The McClatchy Co. today reported a fourth-quarter loss because of declining revenue and a non-cash writedown. The Sun-Star's publisher also announced it is freezing its pensions, temporarily halting matching contributions to its 401(k) program, and developing plans to lop another $100 million to $110 million from its operating expenses.
Sacramento-based McClatchy, which also owns the Sacramento, Modesto and Fresno Bee newspapers, also revealed it is in danger of being de-listed from the New York Stock Exchange because its stock price has fallen below $1 in the past few weeks.
The results reflected the ongoing struggles in the newspaper industry, and the economy in general.
Sacramento-based McClatchy said fourth-quarter earnings from continuing operations fell to $21.8 million, or 26 cents a share. That compared with $36.1 million, or 44 cents a share, a year earlier. Revenue fell 17.9% from a year earlier, to $470.9 million, and advertising sales dropped 20.7%.
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On the bottom line, the company reported a net loss for the fourth quarter of $21.7 million, or 26 cents a share, because of a $59.6 million non-cash writedown. The write-down, the third the company has taken since the downturn began, reflects an acknowledgment that its properties aren't worth as much as previously believed.
In a statement, Chairman and Chief Executive Gary Pruitt said "2008 was a difficult and disappointing year. We faced troubled economic times and structural changes in our business." He said 2009 is off to a rough start, with January "slower than the fourth quarter."
Pruitt called the latest cutbacks -- following significant layoffs and other cutbacks last year -- "especially painful in a horrible economy and we have had to make some very difficult decisions to keep the company safe."
The details of the $100 to $110 million in cost cutting weren't released. Previously the company has resorted to layoffs, buyouts and other measures.
The company said a freeze on executive salaries, which began in 2007, will run through 2009. Pruitt has declined any bonus for last year and this year, and no other senior executives received bonuses last year.
Rank-and-file employees have been under a one-year wage freeze since September.
McClatchy announced last week it was suspending shareholder dividend payments as of April 1. The move will save $60 million a year, cash that will be plowed into McClatchy's $2.04 billion debt.
For the full year, the company reported profits of $1.4 million, or 2 cents a share. Without one-time adjustments, including the latest write-down, the company made $55.4 million, or 67 cents a share, in 2008.
In 2007 the company lost $2.74 billion, or $33.37 a share, reflecting enormous non-cash writedowns. Without the writedowns, the company earned $110 million, or $1.35 a share.
With pensions frozen, employees will no longer accrue additional benefits, although the benefits they've earned will remain intact.
The company said it is suspending contributions to 401(k) plans effective March 31 but said it plans to offer a new 401(k) plan later this year.
The company also announced it will no longer report revenue every month, following a recent trend in the newspaper industry.
McClatchy's stock closed Wednesday at 66 cents a share. Under the stock exchange's de-listing procedures, McClatchy has six months to get its price back above $1. Otherwise, it would be relegated to a less visible, less prestigious exchange.