McClatchy Reports Preliminary Second Quarter 2015 Results

- Executing on strategic initiatives to help counter continuing trends in print advertising

- Revenue categories other than print newspaper advertising grew to 67.6% of Q2 2015 total revenues

- Free cash flow of $70.8 million over trailing 12-month period ended Q2 2015 vs $53.7 million in fiscal 2014

- Reduced debt by $41.3 million in Q2 2015; cash at $32.1 million as of the end of Q2 2015

- Received a final distribution of $7.5 million in Q2 2015 from Classified Ventures

Jul 24, 2015, 09:00 ET from The McClatchy Company

SACRAMENTO, Calif., July 24, 2015 /PRNewswire/ -- The McClatchy Company (NYSE-MNI) today reported preliminary earnings from continuing operations in the second quarter of 2015 of $0.1 million, or $0.00 per share. Preliminary earnings do not include an anticipated non-cash charge to GAAP earnings for impairment of goodwill and long-lived assets discussed below.

In connection with the company's management reorganization actions and the recent decline in its stock price, management noted that it is in the process of performing impairment testing of goodwill and other long-lived assets as of June 28, 2015. Upon completion of that testing, the company expects to record a non-cash impairment charge to GAAP earnings in its second quarter financial statements when it files its Form 10-Q with the Securities and Exchange Commission (SEC) on or before August 7, 2015. The company will issue a press release announcing the final second quarter results when it files its Form 10-Q with the SEC.

For the second quarter of 2014, net income from continuing operations was $91.6 million, or $1.03 per share, and included, among other items, a combined pre-tax gain of $145.9 million primarily from McClatchy's share of the gain from Classified Ventures' sale of Apartments.com and to a lesser extent a gain on the sale of its 50% partnership interest in McClatchy‑Tribune Information Services ("MCT"). Excluding these gains and the net impact of certain other items, adjusted income from continuing operations in the second quarter of 2014 was $2.8 million. Net income in the second quarter of 2014, including the impact of discontinued operations, was $89.9 million, or $1.02 per share.

Pat Talamantes, McClatchy's president and CEO, said, "We made significant progress in the second quarter executing on our strategic initiatives even in the face of another challenging quarter, particularly in print-related advertising revenue. As we outlined during our first quarter earnings call in April of this year, we are working on various revenue-generating and expense-savings initiatives. We are focused on building the leading local media companies in each of our markets as we expand and grow our non-traditional revenue sources while at the same time reducing legacy costs. We are on track to achieve the $25 million to $30 million of cost savings in 2015 that we targeted at the onset from these specific initiatives. We expect the savings to continue to build over the course of the year and, in light of continued weakness in print advertising revenues, individual newspapers continue to adopt additional cost reduction plans to achieve their budgets."

Talamantes continued, "In addition to the gains we made on the operational front, we were also able to reduce our outstanding debt balance by $41.3 million and still end the quarter with $32.1 million in cash. We saw an improvement in free cash flow generation as cash interest continues to decline. And under our newly established share repurchase program, we repurchased 565,000 shares of Class A stock during the quarter."

Second Quarter Results

Total revenues, based on gross sales of Cars.com and certain other digital products and services, in the second quarter of 2015 were $269.4 million, down 7.7% compared to the second quarter of 2014. Advertising revenues, based upon gross sales, were $165.6 million, down 12.5% compared to the same quarter last year. Softness in print advertising and direct marketing advertising negatively impacted total revenue performance in the quarter.  

McClatchy again had growth in digital-only advertising revenues which helped to mitigate the revenue declines from the print side of the business. For the second quarter of 2015, digital-only advertising revenues reported on a gross basis grew 5.0%. Digital audience revenues were up 7.1% in the quarter and total audience revenues were flat compared to the same quarter last year. Together with direct marketing and other non-traditional sources, these revenue categories, which exclude print newspaper advertising, grew in the second quarter of 2015 and accounted for 67.6% of total revenues in the quarter compared to 63.0% in the second quarter of 2014. Total digital gross advertising revenues were down 1.8% compared to the same quarter last year.

