Lee Enterprises Reports Preliminary Earnings for Q4
DAVENPORT, Iowa--(BUSINESS WIRE)--Nov. 13, 2008--Lee Enterprises, Incorporated (NYSE: LEE), reported today that preliminary diluted earnings per common share from continuing operations were 12 cents for its fourth fiscal quarter ended Sept. 28, 2008, compared with 43 cents a year ago. Excluding unusual items(1), earnings were 11 cents per share, compared with 39 cents a year ago.
As discussed more fully below, 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 Securities and Exchange Commission in the company's Form 10-K on or before Dec. 12, 2008.
Mary Junck, chairman and chief executive officer, said: "Like many other businesses and media companies, Lee has been battered by the unprecedented economic turmoil. Consumers have been buying less, which means advertisers have been spending less, resulting in reduced revenue and earnings for Lee. Although downward trends leveled off in October, we are taking steps to protect our financial footing. As we announced two weeks ago, we have made changes to our bank credit agreement to improve our flexibility in meeting debt obligations, and we have suspended our dividend. Also, we expect to reduce 2009 operating expenses by 6-7 percent. Despite the currently weak outlook, we have continued to lead the industry in revenue performance, and our audiences continue to grow. We remain confident that Lee will emerge strong when the economy improves."
PRELIMINARY SEPTEMBER QUARTER PRO FORMA(2) OPERATING RESULTS
Two calendar changes affected results for the quarter and year. Because of period accounting, the 2007 quarter included 14 weeks at the former Pulitzer operations, compared with 13 weeks in 2008. Also, because of the switch from calendar month to period accounting at the remainder of Lee's enterprises, which account for about 60 percent of total revenue, the 2008 quarter contained one fewer publishing day, a Sunday. Sundays normally generate more print advertising than any other day of the week. In September 2008, the company cycled through its change to period accounting, which will make future results significantly more comparable.
On a pro forma basis, excluding the 14th week at the former Pulitzer properties in 2007, total operating revenue from continuing operations for the quarter decreased 10.7 percent from a year ago to $244.9 million. Combined print and online advertising revenue decreased 12.9 percent to $184.5 million. On a same property(3) basis, combined print and online retail advertising revenue declined 5.0 percent, and classified decreased 23.1 percent. Combined same property print and online employment advertising revenue decreased 34.5 percent, automotive decreased 18.8 percent and real estate decreased 30.6 percent. Same property online advertising revenue decreased 15.7 percent, with online retail advertising up 16.0 percent and online employment advertising down 31.5 percent. National advertising revenue decreased 13.2 percent. Circulation revenue decreased 4.1 percent. Total same property revenue declined 10.7 percent.
Operating expenses, excluding depreciation and amortization and unusual items, decreased 1.9 percent to $205.8 million, with compensation down 4.1 percent, newsprint and ink up 6.3 percent and other cash costs down 1.6 percent. Same property operating expenses, excluding depreciation and amortization and unusual items, decreased 2.8 percent. Same property compensation declined 5.1 percent, with full-time equivalent employees down 7.4 percent. Same property newsprint and ink expense increased 1.0 percent and other cash costs decreased 0.9 percent.
Operating cash flow(4) decreased 35.1 percent compared with a year ago to $36.7 million. Operating income, which includes equity in earnings of associated companies, depreciation and amortization, and non-cash charges for impairment of goodwill and other assets, decreased 57.4 percent to $15.8 million.
Also on a pro forma basis, non-operating expense, which consists primarily of financial expense, net of financial income, decreased 32.6 percent to $13.4 million. Income from continuing operations before income taxes decreased 86.0 percent to $2.4 million. Income from continuing operations decreased 66.7 percent to $6.1 million. Net income available to common stockholders decreased 70.7 percent to $5.4 million.
Free cash flow(5) totaled $20.3 million for the quarter, compared with $24.9 million a year ago. Net debt was reduced $57.6 million.
