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, 2000
Commission File Number: 0-7832
JOURNAL EMPLOYEES' STOCK TRUST
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Wisconsin 39-0382060
- ---------- ----------
(State of organization) (I.R.S. Employer identification number)
333 West State Street, Milwaukee, Wisconsin 53203
- ------------------------------------------- -----
(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 9, 2001:
Class Outstanding at March 9, 2001
----- ----------------------------
Units of Beneficial Interest 25,920,000
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, 2000, filed herewith as Exhibit 99.1. Portions of Part III are incorporated
by reference to the Proxy Statement of Journal Communications, Inc., for the
2001 Annual Meeting of Journal Communications, Inc., to be filed as Exhibit 99.2
upon its publication on or about April 30, 2001.
Forward-Looking Statements
- --------------------------
This Annual Report on Form 10-K contains forward-looking statements that may
state the current expectations of the Journal Employees' Stock Trust (the Trust)
or its trustees or of Journal Communications, Inc. (the Company) or its
management. These statements are subject to certain risks, trends, and
uncertainties that could cause actual results to differ materially from those
anticipated. The words "believe," "expect," "anticipate," "intends," "plans,"
"should," "projects," "considers," and similar expressions generally identify
forward-looking statements. Readers are cautioned not to place undue reliance on
such forward-looking statements, which are as of the date of this filing.
PART I
ITEM 1. BUSINESS
-----------------
The Registrant is a trust created under the Journal Employees' Stock Trust
Agreement, dated May 15, 1937, as amended (JESTA), by all of the stockholders of
The Journal Company, Inc. (now known as Journal Communications, Inc.), a
Wisconsin corporation. Its creation was due to the determination of Harry J.
Grant, Chairman of the Company from 1935 to his death in 1963, to offer
employees the opportunity to become partners in ownership of the Company. The
purpose of JESTA is to enable eligible employees to enjoy a beneficial interest
in the shares of the Company's common stock (Journal Stock), to vote those
shares in certain instances, to receive dividends, and to prevent the shares
from being sold to persons outside the Company's active employee group. This
intent is to promote stability and continuity of management and control of the
Company in the interest of the Company and its employee owners (unitholders).
Under JESTA, the descendants of Harry J. Grant (Grant Stockholders) and their
successors in interest who still own Journal Stock are entitled to exchange
shares of Journal Stock for units of beneficial interest (units). In 1937, the
stockholders deposited 25% of the outstanding Journal Stock in the Trust in
exchange for units which they then sold to employees. Similar deposits of
Journal Stock and sales of units in subsequent years have increased the number
of shares of Journal Stock deposited in the Trust to 90% of the outstanding
Journal Stock, or 25,920,000 shares, and an equal number of units have been
issued in exchange. There is one share of Journal Stock in the Trust for every
unit issued. Employees take part in the employee ownership program by buying
units issued under the Trust. The remaining ten percent (10%) of Journal Stock
is owned by the Grant Stockholders.
The Company and the Grant Stockholders are also eligible to purchase and hold
units. In addition, employee benefit trusts established by the Company or its
subsidiaries or established by employees to provide retirement benefits and
other trusts for the benefit of individual beneficiaries or charity are eligible
to own units.
-2-
Oversight of the Trust
The Trust is perpetual in duration unless terminated in accordance with its
terms. It is administered by five (5) Trustees. The Trust engages in no business
other than being the record holder of Journal Stock, issuing units in exchange
for shares of Journal Stock, registering transfers of units, and in limited
instances, the voting of shares held by it.
A Trustee holds office until resignation, termination of employment, death,
incapacity or prolonged absence from the United States or until he or she ceases
to be an owner of one or more units. Successor Trustees are elected by the
Trustees remaining in office or, if there are none so remaining or if those
remaining fail to act within one month of a vacancy, by majority vote of the
units owned by active employee unitholders and employee benefit trusts. The
Trustees receive no remuneration for their service as Trustees. See Item 10,
"Directors and Executive Officers of the Registrant."
The Company intends to pay all administrative costs of the Trust. No charges or
deductions for administration will be made against unitholders or against Trust
assets. There are no liens on any Trust assets. However, unitholders may pledge
units to secure loans in accordance with procedures established by the Trustees.
