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LEE ENTERPRISES, Inc Earnings Release 2004

Nov 12, 2004

34755_rns_2004-11-12_2ebd9579-7bfb-4b67-b23c-4a7ef5ffc3b2.zip

Earnings Release

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8-K 1 nov8k04.htm MARKER FORMAT-SHEET="Page Rule Single" FSL="Default" MARKER FORMAT-SHEET="Head Minor Center" FSL="Default"

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

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FORM 8-K

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CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report: November 11, 2004

Commission File Number 1-6227

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LEE ENTERPRISES, INCORPORATED (Exact name of Registrant as specified in its charter)

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Delaware 42-0823980 (State of Incorporation) (I.R.S. Employer Identification No.)

201 N. Harrison Street, Davenport, Iowa 52801 (Address of Principal Executive Offices)

(563) 383-2100 Registrant’s telephone number, including area code


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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 2.02. Results of Operations and Financial Condition

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On November 11, 2004, Lee Enterprises, Incorporated (the “Company”) reported its results for the fourth fiscal quarter ended September 30, 2004 and for the year ended September 30, 2004. The Company is furnishing the related earnings release under Item 2.02. The Company also reported its revenues for the month of September 2004, and is furnishing the related revenue release under Item 2.02. The following exhibits are included herein: EXHIBIT 99.1 Earnings Release - Fourth Quarter and Year Ended September 30, 2004

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EXHIBIT 99.2 Monthly Revenue Release - September 2004

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The earnings release contains several non-GAAP financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows of the Company. Pursuant to the requirements of Regulation G, the Company has provided a reconciliation within the earnings release of all non-GAAP financial measures to the most directly comparable GAAP financial measures.

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SIGNATURES

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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: November 11, 2004 /s/Carl G. Schmidt
Carl G. Schmidt
Vice President, Chief Financial Officer,
and Treasurer

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EXHIBIT 99.1 Earnings Release — Fourth Quarter and Year Ended September 30, 2004

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Lee Enterprises, Incorporated 201 N. Harrison St. Davenport, IA 52801-1939 www.lee.net

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NEWS RELEASE

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Lee Enterprises reports EPS growth of 6.8% for quarter and 9.7% for fiscal year

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DAVENPORT, Iowa (Nov. 11, 2004) — Lee Enterprises, Incorporated (NYSE: LEE), reported today that diluted earnings per common share from continuing operations were 47 cents for its fourth quarter ended Sept. 30, 2004, and $1.92 for the fiscal year. The results represent increases of 6.8 percent over 44 cents in the quarter a year ago and 9.7 percent over $1.75 in fiscal 2003.

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“Same property advertising revenue growth of 9.5 percent in September capped off another banner year for Lee,” said Mary Junck, chairman and chief executive officer. “Our newspapers turned in impressive performance across the board in fiscal 2004, adding up to strong results for stockholders. We’ve stayed focused on our top priorities of growing revenue creatively and rapidly, increasing readership and circulation, emphasizing strong local news, driving our online strength and exercising careful cost controls. As a result, we’ve continued to become even more vital in our markets as the far-and-away leader for news and advertising, both in print and online.”

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Advertising revenue for the quarter increased 8.2 percent to $130.2 million, with retail up 6.0 percent, classified up 10.0 percent, online ad revenue up 25.1 percent and niche publications down 0.7 percent. Total operating revenue increased 6.9 percent to $174.0 million. On a same property basis, which excludes the impact of acquisitions made in the current or prior year, total advertising revenue for the quarter ended Sept. 30, 2004, increased 6.2 percent from a year ago and total operating revenue increased 5.1 percent.

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Operating expenses, excluding depreciation and amortization, increased 6.2 percent to $128.2 million, with compensation up 4.0 percent, newsprint up 15.6 percent as a result of supplier rate increases and other expenses up 6.5 percent. All categories of expenses were affected by acquisitions made during the fiscal year. Same property operating expenses in the quarter, excluding depreciation and amortization, increased 4.4 percent.

