Tax Rate 38%

Interest Rate on Debt 8%

Revenue Assumptions Historical

Units FY14 FY15 FY16
Total Revenue: $M 1146.552 1056.574 977.093
Revenue Growth Rate: % -5.62% -7.85% -7.52%

Advertising Revenue $M 731.783 637.415 568.735

Growth Rate % -10.99% -12.90% -10.77%
Audience Revenue $M 366.592 367.858 364.83
Growth Rate % 5.86% 0.35% -0.82%
Other Revenue $M 48.177 51.301 43.528
Growth Rate % 3.81% 6.48% -15.15%

Expense Assumptions Historical

Units FY14 FY15 FY16
Total Operating Expenses $M 1064.229 1301.913 954.553
OE as % Revenue % 92.82% 123.22% 97.69%

Compensation $M 411.881 395.449 383.673

Compensation%Revenue % 35.92% 37.43% 39.27%
Newsprint and printing expenses $M 114.801 95.674 78.893
Printing expenses%Revenue % 10.01% 9.06% 8.07%
Depreciation and Amortization $M 113.638 101.595 89.446
D&A as %Revenue % 9.91% 9.62% 9.15%
Other operating expenses $M 415.682 404.347 393.015
Other operating expenses%Revenue % 36.25% 38.27% 40.22%
Goodwill impairment and other writedowns $M 8.227 304.848 9.526

Balance Sheet and Cash Flow Statement Drivers Historical

Units FY14 FY15 FY16

Accounts Receivable % Revenue: % 15.82% 14.62% 12.74%

Inventories % printing expenses: % 16.98% 17.41% 17.67%

Accounts Payables % OpEx: % 4.61% 3.21% 3.86%

Accrued Pension liabilities%OpEx: % 0.80% 0.65% 0.91%
Accrued Compensation%OpEx: % 3.09% 2.26% 2.68%
Unearned Revenue%Revenue: % 5.41% 5.76% 6.62%
Income taxes payable%Total Income taxes % -80.79% 5.82% 60.70%
Other Accrued Liability%OpEx % 1.41% 1.17% 2.20%
Accrued Interest%Total Debt % 1.06% 1.04% 1.02%

Stock-Based Compensation % OpEx: % 0.33% 0.24% 0.33%

Deferred Taxes % Total Income Taxes: % 13.94% -195.70% -254.69%
Retirement Benefit % OpEx % 0.44% 0.77% 1.55%

Annual CapEx: $M 23.441 18.605 13.019

% Revenue: % 2.04% 1.76% 1.33%
Annual Growth %: % N/A -20.63% -30.02%

Other Investing activities%Revenue % 3.87% 0.09% 0.80%

Income Statement Historical

Units FY14 FY15 FY16
Revenue $M 1146.552 1056.574 977.093
Revenue growth % -5.62% -7.85% -7.52%
Operating expenses:
Compensation $M 411.881 395.449 383.673
Newsprint and printing expenses $M 114.801 95.674 78.893
Depreciation and Amortization $M 113.638 101.595 89.446
Other operating expenses $M 415.68 404.347 393.015
Goodwill impairment and other writedowns $M 8.227 304.848 9.526
Total Operating Expenses: $M 1064.229 1301.913 954.553

Operating Income(Loss) $M 82.323 (245.339) 22.540

Non Operating Income(Expense):

Interest expense $M (127.503) (85.973) (83.168)
Interest income $M 0.254 0.331 0.463
Equity Income,net $M 19.084 10.086 12.492
Gains related to equity investments $M 705.247 8.061 0.000
Gain(loss) on extinguishment of debt,net $M (72.777) 1.167 0.431
Other-net $M 0.579 (0.292) (0.016)
524.884 (66.620) (69.798)

Income(loss) before Income taxes $M 607.207 (311.959) (47.258)

Income tax expense $M 231.230 (11.797) (13.065)

Effective Tax Rate % 38.08% 3.78% 27.65%

Income from continuing operations $M 375.977 (300.162) (34.193)

Loss from discontinued operation, net of taxes $M (1.988) - -

Profit(loss) for the period $M 373.989 (300.162) (34.193)

Balance Sheet
Historical
FY14 FY15 FY16
Assets
Current Assets:
Cash & Short Term Investments $M 220.861 9.332 5.291
Accounts Receivable $M 181.345 154.52 124.466
Inventories $M 19.491 16.659 13.939
Other Current Assets $M 15.118 24.551 23.849
Total Current Assets $M 436.815 205.062 167.545

