SECURITIES & EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(X) Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1997.
Commission File Number: 0-7831
JOURNAL COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
Wisconsin 39-0382060
(State of incorporation) (I.R.S. Employer
identification number)
333 West State Street, Milwaukee, Wisconsin 53203
(Address of principal executive offices)
Registrant's telephone number, including area code:
(414) 224-2374
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.25 Per Share
(title of class)
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 _
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]
State the aggregate market value of the voting stock held by
non-affiliates of the Registrant: Not applicable.
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of March 19, 1998:
Class Outstanding at March 19, 1998
Common Stock, par value $0.25 14,213,607
Portions of the annual shareholders report for the year ended December 31,
1997 are incorporated by reference into Parts I and II. Portions of the
proxy statement for the annual shareholders meeting to be held June 2,
1998 are incorporated by reference into Part III.
<PAGE>
PART I
ITEM 1. BUSINESS
The Registrant is a diversified communications and media company. Its 1997
revenues, broken down by business segments, were: publishing - 42.3%;
commercial printing 31.9%; broadcast - 15.1%; telecommunications - 9.0%,
and direct marketing - 1.7%. The following indicates the percent of
consolidated revenues derived from these activities for the past three (3)
years:
Source 1997 1996 1995
Advertising 34.2% 34.2% 35.8%
Circulation 8.1 8.4 9.2
------- ------- -------
Publishing 42.3 42.6 45.0
Broadcast 15.1 15.3 12.5
Commercial Printing 31.9 32.5 34.0
Telecommunications 9.0 7.2 6.6
Direct Marketing 1.7 2.4 1.9
Material developments in the Registrant's business in 1997 included the
acquisition of a group of community newspapers and shoppers in the
Milwaukee area, the acquisition of a fourth radio station in Omaha, the
announcement of the pending acquisition of two additional radio stations
in Omaha (transaction completed on January 2, 1998), the acquisition of
two radio stations in Knoxville, Tennessee in exchange for the
Registrant's radio station in Kansas City, the acquisition of a printing
company in New Orleans, Louisiana and the acquisition of a shopper in
western Massachusetts. In addition to the information provided below, see
Item 6, "Selected Financial Data," Item 7, "Management Discussion and
Analysis," and Item 8, "Consolidated Financial Statements and
Supplementary Data."
Publications
Journal Sentinel Inc., a wholly-owned subsidiary of the Registrant,
publishes the major daily
newspaper in the Milwaukee, Wisconsin market. Prior to April 2, 1995, it
had published the evening Milwaukee Journal (The Journal) since 1882, the
Sunday edition of The Journal (Sunday Journal) since 1911, and the morning
Milwaukee Sentinel (the Sentinel) since it was acquired in 1962. On April
2, 1995, the daily newspapers were merged and became one morning
newspaper, the Milwaukee Journal Sentinel. Average paid circulation for
the twelve months ended March 31 for the last five years, as audited by
the Audit Bureau of Circulation, was:
1997 1996 1995 1994 1997
Journal Sentinel 292,035 298,206 -0- -0- -0-
Sunday Journal 458,480 467,852 486,422 492,425 490,077
Journal -0- - 0- 211,801 228,454 238,351
Sentinel -0- - 0 - 173,895 173,019 171,271
Advertising volume in column inches and preprint units for the
Registrant's Milwaukee newspapers for the last five calendar years was:
(in thousands)
Column Inches
Full Run 2,319.4 2,151.5 2,289.7 2,666.0 2,657.6
Part Run 292.7 250.7 257.1 213.4 260.9
Units
Preprint 2.6 2.5 2.8 2.4 1.9
There are 135 other newspapers, shoppers and magazines published in the
four-county Milwaukee market. Most of these are weekly publications, while
a few are biweekly, fortnightly or monthly. Of these 135 publications, 44
are paid subscription and 91 are delivered without charge or are available
free at various public locations. These publications cover a wide variety
of interests, including community, business, real estate, labor,
religious, ethnic, foreign language or other special interest newspapers.
Two (2) other daily newspapers, the Waukesha Freeman and the West Bend
Daily News, are published in the four-county Milwaukee metropolitan area.
These newspapers are circulated in portions of Waukesha and Washington
Counties, respectively. In addition, editions of USA Today, Chicago
Tribune, Chicago Sun Times, Wall Street Journal, Madison Capitol-Times,
Wisconsin State Journal and New York Times are sold in the Milwaukee
market. The Journal Sentinel newspaper also competes for advertising
revenues or support with five (5) network-affiliated commercial television
stations, eight (8) independent television stations - (three (3) of which
are low power television stations), two (2) public television stations and
thirty-one (31) AM and FM radio stations located in the four-county
market, two (2) cable television companies and several direct mail
services. One network-affiliated television station and two radio stations
in the Milwaukee market are owned by a subsidiary of the Registrant.
