Lee Enterprises Inc. : Lee Enterprises reports improved earnings for June quarter

  Lee Enterprises Inc. : Lee Enterprises reports improved earnings for June
                                   quarter

DAVENPORT, Iowa (July 23, 2013) -- Lee Enterprises, Incorporated (NYSE: LEE),
a major provider of local news, information and advertising in 50 markets,
reported today that earnings^(1) for its third fiscal quarter ended June 30,
2013, totaled 3 cents per diluted common share, compared with a loss of 3
cents a year ago. Excluding unusual matters, adjusted earnings per diluted
common share^(2) totaled 6 cents, compared with 3 cents a year ago.

"Continued digital growth and cost reduction again resulted in strong, and
improving, cash flow and operating income, enabling even faster debt
reduction," said Mary Junck, Lee chairman and chief executive officer.
"Looking ahead, we see many more digital opportunities, especially in
subscription revenue, mobile advertising and digital marketing services."

She also noted:

  *Total digital revenue for the quarter, including advertising,
    subscriptions and all digital businesses, totaled $19.9 million, an
    increase of 4.9% from a year ago.

  *Mobile advertising revenue increased 89.2% over a year ago, to $1.5
    million.

  *Preprinted advertising revenue continues to grow, up 1.7% for the quarter
    compared with a year ago.

  *Lee expects 2013 full year operating expenses, excluding depreciation,
    amortization and unusual matters, to decrease 4.5-5.5% from their 2012
    level, improved 1% from previous guidance of a decrease of 3.5-4.5%.

  *Interest expense decreased 10.1% for the quarter compared with the prior
    year quarter as a result of overall debt reduction and refinancing of the
    Pulitzer Notes in May 2013.

  *Debt reduction in the quarter totaled $19.5 million. Since completion of
    refinancing in January 2012, debt has been reduced $122 million to $873.5
    million.

THIRD QUARTER OPERATING RESULTS^(3)

Operating revenue for the 13 weeks ended June30, 2013 totaled $167.0 million,
a decrease of 2.8% compared with a year ago. Combined print and digital
advertising and marketing services revenue decreased 5.7% to $113.6 million,
with retail advertising down 4.2%, classified down 8.4% and national down
14.9%. Combined print and digital classified employment revenue decreased
11.1%, while automotive decreased 11.8%, real estate decreased 2.5% and other
classified decreased 6.2%. Digital advertising and marketing services revenue
on a stand-alone basis decreased 0.2% to $16.9 million. Print advertising and
marketing services revenue on a stand-alone basis decreased 6.7%. Subscription
revenue increased 3.5%.

Operating expenses, excluding depreciation, amortization and unusual matters,
decreased 4.1%. Compensation decreased 8.3%, with the average number of
full-time equivalent employees down 8.4%. Newsprint and ink expense decreased
15.3%, primarily a result of a reduction in newsprint volume of 11.9%. Other
operating expenses increased 4.2%.

Operating cash flow^(4) increased 5.6% from a year ago to $39.8 million.
Operating cash flow margin^(4) increased to 23.8% from 21.9% a year ago.
Including equity in earnings of associated companies, depreciation and
amortization, as well as unusual matters in both years, operating income
increased 16.1% to $26.9 million in the current year quarter, compared with
$23.2 million a year ago. Non-operating expenses, primarily interest expense
and debt financing costs, decreased 11.0%, due to lower debt balances and
refinancing of the Pulitzer Notes. Adjustments to deferred income taxes
increased income tax expense approximately $1 million in the quarter,
resulting in a high effective tax rate. The adjustments were made to maximize
available fiscal 2012 tax loss carrybacks and also to reflect current
expectations related to the company's income tax attributes. Income
attributable to Lee Enterprises, Incorporated for the quarter totaled $1.8
million, compared with a loss of $1.5 million a year ago.

ADJUSTED EARNINGS AND EPS FOR THE QUARTER

The following table summarizes the impact from unusual matters on income
(loss) attributable to Lee Enterprises, Incorporated and earnings (loss) per
diluted common share. Per share amounts may not add due to rounding.

