ITEM 1. BUSINESS
The Registrant is a trust created under the Journal Employees' Stock Trust Agreement, dated May 15, 1937, as amended (the "Trust Agreement"), by all the stockholders of The Journal Company (now known as Journal Communications, Inc.), a Wisconsin corporation (the "Company"), to promote stability and to enable its employees to acquire ownership and control of the Company.
Under the Trust Agreement establishing the Registrant, stockholders of the Company and the Company itself deposited shares of the Company's stock in the trust and received in exchange trust units, which in turn have been sold to active employees of the Company and its subsidiaries. Each unit represents one share of the Company's common stock. Unitholders may sell their units to active employees designated by the President of the Company or the Company at the formula price ("Option Price") defined in the Trust Agreement and are required to do so when they die or terminate employment, except that (i) retired employees may retain a decreasing percentage of their units for ten years after retirement and (ii) employees who are terminated due to downsizing or divestiture may retain a decreasing percentage of their units for up to five (5) years. As of the date hereof, the Registrant holds 12,960,000 shares, or ninety percent (90%), of the outstanding common stock of the Company.
The Registrant engages in no business other than the record holding of Company shares, the issuing of trust units and, in limited instances, the voting of Company shares held by it. Most expenses of administering the trust are borne by the Company.
There are five trustees, all employees of the Company, none of whom receives any compensation in his capacity as trustee. The Registrant has no employees.
For a further discussion of the trust's operation and unit ownership, see Item 5, "Market for Registrant's Common Stock and Related Stock Holder Matters," and Item 12, "Security Ownership of Certain Beneficial Owners and Management," in the Annual Report of Journal Communications, Inc. on Form 10-K, filed herewith as Exhibit 99.1.
ITEM 2.
ITEM 2. PROPERTIES
The Registrant owns no physical properties. Its records are kept and its administrative functions are performed in the offices of Journal Communications, Inc., in Milwaukee, Wisconsin.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS None.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of holders of units of the Registrant was held on October 30, 1996 for the purpose of considering a proposal to amend the Trust Agreement to change the Option Price. At the meeting, 6,252,585 votes were cast FOR the proposal, 53,515 votes were case AGAINST the proposal and there were 24,835 abstentions.
PART II ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
Reference is made to Item 5, "Market For Registrant's Common Stock and Related Stock Holder Matters," of the Annual Report of Journal Communications, Inc., on Form 10-K filed herewith as Exhibit 99.1, and incorporated by reference.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Registrant incorporates herein by reference Item 6, "Selected Financial Data," of the Annual Report of Journal Communications, Inc., on Form 10-K filed herewith as Exhibit 99.1.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS
Registrant incorporates herein by reference Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of the Annual Report of Journal Communications, Inc., on Form 10-K filed herewith as Exhibit 99.1.
ITEM 8.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements With Report of Independent Public Auditors are presented on the pages immediately following.
Report of Ernst & Young LLP, Independent Auditors
The Trustees of Journal Employees' Stock Trust
We have audited the accompanying statement of assets and liabilities of Journal Employees' Stock Trust (the Trust) as of December 31, 1996, 1995 and 1994, and the related statements of Journal Communications Inc. common stock held and Trust certificates outstanding, Trust income, and cash flows for the years then ended. These financial statements are the responsibility of the Trustees of the Trust. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Trustees, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the assets and liabilities of Journal Employees' Stock Trust at December 31, 1996, 1995 and 1994, Journal Communications Inc. common stock held and Trust certificates outstanding, Trust income, and cash flows for the years then ended in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Milwaukee, Wisconsin February 3, 1997
JOURNAL EMPLOYEES' STOCK TRUST
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996, 1995 and 1994
1996 1995 1994 Assets: Cash in bank $ 100 $ 100 $ 100 ========= ======== ==========
Liabilities: Note payable to Journal Communications, Inc. $ 100 100 100 --------- -------- ---------- $ 100 $ 100 $ 100 ========= ======== ==========
See accompanying notes.
