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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: April 21, 2003
Commission File Number 1-6227
LEE ENTERPRISES, INCORPORATED
(Exact name of Registrant as specified in its charter)
Delaware 42-0823980
(State of Incorporation) (I.R.S. Employer Identification No.)
215 N. Main Street, Davenport, Iowa 52801
(Address of Principal Executive Offices)
(563) 383-2100
Registrant's telephone number, including area code
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Item 9. Regulation FD Disclosure
See Item 12. Results of Operations and Financial Condition
Item 12. Results of Operations and Financial Condition
On April 21, 2003, Lee Enterprises, Incorporated ("the Company") reported its
second fiscal quarter results and is furnishing the earnings release required
under Item 12. The Company also reported its revenues for the month of March,
2003, and is furnishing the related release under Item 12. The following
exhibits are included herein:
EXHIBIT 99.1 Earnings Release - Second Quarter Ended March 31, 2003
EXHIBIT 99.2 Monthly Revenue Release - March, 2003
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 measure.
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: April 21, 2003 /s/ Carl G. Schmidt
------------------------------------
Carl G. Schmidt
Vice President, Chief Financial Officer,
and Treasurer
EXHIBIT 99.1 Earnings Release - Second Quarter Ended March 31, 2003
LEE ENTERPRISES
215 Main St.
Davenport, IA 52801-1924
www.lee.net
NEWS RELEASE
Lee Enterprises reports Q2 earnings growth of 13.8%
DAVENPORT, Iowa (April 21, 2003) - Lee Enterprises, Incorporated (NYSE: LEE),
reported today that diluted earnings per common share from continuing operations
were 33 cents for its second quarter ended March 31, 2003. The results represent
an increase of 13.8 percent over earnings of 29 cents a year ago, which have
been restated to include employee stock option expense.
Mary Junck, chairman and chief executive officer, said: "Lee posted another
strong quarter despite continued economic uncertainty and war-related dampening
of ad spending. Same-property(1) retail advertising revenue grew 3.0 percent
over last year, and classified increased 2.4 percent, reflecting our ongoing
revenue priority. We're seeing especially good performances at the 16 newspapers
we acquired in 2002. Our momentum continues, as well, from our focus on
improving readership and circulation, emphasizing strong local news, expanding
our online services and carefully controlling our costs. As the war winds down,
we're well positioned to take advantage of any improvement in the ad environment
when it happens."
Operating cash flow(2) increased 57.1 percent to $37.4 million, at a margin of
24.0 percent, compared with 24.6 percent a year ago, primarily a result of lower
margins of businesses acquired a year ago and increasing medical and other
compensation costs. Revenue increased 61.0 percent to $155.3 million, as
acquisitions contributed $56.6 million this year. Operating expenses, excluding
depreciation and amortization, increased 62.2 percent to $118.0 million.
Operating income, which includes equity in net income of associated companies,
depreciation and amortization, increased 34.6 percent. Net income grew 16.4
percent to $14.6 million.
On a same-property basis, which excludes the impact of acquisitions and
divestitures made in the current or prior year, total revenue for the quarter
ended March 31, 2003, increased 3.3 percent from a year ago. Total advertising
revenue increased 2.5 percent. Retail increased 3.0 percent to $37.1 million.
Classified revenue increased 2.4 percent to $22.4 million, with employment
advertising in the daily newspapers down only 0.8 percent. National advertising,
a small category for Lee, decreased 3.4 percent. Circulation revenue decreased
0.3 percent. Online revenue increased 35.6 percent.
YEAR TO DATE
For the six months ended March 31, 2003, total revenue on a same-property basis
increased 2.7 percent. On a reported basis, revenue increased 59.8 percent.
Operating expenses, excluding depreciation and amortization, increased 61.0
percent and operating cash flow increased 56.7 percent. Operating cash flow
margin(2) was 26.6 percent, compared with 27.1 percent a year ago. Operating
income increased 40.2 percent.
Diluted earnings per common share from continuing operations totaled 84 cents,
an increase of 23.5 percent from 68 cents in the first six months a year ago.
EMPLOYEE STOCK OPTIONS
In 2003, Lee has begun expensing employee stock option grants. This will reduce
2003 results about 5 to 7 cents per diluted common share for the full year and
had an impact of one cent per share in the March quarter. Lee has chosen to
restate prior years, which reduces previously reported annual 2002 results by 5
cents. Results for the quarter ended March 31, 2002, were reduced one cent per
diluted common share from the previously reported amount of 30 cents. Year to
date results in the prior year were reduced two cents per diluted common share
from the previously reported amount of 70 cents.
