UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended: October 6, 2002

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission file number: 0-7831

JOURNAL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)

WISCONSIN 39-0382060
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

333 W. State Street
Milwaukee, Wisconsin 53203
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 414-224-2728

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
--- ---

As of October 6, 2002, there were outstanding (i) 28,800,000 shares of Journal
Communications, Inc. Common Stock, par value $0.125; and (ii) 25,920,000 Units
of Beneficial Interest (2,810,971 of which were held by Journal Communications,
Inc.).

JOURNAL COMMUNICATIONS, INC.
INDEX

Page
No.
----
Part I. Financial Information

Item 1. Financial Statements

Consolidated Condensed Balance Sheets as of
October 6, 2002 (Unaudited) and December 31, 2001 2

Unaudited Consolidated Condensed Statements of
Income for the Third Quarter and Three Quarters
Ended October 6, 2002 and October 7, 2001 3

Unaudited Consolidated Condensed Statements of
Cash Flows for the Three Quarters Ended
October 6, 2002 and October 7, 2001 4

Notes to Unaudited Consolidated Condensed
Financial Statements - October 6, 2002 5

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13

Item 3. Quantitative and Qualitative Disclosure About
Market Risk 25

Item 4. Controls and Procedures 25

Part II. Other Information

Item 1 25

Items 2 - 6 26

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Journal Communications, Inc.
Consolidated Condensed Balance Sheets
(in thousands, except per share amounts)

October 6, December 31,
2002 2001
---------- ------------
ASSETS (Unaudited)
- ------
Current assets:
Cash and cash equivalents......................... $ 7,268 $ 8,911
Receivables, less allowance for doubtful
accounts of $8,061 and $3,939.................... 94,668 93,705
Inventories, lower of cost (first-in-first-out)
or market:
Paper and supplies.............................. 8,170 9,797
Work in process................................. 3,021 2,416
Finished goods.................................. 6,701 7,483
--------- ---------
17,892 19,696

Prepaid expenses.................................. 11,278 9,755
Deferred income taxes............................. 5,696 5,696
Net current assets of discontinued operations..... 1,281 1,254
--------- ---------
Total current assets............................ 138,083 139,017

Property and equipment, at cost, less accumulated
depreciation of $339,532 and $319,022.............. 327,305 320,436
Goodwill, net....................................... 111,998 112,289
Broadcast licenses, net............................. 125,492 128,842
Other intangible assets, net........................ 14,093 20,215
Deferred charges and other assets................... 5,852 6,011
Net non-current assets of discontinued operations... 750 2,004
--------- ---------
Total assets.................................... $ 723,573 $ 728,814
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Notes payable to banks............................ $ 70,315 $ 4,420
Accounts payable.................................. 40,969 43,148
Accrued compensation.............................. 26,160 23,794
Deferred revenue.................................. 25,633 21,147
Accrued employee benefits......................... 23,123 23,882
Other current liabilities......................... 12,505 21,952
Current portion of long-term obligations.......... 1,423 1,909
--------- ---------
Total current liabilities....................... 200,128 140,252

Long-term obligations............................... 2,346 2,880
Deferred revenue.................................... 7,344 7,786
Long-term accrued employee benefits................. 20,240 19,508
Deferred income taxes............................... 25,508 25,508

Stockholders' equity:
Common stock - authorized and issued
28,800 shares ($0.125 par value)................. 3,600 3,600
Retained earnings................................. 574,797 556,139
Accumulated other comprehensive loss.............. (4,738) (3,813)
Units of beneficial interest in treasury, at
cost............................................. (105,652) (23,046)
--------- ---------
Total stockholders' equity...................... 468,007 532,880
--------- ---------
Total liabilities and stockholders' equity...... $ 723,573 $ 728,814
========= =========

Note: The balance sheet at December 31, 2001 has been derived from the audited
financial statements at that date, but does not include all the information and
footnotes required by generally accepted accounting principles in the United
States for complete financial statements.

See accompanying notes to unaudited consolidated condensed financial statements.

Journal Communications, Inc.
Unaudited Consolidated Condensed Statements of Income
(in thousands, except per share amounts)

Third Quarter Ended Three Quarters Ended
----------------------- -----------------------
October 6, October 7, October 6, October 7,
2002 2001 2002 2001
---------- ---------- ---------- ----------

Continuing operations:
Revenue:
Publishing................................ $ 87,259 $ 86,303 $ 218,235 $ 225,215
Broadcasting.............................. 46,776 40,390 112,387 100,166
Telecommunications........................ 45,082 47,202 114,181 116,600
Printing.................................. 55,261 62,828 140,027 152,894
Other..................................... 10,939 10,257 26,573 25,146
--------- --------- --------- ---------
Total revenue............................... 245,317 246,980 611,403 620,021

Costs of sales:
Publishing................................ 40,174 41,322 99,629 105,953
Broadcasting.............................. 18,678 17,102 45,174 42,062
Telecommunications........................ 24,281 24,399 61,111 58,319
Printing.................................. 44,589 52,472 114,372 127,522
Other..................................... 8,781 8,696 21,445 21,126
--------- --------- --------- ---------
Total costs of sales........................ 136,503 143,991 341,731 354,982

Selling and administrative expenses......... 75,264 77,767 180,945 203,804
--------- --------- --------- ---------
Total costs of sales and selling and
administrative expenses.................... 211,767 221,758 522,676 558,786

Operating earnings.......................... 33,550 25,222 88,727 61,235

Other income and expense:
Interest income and dividends............. 127 550 960 1,440
Interest expense, net of amounts
capitalized.............................. (199) (226) (507) (310)
--------- --------- --------- ---------
Total other income and expense.............. (72) 324 453 1,130

Earnings from continuing operations before
income taxes and accounting change......... 33,478 25,546 89,180 62,365

Provision for income taxes.................. 13,890 10,062 37,975 24,507
--------- --------- --------- ---------

Earnings from continuing operations
before accounting change................... 19,588 15,484 51,205 37,858

Gain (loss) from discontinued operations,
net of applicable income tax expense
(benefit) of $196, $(56), $(4,986) and
$(603)..................................... 1 (53) (338) (1,002)

Cumulative effect of accounting change,
net of applicable income taxes of $0,
$0, $1,648 and $0.......................... -- -- (7,282) --
--------- --------- --------- ---------

Net earnings................................ $ 19,589 $ 15,431 $ 43,585 $ 36,856
========= ========= ========= =========

Weighted average number of common
shares outstanding....................... 26,326 28,486 26,587 28,026

Basic and diluted earnings per share:
Continuing operations before
accounting change........................ $ 0.74 $ 0.54 $ 1.92 $ 1.35
Discontinued operations................... -- -- (0.01) (0.04)
Cumulative effect of accounting change.... -- -- (0.27) --
--------- --------- --------- ---------
Net earnings per share...................... $ 0.74 $ 0.54 $ 1.64 $ 1.31
========= ========= ========= =========

Cash dividends per share.................... $ 0.30 $ 0.35 $ 0.90 $ 1.05
========= ========= ========= =========

See accompanying notes to unaudited consolidated condensed financial statements.

Journal Communications, Inc.
Unaudited Consolidated Condensed Statements of Cash Flows
(in thousands)
Three Quarters Ended
-----------------------
October 6, October 7,
2002 2001
---------- ----------
Cash flow from operating activities:
Earnings from continuing operations before
accounting change................................ $ 51,205 $ 37,858
Adjustments for non-cash items:
Depreciation.................................... 33,825 30,843
Amortization.................................... 1,508 8,605
Provision for doubtful accounts................. 3,012 2,896
Net loss from disposal of assets................ 445 596
Net changes in assets and liabilities,
excluding effects of sales:
Receivables..................................... (3,959) (4,507)
Inventories..................................... 1,995 (1,510)
Accounts payable................................ (2,447) (8,765)
Other current assets and liabilities............ (139) 11,275
--------- ---------
Net cash provided by operating activities........... 85,445 77,291

Cash flow from investing activities:
Proceeds from sale of assets...................... 1,068 5,164
Property and equipment expenditures............... (42,420) (65,224)
Other, net........................................ 134 438
--------- ---------
Net cash used for investing activities.............. (41,218) (59,622)

Net cash (used for) provided by discontinued
operations......................................... (3,118) 842

Cash flow from financing activities:
Net increase in notes payable to banks............ 65,895 --
Proceeds from other long-term liabilities......... 326 1,880
Payments of other long-term liabilities........... (1,191) (1,647)
Purchases of units of beneficial interest......... (122,539) (71,120)
Sales of units of beneficial interest............. 38,829 93,416
Cash dividends.................................... (23,823) (29,384)
Deferred revenue.................................. (249) --
--------- ---------
Net cash used for financing activities.............. (42,752) (6,855)

Net increase (decrease) in cash and cash
equivalents........................................ (1,643) 11,656

Cash and cash equivalents
Beginning of year................................. 8,911 10,049
--------- ---------
At October 6, 2002 and October 7, 2001............ $ 7,268 $ 21,705
========= =========

See accompanying notes to unaudited consolidated condensed financial statements.

Journal Communications, Inc.
Notes to Unaudited Consolidated Condensed Financial Statements
(in thousands, except per share amounts)

1. Basis of Presentation
The accompanying Consolidated Condensed Financial Statements have been
prepared by Journal Communications, Inc. and its wholly owned subsidiaries
pursuant to the rules and regulations of the Securities and Exchange
Commission and reflect normal and recurring adjustments, which we believe to
be necessary for a fair presentation. As permitted by these regulations,
these statements do not include all of the information and footnotes
required by generally accepted accounting principles in the United States
for annual financial statements. However, we believe that the disclosures
are adequate to make the information presented not misleading. The operating
results for the three quarters ended October 6, 2002 are not necessarily
indicative of the results that may be expected for the year ended December
31, 2002. You should read these Consolidated Condensed Financial Statements
in conjunction with the consolidated financial statements and the notes
thereto included in our latest Annual Report on Form 10-K.

We reclassified certain prior year amounts to conform to the 2002
presentation.

