By: E&P Staff
Champion industries Inc., publisher of The Herald-Dispatch in its headquarters city of Huntington, W.Va., and owner of commercial printing, business forms manufacturing and office products and furniture supply businesses in various regional markets, reported revenues of the second quarter of $33.7 million, down from 36.1 million in the same quarter in 2009.
The decline contributed to a 9.5% decrease for the six months ended April 30, to $66.1 million from $73 million in 2009.
In second-quarter sales, the newspaper was down $191,000, or 4.9%, printing fell $1.5 million, or 6.3%, and office products and furniture were off $753,000, or 8.3%. Year to date, Champion said newspaper sales were down 3.9%, printing was down 10.5%, and office products and office furniture were down 9.4%.
“Even with the revenue constraints we were able to record an improvement in operating income for the second quarter of 2010 over the prior year,” President and Chief Operating Officer Toney K. Adkins said in a statement. “Our profit improvement plan should continue to yield an improved cost structure in subsequent quarters of 2010.”
Second-quarter earnings came in at $333,000, or $0.03 per share, compared with earnings of $295,000, also $0.03 per share, for the same period in 2009 — results that reflected higher operating income partially offset by higher interest expense for the quarter, according to the company.
Net income for the six months ended April 30 was $121,000, or $0.01 in basic and diluted earnings per share, compared with a loss of $339,000, or $0.03 in basic and diluted earnings per share, for the same period in 2009.
“We continued our operating cost realignment strategy and were able to reduce additional costs during the second quarter and into the first few weeks of the third quarter of 2010,” Chairman and CEO Marshall T. Reynolds said in a statement.
Reynolds said Champion’s second quarter” was negatively impacted by costs related to the successful defense of a legal action, and would have been even stronger without this event.” He added that the company addressed its credit situation through a Second Amendment and Waiver to Credit Agreement that provided more flexibility in managing the business in the current economic situation. While subject to new covenants, it also obtained “extensive covenant relief” that includes “higher leverage ratios, lower fixed charge coverage ratios, lower EBITDA thresholds, EBITDA definition modifications, a reinstitution of LIBOR borrowings and a reduction in minimum revolving loan availability thresholds.”
At the end of the second quarter, Champion had approximately $61.6 million of interest-bearing debt – reduced by approximately $22.8 million since Oct. 1, 2007 through use of earnings, cash flow and working capital management.
The 2009 results reflect an earnings restatement related to approximately $300,000 per quarter of non-cash-related adjustments. These were reflected as deferred tax expense associated with deferred tax liability attributes related to goodwill, trade name and masthead of the Herald-Dispatch. Because it was recorded in the fourth quarter of 2009, the interim periods of that year were restated in accordance with the adjustment. Champion further noted that in the three months ended January 31, 2010, it recorded as a component of other income a hedging arrangement of approximately $300,000 million or $200,000 million net of tax.
Champion acquired the Herald-Dispatch from Gatehouse Media almost three year ago, less than six months after Gatehouse acquired the newspaper with two others from Gannett.