ITEM 1. BUSINESS
The Registrant is a diversified communications and media company. Its 1995 revenues, broken down by business segments, were: publishing - 44.5%; printing - 34.2%; broadcast - 12.6%; telecommunications - 6.7%, and direct marketing - 2.0%. Material developments in the Registrant's business in 1995 included: the launching of a new Milwaukee newspaper from the merger of its two daily newspapers; the acquisition of its first radio duopoly (in Omaha) and reaching an agreement to acquire a second multi-station radio operation (in Tucson); extending its label printing market into Latin America; the divestiture of Perry Printing Corporation, a long-run printer of magazines and catalogs; the launching of a major expansion of its fiber optic network in northern Wisconsin; the acquisition of a direct mail business; the adverse impact on earnings of a forty percent (40%) increase in the price of newsprint, and the final payment that settled a 16-year patent infringement lawsuit. In addition to the information provided below, see Item 6, "Selected Financial Data," Item 7, "Management Discussion and Analysis" and Item 8, "Consolidated Financial Statements and Supplementary Data."
The following indicates the percent of consolidated revenues derived from the activities noted for the past three (3) years:
Source 1995 1994 1993 Publications 44.5% 42.2% 44.1% Advertising 35.3 32.7 33.6 Circulation 9.2 9.5 10.5 Broadcast 12.6 10.0 9.8 Commercial Printing 34.2 40.9 40.4 Telecommunications 6.7 5.7 5.7 Direct Marketing 2.0 1.2 0.0
Publishing
Journal Sentinel Inc., a wholly-owned subsidiary of the Registrant, publishes the major daily newspaper in the Milwaukee, Wisconsin, market. Prior to April 2, 1995, it had published the evening Milwaukee Journal (The Journal) since 1882, the Sunday edition of The Journal (Sunday Journal) since 1911, and the morning Milwaukee Sentinel (the Sentinel) since it was acquired in 1962. On April 2, 1995, both daily newspapers were merged and became one morning newspaper, the Milwaukee Journal Sentinel. Average paid circulation for the twelve months ended March 31, 1995, for the last five years, as audited by the Audit Bureau of Circulation, was:
1995 1994 1993 1992 1991
Journal 211,801 228,454 238,351 240,566 260,480 Sentinel 173,895 173,019 171,271 166,085 172,772 Sunday Journal 486,422 492,425 490,077 490,361 497,777
Since the newspapers were combined, average daily paid circulation for the six months ended September 30, 1995, as provided to the Audit Bureau of Circulations, was 309,137.
Advertising volume in column inches and units for the Company's Milwaukee newspapers for the last five calendar years was:
(in thousands) 1995 1994 1993 1992 1991 Column Inches Full Run 2,289.7 2,666.0 2,657.6 2,619.0 2,526.8 Part Run 257.1 213.4 260.9 181.3 195.5 Units Preprint 2.8 2.4 1.9 1.6 1.5
There are 101 other newspapers and shoppers published in the four-county Milwaukee market. Most of these are weekly publications, while a few are biweekly, fortnightly or monthly. Of these 101 publications, 39 are paid subscription and 62 are delivered without charge or are available free at various public locations. These publications cover a wide variety of interests, including community, business, labor, religious, ethnic, foreign language or other special interest newspapers.
One other daily newspaper, The Freeman, is published in Waukesha and is circulated in portions of Waukesha County. In addition, editions of USA Today, Chicago Tribune, Chicago Sun Times, Madison Capitol-Times, Wisconsin State Journal and New York Times are sold in the Milwaukee market. Journal Sentinel Inc.'s newspaper also competes for advertising revenue or support with five (5) network-affiliated commercial television stations, five (5) independent television stations (two (2) of which are low power television stations), two public television stations and 34 AM and FM radio stations located in the four-county market, several cable television companies and several direct mail services. One network- affiliated television station and two radio stations in the Milwaukee market are owned by a subsidiary of the Registrant.
The Milwaukee Journal Sentinel maintains news bureau offices in Madison, Wisconsin, and Washington, D.C. It also has suburban bureaus in Waukesha and Cedarburg and correspondents based in West Bend and Stevens Point, Wisconsin. The Journal Sentinel is a member of the Associated Press and subscribes to these wire services: the Washington Post-Los Angeles Times News Service, the New York Times News Service, the Knight-Ridder News Service and the feature portion of the Gannett News Service. The Journal Sentinel is also a contributing member of the Scripps Howard News Service.
The April 1995 merger resulted in a work-force reduction. Severance, early retirement payments and other non-recurring costs associated with the launch of the Milwaukee Journal Sentinel resulted in a pre-tax charge of $17.5 million.
During 1995, while the cost of newsprint increased by 40%, newsprint consumption at the Milwaukee newspapers was higher than the prior year. Newsprint is purchased from four Canadian and two American suppliers. Supplies for 1996 are considered sufficient and newsprint costs are expected to stabilize.
The Registrant also publishes, through its ADD, Inc. subsidiary, eight (8) weekly newspapers in southwestern Connecticut; six (6) weekly newspapers and one (1) monthly controlled-circulation business publication in Wisconsin; three (3) weekly newspapers and one (1) daily newspaper in Florida; forty-six (46) shopper publications, with twenty-two (22) in Wisconsin, fifteen (15) in Ohio, two (2) in Florida, two (2) in Pennsylvania, two (2) in Vermont, one (1) in Georgia, one (1) in Louisiana and one (1) in New York; three (3) paid auto publications, with two (2) in Louisiana and one (1) in Wisconsin; two (2) paid boating publications, with one in Louisiana and one in Florida; three (3) free auto publications in Ohio; two (2) free monthly Health & Fitness publications, with one (1) in Pennsylvania and one (1) in Louisiana; six (6) monthly real estate publications and two (2) senior citizens' publications in Ohio published six (6) times per year, and one (1) nationwide electronic classified advertising database.
Printing
Imperial Printing Company, a wholly-owned subsidiary acquired on October 6, 1992, specializes in the production of short to medium runs (1,000 to 50,000 copies) of medical, legal and technical journals for various trade associations, documentation manuals for hardware and software manufacturers and the duplication of CD-ROM's, floppy disks and computer tapes. Imperial is based in St. Joseph, Michigan, and has additional operations in Fremont, San Jose and Irvine, California and Roncq, France. No supply restrictions are anticipated in 1996 for the raw materials Imperial utilizes.
In June 1994, the heat-set web offset operations of Perry Printing Corporation ("Old Perry"), a wholly-owned subsidiary of the Registrant, were spun off into a new subsidiary corporation. Perry Printing Corporation changed its name to NorthStar Print Group, Inc., and the name of the new corporation, a subsidiary of NorthStar Print Group, Inc., was changed to Perry Printing Corporation ("New Perry"). The assets and business of New Perry were sold in May 1995 for $95 million plus the assumption of trade and other liabilities. Payment was made by the issuance of 115,000 shares of the buyer's preferred stock with a value of $11.5 million and the delivery of the balance in cash.
NorthStar Print Group, Inc., a wholly-owned subsidiary of the Registrant, the continuing portion of Old Perry, is headquartered in Brown Deer, Wisconsin, and has manufacturing operations in Brown Deer, Green Bay and Watertown, Wisconsin, and Norway, Michigan. It employs a wide array of printing technologies in the various markets it serves. These include sheed-fed offset, rotogravure and flexographic processes that are used to print point-of-purchase materials, labels for consumer goods and industry manufacturers (including in-mold labels), and out-of-home media. NorthStar Print Group, Inc., is one of the nation's largest producers of beer bottle labels and completed an arrangement in 1995 to extend its label market to the largest beer brewer in Brazil. Its supply of raw materials is considered adequate. NorthStar remains the owner of the properties in Waterloo, Wisconsin, that are being leased to New Perry.
