GateHouse Media Announces Third Quarter 2012 Results

             GateHouse Media Announces Third Quarter 2012 Results

PR Newswire

FAIRPORT, N.Y., Nov. 1, 2012

FAIRPORT, N.Y., Nov. 1, 2012 /PRNewswire/ --

Third Quarter Highlights

  oTotal digital revenue increased 27.9% versus the prior year.
  oTotal revenues for the third quarter were $120.8 million, down 3.4% from
    the prior year.
  oAs Adjusted EBITDA decreased 7.8% versus the prior year to $20.3 million.
    Excluding investments in new strategic growth initiatives, As Adjusted
    EBITDA decreased 1.7% versus the prior year.
  oOperating costs and SG&A expense declined $2.1 million from the prior
    year, or 2.1%, to $102.3 million. Adjusting for one-time and non-cash
    items, operating costs and SG&A expense declined 2.5% from the prior year.
  oLevered Free Cash Flow per share was $0.08 versus $0.11 for the prior
    year.

GateHouse Media, Inc. (the "Company" or "GateHouse Media") (OTC Pink Sheets:
GHSE), a leading multi-media company providing news and information to local
communities, today reported financial results for the third quarter ended
September 30, 2012. Total revenues were $120.8 million for the quarter, a
decline of 3.4% from the prior year on a GAAP and same store basis. As
Adjusted EBITDA was $20.3 million, a decline of 7.8% compared to the prior
year.

Commenting on GateHouse Media's results, Michael E. Reed, Chief Executive
Officer of GateHouse Media, said, "We continue to make inroads on our
transformational strategy. While the anemic economic recovery creates a
challenging operating environment, we continue to invest in our digital and
other strategic growth initiatives, grow consumer revenues, reduce overall
expenses and implement new initiatives to stabilize print advertising.

"Digital revenues grew by 27.9% in the quarter versus prior year. Our digital
products extend across web, mobile and tablet products and led to 28% growth
in average monthly page views during the quarter. We invested $1.5 million in
the quarter on new strategic growth initiatives, particularly on our local
digital solutions service to small and medium sized businesses. Our continued
focus on consumer revenue growth resulted in a 3.1% increase in circulation
revenue during the quarter. Pricing initiatives more than offset volume
declines and we saw improving volume trends throughout the quarter,
particularly on Sunday circulation. We currently have pay meters in place in
all of our daily newspapers and early indications suggest they are not having
a significant impact on traffic.

"After adjusting for one-time and non-cash items, our operating expenses
declined 2.5% in the quarter, or 3.9% when the investment in new strategic
growth initiatives is factored out. As Adjusted EBITDA declined 7.8% in the
quarter but remained positive year to date at 0.4%. Additionally, when
excluding our investments in strategic growth initiatives, As Adjusted EBITDA
decreased only 1.7% for the quarter and is up 5.7% year to date.

"I believe we are developing the right strategies and making the right
investments in people and resources to execute on our transformational
strategy, making GateHouse a truly local multi-media company. These
investments along with a more efficient operating structure should position us
to take full advantage of the growth opportunities we see as well as
improvement we should start to see coinciding with a sustainable improvement
in the economy."

Third Quarter 2012

Total revenues were $120.8 million for the quarter, a decline of 3.4% compared
to the prior year on a GAAP and same store basis. The same store results were
driven by strong digital revenue growth of 27.9% offset by declines in print
advertising. The improvement in digital revenue resulted primarily from
increased banner and display advertising revenue from higher page views and
strong growth in our SEO/SEM services. Total advertising revenue declined
6.4% on a same store basis as growth in digital advertising was more than
offset by a 9.2% decline in total print advertising. Classified print revenue
declined 6.6% compared to the prior year, however, trends improved slightly
from the second quarter across all major categories, with auto showing the
greatest improvement. Circulation revenue increased 3.1% driven by price
increases, partially offset by volume declines.

Total operating and SG&A expenses in the quarter were $102.3 million, down
2.1% compared to the prior year. The expense declines were primarily from
lower compensation.

Operating income for the quarter was $6.7 million, a decrease of $2.1 million
as compared to the prior year. As Adjusted EBITDA for the quarter was $20.3
million, a decrease of $1.7 million or 7.8% from the prior year.

Levered Free Cash Flow for the quarter declined $2.0 million, or 31.3%, to
$4.4 million as compared to $6.4 million for the prior year.

