FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ending June 16, 1996
(6 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 shares of Common Stock Outstanding - June 16, 1996 13,054,898
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
Quarter Ended June 16, 1996 Commission file number 0-7831
(6 Accounting Periods)
INDEX
Page No.
Part I. Financial Information
Consolidated Condensed Balance Sheets
June 16, 1996 and December 31, 1995 2
Consolidated Condensed Statements of Income
Six Periods Ended June 16, 1996
and June 18, 1995 3
Consolidated Condensed Statements of Cash Flows
Six Periods Ended June 16, 1996
and June 18, 1995 4
Notes to Consolidated Condensed
Financial Statements 5
Management's Discussion and Analysis of
Consolidated Financial Condition and Results of
Operations 6
Part II. Other Information 7
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 16, 1996 Commission file number 0-7831
(6 Accounting Periods)
Consolidated Condensed Balance Sheets
June 16, 1996 and December 31, 1995
(Dollars in thousands)
ASSETS 6/16/96 12/31/95
(Unaudited)
Current Assets:
Cash $ 9,193 $ 10,133
Short-term investments 33,261 61,362
Receivables 90,356 94,671
Inventories:
Paper and supplies 16,136 19,143
Work in process 5,278 4,559
Finished goods 7,296 7,590
------- --------
28,710 31,292
Prepaid expenses 11,706 9,212
Prepaid income taxes ---- 4,198
Deferred income Taxes 4,706 4,706
------- -------
Total current assets 177,932 215,574
Property and equipment, less accumulated
depreciation of $219,017 and $206,464 164,348 160,433
Deferred charges and other assets 71,476 65,473
Goodwill 38,833 33,259
------- -------
Total Assets $452,589 $474,739
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 40,441 $ 33,592
Taxes on income 2,173 ----
Accrued liabilities 55,303 63,977
Current portion of long-term obligations 6,674 6,889
------- -------
Total current liabilities 104,591 104,458
Long-term obligations 2,045 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 390,347 390,279
Treasury stock, at cost (49,183) (27,549)
------- -------
Total stockholders' equity 344,764 366,330
------- -------
Total liabilities and
stockholders' equity $452,589 $474,739
======= =======
Note: The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date but does not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 16, 1996 Commission file number 0-7831
(6 Accounting Periods)
<TABLE>
Consolidated Condensed Statements of Income
(Dollars in thousands except share and per share amounts)
<CAPTION>
Three Periods Ended Six Periods Ended
06/16/96 06/18/95 06/16/96 06/18/95
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Sales $141,989 $134,783 $273,678 $261,004
Operating costs and expenses:
Cost of sales 82,715 75,249 161,779 149,082
Selling/administrative expenses 44,397 42,291 87,108 82,287
Restructuring charges-Note 4 ---- 14,945 --- 14,945
------- ------- ------- -------
127,112 132,485 248,887 246,314
------- ------- ------- -------
Operating Earnings 14,877 2,298 24,791 14,690
Dividend and interest income 809 306 1,863 1,685
Interest expenses (36) (65) (49) (71)
-------- -------- -------- --------
Earnings before income taxes 15,650 2,539 26,605 16,304
Provision for income taxes 6,501 901 10,949 6,409
-------- -------- -------- --------
Income from Continuing Operations 9,149 1,638 15,656 9,895
Discontinued Operations-Note 3:
Earnings, net of applicable income tax
expense of $487 and $1,489 ---- 101 ---- 1,562
Gain on sale, net of applicable
income tax expense of $9,710 ---- 14,565 ---- 14,565
------- ------- ------- -------
Net Income $ 9,149 $ 16,304 $ 15,656 $ 26,022
======= ======= ======= =======
Weighted average number of common
shares outstanding 13,157,823 14,028,126 13,373,057 14,070,107
========== ========== ========== ==========
Earnings per share:
Continuing Operations 0.68 .12 1.17 .70
Discontinued Operations ---- 1.04 ---- 1.15
---- ---- ---- ----
$0.68 $1.16 $1.17 $1.85
==== ==== ==== ====
Cash dividend per share $0.55 $0.55 $1.10 $1.00
==== ==== ==== ====
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 16, 1996 Commission file number 0-7831
(6 Accounting Periods)
Consolidated Condensed Statements of Cash Flows
(Dollars in thousands)
Six Periods Ended
06/16/96 06/18/95
(Unaudited) (Unaudited)
(Note 3)
Cash flow from operating activities:
Earnings from continuing operations $15,656 $ 9,895
Adjustments to net earnings for
Non-cash items:
Depreciation and amortization 16,524 15,117
Change in:
Accounts receivable 4,314 (2,142)
Inventories 2,496 (5,487)
Accounts payable 6,848 (3,075)
Other current assets and
liabilities (5,862) 11,763
------- -------
Net cash provided by
operating activities $39,976 $26,071
------ ------
Cash flow from investing activities:
Property and equipment expenditures (15,089) (15,438)
Assets of business acquired (16,154) (12,814)
Net (increase) decrease in short-term
investments 28,101 (59,761)
------- -------
Net cash used for investing
activities (3,142) (88,013)
------- ------
Net cash provided by discontinued
operations-Note 3 ---- 79,958
Cash flow from financing activities:
Purchase of treasury stock (29,715) (3,550)
Reduction in long-term obligations (1,773) (2,915)
Sale and distribution of treasury stock 8,129 635
Cash dividends (14,415) (14,059)
------- -------
Net cash used for
financing activities (37,774) (19,889)
------ ------
Net increase (decrease) in cash (940) (1,873)
Cash:
Beginning of year 10,133 13,111
------ ------
End of year $ 9,193 $11,238
======= ======
See notes to condensed consolidated financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 16, 1996 Commission file number 0-7831
(6 Accounting Periods)
Notes to Consolidated Condensed 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 six periods ended June 16, 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
$14,945,000 in the second quarter of 1995.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 16, 1996 Commission file number 0-7831
(6 Accounting Periods)
Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
Through the first six financial periods of 1996, our consolidated revenue
from continuing operations was $273.7 million, up 4.9% from last year.