Purchases and Sales of Units
All purchases and sales of units are transacted at the option price in effect at
the time of the transaction. The option price is based upon a formula prescribed
within JESTA. The formula uses the Company's book value and the past five year's
net income as factors in calculating the option price. An option price is
calculated approximately every four (4) weeks.
After a 90-day waiting period, full-time employees of the Company and its
subsidiaries are eligible to take part in the employee-ownership program.
Part-time employees are eligible to buy units if they have 1,000 or more hours
of service during two consecutive years.
JESTA requires that an employee must offer to sell their units back to the
Company when they retire or otherwise terminate employment. Employees that
retire have a 10-year period after retirement to offer to sell all of their
units at a rate of 10% of the number of units owned at the time of retirement
each year. Generally, employees that leave the Company before retirement are
required to offer to sell all of their units immediately.
JESTA provides that, when a unitholder offers to sell units, certain persons may
have the option to purchase the units at the option price in accordance with
procedures and time periods that JESTA prescribes. Persons who may have the
option to purchase units include designated employees, the Grant Stockholders
and the Company. Where JESTA requires a unitholder to offer to sell units, the
Company's option to purchase the units extends for five years. Recent practice
has been that the Company elects to immediately purchase units offered for sale,
and the Company then resells the units to other employees.
-3-
Amendment or Termination of the Trust
The Trust can be amended or terminated with the written consent of all Trustees,
the written consent of the Grant Stockholders owning 80% of the shares of
Journal Stock held outside the Trust, and the affirmative vote of the owners of
two-thirds of the units then outstanding owned by active employee unitholders
and certain employee benefit trusts.
In 1996, the Trustees, the Grant Stockholders and the active employee
unitholders, voted to amend JESTA. The Trustees believed that the amendment
would cause the unit price to be approximately seventy-five percent (75%) of the
price at which the units would trade if they were publicly-traded securities.
This change to the option price formula is being phased in over five (5) years
beginning in 1997 and continuing through the end of 2001.
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 the Company on Form 10-K, filed herewith as Exhibit 99.1
and incorporated herein by reference.
ITEM 2. PROPERTIES
------------------
The Registrant owns no physical properties. Its records are kept and its
administrative functions are performed in the offices of the Company 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
------------------------
A unit is different than a share of common stock offered by publicly traded
companies. The Trust's units cannot be traded in the open market. In general, a
unit only can be sold to another employee or to the Company. A unit does not
provide a unitholder with all of the rights typically associated with stock
ownership.
Each unit entitles the holder thereof to the rights set forth in JESTA which, to
some extent, are rights associated with one share of Journal Stock and are
subject to certain limitations. Neither unitholders nor Grant Stockholders have
preemptive rights with respect to the units sold by the Company or unitholders
in accordance with JESTA. Neither units nor shares of Journal Stock are
redeemable or convertible except that the Grant Stockholders may convert their
shares into a proportionate number of units and may reconvert the units so
issued into shares at any time.
-4-
Dividends
The Trust, as holder of Journal Stock, is entitled to such dividends as may be
declared by the Board of Directors of the Company. The Trustees in turn must
pass the dividends through to the unitholders as soon as practicable after
receipt, less such sums as the Trustees may deem necessary to provide for
payment of taxes and expenses of administration. In the normal course, the Trust
has not incurred any taxes and none are anticipated and expenses of the Trust
have been paid by the Company. Therefore, at the direction of the Trustees the
Company has paid all dividends directly to the unitholders. The Trust, as such,
pays no dividends.
If the Trust received additional stock of the Company through stock dividends or
stock splits, then the Trust retains that stock in the Trust. Upon the receipt
of stock through a stock dividend or a stock split, the Trustees distribute
additional units to the unitholders so as to retain the relationship of one unit
for each share of Journal Stock. The stock of the Company has been split six (6)
times since JESTA was implemented.
The Company has paid cash dividends every year since the creation of the Trust
in 1937. Dividends are presently being paid on a quarterly basis. The Company
intends to continue the payment of cash dividends on a quarterly basis, but the
payment of future dividends will depend upon earnings, the financial position of
Company and other relevant factors.
