McClatchy Files Form 10-Q for Second Quarter of 2007
The McClatchy Company (NYSE: MNI) today reported that it filed its Quarterly Report on Form 10-Q for the quarter ended July 1, 2007 (the Report) with the Securities Exchange Commission. In the company's Report, earnings for the second quarter of 2007 include the effect of an after-tax non-cash loss of $4.7 million, or six cents per share, related to the settlement of litigation and amendment to a Joint Operating Agreement expected to be paid by the Seattle Times Company (STC) in which McClatchy is a 49.5% owner.
The resolution of the accounting treatment for this settlement was concluded subsequent to the company's preliminary earnings announcement on July 19, 2007.
The company's second quarter 2007 earnings from continuing operations were $34.5 million, or 42 cents per share including the effect of the one-time charge. The company's total net income for the second fiscal quarter of 2007, including the results of discontinued operations, was $35.2 million, or 43 cents per share.
Earnings from continuing operations for the first half of 2007 were $49.0 million or 60 cents per share including the effect of the one-time charge. The company's total net income, including the results of discontinued operations, for the first half of 2007 was $44.3 million, or 54 cents per share.
As the company noted in its press release on July 19, 2007 regarding second quarter 2007 earnings, STC entered into an agreement to settle certain outstanding legal issues and amend the Joint Operating Agreement between STC and The Hearst Corporation's Seattle newspaper (Hearst) during the second quarter of 2007. As a result, STC is expected to pay approximately $24 million to Hearst in the third quarter of 2007. At the time of McClatchy's earnings announcement, the company was still reviewing the transaction to determine the appropriate accounting treatment. After review of the settlement agreement, the company determined that it was appropriate to record its share of the settlement in the second fiscal quarter of 2007, and as a result has taken a pre-tax charge of $7.8 million as an equity loss in the second fiscal quarter of 2007. The expense represents a non-cash charge to McClatchy.
The McClatchy Company is the third largest newspaper company in the United States, with 31 daily newspapers, approximately 50 non-dailies and direct marketing and direct mail operations. McClatchy also operates leading local websites in each of its markets which complement its newspapers and extends its audience reach in each market. Together with its newspapers and direct marketing products, these operations make McClatchy the leading local media company in each of its premium high growth markets. McClatchy-owned newspapers include The Miami Herald, The Sacramento Bee, the (Fort Worth) Star-Telegram, The Kansas City Star, The Charlotte Observer, and The (Raleigh) News & Observer.
McClatchy also has a portfolio of premium digital assets. Its leading local websites offer users information, comprehensive news, advertising, e-commerce and other services. The company owns and operates McClatchy Interactive, an interactive operation that provides websites with content, publishing tools and software development. McClatchy operates Real Cities (http://www.RealCities.com), the largest national advertising network of local news websites and owns 14.4% of CareerBuilder, the nation's largest online job site. McClatchy also owns 25.6% of Classified Ventures, a newspaper industry partnership that offers classified websites such as the nation's number two online auto website, http://cars.com, and the number one rental site, http://apartments.com. McClatchy is listed on the New York Stock Exchange under the symbol MNI.
Statements in this press release regarding future financial and operating results, including revenues, operating expenses, cash flows and debt levels, as well as future opportunities for the company and any other statements about management's future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," estimates and similar expressions) should also be considered to be forward-looking statements. There are a number of important risks and uncertainties that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: McClatchy may not consummate contemplated transactions which may enable debt reduction on anticipated terms or at all; McClatchy may not achieve its expense reduction targets or may do harm to its operations in attempting to achieve such targets; McClatchy's operations have been, and will likely continue to be, adversely affected by competition, including competition from internet publishing and advertising platforms; McClatchy's expense and income levels could be adversely affected by changes in the cost of newsprint and McClatchy's operations could be negatively affected by any deterioration in its labor relations, as well as the other risks detailed from time to time in the Company's publicly filed documents, including the Company's Annual Report on Form 10-K for the year ended December 31, 2006, filed with the U.S. Securities and Exchange Commission. McClatchy disclaims any intention and assumes no obligation to update the forward-looking information contained in this release.