EX-99.1 3 july8k092ex991.htm

Exhibit 99.1 - Earnings Release – Third fiscal quarter ended June 28, 2009

 


                                                                                                              

                           201 N. Harrison St.

                           Davenport, IA 52801

                           www.lee.net

 

NEWS RELEASE

 

Lee Enterprises reports results for third fiscal quarter  

 

DAVENPORT, Iowa (July 30, 2009) — Lee Enterprises, Incorporated (NYSE: LEE), reduced cash operating expenses, excluding unusual items(1), 22.0 percent in its third fiscal quarter ended June 28, 2009, as operating revenue declined 20.5 percent. Excluding non-cash impairment charges and other unusual items, diluted earnings per common share were 12 cents, compared with 30 cents a year ago. Free cash flow(2) totaled $22.1 million, compared with $34.2 million in 2008.

 

Including non-cash impairment charges, Lee recorded a loss per diluted common share of 55 cents for the quarter, compared with earnings of 6 cents per share a year ago.

 

“We are continuing to position Lee so it will emerge strong when the recession ends,” said Mary Junck, chairman and chief executive officer. “We reduced debt by $18 million during the quarter and again performed well within projections we provided to lenders in February. While overall business remains sluggish, it has stabilized, and many of our publishers are reporting cautious optimism from an increasing number of local advertisers. We are also encouraged by our efforts to expand our local advertising market share and the response we have received to new sales programs that reach non-traditional advertisers. Beginning this next quarter, we also expect an enthusiastic response to our rollout of online behavioral targeting advertising through the new Yahoo platform.”

 

She added: “Our streamlining of costs also remains on track, and, thanks in part to 22 percent reductions in the June quarter, we expect to reduce full-year 2009 cash costs, about 17 percent below 2008, a decrease of nearly $140 million. We have completed page width reduction across the company, realigned staffing and consolidated or outsourced printing and distribution in several more locations. As a result of those actions and many more, the overall rate of decline in our operating cash flow(3) has slowed dramatically since last quarter, and more individual enterprises have begun exceeding prior year. Our operating cash flow margin(3), which includes corporate costs, has improved to 21.9 percent from 21.0 percent a year ago.”

 

THIRD QUARTER OPERATING RESULTS

 

Total operating revenue from continuing operations for the quarter decreased 20.5 percent from a year ago to $203.8 million. Combined print and online advertising revenue decreased 24.3 percent to $148.0 million, with retail advertising down 18.4 percent, and classified down 35.2 percent. Combined print and online employment advertising revenue decreased 60.4 percent, automotive decreased 30.9 percent and real estate decreased 35.0 percent. Online advertising revenue declined 29.3 percent, with online retail advertising down 1.7 percent and online classified advertising down 45.8 percent. National advertising revenue decreased 11.4 percent. Circulation revenue declined 6.3 percent, partially a result of elimination of less profitable delivery areas.

 

Operating expenses, excluding unusual items, depreciation and amortization, decreased 22.0 percent to $157.6 million and decreased 21.5 percent in total. Compensation, excluding unusual items, declined 22.4 percent, with the average number of full-time equivalent employees down 16.8 percent. Newsprint and ink expense decreased 41.4 percent, a result of a reduction in newsprint volume of 36.4 percent and more favorable newsprint prices.

 

1

 

 

Operating cash flow decreased 16.9 percent compared with a year ago to $44.7 million. Including equity in earnings (loss) of associated companies, depreciation and amortization, as well as adjustments for impairment and other non-cash charges, the operating loss was $13.8 million.

 

ADJUSTED EARNINGS AND EPS

 

Unusual items, primarily non-cash impairment charges, affected year-over-year comparisons for the quarter. The following table summarizes the impact from unusual items on net income (loss) available to common stockholders and earnings (loss) per diluted common share. Per share amounts may not add due to rounding.

