectively.
Cash used for financing activities was: 1995 - $46.5 million; 1994 - $24.8
million; and 1993 - $23.7 million. Dividends paid during 1995 were $29.2
million, or $2.10 per share. This compares with $26.7 million ($1.90 per
share) in 1994 and $25.2 million ($1.80 per share) in 1993.
Net working capital at the end of 1995 increased by $3.4 million to $111.1
million. Commitments for television programs not yet produced as of
December 31, 1995, were $9 million. The company has traditionally not
used debt as a source of funds.
Effect of Inflation
The company's results of operations and financial conditions have not been
significantly affected by general 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. See publications section for discussion on
impact of newsprint costs.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
The Financial Statements with Report of Independent Public Auditors are
presented on the pages immediately following.
Report of Ernst & Young LLP, 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, 1995 and 1994, and the related
consolidated statements of earnings and retained earnings, and cash flows
for each of the three years in the period ended December 31, 1995. Our
audits also included the financial statement schedule listed in the index
in Item 14(a). These financial statements and the schedule are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements 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, 1995 and 1994, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. In our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth herein.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
February 13, 1996
<PAGE>
JOURNAL COMMUNICATIONS INC.
CONSOLIDATED BALANCE SHEETS
December 31
ASSETS 1995 1994
Current assets:
Cash $10,133,273 $ 12,884,740
Short-term investments (Note 1) 61,362,172 38,964,215
Receivables, net (Note 1) 94,670,354 81,386,307
Inventories (Note 1) 31,292,261 25,443,053
Prepaid expenses 9,211,795 10,249,166
Prepaid income taxes 4,197,508 454,222
Deferred income taxes (Note 3) 4,706,000 5,347,000
Net current assets of discontinued
operations (Note 9) - 16,550,403
----------- -----------
Total current assets 215,573,363 191,279,106
Property and equipment, at cost:
Land and land improvements 11,997,665 10,502,363
Buildings 53,509,836 49,060,730
Equipment 301,388,897 275,766,234
----------- -----------
366,896,398 335,329,327
Less accumulated depreciation 206,463,640 185,642,365
----------- -----------
Net property and equipment 160,432,758 149,686,962
Net non-current assets of discontinued
operations (Note 9) - 49,924,513
Goodwill (Note 1) 33,258,717 28,864,047
Other intangible assets, net (Note 1) 34,798,493 24,287,121
Corporate life insurance investment pool 16,390,303 14,208,090
Other assets (Note 9) 14,284,589 3,166,028
------------ ------------
$474,738,223 $461,415,867
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 33,591,498 $ 31,363,719
Accrued compensation 18,241,478 19,856,229
Customer service deposits 11,705,228 11,823,750
Accrued employee benefits (Note 2) 21,166,388 12,442,829
Other current liabilities 12,864,104 4,916,352
Current portion of long-term obligations 6,889,035 3,201,437
------------ -----------
Total current liabilities 104,457,731 83,604,316
Long-term obligations (Note 5) 2,761,802 2,946,636
Deferred income taxes (Note 3) 1,189,000 7,436,000
Stockholders' equity (Note 6):
Common stock, $.25 par value; authorized
and issued 14,400,000 shares 3,600,000 3,600,000
Retained earnings 390,278,614 373,625,977
Treasury stock, at cost (Note 6) (27,548,924) (9,797,062)
------------ -----------
Total stockholders' equity 366,329,690 367,428,915
------------ -----------
$474,738,223 $461,415,867
============ ============
See accompanying notes.
<PAGE>
JOURNAL COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF EARNINGS
Years ended December 31
1995 1994 1993
Continuing operations:
Operating revenue:
Publications:
Advertising $208,857,471 $198,214,122 $182,536,690
Circulation 54,499,666 57,951,504 57,272,146
Other 3,790,626 5,137,396 4,720,547
Broadcast 74,623,031 63,444,709 54,850,495
Printing 202,556,016 151,853,351 126,401,157
Telecommunications 39,977,523 35,973,931 32,411,290
Direct Marketing 11,577,881 7,799,072 -
Eliminations (4,049,726) (2,793,364) (3,501,062)
------------ ----------- ----------
$591,832,488 $517,580,721 $454,691,263
Operating costs and expenses:
Cost of sales 346,144,072 289,383,027 250,260,769
Selling and administrative
expenses 181,091,296 161,922,335 138,499,227
Merger and litigation
charges(Notes 4 & 8) 23,218,055 - -
----------- ----------- -----------
550,453,423 451,305,362 388,759,996
Operating earnings 41,379,065 66,275,359 65,931,267
Other income(deductions):
Dividends and interest - net 4,806,225 1,668,931 1,542,596
Gain(loss) on sale of assets 45,629 (113,566) 24,252
---------- ---------- ----------
4,851,854
1,555,365 1,566,848
---------- ---------- ----------
Earnings from continuing
operations before income taxes 46,230,919 67,830,724 67,498,115
Provision for income taxes
(Note 3) 18,330,000 27,230,000 26,460,000
---------- ---------- ----------
Earnings from continuing
operations 27,900,919 40,600,724 41,038,115
---------- ---------- ----------
Discontinued operations (Note 9)
Earnings, net of applicable
income taxes of $915,000,
$2,170,000 and $2,140,000 1,371,473 3,266,421 3,166,003
Gain on sale, net of
applicable income tax
expense of $9,960,000 14,940,942 - -
---------- ---------- ----------
Net Earnings $ 44,213,334 $ 43,867,145 $44,204,118
========== ========== ==========
Earnings per share (Note 1)
Continuing operations $2.01 $2.90 $2.93
Discontinued operations 1.17 0.23 0.23
------ ----- -----
Net earnings $3.18 $3.13 $3.16
===== ===== =====
See accompanying notes.
<PAGE>
JOURNAL COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
Years ended December 31
1995 1994 1993
Retained earnings:
Balance at beginning
of year $373,625,977 $355,878,873 $336,553,427
Net earnings 44,213,334 43,867,145 44,204,118
Cash dividends (per share,
1995 $2.10, 1994 $1.90,
1993 $1.80) (29,156,648) (26,699,455) (25,156,340)
Treasury stock transactions
(Note 6) 616,303 416,530 365,145
Currency translation
adjustment 979,648 162,884 (87,477)
----------- ----------- -----------
Balance at end of year $390,278,614 $373,625,977 $355,878,873
=========== ========== ===========
See accompanying notes.
<PAGE>
JOURNAL COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31
1995 1994 1993
Cash flow from operating
activities:
Earnings from continuing
operations: $27,900,919 $40,600,724 $41,038,115
Adjustments for non-cash
items:
Depreciation and
amortization 34,413,368 29,778,626 28,335,179
Deferred income taxes (5,610,000) (400,000) (1,200,000)
Net loss (gain) from sales
of assets (45,629) 113,566 (24,252)
Change in:
Receivables (15,892,523) (15,991,602) (11,033,367)
Inventories (5,414,490) (8,057,754) (1,492,355)
Accounts payable 7,814,280 7,814,136 (6,566,235)
Other current assets and
liabilities of
continuing operations 22,372 5,429,337 4,936,314
---------- ---------- ----------
Net cash provided by
operating activities 43,188,297 59,287,033 53,993,399
Cash flow from investing
activities:
Proceeds from sales of
assets 1,031,417 2,029,798 773,637
Property and equipment
expenditures (33,406,269) (36,569,338) (31,170,841)
Net (increase) decrease in
short-term investments (22,397,956) 11,201,801 3,787,446
Assets of businesses
acquired (22,773,013) (12,697,391) (1,572,769)
Other - net (4,748,507) (5,189,473) (5,552,888)
---------- ----------- ----------
Net cash used for
investing activities (82,294,328) (41,224,603) (33,735,415)
----------- ----------- -----------
Net cash provided by
discontinued operations
(Note 9) 82,831,605 7,193,410 5,375,462
Cash flow from financing
activities:
Net increase (decrease)in
long-term obligations (184,834) (731,975) 1,232,349
Purchase of treasury stock (25,487,943) (1,834,240) (3,865,125)
Sales and distribution of
treasury stock 8,352,384 4,485,108 4,122,332
Cash dividends (29,156,648) (26,699,455) (25,156,340)
----------- ----------- -----------
Net cash used for
financing activities (46,477,041) (24,780,562) (23,666,784)
----------- ----------- -----------
Net increase (decrease)
in cash (2,751,467) 475,278 1,966,662
Cash at beginning of year 12,884,740 12,409,462 10,442,800
---------- ---------- ----------
Cash at end of year $10,133,273 $12,884,740 $12,409,462
========== ========== ==========
Cash paid for income taxes $47,557,000 $29,108,000 $31,122,000
========== ========== ==========
See accompanying notes.
<PAGE>
JOURNAL COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995, 1994 and 1993
l.Principal accounting policies
Basis of consolidation - The consolidated financial statements include
the accounts of Journal Communications, Inc. and its wholly owned
subsidiaries (collectively, the Company). All significant intercompany
balances and transactions have been eliminated.
Foreign currency translation - Assets and liabilities of foreign
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.
Receivables - Allowance for doubtful accounts at December 31, 1995 and
1994 was $2,475,670 and $2,065,012, respectively.
Inventories - Inventories are stated at the lower of cost (first in,
first out method) or market. Inventories at December 31, consist of the
following:
1995 1994
Paper and Supplies $19,142,582 $15,265,140
Work in Process 4,559,107 4,812,159
Finished Goods 7,590,572 5,365,754
---------- ----------
$31,292,261 $25,443,053
========== ==========
Property and equipment - Property and equipment are recorded at cost.
Depreciation of property and equipment is computed principally using the
straight-line method.
Goodwill - Goodwill arising from acquisitions subsequent to November 1,
1970, is amortized on a 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, 1995,
$3,095,000 of goodwill was not being amortized. Accumulated
amortization at December 31, 1995 and 1994 was $9,567,294 and
$8,662,555, respectively.
Other intangible assets - Identifiable intangible assets resulting from
acquisitions are amortized on a straight-line basis for a period up to
30 years. Accumulated amortization relating to intangible assets at
December 31, 1995 and 1994 was $22,989,814 and $17,923,152 respectively.
Other intangible 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.
Use of estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
Reclassification - Certain reclassifications have been made to the 1994
and 1993 financial statements to conform with the 1995 presentation.
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 $9,908,000, of which $4.0 million
relates to the merger of the newspapers, $6,225,000, and $5,712,000 in
1995, 1994 and 1993, respectively.
Net pension cost for the defined benefit plan includes the following
components:
(thousands of dollars)
1995 1994 1993
Service cost $ 2,068 $2,481 $2,233
Interest on projected
benefit obligation 6,015 5,526 5,551
Return on plan assets (10,644) 865 (4,768)
One-time recognition of
costs related to newspaper
merger 4,000 - -
Net amortization and deferral 4,860 (6,570) (683)
------- ------- ------
Net pension cost $6,299 $2,302 $2,333
===== ===== =====
Actuarial assumptions used to project the benefit obligations and the
net pension cost were:
1995 1994 1993
Discount rate 7.50% 8.00% 7.25%
Rate of increase in compensation
levels 5.00% 5.25% 4.75%
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 accrued pension liability at December 31, 1995 and
1994 was $10,199,000 and $7,715,000, respectively.
The funded status of the plan at December 31 was as follows:
(thousands of dollars)
1995 1994
Actuarial present value of
benefit obligations:
Vested benefits $67,428 $60,232
Nonvested benefits 2,949 3,074
------- -------
Accumulated benefit obligation 70,377 63,306
Effect of projected
compensation levels 13,396 13,073
------- -------
Projected benefit obligation 83,733 76,379
Less: plan assets at fair value 63,047 57,342
------ ------
Projected benefit obligation
in excess of plan assets $20,726 $19,037
====== ======
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.
Postretirement benefit expense includes the following components:
(thousands of dollars)
1995 1994 1993
Service cost $433 $572 $454
Interest cost on accumulated
postretirement benefit obligation 2,067 1,991 2,073
Amortization of transition obligation 1,139 1,266 1,266
One-time recognition of costs related
to newspaper merger 2,092 - -
----- ----- -----
Postretirement benefit expense $5,731 $3,829 $3,793
===== ===== =====
The funded status of the plans on an aggregate basis at December 31
was as follows:
(thousands of dollars)
1995 1994
Accumulated postretirement
benefit obligation:
Retirees $19,756 $15,156
Fully eligible participants 855 1,645
Other active participants 7,859 8,131
------- ------
Total accumulated postretirement benefit obligation 28,470 24,932
Unrecognized actuarial gain (loss) (1,655) 837
Less: Unrecognized transition obligation 18,871 22,102
------- ------
Accrued postretirement benefit cost liability $ 7,944 $ 3,667
====== ======
The assumed health care costs trend rates used in measuring the
accumulated postretirement benefit obligation (APBO) for pre-age
retirees for 1996 are 9.0% grading down to 5.0% in 2010 and thereafter,
and for 1995 was 9.5% grading down to 5.5% in 2008 and thereafter, and
for post-age (65) retirees for 1996 are 8.0% grading down to 5.0% in
2006 and thereafter, and 1995 was 8.5% grading down to 5.5% in 2004 and
thereafter. The benefit cost trend rates have a significant effect on
the amounts reported. The impact of a 1% increase in the health care
cost trend rates would have increased the APBO 5.4% at December 31,
1995, and would have increased the aggregate service cost and interest
cost components of the postretirement benefit expense by 6.7%. The
weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% and 8.0% for 1995 and 1994,
respectively.
