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| Journal Communications Reports Second Quarter Results |
Printer Friendly Version (PDF) News Release Printer Friendly Version (PDF) Financial Tables MILWAUKEE--(BUSINESS WIRE)--July 20, 2004--Journal Communications (NYSE:JRN) today announced financial results for its second quarter ended June 27, 2004. For the quarter ended June 27, 2004, net earnings increased 36.8% to $20.8 million compared to $15.2 million for the quarter ended June 29, 2003. For year-over-year comparison purposes, it is important to note that in the second quarter of 2003, Journal Communications recorded a $1.5 million liability, net of tax, for employment-related taxes. Also, for comparison purposes, all results for the second quarter of 2003 have been presented on a basis that conforms to the quarterly reporting of operating results adopted effective January 1, 2004. For the quarter ended June 27, 2004, operating revenue increased 4.3% to $208.0 million compared to $199.4 million for the quarter ended June 29, 2003. "Journal Communications finished the first half of 2004 with another strong performance, driven in large part by the same benefits that we have been reporting for the past three quarters. Chief among them were continued gains in productivity benefits from our new newspaper production facility, broad-based advertising revenue expansion at our publishing businesses and our television and radio stations and cost controls throughout the organization," said Steven J. Smith, chairman and chief executive officer. "Our operating earnings this quarter were again driven by solid contributions from the publishing and broadcast groups, up 41% and 46%, respectively. For the fourth consecutive quarter we benefited from efficiencies generated by our new production facility. At the daily newspaper, we recorded gains in retail, general and classified advertising revenue as well as in our online product and shared mail. We also recorded low double-digit growth in classified advertising at the community newspapers and shoppers for the quarter. Importantly, these gains at the publishing group were accomplished while concurrently lowering costs across numerous expense categories," Smith added. Smith continued, "Our television stations recorded another solid quarter, as local spot advertising and political advertising were both significant contributors. We also continue to see marked improvement at our Las Vegas and Boise television stations, reflecting improving business operations. On the radio side, we were pleased with solid earnings gains at the majority of our developmental markets. "While the wholesale side of our Norlight telecommunications business experienced continuing pricing pressure and service disconnects in the second quarter of 2004, we were encouraged by yet another quarter of nearly 11% revenue growth on the enterprise side," Smith commented. "In the second quarter, we recorded an operating loss at IPC, our printing services company, due primarily to reduced sales volume from several computer-related customers as well as production inefficiencies on print work." "As we move into the second half of the year, we expect that our publishing and broadcast businesses will continue to drive earnings growth with the help of a recovering economy, new revenue initiatives, and strong political and Olympic advertising. We also continue to evaluate a number of broadcast acquisition opportunities that meet our criteria for growth," Smith said. Costs and Expenses For the quarter ended June 27, 2004, costs and expenses of $173.0 million was flat with the second quarter last year. Operating Earnings For the quarter ended June 27, 2004, operating earnings increased 32.3% to $35.0 million compared to $26.5 million for the second quarter of 2003, primarily due to productivity benefits from our new production facility as well as increased revenues at our advertising-based businesses. For the second quarter of 2004, operating earnings margin was 16.8% compared to 13.3% for the second quarter of 2003. Earnings per Share For the quarter ended June 27, 2004, basic and diluted earnings per share were $0.28 and $0.27, respectively, compared to both basic and diluted earnings per share of $0.20 for the second quarter of 2003. EBITDA For the quarter ended June 27, 2004, EBITDA (net earnings plus total other income and expense, provision for income taxes, depreciation and amortization) increased 21.4% to $46.7 million from $38.5 million for the second quarter of 2003. The increase was primarily due to greater publishing and broadcasting revenues and profit margins. Operating Cash Flow For the quarter ended June 27, 2004, operating cash flow (cash provided by operating activities) increased to $27.0 million from $16.4 million for the second quarter of 2003. Publishing Publishing operating revenue for the quarter ended June 27, 2004, increased 4.6% to $83.6 million from $79.9 million for the second quarter of 2003. Operating earnings from publishing for the quarter ended June 27, 2004, increased 41.0% to $12.6 million