On a GAAP basis, which reports revenues associated with the sales of Cars.com and certain other digital products and services net of wholesale fees paid to third-party vendors, total revenues in the second quarter of 2015 were $262.4 million, down 8.7% compared to the second quarter of 2014. Advertising revenues were $158.5 million, down 14.2% compared to the same quarter last year.

Direct marketing advertising revenues declined 6.5% in the quarter and reflect in part the elimination of certain niche products in the third quarter of 2014, and in part, a pullback by large retailers in preprint advertising inserts delivered to non-subscribers.

Audience revenues were $90.8 million, flat from the same quarter in 2014, as print related subscription revenue declines offset 7.1% growth in digital audience revenues. Digital-only subscribers grew to 75,500 in the second quarter of 2015 representing an increase of 28.6% from the second quarter of 2014, which helped contribute to the growth in digital audience revenues in the quarter. The monthly unique visitor count finished the quarter down 0.5% compared to the same quarter last year when monthly unique visitors were up 9.9%. Mobile users continue to grow and represented 52.3% of total monthly unique visitors in the quarter.

Results in the second quarter of 2015 included the following items:

  • A loss on the extinguishment of debt totaling $0.9 million ($0.6 million after-tax);
  • A distribution from Classified Ventures totaling $7.5 million ($4.6 million after-tax);
  • Severance charges totaling $3.9 million ($2.4 million after-tax);
  • Accelerated depreciation charges totaling $1.6 million ($1.0 million after-tax); and
  • Other restructuring charges totaling $1.1 million ($0.7 million after-tax).

Operating cash expenses, excluding severance and certain other charges, declined 4.8% from the same quarter last year. This decrease is in spite of an increase of $1.1 million from investments related to revenue and other initiatives and digital infrastructure such as new enterprise-wide systems.

Operating cash flow from continuing operations was $41.5 million in the second quarter of 2015, down 25.0% compared to the second quarter last year. (Non-GAAP measurements impacting income from continuing operations, cash expenses and operating cash flows are discussed below.)

First Six Months Results

Based on gross sales of Cars.com and certain other digital products and services, total revenues for the first six months of 2015 were $533.8 million, down 6.8% compared to the first six months of 2014. Advertising revenues were $324.0 million, down 12.3% compared to the first six months of last year. Softness in print retail and national advertising continued to negatively impact print and direct marketing advertising revenues. Advertising comparisons also reflect the loss of revenues resulting from the disposition of Apartments.com in April 2014.

On a GAAP basis, which reports revenues associated with the sales of Cars.com and certain other digital products and services net of wholesale fees paid to third-party vendors, total revenues for the first six months of 2015 were $519.5 million, down 7.8% compared to the first six months of 2014. Advertising revenues were $309.8 million, down 14.0% compared to the first six months of 2014.

The net loss from continuing operations for the first six months of 2015 was $11.2 million, or $0.13 per share, compared to income from continuing operations for the first six months of 2014 of $75.6 million, or $0.85 per share, which included among other items, a combined pre-tax gain of $145.9 million primarily from McClatchy's share of the gain from Classified Ventures' sale of Apartments.com and to a lesser extent a gain on the sale of its 50% partnership interest in McClatchy‑Tribune Information Services ("MCT"). Net income including discontinued operations for the first six months of 2014 was $74.1 million, or $0.84 per share, while there were no such discontinued operations reported for the first six months of 2015.

The company recorded a loss from continuing operations for the first six months of 2015, excluding the net impact of certain items itemized below, of $8.6 million. The loss from continuing operations for the first six months of 2014, when adjusted for similar items, was $3.4 million. (Non-GAAP measurements are discussed below.)

Results for the first six months of 2015 included the following items:

  • A loss on the extinguishment of debt totaling $0.9 million ($0.6 million after-tax);
  • A distribution from Classified Ventures totaling $7.5 million and a gain related to the sale of Classified Ventures totaling $0.6 million (combined $5.0 million after-tax);
  • Severance charges totaling $8.1 million ($5.0 million after-tax);
  • Accelerated depreciation charges totaling $1.8 million ($1.1 million after-tax); and
  • Other restructuring charges totaling $1.7 million ($1.0 million after-tax).