 

 

 

13 Weeks Ended

 

 

June 28, 2009 

June 29, 2008 

(Thousands, except EPS)

 

Amount

Per Share

Amount

Per Share

 

 

 

 

 

 

Net income (loss) available to common stockholders, as reported

 

$          (24,512)

$       (0.55)

$             2,832

$       0.06

Adjustments:

 

 

 

 

 

Impairment of goodwill and other assets, including TNI Partners

 

 39,665

 

 13,360

 

Debt financing costs

 

784

 

877

 

Other, net

 

 2,088

 

707

 

 

 

 42,537

 

14,944

 

Income tax (benefit) of adjustments, net, change in deferred tax valuation allowance, and impact on minority interest

 

    (12,737)

 

(5,287)

 

 

 

 29,800

0.67

9,657

0.22

Net income available to common stockholders, as adjusted

 

5,288

0.12

 12,489

0.28

Change in redeemable minority interest liability

 

-

-

655

0.01

Net income, as adjusted

 

$             5,288

$         0.12

$           13,144

$       0.30

 

 

 

 

 

 

YEAR TO DATE OPERATING RESULTS

Total operating revenue from continuing operations for the nine months decreased 17.6 percent from a year ago to $646.2 million. Combined print and online advertising revenue decreased 20.9 percent to $474.1 million, with retail advertising down 14.9 percent, and classified down 32.4 percent. Combined print and online employment advertising revenue decreased 53.6 percent, automotive decreased 27.0 percent and real estate decreased 32.3 percent. Online advertising revenue declined 23.4 percent, with online retail advertising up 9.6 percent and online classified advertising down 40.8 percent. National advertising revenue decreased 10.1 percent. Circulation revenue declined 4.9 percent.

 

Operating expenses, excluding unusual items, depreciation and amortization, decreased 15.9 percent to $515.0 million. Compensation, excluding unusual items, declined 18.3 percent, with the average number of full-time equivalent employees down 14.6 percent. Newsprint and ink expense decreased 19.3 percent and other cash costs decreased 11.3 percent.

 

Operating cash flow decreased 25.8 percent compared with a year ago to $126.5 million. Including equity in earnings of associated companies, depreciation and amortization, as well as adjustments for impairment and other non-cash charges, the operating loss was $194.3 million.

 

2

 

YEAR TO DATE ADJUSTED EARNINGS AND EPS

 

Unusual items affected year-over-year comparisons for the year to date. In both years, unusual items included adjustments for impairment of goodwill and other assets. Also, $71.3 million of the liability related to the redemption of the minority interest in St. Louis initially recorded in 2008 was reversed in 2009, increasing 2009 results by $57.1 million. Unusual items in 2009 also included the incremental cost of debt refinancing. The following table summarizes the impact from unusual items on net income (loss) available to common stockholders and earnings (loss) per diluted common share. Per share amounts may not add due to rounding.

 

 

39 Weeks Ended

 

June 28, 2009 

June 29, 2008 

(Thousands, except EPS)

Amount

Per Share

Amount

Per Share

 

 

 

 

 

Net loss available to common stockholders, as reported

        $ (124,946)

$      (2.81)

$         (688,079)

$    (15.30)

Adjustments:

 

 

 

 

Impairment of goodwill and other   assets, including TNI Partners

264,523

 

944,749

 

Debt financing costs

15,634

 

2,629

 

Other, net

4,753

 

1,643

 

 

284,910

 

949,021

 

Income tax benefit of adjustments, net, change in deferred tax valuation allowance, and impact on minority interest

(89,867)

 

(228,931)

 

 

195,043

4.39

720,090

16.01

Net income available to common stockholders, as adjusted

70,097

1.58

32,011

0.71

Change in redeemable minority interest liability

(57,055)

(1.28)

8,138

0.18

Net income, as adjusted

$            13,042

$       0.29

$             40,149

$       0.89

 

 

 

 

 

PRINT AND ONLINE AUDIENCES

 

The Lee Audience Report for January-June 2009 showed continued strength of both print and online audiences across all age groups.