Non-current Assets:
Net Property, Plant & Equipment $M 404.238 364.219 297.506
Long-Term Investments $M 230.473 233.538 242.382
Goodwill $M 996.115 705.174 705.174
Intangible Assets $M 410.915 348.651 298.986
Other Non-current Assets $M 62.16 65.078 64.34
Deferred Income Taxes $M - 1.312 60.821
Total Non-Current Assets $M 2103.901 1717.972 1669.209

Total Assets $M 2540.716 1923.034 1836.754

Liabilities & Shareholders' Equity

Current Liabilities:
Short/current LT Debt $M - - 16.749
Accounts payable $M 49.095 41.751 36.822
Accrued pension liabilities $M 8.529 8.45 8.647
Accrued compensation $M 32.912 29.41 25.577
Income taxes payable $M 186.805 0.687 7.93
Unearned Revenue $M 62.035 60.811 64.728
Accrued interest $M 10.592 9.423 8.602
Other Accrued liabilities $M 14.957 15.195 20.994

Total Current Liabilities $M 364.925 165.727 190.049

Non-current Liabilities: $M
Long-Term Debt $M 994.812 905.425 829.415
Deferred Taxes $M 25.108 - -
Other Liabilities $M 652.486 659.119 703.377
Total Non-Current Liabilities $M 1672.406 1564.544 1532.792

Total Liabilities $M 2,037.331 1,730.271 1,722.841

Equity:
Common Stock $M 0.872 0.083 0.075
Additional Paid-in capital $M 2222.675 2220.23 2213.098
Retained Earnings $M (1303.384) (1603.546) (1637.739)
Treasury Stock $M -0.175 -2.196 -0.006
Accumulated other comprehensive loss $M -416.603 -421.808 -461.515
Total Equity $M 503.385 192.763 113.913

Liabilities & Shareholders' Equity $M 2,540.716 1,923.034 1,836.754

Balance Check: OK! OK! OK!

Cash Flow Statement

Operating Activities FY14 FY15 FY16

Net Income(Loss) $M 373.989 (300.162) (34.193)
Less loss from discontinued operations,net of tax $M (1.988) - -
Income from Continuing operations $M 375.977 (300.162) (34.193)
Adjustments for Non-Cash Charges:
Depreciation and Amortization $M 113.638 101.595 89.446
(Gains) loss on disposal of property and equipment $M (0.918) 0.347 (5.844)
Contribution to qualified defined benefit pension plan $M (25.000) - -
Retirement benefit expense $M 4.632 9.971 14.776
Stock based compensation expense $M 3.479 3.178 3.130
Deferred income taxes $M (32.233) (23.087) (33.275)
Equity income in unconsolidated companies $M (19.084) (10.086) (12.492)
Gains related to equity investments $M (705.247) (8.061) -
Distributions of income from equity investments $M 160.707 7.500 6.000
Gain on extinguishment of debt, net $M 72.777 (1.167) (0.431)
Goodwill impairment and other asset write-downs $M 8.227 304.848 9.526
Other $M (4.137) (5.501) (6.141)
Changes in certain assets and liabilities:
Trade receivables $M 19.390 6.412 26.057
Inventories $M 3.822 2.832 2.720
Other assets $M (0.111) (7.707) 2.744
Accounts payable $M (1.870) (7.344) (4.964)
Accrued compensation $M (6.291) (3.529) (3.600)
Income taxes $M 186.208 (190.581) 11.872
Accrued interest $M (4.452) (1.169) (0.821)
Other liabilities $M (6.333) (0.818) 10.873
Net cash provided by (used in) continuing operations $M 143.181 (122.529) 75.383
Net cash used in discontinued operations $M -0.037 - -
Net cash provided by (used in) operating activities $M 143.144 (122.529) 75.383

Investing Activities
Purchases of property, plant and equipment -23.441 -18.605 -13.019
Sale of Fixed Assets & Businesses 10.301 0.414 9.241
Purchase of certificates of deposit -33.483 - -
Proceeds from redemption of certificates of deposit - - 2.323
Distributions from equity investments 1.621 7.428 -
Sales of equity investments 607.942 25.553 -
Other Investing activities (44.411) (0.950) (7.817)
Net cash provided by (used in) continuing operations 518.529 13.84 -9.272
Net cash used in discontinued operations 32.953 - -
Net cash provided by (used in) investing activities 551.482 13.84 -9.272