Operating cash flow from continuing operations was $68.7 million for the first six months of 2015, down 26.8% compared to the first six months of 2014. (Non-GAAP measurements impacting income from continuing operations, cash expenses and operating cash flows are discussed below.)

Other Second Quarter Business and Financial Highlights

Interest expense declined by $11.3 million in the second quarter of 2015 compared to the second quarter of 2014 and declined $22.4 million for the first six months of 2015 compared to the first six months of 2014. Cash interest is expected to decline about $41 million for all of 2015 as a result of lower debt balances compared to 2014.

Debt at the end of the second quarter of 2015 was $991.2 million. The company finished the quarter with $32.1 million in cash. The leverage ratio at the end of the second quarter as defined in the company's credit agreement was 4.64 times cash flow compared to a maximum leverage covenant of 6.0 times cash flow (as defined).

Income from equity investments declined $2.7 million in the second quarter of 2015. Income from equity investments included results from Classified Ventures in the second quarter of 2014 with no results in 2015 (Apartments.com sold on April 1, 2014, and Cars.com sold on Oct. 1, 2014).  

Early in the second quarter, the company received a final cash distribution of $7.5 million from Classified Ventures. The amount was recorded as a gain on the sale of an equity investment in its financial statements in the second quarter of 2015 because the company has no continuing ownership interest in Classified Ventures. Also during the second quarter of 2015, the company repurchased 565,000 shares of Class A common stock at a weighted average price of $1.17 per share under its recently authorized limited share repurchase program.

Outlook

Based upon current trends and its revenue initiatives, management expects full year 2015 digital-only advertising revenues to grow in the double-digit range (on a gross basis). Due to the continued pull back of large advertisers in some direct marketing products, management now expects direct marketing revenues to be about flat with 2014, while audience revenues are expected to grow in the low single-digit range. Cash expenses are expected to decline in the mid single-digit range for all of 2015 reflecting the savings from its legacy cost reduction initiatives. Through these revenue and cost reduction efforts, cash flow is expected to flatten in the second half of 2015 on a year-over-year basis, reflecting an improving trend in operating cash flows in the third quarter and growth in the fourth quarter of 2015.

The company's statistical report, which summarizes revenue performance for the second quarter of 2015, is attached. 

Non-GAAP Financial Measures

In addition to the results reported in accordance with accounting principles generally accepted in the United States ("GAAP") included in this press release, the company has presented non-GAAP financial measures such as gross revenues, adjusted net loss from continuing operations, operating cash flow, operating cash flow margin, and free cash flow from operations. Adjusted net loss from continuing operations is defined as net loss from continuing operations excluding amounts (net of tax) for a gain on the sale of an equity investment, severance charges, accelerated depreciation on equipment, real estate related charges, certain other charges, reversal of interest on tax items and certain discrete tax items. Operating cash flow is defined as operating loss plus depreciation and amortization, severance charges and certain other charges. Operating cash flow margin is defined as operating cash flow divided by total net revenues. Free cash flow from operations is defined as operating cash flow less cash paid for interest, taxes from operations, and capital expenditures. These non-GAAP financial measures are reconciled to GAAP measures in the attached schedule. Management believes these non-GAAP measures, when read in conjunction with the company's GAAP financials, provide useful information to investors by offering:

  • the ability to make more meaningful period-to-period comparisons of the company's ongoing operating results;
  • the ability to better identify trends in the company's underlying business;
  • a better understanding of how management plans and measures the company's underlying business; and
  • an easier way to compare the company's most recent operating results against investor and analyst financial models and industry peers.

These non-GAAP financial measures should not be considered a substitute or an alternative to these computations calculated in accordance with and required by GAAP. McClatchy's non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies.

Conference Call Information

At noon Eastern time today, McClatchy will review its results in a conference call (877-278-1205, pass code 77761237) and webcast (www.mcclatchy.com). The webcast will be archived at McClatchy's website.

