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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 25, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 1-9824
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The McClatchy Company |
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(Exact name of registrant as specified in its charter) |
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Delaware |
52-2080478 |
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(State of Incorporation) |
(IRS Employer |
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Identification Number) |
2100 "Q" Street, Sacramento, CA. 95816
(Address of principal executive offices)
(916) 321-1846
(Registrant's telephone number)
Indicate by check mark whether the registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _.
The number of shares of each class of common stock outstanding as of July 31, 2000:
Class A Common Stock 17,929,898
Class B Common Stock 27,209,955
THE McCLATCHY COMPANY
INDEX TO FORM 10-Q
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Part I - FINANCIAL INFORMATION |
Page |
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Item 1 - Financial Statements: |
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3
5 |
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Consolidated Balance Sheet - June 25, 2000 and December 26, 1999 (unaudited) |
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Consolidated Statement of Income for the Three Months and Six Months Ended June 25, 2000 and June 27, 1999 (unaudited) |
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Consolidated Statement of Cash Flows for the Six Months Ended June 25, 2000 and June 27, 1999 (unaudited) |
6
7 |
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Consolidated Statement of Stockholders' Equity for the Period from December 26, 1999 to June 25, 2000 (unaudited) |
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Notes to Consolidated Financial Statements unaudited |
8 |
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Item 2 - Management's Discussion and Analysis of Results of Operations and Financial Condition |
9
15 |
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Item 3 - Quantitative and Qualitative Disclosures about Market Risk |
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Part II - OTHER INFORMATION |
16 |
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PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
THE McCLATCHY COMPANY
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(In thousands)
|
June 25, |
December 26, |
|||
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2000 |
1999 |
|||
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ASSETS |
||||
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CURRENT ASSETS |
||||
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Cash |
$ 6,292 |
$ 1,241 |
||
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Trade receivables (less allowances of $3,532 in 2000 and $3,506 in 1999) |
168,081 |
169,923 |
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Other receivables |
1,821 |
3,616 |
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Newsprint, ink and other inventories |
14,497 |
14,776 |
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Deferred income taxes |
16,253 |
16,399 |
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Other current assets |
10,384 |
9,664 |
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217,328 |
215,619 |
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PROPERTY, PLANT AND EQUIPMENT |
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Buildings and improvements |
213,959 |
212,785 |
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Equipment |
489,679 |
477,924 |
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703,638 |
690,709 |
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Less accumulated depreciation |
(341,529) |
(318,591) |
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362,109 |
372,118 |
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Land |
57,132 |
57,141 |
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Construction in progress |
20,968 |
20,829 |
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440,209 |
450,088 |
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INTANGIBLES - NET |
1,423,649 |
1,452,079 |
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OTHER ASSETS |
91,028 |
86,242 |
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TOTAL ASSETS |
$ 2,172,214 |
$ 2,204,028 |
See notes to consolidated financial statements.
THE McCLATCHY COMPANY
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(In thousands, except share amounts)
|
June 25, |
December 26, |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
2000 |
1999 |
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CURRENT LIABILITIES |
||||
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Current portion of bank debt |
$ - |
$ 19,834 |
||
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Accounts payable |
81,391 |
86,227 |
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Accrued compensation |
53,526 |
55,360 |
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Income taxes |
22,054 |
11,947 |
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Unearned revenue |
36,023 |
35,006 |
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Carrier deposits |
3,315 |
3,456 |
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Other accrued liabilities |
20,292 |
21,624 |
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216,601 |
233,454 |
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LONG-TERM BANK DEBT |
837,000 |
878,166 |
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OTHER LONG-TERM OBLIGATIONS |
73,760 |
80,040 |
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DEFERRED INCOME TAXES |
129,402 |
132,702 |
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COMMITMENTS AND CONTINGENCIES |
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STOCKHOLDERS' EQUITY |
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Common stock $.01 par value: |
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Class A - authorized |
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100,000,000 shares, issued |
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17,903,499 in 2000 and 16,468,502 in 1999 |
179 |
164 |
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Class B - authorized |
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60,000,000 shares, issued |
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27,209,955 in 2000 and 28,489,412 in 1999 |
272 |
285 |
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Additional paid-in capital |
280,859 |
276,693 |
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Retained earnings |
634,141 |
602,524 |
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915,451 |
879,666 |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 2,172,214 |
$ 2,204,028 |
THE McCLATCHY COMPANY
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(In thousands, except per share amounts)
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Three Months Ended |
Six Months Ended |
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June 25, 2000 |
June 27, 1999 |
June 25, 2000 |
June 27, 1999 |
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REVENUES - NET |
