UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported):  January 16, 2009

 

_______________________________________________________________________

LEE ENTERPRISES, INCORPORATED

(Exact name of Registrant as specified in its charter)

 

_______________________________________________________________________

 

Commission File Number 1-6227

 

 

 

201 N. Harrison Street, Davenport, Iowa 52801

(Address of Principal Executive Offices)

 

(563) 383-2100

Registrant’s telephone number, including area code

 

_____________________________________________________________________________________

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

On January 20, 2009 Lee Enterprises, Incorporated (the “Company”) reported its results for the first fiscal quarter ended December 28, 2008. A copy of the earnings release is furnished as Exhibit 99.1 to this Form 8-K and information from the news release is hereby incorporated by reference. The information in this report shall not be treated as filed for purposes of the Securities Exchange Act of 1934, as amended (“Exchange Act”).

 

 

On January 16, 2009, the Company issued a news release. A copy of the news release is attached as Exhibit 99.2 and information from the news release is hereby incorporated by reference. The information in this report shall not be treated as filed for purposes of the Exchange Act.

 

 

 

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.

 

 

2

 

Exhibit 10.1 – Fourth Amendment to Note Agreement and First Amendment to Limited Waiver to Note Agreement and Guaranty Agreement entered into as of January 16, 2009 by and among St. Louis Post-Dispatch LLC, Pulitzer Inc. and the Note-Holders party thereto

 

FOURTH AMENDMENT TO NOTE AGREEMENT

FIRST AMENDMENT TO LIMITED WAIVER TO NOTE AGREEMENT AND GUARANTY AGREEMENT

THIS FOURTH AMENDMENT TO NOTE AGREEMENT AND FIRST AMENDMENT TO LIMITED WAIVER TO NOTE AGREEMENT AND GUARANTY AGREEMENT (this “Amendment”) is entered into as of January 16, 2009 by and among ST. LOUIS POST-DISPATCH LLC, a Delaware limited liability company (the “Company”), PULITZER INC., a Delaware corporation (the “Guarantor”), and the undersigned holders of Notes (as hereinafter defined) (the Company, the Guarantor and the undersigned holders of Notes being collectively referred to herein as the “Parties”). Capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to them in the Waiver or the Note Agreement (as each such term is defined in Recital A below), as amended hereby.

Recitals

A.         Reference is made to (i) that certain Note Agreement, dated as of May 1, 2000, among the Company and the holders of the senior notes issued thereunder, as amended prior to the date hereof (the “Note Agreement”) and (ii) that certain Limited Waiver to Note Agreement and Guaranty Agreement, entered into as of December 26, 2008, by and among the Parties (the “Waiver”).

B.         The Company and the Guarantor have requested, and the holders of the Notes have agreed, subject to the terms and conditions of this Amendment, to extend the terms of the Waiver and, in connection therewith, to amend the Note Agreement, as set forth herein.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.         Amendment to Note Agreement. Paragraph 7A(iv) of the Note Agreement is hereby amended and restated in its entirety to read as follows:

(iv)       the Company fails to perform or observe any agreement contained in paragraph 6 or the Waiver Termination Date (as defined in the Limited Waiver to Note Agreement and Guaranty Agreement, entered into as of December 26, 2008, among the Company, the Guarantor and the holders of the Notes, as amended) shall occur;

2.         Extension of Waiver Period. Paragraph 2 of the Waiver is hereby amended to read in its entirety as follows:

Notwithstanding anything to the contrary contained in the Note Agreement or the Guaranty Agreement, the holders of the Notes hereby waive the Specified Events of Default so long as no other Default or Event of Default exists (or hereafter arises) under the Note Agreement (including, without limitation, Defaults and Events of Default that constitute Guaranty Defaults or Guaranty Events of Default, respectively); provided that such waiver of the Specified Events of Default shall cease to be of any force or effect (v) on January 30, 2009, (w) if at any time on or after the Effective Date (as hereinafter defined) and prior to January 30, 2009, (i) Consolidated Net Worth (as defined in the Guaranty Agreement) is reduced by the making of any dividend, distribution or other payment in respect of equity interests, or any transfer of property of any nature (other than property in the form of cash payments in respect of accounts payable incurred in the ordinary course of business consistent with past practices), by the Guarantor or any of its Subsidiaries to any Affiliate (other than the Guarantor and its Subsidiaries) or by the forgiveness of an account or loan payable by an Affiliate (other than the Guarantor and its Subsidiaries) or the conversion thereof into equity, (ii) the Guarantor or any of its Subsidiaries incurs, assumes or otherwise becomes liable with respect to any Debt in excess of $1,000,000 in the aggregate, or (iii) the Guarantor or any of its Subsidiaries enters into any transaction with an Affiliate (other than the

 

Guarantor and its Subsidiaries), at which time (in the case of each of the foregoing clauses (i)-(iii)) each Specified Event of Default then existing under the Note Agreement or the Guaranty Agreement will constitute an immediate Event of Default under the Note Agreement without regard to this Amendment, (x) if at any time on or after the date hereof and prior to January 30, 2009, a Default or an Event of Default (other than the Specified Events of Default) exists under the Note Agreement (including, without limitation, Defaults and Events of Default that constitute Guaranty Defaults or Guaranty Events of Default, respectively), at which time each Specified Event of Default then existing under the Note Agreement will constitute an immediate Event of Default under the Note Agreement without regard to this Amendment, (y) if at any time on or after the date hereof and prior to January 30, 2009, the Administrative Agent (as defined in the Lee Credit Agreement) shall give notice of an Event of Default under the Lee Credit Agreement, Lee shall notify the Administrative Agent of an Event of Default under the Lee Credit Agreement, the Second Waiver to Credit Agreement relating to the Lee Credit Agreement shall terminate or any of the lenders or agents under the Lee Credit Agreement shall take any action to enforce their rights or remedies under the Lee Credit Agreement or any other Credit Document (as defined in the Lee Credit Agreement) or applicable law (and by their execution of this Amendment, each of the Guarantor and the Company agrees to notify the holders of the Notes immediately if any of the foregoing matters described in this clause (y) shall occur or exist and Lee shall have knowledge thereof), at which time each Specified Event of Default then existing under the Note Agreement or the Guaranty Agreement will constitute an immediate Event of Default under the Note Agreement without regard to this Amendment, or (z) forty-eight (48) hours following provision by the Required Holders of written notice to the Company and the Guarantor of termination of this waiver (the earliest date on which the conditions specified in any of the preceding clauses (v) to (z), inclusive, are satisfied being referred to as the “Waiver Termination Date”), which written notice shall be provided by the Company and the Guarantor as provided in paragraph 11H of the Note Agreement (except that delivery may be made by facsimile or email to Carl G. Schmidt (facsimile number: 563-327-2600/email: carl.schmidt@lee.net)) or by email or facsimile to Sidley & Austin, One South Dearborn, Chicago, Illinois 60603, Attention: Larry Nyhan (facsimile number: 312-853-7036/email address; lnyhan@sidley.com).

3.         Waiver Remains in Full Force and Effect. Except as expressly amended by this Amendment, all terms, conditions, covenants and other provisions contained in the Waiver are hereby ratified and shall be and remain in full force and effect; provided, however, that (a) the conditions to effectiveness contained herein shall supersede those contained in the Waiver, and (b) no additional Waiver Fee or other fee shall be payable in connection with this Amendment.