PRELIMINARY FISCAL YEAR PRO FORMA OPERATING RESULTS
Excluding the 53rd week in 2007 at the former Pulitzer properties, total pro forma revenue from continuing operations for the 52 weeks decreased 7.5 percent from a year ago to $1.03 billion. Total advertising revenue decreased 8.8 percent. Combined same property print and online retail advertising declined 2.8 percent. Combined print and online classified advertising revenue decreased 15.7 percent, with employment down 21.8 percent, automotive down 13.1 percent and real estate down 24.3 percent. Same property online advertising revenue decreased 0.8 percent, with online retail advertising up 19.9 percent and online employment advertising down 9.1 percent. National advertising revenue decreased 18.7 percent. Circulation revenue declined 3.2 percent. Total same property revenue for the 52 weeks decreased 7.5 percent.
Total operating expenses, excluding depreciation and amortization, for the 52 weeks decreased 2.6 percent. Same property operating expenses, excluding unusual items, depreciation and amortization, decreased 3.0 percent.
Operating cash flow for the 52 weeks decreased 22.6 percent to $207.0 million. Excluding unusual items in both years, operating cash flow declined 22.6 percent to $210.4 million.
Free cash flow totaled $112.4 million for the 52 weeks, compared with $126.2 million a year ago. Net debt was reduced $102.2 million. An additional $17.9 million of cash flow was used to liquidate an unfunded retirement plan, and $19.0 million of Lee common stock was repurchased.
IMPAIRMENT CHARGES
For the quarters ended March 30, 2008, and June 29, 2008, Lee recorded non-cash charges totaling $717.2 million after tax to reduce the carrying value of goodwill, other intangible assets and the company's investment in TNI Partners.
The charges have no effect on cash flows but reduced reported earnings per common share, resulting in a loss for the quarter ended March 30, 2008, and full year ended Sept. 28, 2008. Many public companies also have been required to reduce the carrying value of their intangible assets as a result of significant declines in equity market value.
Impairment testing is performed in accordance with generally accepted accounting principles, which, among other factors, requires consideration of differences between current book value and the estimated fair value of the company's net assets, and comparison of the estimated fair value of the company's net assets to its current market capitalization. The preliminary amounts do not include the possible impact of additional impairment charges. An estimate of such charges, if any are determined to be necessary, will be included in financial statements to be filed with the Securities and Exchange Commission in the company's Form 10-K on or before Dec. 12, 2008.
ADJUSTED EARNINGS AND EPS FOR SEPTEMBER QUARTER(1)
Unusual items affecting year-over-year comparisons for the quarter included, in 2008, workforce adjustments at several locations, transition costs at Madison Newspapers, Inc. related to publication frequency changes at The Capital Times, benefit of federal and state tax adjustments, and adjustment for the current value of the company's future liability related to acquisition of the 5 percent minority share in its St. Louis partnership. Unusual items in 2007 included an early retirement program in St. Louis and benefit of federal and state tax adjustments. The following table summarizes the impact from unusual items on income (loss) available to common stockholders and earnings (loss) per diluted common share. Per share amounts may not add due to rounding.
13 Weeks 3 Months
Ended Sept. 28 Ended Sept. 30
2008 2007
---------------- ----------------
Per Per
(Thousands, except EPS) Amount Share Amount Share
-------- ------- -------- -------
Income (loss) available to common
stockholders, as reported......... $ 5,365 $ 0.12 $19,966 $ 0.44
----------------------------------------------------------------------
Adjustments:
Workforce adjustments and
transition costs................. 2,820 7,962
Income tax benefit of adjustments,
net, and impact on minority
interest........................... (996) (3,209)
----------------------------------------------------------------------
1,824 0.04 4,753 0.10
Benefit of other federal and state
tax adjustments.................... (2,811) (0.06) (6,880) (0.15)
----------------------------------------------------------------------
Net income available to common
shareholders, as adjusted 4,378 0.10 17,839 0.39
Change in redeemable minority
interest liability................. 700 0.02 -
----------------------------------------------------------------------
Net income, as adjusted............. $ 5,078 $ 0.11 $17,839 $ 0.39
======================================================================
ADJUSTED EARNINGS AND EPS FOR FISCAL YEAR (1)
For the year ended Sept. 28, 2008, Lee reported a loss per common share of $15.23, compared with earnings of $1.77 in 2007. Excluding non-cash charges for impairment of goodwill and other intangible assets, and also excluding other unusual items(1), earnings were $0.97 per share, compared with $1.66 cents a year ago.