                                                             13 Weeks Ended
                                                June30             June24
                                                   2013                2012
(Thousands of Dollars, Except Per
Share Data)                             Amount  Per Share    Amount  Per Share
Income (loss) attributable to Lee
Enterprises, Incorporated, as reported 1,795       0.03    (1,473 )   (0.03 )
Adjustments:
Debt financing and reorganization
costs                                    468                 (208 )
Amortization of debt present value
adjustment                             1,216                1,387
Other, net                               544                2,975
                                       2,228                4,154
Income tax effect of adjustments, net   (763 )             (1,454 )
                                       1,465       0.03     2,700      0.05
Unusual matters related to
discontinued operations                    -          -       272      0.01
Income attributable to Lee
Enterprises, Incorporated, as adjusted 3,260       0.06     1,499      0.03

YEAR TO DATE OPERATING RESULTS^(3)

Operating revenue for the 39 weeks ended June30, 2013, totaled $512.3
million, a decrease of 2.9% compared with a year ago. Combined print and
digital advertising and marketing services revenue decreased 5.6% to $349.3
million, with retail advertising down 3.6%, classified down 7.7% and national
down 20.5%. Combined print and digital classified employment revenue decreased
7.9%, while automotive decreased 10.4%, real estate decreased 8.4% and other
classified decreased 5.2%. Digital advertising and marketing services revenue
on a stand-alone basis increased 1.9% to $49.1 million. Print advertising and
marketing services revenue on a stand-alone basis decreased 6.9%. Subscription
revenue increased 3.6%.

Operating expenses, excluding depreciation, amortization and unusual matters,
decreased 3.7%. Compensation decreased 6.4%, with the average number of
full-time equivalent employees down 8.4%. Newsprint and ink expense decreased
13.6%, a result of a reduction in newsprint volume of 11.7%. Other operating
expenses increased 2.4%.

Operating cash flow^(4) increased 0.3% from a year ago to $123.2 million.
Operating cash flow margin increased to 24.1% from 23.3% a year ago. Including
equity in earnings of associated companies, depreciation and amortization, as
well as unusual matters in both years, operating income increased 7.6% to
$85.1 million in the current year, compared with $79.1 million a year ago.
Non-operating expenses increased 1.8% due to higher overall interest rates on
debt, partially offset by lower debt balances, the refinancing of the Pulitzer
Notes and a $6.9 million gain on sale of an investment. The Company recognized
$37.6 million of reorganization costs in the prior year. Loss from
discontinued operations, net of income taxes totaled $1.2 million in the
current year compared to $0.6 million a year ago. Income attributable to Lee
Enterprises, Incorporated totaled $10.4 million, compared to a loss of $13.5
million a year ago.

ADJUSTED EARNINGS AND EPS FOR THE YEAR TO DATE

The following table summarizes the impact from unusual matters on income
(loss) attributable to Lee Enterprises, Incorporated and earnings (loss) per
diluted common share. Per share amounts may not add due to rounding.

                                                             39 Weeks Ended
                                               June30              June24
                                                  2013                 2012
(Thousands of Dollars, Except Per
Share Data)                            Amount  Per Share     Amount  Per Share
Income (loss) attributable to Lee
Enterprises, Incorporated, as
reported                             10,372       0.20    (13,544 )   (0.28 )
Adjustments:
Debt financing and reorganization
costs                                   557                40,397
Amortization of debt present value
adjustment                            3,932                 2,557
Gain on sale of investment, net      (6,909 )                   -
Other, net                            2,170                 3,717
                                       (250 )              46,671
Income tax effect of adjustments,
net                                     102               (16,457 )
                                       (148 )        -     30,214      0.62
Unusual matters related to
discontinued operations               1,014       0.02        345      0.01
Income attributable to Lee
Enterprises, Incorporated, as
adjusted                             11,238       0.22     17,015      0.35

DEBT AND FREE CASH FLOW^(5)

Debt was reduced $19.5 million in the quarter, $72.4 million for the year to
date and $82.5 million in the last 12 months. At June30, 2013, the principal
amount of debt totaled $873.5 million, approximately $20 million under the
amount projected in Lee's plan of reorganization for September 2014. Free cash
flow increased to $18.6 million for the quarter compared with $7.3 million a
year ago due to lower interest expense in the current year quarter and
reorganization costs in the prior year. Free cash flow in the 53 weeks ended
June 30, 2013 totaled $74.5 million. Liquidity at the end of the quarter
totaled $41.6 million, compared to required debt principal payments of $16.8
million in the next 12 months.