3. Income Taxes
The provision for income taxes consists of the following:
(thousands of dollars)
1995 1994 1993
Current
Federal $18,670 $21,400 $21,870
State 5,270 6,230 5,790
------- ------- -------
23,940 27,630 27,660
Deferred (5,610) (400) (1,200)
------- ------- -------
$18,330 $27,230 $26,460
======= ======= =======
The components of net deferred taxes as of December 31 were as follows:
(thousands of dollars)
Deferred tax assets: 1995 1994
Accrued compensation and
employee benefits $ 9,520 $ 6,902
Intangible assets 569 896
Inventories 390 49
Accounts receivable 855 648
Domestic loss carryforwards 2,491 1,056
Foreign loss carryforwards 1,121 -
Other 540 687
------- -------
Total deferred tax assets 15,486 10,238
Deferred tax liability:
Property, plant and equipment 11,969 12,327
------- -------
Net deferred tax asset (liability)
included in balance sheet $ 3,517 $(2,089)
======= =======
4. Litigation
In November 1995, a judgement was issued against the Company for $8.4
million in connection with a patent infringement lawsuit. In February
1996, the judgement was settled for $5.7 million, which has been
recorded in fiscal 1995. The settlement fully relieves the Company of
all past and future obligations under this matter.
5. Long-term obligations
December 31,
1995 1994
Note payable,8%, due June 1996 $4,458,565 $ -
Capital lease & other obligations,
average interest 8% in 1995 1,510,508 1,924,895
Television program contracts,
due through 1999 3,681,764 4,223,178
---------- ----------
9,650,837 6,148,073
Less current portion 6,889,035 3,201,437
---------- ----------
$2,761,802 $2,946,636
========== ==========
In addition, the Company has the rights to broadcast certain television
programs during the years 1996-2000 under contracts aggregating
$8,964,075.
6. Stockholders' equity
The Company periodically purchases units of beneficial interest in The
Journal Employees' Stock Trust (JESTA) for use in its Incentive
Compensation Plan and for resale to its employees. Treasury stock
activity is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
Units Amount Units Amount Units Amount
<S> <C> <C> <C> <C>
Beginning Balance 291,249 $ 9,797,062 366,574 $12,031,400 375,214 $11,923,462
Purchases 699,608 25,487,943 52,500 1,834,241 112,245 3,865,125
Sales (232,275) (7,736,081) (127,825) (4,068,579) (120,885) (3,757,187)
-------- ---------- ------- ---------- ------- ----------
Ending Balance 758,582 $27,548,924 291,249 $9,797,062 366,574 $12,031,400
======== ========== ======= ========== ======= ==========
Gain on sales $616,303 $416,530 $365,145
======== ======= =======
</TABLE>
7. Acquisitions
On January 24, 1995 and February 1, 1995, the Company acquired the
business and substantially all of the assets of KEZO-FM, KEZO-AM and
KKCD-FM in Omaha, Nebraska. The combined cash purchase price was
approximately $12.7 million.
On June 22, 1995, the Company acquired the business and substantially
all of the assets of Mega Direct, a direct marketing company based in
Clearwater, Florida, at a purchase price of approximately $8 million.
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 dates of acquisition. Had KEZO-FM, KEZ0-AM, KKCD-FM
and Mega Direct been acquired as of January 1, 1995, the effect of the
acquisitions on the Company's consolidated results of operations would
not have been material.
8. Merger Charges
On April 2, 1995, Journal Sentinel Inc. merged The Milwaukee Journal and
the Milwaukee Sentinel into a morning newspaper called the Milwaukee
Journal Sentinel. This resulted in a pretax charge of $17.5 million,
which consisted of $11.3 million in termination benefits for
approximately 250 employees and $6.2 million for other nonrecurring
costs associated with the launch of the new newspaper. In 1995, $5.2
million of the termination benefits and all of the other costs were
paid.
9. Discontinued Operations
Effective April 27, 1995, the Company sold substantially all the assets
used in the business of its wholly owned subsidiary, Perry Printing
Corporation ("Perry"). Perry was a heatset web offset printer of long
run catalogs and publications. The assets sold consisted of accounts
receivable, inventories, fixtures, equipment and certain real estate.
The Perry operations have been reflected as discontinued operations,and
accordingly, prior period financial statements have been restated to
reflect this treatment.
Net revenues of discontinued operations were as follows:
1995 1994 1993
Net Revenues $45,945,666 $116,967,239 $105,914,558
The sale price was approximately $95 million, which included
115,000 shares of the buyer's preferred stock with a value of $11.5
million, plus the assumption of trade and other liabilities by the
buyer. The Company has recorded an after tax gain on the sale of
$14.9 million.
10. Segment analysis
Journal Communications, Inc. is an employee-owned, diversified
communications company with operations in 16 states and France.
The Company's principal lines of business are publishing,
broadcasting, printing, telecommunications and direct marketing.
The Milwaukee Journal Sentinel and 75 paid and free periodicals
are published. The broadcasting business consists of eight radio
and three television stations. The printing of short-run
publications, circulars and periodicals, computer software
documentation and diskette duplication, quality labels and
packaging and promotional materials is provided by the printing
business. The telecommunications business provides a full range of
services with one of the largest digital networks in the Midwest.
Personalized direct marketing services are provided to
merchandisers and manufacturers.
<TABLE>
<CAPTION>
(thousands of dollars)
Sales Earnings
1995 1994 1993 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Publications $267,148 $261,303 $244,529 $16,020 $43,998 $40,212
Broadcast 74,623 63,445 54,851 19,644 14,589 10,853
Printing 202,556 151,853 126,401 8,124 3,477 8,132
Telecommunications 39,977 35,974 32,411 9,429 9,023 8,715
Direct Marketing 11,578 7,799 -- (2,652) (1,487) --
Corporate & eliminations (4,050) (2,793) (3,501) (9,186) (3,325) (1,981)
-------- -------- -------- ------- ------- -------
$591,832 $517,581 $454,691 41,379 66,275 65,931
======== ======== ========
Corporate - other income 4,852 1,556 1,567
------- ------- -------
Earnings before income taxes $46,231 $67,831 $67,498
======= ======= =======
<CAPTION>
December 31
Identifiable total assets Depreciation Capital expenditures
1995 1994 1993 1995 1994 1993 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Publications $ 94,106 $ 90,175 $ 91,249 $ 5,937 $ 5,393 $ 5,698 $ 8,303 $ 7,320 $ 8,329
Broadcast 66,843 52,268 50,347 2,961 2,811 2,586 3,641 4,310 3,451
Printing 139,211 116,371 86,051 7,832 6,303 4,725 16,785 17,322 13,756
Telecom-
munications 55,216 61,172 56,024 7,446 7,265 6,843 2,612 6,404 5,206
Direct
Marketing 19,471 9,214 -- 829 629 -- 1,594 923 --
Corporate 99,891 65,741 67,444 207 149 121 471 290 429
------- ------- ------- ------ ------ ------ ------- ------- -------
$474,738 $394,941 $351,115 $25,212 $22,550 $19,973 $33,406 $36,569 $31,171
======= ======== ======= ======= ====== ======= ======= ======= =======
</TABLE>
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS OF THE REGISTRANT
Directors Anderson, Barr, Christman, D'Alexander, Davis, Knoche, Koenan
Woodall and Thomas are members of the Unitholders Council who were
selected by unitholders to be nominated for election to the Board of
Directors. Messrs. Bonaiuto, Ditter, Forbes, Davis and Thomas and Ms.
D'Alexander 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 Executive Director of the
Public Policy Forum, Milwaukee. Additional 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 April 29, 1996.
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 April 29, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following chart states the equity ownership of each Director of the
Registrant and the chief executive officer and four next most highly
compensated individuals who will be named as such in the Registrant's
Proxy Statement, which will be filed with the Securities and Exchange
Commission no later than April 29, 1996:
Units Held Percent of
as of Ownership
Held Office March 13, *denotes
Name Age Since 1996(1) <1%(2)
David A. Anderson 44 June 6, 1995 4,630 *
Margaret E. Barr 48 June 7, 1994 9,700 *
Paul M. Bonaiuto 45 June 8, 1993 13,000 *
Sue Ellen Christman 53 June 6, 1995 1,350 *
Judith M. D'Alexander 48 June 6, 1995 200 *
John C. Davis 33 June 6, 1995 3,230 *
James J. Ditter 34 September 6, 1995 2,740 *
Robert M. Dye 47 March 6, 1990 41,580 *
Christine A. Farnsworth 47 June 8, 1993 31,550 *
Gregory H. Forbes 46 June 8, 1993 25,000 *
Stephen O. Huhta 40 June 8, 1993 26,355 *
Robert A. Kahlor 62 March 6, 1973 85,435 *
Thomas M. Karavakis 65 June 5, 1984 77,035 *
Douglas G. Kiel 47 June 4, 1991 26,300 *
Eldon M. Knoche 56 June 6, 1995 11,330 *
M. J. L. Koenan Woodall 29 June 6, 1995 1,495 *
Paul E. Kritzer 53 June 5, 1990 35,070 *
Ronald G. Kurtis 48 June 8, 1993 49,800 *
David G. Meissner 58 June 7, 1988 --(3) --(3)
Steven J. Smith 45 June 2, 1987 73,880 *
Keith K. Spore 53 September 6, 1995 22,000 *
Christopher S. Thomas 26 June 6, 1995 570 *
All directors as
a group(4) 5,844,276 45.1%
(1) A "Unit" represents a beneficial interest in one share of the
common stock of Journal Communications, Inc.
(2) Represents percentage of the 12,960,000 units outstanding on
March 13, 1996.
(3) 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.
(4) Each of Messrs. Bonaiuto, Kahlor, Karavakis, Kiel and Smith has
voting power arising under the Trust Agreement establishing the
Trust in respect to the number of units set forth opposite such
individual's name. In addition, as a group as trustees of the
Trust, such individuals have voting power arising under the Trust
Agreement establishing the Trust, as of March 13, 1996, in
respect of 5,302,026 units held by retirees and other former
employees of the Registrant, employee benefit trusts, employees'
personal trusts and charitable, educational or religious trusts.
Additional 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 April 29, 1996.
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 April 29, 1996.
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, 1995, 1994 and 1993 18
Consolidated Statements of Earnings
and Retained Earnings for each of
the three years in the period ended
December 31, 1995 19-20
Consolidated Statements of Cash Flows
for each of the three years in the
period ended December 31, 1995 21
Notes to Consolidated Financial Statements 22-28
Financial Statement Schedules:
Consolidated schedules for each of the
three years in the period ended
December 31, 1995:
II - Valuation and qualifying accounts 32
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 below are filed as part of this annual report.
Exhibits
( 3.1) Articles of Association, filed herewith
( 3.2) By-Laws [Incorporated by reference to Exhibit 3.1 to Journal
Communications, Inc.'s Current Report on Form 8-K dated March 5,
1996 (Commission File No. 0-7831)]
( 9) Journal Employees' Stock Trust Agreement, dated
May 15, 1937, as amended, filed herewith
(10.1) Management Long Term Incentive Plan, filed herewith
(10.2) Management Annual Incentive Plan, filed herewith
(21) Subsidiaries of the Registrant, filed herewith
(23) Consent of Independent Auditors, filed herewith
(27) Financial Data Schedule, filed herewith
<PAGE>
JOURNAL COMMUNICATIONS, INC.
SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 1995, 1994 and 1993
Balance at Additions Deductions Balance
beginning charged to from at end
of year earnings allowances of year
Allowance for
doubtful receivables:
1995 $2,065,012 $3,007,365 $2,596,707 $2,475,670
========== ========== ========== ==========
1994 $2,500,533 $2,952,136 $3,387,657 $2,065,012
========== ========== ========== ==========
1993 $2,612,329 $2,336,437 $2,448,233 $2,500,533
========== ========== ========== ==========
Note:
(a) Accounts receivable written off, less recoveries, against the
allowance.
