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 June 30, 2000 Commission file number 0-7832
(6 Months) ------------- ------
JOURNAL EMPLOYEES' STOCK TRUST
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(Exact name of registrant as specified in its charter)
WISCONSIN 39-6153189
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 661, 333 W. State St., Milwaukee, Wisconsin 53201
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(Address of principal executive offices) (Zip Code)
414-224-2728
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(Registrant's telephone number, including area code)
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(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
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FORM 10-Q
JOURNAL EMPLOYEES' STOCK TRUST
Quarter Ended June 30, 2000 Commission file number 0-7832
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INDEX
Page No.
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Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Statements of Trust Income
Six and three months ended June 30, 2000 and 1999 3
Statements of Cash Flow
Six and three months ended June 30, 2000 and 1999 4
Notes to Financial Statements
June 30, 2000 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
Item 3. Quantitative and Qualitative Disclosure
of Market Risk 6
Part II. Other Information
Items 1-6. 6
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FORM 10-Q
JOURNAL EMPLOYEES' STOCK TRUST
For Quarter Ended June 30, 2000 Commission file number 0-7832
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Part 1, Item 1 Financial Information
Statements of Trust Income
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(Dollars in thousands, except per share and per unit amounts)
(Unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
06/30/2000 06/30/1999 06/30/2000 06/30/1999
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Dividends on common stock
of Journal Communications,
Inc. held by the Trust $ 8,519 $ 6,913 $ 15,772 $ 13,834
======= ======= ======== ========
Per Share $ 0.35 $ 0.28 $ 0.65 $ 0.56
======= ======= ======== ========
Dividends to holders of Units
of Beneficial Interest $ 8,519 $ 6,913 $ 15,772 $ 13,834
======= ======= ======== ========
Per Unit $ 0.35 $ 0.28 $ 0.65 $ 0.56
======= ======= ======== ========
See notes to financial statements.
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<PAGE>
FORM 10-Q
JOURNAL EMPLOYEES' STOCK TRUST
For Quarter Ended June 30, 2000 Commission file number 0-7832
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Statements of Cash Flow
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(Dollars in thousands, except per share and per unit amounts)
(Unaudited)
Six Months Ended
----------------
06/30/2000 06/30/1999
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Sources of cash:
Receipts from purchasers of Units
of Beneficial Interest $ 95,420 $ 75,006
Dividends received from
Journal Communications, Inc. 15,772 13,834
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111,192 88,840
Uses of cash:
Disbursements to sellers of
Units of Beneficial Interest (95,420) (75,006)
Dividends paid to holders of
Units of Beneficial Interest (15,772) (13,834)
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(111,192) (88,840)
Net change in cash 0 0
Cash at beginning of year 0 0
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Cash at June 30 $ 0 $ 0
========== ========
See notes to financial statements.
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<PAGE>
FORM 10-Q
JOURNAL EMPLOYEES' STOCK TRUST
For Quarter Ended June 30, 2000 Commission file number 0-7832
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Notes to Financial Statements
June 30, 2000
(Unaudited)
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 taxes and 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 directly to the unitholders by the Company. The Trust distributes
all of its income and, therefore, pays no income taxes.
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 employees of the
Company ("Employees"). Sales of Units by the Trust 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 other
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 employees are deposited with the
Trust by the purchaser and remitted by the Trust to the seller.
4. Statement of Assets and Liabilities
The trust does not own any assets or have any liabilities; therefore, a
statement of assets and liabilities is not provided.
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<PAGE>
FORM 10-Q
JOURNAL EMPLOYEES' STOCK TRUST
For Quarter Ended June 30, 2000 Commission file number 0-7832
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Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Income is based solely on dividends from Journal Communications, Inc.
Item 3. Quantitative and Qualitative Disclosure of Market Risk
None.