ABOUT LEE

Lee Enterprises is a leading provider of local news and information, and a
major platform for advertising, in its markets, with 46 daily newspapers and a
joint interest in four others, rapidly growing digital products and nearly 300
specialty publications in 22 states. Lee's newspapers have circulation of 1.2
million daily and 1.4 million Sunday, reaching nearly four million readers in
print alone. Lee's websites and mobile and tablet products attracted 20.8
million unique visitors in June 2013. Lee's markets include St. Louis, MO;
Lincoln, NE; Madison, WI; Davenport, IA; Billings, MT; Bloomington, IL; and
Tucson, AZ. Lee Common Stock is traded on the New York Stock Exchange under
the symbol LEE. For more information about Lee, please visit www.lee.net.

FORWARD-LOOKING STATEMENTS -- The Private Securities Litigation Reform Act of
1995 provides a "safe harbor" for forward-looking statements. This news
release contains information that may be deemed forward-looking that is based
largely on our 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, which in
some instances are beyond our control, are our ability to generate cash flows
and maintain liquidity sufficient to service our debt, comply with or obtain
amendments or waivers of the financial covenants contained in our credit
facilities, if necessary, and to refinance our debt as it comes due. Other
risks and uncertainties include the impact and duration of continuing adverse
conditions in certain aspects of the economy affecting our business, changes
in advertising demand, potential changes in newsprint and other commodity
prices, energy costs, interest rates, labor costs, legislative and regulatory
rulings, difficulties in achieving planned expense reductions, maintaining
employee and customer relationships, increased capital costs, maintaining our
listing status on the NYSE, competition and other risks detailed from time to
time in our publicly filed documents. Any statements that are not statements
of historical fact (including statements containing the words "may", "will",
"would", "could", "believe", "expect", "anticipate", "intend", "plan",
"project", "consider" and similar expressions) generally should be considered
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. We do not undertake to publicly update or revise our forward-looking
statements.

Contact: dan.hayes@lee.net, (563) 383-2100

LEE ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

                                   13 Weeks Ended               39 Weeks Ended
(Thousands of Dollars
and Shares, Except
Per                    June30  June24   Percent   June30  June24   Percent
Share Data)               2013     2012    Change      2013     2012    Change
Operating revenue:
Retail                 70,944   74,049    (4.2 )   221,107  229,323    (3.6 )
Classified:
Employment              8,824    9,929   (11.1 )    25,165   27,309    (7.9 )
Automotive              8,417    9,540   (11.8 )    26,039   29,047   (10.4 )
Real estate             4,864    4,990    (2.5 )    13,941   15,215    (8.4 )
All other              12,491   13,320    (6.2 )    35,634   37,594    (5.2 )
Total classified       34,596   37,779    (8.4 )   100,779  109,165    (7.7 )
National                4,997    5,874   (14.9 )    18,373   23,125   (20.5 )
Niche publications
and other               3,099    2,844     9.0       9,086    8,650     5.0
Total advertising and
marketing services
revenue               113,636  120,546    (5.7 )   349,345  370,263    (5.6 )
Subscription           43,583   42,098     3.5     133,609  128,909     3.6
Commercial printing     3,258    3,368    (3.3 )     9,681    9,390     3.1
Digital services and
other                   6,542    5,733    14.1      19,642   18,915     3.8
Total operating
revenue               167,019  171,745    (2.8 )   512,277  527,477    (2.9 )
Operating expenses:
Compensation           62,340   67,975    (8.3 )   192,505  205,738    (6.4 )
Newsprint and ink      10,471   12,366   (15.3 )    33,357   38,600   (13.6 )
Other operating
expenses               53,461   51,317     4.2     160,929  157,138     2.4
Workforce adjustments     945    2,404   (60.7 )     2,260    3,171   (28.7 )
                      127,217  134,062    (5.1 )   389,051  404,647    (3.9 )
Operating cash flow    39,802   37,683     5.6     123,226  122,830     0.3
Depreciation            5,215    5,811   (10.3 )    16,146   17,755    (9.1 )
Amortization            9,542   10,438    (8.6 )    28,635   31,982   (10.5 )
Equity in earnings of
associated companies    1,893    1,762     7.4       6,671    6,003    11.1
Operating income       26,938   23,196    16.1      85,116   79,096     7.6