 

Combined print and online reach of newspapers and online sites over the course of a week in Lee’s 10 largest markets grew to 68 percent of all adults in January-June 2009, compared with 66 percent for the same period two years ago. Reach of the newspapers alone remained steady at 61 percent. The report, from Thoroughbred Research, formerly Wilkerson & Associates, carries an overall margin of error of 1 percentage point.

 

The number of unique visitors at all Lee online sites increased 5.4 percent to 40.2 million in the quarter compared with the previous year, with page views up 7.7 percent to 559.4 million.

 

3

 

DEBT AND FREE CASH FLOW

 

Debt was reduced $18 million in the quarter and $144 million year to date, including $120 million as a result of refinancing of the Pulitzer Notes in February. Also in February, Lee restructured future payments on its $1.1 billion bank commitment.

 

Carl Schmidt, Lee vice president, chief financial officer and treasurer, said Lee remains well within all of its financial covenants. Liquidity at the end of the quarter totaled $112 million, against $96.9 million of debt repayments due in the next four quarters, substantially all of which are expected to be met from ongoing cash flow.

 

Free cash flow in the quarter totaled $22.1 million, compared with $34.2 million a year ago. Year to date, free cash flow totaled $36.6 million versus $92.1 million a year ago, reflecting debt financing costs of $26.0 million in the current year.

 

IMPAIRMENT CHARGES

 

Non-cash charges for impairment of goodwill and other intangible assets, including TNI Partners, totaled $39.7 million in the quarter and finalized an estimate that was recorded the previous quarter. Year to date, impairment charges total $264.5 million. The charges have no effect on cash flows but reduce reported earnings per common share, which resulted in a loss for the quarter and will result in a loss for the full year ending September 27, 2009.

 

Impairment testing is performed in accordance with generally accepted accounting principles, which, among other factors, require consideration of differences between current book value and the fair value of all of the company's assets, including current market capitalization. The charges are consistent with the manner in which other publishing companies and those in other industries have responded to current equity market valuation issues.

 

ABOUT LEE

 

Lee Enterprises is a premier provider of local news, information and advertising in primarily midsize markets, with 49 daily newspapers and a joint interest in four others, online sites and more than 300 specialty publications in 23 states. Lee’s newspapers have circulation of 1.5 million daily and 1.8 million Sunday, reaching four million readers daily. Lee’s online sites attract 14 million unique visits monthly, and Lee’s weekly publications have distribution of more than four million households. Lee’s markets include St. Louis, Mo.; Lincoln, Neb.; Madison, Wis.; Davenport, Iowa; Billings, Mont.; Bloomington, Ill.; and Tucson, Ariz. Lee stock is traded on the New York Stock Exchange under the symbol LEE. For more information about Lee, please visit www.lee.net.

 

4

 

 

 

LEE ENTERPRISES, INCORPORATED

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(Unaudited)

 

(Thousands, except EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

 

 

 

 

39 Weeks Ended

 

 

 

  June 28

       2009

        June 29

       2008

 

%

 

 

 

 

      June 28

           2009

          June 29

               2008

%

 

Advertising revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

$

85,489

 

$

106,723

 

(19.9

)

 

%

 

 

$

278,276

 

$

333,445

 

(16.5

)%

National

 

 

8,305

 

 

9,375

 

(11.4

)

 

 

 

 

 

30,747

 

 

34,190

 

(10.1

)

Classified:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily newspapers:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employment

 

 

5,840

 

 

15,099

 

(61.3

)

 

 

 

 

 

20,939

 

 

46,166

 

(54.6

)

Automotive

 

 

7,607

 

 

11,797

 

(35.5

)

 

 

 

 

 

23,711

 

 

34,421

 

(31.1

)

Real estate

 

 

7,324

 

 

11,009

 

(33.5

)

 

 

 

 

 

22,764

 

 