Financing Activities
Purchase of treasury shares -7.603 -8.434 -8.08
Issuance/Reduction of Debt, Net -584.366 -92.254 -62.331
Other 3.91 -2.152 0.259
Net Financing Cash Flow -588.059 -102.84 -70.152
Increase (decrease) in cash and cash equivalents 106.567 (211.529) (4.041)
Cash and Equivalents beginning of the period 80.811 220.861 9.332
Cash and Equivalents end of the period 187.378 9.332 5.291
 Projected
FY17 FY18 FY19 FY20 FY21
937.430 906.768 888.533 871.647 864.834
-4.06% -3.27% -2.01% -1.90% -0.78%

523.236 486.610 462.279 439.165 425.990

-8% -7% -5% -5% -3%
371.371 378.029 384.806 391.705 398.728
1.79% 1.79% 1.79% 1.79% 1.79%
42.823 42.130 41.448 40.776 40.116
-1.62% -1.62% -1.62% -1.62% -1.62%

Projected
FY17 FY18 FY19 FY20 FY21
855.76 823.24 793.36 773.92 759.22
91.29% 90.79% 89.29% 88.79% 87.79%

351.904 340.394 333.549 327.210 324.652

37.54% 37.54% 37.54% 37.54% 37.54%
70.307 63.474 57.755 52.299 51.890
7.5% 7.0% 6.5% 6.0% 6.0%
74.994 72.541 62.197 61.015 51.890
8.00% 8.00% 7.00% 7.00% 6.00%
358.559 346.831 339.856 333.398 330.792
38.25% 38.25% 38.25% 38.25% 38.25%
- - - - -

Projected
FY17 FY18 FY19 FY20 FY21

12.50% 12.00% 11.50% 11.00% 10.00%

17.35% 17.35% 17.35% 17.35% 17.35%

3.89% 3.65% 3.80% 3.78% 3.74%

0.79% 0.79% 0.79% 0.79% 0.79%
2.68% 2.68% 2.68% 2.68% 2.68%
7.00% 7.75% 8.50% 9.50% 10.50%
10.00% 10.00% 10.00% 10.00% 10.00%
1.59% 1.59% 1.59% 1.59% 1.59%
1.00% 0.95% 0.90% 0.85% 0.80%

0.30% 0.30% 0.30% 0.30% 0.30%

 20.00% 20.00% 20.00% 20.00% 20.00%
0.92% 0.92% 0.92% 0.92% 0.92%

11.718 11.335 9.774 8.716 7.784

1.25% 1.25% 1.10% 1.00% 0.90%
-9.99% -3.27% -13.77% -10.82% -10.70%

1.59% 1.59% 1.59% 1.59% 1.59%

Projected
FY17 FY18 FY19 FY20 FY21
937.430 906.768 888.533 871.647 864.834
-4.06% -3.27% -2.01% -1.90% -0.78%

351.904 340.394 333.549 327.210 324.652

70.307 63.474 57.755 52.299 51.890
74.994 72.541 62.197 61.015 51.890
358.559 346.831 339.856 333.398 330.792
- - - - -
855.765 823.240 793.357 773.921 759.224

81.665 83.528 95.176 97.726 105.610

-67.693 -67.086 -67.148 -67.204 -67.241

0.349 0.349 0.349 0.349 0.349
13.887 12.155 12.845 12.962 12.654
0 0 0 0 0
0 0 0 0 0
- - - - -
-53.230 -54.354 -53.727 -53.666 -54.011

28.436 29.173 41.450 44.060 51.599

10.805 11.086 15.751 16.743 19.608

38.00% 38.00% 38.00% 38.00% 38.00%

17.630 18.088 25.699 27.317 31.991

- - - - -

17.630 18.088 25.699 27.317 31.991

Projected
FY17 FY18 FY19 FY20 FY21
 232.287 311.753 393.412 477.386 561.649
117.179 108.812 102.181 95.881 86.483
12.200 11.015 10.022 9.075 9.004
23.849 23.849 23.849 23.849 23.849
385.515 455.429 529.464 606.192 680.986

