Jrn Initiate

258
-1

Published on

Sample Research Report

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
258
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Jrn Initiate

  1. 1. Journal Communications, Inc. (JRN-$6.94) NEUTRAL Initiation of Coverage Target: $8 Richard R. Tullo (212) 894-3354 (rtullo@sidoti.com) April 10, 2008 Market Cap (Mil) $435 Price to Book Value 0.9x Avg. Daily Trading Volume* 363,000 Return on Equity (2009E) 8.1% Shares Out (Mil) 62.652 LT Debt-to-Total Capital 21% Float Shares (Mil)* 43.720 12% 5-Year EPS Growth Rate Projection Institutional Holdings* 73% 52-Week Range (2007) 14-6 Dividend $0.32 Russell 2000 703 Dividend Yield 4.6% Short Interest (Mil) 3.780 2006 2007 2008E 2009E Mar. $0.12 $0.12 $0.05 $0.08 June 0.17 0.19 0.17 0.20 Sept. 0.17 0.19 0.17 0.16 Dec. 0.28 0.16 0.23 0.19 Cal. $0.75 $0.65 $0.61 $0.64 P/E (Cal.) 11.4x 10.8x EBITDA $107.9 $108.6 $96.7 $98.0 (mil.) (Cal.) EV / EBITDA 7.3x 6.3x Note: *Class A shares only; excludes non-public B and C class shares. 1Q:07 exclude $64.7 gain on asset sale. 2006-2007 EPS include respective $0.03 and $0.04 of stock-based compensation expense; 2008-2009 include $0.05 each. JRN is in the Russell 2000 and NYSE Composite. Sum of quarterly EPS may not equal full-year total due to rounding and/or change in share count. NC=stock not covered by Sidoti & Company, LLC. Year* 2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E Rev.(Mil.) NA NA $608.4 $561.1 $586.7 $581.7 $628.8 $582.7 $581.6 $582.9 GAAP EPS - - $0.73 $0.45 $0.63 $0.57 $0.75 $0.65 $0.61 $0.64 *2003-2207 include continuing operations Description: Journal Communications, Inc. (www.journalcommunications.com) is a U.S. conglomerate with interests in newspapers, television stations, radio stations, commercial printing, direct marketing and interactive media. JRN operates four business segments: Publishing (46% of 2007 revenue), Broadcast (37%), Printing Services (12%), and Other (5%). Headquarters are in Milwaukee, WI. Initiate Coverage Of Journal Communications, Inc. With A NEUTRAL Rating And An $8 Target Concerns about a weak 1H:08 and Journal’s exposure to troubled Nevada, California and Florida markets cloud our view of this stable media company. We expect continued weakness in automobile and real estate classified ads (down 20% in 2007) against diminished consumer confidence and a weak housing market will weigh heavily on Journal through at least 2Q:08. Our expectation of flattish 2008 EPS reflects outsize revenue and EPS growth for 4Q:08 and rests largely on an expected surge of ad revenue from the Beijing 2008 Olympic Games in 3Q:08 and the U.S. presidential election in 4Q:08. We are hopeful that JRN’s customary advertisers will loosen the reins on ad spending by late 2008 and early 2009 ahead of broad improvement in U.S. leading economic indicators; but until signs of that occurring, we cannot commit to more aggressive projections than flat revenue and EPS propped up by share repurchases through 2009. To answer these challenges, Journal continues to transform from an old-line newspaper publisher to modern media company, in our view. We find that JRN, publisher of the Milwaukee Journal Sentinel since 1882 and winner of five Pulitzer Prizes, continues to exploit its Milwaukee, WI media stronghold to expand its faster-growing Internet business and more profitable broadcast segment; this latter business accounted for 52% of 2007 operating profit on just 37% of revenue. Unique local news, entertainment and sports coverage help explain 61% Internet segment revenue growth in 2007; we expect several new Web products to breathe life into waning print media classified ads by expanding JRN’s advertiser base
  2. 2. JOURNAL COMMUNICATIONS INC. and introducing new ad products to existing local advertisers. We argue that Journal will need to build upon its successful Milwaukee model in newer markets, such as Las Vegas, NV and Fort Myers, FL, which are feeling the sting of major housing slumps and subsequent steep declines in ad spending by auto and consumer retailers and real estate agencies. We expect JRN’s broadcast business on the whole to benefit from an advertising rebound in 2H:08-2009. JRN’s broadcast revenue declined 12% in a challenging 2007, but we expect improvement starting in 2H:08 owing to the Olympics and presidential election. (During the last U.S. national election in 2006, Journal’s combined political and Olympic advertising sales were $16.5 million despite a weakening economy; just $3.3 million was spent on local political advertising in 2007.) We otherwise view aggressive interest rate cuts by the Federal Reserve as a catalyst to stimulate auto, financial services and consumer durables ad growth by 2009 as national advertisers attempt to increase market share and local advertisers piggyback national campaigns to boost sales. We also expect 3Q:07 improvements to JRN’s local daytime and news programming will bolster the company’s ratings and market ranking, leading to higher ad rates. A solid balance sheet and cash flow generation position JRN among the strongest in the peer group… JRN was in line with the peer group (Exhibit I – page 5) for 2007 with $0.51 per share of free cash flow, implying about a 7% yield. We expect FCF per share of $0.89 for 2008 and $1.01 in 2009 and expect management to use cash to buy back stock (2.7 million shares remain on the current authorization), pay down the comparatively low long-term debt to capital ratio (21%, versus 30% for the peer group) and acquire small-market TV stations in regions where Journal already competes; we note that JRN bought back 10 million shares and nearly halved