33,082

 

(31.2

)

All other

 

 

12,580

 

 

11,927

 

5.5

 

 

 

 

 

 

32,572

 

 

31,720

 

2.7

 

Other publications

 

 

7,384

 

 

11,115

 

(33.6

)

 

 

 

 

 

23,293

 

 

32,581

 

(28.5

)

Total classified

 

 

40,735

 

 

60,947

 

(33.2

)

 

 

 

 

 

123,279

 

 

177,970

 

(30.7

)

Online

 

 

10,350

 

 

14,636

 

(29.3

)

 

 

 

 

 

31,890

 

 

41,605

 

(23.4

)

Niche publications

 

 

3,155

 

 

3,821

 

(17.4

)

 

 

 

 

 

9,954

 

 

11,995

 

(17.0

)

Total advertising revenue

 

 

148,034

 

 

195,502

 

(24.3

)

 

 

 

 

 

474,146

 

 

599,205

 

(20.9

)

Circulation

 

 

45,320

 

 

48,344

 

(6.3

)

 

 

 

 

 

139,962

 

 

147,236

 

(4.9

)

Commercial printing

 

 

3,497

 

 

4,433

 

(21.1

)

 

 

 

 

 

10,008

 

 

12,413

 

(19.4

)

Online services & other

 

 

6,954

 

 

8,115

 

(14.3

)

 

 

 

 

 

22,088

 

 

25,121

 

(12.1

)

Total operating revenue

 

 

203,805

 

 

256,394

 

(20.5

)

 

 

 

 

 

646,204

 

 

783,975

 

(17.6

)

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation

 

 

80,703

 

 

103,984

 

(22.4

)

 

 

 

 

 

259,481

 

 

317,753

 

(18.3

)

Newsprint and ink

 

 

15,752

 

 

26,859

 

(41.4

)

 

 

 

 

 

61,570

 

 

76,311

 

(19.3

)

Other operating expenses

 

 

61,118

 

 

71,211

 

(14.2

)

 

 

 

 

 

193,939

 

 

218,587

 

(11.3

)

Workforce adjustments and transition costs

 

 

1,541

 

 

544

 

NM

 

 

 

 

 

 

4,730

 

 

954

 

NM

 

Operating expenses, excluding depreciation and amortization

 

 

159,114

 

 

202,598

 

(21.5

)

 

 

 

 

 

519,720

 

 

613,605

 

(15.3

)

Operating cash flow

 

 

44,691

 

 

53,796

 

(16.9

)

 

 

 

 

 

126,484

 

 

170,370

 

(25.8

)

Depreciation

 

 

8,055

 

 

8,828

 

(8.8

)

 

 

 

 

 

24,759

 

 

25,804

 

(4.0

)

Amortization

 

 

11,597

 

 

13,138

 

(11.7

)

 

 

 

 

 

35,792

 

 

42,878

 

(16.5

)

Impairment of goodwill and other assets

 

 

29,665

 

 

10,360

 

NM

 

 

 

 

 

 

244,572

 

 

851,365

 

NM

 

Equity in earnings (loss) of associated companies:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TNI Partners

 

 

(38

)

 

1,842

 

NM

 

 

 

 

 

 

2,282

 

 

5,475

 

(58.3

)

Madison Newspapers

 

 

876

 

 

707

 

23.9

 

 

 

 

 

 

1,968

 

 

3,183

 

(38.2

)

Reduction in investment in TNI Partners

 

 

10,000

 

 

3,000

 

NM

 

 

 

 

 

 

19,951

 

 

93,384

 

NM

 

Operating income (loss)

 

 

(13,788

)

 

21,019

 

NM

 

 

 

 

 

 

(194,340

)

 

(834,403

)

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial income

 

 

56

 

 

1,386

 

(96.0

)

 

 

 

 

 

1,876

 

 

4,702

 

(60.1

)

Financial expense

 

 

(19,806

)

 

(15,111

)

31.1

 

 

 

 

 

 

(54,922

)

 

(53,033

)

3.6

 

Debt financing costs

 

 

(784

)

 

(877

)

NM

 

 

 

 

 

 

(15,634

)

 

(2,629

)

NM

 

Other, net

 

 

-

 

 

(393

)

NM

 

 

 

 

 

 

1,823

 

 

(369

)

NM

 

 

 

 

(20,534

)

 

(14,995

)

36.9

 

 

 

 

 

 

(66,857

)

 

(51,329

)

30.3

 

Income (loss) from continuing operations before income taxes

 

 

(34,322

)

 

6,024

 

NM

 

 

 

 

 

 

(261,197

)

 

(885,732

)

NM

 

Income tax expense (benefit)

 

 

(9,830

)

 

2,372

 

NM

 

 

 

 

 

 

(79,353

)

 

(206,215

)

NM

 

Minority interest

 

 

20

 

 

113

 

(82.3

)

 

 

 

 

 

152

 

 

709

 

(78.6

)

Income (loss) from continuing operations

 

 

(24,512

)

 

3,539

 

NM

 

 

 

 

 

 

(181,996

)

 

(680,226

)

NM

 

Discontinued operations

 

 

-

 

 

(52

)

NM

 

 

 

 

 

 

(5

)

 

285

 

NM

 

Net income (loss)

 

 

(24,512

)

 

3,487

 

NM

 

 

 

 

 

 

(182,001

)

 

(679,941

)

NM

 

Change in redeemable minority interest liability

 

 

-

 

 

(655

)

NM

 

 

 

 

 

 

57,055

 

 

(8,138

)

NM

 

Net income (loss) available to common stockholders

 

$

(24,512

)

$

2,832

 

NM

 

 

 

 

 

$

(124,946

)

$

(688,079

)

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.55

)

$

0.07

 

NM

 

 

 

 

 

$

(2.81

)

$

(15.31

)

NM

 

Discontinued operations

 

 

-

 

 

-

 

NM

 

 

 

 

 

 

-

 

 

0.01

 

NM

 

 

 

$

(0.55

)

$

0.06

 

NM

 

 

 

 

 

$

(2.81

)

$

(15.30

)

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.55

)

$

0.06

 

NM

 

 

 

 

 

$

(2.81

)

$

(15.31

)

NM

 

Discontinued operations

 

 

-

 

 

-

 

NM

 

 

 

 

 

 

-

 

 

0.01

 

NM

 

 

 

$

(0.55

)

$

0.06

 

NM

 

 

 

 

 

$

(2.81

)

$

(15.30

)

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

44,453

 

 

44,265

 

 

 

 

 

 

 

 

44,435

 

 

44,971

 

 

 

Diluted

 

 

44,453

 

 

44,553

 

 

 

 

 

 

 

 

44,435

 

 

44,971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

SELECTED COMBINED PRINT AND ONLINE ADVERTISING REVENUE

 

 

(Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

 

 

39 Weeks Ended

 

 

 

 

 

 June 28

      2009

 

 June 29

      2008

 

%

 

 

 

 

 

 June 28

      2009

 

 June 29

      2008

 

%

 

 

 

 

 

Retail

 

$

88,592

 

$

108,548

 

(18.4

)

 

%

 

 

$

286,717

 

$

336,855

 

(14.9

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employment

 

 

9,241

 

 

23,324

 

(60.4

)

 

 

 

 

 

32,655

 

 

70,389

 

(53.6

)

 

 

 

 

Automotive

 

 

11,265

 

 

16,311

 

(30.9

)

 

 

 

 

 

35,078

 

 

48,027

 

(27.0

)

 

 

 

 

Real estate

 

 

9,518

 

 

14,632

 

(35.0

)

 

 

 

 

 

29,693

 

 

43,841

 

(32.3

)

 

 

 

 

Other

 

 

17,694

 

 

19,425

 