One-time costs incurred and other non-cash expenses in the quarter were $3.2
million, related primarily to reorganization efforts and initiatives
introduced to realize permanent expense reductions.

About GateHouse Media, Inc.

GateHouse Media, Inc., headquartered in Fairport, New York, is one of the
largest publishers of locally based print and online media in the United
States as measured by its 78 daily publications. GateHouse Media currently
serves local audiences of approximately 10 million per week across 21 states
through hundreds of community publications and local websites. GateHouse
Media is traded in the over-the-counter market under the symbol "GHSE."

For more information regarding GateHouse Media and to be added to our email
distribution list, please visit www.gatehousemedia.com.

Non-GAAP Financial Measures

A non-GAAP financial measure is generally defined as one that purports to
measure historical or future financial performance, financial position or cash
flows, but excludes or includes amounts that would not be so adjusted in the
most comparable GAAP measure. GateHouse Media defines and uses Adjusted
EBITDA, As Adjusted EBITDA, As Adjusted Revenues, and Levered Free Cash Flow,
non-GAAP financial measures, as set forth below. The Company strongly urges
stockholders and other interested persons not to rely on any single financial
measure to evaluate its business. In addition, because Adjusted EBITDA, As
Adjusted EBITDA, As Adjusted Revenues and Levered Free Cash Flow are not
measures of financial performance under GAAP and are susceptible to varying
calculations, these non-GAAP measures, as presented in this press release, may
differ from and may not be comparable to similarly titled measures used by
other companies.

Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues and Levered Free
Cash Flow

The Company defines Adjusted EBITDA as income (loss) from continuing
operations before interest, income tax expense (benefit), depreciation and
amortization and other non-recurring or non-cash items. The Company defines
As Adjusted EBITDA as Adjusted EBITDA before other non-cash items such as
non-cash compensation, non-recurring integration and reorganization costs and
Adjusted EBITDA from non-wholly owned subsidiaries. The Company defines As
Adjusted Revenues as total revenues plus revenues of discontinued operations
less revenues from non-wholly owned subsidiaries. The Company defines Levered
Free Cash Flow as As Adjusted EBITDA less capital expenditures, cash taxes and
interest expense, excluding non-wholly owned subsidiaries.

Management's Use of Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues
and Levered Free Cash Flow

Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues and Levered Free
Cash Flow are not measurements of financial performance under GAAP and should
not be considered in isolation or as alternatives to income from operations,
net income (loss), cash flow from continuing operating activities or any other
measure of performance or liquidity derived in accordance with GAAP.
GateHouse Media's management believes these non-GAAP measures, as defined
above, are useful to investors for the following reasons:

  oEvaluating performance and identifying trends in day-to-day performance
    because the items excluded have little or no significance on its
    day-to-day operations;
  oProviding assessments of controllable expenses that afford management the
    ability to make decisions which are expected to facilitate meeting current
    financial goals as well as achieving optimal financial performance; and
  oIndicators for management to determine if adjustments to current spending
    decisions are needed.

Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues and Levered Free
Cash Flow provide GateHouse Media with measures of financial performance,
independent of items that are beyond the control of management in the
short-term, such as depreciation and amortization, taxation and interest
expense associated with its capital structure. These metrics measure
GateHouse Media's financial performance based on operational factors that
management can impact in the short-term, namely the cost structure or expenses
of the organization. Adjusted EBITDA, As Adjusted EBITDA, As Adjusted
Revenues and Levered Free Cash Flow are some of the metrics used by senior
management and the Board of Directors to review the financial performance of
the business on a monthly basis. In addition, GateHouse Media's management
utilizes these metrics to evaluate the Company's performance, along with other
criteria, to determine the funds available for paying the quarterly dividend.

