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 March 31, 1998
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 March 31, 1998
- --------------------------------------- -----------------------------
Common stock, $2.00 par value 32,909,821
Class "B" Common Stock, $2.00 par value 11,931,324
<PAGE>
PART I. FINANCIAL INFORMATION
Item. 1.
LEE ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
<TABLE>
Three Months Ended Six Months Ended
March 31, March 31,
-------------------- --------------------
1998 1997 1998 1997
-------------------- --------------------
<S> <C> <C> <C> <C>
Operating revenue:
Publishing:
Daily newspaper:
Daily advertising ........................ $ 43,224 $ 40,035 $ 95,229 $ 88,328
Circulation .............................. 20,227 19,826 41,018 40,020
Other ...................................... 25,337 14,306 50,396 28,194
Broadcasting .................................. 30,947 26,039 62,202 61,420
Equity in net income of associated companies .. 1,610 1,581 3,759 3,493
--------------------------------------------
121,345 101,787 252,604 221,455
--------------------------------------------
Operating expenses:
Compensation costs ............................ 47,174 40,466 94,842 81,789
Newsprint and ink ............................. 9,574 6,936 20,136 14,900
Depreciation .................................. 4,700 3,974 9,320 7,955
Amortization of intangibles ................... 4,473 2,702 8,929 5,405
Other ......................................... 31,676 28,709 65,531 59,994
--------------------------------------------
97,597 82,787 198,758 170,043
--------------------------------------------
Operating income ....................... 23,748 19,000 53,846 51,412
--------------------------------------------
Financial (income) expenses, net
Financial (income) ............................ (1,188) (1,454) (1,718) (1,998)
Financial expense ............................. 4,344 2,027 8,050 3,769
--------------------------------------------
3,156 573 6,332 1,771
--------------------------------------------
Income from continuing operations before
taxes on income ........................ 20,592 18,427 47,514 49,641
Income taxes ..................................... 7,981 7,187 18,319 19,293
--------------------------------------------
Income from continuing operations ...... 12,611 11,240 29,195 30,348
Income from discontinued operations, net
of income tax effect .......................... - - 1,000 - - 1,000
--------------------------------------------
Net income ............................. $ 12,611 $ 12,240 $ 29,195 $ 31,348
============================================
Average outstanding shares:
Basic ......................................... 44,990 46,467 45,153 46,668
============================================
Diluted ....................................... 45,783 47,354 45,904 47,555
============================================
Earnings per share:
Basic:
Income from continuing operations .......... $ 0.28 $ 0.24 $ 0.65 $ 0.65
Income from discontinuing operations ....... - - 0.02 - - 0.02
-------------------------------------------
Net income ............................. $ 0.28 $ 0.26 $ 0.65 $ 0.67
===========================================
Diluted:
Income from continuing operations .......... $ 0.28 $ 0.24 $ 0.64 $ 0.64
Income from discontinuing operations ....... - - 0.02 - - 0.02
-------------------------------------------
Net income ............................. $ 0.28 $ 0.26 $ 0.64 $ 0.66
===========================================
Dividends per share .............................. $ 0.14 $ 0.13 $ 0.28 $ 0.26
===========================================
</TABLE>
<PAGE>
LEE ENTERPRISES, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
March 31, September 30,
ASSETS 1998 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents ............................................................ $165,727 $ 14,163
Accounts receivable, net ............................................................. 60,001 58,397
Newsprint inventory .................................................................. 1,378 3,716
Program rights and other ............................................................. 12,372 17,691
------------------
Total current assets ....................................................... 239,478 93,967
Investments .......................................................................... 25,220 24,691
Property and equipment, net .......................................................... 123,210 120,026
Intangibles and other assets ......................................................... 403,621 412,279
------------------
$791,529 $650,963
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------------
Current liabilities .................................................................. $234,727 $248,908
Long-term debt, less current maturities .............................................. 185,546 26,174
Deferred items ....................................................................... 56,569 56,491
