Lee Enterprises Reports Preliminary Earnings for First Fiscal Quarter
The preliminary amounts do not include the possible impact of additional
impairment charges. Such charges would not impact cash flows but would
reduce reported earnings per common share. An estimate of such charges,
if any are determined to be necessary, will be included in financial
statements to be filed with the
Mary Junck, chairman and chief executive officer, said:
"We are reducing costs aggressively in this extraordinary time while still protecting our position as the premier provider of news, information and advertising in our local markets. We reduced staffing by more than 10 percent in our first quarter and have since announced additional reductions in many locations. We have outsourced or consolidated printing in several locations so far, and we also have begun outsourcing distribution where opportunities exist to reduce costs. Among steps to conserve newsprint, all of our newspapers are moving to narrower page widths. We also have discontinued less profitable specialty publications. As a result of those steps and many others, we expect to reduce cash costs in 2009 by 10-11 percent.
"Regarding debt, we are encouraged by the decision of the Pulitzer
Noteholders to extend their waiver to allow time for us to complete
negotiations with them and our bank lenders. Also, as part of our plan
to return to compliance with
Total operating revenue from continuing operations for the quarter
decreased 13.0 percent from a year ago to
Operating expenses, excluding unusual items, depreciation and
amortization, decreased 8.6 percent to
Operating cash flow(2) decreased 26.6 percent compared with a
year ago to
Non-operating expense, which consists primarily of financial expense,
net of financial income, decreased 1.7 percent to
Free cash flow(3) totaled
ADJUSTED EARNINGS AND EPS(1)
Unusual items affecting year-over-year comparisons for the quarter
included, in 2008, workforce adjustments at several locations, a
curtailment gain, reduction in the value of certain press equipment no
longer in use, and an adjustment for the current value of the company's
future liability related to acquisition of the 5 percent minority share
in its
13 Weeks Ended
Dec. 28, 2008 Dec. 30, 2007
(Thousands, except EPS) Amount Per Share Amount Per Share
Income available to common $ 6,796 $ 0.15 $ 22,126 $ 0.48
stockholders, as reported
Adjustments:
Workforce adjustments 838 -
Curtailment gain, TNI Partners (667 ) -
Unrealized losses on property and 2,264
equipment
2,435 -
Income tax benefit of adjustments, (855 ) -
net, and impact on minority interest
1,580 -
Net income available to common 8,376 0.19 22,126 0.48
shareholders, as adjusted
Change in redeemable minority 1,039 0.02 -
interest liability
Net income, as adjusted $ 9,415 $ 0.21 $ 22,126 $ 0.48
IMPAIRMENT CHARGES
In fiscal 2008, Lee recorded after-tax non-cash charges totaling
ABOUT LEE
LEE ENTERPRISES, INCORPORATED PRELIMINARY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Thousands, Except EPS Data) 13 Weeks Ended Dec. 28 Dec. 30 % 2008 2007 Advertising revenue: Retail $ 112,934 $ 127,602 (11.5 )% National 12,851 13,582 (5.4 ) Classified: Daily newspapers: Employment 8,686 15,367 (43.5 ) Automotive 8,643 11,729 (26.3 ) Real estate 8,126 11,543 (29.6 ) All other 10,046 9,988 0.6 Other publications 8,357 10,640 (21.5 ) Total classified 43,858 59,267 (26.0 ) Online 11,621 13,475 (13.8 ) Niche publications 3,319 3,644 (8.9 ) Total advertising revenue 184,583 217,570 (15.2 ) Circulation 47,556 49,805 (4.5 ) Commercial printing 3,469 4,175 (16.9 ) Online services & other 7,947 8,306 (4.3 ) Total operating revenue 243,555 279,856 (13.0 ) Operating expenses: Compensation 94,483 108,194 (12.7 ) Newsprint and ink 25,154 25,103 0.2 Other operating expenses 69,950 74,126 (5.6 ) Workforce adjustments 838 - NM Operating expenses, excluding depreciation 190,425 207,423 (8.2 ) and amortization Operating cash flow(3) 53,130 72,433 (26.6 ) Depreciation 8,296 8,159 1.7 Amortization 12,103 14,872 (18.6 ) Unrealized losses on property and equipment 2,264 - NM Equity in earnings of associated companies: TNI Partners 1,869 2,412 (22.5 ) Madison Newspapers 1,195 1,889 (36.7 ) Operating income 33,531 53,703 (37.6 ) Non-operating income (expense): Financial income 1,271 1,796 (29.2 ) Financial expense (20,008 ) (20,850 ) (4.0 ) (18,737 ) (19,054 ) (1.7 ) Income from continuing operations before 14,794 34,649 (57.3 ) income taxes Income tax expense 6,784 12,254 (44.6 ) Minority interest 170 607 (72.0 ) Income from continuing operations 7,840 21,788 (64.0 ) Discontinued operations (5 ) 338 NM Net income 7,835 22,126 (64.6 ) Change in redeemable minority interest 1,039 - NM Net income available to common stockholders $ 6,796 $ 22,126 (69.3 )% Earnings per common share: Basic: Continuing operations $ 0.15 $ 0.48 (68.8 )% Discontinued operations - 0.01 NM $ 0.15 $ 0.48 (68.8 )% Diluted: Continuing operations $ 0.15 $ 0.48 (68.8 )% Discontinued operations - 0.01 NM $ 0.15 $ 0.48 (68.8 )% Average common shares: Basic 44,405 45,746 Diluted 44,656 45,769
SELECTED COMBINED PRINT AND ONLINE ADVERTISING REVENUE
(Thousands)
13 Weeks Ended
Dec. 28 Dec. 30 %
2008 2007
Retail $ 115,635 $ 128,173 (9.8 )%
Classified:
Employment 13,280 23,125 (42.6 )
Automotive 12,727 16,576 (23.2 )