Forward-Looking Statements

Certain items in this press release may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995,
and are subject to various risks and uncertainties, including without
limitation, statements relating to progress made by the Company in its
integration efforts, growth in revenues and cash flow, on-line revenues,
expense reduction efforts and potential acquisition and sale opportunities.
Forward-looking statements are generally identifiable by use of
forward-looking terminology such as "may," "will," "should," "potential,"
"intend," "expect," "endeavor," "seek," "anticipate," "estimate,"
"overestimate," "underestimate," "believe," "could," "would," "project,"
"predict," "continue" or other similar words or expressions. Forward looking
statements are based on certain assumptions or estimates, discuss future
expectations, describe future plans and strategies, contain projections of
results of operations or of financial condition or state other forward-looking
information. The Company's ability to predict results or the actual effect of
future plans or strategies is inherently uncertain. Although the Company
believes that the expectations reflected in such forward looking statements
are based on reasonable assumptions, actual results and performance could
differ materially from those set forth in the forward-looking statements.
Factors which could have a material adverse effect on the Company's operations
and future prospects or which could cause events or circumstances to differ
from the forward-looking statements include, but are not limited to, the
condition of the economy and the credit markets generally, the Company's
ability to maintain adequate liquidity and financing sources and an
appropriate level of debt, the Company's ability to maintain debt covenants,
the Company's ability to successfully grow digital revenues and audience and
consumer revenues, the Company's ability to successfully stabilize print
revenues, the ability of the Company to successfully identify and develop new
business ventures, the Company's ability to close on a timely basis upon
announced or contemplated transactions, unexpected liabilities arising from
any transaction or that the Company will not receive the expected benefits
from the transaction, the Company's ability to generate sufficient cash flow
to cover required interest and long-term obligations, the effect of the
Company's indebtedness and long-term obligations on its liquidity, the
Company's ability to integrate acquired assets and businesses, any increases
in the price or reduction in the availability of newsprint, seasonal and other
fluctuations affecting the Company's revenues and operating results,any
declines in circulation, the Company's ability to obtain additional capital on
terms acceptable to it,the Company's ability to compete effectively in the
local media industry, the Company's success or failure in pursuing its digital
business and related initiatives and strategic realignments and undertakings,
increases in health costs, the Company's vulnerability to economic downturns,
regulatory changes or acts of nature in certain geographic areas, increases in
competition for skilled personnel, a portion of the Company's workforce being
unionized, departure of key officers, increases in market interest rates, the
cost and difficulty of complying with increasing and evolving regulation, and
other risks detailed from time to time in the Company's SEC reports, including
but not limited to its most recent Annual Report on Form 10-K filed with the
SEC under Commission File Number 001-33091. When considering forward- looking
statements, readers should keep in mind the risk factors and other cautionary
statements in such SEC filings. Readers are also cautioned not to place undue
reliance on any of these forward-looking statements, which reflect
management's views as of the date of this press release. The factors
discussed above and the other factors noted in the Company's SEC filings could
cause actual results to differ significantly from those contained in any
forward-looking statement. Although the Company believes that the
expectations reflected in the forward-looking statements are reasonable, it
cannot guarantee future results, levels of activity, performance or
achievements and expressly disclaims any obligation to release publicly any
updates or revisions to any forward-looking statements to reflect any change
in expectations with regard thereto or change in events, conditions or
circumstances on which any statement is based.



GATEHOUSE MEDIA, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
and Comprehensive Income (Loss)
(In thousands, except share and per share data)
                            Three        Three        Nine months  Nine months
                            months       months       ended        ended
                            ended        ended
                            September    September    September    September
                            30,          25,          30,          25,
                            2012         2011         2012         2011
Revenues:
 Advertising                $       $       $        $    
                            80,262      85,901      246,365     258,808
 Circulation                33,837       32,750       100,076      97,390
 Commercial printing and    6,698        6,373        18,955       18,761
 other
   Total revenues           120,797      125,024      365,396      374,959
Operating costs and
expenses:
 Operating costs            67,098       69,045       204,968      211,314
 Selling, general, and      35,223       35,421       107,812      110,977
 administrative
 Depreciation and           9,836        10,285       30,116       31,694
 amortization
 Integration and            1,597        1,274        3,467        3,317
 reorganization costs
 Impairment of long-lived   -            37           -            1,733
 assets
 Loss on sale of assets     379          157          534          556
   Operating income         6,664        8,805        18,499       15,368
Interest expense            14,500       14,441       43,497       42,690
Amortization of deferred    314          340          994          1,020
financing costs
(Gain) loss on derivative   5            (694)        (1,639)      (274)
instruments
Other expense               7            94           4            94
   Loss from continuing
   operations
       before income taxes  (8,162)      (5,376)      (24,357)     (28,162)
Income tax expense          (250)        22           (207)        90
(benefit)
   Loss from continuing     (7,912)      (5,398)      (24,150)     (28,252)
   operations
Income (loss) from
discontinued operations,
net
 of income taxes            (1,506)      236          (1,504)      (169)
   Net loss                 (9,418)      (5,162)      (25,654)     (28,421)
   Net loss attributable
   to noncontrolling        105          185          410          600
   interest
       Net loss             $       $       $        $    
       attributable to      (9,313)     (4,977)     (25,244)    (27,821)
       GateHouse Media
Loss per share:
 Basic and diluted:
 Loss from continuing
 operations
   attributable to          $       $       $       $     
   GateHouse Media           (0.13)     (0.09)     (0.41)     (0.48)
 Loss from discontinued
 operations
   attributable to
   GateHouse Media, net
   of
   income taxes             (0.03)       -            (0.03)       -
 Net loss attributable to   $       $       $       $     
 GateHouse Media             (0.16)     (0.09)     (0.44)     (0.48)
Basic weighted average      58,051,607   57,976,184   58,038,673   57,935,943
shares outstanding
Diluted weighted average    58,051,607   57,976,184   58,038,673   57,935,943
shares outstanding
Comprehensive income        $       $       $        $    
(loss)                      (6,036)      1,416     (23,545)    (19,590)
 Comprehensive loss
 attributable to
 noncontrolling
   interest                (105)        (185)        (410)        (600)
 Comprehensive income       $       $       $        $    
 (loss) attributable to     (5,931)      1,601     (23,135)    (18,990)
 GateHouse Media