4.         Conditions to Effectiveness. This Amendment shall become effective, as of the date first written above (the “Effective Date”), when:

(a)        the Company, the Guarantor and the Required Holders shall have signed a counterpart hereof (whether the same or separate counterparts) and shall have delivered (including by way of facsimile or other electronic transmission) the same to Bingham McCutchen LLP, One State Street, Hartford CT 06001, Attention: Chip Fisher (facsimile number: 860-240-2564/e-mail address: chip.fisher @bingham.com); and

(b)        the Company shall have paid to Bingham McCutchen, LLP, as special counsel for the holders of the Notes, $150,000 as a retainer (it being understood and agreed that such retainer shall be an “evergreen” retainer and shall not be deemed to be a “cap” on the costs, fees and expenses and that the receipt of such retainer shall not limit the rights and remedies of the holders of the Notes, or the obligations of the Company or the Guarantor under paragraph 11A of the Note Agreement or Section 3 of the Waiver).

                5.          Miscellaneous.

 

(a)        References to Note Agreement and Guaranty Agreement. Upon and after the Effective Date, each reference to the Note Agreement or the Guaranty Agreement in the Note Agreement, the Guaranty Agreement, the Notes, or any other instrument or agreement entered into in connection therewith or otherwise related thereto shall mean and be a reference to the Note Agreement or the Guaranty Agreement as modified by this Amendment.

(b)        Ratification and Confirmation. Except as specifically modified herein, the Note Agreement and the Guaranty Agreement shall remain in full force and effect, and are hereby ratified and confirmed.

 

 

                (c)        No Waiver. Except as expressly provided herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any holder of Notes, nor constitute a waiver of any provision of the Note Agreement, the Guaranty Agreement, any Note or any other instrument or agreement entered into in connection therewith or otherwise related thereto.

(d)        Representation and Warranty. The Company and the Guarantor jointly and severally represent and warrant that (i) none of the events described in clauses (w), (x) or (y) of Section 2 of the Waiver has occurred and (ii) each is in compliance with its respective obligations under Section 3 of the Waiver.

(e)        GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK.

(f)        Counterparts. This Amendment may be executed in counterparts (including those transmitted by facsimile), each of which shall be deemed an original and all of which taken together shall constitute one and the same document. Delivery of this Amendment may be made by facsimile transmission of a duly executed counterpart copy hereof.

[The remainder of this page is intentionally left blank; signature pages follow]

 

 

IN WITNESS WHEREOF, the undersigned have caused this Amendment to be executed and delivered by their duly authorized officers as of the date first above written.

ST. LOUIS POST-DISPATCH LLC

 

 

 

PULITZER INC.

 

 

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

AMERICAN GENERAL LIFE INSURANCE COMPANY

AIG ANNUITY INSURANCE COMPANY

 

 

AIG EDISON LIFE INSURANCE COMPANY

 

GENWORTH LIFE AND ANNUITY INSURANCE COMPANY

(as Successor by Merger to First Colony Insurance Company)

Title:       Investment Officer  

 

 

THE NORTHWESTERN MUTUAL LIFE INSURANCE

COMPANY

 

 

 

 

THE NORTHWESTERN MUTUAL LIFE INSURANCE

COMPANY, for its Group Annuity Separate Account

Its           Authorized Representative  

 

PACIFIC LIFE INSURANCE COMPANY

 

 

 

 

 

Exhibit 99.1 - News Release of Lee Enterprises, Incorporated dated January 20, 2009

 

201 N. Harrison St.

Davenport, IA 52801

www.lee.net

 

NEWS RELEASE

 

Lee Enterprises reports preliminary earnings for first fiscal quarter  

 

DAVENPORT, Iowa (Jan. 20, 2009) — Lee Enterprises, Incorporated (NYSE: LEE), reported today that preliminary diluted earnings per common share from continuing operations were 15 cents for its first fiscal quarter ended Dec. 28, 2008, compared with 48 cents a year ago. Excluding unusual items⁽¹⁾, earnings were 21 cents per share, compared with 48 cents a year ago.

 

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-Q on or before Feb. 6, 2009.

 

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 New York Stock Exchange listing standards, we will ask the stockholders at our annual meeting to authorize the board of directors to implement a reverse stock split, if necessary. We continue to believe that Lee will emerge strong when the economy recovers.”

