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Journal Register Company Reports First Quarter 2008 Results
(Marketwire Via Acquire Media NewsEdge) YARDLEY, PA, May 9 / MARKET WIRE/ --
Journal Register Company (PINKSHEETS: JRCO)
today reported a net loss of $72.2 million or $(1.84) per diluted share,
for the first quarter ended March 30, 2008, as compared to income from
continuing operations of $1.5 million, or $0.04 per diluted share, for the
prior year quarter ended April 1, 2007. The net loss for the period
includes a $95.4 million, $70.2 million net of tax, or $(1.78) per share,
non-cash charge for the impairment of assets under the methodology
prescribed by Statement of Financial Accounting Standards No. 142. This
charge primarily relates to a write-down of the carrying value of mastheads
and goodwill for the Michigan and New York clusters.
The first quarter of 2007 included a loss from discontinued operations and
a gain on the sales of our New England cluster properties in February of
2007. Net income for the 2007 first quarter was $29.1 million, or $0.74
per diluted share.
Excluding non-cash impairment charges and the other items discussed above,
the 2008 first quarter loss would have been $2.0 million or $(0.06) per
share, as compared to net income from continuing operations of $1.5
million, or $0.04 per diluted share for the prior year quarter ended April
1, 2007.
Chairman & Chief Executive Officer James W. Hall said, "Our first quarter
2008 operating results -- while disappointing -- reflect industry-wide
declines in advertising revenues. Ongoing economic concerns have reduced
both local and classified advertising spend, with the latter continuing its
migration to digital/online channels. Although our online and circulation
revenues are relative bright spots, much of the progress and improvements
resulting from the change in our business model and the repositioning of
our resources remain obscured by the effects of the economic cycle.
Nevertheless, we inexorably continue our transformation in order to
position ourselves to enter the next up-cycle as a leaner, fitter and more
relevant organization."
Revenue
Total revenues for the Company's first quarter ended March 30, 2008 were
$102.4 million, as compared to total revenues from continuing operations of
$114.1 million for the first quarter of 2007, a 10.3 percent decrease.
Revenue Performance by Category:
Total Advertising Revenue
Total advertising revenues for the first quarter of 2008 were $75.9
million, a decrease of 12.1 percent, compared to the first quarter of 2007.
Online Revenue
The Company continues to post solid gains in online revenues in 2008.
Total online revenues increased by 22.8 percent for the first quarter 2008
compared to the prior year. All clusters showed growth, with the Greater
Cleveland cluster increasing more than 84 percent. Online revenues
accounted for 6.4 percent of total advertising revenue for the first
quarter of 2008 compared to 4.6 percent in the prior year. The Company's
Web sites generated 103.7 million page views during the first quarter of
2008 and in March reported 4.3 million unique visitors to its Web sites.
Retail
For the first quarter 2008, retail advertising revenues decreased 9.9
percent, as compared to the first quarter of 2007. Top advertisers in the
financial/insurance and grocery/food/drug stores advertising revenue
categories were down in the first quarter, partially offset by sporting
goods stores revenue category gains.
Classified
Classified advertising revenues were down 14.4 percent for the first
quarter of 2008 compared to the prior year period. Within the category,
classified other advertising revenues were up slightly for the first
quarter of 2008, which was more than offset by declines in classified
employment advertising, classified auto advertising, and classified real
estate advertising which declined by 17.3 percent, 14.9 percent and 24.7
percent, respectively, compared to the first quarter of 2007.
National
National advertising revenues, which account for less than 4.0 percent of
total advertising revenues, were down 16.9 percent for the first quarter
2008 compared to the first quarter 2007.
Circulation
Circulation revenues for the first quarter 2008, as compared to the prior
year period were down 1.1 percent. Increases in subscription rates
essentially offset equivalent declines in the number of subscribers.
Operating Expenses
The Company continued its tradition of tightly controlled operating
expenses. Total operating expenses, excluding depreciation and
amortization, for the first quarter of 2008 were down $6.5 million, or 6.8
percent when compared to the first quarter of 2007.
The Company's same store non-newsprint cash operating expenses decreased
5.0 percent for the first quarter 2008 period, compared to the prior year.
Excluding the investment in online operations, the full year non-newsprint
cash operating expenses were down 5.8 percent, as compared to 2007. The
Company continues to make investments in its technological resources and
the development and promotion of its online products.
Newsprint expense for the first quarter 2008 declined 18.5 percent,
reflecting a decrease in average unit cost of 7.2 percent and a decrease of
approximately 12.2 percent in consumption as compared to the first quarter
of 2007. Salaries and employee benefit costs declined $2.5 million, or 5.3
percent on a quarter to quarter comparison basis largely due to headcount
reductions. Selling, general and administrative expenses declined $1.4
million, or 7.1 percent comparing the first quarter of 2008 with the same
prior year period. Increases in professional fees and costs associated
with new online programs were more than offset by declines in other
operating expenses.
