[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|||
For
the quarterly period
ended
|
September
27, 2009
|
|||
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
|
|||
The
McClatchy Company
|
||||
(Exact
name of registrant as specified in its
charter)
|
Delaware
|
52-2080478
|
||
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
||
2100
"Q" Street, Sacramento, CA
|
95816
|
||
(Address
of principal executive offices)
|
(Zip
Code)
|
916-321-1846
|
Registrant's
telephone number, including area
code
|
[ ]
|
Yes
|
[X]
|
No
|
Class
A Common Stock
|
59,667,199
|
Class
B Common Stock
|
24,800,962
|
Part
I - FINANCIAL INFORMATION
|
Page
|
|
Item
1 - Financial Statements (unaudited):
|
||
Consolidated
Balance Sheet – September 27, 2009 and December 28, 2008
|
1
|
|
Consolidated
Statement of Operations for the three and nine months ended September
27, 2009 and September 28, 2008
|
3
|
|
Consolidated
Statement of Cash Flows for the nine months ended September 27, 2009 and
September 28, 2008
|
4
|
|
Consolidated
Statement of Stockholders' Equity for the period December 28, 2008 to
September 27, 2009
|
5
|
|
Notes
to Consolidated Financial Statements
|
6
|
|
Item
2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
|
17
|
|
Item
3 - Quantitative and Qualitative Disclosures About Market
Risk
|
31
|
|
Item
4 - Controls and Procedures
|
32
|
|
Part
II - OTHER INFORMATION
|
32
|
|
Item
1A - Risk Factors
|
32
|
|
Item
6 - Exhibits
|
37
|
|
Signatures
|
38
|
|
Index
of Exhibits
|
39
|
THE
McCLATCHY COMPANY
|
||||||||
CONSOLIDATED
BALANCE SHEET (UNAUDITED)
|
||||||||
(In
thousands, except share amounts)
|
||||||||
ASSETS
|
September
27,
|
December
28,
|
||||||
CURRENT
ASSETS:
|
2009
|
2008
|
||||||
Cash
and cash equivalents
|
$ | 4,230 | $ | 4,998 | ||||
Trade
receivables – (less allowance of
$13,127
in 2009 and $15,255 in 2008)
|
169,474 | 243,700 | ||||||
Other
receivables
|
10,311 | 16,544 | ||||||
Newsprint,
ink and other inventories
|
34,247 | 49,301 | ||||||
Deferred
income taxes
|
29,087 | 29,084 | ||||||
Prepaid
income taxes
|
70 | - | ||||||
Income
tax refund
|
9,894 | 11,451 | ||||||
Land
and other assets held for sale
|
183,641 | 182,566 | ||||||
Other
current assets
|
25,330 | 19,085 | ||||||
466,284 | 556,729 | |||||||
PROPERTY,
PLANT AND EQUIPMENT:
|
||||||||
Land
|
195,883 | 199,584 | ||||||
Building
and improvements
|
388,296 | 390,890 | ||||||
Equipment
|
814,787 | 823,466 | ||||||
Construction
in progress
|
6,506 | 5,071 | ||||||
1,405,472 | 1,419,011 | |||||||
Less
accumulated depreciation
|
(626,077 | ) | (576,134 | ) | ||||
779,395 | 842,877 | |||||||
INTANGIBLE
ASSETS:
|
||||||||
Identifiable
intangibles – net
|
726,588 | 771,076 | ||||||
Goodwill
|
1,006,020 | 1,006,020 | ||||||
1,732,608 | 1,777,096 | |||||||
INVESTMENTS
AND OTHER ASSETS:
|
||||||||
Investments
in unconsolidated companies
|
327,869 | 323,257 | ||||||
Other
assets
|
19,239 | 22,247 | ||||||
347,108 | 345,504 | |||||||
TOTAL
ASSETS
|
$ | 3,325,395 | $ | 3,522,206 | ||||
See
notes to consolidated financial statements.
|
THE
McCLATCHY COMPANY
|
||||||||
CONSOLIDATED
BALANCE SHEET (UNAUDITED) – Continued
|
||||||||
(In
thousands, except share amounts)
|
||||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
September
27,
|
December
28,
|
||||||
CURRENT
LIABILITIES:
|
2009
|
2008
|
||||||
Accounts
payable
|
$ | 40,446 | $ | 68,336 | ||||
Accrued
compensation
|
61,574 | 85,583 | ||||||
Income
taxes payable
|
40,571 | 46,562 | ||||||
Unearned
revenue
|
80,115 | 81,091 | ||||||
Accrued
interest
|
19,883 | 22,107 | ||||||
Accrued
dividends
|
- | 7,431 | ||||||
Other
accrued liabilities
|
32,943 | 36,481 | ||||||
275,532 | 347,591 | |||||||
NON-CURRENT
LIABILITIES:
|
||||||||
Long-term
debt:
|
||||||||
Principal
only
|
1,892,972 | 2,037,776 | ||||||
Principal
and future interest
|
39,487 | - | ||||||
Deferred
income taxes
|
208,353 | 202,015 | ||||||
Pension
and postretirement obligations
|
695,957 | 747,720 | ||||||
Other
long-term obligations
|
110,487 | 134,675 | ||||||
2,947,256 | 3,122,186 | |||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
STOCKHOLDERS'
EQUITY:
|
||||||||
Common
stock $.01 par value:
|
||||||||
Class
A - authorized 200,000,000 shares, issued
|
||||||||
59,307,617
in 2009 and 57,520,445 in 2008
|
593 | 575 | ||||||
Class
B – authorized 60,000,000 shares,
|
||||||||
Issued
24,800,962 in 2009 and 25,050,962 in 2008
|
248 | 251 | ||||||
Additional
paid-in capital
|
2,205,981 | 2,203,776 | ||||||
Accumulated
deficit
|
(1,808,930 | ) | (1,829,717 | ) | ||||
Treasury
stock, 37,902 shares in 2009 and 5,264 shares in 2008 at
cost
|
(153 | ) | (144 | ) | ||||
Accumulated
other comprehensive loss
|
(295,132 | ) | (322,312 | ) | ||||
|
102,607 | 52,429 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 3,325,395 | $ | 3,522,206 | ||||
See
notes to consolidated financial statements.
|
THE
McCLATCHY COMPANY
|
||||||||||||||||
CONSOLIDATED
STATEMENT OF OPERATIONS (UNAUDITED)
|
||||||||||||||||
(In
thousands, except per share amounts)
|
||||||||||||||||
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
27,
|
September
28,
|
September
27,
|
September
28,
|
|||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
REVENUES
- NET:
|
||||||||||||||||
Advertising
|
$ | 266,120 | $ | 370,117 | $ | 834,470 | $ | 1,180,468 | ||||||||
Circulation
|
69,029 | 64,691 | 206,860 | 198,610 | ||||||||||||
Other
|
12,241 | 16,812 | 37,020 | 50,508 | ||||||||||||
347,390 | 451,620 | 1,078,350 | 1,429,586 | |||||||||||||
OPERATING
EXPENSES:
|
||||||||||||||||
Compensation
|
130,048 | 199,861 | 453,483 | 647,771 | ||||||||||||
Newsprint
and supplements
|
33,312 | 61,815 | 133,183 | 186,462 | ||||||||||||
Depreciation
and amortization
|
32,678 | 35,479 | 110,685 | 108,510 | ||||||||||||
Other
operating expenses
|
90,985 | 113,828 | 286,706 | 345,757 | ||||||||||||
287,023 | 410,983 | 984,057 | 1,288,500 | |||||||||||||
OPERATING
INCOME
|
60,367 | 40,637 | 94,293 | 141,086 | ||||||||||||
NON-OPERATING
(EXPENSES) INCOME:
|
||||||||||||||||
Interest
expense
|
(34,549 | ) | (34,195 | ) | (102,775 | ) | (116,140 | ) | ||||||||
Interest
income
|
9 | 761 | 46 | 1,332 | ||||||||||||
Equity
income (losses) in unconsolidated
companies,
net
|
4,379 | (850 | ) | 3,635 | (14,340 | ) | ||||||||||
Gain
on sale of SP Newsprint
|
999 | 2,570 | 214 | 34,546 | ||||||||||||
Gain
(loss) on extinguishment of debt
|
(680 | ) | 180 | 44,149 | 19,680 | |||||||||||
Impairments
related to internet investments
|
- | (2,983 | ) | - | (24,498 | ) | ||||||||||
Other
- net
|
20 | 101 | (314 | ) | 1,120 | |||||||||||
(29,822 | ) | (34,416 | ) | (55,045 | ) | (98,300 | ) | |||||||||
INCOME
FROM CONTINUING OPERATIONS
|
||||||||||||||||
BEFORE
INCOME TAX PROVISION
|
30,545 | 6,221 | 39,248 | 42,786 | ||||||||||||
INCOME
TAX PROVISION
|
6,944 | 2,054 | 11,368 | 19,561 | ||||||||||||
INCOME
FROM CONTINUING OPERATIONS
|
23,601 | 4,167 | 27,880 | 23,225 | ||||||||||||
INCOME
(LOSS) FROM DISCONTINUED
OPERATIONS
- NET OF INCOME TAXES
|
(38 | ) | 67 | 381 | (175 | ) | ||||||||||
NET
INCOME
|
$ | 23,563 | $ | 4,234 | $ | 28,261 | $ | 23,050 | ||||||||
NET
INCOME PER COMMON SHARE:
|
||||||||||||||||
Basic:
|
||||||||||||||||
Income
from continuing operations
|
$ | 0.28 | $ | 0.05 | $ | 0.33 | $ | 0.28 | ||||||||
Income
from discontinued operations
|
- | - | - | - | ||||||||||||
Net
income per share
|
$ | 0.28 | $ | 0.05 | $ | 0.33 | $ | 0.28 | ||||||||
Diluted:
|
||||||||||||||||
Income
from continuing operations
|
$ | 0.28 | $ | 0.05 | $ | 0.33 | $ | 0.28 | ||||||||
Income
from discontinued operations
|
- | - | - | - | ||||||||||||
Net
income per share
|
$ | 0.28 | $ | 0.05 | $ | 0.33 | $ | 0.28 | ||||||||
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES:
|
||||||||||||||||
Basic
|
84,052 | 82,382 | 83,565 | 82,274 | ||||||||||||
Diluted
|
84,061 | 82,434 | 83,579 | 82,327 | ||||||||||||
See notes to consolidated
financial statements.
|
THE
McCLATCHY COMPANY
|
||||||||
CONSOLIDATED
STATEMENT OF CASH FLOWS (UNAUDITED)
|
||||||||
(In
thousands)
|
||||||||
Nine
Months Ended
|
||||||||
September
27,
|
September
28,
|
|||||||
2009
|
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Income
from continuing operations
|
$ | 27,880 | $ | 23,225 | ||||
Reconciliation
to net cash provided by continuing operations:
|
||||||||
Depreciation
and amortization
|
110,685 | 108,510 | ||||||
Employee
benefit expense
|
1,358 | 11,212 | ||||||
Stock
compensation expense
|
1,440 | 3,676 | ||||||
Equity
(income) loss in unconsolidated companies
|
(3,635 | ) | 14,340 | |||||
Gain
on sale of SP Newsprint
|
(214 | ) | (34,546 | ) | ||||
Gain
on extinguishment of debt
|
(44,149 | ) | (19,680 | ) | ||||
Write-off
of deferred financing costs
|
364 | 3,738 | ||||||
Other
|
8,714 | 3,932 | ||||||
Changes
in certain assets and liabilities:
|
||||||||
Trade
receivables
|
74,226 | 71,474 | ||||||
Inventories
|
15,054 | (12,724 | ) | |||||
Other
assets
|
(2,915 | ) | 11,052 | |||||
Accounts
payable
|
(28,066 | ) | (29,688 | ) | ||||
Accrued
compensation
|
(24,009 | ) | (9,333 | ) | ||||
Income
taxes
|
(39,161 | ) | (4,007 | ) | ||||
Other
liabilities
|
(12,545 | ) | (13,916 | ) | ||||
Net
cash provided by operating activities of continuing
operations
|
85,027 | 151,763 | ||||||
Net
cash provided (used) by operating activities of discontinued
operations
|
(6,879 | ) | 188,880 | |||||
Net
cash provided by operating activities
|
78,148 | 340,643 | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchases
of property, plant and equipment
|
(11,227 | ) | (17,052 | ) | ||||
Proceeds
from sale of property, plant and equipment
|
10,699 | 31,721 | ||||||
Proceeds
from sale of SP Newsprint
|
4,214 | 63,141 | ||||||
Equity
investments and other net
|
(23 | ) | (855 | ) | ||||
Net
cash provided by investing activities of continuing
operations
|
3,663 | 76,955 | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Repayment
of term debt
|
(2,000 | ) | - | |||||
Net
repayments of revolving bank debt
|
(22,730 | ) | (97,970 | ) | ||||
Payment
of financing costs
|
(5,665 | ) | (9,330 | ) | ||||
Extinguishment
of public notes and related expenses
|
(38,050 | ) | (288,987 | ) | ||||
Payment
of cash dividends
|
(14,905 | ) | (44,399 | ) | ||||
Other
- principally stock issuances
|
771 | 2,264 | ||||||
Net
cash used by financing activities
|
(82,579 | ) | (438,422 | ) | ||||
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
(768 | ) | (20,824 | ) | ||||
CASH
AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
4,998 | 25,816 | ||||||
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
$ | 4,230 | $ | 4,992 | ||||
OTHER
CASH FLOW INFORMATION:
|
||||||||
Cash
paid (received) during the period for:
|
||||||||
Income
taxes (net of refunds)
|
$ | 55,806 | $ | (172,170 | ) | |||
Interest
(net of capitalized interest)
|
$ | 88,162 | $ | 111,592 | ||||
Other
non-cash financing activities:
|
||||||||
Issuance
of senior notes and future interest in debt exchange
|
$ | 43,503 | - | |||||
Carrying
value of unsecured notes exchanged for senior notes in debt
exchange
|
$ | (89,423 | ) | - | ||||
See
notes to consolidated financial statements.