 

Total operating revenue from continuing operations for the quarter decreased 13.0 percent from a year ago to $243.6 million. Combined print and online advertising revenue decreased 15.2 percent to $184.6 million, with retail advertising down 9.8 percent, and classified down 27.1 percent. Combined print and online employment advertising revenue decreased 42.6 percent, automotive decreased 23.2 percent and real estate decreased 29.7 percent. Online advertising revenue declined 13.8 percent, with online retail advertising up 19.1 percent and online classified advertising down 31.5 percent. National advertising revenue decreased 5.4 percent. Circulation revenue declined 4.5 percent.

 

Operating expenses, excluding unusual items, depreciation and amortization, decreased 8.6 percent to $189.6 million. Compensation, excluding unusual items, declined 12.7 percent, with full-time equivalent employees down 10.6 percent. Newsprint and ink expense increased 0.2 percent and other cash costs decreased 5.6 percent.

 

Operating cash flow⁽²⁾ decreased 26.6 percent compared with a year ago to $53.1 million. Operating income, which includes equity in earnings of associated companies, depreciation and amortization, decreased 37.6 percent to $33.5 million.

 

 

Non-operating expense, which consists primarily of financial expense, net of financial income, decreased 1.7 percent to $18.7 million. Income from continuing operations before income taxes decreased 57.3 percent to $14.8 million. Income from continuing operations decreased 64.0 percent to $7.8 million. Net income available to common stockholders decreased 69.3 percent to $6.8 million.

 

Free cash flow⁽³⁾ totaled $30.2 million for the quarter, compared with $48.1 million a year ago.

 

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 St. Louis partnership. The following table summarizes the impact from unusual items on income available to common stockholders and earnings per diluted common share. Per share amounts may not add due to rounding.

 

 

IMPAIRMENT CHARGES

 

In fiscal 2008, Lee recorded after-tax non-cash charges totaling $893.7 million to reduce the carrying value of goodwill, other assets and the company's investment in TNI Partners. The charges have no effect on cash flows but reduce reported earnings per common share. Many public companies have been required to reduce the carrying value of their intangible assets as a result of significant declines in equity market value and other events. 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.

 

ABOUT LEE

 

Lee Enterprises is a premier provider of local news, information and advertising in primarily midsize markets, with 49 daily newspapers and a joint interest in four others, online sites and more than 300 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, (563) 383-2100

 

 

Exhibit 99.2 - News Release of Lee Enterprises, Incorporated dated January 16, 2009

 

201 N. Harrison St.

Davenport, IA 52801

www.lee.net

 

NEWS RELEASE

 

Lee Enterprises receives extension of covenant waiver  

 

DAVENPORT, Iowa (Jan. 16, 2009) — Lee Enterprises, Incorporated (NYSE: LEE), announced today that a waiver of covenant conditions related to its $306 million Pulitzer Notes debt of its subsidiary St. Louis Post-Dispatch LLC has been extended until Jan. 30, 2009. The waiver had been scheduled to expire today.

 

The Pulitzer Notes mature in April 2009. Carl Schmidt, Lee vice president, chief financial officer and treasurer, said, “Lee and its lenders continue to work diligently to effect an extension of the Pulitzer Notes, and to make longer term changes to our bank credit agreement to maintain the company’s liquidity.”

 

Without such a waiver extension by the holders of the Pulitzer Notes, Lee would be in technical default of several provisions under its applicable debt agreements. An event of default would allow the Pulitzer Noteholders, with notice, to exercise certain remedies granted by the various debt agreements, including acceleration of the maturity of Lee’s debt. The waiver contains a provision that will allow it to be withdrawn with 48 hours notice.

 

Lee Enterprises is a premier provider of local news, information and advertising in primarily midsize markets, with 49 daily newspapers and a joint interest in four others, 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.

 

FORWARD-LOOKING STATEMENTS — The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This report 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 report. The Company does not undertake to publicly update or revise its forward-looking statements.

Contact:  dan.hayes@lee.net, (563) 383-2100