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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended June 27, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to
Commission File Number: 1-12955
JOURNAL REGISTER COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 22-3498615
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
50 WEST STATE STREET, TRENTON, NEW JERSEY 08608-1298
(Address of Principal Executive Offices) (Zip Code)
(609) 396-2200
(Registrant's Telephone Number, Including Area Code)
---------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act, Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: common stock, $.01 par
value per share, 41,950,930 shares outstanding (exclusive of treasury shares)
as of August 2, 2004.
===============================================================================
JOURNAL REGISTER COMPANY
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets...................1
Condensed Consolidated Statements of Income.............2
Condensed Consolidated Statements of Cash Flows.........3
Notes to Condensed Consolidated Financial Statements....4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..........11
Item 3. Quantitative and Qualitative Disclosures
About Market Risk......................................21
Item 4. Controls and Procedures................................22
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders....23
Item 6. Exhibits and Reports on Form 8-K.......................24
Signature.......................................................25
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JOURNAL REGISTER COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
DOLLARS IN THOUSANDS JUNE 27, DECEMBER 28,
FISCAL PERIOD ENDED 2004 2003
====================================================================================================================================
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 37 $ 31
Accounts receivable, less allowance for doubtful
accounts of $ 6,400 and $ 5,785, respectively 44,244 43,591
Inventories 6,660 6,597
Deferred income taxes 2,981 3,719
Other current assets 7,121 4,149
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 61,043 58,087
- ------------------------------------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT:
Land 10,720 10,720
Buildings and improvements 77,044 76,759
Machinery and equipment 177,165 174,519
Construction in progress 9,373 7,413
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 274,302 269,411
Less accumulated depreciation (149,939) (143,398)
- ------------------------------------------------------------------------------------------------------------------------------------
NET PROPERTY, PLANT AND EQUIPMENT 124,363 126,013
- ------------------------------------------------------------------------------------------------------------------------------------
INTANGIBLE AND OTHER ASSETS:
Goodwill 492,179 491,833
Other intangible assets, net of accumulated amortization
of $ 10,346 and $ 9,654, respectively 14,498 14,500
Other assets 3,751 2,627
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 695,834 $ 693,060
====================================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Current maturities of long-term debt $ 40,324 $ 37,853
Accounts payable 12,384 9,454
Accrued interest 1,902 2,062
Deferred subscription revenue 11,091 10,614
Accrued salaries and vacation 5,780 6,455
Fair market value of hedges 583 2,483
Other accrued expenses and current liabilities 18,786 14,564
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 90,850 83,485
- ------------------------------------------------------------------------------------------------------------------------------------
Senior debt, less current maturities 338,530 380,492
Deferred income taxes 51,496 47,379
Accrued retiree benefits and other liabilities 20,468 19,462
Income taxes payable 90,068 89,898
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value per share, 300,000,000 shares authorized,
48,437,581 issued at June 27, 2004 and December 28, 2003 484 484
Additional paid-in capital 360,260 359,359
Unearned compensation (133) -
Accumulated deficit (142,419) (167,426)
- ------------------------------------------------------------------------------------------------------------------------------------
218,192 192,417
- ------------------------------------------------------------------------------------------------------------------------------------
Less treasury stock, 6,486,651 and 6,837,948 shares respectively, at cost. (95,637) (100,817)
Accumulated other comprehensive loss, net of tax (18,133) (19,256)
- ------------------------------------------------------------------------------------------------------------------------------------
NET STOCKHOLDERS' EQUITY 104,422 72,344
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 695,834 $ 693,060
====================================================================================================================================
SEE ACCOMPANYING NOTES.
1
JOURNAL REGISTER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
IN THOUSANDS, EXCEPT PER SHARE DATA JUNE 27, JUNE 29, JUNE 27, JUNE 29,
FISCAL PERIOD ENDED 2004 2003 2004 2003
- ---------------------------------------------------------------------------------------------------------------------
REVENUES:
Advertising $ 81,459 $ 77,725 $154,136 $147,482
Circulation 22,107 22,245 44,608 44,962
- ---------------------------------------------------------------------------------------------------------------------
Newspaper revenues 103,566 99,970 198,744 192,444
Commercial printing and other 4,085 4,190 8,065 8,348
- ---------------------------------------------------------------------------------------------------------------------
TOTAL REVENUES 107,651 104,160 206,809 200,792
- ---------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Salaries and employee benefits 39,438 39,069 78,687 77,919
Newsprint, ink and printing charges 8,162 7,728 15,870 15,174
Selling, general and administrative 14,324 13,059 27,798 26,024
Depreciation and amortization 3,678 3,914 7,389 7,764
Other 14,643 14,477 29,484 28,650
- ---------------------------------------------------------------------------------------------------------------------
Total operating expenses 80,245 78,247 159,228 155,531
- ---------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 27,406 25,913 47,581 45,261
Net interest expense and other (3,128) (3,770) (6,463) (7,729)
- ---------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes 24,278 22,143 41,118 37,532
Provision for income taxes 9,518 8,212 16,111 13,798
- ---------------------------------------------------------------------------------------------------------------------
NET INCOME $ 14,760 13,931 $ 25,007 $ 23,734
=====================================================================================================================
NET INCOME PER COMMON SHARE:
Basic $ 0.35 $ 0.34 $ 0.60 $ 0.57
Diluted $ 0.35 $ 0.34 $ 0.59 $ 0.57
WEIGHTED-AVERAGE SHARES OUTSTANDING:
Basic 41,938 41,137 41,852 41,286
Diluted 42,693 41,566 42,635 41,618
SEE ACCOMPANYING NOTES.
2
JOURNAL REGISTER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
DOLLARS IN THOUSANDS TWENTY-SIX WEEKS ENDED
FISCAL PERIOD ENDED JUNE 27, 2004 JUNE 29, 2003
====================================================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 25,007 $ 23,734
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for losses on accounts receivable 1,728 1,808
Depreciation and amortization 7,389 7,764
Increase in deferred income taxes 4,078 4,134
(Increase) decrease in accounts receivable (2,381) 1,218
Increase (decrease) in accounts payable 2,930 (138)
Other, net 916 1,081
- --------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 39,667 39,601
- --------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net additions to property, plant and equipment (5,070) (8,676)
Purchases of businesses (1,036) -
- --------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (6,106) (8,676)
- --------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments of long-term debt (39,491) (23,547)
Exercise of stock options for common stock 5,936 524
Purchase of Company stock - (7,905)
- --------------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (33,555) (30,928)
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 6 (3)
Cash and cash equivalents, beginning of period 31 33
- --------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 37 $ 30
====================================================================================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 6,557 $ 7,860
Income taxes $ 10,671 $ 10,546
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES:
Comprehensive income - mark-to-market hedge
adjustments, net of tax $ 1,123 $ 724
====================================================================================================================
SEE ACCOMPANYING NOTES.
3
JOURNAL REGISTER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 2004
(Unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements include
Journal Register Company and all of its wholly owned subsidiaries (the
"Company"). The Company primarily publishes daily and non-daily newspapers
serving markets in Greater Philadelphia, Connecticut, the Greater Cleveland area
of Ohio, Central New England, and the Capital-Saratoga and Mid-Hudson regions of
New York. The Company also owns and manages commercial printing operations in
Connecticut and Pennsylvania. In addition, the Company currently operates 161
individual Websites featuring the Company's daily newspapers and non-daily
publications.
The Company has authorized 1,000,000 shares of Preferred Stock, none of
which were issued or outstanding during the periods for which the financial
statements are presented.
The condensed consolidated interim financial statements included herein
have been prepared by the Company, without audit, in accordance with accounting
principles generally accepted in the United States ("GAAP") and pursuant to the
rules and regulations of the Securities and Exchange Commission. The condensed
consolidated interim financial statements do not include all of the information
and footnote disclosure required by GAAP for complete financial statements. In
the opinion of the Company's management, the accompanying unaudited condensed
consolidated financial statements contain all material adjustments (consisting
only of normal recurring accruals) necessary to present fairly its financial
position as of June 27, 2004 and December 28, 2003, the results of its
operations for the thirteen and twenty-six week periods ended June 27, 2004 and
June 29, 2003 and its cash flows for the twenty-six week periods ended June 27,
2004 and June 29, 2003. These financial statements should be read in conjunction
with the Company's December 28, 2003 audited consolidated financial statements
and notes thereto. The interim operating results are not necessarily indicative
of the results to be expected for an entire year.
