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 5, 1997 Commission file number 0-7831
(10 Accounting Periods)
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.)
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 - October 5, 1997 13,670,899
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
Quarter Ended October 5, 1997 Commission file number 0-7831
(10 Accounting Periods)
INDEX
Page No.
Part I. Financial Information
Consolidated Condensed Balance Sheets
October 5, 1997 and December 31, 1996 2
Consolidated Condensed Statements of Income
Ten Periods Ended October 5, 1997
And October 6, 1996 3
Consolidated Condensed Statements of Cash Flows
Ten Periods Ended October 5, 1997
and October 6, 1996 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 October 5, 1997 Commission file number 0-7831
(10 Accounting Periods)
Consolidated Condensed Balance Sheets
October 5, 1997 and December 31, 1996
(Dollars in thousands)
ASSETS 10/05/97 12/31/96
(Unaudited)
Current Assets:
Cash $ 3,411 $ 12,383
Short-term investments 81,581 52,900
Receivables 94,047 93,915
Inventories:
Paper and supplies 13,130 16,596
Work in process 5,081 4,754
Finished goods 5,748 6,328
------- -------
23,959 27,678
Prepaid expenses 12,581 10,301
Deferred income Taxes 3,787 3,813
------- --------
Total current assets 219,366 200,990
Property and equipment, less accumulated
depreciation of $246,439 and $229,060 169,854 163,693
Deferred charges and other assets 92,409 70,978
Deferred income taxes 1,807 1,756
Goodwill 36,624 36,147
-------- --------
Total Assets $ 520,060 $ 473,564
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 41,997 $ 38,685
Taxes on income 6,903 3,558
Accrued liabilities 70,337 66,430
Current portion of long-term
obligations 1,315 2,337
------- -------
Total current liabilities 120,552 111,010
Long-term obligations 2,017 1,524
Stockholders' equity:
Common stock - Authorized and issued
14,400,000 ($0.25 par value) 3,600 3,600
Retained earnings 422,549 402,301
Treasury stock, at cost (28,658) (44,871)
------- -------
Total stockholders' equity 397,491 361,030
------- -------
Total liabilities and
stockholders' equity $520,060 $ 473,564
======= =======
Note: The balance sheet at December 31, 1996 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 October 5, 1997 Commission file number 0-7831
(10 Accounting Periods)
Consolidated Condensed Statements of Income
(Dollars in thousands except share and per share amounts)
Four Periods Ended Ten Periods Ended
10/05/97 10/06/96 10/05/97 10/06/96
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net Sales $203,205 $192,103 $499,550 $465,781
Operating costs and
expenses:
Cost of sales 115,099 107,868 277,081 269,647
Selling/administrative
expenses 58,555 61,640 154,273 148,748
------- ------- ------- -------
173,654 169,508 431,354 418,395
------- ------- ------- -------
Operating Earnings 29,551 22,595 68,196 47,386
Dividend and
interest income 2,199 956 4,945 2,819
Interest expense (155) (247) (256) (296)
------- ------- ------- -------
Earnings before
income taxes 31,595 23,304 72,885 49,909
Provision for
income taxes 13,590 9,909 31,025 20,858
------- -------- -------- --------
Net Income $ 18,005 $ 13,395 $ 41,860 $ 29,051
======= ======== ======== ========
Weighted average
number of common
shares outstanding 13,648,413 12,766,847 13,655,460 13,130,573
========== ========== ========== ==========
Earnings per share $ 1.32 $ 1.02 $ 3.07 $ 2.21
===== ===== ===== =====
Cash dividend per share $ 0.55 $ 0.55 $ 1.65 $ 1.65
===== ===== ===== =====
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended October 5, 1997 Commission file number 0-7831
(10 Accounting Periods)
Consolidated Condensed Statements of Cash Flows
(Dollars in thousands)
Ten Periods Ended
10/05/97 10/06/96
(Unaudited) (Unaudited)
Cash flow from operating activities:
Earnings from continuing operations $ 41,860 $29,051
Adjustments to net earnings for
non-cash items:
Depreciation and amortization 31,508 28,915
Net (gain)/loss from sale of assets (10,179) (718)
Change in:
Accounts receivable (991) 2,067
Inventories 3,558 4,409
Accounts payable 3,574 3,845
Other current assets and liabilities 4,572 1,750
------- -------
Net cash provided by operating activities $ 73,902 $69,319
------- -------
Cash flow from investing activities:
Proceeds from sale of assets 3,637 3,881
Property and equipment expenditures (30,347) (24,860)
Assets of business acquired (20,494) (16,594)
Net (increase)/decrease in short-term
investments (28,681) 28,716
Other-net (1,307) (504)
------- -------
Net cash used for investing activities (77,192) (9,361)
------- -------
Cash flow from financing activities:
Reduction in long-term obligations (1,102) (6,420)
Purchase of treasury stock (43,475) (46,685)
Sale and distribution of treasury stock 61,499 12,260
Cash dividends (22,604) (21,473)
------- -------
Net cash used for financing activities (5,682) (62,318)
------- -------
Net decrease in cash (8,972) (2,360)
Cash:
Beginning of year 12,383 10,133
------- -------
October 5, 1997 $ 3,411 $ 7,773
======= =======
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended October 5, 1997 Commission file number 0-7831
(10 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 ten periods ended October 5, 1997, are not
necessarily indicative of the results that may be expected for the
year ended December 31, 1997. 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, 1996.
