Contact: | Elaine Lintecum
Treasurer
916-321-1846
elintecum@mcclatchy.com |
McCLATCHY REPORTS SECOND QUARTER 2004 EARNINGS AND PROVIDES THIRD QUARTER OUTLOOK
SACRAMENTO, CA, July 15, 2004 - The McClatchy Company (NYSE-MNI) - today reported second quarter earnings of $40.1 million, or 86 cents per share, compared to earnings from continuing operations of $37.5 million, or 81 cents per share, in the second quarter of 2003.
As previously announced, earnings in the 2004 quarter include a non-cash charge equal to $2.25 million after taxes for the write-off of capitalized loan fees as a result of the company's recent debt refinancing. Excluding this refinancing charge, earnings were $42.3 million or 90 cents per share. Total earnings in the 2003 quarter include income from the operating results and sale of The Newspaper Network (TNN), a discontinued operation, of $6.0 million or 13 cents per share. Including the discontinued operation, total earnings were $43.4 million, or 94 cents per share, in the 2003 quarter.
The Company's earnings guidance provided at the Mid-Year Media Review conference in New York on June 23, 2004 was 87 to 88 cents per share excluding the refinancing charge. After the charge, the Company's earnings guidance was 82 to 83 cents per share.
Revenues in the second quarter of 2004 were a record $296.3 million, up 7.2% from 2003 second quarter revenues of $276.4 million, with advertising revenues of $248.0 million, up 8.1%, and circulation revenues of $42.0 million, up 1.7%. Revenues in 2004 include the operations of the recently acquiredMerced Sun-Star and related non-daily newspapers (the Merced Group). Excluding the Merced Group, total revenues were up 5.9% and advertising revenues were up 6.6% in the second quarter of 2004.
Earnings in the first half of 2004 were $69.0 million, or $1.48 per share, and were $1.52 per share excluding the refinancing charge, compared to earnings from continuing operations of $62.8 million, or $1.35 per share, in the first half of 2003. Total earnings in the first half of 2003, including the operating results of TNN and the gain on its sale, were $1.48 per share.
Revenues in the first half were $568.6 million, up 6.4% from 2003 revenues of $534.3 million. Advertising revenues were $472.7 million, up 7.4%, and circulation revenues were $83.5 million, up 0.7%. Excluding the Merced Group, total revenues were up 5.2% and advertising revenues were up 6.1% in the first half of 2004.
Commenting on the results, Gary Pruitt, McClatchy's chairman and chief executive officer, said, "We are pleased with our second quarter earnings, which were somewhat stronger than we had expected. In June we continued to see a rebound in employment advertising, together with solid growth in the retail category compared to April and May. These trends helped drive June advertising revenues up 9.3%. Online advertising continued to post strong results in the quarter, especially in the employment classified area. Our total employment revenues, including both print and online advertising, were up 24.1% in the second quarter.
"Looking at the third quarter and full year, we expect volatility in retail and slower growth in national advertising, which we believe will be offset by strength in employment advertising, online and direct mail revenues. As a result, we expect revenues to be up in the mid-single digits for the rest of 2004. Based on our revenue estimates and continued focus on cost controls, we expect earnings in the third quarter to be between 79 and 82 cents per share. In addition, as we said recently at the Mid-Year Media Review conference, we expect full-year earnings to range between $3.25 and $3.35 per share before considering the second quarter refinancing charge and to range from $3.20 to $3.30 per share after that charge."
Pat Talamantes, McClatchy's chief financial officer, said, "Our debt at June 27 was $333.8 million, down $13.2 million from the end of 2003, even though we borrowed funds early in the first quarter to complete the $41 million Merced acquisition and to make a $60 million voluntary pension contribution. We remain committed to repaying debt with our free cash flow and expect debt at year-end 2004 to be below $300 million."
The company's statistical report, which summarizes its revenue performance for June and the first half of 2004, follows, along with a supplemental report of advertising by category.
At 12:00 noon Eastern time today, McClatchy will review its results in a conference call (877-278-1205 pass code 8260398) and webcast (www.mcclatchy.com). A replay of the call can be accessed for up to 48 hours by dialing 800-642-1687 and using the same pass code, 8260398 The webcast will be archived at McClatchy's website.
The McClatchy Company, headquartered in Sacramento, California, is a leading newspaper and Internet publisher. It publishes 12 daily and 18 non-daily newspapers located in western coastal states, North and South Carolina, and the Twin Cities of Minneapolis/St. Paul. McClatchy has daily circulation of 1.4 million and Sunday circulation of 1.85 million. McClatchy's newspapers include, among others, theStar Tribune in Minneapolis, The Sacramento Bee, The Fresno Bee andThe Modesto Beein California, The News & Observer (Raleigh, NC),The News Tribune(Tacoma, WA) and theAnchorage Daily News.
