-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DnYRDrtGU08E+OzJX/SKE8fsqPa7N1N5Gg+T2dKa2myRj9Rqwp8EcKh7iBWJ+tKD cdeUVTuVaTd9aiuMYkdy2w== 0000743530-96-000008.txt : 19960209 0000743530-96-000008.hdr.sgml : 19960209 ACCESSION NUMBER: 0000743530-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960208 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEE ENTERPRISES INC CENTRAL INDEX KEY: 0000058361 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 420823980 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06227 FILM NUMBER: 96513438 BUSINESS ADDRESS: STREET 1: 400 PUTNAM BLDG STREET 2: 215 N MAIN ST CITY: DAVENPORT STATE: IA ZIP: 52801 BUSINESS PHONE: 3193832100 MAIL ADDRESS: STREET 1: 400 PUTNAM BUILDING STREET 2: 215 N. MAIN STREET CITY: DAVENPORT STATE: IA ZIP: 52801 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended December 31, 1995 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 1-6227 Lee Enterprises, Incorporated A Delaware Corporation I.D. #42-0823980 215 N. Main Street, Davenport, Iowa 52801 Phone: (319) 383-2100 Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Class Outstanding at December 31, 1995 Common Stock, $2.00 par value 34,363,227 Class "B" Common Stock, $2.00 par value 13,034,885 PART I. FINANCIAL INFORMATION Item 1. LEE ENTERPRISES, INCORPORATED CONSOLIDATED STATEMENTS OF INCOME (In Thousands Except Per Share Data) 1995 1994 (Unaudited) Three Months Ended December 31: Operating revenue: Newspaper: Advertising $ 45,201 $ 37,721 Circulation 20,184 17,076 Other 13,126 11,461 Broadcasting 30,341 29,347 Graphic arts 15,882 14,703 Equity in net income of associated companies 1,921 2,780 $126,655 $113,088 Operating expenses: Compensation costs $ 41,638 $ 36,254 Newsprint and ink 10,215 6,776 Depreciation 3,947 2,845 Amortization of intangibles 3,773 3,021 Other 38,519 33,932 $ 98,092 $ 82,828 Operating income $ 28,563 $ 30,260 Financial (income) expense, net: Financial (income) $ (527) $ (811) Financial expense 2,555 3,256 $ 2,028 $ 2,445 Income before taxes on income $ 26,535 $ 27,815 Income taxes 10,595 10,989 Net income $ 15,940 $ 16,826 Weighted average number of shares 48,297 45,816 Earnings per share $ .33 $ .37 Dividends per share $ .12 $ .11 LEE ENTERPRISES, INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands) December 31, September 30, 1995 1995 (Unaudited) ASSETS Cash and cash equivalents $ 29,907 $ 10,683 Temporary investments 200 200 Accounts receivable, net 65,297 58,584 Inventories 16,848 18,355 Program rights and other 15,340 16,687 Total current assets $127,592 $104,509 Investments 20,116 19,700 Property and equipment, net 108,761 108,196 Intangibles and other assets 322,957 327,524 $579,426 $559,929 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $126,253 $116,527 Long-term debt, less current maturities 75,109 75,511 Deferred items 57,358 56,849 Stockholders' equity 320,706 311,042 $579,426 $559,929 LEE ENTERPRISES, INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) 1995 1994 (Unaudited) Three Months Ended December 31: CASH PROVIDED BY OPERATIONS Net income $ 15,940 $ 16,826 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 7,720 5,866 Distributions in excess of current earnings of associated companies 1,953 2,026 Other balance sheet changes (395) 4,927 Net cash provided by operations $ 25,218 $ 29,645 CASH PROVIDED BY (REQUIRED FOR) INVESTING ACTIVITIES Acquisitions $ - - $ (1,350) Purchase of temporary investments (200) - - Proceeds from maturities of temporary investments 200 8,386 Purchase of property and equipment (4,346) (3,081) Other (931) (815) Net cash provided by (required for) investing activities $ (5,277) $ 3,140 CASH (REQUIRED FOR) FINANCING ACTIVITIES Purchase of common stock $ (868) $(13,901) Other 151 106 Net cash (required for) financing activities $ (717) $(13,795) Net increase in cash and cash equivalents $ 19,224 $ 18,990 Cash and cash equivalents: Beginning 10,683 18,784 Ending $ 29,907 $ 37,774 LEE ENTERPRISES, INCORPORATED NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION NOTE 1. BASIS OF PRESENTATION The information furnished reflects all adjustments, consisting of normal recurring accruals, which are, in the opinion of management, necessary to a fair presentation of the financial position as of December 31, 1995 and the results of operations and cash flows for the three-month periods ended December 31, 1995 and 