UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 12 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: February 12, 2002
Commission File Number 1-6227
LEE ENTERPRISES, INCORPORATED
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(Exact name of Registrant as specified in its charter)
Delaware 42-0823980
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(State of Incorporation) (I.R.S. Employer Identification No.)
215 N. Main Street, Davenport, Iowa 52801
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(Address of Principal Executive Offices)
(563) 383-2100
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Registrant's telephone number, including area code
ITEM 5. OTHER EVENTS
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On the evening of February 11, 2002, the Registrant entered into an agreement to
acquire all of the outstanding stock of Howard Publications, Inc. ("Howard").
Howard publishes, directly or through its 50%-owned subsidiary, Sioux City
Newspapers, Inc., 16 daily newspapers.
The transaction is valued at $694 million. Lee Enterprises has agreed to pay
$749 million for 100% of the stock of Howard, which is effectively reduced by
cash retained by Lee and other adjustments totaling $55 million. The transaction
is subject to various conditions, including Hart-Scott-Rodino clearance and
other customary contingencies for a transaction of this nature. The transaction
is anticipated to be completed within 90 days.
In connection with the announcement of the transaction, the Registrant issued
the following news release.
Lee Enterprises will buy 16 newspapers from Howard
$694 million deal brings circulation to 1.1 million and raises
number of dailies to 44
DAVENPORT, Iowa (Feb. 12, 2002)-- Lee Enterprises, Incorporated (NYSE: LEE),
announced today it has reached a definitive agreement to acquire Howard
Publications, a family-owned company of 16 daily newspapers.
The transaction, valued at $694 million, will be paid for with $440 million in
cash and new bank borrowing. The purchase is expected to be accretive to
earnings per share by approximately 15 cents in the first full fiscal year,
beginning Oct. 1, 2002.
Howard newspapers have total daily circulation of 479,000 and include the North
County Times in Oceanside and Escondido, California (89,000 daily circulation),
The Times of northwest Indiana (88,000) and the Waterloo Courier in Iowa
(44,000).
Others include Wyoming's largest newspaper, the Star-Tribune in Casper; The
Times-News in Twin Falls, Idaho, near the Sun Valley ski resort area, and The
Post-Star in Glens Falls, N.Y. The purchase includes Howard's half-interest in
the Sioux City Journal in Iowa.
With the acquisition, Lee will own 38 daily newspapers and have a joint interest
in six others, with total circulation of 1.1 million daily and 1.2 million
Sunday in 18 states.
Mary Junck, Lee Enterprises chief executive officer, said the purchase fulfills
a strategy announced two years ago when Lee decided to sell its television
stations in order to expand in newspapers.
"The Howard newspapers fit precisely with our core strategy of buying midsize
newspapers in good markets," she said. "As we've said repeatedly, we believe
that publishing newspapers in these size markets is a wonderful business, one
that we have proven we know how to do well. Buying Howard will further
strengthen our standing as the pre-eminent newspaper group serving midsize
markets."
William E. Howard of Howard Publications said the family initially approached
Lee. "When we decided it was time to sell our newspapers, we identified Lee as
the best possible operator with the keenest understanding of the kind of
community newspapering we do," he said. "I'm confident that Lee will make our
newspapers more successful and provide more career opportunities for our
employees."
Junck said Lee plans to add value and increase profitability at the Howard
newspapers through more aggressive sales of advertising and newspapers, the
launch of niche publications, and expansion of online services, such as
classified advertising programs and special sections. She said cost savings
include central purchasing of newsprint and reductions in corporate overhead.
Underpinning all of those efforts, she added, are "our strong local news
products that serve communities well."
"Lee has a talented management team with a great track record," Junck said.
"We've proven in the past 18 months that we're among the best in our industry at
driving advertising revenue and circulation sales, even in an adverse economic
climate. We've gained a lot of experience in sales management and tactics,
specifically tailored to midsize markets, and believe that through training,
managing, benchmarking and incenting, we can drive more revenue and readers to
Howard newspapers and their websites. At the same time, we're impressed with
numerous innovative selling and sales management tactics Howard has successfully
executed, and we're eager to move those to Lee."
