Postmedia Network Reports First Quarter Results

Before you go, we thought you'd like these...
Before you go close icon

Postmedia Network Reports First Quarter Results

TORONTO--(BUSINESS WIRE)-- Postmedia Network Canada Corp. ("Postmedia" or the "Company") today released financial information for the three months ended November 30, 2012.

First Quarter Operating Results
Net earnings in the quarter ended November 30, 2012 were $8.3 million compared to net earnings of $28.3 million in the same period in the prior year. The decrease in net earnings is primarily due to lower revenue partially offset by operating cost reductions and the gain on sale of the Times Colonist in Victoria and British Columbia based community newspaper assets in the same period in the prior year.


Operating income of $26.7 million in the quarter decreased $7.5 million compared to operating income of $34.2 million in the same period in the prior year.

Operating income before depreciation, amortization and restructuring of $49.1 million in the quarter represents a decrease of $5.5 million, relative to the same period in the prior year.

Revenue for the quarter totaled $211.7 million, a decrease of $19.4 million (8.4%) relative to the same period in the prior year. This decrease was primarily due to a decrease in print advertising revenue of $16.6 million (11.1%) with declines occurring in classified, national, retail and insert advertising categories. Print circulation revenue decreased $5.0 million (9.2%) due to declines in circulation volumes. Digital revenue increased $2.2 million (9.7%) relative to the same period in the prior year.

Total operating expenses excluding depreciation, amortization and restructuring decreased $13.9 million (7.9%) relative to the same period in the prior year. Expense reductions occurred in all operating expense categories including compensation, newsprint, distribution and other operating expenses.

Business Transformation Initiatives
As previously announced, the Company is implementing a three-year transformation program that is targeted to result in operating cost savings of 15%-20%. As of November 30, 2012 the Company has implemented initiatives which will result in net annualized cost savings of approximately $42 million.

Redemption of Notes
On October 12, 2012, the Company completed the sale of 1450 Don Mills Road in Don Mills, Ontario for gross proceeds of approximately $24 million. On November 12, 2012, the net proceeds from the sale were used for a mandatory redemption of $23.2 million aggregate principal amount of 8.25% Senior Secured Notes due 2017 ("First-Lien Notes") at par in accordance with the terms and conditions of the First-Lien Notes indenture.

Management Commentary
"We are pleased with the progress of our transformation program and continued cost reductions remain a top priority," said Paul Godfrey, President and Chief Executive Officer. "Our revenue outlook remains challenging; however, we are confident we can continue to evolve as an industry leader in multi-platform product and audience development and continue to deliver solid results and innovative programs for advertisers and marketers."

Note: All dollar amounts are expressed in Canadian dollars unless otherwise specified.

Additional Information
Additional information, including financial statements and management's discussion and analysis can be found on the Company's website at www.postmedia.com/investors/financial-reports, on SEDAR at www.sedar.comor on the website maintained by the U.S. Securities and Exchange Commission (the "SEC") at www.sec.gov.

About Postmedia Network Canada Corp.
Postmedia Network Canada Corp. (TSX:PNC.A, PNC.B), is the holding company that owns Postmedia Network Inc., the largest publisher by circulation of paid English-language daily newspapers in Canada, representing some of the country's oldest and best known media brands. Reaching millions of Canadians every week, Postmedia engages readers and offers advertisers and marketers integrated solutions to effectively reach target audiences through a variety of print, online, digital, and mobile platforms.

Forward-Looking Information
This news release may include information that is "forward-looking information" under applicable Canadian securities laws and "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. By their nature, forward-looking information and statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These risks and uncertainties include, among others, statements regarding the implementation and results of the Company's transformation initiatives, including the realization of anticipated cost savings; competition from other newspapers and alternative forms of media; the effect of economic conditions on advertising revenue; the ability of the Company to build out its digital media and online businesses; the failure to maintain current print and online newspaper readership and circulation levels; possible damage to the reputation of the Company's brands or trademarks; possible labor disruptions; possible environmental liabilities, litigation and pension plan obligations; fluctuations in foreign exchange rates and the prices of newsprint and other commodities. For a complete list of our risk factors please refer to the section entitled "Risk Factors" contained in our annual management's discussion and analysis for the years ended August 31, 2012 and 2011. Although the Company bases such information and statements on assumptions believed to be reasonable when made, they are not guarantees of future performance and actual results of operations, financial condition and liquidity, and developments in the industry in which the Company operates, may differ materially from any such information and statements in this press release. Given these risks and uncertainties, undue reliance should not be placed on any forward-looking information or forward-looking statements, which speak only as of the date of such information or statements. Other than as required by law, the Company does not undertake, and specifically declines, any obligation to update such information or statements or to publicly announce the results of any revisions to any such information or statements.