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; Amounts 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


101,594


203,574


206,339


250,897


260,084


509,233


540,953









OPERATING INCOME

11,463


27,307


10,305


22,609









NON-OPERATING (EXPENSES) INCOME:








Interest expense

(22,172)


(33,475)


(44,510)


(66,887)

Interest income

70


46


133


50

Equity income (loss) 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 extinguishment 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

432


147,263


(18,567)


118,777

Income tax provision (benefit)

334


55,615


(7,319)


43,191

INCOME (LOSS) FROM CONTINUING OPERATIONS

98


91,648


(11,248)


75,586









LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES

-


(1,699)


-


(1,479)

NET INCOME (LOSS)

$ 98


$ 89,949


$ (11,248)


$ 74,107









Net income (loss) per common share:








Basic:








Income (loss) from continuing operations

$ 0.00


$ 1.06


$ (0.13)


$ 0.87

Loss from discontinued operations

-


(0.02)


-


(0.01)

Net income (loss) per share

$ 0.00


$ 1.04


$ (0.13)


$ 0.86









Diluted:








Income (loss) from continuing operations

$ 0.00


$ 1.03


$ (0.13)


$ 0.85

Loss from discontinued operations

-


(0.01)


-


(0.01)

Net income (loss) per share

$ 0.00


$ 1.02


$ (0.13)


$ 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

87,648


88,593


87,324


88,513

 

The McClatchy Company

Consolidated Statistical Report

(In thousands, except for preprints)






















Quarter 2



Combined


Print


Digital







































Revenues:


2015


2014


% Change


2015


2014


% Change


2015


2014


% Change




















Advertising revenues reported at gross for certain digital contracts (historical)













Retail


$77,468


$92,655


-16.4%


$56,824


$71,948


-21.0%


$20,644


$20,707


-0.3%

National


11,094


13,145


-15.6%


6,554


8,897


-26.3%


4,540


4,247


6.9%

Classified Total


47,015


51,563


-8.8%


23,550


26,975


-12.7%


23,464


24,590


-4.6%

Automotive


16,114


18,452


-12.7%


3,862


5,730


-32.6%


12,252


12,723


-3.7%

Real Estate


7,171


8,066


-11.1%


4,275


5,297


-19.3%


2,897


2,769


4.6%

Employment


8,417


9,676


-13.0%


3,730


4,224


-11.7%


4,686


5,453


-14.1%

Other


15,313


15,369


-0.4%


11,683


11,724


-0.3%


3,629


3,645


-0.4%

Direct Marketing


29,702


31,757


-6.5%


29,702


31,757


-6.5%







Other Advertising


301


92


227.2%


301


91


230.8%







(A) Total Advertising


$165,580


$189,212


-12.5%


$116,931


$139,668


-16.3%


$48,648


$49,544


-1.8%




















Memo: Digital-only














$32,590


$31,030


5.0%




















Audience


90,842


90,817


0.0%


66,107


67,721


-2.4%


24,735


23,097


7.1%

Other


12,998


11,925


9.0%













Total Revenues


$269,420


$291,954


-7.7%



















































(B) Wholesale fees for certain advertising contracts


$7,060


$4,563


54.7%



















































Advertising revenues reported at net for certain digital contracts (GAAP)














Retail


$77,468


$92,655


-16.4%


$56,824


$71,948


-21.0%


$20,644


$20,707


-0.3%

National


11,094


13,145


-15.6%


6,554


8,897


-26.3%


4,540


4,248


6.9%

Classified Total


39,955


47,000


-15.0%


23,550


26,975


-12.7%


16,405


20,026


-18.1%

Automotive


9,313


14,143


-34.2%


3,862


5,730


-32.6%


5,451


8,414


-35.2%

Real Estate


7,171


8,066


-11.1%


4,275


5,297


-19.3%


2,896


2,769


4.6%

Employment


8,158


9,422


-13.4%


3,730


4,224


-11.7%


4,428


5,197


-14.8%

Other


15,313


15,369


-0.4%


11,683


11,724


-0.3%


3,629


3,645


-0.4%

Direct Marketing


29,702


31,757


-6.5%


29,702


31,757


-6.5%







Other Advertising


301


92


227.2%


301


91


230.8%







(A) -(B) Total Net Advertising


$158,520


$184,649


-14.2%


$116,931


$139,668


-16.3%


$41,589


$44,981


-7.5%




















Memo: Digital-only














$25,651


$26,632


-3.7%




















Audience


90,842


90,817


0.0%


66,107


67,721


-2.4%


24,735


23,097


7.1%

Other


12,998


11,925


9.0%













Total Revenues


$262,360


$287,391


-8.7%






































































Advertising Statistics for Dailies:



