compared to $9.0 million for the second quarter of 2003. In the second quarter of 2004, publishing benefited from stronger advertising revenue, continued production efficiencies at the daily newspaper and cost reduction initiatives, despite a 12% increase in the price of newsprint. Broadcasting Broadcasting operating revenue for the quarter ended June 27, 2004, increased 12.2% to $42.3 million, compared to $37.7 million for the second quarter of 2003. Broadcasting operating earnings for the quarter ended June 27, 2004, increased 45.7% to $11.1 million, compared to $7.6 million for the second quarter of 2003. This growth was driven by a number of factors including strong television political advertising and an increase in local advertising at most of our television and radio markets. For the quarter ended June 27, 2004, operating revenue from radio stations increased 5.7% to $20.5 million from $19.4 million for the quarter ended June 29, 2003. For the quarter ended June 27, 2004, operating earnings from radio stations increased 19.0% to $5.0 million compared to $4.2 million for the second quarter of 2003. For the quarter ended June 27, 2004, operating revenue from television stations increased 19.1% to $21.8 million compared to $18.3 million for the quarter ended June 29, 2003. For the quarter ended June 27, 2004, operating earnings from television stations increased 79.4% to $6.1 million compared to $3.4 million for the second quarter of 2003. Telecommunications Operating revenue from telecommunications for the quarter ended June 27, 2004, decreased 1.8% to $36.8 million from $37.5 million for the second quarter of 2003. For the second quarter of 2004, operating earnings from telecommunications decreased 4.6% to $9.1 million compared to $9.5 million for the second quarter of 2003, due to service disconnects and re-pricing in the wholesale market. Printing Services Operating revenue from printing services for the quarter ended June 27, 2004, decreased 15.9% to $17.4 million from $20.7 million for the second quarter of 2003, due in large part to a reduction in revenue from several computer-related customers partially offset by a gain in revenue from a number of new printing customers. For the second quarter 2004, printing services recorded an operating loss of $0.6 million compared to operating earnings of $0.6 million in the second quarter of 2003. The loss was due primarily to reduced sales volume as well as production inefficiencies. Other Our other segment consists of a label printing business, a direct marketing services business and corporate. For the quarter ended June 27, 2004, other operating revenues increased 18.1% to $27.9 million from $23.6 million for the second quarter of 2003. For the second quarter of 2004, other operating earnings increased to $2.8 million from an operating loss of $0.2 million for the second quarter of 2003 when we recorded a $2.1 million pre-tax liability for employment-related taxes. Follow-on Equity Offering and Tender Offer In mid June, Journal Communications completed a public offering of 6,725,000 shares of its class A common stock at $18.25 per share, including the underwriters' over-allotment. The net proceeds from the offering of $116.0 million were used to repay outstanding indebtedness under the Company's unsecured revolving credit facility and will be used to fund the Green Bay (Wisconsin) television acquisition and for general corporate purposes, including potential future acquisitions. On June 15, 2004, Journal Communications completed a tender offer for its class B common stock at $18.55 per share, in which the Company purchased 8,005,203 shares, or $148.5 million worth of our class B common stock. Following the tender offer and the follow-on equity offering, employee and former-employee shareholders own about 53 percent of the economic value of Journal Communications. Shares Outstanding At June 27, 2004, Journal Communications had the following shares of stock issued and outstanding: 26,926,496 shares of class A common stock; 9,741,509 shares of class B-1 common stock (not including the 4,338,352 shares held by our subsidiary, The Journal Company); 35,518,175 shares of class B-2 common stock (not including the 4,338,353 shares held by The Journal Company); and 3,264,000 shares of class C common stock. The Company's class A shares are traded on the New York Stock Exchange. Class B shares are not traded on the NYSE, and are not convertible to class A shares until after the applicable public sale restriction periods end. Third Quarter 2004 Guidance For the third quarter of 2004, Journal Communications currently anticipates operating revenue to be between $200 and $205 million and net earnings to be between $15 and $18 million. Webcast of Conference Call A live webcast of the second quarter 2004 conference call will be accessible through www.jc.com and www.ccbn.com beginning at 10:00 a.m. CT this morning. An archive of the webcast will be available on these sites today through August 3. For telephone access to this morning's conference call, dial (800) 299-9086 (domestic) or (617) 