[DESCRIPTION]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[TEXT]
FORM 10-Q
[x] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended December 31, 1993
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 December 31, 1993
Common Stock, $2.00 par value 16,089,819
Class "B" Common Stock, $2.00 par value 7,018,336
[DESCRIPTION]
PART I. FINANCIAL INFORMATION
Item 1.
LEE ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
1993 1992
(Unaudited)
Three Months Ended December 31:
Operating revenue:
Newspaper:
Advertising $ 35,008 $ 33,745
Circulation 16,442 15,569
Other 9,330 8,339
Broadcasting 22,934 22,480
Media products and services 15,632 13,780
Equity in net income of associated companies 2,741 2,434
$102,087 $ 96,347
Operating expenses:
Compensation costs $ 34,103 $ 31,915
Newsprint and ink 5,856 5,713
Depreciation 2,683 2,692
Amortization of intangibles 3,160 3,452
Other 31,246 29,774
$ 77,048 $ 73,546
Operating income $ 25,039 $ 22,801
Financial (income) expense, net:
Financial (income) $ (709) $ (601)
Financial expense 3,732 4,071
$ 3,023 $ 3,470
Income before taxes on income $ 22,016 $ 19,331
Income taxes 8,699 7,828
Net income $ 13,317 $ 11,503
Weighted average number of shares 23,462 23,525
Earnings per share $ .57 $ .49
Dividends per share $ .21 $ .20
/TABLE
LEE ENTERPRISES, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
December 31, September 30,
1993 1993
(Unaudited)
ASSETS
Cash and cash equivalents $ 21,490 $ 17,072
Temporary investments 62,100 45,500
Accounts receivable, net 46,417 45,421
Inventories 8,937 11,177
Film rights and other 13,737 15,952
Total current assets $152,681 $135,122
Investments, associated companies 20,708 20,305
Property and equipment, net 76,839 75,356
Intangibles and other assets 252,182 251,534
$502,410 $482,317
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $103,404 $ 91,708
Long-term debt, less current maturities 128,039 127,466
Deferred items 39,405 39,661
Stockholders' equity 231,562 223,482
$502,410 $482,317
/TABLE
LEE ENTERPRISES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
1993 1992
(Unaudited)
Three Months Ended December 31:
CASH PROVIDED BY OPERATIONS
Net income $ 13,317 $ 11,503
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization 5,843 6,144
Distributions in excess of current
earnings of associated companies 1,734 1,394
Other balance sheet changes 7,382 (3,742)
Net cash provided by operations $ 28,276 $ 15,299
CASH PROVIDED BY (REQUIRED FOR) INVESTING
ACTIVITIES
Acquisitions $ (2,370) $ - -
Purchase of temporary investments (38,500) (200)
Proceeds from maturities of temporary
investments 21,900 10,000
Purchase of property and equipment (4,015) (4,418)
Net cash provided by (required for)
investing activities $(22,985) $ 5,382
CASH (REQUIRED FOR) FINANCING ACTIVITIES
Purchase of common stock $ (805) $ (3,109)
Payment of debt (9) (843)
Other, primarily stock options exercised (59) 2,662
Net cash (required for) financing
activities $ (873) $ (1,290)
Net increase in cash and cash
equivalents $ 4,418 $ 19,391
Cash and cash equivalents:
Beginning 17,072 23,271
Ending $ 21,490 $ 42,662
/TABLE
[DESCRIPTION]
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 December 31, 1993 and the results of operations and
cash flows for the three-month periods ended December 31, 1993 and
1992.
NOTE 2. INVESTMENT IN ASSOCIATED COMPANIES
Condensed operating results of unconsolidated associated companies
are as follows:
Three Months Ended
December 31,
1993 1992
(In Thousands)
(Unaudited)
Revenues $ 25,864 $ 24,005
Operating expenses, except
depreciation and amortization 16,707 15,860
Depreciation and amortization 492 484
Operating income 8,665 7,661
Financial income 445 359
Income before income taxes 9,110 8,060
Income taxes 3,606 3,185
Net income 5,504 4,875
a. Madison Newspaper, Inc. (50% owned)
b. Journal-Star Printing Co. (49.75% owned)
c. Quality Information Systems (50% owned)
d. Consumer Power Marketing (50% owned)
LEE ENTERPRISES, INCORPORATED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION
NOTE 3. INVENTORIES
Inventories consist of the following:
December 31, September 30,
1993 1993
(In Thousands)
(Unaudited)
Newsprint $ 706 $ 2,904
Media products and services:
Raw material 4,460 4,737
Finished goods 3,771 3,536
$ 8,937 $ 11,177
NOTE 4. CASH FLOWS INFORMATION
The components of other balance sheet changes are:
Three Months Ended
December 31,
1993 1992
(In Thousands)
(Unaudited)
(Increase) in receivables $ (3,133) $ (616)
Decrease in inventories, film
rights and other 2,300 668
Increase (decrease) in accounts
payable, accrued expenses and
unearned income 833 (10,884)
Increase in income taxes payable 8,132 6,088
Other, primarily deferred items (750) 1,002
$ 7,382 $ (3,742)
NOTE 5. CHANGE IN ACCOUNTING PRINCIPLES
During the quarter ended September 30, 1993, the Company adopted
FASB Statement No. 109, Accounting for Income Taxes. As permitted
by Statement No. 109, the Company has elected to retroactively
apply the provisions of the Statement by restating the financial
statements for the previous periods. In connection with the
restatement the Company recorded additional goodwill and deferred
tax liabilities related to acquired identified intangibles. The
change did not have a material effect on net income.