2. Accounting Periods
We divide our calendar year into thirteen four-week accounting periods,
except that the first and thirteenth periods may be longer or shorter to the
extent necessary to make each accounting year end on December 31. We follow
a practice of publishing our interim financial statements at the end of the
third accounting period (the first quarter), at the end of the sixth
accounting period (the second quarter), and at the end of the tenth
accounting period (the third quarter).

3. New Accounting Standard
In June 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (Statement) No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." Statement No. 146 addresses
financial accounting and reporting for costs associated with exit or
disposal activities and nullifies the previous guidance on the subject. It
requires, among other things, that a liability for a cost associated with an
exit or disposal activity be recognized, at fair value, when the liability
is incurred rather than at the commitment date to the exit or disposal plan.
The provisions for Statement No. 146 are effective for exit or disposal
activities that are initiated after December 31, 2002. Accordingly,
Statement No. 146 may affect the timing of recognizing future costs
associated with exit or disposal activities.

4. Segment Information
Third Quarter Ended Three Quarters Ended
---------------------- ----------------------
October 6, October 7, October 6, October 7,
2002 2001 2002 2001
Revenues ---------- ---------- ---------- ----------
--------
Journal Sentinel............. $ 64,910 $ 64,001 $162,427 $168,633
Journal Broadcast Group...... 46,776 40,390 112,387 100,166
Norlight Telecommunications.. 45,082 47,202 114,181 116,600
IPC Communication Services... 29,965 36,577 76,239 86,276
Add, Inc..................... 29,984 30,867 75,785 79,388
NorthStar Print Group........ 17,661 17,686 43,811 43,812
PrimeNet Marketing Services.. 12,068 11,456 29,300 28,469
Corporate and eliminations... (1,129) (1,199) (2,727) (3,323)
-------- -------- -------- --------
$245,317 $246,980 $611,403 $620,021
======== ======== ======== ========

Earnings (losses) from continuing operations
before income taxes and accounting change
--------------------------------------------
Journal Sentinel............. $ 7,428 $ 4,127 $ 22,616 $ 18,052
Journal Broadcast Group...... 9,776 4,796 22,122 8,927
Norlight Telecommunications.. 12,088 15,045 31,726 37,227
IPC Communication Services... 1,880 1,570 3,201 (401)
Add, Inc..................... 591 254 1,487 1,308
NorthStar Print Group........ 643 531 1,309 (946)
PrimeNet Marketing Services.. 494 (292) 896 (525)
Corporate and eliminations... 650 (809) 5,370 (2,407)
Net interest and dividends... (72) 324 453 1,130
-------- -------- -------- --------
$ 33,478 $ 25,546 $ 89,180 $ 62,365
======== ======== ======== ========

Journal Communications, Inc.
Notes to Unaudited Consolidated Condensed Financial Statements
(in thousands, except per share amounts)

4. Segment Information, continued

October 6, December 31,
2002 2001
---------- ------------
(Audited)

Identifiable total assets
Journal Sentinel ......................... $ 158,951 $ 145,200
Journal Broadcast Group................... 297,982 296,723
Norlight Telecommunications............... 118,997 122,649
IPC Communication Services................ 39,267 47,036
Add, Inc.................................. 64,298 62,897
NorthStar Print Group..................... 23,694 24,079
PrimeNet Marketing Services............... 6,058 13,181
Corporate and eliminations................ 14,326 17,049
--------- ---------
$ 723,573 $ 728,814
========= =========

5. Comprehensive Income

Third Quarter Ended Three Quarters Ended
---------------------- ----------------------
October 6, October 7, October 6, October 7,
2002 2001 2002 2001
---------- ---------- ---------- ----------
Net earnings................ $ 19,589 $ 15,431 $ 43,585 $ 36,856
Foreign currency
translation adjustments.... (500) (56) (925) (68)
-------- -------- -------- --------
Comprehensive income........ $ 19,089 $ 15,375 $ 42,660 $ 36,788
======== ======== ======== ========

6. Goodwill and Other Intangible Assets
Effective January 1, 2002, we adopted Statement No. 142, "Goodwill and Other
Intangible Assets." Under Statement No. 142, goodwill and intangible assets
deemed to have indefinite lives, including broadcast licenses and network
affiliation agreements, are no longer amortized but are reviewed for
impairment and written down and charged to results of operations when their
carrying amounts exceed their estimated fair values. We will continue to
amortize separable definite-lived intangible assets over their useful lives.

We performed transitional impairment tests on our goodwill, definite-lived,
and indefinite-lived intangible assets. The resulting impairment charges
were recorded during the first quarter ended March 24, 2002 and are reported
as the cumulative effect of accounting change in the Consolidated Condensed
Statements of Income.

The following table reconciles the reported earnings from continuing
operations before accounting change, net earnings, earnings per share from
continuing operations before accounting change and earnings per share to
that which would have resulted for the third quarter and three quarters
ended October 7, 2001 if Statement No. 142 had been adopted effective
January 1, 2001:

Journal Communications, Inc.
Notes to Unaudited Consolidated Condensed Financial Statements
(in thousands, except per share amounts)

6. Goodwill and Other Intangible Assets, continued

Third Quarter Ended Three Quarters Ended
October 7, 2001 October 7, 2001
------------------- --------------------

Reported earnings from continuing operations before
accounting change........................................... $ 15,484 $ 37,858
Goodwill amortization, net of tax.......................... 673 1,685
Broadcast licenses amortization, net of tax................ 958 2,395
Network affiliation agreements amortization, net of tax.... 24 58
--------- ---------
Adjusted earnings from continuing operations before
accounting change........................................... $ 17,139 $ 41,996
========= =========

Reported net earnings........................................ $ 15,431 $ 36,856
Goodwill amortization, net of tax.......................... 676 1,692
Broadcast licenses amortization, net of tax................ 958 2,395
Network affiliation agreements amortization, net of tax.... 24 58
--------- ---------
Adjusted net earnings........................................ $ 17,089 $ 41,001
========= =========
Basic and diluted earnings per share:
Reported earnings from continuing operations before
accounting change........................................... $ 0.54 $ 1.35
Goodwill amortization, net of tax.......................... 0.02 0.06
Broadcast licenses amortization, net of tax................ 0.03 0.09
Network affiliation agreements amortization, net of tax.... -- --
--------- ---------
Adjusted earnings from continuing operations before
accounting change........................................... $ 0.59 $ 1.50
========= =========
Basic and diluted earnings per share:
Reported net earnings........................................ $ 0.54 $ 1.31
Goodwill amortization, net of tax.......................... 0.02 0.06
Broadcast licenses amortization, net of tax................ 0.03 0.09
Network affiliation agreements amortization, net of tax.... -- --
--------- ---------
Adjusted net earnings........................................ $ 0.59 $ 1.46
========= =========

Amortization expense was $566 for the third quarter ended October 6, 2002
and $1,508 for the three quarters ended October 6, 2002. We expect that
amortization expense will be reduced from $10,863 in 2001 to approximately
$1,909 in 2002. Estimated amortization expense for each of the years ended
December 31 is as follows:

Year Amount
---- --------

2002.......................................................... $ 1,909
2003.......................................................... 1,636
2004.......................................................... 1,028
2005.......................................................... 455
2006.......................................................... 445

Definite-lived Intangibles
Our definite-lived intangible assets consist primarily of customer lists and
non-compete agreements. We amortize the customer lists over the period of
time we expect the assets to contribute to our cash flows and we amortize
the non-compete agreements over the terms of the contracts. As a result of
the transitional impairment tests, we wrote off $1,260 ($773 after tax) for
a customer list at PrimeNet Marketing Services.

The gross carrying amount, accumulated amortization and net carrying amount
of the major classes of definite-lived intangible assets as of October 6,
2002 and December 31, 2001 is as follows:

Journal Communications, Inc.
Notes to Unaudited Consolidated Condensed Financial Statements
(in thousands, except per share amounts)

6. Goodwill and Other Intangible Assets, continued

Gross Net
Carrying Accumulated Carrying
As of October 6, 2002 Amount Amortization Amount
-------- ------------ --------
Definite-lived intangible assets:
Customer lists........................ $ 16,248 $ (13,156) $ 3,092
Non-compete agreements................ 17,790 (15,873) 1,917
Other................................. 11,625 (11,613) 12
-------- --------- -------
Total................................. $ 45,663 $ (40,642) $ 5,021
======== ========= =======

Gross Net
Carrying Accumulated Carrying
As of December 31, 2001 Amount Amortization Amount
-------- ------------ --------
Definite-lived intangible assets:
Customer lists........................ $ 18,138 $ (13,369) $ 4,769
Non-compete agreements................ 17,690 (14,795) 2,895
Other................................. 16,134 (15,218) 916
-------- --------- -------
Total................................. $ 51,962 $ (43,382) $ 8,580
======== ========= =======

The decrease in the net carrying amount of other definite-lived intangible
assets from December 31, 2001 is due to reclassifying to goodwill the
intangible assets that did not meet the new criteria for recognition
separate from goodwill.

Indefinite-lived Intangibles
Broadcast licenses and network affiliation agreements are deemed to have
indefinite useful lives because we have renewed these agreements without
issue in the past and we intend to renew them indefinitely in the future.
Consequently, we expect the cash flows from both our broadcast licenses and
our network affiliation agreements to continue indefinitely. We performed
transitional impairment tests on our broadcast licenses and network
affiliation agreements at the level of separate identifiable assets and
recorded a transitional broadcast license impairment charge of $722 ($458
after tax) at Journal Broadcast Group.

The net carrying amount of the major classes of indefinite-lived intangible
assets as of October 6, 2002 and December, 2001 is as follows:

October 6, 2002 December 31, 2001
--------------- -----------------
Indefinite lived intangible assets:
Broadcast licenses..................... $ 125,492 $ 128,842
Network affiliation agreements......... 7,495 10,067
Other.................................. 1,577 1,568
--------- ---------
Total.................................. $ 134,564 $ 140,477
========= =========

Goodwill
We performed transitional impairment tests on the goodwill of six of our
reporting units with goodwill, which also are our reportable segments. As a
result, we recorded a transitional goodwill impairment charge of $6,948
($6,051 after tax) at PrimeNet Marketing Services. For goodwill amortization
that was nondeductible for income tax purposes, the transitional goodwill
impairment charge is also nondeductible.