786-2903 (international) at least 10 minutes prior to the scheduled 10:00 a.m. CT start. The access code for the conference call is 54961969. Replays of the conference call will be available today through July 22. To hear the replay, dial (888) 286-8010 (domestic) or (617) 801-6888 (international). The access code for the replay is 23308609. Forward-looking Statements This press release contains certain forward-looking statements related to our businesses that are based on our current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties, including changes in advertising demand and other economic conditions that could cause actual results to differ materially from the expectations expressed in forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Our written policy on forward-looking statements can be found on page 1 of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission. About Journal Communications Journal Communications, Inc., headquartered in Milwaukee, Wisconsin, was founded in 1882. We are a diversified media and communications company with operations in publishing, radio and television broadcasting, telecommunications and printing services. We publish the Milwaukee Journal Sentinel, which serves as the only major daily newspaper for the Milwaukee metropolitan area, and more than 90 community newspapers and shoppers in eight states. We own and operate 38 radio stations and six television stations in 11 states and have signed an agreement to purchase WGBA-TV and to assume an existing local marketing agreement for WACY-TV - both located in the Green Bay/Appleton (Wisconsin) market. Through our telecommunications segment, we own and operate a regional fiber optic network in the upper Midwest, provide integrated data communications solutions for small and mid-size businesses and offer network transmission solutions for other service providers. We also provide a wide range of commercial printing services, including publications, professional journals and documentation material, as well as electronic publishing, kit assembly and fulfillment. In addition, we operate niche businesses in label printing and direct marketing services. Tables Follow
Journal Communications, Inc.
Consolidated Statements of Earnings (unaudited)
(dollars in thousands, except for shares and per-share amounts)
Second Quarter (A)
----------------------
%
2004 2003 Change
--------- --------- ------
Continuing operations:
Operating revenue:
Publishing $ 83,599 $ 79,907 4.6
Broadcasting 42,254 37,657 12.2
Telecommunications 36,804 37,461 (1.8)
Printing services 17,427 20,714 (15.9)
Other 27,938 23,652 18.1
--------- ---------
Total operating revenue 208,022 199,391 4.3
Operating costs and expenses:
Publishing 39,674 39,337 0.9
Broadcasting 16,384 15,784 3.8
Telecommunications 20,898 20,948 (0.2)
Printing services 15,459 17,545 (11.9)
Other 22,842 19,304 18.3
--------- ---------
Total operating costs and
expenses 115,257 112,918 2.1
Selling and administrative
expenses 57,726 59,995 (3.8)
--------- ---------
Total operating costs and
expenses and selling and
administrative expenses 172,983 172,913 0.0
Operating earnings 35,039 26,478 32.3
Other income and expense:
Interest income and
dividends 70 55
Interest expense, net (390) (916)
--------- ---------
Total other income and
expense (320) (861)
Earnings before income taxes 34,719 25,617 35.5
Provision for income taxes 13,888 10,386 33.7
--------- ---------
Net earnings $ 20,831 $ 15,231 36.8
========= =========
Weighted average number of
shares:
Basic 73,866,381 77,747,211
Diluted 78,319,839 77,747,211
Earnings per share:
Basic:
Net earnings $ 0.28 $ 0.20 40.0
Diluted:
Net earnings $ 0.27 $ 0.20 35.0
Two Quarters (B)
----------------------
%
2004 2003 Change
--------- --------- ------
Continuing operations:
Operating revenue:
Publishing $160,270 $154,462 3.8
Broadcasting 76,889 69,908 10.0
Telecommunications 72,361 74,119 (2.4)
Printing services 39,191 43,421 (9.7)
Other 51,981 47,351 9.8
--------- ---------
Total operating revenue 400,692 389,261 2.9
Operating costs and expenses:
Publishing 77,519 77,661 (0.2)
Broadcasting 31,486 30,868 2.0
Telecommunications 41,304 41,089 0.5
Printing services 33,919 36,009 (5.8)
Other 42,695 39,161 9.0
--------- ---------
Total operating costs and
expenses 226,923 224,788 0.9
Selling and administrative
expenses 112,020 116,778 (4.1)
--------- ---------
Total operating costs and
expenses and selling and
administrative expenses 338,943 341,566 (0.8)
Operating earnings 61,749 47,695 29.5
Other income and expense:
Interest income and
dividends 137 137
Interest expense, net (1,002) (1,451)
--------- ---------
Total other income and
expense (865) (1,314)
Earnings before income taxes 60,884 46,381 31.3
Provision for income taxes 24,354 18,692 30.3
--------- ---------
Net earnings $ 36,530 $ 27,689 31.9
========= =========
Weighted average
number of shares:
Basic 73,665,309 77,747,211
Diluted 78,118,888 77,747,211
Earnings per share:
Basic:
Net earnings $ 0.48 $ 0.36 33.3
Diluted:
Net earnings $ 0.47 $ 0.36 30.6
(A) 2004 second quarter: March 29, 2004 to June 27, 2004.
