FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ending October 6, 1996
(10 Accounting Periods)
Commission file number 0-7831
JOURNAL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
WISCONSIN 39-0382060
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Journal Square, P.O. Box 661, 333 W. State St., Milwaukee, Wisconsin 53201
(Address of principal executive offices) (Zip Code)
414-224-2728
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13
or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter
period that the registrant was required to file such
reports, and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
Number of share of Common Stock Outstanding - October 6, 1996
12,703,398
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
Quarter Ended October 6, 1996 Commission file number 0-7831
(10 Accounting Periods)
INDEX
Page No.
Part I. Financial Information
Consolidated Condensed Balance Sheets
October 6, 1996 and December 31, 1995 2
Consolidated Condensed Statements of Income
Ten Periods Ended October 6, 1996
and October 8, 1995 3
Consolidated Condensed Statements of Cash Flows
Ten Periods Ended October 6, 1996
and October 8, 1995 4
Notes to Consolidated Condensed
Financial Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6-7
Part II. Other Information 8
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended October 6, 1996 Commission file number 0-7831
(10 Accounting Periods)
Consolidated Condensed Balance Sheets
October 6, 1996 and December 31, 1995
(Dollars in thousands)
ASSETS 10/06/96 12/31/95
(Unaudited) (Note 3)
Current Assets:
Cash $ 7,773 $10,133
Short-term investments 32,646 61,362
Receivables 92,604 94,671
Inventories:
Paper and supplies 13,905 19,143
Work in process 5,212 4,559
Finished goods 7,675 7,590
------- -------
26,792 31,292
Prepaid expenses 13,073 9,212
Prepaid income taxes -- 4,197
Deferred income taxes 4,706 4,706
------- -------
Total current assets 177,594 215,573
Property and equipment, less accumulated
depreciation of $225,514 and $206,464 164,211 160,433
Deferred charges and other assets 70,554 65,473
Goodwill 36,385 33,259
------- -------
Total Assets $448,744 $474,738
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 38,769 $ 33,591
Taxes on income 1,936 ---
Accrued liabilities 64,219 63,977
Current portion of long-term obligations 2,093 6,889
------- -------
Total current liabilities 107,017 104,457
Long-term obligations 2,419 2,762
Deferred income taxes 1,189 1,189
Stockholders' equity:
Common stock - Authorized and issued
14,400,000 ($0.25 par value) 3,600 3,600
Retained earnings 396,472 390,279
Treasury stock, at cost (61,953) (27,549)
------- -------
Total stockholders' equity 338,119 366,330
------- -------
Total liabilities and
stockholders' equity $448,744 $474,738
======== ========
Note: The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date but does not include all the
information and foot notes required by generally accepted accounting
principles for complete financial statements.
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended October 6, 1996 Commission file number 0-7831
(10 Accounting Periods)
Consolidated Condensed Statement of Income
(Dollars in thousands except share and per share amounts)
Four Periods Ended Ten Periods Ended
10/06/96 10/08/95 10/06/96 10/08/95
(Unaudited) (Unaudited) (Unaudited)(Unaudited)
(Note 3) (Note 3)
Net Sales $192,103 $185,153 $465,781 $446,157
Operating costs and expenses:
Cost of sales 107,868 110,653 269,647 259,736
Selling/administrative
expenses 61,640 56,314 148,748 138,600
Merger charges-Note 4 --- 642 --- 15,587
-------- -------- -------- --------
169,508 167,609 418,395 413,923
-------- -------- -------- --------
Operating Earnings 22,595 17,544 47,386 32,234
Dividend and interest income 956 2,256 2,819 3,941
Interest expense (247) (27) (296) (98)
-------- -------- -------- --------
Earnings before income taxes 23,304 19,773 49,909 36,077
Provision for income taxes 9,909 8,130 20,858 14,539
-------- -------- -------- --------
Income from Continuing
Operations 13,395 11,643 29,051 21,538
Discontinued Operations-Note 3:
Earnings, net of applicable
income tax expense (benefit)
of ($476) and $1,013 --- (113) --- 1,449
Gain on sale, net of
applicable income tax
expense of $9,710 --- --- --- 14,565
-------- -------- -------- --------
Net Income $ 13,395 $ 11,530 $ 29,051 $ 37,552
======== ======== ======== ========
Weighted average number
of common shares
outstanding 12,766,847 13,854,632 13,130,573 13,984,224
========== ========== ========== ==========
Earnings per share:
Continuing Operations 1.02 .85 2.21 1.55
Discontinued Operations --- (.02) --- 1.14
----- ----- ----- -----
$1.02 $ .83 $2.21 $2.69
===== ===== ===== =====
Cash dividend per share $0.55 $0.55 $1.65 $1.55
===== ===== ===== =====
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended October 6, 1996 Commission file number 0-7831
(10 Accounting Periods)