Trumbull Printing, Inc., though a wholly-owned subsidiary of the Registrant, is managed by a subsidiary of ADD, Inc. that is co-located in Trumbull, Connecticut. Trumbull Printing, Inc., is a small web offset printer of newspapers and newspaper inserts. Its principal raw materials, paper and ink, are expected to be in sufficient supply at stable prices in 1996.
Broadcasting
Journal Broadcast Group, Inc., a wholly-owned subsidiary of the Registrant (formerly known as WTMJ, Inc.), operates three television stations and eleven (11) radio stations in six (6) states. All operate under licenses from the Federal Communications Commission.
In Milwaukee, Journal Broadcast Group, Inc. has been the pioneer and leading broadcaster since it started AM operations in 1927, FM in 1941 (discontinued 1950-1960) and television in 1947. News reporting and editorial operations at Journal Broadcast Group, Inc., are independent of the Registrant's newspaper operations.
Registrant's three (3) Milwaukee broadcast operations, WTMJ-TV, WTMJ-AM and WKTI-FM, consistently rank high in audience rating surveys. Competition for advertising revenue in the ten-county area of dominant influence ("ADI") includes nine (9) other commercial television stations (including two (2) low power television stations), two (2) noncommercial stations, thirty-four (34) other radio stations, several cable television companies, seven (7) daily newspapers (including one owned by Registrant), and numerous weekly newspapers.
Journal Broadcast Group, Inc. also operates: KTNV-TV, Las Vegas, Nevada, an ABC affiliate; WSYM-TV, Lansing, Michigan, a Fox affiliate; two radio stations in Wausau, Wisconsin, WSAU-AM and WIFC-FM, both ABC radio affiliates; KQRC-FM, Kansas City/Leavenworth, Kansas, affiliated with The Source/Westwood One network; KEZO-AM, KEZO-FM and KKCD-FM in Omaha, Nebraska where KEZO-AM and KKCD-FM are affiliated with the CBS Spectrum Network, and KMXZ-FM, KKND-AM and KKHG-FM in Tucson, Arizona. WTMJ-TV is affiliated with the NBC network. WTMJ-AM is affiliated with the CBS Radio network, and WKTI-FM is affiliated with the ABC radio network.
Telecommunications
MRC Telecommunications, Inc. (MRC), a wholly-owned subsidiary, provides telecommunications services. Its services include terrestrial and satellite transmission of broadcast-quality video signals. In addition, MRC offers state-of-the-art, bulk, network transmission, including SONET and bandwidth-on-demand, to other common carriers. NorLight, Inc., is a wholly-owned subsidiary of MRC. NorLight, Inc., MRC's business-to- business service, markets advanced data circuits, frame relay, and switched voice services including domestic, international and calling card services, to medium and large businesses in Wisconsin, Michigan, Minnesota and Illinois where NorLight is authorized by the public service commissions to offer services. NorLight has two wholly-owned subsidiaries, Telephone Associates Long Distance, Inc. (TALD) and Bemidji Long Distance, Inc. (BLD), which provide switched voice services to residential and small business customers in Minnesota, Michigan and Wisconsin.
MRC Telecommunications, Inc., is a co-founding member of UniSPAN, a national and international consortium of other regional carriers that provide frame relay services.
Direct Marketing
PrimeNet Marketing, Inc., a wholly-owned subsidiary, was acquired in January 1994. Located in St. Paul, Minnesota, it is engaged in the business of providing personalized database marketing services to merchandisers and manufacturers, which services include the design and development of database systems; the creation, maintenance and enhancement of data files; the development of personalized communications for the purpose of executing specific promotions; mail processing; receiving orders and/or requests through its 1-800 Response Center, and fulfilling such orders and requests.
Mega Direct, Inc., was acquired on June 22, 1995, by ADD, Inc., a wholly- owned subsidiary of the Registrant. Mega Direct is a marketing firm that provides complete direct mail services, including design, printing and distribution. It is one of the largest direct mail firms in the country serving the automotive industry.
Compliance with Environmental Laws
No operation of the Registrant has suffered material adverse effects from having to bring its operations into compliance with environmental laws.
Methods of Distribution
The Registrant's newspapers are distributed through networks of carriers, most of whom are independent contractors. Advertising for Registrant's newspapers and broadcast stations is generally sold by employees, with some national advertising obtained by agents. Sales for the Registrant's commercial printing, telecommunications and direct marketing operations are generally obtained by employees and a limited number of agents.
Employees
The Registrant and its subsidiaries, as of December 31, 1995, had approximately 4,510 full-time and 2,040 part-time employees.
Financial Information About Industry Segments
Financial information about Registrant's industry segments is presented in Note 10 to the Consolidated Financial Statements appearing on pages 27 and 28 of this report.
ITEM 2.

ITEM 2. PROPERTIES
Principal properties operated by the Registrant and its subsidiaries are summarized as follows:
Subsidiary Location How Held Square Footage
Journal Sentinel Inc. (Publishing) Offices/Plant Milwaukee, WI Owned 464,000 Garage Milwaukee, WI Owned 67,500 Distribution Centers Milwaukee, WI Leased 166,100
ADD, Inc. (Publishing) Office/Plant WI, OH, GA, FL Owned or Leased 252,500 VT, NY, PA, LA
Hometown Publications, Inc. (Publishing) Office Trumbull, CT Leased 5,600
Auto Mart Publishing, Inc. (Publishing) Office Dayton, Columbus Leased 4,300 & Cincinnati, OH
Mega Direct, Inc. (Direct Marketing) Office Clearwater, FL Leased 39,700
Journal Broadcast Group, Inc. (Broadcasting) Office and Studios Milwaukee, WI Owned 101,500 KTNV-TV Studios Las Vegas, NV Owned 20,300 WSYM-TV Studios Lansing, MI Leased 10,300 WSAU-AM/WIFC-FM Studios Wausau, WI Owned 5,600 KQRC-FM Studios Kansas City/ Leavenworth, KS Leased 3,700 KEZO-AM/FM & KKCD-FM Office and Studios Omaha, NE Leased 12,200
NorthStar Print Group, Inc. (Commercial Printing) Office/Plant Brown Deer, WI Owned 127,300 Office/Plant Norway, MI Owned 101,700 Office/Plant Watertown, WI Owned 201,700
Label Products & Design Inc. (Commercial Printing) Office and Plant Green Bay, WI Owned 39,600
PPC Liquidations, Inc. (Real Estate Holding) Office & Warehouses Waterloo, WI Owned 120,000
Trumbull Printing, Inc. (Commercial Printing) Office/Plant Trumbull, CT Owned 51,600
Imperial Printing Company (Commercial Printing) Office/Plant/ Warehouse St. Joseph, MI Leased 318,500 Office/Plant Fremont, CA Leased 98,700 Office/Plant Irvine, CA Leased 49,000 Office/Plant/ Warehouse San Jose, CA Leased 226,000 Office/Plant San Jose, CA Leased 83,000
MRC Telecommunications, Inc. (Fiber optic & Rubicon, WI Owned 3,800 microwave Skokie, IL Owned 6,100 transmission Afton, WI Owned 3,800 services) Arden Hills, MN Owned 1,700 Minneapolis, MN Leased 2,100 Brookfield, WI Leased 15,600
NorLight, Inc. (Fiber optics & microwave transmission services) Office Minneapolis, MN Leased 1,300
Telephone Associates Long Distance, Inc. & Bemidji Long Duluth, MN Leased 5,200 Distance, Inc. Bemidji, MN (Long distance telecommunications service)
Nordoc Software Services, S.A. (Commercial Printing) Office/Plant Roncq, France Leased 80,700
PrimeNet Marketing, Inc. (Data Base Management) Mendota Heights, Office/Plant Minnesota Leased 87,200
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS The Company paid damages of $18.6 million in 1991 and $5.7 million in February 1996 in settlement of a patent infringement lawsuit. Otherwise, the Company is involved in various claims and lawsuits incidental to its business, which, in the opinion of management, will not have a material effect in the aggregate on the Company's financial position or operations.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None.