2. EARNINGS PER COMMON SHARE
The following table sets forth the computation of weighted-average shares
outstanding for calculating both basic and diluted earnings per share ("EPS"):
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
JUNE 27, 2004 JUNE 29, 2003 JUNE 27, 2004 JUNE 29, 2003
- --------------------------------------------------------------------------------------------------------------------
Weighted-average shares - basic 41,938 41,137 41,852 41,286
Effect of dilutive securities:
Employee stock options 755 429 783 332
- --------------------------------------------------------------------------------------------------------------------
Weighted-average shares - diluted 42,693 41,566 42,635 41,618
====================================================================================================================
4
JOURNAL REGISTER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 2004
(Unaudited)
2. EARNINGS PER COMMON SHARE (CONTINUED)
Options to purchase approximately 2.2 million shares of common stock at
ranges of $21.00 to $22.50 per share were outstanding during the thirteen and
twenty-six week periods ended June 27, 2004, but were not included in the
computation of diluted EPS in either period because the exercise prices were
greater than the average market price of the common shares during such period.
Similarly, options to purchase approximately 2.2 million shares of common stock
at ranges of $17.63 to $22.50 per share and $16.81 to $22.50 per share were
outstanding during the thirteen and twenty-six week periods ended June 29, 2003,
respectively, but were not included in the computation of diluted EPS in either
period because the exercise prices were greater than the average market price of
the common shares.
3. COMMON STOCK
The Company's Board of Directors has authorized the use of up to $100
million per year for the repurchase of the Company's Common Stock. Shares under
the stock repurchase program are to be purchased at management's discretion,
either in the open market or in privately negotiated transactions. Since January
13, 1999, and as of June 27, 2004, the Company has repurchased approximately 7.5
million shares at a total cost of approximately $110.2 million.
4. STOCK-BASED COMPENSATION COSTS
In December 2002, the Financial Accounting Standards Boards ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 148, ACCOUNTING
FOR STOCK-BASED COMPENSATION - TRANSITION AND DISCLOSURE, to provide alternative
methods of transition for a voluntary change to the fair value method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
amends the disclosure requirements of SFAS No. 123, ACCOUNTING FOR STOCK BASED
COMPENSATION, to require more prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The
additional disclosure requirements of SFAS No. 148 are effective for fiscal
years ending after December 15, 2002. The Company elected to continue to follow
the intrinsic value method of accounting as prescribed by Accounting Principles
Board Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES ("APB 25") and
related interpretations in accounting for its employee stock options. SFAS No.
148 did not require the Company to change to the fair value based method of
accounting for stock-based compensation.
For purposes of pro forma disclosure, the estimated fair value of the
options is amortized to expense over the vesting period for such options. The
Company's quarterly pro forma information, had compensation costs for the
Company's stock option plans been determined in accordance with SFAS No. 123, is
as follows:
5
JOURNAL REGISTER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 2004
(Unaudited)
4. STOCK-BASED COMPENSATION COSTS (CONTINUED)
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
JUNE 27, JUNE 29, JUNE 27, JUNE 29,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2004 2003 2004 2003
___________________________________________________________________________________________________________________
Net income:
As reported $14,760 $13,931 $25,007 $23,734
Add: Stock-based employee compensation
expense included in reported net income,
net of related tax effects 7 -- 7 --
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects (520) (768) (1,000) (1,504)
____________________________________________________________________________________________________________________
Pro forma $14,247 $13,163 $24,014 $22,230
====================================================================================================================
Net income per common share:
As reported:
Basic $ 0.35 $ 0.34 $ 0.60 $ 0.57
Diluted $ 0.35 $ 0.34 $ 0.59 $ 0.57
Pro forma:
Basic $ 0.34 $ 0.32 $ 0.57 $ 0.54
Diluted $ 0.33 $ 0.32 $ 0.56 $ 0.53
====================================================================================================================
5. ACQUISITIONS
The Company applies the purchase method of accounting for acquisitions.
Acquisitions and dispositions of newspaper properties are subject to the
finalization of customary purchase price adjustments and closing costs. The
Company completed one acquisition during 2003 and two acquisitions during the
first half of 2004. On November 17, 2003, the Company completed the acquisition
of the assets of THE NORTH ATTLEBOROUGH FREE PRESS, based in North Attleborough,
Massachusetts. This acquisition included a weekly newspaper servicing North
Attleborough, Attleboro Falls and certain neighboring communities, including
Plainville, South Attleboro and Attleboro. On January 28, 2004, the Company
completed the acquisition of O JORNAL, a weekly Portuguese-language newspaper
based in Fall River, Massachusetts, with circulation of approximately 14,300
serving more than 30 communities in Massachusetts and Rhode Island. On May 4,
2004, the Company completed the acquisition of the assets of Mohawk Valley
Media, a group of non-daily publications based in Rome, New York serving Rome
and neighboring communities.
6
JOURNAL REGISTER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 2004
(Unaudited)
6. HEDGING ACTIVITY
In accordance with the requirements of its Credit Agreement dated July
15, 1998, the Company is required to maintain certain Interest Rate Protection
Agreements ("IRPAs") on a portion of its debt, to reduce the potential exposure
of the Company's future cash flows to fluctuations in variable interest rates.
The minimum requirement varies depending on the Company's Total Leverage Ratio,
as defined in the Credit Agreement.
Pursuant to the requirements of the Credit Agreement, the Company entered
into certain interest rate hedges ("Collars") on November 9, 2001. The Collars
establish an interest rate ceiling ("CAP") and an interest rate floor ("floor").
The CAP on the Company's Collars, which became effective on October 29,
2002, is 6.0 percent and the floor averages approximately 2.66 percent. These
rates are based upon the 90-day LIBOR. In the event 90-day LIBOR exceeds 6.0
percent, the Company will receive cash from the issuers to compensate for the
rate in excess of the 6.0 percent CAP. If the 90-day LIBOR is lower than 2.66
percent, the Company will pay cash to the issuers to compensate for the rate
below the floor. The Collars became effective on October 29, 2002 for a notional
amount of $170 million. The Collars amortize over two years to a notional
aggregate amount of $135 million and terminate on October 29, 2004. As of June
27, 2004, the notional aggregate amount of these Collars was $143 million.
On October 10, 2002, the Company entered into additional interest rate
collars (the "Additional Collars"). The effective date of the Additional Collars
was January 29, 2003. The Additional Collars are for a notional aggregate amount
of $150 million, which is fixed over the two-year term. Similar to the existing
Collars, the Additional Collars establish a CAP and a floor at no initial cost
to the Company. The CAP on the Additional Collars is 4.0 percent and the floor
averages approximately 1.54 percent. These rates are also based upon the 90-day
LIBOR. In the event that 90-day LIBOR exceeds 4.0 percent, the Company will
receive cash from the issuers to compensate for the rate in excess of the 4.0
percent CAP. If the 90-day LIBOR is lower than 1.54 percent, the Company will
pay cash to the issuers to compensate for the rate below the floor.
On April 8, 2004, the Company entered into an additional interest rate
collar ("New Collar"). The effective date of the New Collar will be October 29,
2004. The New Collar is for a notional amount of $100 million, which is fixed
for its two-year term. Similar to the existing Collars, the New Collar
establishes a CAP and a floor at no initial cost to the Company. The CAP on the
New Collar is 4.5 percent and the floor is 2.08 percent. These rates are based
upon the 90-day LIBOR.
Under Financial Accounting Standard No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES ("SFAS 133"), as amended, the fair market
value of derivatives is reported as an adjustment to Other Comprehensive
Income/Loss ("OCI"). The IRPAs were fully effective in hedging the changes in
cash flows related to the debt obligation during the thirteen and twenty-six
week periods ended June 27, 2004 and the fiscal year ended December 28, 2003.
The total deferred loss reported in OCI as of June 27, 2004 and December 28,
2003 was approximately $0.3 million and $1.5 million, respectively (net of $0.2
million and $1.0 million of deferred taxes, respectively). Each IRPA is
designated for all or a portion of the principal balance and term of a specific
debt obligation. From time to time, the Company may enter into additional IRPAs
for nominal amounts on the outstanding debt that will, at a minimum, meet the
requirements of the Credit Agreement.
