-----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, OpACuST+b18NhCwWHi89qypqxsJAYJETa2S/fgLqvsrTx3vDmrunoRgGzQBpyY+b MNkXNRfGyMUpm3WbanBQ5Q== 0000743530-96-000082.txt : 19960801 0000743530-96-000082.hdr.sgml : 19960801 ACCESSION NUMBER: 0000743530-96-000082 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960731 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: 96601869 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 June 30, 1996 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 June 30, 1996 Common Stock, $2.00 par value 34,309,608 Class "B" Common Stock, $2.00 par value 12,717,947 PART I. FINANCIAL INFORMATION Item 1. LEE ENTERPRISES, INCORPORATED CONSOLIDATED STATEMENTS OF INCOME (In Thousands Except Per Share Data) Three Months Ended June 30, Nine Months Ended June 30, ------------------------------ ------------------------------ 1996 1995 1996 1995 - -------------------------------------------------------------------------------------------------------- Operating revenue: Newspaper: Advertising $ 43,362 $ 42,740 $ 126,180 $ 112,403 Circulation 19,967 19,427 59,918 53,372 Other 13,826 12,383 41,071 36,278 Broadcasting 30,671 25,061 88,200 76,129 Graphic arts 17,344 15,785 49,386 44,297 Equity in net income of associated companies 1,664 1,710 4,847 6,356 ------------------------------ ------------------------------- 126,834 117,106 369,602 328,835 ------------------------------ ------------------------------- Operating expenses: Compensation costs 41,335 38,107 124,446 110,091 Newsprint and ink 9,539 8,567 29,777 21,710 Depreciation 4,251 3,270 12,197 9,090 Amortization of intangibles 3,800 3,553 11,498 9,578 Other 37,753 34,125 112,685 99,449 ------------------------------ ------------------------------- 96,678 87,622 290,603 249,918 ------------------------------ ------------------------------- Operating income 30,156 29,484 78,999 78,917 ------------------------------ ------------------------------- Financial (income) expense, net: Financial (income) (663) (901) (1,751) (2,334) Financial expense 2,347 2,917 7,335 8,837 ------------------------------ ------------------------------- 1,684 2,016 5,584 6,503 ------------------------------ ------------------------------- Income before taxes on income 28,472 27,468 73,415 72,414 Income taxes 11,427 11,033 29,625 28,037 ------------------------------ ------------------------------- Net income $ 17,045 $ 16,435 $ 43,790 $ 44,377 ============================== =============================== Weighted average number of shares 47,938 48,364 48,021 46,476 ============================== =============================== Earnings per share $ 0.36 $ 0.34 $ 0.91 $ 0.95 ============================== =============================== Dividends per share $ 0.12 $ 0.11 $ 0.36 $ 0.33 ============================== ===============================
LEE ENTERPRISES, INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands) June 30, September 30, ASSETS 1996 1995 - ------------------------------------------------------------------------------------------------------------- (Unaudited) Cash and cash equivalents $ 25,991 $ 10,683 Temporary investments 200 Accounts receivable, net 66,321 58,584 Inventories 15,177 18,355 Film rights and other 13,636 16,687 ---------------------------------- Total current assets 121,125 104,509 Investments 21,292 19,700 Property and equipment, net 109,326 108,196 Intangibles and other assets 312,452 327,524 ---------------------------------- $ 564,195 $ 559,929 ================================== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------------------------------------------------------------------------------- Current liabilities $ 111,771 $ 116,527 Long-term debt, less current maturities 69,617 75,511 Deferred items 53,925 56,849 Stockholders' equity 328,882 311,042 ---------------------------------- $ 564,195 $ 559,929 ==================================
LEE ENTERPRISES, INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Nine Months Ended June 30: 1996 1995 - ------------------------------------------------------------------------------------------------------------- (Unaudited) Cash Provided by Operations: Net income $ 43,790 $ 44,377 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 23,695 18,668 Distributions in excess of earnings of associated companies 1,166 1,769 Other balance sheet changes (7,228) (761) ---------------------------------- Net cash provided by operations 61,423 64,053 ---------------------------------- Cash Provided by (Required for) Investing Activities: Acquisitions (367) 7,144 Purchase of temporary investments (200) (200) Proceeds from maturities of temporary investments 400 38,859 Purchase of property and equipment (13,866) (10,643) Other (1,320) (964) ---------------------------------- Net cash provided by (required for) investing activities (15,353) 34,196 ---------------------------------- Cash (Required for) Financing Activities: Purchase of common stock (11,654) (26,450) Cash dividends paid (11,316) (9,827) Payment of debt (25,076) (25,000) Proceeds from long-term borrowings 15,000 Other 2,284 757 ---------------------------------- Net cash (required for) financing activities (30,762) (60,520) ---------------------------------- Net increase in cash and cash equivalents 15,308 37,729 Cash and cash equivalents: Beginning 10,683 18,784 ---------------------------------- Ending $ 25,991 $ 56,513 ==================================