2003 second quarter: March 31, 2003 to June 29, 2003 --
presented on a basis that conforms with the second quarter of
2004.
(B) 2004 two quarters: January 1, 2004 to June 27, 2004.
2003 two quarters: January 1, 2003 to June 29, 2003 --
presented on a basis that conforms with the two quarters of 2004.
Journal Communications, Inc.
Segment Information
(dollars in thousands)
Operating revenue, Operating earnings, Depreciation and amortization
and Publishing operating revenue by category are prepared in
accordance with GAAP.
Second Quarter (A) Two Quarters (B)
(unaudited) (unaudited)
------------------- -------------------
% %
2004 2003 Change 2004 2003 Change
--------- --------- ------ --------- --------- ------
Operating revenue
------------------
Publishing $83,599 $79,907 4.6 $160,270 $154,462 3.8
Broadcasting 42,254 37,657 12.2 76,889 69,908 10.0
Telecommunications 36,804 37,461 (1.8) 72,361 74,119 (2.4)
Printing services 17,427 20,714 (15.9) 39,191 43,421 (9.7)
Other 27,938 23,652 18.1 51,981 47,351 9.8
-------- -------- -------- ---------
$208,022 $199,391 4.3 $400,692 $389,261 2.9
========= ========= ========= =========
Operating earnings
------------------
Publishing $12,643 $8,964 41.0 $21,660 $13,041 66.1
Broadcasting 11,072 7,597 45.7 17,576 11,421 53.9
Telecommunications 9,103 9,539 (4.6) 17,833 19,553 (8.8)
Printing services (597) 602 (199.2) 317 1,793 (82.3)
Other 2,818 (224) 1358.0 4,363 1,887 131.2
-------- -------- -------- --------
$35,039 $26,478 32.3 $61,749 $47,695 29.5
======== ======== ======== ========
Depreciation and Amortization
-----------------------------
Publishing $3,917 $4,173 (6.1) $7,897 $8,309 (5.0)
Broadcasting 2,159 2,005 7.7 4,259 3,889 9.5
Telecommunications 4,381 4,377 0.1 8,691 8,570 1.4
Printing services 597 804 (25.7) 1,180 1,690 (30.2)
Other 638 658 (3.0) 1,245 1,310 (5.0)
-------- -------- -------- --------
$11,692 $12,017 (2.7) $23,272 $23,768 (2.1)
======== ======== ======== ========
(A) 2004 second quarter: March 29, 2004 to June 27, 2004.
2003 second quarter: March 31, 2003 to June 29, 2003 -- presented
on a basis that conforms with the second quarter of 2004.
(B) 2004 two quarters: January 1, 2004 to June 27, 2004.
2003 two quarters: January 1, 2003 to June 29, 2003 -- presented
on a basis that conforms with the two quarters of 2004.
Journal Communications, Inc.