7
JOURNAL REGISTER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 2004
(Unaudited)
7. COMPREHENSIVE INCOME
The components of comprehensive income for the thirteen and twenty-six
week periods ended June 27, 2004 and June 29, 2003 are as follows:
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
(DOLLARS IN THOUSANDS) JUNE 27, 2004 JUNE 29, 2003 JUNE 27, 2004 JUNE 29, 2003
- --------------------------------------------------------------------------------------------------------------------
Net income $14,760 $13,931 $25,007 $23,734
Reclassification of unrealized gains on fully
effective hedges to net income, net of
tax 407 403 830 744
Net change in fair value of fully effective
hedges, net of tax 496 (385) 293 (20)
- --------------------------------------------------------------------------------------------------------------------
Comprehensive income $15,663 $13,949 $26,130 $24,458
====================================================================================================================
Accumulated other comprehensive loss, net of tax, as of June 27, 2004 and
December 28, 2003, was approximately $18.1 million and $19.3 million,
respectively. These balances primarily consist of net losses from changes in the
fair value of the Company's minimum pension liabilities and IRPAs.
8. INTANGIBLE AND OTHER ASSETS
On July 25, 2001, the FASB issued SFAS No. 142, GOODWILL AND OTHER
INTANGIBLE ASSETS. Under SFAS No. 142, goodwill and indefinite-lived intangible
assets are no longer amortized. However, goodwill and indefinite-lived
intangible assets are reviewed annually or more frequently, if required, for
impairment. Separable intangible assets that are not deemed to have an
indefinite life will continue to be amortized over their useful lives. During
fiscal year 2001, the Company adopted the amortization provisions of SFAS No.
142, which currently apply to goodwill and intangible assets acquired after June
30, 2001. With respect to goodwill and intangible assets acquired prior to July
1, 2001, the Company adopted SFAS No. 142 at the beginning of fiscal year 2002,
which began December 31, 2001. The Company performs the required annual
impairment tests as of the first day of the fourth quarter of each fiscal year.
Changes in the carrying amounts of intangible assets are as follows:
8
JOURNAL REGISTER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 2004
(Unaudited)
8. INTANGIBLE AND OTHER ASSETS (CONTINUED)
AS OF JUNE 27, 2004 AS OF DECEMBER 28, 2003
------------------------------------------ ------------------------------------------
ACCUMULATED ACCUMULATED
(DOLLARS IN THOUSANDS) GROSS AMORTIZATION NET GROSS AMORTIZATION NET
- --------------------------------------------------------------------------------------------------------------------
INTANGIBLE ASSETS SUBJECT TO
AMORTIZATION:
Customer and subscriber lists $ 6,743 $ (5,217) $ 1,526 $ 6,743 $ (4,853) $ 1,890
Non-compete covenants 2,870 (1,737) 1,133 2,870 (1,686) 1,184
Debt issuance costs 4,573 (3,300) 1,273 4,573 (3,023) 1,550
------------------------------------------------------------------------------------------------------------------
Total 14,186 (10,254) 3,932 14,186 (9,562) 4,624
------------------------------------------------------------------------------------------------------------------
INTANGIBLE ASSETS NOT SUBJECT
TO AMORTIZATION:
Goodwill 555,389 (63,210) 492,179 555,043 (63,210) 491,833
Mastheads 10,658 (92) 10,566 9,968 (92) 9,876
------------------------------------------------------------------------------------------------------------------
Total 566,047 (63,302) 502,745 565,011 (63,302) 501,709
------------------------------------------------------------------------------------------------------------------
Total goodwill and
other intangible assets $580,233 $(73,556) $506,677 $579,197 $(72,864) $506,333
==================================================================================================================
Identifiable intangible assets include customer and subscriber lists,
non-compete covenants, and debt issuance costs, which have an estimable useful
life and are amortizable on a straight-line basis over their useful lives.
Indefinite-lived intangible assets include goodwill and mastheads, which are not
amortizable. Mastheads are included in other intangible assets on the balance
sheet. The change in goodwill reflects the Company's acquisitions during the
twenty-six weeks ended June 27, 2004. For the thirteen week periods ended June
27, 2004 and June 29, 2003, amortization expense for intangible assets was
$346,000. For the twenty-six weeks ended June 27, 2004 and June 29, 2003,
amortization expense for intangible assets was $692,000 and $693,000,
respectively. Estimated future amortization expense for identifiable intangible
assets and other assets is as follows (DOLLARS IN THOUSANDS):
2004----------------------------- $ 1,384
2005----------------------------- 1,361
2006----------------------------- 902
2007----------------------------- 131
2008----------------------------- 131
Thereafter----------------------- 715
9
JOURNAL REGISTER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 2004
(Unaudited)
9. PENSION AND OTHER POST-RETIREMENT BENEFITS
Net Periodic Benefit Cost for the twenty-six weeks ended June 27, 2004
and June 29, 2003 included the following components:
OTHER POST-RETIREMENT
PENSION BENEFITS BENEFITS
-----------------------------------------------------------
(DOLLARS IN THOUSANDS) 2004 2003 2004 2003
- --------------------------------------------------------------------------------------------------------------------
COMPONENTS OF NET PERIODIC BENEFIT COST:
Service Cost $ 557 $ 487 $ - $ 2
Interest Cost 1,478 1,431 61 67
Expected Return on Plan Assets (1,804) (1,713) - -
Amortization of Net:
Transition Obligation - (10) - -
Prior Service Cost (89) (89) (23) (23)
(Gain)/Loss 490 545 (77) (82)
- --------------------------------------------------------------------------------------------------------------------
Net Periodic Benefit Cost $ 632 $ 651 $(39) $(36)
===============================================================================================================
The Company currently does not expect to contribute to the
Company-sponsored pension plans in fiscal year 2004. For the post-retirement
health and life insurance plans, the Company expects to contribute approximately
$400,000 in fiscal year 2004. As of June 27, 2004, approximately $150,000 has
been contributed by the Company to the post-retirement health and life insurance
plans.
10. SUBSEQUENT EVENTS
On July 2, 2004, the Company entered into a definitive agreement to
acquire 21st Century Newspapers, Inc. ("21st Century"), a privately-held
operator of one of the largest newspaper clusters in the United States. Located
in Michigan, 21st Century owns four daily newspapers with combined average daily
net paid circulation of approximately 137,500 and combined average Sunday net
paid circulation of approximately 176,000, and 87 non-daily publications with
approximately 1.5 million non-daily distribution. The 21st Century newspaper
cluster will become the Company's second largest cluster based on revenues,
after the Company's Greater Philadelphia cluster. THE DAILY OAKLAND PRESS and
THE MACOMB DAILY, two of 21st Century's daily newspapers, will become the
Company's second and third largest newspapers, respectively, with the NEW HAVEN
REGISTER remaining the Company's flagship and largest newspaper. Upon completion
of the acquisition, Journal Register Company will own 27 daily newspapers with
combined daily circulation of approximately 650,000 and Sunday circulation of
approximately 675,000, and 327 non-daily publications with combined non-daily
distribution of over 5 million. 21st Century had net revenues of $154.6 million
for the fiscal year ended December 28, 2003.
The purchase price for the acquisition is $415 million and will be paid
in cash. The acquisition will be financed with a portion of the proceeds of new
senior secured credit facilities to be provided by JPMorgan Chase Bank. The new
facilities, which will be for an aggregate amount of up to $1.05 billion, will
also refinance the Company's indebtedness outstanding under its existing Credit
Agreement, which was approximately $378.9 million at June 27, 2004.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company's principal business is publishing newspapers in the United
States, and its publications are primarily daily and non-daily newspapers. The
Company's revenues are derived primarily from advertising, paid circulation and
commercial printing.
As of June 27, 2004, the Company owned and operated 23 daily newspapers
and 240 non-daily publications strategically clustered in six geographic areas:
Greater Philadelphia; Connecticut; the Greater Cleveland area of Ohio; Central
New England; and the Capital-Saratoga and Mid-Hudson regions of New York. The
Company has total paid daily circulation of approximately 512,500, total paid
Sunday circulation of approximately 499,000 and total non-daily distribution of
approximately 3.5 million.
The principal elements of the Company's strategy are to: (i) expand
advertising revenues and readership; (ii) grow by acquisition; (iii) capture
synergies from geographic clustering; and (iv) implement consistent operating
policies and standards.