Lee Enterprises is based in Davenport, Iowa. It owns 38 daily newspapers and a
joint interest in six others, along with associated online services. Lee also
owns more than 175 weekly newspapers, shoppers and classified and specialty
publications. Its stock is traded on the New York Stock Exchange under the
symbol LEE. More information about Lee Enterprises, including revenue statistics
for March, is available at www.lee.net.
LEE ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Unaudited. (Thousands, Except Per Common Share Data)
Three Months Ended Six Months Ended
March 31, March 31,
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2003 2002 % 2003 2002 %
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Operating revenue: (3) (3)
Advertising........................ $103,082 $ 61,332 68.1 $221,884 $133,009 66.8
Circulation........................ 33,113 20,030 65.3 66,725 40,452 64.9
Other.............................. 19,138 15,146 26.4 37,271 30,407 22.6
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155,333 96,508 61.0 325,880 203,868 59.8
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Operating expenses:
Compensation....................... 67,414 40,598 66.1 135,906 81,082 67.6
Newsprint and ink.................. 13,316 8,153 63.3 27,766 17,930 54.9
Other.............................. 37,249 23,975 55.4 75,606 49,606 52.4
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Operating expenses excluding
depreciation and amortization...... 117,979 72,726 62.2 239,278 148,618 61.0
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Operating cash flow.................. 37,354 23,782 57.1 86,602 55,250 56.7
Depreciation and amortization........ 11,713 5,335 119.6 23,084 11,176 106.5
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Operating income, before equity in
net income of associated
companies.......................... 25,641 18,447 39.0 63,518 44,074 44.1
Equity in net income of associated
companies.......................... 1,553 1,752 (11.4) 3,771 3,929 (4.0)
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Operating income..................... 27,194 20,199 34.6 67,289 48,003 40.2
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Non-operating income (expense), net:
Financial income .................. 203 2,468 (91.8) 543 5,235 (89.6)
Financial expense.................. (4,270) (2,844) 50.1 (8,960) (5,882) 52.3
Other, net......................... (43) (1) -- (387) (308) 25.6
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(4,110) (377) 990.2 (8,804) (955) 821.9
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Income from continuing operations
before income taxes ............... 23,084 19,822 16.5 58,485 47,048 24.3
Income tax expense................... 8,460 7,155 18.2 21,383 16,767 27.5
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Income from continuing operations.... 14,624 12,667 15.4 37,102 30,281 22.5
Discontinued operations.............. -- (103) -- (20) (140) (85.7)
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Net income........................... $ 14,624 $ 12,564 16.4 $ 37,082 $ 30,141 23.0
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Earnings per common share:
Basic:
Continuing operations.............. $0.33 $0.29 13.8 $0.84 $0.68 23.5
Discontinued operations............ -- -- -- --
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Net income......................... $0.33 $0.29 13.8 $0.84 $0.68 23.5
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Diluted:
Continuing operations.............. $0.33 $0.29 13.8 $0.84 $0.68 23.5
Discontinued operations............ -- -- -- --
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Net income......................... $0.33 $0.29 13.8 $0.84 $0.68 23.5
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Average outstanding shares:
Basic.............................. 44,257 44,041 44,239 44,009
Diluted............................ 44,405 44,331 44,379 44,286
SELECTED BALANCE SHEET INFORMATION March 31,
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2003 2002
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Cash and temporary cash investments...... $ 17,380 $ 479,030
Total assets............................. 1,436,608 975,976
Debt, including current maturities....... 357,200 173,400
Stockholders' equity..................... 768,179 703,359
(1) Beginning in March 2003, same property revenue excludes revenue of Madison
Newspapers, Inc. (doing business as Capital Newspapers), in order to comply
with newly issued SEC regulations related to disclosure of non-GAAP
financial measures. Lee owns 50% of the capital stock of Capital
Newspapers, which for financial reporting purposes is reported using the
equity method of accounting.
(2) 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 included 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.
(3) Certain amounts as previously reported have been reclassified to conform
with the current period presentation. The presentation of equity in net
income of associated companies has been revised to exclude those amounts
from revenue. Fiscal 2002 amounts have been restated to include expense
relating to employee stock options.
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.