Impairment Charges
Under generally accepted accounting principles, based upon changes in
circumstances of the business, which, among many factors, included a
continued decline in revenue and the decline in the market price of the
common stock, the Company determined that it was more likely than not that
the carrying values of the goodwill and the mastheads of its reporting
units were impaired. As such, the Company recorded an aggregate, non-cash
impairment charge of $95.4 million, $70.2 million net of tax, for its
Michigan and New York clusters in the first quarter of 2008. The impairment
charge does not affect the Company's cash flow, debt covenants or
liquidity. There was no impairment charge in the first quarter of the
prior year.
Debt, Interest Expense and other Financial Information
The Company again amended its credit facility and covenants to increase
liquidity during these difficult times for the newspaper industry. The
Company's next debt amortization payment is due in the second quarter of
2009. The Company's effective interest rate was 7.3 percent for the first
quarter 2008 compared to 7.0 percent for fourth quarter and 6.2 percent for
the first quarter of 2007, respectively.
The Company's capital expenditures were $0.8 million for the first quarter
of 2008. Those expenditures included production equipment and spending for
technological and online improvements. Additionally, during the first
quarter of 2008, the Company sold its distribution center property in
Milford, CT for a gain of $0.4 million.
Additional Information
The Company today filed its quarterly report on Form 10-Q for the first
quarter 2008 with the Securities and Exchange Commission. The Form 10-Q
contains additional information regarding the Company and its first quarter
financial results. The Form 10-Q is available on the Company's Web site at
www.JournalRegister.com under the Investors Relations tab. Investors may
also request a paper copy of the Form 10-Q by contacting the Company's
investor relations department.
About Journal Register Company
Journal Register Company is a leading U.S. media company. Journal Register
Company owns 22 daily newspapers and 302 non-daily publications. Journal
Register Company currently operates 229 individual Web sites that are
affiliated with the Company's daily newspapers, non-daily publications and
its network of employment Web sites. These Web sites can be accessed at
www.JournalRegister.com. All of the Company's operations are strategically
clustered in six geographic areas: Greater Philadelphia; Michigan;
Connecticut; Greater Cleveland; and the Capital-Saratoga and Mid-Hudson
regions of New York. The Company owns JobsInTheUS, a network of 20
employment Web sites.
Safe-Harbor
This release contains forward-looking information about Journal Register
Company that is intended to be covered by the safe harbor for
forward-looking statements provided by the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are statements that are not
historical facts. These statements can be identified by the use of
forward-looking terminology such as "believe," "expect," "may," "will,"
"should," "project," "plan," "seek," "intend," or "anticipate" or the
negative thereof or comparable terminology, and include discussions of
strategy, financial projections and estimates and their underlying
assumptions, the extent or timing of cost savings, charges, the extent of
employees impacted, and statements about the future performance,
operations, products and services of the Company. These forward-looking
statements involve a number of risks and uncertainties, which could cause
actual results to differ materially. These risks and uncertainties include,
but are not limited to, the success of the Company's asset sales and
divestiture activities, the ability of the Company to achieve cost
reductions and integrate acquisitions, competitive pressures including
competition from non-newspaper forms of media, general or regional economic
conditions and advertising trends, the unavailability or a material
increase in the price of newsprint and increases in interest rates, changes
in performance that affect financial covenant compliance or funds available
for borrowing, technological changes and the adoption of new accounting
standards or changes in accounting standards. These and additional risk
factors are outlined in the Company's most recent Annual Report on Form
10-K filed with the Securities and Exchange Commission. The Company
undertakes no obligation to publicly update any forward-looking statement,
whether as a result of new information, future events, or otherwise.
Non-GAAP Financial Measures
In this release, financial measures are presented both in accordance with
United States generally accepted accounting principles ("GAAP") and also on
a non-GAAP basis. All EBITDA, Free Cash Flow, Adjusted Net Income and Net
Income excluding special items figures in this release are non-GAAP
financial measures. EBITDA is defined as net income plus provision for
income taxes, net interest expense, depreciation, amortization, and other
non-cash, special or non-recurring charges. Free cash flow is defined as
EBITDA minus capital expenditures, cash interest and cash income taxes.
Adjusted Net Income excludes the special item that is described elsewhere
in this release. EBITDA Margin is defined as EBITDA divided by total
revenues. The Company believes that the use of certain non-GAAP financial
measures enables the Company and its investors to evaluate and compare the
Company's results from operations and cash resources generated from its
business in a more meaningful and consistent manner and provides an
analysis of operating results using the same measures used by the Company's
chief operating decision makers to measure the performance of the Company.
The emphasis on measures of cash flow is appropriate given the short period
of time it takes to convert new orders to cash. Please see the financial
summary below for information reconciling non-GAAP financial measures to
comparable GAAP financial measures.