(8.9

)

 

 

 

 

 

48,649

 

 

53,696

 

(9.4

)

 

 

 

 

Total classified

 

$

47,718

 

$

73,692

 

(35.2

)

 

%

 

 

$

146,075

 

$

215,953

 

(32.4

)

%

 

 

 

 

 

 

REVENUE BY REGION

(Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

39 Weeks Ended

 

 

                June 28 2009

                 June 29 2008

 

%

 

 

 

 

 

                       June 28

2009

 

                 June 29

2008

 

%

Midwest

 

$

121,719

 

$

154,646

 

(21.3

)

 

%

 

 

$

387,115

 

$

473,882

 

(18.3

)

%

 

 

Mountain West

 

 

38,809

 

 

48,590

 

(20.1

)

 

 

 

 

 

120,747

 

 

144,817

 

(16.6

)

 

 

 

West

 

 

25,344

 

 

32,628

 

(22.3

)

 

 

 

 

 

78,797

 

 

99,099

 

(20.5

)

 

 

 

East/Other

 

 

17,933

 

 

20,530

 

(12.6

)

 

 

 

 

 

59,545

 

 

66,177

 

(10.0

)

 

 

 

Total

 

$

203,805

 

$

256,394

 

(20.5

)

 

%

 

 

$

646,204

 

$

783,975

 

(17.6

)

%

 

 

 

 

 

DAILY NEWSPAPER ADVERTISING VOLUME

 

 

(Thousands of inches)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

 

 

39 Weeks Ended

 

 

 

 

 

 

               June 28

             2009

 

               June 29

             2008

 

                      %

 

 

 

 

 

 June 28

2009

 

             June 29

           2008

 

               %

 

 

 

 

 

 

Retail

 

2,673

 

3,182

 

(16.0

)

%

 

 

 

8,433

 

9,671

 

(12.8

)

 

%

 

 

National

 

113

 

143

 

(21.0

)

 

 

 

 

372

 

484

 

(23.1

)

 

 

 

 

Classified

 

2,990

 

3,775

 

(20.8

)

 

 

 

 

8,655

 

10,686

 

(19.0

)

 

 

 

 

Total

 

5,776

 

7,100

 

(18.6

)

%

 

 

 

17,460

 

20,841

 

(16.2

)

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

SELECTED BALANCE SHEET INFORMATION

 

(Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 28
     2009

 

June 29
     2008

 

Cash

 

 

 

 

 

 

 

 

 

$

15,252

 

$

4,211

 

Restricted cash and investments

 

 

 

 

 

 

 

 

 

 

4,919

 

 

122,310

 

Debt (principal amount)

 

 

 

 

 

 

 

 

 

 

1,188,375

 

 

1,367,000

 

 

 

SELECTED STATISTICAL INFORMATION

 

(Dollars in Thousands)

 

 

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

39 Weeks Ended

 

 

 

 

 

June 28

2009

 

June 29

 2008

 

%

 

 

 

June 28

 2009

 

June 29

 2008

 

%

 

 

 

Capital expenditures

 

$

1,286

 

$

2,956

 

(56.5

)

 

%

$

8,964

 

$

13,796

 

(35.0

)

 

%

Newsprint volume (tonnes)

 

 

23,611

 

 

37,133

 

(36.4

)

 

 

 

79,716

 

 

114,868

 

(30.6

)

 

 

Average full-time equivalent employees

 

 

6,490

 

 

7,801

 

(16.8

)

 

 

 

6,809

 

 

7,969

 

(14.6

)

 

 

 

 

FREE CASH FLOW

 

(Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

 

 

 

 

39 Weeks Ended

 

 

 

                 June 28

                       2009

 

                  June 29

                       2008

 

 

 

 

 

                  June 28

2009

 

                    June 29

2008

 

Operating income (loss)

 

$

(13,788

)

$

21,019

 

 

 

 

 

$

(194,340

)

$

(834,403

)