Journal Communications, Inc.
Notes to Unaudited Consolidated Condensed Financial Statements
(in thousands, except per share amounts)

6. Goodwill and Other Intangible Assets, continued

The changes in the net carrying amount of goodwill for the three quarters
ended October 6, 2002 are as follows:

Goodwill at Goodwill Goodwill Transfer of Goodwill at
January 1, related to related to unidentifiable Impairment October 6,
Segment 2002 acquisitions divestitures intangible losses 2002
------- ----------- ------------ ------------ ------------- ---------- -----------

Journal
Sentinel $ 2,084 $ -- $ -- $ -- $ -- $ 2,084

Journal
Broadcast
Group 76,584 5,368 -- 167 -- 82,119

NorthStar
Print Group 2,362 -- -- -- -- 2,362

Add, Inc. 23,713 -- 398 724 -- 24,835

Norlight
Telecom-
munications 188 -- -- -- -- 188

PrimeNet
Marketing
Services 7,358 -- -- -- (6,948) 410
--------- -------- ------ ------- --------- ---------

Total $ 112,289 $ 5,368 $ 398 $ 891 $ (6,948) $ 111,998
========= ======== ====== ======= ========= =========

According to Statement No. 142, when a portion of a reporting unit that
constitutes a business is disposed of, goodwill associated with that
business is included in the carrying amount of the business based on the
relative fair values of the business disposed of and the portion of the
reporting unit that is retained. As discussed in Note 8 below, we announced
the closure of Fox Cities Newspapers, a part of the Add, Inc. reporting
segment, in January 2002. The book value of its goodwill equaled $398 as of
December 31, 2001. Based upon the valuations of Fox Cities Newspapers and
Add, Inc., the relative value of Fox Cities Newspapers' goodwill now equals
zero. Therefore, upon adoption of Statement No. 142, Fox Cities Newspapers'
goodwill that was classified in net non-current assets of discontinued
operations in the December 31, 2001 Consolidated Condensed Balance Sheet has
been reclassified to the Add, Inc. reporting unit goodwill in the October 6,
2002 Consolidated Condensed Balance Sheet.

The changes in the net carrying amount of goodwill for the three quarters
ended October 7, 2001 are as follows:

Goodwill at Goodwill Goodwill at
January 1, related to October 7,
Segment 2001 divestitures Amortization 2001
------- ----------- ------------ ------------ -----------

Journal
Sentinel $ 2,090 $ -- $ (5) $ 2,085

Journal
Broadcast
Group 76,352 -- (1,626) 74,726

NorthStar
Print Group 2,736 (296) (60) 2,380

Journal Communications, Inc.
Notes to Unaudited Consolidated Condensed Financial Statements
(in thousands, except per share amounts)

6. Goodwill and Other Intangible Assets, continued

Goodwill at Goodwill Goodwill at
January 1, related to October 7,
Segment 2001 divestitures Amortization 2001
- ------- ----------- ------------ ------------ -----------

Add, Inc. 24,411 -- (537) 23,874

Norlight
Telecommunications 202 -- (11) 191

PrimeNet
Marketing Services 7,581 -- (171) 7,410
--------- ------- -------- --------
Total $ 113,372 $ (296) $ (2,410) $110,666
========= ======= ======== ========

Other
We perform impairment tests each year on goodwill and indefinite-lived
intangible assets, or between yearly tests in certain circumstances. We
cannot be certain that future impairment tests will not result in a charge
to earnings. We perform impairment tests as of the beginning of the fourth
quarter.

Statement No. 142 does not change the requirements of Statement No. 109,
"Accounting for Income Taxes," for recognition of deferred taxes related to
broadcast licenses and tax-deductible goodwill. As a result of adopting
Statement No. 142, we will recognize a deferred tax liability for the
difference between book and tax amortization on our broadcast licenses and
tax-deductible goodwill because we are no longer amortizing these intangible
assets for book purposes. As the majority of our deferred tax liability
recorded on the balance sheet relates to the difference between book and tax
on broadcast licenses, the deferred tax liability will not reverse over time
unless future impairment charges are recognized on the broadcast licenses or
they are sold.

7. Notes Payable to Banks
On May 31, 2002, we entered into a $120,000 bank revolving credit agreement,
expiring May 30, 2003, to support our cash requirements. Borrowings under
this credit agreement are at the Base Rate (derived from prime or Federal
Fund rates) or at the LIBOR based rate. As of October 6, 2002, we had
borrowings of $70,315 under the credit agreement, including $1,815 bearing
interest at the Base Rate of 4.75% and $68,500 bearing interest at the LIBOR
based rate of 2.7125%. Upon signing the credit agreement, we paid fees of
$255 which we are amortizing over the life of the credit agreement.

8. Discontinued Operations
Effective January 1, 2002, we adopted Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." Statement No. 144 addresses
financial accounting and reporting for the impairment of long-lived assets
and for long-lived assets to be disposed of, as well as the accounting and
reporting of discontinued operations.

In January 2002, we announced the closure of Fox Cities Newspapers, six
weekly newspapers located in Appleton, Wisconsin. We recorded closure costs
of $487, which are reported in the loss from discontinued operations in the
Consolidated Condensed Statements of Income.

The following table summarizes the results of operations of Fox Cities
Newspapers, which are included in the loss from discontinued operations in
the Consolidated Condensed Statements of Income:

Third Quarter Ended Three Quarters Ended
---------------------- ----------------------
October 6, October 7, October 6, October 7,
2002 2001 2002 2001
---------- ---------- ---------- ----------
Revenue..................... $ -- $ 1,130 $ 154 $ 2,962
Losses before income
tax benefit................ -- (390) (563) (935)

Journal Communications, Inc.
Notes to Unaudited Consolidated Condensed Financial Statements
(in thousands, except per share amounts)

8. Discontinued Operations, continued

At October 6, 2002 and December 31, 2001, the net assets and liabilities of
Fox Cities Newspapers in the Consolidated Condensed Balance Sheets consisted
of the following:
October 6, 2002 December 31, 2001
--------------- -----------------

Other current assets.................. $ -- $ 12
Other current liabilities............. -- (44)
--------- ---------
Net current liabilities............... $ -- $ (32)
========= =========

Property and equipment................ $ 223 $ 223
Goodwill and intangible assets........ -- 543
--------- ---------
Net non-current assets................ $ 223 $ 766
========= =========

On April 29, 2002, we decided to liquidate IPC Communication Services, S.A.,
a part of the IPC Communication Services reporting segment located in Roncq,
France. We recorded closure costs of $2,900, which are reported in the loss
from discontinued operations in the Consolidated Condensed Statements of
Income. We recorded applicable income tax benefits of $4,761.

The following table summarizes the results of operations of IPC
Communication Services, S. A., which are included in the loss from
discontinued operations in the Consolidated Condensed Statements of Income:

Third Quarter Ended Three Quarters Ended
---------------------- ----------------------
October 6, October 7, October 6, October 7,
2002 2001 2002 2001
---------- ---------- ---------- ----------
Revenue....................... $ 355 $ 3,817 $ 3,083 $ 8,524
Income (losses) before income
tax expense (benefit)........ 197 281 (4,761) (670)

At October 6, 2002 and December 31, 2001, the net assets and liabilities of
IPC Communication Services, S. A. in the Consolidated Condensed Balance
Sheets consisted of the following:

October 6, 2002 December 31, 2001
--------------- -----------------

Cash.................................. $ 510 $ 1,176
Receivables........................... 177 2,103
Inventories........................... 10 1,111
Other current assets.................. 1,038 325
--------- ---------
Total current assets............... 1,735 4,715

Accounts payable...................... (454) (2,273)
Other current liabilities............. -- (1,156)
--------- ---------
Total current liabilities.......... (454) (3,429)
--------- ---------

Net current assets.................... $ 1,281 $ 1,286
========= =========

Property and equipment................ $ 559 $ 1,142
Other non-current assets.............. -- 125
--------- ---------
Total non-current assets........... 559 1,267
Long term liabilities................. (32) (29)
--------- ---------
Net non-current assets................ $ 527 $ 1,238
========= =========

Journal Communications, Inc.
Notes to Unaudited Consolidated Condensed Financial Statements
(in thousands, except per share amounts)

9. Acquisition
On December 31, 2001, we acquired the business and certain assets of a
television station, KIVI-TV, in Boise, Idaho and a low-power television
station, KSAW-LP, in Twin Falls, Idaho. The cash purchase price for the
stations was approximately $22,114. We finalized the purchase price
allocation during the third quarter of 2002. The changes are primarily
reclassifications between goodwill, broadcast licenses and network
affiliation agreement values. The preliminary purchase price allocation, the
adjustments, and the final purchase price allocation are as follows:

Preliminary Final
Purchase Price Purchase Price Purchase Price
Allocation Adjustments Allocation
-------------- -------------- --------------

Property and equipment.... $ 4,485 $ 35 $ 4,520
Goodwill.................. 1,601 5,368 6,969
Broadcast licenses........ 10,000 (2,628) 7,372
Network affiliation
agreement................ 5,979 (2,571) 3,408
Accrued liabilities....... -- (155) (155)
-------- -------- --------
Total purchase price...... $ 22,065 $ 49 $ 22,114
======== ======== ========

Journal Communications, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Results of Operations

Third Quarter Ended October 6, 2002 Compared to Third Quarter Ended October 7,
2001

Our consolidated revenue from continuing operations in the third quarter of 2002
was $245.3 million, a decrease of $1.7 million, or 0.7%, compared to $247.0
million in the third quarter of 2001. Revenue increases at Journal Sentinel
Inc., Journal Broadcast Group and PrimeNet Marketing Services were more than
offset by decreases at Norlight Telecommunications, Add, Inc., and IPC
Communications Services. Revenue from NorthStar Print Group was approximately
the same in the third quarter of 2002 compared to the third quarter of 2001.
Revenue in the third quarter of 2001 was adversely impacted by $0.7 million from
preempted advertising due to the uninterrupted news coverage on television and
radio stations following the September 11 terrorist attacks.

