The quarterly report filed Thursday with the Securities and Exchange Commission (SEC) indicated the company, which owns the Carthage Press, Neosho Daily News, Pittsburg Morning Sun and approximately 400 publications, is continuing to lose money and is about $1.6 billion in debt.
From the report:
Three Months Ended June 30, 2013 Compared To Three Months Ended July 1, 2012
Revenue. Total revenue for the three months ended June 30, 2013 decreased by $6.4 million, or 5.1%, to $119.6 million from $126.0 million for the three months ended July 1, 2012. 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 $7.7 million, or 8.9%, decrease in advertising revenue which was offset by a $0.3 million, or 0.9%, increase in circulation revenue and a $1.0 million, or 16.8%, increase in commercial printing and other revenue. Advertising revenue declines were primarily driven by declines on the print side of our business in the local retail and classified categories, which were partially offset by growth in digital advertising. The local retail print declines reflect both secular pressures and a continuing uncertain and weak economic environment. These secular trends and economic conditions have also led to a decline in our print circulation volumes which have been slightly offset by price increases in certain locations. Our circulation revenue was also impacted by approximately $0.5 million for a net to gross accounting change at two of our larger locations. The $1.0 million increase in commercial printing and other revenue is primarily the result of the launch of our small business marketing services within GateHouse Ventures during 2012.
Operating Costs. Operating costs for the three months ended June 30, 2013 decreased by $3.3 million, or 4.9%, to $65.0 million from $68.3 million for the three months ended July 1, 2012. The decrease in operating costs was primarily due to a decrease in compensation expenses, professional and consulting fees, newsprint expenses, and supplies of $1.9 million, $1.2 million, $1.1 million, and $0.3 million, respectively, which were partially offset by an increase in outside services of $1.5 million. These decreases are the result of permanent cost reductions as we continue to work to consolidate operations and improve the productivity of our labor force.
Selling, General and Administrative. Selling, general and administrative expenses for the three months ended June 30, 2013 increased by $5.9 million, or 16.9%, to $41.1 million from $35.2 million for the three months ended July 1, 2012. The increase in selling, general and administrative expenses was primarily due to an increase in outside services and compensation expenses of $5.0 million and $0.5 million. The increase in outside services is primarily from legal expenses related to the exploration of alternatives to improve our capital structure.
And this:
Six Months Ended June 30, 2013 Compared To Six Months Ended July 1, 2012
Revenue. Total revenue for the six months ended June 30, 2013 decreased by $13.0 million, or 5.3%, to $230.2 million from $243.2 million for the six months ended July 1, 2012. The difference between same store revenue and GAAP revenue for the six month periods ended June 30, 2013 and July 1, 2012 is immaterial, therefore, further revenue discussions will be limited to GAAP results. The decrease in total revenue was comprised of a $15.3 million, or 9.2%, decrease in advertising revenue which was offset by a $0.4 million, or 0.6%, increase in circulation revenue and a $1.9 million, or 15.7%, increase in commercial printing and other revenue. Advertising revenue declines were primarily driven by declines on the print side of our business in the local retail and classified categories, which were partially offset by growth in digital advertising. The local retail print declines reflect both secular pressures and a continuing uncertain and weak economic environment. These secular trends and economic conditions have also led to a decline in our print circulation volumes which have been slightly offset by price increases in certain locations. Our circulation revenue was also impacted by approximately $1.0 million for a net to gross accounting change at two of our larger locations. The $1.9 million increase in commercial printing and other revenue is primarily the result of the launch of our small business marketing services within GateHouse Ventures during 2012.
Operating Costs. Operating costs for the six months ended June 30, 2013 decreased by $6.3 million, or 4.6%, to $130.0 million from $136.3 million for the six months ended July 1, 2012. The decrease in operating costs was primarily due to a decrease in compensation expenses, professional and consulting fees, newsprint expenses, and supplies of $4.1 million, $2.2 million, $2.2 million, and $0.6 million, respectively, which were partially offset by an increase in outside services of $3.4 million. These decreases are the result of permanent cost reductions as we continue to work to consolidate operations and improve the productivity of our labor force.
Selling, General and Administrative. Selling, general and administrative expenses for the six months ended June 30, 2013 increased by $6.7 million, or 9.3%, to $78.7 million from $72.0 million for the six months ended July 1, 2012. The increase in selling, general and administrative expenses was primarily due to an increase in outside services and compensation expenses of $5.7 million and $0.5 million. The increase in outside services is primarily from legal expenses related to the exploration of alternatives to improve our capital structure.
Depreciation and Amortization. Depreciation and amortization expense for the six months ended June 30, 2013 decreased by $0.6 million to $19.6 million from $20.2 million for the six months ended July 1, 2012. The decrease in depreciation and amortization expense was primarily due to the sale and disposal of assets, which reduced depreciation expense.
Integration and Reorganization Costs. During the six months ended June 30, 2013 and July 1, 2012, we recorded integration and reorganization costs of $1.0 million and $1.9 million, respectively, primarily resulting from severance costs related to the continued consolidation of our operations resulting from our ongoing implementation of our plans to reduce costs and preserve cash flow.
(Gain) Loss on Derivative Instruments. During the six months ended July 1, 2012, we recorded a net gain on derivative instruments of $1.6 million, which was comprised of reclassifications of accumulated other comprehensive income amortization related to swaps terminated in 2008 that were partially offset by the impact of the ineffectiveness of our remaining swap agreements. The accumulated other comprehensive income reclassification for swaps terminated in 2008 was fully amortized in 2012 and the 2013 loss on derivative instruments relates only to the ineffectiveness of our remaining swaps.
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