Unusual items affecting year-over-year comparisons for the fiscal year included, in 2008, impairment of goodwill, other assets and reduction in the carrying value of the company's investment in TNI Partners, workforce adjustments, transition costs at Madison Newspapers, Inc. related to publication frequency changes at The Capital Times, benefit of federal and state tax adjustments, and adjusting of the current value of the company's future liability related to acquisition of the 5 percent minority share in its St. Louis partnership. Unusual items in 2007 included an early retirement program, curtailment gains and benefit of federal and state tax adjustments.
The following table summarizes the impact from unusual items on income (loss) available to common stockholders and earnings (loss) per diluted common share. Per share amounts may not add due to rounding.
52 Weeks 12 Months
Ended Sept. 28 Ended Sept. 30
2008 2007
------------------- ----------------
(Thousands, except EPS) Amount Per Amount Per
Share Share
---------- -------- -------- -------
Income (loss) available to common
stockholders, as reported....... $(682,714) $(15.23) $80,999 $ 1.77
----------------------------------------------------------------------
Adjustments:
Impairment of goodwill and
other
intangible assets............. 851,365 -
Reduction of investment in TNI
Partners...................... 93,384 -
Workforce adjustments and
transition costs.............. 4,463 7,962
Curtailment gains.............. - (3,731)
Curtailment gains, TNI Partners - (1,037)
----------------------------------------------------------------------
949,212 3,194
Income tax benefit of
adjustments,
net, and impact on minority
interest........................ (229,006) (1,406)
----------------------------------------------------------------------
720,206 16.07 1,788 0.04
Benefit of other federal and
state
tax adjustments................. (2,811) (0.06) (6,880) (0.15)
----------------------------------------------------------------------
Net income available to common
shareholders, as adjusted....... 34,681 0.77 75,907 1.66
Change in redeemable minority
interest liability.............. 8,838 0.20 -
----------------------------------------------------------------------
Net income, as adjusted.......... $ 43,519 $ 0.97 $75,907 $ 1.66
======================================================================
PRINT AND ONLINE AUDIENCES
According to January-June market studies conducted by Wilkerson & Associates, the combined reach of Lee newspapers and online sites among adults over the course of a week in Lee's 10 largest markets grew from 66 percent in 2007 to 71 percent in 2008.
Among other findings, the printed newspapers alone reach 65 percent of all adults in 2008, compared with 61 percent a year earlier. The reach of Lee newspapers among young adults in the markets grew from 54 to 65 percent, and use of the printed newspaper among young adults grew from 48 to 55 percent. The research involved 7,200 interviews in both years and carries an overall error margin of 1.2 percentage points.
While market studies have shown increased reach of Lee's printed newspapers, paid circulation declined. Factors include reduced distribution in less-profitable geographic areas, reductions in sponsored copies and selective price increases. In the six-month Audit Bureau of Circulations Fas-Fax period ended Sept. 30, 2008, Lee newspapers posted declines of 3.7 percent daily and 1.5 percent Sunday, compared with industry average declines of 4.6 percent daily and 4.8 percent Sunday.
Lee's newspapers have circulation of 1.5 million daily and 1.9 million Sunday, reaching more than four million readers daily. Lee's online sites reach more than 12 million unique visitors monthly, and Lee's weekly publications have distribution of more than 4.5 million households.
ABOUT LEE
Lee Enterprises is a premier publisher of local news, information and advertising in primarily midsize markets, with 49 daily newspapers and a joint interest in four others, rapidly growing online sites and more than 300 weekly newspapers and specialty publications in 23 states. Lee's markets include St. Louis, Mo.; Lincoln, Neb.; Madison, Wis.; Davenport, Iowa; Billings, Mont.; Bloomington, Ill.; and Tucson, Ariz. Lee stock is traded on the New York Stock Exchange under the symbol LEE. For more information about Lee, please visit www.lee.net.
