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McClatchy Files Form 10-Q And Reports Final Results For The Third Quarter 2017
Increases Non-cash Valuation Allowance

SACRAMENTO, Calif., Nov. 2, 2017 /PRNewswire/ -- McClatchy (NYSE American-MNI) today reported that it filed its report on Form 10-Q for the third quarter of 2017 with the Securities and Exchange Commission (SEC).  Subsequent to the previously reported preliminary results on October 16, 2017, the company completed its analysis on the deferred tax asset valuation allowance and identified that an additional non-cash valuation allowance of $21.6 million was required. 

For the third quarter of 2017, the company reported non-cash after-tax charges of $252.5 million, leading to a quarterly net loss of $260.5 million, or $34.11 per share. The non-cash charges relate almost solely to a non-cash deferred tax asset valuation allowance.  The third quarter 2017 adjusted net loss remains unchanged from the previously reported results at $5.9 million.

The net loss for the first nine months of 2017 was $393.5 million, or $51.67 per share, and included the effect of $359.4 million non-cash after-tax charges inclusive of the write-down of its CareerBuilder investment, mastheads, inventory, and the deferred tax asset valuation allowance mentioned above. The company refers readers to its October 16, 2017 release on third quarter results and its Form 10-Q for the quarter ended September 24, 2017 for additional information.

The unaudited consolidated statements of operations which have been filed with the SEC are attached to this release.

About McClatchy

McClatchy is a publisher of iconic brands such as the Miami HeraldThe Kansas City Star, The Sacramento Bee, The Charlotte Observer, The (Raleigh) News & Observer, and the (Fort WorthStar-Telegram. McClatchy operates 30 media companies in 14 states, providing each of its communities with high-quality news and advertising services in a wide array of digital and print formats. McClatchy is headquartered in Sacramento, Calif., and listed on the New York Stock Exchange American under the symbol MNI.

Additional Information

Statements in this press release regarding future financial and operating results, including our strategies for success and their effects, our real estate monetization efforts and the repurchase of outstanding notes, revenues, and management's efforts with respect to cost reduction efforts and efficiencies, cash expenses, revenues, adjusted EBITDA, debt levels, interest costs and creation of shareholder value 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  as defined in the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," "estimates" and similar expressions) should also be considered to be forward-looking statements. There are a number of important risks and uncertainties that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: McClatchy may not generate cash from operations, or otherwise, necessary to reduce debt or meet debt covenants as expected; we may not be successful in reducing debt whether through tenders offers, open market repurchase programs or other negotiated transactions; including sales of real estate properties may not close as anticipated or result in cash distributions in the amount or timing anticipated; McClatchy may not successfully implement audience strategies designed to increase audience revenues and may experience decreased audience volumes or subscriptions; McClatchy may experience diminished revenues from advertising; McClatchy may not achieve its expense reduction targets including efforts related to legacy expense initiatives 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; increases in the cost of newsprint; bankruptcies or financial strain of its major advertising customers; litigation or any potential litigation; geo-political uncertainties including the risk of war; changes in printing and distribution costs from anticipated levels, including changes in postal rates or agreements; changes in interest rates; changes in pension assets and liabilities; changes in factors that impact pension contribution requirements, including, without limitation, the value of the company-owned real property that McClatchy has contributed to its pension plan; increased consolidation among major retailers in our markets or other events depressing the level of advertising; our inability to negotiate and obtain favorable terms under collective bargaining agreements with unions; competitive action by other companies; an inability to fully implement and execute its share repurchase plan; and other factors, many of which are beyond our control; 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 Dec. 25, 2016, 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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; In thousands, except per share amounts)










Quarter Ended


Nine Months Ended


September 24,


September 25,


September 24,


September 25,


2017


2016


2017


2016

REVENUES - NET:








Advertising

$        115,331


$        133,212


$        360,459


$        410,368

Audience

87,142


91,022


268,473


272,163

Other

10,131


10,467


30,004


32,383


212,604


234,701


658,936


714,914

OPERATING EXPENSES:








Compensation

80,652


91,351


258,883


284,974

Newsprint, supplements and printing expenses

15,075


19,320


49,379


57,917

Depreciation and amortization

19,588


20,559


59,016


69,551

Other operating expenses

83,963


97,912


268,784


298,265

Other asset write-downs

8,715


330


10,672


330


207,993


229,472


646,734


711,037









OPERATING INCOME

4,611


5,229


12,202


3,877








-

NON-OPERATING (EXPENSES) INCOME:








Interest expense

(19,801)


(20,953)


(60,547)


(62,423)

Interest income

121


110


410


318

Equity income (loss) in unconsolidated companies, net

(600)


3,632


(696)


10,637

Impairments related to equity investments

(1,866)


-


(171,013)


(892)

Gain (loss) on extinguishment of debt, net

(1,831)


-


(2,700)


1,535

Retirement benefit expense

(3,328)


(3,694)


(9,983)


(11,082)

Other - net

23


(13)


106


20


(27,282)


(20,918)


(244,423)


(61,887)









Loss before income taxes

(22,671)


(15,689)


(232,221)


(58,010)

Income tax expense (benefit)

237,805


(5,885)


161,276


(20,731)

NET LOSS

$       (260,476)


$           (9,804)


$       (393,497)


$         (37,279)









Net loss per common share:








Basic

$           (34.11)


$              (1.30)


$           (51.67)


$              (4.77)

Diluted

$           (34.11)


$              (1.30)


$           (51.67)


$              (4.77)









Weighted average number of common shares used :








to calculate basic and diluted earnings per share








Basic

7,637


7,614


7,616


7,809

Diluted

7,637


7,614


7,616


7,809

McClatchy Logo.

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SOURCE McClatchy

Stephanie Zarate, Investor Relations Manager, 916-321-1931, szarate@mcclatchy.com

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