McClatchy Files Form 10-Q And Reports Results For The Second Quarter 2015

Reports Estimated Non-cash Impairment Charges

Aug 07, 2015, 16:22 ET from The McClatchy Company

SACRAMENTO, Calif., Aug. 7, 2015 /PRNewswire/ -- The McClatchy Company (NYSE-MNI) today reported that it filed its Quarterly Report on Form 10-Q for the second quarter of 2015 with the Securities and Exchange Commission (SEC), which includes its estimate of the second quarter 2015 results. 

For the second quarter of 2015, net loss from continuing operations was $296.5 million, or $3.39 per share, which includes estimated non-cash after-tax impairment charges related to goodwill and newspaper mastheads of $296.6 million. Earnings before these charges were unchanged from the $0.1 million, or $0.00 per share previously reported on July 24, 2015.

The net loss from continuing operations for the first six months of 2015 was $307.8 million, or $3.52 per share, which includes the estimated non-cash after-tax impairment charges.

As the company noted in its press release on July 24, 2015, due to the company's management reorganization actions and the recent decline in its stock price, management began performing impairment testing of goodwill and other long-lived assets as of June 28, 2015, in accordance with ASC 350, Goodwill and other Intangible Assets. As of the date of this release, the company has recorded an estimated pre-tax impairment charge of $290.9 million to goodwill and $9.5 million to newspaper mastheads.

Elaine Lintecum, McClatchy's CFO, said, "As we discussed at the time of our second quarter 2015 earnings release, we started the process of conducting impairment analysis on goodwill and other long-lived assets as of the end of the second quarter. This review has resulted in the recording of an estimated non-cash charge to our second quarter results. Due to the significant amount of work and complexity required to perform the analysis, we are recording estimated charges at this time. We will finalize the calculation during the third quarter of 2015.  We believe that the second quarter impairment charge reported represents our best estimate at this time; however; it is still possible that material adjustments to the preliminary estimates may be required as the calculations are finalized."

"As management stated last month when we released our preliminary earnings, these non-cash charges do not reflect our view of the long-term health or the value of McClatchy and they have no impact on our ability to generate cash flow now or in the future."

The unaudited consolidated statements of operations which has been filed with the SEC is attached to this release.

About McClatchy

The McClatchy Company is a 21st century news and information leader, publisher of iconic brands such as the Miami HeraldThe Kansas City Star, The Sacramento Bee, The Charlotte Observer, The (Raleigh) News and Observer, and the (Fort WorthStar-Telegram. McClatchy operates media companies in 28 U.S. markets in 14 states, providing each of its communities with high-quality news and advertising services in a wide array of digital and print formats. McClatchy is headquartered in Sacramento, Calif., and 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, anticipated savings from cost reduction efforts, 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: McClatchy may not generate cash from operations, or otherwise, necessary to reduce debt or meet debt covenants as expected; we may not be successful in the reducing debt whether through tenders offers, open market repurchase programs or other negotiated transactions; transactions may not close as anticipated or result in cash distributions in the amount or timing anticipated; McClatchy may not successfully implement audience strategies designed to increase audience revenue and may experience decreased audience volumes or subscriptions; McClatchy may experience diminished revenues from retail, classified, national and direct marketing advertising; McClatchy may not achieve its expense reduction targets including efforts related to legacy expense initiatives 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; increases in the cost of newsprint; bankruptcies or financial strain of its major advertising customers; litigation or any potential litigation; geo-political uncertainties including the risk of war; changes in printing and distribution costs from anticipated levels, including changes in postal rates or agreements; changes in interest rates; changes in pension assets and liabilities; changes in factors that impact pension contribution requirements, including, without limitation, the value of the company-owned real property that McClatchy has contributed to its pension plan; increased consolidation among major retailers in our markets or other events depressing the level of advertising; our inability to negotiate and obtain favorable terms under collective bargaining agreements with unions; competitive action by other companies; an inability to fully implement and execute its share repurchase plan; and other factors, many of which are beyond our control; 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 Dec. 28, 2014, 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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; In thousands, except per share amounts)










Quarter Ended


Six Months Ended


June 28,


June 29,


June 28,


June 29,


2015


2014


2015


2014

REVENUES - NET:








Advertising

$      158,520


$      184,649


$      309,767


$    360,251

Audience

90,842


90,817


184,051


179,770

Other

12,998


11,925


25,720


23,541


262,360


287,391


519,538


563,562

OPERATING EXPENSES:








Compensation

101,091


103,481


207,763


212,033

Newsprint, supplements and printing expenses

24,523


29,083


49,299


56,360

Depreciation and amortization

24,934


25,926


48,597


66,221

Other operating expenses

100,349


101,456


203,574


205,315

Goodwill and other asset impairments

300,429


138


300,429


1,024


551,326


260,084


809,662


540,953









OPERATING INCOME (LOSS)

(288,966)


27,307


(290,124)


22,609









NON-OPERATING (EXPENSES) INCOME:








Interest expense

(22,172)


(33,475)


(44,510)


(66,887)

Interest income

70


46


133


50

Equity income in unconsolidated companies, net

4,676


7,410


8,543


16,968

Gains related to equity investments

7,460


145,893


8,093


145,893

Loss on extinquishment of debt, net

(883)


-


(883)


-

Other - net

(182)


82


(248)


144


(11,031)


119,956


(28,872)


96,168









Income (loss) from continuing operations before taxes

(299,997)


147,263


(318,996)


118,777

Income tax provision (benefit)

(3,500)


55,615


(11,153)


43,191

INCOME (LOSS) FROM CONTINUING OPERATIONS

(296,497)


91,648


(307,843)


75,586









LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES 

-


(1,699)


-


(1,479)

NET INCOME (LOSS)

$    (296,497)


$        89,949


$    (307,843)


$      74,107









Net income (loss) per common share:








Basic:








Income (loss) from continuing operations

$           (3.39)


$             1.06


$           (3.52)


$           0.87

Loss from discontinued operations

-


(0.02)


-


(0.01)

Net income (loss) per share

$           (3.39)


$             1.04


$           (3.52)


$           0.86









Diluted:








Income (loss) from continuing operations

$           (3.39)


$             1.03


$           (3.52)


$           0.85

Loss from discontinued operations

-


(0.01)


-


(0.01)

Net income (loss) per share

$           (3.39)


$             1.02


$           (3.52)


$           0.84









Weighted average number of common shares used to calculate basic and diluted earnings per share:















Basic

87,441


86,734


87,324


86,604

Diluted

87,441


88,593


87,324


88,513









 

SOURCE The McClatchy Company



RELATED LINKS

http://www.mcclatchy.com