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McClatchy Reports Second Quarter Results

Released 07/24/2008

The McClatchy Company (NYSE: MNI) today reported net income from continuing operations in the second quarter of 2008 of $20.1 million, or 24 cents per share.

Adjusted earnings from continuing operations(1) excluding several unusual items in the second quarter of 2008 were $17.3 million or 21 cents per share. Total net income including discontinued operations was $19.7 million, or 24 cents per share.

Earnings in the second quarter of 2008 included the impact of several unusual events including: a gain on the sale of a one-third interest in SP Newsprint Company (SP), a gain on the extinguishment of debt related to a bond tender, the charges related to implementing a previously announced restructuring plan, the write-down of certain internet investments and a charge for certain discrete tax items.

The company's second quarter 2007 earnings from continuing operations were $34.5 million, or 42 cents per share, and included 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 paid by the Seattle Times Company (STC) in which McClatchy is a 49.5% owner. 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.

Revenues in the second quarter of 2008 were $489.7 million, down 15.6% from revenues from continuing operations of $580.0 million in the second quarter of 2007. Advertising revenues were $406.3 million, down 16.8% from 2007, and circulation revenues were $66.1 million, down 5.2%. Online advertising revenues grew 12.5% in the second quarter of 2008 and were 11.8% of total advertising revenues compared to 8.6% of total advertising revenues for all of 2007.

On March 31, 2008 (the first day of the company's second fiscal quarter), McClatchy and its partners, affiliates of Cox Enterprises, Inc. and Media General, Inc., completed the sale of SP Newsprint Company, of which McClatchy was a one-third owner. The pre-tax gain on the sale of SP was $32.0 million and proceeds of $55 million from the sale were used to reduce debt.

In May 2008, the company purchased $300 million aggregate principal amount of its outstanding publicly traded debt securities for $282.4 million and recorded a pre-tax gain of $19.5 million. The Company repaid $294.7 million in debt in the second quarter reducing total debt to $2.10 billion from $2.40 billion at the end of the first quarter.

On June 16, 2008, the company announced a restructuring plan which is expected to result in $95 million to $100 million in annual savings over the next four quarters. This plan includes a reduction in workforce of approximately 10% and is expected to result in severance of approximately $30 million. The company expects to reduce non-newsprint cash expense in the low double-digit percentage range over the balance of 2008 excluding the severance. Second quarter 2008 results include related severance and retirement plan curtailment charges of $23.3 million.

On June 30, 2008 (the first day of the company's third fiscal quarter) the company sold its 15.0% interest in ShopLocal, LLC for $7.875 million and used the proceeds to reduce debt. A tax benefit from the sale is expected to result in cash tax savings of approximately $5.6 million in the fourth quarter of 2008. The company reduced its carrying value of ShopLocal to match the sales price. In addition, one of the internet companies in which McClatchy has an investment incurred an impairment on a product and as a result, the company recognized a charge related to this investment in the second quarter. The total non-cash pre-tax charges related to impairments of internet investments, including ShopLocal, in the second quarter were $21.5 million.

First Six Months Results:

Income from continuing operations for the first six months of 2008 was $19.1 million or 23 cents per share, and was affected by the issues discussed above as well as two additional items in the first quarter of 2008 which are discussed in the table of adjusted earnings(1) below. Adjusted earnings from continuing operations were $20.0 million or 24 cents in the first half of 2008. The company's total net income for the first six months of 2008 including the results of discontinued operations was $18.8 million, or 23 cents per share.

Earnings from continuing operations for the first half of 2007 were $49.0 million or 60 cents per share including the settlement of litigation and amendment to a Joint Operating Agreement paid by the Seattle Times Company. 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. Discontinued operations reflect the results of the (Minneapolis) Star Tribune newspaper which was sold on March 5, 2007.

Revenues from continuing operations in the first six months of 2008 were down 14.7% to $978.0 million compared to $1.1 billion in 2007. Advertising revenues in 2008 totaled $810.4 million, down 16.1% and circulation revenues were $133.9 million, down 5.4%. Online advertising revenues grew 11.5% in the first half of 2008 and represented 11.6% of total advertising revenues.

Debt repayments totaled more than $370 million in the first six months of 2008 and the company noted that debt was $ 2.10 billion as of June 29, 2008.

Management's Comments:

Commenting on McClatchy's results, Gary Pruitt, chairman and chief executive officer, said, "Our advertising revenues in the second quarter of 2008 were down in the mid-teen percentage range and continued to be hurt by the weak economy and the secular shift in advertising to the internet.