Stockholders' equity ................................................................. 314,687 319,390
------------------
$791,529 $650,963
==================
</TABLE>
<PAGE>
LEE ENTERPRISES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Six Months Ended March 31:
Cash Provided by Operations:
Net income .................................................. $ 29,195 $ 31,348
Adjustments to reconcile net income to net cash provided
by operations:
Depreciation and amortization ............................. 18,249 14,637
Distributions in excess of earnings of associated companies 1,287 1,643
Adjustment of estimated loss on disposition of discontinued
operations ............................................. - - (1,000)
Other balance sheet changes ............................... (245) 7,122
--------------------
Net cash provided by operations ......................... 48,486 53,750
--------------------
Cash Provided by (Required For) Investing Activities:
Purchase of property and equipment .......................... (12,518) (7,727)
Proceeds from sale of subsidiary ............................ - - 55,000
Other ....................................................... (629) (939)
--------------------
Net cash provided by (required for) investing activities (13,147) 46,334
--------------------
Cash Provided by (Required For) Financing Activities:
Purchase of common stock .................................... (32,888) (16,833)
Cash dividends paid ......................................... (6,383) (6,104)
Proceeds from long-term borrowings .......................... 185,000 - -
Principal payments on long-term debt ........................ (25,000) (20,000)
Principal payments on short-term notes payable, net ......... (5,000) (15,000)
Other ....................................................... 496 1,101
--------------------
Net cash provided by (required for) financing activities. 116,225 (56,836)
--------------------
Net increase in cash and cash equivalents ............... 151,564 43,248
Cash and cash equivalents:
Beginning ................................................... 14,163 19,267
--------------------
Ending ...................................................... $165,727 $ 62,515
====================
</TABLE>
<PAGE>
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 March 31, 1998 and the results of
operations for the three- and six-month periods ended March 31, 1998 and 1997
and cash flows for the six-month periods ended March 31, 1998 and 1997.
Note 2. Investment in Associated Companies
Condensed operating results of unconsolidated associated companies are as
follows (dollars in thousands):
Three Months Six Months
Ended March 31, Ended March 31,
---------------- ----------------
1998 1997 1998 1997
---------------- ----------------
Revenues ................................... $20,242 $19,029 $42,027 $38,806
Operating expenses, except
depreciation and amortization ........... 14,427 13,469 28,672 26,658
Income before depreciation and amortization,
interest, and taxes ..................... 5,815 5,560 13,355 12,148
Depreciation and amortization .............. 717 502 1,430 1,003
Operating income ........................... 5,098 5,058 11,925 11,145
Financial income ........................... 291 237 623 554
Income before income taxes ................. 5,389 5,295 12,548 11,699
Income taxes ............................... 2,169 2,132 5,030 4,710
Net income ................................. 3,220 3,163 7,518 6,989
a. Madison Newspapers, Inc. (50% owned)
b. Quality Information Systems (50% owned)
c. INN Partnership, LC (an effective 50% owned)
Note 3. Cash Flows Information
The components of other balance sheet changes are:
Six Months
Ended March 31,
-----------------
1998 1997
-----------------
(In Thousands)
Unaudited)
(Increase) in receivables .................................. $(3,035) $(1,762)
Decrease in inventories, film rights and other ............. 3,986 3,809
Increase (decrease) in accounts payable, accrued expenses
and unearned income ..................................... (1,689) 4,473
Increase in income taxes payable ........................... 433 1,244
Other, primarily deferred items ............................ 60 (642)
----------------
$ (245) $ 7,122
================
Note 4. Change in Accounting Principles
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128 "Earnings per Share". Statement No. 128 replaced
the previously reported primary and fully diluted earnings per share with basic
and diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effects of options, warrants, and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All earnings per share
amounts for all periods have been presented, and where necessary, restated to
conform to Statement No. 128 requirements.
<PAGE>
The American Institute of Certified Public Accountants issued Statement of
Position (SOP) 98-1 "Accounting for the Costs of Computer Software Developed for
Internal Use". In accordance with SOP 98-1, the Company has capitalized the
costs of certain software developed for internal use.
