The quarterly report filed today with the Securities and Exchange Commission, showed a sizable decrease in revenue from the same quarter the previous year, with losses in advertising, circulation, and printing, and a $526.1 million loss for the first six months of the year.
Six Months Ended June 30, 2009 Compared To Six Months Ended June 30, 2008
Revenue. Total revenue for the six months ended June 30, 2009 decreased by $51.5 million or 15.1% to $290.1 million from $341.6 million for the six months ended June 30, 2008. The difference between same store revenue and GAAP revenue for the current quarter is immaterial, therefore, further revenue discussions will be limited to GAAP results. The decrease in total revenue was comprised of a $47.3 million or 19.0% decrease in advertising revenue, a $0.7 million, or 0.9% decrease in circulation revenue and a $3.6 million, or 17.4% decrease in commercial printing and other revenue. Advertising revenue declines were primarily driven by decreases in classified advertising. The weak economy, particularly in the sectors of employment, automotive and real estate, has led to declining classified revenues across the country. Circulation revenue remained relatively stable with volume decline partially offset by price increases. The decrease in commercial printing and other revenue was due to declines in printing projects as a result of weak economic conditions.
Operating Costs. Operating costs for the six months ended June 30, 2009 decreased by $17.0 million, or 8.9%, to $174.2 million from $191.2 million for the six months ended June 30, 2008. The decrease in operating costs was primarily due to a decrease in compensation, other office related expenses, newsprint and delivery of $9.0 million, $4.6 million, $1.6 million and $1.4 million, respectively.
Selling, General and Administrative. Selling, general and administrative expenses for the six months ended June 30, 2009 decreased by $10.9 million, or 11.2%, to $86.5 million from $97.4 million six months ended June 30, 2008. The decrease in selling, general and administrative expenses was primarily due to a decrease in compensation, other office related expenses and health insurance, of $6.4 million, $2.6 million, $0.8 million, respectively.
Depreciation and Amortization. Depreciation and amortization expense for the six months ended June 30, 2009 decreased by $4.8 million to $31.7 million from $36.5 million for the six months ended June 30, 2008. The decrease in depreciation and amortization expense was primarily due to a reduction in amortization expense due to the impairment of amortizable intangibles in June and December of 2008.
Impairment of Long-Lived Assets. During the six months ended June 30, 2009 and 2008 we incurred a charge of $206.1 million and $102.5 million respectively, related to the impairment on our advertiser relationships and subscriber relationships due to reductions in our operating projections within various reporting units.
Goodwill and Mastheads Impairment. During the six months ended June 30, 2009 and 2008, we recorded a $275.3 million and $333.6 million, respectively, impairment on our goodwill mastheads due to softening business conditions and the related impact on the fair value of our reporting units.
Interest Expense. Total interest expense for the six months ended June 30, 2009 decreased by $14.7 million, or 30.9%, to $32.9 million from $47.6 million for the six months ended June 30, 2008. The decrease was primarily due to declines in interest rates and their related impact on the unhedged portion of our debt position, as well as a decrease in our total outstanding debt.
Loss on Derivative Instrument. During the six months ended June 30, 2009 we recorded a net loss of $5.9 million comprised of accumulated other comprehensive income amortization related to swaps terminated in 2008 partially offset by the impact of the ineffectiveness of our remaining swap agreements.
During the six months ended June 30, 2008 we recorded a loss of $1.8 million due to ineffectiveness related to several of our interest rate swaps, which were entered into, in an effort to eliminate a significant portion of our exposure to fluctuations in LIBOR.
Income Tax Expense (Benefit). Income tax expense for the six months ended June 30, 2009 was $0.3 million compared to an income tax benefit of $13.3 million for the six months ended June 30, 2008. The change of $13.6 million was primarily due to an increase in our pre-tax loss, a change in the valuation allowance recognized, and the impairment on the non tax deductible goodwill.
Net Loss from Continuing Operations. Net loss from continuing operations for the six months ended June 30, 2009 was $526.1 million. Net loss from continuing operations for the six months ended June 30, 2008 was $461.2 million. Our net loss from continuing operations increased due to the factors noted above.
7 comments:
If the dumb Neosho Daily News aka the Daily Dissapointment would report the news fairly it might stay around another year. Its is nothing but a state butt kissing propaganda rag.
Is this plagiarized? You use the word 'our'
So GateHouse reported $190 million in revenue, and $170 million in expenses for six months.
And you're headline is about losing half a billion?
Do you even understand financial statements?
The issue raised with my comment isn't what was reported, but the over-emphasis in your headline on what are merely paper impairments, not actual cash losses, which to the unsophisticated reader will seem like a substantial loss.
For your readers and employees who might depend on GateHouse's continuing operations, it might seem like a death blow. That might be an unfair impression to leave. (frankly, I'm unsure just how healthy or not the company is since I'm no longer employed there; just pointing out the available facts contradict the impression you're trying to leave).
Your report lacks any context or explanation, which isn't exactly honest journalism.
Disclosure: I'm a stock holder and former employee.
No, it is not plagiarized. It is reprinted word for word from a public document, the same public document that I link to further up in the poat.
Sorry, Howard, but GateHouse's problem is its incredible debt load. The company does not have any wiggle room and in the current economic climate is going to have an almost impossible time getting more credit.And you can only cut so many times.
The problems are simple:
First, GH is carrying a $1 BILLION debt. If they're only generating $25 million a quarter, or $100 million a year, they can't even pay the interest on the $1 billion.
Second, their strategy of moving into small-market papers, slashing staff and centralizing operations simply serves to alienate the newspaper-buying public. In my local GH-owned paper, over 70% of the copy is from the Associate Press or GH, only 30% locally-generated. Readers want to see LOCAL content, not garbage recycled from AP or other papers.
Lastly, and this is pointed directly at Howard, GH's online strategy of cookie-cutter crapola web sites is as big a failure as their print work. The sites are ugly, slow, and flat-out boring.
In other words, the sites are great examples of Online v. 1999. Unfortunately, it's 2009.
If you work for GH, get out before they find a way to stick you with part of their corporate debt.
If they gave awards for bad management, GH would probably sweep every category.
Howard Owens,
Gatehouse is NOTORIOUS for 'smoke and mirror' bookwork. I'm a current employee and I have seen some incredible feats of mismanagement in my lifetime but this company takes the cake. Believe me, that so called financial report is not what it seems. If you believe what Gatehouse tells you then you must also believe the government has your best interest at heart. I could cite you MANY examples of incredible managerial (corporate and especially regional) missteps that ten years ago would have got you fired the same day. But it seems that upper management thrives on ineptitude. But no matter. The landscape is changing and I don't think the newspaper industry will rebound anytime soon. In fact I personally believe it will fragment even further. If your business model cannot support it's own vehicle - newsprint - then you have to run lean. And it don't get any leaner then simply web. And it doesn't get any dumber then using Zope to distribute your news content. I've talked to many professionals in this field and Zope is not the Cadillac of news delivery - another misstep. Oh well... tomorrow's another day and another phone call from someone Gatehouse owes money too.....
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