Lee Enterprises Reports Advertising Growth of 6.6% and Earnings Growth of 9.1% in Second Quarter
DAVENPORT, Iowa--(BUSINESS WIRE)--April 16, 2004--Lee Enterprises, Incorporated (NYSE:LEE), reported today that diluted earnings per common share from continuing operations were 36 cents for its second quarter ended March 31, 2004. The results represent an increase of 9.1 percent over earnings of 33 cents a year ago.
Advertising revenue increased 6.6 percent to $116.5 million, and total operating revenue increased 5.3 percent to $160.3 million. Operating expenses, excluding depreciation and amortization, rose 5.5 percent to $121.6 million, led by an increase of 10.7 percent for newsprint and ink. Operating cash flow(1) increased 4.7 percent to $38.8 million. Operating cash flow margin(1) was 24.2 percent, compared with 24.3 percent a year ago. Operating income, which includes equity in net income of associated companies and depreciation and amortization, rose 4.5 percent to $28.4 million. Income from continuing operations increased 11.4 percent to $16.3 million. Net income increased 8.1 percent to $15.8 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 ended March 31, 2004, increased 5.9 percent from a year ago and total operating revenue increased 4.6 percent.
"Lee delivered another excellent quarter," said Mary Junck, chairman and chief executive officer. "Advertising and total revenue increased sharply against the strongest percentage growth quarter of last year, as we have continued to intensify our sales programs. Meanwhile, we've kept our focus, too, on circulation, strong local news, online growth and cost controls."
As previously announced, results for the quarter include a pretax charge of $550,000 to accrue for the prospect that Lee, among many others, will be required to refund critical vendor payments received from Kmart Corporation during its bankruptcy proceedings in 2002. The charge reduced earnings for the quarter by less than one cent per common share.
YEAR TO DATE
For the six months ended March 31, 2004, advertising revenue increased 5.4 percent to $245.6 million, and total operating revenue increased 4.3 percent to $333.3 million. Operating expenses, excluding depreciation and amortization, rose 4.2 percent to $243.7 million, led by an increase of 10.5 percent for newsprint and ink. Operating cash flow(1) increased 4.5 percent to $89.7 million. Operating cash flow margin(1) was 26.9 percent, compared with 26.8 percent a year ago. Operating income, rose 4.8 percent to $70.3 million. Income from continuing operations increased 10.1 percent to $40.7 million. Net income increased 8.7 percent to $40.3 million.
On a same property basis, total advertising revenue for the six months ended March 31, 2004, increased 5.0 percent from a year ago and total operating revenue increased 4.0 percent.
Tables follow.
Lee Enterprises is based in Davenport, Iowa, and is the premier publisher of daily newspapers in midsize markets. Lee owns 38 daily newspapers and a joint interest in six others, along with associated online services. Lee also publishes nearly 200 weekly newspapers, shoppers and classified and specialty publications. Lee stock is traded on the New York Stock Exchange under the symbol LEE. More information about Lee Enterprises, including revenue statistics for March, is available at www.lee.net.