Financial summary to follow:
Results presented in the accompanying financial summary are from continuing
operations only and exclude the performance of the Company's Massachusetts
and Rhode Island properties, which were sold in February 2007. The
Massachusetts and Rhode Island properties are shown as discontinued
operations and their results are excluded from revenues, operating expenses
and operating income, but are included in the 2007 net income and earnings
per share.
JOURNAL REGISTER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
In thousands, except per share data
Thirteen weeks ended
Fiscal period ended March 30, 2008 April 1, 2007
============== ==============
Revenues:
Advertising
Retail $ 42,088 $ 46,719
Classified 30,873 36,077
National 2,957 3,557
-------------- --------------
Total Advertising 75,918 86,353
Circulation 22,669 22,912
Commercial printing and other 3,803 4,860
-------------- --------------
Total revenues 102,390 114,125
============== ==============
Costs and expenses:
Salaries and employee benefits 45,346 47,873
Newsprint, ink and printing charges 9,494 11,578
Selling, general and administrative 18,012 19,380
Depreciation and amortization 4,746 4,587
Other 15,815 16,299
-------------- --------------
Cost and expenses 93,413 99,717
Impairment charges 95,400 -
-------------- --------------
Operating (loss) income (86,423) 14,408
Interest expense, net (11,305) (11,036)
Other income (expense), net 369 (20)
-------------- --------------
(Loss) income from continuing operations
before income taxes (97,359) 3,352
(Benefit) provision for income taxes (25,122) 1,840
-------------- --------------
(Loss) income from continuing operations (72,237) 1,512
(Loss) from discontinued operations of New
England cluster, net of income taxes - (86)
Gain on sale of New England cluster
operations, net of income taxes - 27,660
-------------- --------------
Net (loss) income $ (72,237) $ 29,086
============== ==============
(Loss) income per common share (basic)
(Loss) income from continuing operations $ (1.84) $ 0.04
(Loss) from discontinued operations, net
of income taxes - -
Gain on sale of New England cluster
operations, net of income taxes - 0.70
-------------- --------------
Net (loss) income per common share (basic) $ (1.84) $ 0.74
============== ==============
(Loss) income per common share (diluted)
(Loss) income from continuing operations $ (1.84) $ 0.04
(Loss) from discontinued operations, net
of income taxes - -
Gain on sale of New England cluster
operations, net of income taxes - 0.70
-------------- --------------
Net (loss) income per common share
(diluted) $ (1.84) $ 0.74
============== ==============
Dividends declared per common share $ - $ 0.02
Weighted-average shares outstanding:
Basic 39,363 39,128
Diluted 39,363 39,171
JOURNAL REGISTER COMPANY
Other Financial Data for the Company's Continuing Operations
In thousands, except per share data
Thirteen weeks ended
March 30, 2008 April 1, 2007
-------------- --------------
Other Data:
Net (loss) income from continuing
operations $ (72,237) $ 1,512
Add: provision for income taxes (25,122) 1,840
Add: interest expense and other, net 10,936 11,056
-------------- --------------
Operating income (86,423) 14,408
Add: Depreciation and amortization 4,746 4,587
Add: Impairment charges 95,400 -
-------------- --------------
EBITDA 13,723 18,995
EBITDA Margin 13.4% 16.6%
Less: Capital expenditures (849) (9,671)
Less: Cash interest expense and other (11,038) (10,818)
Less: Cash income taxes (1) (441) (184)
-------------- --------------
Free Cash Flow from continuing operations 1,395 (1,678)
Net Cash proceeds from sale of New England
Cluster operations - 55,532
Adjusted Free Cash Flow $ 1,395 $ 53,854
-------------- --------------
Free Cash Flow per diluted share $ 0.04 $ (0.04)
Adjusted Free Cash Flow per diluted share $ 0.04 $ 1.37
Net (Loss) Income, as reported $ (72,237) $ 29,086
Less: Discontinued operations, net of
taxes - 27,574
Plus: Special items (2) (70,200) -
-------------- --------------
Net (Loss) Income, as adjusted from
continuing operations $ (2,037) $ 1,512
============== ==============
Notes:
(1) Cash income taxes represent the application of the Company's expected
current year income tax liability rate to the income before provision for
income taxes for each period presented, without regard to the actual timing
of such payment, reduced by the benefit of the anticipated utilization of
available net operating loss carry forwards.
(2) Special items consist of the impairment of goodwill and intangible
assets, net of applicable income taxes, for the period ended March 30,
2008.
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For more information:
Journal Register Company
Gary Struening
Vice President Finance
Tel: (215) 504-4200
790 Township Line Road
Yardley, PA 19067
Fax: (215) 504-4201
Copyright ? 2008 Marketwire
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