JOURNAL EMPLOYEES' STOCK TRUST
STATEMENT OF JOURNAL COMMUNICATIONS INC. COMMON STOCK HELD AND TRUST CERTIFICATES OUTSTANDING (Notes 1 and 2)
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994 Shares of Journal Communications Inc. common stock: Held at beginning and end of year 12,960,000 12,960,000 12,960,000 ========== ========== ==========
Trust certificates evidencing Units of Beneficial Interest in Journal Communications Inc. common stock: Outstanding at beginning and end of year 12,960,000 12,960,000 12,960,000 ========== ========== ==========
See accompanying notes.
JOURNAL EMPLOYEES' STOCK TRUST
STATEMENT OF TRUST INCOME
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994 Dividends on common stock of Journal Communications Inc. held by the Trust $25,010,263 $25,729,448 $23,598,655 ========== ========== ========== Dividends to holders of Units of Beneficial Interest $25,010,263 $25,729,448 $23,598,655 ========== ========== ==========
Dividends per share $ 2.20 $ 2.10 $ 1.90
See accompanying notes.
JOURNAL EMPLOYEES' STOCK TRUST
STATEMENT OF CASH FLOWS
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994 Sources of cash: Receipts from purchasers of Units of Beneficial Interest (Note 3) $88,661,471 $62,411,465 $45,792,223
Dividends received from Journal Communications Inc. 25,010,263 25,729,448 23,598,655 ----------- ----------- ----------- 113,671,734 88,140,913 69,390,878
Uses of cash: Disbursements to sellers of Units of Beneficial Interest (88,661,471) (62,411,465) (45,792,223) Dividends paid to holders of Units of Beneficial Interest (25,010,263) (25,729,448) (23,598,655) ---------- ---------- ---------- Net increase (decrease) in cash -- -- --
Cash at beginning of year 100 100 100 ---------- ---------- ---------- Cash at end of year $ 100 $ 100 $ 100 ========== ========== ==========
See accompanying notes.
JOURNAL EMPLOYEES' STOCK TRUST NOTES TO FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
l. Organization
The only business of Journal Employees' Stock Trust (Trust), under agreement dated May 15, 1937, as amended, is the record holding of common stock of Journal Communications Inc. (Company), the issuance of Units of Beneficial Interest in such shares (Units) and, in limited instances, the voting of shares of the Company's common stock held by it. The Trust is administered by five trustees who are officers/directors of the Company and receive no remuneration for services performed for the Trust. The trustees are required to distribute all Trust income (consisting solely of dividends paid by the Company), less such amounts as the trustees deem necessary for payment of administrative expenses, as soon as practicable after receipt. Since its origination, substantially all expenses of the Trust have been paid by the Company. The Trust distributes all of its income and, therefore, pays no income taxes under applicable income tax codes.
2. Common stock of the Company
Upon deposit by the Company of shares of common stock, the Trust issues a like number of Units and the Company offers such Units to its employees, or employees of its subsidiaries (Employees). Sales of Units by the Company are made at the formula price determined in accordance with the Trust Agreement.
3. Unitholders' Sales of Units of Beneficial Interest
Unitholders may sell all or a portion of their Units only to the active employees designed by the President of the Company or the Company at the current formula price under the terms and conditions of the Trust Agreement. If the Units are not sold in this manner, the Units are freely transferable, subject to a five-year right of the Company to purchase the Units at any time at the formula price.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
PART III ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following list shows the names and ages of Registrant's trustees and the year in which each became a trustee. It also shows the positions held by each trustee with Journal Communications, Inc.