long-term debt (to $140 million, from $274 million) since 4Q:05. …but fail to incite investor interest in media companies with exposure to out-of-favor markets, in our view. We find that JRN typically trades at a 15% discount to peer group EV/EBITDA multiples. We deem the current 40% discount a bit excessive considering the relative stability of Journal’s core Milwaukee market and the area’s long-standing employers (i.e. Harley-Davidson, Badger Meter and Johnson Controls) that buy advertising. That said, we cannot discount investor concerns with Journal’s 10% revenue exposure to Nevada, California and Florida or management’s strategy of buying out- of-favor TV and radio properties in growing U.S. communities (i.e., Las Vegas, Palm Springs, CA). We initiate coverage of Journal Communications, Inc. with a NEUTRAL rating and an $8 price target. Although we find tremendous potential for Journal to increase ratings and resultant advertising revenue of acquired TV stations in Las Vegas and Palm Springs, we set a price target that appropriately balances the company’s flattish EPS prospects through 2009 against a lackluster ad environment and weakened domestic economy. We value JRN at an implied 20% discount to the 10x peer average EBITDA multiple and at a P/E multiple of 12x our 2009 EPS estimate of $0.64, in line with our normalized five-year EPS growth rate estimate of 12%. We would revisit our NEUTRAL rating with a decline in the share price to about $6, assuming no change in the company’s fundamentals. Company Overview Class B is a legacy of Journal Communications’ employee ownership program; these 11.2 million shares carry 10 Journal Communication, Inc. is a media conglomerate that votes apiece and convert into one publicly traded Class A operates 49 newspapers, 13 broadcast television stations, share. Class C shares (3.3 million) have two votes, pay a 35 radio stations and 121 websites that, combined, special $0.57 dividend (versus $0.32 annually for class A or comprise more than 80% of annual revenue; JRN also B) and convert into 1.12 Class A shares plus 0.24 Class B provides outsource printing and direct marketing services. shares. Insiders own 12.6% of the Class B shares; retired and non-executive employees own the rest. JRN’s founding Wisconsin is Journal’s primary market, but JRN operates in Grant family owns the Class C shares. 12 different states, including California, Florida and Nevada. Journal’s media assets are in strong local communities with Whereas many of the Class B holders once purchased their stable to above-average population growth and are linked shares using special financing from local banks, tighter to either a state capitol or a major university. lending standards now discourage the use of privately-held equity shares as collateral for bank loans. Thus, Journal’s JRN has an experienced management team. CEO Steven current or retired employees sold 40 million Class B shares Smith has been a director since 1987, and CFO Paul since the company’s IPO. Overall, we suggest that JRN’s Bonaiuto has held various roles with the company since unique shareholder structure aligns management’s and the 1994. President Douglas Kiel, with JRN since 1986, current employees’ interests with public shareholders. manages the TV and radio operations. Elizabeth Brenner, Industry Overview COO of publishing, was hired in 2004 after managing publishing operations for McClatchy (NYSE: MNI, NC). PricewaterhouseCoopers (PwC) projects the $1.3 trillion Three-Tiered Share Structure global entertainment and media industry will grow 6.6% per year through 2010. Media includes both physical and digital Journal Communications went public in 3Q:03 via the sale formats and consists of TV and cable broadcasts, as well of 30 million Class A shares priced at $15 per. Class A as newspapers, books, magazines, recorded music, radio, shares (47.1 million) are the only publicly traded, and each billboards, movies, theatrical plays, gaming and interactive has one vote. media. Revenue mostly derives from advertising sales and paid subscriptions. The growth areas are licensed content Sidoti & Company LLC 2
  3. 3. JOURNAL COMMUNICATIONS INC. distribution, emerging markets and interactive media (i.e., in JRN’s production expense to $143 million in 2007 mostly information, content and advertising delivered to mobile reflected lower newsprint and distribution expenses. JRN devices, the Internet, and video games). reduced consumption 14%, and prices declined 12%. Media in the U.S. is roughly a $500 billion industry and In 2007, the company consolidated the printing of the grew 2.9% in 2007, as calculated by market researcher Journal Sentinel onto two of three presses to free the third Universal McCann. U.S. media trailed global media growth for outsource printing of other newspapers. JRN’s high- for a third straight year, due to a decline in housing and capacity presses can print 85,000-plus color newspapers automobile related advertising. Moreover, U.S. government per hour. JRN’s two largest contracts are with USA Today restrictions on media cross ownership and Internet (82,000 issues daily), published by Gannett (NYSE: GCI, gambling also limited industry growth, in our view. NC), and the Chicago Reader (135,000 issues per week). JRN’s print facilities operate at 80% of capacity; we think Virtually every physical media product, such as newspapers there is enough capacity for JRN to expand its GCI and music, has been converted into a digital format, and the relationship or add new clients. newspaper industry has been especially hard hit. Classified help wanted ad revenue (once 20% of industry sales) is In our view, the combined reach of JRN’s newspapers down 90% since 1998 due to the introduction of Internet and Internet sites is the key to newspaper advertising career websites. Automobile and real estate classifieds also growth. In the last 12-18 months, U.S.