<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: /s/ Robert a. Kahlor
Robert A. Kahlor
Chairman of the Board and CEO
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:
/s/ David A. Anderson April 1, 1996
David A. Anderson, Director
/s/ Margaret E. Barr April 1, 1996
Margaret E. Barr, Director
/s/ Paul M. Bonaiuto April 1, 1996
Paul M. Bonaiuto, Director & Chief Financial Officer
(Principal Financial Officer)
/s/ Sue Ellen Christman April 1, 1996
Sue Ellen Christman, Director
/s/ Judith M. D'Alexander April 1, 1996
Judith M. D'Alexander, Director
/s/ John C. Davis April 1, 1996
John C. Davis, Director
/s/ James J. Ditter April 1, 1996
James J. Ditter, Director
/s/ Robert M. Dye April 1, 1996
Robert M. Dye, Director
/s/ Christine A. Farnsworth April 1, 1996
Christine A. Farnsworth, Director
/s/ Gregory H. Forbes April 1, 1996
Gregory H. Forbes, Director
/s/ Stephen O. Huhta April 1, 1996
Stephen O. Huhta, Director
/s/ Robert A. Kahlor April 1, 1996
Robert A. Kahlor, Director & Chairman of the Board
(Principal Executive Officer)
/s/ Thomas M. Karavakis April 1, 1996
Thomas M. Karavakis, Director
/s/ Douglas G. Kiel April 1, 1996
Douglas G. Kiel, Director
/s/ Eldon M. Knoche April 1, 1996
Eldon M. Knoche, Director
/s/ Mary Jane L. Koenen Woodall April 1, 1996
Mary Jane L. Koenen Woodall, Director
/s/ Paul E. Kritzer April 1, 1996
Paul E. Kritzer, Director
/s/ Ronald G. Kurtis April 1, 1996
Ronald G. Kurtis, Director
/s/ David G. Meissner April 1, 1996
David G. Meissner, Director
/s/ Steven J. Smith April 1, 1996
Steven J. Smith, Director
/s/ Keith K. Spore April 1, 1996
Keith K. Spore, Director
/s/ Christopher S. Thomas April 1, 1996
Christopher S. Thomas, Director
<PAGE>
JOURNAL COMMUNICATIONS, INC.
INDEX TO EXHIBITS
(Item 14(a))
Exhibits
( 3.1) Articles of Association, filed herewith
( 3.2) By-Laws [Incorporated by reference to Exhibit 3.1 to
Journal Communications, Inc.'s Current Report on Form 8-
K dated March 5, 1996 (Commission File No. 0-7831)]
( 9) Journal Employees' Stock Trust Agreement, dated May 15,
1937, as amended, filed herewith
(10.1) Management Long Term Incentive Plan, filed herewith
(10.2) Management Annual Incentive Plan, filed herewith
(21) Subsidiaries of the Registrant, filed herewith
(23) Consent of Independent Auditors, filed herewith
(27) Financial Data Schedule, filed herewith
JOURNAL COMMUNICATIONS, INC.
(Organized Under the Laws of the State of Wisconsin, February 5, 1883)
ARTICLES OF ASSOCIATION
Including Amendments Effective March 25, 1996
First: The purposes for which the corporation is organized are to
engage in any lawful activity within the purposes for which corporations
may be organized under the Wisconsin Business Corporation Law, Chapter 180
of the Wisconsin Statutes, including without limitation, the buying,
holding, selling, exchanging, dealing in, acquiring and disposing of,
pledging, leasing and managing of all kinds of real and personal property,
tangible and intangible and wheresoever situated.
Second: The name of said corporation shall be "Journal
Communications, Inc." and said corporation shall be located in the City of
Milwaukee, County of Milwaukee, and State of Wisconsin.
Third: The aggregate number of shares which the corporation shall
have the authority to issue is Fourteen Million Four Hundred Thousand
shares of capital stock having a par value of twenty-five cents per share.
The Board of Directors of the corporation shall have authority to
acquire by purchase from time to time any shares of its issued and
outstanding capital stock for such consideration and upon such terms and
conditions as the Board of Directors in its discretion shall deem proper
and reasonable in the interest of the corporation; and in respect of the
shares of its own capital stock so acquired by the corporation, no
stockholder or the corporation shall be entitled as a matter of pre-
emptive right to subscribe for, purchase or receive any portion thereof;
and in respect of shares of its own capital stock so acquired by the
corporation the Board of Directors shall have authority in its discretion:
(i) To cancel and retire all or any part of such shares, or
(ii) To retain as treasury stock all or any part of such shares, or
(iii) To convert all of any part of such shares of
stock into units of beneficial interest in
capital stock of the corporation pursuant to
the provisions of The Journal Employees
Stock Trust Agreement dated May 15, 1937,
between Harry J. Grant, Faye McBeath and
others, as settlors, and Harry J. Grant, L.
A. Webster, J. D. Ferguson, L. L. Bowyer and
Marvin H. Creager as trustees, and Journal
Communications, Inc. (then named The Journal
Company) and (without first offering the
same for purchase by stockholders) to sell
such units of beneficial interest in capital
stock of the corporation to employees
eligible under said Stock Trust Agreement to
hold units of beneficial interest in such
stock; provided, however, that the price
payable for each such unit of beneficial
interest in capital stock of the corporation
sold by the corporation to any such
employees shall be the "option price"
thereof (as defined in said Stock Trust
Agreement) prevailing at the time of sale in
each case, determined in the manner
prescribed in the Stock Trust Agreement
aforesaid.
Fourth: The property, affairs and business of the corporation shall
be managed by a board of directors consisting of such number of members,
not less than three, as shall be fixed by the By-Laws. Directors need not
be stockholders.
Fifth: Registered holders of the certificates of stock of the
corporation shall be members of the corporation and shall be entitled to
vote at all meetings of said corporation, in person or by proxy, and each
share of stock shall be entitled to one vote.
Sixth: These articles of association may be amended at any regular
or special meeting of said corporation by vote of the holders of at least
two-thirds of all the shares of stock of said corporation.
JOURNAL
EMPLOYEES'
STOCK TRUST
AGREEMENT
As amended February 1, 1990
<PAGE>
Journal Employees'
Stock Trust Agreement
Dated May 15, 1937
(As amended May 5, 1954; December 23, 1964;
July 31, 1968; March 26, 1973; January 16, 1975;
June 1, 1979, April 1, 1982, and January 1, 1986)
Journal Employees'
Stock Trust Agreement
AGREEMENT, dated May 15, 1937, by and between HARRY J. GRANT, FAYE
McBEATH, WILMINGTON TRUST COMPANY, as Trustee under Agreement dated
November 12, 1931, with Katharine Boyd Morehead, WILMINGTON TRUST COMPANY,
as Trustee under Agreement dated November 12, 1931, with Mary Body Evans,
SUSAN A. BOYD, KATHARINE BOYD MOREHEAD and MARY BOYD EVANS, first parties;
HARRY J. GRANT, LESLIE A. WEBSTER, JOHN DONALD FERGUSON, LEONARD L. BOWYER
and MARVIN H. CREAGER, called "the trustees," second parties; and JOURNAL
COMMUNICATIONS, a Wisconsin corporation, called "the Company," third
party:
1: General Definitions.
(a) This Agreement shall be known as "Journal Employees' Stock Trust
Agreement," except where referred to herein as "this Agreement."
(b) "Section" shall mean a division of this Agreement designated by
arabic numerals.
(c) The word "called" shall indicate the adoption for purposes of
simplification and convenience of certain terms and expressions which will
thereafter sometimes be used in this Agreement.
(d) "Persons" shall include corporations, trusts, associations and
partnerships, as well as natural persons.
(e) "Journal stock" shall mean the capital stock of the Company and
in the event of the reorganization or recapitalization of the Company,
whatever voting stock shall most nearly correspond to the present capital
stock of the Company.
(f) "Stockholder-Eligible" shall mean each of the persons named as
First Parties in the preamble of this Agreement so long as such persons
shall hold any shares of Journal stock and shall include the successor or
successors of each such person in the ownership of Journal stock.
(g) "Employee shall mean every person now or at any time hereafter
employed in the service of one or more of the Employers, including the
officers of any of the Employers, so long as they shall be so employed or
on leave of absence duly granted. A director as such shall not be deemed
an employee or an officer for the purposes of this Agreement.
(gg) "Employers" shall mean the Company and all corporations of which
the Company owns directly or indirectly 80% or more of the voting capital
stock.
(h) "Employee-Eligibles" shall mean employees during the continuance
of their employment.
(hh) An "Employee-Eligible-Transferee" means a person to whom units
are assigned by an employee-eligible upon the conditions defined in
Section 12 of this agreement.
(i) "Ex-Employee-Eligibles" shall mean persons who have ceased to be
employee-eligibles and those succeeding to their rights as owners of units
so long as such persons shall own any units as hereinafter defined.
(ii) An "Employee Benefit Trust" shall mean a pension, profit
sharing, stock bonus or other similar trust established by an employer to
provide retirement benefits to employees and a trust established by an
employee-eligible to provide retirement benefits.
(j) "President" shall mean the person from time to time occupying
the office of President of the Company, in his individual and not in his
official capacity.
(k) "Board of Directors" shall mean a majority of the persons from
time to time constituting the Board of Directors of the Company, in their
individual and not in their official capacities.
(l) Unless otherwise indicated by the context, the singular shall
include the plural and the plural the singular, and the masculine shall
include the feminine and neuter.
(m) "Month" shall mean calendar month.
(mm) "Accounting Period" shall mean one of the 13 periods into which
the Company divides the calendar year for accounting purposes. Each such
period is composed of 4 calendar weeks, 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.
(n) "Assign shall mean bargain, sell, assign, convey and deliver.
(o) "Retirement" shall mean the separation of an employee from the
employment of the Employers with a pension granted by any of the Employers
or under provisions of a pension trust or trusts established by any of the
Employers for the benefit of employees.
2: Purpose. The provisions of this Agreement are intended to
promote and facilitate the acquisition and ownership of a beneficial
interest in Journal stock by employee-eligibles and to promote stability
and continuity of management and control of the Company in the interest of
the Company, the stockholder-eligibles and the employee-eligibles through
the instrumentality of the trust hereinafter created.
3: Conveyance to the Trustees. First parties do hereby severally
assign to the trustees, in trust, for the uses and purposes hereinafter
defined, the number of shares of Journal stock set opposite their
respective names below, viz.:
Harry J. Grant 10,000 shares
Faye McBeath 10,000 shares
Wilmington Trust Company, as Trustee
under Agreement dated November 12, 1931,
with Katharine Boyd Morehead 3,300 shares
Wilmington Trust Company, as Trustee under
Agreement dated November 12, 1931, with
Mary Boyd Evans 3,300 shares
Susan A. Boyd, Katharine Boyd Morehead and
Mary Boyd Evans 3,400 shares
____________________________________________________________
Total 30,000 shares
The said 30,000 shares of Journal stock, together with such other
shares of Journal stock as may hereafter be held by the trustees
hereunder, are called the "Capital Stock Fund."
I.
CAPITAL STOCK FUND, UNITS OF
BENEFICIAL INTEREST THEREIN,
TRUST CERTIFICATES
4: Units of Beneficial Interest, Trust Certificates. The
beneficial interests in the Capital Stock Fund shall be divided into
30,000 equal parts called "units." The trustees shall from time to time
increase or decrease the number of units into which the Capital Stock Fund
shall be divided, to accord in so far as may be practicable with the
number of shares of Journal stock held by them hereunder. Units shall be
evidenced by certificates, called "trust certificates," issued by the
trustees.
Every such trust certificate shall be deemed to represent the number
of units specified therein, unless the trustees shall have increased or
decreased the number of units, in which case they shall call in all trust
certificates then outstanding and shall issue in lieu thereof new trust
certificates specifying the proper increased or decreased number of units
represented thereby. From and after any such call, each outstanding trust
certificate affected thereby shall represent not the number of units
specified therein but the number of units for which a new certificate is
required, as aforesaid, to be issued in lieu thereof.
Trust certificates shall be in substantially the following form:
This is to Certify That ________________________________ is the owner
of ______ units of beneficial interest in the trust under Journal
Employees' Stock Trust Agreement dated May 15, 1937, to which reference is
made for the terms and conditions of said trust, including the rights and
obligations of the holder of this certificate. By acceptance of this
certificate the holder consents to be bound by all of the terms and
conditions of said Agreement, an original of which is on file for
inspection at the office of the undersigned trustees at 333 West State
Street, Milwaukee, Wisconsin.
The persons eligible to acquire any right or interest in this
certificate or in the units of beneficial interest represented hereby are
limited and this certificate is transferable only as provided in said
Journal Employees' Stock Trust Agreement.
Dated _____________________________
Trustees under Journal Employees' Stock Trust Agreement dated May 15,
1937.
5: Units Vested in First Parties, Disposition by Them. Ownership
of said 30,000 units shall forthwith be vested in first parties severally
in proportion to the number of shares of Journal stock hereinbefore
assigned by them respectively to the trustees, and first parties reserve
to each of their number the right to assign said units so vested in them,
but only to eligibles as hereinafter defined, in accordance with the terms
of an agreement of even date herewith between first parties and Journal
Shares Corporation, a Wisconsin corporation.
6: Classes of Persons Eligible to Hold Trust Certificates. Except
as otherwise provided in Section 15, units and trust certificates
evidencing units may be owned and held only by persons included in one of
the following classes, which persons are called "eligibles:
(a) Stockholder-eligibles.
(b) Employee-eligibles.
(c) Ex-employee-eligibles, but only with respect to units and trust
certificates evidencing units acquired by them or their predecessors in
interest as employee-eligibles and only on condition that the options
provided for in Section 10 shall not have been exercised, subject,
however, to the limitations set forth in Section 13.
(d) The Company.
(e) Journal Shares Corporation.