"We were pleased to see strength in our online business in the second quarter, reflected in both audience growth and advertising sales. Through the second quarter, unique visitors to our websites were up 24.7% following 41.4% growth in the first quarter.

"Online advertising revenues grew a strong 12.5% in the second quarter of 2008. Excluding employment advertising, which is the category most tied to print up-sell advertising and which has declined nationally both in print and online, our online advertising grew 58.5% in the second quarter of this year. We were pleased to note that nearly 50% of our online advertising came from ads placed only online; they were not tied to a print up-sell.

"Despite the strong growth in our online business, the advertising environment continues to be weak and we expect revenues to continue to be down. Whether revenues improve from recent trends depends upon the direction of the overall economy.

"We are not standing idly by; we are investing significantly in our online operations, including adding sales staff, realigning sales incentives to focus on driving sales and expanding online sales training budgets and efforts. We are working with industry peers and technology companies to offer the best online products. Our partnership with Yahoo will enhance audience reach and enable us to build and refine capabilities for highly targeted advertising and online search, further growing online revenues. In June we named Stephen Bernard to a newly-created position as corporate vice president for advertising to better serve our large retail and national customers both online and in print.

"We are also focused on our cost structure. The continuing decline in print advertising means we have accelerated plans to become a smaller, more efficient company well-positioned for future success in an increasingly competitive environment. We are aggressively pursuing synergies with other newspapers, such as the announcement to partner with Pioneer Newspapers to print our Boise, Idaho, and Bellingham, Wash., papers beginning in 2009. On June 16 we announced a plan to reduce our workforce through both voluntary and involuntary separations by about 1,400 full-time equivalent employees. We are retaining our strategic focus on sales, news and online operations as we realign our cost structure, but are taking advantage of opportunities to streamline operations. Excluding severance and other benefit charges related to this restructuring plan, cash expenses were down 9.1% in the second quarter, and were down 10.0% in the first half of 2008.

"We are committed to doing more if revenues decline further in the second half. Our board will meet during the third quarter to consider dividend policies and we will look at additional cost saving measures as necessary. But we know that economic slowdowns do not last forever and our 151-year-old company has been successful by taking a long-term view and staying true to our strategic plan. So while we will remain focused on realigning our cost structure as we transition to an integrated multimedia company in print and online, we are also focused on continuing to be the leading local media company in some of the best growth markets in the nation. We are working hard to position the company to benefit from a stronger economy once conditions improve."

Pat Talamantes, McClatchy's chief financial officer, said, "We continue to generate significant cash. Our cash flow, coupled with asset sales and the income tax refund related to our sale of the (Minneapolis) Star Tribune in 2007, allowed us to repay more than $370 million of debt in the first half. Debt at the end of the quarter was $2.1 billion, compared to $2.5 billion at the end of 2007. As a result, our interest expense declined $12.9 million or 26% from second quarter 2007. We have met all of our financial obligations, including the financial covenants in our credit agreement, and we expect to continue to do so. We continue to monitor our financial position and have good relationships with our bank group, and we will seek an amendment to our covenants if necessary. We still expect to make further progress in deleveraging our balance sheet and expect total debt to be in the $2 billion range by the end of 2008."

(1) Adjusted Earnings From Continuing Operations and EPS:

Earnings in the second quarter of 2008 included the impact of several unusual events including: the sale of a one-third interest in SP Newsprint Company (SP), a gain on the extinguishment of debt related to a second quarter bond tender, the impact of implementing a previously announced restructuring plan, the write-down of certain internet investments and a charge for certain discrete tax items. The company's 2008 first quarter results included two charges: a charge related to an amendment to the company's bank agreement that provides the company greater flexibility under its debt covenants, and a charge for certain discrete tax items. The impacts of these items on 2008 results are summarized below (dollars in thousands, except per share amounts):

Three Months Ended Six Months Ended Amount Per share Amount Per share Income(loss) from continuing operations $20,051 $0.24 $19,057 $0.23 Unusual items, net of tax: Gain on sale of SP Newsprint Co interest (19,393) (0.23) (19,393) (0.23) Gain on extinguishment of debt (12,299) (0.14) (12,299) (0.14) Restructuring related charges 13,188 0.16 14,373 0.17 Impairments related to internet investments 13,532 0.16 13,532 0.16 Write-off of financing costs, net of tax -- -- 1,914 0.02 Certain discrete tax items 2,245 0.02 2,851 0.03 Adjusted income from continuing operations $17,324 $0.21 $20,035 $0.24

Non-GAAP measures should not be considered a substitute for GAAP measures. However, the adjusted income from continuing operations provides meaningful supplemental information about the company's 2008 underlying results of operations, and management believes it assists investors and financial analysts in analyzing and forecasting future periods.