LEE ENTERPRISES, INCORPORATED
PRELIMINARY CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Thousands, Except EPS Data)
As reported, Pro forma (2),
including 14 weeks excluding 14th
week
in 2007 at former in 2007 at
Pulitzer properties Pulitzer
properties
---------------------------------------------
13 Weeks 3 Months 3 Months
Ended Ended Ended
Sept 28 Sept 30 Sept 30
2008 2007 % 2007 %
----------------------------------------------------------------------
Advertising revenue:
Retail................ $100,625 $111,765 (10.0)% $108,528 (7.3)%
National.............. 9,953 12,071 (17.5) 11,464 (13.2)
Classified:
Daily newspapers:
Employment........ 13,291 21,189 (37.3) 20,728 (35.9)
Automotive........ 10,967 14,221 (22.9) 13,773 (20.4)
Real estate....... 10,200 15,050 (32.2) 14,676 (30.5)
All other......... 11,286 10,639 6.1 10,349 9.1
Other publications.. 10,780 12,636 (14.7) 12,202 (11.7)
----------------------------------------------------------------------
Total classified...... 56,524 73,735 (23.3) 71,728 (21.2)
Online................ 13,515 16,528 (18.2) 16,040 (15.7)
Niche publications.... 3,877 4,075 (4.9) 4,040 (4.0)
----------------------------------------------------------------------
Total advertising
revenue................ 184,494 218,174 (15.4) 211,800 (12.9)
----------------------------------------------------------------------
Circulation............. 48,221 51,835 (7.0) 50,286 (4.1)
Commercial printing..... 3,580 4,155 (13.8) 4,080 (12.3)
Online services & other. 8,598 8,075 6.5 8,019 7.2
----------------------------------------------------------------------
Total operating revenue. 244,893 282,239 (13.2) 274,185 (10.7)
----------------------------------------------------------------------
Operating expenses:
Compensation.......... 103,899 111,137 (6.5) 108,294 (4.1)
Newsprint and ink..... 27,615 26,910 2.6 25,979 6.3
Other operating
expenses............. 74,253 76,813 (3.3) 75,491 (1.6)
Workforce adjustments. 2,474 7,962 NM 7,962 NM
----------------------------------------------------------------------
Operating expenses,
excluding depreciation
and amortization....... 208,241 222,822 (6.5) 217,726 (4.4)
----------------------------------------------------------------------
Operating cash flow(4).. 36,652 59,417 (38.3) 56,459 (35.1)
Depreciation............ 8,866 8,220 7.9 8,221 7.8
Amortization............ 13,530 14,916 (9.3) 14,916 (9.3)
Equity in earnings of
associated companies:
TNI Partners.......... 696 1,492 (53.4) 1,492 (53.4)
Madison Newspapers.... 857 2,305 (62.8) 2,305 (62.8)
----------------------------------------------------------------------
Operating income........ 15,809 40,078 (60.6) 37,119 (57.4)
----------------------------------------------------------------------
Non-operating income
(expense):
Financial income...... 1,155 2,091 (44.8) 1,986 (41.8)
Financial expense..... (15,810) (22,335) (29.2) (21,861) (27.7)
Other, net............ 1,254 - -
----------------------------------------------------------------------
(13,401) (20,244) (33.8) (19,875) (32.6)
----------------------------------------------------------------------
Income from continuing
operations before
income
taxes.................. 2,408 19,834 (87.9) 17,244 (86.0)
Income tax expense...... (3,483) 121 NM (793) NM
Minority interest....... (174) (106) NM (164) NM
----------------------------------------------------------------------
Income from continuing
operations............. 6,065 19,819 (69.4) 18,201 (66.7)
Discontinued operations. - 147 112
----------------------------------------------------------------------
Net income.............. 6,065 19,966 (69.6) 18,313 (66.9)
Change in redeemable
minority interest...... 700 - -
----------------------------------------------------------------------
Net income available to
common stockholders.... $ 5,365 $ 19,966 (73.1)% $ 18,313 (70.7)%
======================================================================
Earnings per common
share:
Basic:
Continuing
operations......... $ 0.12 $ 0.43 (72.1)% $ 0.40 (70.0)%
Discontinued
operations......... - - -
----------------------------------------------------------------------
$ 0.12 $ 0.44 (72.7)% $ 0.40 (70.0)%
======================================================================
Diluted:
Continuing
operations......... $ 0.12 $ 0.43 (72.1)% $ 0.40 (70.0)%
Discontinued
operations......... - - -
----------------------------------------------------------------------
$ 0.12 $ 0.44 (72.7)% $ 0.40 (70.0)%
======================================================================
Average common shares:
Basic................. 44,344 45,772 45,772
Diluted............... 44,891 45,887 45,887
======================================================================
LEE ENTERPRISES, INCORPORATED
PRELIMINARYCONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Thousands,Except EPS Data)
As reported, Pro forma(2),
including 53 weeks excluding 53rd week
in 2007 at former in 2007 at
Pulitzer properties Pulitzer properties
---------------------------------------------------
52 Weeks 12 Months 12 Months
Ended Ended Ended
Sept 28 Sept 30 Sept 30
2008 2007 % 2007 %
----------------------------------------------------------------------
Advertising
revenue:
Retail.......... $ 434,069 $ 455,802 (4.8)% $ 452,565 (4.1)%
National........ 44,143 54,901 (19.6) 54,294 (18.7)
Classified:
Daily
newspapers:
Employment.. 59,457 81,683 (27.2) 81,222 (26.8)
Automotive.. 45,388 55,308 (17.9) 54,860 (17.3)
Real estate. 43,282 58,529 (26.1) 58,155 (25.6)
All other... 43,006 39,284 9.5 38,994 10.3
Other
publications. 43,361 47,737 (9.2) 47,303 (8.3)
----------------------------------------------------------------------
Total classified 234,494 282,541 (17.0) 280,534 (16.4)
Online.......... 55,119 56,074 (1.7) 55,586 (0.8)
Niche
publications... 15,874 16,094 (1.4) 16,059 (1.2)
----------------------------------------------------------------------
Total advertising
revenue.......... 783,699 865,412 (9.4) 859,038 (8.8)
----------------------------------------------------------------------
Circulation....... 195,457 203,481 (3.9) 201,932 (3.2)
Commercial
printing......... 15,993 16,541 (3.3) 16,466 (2.9)
Online services &
other............ 33,719 34,760 (3.0) 34,704 (2.8)
----------------------------------------------------------------------
Total operating
revenue.......... 1,028,868 1,120,194 (8.2) 1,112,140 (7.5)
----------------------------------------------------------------------
Operating
expenses:
Compensation.... 421,652 439,426 (4.0) 436,583 (3.4)
Newsprint and
ink............ 103,926 111,842 (7.1) 110,911 (6.3)
Other operating
expenses....... 292,840 294,145 (0.4) 292,823 -
Workforce
adjustments.... 3,428 7,962 NM 7,962 NM
Curtailment
gains.......... - (3,731) NM (3,731) NM
----------------------------------------------------------------------
Operating
expenses,
excluding
depreciation
and amortization. 821,846 849,644 (3.3) 844,548 (2.7)
----------------------------------------------------------------------
Operating cash
flow(4).......... 207,022 270,550 (23.5) 267,592 (22.6)
Depreciation...... 34,670 32,955 5.2 32,956 5.2
Amortization...... 56,408 59,745 (5.6) 59,745 (5.6)
Impairment of
goodwill and
other intangible
assets.......... 851,365 - NM - NM
Equity in earnings
of
associated
companies:
TNI Partners.... 6,171 11,957 (48.4) 11,957 (48.4)
Madison
Newspapers..... 4,040 8,167 (50.5) 8,167 (50.5)
Reduction in
investment
in TNI Partners 93,384 - NM - NM
----------------------------------------------------------------------
Operating income
(loss)........... (818,594) 197,974 NM 195,015 NM
----------------------------------------------------------------------
Non-operating
income
(expense):
Financial income 5,857 7,613 (23.1) 7,508 (22.0)
Financial
expense........ (71,472) (90,341) (20.9) (89,867) (20.5)
Other, net...... 885 (21) NM (21) NM
----------------------------------------------------------------------
(64,730) (82,749) (21.8) (82,380) (21.4)
----------------------------------------------------------------------
