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: 0-7832
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, 1998:
Class Outstanding at March 19, 1998
Units of Beneficial Interest 12,773,607
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, 1997, 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, 1998.
<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 units of beneficial interest ("Units"),
which in turn have been sold to active employees of the Company and its
subsidiaries. Each Unit represents a beneficial interest in one share of
the Company's common stock. When Unitholders sell all or a portion of
their units, they must sell only through the corporate treasury to active
employees designated by the President of the Company or the Company at the
formula price ("Option Price") defined in the Trust Agreement.
Unitholders are required to sell all of their Units 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 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 of the Registrant, 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
None.
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 FINANCIAL
CONDITION 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, 1997, 1996
and 1995, 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, 1997, 1996 and 1995, 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
January 30, 1998
<PAGE>
JOURNAL EMPLOYEES' STOCK TRUST
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997, 1996 and 1995
1997 1996 1995
Assets:
Cash in bank $100 $100 $100
---- ---- ----
Liabilities:
Note payable to Journal Communications, Inc. $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, 1997, 1996 and 1995
1997 1996 1995
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, 1997, 1996 and 1995
1997 1996 1995
Dividends on common stock of
Journal Communications, Inc.
held by the Trust $27,075,494 $25,010,263 $25,729,448
----------- ----------- -----------
Dividends to holders of Units of
Beneficial Interest $27,075,494 $25,010,263 $25,729,448
Dividends per share $ 2.20 $ 2.20 $ 2.10
See accompanying notes.
<PAGE>
JOURNAL EMPLOYEES' STOCK TRUST
STATEMENT OF CASH FLOWS
Years ended December 31, 1997, 1996 and 1995
1997 1996 1995
Sources of cash:
Receipts from purchasers of
Units of Beneficial Interest
(Note 3) $113,015,360 $ 88,661,471 $62,411,465
Dividends received from
Journal Communications, Inc. 27,075,494 25,010,263 25,729,448
------------ ----------- -----------
140,090,854 113,671,734 88,140,913
Uses of cash:
Disbursements to sellers of
Units of Beneficial Interest (113,015,360) (88,661,471) (62,411,465)
Dividends paid to holders of
Units of Beneficial Interest (27,075,494) (25,010,263) (25,729,448)
------------ ----------- ----------
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, 1997, 1996 and 1995
1. 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, and cash dividends payable to the
Trust have been paid, in turn, to the unitholders of 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 through the treasury
only to eligible employees designated by the President of the Company or,
under certain circumstances, to shareholders of 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. Payments for Units sold by
unitholders are deposited with the Trust by the purchaser and are remitted
by the Trust to the seller.
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 (64) May 28, 1986 Chairman of the Board
Steven J. Smith (47) March 9, 1990 President & CEO
Douglas G. Kiel (49) March 7, 1995 Executive Vice President
Paul M. Bonaiuto (47) February 1, 1996 Executive Vice
President/CFO
Richard A. Williams (60) January 14, 1997 Manager, Retirement
Benefits &
Assistant Secretary
All trustees are directors of Journal Communications, Inc., and have been
employed by Journal Communications, Inc., in key management positions for
at least 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
and Chief Executive Officer (CEO) since March 3, 1998. Previously, he was
Executive Vice President of the Company. Mr. Kiel has been an Executive
Vice President of the Company since June 1997 and President of Journal
Broadcast Group, Inc., a subsidiary of the Company, since June 1992. Prior
to that, he had been a director and Senior Vice President of the Company
and Executive Vice President of Journal Broadcast Group, Inc. Mr. Bonaiuto
has been an Executive Vice President of the Company since June 1997 and
Chief Financial Officer of the Company since January 1996. Previously, he
had been elected a Senior Vice President in March 1996. Prior to that, 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 was appointed Manager of Retirement Benefits in February 1997 and
Assistant Secretary of the Company in June 1997. Previously he had 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, 1998, 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 April 30, 1998, 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) l. Financial Statements and Schedules
The financial statements and schedules listed in the
accompanying index 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.
2. Exhibits
The exhibits listed in the accompanying index to exhibits are
filed as part of this Annual Report on Form 10-K.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the
quarter ended December 31, 1997.
<PAGE>
JOURNAL EMPLOYEES' STOCK TRUST
INDEX TO FINANCIAL STATEMENTS,
FINANCIAL STATEMENT SCHEDULES
AND EXHIBITS
(Item 14(a))
1. Financial StatementsForm 10-K
Statement of Assets and Liabilities at
December 31, 1997, 1996 and 1995 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, 1997 6
Statement of Trust Income for each of the three
years in the period ended December 31, 1997 7
Statement of Cash Flows for each of the three
years in the period ended December 31, 1997 8
Notes to Financial Statements 9
2. Financial Statement Schedule None
3. Exhibits
(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
referenced to Exhibit 3.1 to Journal Communications, Inc.'s
Current Report on Form 8-K dated March 5, 1996 (Commission File
No. 0-7831).
(4) 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).
(23) Consent of Ernst & Young, LLP, Independent Auditors, filed
herewith.
(27) Financial Data Schedule
(99.1) Annual Report to Shareholders 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, 1997. Commission file no. 0-7831).
(99.2) Proxy Statement of Journal Communications, Inc., to be filed
upon its publication on or about April 30, 1998.
<PAGE>
SIGNATURES
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 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
/s/ Robert A. Kahlor
Date: 3/31/98 Robert A. Kahlor
/s/ Steven J. Smith
Date: 3/31/98 Steven J. Smith
/s/ Douglas G. Kiel
Date: 3/31/98 Douglas G. Kiel
/s/ Paul M. Bonaiuto
Date: 3/31/98 Paul M. Bonaiuto
/s/ Richard A. Williams
Date: 3/31/98 Richard A. Williams
<PAGE>
EXHIBIT INDEX
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
referenced to Exhibit 3.1 to Journal Communications, Inc.'s
Current Report on Form 8-K dated March 5, 1996 (Commission File
No. 0-7831).
(4) 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).
(23) Consent of Ernst & Young, LLP, Independent Auditors, filed
herewith.
(27) Financial Data Schedule
(99.1) Annual Report to Shareholders 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, 1997. Commission file no. 0-7831).
(99.2) Proxy Statement of Journal Communications, Inc., to be filed
upon its publication on or about April 30, 1998.
Exhibit 23
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
January 30, 1998 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, 1997.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
March 30, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF JOURNAL EMPLOYEES' STOCK TRUST AS OF AND
FOR THE PERIOD ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 27,075<F1>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 27,075<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0<F2>
<EPS-DILUTED> 0<F2>
<FN>
<F1> The only revenue and expense associated with the
trust pertain to dividends received and paid out.
All dividends received are in turn paid out,
accounting for net income of zero ($0).
<F2> Earnings per share is not applicable as net
income is zero ($0).
</FN>
</TABLE>