The company's statistical report, which summarizes revenue performance for June, the second fiscal quarter and first half of 2008, follows.

At noon Eastern Time today, McClatchy will review its results in a conference call (877-278-1205 pass code 53484230) and webcast (http://www.mcclatchy.com). The webcast will be archived at McClatchy's website.

About McClatchy

The McClatchy Company is the third largest newspaper company in the United States, with 30 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 extend its audience reach. The websites offer users comprehensive news and information, advertising, e-commerce and other services. Together with its newspapers and direct marketing products, these interactive 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 owns a portfolio of premium digital assets, including 14.4% of CareerBuilder, the nation's largest online job site, and 25.6% of Classified Ventures, a newspaper industry partnership that offers two of the nation's premier classified websites: the auto website, cars.com, and the rental site, apartments.com. McClatchy is listed on the New York Stock Exchange under the symbol MNI.

Additional Information:

Statements in this press release regarding future financial and operating results, including revenues, anticipated savings from cost reduction efforts, cash flows, 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: the duration and depth of an economic recession in markets where McClatchy operates its newspapers may reduce its income and cash flow greater than expected; 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 30, 2007, 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.

***THE McCLATCHY COMPANY*** CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (In thousands, except per share amounts)

Three Months Ended Six Months Ended June 29, July 1, June 29, July 1, 2008 2007 2008 2007 REVENUES - NET: Advertising $406,328 $488,277 $810,351 $965,300 Circulation 66,055 69,707 133,919 141,587 Other 17,300 22,043 33,696 39,698 489,683 580,027 977,966 1,146,585 OPERATING EXPENSES: Compensation 229,057 228,959 447,910 465,283 Newsprint and supplements 64,189 72,186 124,647 147,603 Depreciation and amortization 36,649 38,357 73,031 76,190 Other operating expenses 116,073 123,144 231,929 252,740 445,968 462,646 877,517 941,816

OPERATING INCOME 43,715 117,381 100,449 204,769

NON-OPERATING (EXPENSES) INCOME: Interest expense (36,668) (49,556) (81,945) (103,341) Interest income 475 42 571 106 Equity losses in unconsolidated companies, net (366) (11,198) (13,490) (20,947) Impairments related to internet investments (21,515) -- (21,515) -- Gain on sale of SP Newsprint 31,976 -- 31,976 -- Gain on extinguishment of debt 19,500 -- 19,500 -- Other - net 105 791 1,019 743 (6,493) (59,921) (63,884) (123,439) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX PROVISION 37,222 57,460 36,565 81,330

INCOME TAX PROVISION 17,171 22,929 17,508 32,286

INCOME FROM CONTINUING OPERATIONS 20,051 34,531 19,057 49,044

INCOME (LOSS) FROM DISCONTINUED OPERATIONS - NET OF INCOME TAXES (386) 705 (242) (4,778)

NET INCOME $19,665 $35,236 $18,815 $44,266

NET INCOME PER COMMON SHARE: Basic: Income from continuing operations $0.24 $0.42 $0.23 $0.60 Income (loss) from discontinued operations (0.00) 0.01 (0.00) (0.06) Net income per share $0.24 $0.43 $0.23 $0.54

Diluted: Income from continuing operations $0.24 $0.42 $0.23 $0.60 Income (loss) from discontinued operations (0.00) 0.01 (0.00) (0.06) Net income per share $0.24 $0.43 $0.23 $0.54

WEIGHTED AVERAGE NUMBER OF COMMON SHARES: Basic 82,264 81,976 82,220 81,931 Diluted 82,317 82,037 82,274 82,010

See notes to consolidated financial statements.

***The McClatchy Company*** Consolidated Statistical Report (In thousands, except for preprints)

June Combined Revenues - Net: 2008 2007 % Change

Advertising Retail $56,715 $65,433 -13.3% National 10,853 14,635 -25.8% Classified Total 40,355 57,234 -29.5% Automotive 10,949 13,731 -20.3% Real Estate 10,204 16,637 -38.7% Employment 11,832 19,582 -39.6% Other 7,370 7,284 1.2% Direct Marketing 10,947 10,168 7.7% Other Advertising 123 273 -54.9% Total Advertising $118,993 $147,743 -19.5%

Circulation 19,813 21,112 -6.2% Other 5,577 5,736 -2.8% Total Revenues $144,383 $174,591 -17.3%