|
THE
McCLATCHY COMPANY
|
||||||||||||||||||||||||||||
CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
|
||||||||||||||||||||||||||||
(In
thousands, except share and per share amounts)
|
||||||||||||||||||||||||||||
Retained
|
Accumulated
|
|||||||||||||||||||||||||||
Additional
|
Earnings
|
Other
|
||||||||||||||||||||||||||
Par
Value
|
Paid-In
|
Accumulated
|
Comprehensive
|
Treasury
|
||||||||||||||||||||||||
Class
A
|
Class
B
|
Capital
|
Deficit
|
Income
(Loss)
|
Stock
|
Total
|
||||||||||||||||||||||
BALANCES,
DECEMBER 28, 2008
|
$ | 575 | $ | 251 | $ | 2,203,776 | $ | (1,829,717 | ) | $ | (322,312 | ) | $ | (144 | ) | $ | 52,429 | |||||||||||
Net
income
|
28,261 | 28,261 | ||||||||||||||||||||||||||
Other
comprehensive income, net of tax:
|
||||||||||||||||||||||||||||
Pension
and postretirement plans:
|
||||||||||||||||||||||||||||
Unamortized
gain/prior service credit
|
26,632 | 26,632 | ||||||||||||||||||||||||||
Other
comprehensive income related to
|
||||||||||||||||||||||||||||
investments
in unconsolidated companies
|
548 | 548 | ||||||||||||||||||||||||||
Other
comprehensive income
|
27,180 | |||||||||||||||||||||||||||
Total
comprehensive income
|
55,441 | |||||||||||||||||||||||||||
Dividends
declared ($.09 per share)
|
(7,474 | ) | (7,474 | ) | ||||||||||||||||||||||||
Conversion
of 250,000 Class B shares to Class A shares
|
3 | (3 | ) | |||||||||||||||||||||||||
Issuance
of 1,504,534 Class A shares under stock plans
|
15 | 765 | 780 | |||||||||||||||||||||||||
Stock
compensation expense
|
1,440 | 1,440 | ||||||||||||||||||||||||||
Purchase
of 32,628 shares of treasury stock
|
(9 | ) | (9 | ) | ||||||||||||||||||||||||
BALANCES,
SEPTEMBER 27, 2009
|
$ | 593 | $ | 248 | $ | 2,205,981 | $ | (1,808,930 | ) | $ | (295,132 | ) | $ | (153 | ) | $ | 102,607 | |||||||||||
See
notes to consolidated financial statements.
|
NOTE
1.
|
SIGNIFICANT
ACCOUNTING POLICIES
|
For
the Three
Months
Ended
|
For
the Nine
Months
Ended
|
|||||||||||||||
September
27,
2009
|
September
28,
2008
|
September
27,
2009
|
September
28,
2008
|
|||||||||||||
Net
income
|
$ | 23,563 | $ | 4,234 | $ | 28,261 | $ | 23,050 | ||||||||
Pension,
net actuarial gain (loss) and
prior
service costs, net of tax
|
(186 | ) | (4,450 | ) | 26,632 | (40,315 | ) | |||||||||
Other
comprehensive income (loss)
related
to equity investments
|
478 | (474 | ) | 548 | (1,193 | ) | ||||||||||
Total
comprehensive income (loss)
|
$ | 23,855 | $ | (690 | ) | $ | 55,441 | $ | (18,458 | ) |
Company
|
%
Ownership Interest
|
September
27,
2009
|
December
28,
2008
|
|||||||||
CareerBuilder,
LLC
|
14.4 | $ | 218,449 | $ | 217,516 | |||||||
Classified
Ventures, LLC
|
25.6 | 82,518 | 82,642 | |||||||||
Seattle
Times Company (C-Corporation)
|
49.5 | - | - | |||||||||
HomeFinder,
LLC
|
33.3 | 5,783 | - | |||||||||
Ponderay
(general partnership)
|
27.0 | 16,873 | 18,349 | |||||||||
Other
|
Various
|
4,246 | 4,750 | |||||||||
$ | 327,869 | $ | 323,257 |
NOTE
3. INTANGIBLE ASSETS AND GOODWILL
|
||||||||||||||
Intangible
assets and goodwill, along with their weighted-average amortization
periods consisted of the following (in thousands):
|
||||||||||||||
September
27, 2009
|
||||||||||||||
Weighted
|
||||||||||||||
Average
|
||||||||||||||
Gross
|
Accumulated
|
Net
|
Amortization
|
|||||||||||
Amount
|
Amortization
|
Amount
|
Period
|
|||||||||||
Intangible
assets subject to amortization:
|
||||||||||||||
Advertiser
and subscriber lists
|
$ | 803,840 | $ | (292,789 | ) | $ | 511,051 |
14
years
|
||||||
Other
|
40,066 | (30,916 | ) | 9,150 |
8
years
|
|||||||||
Total
|
$ | 843,906 | $ | (323,705 | ) | 520,201 | ||||||||
Other
intangible assets not subject to amortization:
|
||||||||||||||
Newspaper
mastheads
|
206,387 | |||||||||||||
Total
|
726,588 | |||||||||||||
Goodwill
|
1,006,020 | |||||||||||||
Total
intangible assets and goodwill
|
$ | 1,732,608 | ||||||||||||
December
28, 2008
|
||||||||||||||
Weighted
|
||||||||||||||
Average
|
||||||||||||||
Gross
|
Accumulated
|
Net
|
Amortization
|
|||||||||||
Amount
|
Amortization
|
Amount
|
Period
|
|||||||||||
Intangible
assets subject to amortization:
|
||||||||||||||
Advertiser
and subscriber lists
|
$ | 803,840 | $ | (249,650 | ) | $ | 554,190 |
14
years
|
||||||
Other
|
40,066 | (29,567 | ) | 10,499 |
8
years
|
|||||||||
Total
|
$ | 843,906 | $ | (279,217 | ) | 564,689 | ||||||||
