News Release Details

FOURTH QUARTER OPERATING RESULTS⁽³⁾

Excluding the extra week of operations in 2012, operating revenue decreased 2.8%. Operating revenue for the 13 weeks ended September 29, 2013 totaled $162.5 million, a decrease of 9.5% compared with the 14 weeks ended September 30, 2012. Combined print and digital advertising and marketing services revenue, as reported, decreased 11.6% to $110.1 million, with retail advertising down 9.5%, classified down 15.8% and national down 12.5%. Combined print and digital classified employment revenue decreased 12.6%, while automotive decreased 16.7%, real estate decreased 12.0% and other classified decreased 18.8%. Digital advertising and marketing services revenue on a stand-alone basis increased 1.2% to $16.9 million. Print advertising and marketing services revenue on a stand-alone basis decreased 13.6%. Subscription revenue decreased 3.5%.  

Excluding the extra week of operations in 2012, operating expenses, excluding depreciation, amortization and unusual matters, decreased 4.0%. Operating expenses, excluding depreciation, amortization and unusual matters, for the 13 weeks ended September 29, 2013 decreased 9.8% compared to the 14 weeks ended September 30, 2012. Compensation decreased 9.3%, with the average number of full-time equivalent employees down 8.4%. Newsprint and ink expense decreased 22.3%, primarily a result of a reduction in newsprint volume of 19.4%. Other operating expenses decreased 7.6%.

Excluding the extra week of operations in 2012, operating cash flow⁽¹⁾ increased 4.1%. Operating cash flow, as reported,decreased 6.0% from a year ago to $37.5 million. Operating cash flow margin⁽¹⁾ increased to 23.1% from 22.2% a year ago. Including equity in earnings of associated companies, depreciation and amortization, as well as impairment charges and other unusual matters in both years, the company recognized an operating loss of $142.4 million in the current year quarter, compared with operating income of $24.3 million a year ago.

The table below summarizes certain key 2013 financial results on a comparable basis, excluding the extra week of operations in 2012:

Non-operating expenses, primarily interest expense and debt financing costs, decreased 26.2%, due primarily to lower interest expense from lower debt balances, refinancing of the Pulitzer Notes and the extra week in the prior year quarter. Loss attributable to Lee Enterprises, Incorporated for the quarter totaled $88.7 million, compared with a loss of $3.2 million a year ago.

IMPAIRMENT CHARGES

Results for the quarter include non-cash impairment charges to earnings. The current year charges, which total $171.1 million before income taxes, $100.6 million after tax and $1.94 per diluted common share, reduce the carrying value of mastheads, customer and newspaper subscriber lists and real property. The charges have no effect on cash flows but reduce reported earnings per common share, resulting in a loss for the quarter and fiscal year. Impairment testing was performed in accordance with generally accepted accounting principles, which, among other factors, requires consideration of differences between current carrying value and the fair value of all of the Company's assets.

									Quarter Ended
	September 29 2013								September 30 2012
(Thousands of Dollars, Except Per Share Data)	Amount				Per Share				Amount				Per Share
	13 Weeks								14 Weeks
Loss attributable to Lee Enterprises, Incorporated, as reported	(88,697	)			(1.71	)			(3,154	)			(0.06	)
Adjustments:
Impairment of intangible and other assets	171,094								1,388
Litigation settlement	-								2,802
Debt financing and reorganization costs	88								190
Amortization of debt present value adjustment	1,185								1,362
Other, net	541								1,943
	172,908								7,685
Income tax effect of adjustments, net	(71,093	)							(3,032	)
	101,815				1.96				4,653				0.09
Unusual matters related to discontinued operations	-				-				2,349				0.05
Income attributable to Lee Enterprises, Incorporated, as adjusted	13,118				0.25				3,848				0.07

FISCAL 2013 OPERATING RESULTS⁽³⁾

Excluding the extra week of operations in 2012, operating revenue decreased 2.9%. Operating revenue for the 52 weeks ended September 29, 2013, totaled $674.7 million, a decrease of 4.6% compared with the 53 weeks ended September 30, 2012. Combined print and digital advertising and marketing services revenue, as reported, decreased 7.1% to $459.8 million, with retail advertising down 5.0%, classified down 9.8% and national down 18.8%. Combined print and digital classified employment revenue decreased 9.1%, while automotive decreased 12.0%, real estate decreased 9.3% and other classified decreased 8.9%. Digital advertising and marketing services revenue on a stand-alone basis increased 1.8% to $66.4 million. Print advertising and marketing services revenue on a stand-alone basis decreased 8.5%. Subscription revenue increased 1.8%.

Excluding the extra week of operations in 2012, operating expenses, excluding depreciation, amortization and unusual matters, decreased 3.7%. Operating expenses, excluding depreciation, amortization and unusual matters, for the 52 weeks ended September 29, 2013 decreased 5.2% compared to the 53 weeks ended September 30, 2012. Compensation decreased 7.1%, with the average number of full-time equivalent employees down 8.3%. Newsprint and ink expense decreased 15.8%, a result of a reduction in newsprint volume of 13.6%. Other operating expenses decreased 0.2%.