Advertising Revenues by Market: California $21,877 $30,459 -28.2% Florida 16,622 20,595 -19.3% Texas 12,796 15,323 -16.5% Southeast 34,558 41,133 -16.0% Midwest 19,169 22,239 -13.8% Northwest 13,875 17,480 -20.6% Other 96 514 -81.3% Total Advertising $118,993 $147,743 -19.5%

Print Only Revenues - Net: 2008 2007 % Change

Advertising Retail $52,851 $63,225 -16.4% National 9,552 13,980 -31.7% Classified Total 30,394 46,336 -34.4% Automotive 8,152 11,750 -30.6% Real Estate 8,746 15,438 -43.3% Employment 6,835 12,344 -44.6% Other 6,661 6,804 -2.1% Direct Marketing 10,947 10,168 7.7% Other Advertising 123 273 -54.9% Total Advertising $103,867 $133,982 -22.5%

Circulation Other Total Revenues

Advertising Revenues by Market: California $19,479 $28,277 -31.1% Florida 14,431 18,590 -22.4% Texas 11,486 14,169 -18.9% Southeast 29,757 36,824 -19.2% Midwest 16,533 20,119 -17.8% Northwest 12,181 15,620 -22.0% Other 0 383 -100.0% Total Advertising $103,867 $133,982 -22.5%

Advertising Statistics for Dailies: Full Run ROP Linage 2,237.4 2,592.6 -13.7%

Millions of Preprints Distributed 458.2 501.2 -8.6%

Average Paid Circulation:* Daily 2,501.1 2,606.1 -4.0% Sunday 3,149.1 3,309.0 -4.8%

Online Only Revenues - Net: 2008 2007 % Change

Advertising Retail $3,864 $2,208 75.0% National 1,301 655 98.6% Classified Total 9,961 10,898 -8.6% Automotive 2,797 1,981 41.2% Real Estate 1,458 1,199 21.6% Employment 4,997 7,238 -31.0% Other 709 480 47.7% Direct Marketing - - - Other Advertising Marketing - - - Total Advertising $15,126 $13,761 9.9%

Circulation Other Total Revenues

Advertising Revenues by Market: California $2,398 $2,182 9.9% Florida 2,191 2,005 9.3% Texas 1,310 1,154 13.5% Southeast 4,801 4,309 11.4% Midwest 2,636 2,120 24.3% Northwest 1,694 1,860 -8.9% Other 96 131 -26.7% Total Advertising $15,126 $13,761 9.9%

* Reflects average paid circulation based upon number of days in period. Does not reflect ABC reported figures.

***The McClatchy Company*** Consolidated Statistical Report (In thousands, except for preprints)

Quarter 2 Combined Revenues - Net: 2008 2007 % Change

Advertising Retail $196,497 $213,340 -7.9% National 36,682 46,065 -20.4% Classified Total 135,144 187,941 -28.1% Automotive 35,997 43,778 -17.8% Real Estate 34,412 54,724 -37.1% Employment 40,423 66,310 -39.0% Other 24,312 23,129 5.1% Direct Marketing 37,590 40,246 -6.6% Other Advertising 415 685 -39.4% Total Advertising $406,328 $488,277 -16.8%

Circulation 66,055 69,708 -5.2% Other 17,300 22,042 -21.5% Total Revenues $489,683 $580,027 -15.6%

Advertising Revenues by Market: California $72,433 $95,226 -23.9% Florida 58,229 72,616 -19.8% Texas 44,139 50,745 -13.0% Southeast 119,619 138,365 -13.5% Midwest 64,027 71,828 -10.9% Northwest 47,524 57,899 -17.9% Other 357 1,598 -77.7% Total Advertising $406,328 $488,277 -16.8%

Print Only Revenues - Net: 2008 2007 % Change

Advertising Retail $184,681 $206,801 -10.7% National 32,447 44,290 -26.7% Classified Total 103,085 153,475 -32.8% Automotive 27,563 37,740 -27.0% Real Estate 29,891 50,926 -41.3% Employment 23,722 43,341 -45.3% Other 21,909 21,468 2.1% Direct Marketing 37,590 40,246 -6.6% Other Advertising 415 685 -39.4% Total Advertising $358,218 $445,497 -19.6%

Circulation Other Total Revenues

Advertising Revenues by Market: California $64,771 $88,488 -26.8% Florida 51,550 67,127 -23.2% Texas 40,081 47,112 -14.9% Southeast 104,150 124,319 -16.2% Midwest 55,555 65,120 -14.7% Northwest 42,111 52,081 -19.1% Other 0 1,250 -100.0% Total Advertising $358,218 $445,497 -19.6%