ITEM 4A. EXECUTIVE OFFICERS OF REGISTRANT
The executive officers of Registrant, as of March 25, 1996, all of whom hold office until the next annual meeting of the board of directors, which will be held immediately following the annual meeting of shareholders on June 4, 1996, are:
Name Age Office Held Since
Robert A. Kahlor 62 Chairman of the Board/CEO September 4, 1992 Steven J. Smith 45 President September 4, 1992 Thomas M. Karavakis 65 Senior Vice President June 2, 1987 Douglas G. Kiel 47 Senior Vice President June 2, 1992 Keith K. Spore 53 Senior Vice President September 6, 1995 Paul M. Bonaiuto 45 Senior Vice President March 5, 1996 Robert M. Dye 48 Vice President June 5, 1990 Gregory H. Forbes 46 Vice President June 8, 1993 Stephen O. Huhta 40 Vice President June 8, 1993 Ronald G. Kurtis 48 Vice President June 8, 1993 James J. Ditter 34 Vice President September 6, 1995 William T. Lutzen 34 Vice President June 7, 1994 Daniel L. Harmsen 40 Vice President March 5, 1996 Paul E. Kritzer 53 Vice President June 5, 1990 & Secretary September 1, 1992 Christine A. Farnsworth 47 Assistant Secretary June 8, 1993
All of the executive officers of the Registrant except Messrs. Forbes, Bonaiuto and Ditter have been employed by the Company in key management positions for more than five (5) years. Mr. Forbes joined the Company in October 1992 when Imperial Printing Company, of which he was president and owner, was acquired by the Registrant. Mr. Bonaiuto has been Chief Financial Officer of the Registrant since January 1996 and was elected a Senior Vice President in March 1996. Previously Mr. Bonaiuto had been President of NorthStar Print Group, Inc., a subsidiary of the Registrant, from June 1994 to January 1996; Senior Vice President and Chief Financial Officer of Perry Printing Corporation, then a subsidiary of the Registrant, from July 1992 to June 1994, and executive vice president of The Peterson Group, Wilmington, Delaware, a private equity investment firm, for the remainder of the past five-year period. Mr. Ditter was elected President of MRC Telecommunications, Inc., a subsidiary of the Registrant, in September 1995 after serving as that company's senior vice president and chief financial officer since August 1992. Prior to that, Mr. Ditter had been the controller of Peck Foods Corporation, Milwaukee.
PART II ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
There is no established public trading market for the Registrant's common stock. Units representing beneficial interests in the Registrant's common stock can be purchased only by full-time employees with ninety (90) days service and part-timers with two consecutive years of service of one thousand (1,000) hours each year. As of March 13, 1996, the Journal Employes' Stock Trust (the "Trust") owned of record 12,960,000 of the issued common stock shares or 90% of the issued common stock of the Registrant. The Trust issues units, each representing a beneficial interest in one share of the Registrant's stock, to eligible employees ("unitholders"). On March 13, 1996, 2,623 unitholders owned 11,195,983 units (representing 83.1% of Registrant's outstanding common stock) and thus were the beneficial owners of a like number of shares of the Registrant's stock held by the Trust. The balance of 1,764,017 units issued by the Trust were, on the above date, held by personal trusts and employee benefit trusts or by the Company, which are treated as treasury stock and not voted.
Prior to all meetings of shareholders of the Registrant, the Trustees are required to deliver to each active employee-unitholder a proxy, with the right of substitution, for the number of the Registrant's shares represented by his or her units.
Unitholders may sell their units only through procedures, and at a formula price, dictated pursuant to the Stock Trust Agreement and only to other employees designated by President of the Registrant. Whenever a unitholder ceases to be an employee, for any reason except retirement, corporate downsizing or divestiture, he or she must offer his or her units for resale to active employees designated by the President of the Company. Employees who retire may retain a decreasing percentage of their units for up to ten (10) years after the first anniversary of their retirement. All units held by retirees are voted by the Trustees. Units may also be held by employee benefit trusts, and unitholders may transfer units to personal trusts and to charitable, educational or religious trusts. All units held by such trusts are likewise voted by the Trustees of the Stock Trust. As of March 13, 1996, retirees, personal trusts, an employee benefit trust, and other trusts held 5,302,026 units, representing a beneficial interest in 39.3% of the Registrant's outstanding common stock.
All of the Trustees under the Journal Employes' Stock Trust Agreement are directors of the Registrant. They have no financial interest in the Registrant's stock owned by the Trust other than through the units they own individually.
The Registrant's unit price and dividend history for the past decade are presented in the following table:
Employee Stock Ownership Plan
Unit Unit Unit Price Total Price Price Increase Cash Annual Year Begin End (Decrease) Dividend Return
1995 - 4th Qtr 35.95 36.24 0.29 0.55 8.3 1995 - 3rd Qtr 36.12 35.95 (0.17) 0.55 1995 - 2nd Qtr 35.62 36.12 0.50 0.55 1995 - 1st Qtr 35.40 35.62 0.22 0.45 1994 - 4th Qtr 34.97 35.40 0.43 0.55 7.7 1994 - 3nd Qtr 34.92 34.97 0.05 0.45 1994 - 2nd Qtr 34.84 34.92 0.08 0.45 1994 - 1st Qtr 34.64 34.84 0.20 0.45 1993 33.60 34.64 1.04 1.80 8.5 1992 32.60 33.60 1.00 1.80 8.6 1991 31.48 32.60 1.12 1.80 9.3 1990 29.66 31.48 1.82 1.70 11.9 1989 26.65 29.66 3.01 1.70 17.7 1988 23.71 26.65 2.94 1.50 18.7 1987 20.94 23.71 2.77 1.38 19.8 1986 18.54 20.94 2.40 1.25 19.7
In addition to the Journal Employees' Stock Trust, there are two (2) other record holders of stock of the Registrant. The Registrant is not aware of any recent sales of such stock.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
Selected financial data of the Registrant is presented in the table on following page.
ITEM 7.

ITEM 7. MANAGEMENT ANALYSIS AND DISCUSSION
Consolidated Revenue from continuing operations in 1995 was $591.8 million, a 14.3% increase over 1994 revenue of $517.6 million. Revenue from continuing operations in 1993 was $454.7 million. In 1995, operating earnings were $41.4 million, a decrease from 1994 earnings of $66.3 million. The decrease in operating earnings was a result of the one-time newspaper merger charges of $17.5 million and the Webcraft lawsuit settlement of $5.7 million. In 1993, operating earnings were $65.9 million. During 1995, the improving economic conditions and an increase in advertising market share helped to increase advertising revenue and operating profits for the broadcast segment. The printing segment experienced growth through increased revenues in the computer software industry. Operating results, however, declined in the publications segment due to the 40% increase in newsprint prices. The direct marketing segment showed a net loss.
