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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 12 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: July 21, 2003
Commission File Number 1-6227
LEE ENTERPRISES, INCORPORATED
(Exact name of Registrant as specified in its charter)
Delaware 42-0823980
(State of Incorporation) (I.R.S. Employer Identification No.)
215 N. Main Street, Davenport, Iowa 52801
(Address of Principal Executive Offices)
(563) 383-2100
Registrant's telephone number, including area code
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Item 9. Regulation FD Disclosure
See Item 12. Results of Operations and Financial Condition
Item 12. Results of Operations and Financial Condition
On July 21, 2003, Lee Enterprises, Incorporated (the Registrant) reported its
third fiscal quarter results and is furnishing the earnings release required
under Item 12. The Company also reported its revenues for the month of June
2003, and is furnishing the related release under Item 12. The following
exhibits are included herein:
EXHIBIT 99.1 Earnings Release - Third Quarter Ended June 30, 2003
EXHIBIT 99.2 Monthly Revenue Release - June 2003
The earnings release contains several non-GAAP financial measures. A "non-GAAP
financial measure" is defined as a numerical measure of a company's financial
performance that excludes or includes amounts so as to be different than the
most directly comparable measure calculated and presented in accordance with
GAAP in the statement of income, balance sheet or statement of cash flows of the
Company. Pursuant to the requirements of Regulation G, the Company has provided
a reconciliation within the earnings release of all non-GAAP financial measures
to the most directly comparable GAAP financial measure.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LEE ENTERPRISES, INCORPORATED
Date: July 21, 2003 /s/ Carl G. Schmidt
------------------------------------
Carl G. Schmidt
Vice President, Chief Financial Officer,
and Treasurer
EXHIBIT 99.1 Earnings Release - Third Quarter Ended June 30, 2003
LEE ENTERPRISES
215 Main St.
Davenport, IA 52801-1924
www.lee.net
NEWS RELEASE
Lee Enterprises reports Q3 earnings
DAVENPORT, Iowa (July 21, 2003) - Lee Enterprises, Incorporated (NYSE: LEE),
reported today that diluted earnings per common share from continuing operations
were 48 cents for its third quarter ended June 30, 2003.
Last year's earnings of 68 cents per diluted common share from continuing
operations included the favorable resolution of tax issues amounting to $10.0
million, or 22 cents. On an adjusted basis, this year's earnings represent an
increase of 4.4 percent over 46 cents a year ago. Earnings in 2002 have been
restated to include employee stock option expense.
Operating cash flow(2) increased 3.9 percent to $47.6 million, at a margin of
28.3 percent, compared with 28.7 percent a year ago. Revenue increased 5.5
percent to $168.2 million. Operating income, which includes equity in net income
of associated companies, depreciation and amortization, increased 4.4 percent.
Income from continuing operations declined 28.9 percent in comparison with a
year ago, which included gains of $10.0 million resulting from favorable
resolution of tax issues, as noted above.
Operating expenses, excluding depreciation and amortization, increased 6.1
percent to $120.7 million. Current year expenses were increased by the inclusion
of $3.4 million of operating costs of Sioux City Newspapers (SCN). Adjusting for
this factor, operating expenses, excluding depreciation and amortization,
increased 3.1 percent. Expenses in the current year were further influenced by a
14.1% increase in newsprint costs (including SCN). Lee's purchase of Howard
Publications in April 2002 included 15 daily newspapers and a 50 percent
interest in SCN. Lee acquired the remaining 50 percent interest in SCN in July
2002.
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 June 30, 2003, increased 1.0 percent from a year ago. Total advertising
revenue decreased 0.5 percent. Retail increased 1.1 percent. Classified revenue
decreased 2.9 percent, with employment advertising in the daily newspapers down
10.7 percent. National advertising, a small category for Lee, decreased 1.3
percent. Circulation revenue decreased 0.8 percent. Online revenue increased
28.8 percent.
At the 15 newspapers Lee acquired in their entirety in April 2002, revenue for
the quarter increased 4.4 percent(3). Publishing revenue of the former Howard
newspapers increased 14.9 percent on a reported basis, due to the inclusion of
SCN in revenue in the current year.
Mary Junck, chairman and chief executive officer, said: "We continue to benefit
from our acquisitions in 2002, and we remain fully focused on our five top
priorities of driving revenue, improving readership and circulation, emphasizing
strong local news, expanding our online services and carefully controlling our
costs. As our performance shows, especially in comparison with a very strong
quarter a year ago, we're doing the right things and doing them well in a tough
economic environment."
YEAR TO DATE
For the nine months ended June 30, 2003, total revenue on a same property basis
increased 2.1 percent. On a reported basis, revenue increased 36.0 percent.
Operating expenses, excluding depreciation and amortization, increased 37.2
percent, and operating cash flow increased 32.8 percent. Operating cash flow
margin(2) was 27.2 percent, compared with 27.8 percent a year ago. Operating
income increased 24.7 percent.
Diluted earnings per common share from continuing operations totaled $1.32,
compared with $1.36 a year ago, which included the 22 cents of tax benefits
noted above.
