FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ending March 23, 1997
(3 Accounting Periods)
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.)
Journal Square, P.O. Box 661, 333 W. State St., Milwaukee, Wisconsin 53201
(Address of principal executive offices) (Zip Code)
414-224-2728
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13
or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter
period that the registrant was required to file such
reports, and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
Number of share of Common Stock Outstanding - March 23, 1997
13,759,328
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
Quarter Ended March 23, 1997 Commission file number 0-7831
(3 Accounting Periods)
INDEX
Page No.
Part I. Financial Information
Consolidated Condensed Balance Sheets
March 23, 1997 and December 31, 1996 2
Consolidated Condensed Statements of Income
Three Periods Ended March 23, 1997
and March 24, 1996 3
Consolidated Condensed Statements of Cash Flows
Three Periods Ended March 23, 1997
and March 24, 1996 4
Notes to Consolidated Condensed
Financial Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6
Part II. Other Information 7
For Quarter Ended March 23, 1997 Commission file number 0-7831
(3 Accounting Periods)
Consolidated Condensed Balance Sheets
March 23, 1997 and December 31, 1996
(Dollars in thousands)
ASSETS 3/23/97 12/31/96
(Unaudited)
Current Assets:
Cash $ 3,929 $ 12,383
Short-term investments 75,048 52,900
Receivables 95,364 93,915
Inventories:
Paper and supplies 12,739 16,596
Work in process 4,599 4,754
Finished goods 5,734 6,328
-------- ---------
23,072 27,678
Prepaid expenses 14,227 10,301
Deferred Income Taxes 3,787 3,813
-------- ---------
Total current assets 215,427 200,990
Property and equipment, less accumulated
depreciation of $233,808 and $229,060 165,012 163,693
Deferred charges and other assets 73,604 70,978
Deferred income taxes 1,807 1,756
Goodwill 37,193 36,147
-------- ---------
Total Assets $493,043 $473,564
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 31,908 $ 38,685
Taxes on income 7,916 3,558
Accrued liabilities 64,216 66,430
Current portion of long-term obligations 1,819 2,337
-------- ---------
Total current liabilities 105,859 111,010
Long-term obligations 1,360 1,524
Stockholders' equity:
Common stock - Authorized and issued
14,400,000 ($0.25 par value) 3,600 3,600
Retained earnings 405,960 402,301
Treasury stock, at cost (23,736) (44,871)
-------- ---------
Total stockholders' equity 385,824 361,030
Total liabilities and
stockholders' equity $493,043 $473,564
======= ========
Note: The balance sheet at December 31, 1996 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 for complete financial statements.
See accompanying notes to consolidated condensed financial statements.
For Quarter Ended March 23, 1997 Commission file number 0-7831
(3 Accounting Periods)
Consolidated Condensed Statement of Income
(Dollars in thousands except share and per share amounts)
Three Periods Ended
03/23/97 03/24/96
(Unaudited) (Unaudited)
Net Sales $ 143,710 $ 131,689
---------- ---------
Operating costs and expenses:
Cost of sales 79,267 79,064
Selling/administrative expenses 46,691 42,712
---------- ---------
125,958 121,776
---------- ---------
Operating Earnings 17,752 9,913
Dividend and interest income 1,331 1,054
Interest expense (17) (12)
---------- ---------
Earnings before income taxes 19,066 10,955
Provision for income taxes 7,894 4,448
---------- ---------
Net Income $ 11,172 $ 6,507
========== ==========
Weighted average number of common
shares outstanding 13,765,468 13,588,291
========== ==========
Earnings per share $0.81 $0.48
========== ==========
Cash dividend per share $0.55 $0.55
========== ==========
See accompanying notes to consolidated condensed financial statements.
For Quarter Ended March 23, 1997 Commission file number 0-7831
(3 Accounting Periods)
Condensed Consolidated Statement of Cash Flows
(Dollars in thousands)
Three Periods Ended
03/23/97 03/24/96
(Unaudited) (Unaudited)
Cash flow from operating activities:
Net Earnings $11,172 $6,507
Adjustments to net earnings for
non-cash items:
Depreciation and amortization 8,838 8,012
Net (gain) loss from sale of assets (231) 62
Change in:
Accounts receivable (1,882) 6,836
Inventories 4,438 (1,626)
Accounts payable (6,573) (4,533)
Other current assets and liabilities (1,627) (4,207)
---------- ---------
Net cash provided by operating activities $14,135 $ 11,051
---------- ---------
Cash flow from investing activities:
Proceeds from sale of assets 841 64
Property and equipment expenditures (8,864) (5,047)
Assets of business acquired (5,282) (16,154)
Net (increase) decrease in short-term
investments (22,475) 24,154
---------- ---------
Net cash provided by investing activities (35,780) 3,017
---------- ---------
Cash flow from financing activities:
Purchase of treasury stock (14,258) (6,327)
Reduction in long-term obligations (732) (854)
Sale and distribution of treasury stock 35,781 272
Cash dividends (7,600) (7,274)
---------- ---------
Net cash used for financing activities 13,191 (14,183)
---------- ---------
Net increase (decrease) in cash (8,454) (115)
Cash:
Beginning of year 12,383 10,133
---------- ---------
March 23, 1997 $ 3,929 $10,018
========== =========
See notes to condensed consolidated financial statements.