Change in Ownership
Under JESTA, it would be very difficult, if not impossible, for the Trustees to
sell or otherwise permanently dispose of any shares of Journal Stock held by the
Trust. If active employee unitholders and employee benefit trust owners of at
least two-thirds of the units then outstanding owned by such holders authorize a
sale of their units, their units will be offered, successively, to any employee
unitholder and employee benefit trust owner of units who did not consent to the
proposed sale or other permanent disposition (nonconsenting eligibles) and the
Grant Stockholders. If any units remain unsold, the nonconsenting eligibles and
the Grant Stockholders then have a second priority to purchase. Finally, if any
units still remain, they may be purchased by the Company. All of these purchases
would be made at the option price in effect at that time.
See Item 5, "Market For Registrant's Common Stock and Related Stock Holder
Matters," of the Annual Report of the Company, on Form 10-K for additional
information and filed herewith as Exhibit 99.1, and incorporated by reference.
-5-
ITEM 6. SELECTED FINANCIAL DATA
-------------------------------
None.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
---------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
None.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------
None.
ITEM 8. FINANCIAL STATEMENTS
----------------------------
AND SUPPLEMENTARY DATA
----------------------
The Financial Statements with accompanying Report of Independent Auditors are
presented on the pages immediately following.
-6-
Report of Ernst & Young LLP, Independent Auditors
- -------------------------------------------------
The Trustees of Journal
Employees' Stock Trust
We have audited the accompanying statements of financial position of Journal
Employees' Stock Trust (the Trust) as of December 31, 2000 and 1999, and the
related statements of Trust activity and cash flows for the each of the three
years in period ended December 31, 2000. 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 auditing standards generally accepted
in the United States. 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 financial position of Journal Employees' Stock Trust
at December 31, 2000, and 1999, and Trust activity and cash flows for each of
the three years in the period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
January 26, 2001
-7-
Journal Employees' Stock Trust
Statements of Financial Position
December 31
2000 1999
------------ -- ------------
Assets
Cash $ - $ -
============ ============
Liabilities
Note payable to Journal Communications, Inc. $ - $ -
============ ============
See accompanying notes which are an integral part of these statements
-8-
Journal Employees' Stock Trust
Statements of Trust Activity
Year ended December 31
2000 1999 1998
------------------------------------------------------
Dividends on common stock of Journal
Communications, Inc. held by the Trust $32,877,342 $28,002,626 $27,887,406
=============== =============== ================
Dividends to holders of units of beneficial interest $32,877,342 $28,002,626 $27,887,406
=============== =============== ================
Dividends per share $1.35 $1.14 $1.10
See accompanying notes which are an integral part of these statements
-9-
Journal Employees' Stock Trust
Statements of Cash Flows
Year ended December 31
2000 1999 1998
----------------------- ---------------------- --------------------
Sources of cash:
Receipts from purchasers of units of
beneficial interest $167,952,451 $118,444,786 $142,497,943
Dividends received from Journal
Communications, Inc. 32,877,342 28,002,626 27,887,406
----------------------- ---------------------- --------------------
200,829,793 146,447,412 170,385,349
Uses of cash:
Disbursements to sellers of units of
beneficial interest (167,952,451) (118,444,786) (142,498,043)
Dividends paid to holders of units of
beneficial interest (32,877,342) (28,002,626) (27,887,406)
----------------------- ---------------------- --------------------
(200,829,793) (146,447,412) (170,385,449)
Net decrease in cash - - (100)
Cash at beginning of year - - 100
----------------------- ---------------------- --------------------
Cash at end of year $ - $ - $ -
======================= ====================== ====================
See accompanying notes which are an integral part of these statements
-10-
Journal Employees' Stock Trust
Notes to Financial Statements
December 31, 2000
1. Organization
The only business of Journal Employees' Stock Trust (the Trust), under agreement
dated May15, 1937, as amended, is the being the record holder of common stock of
Journal Communications, Inc. (the Company), issuing units of beneficial interest
in such shares (units), registering transfers of units and in limited instances
voting shares of the Company's common stock held by it. The Trust is
administered by five trustees who are employees and 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 directly to the
employees who own units (unitholders) 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
The Trust is the record holder of shares of common stock of the Company. The
Trust has issued one unit for each share of common stock the Trust holds. The
Company offers such units to its employees or employees of its subsidiaries
(employees).