-based local are falling (down 20% in 2007) amid a weak consumer and newspapers offset waning classified ad revenue with housing economy. Circulation (sales of subscriptions and Internet ad revenue from news websites. Industry–wide single copies) declines compound the industry ad sales digital ad revenue was up about 25% in 2007. We think falloff because national advertisers, such as telecom and there is still room to grow as local Internet news products healthcare companies, reduced newspaper advertising due can capture market share. According to media consultant to a decrease in subscriptions Borrell Associates, local websites run by newspapers and TV stations capture just 7% of the local internet advertising JRN has responded to falling newspaper circulation and ad market (estimates of the entire Internet ad market run as sales by selling its non-core community newspapers, print high as $20 billion). facilities and telecom businesses to focus on core media assets, expand its Internet product offering and enter new Typically, online advertisers pay a premium to advertise on markets thought to provide faster growth than the core high-traffic sites. We think as JRN takes steps to improve Milwaukee, WI, base. JRN sold the Northstar Print its Internet offering traffic, ad sales will grow. In March Business in 2005 for $229 million, and purchased network- 2008, JRN entered into the Yahoo (NASDAQ: YHOO, NC) affiliated TV stations in Tucson, AZ (ABC), Omaha, NE consortium of 300 newspapers. Yahoo will provide the (CBS) and Naples/Ft. Myers, FL (FOX) for $238 million. In newspaper industry with Internet tools that will enable JRN 2007, JRN sold Norlight Telecommunications, a phone, to: 1) increase website traffic; 2) sell traditional newspaper Internet and data management services provider in the advertising on the Internet to national advertisers; and 3) Midwest, for $185 million, as well as local newspapers in provide web-based tools such as a paid local search. We Ohio, Louisiana and New England. JRN booked a $62 think by entering the Yahoo consortium JRN will have a million gain on the Norlight sale in 1Q:07. competitive Internet offering. We project 30% average annual Internet ad revenue growth through 2009 for JRN as Publishing (46% Revenue) more advertisers discover the benefit of newspaper-run websites. We expect JRN will offset waning newspaper JRN operates 49 weekly and local newspapers, but we find revenue with Internet ad sales as its newspaper websites the Milwaukee Journal Sentinel (JS) is by far the company’s develop better advertising vehicles and tools for most important asset. The JS, founded in 1882 and winner advertisers. of six Pulitzers, has a weekly circulation of 220,000 and a Sunday circulation of 391,000. JS Sunday circulation We point to industry data to suggest that JRN’s local papers declined 2.6% in 2007, versus 3.5% for the industry. We and websites reach a large relative audience and will prove think JRN’s stronger relative performance reflects the to be a more attractive venue to advertisers than media Journal Sentinel’s focus on the greater Milwaukee behemoths and news aggregators, such as Google community and in-depth coverage of local politics and (NASDAQ: GOOG, NC). Audience-FAX, a partnership sports, namely the Green Bay Packers, Milwaukee between Audit Bureau of Circulations (ABC) and Arbitron Brewers, Milwaukee Bucks and college teams. We think (NYSE: ARB, BUY), shows that JS and jsonline.com reach newspaper sales comprise just 20% of publishing sales, but 75% of Milwaukee’s college graduates (a highly sought largely determine the ad rate Journal charges in our view; demographic for advertisers) per week. By contrast, popular so declines affect retail and national advertising sales. local TV or radio news programs might capture 10%, while major market papers, such as the New York Daily News We pin as much as 50% of Journal’s circulation decline on (1.2 million readers daily), will reach only 25%. In our view, preemptive expense control, as management curtailed local papers such as JS, with limited competition and unprofitable circulation in order to rein in energy and exclusive content, can compete against far bigger outlets newsprint costs. Newsprint, paper, energy and skilled labor and capture greater local online market share from national are the bulk of production expenses. Newsprint costs are advertisers seeking a trusted source for more-captive volatile, at 12%-14% of production expense. A 4% decline Sidoti & Company, LLC 3
  4. 4. JOURNAL COMMUNICATIONS INC. Printing Services (12%) and Other Revenue (5%) audiences in less-competitive markets, as opposed to a small slice of a major market such as New York City. Printing Services includes IPC Print Services in St. Joseph Broadcast (37% of Revenue) Michigan which prints short to medium run magazines and product manuals. In 2007, revenue grew 3.6% as IPC JRN’s TV and radio stations accounted for about one-third increased business with existing customers and added new of 2007 revenue, but 52% of income from operations. JRN higher margin clients. We forecast 2.6% annual printing broadcasts 13 TV stations and 35 radio stations, each with sales growth in the next two years, based on our a corresponding website, in markets anchored by the state assumption that the economy improves in 2H:08 and 2009. capitol or large universities. We favor