(f) Employee-eligible-transferees.
(g) Employee Benefit Trusts.
7: Recordation of Certificates and Transfers Thereof. The trustees
shall keep a record of each trust certificate issued showing the date of
issue, the number of units represented thereby, the certificate number and
the name and address of the person to whom issued. The trustees shall
also keep a record of each transfer of a trust certificate showing the
date of transfer, the name and address of the person or persons to whom
transferred, together with the number of units represented thereby and the
number or numbers of the new trust certificate or certificates issued. If
any trust certificate shall be cancelled, the trustees shall note upon
their record the certificate number, date of cancellation and the number
of units cancelled.
The trustees shall record the transfer of a trust certificate only
upon the production of proof satisfactory to them that the transfer of the
units represented thereby is in accordance with the terms of this
Agreement, and, except in the case of a sale of units owned by employee-
eligibles, ex-employee-eligibles, employee-eligible-transferees and
employee benefit trusts under the options provided for in Section 10, only
upon the surrender of such trust certificate properly endorsed. No
transfer of any unit or of any trust certificate shall be valid or
effective for any purpose unless made in accordance with the terms and
conditions of this Agreement, nor unless such transfer shall have been
entered on the trustees' record. The trustees shall not recognize any
transfer of a fractional unit. The acceptance of a trust certificate by
the person to whom issued or the assertion of any right or interest in
units shall constitute an acceptance of and an agreement to be bound by
all of the terms and conditions of this Agreement.
8: Rights of Stockholder-Eligibles to Exchange Journal Stock for
Trust Certificates and Trust Certificates and Trust Certificates for
Journal Stock. Any stockholder-eligible but no other person may at any
time and from time to time assign shares of Journal stock to the trustees
and receive an exchange therefor trust certificates evidencing units, or
may surrender trust certificates representing units acquired by them as
stockholder-eligibles and subject to the terms and conditions of this
Agreement, receive in exchange therefor shares of Journal stock; provided,
however, that the ratio between the number of units and the number of
shares of Journal stock thus exchanged shall equal the ratio between the
number of units outstanding and the number of shares of Journal stock held
by the trustees immediately prior to such exchange.
9: Option Events With Respect to Units Owned by Employee-Eligibles.
All units owned by employee-eligibles employee benefit trusts, employee-
eligible-transferees or ex-employee-eligibles shall be subject to purchase
under the options defined in section 10, subject to the conditions
hereinafter stated, upon the happening of the option events hereinafter
defined:
(a) A written offer to sell a specified number of units signed by
any unitholder and delivered to the President shall constitute an option
event in respect of the number of units specified in the offer.
(b) Termination of the employer-employee relationship between any
employee-eligible and the Employers by reason of any cause other than
retirement shall constitute an option event in respect of all units then
owned by such employee-eligible and in respect of all units then held by
an employee-eligible-transferee pursuant to prior transfer by such
employee-eligible under the provisions of Section 12 and in respect of all
units held by an Employee Benefit Trust established by an employee-
eligible.
(c) In the event of termination of the employer-employee
relationship between any employee-eligible and the Employers by reason of
retirement, the first anniversary of such retirement shall be an option
event in respect of all units then owned by such individual in excess of
9/10 of the number of units owned at the time of retirement; the second
anniversary of such retirement shall be an option event in respect of all
units then owned by such individual in excess of 8/10 of the number of
units owned at the time of retirement; the third anniversary of such
retirement shall be an option event in respect of all units then owned by
such individual in excess of 7/10 of the number of units owned at the time
of retirement; the fourth anniversary of such retirement shall be an
option event in respect of all units then owned by such individual in
excess of 6/10 of the number of units owned at the time of retirement; the
fifth anniversary of such retirement shall be an option event in respect
of all units then owned by such individual in excess of 5/10 of the number
of units owned at the time of retirement; the sixth anniversary of such
retirement shall be an option event in respect of all units then owned by
such individual in excess of 4/10 of the number of units owned at the time
of retirement; the seventh anniversary of such retirement shall be an
option event in respect of all units then owned by such individual in
excess of 3/10 of the number of units owned at the time of retirement; the
eighth anniversary of such retirement shall be an option event in respect
of all units then owned by such individual in excess of 2/10 of the number
of units owned at the time of retirement; the ninth anniversary of such
retirement shall be an option event in respect of all units then owned by
such individual in excess of 1/10 of the number of units owned at the time
of retirement; the tenth anniversary of such retirement shall be an option
event in respect of all units then owned by such retired ex-employee-
eligible. Provided further that the death of any retired ex-employee-
eligible prior to the tenth anniversary of his retirement shall be an
option event in respect of all units owned by such retired ex-employee-
eligible at the time of death. The above reference to "units owned" and
"units then owned" refers to units registered in the name of the retired
employee and includes any marital or community property interest of the
retired employee's spouse.
(cc) In the case of any retired ex-employee-eligible who retired on
or before December 31, 1974, each anniversary of such retirement after
that date shall, at the written election of such retired ex-employee-
eligible, be an option event in respect of a number of units equal to one-
seventh of the units owned by him at the time of retirement, or such
lesser number of units as may constitute all units owned by him on such
anniversary date. If any such ex-employee-eligible fails to file such
written election with the trustees before the first anniversary of his
retirement after December 31, 1974, option events with respect to units
owned by him shall occur on the dates and in the amounts provided by this
agreement as in effect on the date of his retirement. This paragraph (cc)
shall cease to be a part of this agreement on the date on which the last
unit owned by a retired ex-employee-eligible who retired on or before
December 31, 1974, is sold.
(ccc) In the case of any retired ex-employee-eligible who retired on
or before June 1, 1979, each anniversary of such retirement after that
date shall, at the written election of such retired ex-employee-eligible,
be an option event in respect of a number of units equal to one-tenth of
the units owned by him at the time of retirement, or such lesser number of
units as may constitute all units owned by him on any such anniversary
date. If any such ex-employee-eligible fails to file such written
election with the trustees before the first anniversary of his retirement
after June 1, 1979, option events with respect to units owned by him shall
occur on the dates and in the amounts provided by this agreement as in
effect on the date of his retirement or as elected under Section 9(cc) as
the case may be. This paragraph (ccc) shall cease to be a part of this
agreement on the date on which the last unit owned by a retired ex-
employee-eligible who retired on or before June 1, 1979, is sold. The
above reference to "units owned" and "units then owned" refers to units
registered in the name of the retired employee and includes any marital or
community property interest of the retired employee's spouse.
(d) For purposes of the option events described in Sections ((c),
(cc) and (ccc),
(i) units held by an employee-eligible-transferee or an Employee
Benefit Trust established by an employee-eligible shall be treated as
owned by the ex-employee-eligible who assigned such units to the employee-
eligible-transferee or established the Employee Benefit Trust; and
(ii) such option events shall be applied to such units held by
employee-eligible-transferees and such Employee Benefit Trusts in the
chronological order of the issuance of the certificates evidencing such
units after first being applied to units held by the ex-employee-eligible.
The death of the ex-employee-eligible shall be an option event in respect
of all units then held by the employee-eligible-transferees and such
Employee Benefit Trusts as well as all units then owned by the ex-
employee-eligible.
(e) Termination as referred to in this Section 9 shall be deemed to
have occurred when an employee has ceased to be employed by any of the
Employers.
(f) A sale, transfer or other disposition of a unit or the trust
certificate evidencing a unit, which is invalid and ineffective under the
provisions of Section 12, shall constitute an option event with respect to
such unit at the time of such attempted sale, transfer or other
disposition.
(g) An option event with respect to a unit owned by an employee-
eligible, an ex-employee-eligible or an employee-eligible-transferee shall
constitute an option event with respect to any marital or community
property interest of the spouse of the employee-eligible, the ex-employee-
eligible, or the employee-eligible or ex-employee-eligible who transferred
the unit to the employee-eligible-transferee.
10: Options With Respect to Units. Options to purchase all or any
of the units made available through the happening of an option event, by
depositing at the office of the trustees in cash the option price
determined according to the formula set forth in Section 11, together with
interest thereon as provided in Section 13, within the period of time
limited below, shall be vested in each of the following classes of
optionees successively:
Class A Optionees. For a period of six months after the happening of
an option event, such employee-eligible or eligibles, excluding the
President, either concurrently or successively, for such number of units
and for such period or periods not exceeding six months, as may be
designated in writing by the President to the Trustees.
Class B Optionees. For a period of two months after the expiration
of the time limited to Class A Optionees, such employee-eligible or
eligibles, including the President, and such employee benefit trusts,
either concurrently or successively, for such number of units and for such
period or periods not exceeding two months, as may be designated in
writing by the Board of Directors to the trustees.
Class C Optionees. For a period of four months after the expiration
of the time limited to Class B Optionees, stockholder-eligibles, with the
right as among themselves to purchase the units available to them in
proportion to the number of shares of Journal stock owned by them
respectively, together with their respective proportions of such units not
purchased by any of their number.
Class D Optionees. For a period of five years after the expiration
of the time limited to Class C Optionees, the Company.
The options of each class of optionees shall apply only to units not
purchased by optionees in a prior class or classes.
The options arising upon the occurrence of any option event described
in Section 9(a) or in Section 9(b) shall terminate and supersede options
then pending, if any.
Any cash deposited with the trustees under the provisions of this
section, less taxes and expenses, if any, incident to the purchase of a
unit or units, shall be paid over promptly by the trustees to the seller
of such unit or units, subject, however, to the provisions of Sections 16
and 17.
Any of the aforesaid classes of optionees may waive their options by
delivering written notice thereof to the trustees. The President shall
have the power at any time to waive the options of Class A Optionees and
the Board of Directors shall have the power at any time to waive the
options of Class B Optionees. In the event the option of any class of
optionees shall have been waived, as hereinbefore provided, the options of
the next succeeding class of optionees shall commence on the date of such
waiver.
11: Formula for Option Price of a Unit. The price, called "option
price," at which any unit subject to the foregoing options may be
purchased by any optionee shall be determined as follows:
The option price of a share of Journal stock shall be calculated
according to the formula set forth in Section 25, except that in lieu of
the words "the date of the trustees' offer" wherever occurring in Section
25, there shall be substituted (a) with respect to optionees in Classes A,
B or C, the words "the date of the option event" and (b) with respect to
the optionee in Class D, the words "the date of purchase." This amount
shall then be multiplied by the number of shares of Journal stock held by
the trustees on the date of the option event, in the case of optionees of
Class A, B or C, or on the date of purchase, in the case of Class D
Optionee, and the result thus obtained shall be divided by the number of
units outstanding on such date. The quotient thus obtained shall be the
option price of such unit. The trustees shall make a tentative
determination of such option price and the payment to the trustees of the
sum so determined shall be a sufficient exercise of the option, subject to
such adjustment of such tentative option price as may subsequently be
requisite.
12. Restrictions on Transfer of Units. Every employee-eligible and
ex-employee-eligible shall have the right to assign any or all units owned
by him, by way of gift without considerations to a trustee, herein called
an "employee-eligible-transferee," in trust, for the benefit of (i)
individual beneficiaries or (ii) corporations, associations or foundations
organized for charitable, educational or religious purposes, subject to
the following conditions.
(a) Nothing in this section shall be deemed to authorize the sale of
units for a valuable consideration.
(b) No assignment of units to an employee-eligible-transferee shall
revoke or detract from the purchase option rights to which such units were
subject prior to transfer thereof to the trustee.
(c) A certified copy of the trust instrument evidencing any
assignment of units by an employee-eligible to an employee-eligible-
transferee shall be filed with the trustees under JESTA at the time of
transfer.
Unless and until units owned by an employee-eligible or by an ex-
employee-eligible or by an employee-eligible-transferee or by an employee
benefit trust shall have become subject to purchase under the options
specified in Section 10 and said options shall have been exercised, or
shall have expired without having been exercised, no sale, transfer or
other disposition of such units or the trust certificates evidencing the
same shall be valid or effective for any purpose whatsoever except as
provided in Section 12 above and in Sections 15 and 16. The
classification of a unit as marital property or community property under
applicable state laws shall not be deemed a sale, transfer or other
disposition for purposes of this paragraph so long as the transferor
unitholder in whose name the unit is recorded on the records of the
trustees (the "transferor unitholder") retains sole and exclusive rights
of management and control over the unit; nor shall a subsequent
reassignment of the transferee spouse's marital or community interest back
to the transferor unitholder be deemed a sale, transfer or other
disposition for purposes of this paragraph. The term "management and
control" shall include, among other rights, the right to vote, encumber,
sell or otherwise dispose of the unit during the lifetime of the
transferor unitholder. Any sale, transfer, or other disposition of a unit
or the trust certificate evidencing the same which is not valid or
effective under this paragraph shall constitute an option event under
Section 9 at the time of such attempted sale, transfer or other
disposition.
Nothing in this agreement shall be deemed to prohibit an eligible,
other than an employee-eligible, employee benefit trust, ex-employee-
eligible or employee-eligible-transferee, from assigning to any other
eligible any units owned by him.
