MNI » Topics » Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This excerpt taken from the MNI 10-Q filed Nov 7, 2008.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Debt under the Credit Agreement bears interest at the LIBOR plus a spread ranging from 200.0 basis points to 425.0 basis points.  Applicable rates are based upon the Company's total leverage ratio.  A hypothetical 25 basis point change in LIBOR for a fiscal year would increase or decrease the Company’s annual net income by $1.0 million to $1.25 million based on expected debt balances in 2008.
 
See the discussion at “Recent Events and Trends - Operating Expenses” in Management's Discussion and Analysis of Financial Condition and Results of Operations for the impact of market changes on the Company's newsprint and pension costs.
 
ITEM 4.  CONTROLS AND PROCEDURES
 
Evaluation of disclosure controls and procedures.  Our management evaluated, with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a - 15(e) or 15d - 15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, the Company's management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure and that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission Rules and Forms.
 
Changes in internal control over financial reporting.  There was no change in our internal control over financial reporting that occurred during the third fiscal quarter of 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
PART II - OTHER INFORMATION

ITEM 1A. RISK FACTORS
 
Forward-Looking Information:
 
Statements in this quarterly report on Form 10-Q regarding future financial and operating results, including revenues, operating expenses, cash flows, debt levels, as well as future opportunities for the Company and any other statements about management’s future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should also be considered to be forward-looking statements.  There are a number of important risks and


uncertainties that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including:  anticipated savings from cost restructuring efforts may not materialize in the amount or timing anticipated by management;  the duration and depth of an economic recession in markets where McClatchy operates its newspapers may reduce its income and cash flow more than expected; McClatchy may not consummate contemplated transactions, including but not limited to the pending sale of the real estate in Miami, which may prevent debt reduction on anticipated terms or at all; McClatchy may harm to its operations in attempting to achieve its cost reduction targets; McClatchy’s operations have been, and will likely continue to be, adversely affected by competition, including competition from internet publishing and advertising platforms; McClatchy’s expense and income levels could be adversely affected by changes in the cost of newsprint and McClatchy’s operations could be negatively affected by any deterioration in its labor relations, as well as the other risks detailed from time to time in the Company’s publicly filed documents, including the Company’s Annual Report on Form 10-K for the year ended December 30, 2007, filed with the U.S. Securities and Exchange Commission. McClatchy disclaims any intention and assumes no obligation to update the forward-looking information contained in this quarterly report.
 
Declines in general economic and business conditions subject the Company to risks of declines in advertising revenues.
 
Classified advertising revenues have continued to decline since late 2006 and advertising revenues in all categories have declined across the board in fiscal year 2008.  Advertising revenues were down 17.0% in the first nine months of fiscal year 2008.   The deterioration of general economic and business conditions may continue to have an adverse effect on the Company’s business and financial results, including negatively impacting revenues and margins.
 
This excerpt taken from the MNI 10-Q filed Nov 3, 2006.

Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Based upon the Company’s expected debt balance at December 31, 2006 (see Debt and Related Matters above), and all other things being equal, a hypothetical 25 basis point change in LIBOR for a fiscal year would increase or decrease the Company’s annual net income by $2.5 million to $3.0 million.

See the discussion at “Recent Trends and Events – Operating Expenses” for the impact of market changes on the Company’s newsprint and pension costs.

This excerpt taken from the MNI 10-Q filed Jul 27, 2006.

Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Based upon the Company’s debt balance at July 26, 2006, and all other things being equal, a hypothetical 25 basis point change in LIBOR for a fiscal year would increase or decrease the Company’s annual net income by $3.5 million to $4.0 million.

See the discussion at “Recent Trends and Events – Operating Expenses” for the impact of market changes on the Company’s newsprint and pension costs.

This excerpt taken from the MNI 10-Q filed May 10, 2006.

Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

All things being equal, a hypothetical 25 basis point change in LIBOR for a fiscal year would increase or decrease the Company’s annual results of operations by $200,000 to $400,000, less than one cent per share.

See the discussion at “Recent Trends and Events – Operating Expenses” for the impact of market changes on the Company’s newsprint and pension costs.

This excerpt taken from the MNI 10-K filed Feb 24, 2005.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

All things being equal, a hypothetical 25 basis point change in LIBOR for a fiscal year would increase or decrease in the Company’s annual net income by $300,000 to $400,000, less than one cent per share.

 

See the discussion at “Recent Events and Trends - Operating Expenses” for the impact of market changes on the Company’s newsprint and pension costs.

 

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MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

 

The management of The McClatchy Company (“Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system is designed to provide reasonable assurance regarding the preparation and fair presentation of the Company’s financial statements presented in accordance with generally accepted accounting principles in the United States of America.

 

An internal control system over financial reporting has inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

 

Management of the Company assessed the effectiveness of the Company’s internal control over financial reporting as of December 26, 2004. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework. Based on management’s assessment and those criteria, management believes that the Company maintained effective internal control over financial reporting as of December 26, 2004.

 

The McClatchy Company’s independent auditors have issued an attestation report on management’s assessment of the Company’s internal control over financial reporting. This report appears on page 33.

 

/s/ Gary B. Pruitt


      

/s/ Patrick J. Talamantes


Gary B. Pruitt        Patrick J. Talamantes
Chairman of the Board, President and        Vice President, Finance and
Chief Executive Officer        Chief Financial Officer
February 24, 2005        February 24, 2005

 

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