Publications The publications segment includes daily and weekly newspapers, shoppers and specialty publications. In 1995, revenue was $267.1 million, up 2.2% over 1994 and 9.3% better than in 1993. In 1994 and 1993, revenues from this segment were $261.3 million and $244.5 million, respectively. Operating earnings in 1995 were $16 million, including newspaper merger charges of $17.5 million. Without the $17.5 million in merger charges, operating earnings decreased 23.8% from 1994. Operating earning for 1994 were $44 million, an increase of 9.4% over 1993 operating earnings of $40.2 million. Journal Sentinel Inc. is the largest company in the publications segment. Revenue in 1995 rose by 1.2% to $212.2 million compared with $209.5 million in 1994. In 1995, operating earnings excluding the merger charge were down 25.7% from the prior year. The decrease in operating earnings was the result of drastic increases in newsprint cost. Newsprint costs are expected to stabilize in 1996. Operating earnings in 1994 were up from 1993 by 14.1%. The increase was the result of increased classified advertising revenue and lower newsprint cost. Advertising revenue in 1995, 1994 and 1993 was $155.9 million, $149.4 million and $138 million, respectively. In 1995, classified revenue was up 6.8% over 1994 due to increased employment lineage and rate increases. Retail advertising revenue increase by 4.2% from 1994. General advertising revenue decreased by 8.5%, as a result of decreased volume. Pre-print revenues rose 1.7% compared with 1994. From 1993 to 1994, classified advertising revenue increased by 14%. Retail advertising revenue was approximately equal to the prior year, while general advertising revenue rose by 21% during the 1993-'94 period. In 1995, circulation revenue was $53.1 million, down 6% from 1994. In 1994, circulation revenue was $56.5 million, while in 1993 it was $55.9 million. ADD, Inc. is the other operation in the publications segment. Its 1995 revenue was $54.9 million, a 6% increase over 1994 revenue of $51.8 million. In 1993, revenue was $47.8 million. Operating earnings in 1995 showed a slight decrease from the prior year, decreasing 2.5%. This resulted from the substantial increase in newsprint prices. In 1995, revenue for the Wisconsin and Ohio operations increased by 11.1% and 17.5%, respectively. During 1995, the Wisconsin operations showed significant improvement in operating earnings over the previous year while the Ohio, Louisiana and Pennsylvania operations showed declines.
Broadcast In 1995, revenue was $74.6 million, an increase of 17.6% over 1994 revenue of $63.4 million and 35.9% higher than 1993 revenue of $54.9 million. Operating earnings in 1995 increased 34.6% and 81% over 1994 and 1993, respectively. The 1995 increase was a result of strong national and local advertising sales and excellent ratings at all broadcast operations. In 1995, the company's television stations accounted for 68.8% of the segment's revenue and 82.9% of its operating earnings. At the Milwaukee, Las Vegas and Lansing television stations, the operating earnings showed substantial growth over the prior year. The company acquired three radio stations in Omaha during 1995. Operating earnings in 1995 for the Milwaukee and Kansas City radio stations were ahead of the 1994 operating results. In 1996, the company acquired three radio stations in Tucson.
Printing The 1995 revenue for NorthStar Print Group, Inc. was $53.9 million, a 6.7% decrease from the prior year's revenue of $57.8 million. In 1993, revenue was $51.8 million. NorthStar increased operating earnings to $0.6 million from an operating loss of $0.7 million in 1994. In 1995, significant operating efficiencies were attained at the Norway/Watertown operation. The Milwaukee and Green Bay operations experienced a decrease in revenue and operating earnings for 1995. At Imperial Printing Company, doing business as IPC Software/Publishing Services ("IPC"), 1995 revenue was $122 million, a 66.2% increase over 1994 revenue of $73.4 million The 1995 operating earnings increased by 116.3% compared with 1994. Increased revenue at the Fremont, California, operation contributed to the increase in operating earnings. Nordoc Software Services, located in Roncq, France (near Lille), showed a 97.2% revenue gain, but incurred an operating loss for the year. In 1995, revenue for Trumbull Printing Inc. was $14.1 million, a 24.8% increase compared with 1994 revenue of $11.3 million. Revenue in 1994 was up 45.2% over 1993 revenue. In 1995, operating earnings increased by 13.7% from the 1994 results. The printing plants of ADD Inc. had revenue of $12.5 million in 1995, a 34.4% increase over 1994 revenue of $9.3 million and 115.5% over 1993 revenue of $5.8 million. In 1995, operating earnings increased by 4.8% from 1994.
Telecommunications In the telecommunications segment, 1995 revenue increased by 11.1% to $40 million. This increase is a result of a substantial increase in the private line circuits sold and MRC Telecommunications, Inc.'s ("MRC") entrance into the "switched voice" services market. NorLight, Inc. purchased the business and substantially all the assets of Telephone Associates Long Distance, Inc. ("TALD") and Bemidji Long Distance, Inc. in mid-1994. TALD and Bemidji are "resellers" of long distance services. Operating earnings at MRC increased by 4.5% in 1995 compared with 1994 and 8.2% compared with 1993.
Direct Marketing PrimeNet Marketing, Inc., doing business as PrimeNet Data Systems, which was purchased on January 11, 1994, experienced a decrease in revenue from $7.8 million in 1994 to $6.9 million in 1995. An operating loss was incurred in both 1995 and 1994 as the company restructured. On June 22, 1995, a subsidiary of ADD, Inc. purchased the business and substantially all the assets of Mega Direct, Inc. Mega Direct specializes in customized direct marketing services, primarily for the automotive industry. In 1995, Mega Direct had revenue of $4.7 million and operating earnings of $1 million.
Newspaper Merger Charges On April 2, 1995, Journal Sentinel Inc. merged The Milwaukee Journal and the Milwaukee Sentinel into a morning newspaper called the Milwaukee Journal Sentinel. The merger of the newspapers resulted in a pretax charge of $17.5 million. The charge consisted of $11.3 million in termination benefits for approximately 250 full-time employees and $6.2 million for non-recurring start-up costs of the new newspaper. The 1995 cash outlay of $11.4 million was funded by cash flow from operations and proceeds from the sale of Perry Printing Corporation.
Other Income and Expenses Dividends and interest income were $4.8 million, an increase from $1.7 million in 1994. The 1995 increase was a result of the increase in short- term investments and dividends received from preferred stock. In 1993, this amount was $1.5 million. The company investments in short-term securities have increased due to the proceeds from the sale of Perry.
Income Taxes Income taxes were 39.6% of pretax earnings in 1995, 40.1% in 1994 and 39.2% in 1993. The decrease is a result of a change in the effective state tax rate. Permanent tax "differences" exist for goodwill amortization for acquisitions before 1993 and the increase in cash surrender value of the company's life insurance investment pool.
Earnings from Continuing Operations Earnings from continuing operations of $27.9 million or $2.01 per share in 1995 were $12.7 million or $0.89 per share less than in 1994. The merger charges and the Webcraft settlement reduced 1995 earnings per share by $1.00. Excluding the merger charges and the Webcraft settlement, earnings per share from continuing operations were $3.01 in 1995. In 1993, earnings from continuing operations were $41 million or $2.93 per share.
Discontinued Operations On April 27, 1995, the company sold substantially all the assets used in the business of its wholly-owned subsidiary, Perry Printing Corporation. Perry is a heatset web offset printer of long-run catalogs and publications. The sale of Perry allowed the company to redirect its assets to other segments of the company and earn a better return on investment. As a result, the Perry operations have been accounted for as a discontinued operation. Net revenues were $45.9 million, $117 million and $105.9 million in 1995, 1994 and 1993, respectively. Earnings from discontinued operations were $1.4 million, $3.3 million and $3.2 million during the same years. The aggregate sale price was approximately $95 million plus the assumption of trade and other liabilities. Payment was made by the issuance of 115,000 shares of the buyer's preferred stock with a value of $11.5 million and the payment of the balance in cash. Proceeds were used to fund the ADD, Inc. and Journal Broadcast Group acquisitions, the Journal Sentinel merger charges and increase the cash reserves.