13: Rights of Unitholders to Participate in Dividends While Options
to Class A, B and C Optionees are Pending. From the occurrence of an
option event with respect to any unit, and so long as such unit shall be
subject to purchase by optionees of Class A, B or C, the trustees shall
withhold and accumulate all payments out of dividends on Journal stock
which otherwise would be made on account of such unit and shall pay over
such accumulations, if any, to the purchaser of such unit, if an optionee
of Class A, B or C, and such purchaser shall pay to the trustees, and they
in turn shall pay to the owner of such unit, interest on the option price
of such unit, computed from the date of the happening of the option event
to the date of purchase at the rate per annum to be established by the
trustees from time to time as necessary in their sole discretion to
reasonably reflect prevailing interest rates; but if such unit be not
purchased by an optionee of Class A, B or C, then upon the expiration of
the option to Class C Optionees, the trustees shall pay over such
accumulations unto the owner of such unit.
14: Rights of Unitholder to Participate in Dividends After the
Expiration of the Options to Class C Optionees. After the expiration of
the option to Class C Optionees, all further payments out of dividends
received on Journal Stock on account of any unit which shall not have been
purchased by an optionee of Class A, B or C, shall be paid by the trustees
to the owner of such unit.
15: Right to Transfer Units Not Purchased by Optionees of Class A, B
or C. If any unit shall not have been purchased by an optionee of class
A, B or C, then upon the expiration of the time limited to Class C
Optionees, such unit shall be transferable (and the trustees on demand
shall then make the appropriate notation of such fact on the trust
certificate evidencing such unit) by such person as may from time to time
be the owner thereof, subject to the provisions of Section 7, to anyone
even though not an eligible, provided, however, that such unit shall be
subject to the option to the Class D Optionee until such option shall have
expired.
16: Right of Eligibles to Pledge Units Subject to Options. Any
trust certificate owned by an eligible may be pledged to secure the
payment of a loan or for any other purpose provided, however, unless and
until such eligible shall have notified the trustees in writing of such
pledge, the trustees shall not be bound to recognize the interest of any
pledgee in such trust certificate or in any unit evidenced thereby, and
provided further that the pledgee shall acquire no rights in such unit
greater than the rights of the pledgor therein. No sale or other transfer
of a unit pledged by an employee-eligible or an ex-employee-eligible, upon
foreclosure or other enforcement of such pledge, shall be valid or
effective unless at least five days' notice of such sale or other transfer
shall have been given in writing to the trustees. The occurrence of such
foreclosure sale or other transfer pursuant to due notice to the trustees,
shall be deemed an option event with respect to any unit affected thereby
and shall have the same effect as an option event specified in Section
9(a) and shall terminate and supersede options then pending, if any; and
thereupon such unit shall be subject to purchase under the options
provided in Section 10. If such unit shall be purchased by an optionee of
Class A, B, C or D, the option price, together with interest or payments
on account of dividends as provided in Section 13, shall be paid over by
the trustees to their pledgor, the pledgee and/or the foreclosure
purchaser as their respective interests may appear. Any pledgee, by
accepting any unit or the trust certificate evidencing the same in pledge,
shall be deemed to have accepted and to have agreed to be bound by all the
terms and conditions of this Agreement.
17: Obligation to Surrender Trust Certificates Upon the Happening of
an Option Event; Remedies. Forthwith upon the occurrence of an option
event with respect to any unit, it shall be the duty of whatever person
shall have possession of the trust certificate evidencing such unit, to
deliver the same to the trustees properly endorsed for transfer to the
purchaser, and the trustees shall be entitled to the remedy of specific
performance to enforce such duty, irrespective of whether or not they have
or could have resorted to other remedies. In the event that any unit
shall have been purchased by an optionee of any class and the trust
certificate evidencing such unit properly endorsed for transfer to the
purchaser shall not have been delivered to the trustees at the time of
such purchase, such trust certificate shall thereupon become void and of
no effect except as evidence of the right to receive the option price,
which may be deposited without interest in any bank which the trustees may
select; and the trustees shall re cord the transfer of such unit and shall
issue to the optionee purchasing the same a new trust certificate
therefor.
18. Lost, Stolen or Destroyed Trust Certificates. The trustees, if
satisfied that any trust certificate has been lost, stolen or destroyed,
may issue in lie of thereof a new trust certificate, whereupon the old
trust certificate, whether or not in fact lost, stolen or destroyed, shall
become void and of no effect whatsoever and the trustees may impose such
conditions upon and exact such indemnity for the issuance of such new
trust certificate as they may deem necessary to desirable.
19: Information and Records Concerning Option Events. The trustees
shall furnish to the Company a list of all owners of units and shall
thereafter notify the Company currently of all persons becoming owners or
ceasing to be owners of units. The Company shall promptly notify the
trustees of the occurrence of any option event specified in Section 9(a)
and (b) and the President shall promptly notify the trustees of the
occurrence of an option event specified in Section 9(c). Upon receipt of
information to the effect that an option event has occurred, the trustees
shall make a record of the name of the owner and the number of units with
respect to which such option event shall have occurred, and the date of
the occurrence of such option event, which record shall be open to
inspection by all interested persons under such conditions as the trustees
in their discretion shall prescribe. In any unit or units, with respect
to which an option event shall have occurred, shall not have been
purchased by optionees of Class A or Class B as provided in Section 10,
the trustees, promptly upon the expiration of the time limited to Class B
Optionees, or waiver of option, shall notify each Class C Optionee in
writing of his option, specifying the number of units subject to option,
and if any such unit or units shall not have been purchased by Class C
Optionees the trustees shall promptly upon the expiration of the time
limited to class C Optionees notify Class D Optionee in writing of its
option, specifying the number of units subject to its option.
II.
PROVISIONS RELATING TO
JOURNAL STOCK
20: Disposition of Income. The trustees shall pay over, as soon as
practicable after receipt, all income for the Capital Stock Fund,
including such bonds or notes of the Company, if any, as may be received
in lieu of current income, less such sums as they may deem necessary to
provide for the payment of taxes and expenses of administering the Capital
Stock Fund, to owners of units in proportion to the number of units owned
by them respectively.
The trustees may instruct the Company to pay directly to the owners
of units any sums out of the dividends on Journal stock which otherwise
would be payable to the trustees, and the receipt of any such instructions
by the Company shall discharge the trustees from any and all further
liability on account of any such payment.
If any units shall have been pledged as provided in Section 16 and
the pledgor shall have given written directions to the trustees for
payment to the pledgee of the whole or any part of the income to which
such pledgor would otherwise be entitled, the trustees shall comply with
such directions or cause the same to be complied with, so long as they
shall remain unrevoked.
21: Voting Rights. The trustees, as soon as they shall receive
notice of any meeting of the owners of Journal stock, shall issue to each
owner of units, except ex-employee-eligibles, employee benefit trusts and
employee-eligible-transferees, a proxy authorizing him or such other
person or persons as he may substitute for him to vote at such meeting the
number of shares of Journal stock represented by the units owned by him,
provided, however, and each such proxy shall so state, that neither the
owner of such units nor his substitute or substitutes shall have the power
or authority to vote (a) to sell or lease all or substantially all of the
assets of the Company, or (b) to dissolve the Company, or (c) to merge or
consolidate the Company with any other corporation or corporations in
which the Company and/or the stockholders of the Company upon completion
of such consolidation or merger do not control directly or indirectly a
majority of the voting stock, unless the employee owners of at least two-
thirds of the outstanding units owned by employee-eligible shall have
authorized the trustees to offer all shares held by the trustees for sale
in accordance with the provisions of Section 24 to the classes of
optionees therein defined and such options shall have expired within three
months prior to such vote. The trustees may authorize the affixing of a
facsimile of their signatures to any proxy with the same effect as though
such proxy were signed by them personally.
The trustees shall have exclusive authority to vote all shares of
Journal stock represented by units owned by ex-employee-eligibles,
employee benefit trusts and employee-eligible-transferees.
22: Stock Dividends. All dividends paid to and received by the
trustees in shares of Journal stock shall be added to and become a part of
the Capital Stock Fund.
23: Subscription Rights. In the event that the trustees shall
become entitled to subscribe to additional shares of Journal stock, they
shall, as soon as practicable thereafter, notify in writing each owner of
a unit then outstanding, other than an ex-employee-eligible, of such fact
and shall make an offer to each such owner to subscribe on his behalf to
such part of such shares of Journal stock as shall be proportional to the
number of units owned by him or any portion of such part, on condition
that he shall accept such offer and pay to the trustees the subscription
price before a specified date, sufficiently prior to the date when the
trustees' right to subscribe shall expire to enable them to exercise such
right; and on the further condition that the trustees shall not be obliged
to subscribe to any fractional share of Journal stock on behalf of any
such owner, and in every case they shall have authority to reduce the
number of shares subscribed for so far as may be requisite to avoid the
creation of a fractional unit. Any owner of a unit who shall receive such
an offer from the trustees may, subject to his obtaining the prior written
consent of the President, transfer to any eligible, other than an ex-
employee-eligible, his right to have the trustee subscribe to additional
shares of Journal stock on his behalf.
The trustees shall subscribe to so many shares of Journal stock as
can be paid for with the funds supplied to them by the owners of units
accepting the trustees' offer and shall permit their right, with respect
to the remaining shares of Journal stock to which they shall be entitled
to subscribe, to lapse. Upon receipt of any shares of Journal stock thus
subscribed for, the trustees shall forthwith issue to each owner of a unit
or units who shall have accepted the trustees' offer, a trust certificate
for so many units as shall be necessary to represent the number of shares
of Journal stock paid for by him, at the ratio obtaining immediately prior
to such subscription between the number of units outstanding and the
number of shares of Journal stock held by the trustees. Rights to
subscribe to bonds or notes of any corporation, if any shall be required
by the trustees, shall be distributed pro rata among the owners of units.
24: Sale of Journal Stock. None of the shares of Journal stock held
by the trustees shall be sold or otherwise permanently disposed of except
in exchange for its equivalent in the recapitalization or reorganization
of the Company unless and until (a) written authorization thereto signed
by the employee-eligible and employee benefit trust owners of at least
two-thirds of the units then outstanding owned by employee-eligibles and
employee benefit trusts shall have been filed with the trustees within
eighteen months prior to such sale or other permanent disposition, and (b)
the trustees shall have first granted to the following classes of
optionees, successively, options in writing for the periods of time
limited below, to purchase all or any part of such Journal stock, not
purchased by prior optionees, by depositing at the office of the trustees
the option price in cash determined according to the formula set forth in
Section 25.
Class One Optionees. Beginning with the date of the first granting
of the options by the trustees, called "date of trustees' offer," and
ending at the expiration of six months thereafter:
(a) Each employee-eligible and employee benefit trust owner of units
who did not consent to such proposed sale or other permanent disposition,
called "non-consenting eligibles," as to such proportion of the shares of
Journal stock offered by the trustees as the number of units owned by him
bears to the total number of units then outstanding.
(b) Stockholder-eligibles as to the remainder of the shares of
Journal stock offered by the trustees, with the right as among themselves
to purchase such remainder, in proportion to the number of shares of
Journal stock owned by them respectively, together with their respective
proportion of such remainder, if any, not purchased by any of their
number.
Class Two Optionees. For a period of three months after the
expiration of the time limited to Class One Optionees.
(a) The non-consenting eligibles as to so many of the shares of
Journal stock offered to stockholder-eligibles as Class One optionees as
shall not have been purchased by said stockholder-eligibles, with the
right in such non-consenting eligibles as among themselves to purchase
such shares of Journal stock, in proportion to the number of units owned
by them respectively, together with their respective proportion of such
shares, if any, not purchased by any of their number.
(b) Stockholder-eligibles as to so many of the shares of Journal
stock offered to non-consenting eligibles as Class One optionees as shall
not have been purchased by said non-consenting eligibles, with the right
in said stockholder-eligibles as among themselves to purchase such shares
of Journal stock, in proportion to the number of units owned by them
respectively, together with their respective proportions of such shares,
if any, not purchased by any of their number.
Class Three Optionees. For a period of three months after the
expiration of the time limited to Class Two optionees, the Company.
All of the optionees within any of the aforesaid classes may waive
their options by delivering joint written notice thereof to the trustees,
in which event the options of the next succeeding class of optionees shall
be deemed to begin to run on the date of such waiver.
The trustees shall not sell or otherwise permanently dispose of
(except in exchange for its equivalent on recapitalization or
reorganization of the Company) any of the shares of Journal stock held by
them hereunder to any person other than a Class One, Two or Three optionee
except under the express condition that the person so purchasing or
otherwise acquiring such shares of Journal stock shall agree also to
purchase or take over from each Class One optionee, within three months
after the date of such purchase or other acquisition, for the same price
or other consideration and upon the same terms and conditions, so many
shares of Journal stock as may be offered to such purchaser by such Class
One optionee; provided, however, that if the trustees shall hold less than
a majority of the total number of shares of Journal stock outstanding such
purchaser shall not be obligated so to purchase or take over from any
Class One optionee any greater proportion of the shares of Journal stock
owned by such Class One optionee than the ratio between the number of
shares so sold or otherwise permanently disposed of by the trustees and
the total number of shares of Journal stock held by the trustees.