LEE ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
March 31 March 31
----------------------------------------------------------------------
(Thousands,
Except EPS Data) 2004 2003 % 2004 2003 %
----------------------------------------------------------------------
Operating
revenue:
Advertising
revenue:
Retail........ $ 62,571 $ 60,352 3.7% $140,108 $ 135,591 3.3%
National...... 4,595 3,754 22.4 9,281 7,809 18.9
Classified:
Daily
newspapers:
Employment.. 10,515 9,192 14.4 19,541 17,898 9.2
Automotive.. 9,445 9,620 (1.8) 19,381 19,745 (1.8)
Real estate. 8,287 7,573 9.4 16,493 14,794 11.5
All other... 6,443 6,130 5.1 13,249 12,891 2.8
Other
publications 8,919 8,336 7.0 17,401 16,652 4.5
----------------------------------------------------------------------
Total
classified... 43,609 40,851 6.8 86,065 81,980 5.0
Niche
publications. 3,018 2,411 25.2 5,113 3,997 27.9
Online........ 2,690 1,892 42.2 4,985 3,619 37.7
----------------------------------------------------------------------
Total
advertising
revenue....... 116,483 109,260 6.6 245,552 232,996 5.4
----------------------------------------------------------------------
Circulation.... 32,529 32,391 0.4 65,509 65,254 0.4
Commercial
printing...... 4,777 4,404 8.5 9,502 9,374 1.4
Online services
& other....... 6,555 6,235 5.1 12,765 11,960 6.7
----------------------------------------------------------------------
Total operating
revenue....... 160,344 152,290 5.3 333,328 319,584 4.3
----------------------------------------------------------------------
Operating
expenses:
Compensation.. 68,974 66,239 4.1 137,358 133,492 2.9
Newsprint and
ink.......... 14,542 13,131 10.7 30,222 27,360 10.5
Other
operating
expenses..... 38,056 35,877 6.1 76,074 72,925 4.3
----------------------------------------------------------------------
Operating
expenses,
excluding
depreciation
and
amortization.. 121,572 115,247 5.5 243,654 233,777 4.2
----------------------------------------------------------------------
Operating cash
flow(1)....... 38,772 37,043 4.7 89,674 85,807 4.5
Depreciation... 5,062 4,741 6.8 9,622 9,079 6.0
Amortization... 6,909 6,697 3.2 13,665 13,452 1.6
----------------------------------------------------------------------
Operating
income, before
equity in net
income of
associated
companies..... 26,801 25,605 4.7 66,387 63,276 4.9
Equity in net
income of
associated
companies..... 1,589 1,553 2.3 3,881 3,771 2.9
----------------------------------------------------------------------
Operating
income........ 28,390 27,158 4.5 70,268 67,047 4.8
----------------------------------------------------------------------
Non-operating
income:
Financial
income....... 267 203 31.5 565 543 4.1
Financial
expense...... (3,398) (4,270) (20.4) (6,934) (8,960) (22.6)
Other, net.... (266) (43) NM (294) (387) (24.0)
----------------------------------------------------------------------
(3,397) (4,110) (17.3) (6,663) (8,804) (24.3)
----------------------------------------------------------------------
Income from
continuing
operations
before
income taxes.. 24,993 23,048 8.4 63,605 58,243 9.2
Income tax
expense....... 8,721 8,446 3.3 22,936 21,288 7.7
----------------------------------------------------------------------
Income from
continuing
operations.... 16,272 14,602 11.4 40,669 36,955 10.1
Discontinued
operations.... (458) 22 NM (376) 127 NM
----------------------------------------------------------------------
Net income..... $ 15,814 $ 14,624 8.1% $ 40,293 $ 37,082 8.7%
======================================================================
Earnings per
common share:
Basic:
Continuing
operations.. $ 0.36 $ 0.33 9.1% $ 0.91 $ 0.84 8.3%
Discontinued
operations.. (0.01) - NM (0.01) - NM
----------------------------------------------------------------------
Net income..... $ 0.35 $ 0.33 6.1% $ 0.90 $ 0.84 7.1%
======================================================================
Diluted:
Continuing
operations.. $ 0.36 $ 0.33 9.1% $ 0.90 $ 0.83 8.4%
Discontinued
operations.. (0.01) - NM (0.01) - NM
----------------------------------------------------------------------
Net income..... $ 0.35 $ 0.33 6.1% $ 0.90 $ 0.84 7.1%
======================================================================
Average common
shares:
Basic......... 44,742 44,257 44,658 44,239
Diluted....... 45,050 44,405 44,945 44,379
======================================================================
SELECTED BALANCE SHEET INFORMATION
March 31
----------------------------------------------------------------------
(Thousands) 2004 2003
----------------------------------------------------------------------
Cash and temporary cash investments.............$ 14,289 $ 17,380
Total assets.................................... 1,408,520 1,436,608
Debt, including current maturities.............. 263,600 357,200
Stockholders' equity............................ 837,015 768,179
======================================================================
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. Also, in order to
report revenue statistics on a basis more consistent with peer
newspaper companies and to recognize the growing importance of
niche and online advertising revenue, several revenue categories
have been reclassified. 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.
(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.
CONTACT: Lee Enterprises, Incorporated, Davenport
Dan Hayes, 563-383-2100
dan.hayes@lee.net
SOURCE: Lee Enterprises, Incorporated