Other
intangible assets not subject to amortization:
|
||||||||||||||
Newspaper
mastheads
|
206,387 | |||||||||||||
Total
|
771,076 | |||||||||||||
Goodwill
|
1,006,020 | |||||||||||||
Total
intangible assets and goodwill
|
$ | 1,777,096 |
Amortization
|
||||
Year
|
Expense
|
|||
2009
(remaining)
|
14,824 | |||
2010
|
58,639 | |||
2011
|
57,538 | |||
2012
|
57,363 | |||
2013
|
56,223 | |||
2014
|
51,745 |
September
27,
2009
|
December
28,
2008
|
|||||||
Term
A bank debt, interest of 4.3% at September 27, 2009 and 4.8% at
December
28, 2008
|
$ | 548,000 | $ | 550,000 | ||||
Revolving
bank debt, interest of 4.3% at September 27, 2009 and 4.5% at
December 28, 2008
|
368,970 | 391,700 | ||||||
Notes:
|
||||||||
$31
million 9.875% notes due in 2009
|
- | 31,217 | ||||||
$166
million 7.125% notes due in 2011
|
167,142 | 171,404 | ||||||
$169
million 4.625% notes due in 2014
|
153,960 | 161,692 | ||||||
$347
million 5.750% notes due in 2017
|
320,782 | 367,351 | ||||||
$89
million 7.150% debentures due in 2027
|
82,000 | 91,607 | ||||||
$276
million 6.875% debentures due in 2029
|
252,118 | 272,805 | ||||||
Total
carrying value of debt principal
|
1,892,972 | 2,037,776 | ||||||
$ $24
million 15.75% senior notes due in 2014
|
24,225 | - | ||||||
Long-term
portion of future interest on 15.75% senior notes
|
15,262 | - | ||||||
Total
carrying value of debt principal and future interest
|
39,487 | - | ||||||
Total
long-term debt
|
$ | 1,932,459 | $ | 2,037,776 |
Year
|
Payments
|
||||
2009
|
$ | - | |||
2010
|
- | ||||
2011
|
1,083,165 | ||||
2012
|
- | ||||
2013
|
- | ||||
Thereafter
|
905,219 | ||||
Debt principal
|
1,988,384 | ||||
Plus
capitalized future interest
|
15,262 | ||||
Less
net discount
|
(71,187 | ) | |||
Total
debt
|
$ | 1,932,459 |
Debt
Ratings
|
|
||
Credit
Facility:
|
|||
S
& P
|
CC
|
||
Moody's
|
B1
|
||
Unsecured
Notes:
|
|||
S
& P
|
C
|
||
Moody's
|
Caa3
|
||
Senior
Notes:
|
|||
S
& P
|
C
|
||
Moody's
|
Caa1
|
||
Corp.
Family Rating:
|
|||
S
& P
|
CC
|
||
Moody's
|
Caa2
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
27,
2009
|
September
28,
2008
|
September
27,
2009
|
September
28,
2008
|
|||||||||||||
Service
cost
|
$ | 1,160 | $ | 5,760 | $ | 5,622 | $ | 22,863 | ||||||||
Interest
cost
|
23,979 | 25,762 | 71,157 | 75,042 | ||||||||||||
Expected
return on plan assets
|
(25,069 | ) | (29,082 | ) | (74,257 | ) | (85,682 | ) | ||||||||
Prior
service cost amortization
|
4 | 108 | 29 | 208 | ||||||||||||
Actuarial
(gain) loss
|
(2 | ) | (2,136 | ) | 20 | (1,953 | ) | |||||||||
Curtailment
(gain) loss
|
- | 724 | (1,900 | ) | 2,373 | |||||||||||
Net
pension expense
|
$ | 72 | $ | 1,136 | $ | 671 | $ | 12,851 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
27,
2009
|
September
28,
2008
|
September
27,
2009
|
September
28,
2008
|
|||||||||||||
Service
cost
|
$ | - | $ | 9 | $ | - | $ | 37 | ||||||||
Interest
cost
|
540 | 695 | 1,621 | 1,810 | ||||||||||||
Prior
service cost amortization
|
(262 | ) | (252 | ) | (786 | ) | (878 | ) | ||||||||
Actuarial
(gain) loss
|
(49 | ) | 133 | (148 | ) | (440 | ) | |||||||||
Curtailment
gain
|
- | (795 | ) | - | (2,167 | ) | ||||||||||
Net
postretirement expense (benefit)
|
$ | 229 | $ | (210 | ) | $ | 687 | $ | (1,638 | ) |
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Quarter
Ended
|
||||||||||||
September
27,
2009
|
September
28,
2008
|
%
Change
|
||||||||||
Advertising:
|
||||||||||||
Retail
|
$ | 139,462 | $ | 181,416 | -23.1 | |||||||
National
|
24,097 | 33,485 | -28.0 | |||||||||
Classified:
|
||||||||||||
Auto
|
22,050 | 33,406 | -34.0 | |||||||||
Employment
|
14,105 | 35,024 | -59.7 | |||||||||
Real
estate
|
17,201 | 30,099 | -42.9 | |||||||||
Other
|
22,285 | 22,902 | -2.7 | |||||||||
Total
classified
|
75,641 | 121,431 | -37.7 | |||||||||
Direct
marketing
|
||||||||||||
and
other
|
26,920 | 33,785 | -20.3 | |||||||||
Total
advertising
|
266,120 | 370,117 | -28.1 | |||||||||
Circulation
|
69,029 | 64,691 | 6.7 | |||||||||
Other
|
12,241 | 16,812 | -27.2 | |||||||||
Total
revenues
|
$ | 347,390 | $ | 451,620 | -23.1 |
·
|
Automotive
advertising decreased $11.4 million, or 34.0%, from the third fiscal
quarter of 2008, reflecting an industry-wide trend. Print
automotive advertising declined 45.0%, while digital automotive
advertising declined 1.5% from the 2008
quarter.