McClatchy also operates leading local websites in each of its 12 daily newspaper markets, offering readers information, comprehensive news, advertising, e-commerce and other services and owns and operates Nando Media, a national on-line publishing operation. McClatchy is listed on the New York Stock Exchange under the symbol MNI.
ADDITIONAL INFORMATION
This release contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ. These risks and uncertainties include national and local economic conditions that could affect advertising and circulation rates and volumes, changes in interest rates and/or newsprint prices, increased competition in our markets, as well as the other risks detailed from time to time in the Company's publicly filed documents, including the Company's December 28, 2003 report on form 10-K and March 28, 2004 report on form 10-Q, filed with the U.S. Securities and Exchange Commission. The Company assumes no obligation to update the forward-looking information contained in this release.
SUMMARY OF UNAUDITED RESULTS |
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) |
|
| Three months ended | | Six months ended |
| June 27, 2004 | | June 29, 2003 | | June 27, 2004 | | June 29, 2003 |
| | | | | | | |
Revenues - net | $ 296,270 | | $ 276,370 | | $ 568,553 | | $ 534,251 |
Operating expenses: | | | | | | | |
Compensation | 118,304 | | 110,799 | | 236,407 | | 222,622 |
Newsprint and supplements | 38,220 | | 34,239 | | 73,189 | | 65,805 |
Depreciation and amortization | 16,410 | | 17,142 | | 33,024 | | 35,353 |
Other operating expenses | 51,210 | | 48,095 | | 102,008 | | 97,115 |
Total operating expenses | 224,144 | | 210,275 | | 444,628 | | 420,895 |
| | | | | | | |
Operating income | 72,126 | | 66,095 | | 123,925 | | 113,356 |
| | | | | | | |
Interest expense | (2,309) | | (5,459) | | (5,948) | | (10,661) |
Refinancing related charge | (3,737) | | - | | (3,737) | | - |
Partnership income (loss) | 419 | | 161 | | 312 | | (190) |
Other non-operating income (loss) - net | (8) | | (390) | | 64 | | (284) |
Income from continuing operations before taxes | 66,491 | | 60,407 | | 114,616 | | 102,221 |
Income tax provision | 26,396 | | 22,941 | | 45,592 | | 39,457 |
Income from continuing operations | 40,095 | | 37,466 | | 69,024 | | 62,764 |
Income from discontinued operation | - | | 5,982 | | - | | 5,994 |
Net income | $ 40,095 | | $ 43,448 | | $ 69,024 | | $ 68,758 |
| | | | | | | |
Net income per common share: | | | | | | | |
Basic: | | | | | | | |
Income from continuing operation | $ 0.86 | | $ 0.81 | | $ 1.49 | | $ 1.36 |
Income from discontinued operation | - | | $ 0.13 | | - | | $ 0.13 |
Net income per share | $ 0.86 | | $ 0.94 | | $ 1.49 | | $ 1.49 |
| | | | | | | |
Diluted: | | | | | | | |
Income from continuing operation | $ 0.86 | | $ 0.81 | | $ 1.48 | | $ 1.35 |
Income from discontinued operation | - | | $ 0.13 | | - | | $ 0.13 |
Net income per share | $ 0.86 | | $ 0.94 | | $ 1.48 | | $ 1.48 |
| | | | | | | |
Weighted average common shares: | | | | | | | |
Basic | 46,361 | | 46,082 | | 46,336 | | 46,057 |
Diluted | 46,803 | | 46,404 | | 46,776 | | 46,357 |
| | | | | | | |
The McClatchy Company |
Consolidated Statistical Report |
(In thousands, except for preprints) |
| Period 6 | | Period 6 Year-to-Date |
Revenues - Net: * | 2004 | | 2003 | | % Change | | 2004 | | 2003 | | % Change |
Advertising | | | | | | | | | | | |
Daily Newspapers: | | | | | | | | | | | |
Minneapolis | $23,808 | | $21,428 | | 11.1% | | $151,415 | | $141,998 | | 6.6% |
California | 29,408 | | 26,957 | | 9.1% | | 180,287 | | 162,702 | | 10.8% |
Carolinas | 12,018 | | 11,054 | | 8.7% | | 75,469 | | 71,449 | | 5.6% |
Northwest | 10,804 | | 10,121 | | 6.7% | | 65,527 | | 63,812 | | 2.7% |