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Newspapers: |
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Advertising |
$ 233,575 |
$ 220,523 |
$ 446,889 |
$ 426,043 |
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Circulation |
43,284 |
43,745 |
87,176 |
88,227 |
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Other |
6,616 |
6,751 |
13,205 |
12,904 |
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283,475 |
271,019 |
547,270 |
527,174 |
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Non-newspapers |
2,883 |
2,556 |
5,673 |
4,836 |
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286,358 |
273,575 |
552,943 |
532,010 |
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OPERATING EXPENSES |
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Compensation |
104,822 |
102,413 |
211,502 |
204,487 |
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Newsprint and supplements |
40,570 |
38,699 |
77,904 |
79,137 |
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Depreciation and amortization |
26,884 |
26,690 |
53,637 |
53,262 |
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Other operating expenses |
49,927 |
46,404 |
98,742 |
92,469 |
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222,203 |
214,206 |
441,785 |
429,355 |
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OPERATING INCOME |
64,155 |
59,369 |
111,158 |
102,655 |
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NON-OPERATING (EXPENSES) INCOME |
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Interest expense |
(16,456) |
(16,433) |
(33,114) |
(33,322) |
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Partnership loss |
(85) |
(250) |
(560) |
(140) |
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Other - net |
384 |
157 |
1,059 |
941 |
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INCOME BEFORE INCOME TAX PROVISION |
47,998 |
42,843 |
78,543 |
70,134 |
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INCOME TAX PROVISION |
23,168 |
20,806 |
37,913 |
34,506 |
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NET INCOME |
$ 24,830 |
$ 22,037 |
$ 40,630 |
$ 35,628 |
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NET INCOME PER COMMON SHARE: |
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Basic |
$ 0.55 |
$ 0.49 |
$ 0.90 |
$ 0.80 |
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Diluted |
$ 0.55 |
$ 0.49 |
$ 0.90 |
$ 0.79 |
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WEIGHTED AVERAGE |
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NUMBER OF COMMON SHARES: |
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Basic |
45,057 |
44,794 |
45,030 |
44,761 |
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Diluted |
45,157 |
44,967 |
45,175 |
44,931 |
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See notes to consolidated financial statements |
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THE McCLATCHY COMPANY |
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CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) |
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(In thousands) |
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Six Months Ended |
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June 25, 2000 |
June 27, 1999 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
$ 40,630 |
$ 35,628 |
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Reconciliation to net cash provided: |
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Depreciation and amortization |
55,374 |
54,991 |
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Changes in certain assets and liabilities - net |
(1,698) |
(11,392) |
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Other |
(2,584) |
(4,759) |
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Net cash provided by operating activities |
91,722 |
74,468 |
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CASH FLOW FROM INVESTING ACTIVITIES: |
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Purchases of property, plant and equipment |
(17,445) |
(22,442) |
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Other - net |
(2,664) |
(1,258) |
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Net cash used by investing activities |
(20,109) |
(23,700) |
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CASH FLOW FROM FINANCING ACTIVITIES: |
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Repayment of long-term debt |
(61,000) |
(44,000) |
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Payment of cash dividends |
(9,013) |
(8,508) |
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Other - principally stock issuances in employee plans |
3,451 |
2,642 |
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Net cash used by financing activities |
(66,562) |
(49,866) |
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NET CHANGE IN CASH AND CASH EQUIVALENTS |
5,051 |
902 |
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CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
1,241 |
9,650 |
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CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ 6,292 |
$ 10,552 |
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OTHER CASH FLOW INFORMATION |
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Cash paid during the period for: |
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Income taxes (net of refunds) |
$ 30,243 |
$ 48,045 |
||||
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Interest paid (net of capitalized interest) |
$ 33,345 |
$ 32,316 |
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See notes to consolidated financial statements |
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THE McCLATCHY COMPANY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
(In thousands, except share and per share amounts)
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Additional |
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Par Value |
Paid-In |
Retained |
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Class A |
Class B |
Capital |
Earnings |
Total |
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BALANCES, DECEMBER 26, 1999 |
$ 164 |
$ 285 |
$ 276,693 |
$ 602,524 |
$ 879,666 |
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Net income (6 months) |
40,630 |
40,630 |
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Dividends paid ($.20 per share) |
( 9,013) |
(9,013) |
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Conversion of 1,279,457 Class B shares to Class A |
13 |
(13) |
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Issuance of 155,540 Class A shares under employee stock plans |
2 |
3,449 |
3,451 |
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Tax benefit from stock plans |
717 |
717 |
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BALANCES, JUNE 25, 2000 |
$ 179 |
$ 272 |
$ 280,859 |
$ 634,141 |
$ 915,451 |
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See notes to consolidated financial statements |
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THE McCLATCHY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The McClatchy Company (the Company) and its subsidiaries are engaged primarily in the publication of newspapers located in Minnesota, California, Washington state, Alaska and North and South Carolina.