|
·
|
Employment
advertising decreased $20.9 million, or 59.7%, from the third fiscal
quarter of 2008, reflecting a sharp, national slowdown in hiring and
therefore, employment advertising. The declines were reflected
both in print employment advertising, down 67.3%, and online employment
advertising, down 49.4%.
|
·
|
Real
estate advertising decreased $12.9 million, or 42.9%, from the third
fiscal quarter of 2008, also an industry-wide trend. In total,
print real estate advertising declined 49.5%, while digital advertising
fell by 5.3%.
|
Quarter
Ended
|
||||||||||||
September
27,
|
September
28,
|
%
|
||||||||||
2009
|
2008
|
Change
|
||||||||||
Operating
expenses
|
$ | 287,023 | $ | 410,983 | -30.2 | |||||||
Restructuring
charges
|
1,350 | 17, 043 |
NM
|
|||||||||
Compensation
expense
|
$ | 130,048 | $ | 199,861 | -34.9 | |||||||
Compensation-related
restructuring charges
|
1,350 | 17, 043 |
NM
|
Nine
Months Ended
|
||||||||||||
September
27,
2009
|
September
28,
2008
|
%
Change
|
||||||||||
Advertising:
|
||||||||||||
Retail
|
$ | 436,719 | $ | 568,670 | -23.2 | |||||||
National
|
75,791 | 108,391 | -30.1 | |||||||||
Classified:
|
||||||||||||
Auto
|
69,551 | 104,790 | -33.6 | |||||||||
Employment
|
46,447 | 121,888 | -61.9 | |||||||||
Real
estate
|
55,631 | 99,934 | -44.3 | |||||||||
Other
|
65,721 | 70,174 | -6.3 | |||||||||
Total
classified
|
237,350 | 396,786 | -40.2 | |||||||||
Direct
marketing
|
||||||||||||
and
other
|
84,610 | 106,621 | -20.6 | |||||||||
Total
advertising
|
834,470 | 1,180,468 | -29.3 | |||||||||
Circulation
|
206,860 | 198,610 | 4.2 | |||||||||
Other
|
37,020 | 50,508 | -26.7 | |||||||||
Total
revenues
|
$ | 1,078,350 | $ | 1,429,586 | -24.6 |
·
|
Automotive
advertising decreased $35.2 million, or 33.6%, from the first nine months
of 2008, reflecting lower automotive sales and the consolidation of
automotive dealers. Print automotive advertising declined
43.5%, while online advertising was down
1.6%.
|
·
|
Employment
advertising decreased $75.4 million, or 61.9%, from the first nine months
of 2008 reflecting a national slowdown in hiring and therefore employment
advertising. The declines were reflected both in print
employment advertising, down 67.6%, and online employment advertising,
down 53.5%.
|
·
|
Real
estate advertising decreased $44.3 million, or 44.3%, from the first nine
months of 2008. In total, print real estate advertising
declined 50.9%, while online advertising declined
0.7%.
|
Nine
Months Ended
|
||||||||||||
September
27,
|
September
28,
|
%
|
||||||||||
2009
|
2008
|
Change
|
||||||||||
Operating
expenses
|
$ | 984,057 | $ | 1,288,500 | -23.6 | |||||||
Restructuring
and other items
|
35,659 | 42,687 | -16.5 | |||||||||
Compensation
expense
|
$ | 453,483 | $ | 647,771 | -30.0 | |||||||
Restructuring
charges
|
25,095 | 42,451 | -40.9 |
|
LIQUIDITY
AND CAPITAL RESOURCES
|
Debt Ratings |
|
||||
Credit
Facility:
|
|||||
S
& P
|
CC
|
||||
Moody's
|
B1
|
||||
Unsecured
Notes:
|
|||||
S
& P
|
C
|
||||
Moody's
|
Caa3
|
||||
Senior
Notes:
|
|||||
S
& P
|
C
|
||||
Moody's
|
Caa1
|
||||
Corp.
Family Rating:
|
|||||
S
& P
|
CC
|
||||
Moody's
|
Caa2
|
·
|
pay
dividends or make distributions on capital stock, repurchase or make
payments on capital stock or prepay, repurchase, redeem, retire, defease,
acquire or cancel any of the Company’s existing notes or debentures prior
to the stated maturity thereof;
|
·
|
create
or permit restrictions on the ability of its subsidiaries to pay dividends
or make other distributions to the Company or to guarantee its debt, limit
the Company or any of its subsidiaries’ ability to create liens, or that
require the grant of a lien to secure an obligation if a lien is granted
to secure another obligation;
|
·
|
engage
in certain transactions with affiliates;
or
|
·
|
dissolve,
liquidate, consolidate or merge with or into other companies, sell,
transfer, license, lease or dispose of Company
assets.