Postmedia Network Canada Corp.
Consolidated Statements of Operations
For the three months ended November 30, 2012 and 2011
(UNAUDITED)

(In thousands of Canadian dollars, except per share amounts) 2012 2011
 
Revenues
Print advertising132,741149,368
Print circulation49,27654,269
Digital24,81322,622
Other4,8424,831
Total revenues211,672231,090
Expenses
Compensation82,94887,121
Newsprint12,10814,634
Distribution28,19232,705
Other operating39,31841,983
Operating income before depreciation, amortization and restructuring
49,10654,647
Depreciation6,8906,462
Amortization10,73411,021
Restructuring and other items4,7972,982
Operating income26,68534,182
Interest expense16,16716,837
Net financing expense related to employee benefit plans383975
Loss on disposal of property and equipment268-
(Gain) loss on derivative financial instruments697-10,040
Foreign currency exchange losses86612,132
Earnings before income taxes8,30414,278
Provision for income taxes--
Net earnings from continuing operations8,30414,278
Net earnings from discontinued operations, net of tax of nil-14,053
Net earnings attributable to equity holders of the Company8,30428,331
 
Earnings per share from continuing operations
Basic$0.21$0.35
Diluted$0.20$0.34
Earnings per share from discontinued operations
Basic$0.00$0.35
Diluted$0.00$0.34
Earnings per share attributable to equity holders of the Company
Basic$0.21$0.70
Diluted$0.20$0.70


Postmedia Network Canada Corp.
Consolidated Statements of Financial Position
(UNAUDITED)

(In thousands of Canadian dollars) As at

November 30, 2012

 As at

August 31, 2012

 
Assets
Current Assets
Cash33,23322,189
Accounts receivable112,90290,923
Inventory3,2643,829
Prepaid expenses and other assets9,74510,258
Total current assets159,144127,199
Non-Current Assets
Property and equipment261,007267,491
Asset held-for-sale41023,139
Derivative financial instruments23,41124,108
Other assets1,3451,549
Intangible assets368,084377,862
Goodwill223,500223,500
Total assets1,036,9011,044,848
 
Liabilities and Equity
Current Liabilities
Accounts payable and accrued liabilities81,67665,268
Provisions25,89029,888
Deferred revenue24,65525,915
Current portion of derivative financial instruments2,6716,069
Current portion of long-term debt15,10332,153
Total current liabilities149,995159,293
Non-Current Liabilities
Long-term debt464,330467,749
Derivative financial instruments8,06112,369
Other non-current liabilities180,069169,413
Provisions9701,588
Deferred income taxes681681
Total liabilities804,106811,093
 
Equity
Capital stock371,132371,132
Contributed surplus8,2427,888
Deficit(138,538)(139,357)
Accumulated other comprehensive loss(8,041)(5,908)
Total equity232,795233,755
Total liabilities and equity1,036,9011,044,848



Postmedia Network Canada Corp.
Consolidated Statements of Cash Flows
For the three months ended November 30, 2012 and 2011
(UNAUDITED)

(In thousands of Canadian dollars) 2012 2011
 
Cash Generated (Utilized) by:
Operating Activities
Net earnings attributable to equity holders of the Company8,30428,331
Items not affecting cash:
Depreciation6,8906,625
Amortization10,73411,076
(Gain) loss on derivative financial instruments697-11,029
Non-cash interest1,3318,688
Loss on disposal of property and equipment268-
Non-cash foreign currency exchange losses82412,007
Gain on sale of discontinued operations--17,109

Share-based compensation plans and other long-term incentive plan expense (recovery)

878-1,250
Net financing expense relating to employee benefit plans383982
Non-cash compensation expense of employee benefit plans1,909-
Employee benefit funding in excess of compensation expense--9,440

Settlement of foreign currency interest rate swap designated as a cash flow hedge

-8,976-
Net change in non-cash operating accounts-10,014-18,959
Cash flows from operating activities13,2289,922
 
Investing Activities
Net proceeds received on the sale of discontinued operations-85,890

Net proceeds from the sale of property and equipment and asset held-for-sale

24,691-
Additions to property and equipment-2,636-1,499
Additions to intangible assets-956-1,500
Cash flows from investing activities21,09982,891
 
Financing activities
Repayment of long-term debt-23,187-90,825
Debt issuance costs-96-37
Cash flows from financing activities-23,283-90,862
 
Net change in cash11,0441,951
Cash at beginning of period22,18910,483
Cash at end of period33,23312,434
   
Supplemental disclosure of operating cash flows
Interest paid1,2225,879
Income taxes paid--



Media Contact
Phyllise Gelfand, (416) 442-2936
Vice President, Communications
pgelfand@postmedia.com
or
Investor Contact
Doug Lamb, (416) 383-2325
Executive Vice President and Chief Financial Officer
dlamb@postmedia.com

KEYWORDS:   North America  Canada

INDUSTRY KEYWORDS:

The article Postmedia Network Reports First Quarter Results originally appeared on Fool.com.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners