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, 1996
Commission File Number: 0-7832
JOURNAL EMPLOYEES' STOCK TRUST
(Exact name of registrant as specified in its charter)
Wisconsin 39-6153189
(State of organization) (I.R.S. employer identification number)
333 West State Street, P. O. Box 661, Milwaukee, Wisconsin 53201
Address of principal executive offices (zip code)
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:
Units of Beneficial Interest
(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 Registrant: Not Applicable.
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of March 19, 1997:
Class Outstanding at March 19, 1997
Units of beneficial interest 12,312,333
Portions of Parts I, II and III are incorporated by reference to the
Annual Report of Journal Communications, Inc. on Form 10-K for the year
ended December 31, 1996, filed herewith as Exhibit 99.1. Portions of Part
III are incorporated by reference to the Proxy Statement of Journal
Communications, Inc., for the 1997 Annual Meeting of Journal
Communications, Inc., to be filed as Exhibit 99.2 upon its publication on
or about April 30, 1997.
<PAGE>
PART I
ITEM 1. BUSINESS
The Registrant is a trust created under the Journal Employees' Stock Trust
Agreement, dated May 15, 1937, as amended (the "Trust Agreement"), by all
the stockholders of The Journal Company (now known as Journal
Communications, Inc.), a Wisconsin corporation (the "Company"), to promote
stability and to enable its employees to acquire ownership and control of
the Company.
Under the Trust Agreement establishing the Registrant, stockholders of the
Company and the Company itself deposited shares of the Company's stock in
the trust and received in exchange trust units, which in turn have been
sold to active employees of the Company and its subsidiaries. Each unit
represents one share of the Company's common stock. Unitholders may sell
their units to active employees designated by the President of the Company
or the Company at the formula price ("Option Price") defined in the Trust
Agreement and are required to do so when they die or terminate employment,
except that (i) retired employees may retain a decreasing percentage of
their units for ten years after retirement and (ii) employees who are
terminated due to downsizing or divestiture may retain a decreasing
percentage of their units for up to five (5) years. As of the date
hereof, the Registrant holds 12,960,000 shares, or ninety percent (90%),
of the outstanding common stock of the Company.
The Registrant engages in no business other than the record holding of
Company shares, the issuing of trust units and, in limited instances, the
voting of Company shares held by it. Most expenses of administering the
trust are borne by the Company.
There are five trustees, all employees of the Company, none of whom
receives any compensation in his capacity as trustee. The Registrant has
no employees.
For a further discussion of the trust's operation and unit ownership, see
Item 5, "Market for Registrant's Common Stock and Related Stock Holder
Matters," and Item 12, "Security Ownership of Certain Beneficial Owners
and Management," in the Annual Report of Journal Communications, Inc. on
Form 10-K, filed herewith as Exhibit 99.1.
ITEM 2. PROPERTIES
The Registrant owns no physical properties. Its records are kept and its
administrative functions are performed in the offices of Journal
Communications, Inc., in Milwaukee, Wisconsin.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of holders of units of the Registrant was held on
October 30, 1996 for the purpose of considering a proposal to amend the
Trust Agreement to change the Option Price. At the meeting, 6,252,585
votes were cast FOR the proposal, 53,515 votes were case AGAINST the
proposal and there were 24,835 abstentions.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
Reference is made to Item 5, "Market For Registrant's Common Stock and
Related Stock Holder Matters," of the Annual Report of Journal
Communications, Inc., on Form 10-K filed herewith as Exhibit 99.1, and
incorporated by reference.
ITEM 6. SELECTED FINANCIAL DATA
Registrant incorporates herein by reference Item 6, "Selected Financial
Data," of the Annual Report of Journal Communications, Inc., on Form 10-K
filed herewith as Exhibit 99.1.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND
RESULTS OF OPERATIONS
Registrant incorporates herein by reference Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
of the Annual Report of Journal Communications, Inc., on Form 10-K filed
herewith as Exhibit 99.1.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
The Financial Statements With Report of Independent Public Auditors are
presented on the pages immediately following.
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Trustees of Journal
Employees' Stock Trust
We have audited the accompanying statement of assets and liabilities of
Journal Employees' Stock Trust (the Trust) as of December 31, 1996, 1995
and 1994, and the related statements of Journal Communications Inc. common
stock held and Trust certificates outstanding, Trust income, and cash
flows for the years then ended. These financial statements are the
responsibility of the Trustees of the Trust. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the Trustees, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the assets and liabilities of Journal Employees'
Stock Trust at December 31, 1996, 1995 and 1994, Journal Communications
Inc. common stock held and Trust certificates outstanding, Trust income,
and cash flows for the years then ended in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
February 3, 1997
<PAGE>
JOURNAL EMPLOYEES' STOCK TRUST
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996, 1995 and 1994
1996 1995 1994
Assets:
Cash in bank $ 100 $ 100 $ 100
========= ======== ==========
Liabilities:
Note payable to Journal
Communications, Inc. $ 100 100 100
--------- -------- ----------
$ 100 $ 100 $ 100
========= ======== ==========
See accompanying notes.
