Lee Enterprises
201 N. Harrison St.
Davenport, IA
52801-1939
(563) 383-2100 |
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Lee reports second quarter earnings
DAVENPORT, Iowa (April 23, 2007) — Lee Enterprises, Incorporated
(NYSE: LEE), reported today that diluted earnings per common
share from continuing operations were 26 cents for its second
fiscal quarter ended March 31, 2007, compared with 30 cents a
year ago.
Including discontinued operations, net income for the quarter
totaled 26 cents per diluted common share, compared with 32 cents
a year ago.
"Online advertising revenue climbed 54 percent in the
quarter, and that rapid growth continues to offset softness in
print advertising, particularly classified employment, automotive
and real estate," said Mary Junck, Lee chairman and chief
executive officer. "Our rollout of Yahoo! HotJobs over the
last two months has received a terrific reception, and our customers
have already placed more than 30,000 postings on the network.
While that rollout still gathers momentum, we are moving quickly
on new initiatives with Yahoo and other top newspaper companies
to extend our online advertising capabilities and attract even
larger audiences to our sites. At the same time, we remain keenly
focused on driving print revenue, increasing print and online
audiences, emphasizing strong local news and controlling costs."
Total revenue for the quarter from continuing operations decreased
1.7 percent from a year ago to $261.7 million. Total advertising
revenue decreased 2.2 percent, with online advertising up 53.9
percent and national down 8.3 percent. On a combined basis, print
and online retail advertising decreased 1.5 percent, and classified
advertising decreased 2.0 percent. Print-only retail advertising
declined 2.8 percent, and print-only classified decreased 6.5
percent. Circulation revenue declined 1.5 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
decreased 1.9 percent from a year ago.
The quarter included one fewer Sunday and one additional Saturday
compared with a year ago, affecting year-over-year comparisons,
as Sundays normally generate substantially more print advertising
revenue than any other day of the week. Day exchanges affect
newspapers owned before the Pulitzer acquisition, which account
for about 60 percent of revenue. The former Pulitzer newspapers
use period accounting and are not affected by day exchanges.
Total operating expenses, excluding depreciation and amortization,
decreased 1.3 percent for the quarter, reflecting lower newsprint
costs, along with curtailment gains related to defined pension
benefit and postretirement medical plans in the current year,
and early retirement and transition costs in the prior year.
Other operating expenses increased 4.8 percent, reflecting revenue
initiatives in print and online.
Same property operating expenses, excluding unusual items,
depreciation and amortization, increased 1.6 percent over a year
ago, with compensation up 0.2 percent, newsprint and ink down
2.4 percent, and other operating expenses up 5.6 percent.
Operating cash flow (2)
decreased 3.2 percent to $58.4 million. Operating income, which
includes equity in earnings of associated companies and depreciation
and amortization, decreased 8.0 percent to $40.0 million. Non-operating
expenses, which are primarily financial expense, declined 4.8
percent to $21.0 million. Income from continuing operations before
income taxes decreased 11.2 percent to $18.9 million. Income
from continuing operations decreased 11.1 percent, to $11.9 million.
Net income decreased 17.6 percent to $11.9 million.
YEAR TO DATE
For the six months ended March 31, 2007, total revenue from
continuing operations increased 0.7 percent from a year ago to
$562.2 million. Total advertising revenue increased 0.2 percent,
with online advertising up 53.5 percent and national down 2.9
percent. On a combined basis, print and online retail advertising
increased 0.4 percent, and classified advertising also increased
0.4 percent. Print-only retail advertising declined 0.7 percent,
and print-only classified decreased 3.5 percent. Circulation
revenue declined 0.1 percent.
On a same property basis, which excludes the impact of acquisitions
and divestitures made in the current or prior year, total revenue
for the six months increased 0.4 percent from a year ago.
Total operating expenses, excluding depreciation and amortization,
for the six months decreased 0.8 percent, reflecting lower newsprint
costs, along with curtailment gains related to the freezing of
defined pension benefit plans for certain employees and modifications
in defined postretirement medical benefits for certain employees
in the current year, and early retirement and transition costs
in the prior year. Other operating expenses increased 5.9 percent,
reflecting revenue initiatives in print and online.
