Lee Enterprises Earnings Rise 11.1% as Advertising Revenue Climbs 7.5%
DAVENPORT, Iowa, Apr 18, 2005 (BUSINESS WIRE) -- Newspaper publisher Lee Enterprises, Incorporated (NYSE:LEE), reported today that diluted earnings per common share from continuing operations were 40 cents for its second fiscal quarter ended March 31, 2005. The results represent an increase of 11.1 percent over earnings of 36 cents a year ago.
"Lee posted another standout quarter, and we're especially gratified to see such continued good revenue growth and margin improvement on top of our strong results a year ago," said Mary Junck, chairman and chief executive officer. "Again, we credit our focus on revenue and the other basics of our business, including readership and circulation, strong local news, online growth and careful cost control."
Advertising revenue for the quarter increased 7.5 percent from a year ago to $125.1 million, with growth of 6.2 percent in retail, 6.3 percent in classified, 24.0 percent in national, 8.2 percent in niche and 28.4 percent in online advertising. Circulation revenue declined 2.2 percent. Total operating revenue increased 5.2 percent to $168.7 million. On a same property basis, which excludes the impact of acquisitions and divestitures made in the current or prior year, total advertising revenue for the quarter increased 5.1 percent from a year ago and total operating revenue increased 3.7 percent.
Operating expenses, excluding depreciation and amortization, increased 4.4 percent to $126.9 million, with compensation up 2.9 percent, newsprint and ink up 10.5 percent and other expenses up 4.8 percent. All categories of expenses were affected by acquisitions made in the current or prior year. Same property operating expenses, excluding depreciation and amortization, increased 2.9 percent in the quarter, with compensation up 2.0 percent, newsprint and ink up 9.3 percent and other operating expenses up 1.8 percent.
Operating cash flow(1) increased 7.7 percent to $41.8 million. Operating cash flow margin(1) was 24.8 percent, compared with 24.2 percent a year ago. Operating income, which includes equity in net income of associated companies and depreciation and amortization, rose 10.9 percent to $31.5 million. Income from continuing operations increased 11.0 percent to $18.1 million. Net income increased 14.2 percent to $18.1 million.
YEAR TO DATE
For the six months ended March 31, 2005, advertising revenue increased 8.0 percent to $264.9 million, and total operating revenue increased 5.8 percent to $352.8 million. Operating expenses, excluding depreciation and amortization, rose 5.3 percent to $256.6 million, led by an increase of 8.9 percent for newsprint and ink. Operating cash flow increased 7.3 percent to $96.2 million.
Operating cash flow margin was 27.3 percent, compared with 26.9 percent a year ago. Operating income rose 9.5 percent to $77.0 million. Income from continuing operations increased 10.8 percent to $45.1 million. Net income increased 11.9 percent to $45.1 million.
On a same property basis, total advertising revenue for the six months ended March 31, 2005, increased 5.5 percent from a year ago and total operating revenue increased 4.1 percent.
Tables follow. Expanded tables with same property comparisons are available at www.lee.net/financial.
Lee Enterprises operates 44 daily newspapers in 19 states, along with associated online services, and 200 weekly newspapers, shoppers and specialty publications. Lee stock is traded on the New York Stock Exchange under the symbol LEE. More information about Lee, including revenue statistics for March, is available at www.lee.net.
On Jan. 30, 2005, Lee and Pulitzer Inc. (NYSE:PTZ) announced that they have entered into a definitive agreement for Lee to acquire all of Pulitzer's capital stock for a cash purchase price of $64 per share, with enterprise value totaling $1.46 billion based upon a value of $64 per share. The boards of directors of both companies have unanimously approved the transaction. The transaction is subject to customary closing conditions and approval by Pulitzer shareholders. The transaction is expected to close by the end of the second calendar quarter of 2005. Pulitzer's 14 daily newspapers include the St. Louis Post-Dispatch.