this strategy because these communities tend to be economically stable and are “Other” includes the Journal’s PrimeNet marketing services active. As such, JRN’s communities create the demand for arm, which provides database and direct mail services, and the company’s media content, in our view. so-called “eliminations,” or sales of products and services between JRN divisions. Other sales declined 23% in 2007 JRN’s broadcast revenue comes from advertisements aired to $28.9 million on an increase in eliminations (deducted during news and local TV and radio programming. JRN from revenue) and a decline in marketing services demand cross sells ad space on its websites and collects due to economic weakness. We expect flattish “Other retransmission (carriage) fees from cable systems that revenue” of $24.9-$25.6 million annually in 2008 and 2009 distribute its TV channels. Ad rates are determined by as increased eliminations offset modest services growth. audience size, the advertising customer and audience Risks income, as well as Nielsen (TV) and Arbitron (radio) ratings. Local advertisers pay higher rates than national advertisers; they typically buy fewer slots and have limited alternatives, Union activity. JRN’s print and broadcast operations are in but need to advertise locally to generate sales. JRN boasts part staffed by union employees, so any prolonged strike strong local ad sales: 72% of TV ad slots and 80% of radio would hurt Journal’s earnings. ad slots are filled by local advertisers. This signifies to us the benefits of a strong connection to smaller communities Economic. Most media industry revenue is based on and less reliance, versus many peers, on network advertising. Advertising revenue is cyclically sensitive, with programming or volatile budgets of national advertisers. advertisers typically cutting back on discretionary ad purchases during periods of economic slowness. Only five of JRN’s 47 TV and radio stations, however, are in its core Wisconsin market. The others span 11 states, six of Plant Disruption. JRN consolidated print operations to its which we consider (including Wisconsin and Florida) as key Milwaukee facility; any disruption in production could affect battlegrounds (i.e., greater advertising revenue) in the 2008 both JRN’s publishing and commercial print operations. Presidential election. The Internet crippled newspaper classified ad sales; to a JRN’s top line included $16.5 million of TV/radio political lesser extent, the expansion of TV/radio channels altered advertising (local and state) in 2006 and only $3.3 million in the broadcast ad landscape. A decline in broadcast 2007. We expect Journal to benefit in 2008, with total U.S. advertising revenue could hurt sales and earnings; election advertising spending expected to exceed (by most however, JRN is diversifying its ad revenue stream by way industry forecasts) the previous (2006) record of $2.1 billion of new Web products and tuck-in acquisitions. because the U.S. Supreme Court lifted restrictions on Recent Results special interest ads. We also expect JRN’s three NBC affiliates to benefit from the 2008 Olympics; for comparison, In 2007, revenue fell 7.3% to $583 million as ad sales the 2006 winter games contributed revenue of $3.3 million. tracked the cyclical slowdown in the economy, political ad revenue slipped $13 million from a 2006 election year, and New local programming, improved news broadcasts (i.e., in Journal’s Sunday newspaper circulation declined 2.6%. Las Vegas) and expected 2H:09 renegotiation of carriage Publishing revenue declined 5.9% to $268 million. rates with Cablevision (NYSE: CVC, NC) and Time Warner Recurring non-political broadcast revenue declined 7% to (NYSE: TWX, NC) are other revenue catalysts, in our view. $209.7 million (from $225.3 million) absent the 2006 Less than 1% of JRN’s broadcast revenue is from carriage, political ad revenue. However, Printing Services grew 3.6% but we expect new contracts to generate $3-$7 million of to $69 million (from $66 million). incremental revenue (based on $0.25-$1.00 fees cable channels typically get per subscriber). New programs, such Operating costs ebbed 4% in 2007 to $501 million with staff as the Milwaukee talk show “Morning Blend”, may provide cutbacks in publishing and less newsprint consumption upside to our EPS estimates, since the show is less amid circulation declines and the reduction in width (web expensive to air than comparable syndicated talk shows size) of the Journal Sentinel. The operating margin and will likely attract high-margin local advertisers, in our narrowed 310 basis points to 13.5% in 2007, from 16.6% in view. JRN plans to roll out versions of the show to other 2006, as the above-mentioned cost reductions did not offset local markets in 2008. In Las Vegas, JRN hired the leading the revenue decline. The tax rate fell to 38%, from 40% in news anchors away from rivals and revamped its entire 2006. Excluding gains on asset sales, however, 2007 EPS format to appeal to the local audience in the hopes of rising declined 13% to $0.65, from $0.75 in 2006. from No. 3 in the ratings. Sidoti & Company, LLC 4