The Journal Sentinel maintains news bureau offices in Madison, Wisconsin,
and Washington, D.C. It also has suburban bureaus in Waukesha and
Cedarburg and correspondents based in West Bend and Stevens Point,
Wisconsin. The Journal Sentinel is a member of the Associated Press and
subscribes to these wire services: the Washington Post-Los Angeles Times
News Service, the New York Times News Service and the Knight-Ridder News
Service. The Journal Sentinel is also a contributing member of the Scripps
Howard News Service.
The April 1995 merger resulted in a work-force reduction. Severance, early
retirement payments and other non-recurring costs associated with the
launch of the Journal Sentinel resulted in a pre-tax charge of $17.5
million.
During 1997, the average price per ton for newsprint decreased by 14.5 %
compared to the previous year. Total consumption for all products in 1997
was 6.2% above 1996's total. Newsprint is purchased from five Canadian and
two American suppliers. Anticipated supplies for 1998 are considered
sufficient.
The Registrant also publishes, through its Add, Inc. subsidiary. In
February 1997, Add, Inc. purchased one (1) shopper in Massachusetts and
sold one (1) shopper in Wisconsin and one (1) in Ohio. In June 1997, Add,
Inc. purchased a printing firm in New Orleans. In October 1997, Add, Inc.
purchased a group of seventeen (17) shoppers and twenty-three (23) weekly
newspapers in the Milwaukee area. At December 31, 1997, Add, Inc.
published nine (9) weekly newspapers in southwestern Connecticut; thirty-
two (32) weekly newspapers and one (1) controlled-circulation business
publication in Wisconsin; one (1) weekly newspaper in Florida; fifty-seven
(57) shopper publications, with thirty-six (36) in Wisconsin, twelve (12)
in Ohio, three (3) in Florida, two (2) in Pennsylvania, two (2) in
Vermont, one (1) in Massachusetts, and one (1) in New York; three (3) paid
auto publications, with two (2) in Louisiana and one (1) in Wisconsin; two
(2) paid boating publications, with one (1) in Louisiana and one (1) in
Florida; three (3) free auto publications in Ohio; two (2) free monthly
Health & Fitness publications, with one (1) in Pennsylvania and one (1) in
Louisiana, and one (1) nationwide electronic classified database.
Printing
IPC Communication Services, Inc., a wholly-owned subsidiary, specializes
in the production, management of inventory, materials procurement and
fulfillment for customers in the technology and publications industries.
This includes printing of documentation manuals for hardware and software
manufacturers and the duplication of CD-ROMs, DVDs, masters, disks and
tapes and the printing of medical, legal and technical journals for
various trade associations. IPC is based in Fremont, California (moved
from San Jose, California in January 1998), and has additional operations
in Foothill Ranch, California (moved from Irvine, California in January
1998), St. Joseph, Michigan, Austin, Texas, and Roncq, France. No supply
restrictions are anticipated in 1998 for the raw materials IPC utilizes.
NorthStar Print Group, Inc., a wholly-owned subsidiary of the Registrant,
is headquartered in Brown Deer, Wisconsin, and has manufacturing
operations in Brown Deer, Green Bay and Watertown, Wisconsin, and Norway,
Michigan. It employs a wide array of printing technologies in the various
markets it serves. These include sheet-fed offset, rotogravure and
flexographic processes that are used to print point-of-purchase materials,
labels for consumer goods and industry manufacturers (including in-mold
labels), and out-of-home media. NorthStar Print Group, Inc., is one of the
nation's largest producers of beer bottle labels and also provides beer
bottle labels in Brazil. Its supply of raw materials is considered
adequate.
Trumbull Printing, Inc., though a wholly-owned subsidiary of the
Registrant, is managed by a subsidiary of Add, Inc. that is co-located in
Trumbull, Connecticut. Trumbull Printing, Inc., is a web offset printer of
newspapers, newspaper inserts and other publications. Its principal raw
materials, paper and ink, are expected to be in sufficient supply in 1998.
Broadcasting
Journal Broadcast Group, Inc., a wholly-owned subsidiary of the
Registrant, was re-incorporated in Nevada as Journal Broadcast Corporation
in March 1998. Thereafter, Journal Broadcast Corporation incorporated a
wholly-owned subsidiary, which was named Journal Broadcast Group, Inc.
Journal Broadcast Corporation operates television station KTNV, an
affiliate of the ABC Television Network, in Las Vegas, Nevada. Its
subsidiary, Journal Broadcast Group, Inc., operates two (2) television
stations and thirteen (13) radio stations in five (5) states. All operate
under licenses from the Federal Communications Commission.
The Registrant's three (3) Milwaukee broadcast operations, WTMJ-TV,
WTMJ-AM and WKTI-FM, consistently rank high in audience rating surveys.