Total Advertising | $76,038 | | $69,560 | | 9.3% | | $472,698 | | $439,961 | | 7.4% |
| | | | | | | | | | | |
Circulation | 12,859 | | 12,524 | | 2.7% | | 83,510 | | 82,936 | | 0.7% |
Other | 1,660 | | 1,594 | | 4.1% | | 11,897 | | 10,778 | | 10.4% |
Total Newspapers | $90,557 | | $83,678 | | 8.2% | | $568,105 | | $533,675 | | 6.5% |
| | | | | | | | | | | |
Non-Newspapers | 81 | | 89 | | -9.0% | | 448 | | 576 | | -22.2% |
Total Revenue | $90,638 | | $83,767 | | 8.2% | | $568,553 | | $534,251 | | 6.4% |
* Revenues in 2003 are re-classified to report continuing operations only. | | | | | | |
| | | | | | | | | | | |
Average Paid Circulation: | | | | | | | | | | | |
Daily | 1,375.3 | | 1,360.0 | | 1.1% | | 1,413.7 | | 1,387.2 | | 1.9% |
Sunday | 1,841.6 | | 1,842.5 | | 0.0% | | 1,847.7 | | 1,847.1 | | 0.0% |
Community Newspapers | 68.8 | | 60.2 | | 14.3% | | 67.8 | | 61.1 | | 11.0% |
| | | | | | | | | | | |
Advertising Linage for Dailies: | | | | | | | | | | | |
Full Run ROP | | | | | | | | | | | |
Retail | 449.8 | | 430.9 | | 4.4% | | 2,711.8 | | 2,687.8 | | 0.9% |
National | 89.6 | | 106.7 | | -16.0% | | 612.5 | | 583.2 | | 5.0% |
Classified | 629.9 | | 593.5 | | 6.1% | | 3,901.2 | | 3,677.8 | | 6.1% |
Total | 1,169.3 | | 1,131.1 | | 3.4% | | 7,225.5 | | 6,948.8 | | 4.0% |
| | | | | | | | | | | |
Millions of Preprints Distributed | 258.0 | | 228.3 | | 13.0% | | 1,577.4 | | 1,514.7 | | 4.1% |
| | | | | | | | | | | |
Full Run ROP Linage by Market for Dailies: | | | | | | | | | | |
California: | | | | | | | | | | | |
The Sacramento Bee | 207.2 | | 209.1 | | -0.9% | | 1,285.2 | | 1,243.4 | | 3.4% |
The Fresno Bee | 106.4 | | 105.8 | | 0.6% | | 651.3 | | 634.5 | | 2.6% |
The Modesto Bee | 109.0 | | 113.5 | | -4.0% | | 644.3 | | 636.9 | | 1.2% |
Merced Sun-Star | 48.0 | | 0.0 | | 0.0% | | 292.7 | | 0.0 | | 0.0% |
| | | | | | | | | | | |
Star Tribune, Minneapolis | 148.1 | | 151.2 | | -2.1% | | 927.9 | | 924.0 | | 0.4% |
| | | | | | | | | | | |
Northwest: | | | | | | | | | | | |
The News Tribune, Tacoma | 104.2 | | 109.1 | | -4.5% | | 622.6 | | 666.2 | | -6.5% |
Anchorage Daily News | 75.6 | | 70.6 | | 7.1% | | 452.3 | | 453.6 | | -0.3% |
Tri-City Herald | 65.0 | | 62.0 | | 4.8% | | 396.4 | | 376.5 | | 5.3% |
| | | | | | | | | | | |
Carolinas: | | | | | | | | | | | |
The News & Observer, Raleigh | 150.2 | | 148.6 | | 1.1% | | 930.7 | | 970.1 | | -4.1% |
South Carolina Dailies | 155.6 | | 161.2 | | -3.5% | | 1,022.1 | | 1,043.6 | | -2.1% |
Total | 1,169.3 | | 1,131.1 | | 3.4% | | 7,225.5 | | 6,948.8 | | 4.0% |
| | | | | | | | | | | |
Data in 2004 includes theMerced Sun-Starand related community newspapers, purchased on January 7, 2004. | | |
THE McCLATCHY COMPANY
SUPPLEMENTAL ADVERTISING DATA
BY CATEGORY FOR THE PERIOD
ENDED JUNE 27, 2004
| | June 2004* Percent Change | | Year-to-Date* Percent Change |
Retail | 6.9 | | 2.6 |
National | 2.5 | | 8.9 |
Classified Total | 6.2 | | 5.1 |
| | Auto | (1.1) | | 1.6 |
| | Real Estate | 9.1 | | 8.9 |
| | Employment | 12.6 | | 8.6 |
Online | 55.7 | | 55.9 |
Direct Marketing | 16.0 | | 10.8 |
Total Advertising | 7.9 | | 6.1 |
* Excludes Merced Group
Most of the Company's online advertising is in the classified categories. On a combined basis in June, print and online classified advertising increased 9.9% versus 6.2% from print classified only. Employment classified advertising on a combined basis increased 21.2% versus 12.6% on a print only basis.
For the year-to-date comparisons, total combined print and online classified increased 8.6% compared to 5.1% on a print-only basis. Employment advertising for the six months grew 17.3% on a print and online combined basis, compared to 8.6% for print only.
