The McClatchy Company Reports Operating Results (10-Q)
The Mcclatchy Company has a market cap of $280.7 million; its shares were traded at around $3.27 with a P/E ratio of 3.8 and P/S ratio of 0.2. MNI is in the portfolios of Francis Chou of Chou Associates Management Inc., John Rogers of ARIEL CAPITAL MANAGEMENT LLC, John Paulson of Paulson & Co., Chuck Royce of Royce& Associates.
Highlight of Business Operations:The Company was a party to a credit agreement, dated as of June 27, 2006 (as amended through May 20, 2009, the “original credit agreement”), which provided for a five-year revolving credit facility and term loans. On January 26, 2010, the Company entered into an amendment and restatement of the original credit agreement that became effective on February 11, 2010 (the “Amended and Restated 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 $41.0 million term loan and a $236.4 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 $11.8 million will mature on June 27, 2011, as will revolving loan commitments of $40.4 million. The remaining term loans of $29.2 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.
Retail advertising decreased $11.7 million for the third fiscal quarter of 2010, or 8.4%, from the third fiscal quarter of 2009. Print retail run of press (ROP) advertising decreased $12.2 million for the third fiscal quarter of 2010, or 10.0%, and preprint advertising decreased $2.7 million, or 4.8% in each case, as compared to the third fiscal quarter of 2009. Digital retail advertising, which is included as part of retail advertising, increased $0.5 million for the third fiscal quarter of 2010, or 2.8% from the third fiscal quarter of 2009.
Interest expense was $44.0 million for the third fiscal quarter of 2010, up 27.4% from interest expense of $34.5 million in the 2009 third fiscal quarter. Interest associated with debt increased $13.8 million. The increase in debt-related 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 third quarter of 2010 included a $0.5 million write-off of deferred debt financing fees associated with $20 million of bank term debt repaid during the quarter.
The Company reported income from continuing operations in the first nine months of 2010 of $17.4 million, or $0.20 per share, compared to $27.9 million, or $0.33 per share, for the same period in 2009. The Company s net income was $21.4 million, or $0.25 per share, including discontinued operations in the first nine months of 2010, compared to $28.3 million, or $0.33 per share, in the first nine months of 2009. Net income in the first nine months of both years was impacted by the events discussed previously in the quarterly results.
Retail advertising decreased $44.7 million, or 10.2%, from the first nine months of 2009 and largely reflected the factors discussed previously in the quarterly results. Print ROP advertising decreased $47.3 million, or 12.2%, from the first nine months of 2009 and preprint advertising decreased $15.5 million, or 8.7%, from the first nine months of 2009. Digital retail advertising increased $2.6 million, or 5.1%, from the first nine months of 2010 driven by increased banner and display advertisements.
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