Note 5. Earnings Per Share
The following table sets forth the computation of basis and diluted earnings per
share (in thousands except per share amounts):
<TABLE>
Three Months Six Months
Ended March 31, Ended March 31,
----------------- -----------------
1998 1997 1998 1997
----------------- -----------------
<S> <C> <C> <C> <C>
Numerator income applicable to common shares:
Income from continuing operations ........ $12,611 $11,240 $29,195 $30,348
Income from discontinued operations ...... - - 1,000 - - 1,000
-------------------------------------
Net income ........................ $12,611 $12,240 $29,195 $31,348
=====================================
Denominator:
Basic-weighted average common shares
outstanding ........................... 44,990 46,467 45,153 46,668
Dilutive effect of employee stock options 793 887 751 887
-------------------------------------
Diluted outstanding shares ............... 45,783 47,354 45,904 47,555
=====================================
Basic earnings per share:
Income from continuing operations ........ $ 0.28 $ 0.24 $ 0.64 $ 0.65
Income from discontinuing operations ..... - - 0.02 - - 0.02
-------------------------------------
Net income ........................ $ 0.28 $ 0.26 $ 0.64 $ 0.67
=====================================
Diluted earnings per share:
Income from continuing operations ........ $ 0.28 $ 0.24 $ 0.64 $ 0.64
Income from discontinuing operations ..... - - 0.02 - - 0.02
-------------------------------------
Net income ........................ $ 0.28 $ 0.26 $ 0.64 $ 0.66
=====================================
</TABLE>
Note 6. Subsequent Event
On March 31, 1998 the Company received $185,000,000 in proceeds from a private
placement of long-term debt. On April 6, 1998 the Company repaid $140,000,000
borrowed under a $200,000,000 unsecured revolving loan agreement associated with
the Pacific Northwest Publishing Group acquisition and the revolving loan credit
facility was reduced to $50,000,000. The debt has an average maturity of nine
years and a weighted average interest rate of 6.36%. Covenants under the loan
agreement are not expected to be restrictive to operations or stockholder
dividends.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Operating results (dollars in thousands, except per share data):
<TABLE>
Three Months Ended March 31, Six Months Ended March 31,
---------------------------------- ---------------------------------
1998 1997 1997 1998 1997 1997
---------------------------------- ---------------------------------
(Pro Forma) (Pro Forma)
<S> <C> <C> <C> <C> <C> <C>
Revenue ................................. $121,345 $101,787 $114,006 $252,604 $221,455 $247,087
Percent change ....................... 19.2% 14.1%
Percent change, pro forma ............ 6.4% 2.2%
Income before depreciation and
amortization, interest and taxes
(EBITDA) ............................. 32,921 25,676 28,728 72,095 64,772 71,979
Percent change ....................... 28.2% 11.3%
Percent change, pro forma ............ 14.6% 0.2%
Operating income ........................ 23,748 19,000 19,787 53,846 51,412 54,261
Percent change ....................... 25.0% 4.7%
Percent change, pro forma ............ 20.0% (0.8)%
Income from continuing operations ....... 12,611 11,240 9,862 29,195 30,348 28,365
Percent change ....................... 12.2% (3.8)%
Percent change, pro forma ............ 27.9% 2.9%
Net income .............................. 12,611 12,240 10,862 29,195 31,348 29,365
Percent change ....................... 3.0% (6.9)%
Percent change, pro forma ............ 16.1% (0.6)%
Earnings per share:
Basic:
Income from continuing operations $ 0.28 $ 0.24 $ 0.21 $ 0.65 $ 0.65 $ 0.61
Percent change .................. 16.7% - -%
Percent change, pro forma ....... 33.3% 6.6%
Net income ........................ 0.28 0.26 0.23 0.65 0.67 0.63
Percent change .................. 7.7% (3.0)%
Percent change, pro forma ....... 21.7% 3.2%
Diluted:
Income from continuing operations . $ 0.28 $ 0.24 $ 0.21 $ 0.64 $ 0.64 $ 0.60
Percent change .................. 16.7% - %
Percent change, pro forma ....... 33.3% 6.7%
Net income ........................ 0.28 0.26 0.23 0.64 0.66 0.62
Percent change .................. 7.7% (3.0)%
Percent change, pro forma ....... 21.7% 3.2%
</TABLE>
<PAGE>
Operations by line of business are as follows (dollars in thousands, except per
share data):
<TABLE>
Three Months Ended March 31, Six Months Ended March 31,
------------------------------- --------------------------------
1998 1997 1997 1998 1997 1997
------------------------------- --------------------------------
(Pro Forma) (Pro Forma)
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Publishing .......................... $ 90,398 $ 75,748 $ 87,967 $190,402 $160,035 $185,667