Our earnings from continuing operations before accounting change in the third
quarter of 2002 were $19.6 million, an increase of $4.1 million, or 26.5%,
compared to $15.5 million in the third quarter of 2001. The increase was
primarily due to the decrease in the total cost of newsprint, the increase in
political and issue advertising, the decrease in operating expenses resulting
from cost control measures, workforce reductions and the closure or transition
of certain business units and the adverse impact on third quarter 2001 earnings
following the September 11 terrorist attacks offset by the decrease in the
profit margin on services provided by Norlight. Effective January 1, 2002, we
adopted Statement No. 142, and accordingly, we ceased amortizing goodwill,
broadcast licenses and network affiliation agreements. If Statement No. 142 had
been adopted effective January 1, 2001, our earnings from continuing operations
before accounting change in the third quarter of 2001 would have been $17.1
million.

Journal Sentinel

Journal Sentinel's revenue in the third quarter of 2002 was $64.9 million, an
increase of $0.9 million, or 1.4%, compared to $64.0 million in the third
quarter of 2001. The following table presents Journal Sentinel's revenues by
category for the third quarters of 2002 and 2001:
Third quarter ended
----------------------------------
October 6, 2002 October 7, 2001
--------------- ---------------
($ in millions)
Advertising:
Retail................................. $ 21.4 $ 21.2
Classified............................. 20.6 20.5
General................................ 3.5 2.5
Other.................................. 4.9 4.2
------- -------
Total advertising........................ 50.4 48.4
Circulation.............................. 13.8 14.7
Other.................................... 0.7 0.9
------- -------
Total revenue............................ $ 64.9 $ 64.0
======= =======

Retail advertising revenue in the third quarter of 2002 was $21.4 million, an
increase of $0.2 million, or 0.9%, compared to $21.2 million in the third
quarter of 2001. The increase is comprised of a $0.9 million increase in retail
preprints offset by a $0.7 million decrease in retail ROP (run-of-press)
advertisements that are published in all editions of a particular day's
newspaper. We believe the shift toward retail preprints in the third quarter was
due in part to changes in marketing strategies of certain major national retail
advertisers. Additionally, in the third quarter of 2001, many advertisers
reduced or eliminated their newspaper advertisements following the terrorist
attacks.

Classified advertising revenue in the third quarter of 2002 was $20.6 million,
an increase of $0.1 million, or 0.5%, compared to $20.5 million in the third
quarter of 2001. Increases in automotive advertising of $1.2 million and general
advertising of $0.5 million were partially offset by decreases in employment
advertising of $1.1 million and real estate advertising of $0.5 million. The
increase in automotive advertising is attributed to auto manufacturers promoting
0% financing programs. The decrease in employment advertising, which accounts
for about 42.0% of total classified advertising, represented a 13.0% decrease
from the third quarter of 2001, which compares favorably to previously reported
decreases of 31.0% for the second quarter of 2002 compared to the second quarter
of 2001 and 45.0% for the first quarter of 2002 compared to the first quarter of
2001. We believe the decrease in employment advertising resulted primarily from
continuing economic uncertainty.
13

Journal Communications, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, continued

General advertising revenue in the third quarter of 2002 was $3.5 million, an
increase of $1.0 million, or 40.0%, compared to $2.5 million in the third
quarter of 2001. The increase is primarily attributable to an increase in
general ROP advertising mainly from the telecommunication category.

The following table presents Journal Sentinel's advertising linage by category
for the third quarters of 2002 and 2001:
Third quarter ended
------------------------------------------
October 6, 2002 October 7, 2001 Change
--------------- --------------- ------
(inches in thousands)
Advertising linage:
Retail............................. 211.5 219.7 - 3.7%
Classified......................... 303.6 296.7 + 2.3%
General............................ 18.2 13.5 +34.8%
Total advertising linage in inches... 533.3 529.9 + 0.6%
Preprint pieces (in millions)........ 266.0 253.5 + 4.9%

Total advertising linage in the third quarter of 2002 increased 0.6% compared to
the third quarter of 2001. The increase is largely due to a 34.8% increase in
general advertising and a 2.3% increase in classified advertising. Retail
advertising linage decreased 3.7% due primarily to the shift in major retail
advertising to more preprint advertising. Preprint advertising pieces rose 4.9%
in the third quarter of 2002 primarily due to an increase in preprint
advertising from a major national retail customer.

Other advertising revenue, consisting of revenue from direct marketing efforts,
JSOnline and event marketing, in the third quarter of 2002 was $4.9 million, an
increase of $0.7 million, or 16.7%, compared to $4.2 million in the third
quarter of 2001. The increase was largely due to increased direct mail
advertising and online classified advertising.

Circulation revenue in the third quarter of 2002 was $13.8 million, a decrease
of $0.9 million, or 6.2%, compared to $14.7 million in the third quarter of
2001. Increases in the third quarter of 1.5% in average net paid circulation for
Journal Sentinel's daily newspaper and of 1.6% in average net paid circulation
for Journal Sentinel's Sunday newspaper were more than offset by discounts given
to new subscribers. In January 2002, Journal Sentinel eliminated home delivery
of its newspaper in all but the twelve counties in southeastern Wisconsin. As of
the end of the third quarter, this decision resulted in a decrease in net paid
circulation for the daily and Sunday newspaper of 3.8% and 4.9%, respectively.
On June 30, 2002, in an effort to increase readership in certain areas of
Milwaukee County, Journal Sentinel began offering greater discounts on home
delivery and single copy sales. Readership in those areas has increased since
offering the discounts.

Journal Sentinel's earnings before income taxes in the third quarter of 2002
were $7.4 million, an increase of $3.3 million, or 80.0%, compared to $4.1
million in the third quarter of 2001. Contributing to the increase was a $2.6
million reduction in the total cost of newsprint and ink compared to the third
quarter of 2001 and a $0.4 million decrease in direct wages and selling and
administrative expenses, which resulted primarily from work force reduction
programs. These cost reductions were partially offset by $1.6 million in start
up costs in the third quarter of 2002 related to the new production facility.

Journal Broadcast Group

Journal Broadcast Group's revenue in the third quarter of 2002 was $46.8
million, an increase of $6.4 million, or 15.8%, compared to $40.4 million in the
third quarter of 2001. Earnings before income taxes and accounting change in the
third quarter of 2002 were $9.8 million, an increase of $5.0 million, or 103.8%,
compared to $4.8 million in the third quarter of 2001.

The following table presents Journal Broadcast Group's revenue and earnings
before income taxes and accounting change by television stations and radio
stations for the third quarters of 2002 and 2001:
Third quarter ended
----------------------------------
October 6, 2002 October 7, 2001
--------------- ---------------
($ in millions)
Revenue:
Television............................. $ 21.7 $ 17.0
Radio.................................. 25.1 23.4
------- -------
Total ................................ $ 46.8 $ 40.4
======= =======
14

Journal Communications, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, continued

Earnings before income taxes and accounting change:
Television.......................................... $ 4.6 $ 2.2
Radio............................................... 5.2 2.6
------- -------
Total................................................. $ 9.8 $ 4.8
======= =======

Television stations' revenue in the third quarter of 2002 was $21.7 million, an
increase of $4.7 million, or 27.6%, compared to $17.0 million in the third
quarter of 2001. The increase in television stations' revenue was attributed
primarily to a collective $2.0 million increase in local advertising, a $1.7
million increase in political and issue advertising and a $0.9 million increase
from national advertising across all markets. Included in the revenue increase
is $1.6 million from the two stations in Idaho that were acquired on December
31, 2001. In the third quarter of 2001, the uninterrupted news coverage
following the September 11 terrorist attacks had a $0.5 million adverse impact
on advertising revenue from the television stations.

Television stations' earnings before income taxes in the third quarter of 2002
was $4.6 million, an increase of $2.4 million, or 109.1%, compared to $2.2
million in the third quarter of 2001. The increase is primarily attributed to
the $4.7 million increase in revenue, the discontinuation of $0.3 million of
goodwill, broadcast license and network affiliation agreement amortization
expense and the effects of cost containment initiatives in all markets.

Radio stations' revenue in the third quarter of 2002 was $25.1 million, an
increase of $1.7 million, or 7.3%, compared to $23.4 million in the third
quarter of 2001. The increase was primarily attributed to a collective $1.1
million increase in local advertising and a $0.4 million increase from national
advertising across all markets and a $0.2 million increase in political and
issue advertising revenue. In the third quarter of 2001, the uninterrupted news
coverage following the September 11 terrorist attacks had a $0.2 million adverse
impact on advertising revenue from the radio stations.

Radio stations earnings' before income taxes and accounting change in the third
quarter of 2002 was $5.2 million, an increase of $2.6 million, or 100.0%,
compared to $2.6 million in the third quarter of 2001. The increase is primarily
attributed to the discontinuation of $1.7 million of goodwill and broadcast
license amortization expense, the $1.7 million increase in revenue and the
effects of cost control initiatives in all markets.

Norlight

Norlight's revenue in the third quarter of 2002 was $45.1 million, a decrease of
$2.1 million, or 4.5%, compared to $47.2 million in the third quarter of 2001.
The following table presents Norlight's revenue by business category for the
third quarters of 2002 and 2001:
Third quarter ended
----------------------------------
October 6, 2002 October 7, 2001
--------------- ---------------
($ in millions)
Revenue:
Wholesale services..................... $ 29.2 $ 31.7
Commercial services.................... 15.9 15.5
------- -------
Total.................................... $ 45.1 $ 47.2
======= =======

Norlight's Wholesale services provide network transmission solutions for other
service providers by offering bulk transmission capacity. Revenue from Wholesale
services in the third quarter of 2002 was $29.2 million, a decrease of $2.5
million, or 7.9%, compared to $31.7 million in the third quarter of 2001. The
decrease is primarily attributed to service disconnections and price reductions.
Monthly recurring revenue from Wholesale services at the end of the third
quarter of 2002 was $7.5 million compared to $7.6 million at the beginning of
the third quarter of 2002 and $8.4 million at the end of the third quarter of
2001.