As part of the Company's strategy, the Company focuses on increasing
advertising and circulation revenues and expanding readership at its existing
and newly acquired properties. The Company has also developed certain operating
policies and standards, which it believes have resulted in significant
improvements in the cash flow and profitability of its existing and acquired
newspapers, including: (i) focusing on local content; (ii) maintaining and
improving product quality; (iii) enhancing distribution; and (iv) promoting
community involvement.
The Company is a leader in executing its clustering strategy. The Company
believes that its clustering strategy creates significant synergies and cost
savings within each cluster, including cross-selling of advertising, centralized
news gathering and consolidation of printing, production and back office
activities. The Company also believes that its clustering strategy enables it to
improve print quality and distribution, introduce new products and services in a
cost-effective manner and increase readership. In addition, clustering enables
the Company's advertisers to expand their reach and target their message both
geographically and demographically.
The Company's revenues are derived from advertising, paid circulation,
including single copy sales and subscription sales, and commercial printing and
other activities. Advertising revenues are comprised of three basic categories:
retail, classified and national. The Company's advertiser base is predominantly
local. The Company's newspapers seek to produce desirable results for local
advertisers by targeting readers based on certain geographic and demographic
characteristics. The Company seeks to increase readership, and thereby generate
traffic for its advertisers, by focusing on high product quality, compelling and
often proprietary local content and creative and interactive promotions.
The Company's advertising revenues are derived primarily from a broad
group of local advertisers. No single advertiser accounted for more than one
percent of the Company's total fiscal year 2003 revenues. The Company's
management believes that its advertising revenues tend to be relatively stable
because its newspapers rely on a broad base of local retail and local classified
advertising, rather than the generally more volatile national and major account
advertising. However, the Company's advertising revenues are susceptible to
economic swings, particularly those that affect the local economies in the
markets in which the Company operates, and can be difficult to predict.
In addition, the Company is committed to expanding its business through
its Internet initiatives. Online revenues are included in advertising revenues
and constituted approximately 1.7 percent of total advertising revenues for the
twenty-six week period ended June 27, 2004. The Company's online objective is to
make its Websites, all of which are accessible through WWW.JOURNALREGISTER.COM,
the indispensable source of useful and reliable community news, sports and
information in their markets by making the Websites the local information portal
for their respective markets. The Company currently operates 161 Websites, which
are affiliated with the Company's daily newspapers and non-daily publications.
11
The Company promotes single copy sales of its newspapers because it
believes that such sales have even higher readership than subscription sales,
and that single-copy readers tend to be more active consumers of goods and
services, as indicated by a Newspaper Association of America ("NAA") study.
Single copy sales also tend to generate higher profit margins than subscription
sales, as single copy sales generally have higher per unit prices and lower
distribution costs. Subscription sales, which provide readers with the
convenience of home delivery, are an important component of the Company's
circulation base. The Company also publishes numerous special sections and niche
and special interest publications. Such publications tend to increase readership
within targeted demographic groups and geographic areas. The Company's
management believes that as a result of these strategies, its newspapers
represent an attractive and cost-effective medium for its readers and
advertisers.
ACQUISITIONS AND DISPOSITIONS
On July 2, 2004, the Company entered into a definitive agreement to
acquire 21st Century Newspapers, Inc., a privately-held operator of one of the
largest newspaper clusters in the United States. Located in Michigan, 21st
Century owns four daily newspapers with combined average daily net paid
circulation of approximately 137,500 and combined average Sunday net paid
circulation of approximately 176,000, and 87 non-daily publications with
approximately 1.5 million non-daily distribution. The 21st Century newspaper
cluster will become the Company's second largest cluster based on revenues,
after the Company's Greater Philadelphia cluster. THE DAILY OAKLAND PRESS and
THE MACOMB DAILY, two of 21st Century's daily newspapers, will become the
Company's second and third largest newspapers, respectively, with the NEW HAVEN
REGISTER remaining the Company's flagship and largest newspaper. Upon completion
of the acquisition, Journal Register Company will own 27 daily newspapers with
combined daily circulation of approximately 650,000 and Sunday circulation of
approximately 675,000, and 327 non-daily publications with combined non-daily
distribution of over 5 million. The closing of the acquisition is expected to
occur in August 2004, subject to customary closing conditions.
From September 1993 through June 2004, the Company completed 28 strategic
acquisitions, acquiring 14 daily newspapers, 197 non-daily publications and four
commercial printing companies. Three of the four commercial printing facilities
owned by the Company print a number of the Company's non-daily publications and
the fourth is a premium quality sheet-fed printing company.
The Company completed one acquisition during 2003 and two acquisitions
during the first half of 2004. On November 17, 2003, the Company completed the
acquisition of the assets of THE NORTH ATTLEBOROUGH FREE PRESS, based in North
Attleborough, Massachusetts. This acquisition included a weekly newspaper
servicing North Attleborough, Attleboro Falls and certain neighboring
communities, including Plainville, South Attleboro and Attleboro. On January 28,
2004, the Company completed the acquisition of O JORNAL, a weekly
Portuguese-language newspaper based in Fall River, Massachusetts, with
circulation of approximately 14,300 serving more than 30 communities in
Massachusetts and Rhode Island. On May 4, 2004, the Company completed the
acquisition of the assets of Mohawk Valley Media, a group of non-daily
publications based in Rome, New York serving Rome and neighboring communities.
The Company's management believes that its newspapers are effective in
addressing the needs of local readers and advertisers. The Company's management
also believes that because its newspapers rely on a broad base of local retail
and local classified advertising, rather than more volatile national and major
account advertising, its advertising revenues tend to be relatively more stable
than large metropolitan and national newspapers.
RESULTS OF OPERATIONS
THIRTEEN WEEK PERIOD ENDED JUNE 27, 2004 AS COMPARED TO THE THIRTEEN WEEK
PERIOD ENDED JUNE 29, 2003
FOR COMPARISON PURPOSES, WHERE NOTED, THE COMPANY'S FINANCIAL RESULTS ARE
PRESENTED ON A SAME-STORE BASIS, WHICH EXCLUDES THE RESULTS OF THE COMPANY'S
ACQUISITIONS COMPLETED IN 2003 AND 2004 FROM THE RESULTS OF THE PERIODS
PRESENTED.
SUMMARY. Net income for the thirteen week period ended June 27, 2004 was
$14.8 million, or $0.35 per diluted share, versus $13.9 million, or $0.34 per
diluted share, for the thirteen week period ended June 29, 2003.
12
REVENUES. For the thirteen week period ended June 27, 2004, the Company's
revenues increased $3.5 million, or 3.4 percent, to $107.7 million. Newspaper
revenues for the thirteen weeks ended June 27, 2004 as compared to the prior
year period increased $3.6 million, or 3.6 percent, to $103.6 million,
principally due to an increase in advertising revenues of $3.7 million, or 4.8
percent, which increase in advertising revenues was partially offset by a
decrease in circulation revenues of $0.1 million, or 0.6 percent, as compared to
the prior year period. Commercial printing and other revenues for the thirteen
weeks ended June 27, 2004 decreased approximately $0.1 million, or 2.5 percent,
to $4.1 million as compared to the prior year period and represented 3.8 percent
of the Company's revenues for the thirteen weeks ended June 27, 2004. Online
revenues for the thirteen weeks ended June 27, 2004 were approximately $1.4
million, an increase of approximately 20.5 percent as compared to the prior year
period.
The following table sets forth the Company's total advertising revenues,
by category, for the thirteen week periods ended June 27, 2004 and June 29,
2003:
THIRTEEN WEEKS ENDED
(DOLLARS IN THOUSANDS) June 27, 2004 June 29, 2003 % Increase
-------------------------------------------------------------------------------------------------
Local $44,177 $43,014 2.7%
Classified 33,049 31,041 6.5%
National 4,233 3,670 15.3%
-------------------------------------------------------------------------------------------------
Total advertising revenues $81,459 $77,725 4.8%
=================================================================================================
SAME-STORE NEWSPAPER REVENUES. On a same-store basis, total newspaper
revenues for the thirteen week period ended June 27, 2004 increased $3.2
million, or 3.2 percent, to $103.2 million from $100.0 million in the prior year
period. Same-store advertising revenues increased $3.3 million, or 4.3 percent,
with all three categories of advertising revenues showing positive
year-over-year trends. Classified advertising revenues increased 6.4 percent,
retail advertising revenues increased 1.8 percent and national advertising
revenues increased 15.3 percent on a same store basis for the thirteen weeks
ended June 27, 2004, as compared to the thirteen weeks ended June 29, 2003. The
increase in classified advertising revenues resulted from a 14.5 percent
increase in same-store classified employment advertising revenues and a 12.3
percent increase in same-store classified real estate advertising revenues,
partially offset by a 7.4 percent decrease in same-store classified automotive
advertising revenues. Same-store circulation revenues declined $0.1 million, or
0.6 percent, as compared to the thirteen week period ended June 29, 2003.
