Contact: | Elaine Lintecum 916-321-1846 elintecum@mcclatchy.com |
McCLATCHY REPORTS FOURTH QUARTER 2005 EARNINGS
SACRAMENTO, Calif., January 25, 2006 The McClatchy Company (NYSE-MNI) today reported fourth quarter 2005 earnings of $45.4 million, or 97 cents per share, compared to earnings of $47.8 million, or $1.02 per share, in the fourth quarter of 2004.
Revenues in the fourth quarter of 2005 were $309.8 million, up 0.5% from 2004 fourth quarter revenues of $308.2 million, with advertising revenues of $263.4 million, up 1.1%, and circulation revenues of $39.9 million, down 3.8%.
Earnings for full year 2005 were a record $160.5 million, or $3.42 per share, and include $1.0 million in third quarter legal costs related to defending a lawsuit filed against the company and its MinneapolisStar Tribune newspaper. That lawsuit has since been dismissed. Earnings in 2004 were $3.33 per share and included a $3.7 million charge related to the company's debt refinancing in the second quarter of 2004. Adjusted for the after-tax effect of these two items, earnings per share were $3.43 in 2005 and were $3.38 in 2004.
Revenues for the full year 2005 were $1.19 billion, up 2.0% from 2004 revenues of $1.16 billion. Advertising revenues were $1.0 billion, up 2.8%, and circulation revenues were $162.4 million, down 2.5%.
Commenting on the results, Gary Pruitt, McClatchy's chairman and chief executive officer, said, "December advertising, which was down 1.0%, resulted in fourth quarter results below our expectations. Christmas was on a Sunday in 2005, which had a greater than expected negative impact on retail and classified advertising during the last weekend of our fiscal year. In addition, our California papers had held up well in automotive advertising, but the industry-wide decline in this category reached them in the fourth quarter as well."
"Nonetheless," said Pruitt, "2005 was a solid year for the company. We reported record revenues and earnings. Our online advertising grew 38.3% and direct marketing advertising was up 9.6%. We continued to outperform the industry in circulation and in advertising. In fact, 2005 was the fifth consecutive year we have outperformed the industry in advertising revenue growth.
"Advertising spending continues to be somewhat choppy in our markets, but we do not view December's results as indicative of a trend in advertising performance going forward. We believe advertising will remain strong in our real estate and employment classified categories, on our internet sites, and in direct marketing. We expect overall advertising revenue growth in the low-to-mid single digits in the first quarter, despite the toughest comparisons we will face in 2006."
Pat Talamantes, McClatchy's chief financial officer, said, "We ended the year with debt of $154.2 million, down $113 million from year-end 2004. We increased debt in early 2006 to make a $40 million voluntary contribution to the company's pension plans. Capital expenditures totaled $54.5 million in 2005, and we expect capital expenditures to be about $62 million in 2006."
The company's statistical report, which summarizes its revenue performance for December and full year 2005, follows, along with a supplemental report of advertising revenue data by category.
At noon Eastern time today, McClatchy will review its results in a conference call (877-278-1205 pass code 4097985) and webcast (http://www.mcclatchy.com/). 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 17 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 1.8 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 daily newspaper markets, offering readers information, comprehensive news, advertising, e-commerce and other services, and owns and operates McClatchy Interactive, an interactive operation that provides websites with content, publishing tools and software development. 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, the impact of any litigation or potential litigation, as well as the other risks detailed from time to time in the Company's publicly filed documents, including the Company's December 26, 2004 report on form 10-K and filed with the U.S. Securities and Exchange Commission. The Company assumes no obligation to update the forward-looking information contained in this release.
The attached income statement contains a reconciliation of the Non-GAAP items referred to in this press release.
