Star Tribune posts $18.3 million net loss in bankruptcy

I wasn’t sure if I’d get another month of Star Tribune operating reports, but the final final one is in and I can now give you complete Chapter 11 financial data.

For September (technically Aug. 31 to Sept. 27, the day before the Strib emerged from bankruptcy), the company posted a hefty $2 million operating profit, only the third in nine months and by far the biggest.

The explanation? Remarkably low compensation expenses, which fell from roughly $8 million a month to $4.7 million. The bankruptcy filing contains no explanation. However, it’s likely a one-time event, since fourth-quarter projections filed earlier with the court bounce back to that $8-ish million number.

Meanwhile, heftier-than-normal reorganization costs — $4.8 million — plus a $1.1 million tax benefit gave the Strib a $1.6 million net loss for the period.

For the entire bankruptcy period (Jan. 15-Sept. 27), the Strib grossed $134 million and spent $127 million. That put EBITDA (Earnings before interest, taxes, depreciation and amortization) at $7 million. EBITDA measures cash flow an operating business produces.

Toss in $22.3 million in non-cash depreciation charges, and Strib’s operating loss totaled $15.3 million. Reorganization expenses and income-tax credits brought the net loss to $18.3 million.

Thanks to the Strib’s reported results and its fourth-quarter projections, we’re able to gin up nearly complete 2009 operating statement. (Only the first two weeks of January are missing; you could add about $4 million on the revenue and expense side to get a full-year estimate.)

Revenues: $184.3 million
Operating expenses excluding depreciation: $173.6 million
EBITDA: $16.5 million (includes one-time, fourth-quarter pension add-back)
Depreciation and amortization: $25.6 million
Operating loss: $15.2 million
Net loss: $19.6 million

All told, the paper’s bankruptcy lawyers and financial consultants have requested about $13 million.

Between 2010 and 2012, the Strib projects annual operating income in the $6 million to $9 million range, EBITDA between $20 million and $26 million, and net losses of $1 million to $2 million. As noted previously, some experts find the projections too optimistic, but all the numbers are educated guesses at this point. 

Comments (3)

  1. Submitted by karl anderson on 10/21/2009 - 08:46 am.

    can someone – preferably in english – explain what an EBITDA is?

    And while you are at it, what are derivatives?

    Kudos to FRONTLINE last night. Excellent explanation on the financial meltdown. Good work!

  2. Submitted by David Brauer on 10/21/2009 - 09:38 am.

    karl –

    the definition is in the story: EBITDA (Earnings before interest, taxes, depreciation and amortization.)

    To use a bit *more* English, Earnings are revenues minus cash operating expenses … in the Strib’s case, primarily compensation and newsprint, with about $4 million monthly catchall category.

    Depreciation – a write-down on the value of things like printing presses, equipment, etc. Amortization is similar.

    Because depreciation is a “paper” expense – you don’t have to shell out cash – finance guys wanting to measure a business’s ability to generate cash like EBITDA, which doesn’t include non-cash charges.

    Operating losses include interest, taxes, depreciation and amortization. Net losses include other costs; for example, in the Strib’s case, reorganization expenses not tied to the regular running of the business.

    I’ll leave derivatives for another day.

  3. Submitted by William Souder on 10/21/2009 - 10:44 am.

    Karl is right on about last night’s Frontline…a gripping classic. I think you can stream it or get it as a podcast. If Channel Two does a re-broadcast, David, you should preview it.

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