Condensed Consolidated Statement of Cash Flows
(Dollars in thousands)
Ten Periods Ended
10/06/96 10/08/95
(Unaudited) (Unaudited)
(Note 3)
Cash flow from operating activities:
Earnings from continuing operations $29,051 $21,538
Adjustments to net earnings for
Non-cash items:
Net(gain) loss from sale of assets (718) ---
Depreciation and amortization 28,915 26,720
Change in:
Accounts receivable 2,067 (11,176)
Inventories 4,409 (5,571)
Accounts Payable 3,845 3,509
Other current assets and liabilities 1,750 (7,014)
------- -------
Net cash provided by operating activities $69,319 $28,006
------- -------
Cash flow from investing activities:
Proceeds from sale of assets 3,881 642
Property and equipment expenditures (24,860) (24,879)
Assets of business acquired (16,594) (16,014)
Net (increase) decrease in short-term
investments 28,212 (28,810)
------- -------
Net cash used for investing activities (9,361) (69,061)
------- -------
Net cash provided by discontinued
operations-Note 3 --- 77,671
Cash flow from financing activities:
Purchase of treasury stock (46,685) (21,275)
Reduction in long-term obligations (6,420) (4,130)
Sale and distribution of treasury stock 12,260 8,197
Cash dividends (21,473) (21,652)
------- -------
Net cash used for financing activities (62,318) (38,860)
------- -------
Net increase (decrease) in cash (2,360) (2,244)
Cash:
Beginning of year 10,133 13,111
------- -------
October 6, 1996 $ 7,773 $10,867
======= =======
See notes to condensed consolidated financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended October 6, 1996 Commission file number 0-7831
(10 Accounting Periods)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulations S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the ten periods ended October 6, 1996, are not
necessarily indicative of the results that may be expected for the
year ended December 31, 1996. For further information, refer to
the consolidated financial statements and footnotes thereto
included in the Journal Communications, Inc. annual report on
Form 10-K for the year ended December 31, 1995.
2. The Registrant divides its calendar year into thirteen four-week
accounting periods, except that the first and thirteenth periods
may be longer or shorter to the extent necessary to make each
accounting year end on December 31. Registrant follows a practice
of publishing its financial statement at the end of the third
accounting period (its first quarter) and at the end of the sixth
accounting period (its second quarter), and at the end of the tenth
accounting period (its third quarter).
3. Effective April 27, 1995, the Company sold its long-run catalog and
publication printing business assets. The Company has accounted for
this operation as a discontinued operation, using an April 27, 1995
measurement date. Prior period financial statements have been
restated to reflect the discontinuation of this business segment.
4. Journal/Sentinel Inc. merged The Milwaukee Journal and the
Milwaukee Sentinel into one newspaper called the Milwaukee Journal
Sentinel. Distribution of the Milwaukee Journal Sentinel began
April 2, 1995.
The merger resulted in a work force reduction. The Company
recorded severance and early retirement payments and other costs
associated with the launch of the Milwaukee Journal Sentinel of
$642,000 in the third quarter of 1995, totaling $15,587,000 for the
ten periods ended October 8, 1995.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended October 6, 1996 Commission file number 0-7831
(10 Accounting Periods)
Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
Consolidated operating earnings during the third quarter were $22.6
million, which is $5.1 million, or 28.8%, higher than the previous year.
That is due to substantial earnings growth at Journal Sentinel Inc. and
Journal Broadcast Group Inc. The improved earnings picture should
continue into the fourth quarter of the year.
Year-to-date, through 10 financial periods, our consolidated
revenue from continuing operations was $465.8 million, up 4.4% from last
year. However, net earnings were $29.1 million, down 22.6% year-to-date.
Last year's earnings were significantly impacted by two unusual events,
the gain from the sale of Perry Printing Corp. and the costs associated
with the merger of the two Milwaukee newspapers. If the effect of these
two events were excluded from 1995 earnings, the year-to-date net income
would have been $30.9 million, and we would have shown a year-to-year
decline of only 5.8% in net earnings.
At Journal Sentinel Inc., operating earnings were $25.8 million, up
4.1%. Comparing just the third quarter results, revenue was up by 2% and
operating earnings were up 51.9% over 1995. Lower newsprint prices,
improved circulation sales, an enhanced advertising market and improved
customer service all are responsible for the earnings gain. Revenue year-
to-date was $158.3 million, down 2.9%.