  5. 5. JOURNAL COMMUNICATIONS INC. Earnings Outlook compares with 30% for the peer group, though we find that investors seemingly give little reward to this metric in We expect continued challenges for the media industry, and valuing JRN stock. Since 4Q:05, JRN bought back 10 Journal in particular, at least through the first half of 2008, million shares and reduced debt to $140 million from $274 owing to weakness in automobile and classified advertising million. We forecast continued debt reduction (to 19% of declines (down 20% in 2007) and weakness in the housing total capital) by the end of 2009. Journal’s returns on assets market. As well, we suspect political and Olympic spending and equity for 2007 declined to 5% (from 5.7%) and 8.8% will do little to prop up 1H:08 EPS. (from 11.4%), respectively, hurt by the decline in net income with the sale of North Star and weakness in the By 2H:08, we think Journal will benefit from an improved ad newspaper industry. We target diminished ROA and ROE environment as the Olympics and presidential election lead in 2009 of 4.7% and 8.1%, respectively. to top-line growth of 2% in 3Q:08 and 16% in 4Q:08, by our model. Since we project that a 7.5% increase in high- The sale of Journal’s profitable telecom business (Norlight) margin broadcast ad sales offsets a 2.5% decline in lower- helped to explain the 2007 FCF decline to $0.51 per share, margin publishing sales, we estimate operating margin from $1.40 in 2006. Nonetheless, we argue that JRN’s expansion of 80 basis points to 14.3% in 2H:08, from 13.5% 13.5% FCF yield is quite attractive. We forecast FCF per in 2H:07. Based on these assumptions, we project a 14% share of $0.89 for 2008 and $1.00 for 2009. As noted, we 2H:08 EPS advance to $0.40 (from $0.35 in 2H:07). think JRN will use FCF to pay down debt and buy back stock. There are 2.7 million shares outstanding in the We predict 2008 net income from continuing operations will current program. slip to $39 million, from $43 million in 2007, but that JRN Valuation will put cash toward stock buybacks (reducing the diluted share count 8.6% from 2007), debt repayment and small bolt-on acquisitions. Thus, we predict a 16% interest We find tremendous potential for Journal to increase ratings expense decline in 2008 to $7.7 million (from $9.2 million in and resultant advertising revenue of acquired TV stations in 2007) and EPS to decline to $0.61, from $0.65 in 2007. We Las Vegas and Palm Springs, CA, but set a price target that expect JRN’s tax rate to decline to 34.9%, from 38.2% in appropriately balances flattish EPS prospects through 2009 2007, absent capital gains on asset divestitures. against a lackluster advertising environment and weakened domestic economy. We think the recent Fed rate cuts will stimulate automotive and housing advertising improvement in 2009 and offset the We are concerned by JRN’s growing 10% top-line exposure loss of political advertising, but forecast flattish revenue of to Nevada, California and Florida and the related affect on $583 million against a projected 1%-2% slide in newspaper 2008 and 2009 results. Management’s strategy of buying circulation. We expect JRN to command higher broadcast out-of-favor TV and radio properties in growing U.S. TV and radio rates due to the steps taken to strengthen the communities (i.e. Las Vegas, Palm Springs, CA) has great broadcast schedule and ratings with new programs and potential, in our view, but the economic downturns and news personalities. We suggest increased Internet ad sales associated ad revenue declines in those markets may offset will offset a circulation decline at the Journal Sentinel and any programming-related revenue gains, in our view. that publishing will grow 2.0% in 2009. We expect the operating margin to hold steady at 11.8% based on our We value JRN at price-to-earnings multiple of 12x our $0.64 projection that income from continuing operations is about 2009 EPS estimate to set an $8 price target. This valuation flat at $39.2 million against a $20 million drop in political ad implies steep discounts to media conglomerate peers (see revenue. We forecast a 5% EPS advance to $0.64 in 2009 Exhibit I) on the basis of EPS (a 30% discount) and based on the repurchase of 2.6 million shares. EV/EBITDA (40% discount, versus the 15% average). Balance Sheet and Cash Flow Although we find the latter discount overdone, we initiate coverage of JRN shares with a NEUTRAL rating, since we JRN has a strong balance sheet and ample free cash flow think the weak ad markets in Las Vegas and Florida will (FCF) that allows the company to create shareholder value keep a lid on annual EPS growth (absent buybacks) by paying down debt and buying back stock. JRN’s long- through 2009. We would revisit our rating if JRN shares term debt to capital ratio of 21% at the end of 2007 decline below $6 with no change in fundamentals. Exhibit I. Journal Communications Comparable Table P/BV FCF/P EV/EBITDA Curent EPS Forward LT-Debt/ 5Yr. 2007 2009 2007 Ratio Company Rating Ticker PX MCAP 2009E P/E Capital PEG 1.0 13.4% Journal Communications JRN $7.46 $430 $0.64 11.7 7.1 1.4 21% 0.97 NEUTRAL 4.6% News Corp NC NWS.A $19.32 $58,200 $1.44 13.4 1.8 11.7 1.5 25% 0.81 NM The New York Times Company NC NYT $19.16 $2,590 $1.10 17.4 2.8 7.2 0.7 41% NM 4.0% Hearst-Argyle Television Inc. NC HTV $21.62 $2,007 $0.80 27.0 1.1 16.7 1.1 30% 3.9 19.6% Media General Inc. BUY MEG $15.68 $358 $1.32 11.9 0.4 8.7 1.6 51% 0.74 4.3% The Washington Post Co. NC WPO $671.00 $6,375 $34.25 19.6 2.3 11.3 1.0 10% 2.80 Industry Average: 17.9 1.6 9.2% 10.4 1.2 30% 2.05 Source: Sidoti & Company, LLC Estimates, First Call and company reports Sidoti & Company, LLC 5