Real estate 10,738 15,279 (29.7 )
Other 15,848 17,165 (7.7 )
Total classified $ 52,593 $ 72,145 (27.1 )%
REVENUE BY REGION
(Thousands)
13 Weeks Ended
Dec. 28 Dec. 30 %
2008 2007
Midwest $ 147,762 $ 170,729 (13.5 )%
Mountain West 45,201 50,881 (11.2 )
West 29,429 35,446 (17.0 )
East/Other 21,163 22,800 (7.2 )
Total $ 243,555 $ 279,856 (13.0 )%
DAILY NEWSPAPER ADVERTISING VOLUME
(Thousands of inches)
13 Weeks Ended
Dec. 28 Dec. 30 %
2008 2007
Retail 3,303 3,543 (6.8 )%
National 148 180 (17.8 )
Classified 2,969 3,562 (16.6 )
Total 6,420 7,285 (11.9 )%
SELECTED BALANCE SHEET INFORMATION
(Thousands)
Dec. 28 Dec. 30
2008 2007
Cash $ 25,602 $ 7,732
Restricted cash and investments 129,810 114,810
Debt (principal amount) 1,359,375 1,374,625
SELECTED STATISTICAL INFORMATION
(Thousands)
13 Weeks Ended
Dec. 28 Dec. 30 %
2008 2007
Capital expenditures $ 3,957 $ 6,062 (34.7 )%
Newsprint volume (tonnes) 30,774 40,541 (24.1 )
Full-time equivalent employees 7,276 8,141 (10.6 )
PRELIMINARY FREE CASH FLOW(3)
(Thousands)
13 Weeks Ended
Dec. 28 Dec. 30
2008 2007
Operating income $ 33,531 $ 53,703
Depreciation and amortization 20,778 24,616
Unrealized losses on property and equipment 2,264 -
Stock compensation 1,052 1,514
Cash interest expense (20,149 ) (21,931 )
Financial income 1,271 1,796
Cash income taxes (4,417 ) (4,963 )
Minority interest (170 ) (607 )
Capital expenditures (3,957 ) (6,062 )
$ 30,203 $ 48,066
NOTES:
Adjusted net income and adjusted earnings per common share, which are
defined as income (loss) available to common stockholders and earnings
(loss) per common share adjusted to exclude unusual items and those of a
(1) substantially non-recurring nature, are non-GAAP (Generally Accepted
Accounting Principles) financial measures. Reconciliations of adjusted net
income and adjusted earnings per common share to income (loss) available to
common stockholders and earnings (loss) per common share are included in
tables in this release.
No non-GAAP financial measure should be considered as a substitute for any
related GAAP financial measure. However, the company believes the use of
non-GAAP financial measures provides meaningful supplemental information
with which to evaluate its financial performance, or assist in forecasting
and analyzing future periods. The company also believes such non-GAAP
financial measures are alternative indicators of performance used by
investors, lenders, rating agencies and financial analysts to estimate the
value of a publishing business and its ability to meet debt service
requirements.
Operating cash flow, which is defined as operating income before
depreciation, amortization, impairment charges and equity in earnings of
associated companies, is a non-GAAP financial measure. See (1) above. The
company believes operating cash flow provides meaningful supplemental
(2) information because of its focus on results from operations before
depreciation and amortization and earnings from equity investments.
Reconciliations of operating cash flow to operating income (loss), the most
directly comparable GAAP measure, are included in tables accompanying this
release.
Free cash flow, which is defined as operating income, plus depreciation and
amortization, impairment charges, stock compensation and financial income,
minus financial expense (exclusive of non-cash amortization and accretion),
cash income taxes, capital expenditures and minority interest, is a
(3) non-GAAP financial measure. See (1) above. The company believes free cash
flow provides meaningful supplemental information because of its focus on
results from operations after inclusion or exclusion of the several factors
noted above. Reconciliations of free cash flow to operating income (loss),
the most directly comparable GAAP measure, are included in a table
accompanying this release.
Certain amounts as previously reported have been reclassified to conform
(4) with the current period presentation. The prior period has been restated
for comparative purposes, and the reclassifications have no impact on
earnings.
(5) The company disclaims responsibility for updating information beyond the
release date.
FORWARD-LOOKING STATEMENTS -- 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, that is based largely on the Company's (as defined below) 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 its control, are the Company's ability to generate cash flows and maintain liquidity sufficient to service its debt, and comply with or obtain amendments or waivers of the financial covenants contained in its credit facilities, if necessary. Other risks and uncertainties include the impact of continuing adverse economic conditions, potential changes in advertising demand, newsprint and other commodity prices, energy costs, interest rates and the availability of credit due to instability in the credit markets, labor costs, legislative and regulatory rulings and other results of operations or financial conditions, difficulties in maintaining employee and customer relationships, increased capital and other costs, competition and other risks detailed from time to time in the Company's publicly filed documents. 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 undertake to publicly update or revise its forward-looking statements.
CONTACT:
dan.hayes@lee.net
Source: