SEC Filing | Lee Enterprises, Inc.

FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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) (Zip Code) Registrant's telephone number, including area code (319) 383-2100 Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange On Title of Each Class Which Registered - -------------------------------- ------------------------ Common Stock - $2.00 par value New York Stock Exchange Preferred Share Purchase Rights New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: Title of Class -------------------------------------- Class B Common Stock - $2.00 par value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] State the aggregate market value of voting stock held by nonaffiliates of the registrant as of December 1, 2000. Common Stock and Class B Common Stock, $2.00 par value, $1,197,960,000. Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of December 1, 2000. Common Stock, $2.00 par value, 32,975,540 shares; and Class B Common Stock, $2.00 par value, 10,726,497 shares. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Lee Enterprises, Incorporated Definitive Proxy Statement dated December 27, 2000 are incorporated by reference in Part III of this Form 10-K.

PART I Item 1. Business This Annual Report on Form 10-K contains certain forward-looking statements that are based largely on the Company's current expectations and are subject to certain risks, trends, and uncertainties that could cause actual results to differ materially from those anticipated. Among such risks, trends, and uncertainties are changes in advertising demand, newsprint prices, interest rates, regulatory rulings, other economic conditions, and the effect of acquisitions, investments, and dispositions on the Company's results of operations or financial condition. The words "believe," "expect," "anticipate," "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 as of the date of this filing. Item 1(a). Recent business developments. On October 1, 2000 the Company consummated the sale of certain broadcasting properties for approximately $565,000,000, net of selling expenses. For additional information related to the disposition, see Note 2 of the Notes to Consolidated Financial Statements under Item 8, herein. Item 1(b). The Company operates as a single industry segment publishing newspapers, classified and specialty publications, along with associated online services.

Item 1(c) Narrative description of business. The Company and its subsidiaries publish the following: Daily Newspapers: Circulation ------------------------------- Newspaper City State Daily (M-F) Sunday - -------------------------------------------------------------------------------------------------------- Southern Illinoisian Carbondale Illinois 25,667 35,431 Herald & Review Decatur Illinois 34,708 42,842 Quad City Times Davenport Iowa 50,237 72,154 Globe Gazette Mason City Iowa 19,451 23,520 Muscatine Journal Muscatine Iowa 8,121 - Winona Daily News Winona Minnesota 11,910 12,733 Billings Gazette Billings Montana 47,390 52,895 The Montana Standard Butte Montana 14,388 14,730 Ravalli Republic Hamilton Montana 4,600 * - Independent Record Helena Montana 13,123 13,933 Missoulian Missoula Montana 30,405 36,863 Beatrice Daily Sun Beatrice Nebraska 8,200 - Columbus Telegram Columbus Nebraska 10,116 10,933 Fremont Tribune Fremont Nebraska 9,319 * - Lincoln Journal Star Lincoln Nebraska 74,862 83,469 The Bismarck Tribune Bismarck North Dakota 27,311 30,380 Democrat-Herald Albany Oregon 18,669 32,758 ** Ashland Daily Tidings Ashland Oregon 5,086 - Corvallis Gazette-Times Corvallis Oregon 12,322 - ** Rapid City Journal Rapid City South Dakota 29,963 34,004 Baraboo News Republic *** Baraboo Wisconsin 3,812 * - Chippewa Herald Chippewa Falls Wisconsin 7,550 * - LaCrosse Tribune LaCrosse Wisconsin 31,390 40,505 Wisconsin State Journal *** Madison Wisconsin 88,171 158,492 Portage Daily Register *** Portage Wisconsin 4,645 * - The Journal Times Racine Wisconsin 29,636 31,091 Shawano Leader *** Shawano Wisconsin 5,981 * 6,292 -------------- -------------- Total paid daily and Sunday circulation 627,033 733,025 ============== ============== Source - Audit Bureau of Circulation (ABC): Average of 6 months ended March and September 2000. * From publisher's statement. ** Combined edition with Democrat-Herald. *** Published by Madison Newspapers, Inc., a 50%-owned affiliate. The Company owns 50% of the capital stock of Madison Newspapers, Inc. and 17% of the nonvoting common stock of The Capital Times Company. The Capital Times Company owns the remaining 50% of the capital stock of Madison Newspapers, Inc. Madison Newspapers, Inc. owns the Wisconsin State Journal, a morning newspaper published seven days each week, and The Capital Times, an afternoon paper published Monday through Saturday each week. Both newspapers are produced in the printing plant of Madison Newspapers, Inc., which maintains common advertising, circulation, delivery, and business departments for the two newspapers. Central Wisconsin Newspapers, Inc., a wholly-owned subsidiary of Madison Newspapers, Inc., publishes three daily newspapers, seven weekly publications, and two classified publications.

The Company has a contract to furnish the editorial and news content for the Wisconsin State Journal. The Wisconsin State Journal is classified as one of the Lee Group of newspapers in the newspaper field and in the rating services. Weekly Newspapers: Newspaper City State Day(s) Circulation - --------------------------------------------------------------------------------------------------------------- Bettendorf News Bettendorf Iowa Wednesday 7,800 Britt Tribune News Britt Iowa Tuesday 1,750 Forest City Summit Forest City Iowa Wednesday 3,200 Mitchell County Press-News Osage Iowa Wednesday 3,300 Bigfork Eagle Big Fork Montana Wednesday 1,600 Hungry Horse News Columbia Falls Montana Thursday 6,500 Clark Fork Valley Press Plains Montana Wednesday 1,500 Lake County Leader Polson Montana Thursday 5,600 Mineral County Independent Superior Montana Wednesday 11,000 Whitefish Pilot Whitefish Montana Thursday 4,000 David City Banner Press David City Nebraska Thursday 3,800 The Plattsmouth Journal Plattsmouth Nebraska Thursday 5,500 Schuyler Sun Schuyler Nebraska Thursday 2,950 Burt County Plaindealer Tekamah Nebraska Tuesday 2,000 Mandan News Mandan North Dakota Thursday 1,900 Cottage Grove Sentinel Cottage Grove Oregon Wednesday 4,500 Lebanon Express Lebanon Oregon Wednesday 3,500 Newport News-Times Newport Oregon Wednesday and Friday 10,000 The Springfield News Springfield Oregon Wednesday and Saturday 11,000 Business First * Madison Wisconsin Tuesday 10,000 Juneau County Star-Times * Mauston Wisconsin Wednesday and Saturday 2,900 Dunn County News Menomonie Wisconsin Wednesday and Sunday 4,400 Oregon News * Oregon Wisconsin Thursday 5,000 Reedsburg Times Press/Report * Reedsburg Wisconsin Thursday and Saturday 2,400 Sauk Prairie Eagle * Sauk City Wisconsin Thursday 2,400 Stoughton News * Stoughton Wisconsin Thursday 5,000 Sun Prairie News * Sun Prairie Wisconsin Thursday 9,000 Tomah Journal/Monitor Herald Tomah Wisconsin Monday and Thursday 5,150 Vernon County Broadcaster Viroqua Wisconsin Thursday 5,400 Coulee News West Salem Wisconsin Thursday 2,100 Westby Times Westby Wisconsin Thursday 1,600 Wisconsin Dells Events * Wisconsin Dells Wisconsin Wednesday and Saturday 1,800 --------------- Total paid weekly circulation 148,550 =============== Source: Company statistics * Published by Madison Newspapers, Inc., a 50%-owned affiliate.

Classified Publications: Publication City State Day(s) Circulation - ------------------------------------------------------------------------------------------------------------------ Dandy Dime Tucson Arizona Friday 37,000 Nickel Want Ad Newspaper Redding California Thursday 19,000 Flipside Carbondale Illinois Thursday 11,000 Southern Hometown Shopper Carbondale Illinois Wednesday 35,100 Prairie Shopper Decatur Illinois Tuesday 44,200 The Extra Decatur Illinois Tuesday 22,000 Thrifty Nickel East Moline Illinois Thursday 11,700 Town & Country Advertiser Britt Iowa Tuesday 4,700 Gateway Times Clinton Iowa Saturday 10,000 Quad City Advertiser Davenport Iowa Wednesday 25,000 Summit Advertiser Forest City Iowa Wednesday 7,500 Winnebago/Hancock Shopper Forest City Iowa Monday 10,700 Globe Advertiser Mason City Iowa Tuesday 5,800 Mason City Shopper Mason City Iowa Tuesday 28,200 Sunday Express Muscatine Iowa Sunday 4,300 The Post Muscatine Iowa Tuesday 20,500 Town & Country Shopper Osage Iowa Wednesday 3,600 Neighbors Extra Winona Minnesota Saturday 9,700 Thrifty Nickel Billings Montana Thursday 30,000 Work for You Billings Montana Wednesday 10,000 Yellowstone Shopper Billings Montana Thursday 14,800 Mini Nickel Bozeman Montana Thursday 27,500 Western Montana Shopper Deer Lodge Montana Thursday 3,500 Consumers Press Great Falls Montana Thursday 34,000 Post Script Hamilton Montana Wednesday 16,000 The Adit Helena Montana Wednesday 23,500 West Shore News Lakeside Montana Wednesday 3,500 The Shopping News Missoula Montana Wednesday 15,500 Western Montana Messenger Missoula Montana Wednesday 33,000 The Advertiser Polson Montana Wednesday 28,000 Penny Press Beatrice Nebraska Tuesday 18,500 Plug Nickel Beatrice Nebraska Wednesday 8,500 Sunland Weekend Extra Beatrice Nebraska Saturday 15,000 Scout Shopper Columbus Nebraska Tuesday 13,500 Tribune Marketplace Fremont Nebraska Tuesday 21,000 Homefront Buyers Guide Fremont Nebraska Friday 19,500 Neighborhood Extra Lincoln Nebraska Saturday 62,000 Star Express Lincoln Nebraska Wednesday 30,000 Stuff for You Lincoln Nebraska Friday 5,000 Work for You Lincoln Nebraska Tuesday 7,500 Consumer Connection Plattsmouth Nebraska Tuesday 18,000 Nifty Nickel Las Vegas Nevada Friday 50,000 Penny Saver Albuquerque New Mexico Thursday 24,000 Quik Quarter/Thrifty Nickel Albuquerque New Mexico Thursday 36,000 Tribune Extra Bismarck North Dakota Wednesday 15,000 --------------- Circulation subtotal forward 892,800