  6. 6. JOURNAL COMMUNICATIONS, INC. T ab le 1 . J o u rn al C o m m u n ica tio n s In c o m e S ta tem e n t 2006 M ar. Jun. Sep. Dec 2007 Mar. Jun. Sep. Dec 2008E Mar. Jun. Sep. Dec 2009E REVENUE 6 2 8 ,7 6 3 1 5 2 ,8 3 1 1 4 7 ,4 6 4 1 4 4 ,3 7 9 147,617 582,654 140,002 141,472 143,575 156,559 581,608 142,317 147,839 143,271 149,502 582,929 A n n u a l C h an g e 8 .0 9 % -2 .2 7 % -4 .2 6 % -5 .6 3 % -20.9% -7.3% -8.4% -4.1% -0.6% 6.1% -0.2% 1.7% 4.5% -0.2% -4.5% 0.2% O p er a tin g co sts: P u b lish in g 1 4 9 ,8 9 8 4 2 ,8 2 8 3 5 ,4 7 6 3 4 ,1 7 2 36,798 143,321 41,757 34,589 33,318 35,878 145,542 42,789 35,444 34,141 36,765 149,140 B ro ad c ast 9 5 ,7 4 5 2 2 ,3 9 5 2 3 ,7 3 5 2 5 ,4 6 2 25,332 96,924 23,291 25,159 26,990 26,852 102,292 23,757 25662 27,530 27,389 104,337 P rin tin g 5 6 ,1 2 9 1 4 ,1 6 5 1 3 ,4 0 7 1 3 ,7 5 8 13,982 55,313 14,590 13,809 13,772 14,401 56,572 15,465 14,638 14,598 15,266 59,967 O th e r 3 2 ,8 9 3 6 ,9 2 4 6153 6 ,1 5 5 5,428 24,659 6,993 6,215 6,217 5,482 24,907 7,203 6,401 6,403 5,647 25,654 S e llin g an d a d m in istra tiv e 1 8 9 ,4 9 8 4 9 ,3 4 6 4 5 ,9 4 8 4 3 ,3 6 8 48,126 183,649 46,201 43,856 44,508 50,099 184,664 42,695 44,352 42,981 44,850 174,879 D ep r ec ia tio n a n d a m o r tiza tio n 2 9 ,0 7 8 7 ,7 1 4 7 ,0 3 8 7 ,2 6 0 7,260 29,272 7,260 7,260 7,260 7,260 29,040 7,260 7,260 7,260 7,260 29,040 T o ta l o p e ra tin g c o sts 5 2 4 ,1 6 3 1 3 5 ,6 5 8 1 2 4 ,7 1 9 1 2 2 ,9 1 5 129,666 500,866 132,832 123,628 124,804 132,713 513,977 131,910 126,497 125,653 129,917 513,976 O p era tin g in c o m e 1 0 4 ,6 0 0 1 7 ,1 7 3 2 2 ,7 4 5 2 1 ,4 6 4 17,951 78,788 7,170 17,844 18,771 23,847 67,631 10,408 21,342 17,618 19,585 68,953 O p era tin g M a rg in 1 6 .6 % 1 1 .2 % 1 5 .4 % 1 4 .9 % 12.2% 13.5% 5.1% 12.6% 13.1% 15.2% 11.6% 7.3% 14.4% 12.3% 13.1% 11.8% O th e r in co m e (e x p e n se ): In terest in c o m e 37 2 1 23 10 36 12 12 12 12 48 12 12 12 12 48 In terest ex p en se (1 5 ,6 0 7 ) (2 ,9 9 5 ) (1 ,9 8 3 ) (1 ,9 3 7 ) (2,261) (9,180) (1,937) (1,937) (1,937) (1,937) (7,748) (1,937) (1,937) (1,937) (1,937) (7,748) T o ta l o th e r in co m e (ex p e n se) (1 5 ,5 7 0 ) (2 ,9 9 3 ) (1 ,9 8 2 ) (1 ,9 1 4 ) (2,251) (9,144) (1,925) (1,925) (1,925) (1,925) (7,700) (1,925) (1,925) (1,925) (1,925) (7,700) E a rn in g s fro m co n tin u in g o p e ra tio n s b /f ta x 8 9 ,0 3 0 1 4 ,1 7 8 2 0 ,7 6 2 1 9 ,5 5 0 15,700 69,644 5,245 15,919 16,846 21,922 59,931 8,483 19,417 15,693 17,660 61,253 In c o m e ta x e s 3 5 ,2 4 7 5 ,6 0 6 8 ,0 6 0 6 ,9 4 4 5,459 26,626 1,731 5,253 6,065 7,892 20,940 3,054 6,990 5,649 6,358 22,051 T ax % 3 9 .6 % 3 9 .5 % 3 8 .8 % 3 5 .5 % 35.0% 38.2% 33.0% 33.0% 36.0% 36.0% 34.9% 36.0% 36.0% 36.0% 36.0% 36.0% In c o m e fro m co n tin u in g o p e ra tio n s 5 3 ,7 8 3 8 ,5 7 2 1 2 ,7 0 2 1 2 ,6 0 6 10,241 43,018 3,514 10,665 10,781 14,030 38,991 5,429 12,427 10,043 11,302 39,202 D isco n tin u ed o p eratio n s: In c o m e(L o ss) fro m d isc . o p s (n et o f in co m e ta x e s) 1293 (772) G ain (L o ss)o n sale o f o p s (n et o f in c o m e T ax ) 1 0 ,5 9 0 6 4 ,7 5 9 1448 67,060 N et in co m e (lo ss) 6 4 ,3 7 3 7 3 ,3 3 1 1 4 ,1 5 0 1 3 ,8 9 9 9,469 110,078 3,514 10,665 10,781 14,030 38,991 5,429 12,427 10,043 11,302 39,202 E a rn in g s a v a ilab le to cla ss a,b sh a re h o ld ers 6 2 ,5 1 8 72867 13686 13436 9,002 108,991 3,047 10,198 10,314 13,563 37,123 4,962 11,960 9,576 10,835 37,334 E a rn in g s (lo ss) p er c o m m o n sh a re: E a rn in g s(lo ss) p er sh a re $ 0 .8 0 $ 0 .1 3 $ 0 .1 9 $ 0 .2 0 $0.17 $0.66 $0.05 $0.18 $0.19 $0.24 $0.66 $0.09 $0.22 $0.18 $0.20 $0.70 D isco n tin u ed O p era tio n s (n e t) $ 0 .1 3 $ 0 .9 3 $ 0 .0 3 $ 0 .0 2 ($0.01) $1.08 N et in c o m e (lo ss) p e r sh are $ 0 .9 3 $ 1 .0 5 $ 0 .2 2 $ 0 .2 2 $0.15 $1.74 $0.05 $0.18 $0.19 $0.24 $0.66 $0.09 $0.22 $0.18 $0.20 $0.70 D ilu ted e a rn in g s(lo ss) p e r sh a re $ 0 .7 5 $ 0 .1 2 $ 0 .1 9 $ 0 .1 9 $0.16 $0.65 $0.05 $0.17 $0.17 $0.23 $0.61 $0.08 $0.20 $0.16 $0.19 $0.64 S h a re s O u tsta n d in g B asic 6 7 ,4 7 5 6 9 ,3 9 7 6 2 ,2 0 9 6 1 ,0 7 3 58,138 62,276 56,938 55,738 55,738 55,738 56,038 54,956 54,175 54,175 53,394 53,394 D ilu te d 7 1 ,9 8 4 6 9 ,3 9 7 6 5 ,1 7 1 6 3 ,9 8 1 62,652 66,809 61,402 60,152 60,152 60,152 60,465 59,371 58,590 58,590 57,809 58,590 D iv id en d s 0 .2 6 0 .0 7 5 0 .0 7 5 0 .0 7 5 0.075 0.30 0.08 0.08 0.08 0.08 0.32 0.08 0.08 0.08 0.08 0.32 E B IT D A 1 3 3 ,7 1 5 2 4 ,8 8 7 2 9 ,7 8 3 2 8 ,7 4 7 25,221 108,096 14,442 25,116 26,043 31,119 96,719 17,680 28,614 24,890 26,857 98,041 E B IT D A T T M 1 3 3 ,7 1 5 1 3 4 ,6 8 9 1 2 5 ,7 4 7 1 0 9 ,1 1 5 108,638 108,638 98,193 93,526 90,822 96,719 96,719 99,956 103,455 102,302 98,041 98,041 E B IT D A p e r sh are 1 .8 6 1 .9 4 1 .9 3 1 .7 1 1.73 1.63 1.60 1.55 1.51 1.61 1.60 1.68 1.77 1.75 1.70 1.67 E V /E B IT D A 8 .5 2 7 .5 7 .7 6 .9 6.4 7.1 7.3 7.5 7.7 7.3 7.3 6.8 6.5 6.6 6.9 6.3 G ro ss M arg in 4 6 .8 % 4 3 .5 % 4 6 .6 % 4 4 .9 % 44.8% 45.0% 38.1% 43.6% 44.1% 47.2% 43.4% 37.3% 44.4% 42.3% 43.1% 41.8% E B IT M arg in 1 3 .4 % 4 9 .7 % 1 3 .7 % 1 3 .1 % 8.6% 21.9% 2.4% 9.9% 10.4% 12.8% 9.0% 4.6% 11.8% 9.6% 10.5% 9.2% E B IT D A M a rg in 2 1 .3 % 8 8 .1 % 8 5 .3 % 7 5 .6 % 73.6% 18.6% 70.1% 66.1% 63.3% 61.8% 16.6% 70.2% 70.0% 71.4% 65.6% 16.8% N et M arg in 1 0 .2 % 4 8 .0 % 9 .6 % 9 .6 % 6.4% 18.9% 2.5% 7.5% 7.5% 9.0% 6.7% 3.8% 8.4% 7.0% 7.6% 6.7% A nnual change T o ta l re v e n u e 8 .1 % -2 .3 % -4 .3 % -5 .6 % -20.9% -7.3% -8.4% -4.1% -0.6% 6.1% -0.2% 1.7% 4.5% -0.2% -4.5% 0.2% O p era tin g c o sts 3 .5 % -1 .2 % -3 .5 % -4 .4 % -13.0% -4.4% -2.1% -0.9% 1.5% 2.3% 2.6% -0.7% 2.3% 0.7% -2.1% 0.1% EPS 1 9 .0 % -7 .7 % 1 1 .8 % 1 1 .8 % -49.7% -13.3% -58.6% -10.8% -9.8% 44.5% -6.2% 68.4% 20.4% -4.7% -16.9% 9.8% S o u rce : S id o ti & C o m p a n y , L L C E stim ate s a n d co m p an y rep o rts Sidoti & Company, LLC 6