Norlight's Commercial services provide advanced data communications products to
small and medium sized businesses in the Upper Midwest, principally in
Wisconsin, Minnesota, Illinois, Indiana and Michigan. Revenue from Commercial
services in the third quarter of 2002 was $15.9 million, an increase of $0.4
million, or 2.5%, compared to $15.5 million in the third quarter of 2001. The
increase was primarily attributed to an increase in long distance services.
Monthly recurring revenue from Commercial data services at the end of the third
quarter of 2002 of $3.0 million was virtually equal to the amount at the
beginning of the third quarter of 2002 and at the end of the third quarter of
2001.
15

Journal Communications, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, continued

Earnings before income taxes in the third quarter of 2002 was $12.1 million, a
decrease of $2.9 million, or 19.7%, compared to $15.0 million in the third
quarter of 2001. The decrease in earnings is primarily attributed to the
decrease in profit margins on services provided due to price reductions and the
increase in depreciation expense of $0.5 million resulting from the completion
of several capital investment initiatives during 2001.

WorldCom and Global Crossing accounted for 20.2% of Norlight's revenue in the
third quarter of 2002 compared to 19.6% in the third quarter of 2001. Global
Crossing filed for Chapter 11 bankruptcy protection in January 2002 and WorldCom
filed for Chapter 11 bankruptcy protection in July 2002. The loss of the ongoing
business from either of these two customers would have a significant adverse
affect on our results of operations. A renewal service contract with Global
Crossing is being negotiated.

We believe we do not have a material bad debt exposure because we bill all data
services for both Wholesale and Commercial customers in advance of providing
services. Most customers are required to pay their bill before services are
provided. Norlight continues to provide services to WorldCom and Global Crossing
and receives timely payment for those services.

Norlight has a pre-bankruptcy receivable, net of applicable "set-off" accounts
payable, from WorldCom of $0.5 million. We recorded a reserve in the amount of
the net receivable in the third quarter of 2002.

IPC

IPC's revenue from continuing operations in the third quarter of 2002 was $30.0
million, a decrease of $6.6 million, or 18.1%, compared to $36.6 million in the
third quarter of 2001. The decrease was primarily attributed to the continued
slowdown in the publication printing business and the consolidation of IPC's
U.S. operations to eliminate customers that did not fit our long term strategic
business plans. CD-ROM replication continued at essentially the same level as
compared to the comparable period last year; however, IPC continues to
experience strong price competition for this product in all markets.

Earnings from continuing operations before income taxes in the third quarter of
2002 were $1.9 million, an increase of $0.3 million, or 19.7%, compared to $1.6
million in the third quarter of 2001. The impact on earnings from the decrease
in revenue was more than offset by improvements in sales mix profitability of
$1.8 million and a reduction in operational costs of $1.1 million in the third
quarter of 2002 compared to the third quarter of 2001.

IPC derived 40.4% and 34.3% of its revenue in the third quarters of 2002 and
2001 from its single largest customer, a large computer hardware OEM (original
equipment manufacturer). The loss of this customer could have a material adverse
effect on our results of operations.

Add, Inc.

Add, Inc.'s revenue from continuing operations in the third quarter of 2002 was
$30.0 million, a decrease of $0.9 million, or 2.9%, compared to $30.9 million in
the third quarter of 2001. Revenue from Add, Inc.'s publishing operations was
$22.3 million in the third quarter of 2002 and the third quarter of 2001.
Revenue from Add, Inc.'s printing operations in the third quarter of 2002 were
$7.7 million, a decrease of $0.9 million from the third quarter of 2001. The
decrease in revenue is primarily attributed to reduced press runs and page
counts from existing customers and the loss of three customers.

Earnings from continuing operations before income taxes in the third quarter of
2002 were $0.6 million, an increase of $0.3 million, or 132.7%, compared to $0.3
million in the third quarter of 2001. The increase was primarily attributed to a
$0.3 million decrease in newsprint prices and the discontinuation of $0.2
million of goodwill amortization, primarily offset by the decrease in revenue.

NorthStar

NorthStar's revenue in the third quarter of 2002 and 2001 was $17.7 million.
Increases in the gravure printing operation were offset by decreases in the
flexographic label market. Earnings before income taxes in the third quarter of
2002 were $0.6 million, an increase of $0.1 million, or 21.1%, compared to $0.5
million in the third quarter of 2002.

SAB/Miller Brewing Company accounted for approximately 49.5% and 49.7% of
NorthStar's revenue in the third quarter of 2002 and 2001, respectively.
NorthStar is in the second year of a five-year contract with Miller. The loss of
Miller could materially affect our results of operations.
16

Journal Communications, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, continued

PrimeNet

PrimeNet's revenue in the third quarter of 2002 was $12.1 million, an increase
of $0.6 million, or 5.3%, compared to $11.5 million in the third quarter of
2001. PrimeNet's earnings before income taxes and accounting change in the third
quarter of 2002 of $0.5 million compared to a loss of $0.3 million last year.
The increase in revenue was primarily due to an increase in print and mail
services and database marketing services. The increase in earnings was primarily
the result of the increase in revenue and cost controls. Additionally, in the
third quarter of 2001, the anthrax scare resulted in advertisers deciding to use
other media to reach their target audiences.

Non Operating Income and Taxes From Continuing Operations

Interest income and dividends in the third quarter of 2002 were $0.1 million
compared to $0.5 million in the third quarter of 2001. The decrease is primarily
attributed to the decrease in cash and cash equivalents. Interest expense in the
third quarter of 2002 and 2001 was $0.2 million. In the third quarter of 2002,
gross interest expense from borrowings under our credit agreement of $0.5
million was capitalized as part of our construction of the Journal Sentinel
production facility. In 2001, we paid interest on certain state income tax
audits.

The effective tax rate on continuing operations was 41.5% in the third quarter
2002 compared to 39.4% in the third quarter of 2001. In the third quarter 2002,
the difference between the statutory federal tax rate and the effective tax rate
is primarily the result of litigation that was settled during 2002.

Discontinued Operations

In January 2002, we announced the closure of the Fox Cities Newspapers, located
in Appleton, Wisconsin. The Newspapers were part of the Add, Inc. reporting
segment and included six weekly papers.

On April 29, 2002, a resolution was approved by the Board of Directors for IPC
Communication Services, S. A. to proceed to close IPC Communication Services, S.
A. through a liquidation process. We currently expect the operations of IPC
Communication Services, S. A. to cease in the fourth quarter of 2002 with final
liquidation completed in early 2003.

The operations of the Newspapers and IPC Communication Services, S.A. have been
reflected as discontinued operations in the unaudited financial statements and,
accordingly, prior periods have been restated to reflect this treatment.

Net revenues from discontinued operations in the third quarter of 2002 and 2001
were $0.4 million and $4.9 million, respectively. Net current and non-current
assets of discontinued operations were $2.0 million at October 6, 2002 and $3.3
million at December 31, 2001. Earnings from discontinued operations in the third
quarter of 2002 were $0.2 million compared to losses from discontinued
operations in the third quarter of 2001 of $0.1 million. We recorded applicable
income tax expense in the third quarter of 2002 of $0.2 million. Applicable
income tax benefits in the third quarter of 2001 were $0.1 million. We will
likely record additional closure costs for IPC Communication Services, S. A. in
the fourth quarter of 2002; however, we do not expect the additional closure
costs to be material to our results of operations.

Three Quarters Ended October 6, 2002 Compared to Three Quarters Ended October 7,
2001

Our consolidated revenue from continuing operations in the three quarters of
2002 was $611.4 million, a decrease of $8.6 million, or 1.4%, compared to $620.0
million in the three quarters of 2001. Revenue increases at Journal Broadcast
Group and PrimeNet were more than offset by decreases at Journal Sentinel,
Norlight, Add, Inc., and IPC. Revenue at NorthStar was approximately the same in
the three quarters of 2002 compared to the three quarters of 2001. Revenue in
the three quarters of 2001 was adversely impacted by $0.7 million from preempted
advertising due to the uninterrupted news coverage on television and radio
stations following the September 11 terrorist attacks.

Our earnings from continuing operations before accounting change in the three
quarters of 2002 were $51.2 million, an increase of $13.3 million, or 35.3%,
compared to $37.9 million in the three quarters of 2001. The increase was
primarily due to the decrease in the total cost of newsprint, the increase in
Olympic, political and issue advertising, the decrease in the litigation reserve
by $4.1 million to reflect the second quarter settlement of the Newspaper Merger
Class Action Suit, the decrease in operating expenses resulting from cost
control measures, workforce reductions and the closure or transition of certain
business units and the adverse impact on third quarter 2001 earnings following
the September 11 terrorist attacks offset by the decrease in the profit margin
on services provided by Norlight. Effective January 1, 2002, we adopted
Statement No. 142, and accordingly, we ceased amortizing goodwill, broadcast
licenses and network affiliation agreements. If Statement No. 142 had been
adopted effective January 1, 2001, our earnings from continuing operations
before accounting change in the three quarters of 2001 would have been $42.0
million.
17

Journal Communications, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, continued

Journal Sentinel

Journal Sentinel's revenue in the three quarters of 2002 was $162.4 million, a
decrease of $6.2 million, or 3.7%, compared to $168.6 million in the three
quarters of 2001. The following table presents Journal Sentinel's revenues by
category for the three quarters of 2002 and 2001:
Three quarters ended
----------------------------------
October 6, 2002 October 7, 2001
--------------- ---------------
($ in millions)
Advertising:
Retail................................. $ 54.7 $ 55.0
Classified............................. 49.4 54.9
General................................ 8.2 7.5
Other.................................. 12.2 10.7
------- -------
Total advertising........................ 124.5 128.1
Circulation.............................. 34.8 36.8
Other.................................... 3.1 3.7
------- -------
Total revenue............................ $ 162.4 $ 168.6
======= =======

Retail advertising revenue in the three quarters of 2002 was $54.7 million, a
decrease of $0.3 million, or 0.5%, compared to $55.0 million in the three
quarters of 2001. The decrease is comprised of a $1.7 million increase in retail
preprints offset by a $2.0 million decrease in retail ROP advertisements. We
believe the shift toward retail preprints in the three quarters was due in part
to changes in marketing strategies of certain major national retail advertisers.
Additionally, in the third quarter of 2001, many advertisers reduced or
eliminated their newspaper advertisements following the terrorist attacks.