Publication City State Day(s) Circulation - ------------------------------------------------------------------------------------------------------------------ Circulation subtotal forwarded 892,800 Pennysaver Dickinson North Dakota Wednesday 13,800 The Finder Mandan North Dakota Wednesday 39,200 Minot Finder Minot North Dakota Wednesday 18,000 This Week Albany/Corvallis Oregon Wednesday 16,500 Ashland People Ashland Oregon Tuesday 6,000 Nickel Want Ad Newspaper Klamath Falls Oregon Thursday 19,000 Nickel Want Ad Newspaper Medford Oregon Thursday 27,500 This Week Newport Oregon Tuesday 10,000 Nickel Ads Portland Oregon Friday 173,000 Rapid City Advertiser Rapid City South Dakota Wednesday 28,000 Northern Hills Advertiser Spearfish South Dakota Wednesday 15,000 Pioneer Shopper St. George Utah Thursday 28,500 Little Nickel Lynnwood Washington Wednesday and Thursday 320,000 Nickel Saver Moses Lake Washington Thursday 21,500 Nickel Nik Spokane Washington Friday 37,000 Buyline Walla Walla Washington Thursday 20,000 Nickel Ads Wenatchee Washington Thursday 26,500 Chippewa County Advertiser Chippewa Falls Wisconsin Sunday 12,500 Your Family Shopper Chippewa Falls Wisconsin Saturday 31,800 Tradin' Post Buyer's Guide Eau Claire Wisconsin Monday 27,000 Foxxy Shopper LaCrosse Wisconsin Tuesday 34,000 Tribune Extra LaCrosse Wisconsin Wednesday 21,300 Work for You Extra ** Madison Wisconsin Sunday 40,000 Dunn County Reminder Menomonie Wisconsin Thursday 22,000 Dunn County Shopper Menomonie Wisconsin Sunday 16,000 Shopper Stopper ** Merrimac Wisconsin Tuesday 123,000 Pennysaver Racine Wisconsin Monday 55,000 Foxxy Shopper Sparta Wisconsin Tuesday 43,800 Tri-County Advertiser Tomah Wisconsin Tuesday 12,200 Economy Shopper West Salem Wisconsin Tuesday 18,900 --------------- Total non-paid weekly circulation 2,169,800 =============== Source: Company statistics ** Published by Madison Newspapers, Inc., a 50%-owned affiliate. Classified publications are weekly advertising publications available in racks or delivered free by carriers or third-class mail to all households in a particular geographic area. Classified publications offer advertisers a cost-effective local advertising system. Classified publications are particularly effective in larger markets with high media fragmentation in which metropolitan newspapers generally have low penetration.

Specialty Publications: City State - -------------------------------------------------------------------------------- Cars & Trucks Tuscon Arizona Welcome Home Carbondale Illinois Wheels for You Decatur Illinois Thrifty Nickel Wheel Deals East Moline Illinois Classic Images Muscatine Iowa Films of the Golden Age Muscatine Iowa Autofinder Billings Montana Western Business Billings Montana Prairie Star Great Falls Montana Montana Magazine Helena Montana Autofinder Missoula Montana Wheels for You Grand Island Nebraska Real Estate Lincoln Nebraska Rentals for You Lincoln Nebraska Wheels for You Lincoln Nebraska Midwest Messenger Tekamah Nebraska Farm & Ranch Guide Bismarck North Dakota The Family Times Corvallis Oregon Goldmine Cottage Grove Oregon Mighty Mailer Springfield Oregon Tri-State Neighbor Sioux Falls South Dakota Homes Moses Lake Washington Driveline Spokane Washington Home Buyer's Guide Spokane Washington Nickel Nik's RV/Truck Wheel Deals Spokane Washington Nickel Nik's Wheel Deals Spokane Washington Homes Wenatchee Washington Enterpriser LaCrosse Wisconsin Wheels for You LaCrosse Wisconsin Home Buyers Guide LaCrosse Wisconsin Ad World ** Madison Wisconsin AgriView ** Madison Wisconsin Apartment Showcase ** Madison/Milwaukee Wisconsin Nursing Matters ** Madison Wisconsin Wisconsin Reminder ** Mauston Wisconsin Cent Saver ** Portage Wisconsin Penny Saver ** Shawano Wisconsin ** Published by Madison Newspapers, Inc., a 50%-owned affiliate. Commercial Printing: City State - ----------------------------------------------------------------------------- William Street Press Decatur Illinois Hawkeye Printing Davenport Iowa Platen Press Deer Lodge Montana Farcountry Press Helena Montana Broadwater Printing Townsend Montana Oak Creek Printing Lincoln Nebraska Little Nickel Quik Print Lynwood Washington Maple Street Press Spokane Washington

Online Services: The Company's internet activities are comprised of websites and investments in three internet service companies. These activities are reported and managed as a part of the Company's publishing operations. The Company expects significant growth from these operations in 2001. The Company has an 81% interest in INN Partners, L.C. d/b/a International Newspaper Network, a provider of web solutions for small daily and weekly newspapers and shoppers. The Company has a 6.3% interest in Ad One, LLC, a provider of integrated online classified solutions for the newspaper industry. The Company has an agreement to invest up to $1,500,000 in three-year subordinated convertible debentures of CityXpress.com Corp., an integrator of online editorial content with transactional and promotional opportunities. The Company's strategy is to increase its share of local advertising in its existing markets, and over time, to increase circulation through internal expansion into contiguous markets and make selective acquisitions. The basic raw material of newspapers, classified, and specialty publications is newsprint. The Company and its subsidiaries purchase newsprint from U.S. and Canadian producers. The Company believes it will continue to receive a supply of newsprint adequate to its needs. Newsprint prices are volatile and fluctuate based upon factors which include both the foreign and domestic production capacity and consumption. The price fluctuations can have a significant effect on the results of operations. For the quantitative impacts of these fluctuations, see "Management Discussion and Analysis of Financial Condition and Results of Operations" under Item 7, herein. Publishing revenue has traditionally been highest in the quarter ended December 31 and, likewise, has been lowest in the quarter ended March 31. The Company's newspapers, classified and specialty publications compete with newspapers having national or regional circulation, magazines, radio, television, other advertising media such as billboards, classified and specialty publications and direct mail, as well as other information content providers such as on-line services. In addition, several of the Company's daily and Sunday newspapers compete with other newspapers in nearby cities and towns. OTHER MATTERS In the opinion of management, compliance with present statutory and regulatory requirements respecting environmental quality will not necessitate significant capital outlays, or materially affect the earning power of the business of the Company, or cause material changes in the Company's business, whether present or intended. In September 2000, the Company, its subsidiaries and associated companies had approximately 5,900 employees, including approximately 1,400 part-time employees. This included approximately 1,400 employees, including approximately 100 part-time employees, in the Company's Broadcast division which was sold on October 1, 2000. Item 2. Properties The Company's executive offices are located in facilities leased at 215 North Main Street, Davenport, Iowa. All of the printing plants (except Madison, Wisconsin which is owned by Madison Newspapers, Inc. and a leased plant in Spokane, Washington) are owned by the Company. All printing plants (including Madison) are well maintained, are in good condition, and are suitable for the present office and publishing operations and are adequately equipped with typesetting, printing and other required equipment. Item 3. Legal Proceedings Not applicable. Item 4. Submission of Matters to a Vote of Security Holders Not applicable.

Executive Officers of the Company The following table shows the names and ages of all executive officers of the Company, the period of service for each with the Company, the period during which each has held his or her present office and the office held by each. Period of Period In Service with Present Name Age Company Office Present Office - --------------------------------------------------------------------------------------------------------------- Richard D. Gottlieb 58 37 years 9 months Chairman and Chief Executive Officer Mary E. Junck 53 2 years 9 months President and Chief Operating Officer Phil E. Blake 56 21 years 1 year Vice President - Publishing John VanStrydonck 47 19 years 3 months Vice President - Publishing Greg R. Veon 48 24 years 1 year Vice President - Publishing James W. Hopson 54 2 months 2 months Vice President - Publishing Vytenis P. Kuraitis 52 6 years 4 years Vice President - Human Resources Charles D. Waterman, III 54 11 years 11 years Secretary George C. Wahlig 53 11 years 1 month Vice President - Finance, Interim Chief Financial Officer and Chief Accounting Officer Gregory P. Schermer 46 12 years 3 years Vice President - Interactive Media Michael E. Phelps 54 8 months 8 months Vice President - Sales & Marketing Richard D. Gottlieb was elected Chairman in January 2000. He had been President and Chief Executive Officer since 1991. The Company anticipates that Mr. Gottlieb will retire as Chief Executive Officer in January 2001 and continue as a non-executive Chairman of the Board of Directors of the Company. Mary E. Junck was elected Executive Vice President and Chief Operating Officer in May 1999 and President in January 2000. From May 1996 to April 1999 she was Executive Vice President of The Times Mirror Company and President of Eastern Newspapers. She was named Publisher and Chief Executive Officer of The Baltimore Sun in 1993. The Company anticipates that Ms. Junck will be elected President and Chief Executive Officer of the Company in January 2001. Phil E. Blake was elected Vice President - Publishing in November 1999. For more than the past 5 years has been, publisher of the Wisconsin State Journal and publisher and treasurer of Madison Newspapers, Inc. Mr. Blake retired as publisher of the Wisconsin State Journal in July 2000, and will retire from the Company on December 31, 2000. John VanStrydonck was elected Vice President - Publishing in June 2000; from September 1994 to June 2000 he was publisher of the Rapid City Journal and was Chairman and Chief Operating Officer of NAPP Systems from September 1994 until its sale by Lee in January 1997. Greg R. Veon was elected Vice President - Publishing in November 1999; from November 1995 through November 1999 he was Vice President - Marketing; from 1992 through November 1995 he was Vice President and General Manager of KOIN-TV, Portland, Oregon. James W. Hopson was elected Vice President - Publishing and publisher of the Wisconsin State Journal in July 2000. For more than the past 5 years he has been Chief Executive Officer of Thomson Newspapers Central Ohio Strategic Marketing Group. Vytenis P. Kuraitis was elected Vice President - Human Resources in January 1997. From August 1994 through January 1997 he was Director of Human Resources. Charles D. Waterman, III was elected Secretary of the Company in November 1989. He is presently, and for more than the past five years has been, a partner in the law firm of Lane & Waterman, Davenport, Iowa, general counsel of the Company. George C. Wahlig was appointed interim Chief Financial Officer in September 2000. For more than 5 years he has been Vice President - Finance and Chief Accounting Officer.