Income (loss) from
continuing
operations
before income
taxes........... (883,324) 115,225 NM 112,635 NM
Income tax expense
(benefit)........ (209,698) 33,828 NM 32,914 NM
Minority interest. 535 1,069 (50.0) 1,011 (47.1)
----------------------------------------------------------------------
Income (loss) from
continuing
operations...... (674,161) 80,328 NM 78,710 NM
Discontinued
operations....... 285 671 NM 636 NM
----------------------------------------------------------------------
Net income (loss). (673,876) 80,999 NM 79,346 NM
Change in
redeemable
minority interest. 8,838 - NM - NM
----------------------------------------------------------------------
Net income (loss)
available
to common
shareholders.... $ (682,714) $ 80,999 NM $ 79,346 NM
======================================================================
Earnings (loss)
per
common share:
Basic:
Continuing
operations... $ (15.24) $ 1.76 NM $ 1.72 NM
Discontinued
operations... 0.01 0.01 0.01
----------------------------------------------------------------------
$ (15.23) $ 1.77 NM $ 1.74 NM
======================================================================
Diluted:
Continuing
operations... $ (15.24) $ 1.75 NM $ 1.72 NM
Discontinued
operations... 0.01 0.01 0.01
----------------------------------------------------------------------
$ (15.23) $ 1.77 NM $ 1.73 NM
======================================================================
Average common
shares:
Basic........... 44,813 45,671 45,671
Diluted......... 44,813 45,804 45,804
======================================================================
SELECTED COMBINED PRINT AND ONLINE ADVERTISING REVENUE
(Thousands, Same Property)
Pro Pro
forma(2) forma(2)
13 Weeks 3 Months 52 Weeks 12 Months
Ended Ended Ended Ended
Sept 28 Sept 30 Sept 28 Sept 30
2008 2007 % 2008 2007 %
----------------------------------------------------------------------
Retail $102,854 $108,307 (5.0)% $ 439,477 $ 451,969 (2.8)%
----------------------------------------------------------------------
Classified:
Employment. 20,450 31,244 (34.5) 90,822 116,099 (21.8)
Automotive. 14,962 18,416 (18.8) 62,918 72,405 (13.1)
Real estate 13,524 19,486 (30.6) 57,294 75,642 (24.3)
Other...... 18,546 18,615 (0.4) 72,175 71,771 0.6
----------------------------------------------------------------------
Total
classified.. $ 67,482 $ 87,761 (23.1)% $ 283,209 $ 335,917 (15.7)%
======================================================================
REVENUE BY REGION
(Thousands, Same Property)
Pro Pro
forma(2) forma(2)
13 Weeks 3 Months 52 Weeks 12 Months
Ended Ended Ended Ended
Sept 28 Sept 30 Sept 28 Sept 30
2008 2007 % 2008 2007 %
----------------------------------------------------------------------
Midwest...... $146,520 $164,742 (11.1)% $ 620,349 $ 675,305 (8.1)%
Mountain West 46,120 51,836 (11.0) 190,525 201,568 (5.5)
West......... 30,213 35,759 (15.5) 129,312 146,610 (11.8)
East/Other... 21,844 21,613 1.1 88,018 87,838 0.2
----------------------------------------------------------------------
Total........ $244,697 $273,950 (10.7)% $1,028,204 $1,111,321 (7.5)%
======================================================================
DAILY NEWSPAPER ADVERTISING VOLUME
(Thousands of inches, Same Property)
Pro Pro
forma(2) forma(2)
13 Weeks 3 Months 52 Weeks 12 Months
Ended Ended Ended Ended
Sept 28 Sept 30 Sept 28 Sept 30
2008 2007 % 2008 2007 %
----------------------------------------------------------------------
Retail....... 2,969 3,237 (8.3)% 12,639 13,212 (4.3)%
National..... 128 143 (10.5) 612 671 (8.8)
Classified... 3,632 4,102 (11.5) 14,317 15,716 (8.9)
----------------------------------------------------------------------
Total........ 6,729 7,482 (10.1)% 27,568 29,599 (6.9)%
======================================================================
SELECTED BALANCE SHEET INFORMATION
Sept 28 Sept 30
(Thousands) 2008 2007
----------------------------------------------------------------------
Cash............................................ $ 23,459 $ -