Net Earnings Net earnings from 1995 were $44.2 million or $3.18 per share, versus net earnings of $43.9 million, or $3.13 per share in 1994. In 1993, net earnings for the year were $44.2 million or $3.16 per share.
Liquidity and Capital Resources Cash provided by continuing operations, which is a significant source of the company's liquidity, totaled $43.2 million in 1995, $59.3 million in 1994 and $54 million in 1993. Principal uses of cash during this period were for property and equipment expenditures and acquisitions. Capital expenditures for property and equipment were $33.4 million, $36.6 million and $31.2 million in 1995, 1994 and 1993, respectively. In 1996, capital expenditures are expected to approximate the 1995 level. The company also has remained active in acquiring other businesses. Cash used for acquisitions was $22.8 million in 1995, $12.7 million in 1994 and $1.6 million in 1993. During 1995, the company made acquisitions that expanded its broadcast, shopper and direct marketing operations. In late January and early February 1996, the company acquired three radio stations in Tucson, Arizona. The cash purchase price was approximately $16.1 million. Cash provided by discontinued operations was $82.8 million, $7.2 million and $5.4 million in 1995, 1994 and 1993, respectively. Cash used for financing activities was: 1995 - $46.5 million; 1994 - $24.8 million; and 1993 - $23.7 million. Dividends paid during 1995 were $29.2 million, or $2.10 per share. This compares with $26.7 million ($1.90 per share) in 1994 and $25.2 million ($1.80 per share) in 1993. Net working capital at the end of 1995 increased by $3.4 million to $111.1 million. Commitments for television programs not yet produced as of December 31, 1995, were $9 million. The company has traditionally not used debt as a source of funds.
Effect of Inflation The company's results of operations and financial conditions have not been significantly affected by general inflation. The company has reduced the effect of rising costs through improvements in productivity, cost containment programs and, where the competitive environment permits, increased selling prices. See publications section for discussion on impact of newsprint costs.
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 Board of Directors and Stockholders Journal Communications Inc.
We have audited the accompanying consolidated balance sheets of Journal Communications Inc. as of December 31, 1995 and 1994, and the related consolidated statements of earnings and retained earnings, and cash flows for each of the three years in the period ended December 31, 1995. Our audits also included the financial statement schedule listed in the index in Item 14(a). These financial statements and the schedule are the responsibility of the Company's management. 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 management, 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 consolidated financial position of Journal Communications Inc. at December 31, 1995 and 1994, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. In our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth herein.
ERNST & YOUNG LLP
Milwaukee, Wisconsin February 13, 1996
JOURNAL COMMUNICATIONS INC. CONSOLIDATED BALANCE SHEETS
December 31 ASSETS 1995 1994 Current assets: Cash $10,133,273 $ 12,884,740 Short-term investments (Note 1) 61,362,172 38,964,215 Receivables, net (Note 1) 94,670,354 81,386,307 Inventories (Note 1) 31,292,261 25,443,053 Prepaid expenses 9,211,795 10,249,166 Prepaid income taxes 4,197,508 454,222 Deferred income taxes (Note 3) 4,706,000 5,347,000 Net current assets of discontinued operations (Note 9) - 16,550,403 ----------- ----------- Total current assets 215,573,363 191,279,106
Property and equipment, at cost: Land and land improvements 11,997,665 10,502,363 Buildings 53,509,836 49,060,730 Equipment 301,388,897 275,766,234 ----------- ----------- 366,896,398 335,329,327 Less accumulated depreciation 206,463,640 185,642,365 ----------- ----------- Net property and equipment 160,432,758 149,686,962 Net non-current assets of discontinued operations (Note 9) - 49,924,513 Goodwill (Note 1) 33,258,717 28,864,047 Other intangible assets, net (Note 1) 34,798,493 24,287,121 Corporate life insurance investment pool 16,390,303 14,208,090 Other assets (Note 9) 14,284,589 3,166,028 ------------ ------------ $474,738,223 $461,415,867 ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 33,591,498 $ 31,363,719 Accrued compensation 18,241,478 19,856,229 Customer service deposits 11,705,228 11,823,750 Accrued employee benefits (Note 2) 21,166,388 12,442,829 Other current liabilities 12,864,104 4,916,352 Current portion of long-term obligations 6,889,035 3,201,437 ------------ ----------- Total current liabilities 104,457,731 83,604,316
Long-term obligations (Note 5) 2,761,802 2,946,636 Deferred income taxes (Note 3) 1,189,000 7,436,000
Stockholders' equity (Note 6): Common stock, $.25 par value; authorized and issued 14,400,000 shares 3,600,000 3,600,000 Retained earnings 390,278,614 373,625,977 Treasury stock, at cost (Note 6) (27,548,924) (9,797,062) ------------ ----------- Total stockholders' equity 366,329,690 367,428,915 ------------ ----------- $474,738,223 $461,415,867 ============ ============
See accompanying notes.
JOURNAL COMMUNICATIONS INC. CONSOLIDATED STATEMENTS OF EARNINGS
Years ended December 31 1995 1994 1993 Continuing operations: Operating revenue: Publications: Advertising $208,857,471 $198,214,122 $182,536,690 Circulation 54,499,666 57,951,504 57,272,146 Other 3,790,626 5,137,396 4,720,547 Broadcast 74,623,031 63,444,709 54,850,495 Printing 202,556,016 151,853,351 126,401,157 Telecommunications 39,977,523 35,973,931 32,411,290 Direct Marketing 11,577,881 7,799,072 - Eliminations (4,049,726) (2,793,364) (3,501,062) ------------ ----------- ---------- $591,832,488 $517,580,721 $454,691,263 Operating costs and expenses: Cost of sales 346,144,072 289,383,027 250,260,769 Selling and administrative expenses 181,091,296 161,922,335 138,499,227 Merger and litigation charges(Notes 4 & 8) 23,218,055 - - ----------- ----------- ----------- 550,453,423 451,305,362 388,759,996
Operating earnings 41,379,065 66,275,359 65,931,267 Other income(deductions): Dividends and interest - net 4,806,225 1,668,931 1,542,596 Gain(loss) on sale of assets 45,629 (113,566) 24,252 ---------- ---------- ---------- 4,851,854 1,555,365 1,566,848 ---------- ---------- ---------- Earnings from continuing operations before income taxes 46,230,919 67,830,724 67,498,115
Provision for income taxes (Note 3) 18,330,000 27,230,000 26,460,000 ---------- ---------- ---------- Earnings from continuing operations 27,900,919 40,600,724 41,038,115 ---------- ---------- ---------- Discontinued operations (Note 9) Earnings, net of applicable income taxes of $915,000, $2,170,000 and $2,140,000 1,371,473 3,266,421 3,166,003
Gain on sale, net of applicable income tax expense of $9,960,000 14,940,942 - - ---------- ---------- ---------- Net Earnings $ 44,213,334 $ 43,867,145 $44,204,118 ========== ========== ========== Earnings per share (Note 1) Continuing operations $2.01 $2.90 $2.93 Discontinued operations 1.17 0.23 0.23 ------ ----- ----- Net earnings $3.18 $3.13 $3.16 ===== ===== =====
See accompanying notes.