THE McCLATCHY COMPANY | |||||||||||
SUMMARY OF UNAUDITED RESULTS | |||||||||||
(IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS) | |||||||||||
Three months ended | Year Ended | ||||||||||
December 25, | December 26, | December 25, | December 26, | ||||||||
2005 | 2004 | 2005 | 2004 | ||||||||
Revenues - net | $309,815 | $308,151 | $1,186,115 | $1,163,376 | |||||||
Operating expenses: | |||||||||||
Compensation | 120,763 | 119,954 | 482,509 | 471,289 | |||||||
Newsprint and supplements | 41,022 | 39,895 | 154,672 | 151,134 | |||||||
Depreciation and amortization | 16,641 | 16,758 | 65,769 | 66,532 | |||||||
Other operating expenses | 56,333 | 51,857 | 213,164 | 205,112 | |||||||
Total operating expenses | 234,759 | 228,464 | 916,114 | 894,067 | |||||||
Operating income | 75,056 | 79,687 | 270,001 | 269,309 | |||||||
Interest expense | (1,822) | (1,638) | (7,705) | (9,095) | |||||||
Refinancing related charges | - | - | - | (3,737) | |||||||
Partnership income | 281 | 387 | 712 | 929 | |||||||
Other non-operating income - net | 5 | 217 | 219 | 155 | |||||||
Income before taxes | 73,520 | 78,653 | 263,227 | 257,561 | |||||||
Income tax provision | 28,139 | 30,873 | 102,708 | 101,685 | |||||||
Net income | $ 45,381 | $ 47,780 | $160,519 | $155,876 | |||||||
Net income per common share: | |||||||||||
Basic | $0.97 | $1.03 | $3.44 | $3.36 | |||||||
Diluted | $0.97 | $1.02 | $3.42 | $3.33 | |||||||
Weighted average common shares: | |||||||||||
Basic | 46,680 | 46,448 | 46,606 | 46,382 | |||||||
Diluted | 46,996 | 46,868 | 46,996 | 46,815 | |||||||
Reconciliation of Non-GAAP Amounts | |||||||||||
Net Income | $ 45,381 | $ 47,780 | $160,519 | $155,876 | |||||||
Certain items net of tax effects: | |||||||||||
Third quarter circulation litigation expense | - | - | 648 | - | |||||||
Refinancing related charge | - | - | - | 2,253 | |||||||
Non-GAAP net income | $ 45,381 | $ 47,780 | $161,167 | $158,129 | |||||||
Non-GAAP diluted per share amounts | $0.97 | $1.02 | $3.43 | $3.38 | |||||||
The McClatchy Company | |||||||||||||||||||||
Consolidated Statistical Report | |||||||||||||||||||||
(In thousands, except for preprints) | |||||||||||||||||||||
December | December Year-to-Date | ||||||||||||||||||||
Revenues - Net: | 2005 | 2004 | % Change | 2005 | 2004 | % Change | |||||||||||||||
Advertising | |||||||||||||||||||||
California | $30,844 | $30,305 | 1.8% | $392,158 | $372,232 | 5.4% | |||||||||||||||
Minneapolis | 24,062 | 25,145 | -4.3% | 308,476 | 309,506 | -0.3% | |||||||||||||||
Carolinas | 11,902 | 12,161 | -2.1% | 159,983 | 155,616 | 2.8% | |||||||||||||||
Northwest | 10,892 | 10,846 | 0.4% | 139,649 | 135,454 | 3.1% | |||||||||||||||
Total Advertising | $77,700 | $78,457 | -1.0% | $1,000,266 | $972,808 | 2.8% | |||||||||||||||
Circulation | 11,970 | 12,570 | -4.8% | 162,395 | 166,623 | -2.5% | |||||||||||||||
Other | 2,039 | 1,957 | 4.2% | 23,454 | 23,945 | -2.1% | |||||||||||||||
