Lee Enterprises Reports Preliminary Earnings for Q4

November 13, 2008

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