Broadcasting ........................ 30,947 26,039 26,039 62,202 61,420 61,420
---------------------------------------------------------------
$121,345 $101,787 $114,006 $252,604 $221,455 $247,087
===============================================================
Income before depreciation and
amortization, interest and taxes
(EBITDA):
Publishing .......................... $ 27,132 $ 24,016 $ 27,068 $ 61,838 $ 54,135 $ 61,342
Broadcasting ........................ 8,394 4,863 4,863 16,817 17,788 17,788
Corporate ........................... (2,605) (3,203) (3,203) (6,560) (7,151) (7,151)
---------------------------------------------------------------
$ 32,921 $ 25,676 $ 28,728 $ 72,095 $ 64,772 $ 71,979
===============================================================
Operating income:
Publishing .......................... $ 21,110 $ 20,337 $ 21,124 $ 49,720 $ 46,724 $ 49,573
Broadcasting ........................ 5,579 2,012 2,012 11,259 12,134 12,134
Corporate ........................... (2,941) (3,349) (3,349) (7,133) (7,446) (7,446)
---------------------------------------------------------------
$ 23,748 $ 19,000 $ 19,787 $ 53,846 $ 51,412 $ 54,261
===============================================================
Capital expenditures:
Publishing .......................... $ 5,696 $ 2,120 $ 8,327 $ 3,708
Broadcasting ........................ 1,755 1,305 3,205 3,833
Corporate ........................... 720 - - 986 186
------------------- -------------------
$ 8,171 $ 3,425 $12,518 $ 7,727
=================== ===================
</TABLE>
<PAGE>
QUARTER ENDED MARCH 31, 1998
PUBLISHING
The following daily newspaper revenue information is presented on a pro forma
basis to include The Pacific Northwest Group as if the acquisition had occurred
October 1, 1996.
Pro forma wholly-owned daily newspaper advertising revenue increased $1,535,000,
3.7%. Advertising revenue from local merchants decreased $(119,000), (.5%).
Local "run-of-press" advertising decreased $(471,000), (2.9%), as a result of a
(3.1%) decrease in advertising inches. Local preprint revenue increased
$352,000, 5.0%. Classified advertising revenue increased $1,647,000, 11.7%, as a
result of higher averages rates and a 4.3% increase in advertising inches. The
employment category was the biggest contributor to the increase. Circulation
revenue decreased $(100,000), (.5%), as a result of a 1.1% decrease in volume.
Other revenue consists of revenue from weekly newspapers, classified and
specialty publications, commercial printing, products delivered outside the
newspaper (which include activities such as target marketing and special event
production) and editorial service contracts with Madison Newspapers, Inc.
Other revenue by category and by property is as follows:
1998 1997
------------------
(In Thousands)
Weekly newspapers, classified and specialty publications:
Properties owned for entire period ..................... $ 6,370 $ 6,160
Acquired since December 31, 1996 ....................... 10,393 - -
Commercial printing:
Properties owned for entire period ..................... 3,157 3,384
Acquired since December 31, 1996 ....................... 203 - -
Products delivered outside the newspaper:
Properties owned for entire period ..................... 2,826 2,511
Acquired since December 31, 1996 ....................... 5 - -
Editorial service contracts ............................... 2,383 2,251
-----------------
$25,337 $14,306
=================
The following table sets forth the percentage of revenue of certain items in the
publishing segment.
1998 1997
---------------
Revenue .................................................... 100.0% 100.0%
---------------
Compensation costs ......................................... 36.1 34.7
Newsprint and ink .......................................... 10.6 9.2
Other operating expenses ................................... 23.3 24.4
---------------
70.0 68.3
---------------
Income before depreciation, amortization, interest and taxes 30.0 31.7
Depreciation and amortization .............................. 6.6 4.9
---------------
Operating margin wholly-owned properties ................... 23.4% 26.8%
===============
Exclusive of the effects of acquisitions, costs other than depreciation and
amortization increased $2,046,000, 4.0%. Compensation expense increased
$1,312,000, 5.0%, due primarily to increase in average compensation. Newsprint
and ink costs increased $1,076,000, 15.5%, due primarily to higher prices for
newsprint. Other operating costs exclusive of depreciation and amortization
decreased $(342,000), (1.9%), due to favorable insurance claims experience and
reduced losses on an alternative publishing venture which was terminated.