For Quarter Ended March 23, 1997 Commission file number 0-7831
(3 Accounting Periods)
Notes to Consolidated Condensed Financial Statements
(Unaudited)
1. The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article
10 of Regulations S-X. Accordingly, they do not include all
of the information and footnotes required by generally
accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results
for the three periods ended March 23, 1997, are not
necessarily indicative of the results that may be expected for
the year ended December 31, 1997. For further information,
refer to the consolidated financial statements and footnotes
thereto included in the Journal Communications, Inc. annual
report on Form 10-K for the year ended December 31, 1996.
2. The Registrant divides its 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. Registrant
follows a practice of publishing its financial statement at
the end of the third accounting period (its first quarter) and
at the end of the sixth accounting period (its second
quarter), and at the end of the tenth accounting period (its
third quarter).
For Quarter Ended March 23, 1997 Commission file number 0-7831
(3 Accounting Periods)
Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
Consolidated net income during the first quarter was $11.2 million,
which is 72% higher than the previous year. First quarter revenue was
$143.7 million, up 9%.
Journal Sentinel Inc., Journal Broadcast Group Inc., NorthStar Print
Group Inc. and Norlight Telecommunications Inc. all showed significantly
improved earnings. Add Inc. was up slightly, and the PrimeNet Marketing
Services/Mega Direct operations were behind the results of a year ago.
The turnaround effort at IPC is having a positive impact on their
earnings.
At Journal Sentinel Inc., pretax earnings for the quarter were $10.7
million, up 149% from last year. Revenue was $49.9 million, up 10% over
last year. The revenue increase was driven almost entirely by
advertising, with retail up 11%, general advertising up 41% and classified
up 13% over last year. A slight increase in circulation revenue came
primarily from sales of Packer Plus. Newsprint costs dropped $2.7
million, or 25%, from the same period a year ago, and other expenses
continued to be tightly controlled.
Journal Broadcast Group Inc.'s pretax earnings year-to-date were $5.4
million, up 22% over last year. Revenue was up 12% in 1997 to $20.5
million. This year, with the Packers in the Super Bowl, WTMJ-AM
benefitted significantly, with revenue up 34% and pretax earnings more
than 40 times greater than last year. KTNV-TV, in Las Vegas, had revenue
up 17% and pretax earnings up 34%. In Lansing, Mich., WSYM-TV revenue was
up 12% and pretax earnings increased 29%.
NorthStar Print Group Inc. had pretax earnings of $718,000, which was
181% higher than last year. NorthStar also had a 16% revenue increase to
$12.8 million, with the Norway/Watertown operation up 41%.
Norlight Telecommunications Inc. is benefitting from the network
expansion, with revenue up 30% to $12.4 million, and pretax earnings
increasing to $3.2 million, up 68%. While the carrier side of the
business is driving most of the growth, the retail side is now also
profitable.
At Add Inc. revenue was $17.8 million, down 1%, and pretax earnings were
$1.2 million, up 1%.
IPC Communication Services' pretax earnings were at the break-even
point, which was a significant improvement over last year's $300,000 loss.
Revenue increased 6% to $27.7 million. While there was considerable
improvement domestically, we are continuing to closely monitor the IPC
European plant, which was not profitable in the first quarter.
PrimeNet Marketing Services and Mega Direct suffered from a drop in
business volume. Revenue was off 23% and pretax earnings showed a slight
loss. While continuing to control costs, PrimeNet and Mega Direct will
have greater focus on growing sales for the balance of the year.
Working capital increased to $110 million from $90 million at the end of
1996. Total assets now exceed $493 million while stockholders equity is
$385.8 million.
For Quarter Ended March 23, 1997 Commission file number 0-7831
(3 Accounting Periods)
Part II. Other Information
Item 6 - Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K. There were no reports on form 8-K filed
for the three accounting periods ended March 23, 1997.
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 May 6, 1997 /s/ Robert A. Kahlor
Robert A. Kahlor,
Chairman of the Board
Date May 6, 1997 /s/ Paul M. Bonaiuto
Paul M. Bonaiuto, Senior Vice
President and Chief Financial Officer