MORRIS PUBLISHING ANNOUNCES
2008 SECOND-QUARTER RESULTS
AUGUSTA, Ga. (August 13, 2008) — Morris Publishing Group, LLC today reported second - -quarter operating income of $8.6 million, down $7.5 million, or 46.8%, from $16.2 million for the same period in 2007. Total operating revenue was $82.2 million, down $13.4 million, or 14.0%, and total operating cost was $73.6 million, down $5.9 million, or 7.4%.
Total advertising revenue was $65.2 million, down $13.5 million, or 17.2%, with retail down 12.4%; classified down 24.6%; and national down 4.4%. Circulation revenue was $14.8 million, up $0.4 million, or 2.9%, from 2007, due to home delivery price increases and a change in the way we sell home delivery subscriptions in Florida. Other income was $2.2 million, down $0.3 million, or 11.4%.
For the second quarter, labor and employee benefits costs were $33.6 million, down $3.3 million, or 9.1%; newsprint, ink and supplement cost was $9.7 million, down $0.3 million, or 3.0%; depreciation and amortization expense was $ 3.5 million, down $0.9 million, or 19.8%; and other operating costs were $26.8 million, down $1.4 million, or 4.8%.
Interest and loan amortization expense totaled $6.9 million, down $2.6 million from $9.4 million last year. At the end of the second quarter, the Company had $417.1 million in outstanding debt compared to $522.0 million at the end of the same period last year.
Income from continuing operations was $2.0 million, down $2.0 million from $4.0 million during the second quarter last year. Income from discontinued operations was $0.9 million during the second quarter last year.
Commenting on the results, William S. Morris IV, Morris Publishing Group’s chief executive officer and president, said, "Our advertising revenue results continued to be affected by the weak economy and the secular trends impacting our industry.
“During the quarter, our print advertising revenue was down 19.6%, with declines in all categories. Online advertising revenue was up 2.2%, compared to a 20.9% increase last year. Excluding the employment online category, our online advertising revenue was up 13.7%.
“Our cost structure benefited from a 9% reduction in head count, with salaries and wages down $2.0 million, or 7.6%. In addition, our second largest expense category, newsprint, was up slightly, with a 27.6% increase in the average cost per ton being offset by reduced consumption."
Advertising revenue was $130.5 million, down $23.3 million, or 15.1%, with retail down 10.4%; classified down 21.8%; and national down 6.8%. Circulation revenue was $29.5 million, up $0.9 million, or 3.2%.
For the first six months, labor and employee benefits costs were $68.0 million, down $5.7 million, or 7.7%; newsprint, ink and supplement cost was $18.8 million, down $2.3 million, or 10.8%; depreciation and amortization expense was $7.0 million, down $2.1 million, or 22.8%; and other operating costs were $54.9 million, down $1.9 million, or 3.4%.
Interest and loan amortization expense totaled $14.9 million, down $3.9 million from the first six months last year.
Including the $9.3 million in pre-tax gain on the repurchases of $21.5 million in senior subordinated debt, income from continuing operations for the first six months was $7.6 million, up $2.9 million from $4.8 million last year. Income from discontinued operations was $1.0 million during the first six months last year.
Morris Publishing Group, LLC is a wholly owned subsidiary of Morris Communications Company, LLC, a privately held media company based in Augusta, Ga. Morris Publishing currently owns and operates 13 daily newspapers as well as nondaily newspapers, city magazines and free community publications in the Southeast, Midwest, Southwest and Alaska. For more information, visit our Web site, morris.com.
A conference call will be held Wednesday, August 13, 2008, at 10:00 a.m. Eastern Time. In order to participate, please call 1-888-677-5720 ten (10) minutes prior to the scheduled start. The pass code and leader’s name listed below will be required to join the conference call:
| | MR. STEVE STONE |
| PASS CODE: | | MORRIS PUBLI |
To access the Audio Replay of this call, all parties can:
1. Go to the URL: https://e-meetings.verizonbusiness.com
2. Choose Audio Streaming under Join Events
3. Enter the conference number and pass code.
| PASS CODE: | | MORRIS PUBLI |
| CONFERENCE NUMBER: | | 2522133 |
Replays of the conference call are available for 30 days after the live event at the URL link.
For further information, please contact:
Craig S. Mitchell
Senior Vice President of Finance
Morris Communications Company, LLC
706-823-3236
Second-quarter and six month results follow:
| Morris Publishing Group, LLC | |
| Condensed Consolidated Statements of Income | |
| (unaudited) | |
| | | | | | | | | | | | | |
| | | | | | | |
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| (Dollars in thousands) | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | |
| NET OPERATING REVENUES: | | | | | | | | | | | | |
| Advertising | | $ | 65,192 | | | $ | 78,734 | | | $ | 130,509 | | | $ | 153,777 | |
| Circulation | | | 14,751 | | | | 14,339 | | | | 29,464 | | | | 28,547 | |
| Other | | | 2,228 | | | | 2,516 | | | | 4,906 | | | | 5,039 | |
| Total net operating revenues | | | 82,171 | | | | 95,589 | | | | 164,879 | | | | 187,363 | |
| OPERATING EXPENSES: | | | | | | | | | | | | | | | | |
| Labor and employee benefits | | | 33,586 | | | | 36,930 | | | | 67,997 | | | | 73,655 | |
| Newsprint, ink and supplements | | | 9,657 | | | | 9,959 | | | | 18,800 | | | | 21,082 | |
| Other operating costs (excluding depreciation and amortization) | | | 26,836 | | | | 28,196 | | | | 54,856 | | | | 56,765 | |
| Depreciation and amortization expense | | | 3,501 | | | | 4,366 | | | | 7,025 | | | | 9,105 | |
| Total operating expenses | | | 73,580 | | | | 79,451 | | | | 148,678 | | | | 160,607 | |
| Operating income | | | 8,591 | | | | 16,138 | | | | 16,201 | | | | 26,756 | |
| OTHER EXPENSES (INCOME) : | | | | | | | | | | | | | | | | |
| Interest expense, including amortization of debt issuance costs | | | 6,856 | | | | 9,437 | | | | 14,878 | | | | 18,756 | |
| Pre-tax gain on repurchases of debt | | | (860 | ) | | | - | | | | (9,271 | ) | | | - | |
| Interest income | | | (284 | ) | | | (1 | ) | | | (470 | ) | | | (4 | ) |
| Other, net | | | (41 | ) | | | (44 | ) | | | (72 | ) | | | (85 | ) |
| Total other expenses, net | | | 5,671 | | | | 9,392 | | | | 5,065 | | | | 18,667 | |
| INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | | | 2,920 | | | | 6,746 | | | | 11,136 | | | | 8,089 | |
| PROVISION FOR INCOME TAXES | | | 933 | | | | 2,715 | | | | 3,504 | | | | 3,326 | |
| INCOME FROM CONTINUING OPERATIONS | | | 1,987 | | | | 4,031 | | | | 7,632 | | | | 4,763 | |
| | | | | | | | | | | | | | | | | |
| INCOME FROM DISCONTINUED OPERATIONS, NET OF PROVISIONS FOR INCOME TAXES | | | - | | | | 916 | | | | - | | | | 972 | |
| | | | | | | | | | | | | | | | | |
| NET INCOME | | $ | 1,987 | | | $ | 4,947 | | | $ | 7,632 | | | $ | 5,735 | |
