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 March 22, 1998 Commission file number 0-7831
(3 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 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 March 22, 1998
14,213,607
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
Quarter Ended March 22, 1998 Commission file number 0-7832
INDEX
Page No.
Part I. Financial Information
Consolidated Condensed Balance Sheets
March 22, 1998 and December 31, 1997 2
Consolidated Condensed Statements of Income
Three Periods Ended March 22, 1998 and
March 23, 1997 3
Consolidated Condensed Statements of Cash Flows
Three Periods Ended March 22, 1998 and
March 23, 1997 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 March 22, 1998 Commission file number 0-7831
(3 Accounting Periods)
Consolidated Condensed Balance Sheets
March 22, 1998 and December 31, 1997
(Dollars in thousands)
ASSETS 03/22/98 12/31/97
(Unaudited)
Current Assets:
Cash and Cash Equivalents $117,040 $111,002
Receivables, less allowance for doubtful
accounts of $4,181 and $3,444 92,756 98,366
Inventories:
Paper and Supplies 13,096 13,453
Work in Process 4,974 4,242
Finished Goods 4,335 5,970
------- -------
22,405 23,665
Prepaid expenses 18,529 10,355
Deferred income taxes 5,111 5,111
------- -------
Total current assets 255,841 248,499
Property and equipment, at cost,
less accumulated depreciation
of $253,080 and $245,793 174,837 173,312
Goodwill 53,030 51,680
Other intangibles assets 45,353 43,008
Deferred charges and other assets 33,408 32,275
-------- --------
Total Assets $562,469 $548,774
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 48,633 $ 54,765
Taxes on income 7,109 3,611
Accrued compensation 21,614 23,850
Deferred revenue 16,628 17,418
Accrued employee benefits 26,622 25,249
Other current liabilities 9,033 8,342
Current portion of long-term obligations 1,657 1,556
-------- --------
Total current liabilities 131,296 134,791
Long-term obligations 1,112 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 434,492 430,553
Treasury stock, at cost (8,163) (21,414)
-------- --------
Total stockholders' equity 429,929 412,739
Total liabilities and stockholders' equity $562,469 $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 March 22, 1998 Commission file number 0-7831
(3 Accounting Periods)
Consolidated Condensed Statement of Income
(Dollars in thousands except share and per share amounts)
Three Periods Ended
03/22/98 03/23/97
Net Sales $154,820 $143,710
-------- --------
Operating costs and expenses:
Cost of sales 88,665 79,267
Selling/administrative expenses 50,748 46,921
-------- --------
139,413 126,188
-------- --------
Operating Earnings 15,407 17,522
Dividend and interest income, net 1,411 1,314
Gain on sale of assets 13 230
-------- --------
Earnings before income taxes 16,831 19,066
Provision for income taxes 6,852 7,894
-------- --------
Net Income $ 9,979 $ 11,172
======== ========
Weighted average number of common
shares outstanding 13,907,054 13,765,468
========== ==========
Earnings per share $0.72 $0.81
===== =====
Cash dividend per share $0.55 $0.55
===== =====
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended March 22, 1998 Commission file number 0-7831
(3 Accounting Periods)
Consolidated Condensed Statement of Cash Flows
(Dollars in thousands)
Three Periods Ended
03/22/98 03/23/97
(Unaudited) (Unaudited)
Cash flow from operating activities:
Net Earnings $ 9,979 $11,172
Adjustments to net earnings for
non-cash items:
Depreciation and amortization 9,440 8,838
Net gain from sales of assets (13) (230)
Change in:
Accounts receivable 5,479 (1,882)
Inventories 1,245 4,438
Accounts payable (6,110) (6,573)
Other current assets and
liabilities (5,657) (1,627)
-------- --------
Net cash provided by operating
activities $ 14,363 $14,136
-------- --------
Cash flow from investing activities:
Proceeds from sale of assets 13 840
Property and equipment
expenditures (8,684) (8,864)
Assets of business acquired (6,194) (5,282)
Other-net ( 973) (327)
-------- --------
Net cash provided by investing
activities (15,838) (13,633)
-------- --------
Cash flow from financing activities:
Net increase (decrease) in
long-term obligations 172 (732)
Net sales of treasury stock 15,185 21,523
Cash dividends (7,844) (7,600)
-------- -------
Net cash used for financing
activities 7,513 13,191
-------- -------
Net increase (decrease) in cash
and cash equivalents 6,038 13,694
Cash and cash equivalents
Beginning of year 111,002 65,283
-------- -------
March 22, 1998 $117,040 $78,977
======== =======
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended March 22, 1998 Commission file number 0-7831
(3 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 March 22,
1998 balance sheet. Operating results for the three periods ended
March 22, 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 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 March 22, 1998 Commission file number 0-7831
(3 Accounting Periods)
Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
Consolidated net income during the first quarter was nearly $10.0
million, down more than a million dollars, or 10.7%, from last year.
First quarter revenue was $154.8 million, up 7.7%. The decline in
quarterly earnings from the record year of 1997 was due to losses at IPC
Communication Services' domestic operations, and an 18.7% increase in
newsprint prices that had an impact at Journal Sentinel Inc. and Add Inc.
Journal Sentinel Inc. enjoyed a 7.5% increase in classified
advertising revenue. Retail preprints climbed 16%, while retail run-of-
paper advertising was down substantially. Overall revenue was $52.7
million, up 5.8%. With the price of newsprint up sharply, pre-tax earnings
were down 4.3% to $8.9 million.
Journal Broadcast Group Inc. had revenue for the quarter at $20.7
million, essentially flat compared to last year. Pre-tax earnings were
down 24.3% to $3.6 million. KTNV-TV, our ABC affiliate in Las Vegas, Nev.,
had a good gain, with revenue up 8.9% and pre-tax earnings up 17.2%.
However, pre-tax earnings at radio operations fell $805,000 to $128,000.
Sales were sluggish in some locations. In addition, three format changes
in Omaha and Tucson, plus an additional station in Tucson with no
advertising sales during the start-up, resulted in this slow beginning.
However, we expect to make up most of this shortfall during the balance of
the year.
NorthStar Print Group Inc. saw revenue increase slightly. Pre-tax
earnings slipped by $159,000 to $329,000. The Milwaukee plant had sales
6.2% ahead of last year, and an improvement in pre-tax earnings of more
than $100,000. Although the Norway / Watertown operation continued to
produce labels for Brahma Brewing in Brazil, the volume is considerably
lower than last year.
At Norlight Telecommunications Inc., the excellent performance from
1997 continued to roll. There was a 31.6% increase in revenue to $16.3
million, and pre-tax earnings jumped 43.3% to $4.2 million. Our investment
in expansion of the network over the last two years is paying off with
extensive utilization of the capacity. Network expansion will continue in
response to customer demand.
Add Inc. revenue was up by 22.3% to $21.8 million due to the
addition of Dixie Web Graphics in New Orleans, La., and Community
Newspapers Inc. around Milwaukee. However, without those acquisitions,
revenue would have shown a 1% decline. With soft sales and the increased
paper costs, pre-tax earnings slid 44.8% to $502,000.
Revenue was flat at IPC Communication Services at $27.9 million,
while domestic pre-tax earnings were below last year and below the profit
plan. Domestic revenue was down 2% from last year. The falloff is due to
soft publication sales and factory costs that are higher than anticipated.
The expense of consolidating the two northern California operations
and moving the southern California plant into a larger building had a
negative impact on the first quarter, but should help future earnings. IPC
Europe pre-tax earnings were more than $900,000 over last year's reported
first quarter loss. Nevertheless, the consolidated pre-tax loss for the
quarter for IPC reached $2.5 million.
PrimeNet Marketing Services had consolidated pre-tax earnings up
slightly to $65,000, substantially ahead of expectations, while revenue
remained flat at $2.9 million. Sales growth remains the focus for
PrimeNet, and we are confident they will achieve that goal.
Working capital has increased to $125 million from the end of 1997. Total
assets now exceeds $562 million and stockholders' equity equals $430
million.
<PAGE>
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended March 22, 1998 Commission file number 0-7831
(3 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 three accounting periods ended March 22,
1998.
<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 May 6, 1998 /s/ Steven J. Smith
Steven J. Smith, President and Chief
Executive Officer
Date May 6, 1998 /s/ Paul M. Bonaiuto
Paul M. Bonaiuto, Executive Vice President
And Chief Financial Officer
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