[DESCRIPTION]
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Operating results:
Three Months Ended
December 31,
1993 1992
(Dollar Amounts in
Thousands Except For
Per Share Data)
Revenue $102,087 $ 96,347
Percent change 6.0%
Operating expenses 77,048 73,546
Percent change 4.8%
Operating income 25,039 22,801
Percent change 9.8%
Net income 13,317 11,503
Percent change 15.8%
Earnings per share $ .57 $ .49
Percent change 16.3%
Operations by line of business are as follows:
Three Months Ended
December 31,
1993 1992
(In Thousands)
Revenue:
Newspapers $ 63,468 $ 60,104
Broadcasting 22,934 22,480
Media products and services 15,685 13,763
$102,087 $ 96,347
Operating income:
Newspapers $ 19,904 $ 18,479
Broadcasting 5,806 6,302
Media products and services 2,832 1,420
Corporate and other (3,503) (3,400)
$ 25,039 $ 22,801
Depreciation and amortization:
Newspapers $ 2,659 $ 2,963
Broadcasting 1,848 1,862
Media products and services 1,212 1,196
Corporate 124 123
$ 5,843 $ 6,144
Capital expenditures:
Newspaper $ 3,105 $ 415
Broadcasting 844 189
Media products and services 66 228
Corporate - - 3,586
$ 4,015 $ 4,418
There were no significant non-recurring items during the quarter.
Newspapers:
Wholly-owned daily newspaper advertising revenue increased $1,263,000,
3.7%. Advertising revenue from local merchants increased $243,000, 1.1%.
Local "run-of-press" advertising declined $9,000 as higher average rates
did not offset the 3.8% decline in advertising inches. Local preprint
units were flat while revenue increased $252,000, 3.9%. Classified
advertising revenue increased $904,000, 11.3% as a result of a 9.3%
increase in units in the automotive and real estate segments, more
advertising by individual customers, and higher average rates.
Circulation revenue increased $873,000, 5.6% as a result of higher rates
which offset a .2% decrease in volume. Other revenue at daily newspapers
increased $361,000 primarily as a result of increases in target marketing
and other non-traditional products.
Compensation expense increased $1,077,000, 6.1% due to a 4.9% increase in
average compensation and a 1.4% increase in the number of hours worked.
Newsprint and ink costs increased $139,000, 2.5% as lower unit costs only
partially offset a $200,000 increase in newsprint used by newspapers.
Other cash costs increased $463,000, 3.8% which includes the development
costs of new products.
Revenues from weekly newspapers, shoppers and specialty publications
increased $630,000, 19%. Revenue from properties acquired since the
beginning of the first quarter of the last fiscal year accounted for 7.2%
of the increase.
Broadcasting:
Exclusive of the effects of the acquisition of KZIA TV Las Cruces, New
Mexico, revenue for the quarter increased $307,000, 1.4% as increases in
local and national advertising more than offset the loss of $2,500,000 in
political advertising received during last year's national political
campaign. Compensation costs increased $690,000, 9.1% due primarily to a
5.4% increase in average compensation and a 1.6% increase in the number of
hours worked. Portland, Omaha and Huntington all expanded news
programming which required additional staffing and other costs. Film
amortization for the quarter declined $247,000 primarily due to lower
programming costs. Other cash costs increased $296,000, 6.5% for the
quarter.
Media Products and Services:
Revenue and operating income increased $1,922,000 and $1,412,000,
respectively, which came in large part from operations of NAPP Systems
Inc. NAPP's revenues increased 13.7% due primarily to higher plate orders
from North American customers who are experiencing economic recovery
compared to a year ago. This cyclical increase will not affect the basic
structural change in NAPP's letterpress business where customers are
expected to convert to offset or flexographic printing within the next
fifteen to twenty years.
Equity in Net Income of Associated Companies:
Equity in net income of associated companies increased $307,000 due in
part to a $237,000 increase in the net income of associated newspaper
companies and the balance due to income earned by 50%-owned strategic
alliances, Quality Information Systems and Consumer Power Marketing.
Financial Expense and Income Taxes:
Interest expense was reduced due to payments on long-term debt.
Income taxes were 39.5% of pretax income for the quarter ended
December 31, 1993 and 40.5% of pretax income in the quarter ended
December 31, 1992. Contingencies related to the amortization of
intangibles for income tax purposes increased 1992 income taxes by
$309,000 (for a 1.6% increase in the effective tax rate).
Liquidity and Capital Resources:
Cash provided by operations, which is the Company's primary source of
liquidity, generated $28,276,000 for the quarter. Cash provided by
operations for the three months ended December 31, 1992 was reduced by
$7,749,000 due to the distribution of account balances of the Company's
Deferred Compensation Unit Plan. Available cash balances and cash flow
from operations provide adequate liquidity. Covenants related to the
Company's credit agreements are not considered restrictive to operations
and anticipated stockholder dividends.
[DESCRIPTION]
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit "A" - Computation of Earnings Per Share
(b) There were no reports on Form 8-K during the quarter for which
this report is filed.
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 February 3, 1994 /s/ G. C. Wahlig
G.C. Wahlig, Chief Accounting Officer
[DESCRIPTION]
LEE ENTERPRISES, INCORPORATED
PART I. EXHIBIT "A"
Computation of Earnings Per Common Share
(In Thousands Except Per Share Amounts)
Three Months Ended
December 31,
1993 1992
(Unaudited)
Net income applicable to common shares $ 13,317 $ 11,503
Shares:
Weighted average common shares outstanding 23,103 23,155
Dilutive effect of certain stock options 359 370
Average common shares outstanding as adjusted 23,462 23,525
Earnings per common share $ .57 $ .49