234.229 173.023 120.599 68.300 24.194

181.266 195.664 209.772 223.612 237.344
705.174 705.174 705.174 705.174 705.174
198.986 198.986 198.986 198.986 198.986
64.34 64.34 64.34 64.34 64.34
58.660 56.443 53.293 49.944 46.022
1442.656 1393.629 1352.164 1310.356 1276.060

1828.171 1849.058 1881.628 1916.548 1957.046

26.056 26.829 27.539 28.001 28.35

33.311 30.067 30.154 29.269 28.433
6.722 6.466 6.231 6.079 5.963
22.909 22.038 21.238 20.718 20.324
1.081 1.109 1.575 1.674 1.961
65.620 70.275 75.525 82.806 90.808
8.386 7.974 7.560 7.144 6.727
13.612 13.095 12.619 12.310 12.077

177.696 177.852 182.443 188.002 194.642

812.515 812.515 812.515 812.515 812.515

- - - - -
703.377 703.377 703.377 703.377 703.377
1515.892 1515.892 1515.892 1515.892 1515.892

1693.588 1693.744 1698.335 1703.894 1710.534

2.639 5.106 7.483 9.802 12.077

2213.098 2213.098 2213.098 2213.098 2213.098
(1620.109) (1602.021) (1576.323) (1549.006) (1517.014)
-8.045 -16.084 -24.123 -32.162 -40.201
 -453.001 -444.785 -436.842 -429.078 -421.449
134.582 155.314 183.293 212.654 246.511

1828.170 1849.058 1881.628 1916.548 1957.046

- OK! OK! OK! OK!

Projected
FY17 FY18 FY19 FY20 FY21
17.630 18.088 25.699 27.317 31.991
- - - - -
17.630 18.088 25.699 27.317 31.991

74.994 72.541 62.197 61.015 51.890

- - - - -
- - - - -
7.842 7.544 7.270 7.092 6.957
2.564 2.467 2.377 2.319 2.275
2.161 2.217 3.150 3.349 3.922
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -

7.287 8.367 6.631 6.300 9.398

1.739 1.186 0.992 0.947 0.071
0.000 0.000 0.000 0.000 0.000
-3.511 -3.244 0.086 -0.885 -0.836
-2.668 -0.871 -0.800 -0.520 -0.393
-6.849 0.028 0.466 0.099 0.286
-0.216 -0.412 -0.413 -0.416 -0.417
0.892 4.654 5.251 7.281 8.001
101.865 112.565 112.907 113.897 113.145
- - - - -
101.865 112.565 112.907 113.897 113.145

-11.718 -11.335 -9.774 -8.716 -7.784

100.000 - - - -
- - - - -
- - - - -
- - - - -
76.000 - - - -
-14.884 -14.398 -14.108 -13.840 -13.732
149.398 -25.732 -23.882 -22.556 -21.515
- - - - -
149.398 -25.732 -23.882 -22.556 -21.515

-8.039 -8.039 -8.039 -8.039 -8.039

-16.900 - - - -
0.672 0.672 0.672 0.672 0.672
-24.267 -7.367 -7.367 -7.367 -7.367
226.996 79.466 81.659 83.974 84.263
5.291 232.287 311.753 393.412 477.386
232.287 311.753 393.412 477.386 561.649
Discounted Cash Flow Analysis - Mcclatchy (Unlevered DCF)
($ USD in Millions Except Per Share Amounts in USD as Stated and Per Unit Amounts)

Mcclatchy - DCF Assumptions & Output:

Company Name:
Ticker:
Current Share Price:
Diluted Shares Outstanding:

Effective Tax Rate:

Discount Rate (WACC):

Conversion Units:
Last Fiscal Year:

Mcclatchy - FCF Projections:

Revenue:
Revenue Growth Rate:
Operating Income (EBIT):
Operating Margin:
Growth Rate:

(-) Taxes, Excluding Effect of Interest:

Net Operating Profit After Taxes (NOPAT):

Adjustments for Non-Cash Charges:

Depreciation and Amortization
Dep%Revenue
(Gains) loss on disposal of property and equipment
Contribution to qualified defined benefit pension plan
Retirement benefit expense
Deferred income taxes

Net Change in Working Capital:

% Revenue:

(-) Capital Expenditures:

% Revenue:

Unlevered Free Cash Flow:

