FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ending June 14, 1998 Commission file number 0-7831
(6 Accounting Periods)
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.)
P.O. Box 661, 333 W. State St., Milwaukee, Wisconsin 53203
(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 shares of Common Stock Outstanding June 14, 1998
14,129,282
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
Quarter Ended June 14, 1998 Commission file number 0-7832
INDEX
Page No.
Part I. Financial Information
Consolidated Condensed Balance Sheets
June 14, 1998 and December 31, 1997 2
Consolidated Condensed Statements of Income
Six Periods Ended June 14, 1998 and
June 15, 1997 3
Consolidated Condensed Statements of Cash Flows
Six Periods Ended June 14, 1998 and
June 15, 1997 4
Notes to Consolidated Condensed
Financial Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-7
Part II. Other Information 8
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 14, 1998 Commission file number 0-7831
(6 Accounting Periods)
Consolidated Condensed Balance Sheets
June 14, 1998 and December 31, 1997
(Dollars in thousands)
ASSETS 6/14/98 12/31/97
(Unaudited)
Current Assets:
Cash and Cash Equivalents $87,734 $111,002
Receivables, less allowance for doubtful
accounts of $4,753 and $3,444 105,828 98,366
Inventories:
Paper and Supplies 12,803 13,453
Work in Process 4,817 4,242
Finished Goods 4,433 5,970
------- -------
22,053 23,665
Prepaid expenses 32,305 10,355
Deferred income taxes 5,111 5,111
------- -------
Total current assets 253,031 248,499
Property and equipment, at cost, less
accumulated depreciation of $256,229
and $245,793 177,139 173,312
Goodwill 56,054 51,680
Other intangibles assets 51,846 43,008
Deferred charges and other assets 32,559 32,275
------- -------
Total Assets $570,629 $548,774
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 41,369 $ 54,765
Taxes on income 11,841 3,611
Accrued compensation 24,987 23,850
Deferred revenue 18,182 17,418
Accrued employee benefits 26,349 25,249
Other current liabilities 10,362 8,342
Current portion of long-term obligations 1,555 1,556
------- -------
Total current liabilities 134,645 134,791
Long-term obligations 1,441 1,112
Deferred income taxes 132 132
Stockholders' equity:
Common stock - Authorized and issued
14,400,000 ($0.25 par value) 3,600 3,600
Retained earnings 443,161 430,553
Treasury stock, at cost (12,350) (21,414)
------- -------
Total stockholders' equity 434,411 412,739
------- -------
Total liabilities and
stockholders' equity $570,629 $548,774
======= =======
Note: The balance sheet at December 31, 1997 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.
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 14, 1998 Commission file number 0-7831
(6 Accounting Periods)
Consolidated Condensed Statement of Income
(Dollars in thousands except share and per share amounts)
Three Periods Ended Six Periods Ended
06/14/98 06/15/97 06/14/98 06/15/97
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net Sales $ 170,339 $ 152,634 $ 325,159 $ 296,344
Operating costs and
expenses:
Cost of sales 90,623 82,714 179,288 161,981
Selling/administrative
expenses 53,792 50,739 104,540 97,660
------- ------- ------- -------
144,415 133,453 283,828 259,641
------- ------- ------- -------
Operating Earnings 25,924 19,181 41,331 36,703
Dividend and interest
income, net 1,516 1,331 2,927 2,645
Gain on sale of
assets 170 1,712 183 1,942
------- ------- ------- -------
Earnings before income
taxes 27,610 22,224 44,441 41,290
Provision for income
taxes 11,448 9,541 18,300 17,435
------- ------- ------- -------
Net Income $ 16,162 $ 12,683 $ 26,141 $ 23,855
======= ======= ======= =======
Weighted average number
of common shares
outstanding 14,147,599 13,558,300 14,029,513 13,411,862
========== ========== ========== ==========
Earnings per share $ 1.14 $ 0.93 $ 1.86 $ 1.78
========== ========== ========== ==========
Cash dividend per share $ 0.55 $ 0.55 $ 1.10 $ 1.10
========== ========== ========== ==========
See accompanying notes to consolidated condensed financial statements.