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Operating cash flow (1) increased 8.9 percent to $45.9 million. Operating cash flow margin (1) was 26.4 percent, compared with 25.9 percent a year ago. Operating income, which includes equity in net income of associated companies and depreciation and amortization, rose 8.4 percent to $35.4 million. Income from continuing operations increased 8.8 percent to $21.2 million. Net income increased 9.3 percent to $21.3 million.

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CIRCULATION RESULTS

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As reported Nov. 1 by the Audit Bureau of Circulations, Lee’s circulation volume held steady in the six-month Fas-Fax period that ended Sept. 30. For the 39 Lee newspapers included in the report, average paid circulation was flat both daily and Sunday compared with the previous year. In comparison, the Newspaper Association of America reported that the average change for all newspapers during the period was minus 0.9 percent daily and minus 1.5 percent Sunday. Lee’s 44 daily newspapers have combined paid circulation of 1.1 million weekdays and 1.2 million on Sundays.

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FISCAL YEAR

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For the year ended Sept. 30, 2004, advertising revenue increased 6.7 percent to $507.1 million, and total operating revenue increased 5.6 percent to $683.3 million. Operating expenses, excluding depreciation and amortization, rose 5.3 percent to $497.1 million, led by an increase of 11.5 percent for newsprint and ink. Operating cash flow (1) increased 6.3 percent to $186.2 million. Operating cash flow margin (1) was 27.3 percent, compared with 27.1 percent a year ago. Operating income rose 6.4 percent to $146.6 million. Income from continuing operations increased 11.0 percent to $86.5 million. Net income increased 10.3 percent to $86.1 million.

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On a same property basis, total advertising revenue for the year ended Sept. 30, 2004, increased 5.7 percent from a year ago and total operating revenue increased 4.7 percent. Same property operating expenses, excluding depreciation and amortization, increased 4.7 percent.

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Tables follow.

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Lee Enterprises is based in Davenport, Iowa, and is the premier publisher of daily newspapers in midsize markets. Lee owns 38 daily newspapers and a joint interest in six others, along with associated online services. Lee also publishes nearly 200 weekly newspapers, shoppers and classified and specialty publications. Lee stock is traded on the New York Stock Exchange under the symbol LEE. More information about Lee Enterprises, including revenue statistics for September, is available at www.lee.net .

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LEE ENTERPRISES, INCORPORATED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

