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 4, 1998 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 Identification No.)
incorporation or organization)
P.O. Box 661, 333 W. State St., Milwaukee, Wisconsin 53203
(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 4, 1998
14,000,113
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
Quarter Ended October 4, 1998 Commission file number 0-7831
--------------- ------
INDEX
Page No.
Part I. Financial Information
Consolidated Condensed Balance Sheets
October 4, 1998 and December 31, 1997 1
Consolidated Condensed Statements of Income
Ten Periods Ended October 4, 1998 and
October 5, 1997 2
Consolidated Condensed Statements of Cash Flows
Ten Periods Ended October 4, 1998 and
October 5, 1997 3
Notes to Consolidated Condensed
Financial Statements 4
Management's Discussion and Analysis of
Financial Condition and Results of Operations 5-6
Part II. Other Information 7
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended October 4, 1998 Commission file number 0-7831
--------------- ------
(10 Accounting Periods)
Consolidated Condensed Balance Sheets
October 4, 1998 and December 31, 1997
(Dollars in thousands)
ASSETS 10/4/98 12/31/97
(Unaudited)
Current Assets:
Cash and Cash Equivalents $ 80,380 $ 111,002
Receivables, less allowance for doubtful
accounts of $5,867 and $3,444 104,309 98,366
Inventories:
Paper and Supplies 11,240 13,453
Work in Process 4,171 4,242
Finished Goods 7,179 5,970
--------- ---------
22,590 23,665
Prepaid expenses 22,305 10,355
Deferred income taxes 5,111 5,111
--------- ---------
Total current assets 234,695 248,499
Property and equipment, at cost, less
accumulated depreciation of $250,048
and $245,793 181,339 173,312
Goodwill 60,355 51,680
Other intangibles assets 65,888 43,008
Deferred charges and other assets 33,831 32,275
--------- ---------
Total Assets $ 576,108 $ 548,774
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 45,753 $ 54,765
Taxes on income 4,474 3,611
Accrued compensation 24,927 23,850
Deferred revenue 21,618 17,418
Accrued employee benefits 26,328 25,249
Other current liabilities 10,767 8,342
Current portion of long-term
obligations 1,750 1,556
--------- ---------
Total current liabilities 135,617 134,791
Long-term obligations 2,128 1,112
Deferred income taxes 132 132
Stockholders' equity:
Common stock - Authorized and
issued 14,400,000 ($0.25
par value) 3,600 3,600
Retained earnings 453,390 430,553
Treasury stock, at cost (18,759) (21,414)
--------- ---------
Total stockholders' equity 438,231 412,739
--------- ---------
Total liabilities and
stockholders' equity $ 576,108 $ 548,774
========= =========
Note: The balance sheet at December 31, 1997 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 4, 1998 Commission file number 0-7831
---------------- ------
(10 Accounting Periods)
<TABLE>
Consolidated Condensed Statement of Income
(Dollars in thousands except share and per share amounts)
<CAPTION>
Four Periods Ended Ten Periods Ended
10/4/98 10/5/97 10/4/98 10/5/97
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Sales $ 226,968 $ 203,205 $ 552,127 $ 499,550
------------ ------------ ------------ ------------
Operating costs and expenses:
Cost of sales 123,784 115,099 303,072 277,081
Selling/administrative expenses 74,413 66,792 178,848 164,452
------------ ------------ ------------ ------------
198,197 181,891 481,920 441,533
------------ ------------ ------------ ------------
Operating Earnings 28,771 21,314 70,207 58,017
Dividend and interest income, net 1,961 2,044 4,888 4,689
(Loss)/gain on sale of assets (610) 8,237 (532) 10,179
------------ ------------ ------------ ------------
Earnings before income taxes 30,122 31,595 74,563 72,885
Provision for income taxes 12,563 13,590 30,863 31,025
------------ ------------ ------------ ------------
Net Income $ 17,559 $ 18,005 $ 43,700 $ 41,860
============ ============ ============ ============
Weighted average number of common
shares outstanding 14,057,431 13,648,413 14,040,801 13,655,460
============ ============ ============ ============
Earnings per share $ 1.25 $ 1.32 $ 3.11 $ 3.07
============ ============ ============ ============
Cash dividend per share $ 0.55 $ 0.55 $ 1.65 $ 1.65
============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended October 4, 1998 Commission file number 0-7831
---------------- ------
(10 Accounting Periods)
Consolidated Condensed Statement of Cash Flows
(Dollars in thousands)
Ten Periods Ended
10/4/98 10/5/97
(Unaudited) (Unaudited)
Cash flow from operating activities:
Net Earnings $ 43,700 $ 41,860
Adjustments to net earnings for
non-cash items:
Depreciation and amortization 32,992 31,508
Net (gain)/loss from sales of assets 532 (10,179)
Change in:
Accounts receivable (5,474) (991)
Inventories 1,478 3,558
Accounts payable (5,111) 3,574
Other current assets and liabilities (5,250) 4,572
--------- ---------
Net cash provided by operating activities 62,867 73,902
--------- ---------
Cash flow from investing activities:
Proceeds from sale of assets 224 3,637
Property and equipment expenditures (32,119) (30,347)
Assets of businesses acquired (40,415) (20,494)
Other-net (3,572) (1,307)
--------- ---------
Net cash used by investing activities (75,882) (48,511)
--------- ---------
Cash flow from financing activities:
Net increase/(decrease) in long-term
obligations 800 (1,102)
Net sales of treasury stock 4,932 18,024
Cash dividends (23,339) (22,604)
--------- ---------
Net cash used for financing activities (17,607) (5,682)
--------- ---------
Net increase/(decrease) in cash and
cash equivalents (30,622) 19,709
Cash and cash equivalents
Beginning of year 111,002 65,283
--------- ---------
October 4, 1998 $ 80,380 $ 84,992
========= =========
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended October 4, 1998 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. Certain amounts in
the December 31, 1997 balance sheet have been restated to conform to
classifications made in the October 4, 1998 balance sheet. Operating
results for the ten periods ended October 4, 1998, are not necessarily
indicative of the results that may be expected for the year ended December
31, 1998. 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, 1997.
