Business News

Lee reports earnings for first fiscal quarter

Thursday 24. January 2008 - Lee Enterprises, Incorporated (NYSE: LEE), reported today that diluted earnings per common share from continuing operations were 48 cents for its first fiscal quarter ended December 2007.

The results compare with 58 cents a year ago in a quarter that included an additional publishing day, a Sunday, and the benefit of the World Series in St. Louis. The additional Sunday a year ago and sales related to the World Series resulted in an estimated $7 million of revenue and $4 million of operating cash flow(1). The quarter a year ago also benefited from an additional publishing week in Tucson, Ariz., which is recorded in equity in earnings of associated companies. The impact of these events on prior year earnings for the quarter was approximately six cents per common share.

Mary Junck, chairman and chief executive officer, said: “We believe we’re weathering the current economic slowdown as well as possible in light of the wide-ranging impact of the real estate slump. Our audiences continue to grow, and we continue to focus on our top priorities of revenue growth, online innovation, strong local news, people development and cost control. We believe we have the right strategies and the right people to continue building on our position as, by far, the leading provider of local news, information and advertising in our markets.”

The loss of the Sunday and World Series affected nearly all revenue categories. Total operating revenue from continuing operations for the quarter decreased 6.2 percent from a year ago to $279.9 million. Total advertising revenue decreased 6.5 percent, to $217.6 million, with online advertising revenue up 24.0 percent. Combined print and online retail advertising decreased 2.5 percent. Combined print and online classified advertising revenue decreased 9.5 percent, with employment down 7.9 percent, automotive down 9.5 percent and real estate down 19.8 percent. National advertising revenue decreased 24.1 percent. Circulation revenue decreased 4.3 percent. Same property(2) revenue results were identical.

Operating expenses, exclusive of depreciation and amortization, decreased 4.9 percent, with compensation down 3.6 percent, newsprint and ink down 18.8 percent and other cash costs down 1.1 percent. Same property operating expenses decreased 4.3 percent for the quarter compared with a year ago, with compensation down 1.9 percent, newsprint and ink down 19.4 percent and other cash costs down 1.2 percent.

Compared with a year ago, operating cash flow decreased 10.0 percent to $72.4 million. Operating income, which includes equity in earnings of associated companies and depreciation and amortization, decreased 15.8 percent to $53.7 million.

Non-operating expenses, which consist primarily of financial expense, net of financial income, decreased 13.1 percent to $19.1 million. Income from continuing operations before income taxes decreased 17.2 percent to $34.6 million. Income from continuing operations decreased 17.9 percent, to $21.8 million. Net income, including discontinued operations, decreased 17.0 percent to $22.1 million.

Free cash flow(3) totaled $48.1 million for the quarter, compared with $42.0 million a year ago. Timing of income tax payments had a positive impact on results for the current year quarter. Recent declines in LIBOR and continuing debt reduction are expected to favorably impact interest expense and free cash flow for the rest of the year. Net debt was reduced by $33.0 million in the quarter.

STOCK REPURCHASE

On Jan. 7, Lee announced that its board of directors has authorized the purchase of up to $30 million of Lee common stock. The repurchase is expected to take place in open market purchases or privately negotiated transactions as warranted beginning after today’s earnings announcement.

FINANCIAL CALENDAR

Because of the adoption of period accounting this fiscal year, most enterprises will have one fewer publishing day in 2008 than in 2007. The lost publishing day is a Sunday, which affects year-over-year comparisons, as Sundays provide significantly more revenue than any other day of the week. Compared with 2007, the 2008 financial calendar loses a Sunday in the first fiscal quarter, regains one Sunday in the second quarter and loses it again in the fourth quarter.