Three Months Ended Year Ended
Sept. 30 Sept. 30
(Thousands, Except EPS Data) 2004 2003 % 2004 2003 %
Operating revenue:
Advertising revenue:
Retail $ 69,687 $ 65,741 6 .0% $283,892 $272,213 4 .3%
National 4,582 3,860 18 .7 18,404 15,612 17 .9
Classified:
Daily newspapers:
Employment 12,556 10,951 14 .7 44,562 39,058 14 .1
Automotive 10,724 10,794 (0 .6) 40,873 41,832 (2 .3)
Real estate 9,308 8,370 11 .2 34,081 30,569 11 .5
All other 7,153 6,075 17 .7 25,572 23,728 7 .8
Other publications 10,091 9,093 11 .0 37,431 34,682 7 .9
Total classified 49,832 45,283 10 .0 182,519 169,869 7 .4
Niche publications 2,985 3,005 (0 .7) 11,212 9,227 21 .5
Online 3,133 2,505 25 .1 11,121 8,359 33 .0
Total advertising revenue 130,219 120,394 8 .2 507,148 475,280 6 .7
Circulation 32,680 32,631 0 .2 130,552 130,197 0 .3
Commercial printing 5,048 4,469 13 .0 19,851 18,683 6 .3
Online services & other 6,083 5,291 15 .0 25,773 23,173 11 .2
Total operating revenue 174,030 162,785 6 .9 683,324 647,333 5 .6
Operating expenses:
Compensation 70,008 67,315 4 .0 276,204 267,456 3 .3
Newsprint and ink 16,974 14,683 15 .6 63,502 56,955 11 .5
Other operating expenses 41,178 38,647 6 .5 157,377 147,775 6 .5
Operating expenses,
excluding depreciation
and amortization 128,160 120,645 6 .2 497,083 472,186 5 .3
Operating cash flow(1) 45,870 42,140 8 .9 186,241 175,147 6 .3
Depreciation 5,777 5,035 14 .7 20,578 18,532 11 .0
Amortization 6,929 6,765 2 .4 27,449 26,975 1 .8
Operating income, before
equity in net income of
associated companies 33,164 30,340 9 .3 138,214 129,640 6 .6
Equity in net income of
associated companies 2,250 2,320 (3 .0) 8,340 8,053 3 .6
Operating income 35,414 32,660 8 .4 146,554 137,693 6 .4
Non-operating income:
Financial income 258 204 26 .5 1,066 1,120 (4 .8)
Financial expense (2,864 ) (3,503 ) (18 .2) (12,665 ) (16,535 ) (23 .4)
Other, net - (254 ) N M (294 ) (1,049 ) N M
(2,606 ) (3,553 ) (26 .7) (11,893 ) (16,464 ) (27 .8)
Income from continuing
operations before
income taxes 32,808 29,107 12 .7 134,661 121,229 11 .1
Income tax expense 11,560 9,585 20 .6 48,192 43,348 11 .2
Income from continuing
operations 21,248 19,522 8 .8 86,469 77,881 11 .0
Discontinued operations 66 (21) N M (398) 160 N M
Net income $ 21,314 $ 19,501 9 .3% $ 86,071 $ 78,041 10 .3%

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Earnings per common share:
Basic:
Continuing operations $ 0.47 $ 0.44 6.8% $ 1.93 $ 1.76 9.7%
Discontinued operations - - - (0.01 ) - NM
Net income $ 0.47 $ 0.44 6.8% $ 1.92 $ 1.76 9.1%
Diluted:
Continuing operations $ 0.47 $ 0.44 6.8% $ 1.92 $ 1.75 9.7%
Discontinued operations - - - (0.01 ) - NM
Net income $ 0.47 $ 0.44 6.8% $ 1.91 $ 1.75 9.1%
Average common shares:
Basic 44,969 44,436 44,792 44,316
Diluted 45,271 44,718 45,092 44,513

SELECTED BALANCE SHEET INFORMATION

(Thousands) 2004 2003
Cash and temporary cash investments $ 8,010 $ 11,064
Total assets 1,403,844 1,421,377
Debt, including current maturities 213,600 305,200
Stockholders' equity 876,843 802,156

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NOTES:

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(1) Operating cash flow, which is defined as operating income before depreciation, amortization and equity in net income of associated companies, and operating cash flow margin (operating cash flow divided by operating revenue) represent non-GAAP financial measures. A reconciliation of operating cash flow to operating income, the most directly comparable measure under accounting principles generally accepted in the United States (GAAP), is reflected in the tables accompanying this release. The Company believes that operating cash flow and the related margin ratio are useful measures of evaluating its financial performance because of their focus on the Company’s results from operations before depreciation and amortization. The Company also believes that these measures are several of the alternative financial measures of performance used by investors, rating agencies and financial analysts to estimate the value of a company and evaluate its ability to meet debt service requirements.

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(2) Certain amounts as previously reported have been reclassified to conform with the current period presentation. The prior period has been restated for comparative purposes, and the reclassifications have no impact on earnings.

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(3) Same property comparisons exclude acquisitions and divestitures made in the current or prior year. Same property revenue also excludes revenue of Madison Newspapers, Inc. (MNI). Lee owns 50% of the capital stock of MNI, which for financial reporting purposes is reported using the equity method of accounting.

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(4) The Company disclaims responsibility for updating information beyond the release date.

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The Private Securities Litigation Reform Act of 1995 provides a “Safe Harbor” for forward-looking statements. This release contains information that may be deemed forward-looking and that is based largely on the Company’s current expectations and is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those anticipated. Among such risks, trends and other uncertainties are changes in advertising demand, newsprint prices, interest rates, labor costs, legislative and regulatory rulings and other results of operations or financial conditions, difficulties in integration of acquired businesses or maintaining employee and customer relationships and increased capital and other costs. The words “may,” “will,” “would,” “could,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “projects,” “considers” and similar expressions generally identify forward-looking statements. Readers are cautioned not to place undue reliance on such forward-looking statements, which are made as of the date of this release. The Company does not publicly undertake to update or revise its forward-looking statements.

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Contact: [email protected] , (563) 383-2100

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EXHIBIT 99.2 Monthly Revenue Release – September 2004

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Lee Enterprises, Incorporated 201 N. Harrison St. Davenport, IA 52801-1939 www.lee.net

NEWS RELEASE

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Lee Enterprises reports September ad revenue growth of 9.5%

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DAVENPORT, Iowa (Nov. 11, 2004) — Lee Enterprises, Incorporated (NYSE: LEE), reported today that same property advertising revenue in September increased 9.5 percent over a year ago.

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On a same property (2) basis, which excludes the effects of acquisitions and divestitures, retail advertising revenue increased 10.9 percent. Classified advertising revenue increased 8.2 percent, with employment up 15.4 percent, automotive up 3.6 percent, real estate up 6.8 percent, other newspaper classified categories up 12.8 percent, and classified in non-daily publications up 3.1 percent. National advertising revenue, a small category for Lee, increased 11.4 percent. Niche publication revenue decreased 8.7 percent and online advertising revenue increased 26.2 percent. Circulation revenue declined 1.0 percent.

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Total same property operating revenue increased 8.3 percent. Including the effect of acquisitions and divestitures, total advertising revenue increased 11.9 percent, and total operating revenue increased 10.4 percent.

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Mary Junck, chairman and chief executive officer, said: “Our revenue engines cranked at full throttle in September, particularly in retail advertising, where we drove growth in double digits. We continue to be gratified also by the strong results of our initiatives in classified, where we’re focused on strengthening even further our position as the market leader in every advertising category.”

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Tables follow.

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Lee Enterprises is based in Davenport, Iowa, and is the premier publisher of daily newspapers in midsize markets. Lee owns 38 daily newspapers and a joint interest in six others, along with associated online services. Lee also publishes nearly 200 weekly newspapers, shoppers and classified and specialty publications. Lee stock is traded on the New York Stock Exchange under the symbol LEE. More information about Lee Enterprises is available at www.lee.net .

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Contact: [email protected] , (563) 383-2100

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LEE ENTERPRISES, INCORPORATED Revenue and Statistical Summary (Unaudited) OPERATING REVENUE

(Thousands) 2004 September — 2003 % 2004 Year to Date — 2003 %
Advertising revenue:
Retail $ 23,859 $ 21,512 10 .9% $ 281,769 $ 272,213 3 .5%
National 1,510 1,356 11 .4 17,828 15,612 14 .2
Classified:
Daily newspapers:
Employment 4,032 3,495 15 .4 44,414 39,058 13 .7
Automotive 3,542 3,418 3 .6 40,849 41,832 (2 .3)
Real estate 2,932 2,745 6 .8 34,003 30,569 11 .2
All other 2,420 2,146 12 .8 25,212 23,728 6 .3
Other publications 2,976 2,887 3 .1 36,310 34,682 4 .7
Total classified revenue 15,902 14,691 8 .2 180,788 169,869 6 .4
Niche publications 1,360 1,489 (8 .7) 11,103 9,227 20 .3
Online 1,061 841 26 .2 11,084 8,359 32 .6
Total advertising revenue 43,692 39,889 9 .5 502,572 475,280 5 .7
Circulation 10,545 10,655 (1 .0) 129,780 130,197 (0 .3)
Commercial printing 1,859 1,486 25 .1 19,528 18,683 4 .5
Online services and other 1,996 1,607 24 .2 25,753 23,173 11 .1
Total same property
operating revenue 58,092 53,637 8 .3 677,633 647,333 4 .7
Acquisitions 1,103 - N M 5,691 - N M
Total operating revenue $ 59,195 $ 53,637 10 .4% $ 683,324 $ 647,333 5 .6%