Contact: dan.hayes@lee.net, (563) 383-2163
EXHIBIT 99.2 Monthly Revenue Release - March, 2003
LEE ENTERPRISES
215 Main St.
Davenport, IA 52801-1924
www.lee.net
NEWS RELEASE
Lee Enterprises reports March revenue statistics
DAVENPORT, Iowa (April 21, 2003) - Lee Enterprises, Incorporated (NYSE: LEE),
reported today that, excluding the effects of acquisitions and divestitures,
publishing revenue increased 2.0 percent in March compared with a year ago.
Total advertising revenue increased 1.1 percent. Retail advertising revenue
increased 1.5 percent. Classified advertising revenue increased 1.0 percent,
with employment down 2.3 percent, automotive up 3.3 percent, real estate up 15.0
percent, other newspaper classified categories down 1.0 percent, and classified
in alternative publications down 6.9 percent. National advertising revenue, a
small category for Lee, decreased 5.1 percent.
Circulation revenue declined 0.8 percent. Online revenue increased 32.5 percent.
Including the results of acquisitions and divestitures, total publishing revenue
increased 60.4 percent.
Lee Enterprises is based in Davenport, Iowa. Lee owns 38 daily newspapers and a
joint interest in six others, along with associated online services. Lee also
owns more than 175 weekly newspapers, shoppers and classified and specialty
publications. Its stock is traded on the New York Stock Exchange under the
symbol LEE. More information about Lee Enterprises is available at www.lee.net.
The monthly and year-to-date statistical information follows.
LEE ENTERPRISES, INCORPORATED
Revenue and Statistical Summary
March 2003
(Unaudited)
PUBLISHING REVENUE
March Year To Date
(Thousands) --------------------------- ---------------------------
2003 2002 % 2003 2002 %
--------- --------- ------- --------- --------- -------
(1)(2) (1)(2) (2) (2)
Advertising:
Retail.................. $ 13,734 $ 13,531 1.5 % $ 82,957 $ 80,488 3.1 %
National................ 782 824 (5.1) 4,936 5,155 (4.2)
Classified:
Daily newspapers:
Employment.......... 1,911 1,956 (2.3) 9,922 10,187 (2.6)
Automotive.......... 1,865 1,805 3.3 10,300 10,169 1.3
Real estate......... 1,501 1,305 15.0 8,184 7,504 9.1
All other........... 1,192 1,204 (1.0) 6,761 6,820 (0.9)
Alternative
publications........ 1,645 1,766 (6.9) 10,003 9,633 3.8
--------- --------- --------- ---------
Total classified...... 8,114 8,036 1.0 45,170 44,313 1.9
--------- --------- --------- ---------
Total advertising..... 22,630 22,391 1.1 133,063 129,956 2.4
Circulation............... 7,092 7,149 (0.8) 40,390 40,451 (0.2)
Online.................... 763 576 32.5 4,171 3,037 37.3
Other..................... 5,402 5,068 6.6 28,571 27,276 4.7
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Total, Same property.. 35,887 35,184 2.0 206,195 200,720 2.7
Acquired/divested
properties............. 20,777 134 NM 119,685 3,148 NM
--------- --------- --------- ---------
Total publishing
revenue............... $ 56,664 $ 35,318 60.4 % $325,880 $203,868 59.8 %
========= ========= ========= =========
DAILY NEWSPAPER ADVERTISING VOLUME
March Year To Date
------------------------- -------------------------
(Thousands of Inches) 2003 2002 % 2003 2002 %
------- ------- ------ ------- ------- ------
(1)(2) (1)(2) (2) (2)
Retail.................... 494 508 (2.8)% 3,057 3,045 0.4 %
National.................. 22 27 (18.5) 145 172 (15.7)
Classified................ 485 475 2.1 2,712 2,685 1.0
------- ------- ------- -------
Total, Same property.. 1,001 1,010 (0.9)% 5,914 5,902 0.2 %
======= ======= ======= =======
Notes to Revenue and Statistical Summary:
(1) The month had one more Monday and one fewer Friday than the prior period.
(2) Beginning in March 2003, same property revenue excludes revenue of Madison
Newspapers, Inc. (doing business as Capital Newspapers), in order to comply
with newly issued SEC regulations related to disclosure of non-GAAP
financial measures. Lee owns 50% of the capital stock of Capital
Newspapers, which for financial reporting purposes is reported using the
equity method of accounting.
(3) The Company's fiscal year ends on September 30.
(4) The Company disclaims responsibility for updating information beyond
release date.
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.
Contact: dan.hayes@lee.net, (563) 383-2100