Part II. Other Information
Item 1 - Legal Proceedings
On April 14, 2000, the Milwaukee County Circuit Court (J. Donegan) on a motion
for summary judgement in Gauthier v. Journal Communications, Inc., ruled that
the Company was contractually liable to a class of plaintiffs for requiring them
to sell back their Journal units prematurely. The suit was filed by five former
employees who owned Journal units (unitholders). The unitholders were terminated
at the time of the 1995 merger of The Milwaukee Journal and the Milwaukee
Sentinel. The judge previously ruled that the lawsuit could be a class action to
include other former unitholders who terminated during the newspaper merger. As
a result of the merger, some full-time employees took early retirement and
others received voluntary separation incentives. Under the Journal Employees'
Stock Trust Agreement (JESTA), employees whose employment is terminated before
retirement are required to sell back all units to the Company upon termination.
In January 1995, a stock sell-back policy was approved by the trustees of JESTA
that employees who lose their jobs because of corporate restructuring were given
more time to sell back their stock. Employees with twenty (20) or more years as
a unitholder had up to five (5) years to sell their stock, one-fifth each year;
fifteen (15) to twenty (20) years a unitholder had up to four (4) years,
one-fourth each year; ten (10) to fifteen (15) years as a unitholder had three
(3) years, one-third each year; five (5) to ten (10) years as a unitholder had
two (2) years, one-half each year; and two (2) to five (5) years as a unitholder
had one year. The judge ruled that the former employees, who signed separation
agreements in 1995, should have been allowed to sell back units at any point
during the time period. He based his decision on a Journal Sentinel internal
memorandum that outlined termination incentives, including the stock sell-back
schedule but without the language specifying the portion to be sold each year.
That information was widely known and understood. The memorandum
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<PAGE>
FORM 10-Q
JOURNAL EMPLOYEES' STOCK TRUST
For Quarter Ended June 30, 2000 Commission file number 0-7832
------------- ------
was not part of the separation agreement that employees signed, but it was
referred to in the agreement. Under the judge's ruling, for instance, a twenty
(20) year unitholder would be permitted to hold all units until five years had
passed, rather than selling some each year. The Company disagrees with this
ruling and on April 21, it filed an interlocutory appeal before the Wisconsin
Court of Appeals to have this decision reversed. This appeal was denied and the
Company will proceed to trial. At this time the impact of this decision on the
Company or JESTA cannot be determined.
Item 2 - Changes in Securities and Use of Proceeds
None
Item 3 - Defaults upon Senior Securities
Not applicable
Item 4- Submission of Matter to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on June 6, 2000 for the
purpose of electing twenty-seven (27) directors.
Steven J. Smith and Douglas G. Kiel, as the designated proxies, voted the shares
of common stock of Journal Communications, Inc., as they were instructed by the
shareholders and unitholders of the Company and the Trustees of the Journal
Employees Stock Trust. 84% of all shares eligible to vote were represented at
the Annual Meeting in person or by proxy. All nominees for Director were elected
by the affirmative vote of at least 99% of the shares voted.
The following nominees were elected to the Board of Directors for the 2000-2001
term:
Todd K. Adams Joseph O. Hoffman David G. Meissner
David A. Anderson Stephanie E. Hughes Roger D. Peirce
Paul M. Bonaiuto Stephen O. Huhta James P. Prather
James J. Ditter Mark J. Keefe Philippe L. Secker
Carl L. Dittoe Douglas G. Kiel Steven J. Smith
Robert M. Dye Kenneth L. Kozminski Keith K. Spore
James L. Forbes Paul E. Kritzer Thomas J. Szews
Carl D. Gardner Ronald G. Kurtis Joseph C. Taschler III
Richard J. Gasper Judith A. Leonard Karen O. Trickle
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FORM 10-Q
JOURNAL EMPLOYEES' STOCK TRUST
For Quarter Ended June 30, 2000 Commission file number 0-7832
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Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibit (27) Financial Data Schedule
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<PAGE>
FORM 10-Q
JOURNAL EMPLOYEES' STOCK TRUST
For Quarter Ended June 30, 2000 Commission file number 0-7832
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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 EMPLOYEES' STOCK TRUST
Date: August 1, 2000 By: /s/ Steven J. Smith
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Steven J. Smith
Trustee
Date: August 1, 2000 By: /s/ Paul M. Bonaiuto
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Paul M. Bonaiuto
Trustee
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FORM 10-Q
JOURNAL EMPLOYEES' STOCK TRUST
For Quarter Ended June 30, 2000 Commission file number 0-7832
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
27 FINANCIAL DATA SCHEDULE
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