Same property operating expenses, excluding unusual items,
depreciation and amortization, increased 2.1 percent for the
six months compared with a year ago, with compensation up 0.2
percent, newsprint and ink up 1.1 percent, and other operating
expenses up 5.6 percent.
There were no significant day exchanges for the six months,
as the first fiscal quarter included an additional Sunday compared
with a year ago, and the second quarter contained one fewer.
At Lee's 50 percent partnership in Tucson, which uses calendar
year period accounting, a 53rd week of the 2006 calendar year
was recognized in December 2006. Tucson results are reported
as equity in earnings of associated companies. The remaining
former Pulitzer enterprises will record a 53rd week in September
2007.
Operating cash flow increased 5.3 percent to $139.3 million.
Operating income, which includes equity in earnings of associated
companies and depreciation and amortization, increased 4.2 percent
to $104.0 million. Non-operating expenses, which are primarily
financial expense, declined 4.1 percent to $42.9 million. Income
from continuing operations before income taxes increased 10.9
percent to $61.0 million. Income from continuing operations increased
10.9 percent, to $38.6 million. Net income increased 3.6 percent
to $38.5 million.
For the first and second fiscal quarters combined, diluted
earnings per common share from continuing operations were 84
cents, compared with 77 cents a year ago.
Tables 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 11 million
visits monthly, and Lee's weekly publications are distributed
to more than 4.5 million households. Lee's 55 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.
ADJUSTED EARNINGS AND EPS
(3)
The following tables summarize the impact on income from continuing
operations and earnings per diluted common share from unusual
costs and one-time items. Per share amounts may not add due to
rounding.
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Three Months Ended March 31
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2007 2006
------------------- -------------------
(Thousands, except EPS) Amount Per Share Amount Per Share
-------- --------- -------- ---------
Income from continuing operations,
as reported...................... $11,945 $0.26 $13,441 $0.30
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Adjustments to income from
continuing operations:
Curtailment gains................ (3,731) -
Curtailment gains, Tucson........ (1,037) -
Early retirement program......... - 281
Transition costs................. - 801
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(4,768) 1,082
Income tax expense (benefits)
of adjustments, net............... 1,683 (388)
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(3,085) (0.07) 694 0.02
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Income from continuing operations,
as adjusted...................... $ 8,860 $0.19 $14,135 $0.31
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Six Months Ended March 31
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2007 2006
------------------- -------------------
(Thousands, except EPS) Amount Per Share Amount Per Share
-------- --------- -------- ---------
Income from continuing operations,
as reported...................... $38,634 $0.84 $34,835 $0.77
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Adjustments to income from
continuing operations:
Curtailment gains................ (3,731) -
Curtailment gains, Tucson........ (1,037) -
Early retirement program......... - 8,654
Transition costs................. - 1,153
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(4,768) 9,807
Income tax expense (benefits)
of adjustments, net............... 1,683 (3,521)
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(3,085) (0.07) 6,286 0.14
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Income from continuing operations,
as adjusted...................... $35,549 $0.78 $41,121 $0.90
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LEE ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
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Three Months Ended Six Months Ended
March 31 March 31
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(Thousands, Except EPS Data) 2007 2006 % 2007 2006 %
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Advertising revenue:
Retail.................. $101,298 $104,188 (2.8)% $233,941 $235,533 (0.7)%
National................ 12,954 14,121 (8.3) 30,856 31,779 (2.9)
Classified:
Daily newspapers:
Employment............ 20,424 22,738 (10.2) 39,717 42,865 (7.3)
Automotive............ 13,144 14,573 (9.8) 27,182 28,786 (5.6)
Real estate........... 13,861 14,962 (7.4) 28,752 30,348 (5.3)
All other............. 8,604 9,151 (6.0) 18,061 18,292 (1.3)
Other publications..... 11,624 10,926 6.4 23,048 21,405 7.7
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Total classified........ 67,657 72,350 (6.5) 136,760 141,696 (3.5)
Online.................. 12,595 8,185 53.9 23,508 15,319 53.5
Niche publications...... 4,318 4,476 (3.5) 7,917 7,889 0.4
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Total advertising revenue 198,822 203,320 (2.2) 432,982 432,216 0.2