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 14, 1998 Commission file number 0-7831
(6 Accounting Periods)
Consolidated Condensed Statement of Cash Flows
(Dollars in thousands)
Six Periods Ended
06/14/98 06/15/97
(Unaudited) (Unaudited)
Cash flow from operating
activities:
Net Earnings $ 26,141 $ 23,855
Adjustments to net earnings
for non-cash items:
Depreciation and amortization 19,927 18,506
Net gain from sales of assets (183) (1,942)
Change in:
Accounts receivable (7,194) (2,719)
Inventories 1,614 5,169
Accounts payable (11,869) 2,914
Other current assets
and liabilities (8,720) (1,012)
------- -------
Net cash provided by
operating activities 19,716 44,771
------- -------
Cash flow from investing activities:
Proceeds from sale of assets 389 3,118
Property and equipment expenditures (18,995) (19,220)
Assets of businesses acquired (18,636) (5,281)
Other-net (878) (561)
------- -------
Net cash used by investing
activities (38,120) (21,944)
------- -------
Cash flow from financing activities:
Net increase/(decrease) in
long-term obligations (323) (1,243)
Net sales of treasury stock 11,083 13,374
Cash dividends (15,624) (15,086)
------- -------
Net cash used for financing
activities (4,864) (2,955)
------- -------
Net increase/(decrease) in cash
and cash equivalents (23,268) 19,872
Cash and cash equivalents
Beginning of year 111,002 65,283
------- -------
June 14, 1998 $ 87,734 $ 85,155
======= =======
See accompanying notes to consolidated condensed financial statements.
FORM 10-Q
JOURNAL COMMUNICATIONS, INC.
For Quarter Ended June 14, 1998
Commission file number 0-7831
(6 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. Certain amounts in the
December 31, 1997 balance sheet have been restated to conform to
classifications made in the June 14, 1998 balance sheet. Operating
results for the six periods ended June 14, 1998, are not necessarily
indicative of the results that may be expected for the year ended
December 31, 1998. 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, 1997.
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).
Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
After the first quarter, consolidated net earnings were down more
than a million dollars from last year. But after six financial periods of
1998, our consolidated net earnings were $26.1 million, up nearly $2.3
million, or 9.6%, from last year. Consolidated revenue was $325.2
million, up 9.7% from 1997.
Journal Sentinel Inc. had pre-tax earnings of just over $20 million,
up 9.5% from last year, on revenue of $108 million, up 6.6%. Double-digit
increases in classified advertising, up 11%, and preprints, up 15%, helped
to offset a 13% increase in newsprint costs.
Journal Broadcast Group Inc. had year-to-date pre-tax earnings of
$12.4 million, up slightly, while revenue grew 9.1% to $48.1 million.
Both WTMJ-TV in Milwaukee and KTNV-TV in Las Vegas exceeded their profit
plan, while revenue and earnings were down at WSYM-TV in Lansing, Mich.
The Milwaukee radio operations exceeded last year through six periods,
while the Omaha and Tucson operations showed improvement in period six
over the results earlier this year.
NorthStar Print Group Inc. had pre-tax earnings fall from $1.4
million in 1997 to $634,000 through six periods this year. Sales were
down 5.2% to $25.9 million. Although Norway / Watertown was behind last
year, the operation exceeded the profit plan due to unanticipated label
sales to Brahma Brewing in Brazil. Both NorthStar Milwaukee and Label
Products & Design have encountered soft market conditions.
Norlight Telecommunications Inc. enjoyed the strongest growth of our
companies, with pre-tax earnings up nearly 60% to $9.1 million. Sales
were up 35% from 1997 to $34.4 million as Norlight management effectively
utilized the expanded network in which we have made significant capital
investment.
Add Inc. revenue was up 25.1% to $48.2 million, including the
addition of Dixie Web Graphics in New Orleans, La., and Community
Newspapers Inc. around Milwaukee. Without acquisitions, revenue on a
same-store basis was up just 3.6%. Higher newsprint prices and steeper
losses in Quest contributed to a fall in pre-tax earnings by $2 million to
$2.8 million. Although weekly newspapers continued to be successful,
revenue from shoppers was down and the printing segment was dealing with
the loss of major customers at several facilities.
At IPC Communication Services, sales were up 1% to $55.3 million. In
the Eastern region, sales have not met expectations. The Northern
California plant, where the workforce has been reduced, has accounted for
nearly 88% of the $3.5 million pre-tax loss at IPC year-to-date. Southern
California is poised for substantial growth. Significant turn-around
efforts at IPC Europe have resulted in pre-tax earnings of $535,000 on
sales of $6.5 million.
PrimeNet Marketing Services is having an excellent year, with pre-tax
earnings reaching $303,000. In 1997, the pre-tax loss after six periods
was $213,000. Revenue in 1998 was up 6.5% to $6.1 million, with most of
the increase coming at the St. Paul, Minn., plant. After the 1997 loss of
its largest customer, PrimeNet has successfully replaced that work with
more business that better fits its competencies.
Working capital stands at $118 million, an increase of $4 million
from the end of 1997. Total assets now exceed $570 million and
stockholders' equity equals $434 million.
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 six accounting periods ended June 14, 1998.
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
Steven J. Smith, President and Chief
Executive Officer
Date July 28, 1998 /s/ Paul M. Bonaiuto
Paul M. Bonaiuto, Executive Vice
President And Chief Financial Officer