<PAGE>
JOURNAL EMPLOYEES' STOCK TRUST
STATEMENT OF JOURNAL COMMUNICATIONS INC.
COMMON STOCK HELD AND TRUST CERTIFICATES
OUTSTANDING (Notes 1 and 2)
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994
Shares of Journal
Communications Inc.
common stock:
Held at beginning and
end of year 12,960,000 12,960,000 12,960,000
========== ========== ==========
Trust certificates evidencing
Units of Beneficial Interest
in Journal Communications Inc.
common stock:
Outstanding at beginning
and end of year 12,960,000 12,960,000 12,960,000
========== ========== ==========
See accompanying notes.
<PAGE>
JOURNAL EMPLOYEES' STOCK TRUST
STATEMENT OF TRUST INCOME
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994
Dividends on common stock
of Journal Communications
Inc. held by the Trust $25,010,263 $25,729,448 $23,598,655
========== ========== ==========
Dividends to holders of
Units of Beneficial
Interest $25,010,263 $25,729,448 $23,598,655
========== ========== ==========
Dividends per share $ 2.20 $ 2.10 $ 1.90
See accompanying notes.
<PAGE>
JOURNAL EMPLOYEES' STOCK TRUST
STATEMENT OF CASH FLOWS
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994
Sources of cash:
Receipts from purchasers
of Units of Beneficial
Interest (Note 3) $88,661,471 $62,411,465 $45,792,223
Dividends received from
Journal Communications
Inc. 25,010,263 25,729,448 23,598,655
----------- ----------- -----------
113,671,734 88,140,913 69,390,878
Uses of cash:
Disbursements to sellers
of Units of Beneficial
Interest (88,661,471) (62,411,465) (45,792,223)
Dividends paid to holders
of Units of Beneficial
Interest (25,010,263) (25,729,448) (23,598,655)
---------- ---------- ----------
Net increase (decrease)
in cash -- -- --
Cash at beginning of year 100 100 100
---------- ---------- ----------
Cash at end of year $ 100 $ 100 $ 100
========== ========== ==========
See accompanying notes.
<PAGE>
JOURNAL EMPLOYEES' STOCK TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
l. Organization
The only business of Journal Employees' Stock Trust (Trust), under
agreement dated May 15, 1937, as amended, is the record holding of
common stock of Journal Communications Inc. (Company), the issuance of
Units of Beneficial Interest in such shares (Units) and, in limited
instances, the voting of shares of the Company's common stock held by
it. The Trust is administered by five trustees who are
officers/directors of the Company and receive no remuneration for
services performed for the Trust. The trustees are required to
distribute all Trust income (consisting solely of dividends paid by the
Company), less such amounts as the trustees deem necessary for payment
of administrative expenses, as soon as practicable after receipt. Since
its origination, substantially all expenses of the Trust have been paid
by the Company. The Trust distributes all of its income and, therefore,
pays no income taxes under applicable income tax codes.
2. Common stock of the Company
Upon deposit by the Company of shares of common stock, the Trust issues
a like number of Units and the Company offers such Units to its
employees, or employees of its subsidiaries (Employees). Sales of Units
by the Company are made at the formula price determined in accordance
with the Trust Agreement.
3. Unitholders' Sales of Units of Beneficial Interest
Unitholders may sell all or a portion of their Units only to the active
employees designed by the President of the Company or the Company at the
current formula price under the terms and conditions of the Trust
Agreement. If the Units are not sold in this manner, the Units are
freely transferable, subject to a five-year right of the Company to
purchase the Units at any time at the formula price.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following list shows the names and ages of Registrant's trustees and
the year in which each became a trustee. It also shows the positions held
by each trustee with Journal Communications, Inc.
Position/Office
Name Age Trustee Since with the Company
Robert A. Kahlor (63) May 28, 1986 Chairman of the Board & CEO
Steven J. Smith (46) March 9, 1990 President & COO
Douglas G. Kiel (48) March 7, 1995 Senior Vice President
Paul M. Bonaiuto (46) February 1, 1996 Senior Vice President/CFO
Richard A.