Competition for advertising revenue in the ten-county area of dominant
influence ("ADI") includes four (4) other network-affiliated commercial
televisions stations, eight (8) independent television stations (three (3)
of which are low-power television stations), two (2) public television
stations, thirty-four (34) other radio stations, two (2) cable television
companies, seven (7) daily newspapers (including one owned by Registrant),
and numerous weekly newspapers. News reporting and editorial operations at
WTMJ-TV, WTMJ-AM and WKTI-FM, Milwaukee, are independent of the
Registrant's Milwaukee newspaper operations.
The broadcast stations of Journal Broadcast Group, Inc. are:
Station Location Network Affiliation
WTMJ-TV Milwaukee, WI NBC Television
WTMJ-AM Milwaukee, WI ABC Information
WKTI-FM Milwaukee, WI ABC Contemporary
WSYM-TV Lansing, Michigan Fox Television
KOSR-AM Omaha, Nebraska USA Radio, One-on-One Sports
KEZO-FM Omaha, Nebraska
KSRZ-FM Omaha, Nebraska ABC Contemporary
KESY-FM Omaha, Nebraska
KBBX-AM Omaha, Nebraska
KKCD-FM Omaha, Nebraska
KMXZ-FM Tucson, Arizona
KFFN-AM Tucson, Arizona CBS Spectrum
KZPT-FM Tucson, Arizona CBS Spectrum
WMYU-FM Knoxville, Tennessee ABC News Wire
WWST-FM Knoxville, Tennessee
In December 1997, Journal Broadcast Group reached an agreement with
Sequoyah Communications Inc. to purchase two (2) additional radio stations
in Knoxville, WQBB-FM and WQBB-AM. In February 1998, Journal Broadcast
Group reached an agreement with Desert West Air Rancher Corporation to
purchase radio station KLQB-FM in Oracle, Arizona. In March 1998, Journal
Broadcast Group reached an agreement with AGM-Nevada to purchase
seven (7) radio stations in and near Boise, Idaho: KCID-AM, KCID-FM,
KJOT-FM, KQXR-FM, KGEM-AM, KSRV-AM and KSRV-FM. All of these
acquisitions will take effect upon approval by the Federal
Communications Commission.
Telecommunications
Norlight Telecommunications, Inc., a wholly-owned subsidiary, provides
telecommunications services. Norlight's business-to-business service
markets advanced data circuits, frame relay, Internet access, and switched
voice services, including domestic, international and calling card
services, to medium and large businesses in Wisconsin, Michigan, Minnesota
and Illinois. Norlight's residential service provides switched voice
services to residential and small business customers in Minnesota,
Michigan and Wisconsin. Norlight has entered into an agreement to sell
its residential and small business customer business that is based in
Duluth, Minnesota, as of March 31, 1998. Norlight's carrier services
offer state-of-the-art, bulk, network transmission, including SONET and
bandwidth-on-demand, to other telecommunications carriers. Norlight's
satellite and video services provides terrestrial and satellite
transmission of broadcast quality video signals.
Direct Marketing
PrimeNet Marketing Services, Inc., a wholly-owned subsidiary, is located
in St. Paul, Minnesota. It is engaged in the business of providing
marketing database services, consulting and computer mailing services,
customized laser printing, lettershop work and fulfillment services.
Mega Direct, Inc., a wholly-owned subsidiary of PrimeNet Marketing
Services, is located in Clearwater, Florida. It was acquired on June 22,
1995. Mega Direct is a direct mail operation offering customers design
services, printing, direct mail production and processing and fulfillment.
Compliance with Environmental Laws
The Registrant does not currently anticipate the need for significant
capital expenditures and expects no material adverse effects to its
earnings or competitive position to maintain compliance with environmental
laws.
Impact of Year 2000 Issue
The Registrant's statement on the Year 2000 Issue is presented in
"Management Discussion and Analysis" on page 22 of the Registrant's Annual
Report and is in incorporated herein by reference.
Methods of Distribution
The Registrant's newspapers are distributed through networks of carriers,
most of whom are independent contractors. Advertising for Registrant's
newspapers and broadcast stations is generally sold by employees, with
some national advertising obtained by agents. Sales for the Registrant's
commercial printing, telecommunications and direct marketing operations
are generally obtained by employees and a limited number of agents.
Employees
The Registrant and its subsidiaries, as of December 31, 1997, had
approximately 4,568 full-time and 2,470 part-time employees.
Financial Information About Industry Segments
Financial information about Registrant's industry segments is presented in
Note 10 to the Consolidated Financial Statements appearing on pages 30 and
31 of Registrant's Annual Report.