BROADCASTING
Revenue for the quarter increased $4,908,000, 18.8%, as local/regional/national
advertising increased $4,525,000, 20.8%, primarily due to Winter Olympics
advertising on our CBS-affiliated stations. Political advertising increased
$39,000, 41.5%, and production revenue and revenues from other services
increased $511,000, 22.0%. Advertising revenue growth may be favorably affected
later in the year due to primary elections.
<PAGE>
The following table sets forth the percentage of revenue of certain items in the
broadcasting segment.
1998 1997
---------------
Revenue .................................................... 100.0% 100.0%
---------------
Compensation costs ......................................... 42.2 47.5
Programming costs .......................................... 6.7 7.1
Other operating expenses ................................... 24.0 26.7
---------------
72.9 81.3
---------------
Income before depreciation, amortization, interest and taxes 27.1 18.7
Depreciation and amortization .............................. 9.1 11.0
---------------
Operating margin wholly-owned properties ................... 18.0% 7.7%
===============
Compensation costs increased $700,000, 5.7%, due to incentive compensation on
higher revenue and to increases in average compensation. Programming costs for
the quarter increased $223,000, 12.1%, primarily due to accelerated amortization
on new programming. Other operating expenses, exclusive of depreciation and
amortization, increased $454,000, 6.5%, due to increased costs for Winter
Olympics coverage, audience research and helicopter rental.
CORPORATE COSTS
Corporate costs decreased by $(408,000), (12.2%), primarily as a result of the
capitalization of computer software developed for internal use which was
previously expensed as incurred. Reductions in community development
contributions and incentive compensation offset other cost increases.
FINANCIAL EXPENSE AND INCOME TAXES
Interest expense increased due to short-term borrowings to finance The Pacific
Northwest Group acquisition.
Income taxes were 38.8% and 39.0% of pretax income for the quarters ended March
31, 1998 and 1997, respectively.
SIX MONTHS ENDED MARCH 31, 1998
PUBLISHING
The following daily newspaper revenue information is presented on a pro forma
basis to include The Pacific Northwest Group as if the acquisition had occurred
October 1, 1996.
Pro forma wholly-owned daily newspaper advertising revenue increased $3,391,000,
3.7%. Advertising revenue from local merchants decreased $(238,000), (.4%).
Local "run-of-press" advertising decreased $(1,181,000), (3.1%), as a result of
a (4.3%) decrease in advertising inches. Local preprint revenue increased
$943,000, 5.6%. Classified advertising revenue increased $3,504,000, 12.4%, as a
result of higher averages rates and a 4.8% increase in advertising inches. The
employment category was the biggest contributor to the increase. Circulation
revenue was even as a result of higher rates which offset a 1.4% decrease in
volume.
Other revenue consists of revenue from weekly newspapers, classified and
specialty publications, commercial printing, products delivered outside the
newspaper (which include activities such as target marketing and special event
production) and editorial service contracts with Madison Newspapers, Inc.
Other revenue by category and by property is as follows:
1998 1997
------------------
(In Thousands)
Weekly newspapers, classified and specialty publications:
Properties owned for entire period ..................... $12,185 $11,622
Acquired since September 30, 1996 ...................... 21,120 - -
Commercial printing:
Properties owned for entire period ..................... 6,736 7,382
Acquired since September 30, 1996 ...................... 444 - -
Products delivered outside the newspaper:
Properties owned for entire period ..................... 5,400 4,893
Acquired since September 30, 1996 ...................... 9 - -
Editorial service contracts ............................... 4,502 4,297
-----------------
$50,396 $28,194
=================
<PAGE>
The following table sets forth the percentage of revenue of certain items in the
publishing segment.
1998 1997
---------------
Revenue .................................................... 100.0% 100.0%
---------------
Compensation costs ......................................... 34.4 33.3
Newsprint and ink .......................................... 10.6 9.3
Other operating expenses ................................... 22.5 23.6
---------------
67.5 66.2
---------------
Income before depreciation, amortization, interest and taxes 32.5 33.8
Depreciation and amortization .............................. 6.4 4.6
---------------
Operating margin wholly-owned properties ................... 26.1% 29.2%
===============
Exclusive of the effects of acquisitions, costs other than depreciation and
amortization increased $3,785,000, 3.6%. Compensation expense increased
$2,487,000, 4.7%, due primarily to increase in average compensation. Newsprint
and ink costs increased $1,990,000, 13.4%, due primarily to higher prices for
newsprint. Other operating costs exclusive of depreciation and amortization
decreased $(692,000), (1.8%), due to favorable insurance claims experience and
reduced losses on an alternative publishing venture which was terminated.