Full Run ROP Linage








3,094.2


3,651.4


-15.3%


























Millions of Preprints Distributed







777.9


946.5


-17.8%













































Audience:



















Daily Average Total Circulation*







1,640.9


1,710.7


-4.1%







Sunday Average Total Circulation*







2,475.9


2,622.0


-5.6%







Monthly Unique Visitors














40,878.1


41,102.5


-0.5%




















Columns may not add due to rounding





































* Reflects total average circulation based upon number of days in the period. Does not reflect AAM reported figures.







 

The McClatchy Company

Consolidated Statistical Report

(In thousands, except for preprints)






















June Year-to-Date



Combined


Print


Digital







































Revenues


2015


2014


% Change


2015


2014


% Change


2015


2014


% Change




















Advertising revenues reported at gross for certain digital contracts (historical)













Retail


$154,074


$180,576


-14.7%


$114,316


$141,729


-19.3%


$39,758


$38,847


2.3%

National


20,652


25,971


-20.5%


12,324


17,593


-29.9%


8,328


8,378


-0.6%

Classified Total


93,130


102,112


-8.8%


46,913


53,482


-12.3%


46,217


48,633


-5.0%

Automotive


32,219


36,807


-12.5%


8,008


11,595


-30.9%


24,211


25,213


-4.0%

Real Estate


14,018


15,656


-10.5%


8,556


10,173


-15.9%


5,462


5,483


-0.4%

Employment


16,603


18,818


-11.8%


7,345


8,234


-10.8%


9,258


10,586


-12.5%

Other


30,290


30,831


-1.8%


23,004


23,481


-2.0%


7,286


7,350


-0.9%

Direct Marketing


55,677


60,479


-7.9%


55,677


60,479


-7.9%







Other Advertising


498


173


187.9%


498


172


189.5%







(A) Total Advertising


$324,033


$369,311


-12.3%


$229,728


$273,455


-16.0%


$94,305


$95,856


-1.6%




















Memo: Digital-only(excl apts.com)













$62,324


$59,505


4.7%




















Audience


184,051


179,770


2.4%


135,321


135,549


-0.2%


48,730


44,221


10.2%

Other


25,720


23,541


9.3%













Total Revenues


$533,804


$572,622


-6.8%






































































(B) Wholesale fees for certain advertising contracts


$14,266


$9,060


57.5%



















































Advertising revenues reported at net for certain digital contracts (GAAP)














Retail


$154,074


$180,576


-14.7%


$114,316


$141,729


-19.3%


$39,758


$38,847


2.3%

National


20,652


25,971


-20.5%


12,324


17,593


-29.9%


8,328


8,378


-0.6%

Classified Total


78,866


93,052


-15.2%


46,913


53,482


-12.3%


31,953


39,571


-19.3%

Automotive


18,515


28,297


-34.6%


8,008


11,595


-30.9%


10,507


16,703


-37.1%

Real Estate


14,018


15,656


-10.5%


8,556


10,173


-15.9%


5,462


5,483


-0.4%

Employment


16,043


18,268


-12.2%


7,345


8,234


-10.8%


8,698


10,034


-13.3%

Other


30,290


30,831


-1.8%


23,004


23,481


-2.0%


7,286


7,350


-0.9%

Direct Marketing


55,677


60,479


-7.9%


55,677


60,479


-7.9%







Other Advertising


498


173


187.9%


498


172


189.5%







(A) -(B) Total Net Advertising


$309,767


$360,251


-14.0%


$229,728


$273,455


-16.0%


$80,039


$86,796


-7.8%




















Memo: Digital-only(excl apts.com)













$48,295


$50,842


-5.0%




















Audience


184,051


179,770


2.4%


135,321


135,549


-0.2%


48,730


44,221


10.2%

Other


25,720


23,541


9.3%













Total Revenues


$519,538


$563,562


-7.8%






































































Advertising Statistics for Dailies:



















Full Run ROP Linage








6,208.1


7,160.3


-13.3%


























Millions of Preprints Distributed







1,572.3


1,873.0


-16.1%













































Audience:



















Daily Average Total Circulation*







1,684.7


1,760.6


-4.3%







Sunday Average Total Circulation*







2,532.3


2,643.4


-4.2%







Monthly Unique Visitors














43,415.2


43,367.0


0.1%




















Columns may not add due to rounding




































* Reflects total average circulation based upon number of days in period. Does not reflect AAM reported figures.







