Reports Non-cash Impairment Charges
SACRAMENTO, Calif., Feb. 28 /PRNewswire-FirstCall/ -- The McClatchy
Company (NYSE: MNI) today reported that it filed its Annual Report on Form
10-K for the year ended December 30, 2007 (the Report) with the Securities and
Exchange Commission (SEC), which includes its final fourth quarter and full
year 2007 results. The company's fourth quarter 2007 after-tax loss from
continuing operations was $1.43 billion, or $17.42 per share including the
effect of non-cash after-tax impairment charges related to goodwill and
newspaper mastheads of $1.47 billion, or $17.86 per share. The company's
total net loss, including the results of discontinued operations, was $1.43
billion, or $17.46 per share.
The loss from continuing operations for full year 2007 was $2.73 billion
or $33.26 per share including the effect of the non-cash impairment charges
taken in the third and fourth quarters. The company's total net loss,
including the results of discontinued operations, was $2.74 billion, or $33.37
per share.
As the company noted in its press release on February 6, 2008, management
performed its regular annual impairment testing of goodwill and other
long-lived assets as of December 30, 2007, in accordance with Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.
Upon completion of that testing, the company recorded non-cash pre-tax
impairment charges of $1.39 billion to goodwill and $166.6 million to
newspaper mastheads in the fourth quarter.
Gary Pruitt, McClatchy's chairman and chief executive officer, said "As I
noted in our fourth quarter preliminary earnings release, the recessionary
outlook, coupled with the continued decline in our stock price since the end
of the third quarter, resulted in additional impairment charges in the fourth
quarter. It's important to understand that this non-cash charge does not
reflect our view of the long-term health of the newspaper industry or the
value of McClatchy. However, when completing the goodwill impairment
assessment, GAAP required that we reconcile the sum of the fair values of our
reporting units to our current market capitalization. The company considered
the current stock market price of its Class A shares and the fair value of
public debt, as well as general economic indicators in determining the amount
of the impairment charges recorded in the fourth quarter."
"We believe investors should focus on the more important fundamentals of
our business. We continue to produce strong cash flows and are quickly moving
to become a successful hybrid print and online news company. We are focused on
four major areas: driving new revenues, with a particular emphasis on online
advertising; focusing on growing total audience; providing high quality public
service journalism; and reducing our cost structure."
The unaudited consolidated statement of income for the 2007 fourth quarter
and full year is attached to this release.
About McClatchy
The McClatchy Company is the third largest newspaper company in the United
States, with 30 daily newspapers, approximately 50 non-dailies, and direct
marketing and direct mail operations. McClatchy also operates leading local
websites in each of its markets which extend its audience reach. The websites
offer users information, comprehensive news, advertising, e-commerce and other
services. Together with its newspapers and direct marketing products, these
interactive operations make McClatchy the leading local media company in each
of its premium high growth markets. McClatchy-owned newspapers include The
Miami Herald, The Sacramento Bee, The Fort Worth Star-Telegram, The Kansas
City Star, The Charlotte Observer, and The (Raleigh) News & Observer.
McClatchy also has a portfolio of premium digital assets. The company
owns and operates McClatchy Interactive, an interactive operation that
provides websites with content, publishing tools and software development.
McClatchy owns 14.4% of CareerBuilder, the nation's largest online job site,
and owns 25.6% of Classified Ventures, a newspaper industry partnership that
offers two of the nation's premier classified websites: the auto website,
cars.com, and the rental site, apartments.com. McClatchy is listed on the New
York Stock Exchange under the symbol MNI.
Additional Information:
Statements in this press release regarding future financial and operating
results, including revenues, operating expenses, cash flows, debt levels, as
well as future opportunities for the company and any other statements about
management's future expectations, beliefs, goals, plans or prospects
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Any statements that are not
statements of historical fact (including statements containing the words
"believes," "plans," "anticipates," "expects," estimates and similar
expressions) should also be considered to be forward-looking statements.
There are a number of important risks and uncertainties that could cause
actual results or events to differ materially from those indicated by such
forward-looking statements, including: the duration and depth of an economic
recession in markets where McClatchy operates its newspapers may reduce its
income and cash flow greater than expected; McClatchy may not consummate
contemplated transactions which may enable debt reduction on anticipated terms
or at all; McClatchy may not achieve its expense reduction targets or may do
harm to its operations in attempting to achieve such targets; McClatchy's
operations have been, and will likely continue to be, adversely affected by
competition, including competition from internet publishing and advertising
platforms; McClatchy's expense and income levels could be adversely affected
by changes in the cost of newsprint and McClatchy's operations could be
negatively affected by any deterioration in its labor relations, as well as
the other risks detailed from time to time in the Company's publicly filed
documents, including the Company's Annual Report on Form 10-K for the year
ended December 30, 2007, filed with the U.S. Securities and Exchange
Commission. McClatchy disclaims any intention and assumes no obligation to
update the forward-looking information contained in this release.
***THE McCLATCHY COMPANY***
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended Year Ended
December December December December
30, 31, 30, 31,
2007 2006 2007 2006
REVENUES - NET:
Advertising $489,405 $576,123 $1,911,722 $1,432,913
Circulation 66,076 77,037 275,658 194,940
Other 17,953 20,439 72,983 47,337
573,434 673,599 2,260,363 1,675,190
OPERATING EXPENSES:
Compensation 222,372 250,129 911,964 652,582
Newsprint and
supplements 66,431 94,366 277,634 231,068
Depreciation and
amortization 36,119 42,343 148,559 98,865
Other operating
expenses 124,932 141,076 496,112 345,767
Goodwill and newspaper
masthead impairment 1,557,456 - 2,992,046 -
2,007,310 527,914 4,826,315 1,328,282
OPERATING INCOME (LOSS) (1,433,876) 145,685 (2,565,952) 346,908
NON-OPERATING (EXPENSES)
INCOME:
Interest expense (46,392) (46,985) (197,997) (93,664)
Interest income 114 1,527 243 3,562
Equity income (losses)
in unconsolidated
companies, net (8,300) 4,870 (36,899) 4,951
Write-down of
investments and land
held for sale - - (84,568) -
Other - net 539 738 1,982 9,128
(54,039) (39,850) (317,239) (76,023)
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INCOME TAX
PROVISION (BENEFIT) (1,487,915) 105,835 (2,883,191) 270,885
INCOME TAX PROVISION
(BENEFIT) (57,449) 28,920 (156,582) 87,390
INCOME (LOSS) FROM
CONTINUING OPERATIONS (1,430,466) 76,915 (2,726,609) 183,495
LOSS FROM DISCONTINUED
OPERATIONS -
NET OF INCOME TAXES (3,080) (356,186) (9,404) (339,072)
NET LOSS $(1,433,546) $(279,271) $(2,736,013) $(155,577)
NET INCOME (LOSS) PER
COMMON SHARE:
Basic:
Income (loss) from
continuing
operations $(17.42) $0.94 $(33.26) $2.85
Loss from
discontinued
operations $(0.04) $(4.35) $(0.11) $(5.27)
Net loss per share $(17.46) $(3.41) $(33.37) $(2.42)
Diluted:
Income (loss) from
continuing
operations $(17.42) $0.94 $(33.26) $2.84
Loss from
discontinued
operations $(0.04) $(4.34) $(0.11) $(5.25)
Net loss per share $(17.46) $(3.40) $(33.37) $(2.41)
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES:
Basic 82,097 81,803 82,000 64,415
Diluted 82,097 81,995 82,000 64,645
SOURCE The McClatchy Company
Elaine Lintecum of The McClatchy Company, +1-916-321-1846,
elintecum@mcclatchy.com
