Lee Enterprises
201 N. Harrison St.
Davenport, IA
52801-1939
(563) 383-2100 |
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Lee reports first quarter earnings
DAVENPORT, Iowa (Jan. 22, 2007) — Lee Enterprises, Incorporated
(NYSE: LEE), reported today that diluted earnings per common
share from continuing operations were 58 cents for its first
fiscal quarter ended Dec. 31, 2006.
The results compare with 47 cents a year ago, when early retirement
and transition costs related to the acquisition of Pulitzer Inc.
reduced earnings 12 cents.
Including discontinued operations, net income for the quarter
totaled $26.7 million, or 58 cents per diluted common share,
compared with 50 cents a year ago.
"Our online advertising revenue for the quarter grew
at a strong pace of 53 percent over a year ago," said Mary
Junck, chairman and chief executive officer. "This rapid
online growth, coupled with a solid performance in print, helped
us deliver another good quarter and exceed earnings expectations.
In the coming quarter, we plan to lay the foundation for more
online growth with the co-branded rollout of our local employment
listings into Yahoo's HotJobs platform. Also, in February we're
kicking off a major internal initiative, called Lee Online University,
to speed more interactive innovation in news and sales."
Total revenue for the quarter increased 2.8 percent from a
year ago to $300.5 million. Total advertising revenue increased
2.3 percent, with online advertising up 53.0 percent, retail
advertising up 1.0 percent, classified down 0.4 percent, national
up 1.4 percent and niche advertising up 5.4 percent. Circulation
revenue increased 1.3 percent.
On a same property (1)
basis, which excludes the impact of acquisitions and divestitures
made in the current or prior year, total revenue for the quarter
increased 2.5 percent from a year ago. Total advertising revenue
increased 2.3 percent, with online advertising up 53.0 percent,
retail up 1.0 percent, classified down 0.4 percent, national
up 1.4 percent and niche advertising up 5.4 percent. Circulation
revenue increased 1.3 percent.
Total operating expenses, excluding depreciation and amortization,
for the quarter decreased 0.3 percent on a reported basis, reflecting
cycling of unusual transition and early retirement costs a year
ago related to Pulitzer. Excluding the unusual costs and depreciation
and amortization, total operating expenses increased 3.8 percent.
Compensation expense increased 1.9 percent. Newsprint and ink
expense increased 3.1 percent, and other cash operating expenses
increased 7.0 percent.
Same property operating expenses, excluding the unusual costs,
depreciation and amortization, increased 2.6 percent over a year
ago, with compensation up 0.2 percent, newsprint and ink up 4.3
percent, and other operating expenses up 5.7 percent.
Operating cash flow (2)
increased 12.5 percent to $80.9 million. Operating income, which
includes equity in earnings of associated companies and depreciation
and amortization, increased 13.5 percent to $64.0 million. Non-operating
expenses, which include financial expense related to the acquisition
of Pulitzer, decreased 3.3 percent to $21.9 million. Income from
continuing operations before income taxes increased 24.9 percent
to $42.1 million. Income from continuing operations also increased
24.7 percent, to $26.7 million. Net income also totaled $26.7
million, an increase of 17.1 percent over a year ago.
Day exchanges in the quarter affected results in varying degrees.
The Lee newspapers owned before the Pulitzer acquisition, which
account for about 60 percent of revenue, recorded 14 Sundays
in the 2006 quarter, compared with 13 a year ago. Sundays normally
generate more advertising revenue than any other day of the week.
In December 2006, however, the last two Sundays preceded holidays,
which tends to diminish retail and classified advertising. The
former Pulitzer newspapers use period accounting and were not
affected by day exchanges, with the exception of Tucson. Many
public publishing companies using calendar year period accounting
will recognize a 53rd week of the 2006 year in December 2006.
At Lee's 50 percent partnership in Tucson, which uses calendar
year period accounting, the additional week was recognized in
December 2006. Tucson results are reported as equity in earnings
of associated companies. For Lee's September 2007 fiscal year,
the remaining former Pulitzer enterprises will record this week
in September 2007.
UNUSUAL COSTS
The following table summarizes the impact on income from continuing
operations and earnings per diluted common share from unusual
costs related to the Pulitzer acquisition:
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Three Months Ended Dec. 31
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2006 2005
------------------- -------------------
(Thousands, except EPS) Amount Per Share Amount Per Share
-------- --------- -------- ---------
Income from continuing operations,
as reported...................... $26,689 $0.58 $21,394 $0.47
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Adjustments to income from
continuing operations:
Early retirement program......... - 8,373
Transition costs................. - 352
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8,725
Income tax benefits of adjustments,
net............................... - (3,133)
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5,592 0.12
Income from continuing operations,
as adjusted...................... $26,689 $0.58 $26,986 $0.59
=============================================================================
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Consolidated statements of income, selected balance sheet
items and selected statistics follow.