1994. NOTE 2. COMMON STOCK SPLIT On November 9, 1995, the Board of Directors declared a two-for-one stock split on the Company's common stock and Class B common stock effected in the form of a stock dividend payable December 8, 1995, to holders of record on November 20, 1995. All share and per share data is stated to reflect the split. NOTE 3. INVESTMENT IN ASSOCIATED COMPANIES Condensed operating results of unconsolidated associated companies are as follows: Three Months Ended December 31, 1995 1994 (In Thousands) (Unaudited) Revenues $ 19,291 $ 26,891 Operating expenses, except depreciation and amortization 12,727 17,459 Depreciation and amortization 460 611 Operating income 6,104 8,821 Financial income 308 495 Income before income taxes 6,412 9,316 Income taxes 2,569 3,748 Net income 3,843 5,568 a. Madison Newspapers, Inc. (50% owned) b. Journal-Star Printing Co. (49.75% owned until March 31, 1995) c. Quality Information Systems (50% owned) NOTE 4. INVENTORIES Inventories consist of the following: December 31, September 30, 1995 1995 (In Thousands) (Unaudited) Newsprint $ 2,786 $ 3,634 Media products and services: Raw material 6,881 7,554 Finished goods 7,181 7,167 $ 16,848 $ 18,355 LEE ENTERPRISES, INCORPORATED NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION NOTE 5. CASH FLOWS INFORMATION The components of other balance sheet changes are: Three Months Ended December 31, 1995 1994 (In Thousands) (Unaudited) (Increase) in receivables $ (8,151) $ (7,032) Decrease in inventories, film rights and other 1,969 2,107 Increase (decrease) in accounts payable, accrued expenses and unearned income (4,209) 1,047 Increase in income taxes payable 9,265 8,734 Other 731 71 $ (395) $ 4,927 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Operating results: Three Months Ended December 31, 1995 1994 (Dollar Amounts in Thousands Except For Per Share Data) Revenue $126,655 $113,088 Percent change 12.0% Income before depreciation and amortization, interest and taxes (EBITDA) 36,283 36,126 Percent change .4% Operating income 28,563 30,260 Percent change (5.6%) Net income 15,940 16,826 Percent change (5.3%) Earnings per share $ .33 $ .37 Percent change (10.8%) As if acquisition of Journal-Star Printing Co. and SJL of Kansas Corp. had occurred on October 1, 1994. Proforma: Revenue $126,655 $124,961 Percent change 1.4% Income before depreciation and amortization, interest and taxes (EBITDA) 36,283 39,892 Percent change (9.0%) Operating income 28,563 32,536 Percent change 12.2% Net income 15,940 17,425 Percent change (8.5%) Earnings per share $ .33 $ .35 Percent change (5.7%) Operations by line of business are as follows: Three Months Ended December 31, 1995 1994 (In Thousands) Revenue: Newspapers $ 80,425 $ 69,051 Broadcasting 30,341 29,347 Graphic arts 15,889 14,690 $126,655 $113,088 Income before depreciation and amortization, interest and taxes (EBITDA): Newspapers $ 26,143 $ 23,527 Broadcasting 9,878 13,491 Graphic arts 3,617 2,845 Corporate (3,355) (3,737) $ 36,283 $ 36,126 Operating income: Newspapers $ 22,593 $ 20,793 Broadcasting 6,951 11,618 Graphic arts 2,508 1,712 Corporate and other (3,489) (3,863) $ 28,563 $ 30,260 Capital expenditures: Newspaper $ 2,013 $ 1,367 Broadcasting 2,061 1,673 Graphic arts 227 41 Corporate 45 - - $ 4,346 $ 3,081 There were no significant non-recurring items during the quarter. The advertising environment was sluggish in the first quarter of the fiscal year and is expected to remain sluggish at least through the second quarter. Newspapers: On a proforma basis for newspapers owned at the end of fiscal 1995, wholly-owned daily newspaper advertising revenue increased $1,322,000, 3.0%. Advertising revenue from local merchants increased $661,000, 2.4%. Local "run-of-press" advertising decreased $142,000, (.7%) as a result of higher average rates which partially offset a 6.1% decrease in advertising inches. Local preprint revenue increased $803,000, 9.6%. Classified advertising revenue increased $568,000, 4.8% as a 3.0% decrease in units primarily related to weakness in the automotive segment was offset by higher average rates. Circulation revenue increased $1,065,000, 5.6% as a result of higher rates which offset a 2.0% decrease in volume. Other revenue at daily newspapers increased $1,569,000, 24.6% primarily as a result of increases in commercial printing and other non-traditional products and services. On a proforma basis for newspapers owned at the end of fiscal 1995, wholly-owned daily newspaper compensation expense increased $778,000, 3.4% due primarily to increases in average compensation. Newsprint and ink costs increased $2,258,000, 28.8%. Higher unit costs were offset in part by a 2.3% decrease in consumption. Other operating expenses exclusive of depreciation and amortization decreased $214,000, (1.3%). Revenues from weekly newspapers, shoppers and specialty publications increased $382,000, 8.0%. Revenue from properties acquired since the beginning of the first quarter of the last fiscal year were not significant. Broadcasting: Exclusive of the effects of the acquisition of SJL of Kansas Corp. revenue for the quarter decreased $3,371,000, (11.5%), as political advertising decreased $2,905,000, local/regional advertising increased $595,000, (4.3%) and national advertising decreased $50,000, (.6%). Compensation costs increased $351,000, 4.9% due primarily to a 9.8% increase in the number of hours worked which was offset, in part, by a decrease in the average hourly rates. Programming costs for the quarter increased $411,000, 23.6% primarily due to higher program acquisition costs. Other operating expenses exclusive of depreciation and amortization increased $336,000, 6.5% for the quarter. Graphic Arts: Graphic arts revenue increased $1,179,000, 8.0%, as decreased unit volume from NAPP's letterpress plate business was offset by higher selling prices, growth in the flexographic printing plate business and revenue from the distribution of flexographic commercial printing plates which commenced in September 1995. Letterpress customers reduced inventory levels and several customers completed conversion to offset or flexographic printing. Revenue from the letterpress business is expected to decrease each year as conversions continue. Operating income increased $796,000, 46.5% due to the increased sales volume and a reduction in spending on new product initiatives. Equity in Net Income of Associated Companies: Equity in net income of associated companies decreased $859,000. The prior year included $808,000 of equity in net income of Journal-Star Printing Co. Financial Expense and Income Taxes: Interest expense was reduced due to payments on long-term debt offset, in part, by $15,000,000 of short-term borrowings to finance the acquisition of SJL of Kansas Corp. Income taxes were 39.9% and 39.5% of pre-tax income for the quarters ended December 31, 1995 and 1994, respectively. The increase in the effective income tax rate was due to an increase in nondeductible intangible asset amortizations. Liquidity and Capital Resources: Cash provided by operations, which is the Company's primary source of liquidity, generated $25,218,000 for the quarter. Available cash balances, cash flow from operations and bank lines-of-credit provide adequate liquidity. Covenants related to the Company's credit agreements are not considered restrictive to operations and anticipated stockholder dividends. LEE ENTERPRISES, INCORPORATED PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit "A" - Computation of Earnings Per Share (b) The following report on Form 8-K was filed during the three months ended December 31, 1995. Date of report: December 5, 1995 Item: 5 - Announce the declaration of the two-for-one stock split Financial statements filed: none 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 2/08/96 /s/G. C. Wahlig G. C. Wahlig, Chief Accounting Officer EX-11 2 PART I. EXHIBIT "A" COMPUTATION OF EARNINGS PER COMMON SHARE (In Thousands Except Per Share Data) Three Months Ended December 31, 1995 1994 (Unaudited) Net income applicable to common shares $ 15,940 $ 16,826 Shares: Weighted average common shares outstanding 47,378 45,218 Dilutive effect of certain stock options 919 598 Average common shares outstanding as adjusted 48,297 45,816 Earnings per common share $ .33 $ .37 EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACED FROM THE DECEMBER 31, 1995 10-Q OF LEE ENTERPRISES, INCORPORATED AND IS QUALIFIED IN ITS ENTIRETY TO REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 3-MOS SEP-30-1996 DEC-31-1995 29,907 200 69,597 4,300 16,848 127,592 257,481 148,720 579,426 126,253 75,109 0 0 94,796 225,910 579,426 126,655 126,655 0 08,092 0 0 2,555 26,535 10,595 15,940 0 0 0 15,940 .33 .33
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