However, net earnings were $15.7 million, down 39.8% from a year ago.
We must remember that last year we had a $14.6 million after-tax gain on
the sale of Perry Printing Corp. and, at Journal Sentinel Inc., an after-
tax loss of nearly $9 million due to the merger. Without those two one-
time events, the reduction in net earnings from 1995 to 1996 would have
been less.
The option price as of June 16 was $36.14, up only slightly from a year
ago. The most recent increase, 24 cents for the sixth period, was the
highest this year. The two dividends in the first half of the year
totaled $1.10 in 1996, while a year ago it was $1.00.
Journal Sentinel Inc.'s year-to-date revenue was $93.3 million, down 6%
from the 1995 figure of $99.2 million. Operating earnings this year were
$12.5 million, down 22%. However, in both periods 5 and 6, as expense
reductions began to take hold and as newsprint costs began to fall,
operating earnings exceeded 1995. An additional newsprint price reduction
took effect July 1, but the cost of newsprint still is higher than it was
a year ago.
Journal Broadcast Group Inc. continues to exceed everyone's expectations.
Revenue was up 22% to almost $40 million, while operating earnings were
$12.9 million, up more than 44%. Leading the earnings increases were
WKTI-FM in Milwaukee, up 72%; KQRC-FM in Kansas City, up 57%; WTMJ-TV in
Milwaukee, up 40%; and KTNV-TV in Las Vegas, up 36%. The three radio
stations in Tucson have added $437,000 in earnings to the broadcast group
year-to-date.
NorthStar Print Group Inc. had revenue of $23.7 million, down 4.5%.
However, earnings have rebounded this year to $721,000 year-to-date,
nearly double last year's figure. We have begun to produce labels for
Brahma Brewing in Brazil, and that will improve the volume at the
Norway/Watertown operation and should substantially improve sales and
earnings.
At Norlight Telecommunications, revenue was $19.8 million, up 7.5%, while
operating earnings were $4.5 million, down 7.4%. We expect sales and
earnings to improve significantly in the second half of the year,
particularly when the network expansion in northern Wisconsin is completed
in the fall.
Revenue was up 18% to $43 million at Add Inc. and Trumbull Printing Inc.
Operating earnings were held back by newsprint costs, but still increased
4% to $6.3 million. If newsprint prices continue to fall, Add Inc. will
benefit along with Journal Sentinel.
IPC Communication Services' revenue growth continues, up 12% to $52.6
million, but has a year-to-date loss due to operational problems. Once
those problems have been resolved, earnings should quickly improve. We
recently replaced the president at IPC and we have new management teams in
place in France and California. We expect earnings improvement by the end
of the year.
PrimeNet Marketing Services, which had an operating loss in 1995, has
continued to be profitable in each period of 1996. Year-to-date earnings
were $318,000 on sales of just over $3 million.
Working capital remains strong at $73.3 million, while total assets are
$452.6 million. Stockholders equity is $344.8 million.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 16, 1996 Commission file number 0-7831
(6 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 six accounting periods ended June 16, 1996.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JOURNAL COMMUNICATIONS, INC.
Registrant
Date July 30, 1996 /s/ Robert A. Kahlor
Robert A. Kahlor, Chairman of the
Board
Date July 30, 1996 /s/ Paul M. Bonaiuto
Paul M. Bonaiuto, Senior Vice
President and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF JOURNAL COMMUNICATIONS, INC.
AS OF AND FOR THE QUARTER ENDED JUNE 16, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-16-1996
<CASH> 9,193
<SECURITIES> 33,261
<RECEIVABLES> 90,356
<ALLOWANCES> 0
<INVENTORY> 28,710
<CURRENT-ASSETS> 177,932
<PP&E> 383,365
<DEPRECIATION> 219,017
<TOTAL-ASSETS> 452,589
<CURRENT-LIABILITIES> 104,591
<BONDS> 2,045
0
0
<COMMON> 3,600
<OTHER-SE> 341,164
<TOTAL-LIABILITY-AND-EQUITY> 452,589
<SALES> 273,678
<TOTAL-REVENUES> 273,678
<CGS> 161,779
<TOTAL-COSTS> 248,887
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49
<INCOME-PRETAX> 26,605
<INCOME-TAX> 10,949
<INCOME-CONTINUING> 15,656
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,656
<EPS-PRIMARY> 1.17
<EPS-DILUTED> 1.17
</TABLE>