Publishing Segment Information
(unaudited)
(dollars in thousands)
Publishing operating revenue by category:
-----------------------------------------
Second Quarter of 2004(A) Second Quarter of 2003(B)
------------------------- ------------------------
Community Community
Newspapers Newspapers
Daily & Daily & %
Newspaper Shoppers Total Newspaper Shoppers Total Change
--------- -------- ----- --------- -------- ----- ------
Advertising
revenue:
Retail $20,981 $14,840 $35,821 $20,271 $14,944 $35,215 1.7
Classified 16,642 2,526 19,168 15,490 2,296 17,786 7.8
General 2,706 - 2,706 2,540 - 2,540 6.5
Other 5,273 444 5,717 4,839 525 5,364 6.6
-------- -------- -------- -------- -------- --------
Total
advertising
revenue 45,602 17,810 63,412 43,140 17,765 60,905 4.1
Circulation
revenue 10,928 695 11,623 10,736 715 11,451 1.5
Other
revenue 868 7,696 8,564 656 6,895 7,551 13.4
-------- -------- -------- -------- -------- --------
Total
operating
revenue $57,398 $26,201 $83,599 $54,532 $25,375 $79,907 4.6
======== ======== ======== ======== ======== ========
Two Quarters of 2004(C) Two Quarters of 2003(D)
------------------------- ------------------------
Community Community
Newspapers Newspapers
Daily & Daily & %
Newspaper Shoppers Total Newspaper Shoppers Total Change
--------- -------- ----- --------- -------- ----- ------
Advertising
revenue:
Retail $39,304 $27,579 $66,883 $38,332 $27,890 $66,222 1.0
Classified 31,718 4,478 36,196 30,259 4,069 34,328 5.4
General 5,978 - 5,978 5,381 - 5,381 11.1
Other 9,517 1,064 10,581 8,646 1,136 9,782 8.2
-------- -------- -------- -------- -------- --------
Total
advertising
revenue 86,517 33,121 119,638 82,618 33,095 115,713 3.4
Circulation
revenue 21,437 1,398 22,835 21,236 1,433 22,669 0.7
Other
revenue 3,323 14,474 17,797 2,761 13,319 16,080 10.7
-------- -------- -------- -------- -------- --------
Total
operating
revenue $111,277 $48,993 $160,270 $106,615 $47,847 $154,462 3.8
======== ======== ======== ======== ======== ========
(A) 2004 second quarter: March 29, 2004 to June 27, 2004.
2003 second quarter: March 31, 2003 to June 29, 2003 -- presented
on a basis that conforms with the second quarter of 2004.
(B) 2004 two quarters: January 1, 2004 to June 27, 2004.
2003 two quarters: January 1, 2003 to June 29, 2003 -- presented
on a basis that conforms with the two quarters of 2004.
NOTE: Publishing segment information is provided to facilitate
comparison of our publishing segment results with those of other
publishing companies and is not representative of the overall business
of Journal Communications or its operating results.
Daily newspaper's core newspaper advertising linage by category:
----------------------------------------------------------------
Second Quarter (A) Two Quarters (B)
------------------ -----------------
% %
2004 2003 Change 2004 2003 Change
------- ------- ------ ------- ------- ------
Advertising
linage (inches):
Full run
Retail 188,916 183,224 3.1 346,430 342,292 1.2
Classified 224,308 227,957 (1.6) 424,895 430,914 (1.4)
General 12,438 12,087 2.9 28,348 24,010 18.1
------- ------- ------- -------
Total full run 425,662 423,268 0.6 799,673 797,216 0.3
Part run 45,328 30,933 46.5 70,542 50,145 40.7
------- ------- ------- -------
Total advertising
linage 470,990 454,201 3.7 870,215 847,361 2.7
======= ======= ======= =======
Preprint pieces
(in thousands) 187,974 208,414 (9.8) 373,748 408,195 (8.4)
======= ======= ======= =======
Full pages of advertising and revenue per page of our community
newspapers and shoppers:
------------------------
Full pages of advertising:
Community
newspapers 26,750 29,262 (8.6) 49,370 54,786 (9.9)
Shoppers 23,445 25,584 (8.4) 43,975 47,910 (8.2)
------- ------- ------- -------
Total full pages
of advertising 50,195 54,846 (8.5) 93,345 102,696 (9.1)
======= ======= ======= =======
Revenue per page $316.73 $287.38 10.2 $314.25 $284.21 10.6
======= ======= ======= =======
(A) 2004 second quarter: March 29, 2004 to June 27, 2004.