Lee Enterprises is a premier provider of local news, information
and advertising in primarily midsize markets, with 51 daily newspapers
and a joint interest in five others, rapidly growing online sites
and more than 300 weekly newspapers and specialty publications
in 23 states. Lee's newspapers have circulation of 1.6 million
daily and 1.9 million Sunday, reaching more than four million
readers daily. Lee's online sites attract more than three million
users, and Lee's weekly publications are distributed to more
than 4.5 million households. Lee's 55 newspaper markets include
St. Louis, Mo.; Lincoln, Neb.; Madison, Wis.; Davenport, Iowa;
Billings, Mont.; Bloomington, Ill.; Tucson, Ariz.; and Napa,
Calif. Lee is based in Davenport, Iowa, and its stock is traded
on the New York Stock Exchange under the symbol LEE. For more
information about Lee Enterprises, please visit www.lee.net. |
LEE ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
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Three Months Ended
Dec. 31
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(Thousands, Except EPS Data) 2006 2005 %
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Advertising revenue:
Retail............................ $132,643 $131,346 1.0 %
National.......................... 17,902 17,659 1.4
Classified:
Daily newspapers:
Employment...................... 19,248 20,091 (4.2)
Automotive...................... 14,038 14,212 (1.2)
Real estate..................... 14,891 15,387 (3.2)
All other....................... 9,502 9,177 3.5
Other publications............... 11,424 10,479 9.0
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Total classified.................. 69,103 69,346 (0.4)
Online............................ 10,913 7,134 53.0
Niche publications................ 3,599 3,414 5.4
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Total advertising revenue.......... 234,160 228,899 2.3
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Circulation........................ 52,271 51,587 1.3
Commercial printing................ 4,210 4,320 (2.5)
Online services and other.......... 9,849 7,439 32.4
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Total operating revenue............ 300,490 292,245 2.8
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Operating expenses:
Compensation...................... 113,012 110,923 1.9
Newsprint and ink................. 31,101 30,160 3.1
Other operating expenses.......... 75,446 70,484 7.0
Transition costs.................. - 352 NM
Early retirement program.......... - 8,373 NM
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Operating expenses, excluding
depreciation and amortization..... 219,559 220,292 (0.3)
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Operating cash flow(2)............. 80,931 71,953 12.5
Depreciation....................... 8,347 8,034 3.9
Amortization....................... 15,081 13,847 8.9
Equity in earnings of associated
companies:
Tucson partnership............... 3,912 4,138 (5.5)
Madison Newspapers............... 2,593 2,165 19.8
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Operating income................... 64,008 56,375 13.5
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Non-operating income (expense):
Financial income.................. 1,509 1,356 11.3
Financial expense................. (23,435) (24,037) (2.5)
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(21,926) (22,681) (3.3)
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Income from continuing operations
before income taxes................ 42,082 33,694 24.9
Income tax expense.................. 14,889 12,041 23.7
Minority interest................... 504 259 94.6
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Income from continuing operations... 26,689 21,394 24.7
Discontinued operations............. (38) 1,370 NM
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Net income.......................... $ 26,651 $ 22,764 17.1 %
================================================================
Earnings per common share:
Basic:
Continuing operations............. $0.59 $0.47 25.5 %
Discontinued operations........... - 0.03 NM
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$0.58 $0.50 16.0 %
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Diluted:
Continuing operations............. $0.58 $0.47 23.4 %
Discontinued operations........... - 0.03 NM
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$0.58 $0.50 16.0 %
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Average common shares:
Basic.............................. 45,573 45,260
Diluted............................ 45,637 45,400
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SELECTED BALANCE SHEET INFORMATION
(Unaudited)
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Dec. 31
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(Thousands) 2006 2005
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Cash................................. $ 10,743 $ 11,379
Restricted cash and investments...... 99,810 84,810
Debt (principal amount).............. 1,487,000 1,660,000
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SELECTED STATISTICAL INFORMATION
(Unaudited)
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Three Months Ended
Dec. 31
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(Dollars in thousands) 2006 2005 %
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Capital expenditures................ $5,701 $5,039 13.1 %
Same property newsprint volume
(tonnes)........................... 44,363 47,287 (6.2)
Same property full-time equivalent
employees.......................... 8,213 8,333 (1.4)
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NOTES:
(1) Same property comparisons exclude acquisitions and divestitures
made in the current and prior year. Same property revenue also
excludes Lee's 50% ownership in Madison and Tucson, which are
reported using the equity method of accounting. Same property
comparisons also exclude corporate office costs.
(2) Operating cash flow, which is defined as operating income before
depreciation, amortization and equity in earnings of associated
companies, is a non-GAAP financial measure. 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 tables accompanying
this release.
(3) 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.
(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, energy costs,
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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