GATEHOUSE MEDIA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
                                            September 30,      January 1, 2012
                                            2012
                                            (unaudited)
Assets
Current assets:
 Cash and cash equivalents                  $            $      
                                            36,820             19,212
 Restricted cash                            6,167              6,167
 Accounts receivable, net of allowance for
 doubtful accounts of $2,789
    and $2,976 at September 30, 2012 and    51,023             59,236
    January 1, 2012, respectively
 Inventory                                  6,104              6,017
 Prepaid expenses                           5,798              15,483
 Other current assets                       8,280              7,347
 Current assets held for sale               1,433              -
    Total current assets                    115,625            113,462
 Property, plant, and equipment, net of
 accumulated depreciation of $124,625
    and $116,780 at September 30, 2012 and  119,785            130,937
    January 1, 2012, respectively
 Goodwill                                   13,742             13,958
 Intangible assets, net of accumulated
 amortization of $190,981 and $179,327
    at September 30, 2012 and January 1,    224,873            246,661
    2012, respectively
 Deferred financing costs, net              1,980              2,974
 Other assets                               2,118              1,876
 Long-term assets held for sale             2,315              934
    Total assets                            $             $     
                                            480,438            510,802
Liabilities and Stockholders' Deficit
Current liabilities:
 Current portion of long-term liabilities   $          $       
                                            889               1,039
 Current portion of long-term debt          -                  4,600
 Accounts payable                           9,933              8,216
 Accrued expenses                           29,531             27,625
 Accrued interest                           2,479              2,876
 Deferred revenue                           25,865             27,171
 Current liabilities held for sale          597                -
    Total current liabilities               69,294             71,527
Long-term liabilities:
 Long-term debt                             1,176,638          1,176,638
 Long-term liabilities, less current        2,422              2,935
 portion
 Derivative instruments                     48,317             51,576
 Pension and other postretirement benefit   12,873             13,758
 obligations
    Total liabilities                       1,309,544          1,316,434
Stockholders' deficit:
 Common stock, $0.01 par value,
 150,000,000 shares authorized at
    September 30, 2012 and January 1,
    2012; 58,313,868 issued, and
    58,077,031 outstanding at September     568                568
    30, 2012 and January 1, 2012
 Additional paid-in capital                 831,320            831,249
 Accumulated other comprehensive loss       (52,250)           (54,359)
 Accumulated deficit                        (1,606,358)        (1,581,114)
 Treasury stock, at cost, 236,837 shares
 at September 30, 2012 and
    January 1, 2012                         (310)              (310)
    Total GateHouse Media              (827,030)          (803,966)
    stockholders' deficit
    Noncontrolling Interest            (2,076)            (1,666)
    Total stockholders' deficit        (829,106)          (805,632)
    Total liabilities and         480,438            510,802
    stockholders' deficit