Growth Rate:

Discount Period:
Discount Rate (WACC):
Cumulative Discount Factor:

PV of Unlevered FCF:

EBITDA:
Growth Rate:
 Mcclatchy Terminal Value - Multiples Method:
MNI
$ 7.70 Median EV / EBITDA of Comps:
7,622,733
Baseline Terminal EBITDA Multiple:
38.0% Baseline Terminal Value:
8.0% Implied Terminal FCF Growth Rate:

1,000 (+) PV of Terminal Value:

2016-12-25 (+) Sum of PV of Free Cash Flows:
Implied Enterprise Value:

% of Implied EV from Terminal Value:

(+) Cash & Cash-Equivalents:

(+) Equity Investments:
(+) Other Non-Core Assets, Net:
(+) Net Operating Losses:
(-) Total Debt:
(-) Preferred Stock:
(-) Noncontrolling Interests:
(-) Unfunded Pension Obligations:
(-) Capital Leases:
(-) Restructuring & Other Liabilities:
Implied Equity Value:

Diluted Shares Outstanding:

Implied Share Price from DCF:

Premium / (Discount) to Current:

Historical Proj
Units FY14 FY15 FY16 FY17

$M $ 1,146.552 $ 1,056.574 $ 977.093 $ 937.430

% (5.62%) (7.85%) (7.52%) (4.06%)
$M 82.323 (245.339) 22.540 81.665
% 7.2% (23.2%) 2.3% 8.7%
% (31.9%) (398.0%) (109.2%) 262.3%

$M (31.3) 93.2 (8.6) (31.0)

$M 51.040 (152.110) 13.975 50.632

$M 113.638 101.595 89.446 74.994

% 9.91% 9.62% 9.15% 8.00%
$M (0.918) 0.347 (5.844) -
$M (25.000) - - -
$M 4.632 9.971 14.776 7.842
$M (32.233) (23.087) (33.275) 2.161

$M 190.363 (201.904) 44.881 (3.327)

% 16.6% (19.1%) 4.6% (0.4%)

$M (23.441) (18.605) (13.019) (11.718)

% 2.0% 1.8% 1.3% 1.3%

$M 278.08 (283.79) 110.94 120.59

% N/A (202.1%) (139.1%) 8.7%

# 1
% 8.00%
# 0.926

$M $ 111.653

$M $ 196.0 $ (143.7) $ 112.0 $ 156.7

% N/A (173.4%) (177.9%) 39.9%
Multiples Method:

TDA of Comps: 9.0 x

l EBITDA Multiple: 7.3 x

$ 1,149.75
FCF Growth Rate: (3.5%)

782.5
of Free Cash Flows: 524.7
$ 1,307.159

rom Terminal Value: 59.9%

h-Equivalents: $ 8.433
$ 83.462
-Core Assets, Net: $ 62.406
ting Losses: $ -
$ (833.000)
$ -
ling Interests: $ -
Pension Obligations: $ (597.238)
$ -
ng & Other Liabilities: $ -
31.2

utstanding: 7,622,733.000

ice from DCF: $ 4.10

ount) to Current: (46.8%)

Projected
FY18 FY19 FY20 FY21

$ 906.768 $ 888.533 $ 871.647 $ 864.834

(3.27%) (2.01%) (1.90%) (0.78%)
 83.528 95.176 97.726 105.610
9.2% 10.7% 11.2% 12.2%
2.3% 13.9% 2.7% 8.1%

(31.7) (36.2) (37.1) (40.1)

51.787 59.009 60.590 65.478

72.541 62.197 61.015 51.890

8.00% 7.00% 7.00% 6.00%
- - - -
- - - -
7.544 7.270 7.092 6.957
2.217 3.150 3.349 3.922

9.709 12.214 12.806 16.110

1.1% 1.4% 1.5% 1.9%

(11.335) (9.774) (8.716) (7.784)

1.3% 1.1% 1.0% 0.9%

132.46 134.07 136.13 136.57

9.9% 1.2% 1.5% 0.3%

2 3 4 5
8.00% 8.00% 8.00% 8.00%
0.857 0.794 0.735 0.681

$ 113.566 $ 106.426 $ 100.063 $ 92.949

$ 156.1 $ 157.4 $ 158.7 $ 157.5

(0.4%) 0.8% 0.9% (0.8%)