The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany items and transactions have been eliminated. In preparing the financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the Company's financial position, results of operations, and cash flows for the interim periods presented. All adjustments are normal recurring entries. Such financial statements are not necessarily indicative of the results to be expected for the full year.
NOTE 2. LONG-TERM BANK DEBT AND OTHER LONG-TERM OBLIGATIONS
In March 1998, the Company entered into a bank credit agreement (Credit Agreement) with a syndicate of banks and financial institutions providing for borrowings of up to $1,265,000,000. The Credit Agreement includes term loans consisting of Tranche A of $735,000,000 bearing interest at the London Interbank Offered Rate (LIBOR) plus 62.5 basis points, payable in increasing quarterly installments from June 30, 1998 through March 31, 2005, and Tranche B of $330,000,000 bearing interest at LIBOR plus 150 basis points and payable in semi-annual installments from September 30, 1998 through September 30, 2008. A revolving credit line of up to $200,000,000 bears interest at LIBOR plus 62.5 basis points and is payable by March 19, 2005. Interest rates applicable to debt drawn down at June 25, 2000, ranged from 6.9% to 8.3%. The debt is unsecured and is pre-payable without penalty.
The terms of the Credit Agreement include certain operating and financial restrictions, such as limits on the Company's ability to incur additional debt, create liens, sell assets, engage in mergers, make investments and pay dividends.
The Company's Credit Agreement requires a minimum of $300,000,000 of debt be subject to interest rate protection agreements. This requirement has been satisfied by interest rate swap agreements, expiring in 2002 to 2003, with an aggregate notional amount of $300,000,000. The effect of these agreements is to fix the LIBOR interest rate exposure at approximately 5.9% on that portion of the Company's term loans.
Also, the Company has entered into an interest rate collar with a $200,000,000 notional amount, and a LIBOR ceiling rate of 6.5% and a floor of 5.3%. The collar arrangement terminates in the fourth quarter of 2000.
The Company has outstanding letters of credit totaling $11,622,000 securing estimated obligations stemming from workers' compensation claims and other contingent claims.
Long-term debt consisted of (in thousands):
|
June 25, |
December 26, |
|||
|
2000 |
1999 |
|||
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Credit Agreement: |
||||
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Term loans |
$ 727,000 |
$ 788,000 |
||
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Revolving credit line |
110,000 |
110,000 |
||
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Total indebtedness |
837,000 |
898,000 |
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Less current portion |
- |
(19,834) |
||
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Long-term indebtedness |
$ 837,000 |
$ 878,166 |
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Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Recent Events and Trends
In the first quarter of 2000, the Company reported lower newsprint costs than 1999. However, newsprint prices began to rise with an October 1999 newsprint price increase, followed by an April 1, 2000 increase. Hence, the newspaper industry is now paying higher prices per ton than last year. Also, an additional $50 per ton price increase has been announced for the third quarter of 2000 by many newsprint vendors and the Company continues to negotiate with said vendors. Higher newsprint pricing will result in higher costs to the Company, which are expected to be at least partially offset with greater advertising revenue growth, but are expected to have a negative impact on operating income throughout the rest of the year.
During 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard 133 (Accounting for Derivative Instruments and Hedging Activities) which requires that all derivatives be carried at fair value on the balance sheet. This statement will become effective in the Company's fiscal year 2001. While adoption of this statement is not expected to materially impact the Company's financial results, management has not determined the impact on the Company's consolidated financial position.