SALARIES AND EMPLOYEE BENEFITS. Salaries and employee benefit expenses
were 36.6 percent of the Company's revenues for the thirteen week period ended
June 27, 2004, as compared to 37.5 percent for the thirteen week period ended
June 29, 2003. Salaries and employee benefits increased $0.4 million, or 0.9
percent, to $39.4 million for the thirteen week period ended June 27, 2004.
NEWSPRINT, INK AND PRINTING CHARGES. For the thirteen week period ended
June 27, 2004, newsprint, ink and printing charges were 7.6 percent of the
Company's revenues, as compared to 7.4 percent for the thirteen week period
ended June 29, 2003. Newsprint, ink and printing charges for the thirteen week
period ended June 27, 2004 increased approximately $0.4 million, or 5.6 percent,
as compared to the thirteen week period ended June 29, 2003. This increase is
principally due to an increase of approximately 8.1 percent in newsprint
expense. The increase in newsprint expense is due to an increase in unit costs
of approximately nine percent, partially offset by a decline in consumption.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses were 13.3 percent and 12.5 percent of the Company's revenues for the
thirteen week periods ended June 27, 2004 and June 29, 2003, respectively. As
compared to the prior year period, selling, general and administrative expenses
for the thirteen week period ended June 27, 2004 increased $1.3 million, or 9.7
percent, to $14.3 million. This increase was primarily due to costs related to
compliance with Section 404 of the Sarbanes-Oxley Act of 2002 and increased
insurance costs.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense was
3.4 percent of the Company's revenues for the thirteen week period ended June
27, 2004 as compared to 3.8 percent for the thirteen week period ended June 29,
2003. Depreciation and amortization expense for the period ended June 27, 2004
decreased approximately $0.2 million, or 6.0 percent, to $3.7 million as
compared to the prior year period, primarily
13
as a result of decreased depreciation due to the reduction in expense for assets
that are now fully depreciated, partially offset by depreciation associated with
capital expenditures.
OTHER EXPENSES. Other expenses were 13.6 percent and 13.9 percent of the
Company's revenues for the thirteen week periods ended June 27, 2004 and June
29, 2003, respectively. Other expenses increased approximately $0.2 million, or
1.1 percent, to $14.6 million for the thirteen week period ended June 27, 2004,
as compared to the prior year period, principally as a result of increases in
distribution and promotion costs.
OPERATING INCOME. Operating income was $27.4 million, or 25.5 percent of
the Company's revenues, for the thirteen week period ended June 27, 2004 as
compared to $25.9 million, or 24.9 percent of the Company's revenues, for the
thirteen week period ended June 29, 2003.
NET INTEREST AND OTHER EXPENSE. Net interest and other expense decreased
approximately $0.6 million, or 17.0 percent, for the thirteen week period ended
June 27, 2004 as compared to the thirteen week period ended June 29, 2003,
principally due to a reduction in the weighted-average debt outstanding during
the thirteen week period ended June 27, 2004 as compared to the thirteen week
period ended June 29, 2003. Interest rates were approximately 1.5 percent lower
in the 2004 period.
PROVISION FOR INCOME TAXES. The provision for income taxes increased
approximately $1.3 million, or 15.9 percent, for the thirteen week period ended
June 27, 2004 as compared to the thirteen week period ended June 29, 2003, due
to an increase in pretax income and an increase in the Company's effective tax
rate to 39.2 percent from 37.1 percent. The increase in the effective tax rate
is principally the result of state tax law changes.
OTHER INFORMATION. EBITDA (which the Company defines as net income plus
provision for income taxes, net interest expense, depreciation, amortization,
and other non-cash, special or non-recurring charges) was $31.1 million for the
thirteen week period ended June 27, 2004 as compared to $29.8 million for the
thirteen week period ended June 29, 2003. Free cash flow (which the Company
defines as EBITDA minus capital expenditures, net interest expense and cash
income taxes) was $18.0 million, or $0.42 per diluted share, for the thirteen
week period ended June 27, 2004, as compared to $13.9 million, or $0.33 per
diluted share, for the thirteen week period ended June 29, 2003. See
"Reconciliation of Certain Non-GAAP Financial Measures" below.
TWENTY-SIX WEEK PERIOD ENDED JUNE 27, 2004 AS COMPARED TO THE TWENTY-SIX WEEK
PERIOD ENDED JUNE 29, 2003
FOR COMPARISON PURPOSES, WHERE NOTED, THE COMPANY'S FINANCIAL RESULTS ARE
PRESENTED ON A SAME-STORE BASIS, WHICH EXCLUDES THE RESULTS OF THE COMPANY'S
ACQUISITIONS COMPLETED IN 2003 AND 2004 FROM THE RESULTS OF THE PERIODS
PRESENTED.
SUMMARY. Net income for the twenty-six week period ended June 27, 2004
was $25.0 million, or $0.59 per diluted share, versus $23.7 million, or $0.57
per diluted share, for the period ended June 29, 2003.
REVENUES. For the twenty-six week period ended June 27, 2004, the
Company's revenues increased $6.0 million, or 3.0 percent, to $206.8 million.
Newspaper revenues for the twenty-six weeks ended June 27, 2004 as compared to
the prior year period increased $6.3 million, or 3.3 percent, to $198.7 million,
due to an increase in advertising revenue of $6.7 million, or 4.5 percent, which
increase in advertising revenues was partially offset by a reduction in
circulation revenues for the twenty-six week period of $0.4 million, or 0.8
percent, as compared to the prior year period. Commercial printing and other
revenues for the twenty-six weeks ended June 27, 2004 decreased approximately
$0.3 million, or 3.4 percent, to $8.1 million as compared to the prior year
period and represented 3.9 percent of the Company's revenues for the twenty-six
weeks ended June 27, 2004 as compared to 4.2 percent for the prior year period.
Online revenues for the twenty-six weeks ended June 27, 2004 were approximately
$2.7 million, an increase of approximately 20.2 percent as compared to the prior
year period.
14
The following table sets forth the Company's total advertising revenues,
by category, for the twenty-six week periods ended June 27, 2004 and June 29,
2003:
TWENTY-SIX WEEKS ENDED
(DOLLARS IN THOUSANDS) June 27, 2004 June 29, 2003 % Increase
----------------------------------------------------------------------------------------------------
Local $ 82,909 $ 80,960 2.4%
Classified 63,080 59,121 6.7%
National 8,147 7,401 10.1%
----------------------------------------------------------------------------------------------------
Total advertising revenues $154,136 $147,482 4.5%
====================================================================================================
SAME-STORE NEWSPAPER REVENUES. On a same-store basis, total newspaper
revenues for the twenty-six week period ended June 27, 2004 increased $5.7
million, or 2.9 percent, to $198.1 million from $192.4 million in the prior year
period. Same-store advertising revenues increased $6.0 million, or 4.1 percent,
with all three categories of advertising revenues showing positive
year-over-year trends. Classified advertising revenues increased 6.6 percent,
retail advertising revenues increased 1.7 percent and national advertising
increased 10.1 percent for the twenty-six weeks ended June 27, 2004, each on a
same store basis and as compared to the twenty-six weeks ended June 29, 2003.
The increase in classified advertising revenues resulted from a 13.2 percent
increase in same-store classified employment advertising revenues and a 12.2
percent increase in same-store classified real estate advertising revenues,
partially offset by a 6.0 percent decrease in same-store classified automotive
advertising revenues. Same-store circulation revenues declined $0.4 million, or
0.8 percent, as compared to the twenty-six week period ended June 29, 2003.
SALARIES AND EMPLOYEE BENEFITS. Salaries and employee benefit expenses
were 38.0 percent of the Company's revenues for the twenty-six week period ended
June 27, 2004, as compared to 38.8 percent for the twenty-six week period ended
June 29, 2003. Salaries and employee benefits increased $0.8 million, or 1.0
percent, for the twenty-six week period ended June 27, 2004 to $78.7 million.