|
ITEM
6. EXHIBITS
|
The
McClatchy Company
|
||
November
6, 2009
|
By: /s/
Gary B. Pruitt
|
|
Date
|
Gary
B. Pruitt
Chief
Executive Officer
|
|
November
6, 2009
|
By: /s/
Patrick J. Talamantes
|
|
Date
|
Patrick
J. Talamantes
Chief
Financial Officer
|
TABLE
OF EXHIBITS
|
|||
Exhibit
|
Description
|
||
2.1 | * |
Agreement
and Plan of Merger, dated March 12, 2006, between the Company and
Knight-Ridder, Inc., included as Exhibit 2.1 in the Company’s Current
Report on Form 8-K filed March 12, 2006
|
|
3.1 | * |
The
Company's Restated Certificate of Incorporation dated June 26, 2006,
included as Exhibit 3.1 in the Company's Quarterly Report on Form 10-Q for
the quarter ended
June
25, 2006
|
|
3.2 | * |
The
Company's Bylaws as amended and restated effective July 23, 2008, included
as Exhibit 3.2 in the Company's Current Report on Form 8-K filed July 28,
2008
|
|
4.1 | * |
Form
of Physical Note for Commercial Paper Program included as Exhibit 4.1 to
the Company's Quarterly Report on Form 10-Q for the quarter ended June 27,
2004
|
|
10.1 | * |
Credit
Agreement dated June 27, 2006 by and among the Company, lenders party
thereto, Bank of America, N.A. as Administrative Agent, Swing Line Lender
and Letter of Credit Issuer, JPMorgan Chase Bank as Syndication Agent and
Banc of America Securities LLC and JPMorgan Securities Inc. as Joint Lead
Arrangers and Joint Book Managers, included as Exhibit 10.2 in the
Company's Quarterly Report on Form 10-Q filed for the quarter ending on
June 25, 2006
|
|
10.2 | * |
Amendment
No. 1 to Credit Agreement dated March 28, 2007 by and between The
McClatchy Company and Bank of America, N.A., as Administrative Agent,
included as Exhibit 99.1 in the Company's Current Report on Form 8-K filed
April 2, 2007
|
|
10.3 | * |
Amendment
No. 2 to Credit Agreement dated July 30, 2007 by and between The McClatchy
Company and Bank of America, N.A., as Administrative Agent, included as
Exhibit 10.1 in the Company's Current Report on Form 8-K filed July 31,
2007
|
|
10.4 | * |
Amendment
No. 3 to Credit Agreement dated March 28, 2008 by and between The
McClatchy Company and Bank of America, N.A., as Administrative Agent,
included as Exhibit 10.1 in the Company’s Current Report on Form 8-K filed
March 31, 2008
|
|
10.5 | * |
Amendment
No. 4 to Credit Agreement dated September 26, 2008 by and between The
McClatchy Company and Bank of America, N.A., as Administrative Agent,
included as Exhibit 10.1 in the Company’s Current Report on Form 8-K filed
September 30, 2008
|
|
10.6 | * |
Amendment
No. 5 to Credit Agreement dated May 20, 2009 by and between The McClatchy
Company and Bank of America, N.A., as Administrative Agent, included as
Exhibit 10.1 in the Company’s Current Report on Form 8-K filed May 21,
2009
|
|
10.7 | * |
General
Continuing Guaranty dated May 4, 2007 by each Material
Subsidiary in favor of the Lenders party to the Credit Agreement
dated June 27, 2006 by and between The McClatchy Company, the
Lenders and Bank of America, N.A., as Administrative Agent, included as
Exhibit 10.3 in the Company’s Quarterly Report on Form 10-Q for the
quarter ending on April 1, 2007
|
|
10.8 | * |
Second
Supplemental Indenture dated June 27, 2006, between the Company and
Knight-Ridder, Inc. included as Exhibit 10.3 in the Company's Current
Report on Form 10-Q filed for the quarter ending on June 25,
2006
|
|
10.9 | * |
Fourth
Supplemental Indenture dated June 27, 2006, between the Company and
Knight-Ridder, Inc. included as Exhibit 10.4 in the Company's Quarterly
Report on Form 10-Q filed for the quarter ending on June 25,
2006
|
Exhibit
|
Description
|
||
10.10* |
Indenture,
dated as of June 26, 2009, by and between U.S. Bank National Association,
as Trustee, and the Company included as Exhibit 4.1 to the Company’s
Current Report on Form 8-K filed June 30, 2009
|
||
10.11* |
Registration
Rights Agreement, dated as of June 26, 2009, by and between Lazard Capital
Markets LLC and the Company included as Exhibit 4.2 to the Company’s
Current Report on Form 8-K filed June 30, 2009
|
||
**10.12* |
The
McClatchy Company Management by Objective Plan Description included as
Exhibit 10.4 in the Company's Report filed on Form 10-K for the Year
ending December 30, 2000
|
||
**10.13* |
The
Company’s Amended and Restated Long-Term Incentive Plan included as
Exhibit 99.1 to the Company’s Current Report on Form 8-K filed May 23,
2005
|
||
**10.14* |
The
Company’s Amended and Restated Long-Term Incentive Plan included as
Exhibit 99.1 to the Company’s Current Report on Form 8-K filed May 23,
2005
|
||
**10.15* |
Amended