GATEHOUSE MEDIA, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
                                          Nine months ended  Nine months ended
                                          September 30,      September 25,
                                          2012               2011
Cash flows from operating activities:
 Net loss                                 $             $     
                                          (25,654)           (28,421)
 Adjustments to reconcile net loss to
 net cash
    provided by operating activities:
      Depreciation and amortization       30,710             32,315
      Amortization of deferred financing  994                1,020
      costs
      Gain on derivative instrument       (1,639)            (274)
      Non-cash compensation expense       71                 422
      Loss on sale of assets              566                905
      Pension and other postretirement    (432)              (680)
      benefit obligations
      Impairment of long-lived assets     2,344              2,051
      Changes in assets and liabilities:
            Accounts receivable, net      6,889              6,801
            Inventory                     (87)               1,133
            Prepaid expenses              9,622              6,156
            Other assets                  (1,181)            (557)
            Accounts payable              1,859              3,272
            Accrued expenses              2,019              2,457
            Accrued interest              (397)              1,328
            Deferred revenue              (949)              (659)
            Other long-term liabilities   (513)              (577)
            Net cash provided by          24,222             26,692
            operating activities
Cash flows from investing activities:
 Purchases of property, plant, and        (2,854)            (2,431)
 equipment
 Proceeds from sale of assets and         840                2,389
 insurance
            Net cash used in investing    (2,014)            (42)
            activities
Cash flows from financing activities:
 Repayments under current portion of      (4,600)            (11,249)
 long-term debt
            Net cash used in financing    (4,600)            (11,249)
            activities
            Net increase in cash and      17,608             15,401
            cash equivalents
Cash and cash equivalents at beginning    19,212             8,753
of period
Cash and cash equivalents at end of       $            $      
period                                    36,820             24,154



GATEHOUSE MEDIA, INC. AND SUBSIDIARIES
As Adjusted EBITDA
(In thousands)
                            Three        Three        Nine months  Nine months
                            months       months       ended        ended
                            ended        ended
                            September    September    September    September
                            30,          25,          30,          25,
                            2012         2011         2012         2011
Loss from continuing        $       $       $        $    
operations                  (7,912)     (5,398)     (24,150)    (28,252)
Income tax expense          (250)        22           (207)        90
(benefit)
(Gain) loss on derivative
instruments ^(1)       5            (694)        (1,639)      (274)
Amortization of deferred
financing costs        314          340          994          1,020
Interest expense            14,500       14,441       43,497       42,690
Impairment of long-lived    -            37           -            1,733
assets
Depreciation and            9,836        10,285       30,116       31,694
amortization
Adjusted EBITDA
from
continuing        16,493       19,033       48,611       48,701
operations
Non-cash compensation and
other expense          1,417        1,215        4,125        4,018
Non-cash portion of
postretirement
benefits
expense                (188)        (107)        (432)        (229)
Integration and
reorganization
costs                  1,597        1,274        3,467        3,317
Loss on sale of assets      379          157          534          556
As adjusted EBITDA from     612          467          1,472        1,184
discontinued operations
As Adjusted EBITDA     20,310       22,039       57,777       57,547
Net capital expenditures^  (1,117)      (757)        (2,853)      (2,366)
Cash taxes                  -            -            -            -
Interest paid               (14,772)     (14,847)     (43,778)     (41,384)
Levered Free Cash      $       $       $       $     
Flow                         4,421      6,435     11,146      13,797

    Non-cash loss on derivative instruments is related to interest rate swap
(1) agreements which are financing related and are excluded from Adjusted
    EBITDA.





GATEHOUSE MEDIA, INC. AND SUBSIDIARIES
As Adjusted Revenues
(In thousands)
                       Three months     Three months  Nine months  Nine months
                       ended            ended         ended        ended
                       September 30,    September     September    September
                       2012             25,           30,          25,
                                        2011          2012         2011
Total revenues from    $            $         $        $    
continuing             120,797         125,024      365,396     374,959
 operations
Revenues from
discontinued
 operations          2,145            2,119         6,326        6,396
Revenues from
non-wholly owned
 subsidiary          (818)            (729)         (2,235)      (1,741)
Same reporting period  -                -             (2,256)      -
basis adjustment
 As Adjusted         $            $         $        $    
Revenues               122,124         126,414      367,231     379,614





SOURCE GateHouse Media, Inc.

Website: www.gatehousemedia.com
Contact: Melinda A. Janik, Chief Financial Officer, +1-585-598-0031; or Mark
Maring, Investor Relations, +1-585-598-6874
 
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