NEWSPRINT, INK AND PRINTING CHARGES. For the twenty-six week period ended
June 27, 2004, newsprint, ink and printing charges were 7.7 percent of the
Company's revenues, as compared to 7.6 percent for the twenty-six week period
ended June 29, 2003. Newsprint, ink and printing charges for the twenty-six week
period ended June 27, 2004 increased approximately $0.7 million, or 4.6 percent,
as compared to the twenty-six week period ended June 29, 2003. This increase is
principally due to an increase of approximately 7.4 percent in newsprint
expense. The increase in newsprint expense is due to an increase in unit costs
of approximately nine percent, partially offset by a decline in consumption.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses were 13.4 percent and 13.0 percent of the Company's revenues for the
twenty-six week periods ended June 27, 2004 and June 29, 2003, respectively. As
compared to the prior year period, selling, general and administrative expenses
for the twenty-six week period ended June 27, 2004 increased $1.8 million, or
6.8 percent, to $27.8 million. This increase was primarily due to costs related
to compliance with Section 404 of the Sarbanes-Oxley Act of 2002 and increased
insurance costs.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense for
the twenty-six period ended June 27, 2004 was 3.6 percent of the Company's
revenues 2004 as compared to 3.9 percent for the twenty-six week period ended
June 29, 2003. Depreciation and amortization expense for the twenty-six week
period ended June 27, 2004 decreased $0.4 million, or 4.8 percent, to $7.4
million as a result of decreased depreciation due to the reduction in expense
for assets that are now fully depreciated, partially offset by depreciation
associated with capital expenditures.
OTHER EXPENSES. Other expenses were 14.3 percent of the Company's
revenues for both the twenty-six week period ended June 27, 2004 and the
twenty-six week period ended June 29, 2003. Other expenses increased $0.8
million, or 2.9 percent, to $29.5 million in the twenty-six week period ended
June 27, 2004. This increase was primarily due to increases in distribution and
promotion costs.
15
OPERATING INCOME. Operating income was $47.6 million, or 23.0 percent of
the Company's revenues, for the twenty-six week period ended June 27, 2004 as
compared to $45.3 million, or 22.5 percent of the Company's revenues, for the
twenty-six week period ended June 29, 2003.
NET INTEREST AND OTHER EXPENSE. Net interest and other expense decreased
approximately $1.3 million, or 16.4 percent, for the twenty-six week period
ended June 27, 2004 as compared to the twenty-six week period ended June 29,
2003, principally due to a reduction in the weighted-average debt outstanding
during the twenty-six week period ended June 27, 2004 as compared to the
twenty-six week period ended June 29, 2003. Interest rates were approximately
1.5 percent lower in the 2004 period.
PROVISION FOR INCOME TAXES. The provision for income taxes increased
approximately $2.3 million, or 16.8 percent, for the twenty-six week period
ended June 27, 2004 as compared to the twenty-six week period ended June 29,
2003, primarily due to an increase in pretax income and an increase in the
Company's effective tax rate to 39.2 percent from 36.8 percent. The increase in
the effective tax rate is principally the result of state law changes and a
Federal Empowerment Zone tax credit of approximately $150,000, which was
recognized in the first quarter of 2003.
OTHER INFORMATION. EBITDA (which the Company defines as net income plus
provision for income taxes, net interest expense, depreciation, amortization,
and other non-cash, special or non-recurring charges) was $55.0 million in the
twenty-six week period ended June 27, 2004, as compared to $53.0 million for the
twenty-six week period ended June 29, 2003. Free cash flow (which the Company
defines as EBITDA minus capital expenditures, net interest expense and cash
income taxes) was $31.9 million, or $0.75 per diluted share, for the twenty-six
week period ended June 27, 2004, as compared to $27.0 million, $0.65 per diluted
share, for the twenty-six week period ended June 29, 2003. See "Reconciliation
of Certain Non-GAAP Financial Measures" below.
LIQUIDITY AND CAPITAL RESOURCES
On July 2, 2004, the Company entered into a definitive agreement to
acquire 21st Century Newspapers, Inc., a privately-held operator of one of the
largest newspaper clusters in the United States. The purchase price for the
acquisition is $415 million and will be paid in cash. The acquisition will be
financed with a portion of the proceeds of new senior secured credit facilities
to be provided by JPMorgan Chase Bank. The new facilities, which will be in an
aggregate amount of up to $1.05 billion, will also refinance the Company's
indebtedness outstanding under its existing Credit Agreement, which was
approximately $378.9 million at June 27, 2004. Upon closing of the new facility,
the Company anticipates that it will have availability under the new facility of
approximately $230 million.
The Company's operations have historically generated strong positive cash
flow. The Company believes that cash flows from operations and the availability
of funds from external sources, will be sufficient to fund its operating needs,
capital expenditure requirements and long-term debt obligations and will provide
it with flexibility to finance its acquisition strategy and share repurchase
program.
CASH FLOWS FROM OPERATING ACTIVITIES. Net cash provided by operating
activities for the twenty-six week period ended June 27, 2004 was $39.7 million
as compared to $39.6 million for the twenty-six week period ended June 29, 2003.
Current assets were $61.0 million and current liabilities, excluding current
maturities of long-term debt, were $50.5 million as of June 27, 2004. The
Company manages its working capital through the utilization of its Revolving
Credit Facility. The outstanding balance on the Revolving Credit Facility in
accordance with its terms, is classified as a long-term liability.
CASH FLOWS FROM INVESTING ACTIVITIES. Net cash used in investing
activities was $6.1 million for the twenty-six week period ended June 27, 2004.
Cash used in investing activities in 2004 was for investments in property, plant
and equipment and purchases of businesses. Net cash used in investing activities
was $8.7 million for the twenty-six week period ended June 29, 2003. The Company
has a capital expenditure program for its existing operation of approximately
$16 million in place for 2004, which includes: spending on technology, including
prepress and business systems, computer hardware and software; buildings; other
machinery and equipment; and vehicles. The Company believes its capital
expenditure program is sufficient to maintain its current level and
16
quality of operations. The Company reviews its capital expenditure program
periodically and modifies it as required to meet current needs.
CASH FLOWS FROM FINANCING ACTIVITIES. Net cash used in financing
activities was $33.6 million for the twenty-six week period ended June 27, 2004,
reflecting the utilization of free cash flow to repay $39.5 million of debt,
offset partially by proceeds from stock option exercises. Net cash used in
financing activities was $30.9 million for the twenty-six week period ended June
29, 2003, of which $23.5 million was used to repay debt and $7.9 million was
used to repurchase the Company's stock, offset partially by proceeds received
from stock option exercises.
DEBT AND DERIVATIVE ACTIVITY. The Company entered into a credit agreement
in July 1998 with a group of lenders, led by Chase Manhattan Bank (the
predecessor to JPMorgan Chase Bank) as administrative agent (the "Credit
Agreement"). The Credit Agreement provided for two secured term loan facilities
("Term Loan A" and "Term Loan B" or collectively, the "Term Loans") each at a
face amount of $250 million, and a secured revolving credit facility (the
"Revolving Credit Facility") for $400 million. The Credit Agreement also
provides for an uncommitted, multiple draw term loan facility (the "Incremental
Facility") in the amount of up to $500 million, as permitted by the
administrative agent, to be repaid under conditions as defined in the Credit
Agreement. To date, the Company has not drawn down on the Incremental Facility.
The Term Loans mature on March 31, 2006 and September 30, 2006, and the
Revolving Credit Facility matures on March 31, 2006. The Term Loans are
repayable in quarterly installments and the availability of the Revolving Credit
Facility is subject to certain quarterly reductions that commenced in 2002. In
addition, under the terms of the Company's Credit Agreement, net proceeds, as
defined in the Credit Agreement, from the sale of newspaper properties that are
not reinvested within 365 days must be used to prepay debt.
The amounts outstanding under the Credit Agreement bear interest at (i) 1
3/4 percent to 1/2 percent above LIBOR (as defined in the Credit Agreement) or
(ii) 1/2 percent to 0 percent above the higher of (a) the Prime Rate (as defined
in the Credit Agreement) or (b) 1/2 percent above the Federal Funds Rate (as
defined in the Credit Agreement). The interest rate spreads ("the applicable
margins") are dependent upon the ratio of debt to trailing four quarters Cash
Flow (as defined in the Credit Agreement) and are reduced or increased as such
ratio declines or increases, respectively. The estimated fair value of the Term
Loans and Revolving Credit Facility approximates their carrying value.