  7. 7. JOURNAL COMMUNICATIONS, INC. T a b le 2 . J o u r n sl C o m m u n ic a tio n s Q u a r te r ly S ta te m e n t o f C a sh F lo w s (0 0 0 s) 2006 M a r. A Ju n. A S ep. A D ec A 2007A 2008E 2009E N et Incom e 6 4 ,3 7 3 7 3 ,3 3 1 1 4 ,1 5 0 1 3 ,8 9 9 8 ,6 9 8 1 1 0 ,0 7 8 3 8 ,9 9 1 3 9 ,2 0 2 G a in fro m d is c o n tin u e d o p e ra tio n s 8 ,6 3 6 6 4 ,7 5 9 1 ,7 8 0 1 ,2 9 3 1 ,1 0 0 6 7 ,0 6 0 E a rn in g s fro m c o n tin u in g o p e ra tio n s 5 5 ,7 3 7 8 ,5 7 2 1 2 ,3 7 0 1 2 ,6 0 6 7 ,5 9 8 4 3 ,0 1 8 3 8 ,9 9 1 3 9 ,2 0 2 A d ju stm e n ts D e p re c ia tio n 2 7 ,8 8 7 7 ,2 2 5 6 ,5 7 7 6 ,7 6 2 6 ,7 6 2 2 7 ,4 0 7 2 7 ,0 4 8 2 7 ,0 4 8 A m o rtiz a tio n 2 ,0 6 0 489 461 498 498 1 ,9 6 1 1 ,9 9 2 1 ,9 9 2 W rite -o ff o f fin a n c in g c o s ts P ro v is io n fo r d o u b tfu l a c c o u n ts 1 ,4 8 1 71 382 564 400 1 ,6 4 6 1 ,9 0 0 1 ,4 0 0 D e fe rre d in c o m e ta x e s 6 ,8 8 7 (3 ,8 4 7 ) 1 ,0 9 1 (8 5 5 ) 7 ,9 2 1 (1 ,2 7 5 ) (3 ,0 0 0 ) 6 ,0 2 5 N o n -c a sh c o m p e n sa tio n 1 ,3 7 3 249 880 256 300 1 ,8 2 9 2 ,0 0 0 2 ,0 0 0 C u rta ilm e n t g a in s fo r d e fin e d b e n e fit a n d p e n s io n p la n s (2 ,4 0 2 ) N e t lo s s (g a in ) fro m d is p o s a l o f b u s in e s s a n d a s s e ts (3 ,4 4 3 ) (3 9 ) (8 6 1 ) (4 ) (7 4 4 ) N e t o p e ra tin g a c tiv itie s o f d is c o n tin u e d o p e ra tio n s 2 7 ,3 2 9 2 ,7 7 3 1 8 ,7 3 8 (2 1 ,5 1 1 ) - N e t c h a n g e s in o p e r a tin g a s s e ts a n d lia b ilitie s R e c ie v a b le s (7 ,6 0 8 ) 7 ,1 7 5 (5 ,4 9 9 ) (2 ,2 6 2 ) ( 1 ,0 4 7 ) (4 1 2 ) 3 ,2 0 0 (2 ,8 9 4 ) In v e n to rie s 862 798 (1 2 0 ) (2 2 4 ) 200 (5 0 6 ) (9 4 5 ) 316 A c c o u n ts p a y a b le (6 ,1 5 6 ) (6 ,6 9 3 ) 695 1 ,4 9 7 (1 ,0 8 2 ) 650 (1 ,8 7 6 ) O th e r a s s e ts a n d lia b ilitie s 1 5 ,9 9 2 ( 1 2 ,1 8 7 ) 5 ,9 0 6 (2 ,8 3 5 ) (5 ,2 0 1 ) (3 ,4 3 4 ) N e t c a s h p r o v id e d b y o p e r a tin g a c tiv itie s 1 1 9 ,9 9 9 4 ,5 8 5 (2 ,3 9 7 ) 3 7 ,5 1 0 4 ,5 8 5 6 6 ,6 4 1 6 8 ,4 0 1 7 3 ,2 1 2 C F fr o m In v e s tm e n ts C a p ita l e x p e n d itu re s ( 2 2 ,2 2 3 ) (7 ,8 5 5 ) (9 ,0 3 8 ) (6 ,6 5 6 ) ( 5 ,5 0 0 ) (3 5 ,9 0 6 ) ( 1 4 ,8 0 0 ) ( 1 4 ,8 0 0 ) P ro c e e d fro m s a le s o f a s s e ts 2 ,8 7 1 63 2 ,0 0 3 658 3 ,3 9 1 A c q u is itio n o f b u s in e s s e s 7 ,2 5 2 ( 1 1 ,4 2 5 ) 0 (1 7 1 ) (1 2 ,2 2 1 ) P ro c e e d s fro m s a le o f b u s in e s s ( 1 4 ,9 4 7 ) 1 7 6 ,3 9 5 8 ,8 5 9 1 9 ,9 6 4 2 0 5 ,0 0 7 N e t In v e s tin g o f d is c o n tin u e d o p s (6 4 1 ) (3 8 ) 679 - ( 2 7 ,0 4 7 ) 1 5 6 ,5 3 7 1 ,7 8 6 1 4 ,4 7 4 (5 ,5 0 0 ) 1 6 0 ,2 7 1 (1 4 ,8 0 0 ) (1 4 ,8 0 0 ) C a s h P r o v id e d b y (u s e d in ) I n v e s tin g A c tiv itie s C F fr o m F in a n c in g A c tiv itie s F in a n c in g c o s ts o n n o te s p a y a b le P ro c e e d s fro m lo n g -te rm n o te p a y a b le 2 2 4 ,0 5 2 9 9 ,3 4 5 7 6 ,5 4 0 8 9 ,5 7 0 8 9 ,5 7 0 3 4 3 ,3 1 0 P a y m e n ts o f lo n g te rm n o te p a y a b le ( 2 6 3 ,5 9 7 ) ( 2 2 9 ,0 6 5 ) ( 6 3 ,4 6 5 ) (5 8 ,8 0 5 ) ( 8 1 ,7 3 1 ) ( 3 9 9 ,4 2 5 ) N e t n o te p a y a b le ( 3 9 ,5 4 5 ) ( 1 2 9 ,7 2 0 ) 1 3 ,0 7 5 3 0 ,7 6 5 7 ,8 3 9 (5 6 ,1 1 5 ) ( 1 2 ,7 8 0 ) ( 1 5 ,0 0 0 ) P ro c e e d s fro m is s u a n c e o f c o m m o n s to c k 1 ,3 3 2 321 1 322 R e d e m p tio n o f c o m m o n sto c k ( 3 4 ,2 3 7 ) ( 2 8 ,1 1 1 ) (6 ,9 4 4 ) (4 3 ,9 0 9 ) ( 1 0 2 ,3 9 6 ) ( 2 0 ,0 0 0 ) ( 2 5 ,0 0 0 ) C a s h d iv id e n d s ( 1 9 ,4 4 3 ) (5 ,3 6 5 ) (5 ,2 4 4 ) (5 ,0 0 5 ) ( 5 ,0 0 5 ) (2 0 ,4 4 5 ) ( 1 9 ,8 1 3 ) ( 1 9 ,8 1 3 ) ( 9 1 ,8 9 3 ) (1 6 3 ,1 9 6 ) 1 ,2 0 8 ( 1 8 ,1 4 8 ) 2 ,8 3 4 ( 1 7 8 ,6 3 4 ) (5 2 ,5 9 3 ) (5 9 ,8 1 3 ) C a s h P r o v id e d b y (u s e d in ) F in a n c in g A c tiv itie s N e t c a s h fr o m d is c o n tin u e d o p e r a tio n s (3 3 ,6 2 2 ) ( 2 ,3 2 3 ) (4 9 ,9 4 5 ) In c re a s e (D e c re a s e ) in c a s h a n d e q u iv a le n ts 1 ,0 5 9 (2 ,0 7 4 ) 597 214 1 ,9 1 9 (1 ,6 6 7 ) 1 ,0 0 8 (1 ,4 0 1 ) C a sh , b e g in n in g 5 ,7 7 0 7 ,9 2 3 5 ,8 4 9 6 ,4 4 6 6 ,6 6 0 7 ,9 2 3 6 ,2 5 6 7 ,2 6 4 C a s h , e n d in g 7 ,9 2 3 5 ,8 4 9 6 ,4 4 6 6 ,6 6 0 6 ,2 5 6 6 ,2 5 6 7 ,2 6 4 5 ,8 6 3 C a s h , c a sh a n d s/t in v e s tm e n ts, e n d in g 7 ,9 2 3 5 ,8 4 9 6 ,4 4 6 6 ,6 6 0 6 ,2 5 6 6 ,2 5 6 7 ,2 6 4 5 ,8 6 3 F re e C a sh F lo w 1 0 0 ,6 4 7 (3 ,2 0 7 ) (9 ,4 3 2 ) 3 1 ,5 1 2 (9 1 5 ) 3 4 ,1 2 6 5 3 ,6 0 1 5 8 ,4 1 2 F C F P e r S h a re 1 .4 0 (0 .0 5 ) (0 .1 4 ) 0 .4 9 (0 .0 1 ) 0 .5 1 0 .8 9 1 .0 1 S o u r c e : S i d o t i & C o m p a n y , L L C E s t i m a t e s a n d c o m p a n y r e p o rrtt s Sidoti & Company, LLC 7
  8. 8. JOURNAL COMMUNICATIONS, INC. T a b le 3 . J o u r n a l C o m m u n ic a tio n s B a la n c e S h e e t 2006 M ar. Ju n . Sep. 2007 2008E 2009E ASSETS C u rren t a ssets C a s h & c a s h e q u iv a le n ts 7923 5 ,8 4 9 6 ,4 4 6 6 ,6 6 0 6 ,2 5 6 7 ,2 6 4 5 ,8 6 3 A c c o u n ts re c e iv a b le , 8 7 ,1 8 2 8 5 ,0 0 2 8 5 ,0 5 2 8 6 ,7 5 0 8 6 ,1 9 7 8 2 ,9 9 7 8 5 ,8 9 2 DSO 50 49 28 33 54 49 49 In v e n to rie s , n e t 6 ,7 5 2 7 ,0 9 2 6 ,0 4 2 6 ,2 9 8 7 ,2 5 8 6 ,3 1 3 6 ,6 2 9 P re p a id a n d o th e r 1 1 ,4 9 5 9 ,6 4 5 7 ,8 9 0 1 2 ,9 1 6 1 3 ,0 6 6 1 0 ,0 6 6 1 0 ,0 6 6 D e fe rre d in c o m e ta x e s 1 1 ,0 1 7 7 ,6 0 2 7 ,2 2 2 7 ,3 6 1 6 ,8 2 1 6 ,8 2 1 6 ,8 2 1 A s s e ts o f d is c o u n tin u e d o p e ra tio n s 1 1 8 ,5 8 9 413 1 8 ,7 8 8 133 T o ta l c u r r e n t a sse ts: 2 4 2 ,9 5 8 1 1 5 ,6 0 3 1 3 1 ,4 4 0 1 2 0 ,1 1 8 1 1 9 ,5 9 8 1 1 3 ,4 6 1 1 1 5 ,2 7 0 PPE NET 2 1 7 ,8 2 3 2 2 4 ,2 6 2 2 1 9 ,5 9 6 2 1 8 ,8 4 1 2 2 3 ,8 0 0 2 1 0 ,6 2 5 1 9 9 ,0 9 7 G o o d w ill a n d o th e r in ta n g ib le s , n e t 2 3 1 ,6 3 5 2 4 5 ,4 6 7 2 3 1 ,5 5 0 2 3 2 ,3 6 6 2 3 2 ,5 3 8 2 3 2 ,5 3 8 2 3 2 ,5 3 8 F C C lic e n s e s a n d o th e r in ta n g ib le s , n e t 1 9 6 ,6 4 8 2 2 3 ,5 2 9 2 2 3 ,5 2 9 2 2 3 ,5 2 9 2 2 3 ,5 2 9 2 2 3 ,5 2 9 2 2 