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
statements 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 4, 1998 Commission file number 0-7831
--------------- ------
(10 Accounting Periods)
Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
After 10 of the 13 four-week business periods of the year, consolidated revenue
was $552.1 million, up 10.5% from 1997. Consolidated net earnings were $43.7
million, up 4.4% from last year.
Journal Sentinel Inc. had pre-tax earnings of $33.1 million, up 11.1% from last
year at this time. Revenue was up 4.7% to $179.8 million. We are seeing some
slowdown in classified advertising, which earlier in the year had been showing
double-digit growth over 1997. However, preprints continue to remain strong;
year-to-date, preprints are almost 26% ahead of a year ago.
Journal Broadcast Corporation, Inc. had pre-tax earnings of $21.9 million.
Excluding the gain on the 1997 exchange of KQRC-FM in Kansas City, pre-tax
earnings are up 3% from last year. Revenue was up 11.7% to $83.1 million. At
KTNV-TV in Las Vegas, pre-tax earnings grew by 34%. The radio group in Omaha,
Neb., enjoyed an 83% growth in pre-tax earnings and WKTI-FM was up 9.9%, but
earnings were down substantially at WSYM-TV in Lansing, Mich. There was a
pre-tax loss at the Knoxville, Tenn., radio operations, where there were
start-up format projects.
NorthStar Print Group Inc. had year-to-date pre-tax earnings of $1.3 million,
down 39.1%, while revenue slipped 3.5% from 1997 to $42.8 million. Sales dropped
11.5% in Milwaukee, where an extensive reduction in operating costs has been
implemented. All three NorthStar divisions have focused on sales initiatives and
cost control.
Norlight Telecommunications Inc. had pre-tax earnings soar 98.4% to $16.7
million. Revenue climbed 36% to $60 million. The growth has been the result of
strong market conditions and Norlight's ability to effectively use the increased
capital allocated to them. A sharp focus on sales and customer service has
driven consistent success for Norlight in 1998.
At ADD, Inc., year-to-date pre-tax earnings were $4.3 million, a decline of
18.5% from 1997 excluding the gain on the sale of the Warner Robins, Ga.,
operation last year. Sales were up 25% to $82.5 million. The earnings decline is
attributed to the loss of several large commercial printing customers and strong
competition in several geographic regions.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended October 4, 1998 Commission file number 0-7831
--------------- ------
(10 Accounting Periods)
Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
IPC Communication Services had a pre-tax loss of $8.3 million, all due to the
northern California operation. The Eastern Region in St. Joseph, Mich., southern
California and Europe all have been profitable. Without northern California, IPC
would be reporting pre-tax earnings of $1.7 million. Nevertheless, the closure
in northern California is being managed well, and, once that has been completed,
we expect IPC to contribute meaningfully to earnings. The costs associated with
the closure have reached $4.8 million. Year-to-date, worldwide sales were $94.9
million, up 4.2%.
PrimeNet Marketing Services reached $386,000 in pre-tax earnings, after a loss
at this point last year. Growing sales, which has been a focus for this year,
continued to be successful, with an increase from 1997 of 15.9% to $10.4
million.
Total assets have increased $27 million from December 31, 1997 to $576 million,
while stockholders' equity now exceeds $438 million.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended October 4, 1998 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 4, 1998.
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 17, 1998 /S/ Steven J. Smith
Steven J. Smith, President and Chief
Executive Officer
Date November 17, 1998 /s/ Paul M. Bonaiuto
Paul M. Bonaiuto,
Executive Vice President
And Chief Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
27 FINANCIAL DATA SCHEDULE
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER<F1>
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> OCT-04-1998
<CASH> 80,380
<SECURITIES> 0
<RECEIVABLES> 104,309
<ALLOWANCES> 5,867
<INVENTORY> 22,590
<CURRENT-ASSETS> 234,695
<PP&E> 181,339
<DEPRECIATION> 250,048
<TOTAL-ASSETS> 576,108
<CURRENT-LIABILITIES> 135,617
<BONDS> 2,128
0
0
<COMMON> 3,600
<OTHER-SE> 434,631
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 552,127
<TOTAL-REVENUES> 552,127
<CGS> 303,027
<TOTAL-COSTS> 481,920
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 74,563
<INCOME-TAX> 30,863
<INCOME-CONTINUING> 43,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,700
<EPS-PRIMARY> 3.11
<EPS-DILUTED> 3.11
<FN>
<F1> 10 ACCOUNTING PERIODS
</FN>
</TABLE>