Total Revenue | $91,709 | $92,984 | -1.4% | $1,186,115 | $1,163,376 | 2.0% | |||||||||||||||
Average Paid Circulation:* | |||||||||||||||||||||
Daily | 1,419.8 | 1,436.9 | -1.2% | 1,401.8 | 1,419.4 | -1.2% | |||||||||||||||
Sunday | 1,743.8 | 1,836.1 | -5.0% | 1,787.7 | 1,847.2 | -3.2% | |||||||||||||||
Community Newspapers | 48.2 | 51.7 | -6.8% | 50.9 | 52.7 | -3.4% | |||||||||||||||
*Reflects average paid circulation based upon number of days in period. Does not reflect ABC reported figures. | |||||||||||||||||||||
Full Run ROP | |||||||||||||||||||||
Retail | 490.0 | 522.3 | -6.2% | 5,500.2 | 5,679.0 | -3.1% | |||||||||||||||
National | 101.1 | 96.9 | 4.3% | 1,183.5 | 1,204.3 | -1.7% | |||||||||||||||
Classified | 513.6 | 512.6 | 0.2% | 7,801.3 | 7,806.5 | -0.1% | |||||||||||||||
Total | 1,104.7 | 1,131.8 | -2.4% | 14,485.0 | 14,689.8 | -1.4% | |||||||||||||||
Millions of Preprints Distributed | 390.2 | 352.4 | 10.7% | 3,607.6 | 3,458.1 | 4.3% | |||||||||||||||
California: | |||||||||||||||||||||
The Sacramento Bee | 185.1 | 191.0 | -3.1% | 2,568.3 | 2,586.4 | -0.7% | |||||||||||||||
The Fresno Bee | 111.8 | 108.3 | 3.2% | 1,307.3 | 1,302.7 | 0.4% | |||||||||||||||
The Modesto Bee | 107.0 | 97.3 | 10.0% | 1,304.9 | 1,298.7 | 0.5% | |||||||||||||||
Merced Sun-Star | 55.1 | 43.9 | 25.5% | 652.1 | 599.6 | 8.8% | |||||||||||||||
Star Tribune,Minneapolis | 138.4 | 154.8 | -10.6% | 1,766.5 | 1,894.9 | -6.8% | |||||||||||||||
Northwest: | |||||||||||||||||||||
The News Tribune,Tacoma | 99.8 | 109.7 | -9.0% | 1,215.7 | 1,266.3 | -4.0% | |||||||||||||||
Anchorage Daily News | 63.4 | 68.6 | -7.6% | 951.5 | 947.2 | 0.5% | |||||||||||||||
Tri-City Herald | 68.5 | 68.0 | 0.7% | 902.1 | 842.7 | 7.0% | |||||||||||||||
Carolinas: | |||||||||||||||||||||
The News & Observer,Raleigh | 130.2 | 140.0 | -7.0% | 1,828.7 | 1,899.6 | -3.7% | |||||||||||||||
South Carolina Dailies | 145.4 | 150.2 | -3.2% | 1,987.9 | 2,051.7 | -3.1% | |||||||||||||||
Total | 1,104.7 | 1,131.8 | -2.4% | 14,485.0 | 14,689.8 | -1.4% | |||||||||||||||
The McClatchy Company | |||||||||||||||||||||
Supplemental Advertising Revenue Data | |||||||||||||||||||||
By Category for the Periods Ending December 25, 2005 | |||||||||||||||||||||
December | Qtr 4 | December Year-to-Date | |||||||||||||||||||
% | % Change | % | % Change | % | % Change | ||||||||||||||||
Advertising categories: | |||||||||||||||||||||
Retail | (4.8) | (5.4) | (2.2) | (2.9) | (0.0) | (0.3) | |||||||||||||||
National | 5.2 | 5.3 | 1.4 | 1.4 | (1.0) | (1.1) | |||||||||||||||
Classified Total | 1.4 | (2.3) | 3.9 | 0.7 | 5.9 | 2.5 | |||||||||||||||
Auto | (19.6) | (23.1) | (17.9) | (20.8) | (10.4) | (12.7) | |||||||||||||||
Real Estate | 19.0 | 17.5 | 22.3 | 20.9 | 18.3 | 16.1 | |||||||||||||||
Employment | 8.9 | 3.2 | 11.2 | 6.4 | 13.7 | 8.5 | |||||||||||||||
Direct Marketing | 11.2 | 11.2 | 12.4 | 12.4 | 9.6 | 9.6 | |||||||||||||||
Total advertising growth | (1.0) | (2.4) | 1.1 | (0.3) | 2.8 | 1.3 | |||||||||||||||