3. Unitholders' Sales of Units of Beneficial Interest
Unitholders may sell their units only in accordance with the terms and
conditions of the Trust Agreement. Since 1996, the procedure under which
employees have bought and sold units has essentially been that the Company has
purchased units under the Trust Agreement and resold them to active employees in
lieu of the Trust Agreement's more cumbersome procedure under which selling
unitholders sell units directly to "optionees" designated in accordance with the
Trust Agreement. Purchases and sales of units by the Company are made at the
formula price determined in accordance with the Trust Agreement (option price).
Payments for units sold by unitholders are deposited with the Trust by the
purchaser and remitted by the Trust to the seller.
4. Common Stock Held and Trust Certificates Outstanding
At December 31, 2000, 1999 and 1998, the Trust held 25,920,000 shares of the
Company's common stock and has issued Trust certificates evidencing a like
number of units of beneficial interest.
-11-
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
-----------------------------------------------------------
All trustees are directors of the Company and have been employed by the Company,
in key management positions for at least five years. Following are the names and
ages of the Registrant's trustees and the year in which each became a trustee
and the positions held by each trustee during the past five years with the
Company.
Steven J. Smith (50)
Trustee since March 1990; Chairman of the Board of Directors of the Company
since December 1998 and Chief Executive Officer since March 1998; President of
the Company from September 1992 to December 1998; Director of the Company since
1987.
Douglas G. Kiel (52)
Trustee since March 1995; President of the Company since December 1998;
Executive Vice President of the Company between June 1997 and December 1998;
President of Journal Broadcast Group, Inc.* from June 1992 to December 1998;
Director of the Company since 1991.
Paul M. Bonaiuto (50)
Trustee since February 1996; Executive Vice President of the Company since June
1997 and Chief Financial Officer since January 1996; Director of the Company
since June 1993.
Keith K. Spore (58)
Trustee since January 1999; Director and Senior Vice President of the Company
and President of Journal Sentinel Inc.* since September 1995; Publisher of the
Milwaukee Journal Sentinel since June 1996.
James J. Ditter (39)
Trustee since July 1999; Director and Vice President of the Company since
September 1995; President of Norlight Telecommunications, Inc.* since September
1995.
* A subsidiary of the Company
-12-
ITEM 11. EXECUTIVE COMPENSATION
-------------------------------
The five trustees, all employees of the Company, do not receive any compensation
in their capacity as trustee. Information about compensation paid to some of
these trustees by the Company, in such trustees' capacities as employees of the
Company, will be presented in the Proxy Statement of the Company, to be filed as
Exhibit 99.2 on or about April 30, 2001, 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 the Company, to be filed as Exhibit
99.2 on or about April 30, 2001, 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, 2000.
-13-
JOURNAL EMPLOYEES' STOCK TRUST
INDEX TO FINANCIAL STATEMENTS,
FINANCIAL STATEMENT SCHEDULES
AND EXHIBITS
(Item 14(a))
1. Financial Statements Form 10-K
-------------------- ---------
Statements of Financial Position at
December 31, 2000 and 1999 8
Statements of Trust Activity for each of the three
years in the period ended December 31, 2000 9
Statements of Cash Flows for each of the three
years in the period ended December 31, 2000 10
Notes to Financial Statements at December 31, 2000 11
2. Financial Statement Schedules 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]).
(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 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, 1999 [Commission File No.
0-7831]).
(99.2) Proxy Statement of Journal Communications, Inc., to be filed
upon its publication on or about April 30, 2001.
-14-
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/ Steven J. Smith
-----------------------------------
Steven J. Smith, 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/ Steven J. Smith
Date: 3-28-01 ------------------------------------
Steven J. Smith
/s/ Douglas G. Kiel
Date: 3-28-01 ------------------------------------
Douglas G. Kiel
/s/ Paul M. Bonaiuto
Date: 3-29-01 ------------------------------------
Paul M. Bonaiuto
/s/ Keith K. Spore
Date: 3-28-01 ------------------------------------
Keith K. Spore
/s/ James J. Ditter
Date: 3-30-01 ------------------------------------
James J. Ditter
-15-