EMPLOYEE STOCK OPTIONS
In 2003, Lee has begun expensing employee stock option grants and has chosen to
restate prior years. This will reduce 2003 results 5 to 6 cents per diluted
common share for the full year and had an impact of one cent per share in the
June quarter. Year to date results in the prior year were reduced four cents per
diluted common share from the previously reported amount of $1.43 cents.
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 more than 175 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.
2
LEE ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Unaudited. (Thousands, Except Per Common Share Data)
Three Months Ended Nine Months Ended
June 30, June 30,
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2003 2002 % 2003 2002 %
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Operating revenue: (4) (4)
Advertising........................ $115,099 $110,208 4.4 $336,983 $243,217 38.6
Circulation........................ 33,052 31,567 4.7 99,777 72,019 38.5
Other.............................. 20,098 17,771 13.1 57,369 48,178 19.1
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168,249 159,546 5.5 494,129 363,414 36.0
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Operating expenses:
Compensation....................... 67,884 63,280 7.3 203,790 144,362 41.2
Newsprint and ink.................. 15,124 13,258 14.1 42,890 31,188 37.5
Other.............................. 37,680 37,216 1.2 113,286 86,822 30.5
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Operating expenses excluding
depreciation and amortization...... 120,688 113,754 6.1 359,966 262,372 37.2
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Operating cash flow.................. 47,561 45,792 3.9 134,163 101,042 32.8
Depreciation and amortization........ 11,447 12,197 (6.1) 34,531 23,373 47.7
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Operating income, before equity in
net income of associated
companies.......................... 36,114 33,595 7.5 99,632 77,669 28.3
Equity in net income of associated
companies.......................... 1,962 2,867 (31.6) 5,733 6,796 (15.6)
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Operating income..................... 38,076 36,462 4.4 105,365 84,465 24.7
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Non-operating income (expense), net:
Financial income .................. 373 470 (20.6) 916 5,705 (83.9)
Financial expense.................. (4,072) (5,117) (20.4) (13,032) (10,999) 18.5
Other, net......................... (408) 9 NM (795) (299) NM
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(4,107) (4,638) (11.4) (12,911) (5,593) 130.8
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Income from continuing operations
before income taxes ............... 33,969 31,824 6.7 92,454 78,872 17.2
Income tax expense................... 12,511 1,637 NM 33,894 18,404 84.2
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Income from continuing operations.... 21,458 30,187 (28.9) 58,560 60,468 (3.2)
Discontinued operations.............. -- 1,333 -- (20) 1,193 NM
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Net income........................... $ 21,458 $ 31,520 (31.9) $ 58,540 $ 61,661 (5.1)
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Earnings per common share:
Basic:
Continuing operations.............. $0.48 $0.68 (29.4) $1.32 $1.37 (3.6)
Discontinued operations............ -- 0.03 -- 0.03
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Net income......................... $0.48 $0.71 (32.4) $1.32 $1.40 (5.7)
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Diluted:
Continuing operations.............. $0.48 $0.68 (29.4) $1.32 $1.36 (2.9)
Discontinued operations............ -- 0.03 -- 0.03
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Net income......................... $0.48 $0.71 (32.4) $1.32 $1.39 (5.0)
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Average outstanding shares:
Basic.............................. 44,351 44,144 44,277 44,054
Diluted............................ 44,574 44,474 44,444 44,349
3
SELECTED BALANCE SHEET INFORMATION June 30,
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2003 2002
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Cash and temporary cash investments...... $ 20,960 $ 72,710
Total assets............................. 1,436,029 1,400,576
Debt, including current maturities....... 331,200 425,799
Stockholders' equity..................... 787,798 730,494
(1) Beginning in March 2003, same property revenue excludes revenue of Madison
Newspapers, Inc., (MNI) 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 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) Same property revenue related to newspapers acquired from Howard
Publications excludes revenue of Sioux City Newspapers (SCN). Lee owned 50%
of the capital stock of SCN during the period from April through June 2002,
which was accounted for using the equity method of accounting. Year to date
same property revenue information is not meaningful due to the consummation
of the acquisition at a date during the fiscal year. The following table
reconciles Howard acquisition revenue on a same property basis to revenue
as reported.
Three months ended
June 30,
-----------------------------
(Thousands) 2003 2002 %
Howard acquisition revenue.................. $56,576 $54,193 4.4%
SCN......................................... 5,718 -- NM
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Total publishing revenue.................... $62,294 $54,193 14.9%
======== =======
(4) 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.
Contact: dan.hayes@lee.net, (563) 383-2163
4
EXHIBIT 99.2 Monthly Revenue Release - June 2003
LEE ENTERPRISES
215 Main St.
Davenport, IA 52801-1924
www.lee.net
NEWS RELEASE
Lee Enterprises reports June revenue statistics
DAVENPORT, Iowa (July 21, 2003) - Lee Enterprises, Incorporated (NYSE: LEE),
reported today that June publishing revenue increased 4.7 percent.
Same property publishing revenue(2), which excludes the effects of acquisitions
and divestitures, increased 0.7 percent in June and 2.1 percent year to date
compared with 2002. Total advertising revenue on a same property basis was up
0.1 percent for the month and up 1.4 percent year to date. Retail advertising
revenue was up 1.6 percent for the month and up 2.4 percent year to date.