In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements ("SAB 101"). SAB 101 provides guidance on the recognition, presentation, and disclosure of revenue in financial statements filed with the SEC. This accounting bulletin, as amended in June 2000, is effective for the Company beginning the fourth quarter of the Company's fiscal year beginning December 27, 1999. The Company does not believe that the adoption of SAB 101 will have a material impact on its financial statements.
Second Quarter 2000 Compared To 1999
The Company reported net income of $24.8 million or 55 cents per share, up 12.7% over the 1999 quarterly earnings of $22.0 million or 49 cents per share. Much of the earnings growth reflects improved advertising revenue growth, particularly at the Company's California and Carolinas' newspapers.
Revenues
Revenues in the second quarter of 2000 were $286.4 million, up 4.7% from 1999 with advertising revenues up 5.9% to $233.6 million and circulation revenues down 1.1% to $43.3 million.
Advertising revenue growth reflects a mix of rate increases and volume growth. The decline in circulation revenues reflects the Company's strategy to continue to promote circulation volume growth over revenue growth. Certain newspapers lowered the wholesale price of the daily newspapers, and The Sacramento Bee is in the process of converting from employee delivery to contract carrier delivery in its outlying regions. These changes result in lower net circulation revenues.
Operating Revenues by Region:
(In thousands)
|
2000 |
1999 |
% Change |
||||
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Minnesota newspaper |
$ 100,300 |
$ 98,247 |
2.1 |
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California newspapers |
92,475 |
85,996 |
7.5 |
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Carolinas newspapers |
49,381 |
45,508 |
8.5 |
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Northwest newspapers |
41,319 |
41,268 |
0.1 |
|||
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Non-newspaper operations |
2,883 |
2,556 |
12.8 |
|||
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$ 286,358 |
$ 273,575 |
4.7 |
||||
Minnesota - The Star Tribune generated about 35% of the Company's total second quarter revenues. Advertising revenues were up 3.1% and total revenues were up 2.1%. While retail advertising was soft - particularly in the grocery category - national and classified trends improved at the Star Tribune. Retail advertising revenues were down 2.3% in the quarter; national revenues were up 25.3% and classified revenues grew 4.0%.
California - The Company's California newspapers - The Sacramento Bee, The Fresno Bee and The Modesto Bee - generated about 32% of second quarter revenues with advertising revenues up 8.9% and total revenues up 7.5%. Advertising revenues were strong across all categories and at all three Bee newspapers. By category: retail was up 4.5%, national up 23.5% and classified was up a strong 8.1%.
Carolinas - The Carolinas reported over 17% of the Company's second quarter revenues. Led by The (Raleigh) News and Observer, advertising revenues were up 10.6% at the daily newspapers and total revenues in the region were up 8.5%. Total revenues were lower in this region due primarily to slower growth at the Company's ten non-daily Carolinas newspapers compared to the daily newspapers. Advertising revenues at the dailies were strong in all categories: retail was up 9.9%, national up 78.3% and classified was up 6.5%.
The Northwest - The Northwest newspapers generated about 14% of the Company's second quarter revenues. Advertising revenues were up 1.5% and total revenues were flat. This region was the Company's fastest growing in terms of revenues in 1999 so, with tougher comparisons and some retail consolidation, revenue growth has slowed in the Northwest in 2000. Retail was down 0.7%, national down 5.5% and classified grew 3.3%.
Non-Newspaper Operations - Revenues primarily reflect those at The Newspaper Network (TNN), the Company's national sales and marketing subsidiary, where revenues increased 10.8%; and Nando Media, the Company's national online publishing operation, where revenues grew 32.3%.
Operating Expenses:
Total operating expenses were up 3.7% from second quarter 1999. Newsprint expense was up 3.2%, mostly due to price increases as newsprint usage was about flat in the quarter. Compensation was up 2.4% and all other non-newsprint expenses were up 5.8% reflecting investments in product and promotion.
Non-Operating Expenses - Income - Net:
Interest expense was $16.5 million, about even with the 1999 quarter. The Company's debt was down substantially, but higher interest rates in 2000 had an offsetting effect on the Company's debt service costs. The Company recorded a loss of $85,000 as its portion of the results from the Ponderay Newsprint Mill Company, and expects these losses to decline if newsprint prices continue to rise in 2000.
Income Taxes:
The Company's effective income tax rate is 48.3% versus 48.6% in 1999 and primarily reflects higher income before tax relative to a set amount of non-deductible expenses in each year.