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 June 30, 1996 and the results of operations for the three and nine month periods ended June 30, 1996 and 1995 and cash flows for the nine month periods needed June 30, 1996 and 1995. 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 June 30, Nine Months Ended June 30, ------------------------------ ------------------------------ 1996 1995 1996 1995 -------------------------------------------------------------- Revenues $ 18,226 $ 17,427 $ 54,576 $ 68,110 Operating expenses, except depreciation and amortization 12,506 11,502 37,871 46,276 Depreciation and amortization 433 444 1,363 1,708 Operating income 5,287 5,481 15,342 20,126 Financial income 287 312 876 1,212 Income before income taxes 5,573 5,793 16,218 21,338 Income taxes 2,249 2,339 6,522 8,579 Net income 3,324 3,454 9,696 12,759
a. Madison Newspaper, 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: June 30, September 30, 1996 1995 --------------------------------- (In Thousands) (Unaudited) Newsprint $ 2,279 $ 3,634 Media products and services: Raw material 5,514 7,554 Finished goods 7,384 7,167 --------------------------------- $ 15,177 $ 18,355 =================================
Note 5. Cash Flows Information The components of other balance sheet changes are: Nine Months Ended June 30, --------------------------------- 1996 1995 --------------------------------- (In Thousands) (Unaudited) (Increase) in receivables $ (9,175) $ (6,128) (Increase) decrease in inventories, film rights and other 2,098 (428) Increase (decrease) in accounts payable, accrued expenses and unearned income (5,987) 4,877 Increase in income taxes payable 4,622 277 Other, primarily deferred items 1,214 (323) --------------------------------- $ (7,228) $ (1,725) =================================
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Operating results: Three Months Ended June 30, Nine Months Ended June 30, ----------------------------- ------------------------------- 1996 1995 1996 1995 -------------------------------------------------------------- (Dollar Amounts in Thousands Except for Per Share Data) Operating revenue $ 126,834 $ 117,106 $ 369,602 $ 328,835 Percent change 8.3% 12.4% Income before depreciation and amortization, interest and taxes (EBITDA) 38,207 36,307 102,694 97,585 Percent change 5.2% 5.2% Operating income 30,156 29,484 78,999 78,917 Percent change 2.3% 0.1% Net income 17,045 16,435 43,790 44,377 Percent change 3.7% (1.3)% Earnings per share $ 0.36 $ 0.34 $ 0.91 $ 0.95 Percent change 5.9% (4.2)%
As if the acquisition of Journal-Star Printing Co. and SJL of Kansas Corp. had occurred on October 1, 1994. Three Months Ended June 30, Nine Months Ended June 30, ----------------------------- ------------------------------- 1996 1995 1996 1995 -------------------------------------------------------------- (Dollar Amounts in Thousands Except for Per Share Data) Proforma: Operating revenue $ 126,834 $ 121,325 $ 369,602 $ 355,566 Percent change 4.5% 4.0% Income before depreciation and amortization, interest and taxes (EBITDA) 38,207 37,795 102,694 106,498 Percent change 1.1% (3.6)% Operating income 30,156 30,183 78,999 84,068 Percent change (0.1)% (6.0)% Net income 17,045 16,387 43,790 44,770 Percent change 4.0% (2.2)% Earnings per share $ 0.36 $ 0.34 $ 0.91 $ 0.92 Percent change 5.9% (1.1)%
Operations by line of business are as follows: Three Months Ended June 30, Nine Months Ended June 30, ----------------------------- ------------------------------- 1996 1995 1996 1995 -------------------------------------------------------------- (In Thousands) Operating revenue: Newspapers $ 78,841 $ 76,274 $ 232,059 $ 208,452 Broadcasting 30,671 25,061 88,200 76,129 Graphic arts 17,322 15,771 49,343 44,254 ------------------------------ ------------------------------- $ 126,834 $ 117,106 $ 369,602 $ 328,835 ============================== =============================== Income before depreciation and amortization, interest and taxes (EBITDA): Newspapers $ 25,752 $ 25,238 $ 71,613 $ 67,258 Broadcasting 10,425 9,253 27,017 29,056 Graphic arts 4,228 5,038 12,194 11,385 Corporate (2,198) (3,222) (8,130) (10,114) ------------------------------ ------------------------------- $ 38,207 $ 36,307 $ 102,694 $ 97,585 ============================== =============================== Operating income: Newspapers $ 21,998 $ 21,666 $ 60,728 $ 58,164 Broadcasting 7,342 7,259 17,907 23,268 Graphic arts 3,161 3,916 8,917 7,994 Corporate (2,345) (3,357) (8,553) (10,509) ------------------------------ ------------------------------- $ 30,156 $ 29,484 $ 78,999 $ 78,917 ============================== =============================== Capital expenditures: Newspapers $ 3,269 $ 2,183 $ 8,302 $ 5,268 Broadcasting 1,428 1,870 4,951 5,066 Graphic arts 24 15 251 61 Corporate 186 11 362 248 ------------------------------ ------------------------------- $ 4,907 $ 4,079 $ 13,866 $ 10,643 ============================== ===============================
On March 31, 1995, the Company acquired the 50.25% interest in Journal-Star Printing Co. ("JSPC") not previously owned, making JSPC a wholly-owned subsidiary. The transaction involved the issuance of 3,293,286 shares of the Company's common stock and was accounted for as a purchase. The 49.75% interest previously owned by the Company is accounted for by the equity method through March 31, 1995. As a result of the acquisition deferred income taxes related to the undistributed income of the 49.75% interest in JSPC were recognized as a reduction of income tax expense and certain contract termination, relocation and reorganization payments related to the 49.75% ownership interest were recognized as expense as of March 31, 1995. Without these one-time costs operating income for the nine months ended June 30, 1995 would have been $80,150,000. As a result of the $838,000 tax benefit, the total effect of these transactions was not significant to net income for the nine month period ended June 30, 1995. On August 28, 1995, the Company also purchased all of the stock of SJL of Kansas Corp. which operates NBC affiliates KSNW-TV and KSNT-TV in Wichita and Topeka, Kansas. QUARTER ENDED JUNE 30, 1996 Newspapers: Wholly-owned daily newspaper advertising revenue increased $622,000, 1.5%. Advertising revenue from local merchants increased $283,000, 1.2%. Local "run-of-press" advertising increased $885,000, 5.4% as a result of higher average rates. Advertising inches increased less than 1%. Local preprint revenue decreased $602,000, 7.6% due to reductions in distribution of preprints by merchants. Classified advertising revenue increased $964,000, 7.1% as a .6% decrease in units was offset by higher average rates. These increases were offset by a $625,000 decrease in national and other advertising revenue. Circulation revenue increased $540,000, 2.8% as a result of higher rates which offset a 2.3% decrease in volume. Other revenue at daily newspapers increased $1,564,000, 22.8% primarily as a result of increases in commercial printing and other nontraditional products and services. Wholly-owned daily newspaper compensation expense increased $863,000, 3.8% due primarily to increases in average compensation. Newsprint and ink costs increased $942,000, 11.1%. The increase was a result of higher unit costs and a 1.2% increase in consumption due to increased commercial printing activity. Other operating expenses exclusive of depreciation and amortization increased $85,000, .6%. Revenues from weekly newspapers, shoppers and specialty publications decreased $121,000, 2.2% primarily as a result of reduction in book publishing revenue and the elimination of nonperforming properties. Operating income decreased $245,000 due to development costs of the Company's new tourism publication. Broadcasting: Exclusive of the effects of the acquisition of SJL of Kansas Corp., revenue for the quarter increased $548,000, 2.2%, as political advertising increased $1,140,000, local/regional advertising decreased $1,323,000, 9.9%, national advertising increased $523,000, 5.9% and production revenue increased $244,000. Compensation costs increased $484,000, 5.4% due to an increase in the number of hours worked in production operations and normal compensation increases. Programming costs increased $377,000, 24.8% primarily due to higher program acquisition costs. Other operating expenses exclusive of depreciation and amortization increased $50,000, .9% for the quarter. Graphic Arts: Graphic arts revenue increased $1,559,000, 9.9%, 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. Revenue from the letterpress business is expected to decrease each year as conversions to offset or flexographic printing continue. Operating income decreased $755,000, 19.3% due to operating margins from distribution being lower than the margin on manufactured products. Corporate: Corporate costs were reduced by $500,000 due to favorable experience in the Company's self funded medical plan. 