25: Formula for Option Price of Journal Stock. The price, called
"option price," at which any share of Journal stock shall be subject to
purchase pursuant to the options provided in Section 24 shall be
determined on a consolidated basis in accordance with generally accepted
accounting principles practiced by the Company as shown by the books and
records of the Company and its subsidiaries, as follows:
The book value of all outstanding Journal stock as of the close of
the fiscal year next preceding the date of the trustees' offer shall first
be determined. This figure shall be increased by the net income or
decreased by the net loss, as the case may be, realized between the close
of such fiscal year and the close of the accounting period next preceding
the date of the trustees' offer, and from the amount thus obtained shall
be subtracted the amount of dividends, if any, paid on such Journal stock
after the close of such fiscal year. To this result there shall be added
an amount equal to 39 times the average accounting period net income of
the Company available for dividends on Journal stock during the 65
accounting periods next preceding the date of the trustees' offer; but in
computing such net income there shall be deducted dividends; if any, paid
or payable on any stock having priority over Journal stock. The sum thus
obtained shall be divided by the number of shares of Journal stock
outstanding as of the date of the trustees' offer and the quotient shall
be the option price of each share of Journal stock. In the event that
there shall have been any change in the capitalization of the Company
between the end of the fiscal year next preceding the date of the
trustees' offer and the date of the trustees' offer, the trustees shall
make such adjustment in the option price as may be necessary fairly to
reflect such change. The trustees shall make a tentative determination of
such option price and payment to the trustees of the sum so determined
shall be sufficient exercise of the option, subject to such adjustment of
such tentative option price as may subsequently be requisite.
III.
GENERAL ADMINISTRATIVE
CLAUSES
26: General Powers of the Trustees. The trustees are authorized and
empowered:
(a) To cause to be transferred into their names as trustees
hereunder and to retain any and all shares of Journal stock now or
hereafter acquired by them under this Agreement, without liability on the
part of the trustees for any decrease in value thereof.
(b) Subject to the provisions and limitations herein expressly set
forth, to sell at public or private sale, exchange for like or unlike
property, and otherwise dispose off any or all shares of Journal stock
held by them hereunder, at such price and upon such terms and credits as
the trustees may deem proper.
(c) Subject to the provisions and limitations herein expressly set
forth, to participate in any plan or proceeding for reorganizing,
consolidating, merging or adjusting the finances of the Company, to pay
any assessment or any expense incident thereto and to do any other act or
thing that the trustees may deem necessary or advisable in connection
therewith.
(d) To employ counsel and pay them reasonable compensation and the
trustees shall be fully protected in any action under this Agreement taken
by them in good faith in accordance with the opinion of such counsel.
(e) To select and employ suitable agents and to pay them reasonable
compensation.
(f) To compromise or submit to arbitration any claim in favor of or
against the trust estate or any controversy as to the option price of
Journal stock.
(g) To transfer so many shares of Journal stock held by them
hereunder into the name of each person elected a Director of the Company
who may have been so elected by the vote of the owners of units as shall
be necessary to enable such person to qualify as such Director.
(h) In every case of controversy between buyer and seller respecting
the option price of any unit, to employ at the expense of the Capital
Stock Fund a certified public accountant or a firm of certified public
accountants approved by the Company, to determine the amount of such
option price, and every determination so made shall be binding and
conclusive upon all parties to the transaction.
(i) To borrow any sum or sums of money from time to time from any
person, including the Company, for the purpose of paying taxes and, as
security for the payment of any sums so borrowed, together with interest
thereon, to charge, by pledge, mortgage or otherwise, the Capital Stock
Fund or any other assets in the hands of the trustees and to execute such
evidences of indebtedness as the lenders may from time to time require.
(j) To institute or cause to be taken or instituted or to intervene
in or become a party to or exercise control over such actions, suits or
proceedings as the trustees shall deem judicious or proper in order to
protect the Capital Stock Fund or any other assets held by the trustees
and to defend or settle, in whole or in part, any litigation which may at
any time be threatened or instituted.
27: Notices. It shall be the duty of each party in interest
hereunder, including each owner of trust certificates, to keep the
trustees informed of his proper post office address, and any notice,
communication, payment or distribution under this Agreement may be given
or made by mailing such notice, communication, payment or distribution to
such address with the same force and effect as if personally delivered.
28: Meetings of Owners of Trust Certificates. Meetings of owners of
trust certificates or of any class of such owners may be called by the
trustees in their discretion and held at such time and place as shall be
designated by the trustees, upon five days' notice in writing, from the
trustees to the class of owners of trust certificates for which such
meeting is held and at any such meeting a trustee designated by the
trustees shall act as chairman and each unit shall be entitled to one vote
in determining any matter presented to such meeting. In case there shall
be no trustees such meeting may be called by any five owners of units.
IV.
THE TRUSTEES
29: Right to Resign; Selection of Successor Trustees. The office of
any trustee hereunder shall be vacated and any and all right, title and
interest of such trustee in the Capital Stock Fund and other assets in the
hands of the trustees, if any, shall be divested without formal conveyance
by (a) death, (b) mental or physical incapacity certified to the remaining
trustees by two physicians of good standing retained by the trustees, (c)
absence from the United States for a period of more than one year, (d)
resignation evidenced by written instrument delivered to the remaining
trustees, (e) termination of employment in the service of the Employers,
or (f) ceasing to be an owner of one or more units.
Any vacancy occurring in the office of any trustee shall be filled
from among the employee-eligible owners of units by the written
appointment of Harry J. Grant, so long as he shall be one of the trustees
hereof; and by the written acceptance of such appointee. Thereafter every
such vacancy shall be filled from among the employee-eligible owners of
units by the written appointment of the remaining trustees or trustee and
the written acceptance of the appointee, but if such remaining trustees or
trustee shall not have filled such vacancy within one month after such
vacancy shall have occurred, or if there shall be no remaining trustee,
then by the affirmative vote of the employee-eligibles and employee
benefit trusts owning at least a majority of the units then outstanding
owned by employee-eligibles and employee benefit trusts.
A certificate executed by any three trustees in the same manner as a
deed to be recorded shall for all purposes of this Agreement be evidence
of the identity of the trustees acting under this Agreement at the time
specified in such certificate.
All persons appointed or elected to the office of trustee, as
aforesaid, shall be vested with all the same estates, powers, rights,
duties privileges, immunities and discretions as if originally named
herein.
30: Majority Rule; Action by Trustees. Except only as provided in
Section 38, a majority of the number of the trustees from time to time
acting hereunder, even though less than five, may do any act which might
be performed by all of their number, and such action may be at a meeting
of the trustees or without a meeting by an instrument or separate
concurrent instruments in writing signed by the requisite number of
trustees and filed at the office of the trustees. If less than all of the
trustees shall perform any act they shall give prompt notice of such
action to the trustees who did not participate therein, but failure to
give such notice shall not invalidate such act. No trustee shall be
answerable or accountable for any act of any other trustee in which he
shall not have participated, nor for the custody of any property except
such as shall come into his own possessions or personal control.
The trustees may appoint a secretary who shall keep and maintain a
record of their proceedings and actions in such form as the trustees shall
determine and meetings of the trustees shall be held at such times and
places and upon such notice as they may from time to time determine and
establish by agreement or resolution.
31: Eligibility of Trustees as Officers and Directors. No person
holding office as trustee hereunder shall on that account be ineligible to
serve as an officer or member of the Board of Directors of any of the
Employers, nor to receive compensation for services rendered to any of the
Employers, nor to acquire or hold for his personal account shares of
Journal stock, units or trust certificates evidencing units.
32: No Bond Required of Trustees. No bond or other security shall
be required of any trustee for the due performance of his duties hereunder
unless a majority of the trustees shall from time to time determine
otherwise.
33: Limitation on Liability of Trustees for Losses. No trustee
shall incur any liability or have any responsibility for any error of
judgment or mistake of law, or for any action or omissions in the
administration of this trust, except only for his individual willful
misconduct.
34: Compensation of Trustees; Exoneration From Liability. The
trustees shall be entitled to no compensation for their services
hereunder, but shall be entitled to exoneration from any and all
liabilities which may be incurred by them in the bona fide discharge of
their duties hereunder and shall be entitled to reimbursement for taxes
and expenses paid in administering this trust, and shall have a lien upon
all trust assets in their hands to secure such exoneration and
reimbursement.
35. Audit of the Trustees' Accounts. The trustees shall, at least
once in every year, cause to be prepared a comprehensive report setting
forth their assets and liabilities, receipts and disbursements, and shall
cause such report to be audited by a certified public accountant or a firm
of certified public accountants selected by the trustees and copies
thereof shall be filed in the office of the trustees and shall there be
open for the inspection of stockholder-eligibles and the owners of units.
V.
TERMINATION, AMENDMENT AND DISTRIBUTION
36: Termination by Sale of Journal Stock. In the event that the
trustees shall have sold, in compliance with the provisions of Section 24,
any or all of the shares of Journal stock held by them hereunder, this
trust, with respect to the shares of Journal stock so sold, shall
terminate.
37: Duration of Trust. Unless terminated in the manner provided in
Section 36 or in Section 38, the duration of this trust shall be
perpetual.
38: Amendment and Termination by Consent. This Agreement may be
amended, or the trust hereby created may be terminated at any time by the
written consent of all of the trustees then acting hereunder and the
written consent of such of the stockholder-eligibles as shall own at least
80 percent of the shares of Journal stock then owned by stockholder-
eligibles, and the affirmative vote of employee-eligible and employee
benefit trust owners of at least two-thirds of the units then outstanding
owned by employee-eligibles and employee benefit trusts.
39: Distribution Upon Termination. In the event that this trust
shall be terminated by sale of Journal stock as provided in Section 36 the
trustees shall distribute the proceeds of such sale, or in the event this
trust shall be terminated in the manner provided in Section 38, the
trustees shall distribute the Capital Stock Fund as it may then be
constituted, including principal and undistributed income thereof, if any,
less such sums as the trustees shall deem necessary to reserve for taxes,
expenses and other charges which may be incurred by the trustees in making
such sale and/or distribution, unto the owners of units then outstanding,
in proportion to the number of such units owned by them respectively.
VI.
SUPPLEMENTARY TRUST FUNDS
40: Composition of a Supplementary Trust Fund. If the trustees
shall acquire, either through the receipt of dividends, the exercise of
subscription rights, an exchange upon recapitalization or reorganization,
or by any other means, stock of the Company of a kind or class other than
Journal stock is defined in Section 1, each such kind or class of stock,
called "supplementary stock," shall be segregated and held by the trustees
in a separate trust fund, called "supplementary trust fund," the
beneficial interest in which shall be divided into as many equal parts,
called "supplementary units," as the trustees shall deem necessary or
convenient, and ownership of such supplementary units shall be vested in
the owners of units or supplementary units on account of which the same
shall have been acquired pro rata and shall be evidenced by trust
certificates, called "supplementary trust certificates," which shall be
issued in substantially the form set forth in Section 4.
41: Terms and Conditions Governing Supplementary Trust Funds, Units
Therein and Supplementary Trust Certificates. Except as to the formula
for determining option price, as provided in Section 42 and 43,
respectively, each supplementary unit and each kind or class of
supplementary stock represented thereby shall be subject to all the terms
and conditions of this Agreement which are applicable to units and Journal
stock respectively, to the same extent as though the words "supplementary
unit" were substituted whenever the word "unit" appears, and the words
"supplementary stock" were substituted wherever the words "Journal stock"
appear, and each supplementary trust certificate and each supplementary
trust fund shall be subject to all the terms and conditions of this
Agreement which are applicable to trust certificates and the Capital Stock
Fund, respectively, to the same extent as though the words "supplementary
trust certificate" were substituted wherever the words "trust certificate"
appear, and the words "supplementary trust fund" were substituted wherever
the words "Capital Stock Fund" appear. Supplementary units subject to the
terms and conditions of this Agreement may be dealt with by the owners
thereof independently of the units or other supplementary units on account
of which they may be acquired.
42: Formula for Option Price of a Supplementary Unit. In the event
that any supplementary unit shall be subject to purchase under the options
as provided in Section 9 and 10, the price, called "option price," at
which such supplementary unit may be purchased by any optionee shall be
determined as follows:
The option price of a share of the supplementary stock represented by
such unit shall be calculated according to the formula set forth in
Section 43, except that in lieu of the words "date of the trustees' offer"
wherever occurring in Section 43, there shall be substituted (a) with
respect to optionees of Class A, B or C the words "date of the option
event," and (b) with respect to Class D optionee the words "date of
purchase." This amount shall then be multiplied by the number of shares
of such supplementary stock held by the trustees on the date of the option
event in the case of optionees of Class A, B or C or on the date of
purchase in the case of Class D optionee, and the result thus obtained
shall be divided by the number of such supplementary units outstanding on
such date. The quotient thus obtained shall be the option price of such
supplementary unit, which shall be tentatively determined with the same
effect as provided in Section 11.