Classified advertising revenue in the three quarters of 2002 was $49.4 million,
a decrease of $5.5 million, or 10.0%, compared to $54.9 million in the three
quarters of 2001. Decreases in employment advertising of $8.5 million and real
estate advertising of $0.1 million were partially offset by increases in
automotive advertising of $2.7 million and general advertising of $0.5 million.
The decrease in employment advertising, which accounts for almost 39.0% of total
classified advertising represented a 13.0% decrease from the third quarter of
2001, which compares favorably to previously reported decreases of 31.0% for the
second quarter of 2002 compared to the second quarter of 2001 and 45.0% for the
first quarter of 2002 compared to the first quarter of 2001. We believe the
decrease in employment advertising resulted primarily from continuing economic
uncertainty. The increase in automotive advertising is attributed to auto
manufacturers promoting 0% financing programs.

General advertising revenue in the three quarters of 2002 was $8.2 million, an
increase of $0.7 million, or 9.3%, compared to $7.5 million in the three
quarters of 2001. The increase is primarily attributable to an increase in
general ROP advertising mainly from the telecommunication category.

The following table presents Journal Sentinel's advertising linage by category
for the three quarters of 2002 and 2001:
Three quarters ended
------------------------------------------
October 6, 2002 October 7, 2001 Change
--------------- --------------- ------
(inches in thousands)
Advertising linage:
Retail............................. 540.9 563.2 -4.0%
Classified......................... 716.3 758.6 -5.6%
General............................ 39.6 40.2 -1.5%
Total advertising linage in inches... 1,296.8 1,362.0 -4.8%
Preprint pieces (in millions) 637.7 617.2 +3.3%

Total advertising linage in the three quarters of 2002 decreased 4.8% compared
to the three quarters of 2001. The decrease is largely due to a 5.6% decrease in
classified advertising, a 4.0% decrease in retail advertising and a 1.5%
decrease in general advertising. Retail advertising linage decreased 4.0% due
primarily to the shift in major retail advertising to more preprint advertising.
Preprint advertising pieces rose 3.3% in the three quarters of 2002 primarily
due to an increase in preprint advertising from a major national retail
customer.
18

Journal Communications, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, continued

Other advertising revenue, consisting of revenue from direct marketing efforts,
JSOnline and event marketing, in the three quarters of 2002 was $12.2 million,
an increase of $1.5 million, or 14.0%, compared to $10.7 million in the three
quarters of 2001. The increase was largely due to increased direct mail
advertising and online classified advertising.

Circulation revenue in the three quarters of 2002 was $34.8 million, a decrease
of $2.0 million, or 5.4%, compared to $36.8 million in the three quarters of
2001. The decrease is mainly attributed to the 5.9% decrease in average net paid
circulation for Journal Sentinel's daily newspaper and 4.1% decrease in average
net paid circulation for Journal Sentinel's Sunday newspaper combined with
greater discounts given to new subscribers. In January 2002, Journal Sentinel
eliminated home delivery of its newspaper in all but the twelve counties in
southeastern Wisconsin. As of the end of the third quarter of 2002, this
decision resulted in a decrease in net paid circulation for the daily and Sunday
newspaper of 3.8% and 4.9%, respectively. On June 30, 2002, in an effort to
increase readership in certain areas of Milwaukee County, Journal Sentinel began
offering greater discounts on home delivery and single copy sales. Readership in
those areas has increased since offering the discounts.

Journal Sentinel's earnings before income taxes in the three quarters of 2002
were $22.6 million, an increase of $4.6 million, or 25.3%, compared to $18.1
million in the three quarters of 2001. Contributing to the increase was a $6.9
million reduction in the total cost of newsprint and ink compared to the three
quarters of 2001 and a $5.1 million decrease in direct wages and selling and
administrative expenses, which resulted primarily from work force reduction
programs. These cost reductions were partially offset by $3.5 million in start
up costs in the three quarters of 2002 related to the new production facility.

We anticipate that our new presses will be installed and our new production
facility will be fully operational in early 2003. We expect that our new presses
will provide improved print reproduction quality and increased productivity, as
well as additional opportunities to pursue commercial printing revenue from
third parties.

Journal Broadcast Group

Journal Broadcast Group's revenue in the three quarters of 2002 was $112.4
million, an increase of $12.2 million, or 12.2%, compared to $100.2 million in
the three quarters of 2001. Earnings before income taxes and accounting change
in the three quarters of 2002 were $22.1 million, an increase of $13.2 million,
or 147.8%, compared to $8.9 million in the three quarters of 2001.

The following table presents Journal Broadcast Group's revenue and earnings
before income taxes and accounting change by television stations and radio
stations for the three quarters of 2002 and 2001:
Three quarters ended
----------------------------------
October 6, 2002 October 7, 2001
--------------- ---------------
($ in millions)
Revenue:
Television............................. $ 54.3 $ 45.2
Radio.................................. 58.1 55.0
------- -------
Total.................................... $ 112.4 $ 100.2
======= =======
Earnings before income taxes and
accounting change:
Television............................. $ 11.9 $ 6.1
Radio.................................. 10.2 2.8
------- -------
Total.................................... $ 22.1 $ 8.9
======= =======

Television stations' revenue in the three quarters of 2002 was $54.3 million, an
increase of $9.1 million, or 20.1%, compared to $45.2 million in the three
quarters of 2001. The increase in television stations' revenue was primarily
attributed to a collective $5.3 million increase in local advertising, a $5.0
million increase in Olympic, political and issue advertising and a $1.2 million
increase from national advertising across all markets. Included in the revenue
increase is $3.7 million from the two stations in Idaho that were acquired on
December 31, 2001. In the third quarter of 2001, the uninterrupted news coverage
following the September 11 terrorist attacks had a $0.5 million adverse impact
on advertising revenue from the television stations.

Television stations' earnings before income taxes in the three quarters of 2002
was $11.9 million, an increase of $5.8 million, or 95.1%, compared to $6.1
million in the three quarters of 2001. The increase is primarily attributed to
the $9.1 million increase in revenue, the discontinuation of $0.8 million of
goodwill, broadcast license and network affiliation agreement amortization
expense and the effects of cost containment initiatives in all markets.
19

Journal Communications, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, continued

Radio stations' revenue in the three quarters of 2002 was $58.1 million, an
increase of $3.1 million, or 5.6%, compared to $55.0 million in the three
quarters of 2001. The increase was primarily attributed to a collective $1.9
million increase in local advertising and a $0.5 million increase from national
advertising across all markets, and a $0.4 million increase in political and
issue advertising revenue. In the third quarter of 2001, the uninterrupted news
coverage following the September 11 terrorist attacks had a $0.2 million adverse
impact on advertising revenue from the radio stations.

Radio stations' earnings before income taxes and accounting change in the three
quarters of 2002 was $10.2 million, an increase of $7.4 million, or 264.3%,
compared to $2.8 million in the three quarters of 2001. The increase is
primarily attributed to the discontinuation of $4.3 million of goodwill and
broadcast license amortization expense, the $3.1 million increase in revenue and
the effects of cost control initiatives in all markets.

Norlight

Norlight's revenue in the three quarters of 2002 was $114.2 million, a decrease
of $2.4 million, or 2.1%, compared to $116.6 million in the three quarters of
2001. The following table presents Norlight's revenue by business category for
the three quarters of 2002 and 2001:
Three quarters ended
----------------------------------
October 6, 2002 October 7, 2001
--------------- ---------------
($ in millions)
Revenue:
Wholesale services..................... $ 75.0 $ 79.0
Commercial services.................... 39.2 37.6
------- -------
Total.................................... $ 114.2 $ 116.6
======= =======

Norlight's Wholesale services provide network transmission solutions for other
service providers by offering bulk transmission capacity. Revenue from Wholesale
services in the three quarters of 2002 was $75.0 million, a decrease of $4.0
million, or 5.1%, compared to $79.0 million in the three quarters of 2001. The
decrease is primarily attributed to service disconnections and price reductions.
Monthly recurring revenue from Wholesale services at the end of the third
quarter of 2002 was $7.5 million compared to $8.1 million at the beginning of
2002 and $8.4 million at the end of the third quarter of 2001. During 2002, new
customers and new circuit connections of $1.0 million were more than offset by
service disconnections, price reductions and lost customers.

Norlight's Commercial services provide advanced data communications products to
small and medium sized businesses in the Upper Midwest, principally in
Wisconsin, Minnesota, Illinois, Indiana and Michigan. Revenue from Commercial
services in the three quarters of 2002 was $39.2 million, an increase of $1.6
million, or 4.3%, compared to $37.6 million in the three quarters of 2001. The
increase was primarily attributed to an increase in long distance services.
Monthly recurring revenue from Commercial data services at the end of the third
quarter of 2002 of $3.0 million was virtually equal to the amount at the
beginning of 2002 and at the end of the third quarter of 2001. During 2002, new
customers and new circuit connections of $0.6 million were offset by service
disconnections, price reductions and lost customers.

Earnings before income taxes in the three quarters of 2002 were $31.7 million, a
decrease of $5.5 million, or 14.8%, compared to $37.2 million in the three
quarters of 2001. The decrease in earnings is primarily attributed to the
decrease in profit margins on services provided due to price reductions and the
increase in depreciation expense of $2.0 million resulting from the completion
of several capital investment initiatives during 2001. We expect continued price
reductions and service disconnections will cause a downward trend in earnings
into next year.