Excluding the extra week of operations in 2012, operating cash flow increased 1.2%. Operating cash flow, as reported, decreased 1.2% from a year ago to $160.7 million. Operating cash flow margin increased to 23.8% from 23.0% a year ago. Including equity in earnings of associated companies, depreciation and amortization, as well as impairment charges and other unusual matters in both years, the company recognized an operating loss of $57.3 million in the current year, compared with operating income of $103.4 million a year ago.

The table below summarizes certain key 2013 financial results on a comparable basis, excluding the extra week of operations in 2012:

Non-operating expenses decreased 7.1% due to lower debt balances, the refinancing of the Pulitzer Notes and a $6.9 million gain on sale of an investment. The Company recognized $37.8 million of reorganization costs in the prior year. Loss from discontinued operations, net of income taxes totaled $1.2 million in the current year compared to $2.9 million a year ago. Loss attributable to Lee Enterprises, Incorporated totaled $78.3 million, compared to a loss of $16.7 million a year ago.

FISCAL 2013 ADJUSTED EARNINGS AND EPS

The following table summarizes the impact from unusual matters on income (loss) attributable to Lee Enterprises, Incorporated and earnings (loss) per diluted common share. Per share amounts may not add due to rounding.

ABOUT LEE

Lee Enterprises is a leading provider of local news and information, and a major platform for advertising, in its markets, with 46 daily newspapers and a joint interest in four others, rapidly growing digital products and nearly 300 specialty publications in 22 states. Lee's newspapers have circulation of 1.1 million daily and 1.5 million Sunday, reaching nearly four million readers in print alone. Lee's websites and mobile and tablet products attracted 23.2 million unique visitors in September 2013. Lee's markets include St. Louis, MO; Lincoln, NE; Madison, WI; Davenport, IA; Billings, MT; Bloomington, IL; and Tucson, AZ. Lee Common Stock is traded on the New York Stock Exchange under the symbol LEE. For more information about Lee, please visit lee.net.

FORWARD-LOOKING STATEMENTS -- The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This news release contains information that may be deemed forward-looking that is based largely on our 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, which in some instances are beyond our control, are our ability to generate cash flows and maintain liquidity sufficient to service our debt, comply with or obtain amendments or waivers of the financial covenants contained in our credit facilities, if necessary, and to refinance our debt as it comes due. Other risks and uncertainties include the impact and duration of continuing adverse conditions in certain aspects of the economy affecting our business, changes in advertising demand, potential changes in newsprint and other commodity prices, energy costs, interest rates, labor costs, legislative and regulatory rulings, difficulties in achieving planned expense reductions, maintaining employee and customer relationships, increased capital costs, maintaining our listing status on the NYSE, competition and other risks detailed from time to time in our publicly filed documents. Any statements that are not statements of historical fact (including statements containing the words "may", "will", "would", "could", "believe", "expect", "anticipate", "intend", "plan", "project", "consider" and similar expressions) generally should be considered 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. We do not undertake to publicly update or revise our forward-looking statements.

Contact: dan.hayes@lee.net, (563) 383-2100

	Quarter Ended								Year Ended
(Thousands of Dollars and Shares, Except Per Share Data)	Sept 29     2013	Sept 30 2012		Percent Change					Sept 29     2013	Sept 30 2012		Percent Change
	13 Weeks	14 Weeks							52 Weeks	53 Weeks
Operating revenue:
Retail	68,219		75,363		(9.5	)			289,326		304,686			(5.0	)
Classified:
Employment	8,395		9,602		(12.6	)			33,560		36,911			(9.1	)
Automotive	8,336		10,007		(16.7	)			34,375		39,054			(12.0	)
Real estate	4,920		5,590		(12.0	)			18,862		20,805			(9.3	)
All other	11,565		14,243		(18.8	)			47,198		51,837			(8.9	)
Total classified	33,216		39,442		(15.8	)			133,995		148,607			(9.8	)
National	5,683		6,492		(12.5	)			24,056		29,618			(18.8	)
Niche publications and other	2,997		3,277		(8.5	)			12,468		12,267			1.6
Total advertising and marketing services revenue	110,115		124,574		(11.6	)			459,845		495,178			(7.1	)
Subscription	43,502		45,061		(3.5	)			177,111		173,971			1.8
Commercial printing	2,945		3,341		(11.9	)			12,625		12,731			(0.8	)
Digital services and other	5,900		6,469		(8.8	)			25,159		25,041			0.5
Total operating revenue	162,462		179,445		(9.5	)			674,740		706,921			(4.6	)
Operating expenses:
Compensation	62,327		68,689		(9.3	)			254,831		274,427			(7.1	)
Newsprint and ink	10,123		13,034		(22.3	)			43,481		51,635			(15.8	)
Other operating expenses	52,090		56,364		(7.6	)			213,021		213,502			(0.2	)
Workforce adjustments	419		1,470		(71.5	)			2,680		4,640			(42.2	)
	124,959		139,557		(10.5	)			514,013		544,204			(5.5	)
Operating cash flow	37,503		39,888		(6.0	)			160,727		162,717			(1.2	)
Depreciation	5,266		5,688		(7.4	)			21,412		23,443			(8.7	)
Amortization	5,590		9,714		(42.5	)			34,225		41,696			(17.9	)
Impairment of intangible and other assets	171,094		1,388		NM				171,094		1,388			NM
Equity in earnings of associated companies	2,015		1,229		64.0				8,685		7,231			20.1
Operating income (loss)	(142,432	)	24,327		NM				(57,319	)	103,421			NM