The year-to-date cost of newsprint for Journal Sentinel remains
ahead of a year ago, due to the high prices at the start of the year. But
during Period 10, newsprint expense was $600,000 less than the same period
in 1995, reflecting the dramatic drop in pricing experienced during the
second and third quarters.
Journal Broadcast Group Inc. revenues during the third quarter were
$29.6 million up 34.6% over last year. Operating earnings in the quarter
were $10.9 million, up a remarkable 90.8%. Year-to-date, sales were $69.6
million, up 27.1% while earnings were $23.8 million, up 62.4%.
Although the addition of the Tucson radio stations helped to
improve results for 1996, the broadcast operations in Milwaukee, Las
Vegas, Lansing, Kansas City and Omaha were responsible for the majority of
the significant growth in both revenue and earnings. During the third
quarter, we completed the sale of WSAU-AM and WIFC-FM. Sales and earnings
in Wausau, Wis., were small and, as such, had little impact on the
Broadcast Group results.
NorthStar Print Group Inc. had year-to-date revenues of $42.2
million, up slightly over last year. Operating earnings of $2.0 million
reflected a more than four-fold increase over one year ago. Production of
beer labels for Brahma Brewing in Brazil increased to anticipated levels
during the quarter, with year-to-date sales to Brahma reaching $3.3
million. At Label Products & Design in Green Bay as well as at the
Milwaukee operation, sales for the year were flat compared to 1995.
Earnings at these operations increased dramatically, by $224,000 (39.9%)
and $971,000 respectively.
Norlight Telecommunications Inc. reported year-to-date revenues of
$33.8 million, up 10.3%, with earnings down 2.2% to $7.7 million. Network
expansion completed during the quarter improved the quarterly earnings
growth to 5.9%, and positions Norlight for a stronger fourth quarter.
Add Inc. had revenue of $71.9 million through 10 periods, up 11.7%,
and operating earnings of $11.0 million, up 3.5%, largely as a result of
acquisitions. Year-to-date, Mega Direct, which was acquired in June 1995,
and the Florida Mariner added $7.5 million in revenue and $2.2 million in
earnings.
Much as Journal Sentinel was affected, Add Inc. has spent $5
million more on newsprint in 1996 than one year ago. However, as a result
of lower newsprint prices, the Period 10 newsprint expense was $484,000
less than in 1995.
IPC Communication Services was marginally profitable in
Periods 9 and 10, but that was a significant improvement over losses
earlier in the year. Year-to-date, IPC reported an operating loss on
sales of $86.7 million. The management team has been restructured, and we
believe we can take advantage of several opportunities in 1997.
PrimeNet Marketing Services continues to perform well. Sales
year-to date were $4.8 million, down more than $500,000 as the company
focused on its core business. Earnings were $500,000, versus a loss of
$1.8 million at this point last year.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended October 6, 1996 Commission file number 0-7831
(10 Accounting Periods)
Part II. Other Information
Item 6 - Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K. There were no reports on Form 8-K filed
for the ten accounting periods ended October 6, 1996.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JOURNAL COMMUNICATIONS, INC.
Registrant
Date November 15, 1996 /s/ Robert A. Kahlor
Robert A. Kahlor, Chairman of the Board
Date November 15, 1996 /s/ Paul M. Bonaiuto
Paul M. Bonaiuto, Senior Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. 27 Description
Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF JOURNAL COMMUNICATIONS,
INC. AS OF AND FOR THE PERIOD ENDED OCTOBER 6, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER<F1>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> OCT-06-1996
<CASH> 7,773
<SECURITIES> 32,646
<RECEIVABLES> 92,604
<ALLOWANCES> 0
<INVENTORY> 26,792
<CURRENT-ASSETS> 177,594
<PP&E> 389,725
<DEPRECIATION> 225,514
<TOTAL-ASSETS> 448,744
<CURRENT-LIABILITIES> 107,017
<BONDS> 2,419
0
0
<COMMON> 3,600
<OTHER-SE> 334,519
<TOTAL-LIABILITY-AND-EQUITY> 448,744
<SALES> 465,781
<TOTAL-REVENUES> 465,781
<CGS> 269,647
<TOTAL-COSTS> 418,395
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 296
<INCOME-PRETAX> 49,909
<INCOME-TAX> 20,858
<INCOME-CONTINUING> 29,051
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,051
<EPS-PRIMARY> 2.21
<EPS-DILUTED> 2.21
<FN>
<F1>10 accounting periods
</FN>
</TABLE>