WorldCom and Global Crossing accounted for 20.2% of Norlight's revenue in the
three quarters of 2002 compared to 20.6% in the three quarters of 2001. Global
Crossing filed for Chapter 11 bankruptcy protection in January 2002 and WorldCom
filed for Chapter 11 bankruptcy protection in July 2002. The loss of the ongoing
business from either of these two customers would have a significant adverse
affect on our results of operations. A renewal service contract with Global
Crossing is being negotiated.

Journal Communications, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, continued

IPC

IPC's revenue from continuing operations in the three quarters of 2002 was $76.2
million, a decrease of $10.0 million, or 11.6%, compared to $86.3 million in the
three quarters of 2001. The decrease was primarily attributed to the continued
slowdown in the publication printing business and the consolidation of IPC's
U.S. operations to eliminate customers that did not fit our long term strategic
business plans. CD-ROM replication continued at essentially the same level as
compared to the comparable period last year; however, IPC continues to
experience strong price competition for this product in all markets.

Earnings from continuing operations before income taxes in the three quarters of
2002 were $3.2 million, an increase of $3.6 million, compared to a loss of $0.4
million in the three quarters of 2001. The impact on earnings from the decrease
in revenue was more than offset by a reduction in operational costs of $3.9
million and improvements in sales mix profitability of $3.7 million in the three
quarters of 2002 compared to the three quarters of 2001.

IPC derived 40.4% and 29.4% of its revenue in the three quarters of 2002 and
2001 from its single largest customer, a large computer hardware OEM (original
equipment manufacturer). The loss of this customer could have a material adverse
effect on our results of operations.

Add, Inc.

Add, Inc.'s revenue from continuing operations in the three quarters of 2002 was
$75.8 million, a decrease of $3.6 million, or 4.5%, compared to $79.4 million in
the three quarters of 2001. Revenue from Add, Inc.'s publishing operations was
$55.8 million in the three quarters of 2002 compared to $56.6 million in the
three quarters of 2001. Revenue from Add, Inc.'s printing operations in the
three quarters of 2002 was $20.0 million, a decrease of $2.8 million from the
three quarters of 2001. The decrease in revenue is primarily due to reduced
press runs and page counts from existing customers and the loss of three
customers.

Earnings from continuing operations before income taxes in the three quarters of
2002 were $1.5 million, an increase of $0.2 million, or 13.7%, compared to $1.3
million in the three quarters of 2001. The increase was primarily attributed to
a $0.7 million decrease in newsprint prices and the discontinuation of $0.5
million of goodwill amortization, primarily offset by the decrease in revenue.

NorthStar

NorthStar's revenue in the three quarters of 2002 and 2001 was $43.8 million.
Increases in the gravure printing operation were offset by decreases in the
flexographic label market. Earnings before income taxes in the three quarters of
2002 were $1.3 million compared to a loss of $0.9 million in the three quarters
of 2002.

SAB/Miller Brewing Company accounted for approximately 52.1% and 50.3% of
NorthStar's revenue in the three quarters of 2002 and 2001, respectively.
NorthStar is in the second year of a five-year contract with Miller. The loss of
Miller could materially affect our results of operations.

PrimeNet

PrimeNet's revenue in the three quarters of 2002 was $29.3 million, an increase
of $0.8 million, or 2.9%, compared to $28.5 million in the three quarters of
2001. PrimeNet's earnings before income taxes and accounting change in the three
quarters of 2002 of $0.9 million compared to a loss of $0.5 million last year.
The increase in revenue was primarily due to an increase in print and mail
services and database marketing services. The increase in earnings was primarily
the result of the increase in revenue, the discontinuation of $0.2 million of
goodwill amortization expense, and cost controls. Additionally, in the third
quarter of 2001, the anthrax scare resulted in advertisers deciding to use other
media to reach their target audiences.

Non Operating Income and Taxes From Continuing Operations

Interest income and dividends in the three quarters of 2002 were $1.0 million
compared to $1.4 million in the first three quarters of 2001. The decrease is
primarily attributed to the decrease in cash and cash equivalents offset by
interest income received from refunds of state income taxes. Interest expense
was $0.5 million in the three quarters of 2002 compared to
21

Journal Communications, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, continued

$0.3 million in the three quarters of 2001. In the three quarters of 2002, gross
interest expense from borrowings under our credit agreement was $1.1 million.
Interest expense of $0.9 million was capitalized as part of our construction of
the Journal Sentinel production facility.

The year-to-date effective tax rate on continuing operations was 42.6% in 2002
compared to 39.3% in the same period last year. The difference between the
statutory federal tax rate and the effective tax rate is primarily the result of
the litigation that was settled during 2002 and an adjustment to accrued income
taxes.

Discontinued Operations

Net revenues from discontinued operations in the three quarters of 2002 and 2001
were $3.2 million and $11.5 million, respectively. Net current and non-current
assets of discontinued operations were $2.0 million at October 6, 2002 and $3.3
million at December 31, 2001. Losses from discontinued operations in the three
quarters of 2002 were $5.3 million compared to losses from discontinued
operations in the three quarters of 2001 of $1.6 million. We recorded applicable
income tax benefits in the three quarters of 2002 of $5.0 million. The
applicable income tax benefits in the first three quarters of 2001 were $0.6
million. We will likely record additional closure costs for IPC Communication
Services S. A. in the fourth quarter of 2002; however, we do not expect the
additional closure costs to be material to our results of operations.

Liquidity and Capital Resources

Cash provided by operating activities was $85.4 million in the three quarters of
2002 compared to $77.3 million in the three quarters of 2001. The increase is
mainly due to earnings from continuing operations.

Cash used for investing activities was $41.2 million in the three quarters of
2002 compared to $59.6 million in the three quarters of 2001. We continue to
invest in the building of the new Journal Sentinel production facility, upgrades
to the Norlight fiber optic network and digital television equipment at Journal
Broadcast Group. In the three quarters of 2001, we had $4.7 million in proceeds
from the sale of certain of the assets of the Milwaukee operation of NorthStar.

Cash used for discontinued operations was $3.1 million in the three quarters of
2002. Cash of $0.8 million was provided by discontinued operations in the three
quarters of 2001.

Cash used for financing activities was $42.8 million in the three quarters of
2002 compared with $6.9 million in the three quarters of 2001. We increased our
borrowing under our credit agreement by $65.9 million. The increased borrowing
was primarily used to purchase units of beneficial interest from employees and
former employees. In the three quarters of 2002, purchases of units were $122.5
million compared with $71.1 million in the three quarters of 2001. Sales of
units were $38.8 million and $93.4 million in the three quarters of 2002 and
2001, respectively. We paid cash dividends of $23.8 million and $29.4 million in
the three quarters of 2002 and 2001, respectively.

We conducted a preliminary review of our obligations under our defined benefit
pension plan. We anticipate that plan obligations will exceed plan assets by $35
to $45 million on December 31, 2002 due primarily to anticipated losses in plan
assets during the year and the assumed discount rate used to calculate plan
obligations. By that date, we will either contribute cash into the plan or
record a pension accrual to equalize assets and obligations. The effect of this
decision will not materially impact our results of operations.

We have a $120.0 million bank revolving credit agreement to support our cash
requirements. As of October 6, 2002, we had borrowings of $70.3 million under
this credit agreement and immediately available credit of $49.7 million. We
believe that current cash balances, expected cash flows from operations and
borrowings under the revolving credit agreement will be adequate for the
foreseeable future to provide for our capital expenditures, cash dividends,
working capital and if approved, the funding of our pension plan obligations.

As of October 6, 2002, we, our employees, and former employees owned units
representing beneficial ownership of 90% of our stock with a total aggregate
price per the Journal Employees' Stock Trust Agreement option price formula of
$980.0 million based on the third quarter of 2002 ending unit price of $37.81.
As of the end of the third quarter of 2002, we believe that employees and former
employees had outstanding balances under demand notes secured by pledges of
units from various financial institutions totaling approximately $434.3 million.
22

Journal Communications, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, continued

Eligible optionees under the Stock Trust Agreement, including certain categories
of designated employees, the Grant family stockholders (as further described in
our Annual Report on Form 10-K) and us have the right to purchase units offered
for sale. We are not obligated to purchase units, though in recent years, for
the convenience of the Stock Trust Agreement unitholders, we have elected to do
so. On October 25, 2002, the Board of Directors determined to indefinitely
suspend our purchase and sale of units.

On October 25, 2002, the Board of Directors also directed us to explore
potential sources for additional permanent capital. We cannot assure you that we
will be able to obtain additional permanent capital, or if we do, what the terms
or structure will be.

Outlook

We expect revenue for the full year 2002 to be down slightly, compared to 2001,
primarily due to employment classified advertising and price reductions and
service disconnections at Norlight. We expect net earnings to exceed last year
primarily due to a decrease in the total cost of newsprint and ink, an increase
in revenue from Olympic, political and issue advertising, the discontinuation of
goodwill, broadcast license and network affiliation agreement amortization
expense and savings related to the implementation of the previously announced
workforce reduction programs.

New Accounting Standards

In June 2002, the Financial Accounting Standards Board issued Statement No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities." Statement
No. 146 addresses financial accounting and reporting for costs associated with
exit or disposal activities and nullifies the previous guidance on the subject.
It requires, among other things, that a liability for a cost associated with an
exit or disposal activity be recognized, at fair value, when the liability is
incurred rather than at the commitment date to the exit or disposal plan. The
provisions for Statement No. 146 are effective for exit or disposal activities
that are initiated after December 31, 2002. Accordingly, Statement No. 146 may
affect the timing of recognizing future costs associated with exit and disposal
activities.

Critical Accounting Policies

Critical accounting policies are defined as those that are reflective of
significant judgments and uncertainties, and potentially result in materially
different results under different assumptions and conditions. We believe that
our critical accounting policies are limited to those described below.

