Lee Enterprises Reports Earnings for Fiscal Q4 and Year
DAVENPORT, Iowa, Nov 11, 2003 (BUSINESS WIRE) -- Lee Enterprises, Incorporated (NYSE:LEE), reported today that diluted earnings per common share from continuing operations were 44 cents for its fourth quarter ended Sept. 30, 2003. The results represent an increase of 7.3 percent over earnings of 41 cents a year ago, which have been restated to include employee stock option expense.
Advertising revenue increased 3.1 percent to $121.6 million and total operating revenue increased 2.3 percent to $165.0 million. Operating expenses excluding depreciation and amortization, which were significantly impacted by an 18.7 percent increase in newsprint and ink, rose 4.5 percent to $122.6 million. Operating cash flow(2) decreased 3.6 percent to $42.4 million. Operating cash flow margin(2) was 25.7 percent, compared with 27.3 percent a year ago, reflecting strongly rising prices for newsprint and a sluggish revenue environment. Operating income, which includes equity in net income of associated companies and depreciation and amortization, decreased 5.6 percent to $32.6 million. Income from continuing operations increased 5.9 percent to $19.5 million. Net income increased 7.3 percent.
On a same property basis(1), which excludes the impact of acquisitions and divestitures made in the current or prior year, total advertising revenue for the quarter ended Sept. 30, 2003, increased 2.8 percent from a year ago, and total operating revenue increased 2.5 percent. Retail revenue increased 1.2 percent. Classified revenue increased 0.1 percent, with employment advertising down 4.7 percent. Advertising in niche publications increased 34.4 percent and online advertising revenue increased 34.7 percent. National advertising, a small category for Lee, increased 4.3 percent. Circulation revenue increased 0.3 percent.
At the 16 newspapers Lee acquired in 2002, advertising revenue for the quarter increased 4.7 percent and total operating revenue increased 2.7 percent.
After two years of gains, daily circulation volume, including Madison Newspapers, remained level and Sunday circulation grew 0.3 percent in the six-month Audit Bureau of Circulations reporting period ended Sept. 30, 2003. Lee's 44 daily newspapers have combined paid circulation of 1.1 million weekdays and 1.2 million on Sundays.
FISCAL YEAR
For the year ended Sept. 30, 2003, diluted earnings per common share from continuing operations totaled $1.75, compared with $1.78 in 2002. The prior year included favorable resolution of tax issues amounting to $10.1 million, or 23 cents per share. Excluding the resolution of tax issues, this year's earnings represent an increase of 12.9 percent over $1.55 a year ago.
In 2003, Lee began expensing employee stock option grants and has restated earnings for prior years. Results in 2002 were reduced 5 cents per diluted common share to $1.78 from the previously reported amount of $1.83.
For the year ended Sept. 30, 2003, total advertising revenue on a same property basis increased 3.0 percent and total operating revenue increased 2.0 percent. On a reported basis, which includes acquisitions and divestitures, total operating revenue increased 25.4 percent. Operating expenses, excluding depreciation and amortization, increased 26.8 percent, and operating cash flow increased 21.7 percent. Operating cash flow margin(2) was 26.9 percent, compared with 27.7 percent a year ago, reflecting a full year of results of acquired businesses with lower margins in the current year compared to six months in the prior year. Operating income increased 15.9 percent.
Mary Junck, chairman and chief executive officer, said: "As our 2003 results show, our newspapers have performed well in a tough economy, and our acquisitions continue to stand out as a success. Meanwhile, our strong cash flow has enabled us to reduce debt by more than $100 million in 2003. We continue to execute well on our top five priorities of driving revenue, improving readership and circulation, emphasizing strong local news, expanding our online services and carefully controlling our costs, and we believe we're well-positioned for continued growth in 2004."
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 is available at www.lee.net.
LEE ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Unaudited. (Thousands, Except Per Common Share Data)
Three Months Ended Year Ended
Sept. 30, Sept. 30,
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2003 2002 % 2003 2002 %
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Operating revenue: (3) (3)
Advertising... $121,598 $117,943 3.1 $480,988 $377,145 27.5
Circulation... 33,371 33,692 (1.0) 133,148 105,711 26.0
Other......... 10,064 9,693 3.8 42,605 40,800 4.4
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165,033 161,328 2.3 656,741 523,656 25.4
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Operating expenses:
Compensation.. 68,521 64,901 5.6 272,311 209,263 30.1
Newsprint and
ink.......... 14,883 12,539 18.7 57,773 43,727 32.1
Other......... 39,242 39,909 (1.7) 150,107 125,645 19.5
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Operating expenses
excluding
depreciation and
amortization... 122,646 117,349 4.5 480,191 378,635 26.8
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Operating cash
flow........... 42,387 43,979 (3.6) 176,550 145,021 21.7
Depreciation and
amortization... 12,085 11,677 3.5 46,616 35,050 33.0
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Operating income,
before equity in
net income of
associated
companies...... 30,302 32,302 (6.2) 129,934 109,971 18.2
Equity in net
income of
associated
companies...... 2,320 2,261 2.6 8,053 9,057 (11.1)
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Operating income 32,622 34,563 (5.6) 137,987 119,028 15.9
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Non-operating income:
Financial
income....... 204 302 (32.5) 1,120 6,007 (81.4)
Financial
expense...... (3,503) (4,778) (26.7) (16,535) (15,777) 4.8
Other, net.... (254) (709) NM (1,049) (1,008) 4.1
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(3,553) (5,185) (31.5) (16,464) (10,778) 52.8
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Income from
continuing
operations
before income
taxes.......... 29,069 29,378 (1.1) 121,523 108,250 12.3
Income tax
expense........ 9,568 10,960 (12.7) 43,462 29,366 48.0
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Income from
continuing
operations..... 19,501 18,418 5.9 78,061 78,884 (1.0)
Discontinued
operations..... -- (247) NM (20) 946 NM
----------------------------------------------------------------------
Net income...... $19,501 $18,171 7.3 $78,041 $79,830 (2.2)
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Earnings per
common share:
Basic:
Continuing
operations... $0.44 $0.42 4.8 $1.76 $1.79 (1.7)
Discontinued
operations... -- (0.01) -- 0.02
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Net income.... $0.44 $0.41 7.3 $1.76 $1.81 (2.8)
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Diluted:
Continuing
operations... $0.44 $0.41 7.3 $1.75 $1.78 (1.7)
Discontinued
operations... -- (0.01) -- 0.02
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Net income.... $0.44 $0.41 7.3 $1.75 $1.80 (2.8)
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Average outstanding
shares:
Basic......... 44,436 44,187 44,316 44,087
Diluted....... 44,718 44,357 44,513 44,351
SELECTED BALANCE SHEET INFORMATION Sept. 30,
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2003 2002
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Cash and temporary cash investments.............$ 11,064 $ 14,381
Total assets.................................... 1,421,377 1,463,830
Debt, including current maturities.............. 305,200 409,300
Stockholders' equity............................ 802,156 742,774
(1) 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) in order to
comply with SEC regulations related to disclosure of non-GAAP
financial measures. Lee owns 50% of the capital stock of MNI,
which for financial reporting purposes is reported using the
equity method of accounting.
(2) 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
included 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.
(3) Certain amounts as previously reported have been reclassified to
conform with the current period presentation. The presentation of
equity in net income of associated companies has been revised to
exclude those amounts from revenue. Fiscal 2002 amounts have been
restated to include expense relating to employee stock options.
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.
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, 563-383-2163
dan.hayes@lee.net