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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 14.3 percent, with compensation down 9.7 percent and newsprint and ink down 43.8 percent.

Operating cash flow increased 5.7 percent for the six months compared with a year ago to $86.4 million. Operating cash flow margin increased to 21.9 percent from 18.5 percent a year ago. Including equity in earnings of associated companies, depreciation and amortization, as well as impairment charges and other unusual items, operating income totaled $94.5 million, compared with a loss of $180.6 million a year ago. Operating income margin was 23.9 percent for the six months. Non-operating expenses, primarily interest expense and debt financing costs, declined $7.1 million. Income tax expense was adversely impacted by health care legislation, all of which, combined, resulted in income available to common stockholders of $30.9 million, compared with a loss of $100.4 million a year ago.

YEAR TO DATE ADJUSTED EARNINGS AND EPS

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 $57.1 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.

 

26 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

$ 30,897 $ 0.69 $ (100,434 ) $ (2.26 )
Adjustments:
Curtailment gains (45,012 ) -

Impairment of goodwill and other assets, including TNI Partners

3,290 224,858
Debt financing costs 3,967 14,850
Other, net     1,095           2,665      
(36,660 ) 242,373

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

    17,013           (77,131 )    
      (17,635 )     (0.40 )     165,242       3.72  

Income available to common stockholders, as adjusted

13,262 0.30 64,808 1.46

Change in redeemable minority interest liability

  -     -       (57,055 )     (1.28 )
Net income, as adjusted   $ 13,262     $ 0.30     $ 7,753     $ 0.17  
 

DEBT AND FREE CASH FLOW (3)

Debt was reduced $27.1 million in the quarter and $34.3 million year to date. Debt, net of cash, has been reduced $83.2 million in the last 12 months.

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