43: Formula for Option Price of Supplementary Stock. In the event
that any share of supplementary stock shall become subject to purchase
under the options provided in Section 24, the price, called "option
price," at which such supplementary stock may be purchased by any optionee
described in said Section 24 shall be determined on a consolidated basis
in accordance with generally accepted accounting principles practiced by
the Company as shown by the books and records of the Company and its
subsidiaries, as follows:
The book value of all such outstanding supplementary stock as of the
close of the fiscal year next preceding the date of the trustees' offer
shall first be determined. Insofar as applicable to such supplementary
stock, this figure shall be increased by the net income or decreased by
the net loss, as the case may be, realized between the close of such
fiscal year and the close of the accounting period next preceding the date
of the trustees' offer, and from the amount thus obtained shall be
subtracted the amount of dividends, if any, paid on such supplementary
stock since the close of such fiscal year. To this result there shall be
added, if such supplementary stock shall be the terms of its issue be
entitled to participate without limit in the net income of the Company
available for dividends, an amount equal to 39 times the proportionate
interest of such supplementary stock in the average accounting period net
income of the Company available for dividends during as many accounting
periods not exceeding 65 next preceding the date of the trustees' offer as
such supplementary stock shall have been outstanding. The sum thus
obtained shall be divided by the number of shares of such supplementary
stock outstanding as of the date of the trustees' offer, and the quotient
shall be the option price for each share of such supplementary stock which
shall be tentatively determined with the same effect as provided in
Section 25. Provided however, that the option price of any share of
supplementary stock which by the terms of its issue is entitled to
participate in net earnings of the Company in a limited amount or
percentage, shall not in any event exceed the price at which it is
callable or redeemable under the terms of its issue, or the stated amount
at which it is entitled by the terms of its issue to participate in the
assets of the Company in the event of liquidation, whichever is higher.
In the event that there shall have been any change in the capitalization
of the Company between the end of the fiscal year next preceding the date
of the trustees' offer and the date of the trustees' offer, the trustees
shall make such adjustment in the option price as may be necessary fairly
to reflect such change.
VII.
DIVISION OF TRUST INTO SEPARATE TRUSTS
44: Circumstances Under Which Trust is Divisible. If the trustees
shall acquire, either through the receipt of dividends, the exercise of
subscription rights, an exchange upon reorganization or by any other
means, stock of any corporation other than the Company, which corporation
and in that event the Company also are called "separate corporations," and
any owner of units shall cease to be employed by any separate corporation
but shall be employed by any other separate corporation, the trustees
shall divide this trust into separate and distinct trusts, called
"separate trusts," so that the stock of each separate corporation
employing the same owners of units shall be held in the same separate
trust but that the stock of each separate corporation employing different
owners of units shall be in different separate trusts, but, subject to
such limitation, the trustees may make any allocation among such separate
trust, of supplementary stock, if any, held in this trust before its
division as aforesaid which they may deem appropriate, having regard to
the nature of the business conducted by the separate corporations whose
stock shall be held in the several separate trusts.
If, however, the trustees shall acquire, through any of the means
described in the preceding sentence, stock of any corporation other than
the Company and none of the owners of units shall cease to be employed by
the Company by reason of being transferred to such corporation other than
the Company, the stock of such other corporation shall be called, and
treated in all respects as, supplementary stock, as provided in Sections
40, 41, 42, and 43.
45: Exchange of Trust Certificates and Supplementary Trust
Certificates, Terms Governing Separate Trusts. Upon the division of this
trust into separate trusts as provided in Section 44, the trustees shall
call in all of the outstanding trust certificates and supplementary trust
certificates, if any, and shall issue in exchange therefor to the owners
thereof appropriate trust certificates and, if issuable, supplementary
trust certificates for their proper number of units of beneficial interest
in each separate trust respectively. Upon receipt of trust certificates
and supplementary trust certificates, if any, in each separate trust each
employee-eligible or employee benefit trust owner thereof shall offer such
of them as represent units of supplementary units in shares of stock of a
separate corporation by which such owner is not employed or was not
created for sale to optionees in the manner set forth in Sections 9, 10,
41 and 42, provided, however, that Class A and B optionees shall be
employee-eligibles and employee benefit trusts of such separate
corporation and Class D optionee such separate corporation.
Thereafter each separate trust shall be administered independently of
each other separate trust and shall be subject to all the terms and
conditions of this Agreement as though the stock of each separate
corporation held in such separate trust were Journal stock or
supplementary stock, as the case may be, and each such separate
corporation were the Company, provided, however, that if any of the
trustees of this trust shall become disqualified to act as trustees of any
separate trust by reason of their not owning any units in such separate
trust, the remaining trustees who are not so disqualified shall constitute
the trustees for such separate trust and they, or if all of the trustees
shall be so disqualified, then all of such disqualified trustees shall
fill the vacancy of any disqualified trustee or trustees in the manner
herein provided with respect to this trust, and thereafter the several
separate trusts shall be administered by separate trustees.
46: Subdivision of Separate Trusts. If after a separation of this
trust into separate trusts, as provided in Section 44, any owner of a
separate unit or units shall cease to be employed by any separate
corporation but shall be employed by any other separate corporation whose
stock shall be held in any separate trust, or if the trustees shall
acquire in any separate trust, stock of a corporation other than that
whose stock shall be held in such separate trust and any of the owners of
units in such separate trust shall cease to be employed by any such
separate corporation but shall be employed by any other such separate
corporation whose stock shall be held in such separate trust, the trustees
shall subdivide such separate trust into further separate trusts, and the
same procedure shall be followed with the same effect as described in
Sections 44 and 45.
VIII.
SITUS; INSPECTION OF AGREEMENTS;
AND SEVERABILITY OF PROVISIONS
47: Situs. The trustees may, in their discretion, from time to
time, change the situs of the Capital Stock Fund or other assets held by
the trustees to any place within the United States, which situs may be at
a place other than the residence of the respective trustees, or any of
them.
48: Inspection of This Agreement. A copy of this Agreement shall be
filed in the principal office of the Company and in the office of the
trustees, and shall be open to inspection by all interested persons, under
such conditions as the trustees in their discretion shall prescribe.
49: Severability of Provisions. If for any reason any provisions of
this Agreement shall become or be held inoperative or illegal, the
validity and effect of the other provisions hereof shall not thereby be
affected.
This Agreement is executed in fourteen counterparts, each of which
will be deemed to be an original.
IN WITNESS WHEREOF, first parties, HARRY J. GRANT, FAYE McBEATH,
SUSAN A. BOYD, KATHARINE BOYD MOREHEAD and MARY BOYD EVANS, have hereunto
set their hands and seals, and WILMINGTON TRUST COMPANY, as Trustee under
Agreement dated November 12, 1931, with Katharine Boyd Morehead, and
WILMINGTON TRUST COMPANY, as Trustee under Agreement dated November 12,
1931, with Mary Boyd Evans, has caused this Agreement to be signed in its
name by one of its Vice Presidents and to be attested and its corporate
seal to be hereunto affixed by one of its Assistant Secretaries; and the
trustees, HARRY J. GRANT, LESLIE A. WEBSTER, JOHN DONALD FERGUSON,
LEONARD L. BOWYER and MARVIN H. CREAGER, have hereunto set their hands and
seals; and the third party, JOURNAL COMMUNICATIONS, has caused this
Agreement to be signed in its name by its President and to be attested and
its corporate seal to be hereunto affixed by its Secretary, done as of
May 15, 1937.
SUMMARY OF
JOURNAL COMMUNICATIONS INC.
MANAGEMENT LONG TERM INCENTIVE PLAN
PLAN PURPOSE
The purpose of the Journal Communications, Inc. Management Long Term Plan
is to:
- Motivate and drive management behavior to achieve results that
will enhance the employee owners' investment over the long term.
- Reward the contribution made by key employees to the long term
creation of shareholder value.
- Provide a long term incentive opportunity incorporating an
appropriate level of risk that will enable the Company to
attract, motivate and retain outstanding executives.
PLAN DEFINITIONS
The following words and phrases have the respective meanings indicated
below unless a different meaning is plainly implied by the context:
- "Plan" means the plan set forth in this Journal Communications
Inc., Management Long Term Plan, as it may be amended from time-
to-time and known as the "Management Long Term Plan."
- "Journal" means Journal Communications Inc., a multifaceted
media communications company based in Milwaukee, Wisconsin,
involved in newspaper publishing, commercial printing, broadcast
operations and telecommunications.
- "Subsidiary" means any subsidiary that is a part of Journal
Communications Inc.
- "Compensation Committee" or "Committee" means a committee of
non-employee individuals who have been appointed by the Board of
Directors and authorized to assume designated responsibilities
and perform designated functions in regard to executive
compensation decisions.
- "Eligible employee" or "employee" or "participant" means any
management employee of Journal Communications Inc. who is in a
position designated by the CEO and approved by the Compensation
Committee as eligible to receive a long term incentive award
under this Plan.
- "Performance Credit" refers to a unit of value awarded to each
eligible participant used in determining the amount of his/her
long term incentive bonus.
- "Performance Goals" refers to the levels of performance
established for each performance measure.
- "Performance Credit Values" refers to the dollar value placed on
a performance credit as the result of achieving a pre-determined
performance goal. Minimum, midpoint and maximum performance
credit values range from $25 to $150. Performance Credits will
have no value if performance fails to reach the minimum.
- "CEO" means Chief Executive Officer.
- "Long Term Incentive award" or "award" or "incentive" means the
amount to be paid, in the form of cash, to an eligible employee
pursuant to this Plan.
- "Performance Cycle" means a three year period (36 months)
beginning each January 1 and ending December 31.
- "Compensation" is defined as the annualized base salary as of
February 1st of the Plan year.
PLAN ADMINISTRATION
- The Plan shall be administered by the Compensation Committee
appointed by the Board of Directors of Journal Communications.
A majority of the Compensation Committee shall constitute a
quorum and the acts of a majority of the members present at any
meeting at which a quorum is present, or actions approved in
writing by all members of the Compensation Committee shall
constitute the acts of the Compensation Committee.
- The Compensation Committee shall have sole authority and
discretion, consistent with the provisions of this Plan to:
- Approve participants eligible to participate in the Plan
- Approve at the beginning of each Plan Cycle:
- Performance Credit Values at Minimum, Midpoint and
Maximum.
- Performance Credit Awards granted to each participant.
- Distribution of Corporate and Subsidiary Performance
Credits to each participant.
- Corporate and subsidiary performance measures and
goals.
Establish and approve the performance credit values, performance
credit awards, performance measures and goals for Journal
Communications' CEO.
- Approve Incentive Planning Calendar
- Approve at the end of each Plan Cycle:
- The final value of the performance credits.
- Long term incentive awards and individual payments for
all Plan participants.
- The Compensation Committee shall have full authority and
discretion to adopt rules and regulations to carry out the
purposes and provisions of this Plan within the parameters
defined by the Board of Directors. The Compensation Committee
interpretation and construction of any provision of this Plan
shall be binding and conclusive.
- The Committee will make decisions according to a majority vote
and maintain a written record of its decisions and actions, but
no member of the Committee shall act on any matter that has
particular reference to such member's own interest under the
Plan.
- All decisions and actions of the Compensation Committee shall be
binding and conclusive.
- All expenses of administering the Plan shall be borne by Journal
Communications.
PLAN OVERVIEW
- Performance cycles of three years are established as the
performance period of the long term incentive plan to which the
incentive awards relate. A new overlapping performance cycle
begins at the start of each new calendar year.
- Performance credits are calculated based on the selection of a
market multiple multiplied by the annualized base salary to
determine the midpoint award value for each eligible plan
participant. The midpoint award value is divided by $100 to
arrive at the number of performance credits to be granted.
- Performance credits are granted to each eligible participant
prior to the beginning of the performance cycle. Performance
credits for subsidiary presidents are granted in a combination
of subsidiary and corporate performance credits while
performance credits for corporate officers are granted in
corporate performance credits only.
- Performance credit values are based on the achievement of pre-
determined performance goals of the subsidiary and/or
corporation. The value of these performance credits are set for
the minimum, midpoint and maximum level of subsidiary and/or
corporate performance goals based on a pre-determined
performance measure(s). Performance measures and goals for the
corporation and subsidiaries as well as performance values are
set by the CEO and approved by the Compensation Committee for
each eligible participant.
- Each participant's long term incentive award will be determined
based on the degree to which three year performance at the
subsidiary and/or corporate level is achieved at the conclusion
of the performance cycle. Based on the performance goal
achieved at the end of the cycle, the performance credit's value
will be determined and multiplied by the number of credits
awarded to the participant at the beginning of the year to
determine the long term award earned for that performance cycle.
- Participants' long term incentive awards will be calculated
after the end of each performance cycle.
ELIGIBILITY AND PARTICIPATION
- The Compensation Committee is responsible for reviewing and
approving the recommendations of the CEO regarding the
eligibility and participation of employees in the Long Term
Plan.
- Participation in the Plan is limited to key employees of Journal
whose job responsibilities have a direct impact on the strategic
goals of Journal Communications.
- Initial Plan participants include the following:
- Chairman of the Board & CEO -- Journal Communications, Inc.
- President -- Journal Communications, Inc.
- Senior Vice President/Finance -- Journal Communications,
Inc.
