MORRIS
PUBLISHING GROUP LLC ANNOUNCES SECOND QUARTER RESULTS
AUGUSTA,
Ga.— Morris Publishing Group LLC ("the Company") today announced
its results of operations for the second quarter ended June 30,
2003. The Company reported that revenue increased by 2.0% in the
second quarter over the same period a year ago, driven by growth
in all advertising categories: retail, classified and national.
Total revenues for the second quarter were $111.1 million.
Total
advertising revenues were up 2.5% for the second quarter and
up 2.5% year to date, driven by all three categories of advertising.
Retail advertising was up 1.7% for the second quarter and 1.6
% year to date. Classified advertising revenue was up 2.3% for
the second quarter and 3.3% year to date. National revenue was
up 9.8% for the second quarter and 5.5% year to date. Circulation
revenue was down 0.7% for the second quarter and 0.8% year to
date.
William S. Morris IV, chief executive officer, said this quarter's
revenue represents a continued stable growth trend. "We are
pleased with our revenue improvement in the second quarter,
particularly that increases were seen in all categories of advertising."
EBITDA
(net income before net interest expense, including amortization
of debt issuance costs, provision for income taxes, depreciation
and amortization expense) for the June 2003 fiscal quarter was
$28.7 million. The results represent lower EBITDA than the same
period last year due to the planned expenses associated with
investments in shared services initiatives. EBITDA margin for
the June 2003 fiscal quarter was 25.8%, in line with the full-year
2002 EBITDA margin.
On
August 7, 2003, the Company and its parent, Morris Communications
Company LLC ("Morris Communications") realigned various aspects
of their debt and capital structure, including the following:
The
Company issued $250.0 million in aggregate principal amount
of its 7% Senior Subordinated Notes due 2013, issued under an
Indenture with Wachovia Bank, National Association, as trustee.
The
Company entered into new $400.0 million senior secured credit
facilities, which rank senior to the notes and are guaranteed
by Morris Communications and its restricted subsidiaries, including
all of the Company's existing subsidiaries.
The
Company repaid its intercompany debt due to its parent, Morris
Communications, which in turn repaid its existing senior secured
credit facilities. As a result, the Company incurred a non-cash
financing loss on extinguishment of debt of approximately $6.4
million related to the write-off of unamortized deferred loan
costs.
Morris
Communications contributed various real estate and trademarks
primarily used in the newspaper business to the Company. The
Company distributed to Morris Communications various parcels
of real estate and related personal property that are not part
of the newspaper business. These contributions and distributions
will not affect the combined financial statements of the Company.
The
Company entered into a management agreement with Morris Communications,
whereby Morris Communications and its subsidiary, MStar Solutions,
will provide a wide range of management and general corporate
services to the Company for certain fees payable by the Company.
Total debt outstanding at June 30, 2003, proforma for these
and other related transactions was $550.0 million. Morris Publishing
Group LLC is a wholly owned subsidiary of Morris Communications
Company LLC, a privately held media company based in Augusta,
Ga.. Morris Publishing Group was formed in 2001 and assumed
the operations of the newspaper business segment of its parent,
Morris Communications. Morris Publishing publishes 26 daily,
10 nondaily and 23 free community newspapers in the United States.
Second Quarter
information follows:
Morris Publishing Group LLC
Income Statement
For the quarter
ended June 30, 2003
(Dollars
in thousands) Three Months EndedJune 30, 2003 2002 (unaudited)
OPERATING
REVENUES:
Advertising
$ 88,719 $86,540
Circulation
17,810 17,938
Other 4,597
4,504
Total operating
revenues 111,126 108,982
OPERATING
EXPENSES:
Labor and
employee benefits 42,295 39,291
Newsprint,
ink and supplements 13,037 12,050
Other operating
costs (excluding depreciation and amortization) 27,008 23,874
Depreciation
and amortization 2,787 4,501
Total operating
expenses 85,127 79,716
Operating
income 25,999 29,266
OTHER EXPENSE:
Interest
expense, including amortization of debt issuance costs 5,563
6,230
Other, net
53 93
5,616 6,323
INCOME BEFORE
INCOME TAXES 20,383 22,943
PROVISION
FOR INCOME TAXES 7,876 8,859
NET INCOME
$ 12,507 $ 14,084
The follow
table reconciles net income to EBITDA:
(Dollars
in thousands) Three Months Ended June 30, 2003 2002
NET INCOME
$ 12,507 $ 14,084
Add:
Interest
Expense, including amortization of debt issuance costs 5,563
6,230
Interest
Income (4) (5)
Provision
for Income Taxes 7,876 8,859
Depreciation
and amortization expense 2,787 4,501
EBITDA $
28,729 $ 33,669