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 40.1% and 40.2% of pre-tax income for the quarters ended June 30, 1996 and 1995, respectively. NINE MONTHS ENDED JUNE 30, 1996 Newspapers: On a proforma basis for newspapers owned at the end of fiscal 1995, wholly-owned daily newspaper advertising revenue increased $2,227,000, 1.8%. Advertising revenue from local merchants increased $1,267,000, 1.7%. Local "run-of-press" advertising increased $1,079,000, 2.1% as a result of higher average rates which offset a 3.0% decrease in advertising inches. Local preprint revenue increased $188,000, .8%. Classified advertising revenue increased $2,137,000, 5.8% as a 1.7% decrease in units primarily related to weakness in the automotive segment in the first six months of the year was offset by higher average rates. These increases were offset by a $1,177,000 decrease in national and other advertising revenue. Circulation revenue increased $2,414,000, 4.2% as a result of higher average rates which offset a 2% decrease in volume. Other revenue at daily newspapers increased $2,971,000, 13.8% primarily as a result of increases in commercial printing and other nontraditional products and services. On a proforma basis for newspapers owned at the end of fiscal 1995, wholly-owned daily newspaper compensation expense increased $2,562,000, 3.8% due primarily to increases in average compensation. Newsprint and ink costs increased $5,132,000, 21.1%. Higher unit costs were offset in part by a .1% decrease in consumption. Other operating expenses exclusive of depreciation and amortization decreased $57,000, .1%. Revenues from weekly newspapers, shoppers and specialty publications increased $873,000, 5.6%, primarily as a result of revenue from properties acquired since the beginning of the first quarter of the last fiscal year. Operating income decreased $268,000 due to development costs of the Company's new tourism publication. Broadcasting: Exclusive of the effects of the acquisition of SJL of Kansas Corp. revenue decreased $1,717,000, 2.3%, as political advertising decreased $934,000, local/regional advertising decreased $2,665,000, 6.9% national advertising increased $892,000, 3.6% and production revenue increased $575,000. Compensation costs increased $1,946,000, 7.3% due primarily to an increase in the number of hours worked in production operations. Programming costs increased $995,000, 20.1% primarily due to higher program acquisition costs. Other operating expenses exclusive of depreciation and amortization increased $976,000, 6.3%. Graphic Arts: Graphic arts revenue increased $5,079,000, 11.5%, 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. Several letterpress customers completed conversion to offset or flexographic printing. Revenue from the letterpress business is expected to decrease each year as conversions continued. Operating income increased $923,000, 11.5% 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 $1,509,000. The prior year included $1,423,000 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 40.4% and 38.7% of pre-tax income for the nine months ended June 30, 1996 and 1995, respectively. The increase in the effective income tax rate was due to an increase in nondeductible intangible asset amortizations. Elimination of the Journal-Star Printing Company deferred taxes discussed above decreased the 1995 effective rate by 1.2%. Liquidity and Capital Resources: Cash provided by operations, which is the Company's primary source of liquidity, generated $61,423,000 for the nine month period ended June 30, 1996. 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. Item 6. Exhibits and Reports on Form 8-K a. Exhibits: Exhibit 11 - Computation of Earnings Per Share b. There were no reports on Form 8-K required to be filed during the quarter for which this report is filed. 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:------------------------ -------------------------------------- G.C. Wahlig, Chief Accounting Officer EX-11 2 LEE ENTERPRISES, INCORPORATED PART I. EXHIBIT 11 Computation of Earnings Per Common Share (In Thousands Except Per Share Amounts) Three Months Ended June 30, Nine Months Ended June 30, ----------------------------- ------------------------------ 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------- Net income applicable to common shares $ 17,045 $ 16,435 $ 43,790 $ 44,377 Shares: Weighted average common shares outstanding 46,974 47,614 47,126 45,804 Dilutive effect of certain stock options 964 750 895 672 Average common shares outstanding as adjusted 47,938 48,364 48,021 46,476 Earnings per common share $ 0.36 $ 0.34 $ 0.91 $ 0.95
EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30 1996 10-Q FOR LEE ENTERPRISES, INCORPORATED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 9-MOS SEP-30-1996 JUN-30-1996 25,991 0 71,073 4,752 15,177 121,125 265,143 155,817 564,195 111,771 69,617 0 0 94,056 234,826 564,195 364,755 369,602 0 290,603 0 0 7,335 73,415 29,625 43,790 0 0 0 43790 .91 .91
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