CONSOLIDATED STATEMENTS OF OPERATIONS,
continued
                                 13 Weeks Ended                 39 Weeks Ended
(Thousands of
Dollars and
Shares, Except      June30   June24   Percent    June30   June24   Percent
Per Share Data)        2013      2012    Change       2013      2012    Change
Non-operating
income (expense):
Financial income      134         3       NM         219       113     93.8
Interest expense  (21,991 ) (24,468 )  (10.1 )   (68,390 ) (57,533 )   18.9
Debt financing
costs                (468 )     (42 )     NM        (557 )  (2,780 )  (80.0 )
Other, net            520         -       NM       7,466         -       NM
                  (21,805 ) (24,507 )  (11.0 )   (61,262 ) (60,200 )    1.8
Income (loss)
before
reorganization
costs and income
taxes               5,133    (1,311 )     NM      23,854    18,896     26.2
Reorganization
costs                   -      (250 )     NM           -    37,617       NM
Income (loss)
before income
taxes               5,133    (1,061 )     NM      23,854   (18,721 )     NM
Income tax
expense (benefit)   3,165      (119 )     NM      11,805    (6,002 )     NM
Income (loss)
from continuing
operations          1,968      (942 )     NM      12,049   (12,719 )     NM
Discontinued
operations, net
of income taxes         -      (412 )     NM      (1,247 )    (553 )     NM
Net income (loss)   1,968    (1,354 )     NM      10,802   (13,272 )     NM
Net income
attributable to
non-controlling
interests            (173 )    (119 )   45.4        (430 )    (272 )   58.1
Income (loss)
attributable to
Lee Enterprises,
Incorporated        1,795    (1,473 )     NM      10,372   (13,544 )     NM
Income (loss)
from continuing
operations
attributable to
Lee Enterprises,
Incorporated        1,795    (1,061 )     NM      11,619   (12,991 )     NM
Earnings (loss)
per common share:
Basic:
Continuing
operations           0.03     (0.02 )     NM        0.22     (0.27 )     NM
Discontinued
operations              -     (0.01 )     NM       (0.02 )   (0.01 )     NM
                     0.03     (0.03 )     NM        0.20     (0.28 )     NM
Diluted:
Continuing
operations           0.03     (0.02 )     NM        0.22     (0.27 )     NM
Discontinued
operations              -     (0.01 )     NM       (0.02 )   (0.01 )     NM
                     0.03     (0.03 )     NM        0.20     (0.28 )     NM
Average common
shares:
Basic              51,825    51,731               51,805    48,733
Diluted            52,038    51,731               51,912    48,733

FREE CASH FLOW FROM CONTINUING OPERATIONS

                                                                      53 Weeks
                            13 Weeks Ended       39 Weeks Ended          Ended
                           June30   June24    June30   June24      June30
(Thousands of Dollars)        2013      2012       2013      2012         2013
Operating income          26,938    23,196     85,116    79,096     109,441
Depreciation and
amortization              14,912    16,430     45,297    50,279      60,880
Impairment of goodwill
and other assets               -         -          -         -       1,388
Stock compensation           371       304      1,101       792       1,376
Financial income             134         3        219       113         342
Cash interest expense    (20,775 ) (23,082 )  (64,141 ) (54,975 )   (87,454 )
Debt financing and
reorganization costs
paid                        (658 )  (7,771 )     (698 ) (31,226 )    (1,772 )
Cash income tax benefit
(paid)                       (27 )      (4 )     (360 )    (128 )       908
Non-controlling
interests                   (173 )    (119 )     (430 )    (272 )      (557 )
Capital expenditures      (2,141 )  (1,650 )   (6,835 )  (4,613 )   (10,065 )
Total                     18,581     7,307     59,269    39,066      74,487