Williams (59) January 14, 1997 Human Relations Manager
All trustees, except for Mr. Williams, are directors of Journal
Communications, Inc., and, except for Mr. Bonaiuto, have been employed by
Journal Communications, Inc., in key management positions for at least the
last five years. Mr. Kahlor has been Chairman of the Board of the Company
since September 1992. Prior to that, he had been President of the
Company. Mr. Smith has been President of the Company since September
1992. Prior to that he was Executive Vice President of the Company. Mr.
Kiel has been a Senior Vice President of the Company and President of
Journal Broadcast Group, Inc., a subsidiary of the Company, since June
1992. Prior to that, he had been a director of the Company and Executive
Vice President of Journal Broadcast Group, Inc. Mr. Bonaiuto has been
Chief Financial Officer of the Company since January 1996 and was elected
a senior vice president in March 1996. Previously Mr. Bonaiuto had been a
director and vice president of the Company and President of NorthStar
Print Group, Inc., a subsidiary of the Company, from June 1994 to January
1996; Senior Vice President and Chief Financial Officer of Perry Printing
Corporation, then a subsidiary of the Company, from July 1992 to June
1994, and executive vice president of The Peterson Group, Wilmington,
Delaware, a private equity investment firm. Mr. Williams has been Human
Relations Manager for Journal Sentinel Inc. None of the trustees of the
Registrant is a director or trustee of a publicly-owned, for-profit
corporation.
ITEM 11. EXECUTIVE COMPENSATION
The five trustees, all employees of Journal Communications, Inc., do not
receive any compensation in their capacity as trustee. Information about
compensation paid to some of these trustees by Journal Communications,
Inc., in such trustees' capacities as employees of Journal Communications,
Inc., will be presented in the Proxy Statement of Journal Communications,
Inc., to be filed as Exhibit 99.2 on or about April 30, 1997, and
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Reference is made to Item 6, "Security Ownership of Certain Beneficial
Owners and Management," of the Proxy Statement of Journal Communications,
Inc., to be filed as Exhibit 99.2 on or about May 1, 1997, and
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) 1. Financial Statements and Schedules
The financial statements listed below are filed as part of this
annual report. All 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.
Form 10-K
Statement of Assets and Liabilities at
December 31, 1996, 1995 and 1994 5
Statement of Journal Communications, Inc.
Common Stock held and Trust Certificates
Outstanding for each of the three years in the
period ended December 31, 1996 6
Statement of Trust Income for each of the three
years in the period ended December 31, 1996 7
Statement of Cash Flows for each of the three
years in the period ended December 31, 1996 8
Notes to Financial Statements 9
2. Financial Statement Schedules None
3. Exhibits
The exhibits listed on the exhibit index are filed as part of
this annual report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the
quarter ended December 31, 1996.
<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, thereunto duly authorized.
JOURNAL EMPLOYEES' STOCK TRUST
By: /s/ Robert A. Kahlor
Robert A. Kahlor, Trustee
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:
TRUSTEES OF JOURNAL EMPLOYEES' STOCK TRUST
Date: March 31, 1997 /s/ Robert A. Kahlor
Robert A. Kahlor
Date: March 31, 1997
Steven J. Smith
Date: March 31, 1997 /s/ Douglas G. Kiel
Douglas G. Kiel
Date: March 31, 1997 /s/ Paul M. Bonaiuto
Paul M. Bonaiuto
Date: March 31, 1997
Richard A. Williams
<PAGE>
JOURNAL EMPLOYEES' STOCK TRUST
INDEX TO EXHIBITS
Exhibit No. Description
(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 3.2 to Journal Communications, Inc.'s
Current Report on Form 8-K dated March 5, 1996 (Commission
File No. 0-7831)).
(4.1) The Journal Employees' Stock Trust agreement dated May 15,
1937, as amended (incorporated by reference to Exhibit 9 to
the Annual Report on Form 10-K of Journal Communications,
Inc. for the fiscal year ended December 31, 1995
(Commission File No. 0-7831)).
(4.2) 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))
(23) Consent of Ernst & Young, LLP, Independent Auditors, filed
herewith.
(99.1) Annual Report of Journal Communications, Inc., on Form 10-
K, filed herewith. (incorporated by reference to the Annual
Report on Form 10-K of Journal Communications, Inc. for the
year ended December 31, 1996. (Commission file no. 0-
7831)).
(99.2) Proxy Statement of Journal Communications, Inc., to be
filed upon its publication on or about May 1, 1997.
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference,
(a) In the Registration Statement (Form S-8 No. 33-14771) pertaining
to Journal Employees' Stock Trust and in the related prospectus,
and
(b) In the Registration Statement (Form S-8 No. 333-15669)
pertaining to Journal Communications, Inc. Employees' Stock
Trust submitted to the Securities and Exchange Commission for
filing on November 5, 1996 with respect to 1,500,000 units of
beneficial interest in said trust, and in the related prospectus
of our report dated February 3, 1997 with respect to the consolidated
financial statements of Journal Employees' Stock Trust included in this
Annual Report (Form 10-K) for the year ended December 31, 1996.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
March 31, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE JOURNAL EMPLOYEES' STOCK TRUST AS OF AND
FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 100
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 100
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<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 100
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<TOTAL-REVENUES> 25,010,263
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
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<INCOME-PRETAX> 25,010,263
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