MORRIS PUBLISHING ANNOUNCES
2007 FOURTH-QUARTER AND YEAR-END RESULTS
AUGUSTA, Ga. (March 27, 2008) — Morris Publishing Group, LLC today reported fourth-quarter operating income from continuing operations of $18.6 million, down $3.1 million, or 14.4%, from $21.7 million for the same period in 2006. Net income from continuing operations for the quarter was $5.9 million, down $1.3 million, or 17.5%, from $7.2 million in the prior year.
On November 30, 2007, Morris Publishing sold fourteen daily newspapers, three nondaily newspapers, a commercial printing operation and other related publications to GateHouse Media. The total purchase price was $115 million, with the sale resulting in a fourth-quarter after-tax gain of $49.6 million.
From continuing operations, total operating revenue for the fourth quarter was $95.0 million, down $10.2 million, or 9.7%, from 2006. Total advertising revenue was $77.7 million, down $10.2 million, or 11.6%, with retail advertising revenue of $44.8 million, down 8.8%; classified advertising revenue of $27.7 million, down 15.1%; and national advertising revenue of $5.2 million, down 15.4%. Circulation revenue was $14.6 million, down 2.2% from 2006.
For the fourth quarter, total operating cost from continuing operations was $76.5 million, down $7.1 million, or 8.5%, from 2006, with labor and employee benefits cost of $34.1 million, down $2.8 million, or 7.5%; newsprint, ink and supplement cost of $10.2 million, down $3.1 million, or 23.3%; depreciation and amortization expense of $3.6 million, down $1.4 million, or 27.6%; and other operating cost of $28.7 million, up $0.1 million, or 0.4%.
Commenting on the results, William S. Morris IV, Morris Publishing Group’s chief executive officer and president, said, “The advertising environment in which we are now operating continues to be very challenging, but the fundamentals of our business remain solid, as we have the largest advertising reach and we remain the preeminent provider of news and information in the communities we serve.
“The fourth-quarter results of The Florida Times-Union strongly reflect the well publicized downturn in the state’s real estate markets. Not only has its classified advertising revenue been adversely affected, but a large portion of its revenue declines were from retailers dependent on the housing industry. In response, we have implemented various initiatives to increase Jacksonville’s revenues and to improve the newspaper’s operational efficiencies through a number of cost control measures. A number of these initiatives, many of which were implemented last year, have already begun to bear fruit.”
For the year, operating income from continuing operations for 2007 was $61.1 million, down $18.3 million, or 23.0%, from $79.4 million in 2006. Net income from continuing operations was $14.6 million, down $11.3 million, or 43.6%, from $25.9 million in 2006.
From continuing operations, total operating revenue for 2007 was $374.6 million, down $29.2 million, or 7.2%, from $403.8 million in 2006. Total advertising revenue was $306.7 million, down $29.6 million, or 8.8%, while circulation revenue was $57.6 million, down $1.2 million, or 2.1%. Retail, national and classified advertising revenues were down 4.1%, 15.0% and 13.1%, respectively.
Total operating cost from continuing operations for 2007 was $313.5 million, down $10.9 million, or 3.4%, from $324.4 million in 2006, with labor and employee benefits cost of $143.3 million, down $0.8 million, or 0.6%; newsprint, ink and supplement cost of $40.3 million, down $11.3 million, or 21.8%; depreciation and amortization expense of $16.2 million, down $2.9 million, or 15.1%; and other operating cost of $113.7 million, up $4.1 million, or 3.7%.
Excluding the gain on the GateHouse sale, income from discontinued operations, net of income taxes, was $4.5 million for the year compared to $4.4 million during 2006.
Net income for 2007 was $68.7 million compared to $30.3 million during 2006.
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 Thursday, March 27, 2008, at 10:00 a.m. Eastern Time. In order to participate, please call 1-888-928-9177 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:
| LEADER: | | 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: | | 9399988 |
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
Fourth-quarter and twelve-month results follow:
| Morris Publishing Group, LLC | |
| Condensed Consolidated Statements of Income | |
| (unaudited) | |
| | | | | | | | | | | | | |
| | | Three Months | | | Twelve Months | |
| | | Ended | | | Ended | |
| (Dollars in thousands) | | December 31, | | | December 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| | | | | | | | | | | | | |
| NET OPERATING REVENUES: | | | | | | | | | | | | |
| Advertising | | $ | 77,693 | | | $ | 87,889 | | | $ | 306,694 | | | $ | 336,245 | |
| Circulation | | | 14,551 | | | | 14,884 | | | | 57,602 | | | | 58,838 | |
| Other | | | 2,779 | | | | 2,487 | | | | 10,332 | | | | 8,685 | |
| Total net operating revenues | | | 95,023 | | | | 105,260 | | | | 374,628 | | | | 403,768 | |
| OPERATING EXPENSES: | | | | | | | | | | | | | | | | |
| Labor and employee benefits | | | 34,077 | | | | 36,853 | | | | 143,299 | | | | 144,108 | |
| Newsprint, ink and supplements | | | 10,185 | | | | 13,278 | | | | 40,338 | | | | 51,596 | |
| Other operating costs (excluding depreciation and amortization) | | | 28,658 | | | | 28,548 | | | | 113,657 | | | | 109,597 | |
| Depreciation and amortization expense | | | 3,551 | | | | 4,907 | | | | 16,219 | | | | 19,100 | |
| Total operating expenses | | | 76,471 | | | | 83,586 | | | | 313,513 | | | | 324,401 | |
| Operating income | | | 18,552 | | | | 21,674 | | | | 61,115 | | | | 79,367 | |
| OTHER EXPENSES (INCOME): | | | | | | | | | | | | | | | | |
| Interest expense, including amortization of debt issuance costs | | | 9,511 | | | | 9,499 | | | | 37,881 | | | | 37,059 | |
| Interest income | | | (108 | ) | | | (1 | ) | | | (114 | ) | | | (70 | ) |
| Other, net | | | (99 | ) | | | (260 | ) | | | (258 | ) | | | (369 | ) |
| Total other expenses, net | | | 9,304 | | | | 9,238 | | | | 37,509 | | | | 36,620 | |
| INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | | | 9,248 | | | | 12,436 | | | | 23,606 | | | | 42,747 | |
| PROVISION FOR INCOME TAXES | | | 3,310 | | | | 5,237 | | | | 8,993 | | | | 16,840 | |
| INCOME FROM CONTINUING OPERATIONS | | | 5,938 | | | | 7,199 | | | | 14,613 | | | | 25,907 | |
| | | | | | | | | | | | | | | | | |
| DISCONTINUED OPERATIONS | | | | | | | | | | | | | | | | |
| Income from discontinued operations, net of income taxes | | | 2,469 | | | | 1,111 | | | | 4,490 | | | | 4,368 | |
| Gain on sale of discontinued operations, net of income taxes of $30,505 | | | 49,567 | | | | - | | | | 49,567 | | | | - | |
| INCOME FROM DISCONTINUED OPERATIONS | | | 52,036 | | | | 1,111 | | | | 54,057 | | | | 4,368 | |
| | | | | | | | | | | | | | | | | |
| NET INCOME | | $ | 57,974 | | | $ | 8,310 | | | $ | 68,670 | | | $ | 30,275 | |
