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The McClatchy Company Reports Operating Results (10-Q)

August 06, 2010 | About:
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10qk

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The McClatchy Company (MNI) filed Quarterly Report for the period ended 2010-08-06.

The Mcclatchy Company has a market cap of $285.9 million; its shares were traded at around $3.38 with a P/E ratio of 3.9 and P/S ratio of 0.2. MNI is in the portfolios of John Rogers of ARIEL CAPITAL MANAGEMENT LLC, Chuck Royce of Royce& Associates, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Credit Agreement”) immediately prior to the closing of an offering of $875.0 million of senior secured notes. The Amended and Restated Credit Agreement is a senior secured credit facility that provides for a $61.0 million term loan and a $237.3 million revolving credit facility, including a $100.0 million letter of credit sub-facility, and extends the term of certain of the credit commitments to July 1, 2013. In connection with the Amended and Restated Credit Agreement, certain of the lenders did not extend the maturity of their commitments from the original maturity date of June 27, 2011. Non-extended term loans of $17.5 million will mature on June 27, 2011, as will revolving loan commitments of $41.3 million. The remaining term loans of $43.5 million and revolving loan commitments of $196.0 million under the Amended and Restated Credit Agreement will mature on July 1, 2013.

In connection with the Amended and Restated Credit Agreement, the Company issued new 11.50% Senior Secured Notes due 2017 (the “2017 Notes”) totaling $875.0 million. In addition, the Company completed tender offers for its 7.125% notes due in 2011 (the “2011 Notes”) and 15.75% senior notes due in 2014 (the “2014 Notes”), paying $187.3 million in cash for aggregate principal amounts of $148.0 million of 2011 Notes and $23.9 million of 2014 Notes.

The Company reported income from continuing operations in the second fiscal quarter of 2010 of $7.3 million, or $0.09 per share, compared to $42.0 million, or $0.50 per share, in the second fiscal quarter of 2009. Earnings in the second fiscal quarter of 2009 included, among other items, an after-tax gain of $28.3 million on the extinguishment of debt and $7.4 million (after-tax) of accelerated depreciation on equipment related to the outsourcing of printing operations at various newspapers in the second fiscal quarter of 2009. The Company s net income in the second fiscal quarter of 2009, including discontinued operations, was $42.2 million, or $0.50 per share.

Operating expenses in the second fiscal quarter of 2010 decreased by $35.6 million compared to the second fiscal quarter of 2009. Operating expenses in the quarter included $0.9 million in severance related to the Company s restructuring plans, which were largely paid as of the end of the quarter, and $3.4 million of accelerated depreciation on equipment related to the outsourcing of printing operations at one newspaper. Operating expenses in the second fiscal quarter of 2009 included $4.0 million in compensation-related restructuring charges and $10.6 million of accelerated depreciation on equipment related to the outsourcing of printing operations at various newspapers. The following table summarizes operating expenses, including the impact of restructuring charges included in the operating expenses, in the 2010 and 2009 second fiscal quarters (in thousands):

Interest expense was $49.4 million for the second fiscal quarter of 2010, up 44.1% from interest expense of $34.3 million in the 2009 quarter. The increase in expense primarily reflects higher interest rates resulting from the Company s debt refinancing in February 2010, offset partially by lower debt balances. In addition, interest expense in the second quarter of 2010 included a $1.7 million write-off of deferred debt financing fees associated with $70 million of bank term debt repaid during the quarter, while the 2009 quarter included a similar $0.4 million of deferred fee write-off related to a bank amendment.

The Company reported income from continuing operations in the first six months of 2010 of $5.3 million, or $0.06 per share, compared to $4.3 million, or $0.05 per share, for the same period in 2009. The Company s net income was $9.5 million, or $0.11 per share, including discontinued operations in the first six months of 2010, compared to $4.7 million, or $0.06 per share, in the first six months of 2009. Net income in the first six months of both years was impacted by the events discussed in the quarterly results above.

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