ITEM 2. PROPERTIES
<TABLE>
<CAPTION>
Principal properties operated by the Registrant and its subsidiaries as of December 31, 1997, are summarized as follows:
Subsidiary Location How Held Square Footage
<S> <C> <C> <C>
Journal Sentinel Inc.
(Publishing)
Offices/Plant Milwaukee, WI Owned 464,000
Garage Milwaukee, WI Owned 67,500
Distribution Centers Milwaukee, WI Leased or Owned 180,893
Inserting Plant Milwaukee, WI Leased 46,000
Add, Inc.
(Publishing)
Office/Plant WI, OH, MA, FL Owned or Leased 286,281
VT, NY, PA, LA
Hometown Publications, Inc.
(Publishing)
Office Trumbull, CT Leased 7,003
Auto Mart Publishing, Inc.
(Publishing)
Office Dayton, Columbus Leased 2,850
& Cincinnati, OH
Community Newspapers, Inc.
(Publishing)
Offices/Plant Oak Creek, New Owned/Leased 29,450
Berlin, Waukesha, WI
Trumbull Printing, Inc.
(Commercial Printing)
Office/Plant Trumbull, CT Owned 78,000
Journal Broadcast Group, Inc.
(Broadcasting)
Office and Studios Milwaukee, WI Owned 101,500
KTNV-TV Studios Las Vegas, NV Owned 20d,300
WSYM-TV Studios Lansing, MI Leased 13,173
Office & Studios Knoxville, TN Leased 6,400
Office and Studios Omaha, NE Leased 12,200
Office and Studios Tucson, AZ Leased 8,583
Subsidiary
NorthStar Print Group, Inc.
(Commercial Printing)
Office/Plant Brown Deer, WI Owned 128,360
Office/Plant Norway, MI Owned 108,000
Office/Plant Watertown, WI Owned 60,000
Label Products & Design Inc.
(Commercial Printing)
Office and Plant Green Bay, WI Owned 39,620
IPC Communication Services, Inc.
(Commercial Printing)
Office/Plant/Warehouse St. Joseph, MI Leased 326,000
Office/Plant/Warehouse Fremont, CA Leased 253,440
Office/Plant Irvine, CA Leased 123,500
Office/Plant/Warehouse San Jose, CA Leased 367,649
Office/Warehouse Austin, TX Leased 8,000
Nordoc Software Services, S.A.
(Commercial Printing)
Office/Plant Roncq, France Leased 67,000
Norlight Telecommunications, Inc.
(Telecommunications)
Office Rubicon, WI Owned 3,800
Office/Satellite Antennae Skokie, IL Leased 6,094
Office Afton, WI Owned 3,800
Office Arden Hills, MN Owned 1,700
Office Minneapolis, M N Leased 2,934
Office Brookfield, WI Leased 21,593
Office Duluth/Bemidji, MN Leased 5,200
Office Green Bay, WI Leased 200
PrimeNet Marketing Services, Inc.
(Data Base Management)
Office/Plant St. Paul, MN Leased 87,218
Mega Direct, Inc.
(Direct Marketing)
Office Clearwater, FL Leased 32,000
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
In a libel lawsuit, a jury awarded damages of $450,000 in October 1997
against the former Milwaukee Sentinel and a reporter. The damage award is
partially covered by insurance. The Registrant has appealed the decision to
the Wisconsin Court of Appeals. An appellate decision is expected sometime
in late 1998 or early 1999. Otherwise, the Company is involved in various
claims and lawsuits incidental to its business, which, in the opinion of
management, will not have a material effect in the aggregate on the Company's
financial position or operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 4A. EXECUTIVE OFFICERS OF REGISTRANT
The executive officers of Registrant, as of March 19, 1998, all of whom
hold office until the next annual meeting of the board of directors, which
will be held immediately following the annual meeting of shareholders on
June 2, 1998, are:
Name Age Office Held Since
Robert A. Kahlor 64 Chairman of the Board September 4, 1992
Steven J. Smith 47 President September 4, 1992
& Chief Executive Officer March 3, 1998
Douglas G. Kiel 49 Executive Vice President June 3, 1997
Paul M. Bonaiuto 47 Executive Vice President/CFO June 3, 1997
Keith K. Spore 55 Senior Vice President September 6, 1995
Robert M. Dye 50 Vice President March 6, 1990
Stephen O. Huhta 42 Vice President June 8, 1993
Ronald G. Kurtis 50 Vice President June 8, 1993
James J. Ditter 36 Vice President September 6, 1995
William T. Lutzen 36 Vice President June 7, 1994
Daniel L. Harmsen 42 Vice President March 5, 1996
Mark J. Keefe 38 Vice President June 4, 1996
Douglas G. Hosking 41 Vice President September 4, 1996
Richard J. Gasper 54 Vice President June 4, 1996
Karen O. Trickle 41 Treasurer December 3, 1996
Paul E. Kritzer 55 Vice President June 5, 1990
& Secretary September 1, 1992
Richard A. Williams 60 Assistant Secretary June 3, 1997
Todd K. Adams 39 Vice President June 4, 996
All of the executive officers of the Registrant except Messrs. Hosking,
Keefe and Gasper and Ms. Trickle have been employed by the Company in key
management positions for more than five (5) years. Mr. Hosking joined the
Registrant in April 1996 as President of IPC Communication Services, Inc.