JOURNAL COMMUNICATIONS INC. CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
Years ended December 31 1995 1994 1993 Retained earnings:
Balance at beginning of year $373,625,977 $355,878,873 $336,553,427
Net earnings 44,213,334 43,867,145 44,204,118
Cash dividends (per share, 1995 $2.10, 1994 $1.90, 1993 $1.80) (29,156,648) (26,699,455) (25,156,340)
Treasury stock transactions (Note 6) 616,303 416,530 365,145
Currency translation adjustment 979,648 162,884 (87,477) ----------- ----------- ----------- Balance at end of year $390,278,614 $373,625,977 $355,878,873 =========== ========== ===========
See accompanying notes.
JOURNAL COMMUNICATIONS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31 1995 1994 1993
Cash flow from operating activities: Earnings from continuing operations: $27,900,919 $40,600,724 $41,038,115 Adjustments for non-cash items: Depreciation and amortization 34,413,368 29,778,626 28,335,179 Deferred income taxes (5,610,000) (400,000) (1,200,000) Net loss (gain) from sales of assets (45,629) 113,566 (24,252) Change in: Receivables (15,892,523) (15,991,602) (11,033,367) Inventories (5,414,490) (8,057,754) (1,492,355) Accounts payable 7,814,280 7,814,136 (6,566,235) Other current assets and liabilities of continuing operations 22,372 5,429,337 4,936,314 ---------- ---------- ----------
Net cash provided by operating activities 43,188,297 59,287,033 53,993,399
Cash flow from investing activities: Proceeds from sales of assets 1,031,417 2,029,798 773,637 Property and equipment expenditures (33,406,269) (36,569,338) (31,170,841) Net (increase) decrease in short-term investments (22,397,956) 11,201,801 3,787,446 Assets of businesses acquired (22,773,013) (12,697,391) (1,572,769) Other - net (4,748,507) (5,189,473) (5,552,888) ---------- ----------- ---------- Net cash used for investing activities (82,294,328) (41,224,603) (33,735,415) ----------- ----------- ----------- Net cash provided by discontinued operations (Note 9) 82,831,605 7,193,410 5,375,462
Cash flow from financing activities: Net increase (decrease)in long-term obligations (184,834) (731,975) 1,232,349 Purchase of treasury stock (25,487,943) (1,834,240) (3,865,125) Sales and distribution of treasury stock 8,352,384 4,485,108 4,122,332 Cash dividends (29,156,648) (26,699,455) (25,156,340) ----------- ----------- ----------- Net cash used for financing activities (46,477,041) (24,780,562) (23,666,784) ----------- ----------- ----------- Net increase (decrease) in cash (2,751,467) 475,278 1,966,662
Cash at beginning of year 12,884,740 12,409,462 10,442,800 ---------- ---------- ---------- Cash at end of year $10,133,273 $12,884,740 $12,409,462 ========== ========== ========== Cash paid for income taxes $47,557,000 $29,108,000 $31,122,000 ========== ========== ==========
See accompanying notes.
JOURNAL COMMUNICATIONS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1995, 1994 and 1993
l.Principal accounting policies
Basis of consolidation - The consolidated financial statements include the accounts of Journal Communications, Inc. and its wholly owned subsidiaries (collectively, the Company). All significant intercompany balances and transactions have been eliminated.
Foreign currency translation - Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at year-end exchange rates while income and expense items are translated at the average exchange rates for the year. Resulting translation adjustments are reflected in retained earnings.
Earnings per share - Earnings per share is based on the weighted average shares outstanding during each period.
Short-term investments - Short-term investments, which consist principally of government securities, commercial paper and bank certificates of deposit with maturities of one year or less, are stated at cost, which approximates market value.
Receivables - Allowance for doubtful accounts at December 31, 1995 and 1994 was $2,475,670 and $2,065,012, respectively.
Inventories - Inventories are stated at the lower of cost (first in, first out method) or market. Inventories at December 31, consist of the following:
1995 1994 Paper and Supplies $19,142,582 $15,265,140 Work in Process 4,559,107 4,812,159 Finished Goods 7,590,572 5,365,754 ---------- ---------- $31,292,261 $25,443,053 ========== ==========
Property and equipment - Property and equipment are recorded at cost. Depreciation of property and equipment is computed principally using the straight-line method.
Goodwill - Goodwill arising from acquisitions subsequent to November 1, 1970, is amortized on a straight-line basis over 40 years. Goodwill prior to November 1, 1970, is amortized when it is determined that such intangible assets have a limited useful life. At December 31, 1995, $3,095,000 of goodwill was not being amortized. Accumulated amortization at December 31, 1995 and 1994 was $9,567,294 and $8,662,555, respectively.
Other intangible assets - Identifiable intangible assets resulting from acquisitions are amortized on a straight-line basis for a period up to 30 years. Accumulated amortization relating to intangible assets at December 31, 1995 and 1994 was $22,989,814 and $17,923,152 respectively. Other intangible assets also include the costs of television program contracts, recorded under the gross method, which are deferred and amortized over the estimated number of runs of the related programs.
Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Reclassification - Certain reclassifications have been made to the 1994 and 1993 financial statements to conform with the 1995 presentation.
2.Employee benefit plans
Contributory and noncontributory pension and savings plans cover substantially all employees. The amount charged against earnings with respect to all of these plans was $9,908,000, of which $4.0 million relates to the merger of the newspapers, $6,225,000, and $5,712,000 in 1995, 1994 and 1993, respectively.
Net pension cost for the defined benefit plan includes the following components:
(thousands of dollars) 1995 1994 1993 Service cost $ 2,068 $2,481 $2,233 Interest on projected benefit obligation 6,015 5,526 5,551 Return on plan assets (10,644) 865 (4,768) One-time recognition of costs related to newspaper merger 4,000 - - Net amortization and deferral 4,860 (6,570) (683) ------- ------- ------ Net pension cost $6,299 $2,302 $2,333 ===== ===== =====
Actuarial assumptions used to project the benefit obligations and the net pension cost were:
1995 1994 1993
Discount rate 7.50% 8.00% 7.25% Rate of increase in compensation levels 5.00% 5.25% 4.75% Expected long-term rate of return on plan assets 9.50% 9.50% 9.50%
The assets of the plan consist primarily of government and other bonds and listed stocks. The accrued pension liability at December 31, 1995 and 1994 was $10,199,000 and $7,715,000, respectively.