 










THE McCLATCHY COMPANY

Reconciliation of GAAP Measures to Non-GAAP Amounts

(In thousands)










Reconciliation of Operating Income from Continuing Operations to Operating Cash Flows












Quarters 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 excluding severance charges


97,142


102,406


199,631


209,129

   Newsprint, supplements and printing expense


24,523


29,083


49,299


56,360

   Other cash operating expenses


99,227


100,599


201,896


204,238

   Cash operating expenses excluding severance and other charges










220,892


232,088


450,826


469,727

   Severance charges


3,949


1,075


8,132


2,904

   Other charges


1,122


995


1,678


2,101

   Depreciation and amortization


24,934


25,926


48,597


66,221

   Total operating expenses


250,897


260,084


509,233


540,953










OPERATING INCOME


11,463


27,307


10,305


22,609

Add back:









   Depreciation and amortization


24,934


25,926


48,597


66,221

   Severance charges


3,949


1,075


8,132


2,904

   Other charges


1,122


995


1,678


2,101

OPERATING CASH FLOW


$           41,468


$           55,303


$           68,712


$           93,835










OPERATING CASH FLOW MARGIN


15.8%


19.2%


13.2%


16.7%










Reconciliation of Net Income / (Loss) from Continuing Operations to Adjusted Net Income / (Loss)














Net income / (Loss) from continuing operations:


$                   98


$           91,648


$         (11,248)


$           75,586










Add back certain items, net of tax:









   Loss / (Gain) on extinguishment of debt


560




560



   Gain related to equity investment distribution




(89,046)




(89,046)

   Gain on sale of equity investments 


(4,631)


(1,057)


(5,024)


(1,057)

   Severance charges


2,418


584


4,980


1,635

   Accelerated depreciation on equipment 


977


4


1,067


8,332

   Real estate related charges


33


417


33


979

   Other charges 


675


215


1,015


352

   Reversal of interest on tax items


-


-


-


(141)

   Certain discrete tax items


-


-


-


-

Adjusted net income / (loss) from continuing operations


$                 130


$             2,765


$            (8,617)


$            (3,360)

 















 THE McCLATCHY COMPANY 

 Reconciliation of GAAP Measures to Non-GAAP Amounts 

 (In thousands) 















 Reconciliation of Operating Cash Flow From Operations to Free Cash Flow 


















Year Ended


Q3 2014


Q4 2014


Q1 2015


Q2 2015


TTM 




December 28,


September 28,


December 28,


March 29, 


June 28,


June 28,




2014


2014


2014


2015


2015


2015

 Operating income 



$             82,323


$             18,550


$             41,164


$              (1,158)


$             11,463


$             70,019

 Add back:   














     Depreciation & amortization 



113,638


23,804


23,613


23,663


24,934


96,014

     Severance charges 



5,488


2,099


485


4,183


3,949


10,716

     Other charges 



9,047


358


6,594


555


1,122


8,629

 Operating cash flow 



$           210,496


$             44,811


$             71,856


$             27,243


$             41,468


$           185,378















 Cash interest paid 



(121,375)


$            (16,797)


$            (43,380)


$            (12,695)


$            (28,820)


(101,692)

 Cash taxes from operations 

   1


(11,968)


$              (6,612)


$                6,024


$             12,519


$              (8,335)


3,597

 Capital expenditures 



(23,441)


$              (5,816)


$              (3,436)


$              (2,575)


$              (4,617)


(16,444)

 Free cash flow from operations 



$             53,712


$             15,586


$             31,064


$             24,492


$                 (304)


$             70,839















 Footnotes 














1

 Excludes taxes paid for unusual transactions (i.e. sales of equity investments) 





 

SOURCE The McClatchy Company



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