Lee Enterprises Reports Earnings for Second Fiscal Quarter
DAVENPORT, Iowa--(BUSINESS WIRE)--April 20, 2006--Lee Enterprises, Incorporated (NYSE:LEE), reported today that diluted earnings per common share from continuing operations were 32 cents for its second fiscal quarter ended March 31, 2006, compared with 40 cents a year ago, reflecting additional financial expense and amortization of intangible assets from the acquisition of Pulitzer Inc. in June 2005.
Early retirement and transition costs related to the acquisition of Pulitzer reduced diluted earnings per common share from continuing operations by 2 cents. Earnings in both the current and prior year reflect the impact of stock compensation expense, which Lee has been recognizing since October 2002.
Mary Junck, chairman and chief executive officer, said: "Strong growth in online, employment and niche advertising revenue helped offset slower spending by automotive, national and department store customers. As a result of continued strong cash flow, we were able to reduce debt in the quarter by $54.0 million and continue delivering on our successful acquisition of Pulitzer."
On a reported basis, which includes the addition of Pulitzer in the current year, advertising revenue for the quarter increased 68.6 percent from a year ago to $210.9 million, with growth of 57.3 percent in retail, 72.1 percent in classified and 147.7 percent in national. Online advertising revenue increased 146.1 percent, and niche advertising rose 39.7 percent. Circulation revenue increased 60.7 percent. Total operating revenue increased 63.5 percent to $275.8 million.
On a same property (1) basis, which excludes the impact of Pulitzer and other acquisitions and divestitures made in the current or prior year, total advertising revenue for the quarter increased 1.7 percent from a year ago, with retail up 0.3 percent, classified up 1.6 percent, national down 8.8 percent and online advertising revenue up 38.2 percent. Circulation revenue decreased 1.9 percent, and total operating revenue increased 0.8 percent.
Operating expenses, on a reported basis, excluding depreciation and amortization, increased 68.2 percent to $213.5 million for the quarter, also reflecting the acquisition of Pulitzer. Compensation expense increased 60.0 percent, newsprint and ink increased 85.7 percent, and other expenses increased 73.3 percent. Transition and early retirement costs related to the acquisition of Pulitzer added $1.1 million.
Same property operating expenses, excluding depreciation and amortization, increased 3.2 percent in the quarter, with compensation up 1.4 percent, newsprint and ink up 8.5 percent, and other operating expenses up 4.1 percent.
Operating cash flow (2) increased 49.1 percent to $62.3 million, including acquisitions and related costs. Operating income, which includes equity in earnings of associated companies and depreciation and amortization, increased 43.0 percent to $45.0 million. Non-operating expenses, which include financial expense related to Pulitzer, totaled $22.1 million, compared with $2.6 million a year ago. As a result, income from continuing operations before income taxes decreased 20.5 percent to $22.9 million. Net income decreased 20.1 percent to $14.4 million.
YEAR TO DATE
For the six months ended March 31, diluted earnings per common share from continuing operations total 82 cents, compared with $1.00 a year ago. Excluding 14 cents of early retirement and transition costs related to the acquisition of Pulitzer, diluted earnings per common share from continuing operations total 96 cents.
On a reported basis, including acquisitions, advertising revenue for the six months increased 69.1 percent to $448.0 million, and total operating revenue increased 64.0 percent to $578.4 million. Operating expenses, excluding depreciation and amortization, rose 72.1 percent to $441.5 million. On a same property basis, advertising revenue increased 1.5 percent, total operating revenue increased 0.6 percent, and operating expenses, excluding depreciation and amortization, increased 3.1 percent.
Including acquisitions, operating cash flow increased 42.3 percent, to $136.9 million. Operating income rose 34.6 percent to $103.6 million. Income from continuing operations before income taxes decreased 18.0 percent to $58.9 million. Net income decreased 17.5 percent to $37.2 million.
PULITZER TRANSITION COSTS
The following table summarizes the impact on earnings per diluted common share from early retirement and transition costs related to the acquisition of Pulitzer:
Three Months Ended Six Months Ended
March 31 March 31
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Diluted EPS, continuing operations $ 0.32 $0.82
Early retirement program and other
Pulitzer transition costs 0.02 0.14
----------------------------------------------------------------------
Diluted EPS, excluding costs
related to Pulitzer acquisition $ 0.33 (a) $0.96
======================================================================
(a) Amounts do not add due to rounding
Consolidated statements of income and selected balance sheet tables follow. Expanded tables with same property comparisons, as well as revenue statistics for March, are available at www.lee.net/financial.
Lee Enterprises is a premier publisher of newspapers in midsize markets, with 52 dailies and a joint interest in six others, a rapidly growing online business and more than 300 weekly newspapers and specialty publications in 23 states. Lee's newspapers have circulation of 1.7 million daily and 1.9 million Sunday, reaching more than four million readers daily. Lee's newspaper online sites reach more than two million users, and Lee's weekly publications have distribution of more than 4.5 million households. Lee's newspapers include such diverse markets as Napa, Calif.; Bloomington, Ill.; Billings, Mont.; Escondido, Calif.; Madison, Wis.; and St. Louis, Mo. Lee is based in Davenport, Iowa, and its stock is traded on the New York Stock Exchange under the symbol LEE. For more information about Lee Enterprises, please visit www.lee.net.
LEE ENTERPRISES,INCORPORATED
CONSOLIDATED STATEMENTS OFINCOME
(Unaudited)
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Three Months Ended
March 31
----------------------------------------------------------------------
(Thousands, Except EPS Data) 2006 2005 %
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Operating revenue:
Advertising revenue:
Retail................... $107,940 $68,642 57.3 %
National................. 14,138 5,708 147.7
Classified:
Daily newspapers:
Employment............. 22,749 12,302 84.9
Automotive............. 14,577 9,233 57.9
Real estate............ 14,965 8,754 71.0
All other.............. 9,225 5,445 69.4
Other publications...... 14,259 8,292 72.0
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Total classified......... 75,775 44,026 72.1
Online................... 8,498 3,453 146.1
Niche publications....... 4,567 3,268 39.7
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Total advertising revenue 210,918 125,097 68.6
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Circulation............... 51,121 31,807 60.7
Commercial printing....... 5,643 5,127 10.1
Online services & other.. 8,087 6,664 21.4
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Total operating revenue.. 275,769 168,695 63.5
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Operating expenses:
Compensation............. 113,553 70,954 60.0
Newsprint and ink........ 29,830 16,066 85.7
Other operating expenses 69,012 39,813 73.3
Transition costs......... 801 93 NM
Early retirement program 281 - NM
----------------------------------------------------------------------
Operating expenses,
excluding depreciation
and amortization......... 213,477 126,926 68.2
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Operating cash flow(2) 62,292 41,769 49.1
Depreciation.............. 8,265 5,165 60.0
Amortization.............. 14,030 6,409 118.9
Equity in earnings of
associated companies:
Tucson partnership...... 3,550 - NM
Madison Newspapers...... 1,467 1,635 (10.3)
Other................... - (348) NM
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Operating income.......... 45,014 31,482 43.0
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Non-operating income:
Financial income......... 1,610 189 751.9
Financial expense........ (23,694) (2,747) 762.5
Other, net............... - (65) NM
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(22,084) (2,623) 741.9
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Income before
income taxes............. 22,930 28,859 (20.5)
Income tax expense........ 8,231 10,795 (23.8)
Minority interest......... 264 - NM
----------------------------------------------------------------------
Net income................ $14,435 $18,064 (20.1)%
======================================================================
Earnings per common share:
Basic.................... $0.32 $0.40 (20.0)%
Diluted.................. $0.32 $0.40 (20.0)%
======================================================================
Average common shares:
Basic.................... 45,390 45,086
Diluted.................. 45,526 45,315
======================================================================
Six Months Ended
March 31
----------------------------------------------------------------------
(Thousands, Except EPS Data) 2006 2005 %
----------------------------------------------------------------------
Operating revenue:
Advertising revenue:
Retail................... $243,470 $152,104 60.1 %
National................. 31,812 12,257 159.5
Classified:
Daily newspapers:
Employment............. 42,883 23,084 85.8
Automotive............. 28,815 19,096 50.9
Real estate............ 30,304 17,975 68.6
All other.............. 18,454 11,148 65.5
Other publications...... 28,232 16,728 68.8
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Total classified......... 148,688 88,031 68.9
Online................... 15,969 6,577 142.8
Niche publications....... 8,054 5,934 35.7
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Total advertising revenue 447,993 264,903 69.1
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Circulation............... 102,941 64,258 60.2
Commercial printing....... 11,652 10,507 10.9
Online services & other.. 15,822 13,111 20.7
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Total operating revenue.. 578,408 352,779 64.0
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Operating expenses:
Compensation............. 228,624 142,683 60.2
Newsprint and ink........ 61,392 32,893 86.6
Other operating expenses 141,707 80,922 75.1
Transition costs......... 1,153 103 NM
Early retirement program 8,654 - NM
----------------------------------------------------------------------
Operating expenses,
excluding depreciation
and amortization......... 441,530 256,601 72.1
----------------------------------------------------------------------
Operating cash flow(2) 136,878 96,178 42.3
Depreciation.............. 16,596 10,110 64.2
Amortization.............. 27,984 12,970 115.8
Equity in earnings of
associated companies:
Tucson partnership...... 7,688 - NM
Madison Newspapers...... 3,632 4,261 (14.8)
Other................... - (381) NM
----------------------------------------------------------------------
Operating income.......... 103,618 76,978 34.6
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Non-operating income:
Financial income......... 2,966 467 535.1
Financial expense........ (47,731) (5,586) 754.5
Other, net............... - (65) NM
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(44,765) (5,184) 763.5
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Income before
income taxes............. 58,853 71,794 (18.0)
Income tax expense........ 21,131 26,719 (20.9)
Minority interest......... 523 - NM
----------------------------------------------------------------------
Net income................ $37,199 $45,075 (17.5)%
======================================================================
Earnings per common share:
Basic.................... $0.82 $1.00 (18.0)%
Diluted.................. $0.82 $1.00 (18.0)%
======================================================================
Average common shares:
Basic.................... 45,325 45,057
Diluted.................. 45,462 45,279
======================================================================
SELECTED BALANCE SHEET INFORMATION
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March 31
----------------------------------------------------------------------
(Thousands) 2006 2005
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Cash.................................... $7,918 $1,168
Restricted cash and investments......... 88,560 -
Debt (principal amount)................. 1,606,000 165,000
======================================================================
NOTES:
(1) Same property comparisons exclude acquisitions and divestitures
made in the current and prior year. Same property revenue also
excludes revenue of Madison Newspapers, Inc. (MNI), in which Lee
owns a 50% share. It is reported using the equity method of
accounting. Same property comparisons also exclude corporate
office costs.
(2) Operating cash flow, which is defined as operating income before
depreciation, amortization and equity in net income of associated
companies, is a non-GAAP financial measure. 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.
(3) 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.
(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, energy costs, 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