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Circulation.............. 50,119 50,903 (1.5) 102,390 102,490 (0.1)
Commercial printing...... 3,922 4,146 (5.4) 8,132 8,466 (3.9)
Online services & other.. 8,797 7,821 12.5 18,646 15,263 22.2
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Total operating revenue.. 261,660 266,190 (1.7) 562,150 558,435 0.7
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Operating expenses:
Compensation............ 109,668 109,393 0.3 222,680 220,316 1.1
Newsprint and ink....... 27,235 28,511 (4.5) 58,336 58,671 (0.6)
Other operating expenses 70,096 66,892 4.8 145,542 137,376 5.9
Curtailment gains....... (3,731) - NM (3,731) - NM
Transition costs........ - 801 NM - 1,153 NM
Early retirement program - 281 NM - 8,654 NM
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Operating expenses,
excluding depreciation
and amortization........ 203,268 205,878 (1.3) 422,827 426,170 (0.8)
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Operating cash flow(2)... 58,392 60,312 (3.2) 139,323 132,265 5.3
Depreciation............. 8,691 8,005 8.6 17,038 16,039 6.2
Amortization............. 15,059 13,924 8.2 30,140 27,771 8.5
Equity in earnings of
associated companies:
Tucson partnership..... 3,963 3,550 11.6 7,875 7,688 2.4
Madison Newspapers..... 1,342 1,467 (8.5) 3,935 3,632 8.3
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Operating income......... 39,947 43,400 (8.0) 103,955 99,775 4.2
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Non-operating income
(expense):
Financial income........ 1,522 1,610 (5.5) 3,031 2,966 2.2
Financial expense....... (22,544) (23,694) (4.9) (45,979) (47,731) (3.7)
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(21,022) (22,084) (4.8) (42,948) (44,765) (4.1)
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Income from continuing
operations before income
taxes................... 18,925 21,316 (11.2) 61,007 55,010 10.9
Income tax expense....... 6,680 7,611 (12.2) 21,569 19,652 9.8
Minority interest........ 300 264 13.6 804 523 53.7
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Income from continuing
operations.............. 11,945 13,441 (11.1) 38,634 34,835 10.9
Discontinued operations.. (54) 994 NM (92) 2,364 NM
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Net income............... $ 11,891 $ 14,435 (17.6)% $ 38,542 $ 37,199 3.6 %
================================================================================
Earnings per common share:
Basic:
Continuing operations... $0.26 $0.30 (13.3)% $0.85 $0.77 10.4 %
Discontinued operations. - 0.02 NM - 0.05 NM
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$0.26 $0.32 (18.8)% $0.85 $0.82 3.7 %
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Diluted:
Continuing operations... $0.26 $0.30 (13.3)% $0.84 $0.77 9.1 %
Discontinued operations. - 0.02 NM - 0.05 NM
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$0.26 $0.32 (18.8)% $0.84 $0.82 2.4 %
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Average common shares:
Basic................... 45,625 45,390 45,599 45,325
Diluted................. 45,805 45,526 45,721 45,462
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SELECTED BALANCE SHEET INFORMATION
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March 31
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(Thousands) 2007 2006
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Cash............................................. $ 10,821 $ 7,918
Restricted cash and investments.................. 103,560 88,560
Debt (principal amount).......................... 1,463,375 1,606,000
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SELECTED STATISTICAL INFORMATION
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Three Months Ended Six Months Ended
March 31 March 31
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(Dollars in thousands) 2007 2006 % 2007 2006 %
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Capital expenditures..... $ 7,004 $ 6,446 8.7 % $12,705 $11,485 10.6 %
Same property newsprint
volume (tonnes)......... 40,938 42,665 (4.0) 85,198 89,238 (4.5)
Same property full-time
equivalent employees.... 8,063 8,147 (1.0) 8,137 8,242 (1.3)
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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. Reconciliations of operating cash flow to
operating income, the most directly comparable measure under accounting
principles generally accepted in the United States (GAAP), are included in
tables accompanying this release.
(3) Adjusted earnings from continuing operations and adjusted earnings per
common share, which are defined as income from continuing operations and
earnings per common share adjusted to exclude matters of a substantially
non-recurring nature, represent non-GAAP financial measures.
Reconciliations of adjusted earnings from continuing operations and
adjusted EPS to income from continuing operations and earnings per common
share are included in tables accompanying this release.
(4) 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.
(5) 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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