2003 second quarter: March 31, 2003 to June 29, 2003 --
presented on a basis that conforms with the second quarter of
2004.
(B) 2004 two quarters: January 1, 2004 to June 27, 2004.
2003 two quarters: January 1, 2003 to June 29, 2003 --
presented on a basis that conforms with the two quarters of
2004.
NOTE: Publishing segment information is provided to facilitate
comparison of our publishing segment results with those of other
publishing companies and is not representative of the overall
business of Journal Communications or its operating results.
Journal Communications, Inc.
Reconciliation of our consolidated net earnings to consolidated EBITDA
(unaudited)
(dollars in thousands)
Second Quarter (A) Two Quarters (B)
------------------- -------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Net earnings $20,831 $15,231 $36,530 $27,689
Total other (income) and
expense 320 861 865 1,314
Provision for income taxes 13,888 10,386 24,354 18,692
Depreciation 11,271 11,611 22,360 22,934
Amortization 421 406 912 834
--------- --------- --------- ---------
EBITDA $46,731 $38,495 $85,021 $71,463
========= ========= ========= =========
(A) 2004 second quarter: March 29, 2004 to June 27, 2004.
2003 second quarter: March 31, 2003 to June 29, 2003 --
presented on a basis that conforms with the second quarter of
2004.
(B) 2004 two quarters: January 1, 2004 to June 27, 2004.
2003 two quarters: January 1, 2003 to June 29, 2003 --
presented on a basis that conforms with the two quarters of
2004.
We believe that EBITDA is relevant and useful because it helps improve
our investors' ability to understand our operating performance and
makes it easier to compare our results with other companies that have
different financing and capital structures or tax rates. We use
EBITDA, among other things, to evaluate our operating performance, to
value prospective acquisitions and as a component of incentive
compensation targets for certain management personnel. Our lenders use
EBITDA as one of the measures of our ability to service our debt.
EBITDA is not a measure of performance calculated in accordance with
accounting principles generally accepted in the United States. EBITDA
should not be considered in isolation of, or as a substitute for, net
earnings as an indicator of operating performance or cash flows
measures from operating performance as a measure of liquidity. EBITDA,
as we calculate it, may not be comparable to EBITDA reported by other
companies. In addition, EBITDA does not represent funds available for
discretionary use.
Journal Communications, Inc.
Consolidated Condensed Balance Sheet
(dollars in thousands)
(Unaudited)
June 27, December 31,
2004 2003
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 6,148 $ 8,444
Receivables, net 91,787 96,563
Inventories, net 16,531 15,216
Prepaid expenses 10,287 13,236
Deferred income taxes 9,117 8,948
------------ ------------
Total current assets $133,870 $142,407
Property and equipment, net 306,911 314,595
Goodwill 114,283 114,283
Broadcast licenses 129,548 129,548
Other intangible assets, net 9,505 9,900
Prepaid pension costs 26,159 28,421
Other assets 13,046 8,021
------------ ------------
Total assets $733,322 $747,175
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 41,042 $ 38,369
Accrued compensation 19,830 24,704
Deferred revenue 19,522 22,590
Accrued employee benefits 12,073 9,830
Other current liabilities 14,537 21,567
Current portion of long-term liabilities 766 683
------------ ------------
Total current liabilities $107,770 $117,743
Accrued employee benefits 16,484 16,457
Long-term notes payable to banks 76,735 84,000
Other long term liabilities 15,218 8,748
Deferred income taxes 59,988 56,477
Shareholders' equity 457,127 463,750
------------ ------------
Total liabilities and shareholders' equity $733,322 $747,175
============ ============
CONTACT: Journal Communications
Sara Leuchter Wilkins, 414-224-2633
swilkins@jc.com
SOURCE: Journal Communications, Inc.
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