An annual commitment fee is incurred on the average daily-unused portion
of the Revolving Credit Facility, payable quarterly in arrears, at a percentage
that varies from 0.375 percent to 0.250 percent based on the quarterly
calculation of the Total Leverage Ratio (as defined in the Credit Agreement).
Pursuant to the requirements of the Credit Agreement, the Company entered
into certain interest rate hedges (the "Collars") on November 9, 2001. The
Collars establish an interest rate ceiling ("CAP") and an interest rate floor
(the "floor").
The CAP on the Company's Collars, which became effective on October 29,
2002, is 6.0 percent and the floor averages approximately 2.66 percent. These
rates are based upon the 90-day LIBOR. In the event the 90-day LIBOR exceeds 6.0
percent, the Company will receive cash from the issuers to compensate for the
rate in excess of the 6.0 percent CAP. If the 90-day LIBOR is lower than 2.66
percent, the Company will pay cash to the issuers to compensate for the rate
below the floor. The Collars became effective on October 29, 2002 for a notional
amount of $170 million. The Collars amortize over two years to a notional
aggregate amount of $135 million and terminate on October 29, 2004.
On October 10, 2002, the Company entered into additional interest rate
Collars (the "Additional Collars"). The effective date of the Additional Collars
was January 29, 2003. The Additional Collars are for a notional aggregate amount
of $150 million, which is fixed over its two-year term. Similar to the existing
Collars, the Additional Collars establish a CAP and a floor at no initial cost
to the Company. The CAP on the Additional Collars is 4.0 percent and the floor
averages approximately 1.54 percent. These rates are also based upon the 90-day
LIBOR. In the event that 90-day LIBOR exceeds 4.0 percent, the Company will
receive cash from the issuers to compensate for the rate in excess of the 4.0
percent CAP. If the 90-day LIBOR is lower than 1.54 percent, the Company will
pay cash to the issuers to compensate for the rate below the floor.
17
On April 8, 2004, the Company entered into an additional interest rate
collar (the "New Collar"). The effective date of the New Collar is October 29,
2004. The New Collar is for a notional amount of $100 million, which is fixed
for its two-year term. Similar to the existing Collars, the New Collar
establishes a CAP and a floor at no initial cost to the Company. The CAP on the
New Collar is 4.5 percent and the floor is 2.08 percent. These rates are based
upon the 90-day LIBOR.
Under Financial Accounting Standard No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES ("SFAS 133") as amended, the fair market
value of derivatives is reported as an adjustment to Other Comprehensive
Income/Loss ("OCI"). The IRPAs were fully effective in hedging the changes in
cash flows related to the debt obligation during the thirteen and twenty-six
weeks ended June 27, 2004 and the fiscal year ended December 28, 2003. The total
deferred loss reported in OCI as of June 27, 2004 and December 28, 2003 was
approximately $ 0.3 million and $1.5 million, respectively (net of $ 0.2 million
and $1.0 million of deferred taxes, respectively).
Each IRPA is designated for all or a portion of the principal balance and
term of a specific debt obligation. From time to time, the Company may enter
into additional IRPA's for nominal amounts on the outstanding debt that will, at
a minimum, meet the requirements of the Credit Agreement.
The Company's weighted-average effective interest rate was approximately
3.2 percent for the twenty-six week period ended June 27, 2004. These interest
rates reflect the effect of a $1.4 million pre-tax charge realized and reported
as a component of interest expense for the twenty-six week period ended June 27,
2004 related to the Company's IRPAs in place during 2004.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS. As of June 27, 2004, the Company
had outstanding indebtedness under the Credit Agreement, due and payable in
installments through 2006, of $378.9 million, of which $95.4 million was
outstanding under the Revolving Credit Facility and $283.5 million was
outstanding under the Term Loans. As noted above, the Company intends to
refinance the obligations outstanding under the Credit Agreement in connection
with the 21st Century acquisition. See "- Acquisitions and Dispositions."
The remaining aggregate maturities payable under the Term Loans for the
following fiscal years are as follows (DOLLARS IN THOUSANDS):
2004 $ 20,162
2005 64,637
2006 198,655
The Revolving Credit Facility is available until March 31, 2006. Initial
availability was $400 million and has been and will continue to be reduced by
equal consecutive quarterly reductions, commencing on June 30, 2002 and ending
on March 31, 2006, in an aggregate amount for each remaining twelve month period
commencing on the dates set forth below, equal to the amount set forth opposite
such date (DOLLARS IN THOUSANDS):
June 30, 2002 $ 55,000
June 30, 2003 65,000
June 30, 2004 100,000
June 30, 2005 180,000
As of June 27, 2004, the maximum availability under the Revolving Credit
Facility was $184.6 million, with $167.6 million available based on the terms of
the Credit Agreement.
The Term Loans and Revolving Credit Facility are secured by substantially
all of the assets of the Company and the common stock and assets of the
Company's subsidiaries. The Term Loans and Revolving Credit Facility require
compliance with certain covenants, which require, among other things,
maintenance of certain financial ratios, which may restrict among other things,
the Company's ability to declare dividends, purchase
18
treasury stock, incur additional indebtedness, create liens, sell assets,
consummate mergers and make capital expenditures, investments and
acquisitions. The Company is in compliance with the financial covenants
contained in the Credit Agreement.
The Company leases office space and equipment under non-cancelable
operating leases. These leases contain several renewal options for periods up to
seven years. The Company's future minimum lease payments under non-cancelable
operating leases in effect as of December 28, 2003, are as follows (DOLLARS IN
THOUSANDS):
2004 $ 2,027
2005 1,509
2006 1,229
2007 833
2008 704
Thereafter 1,169
INFLATION
The Company's results of operations and financial condition have not been
significantly affected by inflation. Subject to normal competitive conditions,
the Company generally has been able to pass along rising costs through increased
advertising and circulation rates.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
GENERAL
The Company's discussion and analysis of its financial condition and
results of operations are based upon the Company's condensed consolidated
interim financial statements, which have been prepared, by the Company, without
audit, in accordance with accounting principles generally accepted in the United
States. The preparation of these financial statements requires the Company to
make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, the Company evaluates its estimates,
including those related to bad debts, inventories, investments, remaining useful
lives of long-lived assets, income taxes, pensions and other post-retirement
benefits, as well as contingencies and litigation. The Company bases its
estimates on historical experience and actuarial studies and on other
assumptions that are believed to be reasonable and applicable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. The Company believes the following critical
accounting policies affect its more significant judgments and estimates used in
the preparation of its consolidated financial statements.
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
Accounts receivable consist primarily of amounts due to the Company from
normal business activities. The allowance for doubtful accounts represents
reserves for the estimated loss from the inability of customers to make required
payments. The Company uses historical experience as well as current market
information in determining the estimate. If the financial condition of the
Company's customers were to deteriorate, resulting in an impairment of their
ability to make payments, additional allowances may be required.
LONG-LIVED ASSETS
Identifiable intangible assets, such as customer lists and covenants not
to compete, are amortized using the straight-line method over their estimated
useful lives for the years presented in the Company's consolidated financial
statements. Under SFAS No. 142, goodwill and indefinite-lived intangible assets
are no longer amortized but are reviewed annually, or more frequently if
required, for impairment. This asset impairment review assesses the fair value
of the assets based on the future cash flows the assets are expected to
generate. An impairment loss is recognized when estimated undiscounted future
cash flows expected to result from the use of the asset plus net proceeds
expected from the disposition of the asset (if any) are less than the carrying
value of the asset. This approach uses estimates for future market growth,
forecasted revenue and costs, expected periods the assets will be
19
utilized and appropriate discount rates. Separable intangible assets that are
not deemed to have an indefinite life will continue to be amortized over their
useful lives.
PENSION AND POST-RETIREMENT BENEFITS
Pension and post-retirement benefit costs and credits are developed from
actuarial valuations. Inherent in these valuations are key assumptions including
discount rates and expected return on plan assets. The Company considers current
market conditions, including changes in interest rates, in selecting these
assumptions. Changes in the related pension and post-retirement benefit costs or
credits may occur in the future as a result of fluctuations in the Company's
headcount, changes in actuarial assumptions and market performance.
SELF-INSURANCE
The Company is self-insured for a portion of its insurable risks. The
Company analyzes its claims experience and consults with actuaries and
administrators in determining an adequate liability for self-insured claims.
