McClatchy reports sharply lower third quarter profit

Stock today was down from $19.17 to $18.84

News release from McClatchy today at 9 a.m,

SACRAMENTO, Calif., Oct. 16 -- The McClatchy Company (NYSE: MNI - News) today reported preliminary earnings from continuing operations in the third quarter of 2007 of $23.5 million, or 29 cents per share. Preliminary earnings do not include an anticipated non-cash charge to GAAP earnings for impairment of goodwill and long-lived assets discussed below, but do include a three cent per share charge related to certain tax positions taken by the company for which it has established reserves.

Income from continuing operations in the third quarter of 2006 was $52.6 million or 65 cents per share, and included an after-tax gain of seven cents per share related to the sale of land. Total net income in the 2006 third quarter was $51.8 million, or 64 cents per share.

Management noted that it is in the process of performing impairment testing of goodwill and other long-lived assets as of September 30, 2007, due to the continuing challenging business conditions and the resulting weakness in the company's stock price as of the end of its third quarter. Upon completion of that testing, the company expects to record a non-cash impairment charge to GAAP earnings in its third quarter financial statements when it files its Form 10-Q with the Securities and Exchange Commission (SEC) on or before November 9, 2007 and the company will issue a press release announcing the final third quarter results when it files its Form 10-Q with the SEC.

Revenues from continuing operations in the third quarter of 2007 were $540.3 million, down 9.2% from revenues from continuing operations of $595.1 million in 2006. Advertising revenues were $457.0 million, down 9.8% from advertising in 2006, and circulation revenues were $68.0 million, down 3.7%. The company benefited from continued strong cost reduction efforts in the 2007 quarter. Cash expenses were down 8.6% as the result of reduction in staffing levels, lower newsprint expense and continued vigilance in all other expenses.

Total losses recorded from unconsolidated investments were $7.7 million compared to losses from unconsolidated investments in the third quarter of 2006 of $0.8 million. The 2007 losses were due primarily to the operating results of the company's newsprint investments and were partially offset by income from its internet investments.

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