SIX-MONTH COMPARISONS
Earnings in the first half of 2000 were $40.6 million or 90 cents per share, up 14.0% from 1999 earnings of $35.6 million or 79 cents per share. Generally, the same factors that drove the second quarter results also affected the six-month period, with notable differences discussed below.
Revenues:
Total revenues were $552.9 million in the first six months of 2000, up 3.9% from the first half of 1999. Advertising revenues rose 4.9% to $446.9 million and circulation revenues declined 1.2% to $87.2 million. In general, the Company experienced slower revenue growth in the first quarter of 2000 due to a very strong national performance in the same quarter in 1999 in certain regions (see below).
Operating Revenues By Region (dollars in thousands):
|
2000 |
1999 |
% Change |
||||
|
Minnesota newspaper |
$ 197,635 |
$ 195,886 |
0.9 |
|||
|
California newspapers |
178,189 |
166,102 |
7.3 |
|||
|
Carolinas newspapers |
93,100 |
87,537 |
6.4 |
|||
|
Northwest newspapers |
78,346 |
77,649 |
0.9 |
|||
|
Non-newspaper operations |
5,673 |
4,836 |
17.3 |
|||
|
$ 552,943 |
$ 532,010 |
3.9 |
||||
Minnesota and Northwest newspapers - The (Minneapolis, MN) Star Tribune and Northwest newspapers contributed 32.2% and 14.2% of total revenues respectively. Advertising revenues in these regions were particularly strong in the national advertising category in the first quarter of 1999. These tougher comparisons, coupled with some retailer consolidations in each region, slowed their advertising revenue growth for the six-month period. Advertising revenues grew 1.3% to $160.9 million in the first half at the Star Tribune and was up 2.5% to $57.9 million at the Northwest daily newspapers.
California and Carolinas Newspapers - The Company's newspapers in California (32.2% of total revenues) and the Carolinas (16.8% of total revenues) had healthy revenue growth in the first half of 2000. Advertising revenues at the daily newspapers increased 8.7% to $148.1 million in California and 8.4% to $72.9 million in the Carolinas, and were healthy in all advertising categories. Total revenue growth in the Carolinas was slowed somewhat in the first quarter due to ice storms in late January 2000 and slower growth at the non-daily newspapers in this region.
Non-Newspaper Operations - Revenues increased 17.3%, with good growth at TNN (up 15.0%) and at Nando Media (up 40.0%).
Operating Expenses:
Total operating expenses increased 2.9% in the first half of 2000. Compensation costs increased 3.4%, primarily reflecting salary increases ranging from 2.0% to 4.0%. Newsprint and supplements expense declined 1.6%, mostly due to lower newsprint prices in the first quarter, offset partially by newsprint usage increases of 1.5%. All other operating expenses increased 4.7% reflecting those trends discussed in the second quarter comparisons above.
Non-Operating (Expense) Income - Net:
Interest expense was about flat with 1999 as the impact of debt repayment was largely offset by higher interest rates. The Company recorded a $560,000 loss as its share of The Ponderay Newsprint Mill's loss versus a $140,000 loss in 1999.
Income Taxes:
The Company's effective income tax rate was 48.3% as discussed in the second quarter comparisons above.
Liquidity & Capital Resources
Operations generated $91.7 million through June 2000. Cash was used primarily to repay debt, pay for capital expenditures and pay dividends. Capital expenditures are projected to be $53.0 million in 2000.
In March 1998, the Company entered into a bank credit agreement (Credit Agreement) with a syndicate of banks and financial institutions providing for borrowings of up to $1,265,000,000. The Credit Agreement includes term loans consisting of Tranche A of $735,000,000 bearing interest at the London Interbank Offered Rate (LIBOR) plus 62.5 basis points, payable in increasing quarterly installments from June 30, 1998 through March 31, 2005, and Tranche B of $330,000,000 bearing interest at LIBOR plus 150 basis points and payable in semi-annual installments from September 30, 1998 through September 30, 2008. A revolving credit line of up to $200,000,000 bears interest at LIBOR plus 62.5 basis points and is payable by March 19, 2005. Interest rates applicable to debt drawn down at June 25, 2000, ranged from 6.9% to 8.3%. The debt is unsecured and is pre-payable without penalty.
The terms of the Credit Agreement include certain operating and financial restrictions, such as limits on the Company's ability to incur additional debt, create liens, sell assets, engage in mergers, make investments and pay dividends.