Previously he had been Vice President for commercial development and
general manager of the food fiber division of Opta Food Ingredients, Inc.,
for two years and Executive Vice President of Courier Corp., San
Francisco, a national book printer. Mr. Keefe joined the Registrant in
October 1995 as President of PrimeNet Marketing Services, Inc. Prior to
that he had been a Vice President for Donnelly Marketing, Inc., St. Louis
Park, Minnesota, from January 1994 to September 1995, and a Vice President
of FDC, Inc. (a subsidiary of Fingerhut Corporation) in Minnetonka,
Minnesota. Mr. Gasper has been President of NorthStar Print Group, Inc.,
since January 1996. Prior to that he was Vice President and General
Manager of Label Products & Design, Inc., Green Bay, Wisconsin, from April
1993 to January 1996, and President and owner of Competitive Advantages,
Inc., a training and consulting firm in Florence, South Carolina, from
April 1992 to April 1993. Ms. Trickle started with Registrant in September
1996. Previously, she had been Assistant Treasurer (International) for
Harnischfeger Industries, Inc., Brookfield, Wisconsin, from September 1994
to September 1996, and Assistant Treasurer for Applied Power, Inc.,
Butler, Wisconsin, up to September 1994.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK
AND RELATED STOCKHOLDER MATTERS
There is no established public trading market for the Registrant's common
stock. Units representing beneficial interests in the Registrant's common
stock ("Units") can be purchased only by full-time employees with ninety
(90) days service and part-time employees with two consecutive years of
service of one thousand (l,000) hours each year. As of March 19, 1998, the
Journal Employees' Stock Trust, dated May 15, 1937, as amended, (the
"Trust") owned of record 12,960,000 shares, or 90%, of the issued and
outstanding common stock of the Registrant.
The Trust issues Units, each representing a beneficial interest in one
share of the Registrant's stock, to eligible employees ("Unitholders"). On
March 19, 1998, 3,387 Unitholders owned 12,106,493 Units (representing
85.2% of Registrant's outstanding common stock) and thus were the
beneficial owners of a like number of shares of the Registrant's stock
held by the Trust. The balance of 853,507 Units issued by the Trust were,
on the above date, held by personal trusts and employee benefit trusts and
by the Registrant, treated as treasury stock and not voted.
Prior to all meetings of shareholders of the Registrant, the trustees of
the Trust ("Trustees") are required to deliver to each active
employee-Unitholder a proxy, with the right of substitution, for the
number of the Registrant's shares represented by his or her Units.
Unitholders may sell their Units only through procedures, and at a formula
price, dictated pursuant to the Stock Trust Agreement, under which the
Trust was formed and the policy determinations of the Trustees. Whenever a
Unitholder ceases to be an employee, for any reason except retirement,
corporate downsizing or divestiture, he or she must offer his or her Units
for resale through the corporate treasury to active employees designated
by the President of the Registrant or the Registrant. Employees who retire
may retain a decreasing percentage of their Units for up to ten (10) years
after the first anniversary of their retirement. Employees who are
separated from the Registrant due to divestiture or downsizing may retain
a decreasing percentage of their Units for up to five (5) years after the
first anniversary of their separation. All Units held by retirees are
voted by the Trustees. Units may also be held by employee benefit trusts,
and Unitholders may transfer Units to personal trusts and to charitable,
educational or religious trusts. All Units held by such trusts are
likewise voted by the Trustees. As of March 19, 1998, retirees, personal
trusts, an employee benefit trust, and other trusts held 4,079,823 units,
representing a beneficial interest in 28.7% of the Registrant's
outstanding common stock.
All of the Trustees are directors of the Registrant. They have no
financial interest in the Registrant's stock owned by the Trust other than
through the Units they own individually.