Advertising Statistics for Dailies: Full Run ROP Linage 7,237.9 8,560.7 -15.5%

Millions of Preprints Distributed 1,535.0 1,645.9 -6.7%

Average Paid Circulation:* Daily 2,624.2 2,720.5 -3.5% Sunday 3,232.0 3,360.8 -3.8%

Online Only Revenues - Net: 2008 2007 % Change

Advertising Retail $11,816 $6,539 80.7% National 4,235 1,775 138.6% Classified Total 32,059 34,466 -7.0% Automotive 8,434 6,038 39.7% Real Estate 4,521 3,798 19.0% Employment 16,701 22,969 -27.3% Other 2,403 1,661 44.7% Direct Marketing -- -- -- Other Advertising -- -- -- Total Advertising $48,110 $42,780 12.5%

Circulation Other Total Revenues

Advertising Revenues by Market: California $7,662 $6,738 13.7% Florida 6,679 5,489 21.7% Texas 4,058 3,633 11.7% Southeast 15,469 14,046 10.1% Midwest 8,472 6,708 26.3% Northwest 5,413 5,818 -7.0% Other 357 348 2.6% Total Advertising $48,110 $42,780 12.5%

* Reflects average paid circulation based upon number of days in period. Does not reflect ABC reported figures.

***The McClatchy Company*** Consolidated Statistical Report (In thousands, except for preprints)

June Year-to-Date Combined Revenues - Net: 2008 2007 % Change

Advertising Retail $387,255 $419,529 -7.7% National 74,907 91,216 -17.9% Classified Total 275,355 376,612 -26.9% Automotive 71,383 85,933 -16.9% Real Estate 69,835 109,911 -36.5% Employment 86,864 136,027 -36.1% Other 47,273 44,741 5.7% Direct Marketing 72,020 76,892 -6.3% Other Advertising 814 1,051 -22.5% Total Advertising $810,351 $965,300 -16.1%

Circulation 133,919 141,587 -5.4% Other 33,696 39,698 -15.1% Total Revenues $977,966 $1,146,585 -14.7%

Advertising Revenues by Market: California $143,514 $187,712 -23.5% Florida 120,971 154,797 -21.9% Texas 89,091 99,185 -10.2% Southeast 237,281 271,116 -12.5% Midwest 125,234 138,965 -9.9% Northwest 93,514 110,472 -15.4% Other 746 3,053 -75.6% Total Advertising $810,351 $965,300 -16.1%

Print Only Revenues - Net: 2008 2007 % Change

Advertising Retail $365,476 $407,096 -10.2% National 66,972 88,037 -23.9% Classified Total 211,395 308,239 -31.4% Automotive 55,178 74,249 -25.7% Real Estate 61,308 102,427 -40.1% Employment 52,139 89,963 -42.0% Other 42,770 41,600 2.8% Direct Marketing 72,020 76,892 -6.3% Other Advertising 814 1,051 -22.5% Total Advertising $716,667 $881,315 -18.7%

Circulation Other Total Revenues

Advertising Revenues by Market: California $128,790 $174,532 -26.2% Florida 108,048 143,466 -24.7% Texas 80,942 92,302 -12.3% Southeast 206,982 243,312 -14.9% Midwest 109,422 125,900 -13.1% Northwest 82,493 99,302 -16.9% Other 0 2,501 -100.0% Total Advertising $716,677 $881,315 -18.7%

Advertising Statistics for Dailies: Full Run ROP Linage 14,197.2 16,467.5 -13.8%

Millions of Preprints Distributed 3,067.6 3,325.3 -7.7%

Average Paid Circulation:* Daily 2,670.6 2,775.4 -3.8% Sunday 3,280.3 3,420.7 -4.1%

Online Only Revenues - Net: 2008 2007 % Change

Advertising Retail $21,779 $12,433 75.2% National 7,935 3,179 149.6% Classified Total 63,960 68,373 -6.5% Automotive 16,205 11,684 38.7% Real Estate 8,527 7,484 13.9% Employment 34,725 46,064 -24.6% Other 4,503 3,141 43.4% Direct Marketing -- -- -- Other Advertising -- -- -- Total Advertising $93,674 $83,985 11.5%

Circulation Other Total Revenues

Advertising Revenues by Market: California $14,724 $13,180 11.7% Florida 12,923 11,331 14.0% Texas 8,149 6,883 18.4% Southeast 30,299 27,804 9.0% Midwest 15,812 13,065 21.0% Northwest 11,021 11,170 -1.3% Other 746 552 35.1% Total Advertising $93,674 $83,985 11.5%

* Reflects average paid circulation based upon number of days in period. Does not reflect ABC reported figures.

SOURCE The McClatchy Company