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).
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended October 5, 1997 Commission file number 0-7831
(10 Accounting Periods)
Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
Our consolidated revenue through 10 periods was $499.6 million, up 7%
from last year. Consolidated net earnings were $41.9 million, 44% higher
than the 1996 figure of $29.1 million. Net earnings per share year-to-
date in 1997 were $3.07, compared with $2.21 over the same period a year
ago.
The pretax earnings increased by more than one-third at three of our
companies: Journal Sentinel Inc., NorthStar Print Group Inc. and Norlight
Telecommunications, Inc.
Year-to-date revenue at Journal Sentinel Inc. was $171.7 million, up
8% from $158.3 million for the same period in 1996, with 15% increases in
both classified and general advertising. Pretax earnings were $34.4
million, up 42% from $24.3 million. A 4.3% newsprint price increase
beginning in November is expected to slow growth in the fourth quarter
compared to last year.
At Journal Broadcast Group Inc., year-to-date revenue was $74.5
million, up 7% from $69.6 million. Pretax earnings were up 4% on
continuing operations. There also was a $7.8 million pretax gain as a
result of the trade of our Kansas City radio station for the two stations
in Knoxville, Tenn. During the fourth quarter, we expect to complete the
acquisition of KESY-FM and KBBX-AM to increase our presence in the Omaha,
Neb., market.
NorthStar Print Group Inc. had year-to-date revenue up 5% to $44.3
million from $42.2 million. Third quarter revenue compared to 1996 was
down 8% due to a drop off in label sales to Brahma Brewing in Brazil.
Year-to-date pretax earnings were nearly $3 million, or about $1.2 million
better than last year at this time.
Norlight Telecommunication Inc. had a revenue increase of 31% to
$44.1 million, up from $33.8 million in 1996, with strong growth in both
the retail and carrier sides of the business. Pretax earnings were ahead
35%, from $6.8 million in 1996 to $9.2 million this year.
Year-to-date revenue at Add Inc. was flat at $66 million. Without
the gain on the sale of the Warner Robins, Ga., operations earlier this
year, pretax earnings would be down 18%. Add Inc. purchased Dixie Web
Graphics in New Orleans, La., in July and has merged its existing web
printing plant into the Dixie plant, providing an excellent opportunity
for earnings growth.
At IPC Communication Services, revenue year-to-date was $91.1
million, up 5% from $86.7 million one year ago. Although there is a year-
to-date pretax loss, the situation has improved significantly over last
year's result. In December, northern California will combine its two
plants, which will mean a lower cost structure. And in the 10th period,
IPC reported a pretax profit of $291,000, including record earnings in
southern California.
Consolidated revenue at PrimeNet Marketing Services and Mega Direct
was down 22% to $9 million. Both operations are focusing on improvement
in sales and profit margins.
Our working capital is $99 million, compared to $90 million at
December 31, 1996. Total assets equal $520 million, while stockholders'
equity is $397 million.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended October 5, 1997 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 six accounting periods ended October 5, 1997.
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 6, 1997 /s/ Robert A. Kahlor
Robert A. Kahlor, Chairman of the Board
Date November 6, 1997 /s/ Paul M. Bonaiuto
Paul M. Bonaiuto, Senior Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Desription
27 Financial Data Schedule
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> OCT-05-1997
<CASH> 3,411
<SECURITIES> 81,581
<RECEIVABLES> 94,047
<ALLOWANCES> 0
<INVENTORY> 23,959
<CURRENT-ASSETS> 219,366
<PP&E> 416,293
<DEPRECIATION> 246,439
<TOTAL-ASSETS> 520,060
<CURRENT-LIABILITIES> 120,552
<BONDS> 2,017
0
0
<COMMON> 3,600
<OTHER-SE> 393,891
<TOTAL-LIABILITY-AND-EQUITY> 520,060
<SALES> 499,550
<TOTAL-REVENUES> 499,550
<CGS> 277,081
<TOTAL-COSTS> 431,354
<OTHER-EXPENSES> 154,273
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 256
<INCOME-PRETAX> 72,885
<INCOME-TAX> 31,025
<INCOME-CONTINUING> 41,860
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,860
<EPS-PRIMARY> 3.07
<EPS-DILUTED> 3.07
</TABLE>