Gregory P. Schermer was elected Vice President - Interactive Media in November 1997; from 1989 through November 1997 he was, and continues to serve as, corporate counsel for the Company. Michael E. Phelps was elected Vice President - Sales and Marketing in February 2000. For more than the past 5 years he has been managing principal of Phelps, Cutler & Associates newspaper management consultants.

PART II Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters COMMON STOCK PRICES AND DIVIDENDS Lee Common Stock is listed on the New York Stock Exchange. Lee Class B Common Stock was issued to stockholders of record of the Company in 1986 pursuant to a 100% stock dividend and is converted at sale or the option of the holder into Lee Common Stock. The table below shows the high and low prices of Lee Common Stock for each quarter during the past three years, the closing price at the end of each quarter and the dividends paid per share. Quarter --------------------------------------------- 4th 3rd 2nd 1st --------------------------------------------- STOCK PRICES 2000 High $28 15/16 $26 3/16 $31 9/16 $32 1/4 Low 23 1/4 20 1/2 19 11/16 27 1/4 Closing 28 7/8 23 5/16 26 1/8 31 15/16 1999 High $31 1/16 $30 1/2 $31 7/16 $31 1/2 Low 26 1/8 27 1/2 26 5/16 21 13/16 Closing 27 3/8 30 1/2 29 31 1/2 1998 High $31 3/4 $33 7/8 $33 9/16 $29 13/16 Low 23 1/2 27 5/16 28 25 1/2 Closing 25 15/16 30 5/8 33 9/16 29 9/16 DIVIDENDS PAID 2000 $ 0.16 $ 0.16 $ 0.16 $ 0.16 1999 0.15 0.15 0.15 0.15 1998 0.14 0.14 0.14 0.14 For a description of the relative rights of Common Stock and Class B Common Stock, see Note 7 of the Notes to Consolidated Financial Statements under Item 8, herein. At September 30, 2000, the Company had 3,185 holders of Common Stock and 2,064 holders of Class B Common Stock.

Item 6. Selected Financial Data FIVE YEAR FINANCIAL PERFORMANCE Year Ended September 30: 2000 1999 1998 1997 1996 --------------------------------------------------------- (In Thousands Except Per Share Data) OPERATIONS Operating revenue $ 431,513 $ 413,846 $ 391,261 $ 326,197 $ 309,572 ========================================================= Income from continuing operations $ 69,875 $ 56,821 $ 47,674 $ 49,879 $ 40,363 --------------------------------------------------------- Discontinued operations 4,738 11,152 14,559 12,866 21,032 Gain (loss) on disposition of discontinued operations 9,050 -- -- 1,485 (15,948) --------------------------------------------------------- 13,788 11,152 14,559 14,351 5,084 --------------------------------------------------------- Net income $ 83,663 $ 67,973 $ 62,233 $ 64,230 $ 45,447 ========================================================= PER SHARE AMOUNTS Weighted average shares: Basic 44,005 44,273 44,829 46,393 46,973 Diluted 44,360 44,861 45,557 47,243 47,899 Basic: Income from continuing operations $ 1.59 $ 1.29 $ 1.07 $ 1.07 $ 0.86 Discontinued operations 0.11 0.25 0.32 0.28 0.44 Gain (loss) on disposition of discontinued operations 0.20 -- -- 0.03 (0.33) --------------------------------------------------------- Net income $ 1.90 $ 1.54 $ 1.39 $ 1.38 $ 0.97 ========================================================= Diluted: Income from continuing operations $ 1.58 $ 1.27 $ 1.05 $ 1.06 $ 0.84 Discontinued operations 0.11 0.25 0.32 0.27 0.44 Gain (loss) on disposition of discontinued operations 0.20 -- -- 0.03 (0.33) --------------------------------------------------------- Net income $ 1.89 $ 1.52 $ 1.37 $ 1.36 $ 0.95 ========================================================= Dividends $ 0.64 $ 0.60 $ 0.56 $ 0.52 $ 0.48 ========================================================= OTHER DATA Total assets $ 746,233 $ 679,513 $ 660,585 $ 650,963 $ 527,416 Debt, including current maturities 222,932 204,625 219,481 203,735 95,503 Stockholders' equity 395,167 354,329 319,759 319,390 324,954

Item 7. Management Discussion and Analysis of Financial Condition and Results of Operations This Management Discussion and Analysis of Financial Condition and Results of Operations contains certain forward-looking statements that are based largely on the Company's current expectations and are subject to certain risks, trends, and uncertainties that could cause actual results to differ materially from those anticipated. Among such risks, trends, and uncertainties are changes in advertising demand, newsprint prices, interest rates, and other economic conditions and the effect of acquisitions, investments, and dispositions on the Company's results of operations or financial condition. The words "believe," "expect," "anticipate," "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 as of the date of this filing. Operating results are summarized below: 2000 1999 1998 --------------------------------- (Dollars in Thousands, Except Per Share Data) Operating revenue $431,513 $413,846 $391,261 Percent change 4.3% 5.8% 19.9% Income before depreciation, amortization, interest and taxes (EBITDA) * 131,793 124,955 113,990 Percent change 5.5% 9.6% 15.7% Operating income 102,467 97,369 87,899 Percent change 5.2% 10.8% 7.3% Non-operating (income) expense, net (7,748) 10,205 12,715 Income from continuing operations 69,875 56,821 47,674 Percent change 23.0% 19.2% (4.4%) Earnings per share, continuing operations Basic 1.59 1.29 1.07 Percent change 23.3% 20.6% 0.0% Diluted 1.58 1.27 1.05 Percent change 24.4% 21.0% (0.9%) * EBITDA is not a financial performance measurement under generally accepted accounting principles (GAAP), and should not be considered in isolation or a substitute for GAAP performance measurements. EBITDA is also not reflected in the Company's consolidated statement of cash flows, but it is a common and meaningful alternative performance measurement for comparison to other companies in the newspaper industry. The computation excludes other non-operating items which are primarily the gain on sale of businesses. Operating revenue consists of the following: 2000 1999 1998 --------------------------------------- (Dollars in Thousands) Advertising revenue: Retail advertising: Retail - "run-of-press" $ 110,996 $ 108,203 $ 106,889 Retail - preprint and other 48,944 46,344 44,477 --------------------------------------- Total retail advertising 159,940 154,547 151,366 Percent change 3.5% 2.1% 21.9% National 9,318 8,737 7,613 Percent change 6.6% 14.8% 8.2% Classified 101,061 95,854 87,622 Percent change 5.4% 9.4% 34.5% Other 5,894 5,254 4,783 Percent change 12.2% 9.8% 26.4% Total advertising 276,213 264,392 251,384 Percent change 4.5% 5.2% 25.6% Circulation revenue 80,468 83,102 83,091 Percent change (3.2%) - % 2.8% Other revenue 65,455 57,114 48,419 Percent change 14.6% 18.0% 29.2%

The following advertising and circulation revenue results are presented exclusive of acquisitions and dispositions. Retail "run-of-press" advertising is advertising by merchants in the local community which is printed in the newspaper, rather than "preprints", which are printed separately by the Company or others and inserted into the newspaper. Retail revenue increased .5% in 2000, .4% in 1999, and decreased (.3%) in 1998. Retail revenue increases were caused primarily by an increase in volume as a result of the continuing emphasis on price incentives in return for larger or more frequent ads. Total revenue realized from retail and national merchants includes preprints, which have lower-priced, higher-volume distribution rates. Preprint revenue increased 2.9% in 2000, 4.2% in 1999, and 4.4% in 1998. Classified advertising revenue increased approximately 4.9% in 2000, 5.3% in 1999, and 8.1% in 1998. In 2000 growth in advertising revenue was in the employment and automotive categories. In 1999 growth in advertising revenue was in the automotive and to a lesser extent in the employment categories. This growth offset a decrease in real estate. In 1998 continued significant growth in employment and real estate advertising offset a small reduction in automotive. In total, advertising revenue increased 3.1%, 3.2%, and 3.6%. In 2000 circulation revenue decreased (2.4%) primarily as a result of a decrease in units. In 1999 circulation revenue decreased by (.3%) as a result of a decrease in volume offset by higher rates. In 1998 circulation revenue decreased (.8%) as a result of a decrease in volume. Other revenue consists of revenue from commercial printing, products, and services delivered outside the newspaper (which include activities such as target marketing, special event production, and online service) and editorial service contracts with Madison Newspapers, Inc. Other revenue by category is as follows: 2000 1999 1998 ---------------------------------- (In Thousands) Commercial printing $ 26,789 $ 23,774 $ 22,278 ---------------------------------- New revenue: Niche publications 13,929 10,702 5,500 Internet/online 3,250 1,597 924 Other 12,543 12,297 11,349 ---------------------------------- Total new revenue 29,722 24,596 17,773 ---------------------------------- Editorial service contracts 8,944 8,744 8,368 ---------------------------------- $ 65,455 $ 57,114 $ 48,419 ================================== In 2000, 1999, and 1998, exclusive of the effects of acquisitions and dispositions, other revenue increased 6.2%, 16.5%, and 3.6%, respectively. Commercial printing increased (decreased) by (5.4%), 2.7%, and (4.3%), respectively, due primarily to changes in sales volumes. Niche publications revenue increased 24.6%, 95.3%, and 28.8%, respectively, with the introduction of new products. Internet/online revenue increased 103.7%, 73.8%, and 336.9%, respectively, due to growth in advertising revenue. The following table sets forth the percentage of revenue of certain items. 2000 1999 1998 ----------------------------- Revenue 100.0% 100.0% 100.0% ----------------------------- Compensation costs 36.8 36.4 36.1 Newsprint and ink 9.0 9.0 10.5 Other operating expenses 23.7 24.4 24.2 ----------------------------- 69.5 69.8 70.8 ----------------------------- Income before depreciation, amortization, interest and taxes 30.5 30.2 29.2 Depreciation and amortization 6.8 6.7 6.7 ----------------------------- Operating margin wholly-owned properties 23.7% 23.5% 22.5% =============================