REVENUE BY REGION

                                 13 Weeks Ended                 39 Weeks Ended
(Thousands of     June30  June24      Percent   June30  June24     Percent
Dollars)             2013     2012       Change      2013     2012      Change
Midwest          105,858  109,014      (2.9 )    322,468  333,126     (3.2 )
Mountain West     33,510   34,668      (3.3 )    101,179  104,506     (3.2 )
West              11,273   12,085      (6.7 )     34,050   36,173     (5.9 )
East/Other        16,378   15,978       2.5       54,580   53,672      1.7
Total            167,019  171,745      (2.8 )    512,277  527,477     (2.9 )

SELECTED BALANCE SHEET INFORMATION

                         June30  June24
(Thousands of Dollars)      2013     2012
Cash                     11,630   19,176
Debt (Principal Amount) 873,500  956,000

SELECTED STATISTICAL INFORMATION

                                     13 Weeks Ended             39 Weeks Ended
                          June30 June24   Percent  June30 June24   Percent
                             2013    2012    Change     2013    2012    Change
Capital expenditures
(Thousands of Dollars)     2,141   1,650    29.8      6,835   4,613    48.2
Newsprint volume (Tonnes) 16,353  18,572   (11.9 )   50,226  56,883   (11.7 )
Average full-time
equivalent employees       4,678   5,109    (8.4 )    4,787   5,226    (8.4 )
Shares outstanding
(Thousands of Shares)                                52,389  51,791     1.2

NOTES

(1) This earnings release is a preliminary report of results for the periods
    included. The reader should refer to the Company's Quarterly Reports on
    Form 10-Q and Annual Reports on Form 10-K for more definitive information.
(2) Adjusted income (loss) and adjusted earnings (loss) per common share,
    which are defined as income (loss) attributable to Lee Enterprises,
    Incorporated and earnings (loss) per common share adjusted to exclude both
    unusual matters and those of a substantially non-recurring nature, are
    non-GAAP (Generally Accepted Accounting Principles) financial measures.
    Reconciliations of adjusted income (loss) and adjusted earnings (loss) per
    common share to income (loss) attributable to Lee Enterprises,
    Incorporated, and earnings (loss) per common share are included in tables
    accompanying this release.
    No non-GAAP financial measure should be considered as a substitute for any
    related GAAP financial measure. However, the Company believes the use of
    non-GAAP financial measures provides meaningful supplemental information
    with which to evaluate its financial performance, or assist in forecasting
    and analyzing future periods. The Company also believes such non-GAAP
    financial measures are alternative indicators of performance used by
    investors, lenders, rating agencies and financial analysts to estimate the
    value of a publishing business and its ability to meet debt service
    requirements.
(3) Certain amounts as previously reported have been reclassified to conform
    with the current period presentation. The prior period has been adjusted
    for comparative purposes, and the reclassifications have no impact on
    earnings.
    Results of North County Times operations and The Garden Island operations
    have been reclassified as discontinued operations for all periods
    presented.
    
(4) Operating cash flow, which is defined as operating income (loss) before
    depreciation, amortization, impairment charges, curtailment gains and
    equity in earnings of associated companies, and operating cash flow margin
    (operating cash flow divided by operating revenue) are non-GAAP financial
    measures. See (2) above. Reconciliations of operating cash flow to
    operating income (loss), the most directly comparable GAAP measure, are
    included in a table accompanying this release.
(5) Free cash flow from continuing operations, which is defined as operating
    income (loss), plus depreciation and amortization, impairment charges,
    stock compensation, financial income and cash income tax benefit, minus
    curtailment gains, financial expense (exclusive of non-cash amortization
    and accretion), cash income taxes, capital expenditures and minority
    interest, is a non-GAAP financial measure. See (2) above. Reconciliations
    of free cash flow from continuing operations to operating income (loss),
    the most directly comparable GAAP measure, are included in a table
    accompanying this release. Changes in working capital, asset sales and
    discontinued operations are excluded.

  

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Source: Lee Enterprises Inc. via Thomson Reuters ONE
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