Classified advertising revenue was down 2.1 percent for the month and up 0.2
percent year to date. For the month, employment classified advertising was down
6.1 percent, automotive down 2.6 percent, real estate up 8.5 percent, other
newspaper classified categories down 5.6 percent, and classified in alternative
publications down 2.8 percent. National advertising revenue, a small category
for Lee, was down 1.9 percent for the month and down 3.3 percent year to date.
Circulation revenue was down 1.1 percent for the month and down 0.4 percent year
to date. Online revenue was up 29.4 percent for the month and up 34.1 percent
year to date.
At the 15 newspapers Lee acquired in their entirety in April 2002, revenue in
June increased 2.9 percent(3). Publishing revenue of the former Howard
newspapers increased 13.0 percent on a reported basis, due to the inclusion of
Sioux City Newspapers (SCN) in revenue in the current year. Lee's purchase of
Howard Publications in April 2002 included 15 daily newspapers and a 50 percent
interest in SCN. Lee acquired the remaining 50 percent interest of SCN in July
2002.
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 more than 175 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.
The monthly and year-to-date statistical information follows.
5
LEE ENTERPRISES, INCORPORATED
Revenue and Statistical Summary
June 2003
(Unaudited)
PUBLISHING REVENUE
June Year To Date
(Thousands) --------------------------- ---------------------------
2003 2002 % 2003 2002 %
--------- --------- ------- --------- --------- -------
(1)(2) (1)(2) (2) (2)
Advertising:
Retail.................. $ 13,448 $ 13,237 1.6 % $124,437 $121,531 2.4 %
National................ 766 781 (1.9) 7,298 7,548 (3.3)
Classified:
Daily newspapers:
Employment.......... 1,973 2,101 (6.1) 15,354 16,270 (5.6)
Automotive.......... 1,817 1,865 (2.6) 15,801 15,640 1.0
Real estate......... 1,655 1,526 8.5 12,760 11,774 8.4
All other........... 1,462 1,549 (5.6) 10,932 11,127 (1.8)
Alternative
publications........ 1,527 1,571 (2.8) 14,940 14,853 0.6
--------- --------- --------- ---------
Total classified...... 8,434 8,612 (2.1) 69,787 69,664 0.2
--------- --------- --------- ---------
Total advertising..... 22,648 22,630 0.1 201,522 198,743 1.4
Circulation............... 6,843 6,917 (1.1) 60,437 60,650 (0.4)
Online.................... 815 630 29.4 6,586 4,913 34.1
Other..................... 4,500 4,394 2.4 43,605 41,317 5.5
--------- --------- --------- ---------
Total, Same property.. 34,806 34,571 0.7 312,150 305,623 2.1
Acquired/divested
properties:
Acquisitions............ 20,975 18,568 13.0 181,979 54,193 NM
Divestitures............ -- 137 NM -- 3,598 NM
--------- --------- --------- ---------
Total acquired/divested
properties............... 20,975 18,705 12.1 181,979 57,791 NM
--------- --------- --------- ---------
Total publishing
revenue............... $ 55,781 $ 53,276 4.7 % $494,129 $363,414 36.0 %
========= ========= ========= =========
DAILY NEWSPAPER ADVERTISING VOLUME
June Year To Date
------------------------- -------------------------
(Thousands of Inches) 2003 2002 % 2003 2002 %
------- ------- ------ ------- ------- ------
(1)(2) (1)(2) (2) (2)
Retail.................... 484 504 (4.0)% 4,538 4,568 (0.7)%
National.................. 24 28 (14.3) 223 262 (14.9)
Classified................ 516 522 (1.1) 4,234 4,197 0.9
------- ------- ------- -------
Total, Same property.. 1,024 1,054 (2.8)% 8,995 9,027 (0.4)%
======= ======= ======= =======
Notes to Revenue and Statistical Summary:
(1) The month had one more Monday and one fewer Saturday than the prior period.
(2) Beginning in March 2003, same property revenue excludes revenue of Madison
Newspapers, Inc. (MNI), 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 MNI, which for financial reporting purposes is
reported using the equity method of accounting.
6
(3) Same property revenue related to newspapers acquired from Howard
Publications excludes revenue of Sioux City Newspapers (SCN). Lee owned 50%
of the capital stock of SCN during the period from April through June 2002,
which was accounted for using the equity method of accounting. Year to date
same property revenue information is not meaningful due to the consummation
of the acquisition at a date during the fiscal year. The following table
reconciles Howard acquisition revenue on a same property basis to revenue
as reported.
June
-----------------------------
(Thousands) 2003 2002 %
Howard acquisition revenue.................. $19,101 $18,568 2.9%
SCN......................................... 1,874 -- NM
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Total publishing revenue.................... $20,975 $18,568 13.0%
======== =======
(4) The Company's fiscal year ends on September 30.
(5) The Company disclaims responsibility for updating information beyond
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, 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: dan.hayes@lee.net, (563) 383-2100
7