Allowance for Doubtful Accounts

We evaluate the collectibility of our accounts receivable based on a combination
of factors. We specifically review historical write-off activity by market,
large customer concentrations, customer creditworthiness and changes in our
customer payment terms when evaluating the adequacy of the allowance for
doubtful accounts. In circumstances where we are aware of a specific customer's
inability to meet its financial obligations to us (e.g., bankruptcy filings,
credit history, etc.), we record a specific reserve for bad debts against
amounts due to reduce the net recognized receivable to the amount we reasonably
believe will be collected. For all other customers, we recognize reserves for
bad debts based on past loss history, the length of time the receivables are
past due and the current business environment. If our evaluations of the
collectibility of our accounts receivable differ from actual results, additional
bad debt expense and allowances may be required.

Property and Equipment

We assign useful lives for our property and equipment based on our estimate of
the amount of time that we will use those assets and we have selected the
straight-line method to depreciate the majority of the property and equipment. A
change in the estimated useful lives or the depreciation method used could have
a material impact upon our results of operations.

We evaluate our property and equipment for impairment whenever indicators of
impairment exist. Accounting standards require that if the sum of the future
cash flows expected to result from a company's assets, undiscounted and without
interest charges, is less than the carrying amount of the asset, an asset
impairment must be recognized in the financial statements. The estimated future
cash flows related to an asset or group of assets are highly susceptible to
change because we must make assumptions about future revenue and the related
cost of sales. Changes in our assumptions could require us to recognize a loss
for asset impairment.
23

Journal Communications, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, continued

Impairment of Goodwill and Indefinite-lived Intangibles

The annual impairment tests for goodwill and indefinite-lived intangibles under
Statement No. 142 require us to make certain assumptions in determining fair
value, including assumptions about cash flow growth rates of our businesses.
Additionally, the fair values are significantly impacted by factors including
competitive industry valuations and long-term interest rates that exist at the
time the annual impairment tests are performed. Accordingly, we may incur
additional impairment charges in future periods under Statement No. 142 to the
extent we do not achieve our expected cash flow growth rates, and to the extent
that market values and long-term interest rates in general decrease and
increase, respectively.

Accrued Income Taxes

The Internal Revenue Service and various state Departments of Revenue routinely
examine our federal and state tax returns. From time to time, the IRS and the
state Departments of Revenue challenge certain of our tax positions. We believe
our tax positions comply with applicable tax law and we would vigorously defend
these positions if challenged. The final disposition of any positions challenged
by the IRS or state Departments of Revenue could require us to make additional
tax payments. Nonetheless, we believe that we have adequately reserved for any
foreseeable payments related to such matters and consequently do not anticipate
any material earnings impact from the ultimate resolution of such matters.

Accrued Litigation

We are subject to various legal actions, administrative proceedings and claims.
When necessary, we may need to record a liability for an estimate of the
probable costs for the resolution of such claims. The estimate would be
developed in consultation with counsel and would be based upon an analysis of
potential results, assuming a combination of litigation and settlement
strategies. We believe that such unresolved legal actions and claims would not
materially affect our results of operations, financial position or cash flows.

Accrued Pension and Other Postretirement Benefits

We engage independent actuarial firms to perform actuarial valuations of the
fair values of our postretirement plans' assets and benefit obligations. We
provide the actuarial firms with certain assumptions that have a significant
effect on the fair value of the assets and obligations such as the:

o discount rate - used to arrive at the net present value of the obligations;
o return on assets - used to estimate the growth in invested asset value
available to satisfy certain obligations;
o salary increases - used to calculate the impact future pay increases will
have on postretirement obligations;
o employee turnover statistics - used to estimate the number of employees to
be paid postretirement benefits; and
o medical cost inflation - used to calculate the impact future medical costs
will have on postretirement obligations.

Changes in these assumptions would affect the benefit obligations and the
service and interest cost components of the pension plan and the other
postretirement plan and the required funding of the pension plan.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains statements that we believe are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements other than statements of
historical fact, including statements regarding our future financial position,
business strategy, budgets, projected costs (including projected costs of
newsprint), plans and objectives of management for future operations, effects of
workforce reduction programs, anticipated levels of advertising and circulation
revenue and anticipated price reductions and service disconnections, are
forward-looking statements. When used in this interim report, words such as
"may," "expect," "will," "intend," "anticipate," "believe," "likely," "should"
and similar expressions are generally intended to identify forward-looking
statements. These statements are not guarantees of future performance and are
subject to risks, uncertainties and other factors, some of which are beyond our
control. These risks, uncertainties and other factors could cause actual results
to differ materially from those expressed or implied by those forward-looking
statements.

Among such risks, uncertainties and other factors are changes in advertising
demand, newsprint prices, fluctuations in interest rates, regulatory rulings,
the outcome of pending and future litigation, the availability of quality
broadcast programming at competitive prices, customers' financial positions,
changes in network affiliation agreements, changes in regulations governing the
number of broadcast licenses that a person may control, quality and rating of
network over-the-air broadcast programs available to our customers, energy
costs, effects of new accounting pronouncements, effects of the rapidly changing
nature of the telecommunications, newspaper, and broadcast industries, other
economic conditions and the
24

Journal Communications, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, continued

availability and effect of acquisitions, investments, and dispositions on our
results of operations or financial condition. Readers are cautioned not to place
undue reliance on such forward-looking statements, which are as of the date of
this filing, and we assume no obligation, and disclaim any obligation, to update
information contained in this Quarterly Report on Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

There are no material changes to the disclosures regarding interest rate risk
and foreign currency exchange risk made in our Annual Report on Form 10-K for
the year ended December 31, 2001.

ITEM 4. CONTROLS AND PROCEDURES

We carried out an evaluation, within 90 days prior to the filing date of this
report, under the supervision and with the participation of our Disclosure
Committee, including our Chief Executive Officer and the Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Exchange Act Rules 13a-14(c) and
15d-14(c). Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed in our Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms,
and that such information is accumulated and communicated to the Chief Executive
Officer and Chief Financial Officer to allow timely decisions regarding required
disclosure.

There have been no significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Newspaper Merger Class Action Suit - On May 4, 1999, five former employees filed
a lawsuit in connection with the 1995 merger of the Milwaukee Journal and
Milwaukee Sentinel. This lawsuit was granted class action status to include
other unitholders who separated from us as part of the merger. The plaintiffs
alleged that an internal memorandum created a contract permitting members of the
plaintiff class to offer to sell units at any time over a period of up to ten
years, depending on their retirement status or years of unit ownership.

On May 7, 2002, the parties reached an out-of-court settlement. On July 1, 2002,
the judge approved the settlement. We agreed to pay the plaintiffs $8.9 million
in cash in settlement of all claims. We also agreed to allow certain members of
the plaintiff class to retain certain rights for a period of time as to units of
beneficial interest in the Journal Employees' Stock Trust. Plaintiffs and their
counsel value these rights at approximately $0.6 million. We reduced our
litigation reserve by $4.1 million in the second quarter of 2002 to reflect the
settlement amount, net of insurance proceeds.

Conley Publishing Group, Ltd. et al. v. Journal Communications, Inc. and Journal
Sentinel Inc. - In August 2000, the publisher of the Waukesha Freeman, West Bend
Daily News and several other publications in southeastern Wisconsin filed an
amended antitrust complaint in state court against us. The plaintiff alleged an
attempt to monopolize by the use of predatory pricing on subscriptions, secret
rebates to advertisers, exclusionary discounts in advertising and contracts in
restraint of trade. The plaintiff alleged damages of $5.4 million, and asked
that damages be trebled. On October 2, 2001, the Waukesha County Circuit Court
granted summary judgment to us and dismissed all of the plaintiff's claims. The
court held that there was no issue of material fact regarding predatory pricing,
that the plaintiff cannot show that our conduct caused the financial losses of
the Waukesha Freeman, and that plaintiff cannot adequately disaggregate or show
which of its losses, if any, were caused by us.

The plaintiff appealed on the issue of predatory pricing, and the Wisconsin
Court of Appeals certified the case for direct appeal to the Wisconsin Supreme
Court. On September 26, 2002, the Wisconsin Supreme Court agreed to hear the
case. A decision is expected in 2003.

IPC Communication Services, Inc. vs. International Paper Company d/b/a XPEDX -
On June 18, 2002, IPC filed a lawsuit for collection of a $1.8 million debt owed
to IPC by International Paper Company, operating a division called XPEDX. IPC
provided services in connection with XPEDX's operations in Dublin, Ireland and
related US activities. The amounts owed IPC represent all unpaid invoices that
IPC has sent to XPEDX for services performed. On August 27, 2002,
representatives from both parties met to try and resolve the issues. Both
parties are working to substantiate their claims. A pretrial hearing is set for
November 25, 2002. We continue to believe the amount owed IPC from XPEDX is a
valid receivable and should be paid in full to IPC.
25

PART II. OTHER INFORMATION, continued

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit No. Description
----------- -----------

99.1 Certification of Steven J. Smith, Chairman and Chief
Executive Officer of Journal Communications, Inc.,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2 Certification of Paul M. Bonaiuto, Executive Vice
President and Chief Financial Officer of Journal
Communications, Inc., pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

Financial
Statements
Filing Date Items Reported Reported
------ ---- -------------- ----------

8-K October 28, 2002 Item 9 Regulation FD Disclosure None
8-K October 30, 2002 Item 9 Regulation FD Disclosure None

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 COMMUNICATIONS, INC.
Registrant

Date November 20, 2002 /s/ Steven J. Smith
----------------- ------------------------------------------
Steven J. Smith, Chairman and
Chief Executive Officer

Date November 20, 2002 /s/ Paul M. Bonaiuto
----------------- ------------------------------------------
Paul M. Bonaiuto, Executive Vice President
and Chief Financial Officer

CERTIFICATIONS

I, Steven J. Smith, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Journal
Communications, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Date November 20, 2002 /s/ Steven J. Smith
-------------------- ---------------------------------------
Steven J. Smith
Chairman and
Chief Executive Officer

I, Paul M. Bonaiuto, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Journal
Communications, Inc.;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

Date November 20, 2002 /s/ Paul M. Bonaiuto
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Paul M. Bonaiuto
Executive Vice President and
Chief Financial Officer