The Company reported total revenues of $184.1 million in the quarter, an increase of 16.5% over the second quarter of 2007. On a same-store basis, As Adjusted Revenues for the Company were $184.4 million in the quarter, decreasing 4.7% over the prior year. GateHouse Media revenues continued to outperform its newspaper peers, which averaged double-digit revenue declines.
Operating loss for the second quarter was $429.7 million, which included a goodwill, intangibles and long-lived assets impairment charge of $443.1 million. Excluding the goodwill, intangible and long-lived assets impairment charge, which is a non-cash charge, operating income was $13.4 million compared to $18.5 million in the second quarter of 2007. As Adjusted EBITDA for the quarter was $38.0 million, a decrease of 16.0% on a same store basis.
CEO Michael Reed also announced GateHouse Media will not pay its second quarter dividend:
Michael E. Reed, GateHouse Media’s Chief Executive Officer, said, “The Company delivered industry leading same store results in a very challenging economic environment. The majority of our revenue declines continue to come from classified advertising. Local advertising revenue is holding up quite well and our online and circulation revenues continue to grow.
“We are experiencing increasing inflationary pressure, particularly with regard to newsprint pricing, delivery costs and health care expenses. Unfortunately, these expense increases offset our targeted cost reductions in the second quarter, resulting in a 1.3% decline in expenses year over year on a same store basis, less than we anticipated. We continue to aggressively look for ways to reduce expenses without impacting the quality of news and customer service we provide to our readers and advertisers. We also continue to invest in and expand our online business which is translating into growth. Both protecting and enhancing our local franchises, print and online, is very important to our future.”
The Company announced that it will temporarily suspend payment of a quarterly dividend to common shareholders commencing with the second quarter of 2008. A subsidiary of the Company entered into an agreement to issue $11.5 million of non-voting cumulative preferred stock to a private equity fund managed by an affiliate of Fortress Investment Group, GateHouse Media’s largest shareholder. The proceeds will be used to ensure the Company is in compliance with its credit agreement.
Commenting on the capital management initiatives, Reed said, “Given the challenging environment we are using free cash flow to reduce leverage and maintain additional liquidity. These initiatives will also allow us to pay down our revolving credit facility to zero over the next three months. When the revolving credit facility is at zero, we have no leverage covenant tests under our credit facility. Our facility does not mature until 2014, which provides us with significant time to strengthen our balance sheet.”
Any future determination to pay dividends will be at the discretion of the Company’s Board of Directors and will depend on, among other things, the Company’s results of operations, cash requirements, financial condition, contractual restrictions and other factors the Board of Directors may deem relevant.