DAILY NEWSPAPER ADVERTISING VOLUME

(Thousands of Inches) 2004 2003 % 2004 2003 %
Retail 853 834 2.3% 10,490 10,450 0.4%
National 42 41 2.4 537 475 13.1
Classified 980 907 8.0 10,977 10,560 3.9
Total, same property 1,875 1,782 5.2% 22,004 21,485 2.4%

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LEE ENTERPRISES, INCORPORATED Revenue and Statistical Summary (Unaudited) OPERATING REVENUE

(Thousands) 2004 2003 %
Advertising revenue:
Retail $ 68,744 $ 65,741 4 .6%
National 4,115 3,860 6 .6
Classified:
Daily newspapers:
Employment 12,495 10,951 14 .1
Automotive 10,711 10,794 (0 .8)
Real estate 9,273 8,370 10 .8
All other 7,018 6,075 15 .5
Other publications 9,451 9,093 3 .9
Total classified revenue 48,948 45,283 8 .1
Niche publications 2,909 3,005 (3 .2)
Online 3,117 2,506 24 .4
Total advertising revenue 127,833 120,395 6 .2
Circulation 32,324 32,631 (0 .9)
Commercial printing 4,925 4,469 10 .2
Online services and other 6,075 5,290 14 .8
Total same property
operating revenue 171,157 162,785 5 .1
Acquisitions 2,873 - N M
Total operating revenue $ 174,030 $ 162,785 6 .9%
DAILY NEWSPAPER ADVERTISING VOLUME
Three Months Ended Sept. 30
(Thousands of Inches) 2004 2003 %
Retail 2,508 2,532 (0 .9)%
National 125 120 4 .2
Classified 2,999 2,787 7 .6
Total, same property 5,632 5,439 3 .5%

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NOTES:

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(1) September and the year had one more Wednesday and Thursday and one fewer Monday and Tuesday than the prior year. The quarter had one more Thursday and one fewer Tuesday than the prior period.

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(2) Certain amounts as previously reported have been reclassified to conform with the current period presentation. The prior period has been restated for comparative purposes, and the reclassifications have no impact on earnings.

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(3) Same property comparisons exclude acquisitions and divestitures made in the current and prior year. Same property revenue also excludes revenue of Madison Newspapers, Inc. (MNI). Lee owns 50% of the capital stock of MNI, which for financial reporting purposes is reported using the equity method of accounting.

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(4) The Company’s fiscal year ends on September 30.

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(5) The Company disclaims responsibility for updating information beyond release date.

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The Private Securities Litigation Reform Act of 1995 provides a “Safe Harbor” for forward-looking statements. This release contains information that may be deemed forward-looking and that is based largely on the Company’s current expectations and is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those anticipated. Among such risks, trends and other uncertainties are changes in advertising demand, newsprint prices, interest rates, labor costs, legislative and regulatory rulings and other results of operations or financial conditions, difficulties in integration of acquired businesses or maintaining employee and customer relationships and increased capital and other costs. The words “may,” “will,” “would,” “could,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “projects,” “considers” and similar expressions generally identify forward-looking statements. Readers are cautioned not to place undue reliance on such forward-looking statements, which are made as of the date of this release. The Company does not publicly undertake to update or revise its forward-looking statements.

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