The Registrant's unit price and dividend history for the past decade are
presented in the following table:
<TABLE>
<CAPTION>
Employee Stock Ownership Plan
Unit Unit Unit Price Total
Price Price Increase Cash Annual
Begin End (Decrease) Dividend Return
Year
<S> <C> <C> <C> <C> <C>
1997 - 4th Qtr 41.80 43.38 1.58 0.55 22.7%
1997 3rd Qtr 39.79 41.80 2.01 0.55
1997 2nd Qtr 38.46 39.79 1.33 0.55
1997 1st Qtr 37.15 38.46 1.31 0.55
1996 - 4th Qtr 36.68 37.15
0.47 0.55 8.6
1996 - 3rd Qtr 36.14 36.68 0.54 0.55
1996 - 2nd Qtr 36.10 36.14 0.04 0.55
1996 - 1st Qtr 36.24 36.10 (0.14) 0.55
1995 35.40 36.24 0.84 2.10 8.3
1994 34.64 35.40 0.76 1.90 7.7
1993 33.60 34.64 1.04 1.80 8.5
1992 32.60 33.60 1.00 1.80 8.6
1991 31.48 32.60 1.12 1.80 9.3
1990 29.66 31.48 1.82 1.70 11.9
1989 26.65 29.66 3.01 1.70 17.7
1988 23.71 26.65 2.94 1.50 18.7
</TABLE>
In October 1996, the Trustees, stockholders and Unitholders of the
Registrant adopted an amendment to the Journal Employees' Stock Trust
Agreement to change the Option Price Formula used to calculate the price
of Units. The amendment added a multiplier to the Option Price Formula
that, effective January 1, 1997, increased the Unit price by an additional
8.5% in 1997. The multiplier, which progressively increases in each of
the 13 periods of the Registrant's fiscal year, will continue to increase
by 8.5% each year for the next four years, 1998-2001. The five-year
phase-in of the multiplier will be completed by the end of 2001, when a
multiplier of 1.5 will become a permanent component of the Option Price
Formula. The Trustees believe that the Option Price Formula amendment
will cause the Unit price to be approximately 75% of the price at which
the Units would trade if they were publicly-traded securities at the end
of the five-year phase-in period, based upon market conditions existing in
October 1996.
In addition to the Journal Employees' Stock Trust, there are two (2) other
record holders of stock of the Registrant. The Registrant is not aware of
any recent sales of stock.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data of the Registrant is presented in the Registrant's
Annual Report on pages 18 and 19 and is incorporated herein by reference.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis is presented on pages 20 through 22 in
Registrant's Annual Report and is incorporated herein by reference.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
The Registrant's Financial Statements with Report of Independent Public
Auditors are presented on pages 23 through 31 of the Registrant's Annual
Report and are incorporated herein by reference.
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information in response to this item is incorporated herein by reference
to the Company's proxy statement, which shall be filed with the Securities
and Exchange Commission no later than April 30, 1998. Information about
executive officers of the Company is included in Part I of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Information in response to this item is incorporated herein by reference
to the Company's proxy statement, which shall be filed with the Securities
and Exchange Commission no later than April 30, 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following chart states the equity ownership of each Director of the
Registrant:
Units Held Percent of
Held Office as of March Ownership
Name Age Since 19, 1998 (') *denotes<1%
Todd K. Adams 39 June 4, 1996 19,495 *
Donna A. Armstrong 51 June 3, 1997 3,513 *
Paul M. Bonaiuto 47 June 8, 1993 24,810 *
James J. Ditter 36 September 6, 1995 12,099 *
Robert M. Dye 50 March 6, 1990 50,370 *
James L. Forbes 65 September 4, 1996 -- (3)
Kathleen A.
Gallagher 38 June 3, 1997 7,051 *
Richard J. Gasper 54 June 4, 1996 15,532 *
Douglas G. Hosking 41 September 4, 1996 9,584 *
Stephen O. Huhta 42 June 8, 1993 38,355 *
Donald L. Jaeschke 49 June 3, 1997 8,000 *
Robert A. Kahlor 64 March 6, 1973 98,935 *
Mark J. Keefe 38 June 4, 1996 11,815 *
Douglas G. Kiel 49 June 4, 1991 40,249 *
Paul E. Kritzer 55 June 5, 1990 45,045 *
Ronald G. Kurtis 50 June 8, 1993 63,500 *
Kirk T. Leigeb 42 June 3, 1997 8,862 *
David G. Meissner 60 June 7, 1988 -- (2) -- (2)
Roger D. Peirce 60 September 4, 1996 -- (3)
John C. Rogge 32 June 3, 1997 550 *
Thomas K. Sheridan 42 June 3, 1997 17,069 *
Steven J. Smith 47 June 2, 1987 85,280 *
Keith K. Spore 55 September 6, 1995 31,000 *
David M. Thomas 30 June 3, 1997 1,372 *
Richard A. Williams 60 June 3, 1997 61,345 *
Ronald A. Zinda 39 June 3, 1997 907 *
(') A "Unit" is equivalent to beneficial interest in one (1) share of
the common stock of Journal Communications, Inc.
