Lee Enterprises Reports Q2 Earnings Growth Of 13.8%
DAVENPORT, Iowa, Apr 21, 2003 (BUSINESS WIRE) -- Lee Enterprises, Incorporated (NYSE:LEE), reported today that diluted earnings per common share from continuing operations were 33 cents for its second quarter ended March 31, 2003.
The results represent an increase of 13.8 percent over earnings of 29 cents a year ago, which have been restated to include employee stock option expense.
Mary Junck, chairman and chief executive officer, said: "Lee posted another strong quarter despite continued economic uncertainty and war-related dampening of ad spending. Same-property(1) retail advertising revenue grew 3.0 percent over last year, and classified increased 2.4 percent, reflecting our ongoing revenue priority. We're seeing especially good performances at the 16 newspapers we acquired in 2002. Our momentum continues, as well, from our focus on improving readership and circulation, emphasizing strong local news, expanding our online services and carefully controlling our costs. As the war winds down, we're well positioned to take advantage of any improvement in the ad environment when it happens."
Operating cash flow(2) increased 57.1 percent to $37.4 million, at a margin of 24.0 percent, compared with 24.6 percent a year ago, primarily a result of lower margins of businesses acquired a year ago and increasing medical and other compensation costs. Revenue increased 61.0 percent to $155.3 million, as acquisitions contributed $56.6 million this year. Operating expenses, excluding depreciation and amortization, increased 62.2 percent to $118.0 million. Operating income, which includes equity in net income of associated companies, depreciation and amortization, increased 34.6 percent. Net income grew 16.4 percent to $14.6 million.
On a same-property basis, which excludes the impact of acquisitions and divestitures made in the current or prior year, total revenue for the quarter ended March 31, 2003, increased 3.3 percent from a year ago. Total advertising revenue increased 2.5 percent. Retail increased 3.0 percent to $37.1 million. Classified revenue increased 2.4 percent to $22.4 million, with employment advertising in the daily newspapers down only 0.8 percent. National advertising, a small category for Lee, decreased 3.4 percent. Circulation revenue decreased 0.3 percent. Online revenue increased 35.6 percent.
YEAR TO DATE
For the six months ended March 31, 2003, total revenue on a same-property basis increased 2.7 percent. On a reported basis, revenue increased 59.8 percent. Operating expenses, excluding depreciation and amortization, increased 61.0 percent and operating cash flow increased 56.7 percent. Operating cash flow margin(2) was 26.6 percent, compared with 27.1 percent a year ago. Operating income increased 40.2 percent.
Diluted earnings per common share from continuing operations totaled 84 cents, an increase of 23.5 percent from 68 cents in the first six months a year ago.
EMPLOYEE STOCK OPTIONS
In 2003, Lee has begun expensing employee stock option grants. This will reduce 2003 results about 5 to 7 cents per diluted common share for the full year and had an impact of one cent per share in the March quarter. Lee has chosen to restate prior years, which reduces previously reported annual 2002 results by 5 cents. Results for the quarter ended March 31, 2002, were reduced one cent per diluted common share from the previously reported amount of 30 cents. Year to date results in the prior year were reduced two cents per diluted common share from the previously reported amount of 70 cents.
Lee Enterprises is based in Davenport, Iowa. It owns 38 daily newspapers and a joint interest in six others, along with associated online services. Lee also owns more than 175 weekly newspapers, shoppers and classified and specialty publications. Its stock is traded on the New York Stock Exchange under the symbol LEE. More information about Lee Enterprises, including revenue statistics for March, is available at www.lee.net.
LEE ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Unaudited. (Thousands, Except Per Common Share Data)
Three Months Ended Six Months Ended
March 31, March 31,
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2003 2002 % 2003 2002 %
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Operating revenue: (3) (3)
Advertising $103,082 $61,332 68.1 $221,884 $133,009 66.8
Circulation 33,113 20,030 65.3 66,725 40,452 64.9
Other 19,138 15,146 26.4 37,271 30,407 22.6
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155,333 96,508 61.0 325,880 203,868 59.8
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Operating expenses:
Compensation 67,414 40,598 66.1 135,906 81,082 67.6
Newsprint and ink 13,316 8,153 63.3 27,766 17,930 54.9
Other 37,249 23,975 55.4 75,606 49,606 52.4
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Operating expenses
excluding
depreciation and
amortization 117,979 72,726 62.2 239,278 148,618 61.0
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Operating cash flow 37,354 23,782 57.1 86,602 55,250 56.7
Depreciation and
amortization 11,713 5,335 119.6 23,084 11,176 106.5
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Operating income,
before equity in
net income of
associated
companies 25,641 18,447 39.0 63,518 44,074 44.1
Equity in net income
of associated
companies 1,553 1,752 (11.4) 3,771 3,929 (4.0)
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Operating income 27,194 20,199 34.6 67,289 48,003 40.2
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Non-operating income
(expense), net:
Financial income 203 2,468 (91.8) 543 5,235 (89.6)
Financial expense (4,270) (2,844) 50.1 (8,960) (5,882) 52.3
Other, net (43) (1) -- (387) (308) 25.6
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(4,110) (377)990.2 (8,804) (955)821.9
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Income from continuing
operations
before income taxes 23,084 19,822 16.5 58,485 47,048 24.3
Income tax expense 8,460 7,155 18.2 21,383 16,767 27.5
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Income from continuing
operations 14,624 12,667 15.4 37,102 30,281 22.5
Discontinued
operations -- (103) -- (20) (140)(85.7)
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Net income $14,624 $12,564 16.4 $37,082 $30,141 23.0
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Earnings per common
share:
Basic:
Continuing
operations $0.33 $0.29 13.8 $0.84 $0.68 23.5
Discontinued
operations -- -- -- --
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Net income $0.33 $0.29 13.8 $0.84 $0.68 23.5
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Diluted:
Continuing
operations $0.33 $0.29 13.8 $0.84 $0.68 23.5
Discontinued
operations -- -- -- --
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Net income $0.33 $0.29 13.8 $0.84 $0.68 23.5
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Average outstanding
shares:
Basic 44,257 44,041 44,239 44,009
Diluted 44,405 44,331 44,379 44,286
SELECTED BALANCE SHEET INFORMATION March 31,
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2003 2002
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Cash and temporary cash investments $17,380 $479,030
Total assets 1,436,608 975,976
Debt, including current maturities 357,200 173,400
Stockholders' equity 768,179 703,359
- Beginning in March 2003, same property revenue excludes revenue of Madison Newspapers, Inc. (doing business as Capital Newspapers), in order to comply with newly issued SEC regulations related to disclosure of non-GAAP financial measures. Lee owns 50% of the capital stock of Capital Newspapers, which for financial reporting purposes is reported using the equity method of accounting.
- 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.
- 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.
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.
Lee Enterprises, Incorporated, Davenport
Dan Hayes, 563/383-2163
dan.hayes@lee.net
www.lee.net