BROADCASTING
Revenue increased $782,000, 1.3%, as local/regional/national advertising
increased $5,289,000, 11.0%, primarily due to Winter Olympics advertising in the
second quarter. Production revenue and revenues from other services increased
$422,000, 9.0%. Advertising revenue growth may be favorably affected later in
the year due to primary elections. Political advertising decreased $(4,810,000),
(88.1%), principally in the first fiscal quarter.
The following table sets forth the percentage of revenue of certain items in the
broadcasting segment.
1998 1997
---------------
Revenue .................................................... 100.0% 100.0%
---------------
Compensation costs ......................................... 41.5 40.6
Programming costs .......................................... 6.9 6.3
Other operating expenses ................................... 24.6 24.1
---------------
73.0 71.0
---------------
Income before depreciation, amortization, interest and taxes 27.0 29.0
Depreciation and amortization .............................. 8.9 9.2
---------------
Operating margin wholly-owned properties ................... 18.1% 19.8%
===============
Compensation costs increased $870,000, 3.5%, due to increases in average
compensation. Programming costs for the period increased $442,000, 11.4%,
primarily due to accelerated amortization on new programming. Other operating
expenses, exclusive of depreciation and amortization, increased $441,000, 3.0%,
as previously discussed.
CORPORATE COSTS
Corporate costs decreased by $(313,000), (4.2%). The decrease occurred in the
second quarter as previously discussed.
FINANCIAL EXPENSE AND INCOME TAXES
Interest expense increased due to short-term borrowings to finance The Pacific
Northwest Group acquisition.
Income taxes were 38.6% and 38.9% of pretax income for the six months ended
March 31, 1998 and 1997, respectively.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations, which is the Company's primary source of liquidity,
generated $48,486,000 for the six month period ended March 31, 1998. On March
31, 1998 the Company received $185,000,000 of proceeds from new long-term
borrowings. At that date, the Company had $140,000,000 borrowed under a
$200,000,000 unsecured revolving loan agreement. The borrowings under the
revolving loan agreement were repaid in full by April 6, 1998 and the revolving
loan credit facility was reduced to $50,000,000. Available cash balances and
cash flow from operations provide adequate liquidity. Covenants related to the
Company's credit agreement are not considered restrictive to operations and
anticipated stockholder dividends.
SAFE HARBOR STATEMENT
This report contains forward-looking statements and includes assumptions
concerning the Company's operations, future results and prospects. These
forward-looking statements are based on current expectations and are subject to
risks and uncertainties. In connection with the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, the Company provides the
following cautionary statements identifying important economic, political, and
technological factors which, among others, could cause the actual results or
events to differ materially from those set forth or implied by the
forward-looking statements or assumptions.
Such factors include the following: (i) changes in the current and future
business environment, including interest rates and capital and consumer
spending; (ii) prices for newsprint products; (iii) the availability of quality
broadcast programming at competitive prices; (iv) the quality and ratings of
network over-the-air broadcast programs; and (v) legislative or regulatory
initiatives affecting the cost of delivery of over-the-air broadcast programs to
the Company's customers. Further information concerning the Company and its
businesses, including additional factors that potentially could materially
affect the Company's financial results, is included in the Company's annual
report on Form 10-K.
<PAGE>
LEE ENTERPRISES, INCORPORATED
PART II. OTHER INFORMATION
Item 4. Submission of matters a vote of security holders
(a) The annual meeting of the Company was held on January 20, 1998.
(b) Andrew E. Newman and Ronald L. Rickman were re-elected directors of
three-year terms expiring at the 2001 annual meeting. Lloyd G.
Schermer and Richard W. Sonnenfeldt were re-elected as directors
for one-year terms expiring at the 1999 annual meeting. Directors
whose terms of office continued after the meeting include: J.P.
Guerin, Charles E. Rickershauser, Jr., Mark Vittert, Rance E.
Crain, Richard D. Gottlieb, and Phyllis Sewell.