LEE ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
March 31 March 31
----------------------------------------------------------------------
(Thousands, Except
EPS Data) 2005 2004 % 2005 2004 %
----------------------------------------------------------------------
Operating revenue:
Advertising
revenue:
Retail............$68,519 $64,545 6.2% $151,857 $143,872 5.6%
National.......... 5,708 4,603 24.0 12,257 9,293 31.9
Classified:
Daily newspapers:
Employment...... 12,360 10,694 15.6 23,165 19,874 16.6
Automotive...... 9,238 9,613 (3.9) 19,106 19,661 (2.8)
Real estate..... 8,750 8,033 8.9 17,540 16,031 9.4
All other....... 5,386 5,341 0.8 11,492 11,060 3.9
Other
publications.... 8,415 7,858 7.1 16,963 15,437 9.9
----------------------------------------------------------------------
Total classified.. 44,149 41,539 6.3 88,266 82,063 7.6
Niche publications 3,268 3,019 8.2 5,934 5,113 16.1
Online............ 3,453 2,690 28.4 6,576 4,985 31.9
----------------------------------------------------------------------
Total advertising
revenue...........125,097 116,396 7.5 264,890 245,326 8.0
----------------------------------------------------------------------
Circulation........ 31,806 32,529 (2.2) 64,258 65,509 (1.9)
Commercial printing 5,127 4,864 5.4 10,507 9,727 8.0
Online services &
other............. 6,665 6,555 1.7 13,124 12,766 2.8
----------------------------------------------------------------------
Total operating
revenue...........168,695 160,344 5.2 352,779 333,328 5.8
----------------------------------------------------------------------
Operating expenses:
Compensation...... 70,954 68,974 2.9 142,683 137,358 3.9
Newsprint and ink. 16,066 14,534 10.5 32,893 30,214 8.9
Other operating
expenses......... 39,906 38,064 4.8 81,025 76,082 6.5
----------------------------------------------------------------------
Operating expenses,
excluding
depreciation and
amortization......126,926 121,572 4.4 256,601 243,654 5.3
Operating cash
flow(1)........... 41,769 38,772 7.7 96,178 89,674 7.3
Depreciation....... 5,165 5,062 2.0 10,110 9,622 5.1
Amortization....... 6,409 6,909 (7.2) 12,970 13,665 (5.1)
----------------------------------------------------------------------
Operating income,
before equity in
net income of
associated
companies......... 30,195 26,801 12.7 73,098 66,387 10.1
Equity in net
income of
associated
companies......... 1,287 1,589 (19.0) 3,880 3,881 (0.0)
Operating income... 31,482 28,390 10.9 76,978 70,268 9.5
----------------------------------------------------------------------
Non-operating
income:
Financial income.. 189 267 (29.2) 467 565 (17.3)
Financial expense. (2,747) (3,398) (19.2) (5,586) (6,934) (19.4)
Other, net........ (65) (266) NM (65) (294) NM
----------------------------------------------------------------------
(2,623) (3,397) (22.8) (5,184) (6,663) (22.2)
----------------------------------------------------------------------
Income from
continuing
operations before
income taxes...... 28,859 24,993 15.5 71,794 63,605 12.9
Income tax expense. 10,795 8,721 23.8 26,719 22,936 16.5
----------------------------------------------------------------------
Income from
continuing
operations........ 18,064 16,272 11.0 45,075 40,669 10.8
Discontinued
operations........ - (458) NM - (376) NM
----------------------------------------------------------------------
Net income.........$18,064 $15,814 14.2 % $45,075 $40,293 11.9 %
======================================================================
Earnings per common
share:
Basic:
Continuing
operations...... $0.40 $0.36 11.1% $1.00 $0.91 9.9%
Discontinued
operations...... - (0.01) - - (0.01) -
----------------------------------------------------------------------
Net income......... $0.40 $0.35 14.3% $1.00 $0.90 11.1%
======================================================================
Diluted:
Continuing
operations...... $0.40 $0.36 11.1% $1.00 $0.90 11.1%
Discontinued
operations...... - (0.01) - - (0.01) -
----------------------------------------------------------------------
Net income......... $0.40 $0.35 14.3% $1.00 $0.90 11.1%
======================================================================
Average common
shares:
Basic............. 45,086 44,742 45,057 44,658
Diluted........... 45,315 45,050 45,279 44,945
======================================================================
SELECTED BALANCE SHEET INFORMATION
March 31
----------------------------------------------------------------------
(Thousands) 2005 2004
----------------------------------------------------------------------
Cash and temporary cash investments....... $1,168 $14,289
Total assets.............................. 1,384,783 1,408,520
Debt, including current maturities........ 165,000 263,600
Stockholders' equity...................... 910,325 837,015
======================================================================
NOTES:
(1) Operating cash flow, which is defined as operating income before
depreciation, amortization and equity in net income of associated
companies, and operating cash flow margin (operating cash flow
divided by operating revenue) represent non-GAAP financial
measures. A reconciliation of operating cash flow to operating
income, the most directly comparable measure under accounting
principles generally accepted in the United States (GAAP), is
reflected in the tables accompanying this release. The Company
believes that operating cash flow and the related margin ratio are
useful measures of evaluating its financial performance because of
their focus on the Company's results from operations before
depreciation and amortization. The Company also believes that
these measures are several of the alternative financial measures
of performance used by investors, rating agencies and financial
analysts to estimate the value of a company and evaluate its
ability to meet debt service requirements.
(2) Certain amounts as previously reported have been reclassified to
conform with the current period presentation. The prior period has
been restated for comparative purposes, and the reclassifications
have no impact on earnings.
(3) Same property comparisons exclude acquisitions and divestitures
made in the current or prior year. Same property revenue also
excludes revenue of Madison Newspapers, Inc., (MNI). Lee owns 50%
of the capital stock of MNI, which for financial reporting
purposes is reported using the equity method of accounting. Same
property comparisons also exclude corporate office costs.
(4) The Company disclaims responsibility for updating information
beyond the release date.
The Private Securities Litigation Reform Act of 1995 provides a "Safe Harbor" for forward-looking statements. This release contains information that may be deemed forward-looking and that is based largely on the Company's current expectations and is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those anticipated. Among such risks, trends and other uncertainties are changes in advertising demand, newsprint prices, interest rates, labor costs, legislative and regulatory rulings and other results of operations or financial conditions, difficulties in integration of acquired businesses or maintaining employee and customer relationships and increased capital and other costs. The words "may," "will," "would," "could," "believes," "expects," "anticipates," "intends," "plans," "projects," "considers" and similar expressions generally identify forward-looking statements. Readers are cautioned not to place undue reliance on such forward-looking statements, which are made as of the date of this release. The Company does not publicly undertake to update or revise its forward-looking statements.
SOURCE: Lee Enterprises, Incorporated
Lee Enterprises, Incorporated, Davenport Dan Hayes, 563-383-2100 dan.hayes@lee.net