Depreciation and amortization

 

 

19,985

 

 

22,629

 

 

 

 

 

 

61,643

 

 

72,515

 

Impairment of goodwill and other assets

 

 

29,665

 

 

10,360

 

 

 

 

 

 

244,572

 

 

851,365

 

Reduction in investment in TNI Partners

 

 

10,000

 

 

3,000

 

 

 

 

 

 

19,951

 

 

93,384

 

Stock compensation

 

 

772

 

 

1,166

 

 

 

 

 

 

2,337

 

 

4,290

 

Cash interest expense

 

 

(19,980

)

 

(17,122

)

 

 

 

 

 

(58,555

)

 

(58,986

)

Debt financing costs

 

 

(3,165

)

 

-

 

 

 

 

 

 

(26,005

)

 

-

 

Financial income

 

 

56

 

 

1,386

 

 

 

 

 

 

1,876

 

 

4,702

 

Cash income taxes

 

 

(132

)

 

(5,170

)

 

 

 

 

 

(5,736

)

 

(26,295

)

Minority interest

 

 

(20

)

 

(113

)

 

 

 

 

 

(152

)

 

(709

)

Capital expenditures

 

 

(1,286

)

 

(2,956

)

 

 

 

 

 

(8,964

)

 

(13,796

)

 

 

$

22,107

 

$

34,199

 

 

 

 

 

$

36,627

 

$

92,067

 

                         

 

8

                         

NOTES:

 

 

(1)

Adjusted net income and adjusted earnings per common share, which are defined as income (loss) available to common stockholders and earnings (loss) per common share adjusted to exclude unusual items and those of a substantially non-recurring nature, are non-GAAP (Generally Accepted Accounting Principles) financial measures. Reconciliations of adjusted net income and adjusted earnings per common share to income (loss) available to common stockholders and earnings (loss) per common share are included in tables in 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.

 

(2)

Free cash flow, which is defined as operating income, plus depreciation and amortization, impairment charges, stock compensation and financial income, minus financial expense (exclusive of non-cash amortization and accretion), cash income taxes, capital expenditures and minority interest, is a non-GAAP financial measure. See (1) above. The company believes free cash flow provides meaningful supplemental information because of its focus on results from operations after inclusion or exclusion of the several factors noted above. Reconciliations of free cash flow to operating income (loss), the most directly comparable GAAP measure, are included in a table accompanying this release.

 

 

(3)

Operating cash flow, which is defined as operating income before depreciation, amortization, impairment charges 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 (1) above. The company believes operating cash flow provides meaningful supplemental information because of its focus on results from operations before depreciation and amortization, non-cash impairment charges and earnings from equity investments. Reconciliations of operating cash flow to operating income (loss), the most directly comparable GAAP measure, are included in tables accompanying this release.

 

(4)

Certain amounts as previously reported have been reclassified to conform with the current period presentation. The prior period has been restated for comparative purposes, and the reclassifications have no impact on earnings.

 

 

FORWARD-LOOKING STATEMENTS — 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, 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, which in some instances are beyond its control, are the Company’s ability to generate cash flows and maintain liquidity sufficient to service its debt, and comply with or obtain amendments or waivers of the financial covenants contained in its credit facilities, if necessary. Other risks and uncertainties include the impact of continuing adverse economic conditions, potential changes in advertising demand, newsprint and other commodity prices, energy costs, interest rates and the availability of credit due to instability in the credit markets, labor costs, legislative and regulatory rulings and other results of operations or financial conditions, difficulties in maintaining employee and customer relationships, increased capital and other costs, competition and other risks detailed from time to time in the Company’s publicly filed documents, including the Company Annual Report on Form 10-K for the year ended September 28, 2008. Any statements that are not statements of historical fact (including statements containing the words “may,” “will,” “would,” “could,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “projects,” “considers” 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. The Company does not undertake to publicly update or revise its forward-looking statements.

 

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

 

9