(c) Votes were cast, all by proxy, for nominees for director as
follows:
Vote
For Withheld
-------------------------
Andrew E. Newman ..... 114,522,654 1,664,734
Ronald L. Rickman .... 114,542,634 1,644,754
Lloyd G. Schermer .... 114,576,460 1,610,928
Richard W. Sonnenfeldt 113,939,445 2,247,943
(d) Abstentions and broker non-votes were not significant.
(e) Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) There were no reports on Form 8-K required to be filed during the
quarter for which this report is filed.
<PAGE>
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 May 14, 1998 /s/ G. C. Wahlig
------------------------------ ---------------------------------------
G. C. Wahlig, Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1998 FORM 10-Q OF LEE ENTERPRISES, INCORPORATED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 165,727
<SECURITIES> 12,885
<RECEIVABLES> 64,601
<ALLOWANCES> 4,600
<INVENTORY> 1,378
<CURRENT-ASSETS> 239,478
<PP&E> 284,766
<DEPRECIATION> 161,556
<TOTAL-ASSETS> 791,529
<CURRENT-LIABILITIES> 234,727
<BONDS> 185,546
0
0
<COMMON> 89,670
<OTHER-SE> 225,017
<TOTAL-LIABILITY-AND-EQUITY> 791,529
<SALES> 248,845
<TOTAL-REVENUES> 252,604
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 198,758
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,050
<INCOME-PRETAX> 47,514
<INCOME-TAX> 18,319
<INCOME-CONTINUING> 29,195
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,195
<EPS-PRIMARY> .65
<EPS-DILUTED> .64
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THESE SCHEDULES CONTAIN SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-Q'S
AND 10-K'S OF LEE ENTERPRISES INCORPORATED AND ARE QUALIFIED IN THIER ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<C>
<PERIOD-TYPE> 3-MOS 3-MOS YEAR YEAR
YEAR
<FISCAL-YEAR-END> SEP-30-1996 SEP-30-1997 SEP-30-1995 SEP-30-1996
SEP-30-1997
<PERIOD-END> DEC-31-1995 DEC-31-1996 SEP-30-1995 SEP-30-1996
SEP-30-1997
<CASH> 30,107 30,590 10,883 19,267
14,163
<SECURITIES> 9,877 11,105 8,946 10,668
12,506
<RECEIVABLES> 69,597 58,752 62,684 52,773
62,997
<ALLOWANCES> 4,300 4,398 4,100 4,000
4,600
<INVENTORY> 16,848 1,441 18,355 3,668
3,716
<CURRENT-ASSETS> 127,592 159,457 104,509 146,708
93,967
<PP&E> 257,481 246,110 253,463 241,887
272,441
<DEPRECIATION> 148,720 141,084 145,267 137,182
152,415
<TOTAL-ASSETS> 579,426 537,913 559,929 527,416
650,963
<CURRENT-LIABILITIES> 126,253 103,387 116,527 97,777
248,908
<BONDS> 75,109 52,103 75,511 52,290
26,174
0 0 0 0
0
0 0 0 0
0
<COMMON> 94,796 93,381 94,732 94,044
91,017
<OTHER-SE> 225,910 235,975 216,310 230,910
228,373
<TOTAL-LIABILITY-AND-EQUITY> 579,426 537,913 559,929 527,416
650,963
<SALES> 108,860 117,756 375,463 420,361
439,110
<TOTAL-REVENUES> 110,781 119,668 383,740 427,369
446,686
<CGS> 0 0 0 0
0
<TOTAL-COSTS> 0 0 0 0
0
<OTHER-EXPENSES> 84,718 87,256 292,335 332,628
342,535
<LOSS-PROVISION> 0 0 1,525 2,560
2,934
<INTEREST-EXPENSE> 2,555 1,742 11,902 9,648
8,321
<INCOME-PRETAX> 24,035 31,214 83,207 87,708
101,222
<INCOME-TAX> 9,343 12,106 30,975 34,032
38,477
<INCOME-CONTINUING> 14,692 19,108 52,232 53,670
62,745
<DISCONTINUED> 1,248 0 6,227 (8,223)
1,485
<EXTRAORDINARY> 0 0 0 0
0
<CHANGES> 0 0 0 0
0
<NET-INCOME> 15,940 19,108 58,459 45,447
64,230
<EPS-PRIMARY> .34 .41 1.27 .97
1.38
<EPS-DILUTED> .33 .40 1.25 .95
1.36
</TABLE>
