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

In addition to the curtailment gains, the contract changes reduced Lee’s liabilities for post-retirement medical benefit and pension obligations by $6.6 million and $2.0 million, respectively. Also, the changes are expected to reduce operating expenses for the six months ending September 2010 by $1.3 million and by an average of $1.8 million on an annual basis over the life of the contract.

IMPACT OF HEALTH CARE LEGISLATION

As a result of the Patient Protection and Affordable Care Act signed into law in March 2010, a one-time charge to earnings of $2.0 million was required in the quarter to reflect the write-off of deferred income tax assets due to the loss of future tax deductions for providing retiree prescription-drug benefits.

ADJUSTED EARNINGS AND EPS FOR THE QUARTER

Unusual items affecting year-over-year comparisons include, in 2010, curtailment gains, the impact of health care legislation and non-cash writedowns of equipment no longer in use due to streamlining of operations. In 2009, unusual items include impairment charges and nonrecurring debt financing costs. 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 $58.1 million. The following table summarizes the impact from unusual items on 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

March 28, 2010

 

March 29, 2009

(Thousands, Except Per Share) Amount   Per Share Amount   Per Share

Income (loss) available to common stockholders, as reported

$ 2,991 $ 0.07 $ (51,757 ) $ (1.16 )
Adjustments:
Curtailment gains (13,882 ) -

Impairment of goodwill and other assets, including TNI Partners

3,290 154,813
Debt financing costs 1,972 12,927
Other, net     306           2,443      
(8,314 ) 170,183

Income tax adjustment related to new health care legislation

2,012 -

Income tax effect of adjustments, net, other unusual tax items, and impact on minority interest

    5,223           (63,261 )    
      (1,079 )     (0.02 )     106,922       2.41  

Income available to common stockholders, as adjusted

1,912 0.04 55,165 1.24

Change in redeemable minority interest liability

  -     -       (58,094 )     (1.31 )
Net income (loss), as adjusted   $ 1,912     $ 0.04     $ (2,929 )   $ (0.07 )
 

YEAR TO DATE OPERATING RESULTS

Operating revenue for the six months totaled $395.6 million, a decline of 10.6 percent compared with a year ago. Combined print and online advertising revenue decreased 12.6 percent to $285.0 million, with retail advertising down 11.4 percent, national down 11.9 percent and classified down 15.3 percent. Combined print and online employment advertising revenue decreased 30.7 percent, automotive decreased 16.0 percent, real estate decreased 19.5 percent and other classified declined 0.4 percent. Online advertising revenue increased 2.0 percent to percent to $22.0 million.

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