The funded status of the plan at December 31 was as follows:
(thousands of dollars) 1995 1994
Actuarial present value of benefit obligations: Vested benefits $67,428 $60,232 Nonvested benefits 2,949 3,074 ------- ------- Accumulated benefit obligation 70,377 63,306 Effect of projected compensation levels 13,396 13,073 ------- ------- Projected benefit obligation 83,733 76,379 Less: plan assets at fair value 63,047 57,342 ------ ------ Projected benefit obligation in excess of plan assets $20,726 $19,037 ====== ======
On January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" (SFAS 106). This standard requires that the expected cost of postretirement health and life insurance benefits be charged to expense during the years the employees render service. The Company has elected to amortize the unfunded obligation of $25,324,000 at January 1, 1993 over a period of 20 years. Postretirement benefit expense includes the following components:
(thousands of dollars) 1995 1994 1993 Service cost $433 $572 $454 Interest cost on accumulated postretirement benefit obligation 2,067 1,991 2,073 Amortization of transition obligation 1,139 1,266 1,266 One-time recognition of costs related to newspaper merger 2,092 - - ----- ----- ----- Postretirement benefit expense $5,731 $3,829 $3,793 ===== ===== =====
The funded status of the plans on an aggregate basis at December 31 was as follows:
(thousands of dollars) 1995 1994 Accumulated postretirement benefit obligation: Retirees $19,756 $15,156 Fully eligible participants 855 1,645 Other active participants 7,859 8,131 ------- ------ Total accumulated postretirement benefit obligation 28,470 24,932 Unrecognized actuarial gain (loss) (1,655) 837
Less: Unrecognized transition obligation 18,871 22,102 ------- ------ Accrued postretirement benefit cost liability $ 7,944 $ 3,667 ====== ======
The assumed health care costs trend rates used in measuring the accumulated postretirement benefit obligation (APBO) for pre-age retirees for 1996 are 9.0% grading down to 5.0% in 2010 and thereafter, and for 1995 was 9.5% grading down to 5.5% in 2008 and thereafter, and for post-age (65) retirees for 1996 are 8.0% grading down to 5.0% in 2006 and thereafter, and 1995 was 8.5% grading down to 5.5% in 2004 and thereafter. The benefit cost trend rates have a significant effect on the amounts reported. The impact of a 1% increase in the health care cost trend rates would have increased the APBO 5.4% at December 31, 1995, and would have increased the aggregate service cost and interest cost components of the postretirement benefit expense by 6.7%. The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 7.5% and 8.0% for 1995 and 1994, respectively.
3. Income Taxes
The provision for income taxes consists of the following:
(thousands of dollars) 1995 1994 1993 Current Federal $18,670 $21,400 $21,870 State 5,270 6,230 5,790 ------- ------- ------- 23,940 27,630 27,660 Deferred (5,610) (400) (1,200) ------- ------- ------- $18,330 $27,230 $26,460 ======= ======= =======
The components of net deferred taxes as of December 31 were as follows:
(thousands of dollars) Deferred tax assets: 1995 1994 Accrued compensation and employee benefits $ 9,520 $ 6,902 Intangible assets 569 896 Inventories 390 49 Accounts receivable 855 648 Domestic loss carryforwards 2,491 1,056 Foreign loss carryforwards 1,121 - Other 540 687 ------- ------- Total deferred tax assets 15,486 10,238
Deferred tax liability: Property, plant and equipment 11,969 12,327 ------- ------- Net deferred tax asset (liability) included in balance sheet $ 3,517 $(2,089) ======= =======
4. Litigation
In November 1995, a judgement was issued against the Company for $8.4 million in connection with a patent infringement lawsuit. In February 1996, the judgement was settled for $5.7 million, which has been recorded in fiscal 1995. The settlement fully relieves the Company of all past and future obligations under this matter.
5. Long-term obligations
December 31, 1995 1994 Note payable,8%, due June 1996 $4,458,565 $ - Capital lease & other obligations, average interest 8% in 1995 1,510,508 1,924,895 Television program contracts, due through 1999 3,681,764 4,223,178 ---------- ---------- 9,650,837 6,148,073 Less current portion 6,889,035 3,201,437 ---------- ----------
$2,761,802 $2,946,636 ========== ==========
In addition, the Company has the rights to broadcast certain television programs during the years 1996-2000 under contracts aggregating $8,964,075.
6. Stockholders' equity
The Company periodically purchases units of beneficial interest in The Journal Employees' Stock Trust (JESTA) for use in its Incentive Compensation Plan and for resale to its employees. Treasury stock activity is as follows:
7. Acquisitions
On January 24, 1995 and February 1, 1995, the Company acquired the business and substantially all of the assets of KEZO-FM, KEZO-AM and KKCD-FM in Omaha, Nebraska. The combined cash purchase price was approximately $12.7 million.
On June 22, 1995, the Company acquired the business and substantially all of the assets of Mega Direct, a direct marketing company based in Clearwater, Florida, at a purchase price of approximately $8 million.
The acquisitions were accounted for using the purchase method. Accordingly, the operating results and cash flows of the acquired businesses are included in the Company's consolidated financial statements from the dates of acquisition. Had KEZO-FM, KEZ0-AM, KKCD-FM and Mega Direct been acquired as of January 1, 1995, the effect of the acquisitions on the Company's consolidated results of operations would not have been material.
8. Merger Charges
On April 2, 1995, Journal Sentinel Inc. merged The Milwaukee Journal and the Milwaukee Sentinel into a morning newspaper called the Milwaukee Journal Sentinel. This resulted in a pretax charge of $17.5 million, which consisted of $11.3 million in termination benefits for approximately 250 employees and $6.2 million for other nonrecurring costs associated with the launch of the new newspaper. In 1995, $5.2 million of the termination benefits and all of the other costs were paid.
9. Discontinued Operations
Effective April 27, 1995, the Company sold substantially all the assets used in the business of its wholly owned subsidiary, Perry Printing Corporation ("Perry"). Perry was a heatset web offset printer of long run catalogs and publications. The assets sold consisted of accounts receivable, inventories, fixtures, equipment and certain real estate.
The Perry operations have been reflected as discontinued operations,and accordingly, prior period financial statements have been restated to reflect this treatment.
Net revenues of discontinued operations were as follows:
1995 1994 1993
Net Revenues $45,945,666 $116,967,239 $105,914,558
The sale price was approximately $95 million, which included 115,000 shares of the buyer's preferred stock with a value of $11.5 million, plus the assumption of trade and other liabilities by the buyer. The Company has recorded an after tax gain on the sale of $14.9 million.
10. Segment analysis
Journal Communications, Inc. is an employee-owned, diversified communications company with operations in 16 states and France. The Company's principal lines of business are publishing, broadcasting, printing, telecommunications and direct marketing. The Milwaukee Journal Sentinel and 75 paid and free periodicals are published. The broadcasting business consists of eight radio and three television stations. The printing of short-run publications, circulars and periodicals, computer software documentation and diskette duplication, quality labels and packaging and promotional materials is provided by the printing business. The telecommunications business provides a full range of services with one of the largest digital networks in the Midwest. Personalized direct marketing services are provided to merchandisers and manufacturers.
ITEM 9.

ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
PART III ITEM 10.

ITEM 10. DIRECTORS OF THE REGISTRANT
Directors Anderson, Barr, Christman, D'Alexander, Davis, Knoche, Koenan Woodall and Thomas are members of the Unitholders Council who were selected by unitholders to be nominated for election to the Board of Directors. Messrs. Bonaiuto, Ditter, Forbes, Davis and Thomas and Ms. D'Alexander have less than five years of service with the Company. The other directors, except for Mr. Meissner, have been employed by the Company or its subsidiaries in key management positions for more than five years. Information regarding the executive officers of the Company is set forth in Part I, Item 4A above. Mr. Meissner is Executive Director of the Public Policy Forum, Milwaukee. Additional information in response to this item is incorporated herein by reference to the Company's proxy statement, which shall be filed with the Securities and Exchange Commission no later than April 29, 1996.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
Information in response to this item is incorporated herein by reference to the Company's proxy statement, which shall be filed with the Securities and Exchange Commission no later than April 29, 1996.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following chart states the equity ownership of each Director of the Registrant and the chief executive officer and four next most highly compensated individuals who will be named as such in the Registrant's Proxy Statement, which will be filed with the Securities and Exchange Commission no later than April 29, 1996:
Units Held Percent of as of Ownership Held Office March 13, *denotes Name Age Since 1996(1) <1%(2)
David A. Anderson 44 June 6, 1995 4,630 * Margaret E. Barr 48 June 7, 1994 9,700 * Paul M. Bonaiuto 45 June 8, 1993 13,000 * Sue Ellen Christman 53 June 6, 1995 1,350 * Judith M. D'Alexander 48 June 6, 1995 200 * John C. Davis 33 June 6, 1995 3,230 * James J. Ditter 34 September 6, 1995 2,740 * Robert M. Dye 47 March 6, 1990 41,580 * Christine A. Farnsworth 47 June 8, 1993 31,550 * Gregory H. Forbes 46 June 8, 1993 25,000 * Stephen O. Huhta 40 June 8, 1993 26,355 * Robert A. Kahlor 62 March 6, 1973 85,435 * Thomas M. Karavakis 65 June 5, 1984 77,035 * Douglas G. Kiel 47 June 4, 1991 26,300 * Eldon M. Knoche 56 June 6, 1995 11,330 * M. J. L. Koenan Woodall 29 June 6, 1995 1,495 * Paul E. Kritzer 53 June 5, 1990 35,070 * Ronald G. Kurtis 48 June 8, 1993 49,800 * David G. Meissner 58 June 7, 1988 --(3) --(3) Steven J. Smith 45 June 2, 1987 73,880 * Keith K. Spore 53 September 6, 1995 22,000 * Christopher S. Thomas 26 June 6, 1995 570 * All directors as a group(4) 5,844,276 45.1%
(1) A "Unit" represents a beneficial interest in one share of the common stock of Journal Communications, Inc.
(2) Represents percentage of the 12,960,000 units outstanding on March 13, 1996.
(3) Mr. Meissner owns no Units but is an officer and director of Matex Inc., which owns 1,320,000 shares of Journal stock. Mr. Meissner's wife is also an officer and director of Matex Inc. and together with her children owns or has a beneficial interest in 33% of the outstanding common stock of Matex Inc. Mrs. Meissner also has a 33% beneficial interest in 120,000 shares of Journal Communications, Inc. common stock. Other members of Mrs. Meissner's family own or have a beneficial interest in the remaining 67% of the Matex Inc. shares and the 120,000 shares of Journal stock.
(4) Each of Messrs. Bonaiuto, Kahlor, Karavakis, Kiel and Smith has voting power arising under the Trust Agreement establishing the Trust in respect to the number of units set forth opposite such individual's name. In addition, as a group as trustees of the Trust, such individuals have voting power arising under the Trust Agreement establishing the Trust, as of March 13, 1996, in respect of 5,302,026 units held by retirees and other former employees of the Registrant, employee benefit trusts, employees' personal trusts and charitable, educational or religious trusts.
Additional information in response to this item is incorporated herein by reference to the Company's proxy statement, which shall be filed with the Securities and Exchange Commission no later than April 29, 1996.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information in response to this item is incorporated herein by reference to the Company's proxy statement, which shall be filed with the Securities and Exchange Commission no later than April 29, 1996.
PART IV ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements and Financial Statement Schedules The following consolidated financial statements of the Registrant are included in Item 8:
Form 10-K Page Number Consolidated Balance Sheets at December 31, 1995, 1994 and 1993 18
Consolidated Statements of Earnings and Retained Earnings for each of the three years in the period ended December 31, 1995 19-20
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 1995 21
Notes to Consolidated Financial Statements 22-28
Financial Statement Schedules: Consolidated schedules for each of the three years in the period ended December 31, 1995: II - Valuation and qualifying accounts 32
All other 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.
2. Exhibits The exhibits listed below are filed as part of this annual report.
Exhibits
( 3.1) Articles of Association, filed herewith
( 3.2) By-Laws [Incorporated by reference to Exhibit 3.1 to Journal Communications, Inc.'s Current Report on Form 8-K dated March 5, 1996 (Commission File No. 0-7831)]
( 9) Journal Employees' Stock Trust Agreement, dated May 15, 1937, as amended, filed herewith
(10.1) Management Long Term Incentive Plan, filed herewith
(10.2) Management Annual Incentive Plan, filed herewith
(21) Subsidiaries of the Registrant, filed herewith
(23) Consent of Independent Auditors, filed herewith
(27) Financial Data Schedule, filed herewith
JOURNAL COMMUNICATIONS, INC.
SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 1995, 1994 and 1993
Balance at Additions Deductions Balance beginning charged to from at end of year earnings allowances of year Allowance for doubtful receivables:
1995 $2,065,012 $3,007,365 $2,596,707 $2,475,670 ========== ========== ========== ========== 1994 $2,500,533 $2,952,136 $3,387,657 $2,065,012 ========== ========== ========== ========== 1993 $2,612,329 $2,336,437 $2,448,233 $2,500,533 ========== ========== ========== ==========
Note:
(a) Accounts receivable written off, less recoveries, against the allowance.
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 COMMUNICATIONS, INC.
By: /s/ Robert a. Kahlor Robert A. Kahlor Chairman of the Board and CEO
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:
/s/ David A. Anderson April 1, 1996 David A. Anderson, Director
/s/ Margaret E. Barr April 1, 1996 Margaret E. Barr, Director
/s/ Paul M. Bonaiuto April 1, 1996 Paul M. Bonaiuto, Director & Chief Financial Officer (Principal Financial Officer)
/s/ Sue Ellen Christman April 1, 1996 Sue Ellen Christman, Director
/s/ Judith M. D'Alexander April 1, 1996 Judith M. D'Alexander, Director
/s/ John C. Davis April 1, 1996 John C. Davis, Director
/s/ James J. Ditter April 1, 1996 James J. Ditter, Director
/s/ Robert M. Dye April 1, 1996 Robert M. Dye, Director
/s/ Christine A. Farnsworth April 1, 1996 Christine A. Farnsworth, Director
/s/ Gregory H. Forbes April 1, 1996 Gregory H. Forbes, Director
/s/ Stephen O. Huhta April 1, 1996 Stephen O. Huhta, Director
/s/ Robert A. Kahlor April 1, 1996 Robert A. Kahlor, Director & Chairman of the Board (Principal Executive Officer)
/s/ Thomas M. Karavakis April 1, 1996 Thomas M. Karavakis, Director
/s/ Douglas G. Kiel April 1, 1996 Douglas G. Kiel, Director
/s/ Eldon M. Knoche April 1, 1996 Eldon M. Knoche, Director
/s/ Mary Jane L. Koenen Woodall April 1, 1996 Mary Jane L. Koenen Woodall, Director
/s/ Paul E. Kritzer April 1, 1996 Paul E. Kritzer, Director
/s/ Ronald G. Kurtis April 1, 1996 Ronald G. Kurtis, Director
/s/ David G. Meissner April 1, 1996 David G. Meissner, Director
/s/ Steven J. Smith April 1, 1996 Steven J. Smith, Director
/s/ Keith K. Spore April 1, 1996 Keith K. Spore, Director
/s/ Christopher S. Thomas April 1, 1996 Christopher S. Thomas, Director
JOURNAL COMMUNICATIONS, INC.
INDEX TO EXHIBITS (Item 14(a))
Exhibits
( 3.1) Articles of Association, filed herewith
( 3.2) By-Laws [Incorporated by reference to Exhibit 3.1 to Journal Communications, Inc.'s Current Report on Form 8- K dated March 5, 1996 (Commission File No. 0-7831)]
( 9) Journal Employees' Stock Trust Agreement, dated May 15, 1937, as amended, filed herewith
(10.1) Management Long Term Incentive Plan, filed herewith
(10.2) Management Annual Incentive Plan, filed herewith
(21) Subsidiaries of the Registrant, filed herewith
(23) Consent of Independent Auditors, filed herewith
(27) Financial Data Schedule, filed herewith