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Lee Enterprises Reports Earnings Growth, Improving Revenue And 16% Increase In Operating Cash Flow

Operating expenses, excluding depreciation, amortization and curtailment gains, decreased 10.4 percent. Compensation declined 5.9 percent, with the average number of full-time equivalent employees down 7.7 percent. Newsprint and ink expense decreased 36.8 percent, a result of a reduction in newsprint volume of 12.7 percent and reduced cost of newsprint. Cash costs are expected to decline 9 percent in total for the fiscal year.

Operating cash flow increased 16.2 percent from a year ago to $33.3 million. Operating cash flow margin (1) increased to 17.9 percent from 14.4 percent a year ago in the historically smallest revenue quarter of the year. Including equity in earnings of associated companies, depreciation and amortization, as well as impairment charges and other unusual items in both years, operating income totaled $26.7 million, compared with an operating loss of $146.3 million a year ago. Operating income margin was 14.4 percent in the quarter. Non-operating expenses, primarily interest expense and debt financing costs, declined $10.1 million. Income tax expense was adversely impacted by new health care legislation, all of which, combined, resulted in income available to common stockholders of $3.0 million, compared with a loss of $51.8 million a year ago.

NEW UNION CONTRACT RESULTS IN CURTAILMENT GAINS

Non-cash, pretax curtailment gains totaling $13.9 million resulted from a new union contract in St. Louis.

On March 27, 2010, members of the St. Louis Newspaper Guild, Local 36047 voted to approve a new, 5.5-year contract, effective April 1, 2010. Guild members had been operating under the provisions of a contract that expired in June 2009. Significant contract provisions that are changed from the previous contract include:

  • Wages
    • Reduction in wages of 6% as of April 1, 2010, excluding certain commissioned sales staff
    • Increase in base compensation for certain commissioned sales staff
    • One week unpaid furlough in the six months ending September 2010
    • One week unpaid furlough in each of the years ending September 2011 and 2012
    • 2.5% wage increases effective on each of October 1, 2012, 2013 and/or 2014 if revenue of the St. Louis Post-Dispatch, including an associated business, achieves 2% growth levels in the immediately preceding fiscal year
  • Benefits
    • Elimination of postretirement medical coverage
    • Elimination of retiree life insurance
    • Freeze of defined benefit pension benefits
    • Increase in annual company 401(k) contributions of $300 per employee.

The new contract includes a six-month moratorium on layoffs for Guild members and relaxes seniority restrictions in the event of future layoffs. The contract continues through September 2015.

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