LITIGATION
The Company is involved in litigation matters that have arisen in the
ordinary course of business. The Company believes that the outcome of these
legal proceedings will not have a material adverse effect on the Company's
financial condition or results of operations.
REVENUE RECOGNITION
Revenue is earned from the sale of advertising, circulation and
commercial printing. Advertising revenues are recognized, net of agency
commissions, in the period when advertising is printed in the Company's
publications or placed on the Company's Websites. Circulation revenues are
recognized when purchased newspapers are distributed. Amounts received from
customers in advance of revenue recognition are deferred as liabilities.
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES.
Journal Register Company believes that the use of certain non-GAAP
financial measures enables the Company and its analysts, investors and other
interested parties to evaluate the Company's results from operations in a more
meaningful manner. Accordingly, this information has been disclosed in this
report to permit a more complete comparative analysis of the Company's operating
performance and capitalization relative to other companies in the industry and
to provide an analysis of operating results using certain principal measures
used by Journal Register Company's chief operating decision makers to measure
the operating results and performance of the Company and its field operations.
Journal Register Company defines EBITDA as net income plus provision for
income taxes, net interest expense, depreciation, amortization, and other
non-cash, special or non-recurring charges. Free cash flow is defined as EBITDA
minus capital expenditures, interest and cash income taxes.
These non-GAAP financial measures should not be considered as
alternatives to GAAP measures of performance, such as operating income or net
income. In addition, Journal Register Company's calculations of these measures
may or may not be consistent with the calculations of these measures by other
companies. The table below provides reconciliations of the differences between
(i) net income and EBITDA and (ii) net income and free cash flow, in each case
for the thirteen and twenty-six week periods ended June 27, 2004 and June 29,
2003.
20
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
JUNE 27, JUNE 29, JUNE 27, JUNE 29,
(DOLLARS IN THOUSANDS) 2004 2003 2004 2003
- -------------------------------------------------------------------------------------------------------------------
Net income $ 14,760 $ 13,931 $ 25,007 $ 23,734
Add: Provision for income taxes 9,518 8,212 16,111 13,798
Add: Net interest expense and other 3,128 3,770 6,463 7,729
---------------- --------------- -----------------------------
Operating income 27,406 25,913 47,581 45,261
---------------- --------------- -----------------------------
Add: Depreciation and amortization 3,678 3,914 7,389 7,764
---------------- --------------- -----------------------------
EBITDA 31,084 29,827 54,970 53,025
---------------- --------------- -----------------------------
EBITDA margin 29% 29% 27% 26%
---------------- --------------- -----------------------------
Less: Capital expenditures (3,017) (6,482) (5,070) (8,676)
Less: Interest expense (3,088) (3,765) (6,397) (7,701)
Less: Cash income taxes (7,008) (5,693) (11,554) (9,694)
---------------- --------------- -----------------------------
Free cash flow $ 17,971 $ 13,887 $ 31,949 $ 26,954
===================================================================================================================
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this Report that are not purely historical are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including
statements regarding the Company's expectations, hopes, intentions or strategies
regarding the future. Forward-looking statements include the plans and
objectives of the Company for future operations and trends affecting the
Company's financial condition and results of operations. In addition, the words
"anticipates," "projects," "plans," "intends," "estimates," "expects," "may,"
"believes" and similar words are intended to identify these forward-looking
statements. All forward-looking statements in this Report are based on
information available to the Company as of the date this Report is filed with
the Securities and Exchange Commission ("SEC"), and the Company assumes no
obligation to update any such forward-looking statements, except as required by
law. All forward-looking statements involve risks and uncertainties. Actual
results may differ materially from those expressed or implied by such
forward-looking statements as a result of certain factors including, but not
limited to, the success of the Company's acquisition strategy, including the
acquisition of 21st Century, dispositions, the ability of the Company to achieve
cost reductions and integrate acquisitions, including the acquisition of 21st
Century, competitive pressures, general or regional economic conditions,
advertising trends, the unavailability or a material increase in the price of
newsprint, and increases in interest rates, among other things. These and other
factors are discussed in more detail in the Company's other filings with the
SEC, including its Annual Report on Form 10-K for the year ended December 28,
2003. The Company undertakes no obligation to release publicly the results of
any future revisions it may make to forward-looking statements to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk arising from changes in interest
rates associated with its long-term debt obligations. The Company's long-term
debt is at variable interest rates based on the LIBOR, the Prime Rate or Federal
Funds Rate, plus a certain interest rate spread as defined in the Credit
Agreement. To manage its exposure to fluctuations in interest rates as required
by its Credit Agreement, the Company enters into certain IRPAs on a portion of
its debt, which reduces the effect of changes in variable interest rates. The
Company's objective with respect to these agreements is for hedging activities
and not for trading or speculative activity.
At June 27, 2004, the Company had in effect collar agreements with
respect to an aggregate notional amount of $293 million of the Company's
outstanding indebtedness. Assuming a 10 percent increase or reduction in
variable interest rates, the annual impact on the Company's pre-tax earnings
would be approximately $0.7 million.
21
Newsprint, which is the principal raw material for the Company's
newspapers, is a commodity and is exposed to price changes. The Company seeks to
manage the effects of increases in the price of newsprint through a combination
of, among other things, technology improvements, including reductions in page
size, inventory management, advertising and circulation price increases.
ITEM 4. CONTROLS AND PROCEDURES
The Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures as of
the end of the period covered by this report. Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective in alerting them in a timely
manner to material information relating to the Company (including its
consolidated subsidiaries) required to be included in the Company's periodic
filings with the SEC.
The Company's disclosure controls and procedures are designed to ensure
that information required to be disclosed by the Company in the reports that the
Company files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files under the Exchange
Act is accumulated and communicated to the Company's management, including its
Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure.
Subsequent to the end of fiscal year 2003, the Company commenced the
deployment of a new suite of software applications in a shared services
environment. The new suite of applications will include (i) financial
applications, including accounts payable, general ledger, fixed assets, and
consolidation and reporting, (ii) circulation management applications and (iii)
advertising management applications. Once fully deployed, the new software,
together with the change to a shared services business model, is intended to
further enhance the Company's internal and disclosure controls and its operating
efficiencies. Deployment of the financial applications is expected to be
completed by the end of fiscal year 2004, and deployment of the advertising and
circulation management applications is expected to occur thereafter. Through
June 27, 2004, the Company has not experienced any adverse effect on its
internal and disclosure controls as a result of this deployment and does not
anticipate any adverse effect during the remainder of the deployment phase.
22
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders on May 18, 2004. At
the Annual Meeting, the stockholders elected Burton B. Staniar and James W. Hall
as Class A directors of the Company to hold office until the 2007 Annual Meeting
of Stockholders. The stockholders also approved an amendment of the 1997 Stock
Incentive Plan, approved the continuation of the Executive Incentive
Compensation Plan, and also ratified the appointment of Ernst & Young LLP as
independent auditors for the Company for fiscal year 2004.
Each of the Class A directors nominated by the Company were elected with the
following voting results:
VOTES VOTES
FOR WITHHELD
Burton B. Staniar 37,905,947 888,811
James W. Hall 37,958,424 836,334
The other proposals submitted to the stockholders were approved with the
following voting results:
VOTES VOTES
CAST FOR CAST AGAINST ABSTENTIONS
Approve an amendment of the 1997
Stock Incentive Plan 25,144,655 6,420,326 642,224
VOTES VOTES
CAST FOR CAST AGAINST ABSTENTIONS
Approve the continuation of the
Executive Incentive Compensation Plan 30,432,293 1,149,597 625,315
VOTES VOTES
CAST FOR CAST AGAINST ABSTENTIONS
Approve the appointment of
Ernst & Young LLP as independent
auditors for the Company for the fiscal
year 2004 37,883,766 889,278 21,714
23
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
31.1 Certification of Principal Executive Officer, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification of Principal Financial Officer, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32 Certification of Principal Executive Officer and Principal
Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K on April 21, 2004,
furnishing pursuant to Item 12 thereof certain information regarding
the text of a press release issued by the Company, dated April 16,
2004, titled "Journal Register Company Announces First Quarter 2004
Results".
24
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 2, 2004 JOURNAL REGISTER COMPANY
By: /S/ JEAN B. CLIFTON
--------------------
Jean B. Clifton Executive Vice
President and Chief Financial
Officer (signing on behalf of the
registrant as principal financial
officer)
25