Restricted cash and investments................. 126,060 111,060
Debt (principal amount)......................... 1,332,375 1,395,625
======================================================================
SELECTED STATISTICAL INFORMATION
Pro Pro
forma(2) forma(2)
13
Weeks 3 Months 52 Weeks 12 Months
Ended Ended Ended Ended
Sept 28 Sept 30 Sept 28 Sept 30
(Dollars in
Thousands) 2008 2007 % 2008 2007 %
----------------------------------------------------------------------
Capital
expenditures.... $ 4,585 $13,819 (66.8)% $ 18,381 $ 34,381 (46.5)%
Same property
newsprint
volume (tonnes).. 35,172 41,251 (14.7) 149,944 167,275 (10.4)
Same property
full-time
equivalent
employees....... 7,417 8,006 (7.4) 7,699 8,046 (4.3)
======================================================================
FREE CASH FLOW(5)
13 Weeks 3 Months 52 Weeks 12 Months
Ended Ended Ended Ended
Sept 28 Sept 30 Sept 28 Sept 30
(Thousands) 2008 2007 2008 2007
----------------------------------------------------------------------
Operating income (loss)...... $ 15,809 $ 40,078 $(818,594) $197,974
Depreciation and amortization 22,982 24,721 95,497 99,040
Impairment of goodwill and
other
intangible assets........... - - 851,365 -
Reduction in investment in
TNI......................... - - 93,384 -
Stock compensation........... 1,615 1,521 5,905 7,188
Cash interest expense........ (16,970) (23,396) (75,956) (94,431)
Financial income............. 1,155 2,091 5,857 7,613
Cash income taxes............ 122 (6,413) (26,173) (55,693)
Minority interest............ 174 106 (535) (1,069)
Capital expenditures......... (4,585) (13,819) (18,381) (34,381)
----------------------------------------------------------------------
$ 20,302 $ 24,889 $ 112,369 $126,241
======================================================================
NOTES:
(1) 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
matters and those of a 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 accompanying 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.
(2) Pro forma information excluding the 53rd week in 2007 at the
former Pulitzer properties is a non-GAAP financial measure. See
(1) above. The Company believes the pro forma information
provides meaningful supplemental information by excluding revenue
and expenses related to the business period that is not
comparable to the prior year. Results for the 53rd week are equal
to the differences between the as-reported, GAAP amounts and the
pro forma amounts. Reconciliation of the pro forma presentation
to the most directly comparable GAAP measures are included in
tables accompanying this release.
(3) Same property comparisons exclude acquisitions and divestitures
made in the current and prior year. Same property revenue also
excludes Lee's 50% ownership in Madison Newspapers, Inc. and TNI
Partners, which are reported using the equity method of
accounting. Same property comparisons also exclude corporate
office costs.
(4) 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 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.
(5) 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 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.
(6) For the legacy Lee properties, there was one fewer publishing day,
a Sunday, in the 2008 quarter and year compared with 2007. For
the former Pulitzer properties, 2007 included a 53rd week of
publishing days.
(7) 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.
(8) 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 general economic conditions, advertising demand, newsprint and other commodity prices, energy costs, interest rates and availability of credit, 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, increased capital and other costs, competition and other risks detailed from time to time in the Company's publicly filed documents, including the Company Annual Report on Form 10-K for the year ended September 30, 2007. 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
Dan Hayes, 563-383-2100
dan.hayes@lee.net
SOURCE:
Lee Enterprises