McClatchy Company is a newspaper and Internet publisher. It publishes daily and non-daily newspapers located in western coastal states North and South Carolina and Minnesota. McClatchy also publishes a local website in each of its daily newspaper markets offering readers information comprehensive news advertising e-commerce and other services. McClatchy also owns and operates other media-related businesses including Nando Media a national on-line publishing operation and The Newspaper Network a national newspaper marketing company. (Company Press Release) The Mcclatchy Company has a market cap of $249.6 million; its shares were traded at around $2.97 with a P/E ratio of 7.2 and P/S ratio of 0.1. The Mcclatchy Company had an annual average earning growth of 1.6% over the past 10 years.
Highlight of Business Operations:In May 2008, the Company purchased $300 million aggregate principal amount of its outstanding debt securities for $282.4 million in cash obtained from its revolving credit facility and recorded a pre-tax gain of $19.5 million. The Company purchased $150 million, $130 million and $20 million of its outstanding principal amount of debt securities maturing in 2009, 2011 and 2014, respectively. In the third fiscal quarter of 2008, the Company purchased $5.9 million aggregate principal of its outstanding debt securities maturing in 2009 for $5.8 million in cash obtained from its revolving credit facility.
On June 26, 2009, the Company completed a private debt exchange offer for all of its outstanding debt securities for a combination of cash and newly issued 15.75% senior notes due July 15, 2014 (New Notes). The New Notes are senior unsecured obligations and will be guaranteed by McClatchy s existing and future material domestic subsidiaries. The Company exchanged $3.4 million in cash and $24.2 million of New Notes in the exchange offer. In exchange for the cash and New Notes the Company retired the following outstanding principal amount of debt securities maturing in the respective years: $3.8 million in 2011 notes, $11.1 million in 2014 notes, $53.4 million in 2017 notes, $10.8 million in 2027 debentures and $23.8 million in 2029 debentures. The Company has recorded a pre-tax gain of approximately $44.1 million on the exchange in 2009. The gain was equal to the carrying amount of the exchanged securities less the total future cash payments of the New Notes, including both payments of interest and principal amount, and related expenses of the exchange.
In connection with the debt exchange offer described above, the Company entered into an agreement on May 20, 2009 to amend the Credit Agreement which, among other things, allows it to use its revolving credit facility for up to $60 million to repurchase its 7.125% Notes due June 1, 2011 or its 4.625% Notes due November 1, 2014 (up to a $25 million limit on the 2014 notes), subject to certain conditions. A total of $3.4 million of the $60 million revolving credit facility allowable for bond repurchase was used in the exchange offer discussed above.
The Company reported income from continuing operations in the third fiscal quarter of 2009 of $23.6 million, or $0.28 per share, compared to $4.2 million, or $0.05 per share in the third fiscal quarter of 2008. The Company recorded a loss from discontinued operations in the third fiscal quarter of 2009 of $38,000 compared to income of $67,000 in the third fiscal quarter of 2008.
Retail advertising decreased $42.0 million, or 23.1% from the third fiscal quarter of 2008, which primarily reflects the impact of the economic recession. Print retail run of press (ROP) advertising decreased $32.2 million, or 33.2%, and preprint advertising decreased $16.2 million, or 22.1%. Digital retail advertising increased $6.4 million, or 57.7%, from the first fiscal quarter of 2008 reflecting continued growth in new advertisers and the impact of the Yahoo alliance.
The Company reported income from continuing operations in the first nine months of 2009 of $27.9 million, or $0.33 per share, compared to $23.2 million, or $0.28 per share in 2008. The Company s net income was $28.3 million, or $0.33 per share, including discontinued operations in the first nine months of 2009, compared to $23.1 million, or $0.28 per share, in the first nine months of 2008. Net income in both years was impacted by the events discussed in the comparison of quarterly results above.
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