Exclusive of the effects of acquisitions and dispositions, in 2000 costs other than depreciation and amortization increased by 2.0%. Newsprint and ink costs decreased by (2.7%) due primarily to lower prices paid for newsprint in the first six months of the fiscal year. Compensation costs increased 4.0% primarily due to an increase in average compensation rates. Other operating costs increased .9%. Exclusive of the effects of acquisitions, in 1999 costs other than depreciation and amortization increased by 2.7%. Newsprint and ink costs decreased by (10.0%) due to lower prices for newsprint offset by a slight increase in usage. Compensation costs increased 5.2% due to an increase in average compensation and hours worked. Other operating costs increased 4.6%. Exclusive of the effects of acquisitions, in 1998 costs other than depreciation and amortization increased 4.9%. Newsprint and ink costs increased 12.1% due to higher prices for newsprint and greater consumption. Compensation costs increased 5.0% due to an increase in average compensation and hours worked. Other operating costs increased 2.0%. NON-OPERATING INCOME AND EXPENSE Financial expense decreased by approximately $(220,000) in 2000 primarily due to payments on long-term debt and increased capitalized interest of $686,000 offset by interest on short-term borrowings and increased deferred compensation costs. Financial expense decreased by approximately $(1,748,000) in 1999 primarily due to payments on long-term debt and a $500,000 increase in capitalized interest offset by additional deferred compensation costs. Financial expense increased by approximately $6,300,000 in 1998 due to borrowings to finance The Pacific Northwest Group acquisition. Interest on deferred compensation arrangements for executives and others is offset by financial income earned on the invested funds held in trust. Financial income and expense included $858,000, $501,000, and $24,000 in 2000, 1999, and 1998, respectively, as a result of these arrangements. In 2000, financial income increased by approximately $1,339,000 due primarily to an increase in income earned on short-term investments, notes receivable, and deferred compensation funds. Financial income remained relatively unchanged in 1999 and 1998. In 2000, other non-operating income, net consists primarily of a $18,439,000 gain from the sale of publishing properties and losses related to its 6.3% interest in Ad One, LLC, a provider of integrated online classified solutions for the newspaper industry. In 1999, other non-operating income, net represents the gain from the sale of a shopper publication. INCOME TAXES Income taxes were 36.6%, 34.8%, and 36.6% of pretax income in 2000, 1999, and 1998, respectively. In 1999 income taxes were reduced by $1,500,000 due to a settlement of a contingency. Exclusive of the settlement, income taxes were 36.5% of pretax income. DISCONTINUED OPERATIONS On October 1, 2000, the Company consummated the sale of substantially all of its broadcasting properties for approximately $565,000,000, net of selling expenses. The results for the broadcast properties have been classified as discontinued operations for all periods presented. For additional information related to the disposition, see Note 2 of the Notes to Consolidated Financial Statements under Item 8, herein. LIQUIDITY, CAPITAL RESOURCES AND COMMITMENTS Cash provided by operations totaled $126,889,000 in 2000. The Company has a $50,000,000 revolving credit arrangement with banks which expires in 2003. The major sources and uses of cash in 2000 were as follows: (In Thousands) Sources of cash: Operations $ 126,889 Short-term borrowings 30,500 Proceeds from sale of properties 8,775 All other 5,139 --------- 171,303 --------- Uses of cash: Acquisitions, net 71,609 Purchase of property and equipment 32,494 Cash dividends paid 28,288 Purchase of Lee Enterprises, Incorporated stock 20,021 --------- 152,412 --------- Increase in cash $ 18,891 =========

Capital expenditures for new and improved facilities and equipment are expected to be approximately $12,000,000 in 2001. The Company anticipates that funds necessary for capital expenditures and other requirements will be available from internally generated funds, net after-tax proceeds from the sale of its broadcast properties, which are expected to be approximately $390,000,000, and the Company's revolving credit agreements. Under the terms of its senior note agreement, the Company will be required to repay the outstanding balance of $173,400,000 on October 1, 2001 unless the Company reinvests the net proceeds of the broadcast sale or obtains a waiver of that provision of the agreement. Covenants under these agreements are not considered restrictive to normal operations or anticipated stockholder dividends. DIVIDENDS AND COMMON STOCK PRICES The current quarterly cash dividend is 17 cents per share, an annual rate of 68 cents. During the fiscal year ended September 30, 2000, the Company paid dividends of $28,288,000 or 33.8% of fiscal year 2000 net income. The Company will continue to review its dividend policy to assure that it remains consistent with its capital demands. Covenants under borrowing arrangements are not considered restrictive to payment of dividends. Lee Common Stock is listed on the New York Stock Exchange. The table under Item 5 herein shows the high and low prices of Lee Common Stock for each quarter during the past three years. It also shows the closing price at the end of each quarter and the dividends paid in the quarter. INFLATION The net effect of inflation on operations has not been material in the last several years because of efforts by the Company to lessen the effect of rising costs through a strategy of improving productivity, controlling costs and, where conditions permit, increasing selling prices. QUARTERLY RESULTS The Company's largest source of publishing revenue, retail run-of-press advertising, is seasonal and tends to fluctuate with retail sales in markets served. Historically, retail run-of-press advertising is higher in the first and third fiscal quarters. Newspaper classified advertising revenue (which includes real estate and automobile ads) is lowest in January and February, which are included in the second fiscal quarter. Quarterly results of operations are summarized under Item 8, herein.

Item 8. Financial Statements and Supplementary Data FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS September 30, ------------------------------ ASSETS 2000 1999 1998 - -------------------------------------------------------------------------------- (Dollars in Thousands) Current Assets: Cash and cash equivalents $ 29,427 $ 10,536 $ 16,941 Trade receivables, less allowance for doubtful accounts 2000 $3,344; 1999 $4,460; 1998 $4,110 41,212 67,122 60,443 Receivables from associated companies 1,500 1,438 1,437 Inventories 4,280 3,625 3,878 Other 7,380 19,822 16,892 Net assets of discontinued operations 167,767 -- -- ------------------------------ Total current assets 251,566 102,543 99,591 ------------------------------ Investments: Associated companies 19,155 16,326 14,107 Other 15,021 15,819 12,364 ------------------------------ 34,176 32,145 26,471 ------------------------------ Property and Equipment: Land and improvements 11,473 14,103 13,856 Buildings and improvements 63,893 67,342 65,945 Equipment 172,366 246,484 219,491 ------------------------------ 247,732 327,929 299,292 Less accumulated depreciation 120,376 188,726 170,920 ------------------------------ 127,356 139,203 128,372 ------------------------------ Intangibles and Other Assets: Intangibles 332,520 396,392 398,111 Other 615 9,230 8,040 ------------------------------ 333,135 405,622 406,151 ------------------------------ $746,233 $679,513 $660,585 ============================== See Notes to Consolidated Financial Statements.

LIABILITIES AND STOCKHOLDERS' September 30, ----------------------------------- EQUITY 2000 1999 1998 - ------------------------------------------------------------------------------------------- (Dollars in Thousands) Current Liabilities: Notes payable and current maturities of long-term debt $ 49,532 $ 17,620 $ 33,453 Accounts payable 14,242 11,764 14,277 Compensation and other accruals 27,603 26,551 26,966 Income taxes payable 7,799 5,378 6,475 Unearned income 18,451 18,135 16,890 ---------------------------------- Total current liabilities 117,627 79,448 98,061 ---------------------------------- Long-Term Debt, net of current maturities 173,400 187,005 186,028 ---------------------------------- Deferred Items: Retirement and compensation 13,418 13,781 13,117 Income taxes 46,621 44,950 43,620 ---------------------------------- 60,039 58,731 56,737 ---------------------------------- Stockholders' Equity: Capital stock: Serial convertible preferred, no par value; authorized 500,000 shares; issued none -- -- -- Common, $2 par value; authorized 60,000,000 shares; issued and outstanding 2000 33,070,000 shares 66,140 66,142 65,144 Class B, common, $2 par value; authorized 30,000,000 shares; issued and outstanding 2000 10,740,000 shares 21,480 22,376 23,556 Additional paid-in capital 37,330 32,641 28,715 Unearned compensation (1,227) (961) (650) Retained earnings 271,444 234,131 202,994 ---------------------------------- 395,167 354,329 319,759 ---------------------------------- $746,233 $679,513 $660,585 ==================================

CONSOLIDATED STATEMENTS OF INCOME Year Ended September 30, ---------------------------------- 2000 1999 1998 ---------------------------------- (In Thousands Except Per Share Data) Operating revenue: Advertising $ 276,213 $ 264,392 $ 251,384 Circulation 80,468 83,102 83,091 Other 65,455 57,114 48,419 Equity in net income of associated companies 9,377 9,238 8,367 --------------------------------- 431,513 413,846 391,261 --------------------------------- Operating expenses: Compensation costs 158,884 150,462 141,261 Newsprint and ink 38,625 37,447 41,165 Depreciation 14,546 13,766 12,403 Amortization of intangibles 14,780 13,820 13,688 Other 102,211 100,982 94,845 --------------------------------- 329,046 316,477 303,362 --------------------------------- Operating income 102,467 97,369 87,899 --------------------------------- Non-operating (income) expense, net: Financial expense 12,643 12,863 14,611 Financial (income) (3,259) (1,920) (1,896) Other, net (17,132) (738) -- --------------------------------- (7,748) 10,205 12,715 --------------------------------- Income from continuing operations before taxes on income 110,215 87,164 75,184 Income taxes 40,340 30,343 27,510 --------------------------------- Income from continuing operations 69,875 56,821 47,674 --------------------------------- Discontinued operations: Income from discontinued operations, net of income tax effect 4,738 11,152 14,559 Gain on disposition of discontinued operations, net of income tax effect 9,050 -- -- ---------------------------------- 13,788 11,152 14,559 ---------------------------------- Net income $ 83,663 $ 67,973 $ 62,233 ================================== Earnings per share: Basic: Income from continuing operations $ 1.59 $ 1.29 $ 1.07 Income from discontinued operations 0.31 0.25 0.32 ---------------------------------- Net income $ 1.90 $ 1.54 $ 1.39 ================================== Diluted: Income from continuing operations $ 1.58 $ 1.27 $ 1.05 Income from discontinued operations 0.31 0.25 0.32 ---------------------------------- Net income $ 1.89 $ 1.52 $ 1.37 ================================== See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Year Ended September 30, -------------------------------------------------------------------------- Amount Shares ----------------------------------- ---------------------------------- 2000 1999 1998 2000 1999 1998 -------------------------------------------------------------------------- (In Thousands Except Per Share Data) Common Stock: Balance, beginning $ 66,142 $ 65,144 $ 66,719 33,071 32,572 33,359 Conversion from Class B Common Stock 770 1,116 649 385 558 325 Shares issued 478 286 286 239 143 143 Shares reacquired (1,250) (404) (2,510) (625) (202) (1,255) -------------------------------------------------------------------------- Balance, ending $ 66,140 $ 66,142 $ 65,144 33,070 33,071 32,572 ========================================================================== Class B Common Stock: Balance, beginning $ 22,376 $ 23,556 $ 24,298 11,188 11,778 12,149 Conversion to Common Stock (770) (1,116) (649) (385) (558) (325) Shares reacquired (126) (64) (93) (63) (32) (46) -------------------------------------------------------------------------- Balance, ending $ 21,480 $ 22,376 $ 23,556 10,740 11,188 11,778 ========================================================================== Additional Paid-In Capital: Balance, beginning $ 32,641 $ 28,715 $ 25,629 Shares issued 4,689 3,926 3,086 ----------------------------------- Balance, ending $ 37,330 $ 32,641 $ 28,715 =================================== Unearned Compensation: Balance, beginning $ (961) $ (650) $ (493) Restricted shares issued (1,364) (1,081) (714) Restricted shares canceled 283 45 7 Amortization 815 725 550 ----------------------------------- Balance, ending $ (1,227) $ (961) $ (650) =================================== Retained Earnings: Balance, beginning $ 234,131 $ 202,994 $ 203,237 Net income 83,663 67,973 62,233 Cash dividends per share 2000 $.64; 1999 $.60; 1998 $.56 (28,288) (26,623) (25,160) Shares reacquired (18,062) (10,213) (37,316) ----------------------------------- Balance, ending $ 271,444 $ 234,131 $ 202,994 =================================== Stockholders' Equity $ 395,167 $ 354,329 $ 319,759 43,810 44,259 44,350 ========================================================================== See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended September 30, ----------------------------------- 2000 1999 1998 ----------------------------------- (In Thousands) Cash Provided by Operating Activities: Net income $ 83,663 $ 67,973 $ 62,233 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 41,263 39,748 37,576 Gain on sale of publishing properties (18,439) (738) -- Distributions less than earnings of associated companies (2,891) (2,220) (1,922) Change in assets and liabilities, net of effects from business acquisitions: (Increase) decrease in receivables 3,727 (6,154) (3,131) (Increase) decrease in inventories and other 1,424 (749) 1,427 Increase (decrease) in accounts payable, accrued expenses and unearned income 7,831 (2,117) 2,370 Increase (decrease) in income taxes payable 2,421 (1,097) 1,721 Other, primarily deferred items 7,890 3,206 465 ----------------------------------- Net cash provided by operating activities 126,889 97,852 100,739 ----------------------------------- Cash (Required for) Investing Activities: Acquisitions, net (71,609) (15,416) (11,944) Purchase of property and equipment (32,494) (32,431) (26,725) Proceeds from sale of publishing properties 8,775 492 -- Other 929 (3,867) (952) ----------------------------------- Net cash (required for) investing activities (94,399) (51,222) (39,621) ----------------------------------- Cash (Required for) Financing Activities: Purchase of common stock (20,021) (11,830) (51,388) Cash dividends paid (28,288) (26,623) (25,160) Proceeds from long-term borrowings -- -- 185,000 Proceeds from (payments on) short-term notes payable, net 30,500 6,000 (145,000) Principal payments on long-term borrowings -- (25,000) (25,000) Other 4,210 4,418 3,208 ----------------------------------- Net cash (required for) financing activities (13,599) (53,035) (58,340) ----------------------------------- Net increase (decrease) in cash and cash equivalents 18,891 (6,405) 2,778 Cash and cash equivalents: Beginning 10,536 16,941 14,163 ----------------------------------- Ending $ 29,427 $ 10,536 $ 16,941 =================================== See Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Nature of Business and Significant Accounting Policies Nature of business: As of September 30, 2000, operating divisions and associated companies publish 28 daily newspapers and more than 100 other weekly, classified and specialty publications and operate more than 75 Web sites. Significant accounting policies: Accounting estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Principles of consolidation: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany items have been eliminated. Inventories: Newsprint inventories are priced at the lower of cost or market with cost being determined primarily by the last-in, first-out method. Newsprint inventories as of September 30, 2000, 1999, and 1998 were less than replacement cost by $4,481,000, $4,710,000, and $4,815,000, respectively. Investments: Investments in the common stock or joint venture capital of associated companies are reported at cost plus the Company's share of undistributed earnings since acquisition, less amortization of intangibles and share of losses. Long-term loans to associated companies are included in investments in associated companies. Other investments primarily consist of various marketable securities held in trust under a deferred compensation arrangement. These investments are classified as trading securities and carried at fair value with gains and losses reported in the consolidated statements of income. Property and equipment: Property and equipment is carried at cost. Equipment, except for printing presses, is depreciated primarily by declining-balance methods. The straight-line method is used for all other assets. The estimated useful lives in years are as follows: Years ------- Buildings and improvements 5 - 25 Publishing: Printing presses 15 - 20 Other major equipment 3 - 11 The Company capitalizes interest as part of the cost of constructing major facilities. Intangibles: Intangibles include covenants not to compete, consulting agreements, customer lists, newspaper subscriber lists, and the excess costs over fair value of net assets of businesses acquired. The excess costs over fair value of net tangible assets include $6,493,000 incurred prior to October 31, 1970, which is not being amortized. Excess costs related to specialty publications are being amortized over 10 to 15 year periods. Intangibles representing non-compete covenants, consulting agreements, customer lists, and newspaper subscriber lists are being amortized over periods of 3 to 40 years. The remaining costs are being amortized over a period of 40 years. All intangibles are amortized by the straight-line method. The Company reviews its intangibles and other long-lived assets annually to determine potential impairment. In performing the review, the Company estimates the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment is recognized. The amount of impairment is measured based upon projected discounted future cash flows using a discount rate reflecting the Company's average cost of funds.

Unearned income: Unearned income arises in the ordinary course of business from advance subscription payments for newspapers. Revenue is recognized in the period in which it is earned. Advertising costs: Advertising costs, which are not material, are expensed as incurred. Income taxes: Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Cash and cash equivalents: For the purpose of reporting cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less at date of acquisition to be cash equivalents. Restricted stock: The Company amortizes as compensation cost the value of restricted stock, issued under a long-term incentive plan, by the straight-line method over the three-year restriction period. Reclassification: Certain items on the consolidated statements of income for the years ended September 30, 1999 and 1998 have been reclassified, with no effect on income or earnings per share, to be consistent with the classifications adopted for the year ended September 30, 2000. Note 2. Discontinued Operations and Subsequent Event On March 1, 2000, the Company decided to discontinue the operations of the Broadcast division. On May 7, 2000 the Company entered into an agreement to sell substantially all of its broadcasting operations, consisting of eight network-affiliated and seven satellite television stations, to Emmis Communications Corporation and closed October 1, 2000. The net proceeds are approximately $565,000,000 resulting in an after-tax gain for financial reporting purposes of approximately $250,000,000. The results for the Broadcast operations have been classified as discontinued operations for all periods presented in the consolidated statements of income. The assets and liabilities of discontinued operations have been classified in the consolidated balance sheet as "net assets of discontinued operations" as of September 30, 2000. The income from discontinued operations consists of the following: Year Ended September 30, ------------------------------- 2000 1999 1998 ------------------------------- (In Thousands) Income from discontinued operations $23,620 $19,371 $24,948 Income taxes 9,832 8,219 10,389 ------------------------------- $13,788 $11,152 $14,559 =============================== As of September 30, 2000, the assets and liabilities of the Broadcast division consisted of the following (in thousands): Assets: Accounts receivable, net $ 23,493 Program rights and other 8,190 Property and equipment, net 29,775 Intangibles and other assets 122,310 -------- 183,768 -------- Liabilities: Current liabilities 13,072 Deferred items and other 2,929 -------- 16,001 -------- Net assets of discontinued operations $167,767 ========

Note 3. Acquisitions and Dispositions of Publishing Properties On October 1, 1999 the Company acquired a daily newspaper and specialty publications in Beatrice, Nebraska and received $9,300,000 of cash in exchange for all the assets used in, and liabilities related to, the publication, marketing, and distribution of two daily newspapers and the related specialty and classified publications in Kewanee, Geneseo, and Aledo, Illinois and Ottumwa, Iowa. In addition, the Company acquired three daily newspapers, eleven weekly newspapers, and fifteen classified or specialty publications in 2000, one daily newspaper, two weekly, and four classified or specialty publications in 1999, and five classified or specialty publications and one commercial printer in 1998. All acquisitions were accounted for as a purchase and the results of operations since the date of acquisition are included in the consolidated financial statements. These acquisitions and dispositions had the effect of increasing revenue and operating income by approximately $8,300,000 and $150,000, respectively, for the year ended September 30, 2000, as compared to the prior year. The purchase price of business acquisitions was allocated as follows: Year Ended September 30, ----------------------------------- 2000 1999 1998 ----------------------------------- (In Thousands) Noncash working capital operations $ 1,475 $ (100) $ 377 Property and equipment 8,197 1,207 1,326 Intangibles 74,745 16,048 11,485 Other long-term assets 54 -- -- Issuance of note payable (432) (1,000) (1,194) Deferred items (1,170) (739) (50) ----------------------------------- 82,869 15,416 11,944 Less fair value of assets exchanged 11,260 -- -- ---------------------------------- Total cash purchase price $ 71,609 $ 15,416 $ 11,944 ================================== Proceeds from the sale of properties consisted of the following: Year Ended September 30, 2000 -------------- (In Thousands) Noncash working capital $ 111 Property and equipment 764 Intangible assets 721 ------- 1,596 Gain recognized on sale of properties 18,439 ------- 20,035 Less fair value of assets exchanged 11,260 ------- Proceeds from sale of properties $ 8,775 =======