3 ,5 2 9 O th e r in ta n g ib le a s s e ts , n e t 2 6 ,8 2 6 2 6 ,5 7 9 2 5 ,8 7 6 2 6 ,1 5 9 2 5 ,7 0 2 2 6 ,1 5 9 2 6 ,1 5 9 P re p a id p e n s io n 2 0 ,0 4 3 5 ,2 0 8 1 5 ,2 9 8 1 5 ,2 9 8 1 5 ,2 9 8 O th e r a s s ts 3 9 ,0 9 0 2 2 ,7 5 9 1 7 ,3 8 4 1 6 ,5 0 2 1 6 ,8 7 5 1 6 ,8 7 5 N o n -c u rre n t a s s e ts o f d is c o n tin u e d o p e ra tio n s 278 271 264 257 TO TAL ASSETS: 9 5 5 ,2 5 8 8 5 8 ,4 7 0 8 5 2 ,2 9 8 8 4 3 ,8 6 2 8 5 6 ,9 6 7 8 3 8 ,4 8 5 8 2 8 ,7 6 6 C U R R E N T L IA B IL IT IE S A c c o u n ts p a y a b le 3 1 ,0 2 5 2 4 ,3 3 2 2 5 ,0 2 8 2 6 ,5 2 4 3 0 ,0 2 6 3 0 ,6 7 6 2 8 ,8 0 0 P a y a b le d a y s 3 6 2 9 2 9 3 0 3 5 3 4 3 1 A c c ru e d e x p e n s e s a n d o th e r lia b ilitie s 1 8 ,7 3 0 1 3 ,1 4 5 1 7 ,8 9 1 1 3 ,5 9 5 1 6 ,8 7 1 1 6 ,5 2 2 1 6 ,5 2 2 A c c u re d e m p lo y e e b e n e fits 1 0 ,4 5 6 1 1 ,1 8 0 1 3 ,0 9 4 1 4 ,5 1 9 1 0 ,3 9 0 1 0 ,8 6 6 1 0 ,8 6 6 D e fe rre d re v e n u e a n d o th e r c u rre n t lia b ilitie s 6 1 ,8 6 0 7 6 ,0 0 0 4 5 ,9 9 6 3 9 ,7 9 7 2 2 ,9 1 2 2 3 ,0 1 9 2 4 ,4 1 9 C u rre n t p o rtio n o f lo n g -te rm d e b t 4 ,7 7 0 3 ,9 2 4 4 ,0 1 6 4 ,0 1 2 4 ,5 0 8 4 ,5 0 8 4 ,5 0 8 T o ta l c u r r e n t lia b ilitie s : 12 6 ,8 4 1 12 8 ,5 8 1 10 6 ,0 2 5 9 8 ,4 4 7 8 4 ,7 0 7 8 5 ,5 9 1 8 5 ,1 1 5 A c c ru e d e m p lo y e e b e n e fits 3 3 ,7 4 9 3 3 ,8 4 2 3 3 ,5 8 3 2 6 ,3 3 3 2 5 ,1 5 7 2 3 ,1 5 7 2 3 ,1 5 7 L o n g -te rm n o te s p a y a b le to b a n k s 23 5 ,0 0 0 10 5 ,2 8 0 11 8 ,3 3 5 14 9 ,1 2 0 17 8 ,8 8 5 16 6 ,1 0 5 15 1 ,1 0 5 D e fe rre d in c o m e ta x e s 6 2 ,0 8 9 5 4 ,5 9 3 5 5 ,5 1 6 5 9 ,7 4 3 6 7 ,6 6 4 5 9 ,7 4 3 7 1 ,7 9 3 O th e r L o n g -te rm lia b ilitie s 1 6 ,6 8 7 1 5 ,3 8 7 1 4 ,5 4 8 1 3 ,3 3 6 1 2 ,9 9 2 1 3 ,3 3 6 1 3 ,3 3 6 T O T A L L IA B IL IT IE S : 47 4 ,3 6 6 33 7 ,6 8 3 32 8 ,0 0 7 34 6 ,9 7 9 36 9 ,4 0 5 34 7 ,9 3 2 34 4 ,5 0 6 S H A R E H O L D E R S E Q U IT Y : C la s s A 481 475 480 475 475 473 472 C la s s B 268 253 243 206 206 204 202 C la s s C 33 33 33 33 33 33 33 A d d itio n a l p a id in c a p ita l 3 3 4 ,9 4 8 3 2 0 ,6 6 8 31 8 ,3 5 6 31 0 ,4 1 5 296 ,6 6 6 29 6 ,6 6 6 296 ,6 6 6 U n e a rn e d c o m p e n s a tio n ( 1 7 ,1 1 4 ) ( 1 7 ,4 3 5 ) (1 7 ,1 2 0 ) ( 9 ,7 4 7 ) (8 ,3 6 0 ) ( 4 ,5 4 6 ) (5 ,2 2 8 ) R e ta in e d e a rn in g s 2 7 0 ,9 9 1 3 2 5 ,5 0 8 33 1 ,0 1 4 30 4 ,2 1 6 307 ,2 5 7 32 6 ,4 3 5 345 ,8 2 3 T re a s u ry S to c k (1 0 8 ,7 1 5 ) (1 0 8 ,7 1 5 ) (1 0 8 ,7 1 5 ) (1 0 8 ,7 1 5 ) (1 0 8 ,7 1 5 ) (1 2 8 ,7 1 1 ) (1 5 3 ,7 0 8 ) L IA B IL IT IE S A N D S H A R E H O L D E R S E Q U IT Y : 9 5 5 ,2 5 8 8 5 8 ,4 7 0 85 2 ,2 9 8 84 3 ,8 6 2 856 ,9 6 7 83 8 ,4 8 5 828 ,7 6 6 C u rre n t R a tio 1 .9 0 .9 1 .2 1 .2 1 .4 1 .3 1 .4 W o rk in g C a p ita l T u rn o v e r 5 .4 -4 7 .1 2 3 .2 2 6 .6 1 6 .7 2 0 .9 1 9 .3 B o o k /S h a re 6 .7 7 .5 8 .0 7 .8 7 .3 8 .1 8 .4 P ric e to B o o k 1 .7 1 .7 1 .6 1 .2 1 .2 1 .1 1 .0 C a sh p e r sh a re 0 .1 4 0 .1 0 0 .1 1 0 .1 1 0 .1 0 0 .1 3 0 .1 0 L T D e b t-to -C a p a ita l 2 4 .6 % 1 2 .3 % 1 3 .9 % 1 7 .7 % 2 0 .9 % 1 9 .8 % 1 9 .4 % D e b t to E q u ity 0 .4 9 0 .2 0 0 .2 3 0 .3 0 0 .3 7 0 .3 4 0 .3 1 ROAA 5 .7 % 5 .2 % 6 .3 % 6 .4 % 5 .0 % 4 .7 % 4 .7 % ROAE 1 1 .4 % 8 .5 % 1 0 .3 % 1 0 .9 % 8 .8 % 7 .9 % 8 .1 % S o u rc e : S id o ti & C om pany, LLC E s tim a te s a n d c o m p a n y re p o rts Sidoti & Compan y, LLC © Copyright 20 08 IMPORTANT DISCLOSURES The Sidoti & Company, LLC Equity Research rating system consists of BUY and NEUTRAL recommendations. BUY suggests capital appreciation of at least 25% from initiation of coverage over the next 12 months, while NEUTRAL denotes that a stock is not likely to provide similar gains over a 12-month period. As of 04/10/08, Sidoti & Company, LLC provides research on 461 companies, of which 332 (72%) are rated BUY and 128 (28%) are rated NEUTRAL. Of the BUYS, Sidoti & Company, LLC has received investment banking income from 7 companies (2.11%). Of the NEUTRALS, Sidoti & Company, LLC has received investment banking income from 1 company (0.78%). Of the NEUTRALS, 60 trade above our price targets. Any estimates or forecasts may not be met. Information contained herein is based on sources we believe to be reliable but we do not guarantee their accuracy. Prices and opinions concerning the composition of market sectors included in this report reflect the judgments as of this date and are subject to change without notice. This report is for information purposes only and is not intended as an offer to sell or a solicitation to buy securities. Reprints of Sidoti & Company, LLC reports are prohibited without permission. The research analyst certifies that this report accurately reflects his/her personal views about the subject securities and issuers and that none of the research analyst's compensation was, is or will be directly or indirectly related to the analyst's specific recommendations or views contained in this research report. Occasionally, Sidoti & Company, LLC may receive a fee, directly or indirectly, at the time of an underwriting for an individual company already under research coverage, for which the covering analyst will not be compensated. Sidoti & Company, LLC or persons associated with it may own securities of the issues described herein and may make purchases or sales while this report is in circulation. Sidoti & Company, LLC policy does not allow any analyst to own shares in any company he/she covers. No employee or household member thereof, serves as an officer or director of a covered company. Sidoti & Company, LLC does not make a market in any securities. Additional information is available upon request.

×