(2) Mr. Meissner owns no Units but is an officer and director of Matex
Inc., which owns 1,320,000 shares of Journal stock, or 9.2% of the
outstanding stock. Mr. Meissner's wife is also an officer and
director of Matex Inc. and together with her children owns or has a
beneficial interest in 33% of the outstanding common stock of Matex
Inc. Mrs. Meissner also has a 33% beneficial interest in 120,000
shares of Journal Communications, Inc. common stock. Other members
of Mrs. Meissner's family own or have a beneficial interest in the
remaining 67% of the Matex Inc. shares and the 120,000 shares of
Journal stock.
(3) Under the terms of the Trust, non-employees are not permitted to own
Units.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information in response to this item is incorporated herein by reference
to the Company's proxy statement, which shall be filed with the Securities
and Exchange Commission no later than April 30, 1998.
PART IV
ITEM 14. EXHIBITS. FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a) 1 and 2.
Financial Statements and Financial Statement Schedules
The following consolidated financial statements of the Registrant are
included in Item 8:
Registrant's Annual Report
Page Number
Consolidated Balance Sheets at
December 31, 1997 and 1996 23
Consolidated Statements of Earnings
for each of the three years in
the period ended
December 31, 1997 24
Consolidated Statements of Cash Flows
for each of the three years in the
period ended December 31, 1997 25
Consolidated Statements of Retained
Earnings for each of the three years
in the period ended December 31, 1997 26
Notes to Consolidated Financial Statements 26-31
Registrant's 10-K
Page Number
Financial Statement Schedules:
Consolidated schedules for each of the
three years in the period ended
December 31, 1997:
II - Valuation and qualifying accounts 15
All other schedules are omitted since the required information is not
present, or is not present in amounts sufficient to require
submission of the schedule, or because the information required is
included in the consolidated financial statements and notes thereto.
3. Exhibits
The exhibits listed on page 19 are filed as part of this annual
report.
(b) Reports on Form 8-K.
No report on Form 8-K was required to be filed by the Registrant
during the quarter ended December 31, 1997.
<PAGE>
JOURNAL COMMUNICATIONS, INC.
SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 1997, 1996 and 1995
Balance at Additions Deductions Balance
beginning charged to from at end
of year earnings allowances (a) of year
Allowance
for doubtful
receivables:
1997 $3,241,512 $3,817,193 $3,614,959 $3,443,746
1996 $2,475,670 $4,184,527 $3,418,685 $3,241,512
1995 $2,065,012 $3,007,365 $2,596,707 $2,475,670
Note:
(a) Accounts receivable written off, less recoveries, against the
allowance.
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report to
be signed on its behalf by the undersigned, hereunto duly authorized.
JOURNAL COMMUNICATIONS, INC.
By: /s/ Robert A. Kahlor
Robert A. Kahlor
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
/s/ Todd K. Adams March 31, 1998
Todd K. Adams, Director
/s/ Donna A. Armstrong March 31, 1998
Donna A. Armstrong, Director
/s/ Paul M. Bonaiuto March 31, 1998
Paul M. Bonaiuto, Director & Chief
Financial Officer (Principal Financial Officer)
_________________________________
James J. Ditter, Director
/s/ Robert M. Dye March 31, 1998
Robert M. Dye, Director
_________________________________
James L. Forbes, Director
_________________________________
Kathleen A. Gallagher, Director
/s/ Richard J. Gasper March 31, 1998
Richard J. Gasper, Director
________________________________
Douglas G. Hosking, Director
________________________________
Steven O. Huhta, Director
/s/ Donald L. Jaeschke March 31, 1998
Donald L. Jaeschke, Director
/s/ Robert A. Kahlor March 31, 1998
Robert A. Kahlor, Director
________________________________
Mark J. Keefe, Director
/s/ Douglas G. Kiel March 31, 1998
Douglas G. Kiel, Director
/s/ Paul E. Kritzer March 31, 1998
Paul E. Kritzer, Director
_______________________________
Ronald G. Kurtis, Director
/s/ Kirk T. Leigeb March 31, 1998
Kirk T. Leigeb, Director
_______________________________
David G. Meissner, Director
_______________________________
Roger D. Peirce, Director
_______________________________
John C. Rogge, Director
/s/ Thomas K. Sheridan March 31, 1998
Thomas K. Sheridan, Director
/s/ Steven J. Smith March 31, 1998
Steven J. Smith, Director & Chief Executive
Officer (Principal Executive Officer)
/s/ Keith K. Spore March 31, 1998
Keith K. Spore, Director
/s/ David M. Thomas March 31, 1998
David M. Thomas, Director
/s/ Richard A. Williams March 31, 1998
Richard A. Williams, Director
_____________________________
Ronald A. Zinda, Director
<PAGE>
JOURNAL COMMUNICATIONS, INC.
INDEX TO EXHIBITS
(Item 14(a))
Exhibits Form 10-K
Page Number
(3.1) Articles of Association of Journal Communications,
Inc., as amended (incorporated by reference to
Exhibit 3.1 to Journal Communications, Inc.'s
Annual Report on Form 10-K for the year ended
December 31, 1995 (Commission File No. 0-7831).
( 3.2) By-Laws of Journal Communications, Inc.
(incorporated by reference to Exhibit 3.1 to
Journal Communications, Inc.'s Current Report
For Form 8-K dated March 5, 1996 (Commission
File No. 0-7831).
(9.1) The Journal Employees' Stock Trust Agreement,
dated May 15, 1937, as amended (incorporated by
reference to Exhibit 9 of the Annual Report on Form
10-K of Journal Communications, Inc. for the fiscal
year ended December 31, 1995 (Commission File
No. 0-7831).
(9.2) Further amendment to Stock Trust Agreement as approved
by unitholders on October 30, 1996 (incorporated by
reference to Exhibit A to the Definitive Proxy
Statement of the Journal Employees' Stock Trust
included in the Trust's Schedule 14A filed October 1,
1996 (Commission File No. 0-7832))
(13) Portions of Registrant's Annual Report, filed herewith*
(21) Subsidiaries of the Registrant, filed herewith 21
(23) Consent of Independent Auditors, filed
herewith 22
(27) Financial Data Schedule, filed herewith
________________________
* In accordance with Rule 201 of Regulation S-T, Exhibit 13 is
being filed in paper pursuant to a temporary hardhsip exemption.
Exhibit No. 21
JOURNAL COMMUNICATIONS, INC.
Subsidiaries of the Registrant
The following list shows the subsidiaries of the Registrant as of March
31, 1998, their respective states of incorporation and the percentage of
voting securities of each subsidiary owned by its immediate parent. All
companies listed have been included in the consolidated financial
statements filed herewith.
Percent of Voting
Securities Owned
State/Country by Registrant or
Subsidiary of Incorporation Immediate Parent
Journal Sentinel Inc. Wisconsin 100% by Registrant
Journal Broadcast Corporation Nevada 100% by Registrant
NorthStar Print Group, Inc. Wisconsin 100% by Registrant
Add, Inc. Wisconsin 100% by Registrant
Norlight Telecommunications, Inc. Wisconsin 100% by Registrant
PrimeNet Marketing Services, Inc. Minnesota 100% by Registrant
Trumbull Printing, Inc. Connecticut 100% by Registrant
IPC Communication Services, Inc. Michigan 100% by Registrant
Journal Broadcast Group, Inc. Wisconsin 100% by Journal
Broadcast
Corporation
Hometown Publications, Inc. Connecticut 100% by Add, Inc.
Label Products & Design, Inc. Wisconsin 100% by NorthStar
PrintGroup
Mega Direct, Inc. Wisconsin 100% by PrimeNet
Marketing
Community Newspapers, Inc. Wisconsin 100% by Add, Inc.
Mega Direct Holdings, Inc. Nevada 100% by Add, Inc.
Auto Mart Publications, Inc. Ohio 100% by Add, Inc.
Nordoc Software Services, S. A. France 99% by IPC
Communication
Services*
Nordoc Europe B.V. Netherlands 99% by IPC
Communication
Services*
___________________________
* 1 % by other subsidiaries of the Registrant
The Registrant has no controlling parent. Twelve million nine hundred and
sixty thousand (12,960,000) shares, or ninety percent (90%), of the
Registrant's issued common stock at December 31, 1997, are owned of record
by the Trust. The right to vote these shares in most instances resides in
the employees who hold Units of beneficial interest in that trust.
Accordingly, the Registrant is not controlled by the Trust and does not
consider it to be a "parent" of the Registrant within the meaning of
Regulation 12b-2. See Item 12 "Security Ownership of Certain Beneficial
Owners and Management."
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report on
Form 10-K of Journal Communications, Inc. of our report dated January 30,
1998, included in the 1997 Annual Report to Shareholders of Journal
Communications, Inc.
Our audits also included the financial statement schedule of Journal
Communications, Inc. listed in item 14(a). This schedule is the
responsibility of the company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, the financial
statement schedule referred to above, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration
Statements of Forms S-8 (File Nos. 2-79770, 33-13771 and 333-15669)
pertaining to Journal Communications, Inc. Employees' Individual
Retirement Agreement; the Journal Employees' Stock Trust, and the Journal
Communications, Inc. Employees' Stock Trust filing of November 5, 1996,
with respect to 1,500,000 units of beneficial interest in said trust, of
our report dated January 30, 1998 with respect to the consolidated
financial statements and schedule of Journal Communications, Inc. included
and incorporated by reference in the Annual Report (Form 10-K) for the
year ended December 31, 1997.
Milwaukee, Wisconsin ERNST & YOUNG LLP
March 30, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF JOURNAL COMMUNICATIONS, INC. AS OF AND FOR
THE PERIOD ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
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