Note 4. Investments in Associated Companies The Company has a 50% ownership interest in Madison Newspapers, Inc., a newspaper company which publishes daily, Sunday, and weekly publications in Madison and three other daily newspapers, seven weekly publications, and various other classified publications in Wisconsin and interest in Internet service ventures. Summarized financial information of Madison Newspapers, Inc. is as follows: Combined Associates 2000 1999 1998 - -------------------------------------------------------------------------------- (In Thousands) ASSETS Current assets $28,102 $30,337 $25,732 Investments and other assets 34,025 6,011 5,919 Property and equipment, net 14,044 9,531 9,997 ----------------------------- $76,171 $45,879 $41,648 ============================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $23,394 $14,023 $14,472 Long-term debt 16,000 -- -- Stockholders' equity 36,777 31,856 27,176 ----------------------------- $76,171 $45,879 $41,648 ============================= Revenue $97,279 $90,626 $85,302 Income before depreciation, amortization, interest, and income taxes 32,482 31,920 29,439 Operating income 29,781 29,325 26,671 Net income 18,791 18,461 16,881 Current receivables from associated companies consist of dividends from Madison Newspapers, Inc. Certain information relating to Company investment in Madison Newspapers, Inc. is as follows: 2000 1999 1998 ------------------------------------- (In Thousands) Share of: Stockholders' equity $18,388 $15,928 $13,588 Undistributed earnings 18,164 15,704 13,364 Note 5. Debt The Company has a $50,000,000 unsecured revolving loan agreement with a bank group which expires in 2003. Interest rates float at rates specified in the agreement. The Company has borrowings of $37,500,000 and $6,000,000 under this agreement as of September 30, 2000 and 1999, respectively. The Company has long-term obligations, net of current maturities, as follows: September 30, ------------------------------ 2000 1999 1998 ------------------------------ (In Thousands) Insurance companies senior notes payable, 6.14% to 6.64%, due in varying amounts from 2001 to 2013 $173,400 $185,000 $185,000 Program contracts, noninterest bearing, due through 2002 -- 2,005 1,028 ------------------------------ $173,400 $187,005 $186,028 ============================== Aggregate maturities during the next five years are $11,600,000, $11,600,000, $11,600,000, $36,600,000, and $11,600,000. Under the terms of its senior note agreement, the Company will be required to repay the outstanding balance of $173,400,000 on October 1, 2001 unless the Company reinvests the net proceeds of its broadcast sale or obtains a waiver of that provision of the agreement. Covenants under these agreements are not considered restrictive to normal operations or anticipated stockholder dividends.

Note 6. Retirement and Compensation Plans Substantially all the Company's employees are covered by a qualified defined contribution retirement plan. The Company has other retirement and compensation plans for executives and others. Retirement and compensation plan costs, including interest on deferred compensation costs, charged to operations were $10,400,000 in 2000, $9,700,000 in 1999, and $8,300,000 in 1998. Note 7. Common Stock, Class B Common Stock, and Preferred Share Purchase Rights Class B Common Stock has ten votes per share on all matters and generally votes as a class with Common Stock (which has one vote per share). The transfer of Class B Common Stock is restricted; however, Class B Common Stock is at all times convertible into shares of Common Stock on a share-for-share basis. Common Stock and Class B Common Stock have identical rights with respect to cash dividends and upon liquidation. All outstanding Class B Common Stock converts to Common Stock when the shares of Class B Common Stock total less than 5,600,000 shares. On May 7, 1998, the Board of Directors adopted a Shareholder Rights Plan ("Plan"). Under the Plan, the Board declared a dividend of one Preferred Share Purchase Right ("Right") for each outstanding Common and Class B Common share (collectively "Common Shares") of the Company. The Rights are attached to and automatically trade with the outstanding shares of the Company's Common Shares. The Rights will become exercisable only in the event that any person or group of affiliated persons becomes a holder of 20% or more of the Company's outstanding Common Shares, or commences a tender or exchange offer which, if consummated, would result in that person or group of affiliated persons owning at least 20% of the Company's outstanding Common Shares. Once the Rights become exercisable, they entitle all other shareholders to purchase, by payment of a $150 exercise price, one one-thousandth of a share of Series A Participating Preferred Stock, subject to adjustment, with a value of twice the exercise price. In addition, at any time after a 20% position is acquired and prior to the acquisition of a 50% position, the Board of Directors may require, in whole or in part, each outstanding Right (other than Rights held by the acquiring person or group of affiliated persons) to be exchanged for one share of Common Stock or one one-thousandth of a share of Series A Preferred Stock. The Rights may be redeemed at a price of $0.001 per Right at any time prior to their expiration on May 31, 2008. Note 8. Stock Option, Restricted Stock, and Stock Purchase Plans At September 30, 2000, the Company has three stock-based compensation plans which are described below. As permitted under generally accepted accounting principles, grants under those plans are accounted for following APB Opinion No. 25 and related interpretations. Accordingly, no compensation cost has been recognized for grants under the stock option or the stock purchase plans. Had compensation costs for all of the stock-based compensation plans been determined based on the grant date fair values of awards (the method described in FASB Statement No. 123), reported net income and earnings per common share would have been reduced to the pro forma amounts shown below: 2000 1999 1998 ------------------------------------------ (Thousands, Except Per Share Data) Net income: As reported $ 83,663 $ 67,973 $ 62,233 Pro forma 82,035 66,600 60,945 Earnings per share: Basic: As reported $ 1.90 $ 1.54 $ 1.39 Pro forma 1.86 1.50 1.36 Diluted: As reported 1.89 1.52 1.37 Pro forma 1.85 1.49 1.34 Stock option and restricted stock plans: The Company has reserved 4,910,000 shares of Common Stock for issuance to key employees under an incentive and nonstatutory stock option and restricted stock plan approved by stockholders. Options have been granted at a price equal to the fair market value on the date of grant, and are exercisable in cumulative installments over a ten-year period. The fair value of each grant is estimated at the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions for grants in 2000, 1999, and 1998, respectively: dividend rates of 2.0% to 2.52%, 2.06%, and 1.95%; price volatility of 18.5% to 19.4%, 18.5%, and 14.5%; risk-free interest rates based upon the life of the option ranging from 6.03% to 6.72%, 4.84% to 6.03%, and 5.29% to 5.77%; and expected lives based upon the life of the option ranging from .7 to 8 years.

A summary of the stock option plan is as follows: Number of Shares --------------------------- 2000 1999 1998 --------------------------- (In Thousands) Under option, beginning of year 1,258 1,491 1,509 Granted 282 185 190 Terminated and canceled (26) (21) (5) Exercised (336) (397) (203) --------------------------- Under option, end of year 1,178 1,258 1,491 =========================== Options exercisable, end of year 767 945 1,110 =========================== Average Price --------------------------- 2000 1999 1998 --------------------------- Granted during the year $29.11 $27.62 $27.18 Exercised during the year 14.15 15.45 15.88 Under option, end of year 22.72 19.09 17.15 Weighted-average fair value per option of options granted 7.75 6.55 6.95 A further summary of options outstanding as of September 30, 2000 is as follows: Options Outstanding ------------------------------------ Weighted- Options Exercisable Average ---------------------- Number Remaining Weighted- Number Weighted- Outstanding Contractual Average Exercisable Average Range of (In Life Exercise (In Exercise Exercise Prices Thousands) (In Years) Price Thousands) Price - -------------------------------------------------------------------------------- $11 to $14 106 1.1 $11.04 106 $11.04 $15 to $20 371 3.8 17.38 371 17.38 $20 to $23 102 6.3 21.58 95 21.49 $25 to $30 582 7.9 28.16 178 27.01 $31 to $34 17 2.1 32.46 17 32.46 -------------------------------------------------------- 1,178 5.8 22.72 767 19.58 ======================================================== Restricted stock is subject to an agreement requiring forfeiture by the employee in the event of termination of employment within three years of the grant date for reasons other than normal retirement, death or disability. In 2000, 1999, and 1998, the Company granted 46,000, 39,000, and 26,000 shares, respectively, of restricted stock to employees. As of September 30, 2000, 92,000 shares of restricted stock were outstanding. At September 30, 2000, 3,732,000 shares were available for granting of stock options or issuance of restricted stock. Stock purchase plan: The Company has 1,072,000 shares of Common Stock available for issuance pursuant to an employee stock purchase plan. April 30, 2001 is the exercise date for the current offering. The purchase price is the lower of 85% of the fair market value at the date of the grant or the exercise date, which is one year from the date of the grant. The weighted-average fair values per share of purchase rights granted in 2000, 1999, and 1998 computed using the Black-Scholes option-pricing model were $5.32, $6.34, and $6.65, respectively. In 2000, 1999, and 1998 employees purchased 124,000, 97,000, and 95,000 shares, respectively, at a per share price of $19.31 in 2000, $24.78 in 1999, and $20.98 in 1998.