and Restated Supplemental Executive Retirement Plan included as Exhibit
10.4 to the Company's 2002 Report on Form 10-K
|
||
**10.16* |
The
Company's Amended and Restated 1990 Directors' Stock Option Plan dated
February 1, 1998 included as Exhibit 10.12 to the Company's 1997 Report on
Form 10-K
|
||
**10.17* |
Amended
and Restated 1994 Stock Option Plan included as Exhibit 10.15 to the
Company's Quarterly Report on Form 10-Q filed for the Quarter Ending on
July 1, 2001
|
||
**10.18* |
Form
of 2004 Stock Incentive Plan Nonqualified Stock Option Agreement included
as Exhibit 99.1 to the Company's Current Report on Form 8-K filed December
16, 2004
|
||
**10.19* |
Form
of Restricted Stock Agreement related to the Company's 2004 Stock
Incentive Plan, included as Exhibit 99.1 to the Company's Current Report
on Form 8-K dated January 28, 2005
|
||
**10.20* |
Amended
and Restated Employment Agreement between the Company and Gary B. Pruitt
dated October 22, 2003, included as Exhibit 10.10 to the Company's 2003
Form 10-K
|
||
**10.21* |
Separation
and Release Agreement between the Company and Lynn Dickerson dated July
16, 2009, included as exhibit 10.21 to the Company’s Quarterly Report on
Form 10-Q filed for the Quarter Ending on June 28, 2009
|
||
**10.22* |
Form
of Indemnification Agreement between the Company and each of its officers
and directors, included as Exhibit 99.1 to the Company's Current Report on
Form 8-K filed on May 23, 2005
|
||
**10.23* |
Amended
and Restated 1997 Stock Option Plan included as Exhibit 10.7 to the
Company's 2002 Report on Form 10-K
|
||
**10.24* |
Amendment
1 to The McClatchy Company 1997 Stock Option Plan dated January 23, 2007
included as Exhibit 10.16 to the Company's 2006 Report on Form
10-K
|
||
**10.25* |
The
Company's Amended and Restated 2001 Director Stock Option Plan, included
as Exhibit 10.13 to the Company's 2005 Report on Form
10-K
|
||
**10.26* |
Amendment
1 to The McClatchy Company 2001 Director Option Plan dated January 23,
2007 included as Exhibit 10.18 to the Company's 2006 Report on Form
10-K
|
Exhibit
|
Description
|
||
10.27* |
Stock
Purchase Agreement by and between The McClatchy Company and Snowboard
Acquisition Corporation, dated December 26, 2006, included as Exhibit 2.1
to the Company's Current Report on Form 8-K filed December 26,
2006
|
||
10.28* |
Contract
for Purchase and Sale of Real Property by and between The Miami Herald
Publishing Company and Richmond, Inc. and Knight-Ridder, Inc. and
Citisquare Group, LLC, dated March 3, 2005, included as Exhibit 10.23 in
the Company's Quarterly Report on Form 10Q filed for the quarter ending
July 1, 2007
|
||
10.29* |
Amendment
to Contract for Purchase and Sale of Real Property by and between The
Miami Herald Publishing Company and Richmond, Inc. and Knight-Ridder, Inc.
and Citisquare Group, LLC, dated March 3, 2005, included as Exhibit 10.24
in the Company's Quarterly Report on Form 10Q filed for the quarter ending
July 1, 2007
|
||
**10.30* |
Form
of Chief Executive Stock Appreciation Rights Agreement related to the
Company's 2004 Stock Incentive Plan included as Exhibit 10.25 in the
Company’s 2007 Report on Form 10-K
|
||
**10.31* |
The
Company’s 2004 Stock Incentive Plan, as amended and restated included as
Exhibit 10.25 in the Company’s Quarterly Report on Form 10-Q filed for the
quarter ending on June 29, 2008
|
||
**10.32* |
Amendment
No. 1 to the Company’s Amended and Restated Long-Term Incentive Plan
included as Exhibit 10.26 in the Company’s Quarterly Report on
Form 10-Q filed for the quarter ending on June 29, 2008
|
||
**10.33* |
The
Company’s Amended and Restated CEO Bonus Plan included as Exhibit
10.27 in the Company’s Quarterly Report on Form 10-Q filed for
the quarter ending on June 29, 2008
|
||
**10.34* |
The
Company’s Amended and Restated Employee Stock Purchase Plan included as
Exhibit 10.28 in the Company’s Quarterly Report on Form 10-Q
filed for the quarter ending on June 29, 2008
|
||
31.1 |
Certification
of the Chief Executive Officer of The McClatchy Company pursuant to Rule
13a-14(a) under the Exchange Act
|
||
31.2 |
Certification
of the Chief Financial Officer of The McClatchy Company pursuant to Rule
13a-14(a) under the Exchange Act
|
||
32.1 |
Certification
of the Chief Executive Officer of The McClatchy Company pursuant to 18
U.S.C. Section 1350.
|
||
32.2 |
Certification
of the Chief Financial Officer of The McClatchy Company pursuant to 18
U.S.C. Section 1350.
|
||
* |
Incorporated
by reference
|
||
** |
Compensation
plans or arrangements for the Company's executive officers and
directors
|