Junck said Lee has agreed to pay $749 million in cash for 100 percent of the
stock of Howard Publications, which, with adjustments including $50 million of
cash on the Howard balance sheet, results in an effective purchase price of $694
million. The transaction values Howard at about 12.3 x EBITDA*, for the 12
months ended April 2000, Howard's most recent pre-recession year, and at about
14.1 x Howard's fiscal 2001 EBITDA. After projected cost and revenue synergies,
the transaction values Howard at about 11.5 x anticipated EBITDA for Lee's
fiscal year ending Sept. 30, 2003. The purchase is expected to be neutral to
earnings per share in the current fiscal year, exclusive of transition costs of
$5 million, and accretive thereafter.
"Owning Howard is an exciting opportunity. The chance to buy 16 successful
newspapers at once doesn't come along very often," Junck said. "Obviously, this
shows how the Howard family views Lee's track record and management of newspaper
people."
She and William Howard said that because of similar cultures, operations and
market sizes, they expect the transition to be quick and efficient with little
disruption. With the addition of Howard's 2,400 employees, Lee will have about
7,200.
The sale is subject to applicable governmental approvals, with closing expected
in the second calendar quarter. The boards of directors of both companies have
given unanimous approval.
Here is the complete list of Howard newspapers: North County Times, Oceanside
and Escondido, Calif; The Times, Munster, Ind.; Sioux City Journal, Sioux City,
Iowa (jointly owned with Hagadone Corporation); Waterloo Courier, Waterloo,
Iowa; The Post-Star, Glens Falls, N.Y.; Casper Star-Tribune, Casper, Wyo.; The
Times-News, Twin Falls, Idaho; The Daily News, Longview, Wash.; The Times and
Democrat, Orangeburg, S.C.; The Journal-Standard, Freeport, Ill.; The Sentinel,
Carlisle, Pa.; The Leader, Corning, N.Y.; The Citizen, Auburn, N.Y.; the Journal
Gazette, Mattoon, Ill.; The Ledger-Independent, Maysville, Ky.; and the
Times-Courier, Charleston, Ill.
Lee Enterprises is based in Davenport, Iowa. It currently owns 23 daily
newspapers and a joint interest in five others. Newspapers include those in
Madison, Wisconsin; Lincoln, Nebraska; Billings, Montana; and Davenport, Iowa.
Lee also owns more than 100 weekly newspapers, shoppers and specialty
publications, along with associated online services. Its stock is traded on the
New York Stock Exchange under the symbol LEE.
More information about Lee Enterprises and the Howard acquisition is available
at www.lee.net, including a press kit with maps, photos and market profiles of
the Howard papers
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An audio webcast discussing details of acquisition will be broadcast at 8 a.m.
CST today at www.lee.net. The presentation also will be accessible through a
limited number of listen-only phone lines at 1-800-340-5809. Those who
wish to listen to the presentation live should connect by 7:45 a.m. CST.
Both the webcast and a recording of the call will be available for replay by
about 10 a.m. CST. The wedcast replay may be accessed at www.lee.net.
The phone replay may be accessed at 1-800-633-8284 or 1-858-812-6440,
with an access code of 20344884.
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*EBITDA means earnings before interest, taxes, depreciation and amortization.
The Private Securities Litigation Reform Act of 1995 provides a "Safe Harbor"
for forward-looking statements. This release contains information that may be
deemed forward-looking and that is based largely on the Company's current
expectations and is subject to certain risks, trends and uncertainties that
could cause actual results to differ materially from those anticipated. Among
such risks, trends, and other uncertainties are changes in advertising demand,
newsprint prices, interest rates, regulatory rulings and other results of
operations or financial condition. The words "believes," "expects,"
"anticipates," "intends," "plans," "projects," "considers" and similar
expressions generally identify forward-looking statements. Readers are cautioned
not to place undue reliance on such forward-looking statements, which are made
as of the date of this release. The Company does not undertake to publicly
update or revise its forward-looking statements.
Lee Enterprises contacts
Dan Hayes, Director of Communications, dan.hayes@lee.net, (563) 383-2163. Carl
Schmidt, Vice President, Chief Financial Officer and Treasurer, (563) 383-2100.
Additional contacts
The Dilenschneider Group, (212) 922-0900.
Steven Yahn, print media, Ext. 115.
Leo Murray, broadcast media, Ext. 161.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LEE ENTERPRISES, INCORPORATED
Date: February 12, 2002 /s/ Carl G. Schmidt
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Carl G. Schmidt
Vice President, Chief Financial Officer,
and Treasurer