Note 9. Income Tax Matters Components of income tax expense consist of the following: Year Ended September 30, --------------------------- 2000 1999 1998 --------------------------- (In Thousands) Paid or payable on currently taxable income: Federal $36,036 $30,633 $29,943 State 6,612 5,652 5,525 Net increase due to deferred income taxes 7,524 2,277 2,431 --------------------------- $50,172 $38,562 $37,899 =========================== The total tax provision has been allocated to the following financial statement items: Year Ended September 30, --------------------------------- 2000 1999 1998 --------------------------------- (In Thousands) Income from continuing operations $40,340 $30,343 $27,510 Discontinued operations 9,832 8,219 10,389 --------------------------------- $50,172 $38,562 $37,899 ================================= Income tax expense for the years ended September 30, 2000, 1999, and 1998 is different from the amounts computed by applying the U.S. federal income tax rate to income before income taxes. The reasons for these differences are as follows: % of Pretax Income ----------------------- 2000 1999 1998 ----------------------- Computed "expected" income tax expense 35.0% 35.0% 35.0% State income taxes, net of federal tax benefit 4.0 3.9 3.9 Net income of associated companies taxed at dividend rates (1.9) (2.7) (2.6) Goodwill amortization 1.3 1.6 1.7 Other (0.9) (1.6) (0.2) ----------------------- 37.5% 36.2% 37.8% ======================= Foreign taxes are not material. Net deferred tax liabilities consist of the following components as of September 30, 2000, 1999, and 1998: 2000 1999 1998 --------------------------- (In Thousands) Deferred tax liabilities: Property and equipment $10,190 $ 8,863 $ 8,334 Equity in undistributed earnings of affiliates 1,457 1,267 1,096 Deferred gain on sale of broadcast properties 3,266 3,308 3,308 Identifiable intangible assets 38,168 34,163 32,653 Other 178 2,831 2,981 --------------------------- 53,259 50,432 48,372 --------------------------- Deferred tax assets: Accrued compensation 8,181 8,309 7,747 Receivable allowance 1,341 1,060 728 Loss carryforwards acquired -- 5,588 6,774 Capital loss carryforward 4,161 7,591 8,121 Other 1,443 1,708 1,745 --------------------------- 15,126 24,256 25,115 Less valuation allowance 4,161 13,179 15,325 --------------------------- 10,965 11,077 9,790 --------------------------- $42,294 $39,355 $38,582 ===========================

The components giving rise to the net deferred tax liabilities described above have been included in the accompanying balance sheets as of September 30, 2000, 1999, and 1998 as follows: 2000 1999 1998 --------------------------------------- (In Thousands) Current assets $ 4,327 $ 5,595 $ 5,038 Noncurrent liabilities (46,621) (44,950) (43,620) -------------------------------------- $(42,294) $(39,355) $(38,582) ====================================== The Company provided a valuation allowance due to limitations imposed by the tax laws on the Company's ability to realize the benefit of capital loss and net operating loss carryforwards. During the year ended September 30, 2000, management determined the valuation allowance and tax contingency on the acquired loss carryforward of SJL of Kansas Corp (SJL), which was sold on October 1, 2000, should be reduced by $1,155,000 and $1,312,000, respectively, with a corresponding $2,467,000 reduction to goodwill. The remaining net operating loss carryforwards of $11,142,000 will be transferred to the acquiror on October 1, 2000. Therefore, the deferred taxes for the net operating loss and the valuation allowance for $4,433,000 have been eliminated. During the years ended September 30, 2000 and 1999, $3,430,000 and $2,146,000, respectively, of the valuation allowance was transferred to the tax contingency which is included in income taxes payable with no effect on tax expense. Note 10. Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value. The carrying amounts of cash and cash equivalents, temporary investments, receivables, and accounts payable approximate fair value because of the short maturity of those instruments. The carrying value of other investments consisting of debt and equity securities in a deferred compensation trust are carried at fair value based upon quoted market prices, and $4,040,000 of equity securities, consisting primarily of the Company's 17% ownership of the nonvoting common stock of The Capital Times Company, which are carried at cost, as the fair value is not readily determinable. The remaining $2,194,000 is an investment in debt and equity securities of Ad One, LLC (a 6.3% interest) which is being accounted for similar to the equity method. The fair value of the Company's debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. The estimated fair values of the Company's debt instruments are as follows: Carrying Amount Fair Value ------------------------ (In Thousands) September 30: 2000 $222,932 $216,262 1999 204,625 202,047 1998 219,481 245,784

Note 11. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share (in thousands except per share amounts): Year Ended September 30, ------------------------------------ 2000 1999 1998 ------------------------------------ Numerator: Income applicable to common shares: Income from continuing operations $ 69,875 $ 56,821 $ 47,674 Income from discontinued operations 13,788 11,152 14,559 ------------------------------------ $ 83,663 $ 67,973 $ 62,233 ==================================== Denominator: Basic-weighted average common shares outstanding 44,005 44,273 44,829 Dilutive effect of employee stock options 355 588 728 ------------------------------------ Diluted outstanding shares 44,360 44,861 45,557 ==================================== Basic earnings per share: Income from continuing operations $ 1.59 $ 1.29 $ 1.07 Income from discontinued operations 0.31 0.25 0.32 ------------------------------------ Net income $ 1.90 $ 1.54 $ 1.39 ==================================== Diluted earnings per share: Income from continuing operations $ 1.58 $ 1.27 $ 1.05 Income from discontinued operations 0.31 0.25 0.32 ------------------------------------ Net income $ 1.89 $ 1.52 $ 1.37 ==================================== Note 12. Other Information Balance sheet information: Other current assets consist of the following: September 30, ------------------------------ 2000 1999 1998 ------------------------------ (In Thousands) Program rights $ -- $ 9,650 $ 8,140 Deferred income taxes 4,327 5,595 5,038 Other 3,053 4,577 3,714 ------------------------------ $ 7,380 $ 19,822 $ 16,892 ============================== Intangibles consist of the following: September 30, ------------------------------ 2000 1999 1998 ------------------------------ (In Thousands) Goodwill $296,130 $345,937 $332,821 Less accumulated amortization 54,170 71,503 63,584 ------------------------------ 241,960 274,434 269,237 ------------------------------ Noncompete covenants and consulting agreements 23,878 28,023 28,213 Less accumulated amortization 22,552 25,497 23,522 ------------------------------ 1,326 2,526 4,691 ------------------------------ Customer lists, broadcasting licenses and agreements, and newspaper subscriber lists 113,084 159,805 157,011 Less accumulated amortization 23,850 40,373 32,828 ------------------------------ 89,234 119,432 124,183 ------------------------------ $332,520 $396,392 $398,111 ==============================

Compensation and other accruals consist of the following: September 30, ------------------------------- 2000 1999 1998 ------------------------------- (In Thousands) Compensation $ 9,136 $ 11,214 $ 12,092 Vacation pay 4,695 5,402 4,384 Retirement and stock purchase plans 4,915 5,324 5,005 Interest 6,022 9 519 Other 2,835 4,602 4,966 ------------------------------- $ 27,603 $ 26,551 $ 26,966 =============================== Cash flows information: Year Ended September 30, ------------------------------- 2000 1999 1998 ------------------------------- (In Thousands) Cash payments for: Interest, net of capitalized interest 2000 $1,389; 1999 $703; 1998 $169 $ 6,630 $ 13,373 $ 15,731 =============================== Income taxes $ 42,345 $ 39,528 $ 33,747 =============================== Program rights were acquired by issuing long-term contracts as follows $ 7,794 $ 12,417 $ 9,017 =============================== Issuance of restricted common stock, net $ 1,081 $ 1,006 $ 682 =============================== Accounts payable for stock acquired $ (317) $ 317 $(10,926) =============================== Note received in connection with sale of businesses $ -- $ 525 $ -- =============================== Capital expenditures related to broadcast properties $ 7,102 $ 7,493 $ 6,825 ===============================

SUPPLEMENTARY DATA QUARTERLY RESULTS (UNAUDITED) 4th 3rd 2nd 1st ----------------------------------------------------- (In Thousands Except Per Share Data) 2000 Quarter: Operating revenue $ 111,928 $ 109,925 $ 100,973 $ 108,687 ===================================================== Income from continuing operations $ 15,787 $ 15,955 $ 11,737 $ 26,396 Income from discontinued operations 3,558 4,218 1,864 4,148 ----------------------------------------------------- Net income $ 19,345 $ 20,173 $ 13,601 $ 30,544 ===================================================== Earnings per share: Basic: Income from continuing operations $ 0.36 $ 0.36 $ 0.27 $ 0.60 Income from discontinued operations 0.08 0.10 0.04 0.09 ----------------------------------------------------- Net income $ 0.44 $ 0.46 $ 0.31 $ 0.69 ===================================================== Diluted: Income from continuing operations $ 0.36 $ 0.36 $ 0.27 $ 0.59 Income from discontinued operations 0.08 0.10 0.04 0.09 ----------------------------------------------------- Net income $ 0.44 $ 0.46 $ 0.31 $ 0.68 ===================================================== 1999 Quarter: Operating revenue $ 105,622 $ 105,163 $ 96,524 $ 106,537 ===================================================== Income from continuing operations $ 15,556 $ 16,436 $ 11,007 $ 13,822 Income from discontinued operations 1,366 3,008 961 5,817 ----------------------------------------------------- Net income $ 16,922 $ 19,444 $ 11,968 $ 19,639 ===================================================== Earnings per share: Basic: Income from continuing operations $ 0.35 $ 0.37 $ 0.25 $ 0.31 Income from discontinued operations 0.03 0.07 0.02 0.13 ----------------------------------------------------- Net income $ 0.38 $ 0.44 $ 0.27 $ 0.44 ===================================================== Diluted: Income from continuing operations $ 0.35 $ 0.36 $ 0.25 $ 0.31 Income from discontinued operations 0.03 0.07 0.02 0.13 ----------------------------------------------------- Net income $ 0.38 $ 0.43 $ 0.27 $ 0.44 ===================================================== 1998 Quarter: Operating revenue $ 100,315 $ 100,544 $ 90,398 $ 100,004 ===================================================== Income from continuing operations $ 12,209 $ 12,808 $ 9,373 $ 13,284 Income from discontinued operations 2,738 5,283 3,238 3,300 ----------------------------------------------------- Net income $ 14,947 $ 18,091 $ 12,611 $ 16,584 ===================================================== Earnings per share: Basic: Income from continuing operations $ 0.27 $ 0.29 $ 0.21 $ 0.30 Income from discontinued operations 0.06 0.12 0.07 0.07 ----------------------------------------------------- Net income $ 0.33 $ 0.41 $ 0.28 $ 0.37 ===================================================== Diluted: Income from continuing operations $ 0.27 $ 0.28 $ 0.21 $ 0.29 Income from discontinued operations 0.06 0.12 0.07 0.07 ----------------------------------------------------- Net income $ 0.33 $ 0.40 $ 0.28 $ 0.36 =====================================================

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure Not applicable. PART III The information called for by Part III of this Form 10-K is omitted in accordance with General Instruction G because the Company will file with the Commission a definitive proxy statement pursuant to Regulation 14A not later than 120 days after the close of the Company's fiscal year ended September 30, 2000.

PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K Page Number ----------- (a) 1. Financial Statements Independent Auditor's Report Financial Statements Consolidated balance sheets as of September 30, 2000, 1999 and 19998 Consolidated statements of income years ended September 30, 2000, 1999 and 1998 Consolidated statements of stockholders' equity years ended September 30, 2000, 1999 and 1998 Consolidated statements of cash flows years ended September 30, 2000, 1999 and 1998 Notes to consolidated financial statements (a) 2. Financial Statements Schedule Schedule II - Valuation and qualifying accounts years ended September 30, 2000, 1999 and 1998 All other schedules have been omitted as not required, not applicable; not deemed material or because the information is included in the Notes to Financial Statements. (a) 3. Exhibits (listed by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K). 21 Subsidiaries 23 Consent of McGladrey & Pullen, LLP 24 Power of Attorney 27 Financial Data Schedule (b) The following reports on Form 8-K were filed for the three months ended September 30, 2000. None * * * * * For the purposes of complying with the amendments to the rules governing Form S-8 (effective July 13, 1991) under the Securities Act of 1933, the undersigned registrant hereby undertakes as follows, which undertaking shall be incorporated by reference into registrant's Registration Statements on Form S-8 Nos. 2-56652 (filed June 17, 1976), 2-58393 (filed March 11, 1977), 2-77121 (filed April 22, 1982), 33-19725 (filed January 20, 1988), 33-46708 (filed March 31, 1992), and 333-6435 and 333-6433 (filed June 20, 1996). Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

INDEPENDENT AUDITOR'S REPORT To the Stockholders Lee Enterprises, Incorporated and subsidiaries Davenport, Iowa We have audited the accompanying consolidated balance sheets of Lee Enterprises, Incorporated and subsidiaries as of September 30, 2000, 1999, and 1998 and the related consolidated statements of income, stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lee Enterprises, Incorporated and subsidiaries as of September 30, 2000, 1999, and 1998 and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. In our opinion, Schedule II included in this Annual Report on Form 10-K for the year ended September 30, 2000, present fairly the information set forth therein, in conformity with generally accepted accounting principles. /s/ McGladrey & Pullen, LLP - --------------------------- Davenport, Iowa November 10, 2000

LEE ENTERPRISES, INCORPORATED AND WHOLLY-OWNED SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (In Thousands) Column A Column B Column C Column D Column E (1) Balance at Additions Charged Deduction Balance Beginning Charged to Other from at Close Description of Period to Income Accounts Reserves of Period - -------------------------------------------------------------------------------- Allowance for doubtful accounts: For the year ended September 30, 2000 $ 4,460 $ 3,445 $(1,203)(2) $ 3,358 $ 3,344 For the year ended September 30, 1999 4,110 3,776 -- 3,426 4,460 For the year ended September 30, 1998 4,600 3,486 -- 3,976 4,110 (1) Represents accounts written off as uncollectible, net of recoveries which are immaterial. (2) September 30, 1999 balance for discontinued broadcast segment.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: December 21, 2000 LEE ENTERPRISES, INCORPORATED ----------------- /s/ Richard D. Gottlieb /s/ G.C. Wahlig - --------------------------------------- ----------------------------------- Richard D. Gottlieb, G. C. Wahlig, Chairman and Chief Executive Officer Vice President of Finance, Interim Chief Financial Officer and Chief Accounting Officer We, the undersigned directors of Lee Enterprises, Incorporated, hereby severally constitute Richard D. Gottlieb and G.C. Wahlig, and each of them, our true and lawful attorneys with full power to them, and each of them, to sign for us and in our names, in the capacities indicated below, the Annual Report on Form 10-K of Lee Enterprises, Incorporated for the fiscal year ended September 30, 2000 to be filed herewith and any amendments to said Annual Report, and generally do all such things in our name and behalf in our capacities as directors to enable Lee Enterprises, Incorporated to comply with the provisions of the Securities Exchange Act of 1934 as amended, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or either of them, to said Annual Report on Form 10-K and any and all amendments thereto. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated: Signature Date - ----------------------------------------- ----------------- /s/ Rance E. Crain - ----------------------------------------- Rance E. Crain, Director November 15, 2000 /s/ J. P. Guerin - ----------------------------------------- J. P. Guerin, Director November 15, 2000 /s/ Mary E. Junck - ----------------------------------------- Mary E. Junck, Director November 15, 2000 /s/ William E. Mayer - ----------------------------------------- William E. Mayer, Director November 15, 2000 /s/ Andrew E. Newman - ----------------------------------------- Andrew E. Newman, Director November 15, 2000 /s/ Gordon Prichett - ----------------------------------------- Gordon Prichett, Director November 15, 2000 /s/ Ronald L. Rickman - ----------------------------------------- Ronald L. Rickman, Director November 15, 2000 /s/ Gregory P. Schermer - ----------------------------------------- Gregory P. Schermer, Director November 15, 2000 /s/ Phyllis Sewell - ----------------------------------------- Phyllis Sewell, Director November 15, 2000 /s/ Mark Vittert - ----------------------------------------- Mark Vittert, Director November 15, 2000

LEE ENTERPRISES, INCORPORATED AND WHOLLY-OWNED SUBSIDIARIES EXHIBIT 21 - WHOLLY-OWNED SUBSIDIARIES AND ASSOCIATED COMPANIES Percentage of Voting Securities State of Organization Owned - -------------------------------------------------------------------------------- Lee Enterprises, Incorporated Delaware Parent Lee Technical Systems, Inc. Iowa 100% Lee Consolidated Holdings Co. South Dakota 100% New Mexico Broadcasting Company, Inc. New Mexico 100% Accudata, Inc. Iowa 100% Target Marketing Systems, Inc. Iowa 100% Journal-Star Printing Co. Nebraska 100% Madison Newspapers, Inc. Wisconsin 50% Oregon News Media, Inc. Delaware 100% Pacific Northwest Publishing Group, Inc. Delaware 100% Nevada Media, Inc. Delaware 100% Nickel of Medford, Inc. Oregon 100% Klamath Falls Basin Publishing, Inc. Oregon 100% Davill, Inc. Washington 100% KMAZ, L.P. Texas 100% INN Partners, L.C. d/b/a International Newspaper Network Iowa 81% * Broadcast entities sold on October 1, 2000: KOIN-TV, Inc. Delaware 100% SJL of Kansas Corp. Kansas 100% IBS/Lee Partners LLC Delaware 50% LINT Co. South Dakota 100% Topeka Television Corp. Missouri 100% Wichita License Subsidiary Corp. Delaware 100% Topeka License Subsidiary Corp. Delaware 100% * Increased to 81% effective October 2, 2000.

MCGLADREY & PULLEN, LLP Certified Public Accountants and Consultants We consent to the incorporation by reference in the Registration Statements on Form S-8 No. 2-56652, No. 2-77121, No. 2-58393, No. 33-19725, No. 33-46708, No. 333-6435 and No. 333-6433 and in the related Prospectuses of our report dated November 10, 2000 with respect to the financial statements of Lee Enterprises, Incorporated, incorporated by reference and the schedule included in this Annual Report on form 10-K for the year ended September 30, 2000 and to the reference to us under the heading "Experts" in such Prospectuses. /s/ MCGLADREY & PULLEN, LLP Davenport, Iowa December 21, 2000

EXHIBIT 24 POWER OF ATTORNEY We, the undersigned directors of Lee Enterprises, Incorporated, hereby severally constitute Richard D. Gottlieb and G.C. Wahlig, and each of them, our true and lawful attorneys with full power to them, and each of them, to sign for us and in our names, the capacities indicated below, the Annual Report on Form 10-K of Lee Enterprises, Incorporated for the fiscal year ended September 30, 2000 to be filed herewith and any amendments to said Annual Report, and generally do all such things in our name and behalf in our capacities as directors to enable Lee Enterprises, Incorporated to comply with the provisions of the Securities Exchange Act of 1934 as amended, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or either of them, to said Annual Report on Form 10-K and any and all amendments thereto. Date ----------------- /s/ Rance E. Crain - -------------------------------- Rance E. Crain, Director November 15, 2000 /s/ J. P. Guerin - -------------------------------- J. P. Guerin, Director November 15, 2000 /s/ Mary E. Junck - -------------------------------- Mary E. Junck, Director November 15, 2000 /s/ William E. Mayer - -------------------------------- William E. Mayer, Director November 15, 2000 /s/ Andrew E. Newman - -------------------------------- Andrew E. Newman, Director November 15, 2000 /s/ Gordon Prichett - -------------------------------- Gordon Prichett, Director November 15, 2000 /s/ Ronald L. Rickman - -------------------------------- Ronald L. Rickman, Director November 15, 2000 /s/ Gregory P. Schermer - -------------------------------- Gregory P. Schermer, Director November 15, 2000 /s/ Phyllis Sewell - -------------------------------- Phyllis Sewell, Director November 15, 2000 /s/ Mark Vittert - -------------------------------- Mark Vittert, Director November 15, 2000

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FORM THE SEPTEMBER 30, 2000 FORM 10-K OF LEE ENTERPRISES, INCORPORATED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 YEAR SEP-30-2000 SEP-30-2000 29,427 0 44,556 3,344 4,280 251,566 247,732 120,376 746,233 117,627 173,400 0 0 87,620 307,547 746,233 422,136 431,513 0 0 325,601 3,445 12,643 110,215 40,340 69,875 13,788 0 0 83,663 1.90 1.89