The Company's Credit Agreement requires a minimum of $300,000,000 of debt be subject to interest rate protection agreements. This requirement has been satisfied by interest rate swap agreements, expiring in 2002 to 2003, with an aggregate notional amount of $300,000,000. The effect of these agreements is to fix the LIBOR interest rate exposure at approximately 5.9% on that portion of the Company's term loans.
Also, the Company has entered into an interest rate collar with a $200,000,000 notional amount, and a LIBOR ceiling rate of 6.5% and a floor of 5.3%. The collar arrangement terminates in the fourth quarter of 2000.
The Company has outstanding letters of credit totaling $11.6 million securing estimated obligations stemming from workers' compensation claims, and other contingent claims. The Company had $78.4 million of available credit under its Credit Agreement at March 26, 2000.
While the Company expects that most of its free cash flow generated from operations in 2000 and in the foreseeable future will be used to repay debt, management is of the opinion that operating cash flow and its present and future credit lines as described above are adequate to meet the liquidity needs of the Company, including currently planned capital expenditures and other investments.
Forward Looking Information
Management has made forward-looking statements in this document that are subject to risks and uncertainties. Forward-looking statements include the information concerning possible or assumed future results of operations of McClatchy. Forward-looking statements are generally preceded by, followed by or are a part of sentences that include the words believes, expects, anticipates or similar expressions. For those statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors, in addition to those discussed elsewhere in this document, could affect the future results of McClatchy, and could cause those future results to differ materially from those expressed in the forward-looking statements: general economic, market or business conditions; increases in newsprint prices and/or printing and distribution costs over anticipated levels; increases in interest rates; competition from other forms of media in our principal markets; increased consolidation among major retailers in our newspaper markets or other events depressing the level of advertising; an economic downturn in the economies of Minnesota, California's Central Valley, the Carolinas, Washington State and Alaska; changes in the Company's ability to negotiate and obtain favorable terms under collective bargaining arrangements with its employees; competitive actions by other companies; other occurrences leading to decreased circulation and diminished revenues from both display and classified advertising; and other factors, many of which are beyond management's control. Consequently, there can be no assurance that the actual results or developments anticipated will be realized or that these results or developments will have the expected consequences.
Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
In addition to normal business risks discussed above, the Company utilizes interest rate protection agreements to help maintain the overall interest rate parameters set by management. None of these agreements were entered into for trading purposes. (See note 2 to the consolidated financial statements.) As a result of this interest rate mix, a hypothetical 10 percent change in interest rates would have a $0.03 to $0.05 per share increase or decrease in the Company's annual results of operations. It would also impact the fair values of its market risk sensitive financial instruments, but would not materially affect the Company's financial position taken as a whole.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Default Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders:
The Company held its annual shareholders meeting on May 17, 2000 to vote on two proposals. Shareholders approved all of the proposals by voting as follows:
|
|
VOTES |
|
|
|
|
FOR |
WITHHELD |
|
|
Nominees for Class A Directors voted by Class A Stockholders |
|
|
|
|
Elizabeth Ballantine |
13,554,182 |
354,632 |
|
|
S. Donley Ritchey, Jr. |
13,547,612 |
361,202 |
|
|
Frederick R. Ruiz |
13,553,837 |
354,977 |
|
|
|
|
|
|
|
Nominees for Class B Directors voted by Class B Stockholders |
|
|
|
|
William K. Coblentz |
28,449,412 |
0 |
|
|
Molly Maloney Evangelisti |
28,449,412 |
0 |
|
|
Larry Jinks |
28,449,412 |
0 |
|
|
Joan F. Lane |
28,449,412 |
0 |
|
|
James B. McClatchy |
28,449,412 |
0 |
|
|
Kevin S. McClatchy |
28,449,412 |
0 |
|
|
William Ellery McClatchy |
28,449,412 |
0 |
|
|
Erwin Potts |
28,449,412 |
0 |
|
|
Gary B. Pruitt |
28,449,412 |
0 |
|
|
FOR |
AGAINST |
ABSTAIN |
BROKER NON-VOTED |
|
|
|
|
|
|
29,835,652 |
731 |
3,409 |
0 |
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibit:
Financial Data Schedule for the six months ended June 25, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.
The McClatchy Company
Registrant
Date: August 2, 2000 /s/ Doretha J. Christoph
Doretha J. Christoph
Vice President, Finance and
Chief Financial Officer
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