CONSOLIDATED STATEMENTS OF OPERATIONS, continued
	Quarter Ended							Year Ended
(Thousands of Dollars and Shares, Except Per Share Data)	Sept 29     2013	Sept 30 2012		Percent Change				Sept 29     2013	Sept 30 2012		Percent Change
	13 Weeks	14 Weeks						52 Weeks	53 Weeks
Non-operating income (expense):
Financial income	81		123		(34.1	)		300		236			27.1
Interest expense	(21,056	)	(25,546	)	(17.6	)		(89,447	)	(83,078		)	7.7
Debt financing costs	(88	)	(42	)	NM			(646	)	(2,823		)	(77.1	)
Other, net	411		(2,533	)	NM			7,889		(2,533		)	NM
	(20,652	)	(27,998	)	(26.2	)		(81,904	)	(88,198		)	(7.1	)
Income (loss) before reorganization costs and income taxes	(163,084	)	(3,671	)	NM			(139,223	)	15,223			NM
Reorganization costs	-		148		NM			-		37,765			NM
Loss before income taxes	(163,084	)	(3,819	)	NM			(139,223	)	(22,542		)	NM
Income tax benefit	(74,548	)	(3,157	)	NM			(62,745	)	(9,161		)	NM
Loss from continuing operations	(88,536	)	(662	)	NM			(76,478	)	(13,381		)	NM
Discontinued operations, net of income taxes	1		(2,365	)	NM			(1,246	)	(2,918		)	(57.3	)
Net loss	(88,535	)	(3,027	)	NM			(77,724	)	(16,299		)	NM
Net income attributable to non-controlling interests	(162	)	(127	)	27.6			(593	)	(399		)	48.6
Loss attributable to Lee Enterprises, Incorporated	(88,697	)	(3,154	)	NM			(78,317	)	(16,698		)	NM
Loss from continuing operations attributable to Lee Enterprises, Incorporated	(88,698	)	(789	)	NM			(77,071	)	(13,780		)	NM
Loss per common share:
Basic:
Continuing operations	(1.71	)	(0.02	)	NM			(1.49	)	(0.28		)	NM
Discontinued operations	-		(0.05	)	NM			(0.02	)	(0.06		)	(66.7	)
	(1.71	)	(0.06	)	NM			(1.51	)	(0.34		)	NM
Diluted:
Continuing operations	(1.71	)	(0.02	)	NM			(1.49	)	(0.28		)	NM
Discontinued operations	-		(0.05	)	NM			(0.02	)	(0.06		)	(66.7	)
	(1.71	)	(0.06	)	NM			(1.51	)	(0.34		)	NM
Average common shares:
Basic	51,916		52,076					51,833		49,261
Diluted	51,916		52,076					51,833		49,261

	Quarter Ended							Year Ended
(Thousands of Dollars)	Sept 29 2013		Sept 30 2012					Sept 29 2013		Sept 30 2012
	13 Weeks		14 Weeks					52 Weeks		53 Weeks
Operating income (loss)	(142,432	)		24,327				(57,319	)		103,421
Equity in earnings of associated companies	(2,015	)		(1,229	)			(8,685	)		(7,231	)
Depreciation and amortization	10,856			15,402				55,637			65,139
Impairment of intangible and other assets	171,094			1,388				171,094			1,388
Operating cash flow	37,503			39,888				160,727			162,717
Distributions from associated companies	3,219			1,826				11,398			9,086
Stock compensation	150			275				1,251			1,067
Financial income	81			123				300			236
Adjusted EBITDA	40,953			42,112				173,676			173,106
Capital expenditures	(2,905	)		(3,231	)			(9,740	)		(7,844	)
Pension contributions	-			(3,458	)			(6,016	)		(6,807	)
Cash income tax refunds	9,485			1,268				9,126			1,140
Unlevered free cash flow	47,533			36,691				167,046			159,595
Interest expense settled in cash	(19,871	)		(23,867	)			(84,012	)		(78,288	)
Debt financing and reorganization costs paid	(264	)		(1,074	)			(962	)		(32,300	)
Free cash flow	27,398			11,750				82,072			49,007

REVENUE BY REGION

SELECTED BALANCE SHEET INFORMATION

SELECTED STATISTICAL INFORMATION

NOTES