Position/Office Name Age Trustee Since with the Company
Robert A. Kahlor (63) May 28, 1986 Chairman of the Board & CEO Steven J. Smith (46) March 9, 1990 President & COO Douglas G. Kiel (48) March 7, 1995 Senior Vice President Paul M. Bonaiuto (46) February 1, 1996 Senior Vice President/CFO Richard A. Williams (59) January 14, 1997 Human Relations Manager
All trustees, except for Mr. Williams, are directors of Journal Communications, Inc., and, except for Mr. Bonaiuto, have been employed by Journal Communications, Inc., in key management positions for at least the last five years. Mr. Kahlor has been Chairman of the Board of the Company since September 1992. Prior to that, he had been President of the Company. Mr. Smith has been President of the Company since September 1992. Prior to that he was Executive Vice President of the Company. Mr. Kiel has been a Senior Vice President of the Company and President of Journal Broadcast Group, Inc., a subsidiary of the Company, since June 1992. Prior to that, he had been a director of the Company and Executive Vice President of Journal Broadcast Group, Inc. Mr. Bonaiuto has been Chief Financial Officer of the Company since January 1996 and was elected a senior vice president in March 1996. Previously Mr. Bonaiuto had been a director and vice president of the Company and President of NorthStar Print Group, Inc., a subsidiary of the Company, from June 1994 to January 1996; Senior Vice President and Chief Financial Officer of Perry Printing Corporation, then a subsidiary of the Company, from July 1992 to June 1994, and executive vice president of The Peterson Group, Wilmington, Delaware, a private equity investment firm. Mr. Williams has been Human Relations Manager for Journal Sentinel Inc. None of the trustees of the Registrant is a director or trustee of a publicly-owned, for-profit corporation.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The five trustees, all employees of Journal Communications, Inc., do not receive any compensation in their capacity as trustee. Information about compensation paid to some of these trustees by Journal Communications, Inc., in such trustees' capacities as employees of Journal Communications, Inc., will be presented in the Proxy Statement of Journal Communications, Inc., to be filed as Exhibit 99.2 on or about April 30, 1997, and incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Reference is made to Item 6, "Security Ownership of Certain Beneficial Owners and Management," of the Proxy Statement of Journal Communications, Inc., to be filed as Exhibit 99.2 on or about May 1, 1997, and incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS None.
PART IV ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements and Schedules
The financial statements listed below are filed as part of this annual report. All schedules are omitted since the required information is not present, or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto.
Form 10-K
Statement of Assets and Liabilities at December 31, 1996, 1995 and 1994 5
Statement of Journal Communications, Inc. Common Stock held and Trust Certificates Outstanding for each of the three years in the period ended December 31, 1996 6
Statement of Trust Income for each of the three years in the period ended December 31, 1996 7
Statement of Cash Flows for each of the three years in the period ended December 31, 1996 8
Notes to Financial Statements 9
2. Financial Statement Schedules None
3. Exhibits
The exhibits listed on the exhibit index are filed as part of this annual report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the quarter ended December 31, 1996.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.
JOURNAL EMPLOYEES' STOCK TRUST
By: /s/ Robert A. Kahlor Robert A. Kahlor, Trustee
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
TRUSTEES OF JOURNAL EMPLOYEES' STOCK TRUST
Date: March 31, 1997 /s/ Robert A. Kahlor Robert A. Kahlor
Date: March 31, 1997 Steven J. Smith
Date: March 31, 1997 /s/ Douglas G. Kiel Douglas G. Kiel
Date: March 31, 1997 /s/ Paul M. Bonaiuto Paul M. Bonaiuto
Date: March 31, 1997 Richard A. Williams
JOURNAL EMPLOYEES' STOCK TRUST
INDEX TO EXHIBITS
Exhibit No. Description
(3.1) Articles of Association of Journal Communications, Inc., as amended (incorporated by reference to Exhibit 3.1 to Journal Communications, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1995 (Commission File No. 0-7831)).
(3.2) By-Laws of Journal Communications, Inc. (incorporated by reference to Exhibit 3.2 to Journal Communications, Inc.'s Current Report on Form 8-K dated March 5, 1996 (Commission File No. 0-7831)).
(4.1) The Journal Employees' Stock Trust agreement dated May 15, 1937, as amended (incorporated by reference to Exhibit 9 to the Annual Report on Form 10-K of Journal Communications, Inc. for the fiscal year ended December 31, 1995 (Commission File No. 0-7831)).
(4.2) Further amendment to Stock Trust Agreement as approved by unitholders on October 30, 1996 (incorporated by reference to Exhibit A to the Definitive Proxy Statement of the Journal Employees' Stock Trust included in the Trust's Schedule 14A filed October 1, 1996 (Commission File No. 0- 7832))
(23) Consent of Ernst & Young, LLP, Independent Auditors, filed herewith.
(99.1) Annual Report of Journal Communications, Inc., on Form 10- K, filed herewith. (incorporated by reference to the Annual Report on Form 10-K of Journal Communications, Inc. for the year ended December 31, 1996. (Commission file no. 0- 7831)).
(99.2) Proxy Statement of Journal Communications, Inc., to be filed upon its publication on or about May 1, 1997.