- President -- Journal Sentinel Inc.
- President -- Journal Broadcast Group, Inc.
- President -- NorthStar Print Group, Inc.
- President -- ADD, Inc.
- President -- MRC Telecommunications Inc.
- President -- IPC Communications Services
- President -- PrimeNet Marketing Services
MODIFICATION OF PERFORMANCE CREDIT AMOUNTS AND DISTRIBUTION
- The number of performance credits and the distribution between
corporate and subsidiary performance units for eligible
employees may be adjusted as those employees move in and out of
positions. Generally, the following conventions will apply when
these changes occur:
- Eligible participants who are promoted to a different
incentive eligible positions will be considered for
purposes of this Plan to have become eligible for that
position's performance credits as well as be eligible to
begin a new performance cycle in the year of promotion if
it is on, or before, June 30th of that year. Eligible
participants who start on, or after, July 1st would become
eligible for that position's performance credits as well as
begin a new performance cycle on the first day of the new
calendar year. Long term incentive awards will be prorated
proportionately between each position depending on the
start date of the new position.
- Non-eligible employees who are promoted and/or newly-hired
into an eligible position must be in the position on, or
before, June 30th of that year to become immediately
eligible for the new position's performance credits and
distribution, performance measures and performance goals.
Non-eligible employees who are promoted and/or newly-hired
on July 1st, or after, become eligible on the first day of
the new calendar year.
ESTABLISHMENT OF PERFORMANCE MEASURES AND MINIMUM
MIDPOINT AND MAXIMUM GOALS FOR THE CEO
- Corporate performance measures, goals, performance credits and
their values will be established for the CEO and approved by the
Compensation Committee. Corporate and subsidiary performance
measures and goals for all other eligible participants will be
established by the CEO for approval by the Compensation
Committee.
DETERMINATION OF INCENTIVE AWARDS
- Long term incentive awards are based on the value of performance
credits multiplied by the number of performance credits awarded
to each eligible participant. The amount of the incentive award
may vary from participant's midpoint incentive opportunity up to
the maximum or down to the minimum of the incentive opportunity
range if the performance of a particular component has exceeded
or has not met its midpoint goal. Performance credits will have
no value if performance fails to reach the minimum. Incentive
opportunity ranges between the minimum and the maximum will be
interpolated for incentive award determination.
- The Compensation Committee will approve final value of the
performance credits, the long term incentive awards and
individual payments for all Plan participants.
PAYMENT OF INCENTIVE AWARDS
- Long term incentive awards will be paid before the close of the
first quarter, if practical, following the completion of the
performance cycle to which the incentive award relates.
- The incentive awards will be paid in the form of cash or
deferred at the request of each respective participant into
Journal Communications' Non-Qualified Deferred Compensation
Plan.
TERMINATION OF EMPLOYMENT
The Compensation Committee shall have the sole authority and discretion to
make decisions regarding the payment of incentives for participants who
terminate employment voluntarily or involuntarily during the performance
cycle due to retirement, disability or for other reasons.
NO ENLARGEMENT OF EMPLOYEE RIGHTS
Nothing contained in the Plan shall be deemed to give any Plan participant
the right to be retained in the service of Journal Communications or to
interfere with the right of Journal Communications to discharge,
discipline or retire any participant at any time.
MODIFICATIONS AND CHANGES TO THE PLAN AND INCENTIVE AWARDS
- The Compensation Committee may, at any time prior to the
approval of the long term incentive awards, approve a
modification or change to the performance measures and/or, goals
for any participant or participants. Such a change may be
desirable in the interests of equitable treatment of the
participants and Journal Communications as a result of
extraordinary or non-recurring events, changes in applicable
accounting rules or principles, changes in Journal
Communications' method of accounting, changes in applicable law,
changes due to consolidation, acquisitions, divestitures,
reorganization or other changes in Journal Communications'
structure, major changes in business strategy, or any other
change of a similar nature to any of the foregoing.
- The Committee also has the right to modify the incentive awards
based on the presence of extraordinary occurrences during the
Performance Cycle. Extraordinary occurrences are those events
which are outside the significant influence of Plan participants
and would, by their inclusion, cause a significant unintended
effect, positive or negative, on the corporate or subsidiary
performance results.
RELATIONSHIP TO OTHER BENEFITS
No payment under the Plan shall be taken into account in determining any
benefits under any pension, retirement, group insurance, or other benefit
plan of Journal Communications or its subsidiaries except as otherwise
specifically provided in the respective benefits plan agreement.
LIMITATION ON VESTED INTEREST
The earning of long term incentive awards by eligible employees under this
Plan is within the sole discretion of Journal Communications in accordance
with the terms of this Plan, and no eligible employee, or other person has
any legal right or vested interest in an incentive award under this Plan
prior to the actual payment to the eligible employee as an incentive
award.
INDEMNIFICATION OF BOARD OF DIRECTORS, COMPENSATION COMMITTEE
MEMBERS AND OFFICERS OF JOURNAL COMMUNICATIONS INC.
Each member of the Board of Directors, Compensation Committee and/or
Officer of Journal Communications Inc. shall be indemnified by Journal
Communications against the reasonable expenses, including attorney's fees,
actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connections with any appeal therein, to
which such person may be a party by reason of any action taken or failure
to act under or in connection with this Plan, and against all amounts paid
by such person in settlement thereof (provided such settlement is approved
by legal counsel selected or approved by Journal Communications), or paid
by such person in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be adjudged
in such action, suit or proceeding, that such Committee member is liable
for gross misconduct; provided that within sixty (60) days after the
institution of such action, suit or proceeding, such Committee member
shall in writing offer Journal Communications the opportunity, at its own
expense, to handle and defend the same.
PLAN AMENDMENT AND DISCONTINUATION
The Compensation Committee of Journal Communications Inc. may modify,
suspend or terminate this Plan at any time.
EFFECTIVE DATE OF THE PLAN
The Plan shall be effective with the Plan Year beginning January 1, 1994.
PLAN COMMUNICATION
- Each participant will be given a written description of the
Management Long Term Plan. The description will provide details
of the Plan including performance credit values, performance
levels, specific performance measures, goals and weightings, and
the incentive opportunity associated with each performance level
and measure.
- Participants will receive annual reports during the performance
cycle with respect to the performance measures of the Plan. A
final report regarding actual performance versus the Plan goals
will be communicated within the first quarter of the fiscal year
following the close of the performance cycle to which the Plan
relates.
JOURNAL COMMUNICATIONS INC.
By: _____________________________________
Date: ___________________________________
Journal Communications Inc.
Management
Annual Incentive Plan
Plan Purpose
Management incentive compensation is an essential element of a
compensation program. It rewards key executives and managers for achieving
pre-established financial and non-financial goals that support the
organization's annual business objectives/mission that will enhance the
employee owners' investment. It is designed to help attract, motivate and
retain the high quality managers necessary to assure continued
profitability and growth of Journal Communications Inc. and to improve
shareholder value.
Plan Objectives
The following specific objectives have been identified in developing this
plan:
- Assurance that unitholder gain and value is achieved before
incentive payments are paid.
- Recognition and reward for superior individual performance.
- Contribution toward the achievement of annual performance goals.
- Provision for compensation that is competitive with the
marketplace.
- Restriction of participation to key executives/managers whose
decisions affect annual results.
Plan Participation
Participation in the plan is determined by the chief executive officer.
The Compensation Committee of the Board of Directors approves
recommendations made by the CEO. Participation in the plan is limited to
key employees of Journal Communications and its subsidiaries whose job
responsibilities have a direct impact on the strategic goals of the
company.
Plan Description
The Management Annual Incentive Plan was established by the Compensation
Committee and approved by the Board of Directors of Journal Communications
Inc. Any changes to the plan must be approved by the Compensation
Committee.
The plan is designed to pay annual incentive awards if pre-established
financial targets and non-financial goals are achieved. A portion of each
participant's award is based on Journal Communications Inc. financial
targets, a portion based on the participant's own subsidiary financial
targets, a portion based on the successful achievement of personal
individual goals, and, if applicable, a portion based on the financial
targets of their division within a subsidiary company. Participants will
receive a chart that indicates the percentage that each organization will
account for in determining their award. Performance results toward
individual goals will account for 20% of a participant's incentive award.
Financial Measures
The financial measures used to determine targets for incentive awards are
Net Return on Invested Capital and Annual Growth in Revenue. These are the
best measures in determining improved value to Journal Communications
unitholders. If these measures increase, unitholder return on investment
also increases. Invested Capital is defined as stockholder's equity plus
intercompany debt, or stockholder's equity minus cash transferred to the
corporate office.
Each participant will be provided with the financial performance matrices
that will be used in determining company performance and in determining
individual awards under the plan.
Individual Goals
Annual individual performance goals will be established by each
participant and agreed upon by the participant's manager and the CEO of
Journal Communications. Success or the degree of success in accomplishing
individual performance goals will be determined by each participant's
manager and approved by the CEO of Journal Communications.
Opportunity Levels
Each participant will be assigned a position level that determines the
Minimum, Midpoint, and Maximum payment amounts that can be received in the
plan. The CEO determines the position levels for participants, and
participants will be annually advised of their level.
Determination of Incentive Awards
Incentive awards are based on the incentive opportunity percentage
achieved multiplied by the respective base salary of each eligible
participant. The base salary will be that annualized compensation as of
February l of the plan year. The amount of the incentive award may vary
from zero up to the individual's maximum depending on the performance of
the components. Incentive opportunity ranges between the minimum and the
maximum will be interpolated for incentive award determination.
Payment of Incentive Awards
Incentive awards will be paid before the close of the first quarter
following the year to which the incentive relates.
Plan Information
The information contained in this booklet is a summary of the Management
Annual Incentive Plan and is not intended to cover all details contained
within the plan document. You should refer to the plan document for
additional details. If questions arise, the plan document will govern the
operation and administration of the plan and not this summary.
Exhibit No. 21
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
Journal Broadcast Group, Inc. Wisconsin 100% by Registrant
NorthStar Print Group, Inc. Wisconsin 100% by Registrant
ADD, Inc. Wisconsin 100% by Registrant
MRC Telecommunications, Inc. Wisconsin 100% by Registrant
NorLight, Inc. Wisconsin 100% by MRC
Telephone Associates
Long Distance, Inc. Wisconsin 100% by NorLight, Inc.
Bemidji Long Distance, Inc. Wisconsin 100% by NorLight, Inc.
PrimeNet Marketing, Inc. Minnesota 100% by Registrant
Trumbull Printing, Inc. Connecticut 100% by Registrant
Imperial Printing Company Michigan 100% by Registrant
Hometown Publications, Inc. Connecticut 100% by ADD, Inc.
Label Products & Design, Inc. Wisconsin 100% by NorthStar Print
Group
PPC Liquidations, Inc. Wisconsin 100% by NorthStar Print
Group
Mega Direct, Inc. Wisconsin 100% by ADD, Inc.
Auto Mart Publications, Inc. Ohio 100% by ADD, Inc.
Nordoc Software
Services, S. A. France 99% by Imperial Printing*
__________________
* 1% by other subsidiaries of the Registrant
The Registrant has no controlling parent. Twelve million nine
hundred and sixty thousand (12,960,000) shares, or ninety percent (90%),
of the Registrant's issued common stock at December 31, 1995, are owned of
record by the Journal Employees' 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 the Journal Employes' Stock Trust and does not consider it
to be a "parent" of the Registrant within the meaning of Regulation 12b-2.
See Item 12 "Security Ownership of Certain Beneficial Owners and
Management."
Exhibit No. 23
CONSENT OF ERNST & YOUNG, LLP, 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 13, 1996, with respect to the consolidated
financial statements and schedule of Journal Communications, Inc.,
included in this Annual Report (Form 10-K) for the year ended December 31,
1995.
Milwaukee, Wisconsin ERNST & YOUNG, LLP
March 25, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF JOURNAL COMMUNICATIONS, INC. FOR THE
TWELVE MONTHS ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 10,133,273
<SECURITIES> 61,362,172
<RECEIVABLES> 94,670,354
<ALLOWANCES> 2,475,670
<INVENTORY> 31,292,261
<CURRENT-ASSETS> 215,573,363
<PP&E> 366,896,398
<DEPRECIATION> 206,463,640
<TOTAL-ASSETS> 474,738,223
<CURRENT-LIABILITIES> 104,457,731
<BONDS> 2,761,802
0
0
<COMMON> 3,600,000
<OTHER-SE> 362,729,690
<TOTAL-LIABILITY-AND-EQUITY> 474,738,223
<SALES> 256,796,582
<TOTAL-REVENUES> 591,832,488
<CGS> 0<F1>
<TOTAL-COSTS> 550,453,423
<OTHER-EXPENSES> (45,629)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (4,806,225)
<INCOME-PRETAX> 46,230,919
<INCOME-TAX> 18,330,000
<INCOME-CONTINUING> 27,900,919
<DISCONTINUED> 16,312,415
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,213,334
<EPS-PRIMARY> 3.18
<EPS-DILUTED> 3.18
<FN>
<F1> Not separately reported.
</TABLE>
